What changed in this filing

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Item 1. Financial Statements

2024-05-02 compared with 2023-10-31 · 286 added, 457 removed, 376 unchanged (66% of the section changed)

3 unchanged sentences

(Unaudited - in thousands, except share and per share data)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets

13 unchanged sentences

665,524 662,864

Long-term marketable securities 5,750 26,569

Investments in affiliates 92,677 92,910

Goodwill 160,842 155,004

Intangible assets 113,201 117,322

Right of use assets 79,580 78,176

20 unchanged sentences

issued and outstanding:

43,926,576 shares as of September 30, 2023 and 43,743,907 shares as of December 31, 2022

44,149,644 shares as of March 31, 2024 and 43,944,118 shares as of December 31, 2023

Additional paid-in capital 479,680 474,134

9 unchanged sentences

(Unaudited - in thousands, except per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 As Restated 2023 As Restated

Three Months Ended March 31,

Construction $ 595,213 $ 503,416

9 unchanged sentences

Gain on sales of property and equipment, net ( 1,418 ) ( 2,037 )

Operating income 73,818 54,699 59,429 68,738

Operating loss ( 43,300 ) ( 43,249 )

Other (income) expense

Loss on debt extinguishment — — 51,052 —

Interest income ( 6,702 ) ( 3,762 )

1 unchanged sentence

Equity in income of affiliates, net ( 3,970 ) ( 5,187 )

Other (income) expense, net 462 77 ( 2,713 ) 4,646

Total other (income) expense, net ( 6,101 ) ( 2,789 ) 29,573 1,747

Income before income taxes 79,919 57,488 29,856 66,991

Provision for (benefit from) income taxes 22,423 ( 7,710 ) 21,978 7,310

Net income 57,496 65,198 7,878 59,681

Other income, net ( 1,743 ) ( 1,950 )

Total other income, net ( 4,332 ) ( 8,008 )

Loss before income taxes ( 38,968 ) ( 35,241 )

Benefit from income taxes ( 9,526 ) ( 9,469 )

Net loss ( 29,442 ) ( 25,772 )

Amount attributable to non-controlling interests ( 1,541 ) 2,749

Net income attributable to Granite Construction Incorporated $ 57,624 $ 69,302 $ 17,601 $ 61,250

Net income per share attributable to common shareholders (see Note 15):

Net loss attributable to Granite Construction Incorporated $ ( 30,983 ) $ ( 23,023 )

Net loss per share attributable to common shareholders (see Note 15):

Basic $ ( 0.70 ) $ ( 0.53 )

5 unchanged sentences

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited - in thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 As Restated 2023 As Restated

Net income $ 57,496 $ 65,198 $ 7,878 $ 59,681

Three Months Ended March 31,

Net loss $ ( 29,442 ) $ ( 25,772 )

Other comprehensive income (loss), net of tax

Net unrealized gain (loss) on cash flow hedges, net of tax $ 589 $ ( 192 )

reclassification for net gains (losses) included in interest expense, net of tax ( 362 ) — ( 250 ) 3,042

reclassification for net gains included in interest expense, net of tax 226 —

Net change $ 815 $ ( 192 )

1 unchanged sentence

Other comprehensive income (loss), net of tax $ 409 $ ( 135 )

Comprehensive income, net of tax $ 57,595 $ 63,345 $ 7,984 $ 63,575

Non-controlling interests in comprehensive income, net of tax 128 4,104 9,723 1,569

Comprehensive income attributable to Granite Construction Incorporated, net of tax $ 57,723 $ 67,449 $ 17,707 $ 65,144

The accompanying notes are an integral part of these condensed consolidated financial statements.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited - in thousands, except share data)

Outstanding Shares Common Stock Additional

Capital Accumulated Other

Comprehensive Income (Loss) Retained Earnings Total Granite

Shareholders’ Equity Non-controlling Interests Total Equity

Balances at June 30, 2023 43,918,798 $ 439 $ 470,511 $ 795 $ 429,797 $ 901,542 $ 39,908 $ 941,450

Net income — — — — 57,624 57,624 ( 128 ) 57,496

Other comprehensive income — — — 99 — 99 — 99

Repurchases of common stock (1) ( 3,334 ) — ( 134 ) — — ( 134 ) — ( 134 )

Restricted stock units (“RSUs”) vested 11,166 — — — — — — —

Dividends on common stock ($ 0.13 per share)

— — 76 — ( 5,785 ) ( 5,709 ) — ( 5,709 )

Transactions with non-controlling interests — — — — — — 11,449 11,449

Stock-based compensation expense and other ( 54 ) — 1,926 — — 1,926 — 1,926

Balances at September 30, 2023 43,926,576 $ 439 $ 472,379 $ 894 $ 481,636 $ 955,348 $ 51,229 $ 1,006,577

Balances at June 30, 2022 (as restated) 44,078,469 $ 441 $ 467,159 $ 2,388 $ 401,667 $ 871,655 $ 33,316 $ 904,971

Net income (as restated) — — — — 69,302 69,302 ( 4,104 ) 65,198

Other comprehensive loss — — — ( 1,853 ) — ( 1,853 ) — ( 1,853 )

Repurchases of common stock (1) ( 378,790 ) ( 4 ) ( 346 ) — — ( 350 ) — ( 350 )

RSUs vested 23,994 — — — — — — —

Dividends on common stock ($ 0.13 per share)

— — 74 — ( 5,759 ) ( 5,685 ) — ( 5,685 )

Transactions with non-controlling interests — — — — — — 6,409 6,409

Stock-based compensation expense and other ( 15 ) — 1,775 — ( 76 ) 1,699 — 1,699

Balances at September 30, 2022 (as restated) 43,723,658 $ 437 $ 468,662 $ 535 $ 465,134 $ 934,768 $ 35,621 $ 970,389

(1) During the three months ended September 30, 2023 and 2022, there were 3,334 shares and 9,641 shares, respectively, withheld related to employee taxes for restricted stock units ("RSUs") vested under our equity incentive plans.

During the three months ended September 30, 2022, we also repurchased 366,785 shares under the Board approved share repurchase program.

Comprehensive loss, net of tax $ ( 29,033 ) $ ( 25,907 )

Non-controlling interests in comprehensive (income) loss, net of tax ( 1,541 ) 2,749

Comprehensive loss attributable to Granite Construction Incorporated, net of tax $ ( 30,574 ) $ ( 23,158 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

7 unchanged sentences

Balances at December 31, 2023

Net income — — — — 17,601 17,601 ( 9,723 ) 7,878

43,944,118 $ 439 $ 474,134 $ 881 $ 501,844 $ 977,298 $ 49,668 $ 1,026,966

Net loss — — — — ( 30,983 ) ( 30,983 ) 1,541 ( 29,442 )

Other comprehensive income — — — 409 — 409 — 409

3 unchanged sentences

— — 72 — ( 5,813 ) ( 5,741 ) — ( 5,741 )

Capped call transactions — — ( 39,379 ) — — ( 39,379 ) — ( 39,379 )

Redemption of warrants — — ( 13,201 ) — — ( 13,201 ) — ( 13,201 )

Common stock issued in debt extinguishment 1,390,500 14 49,321 — — 49,335 — 49,335

Exercise of bond hedge ( 1,390,516 ) ( 14 ) 14 — — — — —

Transactions with non-controlling interests — — — — — — 6,938 6,938

Stock-based compensation expense and other ( 434 ) — 12,891 — — 12,891 — 12,891

Balances at September 30, 2023 43,926,576 $ 439 $ 472,379 $ 894 $ 481,636 $ 955,348 $ 51,229 $ 1,006,577

Balances at March 31, 2024

44,149,644 $ 441 $ 479,679 $ 1,290 $ 465,048 $ 946,458 $ 58,147 $ 1,004,605

Balances at December 31, 2022

Cumulative effect of newly adopted accounting standard — — ( 26,961 ) — 10,543 ( 16,418 ) — ( 16,418 )

Balances at January 1, 2022 45,840,260 458 532,791 ( 3,359 ) 421,374 951,264 27,881 979,145

Net income (as restated) — — — — 61,250 61,250 ( 1,569 ) 59,681

Other comprehensive income — — — 3,894 — 3,894 — 3,894

43,743,907 $ 437 $ 470,407 $ 788 $ 481,384 $ 953,016 $ 32,129 $ 985,145

Net loss — — — — ( 23,023 ) ( 23,023 ) ( 2,749 ) ( 25,772 )

Other comprehensive loss — — — ( 135 ) — ( 135 ) — ( 135 )

Repurchases of common stock (1) ( 87,260 ) — ( 3,523 ) — — ( 3,523 ) — ( 3,523 )

4 unchanged sentences

Stock-based compensation expense and other ( 390 ) — 4,826 — — 4,826 — 4,826

Balances at September 30, 2022 (as restated) 43,723,658 $ 437 $ 468,662 $ 535 $ 465,134 $ 934,768 $ 35,621 $ 970,389

(1) During the nine months ended September 30, 2023 and 2022, there were 96,936 shares and 69,659 shares, respectively, withheld related to employee taxes for RSUs vested under our equity incentive plans.

During the nine months ended September 30, 2022, we also repurchased 2,298,353 shares under the Board approved share repurchase program.

Balances at March 31, 2023

43,880,224 $ 439 $ 471,782 $ 653 $ 452,583 $ 925,457 $ 46,954 $ 972,411

(1) Represents shares withheld related to employee taxes for RSUs vested under our equity incentive plans.

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

( Unaudited - in thousands )

Nine Months Ended September 30, 2023 As Restated

Three Months Ended March 31, 2024 2023

Operating activities

Net income $ 7,878 $ 59,681

Adjustments to reconcile net income to net cash used in operating activities:

Net loss $ ( 29,442 ) $ ( 25,772 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation, depletion and amortization 29,068 19,733

Amortization related to long-term debt 758 472

Non-cash loss on debt extinguishment 51,052 —

Gain on sale of business — ( 3,278 )

Gain on sales of property and equipment, net ( 1,418 ) ( 2,037 )

Deferred income taxes 1,542 ( 17,819 )

Stock-based compensation 12,895 4,828

Equity in net (income) loss from unconsolidated joint ventures ( 4,535 ) 25,066

Equity in net income from unconsolidated construction joint ventures ( 2,290 ) ( 911 )

Net income from affiliates ( 3,970 ) ( 5,187 )

11 unchanged sentences

Investing activities

Purchases of marketable securities ( 9,740 ) ( 59,810 )

Maturities of marketable securities 20,000 10,000

2 unchanged sentences

Proceeds from company owned life insurance — 1,545

Proceeds from the sale of business — 142,571

Acquisition of business ( 26,933 ) —

Issuance of notes receivable — ( 7,560 )

Return of investment in affiliates 693 —

Cash paid for purchase price adjustments on business acquisition (See Note 3) ( 6,119 ) —

Collection of notes receivable — 62

Net cash provided by (used in) investing activities $ ( 89,270 ) $ 13,874

Net cash used in investing activities $ ( 10,762 ) $ ( 24,336 )

Financing activities

Proceeds from long-term debt 55,000 50,000

Debt principal repayments ( 102,140 ) ( 256 )

Capped call transactions ( 53,035 ) —

Redemption of warrants ( 13,201 ) —

Proceeds from issuance of 3.75 % Convertible Notes

Debt issuance costs ( 10,024 ) —

Cash dividends paid ( 5,713 ) ( 5,687 )

4 unchanged sentences

Net cash provided by (used in) financing activities $ ( 109,222 ) $ 6,784

Net decrease in cash, cash equivalents and restricted cash ( 1,867 ) ( 158,571 )

Cash, cash equivalents and $ 0 and $ 1,512 in restricted cash at beginning of period

293,991 413,655

Cash, cash equivalents and $ 0 in restricted cash at end of period

$ 292,124 $ 255,084

Net decrease in cash, cash equivalents ( 95,911 ) ( 94,240 )

Cash and cash equivalents at beginning of period 417,663 293,991

Cash and cash equivalents at end of period $ 321,752 $ 199,751

Supplementary Information

4 unchanged sentences

Income taxes $ 831 $ 166

Other non-cash operating activities:

Performance guarantees $ ( 6,513 ) $ ( 4,678 )

Deferred taxes related to capped call transactions $ 13,656 $ —

Non-cash investing and financing activities:

2 unchanged sentences

Contributions from non-controlling partners $ 888 $ 1,324

Accrued equipment purchases $ ( 2,204 ) $ 897

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

Basis of Presentation:

The condensed consolidated financial statements included herein have been prepared by Granite Construction Incorporated (“we,” “us,” “our,” the “Company” or “Granite”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), are unaudited and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual Report”).

The condensed consolidated financial statements included herein have been prepared by Granite Construction Incorporated (“we,” “us,” “our,” the “Company” or “Granite”) pursuant to the rules and regulations of the Securities and Exchange Commission, are unaudited and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023 (“Annual Report”).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) have been condensed or omitted.

Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to state fairly our financial position at September 30, 2023 and the results of our operations and cash flows for the periods presented.

Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to state fairly our financial position at March 31, 2024 and the results of our operations and cash flows for the periods presented.

The December 31, 2023 condensed consolidated balance sheet data included herein was derived from audited consolidated financial statements but does not include all disclosures required by U.S.

Acquisition :

On April 24, 2023, we completed the purchase of Coast Mountain Resources (2020) Ltd.

(“CMR”) for approximately $ 26.9 million in cash, subject to certain adjustments.

During the first quarter of 2024, we reorganized our operational structure to more closely align with our two reportable segments, Construction and Materials.

Previously, leaders within our three operating groups of California, Central and Mountain managed both Construction and Materials operations within each group.

This change will allow us to better leverage our expertise within each reportable segment with leadership having direct oversight of their respective segment operations.

As a result of the reorganization, we will no longer disclose financial information by operating group.

There were no material impacts to our unaudited condensed consolidated financial statements and no changes to our reportable segments.

Due to the changes in our operational structure and the resulting changes to reporting units, we performed quantitative goodwill impairment tests, immediately before and after the reorganization, on the affected reporting units.

These reporting units previously aligned with our operating group structure, but have now been combined into two reporting units, Construction and Materials.

The reporting units associated with the acquisition of Lehman-Roberts Company and Memphis Stone & Gravel Company (collectively, "LRC/MSG") were not impacted by the reorganization.

For each of the affected reporting units, we calculated the estimated fair value consistent with the annual impairment assessment using the discounted cash flows and market multiple methods.

These tests indicated that the estimated fair values of the affected reporting units exceeded their carrying amounts with headroom in excess of 25 %.

Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may alter our construction schedules and can create variability in our revenues and profitability.

Therefore, the results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year.

Recently Issued and Adopted Accounting Pronouncements

We closely monitor all Accounting Standards Updates issued by the Financial Accounting Standards Board and other authoritative guidance.

No new accounting pronouncements were adopted in the three months ended March 31, 2024 that had a material impact on our financial statements.

On April 24, 2023, we acquired Coast Mountain Resources (2020) Ltd.

CMR is a construction aggregate producer based in British Columbia, Canada operating on Malahat First Nation land.

1 unchanged sentence

This acquisition did not have a material impact on our financial statements.

In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification (“ASC”) Topic 805, Business Combinations , the total purchase price and assumed liabilities were allocated based on their estimated fair values as of April 24, 2023.

The tangible assets acquired and liabilities assumed were approximately $ 29.2 million and $ 7.1 million, respectively, resulting in acquired goodwill of $ 4.8 million.

The tangible assets balance consists primarily of equipment, vehicles and the right-to-mine which are reported in Property and equipment, net.

The estimated allocation is subject to revision during the measurement period, which may result in adjustments to the values presented herein.

We expect to finalize these amounts within 12 months from the acquisition date.

Impairment charges:

During the third quarter of 2023, we made the decision to wind down our international Mineral Services operations.

We perform goodwill impairment tests annually as of November 1 and more frequently when events and circumstances occur that indicate a possible impairment of goodwill.

In response to this change in the business, we performed an interim goodwill impairment test on the Mountain Group Construction reporting unit, which resulted in a non-cash impairment charge.

We also assessed the long-lived tangible assets and amortizable intangible assets associated with these Mineral Services operations.

We recorded a total of $ 4.5 million of non-cash impairment charges during the three and nine months ended September 30, 2023 related to the wind down of international Mineral Services operations, which are included in other costs on our condensed consolidated statement of operations.

Therefore, the results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

Recently Issued and Adopted Accounting Pronouncements

We closely monitor all Accounting Standards Updates ("ASU") issued by the FASB and other authoritative guidance.

In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement , which requires that a joint venture apply a new basis of accounting upon formation.

As a result, a newly formed joint venture, upon formation, would initially measure its assets and liabilities at fair value.

This ASU is effective prospectively for all joint venture formations with a formation date on or after January 1, 2025.

We plan to adopt this ASU in the first quarter of 2025 but do not expect the adoption to have a material impact on our consolidated financial statements.

No new accounting pronouncements were adopted in the nine months ended September 30, 2023 that had a material impact on our financial statements.

Restatement Background

As disclosed in our Annual Report, we identified errors during the preparation of the Annual Report related to deferred taxes and the calculation of income tax expense of $ 12.3 million in connection with the sale of Inliner, which was completed in the first quarter of 2022 and was classified in Other costs, net and Provision for income taxes in our condensed consolidated financial statements.

As a result, our previously issued unaudited quarterly financial information

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

for each interim period within the nine months ended September 30, 2022 require restatement.

The restated financial information also includes adjustments to correct other immaterial errors in the first three quarters of 2022, including certain errors (primarily in revenue and cost of revenue, as well as the associated tax impact) that had previously been adjusted for as out of period corrections in the periods identified.

Description of Restatement Tables

We have presented below a reconciliation from the previously reported to the restated amounts for the three and nine months ended September 30, 2022.

The amounts labeled “As Previously Reported” were derived from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 filed on October 27, 2022.

The impacts to the condensed consolidated statements of shareholders’ equity and comprehensive income (loss) as a result of the restatement were due to the changes in net income for the three and nine months ended September 30, 2022.

In addition, there was no impact to net cash provided by (used in) investing and financing activities for the nine months ended September 30, 2022 as a result of the restatement.

The effects of the prior-period errors on our condensed consolidated financial statements are as follows (in thousands, except per share data):

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Three months ended September 30, 2022 As Previously Reported Restatement Impacts As Restated

Construction $ 848,267 $ ( 896 ) $ 847,371

Materials 161,539 — 161,539

Total revenue 1,009,806 ( 896 ) 1,008,910

Cost of revenue

Construction 749,938 4,416 754,354

Materials 139,501 — 139,501

Total cost of revenue 889,439 4,416 893,855

Gross profit 120,367 ( 5,312 ) 115,055

Selling, general and administrative expenses 61,795 — 61,795

Other costs, net ( 490 ) — ( 490 )

Gain on sales of property and equipment, net ( 949 ) — ( 949 )

Operating income 60,011 ( 5,312 ) 54,699

Other (income) expense

Interest income ( 1,894 ) — ( 1,894 )

Interest expense 2,519 — 2,519

Equity in income of affiliates ( 3,491 ) — ( 3,491 )

Other expense, net 77 — 77

Total other (income), net ( 2,789 ) — ( 2,789 )

Income before income taxes 62,800 ( 5,312 ) 57,488

Benefit from income taxes ( 6,489 ) ( 1,221 ) ( 7,710 )

Net income 69,289 ( 4,091 ) 65,198

Amount attributable to non-controlling interests 4,104 — 4,104

Net income attributable to Granite Construction Incorporated $ 73,393 $ ( 4,091 ) $ 69,302

Net income per share attributable to common shareholders

Basic earnings per share $ 1.67 $ ( 0.09 ) $ 1.58

Diluted earnings per share $ 1.44 $ ( 0.08 ) $ 1.36

Weighted average shares outstanding:

Basic 43,973 — 43,973

Diluted 51,863 — 51,863

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Nine months ended September 30, 2022 As Previously Reported Restatement Impacts As Restated

Construction $ 2,141,009 $ ( 2,151 ) $ 2,138,858

Materials 373,185 — 373,185

Total revenue 2,514,194 ( 2,151 ) 2,512,043

Cost of revenue

Construction 1,903,949 3,161 1,907,110

Materials 332,220 — 332,220

Total cost of revenue 2,236,169 3,161 2,239,330

Gross profit 278,025 ( 5,312 ) 272,713

Selling, general and administrative expenses 192,036 — 192,036

Other costs, net 19,445 2,956 22,401

Gain on sales of property and equipment, net ( 10,462 ) — ( 10,462 )

Operating income 77,006 ( 8,268 ) 68,738

Other (income) expense

Interest income ( 3,246 ) — ( 3,246 )

Interest expense 10,003 — 10,003

Equity in income of affiliates ( 9,656 ) — ( 9,656 )

Other expense, net 4,646 — 4,646

Total other expense, net 1,747 — 1,747

Income before income taxes 75,259 ( 8,268 ) 66,991

Provision for (benefit from) income taxes ( 777 ) 8,087 7,310

Net income 76,036 ( 16,355 ) 59,681

Amount attributable to non-controlling interests 1,569 — 1,569

Net income attributable to Granite Construction Incorporated $ 77,605 $ ( 16,355 ) $ 61,250

Net income per share attributable to common shareholders

Basic earnings per share $ 1.73 $ ( 0.36 ) $ 1.37

Diluted earnings per share $ 1.56 $ ( 0.31 ) $ 1.25

Weighted average shares outstanding:

Basic 44,739 — 44,739

Diluted 52,613 — 52,613

On November 30, 2023 (“acquisition date”), we completed the acquisition of LRC/MSG for $ 278.0 million, subject to customary closing adjustments, plus an estimated amount related to tax make-whole agreements with the seller.

We purchased all of the outstanding equity interests in LRC/MSG and the purchase price was funded by a $ 150.0 million senior secured term loan, as described further in Note 14, a draw of $ 100 million under our existing revolver, which was fully repaid during the three months ended March 31, 2024, and the remainder from cash on hand.

The acquired businesses are longstanding asphalt paving and asphalt and aggregates producers and suppliers.

LRC/MSG operates strategically located asphalt plants and sand and gravel mines serving the greater Memphis area and northern Mississippi.

The buyer of LRC/MSG, Granite Southeast, is a wholly-owned subsidiary of Granite Construction Incorporated, and its results have been included in the Construction and Materials segments since the acquisition date.

LRC/MSG’s customers are in both the public and private sectors.

We have accounted for this transaction in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations (“ASC 805”).

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Nine months ended September 30, 2022 As Previously Reported Restatement Impacts As Restated

Operating activities

Net income $ 76,036 $ ( 16,355 ) $ 59,681

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation, depletion and amortization 61,714 — 61,714

Amortization related to long-term debt 1,901 — 1,901

Gain on sale of business ( 6,234 ) 2,956 ( 3,278 )

Gain on sales of property and equipment, net ( 10,462 ) — ( 10,462 )

Deferred income taxes ( 17,819 ) — ( 17,819 )

Stock-based compensation 6,151 — 6,151

Equity in net loss from unconsolidated joint ventures 23,585 1,481 25,066

Net income from affiliates ( 9,656 ) — ( 9,656 )

Other non-cash adjustments 38 — 38

Changes in assets and liabilities:

Revenue and gross loss attributable to LRC/MSG for the three months ended March 31, 2024 was $ 14.0 million and $ 8.5 million, respectively.

During the three months ended March 31, 2024, we incurred an immaterial amount of pre-tax integration expenses associated with the LRC/MSG acquisition which were primarily related to professional services.

Preliminary Purchase Price Allocation

In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable intangible assets based on their estimated fair values as of the acquisition date, as presented in the table below.

These estimates are subject to revision, which may result in adjustments to the values presented below.

There are certain provisional estimates that are subject to finalization, one of which is related to tax make-whole agreements with the seller of approximately $ 24.0 million, which will be finalized upon the former owners of LRC/MSG paying their personal tax burden related to the sale of the businesses.

During the three months ended March 31, 2024, we made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date.

These adjustments included a $ 4.6 million net increase from net working capital adjustments and a $ 2.0 million increase in the estimated obligation associated with the tax make-whole agreements noted above, offset by a $ 0.6 million net increase in the value of the net tangible and identifiable intangible assets acquired.

The impact of these adjustments was an increase in goodwill of $ 6.0 million.

We paid $ 6.1 million during the three months ended March 31, 2024 for net working capital adjustments associated with the acquisition of LRC/MSG.

As we continue to integrate the acquired business, we may obtain additional information on the acquired identifiable intangible assets which, if significant, may require revisions to preliminary valuation assumptions, estimates and resulting fair values.

We expect to finalize these amounts within 12 months from the acquisition date.

The following table presents the preliminary purchase price allocation:

(in thousands)

Cash and cash equivalents $ 12,798

Receivables 18,373

Contract assets, net ( 94,933 ) 3,831 ( 91,102 )

Contract assets 3,388

Inventories 13,738

Contributions to unconsolidated construction joint ventures ( 44,667 ) — ( 44,667 )

Distributions from unconsolidated construction joint ventures and affiliates 7,960 — 7,960

Other assets, net 30,589 ( 2,956 ) 27,633

Other current assets 1,032

Property and equipment 86,329

Right of use assets 15,539

Other noncurrent assets 3,718

Total tangible assets 154,915

Identifiable intangible assets 110,360

Accounts payable 6,806

Accrued expenses and other liabilities, net 3,221 11,043 14,264

Net cash used in operating activities $ ( 14,631 ) $ — $ ( 14,631 )

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Contract liabilities 3,213

Accrued expenses and other current liabilities 10,166

Long-term lease liabilities 15,558

Other long-term liabilities 5,960

Total liabilities assumed 41,703

Total tangible and identifiable intangible net assets acquired 223,572

Goodwill 86,780

Estimated purchase price $ 310,352

Revisions in Estimates

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These estimates can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, and uncertainties are resolved.

Changes in estimates of transaction price and costs to complete may result in the reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate.

Changes in estimates of transaction price and costs to complete may result in the

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate.

In addition, the estimated or actual recovery related to estimated costs associated with unresolved affirmative claims and back charges may be recorded in future periods or may be at values below the associated cost, which can cause fluctuations in the gross profit impact from revisions in estimates.

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There can be no assurance that we will not experience further changes in circumstances or otherwise be required to revise our estimates in the future.

In our review of these changes for the three and nine months ended September 30, 2023 and 2022, we did not identify any material amounts that should have been recorded in a prior period.

The projects with increases from revisions in estimates, which individually had an impact of $ 5.0 million or more on gross profit, are summarized as follows (dollars in millions, except per share data):

Three Months Ended

September 30, Nine Months Ended

September 30,

As Restated As Restated

2023 2022 2023 2022

Number of projects with upward estimate changes 1 1 1 —

Increase to project profitability, net $ 8.6 $ 6.6 $ 8.1 $ —

Increase to net income/decrease to net loss $ 6.5 $ 5.1 $ 6.1 $ —

Amounts attributable to non-controlling interests $ — $ — $ 3.3 $ —

Increase to net income/decrease to net loss attributable to Granite Construction Incorporated $ 6.5 $ 5.1 $ 2.8 $ —

Increase to net income/decrease to net loss per diluted share attributable to common shareholders $ 0.12 $ 0.10 $ 0.06 $ —

The increases during the three months ended September 30, 2023 and September 30, 2022 were due to changes in the estimated amount of probable recovery on outstanding claims.

The increase during the nine months ended September 30, 2023 was due to decreases in estimated costs from mitigated risks.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

In our review of these changes for the three months ended March 31, 2024 and 2023, we did not identify any material amounts that should have been recorded in a prior period.

During the three months ended March 31, 2024, there was one project with an increase from revisions in estimates which had an impact to gross profit of $ 7.4 million and a reduction of net loss of $ 5.6 million, none of which was attributable to non-controlling interests.

The revision decreased the net loss per diluted share attributable to common shareholders by $ 0.13 .

The increase was due to changes in the estimated transaction price related to unresolved contract modifications resulting from revisions to project work plans, permitting and schedule.

There were no increases from revisions in estimates, which individually had an impact of $ 5.0 million or more on gross profit, for the three months ended March 31, 2023.

The projects with decreases from revisions in estimates, which individually had an impact of $ 5.0 million or more on gross profit, are summarized as follows (dollars in millions, except per share data):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Three Months Ended March 31,

Number of projects with downward estimate changes 1 2

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Decrease to project profitability, net $ 7.7 $ 17.6

Decrease to net income/increase to net loss $ 6.3 $ 11.7 $ 38.3 $ 49.8

Increase to net loss $ 5.8 $ 13.1

Amounts attributable to non-controlling interests $ — $ 5.7

Decrease to net income/increase to net loss attributable to Granite Construction Incorporated $ 2.1 $ 4.1 $ 18.1 $ 36.6

Decrease to net income/increase to net loss per diluted share attributable to common shareholders $ 0.04 $ 0.08 $ 0.41 $ 0.70

The decreases during the three and nine months ended September 30, 2023 were due to additional costs related to changes in project durations, lower productivity than originally anticipated and increased labor and materials costs.

The decreases during the three and nine months ended September 30, 2022 were due to additional costs related to extended project duration, increased labor and materials costs, and disputed work being performed where there were ongoing legal claims.

Increase to net loss attributable to Granite Construction Incorporated $ 5.8 $ 7.5

Increase to net loss per diluted share attributable to common shareholders $ 0.13 $ 0.17

The decrease during the three months ended March 31, 2024 was due to additional costs related to changes in project duration, lower productivity than originally anticipated and increased labor and materials costs.

The decreases during the three months ended March 31, 2023 were due to additional costs related to extended project duration, increased labor and materials costs, lower productivity than originally anticipated and unfavorable weather.

Disaggregation of Revenue

As discussed in Note 1, during the first quarter of 2024, we reorganized our operational structure to more closely align with our two reportable segments, Construction and Materials.

Previously, leaders within our three operating groups of California, Central and Mountain managed both Construction and Materials operations within each group.

As a result of the reorganization, we will no longer disclose financial information by operating group and we have updated our presentation of disaggregated revenue.

The prior year disaggregation of revenue amounts have been recast to conform with current period presentation.

Revenue is disaggregated by reportable segment (see Note 18) and customer type, which we believe best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Customer Type

Customers in our Construction segment are predominantly in the public sector which includes certain federal agencies, state departments of transportation, local transit authorities, county and city public works departments and school districts.

Our private sector customers include, but are not limited to, developers, utilities and private owners of industrial, commercial and residential sites.

Customers of our Materials segment include internal usage by our own construction

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Disaggregation of Revenue

We disaggregate our revenue based on our reportable segments (see Note 18) and operating groups as these are the formats that are regularly reviewed by management.

Our reportable segments are:

Construction and Materials.

In alphabetical order, our operating groups are:

California, Central and Mountain.

The following tables present our disaggregated revenue by operating group (in thousands):

Three Months Ended September 30,

2023 Construction Materials Total

California $ 317,244 $ 83,867 $ 401,111

Central 222,144 11,357 233,501

Mountain 406,310 75,898 482,208

Total $ 945,698 $ 171,122 $ 1,116,820

2022 (As Restated) Construction Materials Total

California $ 262,972 $ 85,173 $ 348,145

Central 222,082 9,348 231,430

Mountain 362,317 67,018 429,335

Total $ 847,371 $ 161,539 $ 1,008,910

Nine Months Ended September 30,

2023 Construction Materials Total

California $ 699,093 $ 191,221 $ 890,314

Central 593,632 35,251 628,883

Mountain 905,802 150,441 1,056,243

Total $ 2,198,527 $ 376,913 $ 2,575,440

2022 (As Restated) Construction Materials Total

California $ 606,716 $ 202,371 $ 809,087

Central 653,581 33,634 687,215

Mountain 878,561 137,180 1,015,741

Total $ 2,138,858 $ 373,185 $ 2,512,043

projects, as well as third-party customers.

Based on the nature of the Materials business, it is not meaningful to disaggregate revenue by customer type.

The following table presents our revenue disaggregated by reportable segment and by customer type for the Construction segment:

Three Months Ended March 31,

(in thousands) 2024 2023

Construction segment revenue:

Public $ 419,816 $ 333,091

Private 175,397 170,325

Total Construction segment revenue 595,213 503,416

Materials segment revenue 77,062 56,652

Total revenue $ 672,275 $ 560,068

Unearned Revenue

The following table presents our unearned revenue as of the respective periods:

(in thousands) September 30, 2023 December 31, 2022

California $ 1,423,845 $ 945,971

Central 1,581,426 1,444,983

Mountain 959,478 486,524

The following table presents our unearned revenue disaggregated by customer type as of the respective periods:

(in thousands) March 31, 2024 December 31, 2023

Public $ 2,976,856 $ 2,892,255

Private 629,848 704,421

Total $ 3,606,704 $ 3,596,676

All unearned revenue is in the Construction segment.

Approximately $ 2.5 billion of the September 30, 2023 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.

Approximately $ 2.4 billion of the March 31, 2024 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.

Contract Assets and Liabilities

As a result of changes in contract transaction price related to performance obligations that were satisfied or partially satisfied prior to the end of the periods, we recognized revenue of $ 41.6 million and $ 131.3 million during the three and nine months ended September 30, 2023 and $ 35.8 million and $ 150.4 million during the three and nine months ended September 30, 2022, respectively.

The changes in contract transaction price for the three and nine months ended

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

September 30, 2023 and 2022 were from items such as executed or estimated change orders and unresolved contract modifications and claims.

As of September 30, 2023 and December 31, 2022, the aggregate claim recovery estimates included in contract asset and liability balances were $ 71.6 million and $ 75.8 million, respectively.

As a result of changes in contract transaction price related to performance obligations that were satisfied or partially satisfied prior to the end of the periods, we recognized revenue of $ 84.3 million and $ 44.2 million during the three months ended March 31, 2024 and 2023, respectively.

The changes in contract transaction price for the three months ended March 31, 2024 and 2023 were from items such as executed or estimated change orders and unresolved contract modifications and claims.

As of March 31, 2024 and December 31, 2023, the aggregate claim recovery estimates included in contract asset and liability balances were $ 75.1 million and $ 77.9 million, respectively.

The components of the contract asset balances as of the respective dates were as follows:

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Costs in excess of billings and estimated earnings $ 142,853 $ 100,106

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Total contract assets $ 306,004 $ 262,987

As of September 30, 2023 and December 31, 2022, contract retention receivable from Brightline Trains Florida LLC represented 10.3 % and 11.7 %, respectively, of total contract assets.

As of March 31, 2024 and December 31, 2023, contract retention receivable from Brightline Trains Florida LLC represented 9.5 % and 11.1 %, respectively, of total contract assets.

No other contract retention receivable individually exceeded 10% of total contract assets at any of the presented dates.

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As work is performed, revenue is recognized and the corresponding contract liabilities are reduced.

We recognized revenue of $ 17.5 million and $ 188.6 million during the three and nine months ended September 30, 2023, respectively, and $ 10.7 million and $ 221.4 million during the three and nine months ended September 30, 2022, respectively, that was included in the contract liability balances at December 31, 2022 and 2021, respectively.

We recognized revenue of $ 198.3 million and $ 123.0 million during the three months ended March 31, 2024 and 2023, respectively, that was included in the contract liability balances at December 31, 2023 and 2022, respectively.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The components of the contract liability balances as of the respective dates were as follows:

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Billings in excess of costs and estimated earnings, net of retention $ 209,099 $ 227,913

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The following table presents major categories of receivables:

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Contracts completed and in progress:

7 unchanged sentences

Total net receivables $ 429,830 $ 598,705

Included in other receivables at September 30, 2023 and December 31, 2022 were items such as estimated recovery from back charge claims, notes receivable, fuel tax refunds and income tax refunds.

Other receivables at September 30, 2023 and December 31, 2022 also included $ 24.9 million of working capital contributions in the form of a loan to a partner in one of our unconsolidated joint ventures that bears interest at prime plus 3.0 % per annum.

None of our customers had a receivable balance in excess of 10 % of our total net receivables as of September 30, 2023 or December 31, 2022.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Included in other receivables at March 31, 2024 and December 31, 2023 were items such as estimated recovery from back charge claims, notes receivable, fuel tax refunds and income tax refunds.

Other receivables at March 31, 2024 and December 31, 2023 also included $ 24.9 million of working capital contributions in the form of a loan to a partner in one of our unconsolidated construction joint ventures, plus accrued interest at prime plus 3.0 % per annum.

None of our customers had a receivable balance in excess of 10 % of our total net receivables as of March 31, 2024 or December 31, 2023.

Fair Value Measurement

1 unchanged sentence

Fair Value Measurement at Reporting Date Using

September 30, 2023 Level 1 Level 2 Level 3 Total

March 31, 2024 Level 1 Level 2 Level 3 Total

Cash equivalents

1 unchanged sentence

Other current assets

Diesel collars $ — $ 335 $ — $ 335

Interest rate swap $ — $ 972 $ — $ 972

Commodity swaps — 1 — 1

Total assets $ 30,484 $ 973 $ — $ 31,457

Accrued and other current liabilities

Diesel collars $ — $ 208 $ — $ 208

Total liabilities $ — $ 208 $ — $ 208

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

December 31, 2023

1 unchanged sentence

Money market funds $ 101,275 $ — $ — $ 101,275

Other current assets

Commodity swaps — 121 — 121

Total assets $ 101,275 $ — $ — $ 101,275

Accrued and other current liabilities

Interest rate swap $ — $ 126 $ — $ 126

Commodity swaps — 153 — 153

Diesel collars — 802 — 802

Total liabilities $ — $ 1,081 $ — $ 1,081

Interest Rate Swap

In connection with entering into Amendment No.

2 of the Fourth Amended and Restated Credit Agreement in November 2023, we entered into an interest rate swap designated as a cash flow hedge with an initial notional amount of $ 75.0 million and an effective date of December 2023 and a maturity date of June 2027.

Commodity Derivatives

As of September 30, 2023 and December 31, 2022, we held commodity swaps for crude oil designated as cash flow hedges with a total outstanding notional amount of $ 1.6 million and $ 7.0 million, respectively, all maturing by October 31, 2023.

The realized and unrealized gains associated with commodity swaps for the three and nine months ended September 30, 2023 were immaterial .

The financial statement impact for the three and nine months ended September 30, 2022 was a realized gain of $ 1.2 million and $ 4.0 million, respectively.

In addition, for the three months ended September 30, 2022, the commodity swaps had an unrealized loss of $ 2.6 million, and for the nine months ended September 30, 2022, the commodity swaps had an immaterial unrealized gain.

In the first three quarters of 2023, we entered into collar contracts to reduce our price exposure on diesel consumption.

The collars were not designated as hedges and will be treated as a mark-to-market derivative instruments through their maturity dates.

The financial statement impact for the three months ended September 30, 2023 was an unrealized gain of $ 1.3 million.

The unrealized gain for the nine months ended September 30, 2023 and the realized gain for the three and nine months ended September 30, 2023 were immaterial .

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

In 2023, we entered into collar contracts and commodity swaps to reduce our price exposure on diesel consumption and heating oil consumption, respectively.

The collars and swaps were not designated as hedges and will be treated as a mark-to-market derivative instruments through their maturity dates.

The financial statement impact of the collar contracts and commodity swaps for the three months ended March 31, 2024 and 2023 was immaterial .

In December 2022, we entered into a commodity swap designed as a cash flow hedge for crude oil with a notional amount of $ 7.0 million and a maturity date of October 31, 2023.

The financial statement impact of this swap during the three months ended March 31, 2023 was immaterial .

Other Assets and Liabilities

The carrying values and estimated fair values of financial instruments that are not required to be recorded at fair value in the condensed consolidated balance sheets were as follows:

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

(in thousands) Fair Value Hierarchy Carrying Value Fair

6 unchanged sentences

Level 2 $ 31,338 $ 56,710 $ 31,338 $ 51,045

Credit Agreement - Revolver (2) Level 3 $ — $ — $ 50,000 $ 49,536

(1) All marketable securities as of September 30, 2023 and December 31, 2022 were classified as held-to-maturity and consisted of U.S.

Government and agency obligations maturing in two months to two years.

(2) The fair values of our 2.75 % convertible senior notes due 2024 (the " 2.75 % Convertible Notes") and the 3.75 % convertible senior notes due 2028 (the " 3.75 % Convertible Notes") are based on the median price of the notes in an active market.

Fourth Amended and Restated Credit Agreement - Term Loan (2) Level 3 $ 148,125 $ 151,314 $ 150,000 $ 153,585

Fourth Amended and Restated Credit Agreement - Revolver (2) Level 3 $ — $ — $ 100,000 $ 102,317

(1) All marketable securities were classified as held-to-maturity and consisted of U.S.

Government and agency obligations as of March 31, 2024 and December 31, 2023.

(2) The fair values of our 2.75 % Convertible Notes and 3.75 % Convertible Notes are based on the median price of the notes in an active market.

The fair value of the Fourth Amended and Restated Credit Agreement, as amended (the "Credit Agreement"), is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk.

See Note 14 for more information about the 2.75 % Convertible Notes, 3.75 % Convertible Notes and the Credit Agreement.

During the nine months ended September 30, 2023 and 2022, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

During the three months ended March 31, 2024 and 2023, we had no material nonfinancial asset and liability fair value adjustments.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Construction Joint Ventures

2 unchanged sentences

We continually evaluate whether there are changes in the status of the VIEs or changes to the primary beneficiary designation of the VIE.

Based on our assessments during the three and nine months ended September 30, 2023, we determined no change was required for existing joint ventures.

Based on our assessments during the three months ended March 31, 2024, we determined no change was required for existing joint ventures.

Due to the joint and several nature of the performance obligations under the related owner contracts, if any of our partners fail to perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a performance guarantee).

At September 30, 2023, there was $ 204.4 million of remaining contract value on unconsolidated and line item construction joint venture contracts of which $ 96.7 million represented our share and the remaining $ 107.7 million represented our partners’ share.

We are not able to estimate amounts that may be required beyond the current remaining forecasted cost of the work to be performed.

2 unchanged sentences

Consolidated Construction Joint Ventures (“CCJVs”)

At September 30, 2023, we were engaged in ten active CCJV projects with total contract values ranging from $ 46.3 million to $ 428.5 million for a combined total of $ 2.0 billion of which our share was $ 1.2 billion.

As of September 30, 2023, our share of revenue remaining to be recognized on these CCJVs was $ 395.3 million and ranged from $ 1.9 million to $ 148.6 million by project.

As of March 31, 2024, we were engaged in ten active CCJV projects.

Our proportionate share of the equity in these joint ventures was between 50.0 % and 70.0 %.

During the three and nine months ended September 30, 2023, total revenue from CCJVs was $ 91.2 million and $ 223.3 million, respectively.

During the three and nine months ended September 30, 2022, total revenue from CCJVs was $ 117.5 million and $ 344.5 million, respectively.

During the nine months ended September 30, 2023 and 2022, CCJVs used $ 36.8 million and provided $ 4.7 million of operating cash flows, respectively.

During the three months ended March 31, 2024 and 2023, total revenue from CCJVs was $ 71.6 million and $ 61.3 million, respectively.

During the three months ended March 31, 2024 and 2023, CCJVs provided $ 5.8 million and used $ 24.8 million of operating cash flows, respectively.

As of March 31, 2024, our share of revenue remaining to be recognized on these CCJVs was $ 311.3 million and ranged from $ 1.3 million to $ 119.1 million by project.

Unconsolidated Construction Joint Ventures

As of September 30, 2023, we were engaged in seven active unconsolidated joint venture projects with total contract values ranging from $ 5.8 million to $ 3.8 billion for a combined total of $ 7.9 billion of which our share was $ 2.3 billion.

As of March 31, 2024, we were engaged in five active unconsolidated construction joint venture projects.

Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 30.0 % to 50.0 %.

As of September 30, 2023, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $ 57.9 million and ranged from $ 1.5 million to $ 33.7 million by project.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

As of March 31, 2024, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $ 39.9 million and ranged from $ 1.2 million to $ 29.8 million by project.

The following is summary financial information related to unconsolidated construction joint ventures:

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Cash, cash equivalents and marketable securities $ 131,579 $ 117,962

7 unchanged sentences

Equity in construction joint ventures (4) $ 156,217 $ 156,311

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 was $ 58.2 million and $ 64.7 million, respectively, related to performance guarantees (see Note 13).

(2) Included in this balance as of September 30, 2023 and December 31, 2022 was $ 85.9 million and $ 104.3 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims.

In addition, this balance included $ 0.9 million and $ 2.7 million related to Granite’s share of estimated recovery of back charge claims as of September 30, 2023 and December 31, 2022, respectively.

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023 was $ 57.8 million related to performance guarantees (see Note 13).

(2) Included in this balance as of March 31, 2024 and December 31, 2023 was $ 66.6 million related to Granite’s share of estimated cost recovery of customer affirmative claims.

In addition, this balance included $ 1.7 million related to Granite’s share of estimated recovery of back charge claims as of March 31, 2024 and December 31, 2023, respectively.

(3) Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

(4) Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets was $ 14.0 million as of both September 30, 2023 and December 31, 2022, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.

Three Months Ended

September 30, Nine Months Ended

September 30,

As Restated As Restated

(4) Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets was $ 12.8 million and $ 14.9 million as of March 31, 2024 and December 31, 2023, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Three Months Ended March 31,

(in thousands) 2024 2023

6 unchanged sentences

Granite’s interest $ 8,481 $ 13,967

Granite’s interest in gross profit (loss) $ 8,468 $ ( 7,938 ) $ 4,214 $ ( 24,627 )

Granite’s interest in gross profit $ 1,749 $ 878

Net Income (Loss)

1 unchanged sentence

partners’ interest and adjustments (1) ( 10,439 ) ( 6,565 )

Granite’s interest in net income (loss) (2) $ 8,540 $ ( 7,839 ) $ 4,535 $ ( 25,067 )

Granite’s interest in net income (2) $ 2,290 $ 911

(1) Partners’ interest and adjustments includes amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast and/or actual differences.

(2) These joint venture net income (loss) amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(2) These joint venture net income amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

Investments in Affiliates

Our investments in affiliates balance consists of equity method investments in the following types of entities:

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Foreign $ 69,945 $ 68,407

3 unchanged sentences

The following table provides summarized balance sheet information for our affiliates accounted for under the equity method on a combined basis:

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Current assets $ 186,450 $ 204,897

7 unchanged sentences

(1) This balance is primarily related to local bank debt for equipment purchases and debt associated with our real estate investments.

Of the $ 371.0 million of total affiliate assets as of September 30, 2023, we had investments in two real estate entities with total assets of $ 59.2 million, our foreign affiliates had total assets of $ 270.3 million and the asphalt terminal entity had total assets of $ 41.5 million.

As of September 30, 2023 and December 31, 2022, all of the investments in real estate affiliates were in residential real estate in Texas.

As of September 30, 2023, our percent ownership in the real estate entities ranged from 10 % to 25 %.

We have direct and indirect investments in our foreign affiliates, and our percent ownership in foreign affiliates ranged from 25 % to 50 % as of September 30, 2023.

Of the $ 328.8 million of total affiliate assets as of March 31, 2024, we had investments in two real estate entities with total assets of $ 40.6 million, our foreign affiliates had total assets of $ 250.2 million and the asphalt terminal entity had total assets of $ 38.0 million.

As of March 31, 2024 and December 31, 2023, all of the investments in real estate affiliates were in residential real estate in Texas.

As of March 31, 2024, our percent ownership in the real estate entities ranged from 10 % to 25 %.

We have direct and indirect investments in our foreign affiliates, and our percent ownership in foreign affiliates

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ranged from 25 % to 50 % as of March 31, 2024.

Our percent ownership in the asphalt terminal entity was 50 % as of March 31, 2024.

Property and Equipment, net

Balances of major classes of assets and total accumulated depreciation and depletion are included in property and equipment, net in the condensed consolidated balance sheets as follows:

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Equipment and vehicles $ 1,150,677 $ 1,140,195

6 unchanged sentences

Property and equipment, net $ 665,524 $ 662,864

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Accrued Expenses and Other Current Liabilities

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

Accrued insurance $ 92,682 $ 81,936

5 unchanged sentences

Total $ 325,103 $ 337,740

Other includes dividends payable, warranty reserves, asset retirement obligations, remediation reserves, legal accruals and other miscellaneous accruals, none of which were greater than 5% of total current liabilities at any of the presented dates.

Other includes dividends payable, warranty reserves, asset retirement obligations, remediation reserves, the LRC/MSG tax make-whole liability (see Note 3), legal accruals and other miscellaneous accruals, none of which were greater than 5% of total current liabilities at any of the presented dates.

Long-Term Debt and Credit Arrangements

(in thousands) September 30, 2023 December 31, 2022

(in thousands) March 31, 2024 December 31, 2023

3.75 % Convertible Notes

2 unchanged sentences

31,338 31,338

Credit Agreement - Term Loan 148,125 150,000

Credit Agreement - Revolver — 100,000

Other, net of debt issuance costs 172 8,381

Debt issuance costs and other ( 24 ) ( 375 )

Total debt $ 553,189 $ 654,713

1 unchanged sentence

Total long-term debt $ 513,203 $ 614,781

Credit Agreement

In June 2022, we entered into the Credit Agreement which matures on June 2, 2027.

The Credit Agreement consisted of a $ 350.0 million senior secured, five-year revolving credit facility (the “Revolver”), including an accordion feature allowing us to increase borrowings up to the greater of (a) $ 200.0 million and (b) 100 % of twelve-month trailing consolidated EBITDA, subject to lender approval.

The Credit Agreement includes a $ 150.0 million sublimit for letters of credit ($ 75.0 million for financial letters of credit) and a $ 20.0 million sublimit for swingline loans.

In May 2023, we entered into Amendment No.

1 to the Credit Agreement ("Amendment No.

Amendment No.

1 amended the Credit Agreement to,

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

among other things, permit the Company to exchange its 2.75 % Convertible Notes for cash and shares of its common stock and to clarify that (i) the issuance of the 3.75 % Convertible Notes was permitted under the terms of the Credit Agreement and (ii) that a Swap Contract (as defined in the Credit Agreement) does not include any Permitted Call Spread Transaction (as defined in the Credit Agreement).

In November 2023, we entered into Amendment No.

2 to the Credit Agreement ("Amendment No.

2") which amended the Credit Agreement to, among other things, provide for a $ 150.0 million senior secured term loan (the “Term Loan”), which was fully drawn on closing to fund the LRC/MSG acquisition.

Borrowings under the Term Loan bear interest at term Secured Overnight Financing Rate (“SOFR”) with an interest period of one, three or six months (at our option), or such other period that is twelve months or less and consented to by all lenders subject to a credit spread adjustment of 0.10 % for one-month and three-month daily simple SOFR and term SOFR and 0.25 % for six-month term SOFR, or a base rate (at our option), in each case, plus an applicable margin of between 1.25 % and 2.25 % for term SOFR loans and 0.25 % and 1.25 % for base rate loans, in each case, based on the our Consolidated Leverage Ratio (as defined in our Credit Agreement).

The Term Loan will mature on June 2, 2027 and will amortize 5 % per year payable in quarterly installments that began in the first quarter of 2024.

We may borrow on the Revolver, at our option, at either (a) the SOFR term rate plus a credit adjustment spread plus applicable margin ranging from 1.0 % to 2.0 %, or (b) a base rate plus an applicable margin ranging from zero to 1.0 %.

The applicable margin is based on our Consolidated Leverage Ratio (as defined in our Credit Agreement), calculated quarterly.

As of March 31, 2024, the total unused availability under the Credit Agreement was $ 333.3 million, resulting from $ 16.7 million in issued and outstanding letters of credit and nothing drawn under the Revolver.

The letters of credit had expiration dates between June 2024 and December 2027.

3.75 % Convertible Notes

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On or after May 20, 2026, we have the option to redeem for cash all or any portion of the 3.75 % Convertible Notes if the last reported sale price of our common stock is equal to or greater than 130 % of the conversion price for a specified period of time at a redemption price equal to 100 % of the principal amount of the 3.75 % Convertible Notes to be redeemed, plus any accrued but unpaid interest to, but excluding, the redemption date.

In addition, as described in the indenture governing the 3.75 % Convertible Notes, certain events of default including, but not limited to, bankruptcy, insolvency or reorganization, may result in the 3.75 % Convertible Notes becoming due and payable immediately.

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The indenture governing the 3.75 % Convertible Notes contains customary events of default.

In the case of an event of default arising from certain events of bankruptcy, insolvency or reorganization, with respect to us or our significant subsidiaries, all outstanding 3.75 % Convertible Notes will become due and payable immediately without further action or notice.

If any other event of default occurs and is continuing, then the trustee or the holders of at least 25 % in aggregate principal amount of the 3.75 % Convertible Notes then outstanding may declare the 3.75 % Convertible Notes due and payable immediately.

The net proceeds from the sale of the 3.75 % Convertible Notes were approximately $ 364.4 million, after deducting the initial purchasers’ discount.

We used approximately $ 53.0 million of the net proceeds from the offering to pay the cost of the Capped Call Transactions (as described below).

In addition, we used approximately $ 198.8 million of the net proceeds and issued 1,390,500 shares of Granite common stock in exchange for approximately $ 198.7 million aggregate principal amount of our 2.75 % Convertible Notes concurrent with the offering in separate and individually negotiated transactions.

We also received 1,390,516 shares from bond option counterparties for the exercise of our bond hedge, corresponding to the portion of the 2.75 % Convertible Notes that were exchanged, and used approximately $ 13.2 million of the net proceeds to pay the cost of terminating the portion of the existing warrant transactions that correspond to the 2.75 % Convertible Notes exchanged.

In addition, we used approximately $ 198.8 million of the net proceeds

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and issued 1,390,500 shares of Granite common stock in exchange for approximately $ 198.7 million aggregate principal amount of our 2.75 % Convertible Notes concurrent with the offering in separate and individually negotiated transactions (the "Exchange Transaction").

In connection with the Exchange Transaction, we entered into partial unwind agreements (the "Unwind Agreements") with certain financial institutions to unwind a portion of the convertible note hedge and warrant transactions entered into in connection with the offering of the 2.75 % Convertible Notes.

Pursuant to the Unwind Agreements, we received 1,390,516 shares of our common stock (and cash in lieu of any fractional shares) in respect of the unwind of the portion of the existing convertible note hedge transactions that correspond to the 2.75 % Convertible Notes that were exchanged in the Exchange Transaction described above and paid $ 13.2 million in cash in respect of the unwind of the portion of the existing warrant transactions that correspond to the 2.75 % Convertible Notes that were exchanged in the Exchange Transaction described above.

Capped Call Transactions

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If, however, the market price per share of Granite’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price ($ 79.83 ) of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions.

The cap price of the Capped Call Transactions will initially be $ 79.83 per share, which represents a premium of 125 % over the last reported sale price of Granite’s common stock of $ 35.48 per share on the New York Stock Exchange on May 8, 2023, and is subject to certain adjustments under the terms of the Capped Call Transactions.

2.75 % Convertible Notes

4 unchanged sentences

Upon conversion, we will pay or deliver, as the case may be, cash, shares of Granite common stock or a combination of cash and shares of Granite common stock, at our election.

In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2.75 % Convertible Notes prior to the maturity date of the 2.75 % Convertible Notes or if the Company delivers a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its 2.75 % Convertible Notes in connection with such a make-whole fundamental change or notice of redemption.

In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2.75 % Convertible Notes prior to the maturity date of the 2.75 % Convertible Notes or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its 2.75 % Convertible Notes in connection with such a make-whole fundamental change or notice of redemption.

We have the option to redeem for cash all or any portion of the 2.75 % Convertible Notes if the last reported sale price of our common stock is equal to or greater than 130 % of the conversion price for a specified period of time at a redemption price equal to 100 % of the principal amount of the 2.75 % Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

Upon the occurrence of a “fundamental change” as defined in the indenture governing the 2.75 % Convertible Notes, holders may require us to repurchase for cash all or any portion of their 2.75 % Convertible Notes at a price equal to 100 % of the principal amount of the 2.75 % Convertible Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

In addition, as described in the indenture governing the 2.75 % Convertible Notes, certain events of default including, but not limited to, bankruptcy, insolvency or reorganization, may result in the 2.75 % Convertible Notes becoming due and payable immediately.

At September 30, 2023, $ 31.3 million remained outstanding of our 2.75 % Convertible Notes.

Credit Agreement

In June 2022, we entered into the Credit Agreement which matures on June 2, 2027.

The Credit Agreement is a $ 350.0 million senior secured, five-year revolving facility (the “Revolver”), including an accordion feature allowing us to increase borrowings up to the greater of (a) $ 200.0 million and (b) 100 % of twelve-month trailing consolidated EBITDA, subject to lender approval.

The Credit Agreement includes a $ 150.0 million sublimit for letters of credit ($ 75.0 million for financial

The indenture governing the 2.75 % Convertible Notes contains customary events of default.

In the case of an event of default arising from certain events of bankruptcy, insolvency or reorganization, with respect to us or our significant subsidiaries, all outstanding 2.75 % Convertible Notes will become due and payable immediately without further action or notice.

If any other event of default occurs and is continuing, then the trustee or the holders of at least 25 % in aggregate principal amount of the 2.75 % Convertible Notes then outstanding may declare the notes due and payable immediately.

At March 31, 2024, $ 31.3 million remained outstanding of our 2.75 % Convertible Notes.

Covenants and Events of Default

Our Credit Agreement requires us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below.

Our failure to comply with these covenants would constitute an event of default under the Credit Agreement.

Additionally, the 2.75 % Convertible Notes and 3.75 % Convertible Notes are governed by the terms and conditions of their respective indentures.

Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75 % Convertible Notes, our 3.75 % Convertible Notes or our Credit Agreement would

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

letters of credit) and a $ 20.0 million sublimit for swingline loans.

In May 2023, we entered into Amendment No.

1 to the Credit Agreement (the "Amendment").

The Amendment amended the Credit Agreement to, among other things, permit the Company to exchange its 2.75 % Convertible Notes for cash and shares of its common stock and to clarify that (i) the issuance of the 3.75 % Convertible Notes was permitted under the terms of the Credit Agreement and (ii) that a Swap Contract (as defined in the Credit Agreement) does not include any Permitted Call Spread Transaction (as defined in the Credit Agreement).

As of September 30, 2023, the total unused availability under the Credit Agreement was $ 330.8 million, resulting from $ 19.2 million in issued and outstanding letters of credit and nothing drawn under the Revolver.

The letters of credit had expiration dates between November 2023 and December 2026.

The Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default.

The financial covenants include a maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) and a minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement).

As of September 30, 2023, we were in compliance with the covenants in the Credit Agreement.

constitute an event of default under the 2.75 % Convertible Notes indenture, the 3.75 % Convertible Note indenture or the Credit Agreement.

A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility;

(ii) termination of such facility;

(iii) the requirement that any letters of credit under such facility be cash collateralized;

(iv) acceleration of amounts owed under the Credit Agreement;

and/or (v) foreclosure on any collateral securing the obligations under such facility.

A default under the 2.75 % Convertible Notes indenture or the 3.75 % Convertible Notes indenture could result in acceleration of the maturity of the notes.

The most significant financial covenants under the terms of our Credit Agreement require the maintenance of a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio.

As of March 31, 2024, we were in compliance with all covenants contained in the Credit Agreement.

We are not aware of any non-compliance by any of our unconsolidated real estate entities with the covenants contained in their debt agreements.

Debt Issuance Costs

During the three and nine months ended September 30, 2023, we recorded $ 0.6 million and $ 3.0 million, respectively, of amortization related to debt issuance costs.

This included $ 1.7 million of accelerated amortization of debt issuance costs associated with the 2.75 % Convertible Notes that were repaid and are included in the loss on debt extinguishment for the nine months ended September 30, 2023.

We also capitalized $ 10.0 million in third party offering costs related to the issuance of the 3.75 % Convertible Notes for the nine months ended September 30, 2023.

These debt issuance costs will be amortized over the expected life of the 3.75 % Convertible Notes.

During the three and nine months ended September 30, 2022, we recorded $ 0.3 million and $ 1.0 million, respectively, of amortization related to debt issuance costs.

Weighted Average Shares Outstanding and Net Income Per Share

The following table presents a reconciliation of the weighted average shares of common stock used in calculating basic and diluted net income per share as well as the calculation of basic and diluted net income per share:

Three Months Ended

September 30, Nine Months Ended

September 30,

As Restated As Restated

During the three months ended March 31, 2024 and 2023, we recorded $ 0.6 million and $ 0.3 million, respectively, of amortization related to debt issuance costs.

Weighted Average Shares Outstanding and Net Loss Per Share

The following table presents a reconciliation of the weighted average shares of common stock used in calculating basic and diluted net loss per share as well as the calculation of basic and diluted net loss per share:

Three Months Ended March 31,

(in thousands, except per share amounts) 2024 2023

Net income attributable to common shareholders for basic earnings per share $ 57,624 $ 69,302 $ 17,601 $ 61,250

Interest expense related to Convertible Notes 3,209 1,473 — 4,418

Net income attributable to common shareholders for diluted earnings per share $ 60,833 $ 70,775 $ 17,601 $ 65,668

Net loss attributable to common shareholders $ ( 30,983 ) $ ( 23,023 )

Weighted average common shares outstanding, basic 43,988 43,764

Dilutive effect of RSUs 589 581 586 565

Dilutive effect of Convertible Notes 9,099 7,309 — 7,309

Weighted average common shares outstanding, diluted 43,988 43,764

Net income per share, basic $ 1.31 $ 1.58 $ 0.40 $ 1.37

Net income per share, diluted $ 1.13 $ 1.36 $ 0.40 $ 1.25

For the nine months ended September 30, 2023, interest expense related to convertible notes of $ 6.9 million and the potential dilution from the convertible notes converting into 9,099 shares of common stock have been excluded from the calculation of diluted earnings per share, as their inclusion would have been antidilutive.

In connection with the issuance of the 3.75 % Convertible Notes in May 2023, we entered into Capped Calls Transactions, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents the provision for (benefit from) income taxes for the respective periods:

Three Months Ended

September 30, Nine Months Ended

September 30,

As Restated As Restated

Net loss per share, basic $ ( 0.70 ) $ ( 0.53 )

Net loss per share, diluted $ ( 0.70 ) $ ( 0.53 )

Due to net losses for the three months ended March 31, 2024 and 2023, both the unvested RSUs representing 573,000 and 583,000 shares, respectively, and the potential dilution from the convertible notes converting into 9,099,000 and 7,309,000 shares, respectively, of common stock have been excluded from the calculation of diluted earnings per share, as their inclusion would have been antidilutive.

In connection with the issuance of the 3.75 % Convertible Notes in May 2023, we entered into Capped Call Transactions, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.

The following table presents the benefit from income taxes for the respective periods:

Three Months Ended March 31,

(dollars in thousands) 2024 2023

Provision for (benefit from) income taxes $ 22,423 $ ( 7,710 ) $ 21,978 $ 7,310

Benefit from income taxes $ ( 9,526 ) $ ( 9,469 )

Effective tax rate 24.4 % 26.9 %

Our effective tax rate for the three months ended September 30, 2023 is higher than the prior year due to the tax benefit recognized in the prior year associated with the reversal of deferred tax liabilities related to the Water Resources and Mineral Services businesses no longer being held for sale and the release of valuation allowances related to the utilization of capital loss carryforwards.

Our effective tax rate for the nine months ended September 30, 2023 was higher than the prior year primarily due to a $ 49.3 million non-deductible expense associated with the refinancing of a portion of the Company's 2.75 % Convertible Notes in the second quarter of 2023, combined with the tax benefits recognized in the prior year for the items noted above, partially offset by non-deductible goodwill associated with the sale of Inliner.

See Note 14 for more information regarding the convertible notes.

Our effective tax rate for the three months ended March 31, 2024 is lower than the prior year primarily due to an increased year-over-year benefit of permanent tax adjustments.

Contingencies - Legal Proceedings

Liabilities relating to legal proceedings and government inquiries, to the extent that we have concluded such liabilities are probable and the amounts of such liabilities are reasonably estimable, are recorded in the consolidated balance sheets.

Disclosure is required when a material loss is probable but not reasonably estimable, a material loss is reasonably possible but not probable, or when it is reasonably possible that the amount of a loss will exceed the amount recorded.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

liabilities recorded in our condensed consolidated balance sheets for legal proceedings and government inquiries were immaterial as of March 31, 2024 and December 31, 2023.

It is possible that future developments in our legal proceedings and inquiries could require us to (i) adjust or reverse existing accruals, or (ii) record new accruals that we did not originally believe to be probable or that could not be reasonably estimated.

Such changes could be material to our financial condition, results of operations and/or cash flows in any particular reporting period.

In addition, disclosure is required when a material loss is probable but not reasonably estimable, a material loss is reasonably possible but not probable, or when it is reasonably possible that the amount of a loss will exceed the amount recorded.

The total liabilities for legal proceedings are recorded in accrued expenses and other current liabilities on the condensed consolidated balance sheet (see Note 13).

The total range of possible loss related to (i) matters considered reasonably possible, and (ii) reasonably possible amounts in excess of accrued losses recorded for probable loss contingencies, including those related to liquidated damages, could have a material impact on our consolidated financial statements if they become probable and the reasonably estimable amount is determined.

Ordinary Course Legal Proceedings

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While any of our pending legal proceedings may be subject to early resolution as a result of our ongoing efforts to resolve the proceedings, whether or when any legal proceeding will be resolved is neither predictable nor guaranteed.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Salesforce Tower Matter

Our wholly-owned subsidiary, Layne Christensen Company ("Layne"), was a subcontractor on the foundation for the Salesforce Tower office building in San Francisco in 2013 and 2014.

Certain anomalies were discovered in March 2014 in the foundation’s structural concrete, which were remediated by the general contractor during 2015.

Layne assigned any insurance claims it may have had under the project’s builder’s risk insurance policy to the general contractor.

During 2014, the project owner and the general contractor submitted a claim to the project’s builder’s risk insurers to cover the cost of remedial work and related damages.

The claim was denied by the builder’s risk insurers.

The project owner and the general contractor subsequently filed a legal proceeding against the insurers seeking coverage under the builder’s risk insurance policy, which proceeding was then transferred by agreement to arbitration.

On July 20, 2021, we were informed of an arbitration award denying insurance coverage for claims related to the remedial measures undertaken by the general contractor of the Salesforce Tower and related damages.

On February 3, 2022, a lawsuit titled Steadfast Insurance Company (“Steadfast”), a subrogee of Clark/Hathaway Dinwiddie, a Joint Venture (“CHDJV”) v.

Layne Christensen Company (“Layne”) , was filed in the Superior Court of the State of California, County of San Francisco, seeking damages of approximately $ 70 million for costs incurred by Steadfast on behalf of CHDJV to cure Layne’s allegedly defective work on the foundation of the Salesforce Tower.

On February 4, 2022, CHDJV submitted an arbitration demand with the American Arbitration Association against Granite Construction Incorporated seeking to recover approximately $ 30 million for costs incurred by CHDJV to cure Layne’s allegedly defective work on the foundation of the Salesforce Tower.

CHDJV subsequently dismissed Granite and added Layne as a respondent to the arbitration.

On May 6, 2022, CHDJV consolidated its claims with those of Steadfast and joined as a plaintiff in the Steadfast lawsuit, and on May 16, 2022, the arbitration was stayed.

The parties attended mediation on August 4, 2023, and, on October 11, 2023, entered into a settlement agreement to resolve the matters in the Steadfast lawsuit and arbitration.

Pursuant to the terms of the settlement agreement, Steadfast and CHDJV agreed to release the Company and Layne from any and all claims, rights, causes of action, liabilities, actions, suits, damages or demands of any kind whatsoever, that arose out of or are based upon or related to the facts alleged in the Steadfast lawsuit and arbitration.

The settlement agreement contained no admission of liability, wrongdoing or responsibility by any of the parties.

The settlement agreement provides for the dismissal of the Steadfast lawsuit and the arbitration following payment of the settlement amount, which is required by December 8, 2023.

We have recorded a pre-tax charge of $ 20.0 million, net of estimated insurance recovery, which is reflected in other costs on the condensed consolidated statements of operations for the nine months ended September 30, 2023.

Reportable Segment Information

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Summarized segment information is as follows (in thousands):

Three months ended September 30, Construction Materials Total

Total revenue from reportable segments $ 945,698 $ 245,060 $ 1,190,758

Elimination of intersegment revenue — ( 73,938 ) ( 73,938 )

Revenue from external customers $ 945,698 $ 171,122 $ 1,116,820

Gross profit $ 137,162 $ 29,481 $ 166,643

Depreciation, depletion and amortization $ 11,239 $ 7,431 $ 18,670

2022 (As Restated)

Total revenue from reportable segments $ 847,371 $ 233,261 $ 1,080,632

Elimination of intersegment revenue — ( 71,722 ) ( 71,722 )

Revenue from external customers $ 847,371 $ 161,539 $ 1,008,910

Gross profit $ 93,017 $ 22,038 $ 115,055

Depreciation, depletion and amortization $ 18,262 $ 6,870 $ 25,132

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Nine Months Ended September 30, Construction Materials Total

Three Months Ended March 31, Construction Materials Total

Total revenue from reportable segments $ 595,213 $ 88,704 $ 683,917

1 unchanged sentence

Revenue from external customers $ 595,213 $ 77,062 $ 672,275

Gross profit $ 253,021 $ 49,067 $ 302,088

Gross profit (loss) $ 56,828 $ ( 2,543 ) $ 54,285

Depreciation, depletion and amortization $ 13,703 $ 10,477 $ 24,180

Segment assets as of period end $ 594,437 $ 562,581 $ 1,157,018

2022 (As Restated)

Total revenue from reportable segments $ 503,416 $ 71,920 $ 575,336

1 unchanged sentence

Revenue from external customers $ 503,416 $ 56,652 $ 560,068

Gross profit $ 231,748 $ 40,965 $ 272,713

Gross profit (loss) $ 36,705 $ ( 4,346 ) $ 32,359

Depreciation, depletion and amortization $ 9,755 $ 6,122 $ 15,877

Segment assets as of period end $ 430,045 $ 390,741 $ 820,786

A reconciliation of segment gross profit to consolidated income before income taxes is as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

As Restated As Restated

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

A reconciliation of segment gross profit to consolidated loss before income taxes is as follows:

Three Months Ended March 31,

(in thousands) 2024 2023

3 unchanged sentences

Gain on sales of property and equipment, net ( 1,418 ) ( 2,037 )

Total other (income) expense, net ( 6,101 ) ( 2,789 ) 29,573 1,747

Income before income taxes $ 79,919 $ 57,488 $ 29,856 $ 66,991

Total other income, net ( 4,332 ) ( 8,008 )

Loss before income taxes $ ( 38,968 ) $ ( 35,241 )

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements