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Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-01 · 93 added, 88 removed, 206 unchanged (47% of the section changed)

38 unchanged sentences

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 at $5.6 billion at the end of the second quarter of 2024.

Our Committed and Awarded Projects (“CAP”) balance continues to be strong at $5.6 billion at the end of the third 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, which impacts comparability to the applicable prior periods.

On August 9, 2024, we acquired Dickerson & Bowen, Inc.

D&B is an aggregates, asphalt, and highway construction company serving central and southern Mississippi.

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

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

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

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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").

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

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.

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 and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended

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

Three Months Ended September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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Other costs, net $ 8,543 $ 19,843 $ 29,778 $ 37,973

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

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

Operating income $ 104,298 $ 73,818 $ 146,819 $ 59,429

Total other (income) expense, net $ (5,148) $ (6,101) $ 16,791 $ 29,573

Amount attributable to non-controlling interests $ (5,026) $ 128 $ (8,529) $ 9,723

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

Net income attributable to Granite Construction Incorporated $ 78,951 $ 57,624 $ 84,863 $ 17,601

Total Revenue by Segment

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

Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2024 2023 2024 2023

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Construction Revenue

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

Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2024 2023 2024 2023

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Total $ 1,080,705 100.0 % $ 945,698 100.0 % $ 2,593,872 100.0 % $ 2,198,527 100.0 %

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.

Construction revenue for the three and nine months ended September 30, 2024 increased by $135.0 million and $395.3 million, or 14.3% and 18.0%, respectively, when compared to 2023, primarily due to higher levels of CAP, more favorable weather conditions early in 2024 and revenue from acquired businesses.

Our acquired businesses contributed $41.5 million and $77.1 million of construction revenue during the three and nine months ended September 30, 2024, respectively.

Materials Revenue

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.

Materials revenue for the three and nine months ended September 30, 2024 increased by $23.7 million and $59.5 million, or 13.8% and 15.8%, respectively, when compared to 2023.

These increases were primarily driven by increases in revenue from newly acquired businesses of $20.8 million and $46.9 million in the three and nine months ended September 30, 2024, respectively, in addition to higher asphalt and aggregate sales prices which offset decreased asphalt volumes.

Committed and Awarded Projects

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All CAP is in the Construction segment.

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

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

Unearned revenue $ 3,884,146 69.1 % $ 3,867,178 69.4 % $ 3,596,676 64.9 % $ 3,964,749 71.0 %

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Total $ 5,619,795 100.0 % $ 5,576,219 100.0 % $ 5,545,754 100.0 % $ 5,584,523 100.0 %

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

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

Customer type:

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Total $ 5,619,795 100.0 % $ 5,576,219 100.0 % $ 5,545,754 100.0 % $ 5,584,523 100.0 %

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.

CAP of $5.6 billion at September 30, 2024 was $43.6 million, or 0.8%, higher than at June 30, 2024.

Significant additions to CAP during the three months ended September 30, 2024 included $180 million for a pumping station project in Nevada and $158 million of Federal work in Guam.

All significant additions listed are for customers in the public sector.

Non-controlling partners’ share of CAP as of September 30, 2024, June 30, 2024, December 31, 2023 and September 30, 2023 was $355.2 million, $351.6 million, $243.8 million and $277.5 million, respectively.

At September 30, 2024, only one contract with remaining CAP of $10 million or more had a total forecasted loss with remaining revenue of $71.8 million, or 1.3%, of total CAP.

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

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Percent of total revenue 15.9 % 14.9 % 13.9 % 11.7 %

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.

Construction gross profit for the three and nine months ended September 30, 2024 increased by $33.5 million and $109.9 million, or 24.4% and 43.4%, 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 $8.7 million and $7.5 million for the three and nine months ended September 30, 2024, respectively, which include $2.3 million and $6.3 million, respectively, of purchase accounting related depreciation and intangible asset amortization.

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

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.

Materials gross profit for the three and nine months ended September 30, 2024 increased by $2.8 million and $10.0 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.

Acquired businesses recognized gross profit of $0.4 million and $1.4 million for the three and nine months ended September 30, 2024, which include $0.4 million and $3.4 million, respectively, of purchase accounting related depreciation and intangible asset amortization.

Selling, General and Administrative Expenses

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

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

(dollars in thousands) 2024 2023 2024 2023

Salaries and related expenses $ 16,515 $ 13,939 $ 47,339 $ 44,195

Incentive compensation 4,738 1,816 5,366 2,327

Stock-based compensation 241 231 1,055 1,303

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Salaries and related expenses 25,565 22,890 80,771 74,715

Incentive compensation 16,757 12,164 19,532 13,727

Stock-based compensation 1,583 1,136 14,873 7,104

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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 and six months ended June 30, 2024 were relatively flat when compared to 2023.

Selling expenses for the three and nine months ended September 30, 2024 increased by $5.0 million and $6.0 million, or 28.9% and 11.5% when compared to the same periods in 2023, primarily due to increases in incentive compensation due to improved financial performance as well as higher salaries and related expenses.

General and Administrative Expenses

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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.

Total general and administrative expenses for the three months ended September 30, 2024 increased by $11.8 million, or 20.6%, when compared to the same period in 2023, primarily due to an increase in incentive compensation due to improved financial performance as well as $4.3 million of general and administrative expenses from acquired businesses, including $2.4 million of purchase accounting related depreciation and intangible asset amortization.

Total general and administrative expenses for the nine months ended September 30, 2024 increased by $31.3 million, or 19.5%, when compared to the same period in 2023, primarily due to $11.9 million of general and administrative expenses from acquired businesses, including $4.5 million of purchase accounting related depreciation and intangible asset amortization, as well as a $7.8 million increase in stock-based compensation and a $5.8 million increase in incentive compensation, both due to improved financial performance.

Other Costs, net

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

Three Months Ended June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

Other costs, net $ 8,543 $ 19,843 $ 29,778 $ 37,973

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.

During the three and nine months ended September 30, 2024, Other costs, net decreased $11.3 million and $8.2 million, respectively, compared to prior year.

The decreases during the three and nine months ended September 30, 2024 were due to $8.0 million and $20.0 million, respectively, of litigation charges in the prior year that did not recur in the current year combined with $5.0 million of non-cash impairment charges during the three and nine months ended September 30, 2023.

Those decreases were partially offset by an increase in 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) Expense

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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

(Gain) loss on debt extinguishment $ (272) $ — $ 27,552 $ 51,052

Interest income (7,513) (4,293) (17,815) (11,287)

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Other (income) expense, net (874) 462 (1,350) (2,713)

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.

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

Three Months Ended June 30, Six Months Ended

Total other (income) expense, net $ (5,148) $ (6,101) $ 16,791 $ 29,573

During the three months ended September 30, 2024, total other income, net, decreased $1.0 million compared to the same period in the prior year.

During the nine months ended September 30, 2024, total other expense, net, decreased $12.8 million compared to the same period in the prior year.

During the nine months ended September 30, 2024, we repurchased approximately $30.2 million in aggregate principal amount of our 2.75% Convertible Notes and incurred a $27.6 million loss on debt extinguishment which was $23.5 million less than the 2023 extinguishment charge.

Interest expense, net of interest income, for the three months ended September 30, 2024 was relatively flat when compared to 2023.

During the nine months ended September 30, 2024, interest expense, net of interest income, increased $2.9 million, as a result of increased borrowings, partially offset by higher interest income due to higher cash balances.

Equity in income of affiliates, net during the three and nine months ended September 30, 2024 decreased $2.8 million and $6.5 million, respectively, primarily due to lower sales by our affiliates.

The following table presents the provision for income taxes for the respective periods:

Three Months Ended September 30, Nine Months Ended

September 30,

(dollars in thousands) 2024 2023 2024 2023

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

Provision for income taxes $ 25,469 $ 22,423 $ 36,636 $ 21,978

Effective tax rate 23.3 % 28.1 % 28.2 % 73.6 %

We calculate our income tax provision (benefit) at the end of each interim period by estimating our annual effective tax rate, applying that rate to our income or loss before tax and adjusting for discrete items not included in our estimate of the annual effective tax rate.

We calculate our income tax provision at the end of each interim period by estimating our annual effective tax rate, applying that rate to our income or loss before tax and adjusting for discrete items not included in our estimate of the annual effective tax rate.

The effect of changes in enacted tax laws, tax rates or tax status is recognized in the interim period in which the change occurs.

