What changed in this filing

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Item 1. Business

2023-02-21 compared with 2022-02-28 · 115 added, 125 removed, 251 unchanged (49% of the section changed)

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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, 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.

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.

Operating Structure

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 segments.

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

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

Our reportable segments are:

Construction and Materials. The 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, battery storage 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 segments. 

In addition to reportable segments, we also review our business by operating groups. In alphabetical order, our operating groups are as follows:

California, which is comprised of vertically integrated businesses in home markets across the state;

Central, which includes the vertically integrated Arizona region and regional civil construction businesses in Illinois, Florida and Texas.

The Central group also includes the Federal division which performs civil construction across the continental United States and Guam, and the Tunnel division;

Mountain, which is comprised of vertically integrated regional businesses in Alaska, Washington, Oregon, Utah and Nevada.

The Mountain Group also includes national businesses in the Industrial & Energy division, which primarily focuses on commercial solar construction projects, Water Resources, which performs water well drilling and rehabilitation services and Mineral Services, which performs mineral exploration services for mining clients.

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.

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

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.

During the years ended December 31, 2022, 2021 and 2020, 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, 2022, 2021 and 2020 represented $348.0 million (10.5% of total revenue), $337.1 million (9.6% of total revenue) and $316.9 million (8.9% of total revenue), 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 year ended December 31, 2022.

None of our customers had revenue that individually exceeded 10% of total revenue during the years ended December 31, 2021 and 2020.

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.

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

Across our footprint of regional offices, we 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 home market strategy which includes 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:

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

Selective Bidding:

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 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.

By ensuring the 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.

We also look for additional vertical integration opportunities that complement our existing construction and materials businesses.

Diversification:

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(1) in both the public and private sectors;

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

(2) in diverse end markets such as federal, rail, power, water 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;

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

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

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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.

Our incentive compensation plans align with the key objectives outlined in our 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.

 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 which are integrity, safety, excellence, sustainability and inclusion.

Human Capital Resources

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.

We believe our employees are our most valuable resource and are the primary factor in 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.

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.

Our focus on inclusive diversity, talent development, talent acquisition, and succession planning has allowed us to build a bench of talented employees.

Our managerial and supervisory personnel have an average tenure of 11 years with Granite, which demonstrates our workforce's strong dedication and great pride in our company.

On December 31, 2022, we employed approximately 2,000 salaried employees who work in project, functional and business unit management, estimating and administrative capacities, plus approximately 1,800 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 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”).

During 2022, the number of hourly employees ranged from approximately 1,800 to 3,800 and averaged approximately 3,400. The majority of both our salaried and hourly personnel were located in the United States during 2022.

As of December 31, 2022, three of our wholly-owned subsidiaries, Granite Construction Company, Layne Christensen Company 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 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;

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.

We have established employee resource groups that serve employees from a variety of backgrounds, and we have designated October as Inclusion month throughout our Company. We periodically conduct pay equity analyses to support our commitment to pay equity, regardless of race, gender, ethnicity or sexual orientation.

We continued to execute on our inclusive diversity five-year strategic plan, which was established in 2020, with the following key goals:

increase representation of women throughout the organization from 13% in 2020 to 18% by 2025;

increase women in leadership from 14% in 2020 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.

increase representation of persons of color in leadership throughout the organization from 15% in 2020 to 20% by 2025;

increase inclusion index survey results from 71% in 2020 to 80% by 2025. 

In 2022 we continued to make progress towards our 2025 goals.

Representation of women throughout the organization was maintained at 13%, women in leadership increased to 19%, representation of persons of color in leadership rose to 18% and our 2022 inclusion index survey results increased to 74%.

We were also successful with our targeted talent acquisition plan focused on diverse colleges and universities.

In 2022, we hired 195 interns from 65 colleges and universities.

Of this, 52% were diverse.

Health and Safety:

 Employee safety is our greatest priority and safety is ultimately about people, not statistics.

Safety is one of our core values and we strive to continuously improve our safety program to better protect our people.

We instill our culture of safety through relationship-based safety training, shared knowledge, and engagement at every level of our organization.

A core part of our mission will always be to provide a safe and healthy work environment for all our employees.

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.

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

The development of our employees is critical to our 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.

We offer a wide variety of training opportunities to ensure our employees are supplementing their on-the-job learning with in-person and online courses needed to promote performance and growth.

In 2022, our employees completed over 25,000 training courses and more than 250 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.

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

Employee Engagement:

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.

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 which includes physical, emotional, social and financial health.

In 2022, we conducted a company-wide engagement survey and the results reflected improved engagement across each of our four key indices:

trust, executive leadership, inclusive diversity and code of conduct.

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.

Our compensation programs are designed to align the compensation of our employees with our financial and safety performance and their individual performance 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 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 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 leave, a retirement plan, life insurance 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.

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

We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs.

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.

Sustainability is one of our core values and we are committed to contributing to the development of a more sustainable future. We are a participating member of the United Nations Global Compact.

Our sustainability objectives encompass corporate social responsibility, environmental stewardship, dependable governance and the creation of enduring economic value.

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

To attain our objectives, we have a Sustainability department that develops, coordinates and communicates our environmental, social and governance (“ESG”) initiatives across the Company.

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.

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

For climate-related issues, we also utilize the recommendations from the Task Force on Climate-related Financial Disclosures.

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.

We publish annual Sustainability Reports, which update stakeholders on our ESG performance.

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.

However, achievement of our sustainability commitments and targets is subject to risks and uncertainties, many of which are outside of our control. See “Item 1A.

Risk Factors”

for additional information.

Our annual sustainability reports, along with additional information about our sustainability program, 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:

Committed and Awarded Projects ("CAP") consists of two components:

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

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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.

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

All CAP is in the Construction segment.

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

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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 

Our CAP was $4.5  billion and $4.0 billion as of 

December 31,  

2022  and 

2021 , respectively.

Approximately $1.8  billion of the 

December 31,  

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

2022  CAP is expected to be completed during 2023.

Competition and Market Trends

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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.

One of our significant competitive advantages is that we own and lease aggregate reserves and own processing plants that are vertically integrated into our construction operations.

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.

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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.

Approximately 70% of our construction-related revenue in 2022 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. 

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

In addition, certain of our contracts with government agencies 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.

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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.

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

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

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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 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.

The percentage of fixed unit price contracts in our unearned revenue was 72.7% and 53.3% at December 31, 2022 and 2021, 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 assumptions 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 and any increase in our cost over budget, whether due to inflation, inefficiency, incorrect estimates or assumptions or other factors, will reduce our profit on the project.

The percentage of fixed price contracts in our unearned revenue was 23.5% and 44.3% at December 31, 2022 and 2021, respectively.

All other contract types represented 3.8% and 2.4% of our unearned revenue at December 31, 2022 and 2021, 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.

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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.

With the exception of contract change orders and affirmative claims, 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.

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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.

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

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

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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.

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

Most of our contracts, including those with the government, provide for termination at the convenience of the contract owner, with provisions to pay us for work performed through the date of termination.

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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, or some portion thereof, in accordance with contract terms until their performance is complete.

Based on our analysis of their construction and financial capabilities, among other criteria, we may 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.

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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.

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

Generally, each construction joint venture is formed as a partnership or limited liability company to accomplish a specific project and is jointly controlled by the joint venture partners.

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 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.

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.

In alignment with our strategic plan and project bidding criteria, when entering into new joint venture agreements, we generally 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 Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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.

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The agreements with our partner(s) for both construction joint ventures and line-item joint ventures define each partner’s management role and financial responsibility in the project.

The amount of operational exposure is generally limited to our stated ownership interest.

However, due to the joint and several nature of the performance obligations under the related owner contracts, if any of the partners fail to perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a performance guarantee).

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corporate and/or other guarantees.

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’

At December 31, 2022, there was $246.4 million of remaining contract value on unconsolidated and line item construction joint venture contracts, of which $110.9 million represented our share and is included in our CAP and the remaining $135.5 million represented our partners’

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

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compensation and employer’s liability.

Further, our policies are placed with financially stable insurers, often in a layered or quota share arrangement which reduces the likelihood of an interruption or impact to operations.

Further, our policies are placed with insurers that we believe are financially stable, often in a layered or quota share arrangement which reduces the likelihood of an interruption or impact to operations.

In connection with our business, we generally are required to provide various types of surety bonds that provide an additional measure of security for our performance under certain public and private sector contracts.

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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):

In 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.

At December 31, 2022 and 2021, 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 and tunnel boring machines that are used in both of our segments.

The number of construction equipment and vehicles as of December 31, 2021 includes those related to the businesses that were classified as held for sale as of that date (see Note 1 and Note 2 of "Notes to Consolidated Financial Statements" for further information).

1,103 pieces of construction equipment and 1,861 vehicles were classified as held for sale as of December 31, 2021.

During the first quarter of 2022, 393 pieces of heavy construction equipment and 720 vehicles were sold as part of the sale of one of the held for sale businesses.

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

We pool certain equipment to maximize utilization.

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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.

In 2022 and 2021, we purchased $73.9 million and $60.1 million, respectively, of construction equipment and vehicles.

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.

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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 has also served as a director of our Board of Directors since June 2021 and has a term expiring at the 2023 annual meeting.

Larkin holds a B.S.

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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, 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.

Richards received a B.S.

in Civil Engineering from New Mexico State University.

Tatusko joined Granite in 1991 and has served as Senior Vice President and Group Manager since January 2020. He served as Vice President and Valley Region Manager from 2014 to 2019, Northern California Area Manager from 2012 to 2014, Design Build Project Executive from 2010 to 2012, Group Construction Manager from 2007 to 2010, Arizona Operations Manager from 2005 to 2007, Arizona Construction Manager from 2001 to 2005, Plants Manager from 1999 to 2001, Estimator/Project Manager from 1995 to 1999 and Project Engineer from 1993 to 1995. Prior to joining Granite, he was employed at Oldcastle Tilcon from 1984 to 1991.

Tatusko received a Construction Management degree from Southern Maine Tech.

Dowd joined Granite in 1986 and has served as Senior Vice President and California Group Manager since January 2021.

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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.

Tatusko received a Construction Management degree from Southern Maine Tech.

Williams joined Granite in 1987 and has served as Senior Vice President and Group Manager since June 2022. He also served as Regional Vice President from January 2015 to June 2022, as Large Project Executive from 2010 to 2015, as Operations Manager in Southern California from 2009 to 2010, as Manager of Construction in Southern California from 2007 to 2009, as Construction Manager in Sacramento from 2000 to 2007, as Senior Project Manager in Utah from 1998 to 2000, as Environmental Construction Manager in California from 1994 to 1998, as Estimator/Project Manager in Santa Barbara from 1989 to 1994, and as Large Project Engineer from 1987 to 1989. Mr.

Williams holds a B.S.

in Civil Engineering from Ohio Northern University.

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

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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