What changed in this filing

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Item 1. Financial Statements

2025-05-01 compared with 2024-10-31 · 221 added, 417 removed, 409 unchanged (61% of the section changed)

3 unchanged sentences

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Current assets

13 unchanged sentences

722,135 716,184

Long-term marketable securities 90,295 —

Investments in affiliates 93,667 94,031

2 unchanged sentences

Right of use assets 94,839 89,791

Deferred income taxes, net 4,990 8,179

Other noncurrent assets 67,101 66,635

18 unchanged sentences

issued and outstanding:

43,704,841 shares as of September 30, 2024 and 43,944,118 shares as of December 31, 2023

43,737,491 shares as of March 31, 2025 and 43,424,646 shares as of December 31, 2024

Additional paid-in capital 427,804 410,739

Accumulated other comprehensive income 437 881

Accumulated other comprehensive income (loss) 65 ( 582 )

Retained earnings 565,223 604,635

7 unchanged sentences

(Unaudited - in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Construction $ 1,080,705 $ 945,698 $ 2,593,872 $ 2,198,527

Materials 194,805 171,122 436,399 376,913

Total revenue 1,275,510 1,116,820 3,030,271 2,575,440

Three Months Ended March 31,

Revenue $ 699,547 $ 672,275

Cost of revenue 615,698 617,990

Construction 910,020 808,536 2,230,987 1,945,506

Materials 162,541 141,641 377,339 327,846

Total cost of revenue 1,072,561 950,177 2,608,326 2,273,352

Gross profit 83,849 54,285

2 unchanged sentences

Gain on sales of property and equipment, net ( 1,737 ) ( 1,418 )

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

Operating loss ( 39,751 ) ( 43,300 )

Other (income) expense

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

Interest income ( 6,268 ) ( 6,702 )

1 unchanged sentence

Equity in income of affiliates, net ( 1,094 ) ( 3,970 )

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

Other income, net ( 63 ) ( 1,743 )

Total other (income) expense, net 332 ( 4,332 )

Income before income taxes 109,446 79,919 130,028 29,856

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

Net income 83,977 57,496 93,392 7,878

Loss before income taxes ( 40,083 ) ( 38,968 )

Benefit from income taxes ( 11,756 ) ( 9,526 )

Net loss ( 28,327 ) ( 29,442 )

Amount attributable to non-controlling interests ( 5,329 ) ( 1,541 )

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

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

Net loss attributable to Granite Construction Incorporated $ ( 33,656 ) $ ( 30,983 )

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

Basic $ ( 0.77 ) $ ( 0.70 )

5 unchanged sentences

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited - in thousands)

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

2024 2023 2024 2023

Net income $ 83,977 $ 57,496 $ 93,392 $ 7,878

Other comprehensive income (loss), net of tax

Net unrealized gain (loss) on cash flow hedges, net of tax $ ( 547 ) $ 883 $ ( 693 ) $ 325

reclassification for net gains (losses) included in interest expense, net of tax 436 ( 362 ) 518 ( 250 )

Three Months Ended March 31,

Net loss $ ( 28,327 ) $ ( 29,442 )

Other comprehensive income, net of tax

Net unrealized gain on cash flow hedges, net of tax $ — $ 589

reclassification for net gains included in interest expense, net of tax 185 226

Net change $ 185 $ 815

Foreign currency translation adjustments, net 462 ( 406 )

Other comprehensive income (loss), net of tax $ 167 $ 99 $ ( 444 ) $ 106

Comprehensive income, net of tax $ 84,144 $ 57,595 $ 92,948 $ 7,984

Non-controlling interests in comprehensive (income) loss, net of tax ( 5,026 ) 128 ( 8,529 ) 9,723

Comprehensive income attributable to Granite Construction Incorporated, net of tax $ 79,118 $ 57,723 $ 84,419 $ 17,707

Other comprehensive income, net of tax $ 647 $ 409

Comprehensive loss, net of tax $ ( 27,680 ) $ ( 29,033 )

Non-controlling interests in comprehensive loss, net of tax ( 5,329 ) ( 1,541 )

Comprehensive loss attributable to Granite Construction Incorporated, net of tax $ ( 33,009 ) $ ( 30,574 )

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

3 unchanged sentences

Outstanding Shares Common Stock Additional

Capital Accumulated Other Comprehensive Income Retained Earnings Total Granite

Shareholders’ Equity Non-controlling Interests Total Equity

Balances at June 30, 2024

43,686,508 $ 437 $ 435,271 $ 270 $ 495,679 $ 931,657 $ 55,758 $ 987,415

Net income — — — — 78,951 78,951 5,026 83,977

Other comprehensive income — — — 167 — 167 — 167

Repurchases of common stock (1) ( 3,546 ) — ( 241 ) — — ( 241 ) — ( 241 )

Restricted stock units (“RSUs”) vested 10,264 — — — — — — —

Dividends on common stock ($0.13 per share) — — 73 — ( 5,753 ) ( 5,680 ) — ( 5,680 )

Common stock issued in debt redemption 11,665 0 (0)

Transactions with non-controlling interests — — — — — — 1,801 1,801

Stock-based compensation expense and other ( 50 ) — 2,240 — — 2,240 — 2,240

Balances at September 30, 2024

43,704,841 $ 437 $ 437,343 $ 437 $ 568,877 $ 1,007,094 $ 62,585 $ 1,069,679

Balances at June 30, 2023

43,918,798 $ 439 $ 470,511 $ 795 $ 429,797 $ 901,542 $ 39,908 $ 941,450

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

Other comprehensive income — — — 99 — 99 — 99

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

RSUs vested 11,166 — — — — — — —

Dividends on common stock ($0.13 per share) — — 76 — ( 5,785 ) ( 5,709 ) — ( 5,709 )

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

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

Balances at September 30, 2023

43,926,576 $ 439 $ 472,379 $ 894 $ 481,636 $ 955,348 $ 51,229 $ 1,006,577

(1) This amount represents employee tax withholding for RSUs vested under our equity incentive plans.

Outstanding Shares Common Stock Additional

Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Granite

Capital Accumulated Other

Comprehensive Income (Loss) Retained Earnings Total Granite

Shareholders’ Equity Non-controlling Interests Total Equity

1 unchanged sentence

43,424,646 $ 434 $ 410,739 $ ( 582 ) $ 604,635 $ 1,015,226 $ 64,137 $ 1,079,363

Net income — — — — 84,863 84,863 8,529 93,392

Other comprehensive loss — — — ( 444 ) — ( 444 ) — ( 444 )

Net loss — — — — ( 33,656 ) ( 33,656 ) 5,329 ( 28,327 )

Other comprehensive income — — — 647 — 647 — 647

Repurchases of common stock (1) ( 198,220 ) ( 2 ) ( 15,207 ) — — ( 15,209 ) — ( 15,209 )

1 unchanged sentence

Dividends on common stock ($ 0.13 per share per quarter)

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

Redemption of warrants — — 466 — — 466 — 466

Common stock issued in debt redemption 11,665 0 (0)

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

— — 69 — ( 5,756 ) ( 5,687 ) — ( 5,687 )

Transactions with non-controlling interests — — — — — — ( 24,703 ) ( 24,703 )

Stock-based compensation expense and other ( 546 ) — 32,208 — — 32,208 — 32,208

Balances at September 30, 2024

Balances at March 31, 2025

43,737,491 $ 437 $ 427,804 $ 65 $ 565,223 $ 993,529 $ 44,763 $ 1,038,292

1 unchanged sentence

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

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

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

Other comprehensive income — — — 409 — 409 — 409

2 unchanged sentences

Dividends on common stock ($ 0.13 per share per quarter)

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

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

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

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

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

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

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

Balances at September 30, 2023

Balances at March 31, 2024

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

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

During the nine months ended September 30, 2024 and 2023, there were 145,113 shares and 96,936 shares, respectively, withheld related to employee taxes for RSUs.

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

(1) Represents shares withheld related to employee taxes for RSUs vested under our equity incentive plans in 2025 and 2024, as well as 200 shares repurchased under our share repurchase program in 2025.

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

2 unchanged sentences

( Unaudited - in thousands )

Nine Months Ended September 30, 2024 2023

Three Months Ended March 31, 2025 2024

Operating activities

Net income $ 93,392 $ 7,878

Adjustments to reconcile net income to net cash provided by operating activities:

Net loss $ ( 28,327 ) $ ( 29,442 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation, depletion and amortization 30,171 29,068

Amortization related to long-term debt 1,081 758

Loss on debt extinguishment 27,552 51,052

Gain on sales of property and equipment, net ( 1,737 ) ( 1,418 )

Deferred income taxes — 1,542

Stock-based compensation 32,217 12,895

Equity in net (income) loss from unconsolidated construction joint ventures 651 ( 4,535 )

Equity in net income from unconsolidated construction joint ventures ( 1,246 ) ( 2,290 )

Net income from affiliates ( 1,094 ) ( 3,970 )

15 unchanged sentences

Proceeds from sales of property and equipment 3,449 2,535

Acquisitions of businesses, net of cash acquired (See Note 3) ( 122,448 ) ( 26,933 )

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

Proceeds from company owned life insurance — 1,545

Return of investment in affiliates 1,429 —

Collection of notes receivable — 208

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

Other investing activities — 693

Net cash used in investing activities $ ( 156,310 ) $ ( 10,762 )

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 ( 274 ) ( 102,140 )

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

Redemption of warrants ( 497 ) ( 13,201 )

Debt issuance costs ( 10,053 ) ( 10,024 )

Cash dividends paid ( 5,652 ) ( 5,713 )

3 unchanged sentences

Other financing activities, net ( 8 ) ( 3 )

Net cash provided by (used in) financing activities $ ( 27,819 ) $ 53,205

Net increase (decrease) in cash and cash equivalents 44,623 ( 1,867 )

Net cash used in financing activities $ ( 46,593 ) $ ( 109,222 )

Net decrease in cash and cash equivalents ( 199,256 ) ( 95,911 )

Cash and cash equivalents at beginning of period 578,330 417,663

6 unchanged sentences

Income taxes $ 23 $ 831

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 September 30, 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 March 31, 2025 and the results of our operations and cash flows for the periods presented.

The December 31, 2024 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 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.

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

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

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

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

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

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

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 nine months ended September 30, 2024, we repurchased 225,000 shares under this authorization.

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 September 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 and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.

Therefore, the results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year.

Recently Issued and Adopted Accounting Pronouncements

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

No new accounting pronouncements were recently issued or adopted in the nine months ended September 30, 2024 that had or are expected to have a material impact on our financial statements.

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

Recently Issued Accounting Pronouncements:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

It also includes certain other amendments intended to improve the effectiveness of income tax disclosures.

These new disclosure requirements are effective prospectively commencing with our annual report for the year ending December 31, 2025.

We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

Recently Adopted Accounting Pronouncements:

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

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

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

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

Adoption of this ASU did not have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures , which enhances the disclosures regarding an entity’s reportable segments and addresses requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses.

We adopted this ASU retrospectively for the year ended December 31, 2024 and quarterly periods thereafter.

See Note 18 for more information.

No other new accounting pronouncements were recently issued or adopted in the three months ended March 31, 2025 that had or are expected to have a material impact on our financial statements.

Dickerson & Bowen, Inc.

On August 9, 2024, we completed the acquisition of Dickerson & Bowen, Inc.

("D&B") for an estimated purchase price of $124.2 million in cash, subject to customary closing adjustments.

("D&B") for $ 125.5 million in cash, subject to customary closing adjustments.

D&B is an aggregates, asphalt and highway construction company serving central and southern Mississippi which expands our footprint in that region.

The buyer of D&B, Granite Southeast Company ("Granite Southeast"), is a wholly-owned subsidiary of Granite and D&B's results have been included in the Construction and Materials segments since the acquisition date.

D&B’s customers are in both the public and private

2 unchanged sentences

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

D&B's results have been included in the Construction and Materials segments since the acquisition date.

Revenue and gross profit attributable to D&B for the three months ended March 31, 2025 were $ 15.6 million and $ 2.1 million, respectively.

Preliminary Purchase Price Allocation

In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable intangible assets based on their estimated fair values as of August 9, 2024.

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.

In accordance with ASC 805, the preliminary purchase price was allocated to assets acquired and liabilities assumed based on their estimated fair values as of August 9, 2024.

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

There are certain provisional estimates that are subject to finalization such as deferred taxes.

As we continue to integrate the acquired business, we may obtain additional information which may result in revisions to preliminary valuation assumptions, estimates and the resulting fair values presented herein.

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

Based on our preliminary purchase price allocation, the net tangible and intangible assets acquired were $31.7 million and $27.7 million, respectively, resulting in acquired goodwill of $64.8 million, none of which is tax deductible.

Of the acquired goodwill, $44.0 million is in the Materials segment and $20.8 million is in the Construction segment.

The factors that contributed to the recognition of goodwill from the acquisition include strengthening and expanding our vertically integrated southeast home market.

The most significant assets acquired were $38.1 million of property and equipment and $18.2 million of customer relationships.

Pro Forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations of Granite and D&B as though the companies had been combined as of January 1, 2023.

The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2023, nor does it intend to be a projection of future results.

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

(unaudited, in thousands, except per share amounts)

2024 2023 2024 2023

Revenue $ 1,285,341 $ 1,150,402 $ 3,085,489 $ 2,657,316

Net income attributable to Granite Construction Incorporated

$ 80,657 $ 63,352 $ 93,770 $ 28,535

Basic net income per share attributable to common shareholders $ 1.85 $ 1.44 $ 2.14 $ 0.65

Diluted net income per share attributable to common shareholders $ 1.54 $ 1.18 $ 1.78 $ 0.64

These amounts have been calculated after applying Granite’s accounting policies and adjusting the results of D&B to reflect the additional depreciation and amortization that would have been recorded assuming the fair value adjustments to property and equipment and intangible assets had been applied starting on January 1, 2023.

Acquisition and integration expenses related to D&B that were incurred during the nine months ended September 30, 2024 are reflected in the nine months ended September 30, 2023 due to the assumed timing of the transaction.

The statutory tax rate of 26% was used for both 2024 and 2023 for the pro forma adjustments.

During the nine months ended September 30, 2024, we incurred $2.3 million of acquisition and integration expenses associated with the D&B acquisition which were primarily related to professional services.

On November 30, 2023, Granite Southeast 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, 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 first half of 2024.

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

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

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

LRC/MSG's results have been included in the Construction and Materials segments since the acquisition date.

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

Revenue attributable to LRC/MSG for the three and nine months ended September 30, 2024 was $ 45.5 million and $ 105.0 million, respectively.

Gross profit attributable to LRC/MSG for the three and nine months ended September 30, 2024 was $ 5.7 million and $ 5.0 million, respectively.

Purchase Price Allocation

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 nine months ended September 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 nine months ended September 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.

There were no material measurement period adjustments during the three months ended September 30, 2024.

As of September 30, 2024, we have finalized the purchase price accounting.

The following table presents the purchase price allocation:

(in thousands)

Cash and cash equivalents $ 12,798

Receivables 18,373

Contract assets 3,388

Inventories 13,738

Other current assets 1,032

Property and equipment 86,329

Right of use assets 15,539

Other noncurrent assets 3,718

Total tangible assets 154,915

Identifiable intangible assets 107,460

Accounts payable 6,806

Contract liabilities 3,213

Accrued expenses and other current liabilities 10,166

Long-term lease liabilities 15,558

Other long-term liabilities 5,960

Total liabilities assumed 41,703

Total tangible and identifiable intangible net assets acquired 220,672

Goodwill 72,744

Purchase price $ 293,416

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Coast Mountain Resources

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

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.

Granite Canada results are reported in the Materials segment.

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

For the purpose of the preliminary purchase price allocation, the contractual purchase price has been adjusted to exclude $ 4 million in cash acquired and include closing adjustments, resulting in an updated purchase price of $ 121.2 million.

The tangible and identifiable intangible assets acquired, net of liabilities assumed, were $ 25.2 million and $ 27.9 million, respectively.

This generated acquired goodwill of $ 68.1 million, none of which is tax deductible.

The most significant assets acquired were $ 38.1 million of property and equipment and an $ 18.2 million customer relationships intangible asset.

During the three months ended March 31, 2025, we made immaterial measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date.

Revisions in Estimates

7 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 and nine months ended September 30, 2024 and 2023, we did not identify any material amounts that should have been recorded in a prior period.

In our review of these changes for the three months ended March 31, 2025 and 2024, we did not identify any material amounts that should have been recorded in a prior period.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Number of projects with upward estimate changes 1 1

Range of increase in gross profit from each project, net $ 5.4 - 5.7

$ 8.6 $ 5.2 - 6.2

Increase in gross profit, net $ 8.3 $ 7.4

Increase to project profitability, net $ 8.3 $ 7.4

Increase to net income $ 8.5 $ 6.5 $ 8.7 $ 6.1

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

Increase to net income attributable to Granite Construction Incorporated $ 8.5 $ 6.5 $ 8.7 $ 2.8

Increase to net income per diluted share attributable to common shareholders $ 0.16 $ 0.12 $ 0.17 $ 0.06

The increases during the three months ended September 30, 2024 and September 30, 2023 were due to changes in the estimated amount of probable recovery on outstanding claims.

In the three months ended September 30, 2024, decreases in estimated costs from mitigated risks also contributed to the increase.

The increases during the nine months ended September 30, 2024 were due to changes in the estimated amount of probable recovery on outstanding claims and changes in the estimated transaction price related to unresolved contract modifications resulting from revisions to project work plans, permitting and scheduling.

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

Decrease to net loss $ 6.2 $ 5.6

Decrease to net loss attributable to Granite Construction Incorporated $ 6.2 $ 5.6

Decrease to net loss per diluted share attributable to common shareholders $ 0.14 $ 0.13

The increase during the three months ended March 31, 2025 was due to a change in the estimated amount of probable recovery on an outstanding claim and the increase during the three months ended March 31, 2024 was due to changes in

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

the estimated transaction price related to contract modifications resulting from revisions to project work plans, permitting and scheduling.

None of the increases above had an impact on non-controlling interest.

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

Three Months Ended September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Three Months Ended March 31,

Number of projects with downward estimate changes 1 1

Range of reduction in gross profit from each project, net $ —

$ 8.4 $ 5.3 - 22.0

Reduction in gross profit, net $ 8.8 $ 7.7

Decrease to project profitability, net $ 8.8 $ 7.7

Decrease to net income $ — $ 6.3 $ 33.8 $ 38.3

Amounts attributable to non-controlling interests $ — $ 4.2 $ 5.4 $ 20.2

Decrease to net income attributable to Granite Construction Incorporated $ — $ 2.1 $ 28.5 $ 18.1

Decrease to net income per diluted share attributable to common shareholders $ — $ 0.04 $ 0.54 $ 0.41

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

Increase to net loss $ 6.6 $ 5.8

Increase to net loss attributable to Granite Construction Incorporated $ 6.6 $ 5.8

Increase to net loss per diluted share attributable to common shareholders $ 0.15 $ 0.13

The decreases during the three months ended March 31, 2025 and 2024 were due to additional costs related to changes in project duration, lower productivity than originally anticipated and increased labor and materials costs.

None of the decreases above had any impact on non-controlling interest.

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 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.

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

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

Customer Type

In addition to disaggregating revenue by reportable segment (see Note 18), we further disaggregate Construction segment revenue by customer type and Materials segment revenue by product line.

We believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.

Construction Segment Disaggregation by Customer Type

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

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

Customers of our Materials segment include internal usage by our own construction 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 September 30, Nine Months Ended September 30,

Materials Segment Disaggregation by Product Line

The Materials segment focuses primarily on production of aggregates, recycled materials, asphalt concrete and liquid asphalt.

In the first quarter of 2025, we began disaggregating Materials segment revenue by product line.

We categorize aggregates and recycled materials as Aggregates and asphalt concrete and liquid asphalt as Asphalt in the table below.

Other includes immaterial amounts of revenue from products and services that are not considered to be core product lines.

The following table presents our revenue disaggregated by reportable segment, by customer type for our Construction segment and product line for our Materials segment:

Three Months Ended March 31,

(in thousands) 2025 2024

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Materials segment revenue:

Aggregates $ 40,402 $ 36,089

Asphalt 43,982 40,813

Other 545 160

Total Materials segment revenue $ 84,929 $ 77,062

Total revenue $ 699,547 $ 672,275

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

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

(in thousands) March 31, 2025 December 31, 2024

Public $ 3,114,074 $ 2,801,273

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All unearned revenue is in the Construction segment.

Approximately $ 2.7 billion of the September 30, 2024 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.

Approximately $ 2.8 billion of the March 31, 2025 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 $ 43.3 million and $ 220.7 million during the three and nine months ended September 30, 2024 and $ 41.6 million and $ 131.3 million during the three and nine months ended September 30, 2023.

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

As of September 30, 2024 and December 31, 2023, the aggregate claim recovery estimates included in contract asset and liability balances were $ 88.0 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 $ 49.5 million and $ 84.3 million during the three months ended March 31, 2025 and 2024, respectively.

The changes in contract transaction price for the three months ended March 31, 2025 and 2024 were from items such as executed or estimated change orders and unresolved contract modifications and claims.

As of March 31, 2025 and December 31, 2024, the aggregate claim recovery estimates included in contract asset and liability balances were $ 44.9 million and $ 46.6 million, respectively.

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

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

(in thousands) March 31, 2025 December 31, 2024

Costs in excess of billings and estimated earnings $ 125,545 $ 139,436

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Total contract assets $ 274,592 $ 328,353

As of September 30, 2024 and December 31, 2023, contract retention receivable from Brightline Trains Florida LLC represented 9.1 % 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.

As of March 31, 2025 and December 31, 2024, no contract retention receivables individually exceeded 10% of total contract assets.

The December 31, 2024 contract retention balance included $ 29.2 million from Brightline Trains Florida LLC, all of which was collected in the first quarter of 2025.

The majority of the contract retention balance is expected to be collected within one year.

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

We recognized revenue of $ 16.7 million and $ 270.0 million during the three and nine months ended September 30, 2024, respectively, and $ 17.5 million and $ 188.6 million during the three and nine months ended September 30, 2023, respectively, that was included in the contract liability balances at December 31, 2023 and 2022, respectively.

We recognized revenue of $ 207.8 million and $ 198.3 million during the three months ended March 31, 2025 and 2024, respectively, that was included in the contract liability balances at December 31, 2024 and 2023, respectively.

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

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

(in thousands) March 31, 2025 December 31, 2024

Billings in excess of costs and estimated earnings, net of retention $ 267,734 $ 288,495

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The following table presents major categories of receivables:

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

(in thousands) March 31, 2025 December 31, 2024

Contracts completed and in progress:

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Total net receivables $ 471,336 $ 511,742

Included in other receivables at September 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 September 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 September 30, 2024 or December 31, 2023.

Included in other receivables at March 31, 2025 and December 31, 2024 were items such as estimated recovery from back charge claims, notes receivable and income and other tax refunds receivable.

Other receivables at March 31, 2025 and December 31, 2024 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 March 31, 2025 or December 31, 2024.

Fair Value Measurement

The following tables summarize significant assets and liabilities measured at fair value in the condensed consolidated balance sheets on a recurring basis for each of the fair value levels (in thousands):

Fair Value Measurement at Reporting Date Using

September 30, 2024 Level 1 Level 2 Level 3 Total

March 31, 2025 Level 1 Level 2 Level 3 Total

Cash equivalents

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Accrued and other current liabilities

Crude oil swaps $ — $ 363 $ — $ 363

Heating oil swaps $ — $ 287 $ — $ 287

Diesel collars — 267 — 267

Total liabilities $ — $ 287 $ — $ 287

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Accrued and other current liabilities

Interest rate swap $ — $ 126 $ — $ 126

Heating oil swaps $ — $ 531 $ — $ 531

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Total liabilities $ — $ 708 $ — $ 708

Commodity Derivatives

We have 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 collar contracts matured on March 31, 2025.

The financial statement impact of the collar contracts and commodity swaps for the three months ended March 31, 2025 and 2024 was immaterial .

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Interest Rate Swap

In connection with entering into Amendment No.

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 mark-to-market derivative instruments through their maturity dates.

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

In April 2024 and December 2022, we entered into commodity swaps designated as cash flow hedges to reduce our price exposure on crude oil with a notional amount of $ 1.8 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 nine months ended September 30, 2024 and 2023 was immaterial .

Other Assets and Liabilities

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in thousands) Fair Value Hierarchy Carrying Value Fair

Value Carrying Value Fair

Held-to-maturity marketable securities (1) Level 1 $ 10,147 $ 10,119 $ 35,863 $ 35,357

Held-to-maturity marketable securities (1)

Corporate notes and bonds Level 1 $ 46,754 $ 46,723 $ — $ —

Government and agency obligations Level 1 $ 44,960 $ 44,925 $ 7,311 $ 7,312

Commercial paper Level 1 $ 26,434 $ 26,425 $ — $ —

Municipal notes and bonds Level 1 $ 15,855 $ 15,843 $ — $ —

Liabilities (including current maturities):

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Level 2 $ 373,750 $ 446,343 $ 373,750 $ 491,582

2.75 % Convertible Notes (2)

Level 2 $ — $ — $ 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 September 30, 2024 and December 31, 2023.

(2) The fair values of our our 3.25 % convertible senior notes due 2030 (the " 3.25 % Convertible Notes"), our 3.75 % convertible senior notes due 2028 (the " 3.75 % Convertible Notes") and our 2.75 % convertible senior notes due 2024 (the " 2.75 % 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 our convertible notes and the Credit Agreement.

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

(1) All marketable securities were classified as held-to-maturity as of the periods presented.

Of the above balances, $ 43.7 million and $ 7.3 million were short-term marketable securities on our condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024, respectively and $ 90.3 million were long-term marketable securities on our condensed consolidated balance sheets as of March 31, 2025.

Our long-term securities have varying maturities between one and three years.

( 2) The fair values of 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.

See Note 14 for more information about our convertible notes.

During the three months ended March 31, 2025 and 2024, 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 and nine months ended September 30, 2024, we determined no change was required for existing joint ventures.

Based on our assessments during the three months ended March 31, 2025, 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).

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

These forecasted costs could be offset by billings to the customer or

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by proceeds from our partners’ corporate and/or other guarantees.

These forecasted costs could be offset by billings to the customer or by proceeds from our partners’ corporate and/or other guarantees.

See Note 13 for disclosure of the performance guarantee amounts recorded in the condensed consolidated balance sheets.

Consolidated Construction Joint Ventures (“CCJVs”)

As of September 30, 2024, we were engaged in ten active CCJV projects.

As of March 31, 2025, we were engaged in nine active CCJV projects.

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

During the three and nine months ended September 30, 2024 and 2023, total revenue from CCJVs was $ 101.3 million, $ 265.1 million, $ 91.2 million, and $ 223.3 million, respectively.

During the nine months ended September 30, 2024 and 2023, CCJVs provided $ 33.0 million and used $ 36.8 million of operating cash flows, respectively.

As of September 30, 2024, our share of revenue remaining to be recognized on these CCJVs was $ 375.8 million and ranged from $ 1.3 million to $ 140.1 million by project.

During the three months ended March 31, 2025 and 2024, total revenue from CCJVs was $ 74.6 million and $ 71.6 million, respectively.

During the three months ended March 31, 2025 and 2024, CCJVs provided $ 59.6 million and $ 5.8 million of operating cash flows, respectively.

As of March 31, 2025, our share of revenue remaining to be recognized on these CCJVs was $ 369.2 million and ranged from $ 1.1 million to $ 188.9 million by project.

Unconsolidated Construction Joint Ventures

As of September 30, 2024, we were engaged in five active unconsolidated construction joint venture projects.

As of March 31, 2025, we were engaged in three active unconsolidated construction joint venture projects.

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

As of September 30, 2024, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $ 31.4 million and ranged from $ 0.7 million to $ 24.6 million by project.

As of March 31, 2025, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $ 21.8 million and ranged from $ 0.5 million to $ 18.6 million by project.

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

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

(in thousands) March 31, 2025 December 31, 2024

Cash, cash equivalents and marketable securities $ 114,035 $ 94,856

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Equity in construction joint ventures (4) $ 148,591 $ 137,277

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

(2) Included in this balance as of September 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 September 30, 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 March 31, 2025 and December 31, 2024 was $ 55.5 million related to performance guarantees (see Note 13).

(2) Included in this balance as of March 31, 2025 and December 31, 2024 was $ 66.9 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, 2025 and December 31, 2024.

(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 $ 4.5 million and $ 14.9 million as of September 30, 2024 and December 31, 2023, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.

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Three Months Ended

September 30, Nine Months Ended

September 30,

(4) Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets was $ 2.9 million and $ 3.7 million as of March 31, 2025 and December 31, 2024, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.

Three Months Ended March 31,

(in thousands) 2025 2024

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Granite’s interest $ 3,950 $ 8,481

Granite’s interest in gross profit (loss) $ ( 1,916 ) $ 8,468 $ ( 2,214 ) $ 4,214

Granite’s interest in gross profit $ 967 $ 1,749

Net Income (Loss)

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partners’ interest and adjustments (1) ( 13,678 ) ( 10,439 )

Granite’s interest in net income (loss) (2) $ ( 1,403 ) $ 8,540 $ ( 651 ) $ 4,535

Granite’s interest in net income (2) $ 1,216 $ 2,290

(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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Investments in Affiliates

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

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

(in thousands) March 31, 2025 December 31, 2024

Foreign $ 72,553 $ 72,075

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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) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Current assets $ 189,152 $ 205,235

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Granite’s share of net assets $ 93,667 $ 94,031

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

Of the $ 337.6 million of total affiliate assets as of September 30, 2024, we had investments in two real estate entities with total assets of $ 34.1 million, our foreign affiliates had total assets of $ 262.1 million and the asphalt terminal entity had total assets of $ 41.4 million.

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

As of September 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

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affiliates ranged from 25 % to 50 % as of September 30, 2024.

Our percent ownership in the asphalt terminal entity was 50 % as of September 30, 2024.

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

Affiliate assets as of March 31, 2025 included $ 249.2 million of foreign affiliate assets, $ 39.2 million of assets in real estate ventures and $ 35.6 million of assets in the asphalt terminal entity.

Property and Equipment, net

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

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

(in thousands) March 31, 2025 December 31, 2024

Equipment and vehicles $ 1,216,375 $ 1,211,208

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Accrued Expenses and Other Current Liabilities

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

(in thousands) March 31, 2025 December 31, 2024

Accrued insurance $ 93,441 $ 80,797

Deficits in unconsolidated construction joint ventures 4,511 14,921

Payroll and related employee benefits 71,102 119,510

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Total $ 296,640 $ 323,956

Other includes dividends payable, warranty reserves, asset retirement obligations, remediation reserves 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.

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Other includes deficits in unconsolidated construction joint ventures, dividends payable, taxes payable, interest payable, warranty reserves, asset retirement obligations, remediation reserves and other miscellaneous accruals, none of which were greater than 5% of total current liabilities at any of the presented dates.

Long-Term Debt and Credit Arrangements

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

3.25 % Convertible Notes

(in thousands) March 31, 2025 December 31, 2024

3.25 % Convertible Notes due 2030

$ 373,750 $ 373,750

3.75 % Convertible Notes

3.75 % Convertible Notes due 2028

373,750 373,750

2.75 % Convertible Notes

Credit Agreement - Term Loan — 150,000

Credit Agreement - Revolver — 100,000

Debt issuance costs and other ( 7,786 ) ( 8,452 )

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Credit Agreement

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

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

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

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

In May 2023, we entered into Amendment No.

1 to the Credit Agreement ("Amendment No.

Amendment No.

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

In November 2023, we entered into Amendment No.

2 to the Credit Agreement ("Amendment No.

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

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.

The Term Loan was fully repaid with the net proceeds from our 3.25 % Convertible Notes in the second quarter of 2024.

In June 2022, we entered into the Fourth Amended and Restated Credit Agreement (the "Credit Agreement") which matures on June 2, 2027.

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

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

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 September 30, 2024, the total unused availability under the Credit Agreement was $ 333.5 million, resulting from $ 16.5 million in issued and outstanding letters of credit and nothing drawn under the Revolver.

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

As of March 31, 2025, the total unused availability under the Credit Agreement was $ 330.4 million, resulting from $ 19.6 million in issued and outstanding letters of credit and no amount drawn under the Revolver.

The letters of credit had expiration dates between June 2025 and November 2025.

3.25 % Convertible Notes

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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.

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

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unpaid interest to, but excluding, the redemption date.

The indenture governing the 3.25 % 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 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

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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

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Thereafter, the 3.75 % 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 initial conversion rate applicable to the 3.75 % Convertible Notes is 21.6807 shares of our common stock per $1,000 principal amount of the 3.75 % Convertible Notes, which is equivalent to an initial conversion price of approximately $ 46.12 per share of our common stock, subject to adjustment if certain events occur.

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

The initial conversion rate applicable to the 3.75 % Convertible Notes is 21.6807 shares of Granite common stock per $1,000 principal amount of the 3.75 % Convertible Notes, which is equivalent to an initial conversion price of approximately $ 46.12 per share of Granite common stock, subject to adjustment if certain events occur.

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 “fundamental change” as defined in the indenture governing the 3.75 % Convertible Notes, holders may require us to repurchase for cash all or any portion of their 3.75 % Convertible Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the 3.75 % Convertible Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

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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 3.75 % Convertible Notes then outstanding may declare the 3.75 % Convertible Notes due and payable immediately.

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

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

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

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

Pursuant to the Unwind Agreements, we received 1,390,516 shares of our common stock (and cash in lieu of any fractional shares) in

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

respect of the unwind of the portion of the existing convertible note hedge transactions that correspond to the 2.75 % Convertible Notes that were exchanged in the Exchange Transaction described above and paid $ 13.2 million in cash in respect of the unwind of the portion of the existing warrant transactions that correspond to the 2.75 % Convertible Notes that were exchanged in the Exchange Transaction described above.

2023 Capped Call Transactions

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The 2023 capped call transactions are expected generally to reduce the potential dilution to our common stock upon conversion of the 3.75 % Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted 3.75 % Convertible Notes, as the case may be.

If, however, the market price per share of our common stock, as measured under the terms of the 2023 capped call transactions, exceeds the cap price of $79.83 of the 2023 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 2023 capped call transactions.

2.75 % Convertible Notes

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.

In June 2024, we called the 2.75 % Convertible Notes for redemption.

As of September 30, 2024, no 2.75% Convertible Notes remained outstanding.

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the 2023 capped call transactions.

Covenants and Events of Default

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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 September 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.

As of March 31, 2025, 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 ventures with the covenants contained in their debt agreements.

Debt Issuance Costs

During the three and nine months ended September 30, 2024, we recorded $ 0.9 million and $ 3.0 million, respectively, of amortization related to debt issuance costs.

We also capitalized $10.3 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 nine months ended September 30, 2023, we recorded $0.6 million and $3.0 million, respectively, of amortization related to debt issuance costs.

This included $1.7 million of accelerated amortization of debt issuance costs associated with the 2.75 % Convertible Notes that were repaid and are included in the loss on debt extinguishment.

We also capitalized $10.0 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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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Weighted Average Shares Outstanding and Net Income Per Share

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

Three Months Ended September 30, Nine Months Ended

September 30,

During the three months ended March 31, 2025 and 2024, we recorded $ 0.9 million and $ 0.6 million, respectively, of amortization related to debt issuance costs.

Weighted Average Shares Outstanding and Net Loss Per Share

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

Three Months Ended March 31,

(in thousands, except per share amounts) 2025 2024

Net income attributable to common shareholders for basic earnings per share $ 78,951 $ 57,624 $ 84,863 $ 17,601

Interest expense related to Convertible Notes (1) 3,064 3,209 9,196 —

Net income attributable to common shareholders for diluted earnings per share $ 82,015 $ 60,833 $ 94,059 $ 17,601

Net loss attributable to common shareholders $ ( 33,656 ) $ ( 30,983 )

Weighted average common shares outstanding, basic 43,463 43,988

Dilutive effect of RSUs 567 589 568 586

Dilutive effect of Convertible Notes (1) 8,103 9,099 8,103 —

Weighted average common shares outstanding, diluted 43,463 43,988

Net income per share, basic $ 1.81 $ 1.31 $ 1.93 $ 0.40

Net income per share, diluted $ 1.57 $ 1.13 $ 1.79 $ 0.40

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

As the 3.75 % Convertible Notes will be convertible into cash, shares of our common stock or a combination thereof, at our election, the 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 nine months ended September 30, 2023, interest expense related to convertible notes of $6.9 million and the potential dilution from the convertible notes converting into 9.1 million shares of common stock have been excluded from the calculation of diluted earnings per share, as their inclusion would have been anti-dilutive.

Net loss per share, basic $ ( 0.77 ) $ ( 0.70 )

Net loss per share, diluted $ ( 0.77 ) $ ( 0.70 )

Due to net losses for the three months ended March 31, 2025 and 2024, both the unvested RSUs representing 585,000 and 573,000 shares, respectively, and the potential dilution from the convertible notes converting into 8,427,000 and 9,099,000 shares, respectively, 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.

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

Effective tax rate 23.3 % 28.1 % 28.2 % 73.6 %

Our effective tax rate for the three months ended September 30, 2024 is lower than the prior year due to tax expense recognized in the third quarter of 2023 associated with recording a non-deductible goodwill impairment and valuation allowances on certain foreign net operating losses.

Our effective rate for the nine months ended September 30, 2024 is lower than the prior year primarily due to incurring less nondeductible debt extinguishment costs in 2024 than 2023 as well as the tax expense associated with the goodwill impairment and valuation allowances recorded in the third quarter of 2023.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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

Three Months Ended March 31,

(dollars in thousands) 2025 2024

Benefit from income taxes $ ( 11,756 ) $ ( 9,526 )

Effective tax rate 29.3 % 24.4 %

Our effective tax rate for the three months ended March 31, 2025 is higher than the prior period because of an increase in the estimated annual effective tax rate combined with an increase in year-to-date discrete benefit associated with lapsed RSU awards.

The estimated annual effective tax rate is higher than the prior period primarily due to changes in the estimated state tax liability and equity earnings of subsidiaries.

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.

The total liabilities recorded in our condensed consolidated balance sheets for legal proceedings and government inquiries were immaterial as of September 30, 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 March 31, 2025 and December 31, 2024.

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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Reportable Segment Information

We manage our operations under two reportable segments, Construction and Materials, which are distinguished by differences in business activities.

Our reportable segments are the same as our operating segments and correspond with how our chief operating decision maker, or decision-making group (our “CODM”) regularly reviews financial information to allocate resources and assess performance.

We identified our CODM as our Chief Executive Officer and our Chief Operating Officer.

Our reportable segments are:

Construction and Materials.

Our CODM evaluates segment performance and makes business decisions based on operating income, which excludes non-operating income or expense.

Segment assets include property and equipment, intangibles, goodwill, inventory and equity in construction joint ventures.

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Summarized segment information is as follows (in thousands):

Three months ended September 30, Construction Materials Total

Total revenue from reportable segments $ 1,080,705 $ 297,398 $ 1,378,103

Elimination of intersegment revenue — ( 102,593 ) ( 102,593 )

Revenue from external customers $ 1,080,705 $ 194,805 $ 1,275,510

Gross profit $ 170,685 $ 32,264 $ 202,949

Depreciation, depletion and amortization $ 16,979 $ 11,685 $ 28,664

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

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

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

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

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

Nine Months Ended September 30, Construction Materials Total

Three Months Ended March 31, Construction Materials Total

Total revenue from reportable segments $ 614,618 $ 105,580 $ 720,198

Elimination of intersegment revenue — ( 20,651 ) ( 20,651 )

Revenue from external customers $ 2,593,872 $ 436,399 $ 3,030,271

Gross profit $ 362,885 $ 59,060 $ 421,945

Revenue 614,618 84,929 699,547

Cost of revenue 529,180 86,518 615,698

Gross profit (loss) 85,438 ( 1,589 ) 83,849

Selling, general and administrative expenses 62,327 8,545 70,872

Gain on sales of property and equipment, net ( 1,849 ) ( 69 ) ( 1,918 )

Operating income (loss) from reportable segments $ 24,960 $ ( 10,065 ) $ 14,895

Depreciation, depletion and amortization $ 14,452 $ 13,555 $ 28,007

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Elimination of intersegment revenue — ( 11,642 ) ( 11,642 )

Revenue from external customers $ 2,198,527 $ 376,913 $ 2,575,440

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

Revenue 595,213 77,062 672,275

Cost of revenue 538,385 79,605 617,990

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

Selling, general and administrative expenses 48,824 5,142 53,966

Gain on sales of property and equipment, net ( 1,222 ) ( 528 ) ( 1,750 )

Operating income (loss) from reportable segments $ 9,226 $ ( 7,157 ) $ 2,069

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

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

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

Three Months Ended September 30, Nine Months Ended

September 30,

A reconciliation of operating income from reportable segments to consolidated loss before income taxes is as follows:

Three Months Ended

(in thousands) 2025 2024

Total gross profit from reportable segments $ 202,949 $ 166,643 $ 421,945 $ 302,088

Selling, general and administrative expenses 91,650 74,794 249,695 212,479

Total operating income from reportable segments $ 14,895 $ 2,069

Corporate selling, general and administrative expenses 45,039 34,027

Corporate loss on sales of property and equipment, net 181 332

Other costs, net 9,426 11,010

Gain on sales of property and equipment, net ( 1,542 ) ( 1,812 ) ( 4,347 ) ( 7,793 )

Total operating loss ( 39,751 ) ( 43,300 )

Total other (income) expense, net 332 ( 4,332 )

Income before income taxes $ 109,446 $ 79,919 $ 130,028 $ 29,856

Loss before income taxes $ ( 40,083 ) $ ( 38,968 )

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