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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 June 30, Six Months Ended

Three Months Ended September 30, Nine Months Ended

September 30,

(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.

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”).

The amounts for the three and nine months ended September 30, 2024

increased $5.2 million and $18.3 million, respectively, compared to the prior year primarily due to the impact of 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, our 3.25% 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 and our 3.25% 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.

See Note 1 and Note 3 of the "Notes to the Condensed Consolidated Financial Statements" for information on our share repurchases during the nine months ended September 30, 2024 and our acquisitions.

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 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.

As of September 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 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.

As of September 30, 2024, the total unused availability under our Credit Agreement was $333.5 million, resulting from $16.5 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 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.

As of September 30, 2024, we had $29.2 million of contract retention receivables from Brightline Trains Florida LLC ("Brightline") which represented 9.1 % of total contract assets (see Note 7 of “Notes to the Condensed Consolidated Financial Statements”).

As of the date of this report, $24.2 million is past due.

Once all conditions of final completion are satisfied, the remaining $5.0 million will be due to us within 40 days.

Brightline has experienced delays in securing additional funding in the past, therefore the timing and probability of future payments may be affected, and our liquidity impacted if Brightline faces future funding difficulties.

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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) June 30, 2024 December 31, 2023

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

Cash and cash equivalents excluding CCJVs $ 313,218 $ 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 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.

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

Granite’s portion of CCJV cash and cash equivalents was $91.1 million and $73.1 million as of September 30, 2024 and December 31, 2023, respectively.

Excluded from the table above is $26.2 million and $34.2 million as of September 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 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.

We currently anticipate 2024 capital expenditures to be approximately $130 million to $150 million, including approximately $50 million in planned strategic materials investments in land, reserves and an aggregate plant.

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

Six Months Ended June 30,

During the nine months ended September 30, 2024, we had capital expenditures of $108.2 million, compared to $109.0 million, during the nine months ended September 30, 2023.

We currently anticipate 2024 capital expenditures to be approximately $130 million, including approximately $40 million in planned strategic materials investments in land, reserves and an aggregate plant.

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

Nine Months Ended September 30,

(in thousands) 2024 2023

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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.

Cash provided by operating activities of $283.5 million for the nine months ended September 30, 2024 represents a $249.4 million increase in cash provided by operating activities when compared to the same period of 2023.

The change was primarily attributable to a $107.1 million increase in net income after adjusting for non-cash items and a $107.2 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 from, net of contributions to, unconsolidated construction joint ventures and affiliates increased $35.0 million when compared to the same period of 2023.

Investing activities

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.

Cash used in investing activities of $211.1 million for the nine months ended September 30, 2024 represents a $121.8 million increase in cash used in investing activities when compared to the same period of 2023.

The change was primarily due to a $108.7 million increase in cash used related to business acquisitions (see Note 3 of “Notes to the Condensed Consolidated Financial Statements”).

Financing activities

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.

Cash used in financing activities of $27.8 million for the nine months ended September 30, 2024 represents an $81.0 million increase in cash used in financing activities when compared to the same period of 2023.

The change was primarily due to a $40.7 million increase in debt repayments and related charges, net of proceeds from debt issuances.

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

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

At September 30, 2024, approximately $3.5 billion of our $5.6 billion CAP was bonded.

Performance bonds do not have stated expiration dates;

rather, we are generally released from the bonds after the owner accepts the work performed under contract.

The ability to maintain bonding capacity to support our current and future level of contracting requires that we maintain cash and working capital balances satisfactory to our sureties.

rather, we are generally released from the bonds when the obligations of the underlying contract have been fulfilled.

The ability to maintain bonding capacity requires that we maintain cash and working capital balances satisfactory to our sureties.

Our investments in real estate affiliates are subject to mortgage indebtedness.

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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.

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

Our 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, 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.

Additionally, the 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 3.25% Convertible Notes, our 3.75% Convertible Notes or our Credit Agreement would constitute an event of default under 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, the 3.25% Convertible Notes indenture, or the 3.75% Convertible Notes indenture could result in acceleration of the maturity of the notes.

A default under 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 June 30, 2024, we were in compliance with the covenants in the Credit Agreement.

As of September 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”).

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.

During the nine months ended September 30, 2024, we repurchased 225,000 shares under the 2022 authorization and $218.2 million remained available under the 2022 authorization as of September 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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis