What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-31 · 107 added, 134 removed, 165 unchanged (59% of the section changed)

13 unchanged sentences

We deliver infrastructure solutions for public and private clients primarily in the United States.

We are one of the largest diversified construction and construction materials companies in the United States.

We are one of the largest diversified, vertically integrated civil contractors and construction materials producers in the United States.

Within the public sector, we primarily concentrate on infrastructure projects, including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, dams, power-related facilities, utilities, tunnels, water well drilling and other infrastructure-related projects.

Within the private sector, we perform various services such as site preparation, mining services and infrastructure services for commercial and industrial sites, railways, residential development, energy development, as well as provide construction management professional services.

We own and lease aggregate reserves and own processing plants that are vertically integrated into our construction operations and we also produce construction materials for sale to third parties.

The five primary economic drivers of our business are (i) the overall health of the U.S.

5 unchanged sentences

Changes in these drivers can either reduce our revenues and/or gross profit margins or provide opportunities for revenue growth and gross profit margin improvement.

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.

Current Economic Environment and Outlook

1 unchanged sentence

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

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

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

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

1 unchanged sentence

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

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

While it is impossible to fully eliminate the impact of these factors, we have applied proactive measures such as fixed forward purchase contracts of oil related inputs, energy surcharges, and adjustment of project schedules for constraints related to construction materials such as concrete.

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 third quarter of 2024.

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

Recently, concerns over tariffs have been a major source of uncertainty in the economy.

To date, we have not experienced a material financial impact due to tariffs.

It is impossible to fully mitigate the potential impacts of the foregoing macro-economic factors and they may negatively impact us in the future.

However, where practicable, we have applied proactive measures to mitigate these macro-economic factors, such as fixed forward purchase contracts of oil related inputs, energy surcharges, and adjustment of project schedules for constraints related to construction materials such as concrete.

Our Committed and Awarded Projects (“CAP”) balance continues to be strong with $5.7 billion at the end of the first quarter of 2025.

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.

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

As previously disclosed, we acquired Dickerson & Bowen, Inc.

("D&B") on August 9, 2024.

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.

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.

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.

The results of operations of D&B are included in our consolidated financial statements from the date of acquisition, which impacts comparability to the applicable prior periods.

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

2 unchanged sentences

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 nine months ended September 30, 2024 and 2023:

Three Months Ended September 30, Nine Months Ended

September 30,

The following table presents a financial summary for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(in thousands) 2025 2024

3 unchanged sentences

Other costs, net $ 9,426 $ 11,010

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

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

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

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

Total Revenue by Segment

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

Three Months Ended March 31,

(dollars in thousands) 2025 2024

3 unchanged sentences

Construction Revenue

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

Three Months Ended March 31,

(dollars in thousands) 2025 2024

2 unchanged sentences

Total $ 614,618 100.0 % $ 595,213 100.0 %

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.

Construction revenue for the three months ended March 31, 2025 increased by $19.4 million, or 3.3%, when compared to 2024.

This increase was primarily due to several new projects ramping up in the current year as well as favorable weather conditions in early 2025.

Additionally, D&B contributed $10.1 million of construction revenue during the three months ended March 31, 2025.

Materials Revenue

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.

Three Months Ended March 31,

(dollars in thousands) 2025 2024

Aggregates $ 40,402 47.6 % $ 36,089 46.8 %

Asphalt 43,982 51.8 40,813 53.0

Other 545 0.6 160 0.2

Total $ 84,929 100.0 % $ 77,062 100.0 %

Materials revenue for the three months ended March 31, 2025 was $84.9 million, an increase of $7.9 million, or 10.2%, when compared to the three months ended March 31, 2024.

This increase was primarily driven by $5.6 million of revenue from D&B, as well as higher aggregates and asphalt volumes and higher aggregates sales prices.

Committed and Awarded Projects

9 unchanged sentences

All CAP is in the Construction segment.

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

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

Unearned revenue $ 3,833,875 66.8 % $ 3,584,378 67.7 %

1 unchanged sentence

Total $ 5,740,015 100.0 % $ 5,296,067 100.0 %

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

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

Customer type:

2 unchanged sentences

Total $ 5,740,015 100.0 % $ 5,296,067 100.0 %

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 September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

CAP of $5.7 billion at March 31, 2025 was $443.9 million or 8.4% higher than at December 31, 2024.

Significant additions to CAP during the three months ended March 31, 2025 included $173 million for three highway projects in California,

$167 million for two federal projects, a $138 million bridge project in Illinois, an $80 million highway project in Texas, and $78 million for a bridge project in California, all of which are for customers in the public sector.

Non-controlling partners’ share of CAP as of March 31, 2025 and December 31, 2024 was $334.7 million and $331.1 million, respectively.

At March 31, 2025, one contract with remaining CAP of $10 million or more per project had total forecasted losses with remaining revenue of $57.7 million, or 1.0%, of total CAP.

Provisions are recognized in the consolidated statements of operations for the full amount of estimated losses on uncompleted contracts whenever evidence indicates that the estimated total cost of a contract exceeds its estimated total revenue.

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

Three Months Ended March 31,

(dollars in thousands) 2025 2024

Construction $ 85,438 $ 56,828

4 unchanged sentences

Percent of total revenue 12.0 % 8.1 %

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 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 $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.

Construction gross profit for the three months ended March 31, 2025 increased by $28.6 million, or 50.3%, when compared to 2024 primarily due to higher revenue and improved project execution across our project portfolio resulting in net increases from revisions in estimates in the current period compared to net decreases in the prior period.

Materials gross loss for the three months ended March 31, 2025 decreased by $1.0 million, or 37.5%, when compared to 2024.

The decreased loss was primarily due to the newly acquired D&B business.

Selling, General and Administrative Expenses

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

Three Months Ended September 30, Nine Months Ended

September 30,

Three Months Ended

(dollars in thousands)

Salaries and related expenses $ 55,416 $ 46,048

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

Stock-based compensation 30,053 12,352

Other selling expenses 960 1,430 4,181 4,155

Total selling 22,454 17,416 57,941 51,980

General and administrative:

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

Other general and administrative expenses 25,290 21,188 76,577 64,953

Total general and administrative 69,196 57,378 191,754 160,499

Total selling, general and administrative $ 91,650 $ 74,794 $ 249,695 $ 212,479

Other selling, general and administrative expenses 30,442 29,593

Total selling, general and administrative expenses $ 115,911 $ 87,993

Percent of revenue 16.6 % 13.1 %

Selling Expenses

Selling expenses include the costs for estimating and bidding including offsetting customer reimbursements for portions of our selling/bid submission expenses (i.e., stipends), business development and materials facility permits.

Selling expenses can vary depending on the volume of projects in process and the number of employees assigned to estimating and bidding activities.

Selling, general and administrative ("SG&A") expenses include the costs for estimating and bidding, including offsetting customer reimbursements for portions of our selling/bid submission expenses (i.e., stipends), business development, materials facility permits, and costs related to our operational offices that are not allocated to direct contract costs and expenses related to our corporate functions.

Other SG&A expenses include travel and entertainment, outside services, information technology, depreciation, occupancy, training, office supplies, changes in the fair market value of our non-qualified deferred compensation plan liability and other miscellaneous expenses.

SG&A expenses can vary depending on the volume of projects in process and the number of employees assigned to estimating and bidding activities.

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 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

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

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

Total general and administrative expenses for the three months ended 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.

SG&A expenses for the three months ended March 31, 2025 increased $27.9 million compared to 2024, primarily due to a $17.7 million increase in stock-based compensation due to improved financial performance, as well as higher salaries and related expenses due to increased labor costs.

Other Costs, net

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

Three Months Ended September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

Other costs, net $ 9,426 $ 11,010

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

September 30, Nine Months Ended

September 30,

Other costs, net mainly consist of costs related to the defense of a former Company officer in his ongoing civil litigation with the Securities and Exchange Commission, and remained fairly consistent with the prior year.

Other Income, net

Three Months Ended March 31,

(in thousands) 2025 2024

(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)

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,

During the three months ended March 31, 2025, total other income, net decreased $4.7 million compared to prior year.

This decrease was primarily due to a decrease of $2.9 million in Equity in income of affiliates, net due to reduced net income of our affiliates and a $1.7 million decrease from Other income, net primarily due to lower gains on investments held within the rabbi trust related to our non-qualified deferred compensation plan obligations.

The fluctuations in these investments mostly offset variances in our non-qualified deferred compensation plan expense in SG&A.

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

Three Months Ended March 31,

(dollars in thousands) 2025 2024

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

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

Effective tax rate 29.3 % 24.4 %

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.

We calculate our income tax provision or benefit at the end of each interim period by estimating our annual effective tax rate, applying that rate to our income or loss before taxes 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.

2 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands) 2025 2024

1 unchanged sentence

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 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”).

During the three months ended March 31, 2025 the increase was primarily due to the impact of new joint venture projects.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, investments, available borrowing capacity under our credit facility and cash generated from operations.

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

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

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 long-term debt.

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 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.

See Note 3 of “Notes to the Condensed Consolidated Financial Statements” for information on our most recent acquisition.

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.

1 unchanged sentence

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 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.

As of March 31, 2025, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisting of commercial paper, corporate notes and bonds, Municipal notes and bonds and U.S.

Government and agency obligations.

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.

As of March 31, 2025, the total unused availability under our Credit Agreement was $330.4 million, resulting from $19.6 million in issued and outstanding letters of credit and nothing drawn under the Revolver.

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

As of 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.

In evaluating our liquidity position and needs, we also consider cash and cash equivalents held by our consolidated construction joint ventures (“CCJVs”).

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

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

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

Cash and cash equivalents excluding CCJVs $ 214,264 $ 404,436

2 unchanged sentences

Short-term marketable securities (2) 43,708 7,311

Long-term marketable securities (2) 90,295 —

Total cash, cash equivalents and marketable securities $ 513,077 $ 585,641

2 unchanged sentences

The decision to distribute joint venture assets must generally be made jointly by a majority of the members and, accordingly, these assets, including those associated with estimated cost recovery of customer affirmative claims and back charge claims, are generally not available for the working capital needs of Granite until distributed.

(2) 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.

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.

(2) All marketable securities were classified as held-to-maturity and consisted of commercial paper, corporate notes and bonds, Municipal notes and bonds and U.S.

Government and agency obligations as of March 31, 2025 and U.S.

Government and agency obligations as of December 31, 2024.

Granite’s portion of CCJV cash and cash equivalents was $101.4 million and $106.0 million as of March 31, 2025 and December 31, 2024, respectively.

Excluded from the table above is $34.5 million and $28.7 million as of March 31, 2025 and December 31, 2024, respectively, of Granite’s portion of unconsolidated construction joint venture cash and cash equivalents.

Capital Expenditures

1 unchanged sentence

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 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,

During the three months ended March 31, 2025, we had capital expenditures of $32.2 million, compared to $27.9 million during the three months ended March 31, 2024.

We currently anticipate 2025 capital expenditures to be approximately $140 million to $160 million, including approximately $50 million in planned strategic materials investments.

Three Months Ended March 31,

(in thousands) 2025 2024

5 unchanged sentences

As a large infrastructure contractor and construction materials producer, our revenue, gross profit and the resulting operating cash flows can differ significantly from period to period due to a variety of factors, including project progression toward completion, outstanding contract change orders and affirmative claims, and the payment terms of our contracts.

Additionally, operating cash flows are impacted by the timing related to funding construction joint ventures and the resolution of uncertainties inherent in the complex nature of the work that we perform, including claim and back charge settlements.

Additionally, operating cash flows are impacted by the timing related to funding construction joint ventures and the resolution of uncertainties inherent in the complex nature of the construction work we perform, including claim and back charge settlements.

Our working capital assets result from both public and private sector projects.

2 unchanged sentences

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 $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.

Cash provided by operating activities of $3.6 million for the three months ended March 31, 2025 represents a $20.4 million decrease in cash provided by operating activities when compared to the same period of 2024.

The change was primarily attributable to a $33.3 million decrease 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 decreased $13.4 million when compared to the same period of 2024.

Partially offsetting this was an increase in net income after adjusting for non-cash items of $26.3 million.

Investing activities

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”).

Cash used in investing activities of $156.3 million for the three months ended March 31, 2025 represents a $145.5 million increase in cash used in investing activities when compared to the same period of 2024.

The change was primarily due to $134.7 million in purchases of marketable securities along with $12.9 million less in maturities of marketable securities.

There was also $4.3 million more in property and equipment purchases compared to the same period in 2024.

Partially offsetting these increases was $6.1 million in cash paid for purchase price adjustments on an acquisition in 2024 that did not occur in 2025.

Financing activities

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.

The year over year increase in cash used in financing activities was also due to a $17.5 million increase in repurchases of common stock as well as a decrease in contributions from non-controlling partners, net of distributions, of $23.9 million.

Cash used in financing activities of $46.6 million for the three months ended March 31, 2025 represents a $62.6 million decrease in cash used in financing activities when compared to the same period of 2024.

The change was primarily due to repayment of the balance drawn on our revolving credit facility in 2024, which had $100.0 million outstanding as of December 31, 2023.

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

This decrease was partially offset by an increase in distributions to non-controlling partners, net of contributions, of $31.5 million and a $7.8 million increase in repurchases of common stock.

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

See Note 9 to “Notes to the Condensed Consolidated Financial Statements” for further information.

The capped call transactions related to the 3.75 % Convertible Notes and 3.25 % Convertible Notes were recorded to equity on our condensed consolidated balance sheets based on the cash proceeds.

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

Surety Bonds and Real Estate Mortgages

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

At March 31, 2025, approximately $3.6 billion of our $5.7 billion CAP was bonded.

Performance bonds do not have stated expiration dates;

1 unchanged sentence

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.

This indebtedness is non-recourse to Granite but is recourse to the real estate entities.

The terms of this indebtedness are typically renegotiated to reflect the evolving nature of the real estate projects as they progress through acquisition, entitlement and development.

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

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

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

This indebtedness is non-recourse to Granite but is recourse to the real estate venture.

The terms of this indebtedness are typically renegotiated to reflect the evolving nature of the real estate projects as they progress through acquisition, entitlement, development and leasing.

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

Our equity method investments in our foreign affiliates are subject to local bank debt primarily for equipment purchases.

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

The debt associated with our unconsolidated non-construction entities is included in Note 10 of “Notes to the Condensed Consolidated Financial Statements.”

The debt associated with our equity method investments is included in Note 11 of “Notes to the Condensed Consolidated Financial Statements.”

Covenants and Events of Default

2 unchanged sentences

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;

5 unchanged sentences

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 the covenants in the Credit Agreement.

As of March 31, 2025, 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 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.

There were 200 shares repurchased under the 2022 authorization in the three months ended March 31, 2025 and $189.5 million remained available under the 2022 authorization as of March 31, 2025.

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

5 unchanged sentences

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in our exposure to market risk from what was previously disclosed in our Annual Report.

There has been no material change in our exposure to market risk from what was previously disclosed in our Annual Report except as disclosed in Note 9 of “Notes to the Condensed Consolidated Financial Statements” regarding diversification of our investment portfolio.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis