What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-02 · 316 added, 190 removed, 472 unchanged (52% of the section changed)

3 unchanged sentences

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Current assets

38 unchanged sentences

issued and outstanding:

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

43,686,508 shares as of June 30, 2024 and 43,944,118 shares as of December 31, 2023

Additional paid-in capital 435,271 474,134

9 unchanged sentences

(Unaudited - in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

2024 2023 2024 2023

Construction $ 917,954 $ 749,413 $ 1,513,167 $ 1,252,829

9 unchanged sentences

Gain on sales of property and equipment, net ( 1,387 ) ( 3,944 ) ( 2,805 ) ( 5,981 )

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

Operating income (loss) 85,821 28,860 42,521 ( 14,389 )

Other (income) expense

Loss on debt extinguishment 27,824 51,052 27,824 51,052

Interest income ( 3,600 ) ( 3,232 ) ( 10,302 ) ( 6,994 )

1 unchanged sentence

Equity in income of affiliates, net ( 4,557 ) ( 7,044 ) ( 8,527 ) ( 12,231 )

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 )

Other (income) expense, net 1,267 ( 1,225 ) ( 476 ) ( 3,175 )

Total other expense, net 26,271 43,682 21,939 35,674

Income (loss) before income taxes 59,550 ( 14,822 ) 20,582 ( 50,063 )

Provision for (benefit from) income taxes 20,693 9,024 11,167 ( 445 )

Net income (loss) 38,857 ( 23,846 ) 9,415 ( 49,618 )

Amount attributable to non-controlling interests ( 1,962 ) 6,846 ( 3,503 ) 9,595

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

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

Net income (loss) attributable to Granite Construction Incorporated $ 36,895 $ ( 17,000 ) $ 5,912 $ ( 40,023 )

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

Basic $ 0.84 $ ( 0.39 ) $ 0.13 $ ( 0.91 )

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GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited - in thousands)

Three Months Ended March 31,

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

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net income (loss) $ 38,857 $ ( 23,846 ) $ 9,415 $ ( 49,618 )

Other comprehensive income (loss), net of tax

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

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

Net unrealized loss on cash flow hedges, net of tax $ ( 735 ) $ ( 366 ) $ ( 146 ) $ ( 558 )

reclassification for net gains (losses) included in interest expense, net of tax ( 144 ) 112 82 112

Net change $ ( 879 ) $ ( 254 ) $ ( 64 ) $ ( 446 )

1 unchanged sentence

Other comprehensive income (loss), net of tax $ ( 1,020 ) $ 142 $ ( 611 ) $ 7

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

Comprehensive income (loss), net of tax $ 37,837 $ ( 23,704 ) $ 8,804 $ ( 49,611 )

Non-controlling interests in comprehensive (income) loss, net of tax ( 1,962 ) 6,846 ( 3,503 ) 9,595

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

Comprehensive income (loss) attributable to Granite Construction Incorporated, net of tax $ 35,875 $ ( 16,858 ) $ 5,301 $ ( 40,016 )

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

6 unchanged sentences

Shareholders’ Equity Non-controlling Interests Total Equity

Balances at December 31, 2023

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

Balances at March 31, 2024 44,149,644 $ 441 $ 479,679 $ 1,290 $ 465,048 $ 946,458 $ 58,147 $ 1,004,605

Net income — — — — 36,895 36,895 1,962 38,857

Other comprehensive loss — — — ( 1,020 ) — ( 1,020 ) — ( 1,020 )

Repurchases of common stock (1) ( 231,133 ) ( 1 ) ( 13,220 ) — ( 505 ) ( 13,726 ) — ( 13,726 )

Restricted stock units (“RSUs”) vested 24,046 — — — — — — —

Dividends on common stock ($0.13 per share) — — 79 — ( 5,759 ) ( 5,680 ) — ( 5,680 )

Capped call transactions — — ( 34,189 ) — — ( 34,189 ) — ( 34,189 )

Redemption of warrants — — 466 — — 466 — 466

Exercise of bond hedge ( 260,883 ) ( 3 ) 3 — — — — —

Transactions with non-controlling interests — — — — — — ( 4,351 ) ( 4,351 )

Stock-based compensation expense and other 4,834 — 2,453 — — 2,453 — 2,453

Balances at June 30, 2024 43,686,508 $ 437 $ 435,271 $ 270 $ 495,679 $ 931,657 $ 55,758 $ 987,415

Balances at March 31, 2023 43,880,224 $ 439 $ 471,782 $ 653 $ 452,583 $ 925,457 $ 46,954 $ 972,411

Net loss — — — — ( 17,000 ) ( 17,000 ) ( 6,846 ) ( 23,846 )

2 unchanged sentences

RSUs vested 37,394 1 ( 1 ) — — — — —

Dividends on common stock ($0.13 per share) — — 76 — ( 5,786 ) ( 5,710 ) — ( 5,710 )

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

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

Loss on 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 — — — — — — ( 200 ) ( 200 )

Stock-based compensation expense and other 7,538 — 2,142 — — 2,142 — 2,142

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

(1) This amount represents employee tax withholding for restricted stock units ("RSUs") vested under our equity incentive plans in 2024 and 2023 and stock repurchased in 2024 under the Board approved repurchase plan.

During the three months ended June 30, 2024 and 2023, there were 6,133 shares and 6,342 shares, respectively, withheld related to employee taxes for RSUs.

During the three months ended June 30, 2024, we also repurchased 225,000 shares under the share repurchase program.

Outstanding Shares Common Stock Additional

Capital Accumulated Other

Comprehensive Income (Loss) Retained Earnings Total Granite

Shareholders’ Equity Non-controlling Interests Total Equity

Balances at December 31, 2023 43,944,118 $ 439 $ 474,134 $ 881 $ 501,844 $ 977,298 $ 49,668 $ 1,026,966

Net income — — — — 5,912 5,912 3,503 9,415

Other comprehensive loss — — — ( 611 ) — ( 611 ) — ( 611 )

Repurchases of common stock (1) ( 366,567 ) ( 3 ) ( 20,636 ) — ( 505 ) ( 21,144 ) — ( 21,144 )

RSUs vested 365,440 4 ( 4 ) — — — — —

Dividends on common stock ($0.13 per share per quarter) — — 152 — ( 11,572 ) ( 11,420 ) — ( 11,420 )

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

Capped call transactions — — ( 34,189 ) — — ( 34,189 ) — ( 34,189 )

Redemption of warrants — — 466 — — 466 — 466

Exercise of bond hedge ( 260,883 ) ( 3 ) 3 — — — — —

Transactions with non-controlling interests — — — — — — 2,587 2,587

Stock-based compensation expense and other 4,400 — 15,345 — — 15,345 — 15,345

Balances at March 31, 2024

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

Balances at June 30, 2024 43,686,508 $ 437 $ 435,271 $ 270 $ 495,679 $ 931,657 $ 55,758 $ 987,415

Balances at December 31, 2022 43,743,907 $ 437 $ 470,407 $ 788 $ 481,384 $ 953,016 $ 32,129 $ 985,145

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

Net loss — — — — ( 40,023 ) ( 40,023 ) ( 9,595 ) ( 49,618 )

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

Other comprehensive income — — — 7 — 7 — 7

Repurchases of common stock (1) ( 93,602 ) (1) ( 3,766 ) — — ( 3,767 ) — ( 3,767 )

1 unchanged sentence

Dividends on common stock ($0.13 per share per quarter) — — 150 — ( 11,564 ) ( 11,414 ) — ( 11,414 )

— — 74 — ( 5,778 ) ( 5,704 ) — ( 5,704 )

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

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

Loss on 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 — — — — — — 17,374 17,374

Stock-based compensation expense and other 7,147 — 6,968 — — 6,968 — 6,968

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.

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

During the six months ended June 30, 2024 and 2023, there were 141,567 shares and 93,602 shares, respectively, withheld related to employee taxes for RSUs.

During the six months ended June 30, 2024, we also repurchased 225,000 shares under the share repurchase program.

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

2 unchanged sentences

( Unaudited - in thousands )

Three Months Ended March 31, 2024 2023

Six Months Ended June 30, 2024 2023

Operating activities

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

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

Net income (loss) $ 9,415 $ ( 49,618 )

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

Depreciation, depletion and amortization 58,468 41,528

Amortization related to long-term debt 2,334 988

Loss on debt extinguishment 27,824 51,052

Gain on sales of property and equipment, net ( 2,805 ) ( 5,981 )

Stock-based compensation 15,084 6,702

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

Equity in net (income) loss from unconsolidated construction joint ventures ( 752 ) 4,005

Net income from affiliates ( 8,527 ) ( 12,231 )

17 unchanged sentences

Cash paid for purchase price adjustments on business acquisition (See Note 3) ( 13,183 ) —

Acquisition of business — ( 26,933 )

Collection of notes receivable — 135

1 unchanged sentence

Financing activities

Proceeds from issuance of convertible notes (See Note 14)

373,750 373,750

Proceeds from long-term debt — 55,000

Debt principal repayments ( 309,808 ) ( 249,589 )

Capped call transactions ( 46,046 ) ( 53,035 )

Redemption of warrants 586 ( 13,201 )

Debt issuance costs ( 9,654 ) ( 9,806 )

Cash dividends paid ( 11,452 ) ( 11,391 )

4 unchanged sentences

Net cash provided by (used in) financing activities $ ( 22,879 ) $ 103,781

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

Net decrease in cash and cash equivalents ( 50,917 ) ( 79,545 )

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

6 unchanged sentences

Income taxes $ 2,940 $ 4,851

Other non-cash operating activities:

Deferred taxes related to capped call transactions $ 11,857 $ 13,656

Non-cash investing and financing activities:

9 unchanged sentences

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 March 31, 2024 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 June 30, 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.

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.

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

This change allows 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.

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

Share Repurchase Program:

As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion.

During the three and six months ended June 30, 2024, we repurchased 225,000 shares under this authorization at an average price of $59.32 per share for $13.3 million.

The share repurchases are included in Repurchases of common stock on the Condensed Consolidated Statements of Shareholders’ Equity and within Financing activities on the Condensed Consolidated Statement of Cash Flows.

As of June 30, 2024, $218.2 million of the authorization remained available.

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.

Therefore, the results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year.

Subsequent Event:

On July 31, 2024, we agreed, subject to customary closing conditions, to acquire Dickerson & Bowen, Inc.

with the transaction expected to close in the third quarter.

Dickerson & Bowen is an aggregates, asphalt, and highway construction company serving central and southern Mississippi.

This acquisition is not expected to have a material impact on our results of operations.

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.

No new accounting pronouncements were recently issued or adopted in the six months ended June 30, 2024 that had or are expected to have 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.

CMR results are reported in the Materials segment.

which changed its name to Granite Infrastructure Canada, Ltd.

("Granite Canada") on May 13, 2024.

Granite Canada is a construction aggregate producer based in British

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Columbia, Canada operating on Malahat First Nation land.

Granite Canada results are reported in the Materials segment.

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

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.

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, a draw of $ 100 million under our existing revolver and the remainder from cash on hand.

Both the senior secured term loan and the draw under the revolver were fully repaid during the the six months ended June 30, 2024.

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

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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

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.

Revenue attributable to LRC/MSG for the three and six months ended June 30, 2024 was $ 45.5 million and $ 59.5 million, respectively.

Gross profit (loss) attributable to LRC/MSG for the three and six months ended June 30, 2024 was a profit of $ 7.9 million and a loss of $ 0.7 million, respectively.

Preliminary Purchase Price Allocation

1 unchanged sentence

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.

We recorded a $22.0 million provisional estimate related to tax make-whole agreements with the seller at the time of the acquisition.

In the second quarter of 2024, the former owners of LRC/MSG determined their personal tax burden related to the sale of the businesses which allowed us to finalize our tax make-whole obligation.

Our obligation was $7.1 million, which was paid in June 2024.

During the six months ended June 30, 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 $2.2 million net decrease in the value of the net tangible and identifiable intangible assets acquired, offset by a $14.9 million decrease in the estimated obligation associated with the tax make-whole agreements noted above.

The impact of these adjustments was a decrease in goodwill of $8.1 million.

We paid $ 13.2 million during the six months ended June 30, 2024 associated with the acquisition of LRC/MSG, which includes $6.1 million for working capital adjustments and $7.1 million for the tax make-whole obligation.

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.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The following table presents the preliminary purchase price allocation:

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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

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.

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.

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.

3 unchanged sentences

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 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 .

In our review of these changes for the three and six months ended June 30, 2024 and 2023, we did not identify any material amounts that should have been recorded in a prior period.

There were no increases to revisions which individually had an impact of $5.0 million or more on gross profit during the three months ended June 30, 2024 or 2023.

During the six months ended June 30, 2024, there was one project with an increase from revisions in estimates which had an impact to gross profit of $6.1 million and an increase in net income of $4.7 million, none of which was attributable to non-controlling interests.

The revision increased the net income per diluted share attributable to common shareholders by $0.11.

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.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

During the six months ended June 30, 2023, there was one project with an increase from revisions in estimates which had an impact to gross profit of $6.9 million and a reduction of net loss of $5.2 million, with $2.7 million of that amount attributable to non-controlling interests.

The revision decreased the net loss per diluted share by $0.06.

The increase was due to decreases in estimated costs from mitigated risks.

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 March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Number of projects with downward estimate changes 2 1 3 2

1 unchanged sentence

Decrease to project profitability, net $ 15.5 $ 20.7 $ 30.2 $ 38.0

Increase to net loss $ 5.8 $ 13.1

Decrease to net income/increase to net loss $ 11.9 $ 15.8 $ 23.2 $ 29.0

Amounts attributable to non-controlling interests $ 2.7 $ 10.4 $ 3.2 $ 16.0

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.

Decrease to net income/increase to net loss attributable to Granite Construction Incorporated $ 9.2 $ 5.4 $ 19.9 $ 13.0

Decrease to net income/increase to net loss per diluted share

attributable to common shareholders $ 0.17 $ 0.12 $ 0.45 $ 0.30

The decreases during the three and six months ended June 30, 2024 were 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 and six months ended June 30, 2023 were due to additional costs related to changes in project duration and increased labor and materials costs.

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.

Previously, leaders within our three former 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.

4 unchanged sentences

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

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

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2024 2023 2024 2023

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

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

(in thousands) June 30, 2024 December 31, 2023

Public $ 3,067,302 $ 2,892,255

2 unchanged sentences

All unearned revenue is in the Construction segment.

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.

Approximately $ 2.7 billion of the June 30, 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 $ 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.

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 $ 93.1 million and $ 177.4 million during the three and six months ended June 30, 2024 and $ 45.5 million and $ 89.7 million during the three and six months ended June 30, 2023.

The changes in contract transaction price for the three and six months ended June 30, 2024 and 2023 were from items such as executed or estimated change orders and unresolved contract modifications and claims.

As of June 30, 2024 and December 31, 2023, the aggregate claim recovery estimates included in contract asset and liability balances were $ 70.4 million and $ 77.9 million, respectively.

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

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

(in thousands) June 30, 2024 December 31, 2023

Costs in excess of billings and estimated earnings $ 135,326 $ 100,106

1 unchanged sentence

Total contract assets $ 309,376 $ 262,987

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.

As of June 30, 2024 and December 31, 2023, contract retention receivable from Brightline Trains Florida LLC represented 9.4 % 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.

1 unchanged sentence

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

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.

We recognized revenue of $ 55.0 million and $ 253.3 million during the three and six months ended June 30, 2024, respectively, and $ 48.1 million and $ 171.1 million during the three and six months ended June 30, 2023, respectively, that was included in the contract liability balances at December 31, 2023 and 2022, respectively.

GRANITE CONSTRUCTION INCORPORATED

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

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

(in thousands) June 30, 2024 December 31, 2023

Billings in excess of costs and estimated earnings, net of retention $ 245,536 $ 227,913

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The following table presents major categories of receivables:

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

(in thousands) June 30, 2024 December 31, 2023

Contracts completed and in progress:

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Total net receivables $ 709,248 $ 598,705

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.

Included in other receivables at June 30, 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 June 30, 2024 and December 31, 2023 also included $ 25.0 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.

None of our customers had a receivable balance in excess of 10 % of our total net receivables as of June 30, 2024 or December 31, 2023.

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Fair Value Measurement

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Fair Value Measurement at Reporting Date Using

March 31, 2024 Level 1 Level 2 Level 3 Total

June 30, 2024 Level 1 Level 2 Level 3 Total

Cash equivalents

Money market funds $ 75,458 $ — $ — $ 75,458

Other current assets

Interest rate swap $ — $ 972 $ — $ 972

Commodity swaps — 1 — 1

Total assets $ 75,458 $ — $ — $ 75,458

Accrued and other current liabilities

Heating oil swaps $ — $ 121 $ — $ 121

Crude oil swaps — 212 — 212

Diesel collars — 246 — 246

Total liabilities $ — $ 579 $ — $ 579

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December 31, 2023

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Interest rate swap $ — $ 126 $ — $ 126

Commodity swaps — 153 — 153

Heating oil swaps — 153 — 153

Diesel collars — 802 — 802

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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.

2 to the Fourth Amended and Restated Credit Agreement, as amended (the "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.

In conjunction with the payoff of our term loan in June 2024, the interest rate swap was terminated resulting in a gain of $1.4 million.

Commodity Derivatives

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 .

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

The financial statement impact of the collar contracts and commodity swaps for the three and six months ended June 30, 2024 and 2023 was immaterial .

In April 2024 and December 2022, we entered into commodity swaps designed as a cash flow hedge for crude oil with a notional amount of $ 9.2 million and $ 7.0 million, respectively, and maturity dates of October 31, 2024 and October 31, 2023, respectively.

The financial statement impact of these swaps during the three and six months ended June 30, 2024 and 2023 was immaterial .

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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:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in thousands) Fair Value Hierarchy Carrying Value Fair

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Level 2 $ 373,750 $ 542,369 $ 373,750 $ 475,601

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

2.75 % Convertible Notes (2)

Level 2 $ 420 $ 825 $ 31,338 $ 51,045

Credit Agreement - Term Loan (2) Level 3 $ — $ — $ 150,000 $ 153,585

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

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Government and agency obligations as of June 30, 2024 and December 31, 2023.

(2) The fair values of our 2.75 % convertible senior notes due 2024 (the " 2.75 % Convertible Notes"), our 3.25 % convertible senior notes due 2030 (the " 3.25 % Convertible Notes") and our 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.

The fair value of 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, 3.25 % Convertible Notes, 3.75 % Convertible Notes and the Credit Agreement.

During the six months ended June 30, 2024 and 2023, we had no material nonfinancial asset and liability fair value adjustments.

Construction Joint Ventures

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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 months ended March 31, 2024, we determined no change was required for existing joint ventures.

Based on our assessments during the three and six months ended June 30, 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).

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Consolidated Construction Joint Ventures (“CCJVs”)

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

As of June 30, 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 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.

During the three and six months ended June 30, 2024 and 2023, total revenue from CCJVs was $ 92.2 million, $ 163.8 million, $ 70.8 million, and $ 132.1 million, respectively.

During the six months ended June 30, 2024 and 2023, CCJVs provided $ 8.6 million of operating cash flows and used $ 48.3 million of operating cash flows, respectively.

As of June 30, 2024, our share of revenue remaining to be recognized on these CCJVs was $ 348.0 million and ranged from $ 2.6 million to $ 105.3 million by project.

Unconsolidated Construction Joint Ventures

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

As of June 30, 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 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.

As of June 30, 2024, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $ 34.6 million and ranged from $ 0.9 million to $ 25.9 million by project.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

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

(in thousands) June 30, 2024 December 31, 2023

Cash, cash equivalents and marketable securities $ 127,513 $ 117,962

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Equity in construction joint ventures (4) $ 150,466 $ 156,311

(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.

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 was $ 57.8 million related to performance guarantees (see Note 13).

(2) Included in this balance as of June 30, 2024 and December 31, 2023 was $ 68.4 million and $66.6 million, respectively, 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 June 30, 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 $ 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Three Months Ended March 31,

(4) Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets was $ 6.6 million and $ 14.9 million as of June 30, 2024 and December 31, 2023, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

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Granite’s interest $ 9,240 $ 14,652 $ 17,721 $ 28,619

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

Granite’s interest in gross loss $ ( 2,047 ) $ ( 5,132 ) $ ( 298 ) $ ( 4,254 )

Net Income (Loss)

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partners’ interest and adjustments (1) ( 2,412 ) ( 9,658 ) ( 12,851 ) ( 16,223 )

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

Granite’s interest in net income (loss) (2) $ ( 1,538 ) $ ( 4,916 ) $ 752 $ ( 4,005 )

(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 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

Investments in Affiliates

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

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

(in thousands) June 30, 2024 December 31, 2023

Foreign $ 72,255 $ 68,407

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

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

(in thousands) June 30, 2024 December 31, 2023

Current assets $ 192,560 $ 204,897

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

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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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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.

Of the $ 334.5 million of total affiliate assets as of June 30, 2024, we had investments in two real estate entities with total assets of $ 41.7 million, our foreign affiliates had total assets of $ 254.5 million and the asphalt terminal entity had total assets of $ 38.3 million.

As of June 30, 2024 and December 31, 2023, all of the investments in real estate affiliates were in residential real estate in Texas.

As of June 30, 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 ranged from 25 % to 50 % as of June 30, 2024.

Our percent ownership in the asphalt terminal entity was 50 % as of June 30, 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) March 31, 2024 December 31, 2023

(in thousands) June 30, 2024 December 31, 2023

Equipment and vehicles $ 1,165,523 $ 1,140,195

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Property and equipment, net $ 670,876 $ 662,864

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Accrued Expenses and Other Current Liabilities

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

(in thousands) June 30, 2024 December 31, 2023

Accrued insurance $ 95,317 $ 81,936

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Total $ 302,039 $ 337,740

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.

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.

At December 31, 2023, the "other" balance above included the estimated LRC/MSG tax make-whole liability (see Note 3) which was finalized and paid in June 2024.

Long-Term Debt and Credit Arrangements

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

(in thousands) June 30, 2024 December 31, 2023

3.25 % Convertible Notes

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373,750 373,750

2.75 % Convertible Notes

Credit Agreement - Term Loan — 150,000

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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).

1 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).

In November 2023, we entered into Amendment No.

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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 Term Loan was scheduled to mature on June 2, 2027 and amortize 5 % per year, payable in quarterly installments beginning in the first quarter of 2024.

At March 31, 2024 there was $ 148.1 million outstanding on the Term Loan which was fully repaid with the net proceeds from our 3.25 % Convertible Notes during the three months ended June 30, 2024.

We may borrow on the Revolver, at our option, at either (a) the Secured Overnight Financing Rate (“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.

As of June 30, 2024, the total unused availability under the Credit Agreement was $ 333.4 million, resulting from $ 16.6 million in issued and outstanding letters of credit and nothing drawn under the Revolver.

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

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

3.25% Convertible Notes

On June 11, 2024, we issued $373.8 million aggregate principal amount of our 3.25 % Convertible Notes.

The 3.25 % Convertible Notes bear interest at a rate of 3.25 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2024.

The 3.25 % Convertible Notes mature on June 15, 2030, unless earlier converted, redeemed or repurchased.

Prior to the close of business on the business day immediately preceding December 15, 2029, the 3.25 % Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods.

Thereafter, the 3.25 % Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding their maturity date.

The 3.25 % Convertible Notes have an initial conversion rate of 12.8398 shares of Granite’s common stock per $1,000 principal amount of the 3.25 % Convertible Notes, which is equivalent to an initial conversion price of approximately $77.88 per share of Granite’s common stock, subject to adjustment if certain events occur.

Upon conversion, we will settle the principal amount of the 3.25 % Convertible Notes in cash, and any conversion premium in excess of the principal amount in cash, or a combination of cash and shares of common stock, at our election.

In addition, upon the occurrence of a “fundamental change” as defined in the indenture governing the 3.25 % Convertible Notes, holders may require us to repurchase for cash all or any portion of their 3.25 % Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 3.25 % Convertible Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

If certain corporate events that constitute a “make-whole fundamental change” as set forth in the indenture governing the 3.25 % Convertible Notes occur prior to the maturity date of the 3.25 % Convertible Notes or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 3.25 % Convertible Notes in connection with such event or notice of redemption.

We will not be able to redeem the 3.25 % Convertible Notes prior to June 21, 2027.

On or after June 21, 2027, we will be able to redeem for cash all or any portion of the 3.25 % Convertible Notes, at our option, if the last reported sale price of Granite’s 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 3.25 % Convertible Notes to be redeemed, plus accrued but unpaid interest to, but excluding, the redemption date.

The indenture governing the 3.25 % 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 3.25 % 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 3.25 % Convertible Notes then outstanding may declare the 3.25 % Convertible Notes due and payable immediately.

The net proceeds from the sale of the 3.25 % Convertible Notes were approximately $365.0 million, after deducting the initial purchasers’ discount.

We used approximately $46.0 million of the net proceeds from the 3.25 % Convertible Notes offering to pay the cost of entering into capped call transactions in connection with the 3.25 % Convertible Notes.

In addition, we paid approximately $57.6 million of the net proceeds from the 3.25 % Convertible Notes offering to repurchase approximately $30.2 million in aggregate principal amount of our 2.75% Convertible Notes in separate and individually negotiated transactions entered into concurrently with the pricing of the offering;

repaid amounts outstanding under our Term Loan of $ 148.1 million;

repurchased $13.3 million of shares under our authorized share repurchase program;

with the remainder of the net proceeds available for general corporate purposes, which may include acquisitions.

2024 Capped Call Transactions

In June 2024, we entered into privately negotiated capped call transactions in connection with the offering of the 3.25 % Convertible Notes (the "2024 capped call transactions").

The 2024 capped call transactions are expected generally to reduce the potential dilution to Granite’s common stock upon any conversion of the 3.25 % Convertible Notes and/or offset any cash payments Granite is required to make in excess of the principal amount of converted 3.25 % Convertible Notes, as the case may be.

If, however, the market price per share of Granite’s common stock, as measured under the terms of the 2024 capped call transactions, exceeds the cap price $119.82 of the 2024 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 2024 capped call transactions.

3.75 % Convertible Notes

On May 11, 2023, we issued $ 373.8 million aggregate principal amount of our 3.75 % Convertible Notes.

The 3.75 % Convertible Notes bear interest at a rate of 3.75 % per annum payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2023 and mature on May 15, 2028, unless earlier converted, redeemed or repurchased.

The 3.75 % Convertible Notes bear interest at a rate of 3.75 % per annum payable semiannually in arrears on May 15 and November 15

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of each year, beginning on November 15, 2023 and mature on May 15, 2028, unless earlier converted, redeemed or repurchased.

Prior to the close of business on the business day immediately preceding November 15, 2027, the 3.75 % Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods.

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We used approximately $ 53.0 million of the net proceeds from the offering to pay the cost of the 2023 capped call transactions (as described below).

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 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 (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.

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The 2.75 % Convertible Notes were issued in November 2019 in an aggregate principal amount of $ 230.0 million, with an interest rate of 2.75 % and a maturity date of November 1, 2024, unless earlier converted, redeemed or repurchased.

The 2.75 % Convertible Notes are convertible at the option of the holders prior to the close of business on the business day before May 1, 2024 only during certain periods and upon the occurrence of certain events.

After May 1, 2024, the 2.75 % Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The conversion rate applicable to the 2.75 % Convertible Notes is 31.7776 shares of Granite common stock per $1,000 principal amount of 2.75 % Convertible Notes, which is equivalent to a conversion price of approximately $ 31.47 per share of Granite common stock.

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 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.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

In June 2024, we called the 2.75 % Convertible Notes for redemption and will redeem all outstanding aggregate principal amount of the 2.75 % Convertible Notes on August 19, 2024.

The redemption price per $1,000 principal amount of the 2.75 % Convertible Notes is equal to $1,000 plus accrued and unpaid interest, if any, to, but excluding the redemption date.

The 2.75 % Convertible Notes may be converted, at the election of the holder of such notes, at any time before the close of business on August 15, 2024.

The conversion rate for the 2.75 % Convertible Notes is 31.7915 shares of Granite common stock per $1,000 principal amount of notes (which includes 0.0139 additional shares to which converting holders are entitled).

With respect any 2.75 % Convertible Note that is properly surrendered for conversion from and after the date of the redemption notice until the close of business on August 15, 2024, we have elected to settle such conversion by delivering cash of $1,000 per $1,000 principal amount of the 2.75 % Convertible Notes and shares of our common stock in respect of the remainder of our conversion obligation in excess of the cash payment.

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

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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.

At June 30, 2024, $ 0.4 million remained outstanding of our 2.75 % Convertible Notes.

Covenants and Events of Default

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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

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

Additionally, the 2.75 % Convertible Notes, 3.25 % 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 3.25 % Convertible Notes, our 3.75 % Convertible Notes or our Credit Agreement would constitute an event of default under the 2.75 % Convertible Notes indenture, the 3.25 % Convertible Notes indenture, the 3.75 % Convertible Notes 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;

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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.

A default under the 2.75 % Convertible Notes indenture, the 3.25 % 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.

As of June 30, 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 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,

During the three and six months ended June 30, 2024, we recorded $ 1.5 million and $ 2.1 million, respectively, of amortization related to debt issuance costs.

We also capitalized $9.7 million in third party offering costs related to the issuance of the 3.25 % Convertible Notes.

These debt issuance costs will be amortized over the expected life of the 3.25 % Convertible Notes.

During the three and six months ended June 30, 2023, we recorded $2.1 million and $2.4 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.

We also capitalized $9.8 million in third party offering costs related to the issuance of the 3.75 % Convertible Notes.

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

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Weighted Average Shares Outstanding and Net Income (Loss) Per Share

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

Three Months Ended June 30, Six Months Ended

(in thousands, except per share amounts) 2024 2023 2024 2023

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

Net income (loss) attributable to common shareholders for basic earnings per share $ 36,895 $ ( 17,000 ) $ 5,912 $ ( 40,023 )

Interest expense related to Convertible Notes (1) 3,074 — — —

Net income (loss) attributable to common shareholders for diluted earnings per share $ 39,969 $ ( 17,000 ) $ 5,912 $ ( 40,023 )

Weighted average common shares outstanding, basic 44,060 43,892 44,024 43,829

Dilutive effect of RSUs 564 — 569 —

Dilutive effect of Convertible Notes (1) 8,103 — — —

Weighted average common shares outstanding, diluted 52,727 43,892 44,593 43,829

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,

Net income (loss) per share, basic $ 0.84 $ ( 0.39 ) $ 0.13 $ ( 0.91 )

Net income (loss) per share, diluted $ 0.76 $ ( 0.39 ) $ 0.13 $ ( 0.91 )

(1) The dilutive effect of the convertible notes was determined using the if-converted method.

