What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-02-21 compared with 2022-02-28 · 188 added, 181 removed, 228 unchanged (62% of the section changed)

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December 1, 2022 through December 31, 2022

(1) On June 2, 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan, which replaced the Amended and Restated 2012 Equity Incentive Plan.

The number of shares purchased is in connection with employee tax withholding for restricted stock units vested under our 2012 and 2021 Equity Incentive Plans.

(2) As announced on April 29, 2016, on April 7, 2016, the Board of Directors authorized us to purchase up to $200.0 million of our common stock at management's discretion (the “2016 authorization”). As part of the 2016 authorization, we established a share repurchase program to facilitate common stock repurchases.

We did not purchase shares under the share purchase plan in any of the periods presented. As of December 31, 2021, $157.2 million of the 2016 authorization remained available. As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion (the “2022 authorization”).

The 2022 authorization replaced the 2016 authorization, including the amount available for repurchase, and no further repurchases will take place under the 2016 authorization. The specific timing and amount of any future purchases will vary based on market conditions, securities law limitations and other factors.

(1) The number of shares purchased was in connection with employee tax withholding for restricted stock units vested under our equity incentive plans.

(2) As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion.

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

Performance Graph

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Heavy Construction index includes the following companies:

AECOM, Emcor Group Inc., Mastec Inc., Quanta Services Inc., Valmont Industries Inc.

AECOM, EMCOR Group Inc., MDU Resources Group Inc, MasTec Inc., Quanta Services Inc., Valmont Industries Inc.

and WillScot Mobile Mini Holdings Corp. Certain of these companies differ from Granite in that they derive more revenue and profit from non-U.S.

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The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2017 through December 31, 2022.

Granite Construction Incorporated

Dow Jones U.S.

Heavy Construction

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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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. 

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.

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 new strategic plan 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 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”

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. 

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.

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.

See Note 2 of “Notes to the Consolidated Financial Statements”

for additional information. 

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.

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

economy including access to resources (labor, supplies and subcontractors);

(ii) federal, state and local public funding levels;

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Conversely, increased levels of public funding as well as an expanding or robust economy will generally increase demand for our services and provide opportunities for revenue growth and margin improvement.

Critical Accounting Policies and Estimates

Critical Accounting Estimate

The financial statements included in “Item 8.

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however, actual amounts could differ from those estimates.

The following are accounting policies and estimates that involve significant management judgment and can have significant effects on the Company’s reported results of operations.

We consider revenue recognition a critical accounting estimate.

It involves significant management judgment and can significantly affect our reported results of operations.

Revenue Recognition

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Significant changes in revenue and cost estimates, particularly in our larger, more complex, multi-year projects have had, and in the future could have, a significant effect on our profitability.

Due to the number of factors that can contribute to changes in estimates of contract cost and profitability, 

the sensitivity of reported amounts to the assumptions underlying the estimate’s calculation is not reasonably available or meaningful.

Due to the number of factors that can contribute to changes in estimates of contract cost and profitability, the sensitivity of reported amounts to the assumptions underlying the estimate’s calculation is not reasonably available or meaningful.

However, Note 3 of “Notes to the Consolidated Financial Statements”

presents the impact material revisions in estimates had on the periods covered by this report.

We perform our goodwill impairment tests annually as of November 1 and more frequently when events and circumstances occur that indicate a possible impairment of goodwill.

Examples of such events or circumstances include, but are not limited to, the following: 

a significant adverse change in the business climate;

a significant adverse change in legal factors or an adverse action or assessment by a regulator;

a more likely than not expectation that a segment or a significant portion thereof will be sold;

the testing for recoverability of a significant asset group within the segment.

In accordance with U.S.

GAAP, we can elect to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or perform a quantitative impairment test.

Based on a qualitative assessment, if we determine that the fair value of a reporting unit is more likely than not to be less than its carrying amount, a quantitative impairment test will be performed.

In performing a quantitative goodwill impairment test, we calculate the estimated fair value of the reporting unit using the discounted cash flow and market multiple methods. The estimated fair value is compared to the carrying amount of the reporting unit, including goodwill.

If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired.

If the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting unit’s carrying amount over the fair value is recognized as a non-cash impairment charge.

Judgments inherent in these methods include the determination of appropriate discount rates, the amount and timing of expected future cash flows, revenue and margin growth rates, and appropriate benchmark companies. The cash flows used in our 2021 discounted cash flow model were based on five-year financial forecasts developed internally by management adjusted for market participant-based assumptions.

Our discount rate assumptions are based on an assessment of the equity cost of capital and appropriate capital structure for our reporting units. To assess for reasonableness, we compare the estimated fair values of the reporting units to our current market capitalization. 

Material assumptions used in the impairment analysis included the weighted average cost of capital percent and terminal growth rates.

Accrued Insurance Costs

We carry insurance policies to cover various risks, including general liability, automobile liability, workers compensation and employee medical expenses under which we are liable to reimburse the insurance company for certain losses. 

The amounts for which we are liable range from the first $0.5 million to $1.5 million per occurrence. We accrue for probable losses, both reported and unreported, that are reasonably estimable using actuarial methods based on historic trends, modified, if necessary, by recent events.

The establishment of accruals for estimated losses associated with our insurance policies are based on actuarial studies that include known facts and interpretations of circumstances, including our experience with similar cases and historical trends involving claim payment patterns, pending levels of unpaid claims, claim severity, frequency patterns and changing regulatory and legal environments.

Changes in our loss assumptions caused by changes in actual experience would affect our assessment of the ultimate liability and could have an effect on our operating results and financial position. A 10% increase in both the claim frequency and the average cost per claim used to estimate the accruals would result in an increase in our accrued insurance and an associated increase in expense of approximately $7.4 million.

A 10% decrease in both the claim frequency and the average cost per claim would result in a decrease in our accrued insurance and an associated reduction in expense of approximately $6.7 million.

Current Economic Environment and Outlook

Funding for our public work projects, which accounts for approximately 75% of our portfolio, is dependent on federal, state, regional and local revenues.

At the federal level, President Biden signed the $1.2 trillion Infrastructure Investment and Jobs Act (“IIJA”) on November 15, 2021.

The five-year IIJA provides the largest increase in federal highway, bridge and transit funding in more than six decades and includes $550 billion in incremental funding.

We believe the increased multi-year spending commitment will improve the programming visibility for state and local governments and bring meaningful impact to project lettings starting in late 2022 and then growing in 2023 and beyond.

Funding for our public work projects, which accounts for approximately 

70%  of our portfolio, is dependent on federal, state, regional and local revenues.

At the federal level, the rollout of the $1.2 trillion Infrastructure Investment and Jobs Act (“IIJA”) has started with the appropriation of funds included in the 2022 federal spending bill enacted in March 2022. The five-year IIJA provides the largest increase in federal highway, bridge and transit funding in more than six decades and includes $550 billion in incremental funding. In October 2022, the U.S.

Department of Transportation announced that it released $59.9 billion in Fiscal Year 2023 apportionments directly to all 50 states, all of which is available for states to authorize following the passing of the FY 2023 omnibus appropriations bill in December 2022.

We continue to believe that the increased multi-year spending commitment will improve the programming visibility for state and local governments and drive an increase in project lettings starting in 2023 and then more meaningfully in 2024 and beyond. We anticipate the impact to our financial statements to gradually grow in 2023 and beyond as funds are allocated first to quicker turn projects and then later to more complex larger projects. 

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

In the November 2021 elections, voters in 17 states approved 89% of state and local ballot initiatives that will provide an additional $6.9 billion in one-time and recurring revenue for transportation improvements.

In California, our top revenue-generating state, a significant part of the state infrastructure spend is funded through Senate Bill 1 (SB-1), the Road Repair and Accountability Act of 2017, which is a 10-year, $54.2 billion program.

Revenue collected through SB-1 is on track to increase over the next five years and supports our growth in the state.

Over the past year, segments of the construction industry were adversely affected by inflation as well as supply chain and labor constraints. Inflation has impacted the cost of inputs such as oil related items, concrete and steel. We continually monitor the expected movement of our construction input costs and apply strategies to mitigate the impacts including adjusting the pricing of our contracts.

One of the most significant impacts to our results of operations has been the increase over the last year of oil prices through our use of diesel fuel and liquid asphalt. While we actively work to mitigate the impacts of oil price inflation, further price increases may adversely impact us in the future.

Granite’s Committed and Awarded Projects (“CAP”) continues to be strong.

During 2021, we saw increased interest in best-value or alternative delivery procurement work by state departments of transportation, such as California and Utah, along with other state agencies. This shift in delivery procurement methodology creates a delay in certain project bookings and project start times in the short term, but we believe will give us the opportunity for larger future work with more sustainable margins and less inherent risk. 

While we are encouraged by the growth outlook, the COVID-19 pandemic continues to create uncertainties to the economy and the normal cadence of project bids, and could adversely impact our operations and financial results in future periods.

While each market is unique, we see a strong funding environment at the state and local levels currently and we expect that environment to improve with the impact of the IIJA.

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

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

While we actively work to mitigate the impacts of oil price inflation, further price increases may adversely impact us in the future. 

Our Committed and Awarded Projects (“CAP”) continues to be strong with $4.5  billion at the end of the fourth quarter of 2022. 

Our CAP is supported by a positive public funding environment and resilient private market which we believe will provide further opportunities in 2023 to continue to grow CAP.

Strategic Actions

The divestiture of the WMS businesses reflect our new strategy to focus on our core civil construction and materials business by using the sale proceeds to invest in these two core businesses.

The divestitures also create opportunities to streamline operational support functions, improve overhead efficiency and better leverage efficiencies of scale.

The current and projected strong demand for civil construction supports the decision to grow our vertically integrated business.

Through our newly reorganized operational structure, our focus is to pursue opportunities in markets where our operating groups’

presence, capabilities and resources provide strategic advantages, with improved and consistent margin expectations.

We enter the 2022 fiscal year with a strong balance sheet and liquidity providing flexibility to invest to strengthen and expand our home market footprint.

During the fourth quarter of 2021, we concluded that the assets and liabilities of our former Water and Mineral Services operating group (“WMS”) met the criteria for classification as held for sale and the results of operations were presented as discontinued operations at that time.

This included:

our trenchless and pipe rehabilitation services business (“Inliner”);

our water supply, treatment, delivery and maintenance business (“Water Resources”);

and our mineral exploration drilling business (“Mineral Services”).

The sale of Inliner was completed on March 16, 2022 for a purchase price of $159.7 million, subject to certain adjustments.

As a result of the sale and post-closing adjustments, we received cash proceeds of $140.6 million and recognized a gain of $1.8 million. 

In September 2022, we announced our decision to retain the Water Resources and Mineral Services businesses that were previously classified as held for sale and reported in discontinued operations.

This change to our plan of sale was due to unfavorable market conditions which undermined our efforts to secure an appropriate value for the businesses.

In connection with the reclassification of the WMS businesses from discontinued operations to continuing operations, the Consolidated Statements of Operations have been revised to include Inliner through the date of sale, as well as the ongoing operations of Water Resources and Mineral Services in the Mountain operating group for all periods presented.

The Water Resources and Mineral Services businesses are included in the Construction segment.

Inliner had both Construction and Materials operations.

See Note 1 and Note 2 of “Notes to the Consolidated Financial Statements”

for further information.

Litigation Matter

As further discussed in Note 20 of “Notes to the Consolidated Financial Statements,”

in early February 2022, our wholly-owned subsidiary, Layne Christensen Company (“Layne”), was sued for $70 million and Granite received an arbitration demand for $30 million relating to Layne’s work on the Salesforce Tower foundation.

Layne was a subcontractor on this project and potential liability for this project remained with Layne in connection with our acquisition of Layne in June 2018. 

See “Item 1A.

our wholly owned subsidiary, Layne Christensen Company (“Layne”), has been sued for $100 million relating to Layne’s work on the Salesforce Tower foundation.

Layne was a subcontractor on this project and potential liability for this project remained with Layne in connection with our acquisition of Layne in June 2018. For additional information, see “Item 1A.

Risk Factors - In connection with acquisitions or divestitures, we may become subject to liabilities”

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Risk Factors - We are involved in lawsuits and legal proceedings in the ordinary course of our business and may in the future be subject to other litigation and legal proceedings, and, if any of these are resolved adversely against us, it could harm our business, financial condition and results of operations.”

for additional information.

Results of Operations

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Selling, general and administrative expenses

Other costs (see Note 1 of “Notes to the Consolidated Financial Statements”)

Non-cash impairment charges (see Note 1 of “Notes to the Consolidated Financial Statements”)

Other costs, net (see Note 1 of “Notes to the Consolidated Financial Statements”)

Gain on sales of property and equipment, net (see Note 11 of “Notes to the Consolidated Financial Statements”)

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Total other (income) expense, net

Net income (loss) from continuing operations

Net income (loss) from discontinued operations (see Note 2 of “Notes to the Consolidated Financial Statements”)

Amount attributable to non-controlling interests from continuing operations

Amount attributable to non-controlling interests

Net income (loss) attributable to Granite Construction Incorporated

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(dollars in thousands)

Construction revenue in 2021 decreased by $161.8 million, or 5.9%, compared to 2020 primarily due to lower CAP in the California operating group and inclement weather conditions in California near the end of 2021.

Lower CAP was reflective of an extended competitive bidding environment that existed through the first half of 2021.

Additionally, the Central operating group revenue decreased as we remain disciplined in our project bidding selection criteria and certain projects neared completion.

During 2021 and 2020, the majority of revenue earned in the Construction segment was from the public sector.

Construction revenue in 

decreased  by $ 272.3  million, or 

8.9% , compared to 2021  primarily due to the wind down of several large projects in the Central operating group, as well as the sale of Inliner in the first quarter of 2022. 

Revenue from the Mountain operating group decreased $54.8 million primarily due to the sale of Inliner which contributed $33 million in 2022 prior to its sale compared to $206 million in 2021.

This decrease was partially offset by increased revenue driven by higher beginning CAP levels and stronger market conditions in the current year.

California operating group revenue decreased $10.8 million in 2022, mainly due to delays in project starts and less favorable weather conditions in the first quarter of  

2022  and 2021 , approximately 70% and 75%, respectively, of revenue earned in the Construction segment was from the public sector.

Materials Revenue

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(dollars in thousands)

Materials revenue in 2021 increased by $43.0 million, or 11.8%, when compared to 2020 from increased volumes in both aggregates and asphalt sales combined with increased pricing in certain markets.

Materials revenue in 2022 increased by $71.6 million, or 16.8%, when compared to 2021 driven by price increases inclusive of energy surcharges and overall market demands driving higher sales volumes of aggregates, slightly offset by decreased sales volumes for asphalt.

Committed and Awarded Projects

Effective during the three months ended June 30, 2021, on a retroactive basis, we renamed contract backlog to CAP and added the general construction portion of construction management/general contractor (“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:

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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.

Other awards include the general construction portion of construction management/general contractor ("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.

All CAP is in the Construction segment.

(dollars in thousands)

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(dollars in thousands)

CAP of $4.0 billion at December 31, 2021 was $15.4 million, or 0.4%, lower than 2020 primarily due to lower CAP in the Central operating group as we made progress on existing projects and maintained our new project bidding selection criteria.

This decrease was partially offset by increased bidding activity in 2021 in our vertically-integrated businesses.

Significant new additions to CAP during the fourth quarter of 2021 included a $160 million CM/GC project in Utah and a $90 million CM/GC highway improvement project in Northern California.

(1) These balances do not include amounts held for sale (see Note 2 of "“Notes to the Consolidated Financial Statements”).

The unearned revenue balance in CAP related to businesses held for sale at December 31, 2021 was $252.7 million and there was no balance for other awards. 

CAP of $4.5 billion at December 31, 2022 was $475.1 million, or 11.8% higher than 2021 primarily due to higher CAP in all of our operating groups due to higher award volume during the fourth quarter of 2022. Including CAP that was classified as held for sale as of December 31, 2021 of $252.7 million and excluding CAP related to Inliner of $199.3 million as of December 31, 2021, which was sold during the first quarter of 2022, comparable CAP increased $421.7 million, or 10.4%, over the prior year.

Significant new additions to CAP during the fourth quarter of 2022 included a $174 million runway project in California, a $170 million highway project in Arizona, a $160 million CM/GC railway project in Illinois and $142 million for multiple road projects in California.

Non-controlling partners’

share of CAP as of December 31, 2022 and 2021 was $85.0 million and $214.3 million, respectively.

At December 31, 2021 and 2020, three and four contracts had total forecasted losses with remaining revenue of $204.2 million, or 5.1% of total CAP, and $423.0 million, or 10.5% of total CAP, respectively. 

At December 31, 2022 and 2021 , five and three contracts with remaining CAP of $10 million or more per project had total forecasted losses with remaining revenue of $134.2 million, or 3.0% of total CAP, and $204.2 million, or 5.1% of total CAP, respectively. 

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

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Percent of total revenue

Construction gross profit for the year ended December 31, 2021  increased by $6.9 million, or 2.9% , when compared to 2020  primarily due to a decrease in the negative net impact from revisions in estimates in our Central operating group (see Note 3 of “Notes to the Consolidated Financial Statements”) , partially offset by decreases in gross profit from our vertically-integrated businesses from an extended competitive bidding environment.

Materials gross profit for the year ended December 31, 2021 decreased by $6.0 million, or 9.5%, when compared to 2020 driven primarily by higher fuel and liquid asphalt costs in 2021 compared to 2020 combined with lower volumes in California due to inclement weather during the fourth quarter of 2021.

Construction gross profit for the year ended December 31, 2022  increased by $0.7 million, or 0.2% , when compared to 2021  primarily driven by strong performance in the vertically integrated businesses in the California and Mountain operating groups. These increases were largely offset by decreases in the Central operating group related to negative net impacts from revisions in estimates (see Note 3 of “Notes to the Consolidated Financial Statements”) as well as the impact of the sale of Inliner in the first quarter of 2022 .

Materials gross profit for the year ended December 31, 2022 increased by $6.2 million, or 10.4%, when compared to 2021 due to higher revenue and greater volumes while gross profit margin decreased due to the impact of higher fuel and energy costs earlier in the year.

Although fuel and liquid asphalt costs increased in 2022 as compared to 2021, we implemented energy surcharges in the second quarter of 2022 to cover these increases on new orders.

Selling, General and Administrative Expenses

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Selling expenses can vary depending on the volume of projects in process and the number of employees assigned to estimating and bidding activities. As projects are completed or the volume of work slows down, we temporarily redeploy project employees to bid on new projects, moving their salaries and related costs from cost of revenue to selling expenses.

Selling expenses for 2021 decreased by $9.2 million, or 12.3%, compared to 2020, primarily due to reduced estimating and bidding activity following the implementation of our new project bidding selection criteria.

Selling salaries and related expenses for 2022 decreased by $7.8 million compared to 2021, primarily due to the sale of Inliner on March 16, 2022 as well as other cost reduction efforts. This decrease was partially offset by an increase of $4.0 million in other selling expenses driven by increased bidding activity in 2022.

General and Administrative Expenses

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

Total general and administrative expenses remained largely unchanged for 2021 when compared to 2020.

Total general and administrative expenses for 2022 decreased by $25.6 million, or 11.3%, compared to 2021, primarily due to the sale of Inliner on March 16, 2022, as well as decreases in the fair market value of our Non-Qualified Deferred Compensation plan liability, which is mostly offset in other (income) expense, net, through our own company-owned life insurance policy.

These decreases were partially offset by an increase in incentive compensation due to improved financial performance.

Other Costs, net

The following table presents other costs for the respective periods:

Years Ended December 31,

(dollars in thousands)

Other costs for the year ended December 31, 2021 increased by $58.2 million when compared to 2020 primarily due to $66 million in net settlement charges incurred during 2021 as further described in Note 20 of “Notes to the Consolidated Financial Statements.” Other costs also included $21.6 million and $35.6 million for the years ended December 31, 2021 and 2020, respectively, of non-recurring legal and accounting fees.

The majority of these non-recurring fees related to the lawsuits discussed in Note 20 of “Notes to the Consolidated Financial Statements”

and to the Investigation undertaken by the Audit Committee discussed in “Item 1A.

Risk Factors.” The remaining other costs includes personnel costs incurred in connection with our operating group reorganization during 2021 and integration expenses incurred in 2020 and 2019 related to the Layne acquisition that occurred in 2018.

(in thousands)

Other costs, net

Other costs for the year ended December 31, 2022 decreased by $77.2 million when compared to 2021 primarily due to the securities litigation settlement charge of $66.0 million that occurred in 2021, settlement of the shareholder derivative lawsuit and related receipt of $5.0 million in 2022 as well as decreases in non-recurring legal and accounting fees of $7.4 million, net divestiture expenses of $8.0 million and personnel costs in connection with our operating group reorganization during 2021 of $2.8 million.

These decreases were partially offset by a $12.0 million charge for the resolution of the SEC investigation in 2022.

See Note 20 of "Notes to the Consolidated Financial Statements" for information related to settlements of certain legal matters and investigations. 

