What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-03-30 · 255 added, 215 removed, 121 unchanged (80% of the section changed)

4 unchanged sentences

refer to Granite Construction Incorporated and its wholly-owned and consolidated subsidiaries.

On June 14, 2018, we completed the $349.8 million acquisition of Layne Christensen Company (“Layne”), a U.S.-based global water management, infrastructure services and drilling company in a stock-for-stock merger which was comprised of $321.0 million in Company common stock, $28.8 million in cash to settle all outstanding stock options, restricted stock awards and unvested Layne performance shares and we assumed $191.5 million in convertible notes at fair value.

On April 3, 2018, we acquired LiquiForce, a privately owned company which provides sewer lining rehabilitation services to public and private sector water and wastewater customers in both Canada and the U.S.

We acquired LiquiForce for $35.9 million in cash primarily borrowed under our revolving credit facility.

See Notes 2 and 14 of “Notes to the Consolidated Financial Statements”

for further discussion of Layne and Liquiforce acquisitions.

On May 22, 2019, we acquired certain assets and equipment of Lametti & Sons, Inc.

a Minnesota-based company with expertise in cured-in-place pipe rehabilitation and trenchless renewal for $6.2 million in cash.

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

We are one of the largest diversified infrastructure companies 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, trenchless and underground utilities, power-related facilities, water-related facilities, well drilling, utilities, tunnels, dams and other infrastructure-related projects.

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 and other infrastructure-related projects.

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

New Strategic Plan

During the fourth quarter of 2021, the Company updated its strategy to focus on its core business capabilities, to leverage its current geographic based home markets in the civil construction and materials business and to target expansion based upon that combined strategy.

Through our strategic analysis, we determined that the end markets and geographic structure of the former Water and Mineral Services operating group (“WMS”) did not align with the Company’s new strategy and the Board of Directors approved a plan to sell these businesses within the next twelve months.

As a result of these actions, we classified WMS as held-for-sale in the consolidated balance sheets and as discontinued operations in the consolidated statements of operations as of and for the year ended December 31, 2021 and applied these changes retrospectively for all other periods presented. See Note 2 of “Notes to the Consolidated Financial Statements”

for WMS financial information, which has been excluded from all other disclosures unless explicitly stated otherwise.

On February 2, 2022, we entered into a purchase agreement with Inland Pipe Rehabilitation LLC (“IPR”) and 1000097155 Ontario Inc.

(“Ontario” and together with IPR, the “Purchasers”), investment affiliates of J.F.

Lehman & Company. Per the terms of that agreement, the Company agreed to sell our trenchless and pipe rehabilitation services business (“Inliner”), a portion of WMS, to the Purchasers, for a purchase price of $159.7 million. The sale has been unanimously approved by the Company’s Board of Directors and is subject to customary covenants and closing conditions. The transaction is expected to close in the first half of 2022.

The water supply, treatment, delivery and maintenance business (“Water Resources”) and mineral exploration drilling business (“Mineral Services”), which represent the remainder of WMS, are expected to be sold within the next twelve months.

Operating Structure

Our reportable business segments are the same as our operating segments and correspond with how our chief operating decision maker (our President) regularly reviews financial information to allocate resources and assess performance. Our reportable business segments are:

Transportation, Water, Specialty and Materials.

Also related to our new strategic plan, during the fourth quarter of 2021, we reorganized our operating groups to improve operating efficiencies and better position the Company for long-term growth.

In alphabetical order, our continuing business operating groups are defined as follows:

Central (formerly Heavy Civil, Federal and Midwest operating groups), which primarily includes offices in Arizona (formerly in the Northwest operating group), Colorado, Florida, Illinois, Texas and Guam;

Mountain (formerly Northwest), which primarily includes offices in Alaska, Nevada, Utah and Washington.

In addition, we revised the financial information our chief operating decision maker, or decision-making group (our “CODM”), regularly reviews to allocate resources and assess our performance.

This change is consistent with our strategic plan update and better aligns with our continuing civil construction and materials business. Our CODM now regularly reviews financial information regarding our two primary product lines, construction and materials, as well as our operating groups.

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

As a result of these changes, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting , our reportable segments, which are the same as our operating segments, were changed to:

Construction and Materials.

The Construction segment replaces the previous Transportation, Water and Specialty reportable segments, with the composition of our Materials segment for our continuing operations remaining unchanged.

These changes have been applied retrospectively for all periods presented. Our Construction segment focuses on construction and rehabilitation of roads, pavement preservation, bridges, rail lines, airports, marine ports, dams, reservoirs, aqueducts, infrastructure and site development for use by the general public and water-related construction for municipal agencies, commercial water suppliers, industrial facilities and energy companies. It also provides construction of various complex projects including infrastructure / site development, mining, public safety, tunnel, solar and other power-related projects.

The Materials segment focuses on production of aggregates and asphalt production for internal use and for sale to third parties.

See Note 21 of “Notes to the Consolidated Financial Statements”

for additional information about our reportable business segments.

In addition to reportable business segments, we review our business by operating groups.

In alphabetical order, our operating groups are defined as follows:

(i) California;

(ii) Federal, which primarily includes offices in California, Colorado, Texas and Guam;

(iii) Heavy Civil, which primarily includes offices in California, Florida and Texas (the New York office was closed in January 2021);

(iv) Midwest, which primarily includes offices in Illinois; (v) Northwest, which primarily includes offices in Alaska, Arizona, Nevada, Utah and Washington;

and (vi) Water and Mineral Services, which includes offices across the United States, Canada and Mexico.

Business Strategy

Our business strategy is to consistently deliver ideas, innovations, products and services to our clients to power today’s mobile society by executing entrepreneurial market strategies that leverage the benefits of our company-wide resources and our core values.

Additionally, we have a continual focus on Operational Excellence, which includes the following:

Code of Conduct - We believe in maintaining high ethical standards through an established Code of Conduct and a company-wide compliance program, while being guided by our core values at all times.

Sustainability - Our focus on sustainability encompasses many aspects of how we conduct ourselves.

As a result, in February 2021, we made sustainability one of our five core values.

Sustainability means to us integrating values of social responsibility, environmental stewardship and dependable governance to deliver enduring economic value.

We believe it is important to our clients, employees, shareholders, and communities, and is also a long-term business driver.

By focusing on specific initiatives that address social, environmental and economic challenges, we can minimize risk and increase our competitive advantage.

Safety - We believe the safety of our employees, the public and the environment is a moral obligation as well as good business.

By identifying and concentrating resources to address jobsite hazards, we continually strive to eliminate our incident rates and the costs associated with accidents.

Productivity - We strive to use our resources efficiently to deliver work on time and on budget.

Quality - We believe in satisfying our clients, mitigating risk, and driving improvement by performing work right the first time.

Our most fundamental objective is to increase long-term shareholder value as measured by the appreciation of the value of our common stock over a period of time, as well as dividend payouts.

In alphabetical order, the following are key factors in our ability to achieve this objective:

Decentralized Profit Centers - Each of our operating groups is established as an individual profit center which encourages entrepreneurial activity while allowing the operating groups to benefit from centralized administrative, operational expertise and support functions.

Dedicated Construction Equipment - We own and lease a large fleet of well-maintained heavy construction equipment. Dedicated access to a large pool of construction equipment enables us to compete more effectively by ensuring availability and maximizing returns on investment of the equipment.

Diversification - To mitigate the risks inherent in the construction business as the result of general economic factors, we pursue projects:

(i) in both the public and private sectors;

(ii) in diverse end markets such as federal, rail, power, water and renewable energy markets;

(iii) for a wide range of clients from the federal government to small municipalities and from large corporations to small private customers;

(iv) in diverse geographic markets;

(v) that are construction management/general contractor, design-build and bid-build;

(vi) at fixed price, time and materials, cost reimbursable and fixed unit price;

and (vii) of various sizes, durations and complexity. 

Employee Development - We believe that our employees are the primary factor for the successful implementation of our business strategies.

Significant resources are employed to attract, develop and retain extraordinary and diverse talent and fully promote each employee’s capabilities.

Performance-Based Incentives - Managers are incentivized with cash compensation and restricted stock unit equity awards, payable upon the attainment of pre-established annual financial and non-financial metrics.

Risk-Balanced Growth - We intend to grow our business by working on many types of infrastructure projects, as well as by strategically expanding into new geographic areas and end markets organically and through acquisitions.

Growth opportunities are evaluated relative to their incremental impact to the execution risk and profitability profile of our operating portfolio.

Selective Bidding  - We focus our resources on bidding jobs that meet our selective bidding criteria, which include analyzing the risk of a potential job relative to:

(i) available personnel to estimate and prepare the proposal as well as to effectively manage and build the project;

(ii) the competitive environment;

(iii) our experience with the type of work and with the owner;

(iv) local resources and partnerships;

(v) equipment resources;

and (vi) the size, complexity and expected profitability of the job.

Vertical Integration - We own and lease aggregate reserves and own processing plants and liner tube manufacturing facilities that are vertically integrated into our construction operations.

By ensuring availability of these resources and providing quality products, we believe we have a competitive advantage in many of our markets, as well as a source of revenue and earnings from the sale of construction materials and liner tubes to third parties.

Raw Materials

We purchase raw materials, including but not limited to, aggregate products, cement, diesel and gasoline fuel, liquid asphalt, natural gas, propane, resin and steel from numerous sources.

Our owned and leased aggregate reserves supply a portion of the raw materials needed in our construction projects.

The price and availability of raw materials may vary from year to year due to market conditions and production capacities.

We do not foresee a lack of availability of any raw materials over the next twelve months from the date of this filing.

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, profitability and the required number of employees.

Customers in our Transportation, Water and Specialty segments are predominantly in the public sector and include certain federal agencies, state departments of transportation, local transit authorities, county and city public works departments, school districts and developers, utilities and private owners of industrial, commercial and residential sites.

for additional information about our reportable segments.

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

Our third-party customers include, but are not limited to, contractors, landscapers, manufacturers of products requiring aggregate materials, retailers, homeowners, farmers and brokers.

Our third-party Materials segment customers include, but are not limited to, contractors, landscapers, manufacturers of products requiring aggregate materials, retailers, homeowners, farmers and brokers.

The majority of both our public and private customers are located in the United States.

None of our customers, including both prime and subcontractor arrangements, had revenue that individually exceeded 10% of total revenue during the years ended December 31, 2020, 2019 and 2018.

Contract Backlog

Our contract backlog consists of the revenue we expect to record in the future on awarded contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts.

We generally include a project in our contract backlog at the time a contract is awarded and to the extent we believe contract execution and funding is probable. Certain government contracts where funding is appropriated on a periodic basis are included in contract backlog at the time of the award when it is probable the contract value will be funded and executed.

Certain contracts contain contract options that are exercisable at the option of our customers without requiring us to go through an additional competitive bidding process or contain task orders related to master contracts under which we perform work only when the customer awards specific task orders to us.

Awarded contracts that include unexercised contract options and unissued task orders are included in contract backlog to the extent option exercise or task order issuance is probable, respectively.

Substantially all of the contracts in our contract backlog may be canceled or modified at the election of the customer;

however, we have not been materially adversely affected by contract cancellations or modifications in the past (see “Contract Provisions and Subcontracting”).

Many projects are added to contract backlog and completed within the same fiscal year and, therefore, may not be reflected in our beginning or year-end contract backlog.

Contract backlog by segment is presented in “Contract Backlog”

under “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our contract backlog was $3.3 billion and $3.7 billion at December 31, 2020 and 2019, respectively, and did not include approximately $973.8 million and $646.6 million, respectively, in awarded construction management/general contractor and construction management at risk projects.

Approximately $2.3 billion of the December 31, 2020 backlog is expected to be completed during 2021. 

At December 31, 2020 and 2019, we owned the following number of construction equipment and vehicles:

Heavy construction equipment

Trucks, truck-tractors, trailers and vehicles

Our portfolio of equipment includes backhoes, barges, bulldozers, cranes, excavators, loaders, motor graders, pavers, rollers, scrapers, trucks, special equipment for pipeline rehabilitation, drilling rigs and tunnel boring machines that are used in all of our segments.

We pool certain equipment to maximize utilization.

We continually monitor and adjust our fleet size so that it is consistent with the size of our business, considering both existing contract backlog and expected future work.

We lease or rent equipment to supplement our portfolio of equipment in response to construction activity cycles.

In 2020 and 2019, we purchased $54.9 million and $55.0 million, respectively, of construction equipment and vehicles.

During the years ended December 31, 2021, 2020 and 2019, our largest volume customer, including both prime and subcontractor arrangements, was the California Department of Transportation (“Caltrans”).

Revenue recognized from contracts with Caltrans during the years ended December 31, 2021, 2020 and 2019 represented $337.1 million (11.2% of total revenue from continuing operations), $316.9 million (10.1% of total revenue from continuing operations) and $226.2 million (7.8% of total revenue from continuing operations), respectively, which was primarily in the Construction segment.

Other than Caltrans, none of our customers, including both prime and subcontractor arrangements, had revenue that individually exceeded 10% of total revenue during the years ended December 31, 2021 and 2020 and none of our customers had revenue that individually exceeded 10% of total revenue during the year ended December 31, 2019.

Business Strategy

Granite exists to satisfy society’s needs for mobility, power, water and essential services that sustain living conditions and improve quality of life.

Across our footprint of regional offices, Granite teams provide horizontal civil infrastructure construction services and construction materials products to a diverse base of public, industrial and commercial clients.

These clients benefit from our local relationships, market intelligence and the resources and expertise of one of the oldest and most respected U.S.

contractors and materials producers.

Local market knowledge, relationships, and project management expertise, supported by the financial strength of a publicly traded company with a strong balance sheet provide Granite a sustainable competitive advantage.

By diversifying our revenue channels across geographies and clients, and by taking measured risks within our construction capabilities, we simultaneously grow our business and mitigate risk.

Supported by proven operating processes, functional support systems and financial governance processes, our growing network of regional businesses focus on local market conditions, client relationships, employee development, workforce capabilities and investment opportunities to drive growth and efficiency within their home markets.

Additionally, the following continue to be key objectives in our new strategic plan:

Selective Bidding:

 We focus our resources on bidding jobs that meet our bidding criteria, which include analyzing the risk of a potential job relative to:

(1) available personnel to estimate and prepare the proposal as well as to effectively manage and build the project;

(2) project procurement methodology;

(3) the competitive environment;

(4) our experience with the type of work and the owner;

(5) local resources and partnerships;

(6) equipment resources;

and (7) the size, duration, complexity and expected profitability of the job

Risk-Balanced Growth:

 We intend to grow our business by strategically adding to our client base within our current geographic markets and expanding into new geographic areas both organically and through acquisitions.

Growth opportunities are evaluated relative to their incremental impact to the execution risk and profitability profile of our operating portfolio.

Vertical Integration:

 We own and lease aggregate reserves and own processing plants that are vertically integrated into our construction operations.

By ensuring availability of these resources through strategic expansion and providing quality products, we believe we have a competitive advantage in many of our markets, as well as a source of revenue and earnings from the sale of construction materials to third parties.

Diversification:

 To mitigate the risks inherent in the construction business as the result of general economic factors, we pursue projects:

(1) in both the public and private sectors;

(2) in diverse end markets such as federal, rail, power and renewable energy;

(3) for a wide range of clients from the federal government to small municipalities and from large corporations to small private customers;

(4) in diverse geographic markets;

(5) with procurement methods that include construction management/general contractor (“CM/GC”), design-build and bid-build;

(6) that are executed according to a fixed price, time and materials, cost reimbursable and fixed unit price;

and (7) of various size, duration and complexity.

Performance-Based Incentives:

 In 2022, we revised our incentive compensation plans to align with the key objectives outlined in our new strategic plan. Managers are incentivized with cash compensation and equity awards, payable upon the attainment of pre-established annual financial and non-financial metrics, including capital efficiency and cash flow generation.

Code of Conduct and Core Values:

 We strive to maintain high ethical standards through an established Code of Conduct and a company-wide compliance program, while always being guided by our core values.

During 2021, we refreshed our core values, with renewed emphasis on Integrity, Safety, Excellence, Sustainability and Inclusion.

We also launched monthly, company-wide campaigns emphasizing the importance of the core values to Granite.

Human Capital Resources

We believe our employees are our most valuable resource, and our workforce possesses a strong dedication to and pride in our company.

Our managerial and supervisory personnel have an average of approximately 11 years of service with Granite.

Successful execution of our strategy is dependent on attracting, developing, and retaining key employees who represent our core values and the communities we serve. Our focus on inclusive diversity, talent development, talent acquisition, and succession planning has allowed us to build our bench throughout the Company on many levels.

On December 31, 2020, we employed approximately 2,800 salaried employees who work in project, functional and business unit management, estimating and clerical capacities, plus approximately 2,600 hourly employees.

Employees: 

We believe our employees are our most valuable resource and are the primary factor in the successful implementation of our business strategies, including our new strategic plan.

Significant resources are employed to attract, develop and retain extraordinary and diverse talent and fully promote each employee’s capabilities.

We believe our workforce possesses strong dedication and great pride in our company demonstrated by our managerial and supervisory personnel having an average tenure of 11 years with Granite.

Successful execution of our new strategy is dependent on attracting, developing, and retaining key employees who represent our core values in the communities we serve.

Our focus on inclusive diversity, talent development, talent acquisition, and succession planning has allowed us to build our bench throughout the Company on many levels.

On December 31, 2021, our continuing operations employed approximately 1,900 salaried employees who work in project, functional and business unit management, estimating and administrative capacities plus approximately 1,400 hourly employees.

These totals do not include employees of unconsolidated joint ventures.

The total number of hourly personnel is subject to the volume of construction in progress and is seasonal.

During 2020, the number of hourly employees ranged from approximately 2,600 to 4,300 and averaged approximately 3,800.

The majority of both our salaried and hourly personnel were located in the United States during 2020 and the employee counts do not include employees of unconsolidated construction joint ventures and non-construction unconsolidated joint ventures.

As of December 31, 2020, five of our wholly-owned subsidiaries, Granite Construction Company, Granite Construction Northeast, Inc., Granite Industrial, Inc., Granite Inliner, LLC and Layne Christensen Company, were parties to craft collective bargaining agreements in many areas in which they operate.

We believe that people are our most valuable asset and their safety is our greatest responsibility.

We also understand that Safety and Health are key components for achieving operational excellence, and as such, are a core value of all our operations.

Our safety culture is reinforced with relationship-based training, shared knowledge, and engagement at every level of our organization while striving for zero workplace injuries.

Our safety focus is also evident in our response to the COVID-19 pandemic around the country.

Implemented a COVID-19 task force that meets each week and provides updates specific to local, state, and federal guidelines.

Added work from home flexibility.

Increased cleaning protocols across all locations.

Initiated regular communication regarding impacts of the COVID-19 pandemic, including health and safety protocols. 

Developed a COVID-19 tracking tool that allows tracking of positive, close contact by region, group and company.

Established new physical distancing procedures for employees who need to be onsite.

Implemented a policy that masks must be worn in all locations as required by local regulations.

Adjusted attendance and sick leave policies to encourage those who are sick to stay home.

Implemented protocols to address actual and suspected COVID-19 cases.

Prohibited non-essential travel for all employees including conferences, training events, leadership meetings, etc.

All of our work is deemed essential and critical, as such, we have invested in creating physically safe work environments for our employees. 

Inclusive Diversity

Our culture is underpinned by our core values, including an unwavering commitment to inclusive diversity as exemplified by strategies that address our guiding belief that diverse backgrounds, perspectives, and experiences enhance creativity and innovation.

During 2021, the number of hourly employees in our continuing operations ranged from approximately 1,400 to 3,300 and averaged approximately 2,800.

The majority of both our salaried and hourly personnel were located in the United States during 2021.

As of December 31, 2021, three of our wholly-owned subsidiaries within our continuing operations, Granite Construction Company, Granite Construction Northeast, Inc.

and Granite Industrial, Inc., were parties to craft collective bargaining agreements in many areas in which they operate (see Note 16 of the “Notes to the Consolidated Financial Statements”).

Inclusive Diversity: 

Our culture is driven by our core values, including an unwavering commitment to inclusive diversity.

This stems from our guiding belief that diverse backgrounds, perspectives, and experiences enhance creativity and innovation.

In 2021, we established Employee Resource Groups that serve employees from a variety of backgrounds.

We created a five-year strategic plan with the following key goals:

Increase Female representation throughout the entire organization from 12.5% in 2020 to 18% by 2025.

Increase Women in leadership from 14% in 2020 to 20% by 2025.

Increase Persons of Color (POC) representation throughout the entire organization from 14.7% in 2020 to 20% by 2025.

Increase Great Places to Work (GPTW) Inclusion Index from 71% in 2020 to 80% by 2025.

Additionally, we established relationships with historically black colleges and universities with targeted talent acquisition plans for these colleges and universities. In 2020, 54% of our 202 interns were diverse.

In 2020, we improved our overall employee diversity percentage from 33% to 37%. Granite is committed to pay equity, regardless of race, gender, ethnicity, or sexual orientation, and annually conducts a pay equity analysis.

Employee Development and Training

The development, attraction, and retention of employees is a critical success factor for Granite and its operating groups. Our people are a key competitive advantage and to grow our organization we encourage every employee to actively participate in their own career growth and development.

We added Inclusion as one of our refreshed core values and designated October as Inclusion month throughout our Company.

We continued to execute our inclusive diversity strategy with the following key goals:

increase the representation of women throughout the entire organization from 13% in 2021 to 18% by 2025;

increase women in leadership from 15% in 2021 to 20% by 2025;

increase persons of color in leadership from 17% in 2021 to 20% by 2025;

increase Inclusion Index based on Kincentric 2021 Survey Data from 70% in 2021 to 80% by 2025.

We have been successful with our targeted talent acquisition plan that focused on diverse colleges and universities as exemplified by 56% of our 220 interns in 2021 being diverse (women and persons of color).

Granite is committed to pay equity, regardless of race, gender, ethnicity or sexual orientation, and annually conducts a pay equity analysis.

Employee Development and Training: 

The development of employees is critical to Granite’s success and is a key factor in our ability to attract and retain talent. Our people are the foundation of our success, and we encourage every employee to actively participate in their own career growth and development.

Granite offers a wide variety of training opportunities to ensure our employees are supplementing their on-the-job learning with classroom and online courses needed to promote performance and growth. Through Granite University, these training topics range from soft skills to job-specific technical skills and from formal instructor-led programs to self-guided online learning.

Programs target specific employee populations including new employees, new engineers, managers, and leaders.

The pandemic has required Granite to convert many live programs to a virtual instructor-led format. In 2020 we have successfully delivered over 100 classes in this virtual format including the graduation of 96 employees from our multi-level leadership development suite that ranges from emerging leaders through senior leaders, and 112 graduating from our 12-week Foundations for Engineers program.

We have a robust talent and succession planning process and have established specialized programs to support the development of our talent pipeline for critical roles in general management, engineering, project management, and operations.

On an annual basis, we conduct group succession planning reviews with senior leaders including our President focusing on our high performing and high potential talent, diverse talent, and the succession for our most critical roles.

Our programs are targeted toward specific employee populations including new employees, new engineers, managers and current and emerging leaders.

In 2021, our employees completed over 40,000 training courses and more than 100 employees ranging from emerging leaders to senior leaders graduated from our multi-level leadership development program.

The COVID-19 pandemic required Granite to convert many live programs to a virtual instructor-led format.

We have successfully delivered over 100 classes in this virtual format in addition to ongoing in-person and self-paced online learning.

We have a robust talent and succession planning process and have established specialized programs to accelerate the development of our talent pipeline for critical roles in general management, engineering, project management, and operations.

On an annual basis, we conduct group succession planning reviews with senior leaders focusing on our high performing and high potential talent, diverse talent and succession for critical roles.

Employee Engagement:

To ensure we provide a rich experience for our employees, we measure organizational culture and engagement to build on the competencies that are important for our future success. We routinely engage independent third parties to conduct cultural and employee engagement surveys. These include corporate culture assessments, as well as real-time feedback on employee engagement and on employee well-being focused on physical, emotional, social and financial health.

Compensation and Benefits

Granite’s compensation programs are designed to align the compensation of our employees with Granite’s performance and to provide proper incentives to attract, retain, and motivate employees to achieve superior results. The structure of our compensation programs balances guaranteed base pay with incentive compensation opportunities.

We measure organizational culture and engagement to build on the competencies that are important for our future success.

At least annually, we engage independent third parties to conduct employee engagement surveys.

These include corporate culture assessments, as well as real-time feedback on employee engagement and on employee well-being which includes physical, emotional, social and financial health.

Compensation and Benefits: 

Granite’s compensation programs are designed to align the compensation of our employees with Granite’s performance and to provide proper incentives to attract, retain and motivate employees to achieve superior results.

The structure of our compensation programs balances guaranteed base pay with incentive compensation opportunities.

Specifically:

We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location.

We engage nationally recognized outside compensation and benefits consulting firms to independently evaluate the effectiveness of our executive compensation and benefit programs and to provide benchmarking against our peers within the industry.

We align our executives’

we provide wages that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location;

we engage nationally recognized compensation and benefits consulting firms to independently evaluate the effectiveness of our executive compensation and benefit programs and to provide benchmarking against our peers. We align our executives’

long-term equity compensation with our shareholders’

interests by linking realizable pay and stock performance.

interests by linking realizable pay to stock performance;

annual increases and incentive compensation are based on merit, which is communicated to employees at the time of hiring and documented through our talent management process as part of our annual review procedures and upon internal transfer and/or promotion;

All employees are eligible for health and wellness insurance, paid and unpaid leaves, a retirement plan and life and disability/accident coverage. 

We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs, including telemedicine, paid parental leave, prescription savings solutions, a personalized health wellness program, pet insurance, and a financial wellness program.

Competitors in our Transportation, Water, Specialty and Materials segments typically range from small, local companies to large, regional, national and international companies.

We compete with numerous companies in individual markets;

however, there are few, if any, companies which compete in all of our market areas.

Many of our Transportation, Water, and Specialty segment competitors have the ability to perform work in either the private or public sectors.

all employees are eligible for health and wellness insurance, paid and unpaid leave, a retirement plan, life insurance and disability/accident coverage.

Environmental, Social and Governance Matters

Sustainability is one of our refreshed core values and we are committed to contributing to the development of a more sustainable future. Our sustainability objectives encompass corporate social responsibility, environmental stewardship, responsible governance and long-term financial prosperity.

We envision Granite as the leading provider of sustainable infrastructure solutions, differentiated by our pursuit of social, environmental, and financial excellence.

To obtain our objectives, we have a Sustainability department that coordinates and communicates our environmental, social and governance (“ESG”) initiatives across the Company and we participate in the United Nations Global Compact.

Our Board of Directors oversees our sustainability program, including how we manage sustainability and ESG-related risks in conjunction with our overall Enterprise Risk Management process.

We are committed to addressing the effects of climate change, and currently have a priority target to reduce scope 1 greenhouse gas emissions by 25% by 2030 from a 2020 baseline.

We use the Global Reporting Initiative and Sustainability Accounting Standards Board standards as frameworks to support performance, tracking and reporting and responsible business behavior.

Within these frameworks, we have selected industry-specific metrics that align with stakeholder expectations, are relevant to our business and will have the most significant impact.

Additional information about the sustainability program and Granite’s annual Sustainability Report can be found on our website at https://www.graniteconstruction.com/company/building-better-future-today.

The information on our website and Granite’s Sustainability Report are not incorporated into, and are not part of, this report.

Committed and Awarded Projects

Effective during the three months ended June 30, 2021, on a retroactive basis, we renamed contract backlog to Committed and Awarded Projects (“CAP”) and added the general construction portion of CM/GC contracts.

This is the same presentation used in our quarterly reports, earnings calls and press releases.

Prior period amounts have been revised to reflect this change. In line with the revised reportable segments, all CAP is now in the Construction segment.

CAP consists of two components:

(1) unearned revenue and (2) other awards.

Unearned revenue includes the revenue we expect to record in the future on executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts.

We generally include a project in unearned revenue at the time a contract is awarded, the contract has been executed and to the extent we believe funding is probable.

Contract options and task orders are included in unearned revenue when exercised or issued, respectively.

Certain government contracts where funding is appropriated on a periodic basis are included in unearned revenue at the time of the award when it is probable the contract value will be funded and executed.

Other awards include the general construction portion of CM/GC contracts and awarded contracts with unexercised contract options or unissued task orders.

The general construction portion of CM/GC contracts are included in other awards to the extent contract execution and funding is probable.

Contracts with unexercised contract options or unissued task orders are included in other awards to the extent option exercise or task order issuance is probable, respectively.

Substantially all of the contracts in CAP may be canceled or modified at the election of the customer;

however, we have not been materially adversely affected by contract cancellations or modifications in the past (see “Contract Provisions and Subcontracting”).

Many projects are added to CAP and completed within the same fiscal year and, therefore, may not be reflected in our beginning or year-end CAP.

CAP by segment is presented in “Committed and Awarded Projects”

under “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our CAP from continuing operations was $ 4.0 billion at both 

December 31,  

2021  and 

Approximately $2.0  billion of the 

December 31,  

2021  CAP from continuing operations is expected to be completed during 2022. 

Competition and Market Trends

In both our Construction and Materials segments, we have competitors within the individual markets and geographic areas in which we operate, ranging from small, local companies to larger regional, national and international companies.

Although the construction business is highly competitive, there are few, if any, companies which compete in all of our market areas.

The degree and type of competition is influenced by the type and scope of construction projects within the individual markets.

One of our significant competitive advantages is that we own and/or have long-term leases for quarries where we mine aggregates.

Factors influencing competitiveness in both of our segments include price, knowledge of local markets and conditions, financial strength, reputation for quality, aggregate materials availability and machinery and equipment.

Factors that also influence competitiveness in our Construction segment are estimating abilities and project management. 

Many of our Construction segment competitors have the ability to perform work in either the private or public sectors.

When opportunities for work in one sector are reduced, competitors tend to look for opportunities in the other sector. This migration has the potential to reduce revenue growth and/or increase pressure on gross profit margins.

We own and/or have long-term leases on aggregate resources that we believe provide a competitive advantage in certain markets for the Transportation, Water and Specialty segments. 

Factors influencing our competitiveness include price, estimating abilities, knowledge of local markets and conditions, project management, financial strength, reputation for quality, aggregate materials availability, and machinery and equipment.

Historically, the construction business has not required large amounts of capital for the smaller size construction work, which can result in relative ease of market entry for companies possessing acceptable qualifications.

By contrast, larger size construction work typically requires large amounts of capital that may make entry into the market by future competitors more difficult.

Historically, the required amount of capital has not had a significant impact on our ability to compete in the marketplace.

Although the construction business is highly competitive, we believe we are well positioned to compete effectively in the markets in which we operate.

Contract Provisions and Subcontract ing

Capital requirements have not historically had a significant impact on our ability to compete in the marketplace.

However, because smaller projects within our Construction segment have not historically required large amounts of capital, the entry by companies possessing acceptable qualifications into this market may be relatively easy.

By contrast, larger projects typically require larger amounts of capital that may make entry into the market by future competitors more difficult.

See “Current Economic Environment and Outlook”

under “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations”

for further information on current market trends.

Government Regulations

Our business is impacted by environmental, health and safety, government procurement, anti-bribery and other government regulations and requirements.

Below is a summary of some of the significant regulations that impact our business.

Environmental:

Our operations are subject to various federal, state, local and foreign laws and regulations relating to the environment, including those relating to:

(i) the discharge of materials into the air, such as equipment-related emissions and crystalline silica dust at our aggregate processing facilities;

(ii) the discharge of materials into water and land;

(iii) the handling and disposal of solid and hazardous waste;

(iv) the handling of underground storage tanks;

and (v) the cleanup of properties affected by hazardous substances.

Certain environmental laws impose substantial penalties for non-compliance and others, such as the federal Comprehensive Environmental Response, Compensation and Liability Act, impose strict, retroactive, joint and several liability upon persons responsible for releases of hazardous substances.

We continually evaluate whether we must take additional steps at our locations to ensure compliance with environmental laws and whether we can operate in a more sustainable manner.

While compliance with applicable regulatory requirements has not materially adversely affected our operations in the past, there can be no assurance that these requirements will not change, and that compliance will not adversely affect our operations in the future.

Government Procurement:

Approximately 75% of our construction-related revenue from continuing operations in 2021 was derived from contracts funded by federal, state and local government agencies and authorities.

Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or implied certifications of compliance.

Our operations are subject to various statutes and executive orders including the Davis-Bacon Act (which regulates wages and benefits), the Walsh-Healy Act (which prescribes a minimum wage and regulates overtime and working conditions), Executive Order 11246 (which establishes equal employment opportunity and affirmative action requirements), Executive Order 14063 (which requires project labor agreements on federal construction projects over $35 million), the Drug-Free Workplace Act, the Federal Acquisition Regulation and the Federal Civil False Claims Act.

We are also subject to the rules and regulations promulgated by the Occupational Safety and Health Administration and the Mine Safety and Health Administration.

In addition, certain contracts within our government agency projects contain minimum Disadvantaged Business Enterprise (“DBE”) participation clauses. 

These laws and regulations affect how we transact business and, in some instances, impose additional costs on our business operations, which may adversely affect our business, results of operations and financial condition.

As further described in “Item 1A.

Risk Factors,”

violation of specific laws and regulations could lead to fines, contract termination, debarment of contractors and/or suspension of future contracts.

Our government customers can also terminate, renegotiate or modify any of their contracts with us at their convenience.

Anti-corruption and Bribery: 

We are subject to the Foreign Corrupt Practices Act (“FCPA”).

The FCPA prohibits U.S.

and other business entities from making improper payments to foreign government officials, political parties or political party officials.

We are also subject to the applicable anti-corruption laws in the jurisdictions in which we operate, thus potentially exposing us to liability and potential penalties in multiple jurisdictions.

The anti-corruption provisions of the FCPA are enforced by the Department of Justice while other state or federal agencies may seek recourse against the Company for issues related to FCPA.

In addition, the Securities and Exchange Commission (“SEC”) requires strict compliance with certain accounting and internal control standards set forth under the FCPA.

Failure to comply with the FCPA and other laws can expose us and/or individual employees to potentially severe criminal and civil penalties.

Such penalties may have a material adverse effect on our business, results of operations and financial condition.

We devote resources to the development, maintenance, communication and enforcement of our Code of Conduct, our anti-bribery compliance policies, our internal control processes and compliance related policies.

We strive to conduct timely internal investigations of potential violations and take appropriate action depending upon the outcome of the investigation.

Contract Provisions and Subcontracting

Contracts with our customers are primarily “fixed unit price”

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Under fixed unit price contracts, we are committed to providing materials or services at fixed unit prices (for example, dollars per cubic yard of concrete placed or cubic yard of earth excavated).

The percentage of fixed unit price contracts in our unearned revenue from continuing operations was 53.3% and 42.6% at December 31, 2021 and 2020, respectively.

While the fixed unit price contract shifts the risk of estimating the quantity of units required for a particular project to the customer, any increase in our unit cost over the expected unit cost in the bid, whether due to inflation, inefficiency, incorrect estimates or other factors, is borne by us unless otherwise provided in the contract.

Fixed price contracts are priced on a lump-sum basis under which we bear the risk that we may not be able to perform the work for the specified contract amount.

The percentage of fixed unit price contracts in our contract backlog was 50.4% and 37.8% at December 31, 2020 and 2019, respectively.

The percentage of fixed price contracts in our contract backlog was 47.3% and 60.6% at December 31, 2020 and 2019, respectively.

All other contract types represented 2.3% and 1.6% of our contract backlog at December 31, 2020 and 2019, respectively.

Within our Transportation, Water and Specialty segments, we utilize several methods of project delivery including, but not limited to, bid-build, design-build, construction management/general contractor and construction management at-risk.

Unlike traditional bid-build projects where owners first hire a design firm or design a project themselves and then put the project out to bid for construction, design-build projects provide the owner with a single point of responsibility and a single contact for both final design and construction.

Under the construction management/general contractor and construction management at-risk methods of delivery, we contract with owners to assist the owner during the design phase of the contract with construction efficiencies and risk mitigation, with the understanding that we will negotiate a contract on the construction phase when the design nears completion.

The percentage of fixed price contracts in our unearned revenue from continuing operations was 44.3% and 54.8% at December 31, 2021 and 2020, respectively.

All other contract types represented 2.4% and 2.6% of our unearned revenue from continuing operations at December 31, 2021 and 2020, respectively.

Within our Construction segment, we utilize several methods of project delivery including, but not limited to, bid-build, design-build, CM/GC, construction management at-risk (“CMAR”) and progressive design-build.

Unlike traditional bid-build projects where owners first hire a design firm or design a project themselves and then put the project out to bid for construction, the design portion of design-build projects is typically only partially complete when going out to bid.

This project delivery method expedites the bidding process for the owner and provides the owner with a single point of responsibility and a single contact for both final design and construction.

Under the CM/GC and CMAR delivery methods, we contract with owners to assist the owner during the design phase of the contract with construction efficiencies and risk mitigation, with the understanding that we will negotiate a contract on the construction phase when the collective design nears completion.

The progressive design-build delivery method is similar to CM/GC and CMAR;

however, we are responsible for the design of the project and will subcontract with a design firm, with the understanding that we will negotiate a contract that includes both the design and construction prices when the collective design nears completion.

With the exception of contract change orders and affirmative claims, which are typically sole-source, our construction contracts are primarily obtained through competitive bidding in response to solicitations by both public agencies and private parties and on a negotiated basis as a result of solicitations from private parties.

Project owners use a variety of methods to make contractors aware of new projects, including posting bidding opportunities on agency websites, disclosing long-term infrastructure plans, advertising and other general solicitations.

Our bidding activity is affected by such factors as the nature and volume of advertising and other solicitations, current contract backlog, available personnel, current utilization of equipment and other resources and competitive considerations.

Our bidding activity is affected by such factors as the nature and volume of advertising and other solicitations, current CAP, available personnel, current utilization of equipment and other resources and competitive considerations.

Our contract review process includes identifying risks and opportunities during the bidding process and managing these risks through mitigation efforts such as contract negotiation, bid/no bid decisions, insurance and pricing.

Contracts fitting certain criteria of size and complexity are reviewed by various levels of management and, in some cases, by our Board of Directors or a committee thereof.

Bidding activity, contract backlog and revenue resulting from the award of new contracts may vary significantly from period to period.

Bidding activity, CAP and revenue resulting from the award of new contracts may vary significantly from period to period.

There are a number of factors that can create variability in contract performance as compared to the original bid.

Such factors can positively or negatively impact costs and profitability, may cause higher than anticipated construction costs and can create additional liability to the contract owner.

Such factors can positively or negatively impact costs and profitability and can create additional liability to the contractor.

The most significant of these include:

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The ability to realize improvements on project profitability at times is more limited than the risk of lower profitability.

For example, design-build contracts carry additional risks such as those associated with design errors and estimating quantities and prices before the project design is completed. We manage this additional risk by including contingencies to our bid amounts, obtaining errors and omissions insurance and obtaining indemnifications from our design consultants where possible.

For example, design-build contracts carry additional risks such as those associated with design errors and estimating quantities and prices before the project design is completed. We manage this additional risk by including contingencies in our bid amounts, obtaining errors and omissions insurance and obtaining indemnifications from our design consultants where possible.

However, there is no guarantee that these risk management strategies will always be successful.

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Thus, we may be subject to increased costs associated with the failure of one or more subcontractors to perform as anticipated.

Based on our analysis of their construction and financial capabilities, among other criteria, we typically require the subcontractor to furnish a bond or other type of security to guarantee their performance and/or we retain payments in accordance with contract terms until their performance is complete.

Disadvantaged business enterprise regulations require us to use our good faith efforts to subcontract a specified portion of contract work done for governmental agencies to certain types of disadvantaged contractors or suppliers.

Based on our analysis of their construction and financial capabilities, among other criteria, we typically require the subcontractor to furnish a bond or other type of security to guarantee their performance and/or we retain payments, or some portion thereof, in accordance with contract terms until their performance is complete.

DBE regulations require us to use our good faith efforts to subcontract a specified portion of contract work done for governmental agencies to certain types of disadvantaged contractors or suppliers.

As with all of our subcontractors, some may not be able to obtain surety bonds or other types of performance security.

Joint Ventures

We participate in various construction joint ventures with other construction companies of which we are a limited member (“joint ventures”) in order to share expertise, risk and resources typically for large, technically complex projects, including design-build projects, where it is necessary or desirable to share risk and resources.

We participate in various construction joint ventures with other construction companies of which we are a limited member (“joint ventures”) typically for large, technically complex projects, including design-build projects, where it is necessary or desirable to share expertise, risk and resources.

Joint venture partners typically provide independently prepared estimates, shared financing and equipment, and often bring local knowledge and expertise.

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We select our joint venture partners (“partner(s)”) based on our analysis of their construction and financial capabilities, expertise in the type of work to be performed and past working relationships, among other criteria.

The joint venture agreements typically provide that our interests in any profits and assets, and our respective share in any losses and liabilities, that may result from the performance of the contract are limited to our stated percentage interest in the project.

The joint venture agreements typically provide that our interests in any profits and assets, and our respective share in any losses and liabilities, that may result from the performance of the contracts are limited to our stated percentage interest in the project.

Under each joint venture agreement, one partner is designated as the sponsor.

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We have been designated as the sponsoring partner in certain of our current joint venture projects and are a non-sponsoring partner in others.

When entering into joint venture agreements, we typically prefer to be the sponsoring partner. 

We consolidate joint ventures where we have determined that through our participation we have a variable interest and are the primary beneficiary as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation , and related standards. Where we have determined we are not the primary beneficiary of a joint venture but do exercise significant influence, we account for our share of the operations of unconsolidated construction joint ventures on a pro rata basis in revenue and cost of revenue in the consolidated statements of operations and in equity in construction joint ventures in the consolidated balance sheets.

In alignment with our new strategic plan and project bidding criteria, when entering into new joint venture agreements, we insist on being the sponsoring partner. 

We consolidate joint ventures if we determine that through our participation we have a variable interest and are the primary beneficiary as defined by FASB ASC Topic 810, Consolidation , and related standards. If we have determined that we are not the primary beneficiary of a joint venture but do exercise significant influence, we account for our share of the operations of unconsolidated construction joint ventures on a pro rata basis in revenue and cost of revenue in the consolidated statements of operations.

We record the corresponding investment balance in equity in construction joint ventures in the consolidated balance sheets except when a project is in a loss position, the investment balance is recorded as a deficit in unconsolidated construction joint ventures and is included in accrued expenses and other current liabilities in the consolidated balance sheets.

We account for non-construction unconsolidated joint ventures under the equity method of accounting in accordance with ASC Topic 323, Investments - Equity Method and Joint Ventures and include our share of the operations in equity in income of affiliates in the consolidated statements of operations and in investment in affiliates in the consolidated balance sheets.

We also participate in various “line item”

We also participate in “line-item”

joint venture agreements under which each partner is responsible for performing certain discrete items of the total scope of contracted work.

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corporate and/or other guarantees.

At December 31, 2020, there was $1.5 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts, of which $0.6 billion represented our share and is included in our contract backlog and the remaining $0.9 billion represented our partners’

At December 31, 2021, there was $0.7 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts, of which $0.3 billion represented our share and is included in our CAP and the remaining $0.4 billion represented our partners’

See Note 9 of “Notes to the Consolidated Financial Statements”

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Our ability to obtain surety bonds depends upon our capitalization, working capital, past performance, management expertise and external factors, including the capacity of the overall surety market.

Surety companies consider such factors in light of the amount of our contract backlog that we have currently bonded and their current underwriting standards, which may change from time to time.

Surety companies consider such factors in light of the amount of our CAP that we have currently bonded and their current underwriting standards, which may change from time to time.

The capacity of the surety market is subject to market-based fluctuations driven primarily by the level of surety industry losses and the degree of surety market consolidation.

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To help mitigate this risk, we employ a co-surety structure involving three sureties.

Although we do not believe that fluctuations in surety market capacity have significantly affected our ability to grow our business, there is no assurance that it will not significantly affect our ability to obtain new contracts in the future (see “Item 1A.

Risk Factors”).

Anti-corruption and Bribery

We are subject to the Foreign Corrupt Practices Act (“FCPA”), which prohibits U.S.

and other business entities from making improper payments to foreign government officials, political parties or political party officials.

We are also subject to the applicable anti-corruption laws in the jurisdictions in which we operate, thus potentially exposing us to liability and potential penalties in multiple jurisdictions.

The anti-corruption provisions of the FCPA are enforced by the Department of Justice while other state or federal agencies may seek recourse against the Company for issues related to FCPA.

In addition, the Securities and Exchange Commission (“SEC”) requires strict compliance with certain accounting and internal control standards set forth under the FCPA.

Failure to comply with the FCPA and other laws can expose us and/or individual employees to potentially severe criminal and civil penalties.

Such penalties may have a material adverse effect on our business, financial condition and results of operations.

We strive to conduct timely internal investigations of potential violations and take appropriate action depending upon the outcome of the investigation.

Environmental Regulations

Our operations are subject to various federal, state and local laws and regulations relating to the environment, including those relating to discharges to air, water and land, the handling and disposal of solid and hazardous waste, the handling of underground storage tanks and the cleanup of properties affected by hazardous substances.

We continually evaluate whether we must take additional steps at our locations to ensure compliance with environmental laws.

We also evaluate whether we can operate in a more sustainable manner. While compliance with applicable regulatory requirements has not materially adversely affected our operations in the past, there can be no assurance that these requirements will not change and that compliance will not adversely affect our operations in the future.

In addition, our aggregate materials operations require operating permits granted by governmental agencies.

Tighter regulations for the protection of the environment and other factors could make it increasingly difficult to obtain new permits and renewal of existing permits may be subject to more restrictive conditions than currently exist.

The California Air Resource Board requires California equipment owners/operators to reduce diesel particulate and nitrogen oxide emissions from in-use off-road diesel equipment and to meet progressively more restrictive emission targets from 2010 to 2022 by retrofitting equipment with diesel emission control devices or replacing equipment with new engine technology as it becomes available.

Over the past few years we have been proactively replacing our fleet prior to the 2022 deadline to be in compliance and do not expect significant future costs above forecasted and planned expenditures.

During 2020, our purchases of property and equipment in California included approximately $3.8 million in off-road construction equipment with emission reduction improvements.

As is the case with other companies in our industry, some of our aggregate products contain varying amounts of crystalline silica, a common mineral.

Also, some of our construction and material processing operations release, as dust, crystalline silica that is in the materials being handled.

Excessive, prolonged inhalation of very small-sized particles of crystalline silica has allegedly been associated with respiratory disease (including Silicosis).

During 2016, the Occupational Safety and Health Administration (“OSHA”) implemented new and more stringent occupational exposure thresholds for crystalline silica exposure as respirable dust.

In addition, the Mine Safety and Health Administration is expected to propose adopting a similar rule as implemented by OSHA.

We have implemented dust control procedures to measure compliance with requisite thresholds and to verify that respiratory protective equipment is made available as necessary.

We also communicate, through safety data sheets and other means, what we believe to be appropriate warnings and cautions to employees and customers about the risks associated with excessive, prolonged inhalation of mineral dust in general and crystalline silica in particular (see “Item 1A.

Although we do not believe that fluctuations in surety market capacity have affected our ability to grow our business, there is no assurance that it will not significantly affect our ability to obtain new contracts in the future (see “Item 1A.

Risk Factors”).

The scope of new exposure limits indicates that additional engineering controls, beyond providing respirators will be required to reduce potential exposure in response to the reduced exposure limits.

The OSHA General Industry and Construction Standards were phased in during late 2017 and were fully implemented in 2018.

Expenses related to this implementation were immaterial during the years ended December 31, 2020, 2019  

Raw Materials

We purchase raw materials, including but not limited to, aggregate products, cement, diesel and gasoline fuel, liquid asphalt, natural gas, propane, resin and steel from numerous sources.

Our owned and leased aggregate reserves supply a portion of the raw materials needed in our construction projects.

The price and availability of raw materials may vary from year to year due to market conditions and production capacities.

We do not foresee a lack of availability of any raw materials over the next twelve months from the date of this filing.

At December 31, 2021 and 2020, we owned the following number of construction equipment and vehicles (excluding discontinued operations):

Heavy construction equipment

Trucks, truck-tractors, trailers and vehicles

Our portfolio of equipment includes backhoes, barges, bulldozers, cranes, excavators, loaders, motor graders, pavers, rollers, scrapers, trucks and tunnel boring machines that are used in both of our segments.

We pool certain equipment to maximize utilization.

We continually monitor and adjust our fleet size so that it is consistent with the size of our business, considering both existing and expected future work.

We lease or rent equipment to supplement our portfolio of equipment in response to construction activity cycles.

In 2021 and 2020, we purchased $49.3 million and $39.7 million, respectively, of construction equipment and vehicles for continuing operations.

Website Access

Our website address is www.graniteconstruction.com.

On our website we make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

On our website we make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

The information on our website is not incorporated into, and is not part of, this report.

These reports, and any amendments to them, are also available at the website of the SEC, www.sec.gov.

These reports, and any amendments to them, are also available on the SEC’s website, www.sec.gov.

Information About Executive Officers

Information regarding our executive officers as of February 1, 2022 is set forth below.

President and Chief Executive Officer

Executive Vice President and Chief Financial Officer

Jigisha Desai

Executive Vice President and Chief Strategy Officer

Executive Vice President and Chief Operating Officer

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Senior Vice President and Group Manager

Larkin joined Granite in 1996 and has served as President since September 2020.

He also served as Executive Vice President and Chief Operating Officer from February 2020 to September 2020, Senior Vice President and Manager of Construction and Materials Operations from 2019 to 2020, Senior Vice President and Group Manager from 2017 to 2019, Vice President and Regional Manager in Nevada from 2014 to 2017 and President of Granite’s wholly owned subsidiary, Intermountain Slurry Seal, Inc.

Chief Accounting Officer

Larkin joined Granite in 1996, has served as President since September 2020 and as Chief Executive Officer since June 2021. He also served as Executive Vice President and Chief Operating Officer from February 2020 to September 2020, Senior Vice President and Manager of Construction and Materials Operations from 2019 to 2020, Senior Vice President and Group Manager from 2017 to 2019, Vice President and Regional Manager in Nevada from 2014 to 2017 and President of Granite’s wholly-owned subsidiary, Intermountain Slurry Seal, Inc.

from 2011 to 2014.

He served as Manager of Construction at the Reno area office from 2008 to 2011, Chief Estimator from 2004 to 2008 and Project Manager, Project Engineer and Estimator at Granite’s Nevada Branch between 1996 and 2003.

Larkin has also served as a director of our Board of Directors since June 2021.

Larkin holds a B.S.

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Curtis joined Granite in 2018 and has served as Executive Vice President and Chief Financial Officer since January 2021.

She also served as Chief Accounting Officer from October 2020 to January 2021, Vice President of Investor Relations since 2019, and Vice President and Integration Management Officer from 2018 to 2019.

She also served as Chief Accounting Officer from October 2020 to January 2021, Vice President of Investor Relations from 2019 to October 2020, and Vice President and Integration Management Officer from 2018 to 2019.

Before joining Granite, Ms.

Curtis served as Vice President and Chief Accounting Officer for Layne Christensen Company.

She received B.S.

degrees in Accounting and Finance from Texas A&M University and is a Certified Public Accountant.

Desai joined Granite in 1993 and has served as Executive Vice President and Chief Strategy Officer since January 2021.

She also served as Senior Vice President and Chief Financial Officer from 2018 to 2021, Vice President of Corporate Finance, Treasurer & Assistant Financial Officer from 2013 to 2018, Vice President, Treasurer & Assistant Financial Officer from 2007 to 2013, Assistant Treasurer & Assistant Secretary from 2001 to 2007 and Treasury Manager from 1993 to 2001.

Desai is a Member of the Association of Financial Professionals.

Desai received a B.S.

in Accounting from the University of Houston, an M.B.A.

in Corporate Finance from Golden Gate University and completed Harvard Business School’s Advanced Management Program.

She is a Certified Treasury Professional.

Radich first joined Granite in 1980 and rejoined the Company in 2011 where he has served as Executive Vice President and Chief Operating Officer since December 2020. He also served as Senior Vice President and Group Manager from January 2020 to December 2020, as Vice President and Coastal Region Manager from 2014 to 2019 and Vice President of the Northern California Region from 2011 to 2014. From 1993 to 2011 Mr.

Curtis served as Vice President and Chief Accounting Officer for Layne Christensen Company (“Layne”) from 2016 to 2018. Prior to joining Layne, Ms.

Curtis worked for Cameron from 2009 to 2016 serving in positions of increasing responsibility and ultimately as their Controller, in charge of external reporting, accounting policies, and internal controls from 2015 to 2016.

Curtis began her career in public accounting with Deloitte and graduated from Texas A&M University with B.S.

degrees in Accounting and Finance and is a Certified Public Accountant.

Radich first joined Granite in 1980 and rejoined the Company in 2011. He has served as Executive Vice President and Chief Operating Officer since December 2020. He also served as Senior Vice President and Group Manager from January 2020 to December 2020, as Vice President and Coastal Region Manager from 2014 to 2019 and Vice President of the Northern California Region from 2011 to 2014. From 1993 to 2011 Mr.

Radich was employed by Oldcastle Materials.

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from Santa Clara University and is a Registered Civil Engineer.

Richards joined Granite in 1992 and has served as Senior Vice President and Group Manager since 2013, Arizona Region Manager from 2006 to 2012, Arizona Region Chief Estimator from 2000 through 2006 and in other positions at Granite’s Arizona Branch between 1992 and 2000.

Prior to joining Granite, he served as a U.S.

Richards joined Granite in 1992 and has served as Senior Vice President and Group Manager since 2013, Arizona Region Manager from 2006 to 2012, Arizona Region Chief Estimator from 2000 through 2006, Estimator/Project Manager from 1996 to 2000, Regional Equipment Manager from 1993 to 1996 and Project Engineer from 1992 into 1993. Prior to joining Granite, he served as a U.S.

Army Officer.

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in Civil Engineering from the University of California, Berkeley and is a Registered Engineer in the states of California and Nevada.

Woolsey joined Granite in June 2021 and was appointed Chief Accounting Officer on January 1, 2022.

Prior to this appointment and since joining the Company in June 2021, Ms.

Woolsey served in a non-officer role with accounting responsibilities and reported directly to Ms.

Curtis. Prior to joining the Company, Ms.

Woolsey was the Vice President and Corporate Controller from December 2018 to August 2020 and Vice President, Corporate Controller and Chief Accounting Officer from August 2020 to June 2021 of MDC Holdings, Inc.

From February 2016 to December 2018, Ms.

Woolsey was the Vice President and Controller of the Energy, Infrastructure and Industrial Construction division of AECOM. Ms.

Woolsey received a B.S.

degree in Accounting from the University of Idaho and is a Certified Public Accountant.

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-K

Item 1. Business