As the 2.75 % Convertible Notes and 3.75 % Convertible Notes will be convertible into cash, shares of our common stock or a combination thereof, at our election, the 2.75 % Convertible Notes and 3.75 % Convertible Notes are assumed to be converted into common stock at the beginning of the reporting period, and the resulting shares are included in the denominator of the calculation.

In addition, interest charges, net of any income tax effects are added back to the numerator of the calculation.

For the 3.25 % Convertible Notes, we are required to settle the principal amount in cash and any conversion premium in excess of the principal amount in cash, shares of common stock, or a combination of cash and shares of common stock, at our election.

As such, the 3.25 % Convertible Notes only have an impact on diluted earnings per share when the average share price of our common stock exceeds the conversion price.

For the three months ended June 30, 2024, an immaterial amount of interest expense related to the 2.75 % Convertible Notes and the potential dilution from those notes converting into 35,000 shares of common stock have been excluded from the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive.

For the six months ended June 30, 2024, $6.6 million of interest expense related to 2.75 % Convertible Notes and 3.75 % Convertible Notes combined and the potential dilution from those convertible notes converting into 8,138,000 shares of common stock have been excluded from the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive.

Due to net losses for the three and six months ended June 30, 2023, both the unvested RSUs representing 586,000 and 584,000 shares, respectively, and the potential dilution from the 2.75 % Convertible Notes and 3.75 % Convertible Notes converting into 10,095,000 shares of common stock have been excluded from the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive.

In connection with the issuance of the 3.25 % Convertible Notes and 3.75 % Convertible Notes, we entered into the 2024 capped call transactions and 2023 capped call transactions, respectively, 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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The following table presents the provision for (benefit from) income taxes for the respective periods:

Three Months Ended June 30, Six Months Ended

(dollars in thousands) 2024 2023 2024 2023

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

Provision for (benefit from) income taxes $ 20,693 $ 9,024 $ 11,167 $ ( 445 )

Effective tax rate 34.7 % ( 60.9 %) 54.3 % 0.9 %

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.

Our effective tax rate for the three and six months ended June 30, 2024 is higher than the prior year primarily due to non-deductible debt extinguishment costs and the related year over year variance in these costs.

Contingencies - Legal Proceedings

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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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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.

The total liabilities recorded in our condensed consolidated balance sheets for legal proceedings and government inquiries were immaterial as of June 30, 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.

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Construction and Materials.

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Summarized segment information is as follows (in thousands):

Three Months Ended March 31, Construction Materials Total

Three months ended June 30, Construction Materials Total

Total revenue from reportable segments $ 917,954 $ 239,468 $ 1,157,422

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Revenue from external customers $ 917,954 $ 164,532 $ 1,082,486

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

Gross profit $ 135,372 $ 29,339 $ 164,711

Depreciation, depletion and amortization $ 13,501 $ 10,917 $ 24,418

Total revenue from reportable segments $ 749,413 $ 206,832 $ 956,245

Elimination of intersegment revenue — ( 57,693 ) ( 57,693 )

Revenue from external customers $ 749,413 $ 149,139 $ 898,552

Gross profit $ 79,154 $ 23,932 $ 103,086

Depreciation, depletion and amortization $ 10,238 $ 7,090 $ 17,328

Six Months Ended June 30, Construction Materials Total

Total revenue from reportable segments $ 1,513,167 $ 328,172 $ 1,841,339

Elimination of intersegment revenue — ( 86,578 ) ( 86,578 )

Revenue from external customers $ 1,513,167 $ 241,594 $ 1,754,761

Gross profit $ 192,200 $ 26,796 $ 218,996

Depreciation, depletion and amortization $ 27,204 $ 21,394 $ 48,598

Segment assets as of period end $ 565,222 $ 570,908 $ 1,136,130

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Revenue from external customers $ 1,252,829 $ 205,791 $ 1,458,620

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

Gross profit $ 115,859 $ 19,586 $ 135,445

Depreciation, depletion and amortization $ 19,993 $ 13,213 $ 33,206

Segment assets as of period end $ 443,112 $ 414,858 $ 857,970

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

Three Months Ended March 31,

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

Three Months Ended June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

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Gain on sales of property and equipment, net ( 1,387 ) ( 3,944 ) ( 2,805 ) ( 5,981 )

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

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

Total other expense, net 26,271 43,682 21,939 35,674

Income (loss) before income taxes $ 59,550 $ ( 14,822 ) $ 20,582 $ ( 50,063 )

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