What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 95 added, 83 removed, 199 unchanged (47% of the section changed)

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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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At the federal level, the continued rollout of the $1.2 trillion Infrastructure Investment and Jobs Act (“IIJA”) has increased federal highway, bridge and transit funding to its highest level in more than six decades with $550 billion in incremental funding over five years.

We believe that the increased multi-year spending commitment has improved the programming visibility for state and local governments and drove an increase in project lettings starting in 2023 that will continue in 2024 and beyond.

The increased multi-year spending commitment has improved the programming visibility for state and local governments and has driven an increase in project lettings starting in 2023 that is continuing in 2024 and we believe will carry into 2025 and beyond.

At state, regional and local levels, voter-approved state and local transportation measures continue to support infrastructure spending.

While each market is unique, we see a strong funding environment at the state and local levels aided by the IIJA.

In California, our top revenue-generating state, a significant part of the state infrastructure spend is funded through Senate Bill 1 (SB-1), the Road Repair and Accountability Act of 2017, which is a 10-year, $54.2 billion program without any sunset provisions.

In California, our top revenue-generating state, despite overall budgetary concerns, a significant part of the state infrastructure spend is funded through Senate Bill 1 (SB-1), the Road Repair and Accountability Act of 2017, a 10-year, $54.2 billion program, which may only be used for transportation-related purposes, without any sunset provisions.

Over the recent years, inflation, supply chain and labor constraints have had a significant impact on the global economy including the construction industry in the United States.

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While we actively work to mitigate the impacts of oil price inflation, further price increases may adversely impact us in the future.

Our Committed and Awarded Projects (“CAP”) balance continues to be strong with $5.5 billion at the end of the first quarter of 2024.

Our Committed and Awarded Projects (“CAP”) balance continues to be strong at $5.6 billion at the end of the second quarter of 2024.

Our CAP is supported by a positive public funding environment and resilient private market which we believe will provide further opportunities for continued CAP growth.

As previously disclosed, we completed two acquisitions during 2023.

The results of operations of these businesses are included in our consolidated financial statements from the dates of acquisition, therefore current quarter results relating to these businesses are not comparable to the first quarter of 2023.

The results of operations of these businesses are included in our consolidated financial statements from the dates of acquisition, which impacts comparability to the applicable prior periods.

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.

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 Columbia, Canada operating on Malahat First Nation land.

On November 30, 2023, we acquired Lehman-Roberts Company and Memphis Stone & Gravel Company (collectively, "LRC/MSG").

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See Note 3 of “Notes to the Condensed Consolidated Financial Statements” for further information.

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.

Results of Operations

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Therefore, the results of operations of a given quarter are not indicative of the results to be expected for the full year.

The following table presents a financial summary for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table presents a financial summary for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

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Other costs, net $ 10,225 $ 13,607 $ 21,235 $ 18,130

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

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

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

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

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

Total Revenue by Segment

Three Months Ended March 31,

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

(dollars in thousands) 2024 2023 2024 2023

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Construction Revenue

Three Months Ended March 31,

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

(dollars in thousands) 2024 2023 2024 2023

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Total 917,954 100.0 % 749,413 100.0 % 1,513,167 100.0 % 1,252,829 100.0 %

Construction revenue for the three months ended March 31, 2024 increased by $91.8 million, or 18.2%, when compared to 2023.

This increase was led by operations in California, Utah and the Midwest driven by more favorable weather conditions in 2024 and higher levels of CAP going into the current quarter.

CAP of $5.5 billion at December 31, 2023 was $1.1 billion, or 24% higher than December 31, 2022.

Additionally, our acquired businesses contributed $5.9 million of construction revenue during the three months ended March 31, 2024.

Construction revenue for the three and six months ended June 30, 2024 increased by $168.5 million and $260.3 million, or 22.5% and 20.8%, respectively, when compared to 2023.

These increases were primarily driven by operations in California, Nevada and Alaska due to more favorable weather conditions in 2024 and higher levels of CAP going into the first and second quarters of this year compared to the prior year.

Additionally, our acquired businesses contributed $29.7 million and $35.6 million of construction revenue during the three and six months ended June 30, 2024, respectively.

Materials Revenue

Materials revenue for the three months ended March 31, 2024 was $77.1 million, an increase of $20.4 million, or 36.0%, when compared to the three months ended March 31, 2023.

This increase was driven by revenue from acquired businesses of $10.3 million, higher asphalt and aggregate sales prices and increased sales volumes as a result of more favorable weather conditions.

Materials revenue for the three and six months ended June 30, 2024 increased by $15.4 million and $35.8 million, or 10.3% and 17.4%, respectively, when compared to 2023.

These increases were primarily driven by increases in revenue from newly acquired businesses of $15.7 million and $26.1 million in the three and six months ended June 30, 2024, respectively.

In addition, higher asphalt and aggregate sales prices were partially offset by lower sales volumes.

Committed and Awarded Projects

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All CAP is in the Construction segment.

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

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

Unearned revenue $ 3,867,178 69.4 % $ 3,606,704 65.6 % $ 3,596,676 64.9 %

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Total $ 5,576,219 100.0 % $ 5,499,129 100.0 % $ 5,545,754 100.0 %

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

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

Customer type:

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Total $ 5,576,219 100.0 % $ 5,499,129 100.0 % $ 5,545,754 — 100.0 %

CAP was $5.5 billion at both March 31, 2024 and December 31, 2023.

Significant additions to CAP during the three months ended March 31, 2024 included a $51 million road widening project in Arizona, $50 million for three highway projects in California and a $31 million highway improvement project in Washington, all of which are for customers in the public sector.

Non-controlling partners’ share of CAP as of March 31, 2024 and December 31, 2023 was $219.4 million and $243.8 million, respectively.

At March 31, 2024, five contracts with remaining CAP of $10 million or more per project had total forecasted losses with remaining revenue of $201.4 million, or 3.7%, of total CAP.

The following table presents gross profit (loss) by reportable segment for the respective periods:

Three Months Ended March 31,

CAP of $5.6 billion at June 30, 2024 was $77.1 million or 1.4% higher than at March 31, 2024.

Significant additions to CAP during the three months ended June 30, 2024 included $183 million for four highway projects in California, $114 million for a bridge project in Michigan, an $89 million airport project in Texas, a $65 million highway project in Utah and a $48 million fish passage project in Washington.

All significant additions listed are for customers in the public sector except the airport project in Texas in which we were awarded a subcontract by a private entity.

Non-controlling partners’ share of CAP as of June 30, 2024, March 31, 2024 and December 31, 2023 was $351.6 million, $219.4 million and $243.8 million, respectively.

At June 30, 2024, five contracts with remaining CAP of $10 million or more per project had total forecasted losses with remaining revenue of $145.1 million, or 2.6%, of total CAP.

The following table presents gross profit by reportable segment for the respective periods:

Three Months Ended June 30, Six Months Ended

2024 2023 2024 2023

Construction $ 135,372 $ 79,154 $ 192,200 $ 115,859

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Percent of total revenue 15.2 % 11.5 % 12.5 % 9.3 %

Construction gross profit for the three months ended March 31, 2024 increased by $20 million, or 54.8%, when compared to 2023 primarily due to higher revenue and less negative net impacts from revisions in estimates in the current period.

For further discussion of projects with revisions in estimates which individually had an impact of $5.0 million or more on gross profit, see Note 4 of "Notes to the Condensed Consolidated Financial Statements." This gross profit improvements was somewhat offset by a gross loss from acquired businesses of $4.8 million, including purchase accounting related depreciation and intangible asset amortization of $2.5 million.

Construction gross profit for the three and six months ended June 30, 2024 increased by $56.2 million and $76.3 million, or 71.0% and 65.9%, respectively, when compared to 2023 primarily due to higher revenue and less negative net impacts from revisions in estimates in the current period.

For further discussion of projects with revisions in estimates which individually had an impact of $5.0 million or more on gross profit, see Note 4 of "Notes to the Condensed Consolidated Financial Statements." Acquired businesses recognized gross profit of $3.5 million for the three months ended June 30, 2024 and gross loss of $1.3 million for six months ended June 30, 2024, which include purchase accounting related depreciation and intangible asset amortization of $2.8 million and $7.1 million, respectively.

See Note 3 of "Notes to the Condensed Consolidated Financial Statements" for further information about acquisitions.

Materials gross loss for the three months ended March 31, 2024 decreased by $1.8 million, when compared to 2023.

The decreased loss was primarily due to higher sales prices but was partially offset by losses from acquired businesses during the quarter.

Acquired businesses recognized a gross loss of $3.4 million, of which $1.7 million was due to purchase accounting related depreciation and intangible asset amortization.

Materials gross profit for the three and six months ended June 30, 2024 increased by $5.4 million and $7.2 million, respectively, when compared to 2023.

The increased gross profit was primarily due to the inclusion of the results of acquired businesses and higher sales prices.

Acquired businesses recognized gross profit of $4.4 million and $1.0 million for the three and six months ended June 30, 2024.

Selling, General and Administrative Expenses

The following table presents the components of selling, general and administrative expenses for the respective periods:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

(dollars in thousands) 2024 2023 2024 2023

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As projects are completed or the volume of work slows down, we temporarily redeploy project employees to bid on new projects, moving their salaries and related costs from cost of revenue to selling expenses.

Selling expenses for the three months ended March 31, 2024 were relatively flat when compared to 2023.

Selling expenses for the three and six months ended June 30, 2024 were relatively flat when compared to 2023.

General and Administrative Expenses

General and administrative expenses include costs related to our operational offices that are not allocated to direct contract costs and expenses related to our corporate functions.

Other general and administrative expenses include travel and

entertainment, outside services, information technology, depreciation, occupancy, training, office supplies, incentive compensation, changes in the fair market value of our Non-Qualified Deferred Compensation plan liability and other miscellaneous expenses.

Total general and administrative expenses for the three months ended March 31, 2024 increased by $13.9 million, or 25.6% when compared to the same period in 2023, primarily due to a $7.0 million increase in stock-based compensation due to improved financial performance as well as $4.5 million of general and administrative expenses from acquired businesses, including $1.0 million of purchase accounting related depreciation and intangible asset amortization.

Other general and administrative expenses include travel and entertainment, outside services, information technology, depreciation, occupancy, training, office supplies, incentive compensation, changes in the fair market value of our Non-Qualified Deferred Compensation plan liability and other miscellaneous expenses.

Total general and administrative expenses for the three and six months ended June 30, 2024 increased by $5.5 million and $19.4 million, or 11.3% and 18.8% when compared to the same period in 2023, primarily due to a $7.3 million increase year to date in stock-based compensation due to improved financial performance as well as $3.0 million and $7.6 million, respectively of general and administrative expenses from acquired businesses, including $1.1 million and $2.1 million, respectively of purchase accounting related depreciation and intangible asset amortization.

Other Costs, net

The following table presents other costs, net for the respective periods:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

Other costs, net $ 10,225 $ 13,607 $ 21,235 $ 18,130

During the three months ended March 31, 2024, Other costs, net increased $6.5 million compared to prior year.

These increases were primarily due to higher costs in the current year associated with the defense of a former Company officer in his ongoing civil litigation with the Securities and Exchange Commission.

Other Income, net

Three Months Ended March 31,

During the three and six months ended June 30, 2024, Other costs, net decreased $3.4 million and increased $3.1 million, respectively, compared to prior year.

The decrease during the three months ended June 30, 2024 was due to a $12.0 million litigation charge in the prior year that did not recur in the current year, partially offset by an increase in costs associated with the defense of a former Company officer in his ongoing civil litigation with the Securities and Exchange Commission.

These defense costs were the primary driver of the increase for the six months ended June 30, 2024.

Other (Income) Expense

Three Months Ended

June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

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

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

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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)

During the three months ended March 31, 2024, total other income, net decreased $3.7 million compared to prior year.

This decrease was primarily due to an increase of $5.2 million in interest expense as a result of increased borrowings in 2024.

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

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

During the three and six months ended June 30, 2024, total other expense, net decreased $17.4 million and $13.7 million, respectively, compared to the prior year.

These decreases were primarily due to lower debt extinguishment costs of $23.2 million in 2024.

In the second quarter of 2024, we repurchased approximately $30.2 million in aggregate principal amount of our 2.75% Convertible Notes and incurred a $27.8 million loss on debt extinguishment.

Partially offsetting the decrease for the six months ended June 30, 2024, interest expense increased $6.4 million as a result of increased borrowings.

See Note 14 of "Notes to the Condensed Consolidated Financial Statements" for more information.

This was partially offset by an increase in interest income of $2.9 million mainly from higher interest rates and higher cash balances.

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

Three Months Ended March 31,

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 %

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The following table presents the amount attributable to non-controlling interests in consolidated subsidiaries for the respective periods:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

(in thousands) 2024 2023 2024 2023

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The amount attributable to non-controlling interests represents the non-controlling owners’ share of the net (income) or loss of our consolidated construction joint ventures.

During the three months ended March 31, 2023, we had one consolidated construction joint venture with a negative impact from revisions in estimates, which did not recur in 2024 (see Note 4 of “Notes to the Condensed Consolidated Financial Statements”).

The amounts for the three and six months ended June 30, 2024 decreased $8.8 million and $13.1 million, respectively, compared to the prior year primarily due to decreased losses from downward revisions in estimates in the current year on one consolidated construction joint venture (see Note 4 of “Notes to the Condensed Consolidated Financial Statements”).

Liquidity and Capital Resources

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We may also from time-to-time issue and sell equity, debt or hybrid securities or engage in other capital markets transactions or sell one or more business units or assets.

See Note 14 of the "Notes to the Condensed Consolidated Financial Statements" for information on our Credit Agreement, our 3.75% Convertible Notes and our 2.75% Convertible Notes.

See Note 14 of the "Notes to the Condensed Consolidated Financial Statements" for information on our Credit Agreement, our 3.75% Convertible Notes, our 3.25% Convertible Notes and our 2.75% Convertible Notes.

Our material cash requirements include paying the costs and expenses associated with our operations, servicing outstanding indebtedness, making capital expenditures and paying dividends on our capital stock.

We may also from time to time prepay or repurchase outstanding indebtedness, repurchase shares of our common stock or acquire assets or businesses that are complementary to our operations.

See Note 1 of the "Notes to the Condensed Consolidated Financial Statements" for information on our share repurchases during the second quarter of 2024.

We believe our primary sources of liquidity will be sufficient to meet our expected working capital needs, capital expenditures, financial commitments, cash dividend payments and other liquidity requirements associated with our existing operations for the next twelve months.

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However, there can be no assurance that sufficient capital will continue to be available or that it will be available on terms acceptable to us.

As of March 31, 2024, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisting primarily of U.S.

As of June 30, 2024, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisting primarily of U.S.

Government and agency obligations.

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

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

See Note 14 of “Notes to the Condensed Consolidated Financial Statements.”

As of March 31, 2024, we had $1.2 million of receivables and $29.1 million of contract retention receivables from Brightline Trains Florida LLC ("Brightline") (see Note 7 of “Notes to the Condensed Consolidated Financial Statements”).

As of the date of this report, all $1.2 million of the receivables are past due.

Our project with Brightline is nearing completion and final payment, including the retention receivable, will be due to us no later than 40 days after all conditions of final completion are satisfied.

We expect to achieve final completion in the second quarter of 2024;

As of June 30, 2024, we had $29.2 million of contract retention receivables from Brightline Trains Florida LLC ("Brightline") which represented 9.4 % of total contract assets (see Note 7 of “Notes to the Condensed Consolidated Financial Statements”).

Once all conditions of final completion are satisfied, the Brightline retention receivable will be due to us within 40 days;

however, timing cannot be assured.

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The following table presents our cash, cash equivalents and marketable securities, including amounts from our CCJVs, as of the respective dates:

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

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

Cash and cash equivalents excluding CCJVs $ 244,783 $ 297,439

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(2) 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.

Granite’s portion of CCJV cash and cash equivalents was $83.5 million and $73.1 million as of March 31, 2024 and December 31, 2023, respectively.

Excluded from the table above is $39.3 million and $34.2 million as of March 31, 2024 and December 31, 2023, respectively, of Granite’s portion of unconsolidated construction joint venture cash and cash equivalents.

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

Granite’s portion of CCJV cash and cash equivalents was $74.9 million and $73.1 million as of June 30, 2024 and December 31, 2023, respectively.

Excluded from the table above is $36.3 million and $34.2 million as of June 30, 2024 and December 31, 2023, respectively, of Granite’s portion of unconsolidated construction joint venture cash and cash equivalents.

Capital Expenditures

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The timing and amount of such expenditures can vary based on the progress of planned capital projects, the type and size of construction projects, changes in business outlook and other factors.

During the three months ended March 31, 2024, we had capital expenditures of $27.9 million, compared t o $40.5 million , during the three months ended March 31, 2023.

During the six months ended June 30, 2024, we had capital expenditures of $66.9 million, compared t o $79.7 million , during the six months ended June 30, 2023.

The decrease year over year is primarily due to acquisition of materials reserves in 2023.

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This range also includes approximately $20 million related to a project-specific tunnel boring machine.

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2024 2023

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however, private sector projects generally have higher gross profit as a percentage of revenue.

While we typically invoice our customers on a monthly basis, our contracts frequently provide for retention that is a specified percentage withheld from each payment by our customers until the contract is completed and the work accepted by the customer.

Cash provided by operating activities of $24.1 million for the three months ended March 31, 2024 represents a $100.8 million increase in cash provided by operating activities when compared to the same period of 2023.

The change was primarily attributable to an $80.0 million increase in cash provided by working capital, which includes receivables, net contract assets, inventories, other assets, accounts payable and accrued expenses and other liabilities.

Additionally, distributions, net of contributions, from unconsolidated construction joint ventures and affiliates increased $6.8 million when compared to the same period of 2023.

While we typically invoice our customers on a monthly basis, our construction contracts frequently provide for retention that is a specified percentage withheld from each payment by our customers until the contract is completed and the work accepted by the customer.

Cash provided by operating activities of $22.1 million for the six months ended June 30, 2024 represents a $141.0 million increase in cash provided by operating activities when compared to the same period of 2023.

The change was primarily attributable to a $64.3 million increase in net income after adjusting for non-cash items and a $54.5 million decrease in cash used by working capital, which includes receivables, net contract assets, inventories, other assets, accounts payable and accrued expenses and other liabilities.

Additionally, distributions from, net of contributions to, unconsolidated construction joint ventures and affiliates increased $22.3 million when compared to the same period of 2023.

Investing activities

Cash used in investing activities of $10.8 million for the three months ended March 31, 2024 represents a $13.6 million decrease in cash used in investing activities when compared to the same period of 2023.

The change was primarily due to $12.6 million less property and equipment purchases compared to the same period 2023 and increased cash provided by marketable securities activity of $10.0 million, partially offset by an outflow of $6.1 million for net working capital adjustments associated with the acquisition of LRC/MSG (see Note 3 of “Notes to the Condensed Consolidated Financial Statements”).

Cash used in investing activities of $50.1 million for the six months ended June 30, 2024 represents a $14.3 million decrease in cash used in investing activities when compared to the same period of 2023.

The change was due to $13.8 million less cash used related to business acquisitions (see Note 3 of “Notes to the Condensed Consolidated Financial Statements”) and $12.8 million less cash used for purchases of property and equipment.

This was partially offset by a $6.3 million decrease in proceeds from sales of property and equipment and a $5.0 million decrease in maturities of marketable securities.

Financing activities

Cash used in financing activities of $109.2 million for the three months ended March 31, 2024 represents a $116.0 million increase in cash used in financing activities when compared to the same period of 2023.

The change was primarily due to repayment of the balance drawn on our revolving credit facility, which had $100 million outstanding as of December 31, 2023.

See Note 14 of the “Notes to the Condensed Consolidated Financial Statements” for further information about our credit facility.

The year over year increase in cash used in financing activities was also due to a decrease in contributions from non-controlling partners, net of distributions, of $10.2 million.

Cash used in financing activities of $22.9 million for the six months ended June 30, 2024 represents a $126.7 million increase in cash used in financing activities when compared to the same period of 2023.

The change was primarily due to a decrease in proceeds from debt issuances, net of debt repayments and related charges of $94.3 million.

See Note 14 of the “Notes to the Condensed Consolidated Financial Statements” for further information.

The year over year increase in cash used in financing activities was also due to a $17.4 million increase in repurchases of common stock as well as a decrease in contributions from non-controlling partners, net of distributions, of $14.9 million.

We recognize derivative instruments as either assets or liabilities in the condensed consolidated balance sheets at fair value using Level 2 inputs.

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We are generally required to provide various types of surety bonds that provide an additional measure of security under certain public and private sector contracts.

At March 31, 2024, approximately $3.2 billion of our $5.5 billion CAP was bonded.

At June 30, 2024, approximately $3.6 billion of our $5.6 billion CAP was bonded.

Performance bonds do not have stated expiration dates;

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Modification of these terms may include changes in loan-to-value ratios requiring the real estate entity to repay portions of the debt.

Our unconsolidated investments in our foreign affiliates are subject to local bank debt primarily for equipment purchases and working capital.

unconsolidated investments in our foreign affiliates are subject to local bank debt primarily for equipment purchases and working capital.

This debt is non-recourse to Granite, but it is recourse to the affiliates.

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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 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 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;

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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 the covenants in the Credit Agreement.

As of June 30, 2024, we were in compliance with the covenants in the Credit Agreement.

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 (the “2022 authorization”).

There were no share repurchases under the 2022 authorization in the three months ended March 31, 2024 and $231.5 million remained available as of March 31, 2024.

During the three and six months ended June 30, 2024, we repurchased 225,000 shares under the 2022 authorization and $218.2 million remained available under the 2022 authorization as of June 30, 2024.

The specific timing and amount of any future repurchases will vary based on market conditions, securities law limitations and other factors.

7 unchanged sentences

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 2. Management’s Discussion and Analysis