Gain on Sales of Property and Equipment, net

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Years Ended December 31,

(dollars in thousands)

(in thousands)

Gain on sales of property and equipment, net

Gain on sales of property and equipment, net for the year ended December 31, 2021  

increased by $28.9 million when compared to 2020 primarily due to the sale of property in California as part of our ongoing asset optimization plan.

See Note 11 of “Notes to the Consolidated Financial Statements”

Gain on sales of property and equipment, net for the year ended December 31, 2022  decreased 

by $53.8 million when compared to 2021 due to fewer properties sold and lower gains per property sold in 2022.

The properties sold were part of our ongoing asset optimization plan. See Note 11 of “Notes to the Consolidated Financial Statements”

for more information.

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Total other (income) expense, net

Interest income for 2021 decreased by $1.8 million, or 61.0%, when compared to 2020 primarily due to the settlement of two notes receivable; one in 2020 and the other during the first quarter of 2021.

Interest expense for 2021 decreased by $3.6 million, or 15.0%, when compared to 2020 

as no amount was drawn on the revolver in 2021 and due to a decrease in the effective interest rate on our credit facility. 

Equity in income of affiliates for 2021 decreased by $1.7 million, or 33.2%, when compared to 2020 primarily due to a decrease in income from a real estate investment entity.

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

Interest income for 2022 increased by $5.4 million when compared to 2021 primarily due to higher interest rates on our investments. Interest expense for 2022 decreased by $8.1 million, or 39.1%, when compared to 2021 because we are no longer recording the amortization of the debt discount on our 2.75% Convertible Notes due to the implementation of ASU 2020-06.

Equity in income of affiliates was relatively flat when compared to 2021.

Other income, net decreased by $5.4 million primarily due to increases in the fair market value of our company owned life insurance policy, which is mostly offset in general and administrative expenses through our Non-Qualified Deferred Compensation plan liability. 

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

Years Ended December 31,

(dollars in thousands)

Provision for (benefit from) income taxes on continuing operations

Provision for (benefit from) income taxes

Effective tax rate

Our tax rate decreased from 121.9% to 13.0% when compared to 2020 primarily due to the impact of non-controlling interest and the valuation allowance on capital losses recorded in 2020 relative to the insignificant income before provision for income taxes in 2020.

Our effective tax rate 

decreased  from 

89.1 % to 14.1 % when compared to 2021  primarily due 

to the tax benefit associated with the reversal of net deferred tax liabilities related to businesses no longer held for sale and the release of valuation allowances related to the utilization of capital loss carryforwards.

The impacts of those items were partially offset by nondeductible goodwill associated with the sale of Inliner and the impact of the relative change in income before income taxes to the provision for income taxes.

Amount Attributable to Non-controlling Interests

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

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

Years Ended December 31,

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The amount attributable to non-controlling interests represents the non-controlling owners’

share of the income or loss of our consolidated construction joint ventures. The change during 2021 was primarily due to a net negative impact from revisions in estimates on two projects 

share of the net loss of our consolidated construction joint ventures. The change during 2022 was primarily due to increased profits from new and existing joint ventures, partially offset by a net negative impact from revisions in estimates on one project. 

(See Note 3 of “Notes to the Consolidated Financial Statements”) .

Net Income (Loss) from Discontinued Operations

Net income from discontinued operations for the year ended December 31, 2021 increased $175.1 million when compared to 2020 primarily due to goodwill impairment charges in 2020.

Prior Years Comparison (2020 to 2019)

 Construction revenue in 2020 increased $188.3 million, or 7.3%, compared to 2019 primarily from increases in the California operating group due to beginning the year with higher CAP, new awards and favorable weather in 2020.

Increases were also due to the Central operating group beginning the year with higher CAP.

The increases were partially offset by decreases in the Mountain operating group due to a decline in new awards in 2020 and beginning the year with lower CAP.

Materials revenue in 2020 increased $25.7 million, or 7.6%, when compared to 2019 primarily due to an increase in revenue in the California operating group from increased volume from improved weather conditions in 2020.

Prior Years Comparison (2021 to 2020)

 Construction revenue in 

decreased  $ 105.5  million, or 3.3% , compared to 2020  primarily due to lower CAP in the California operating group and inclement weather conditions in California near the end of 2021.

Lower CAP was reflective of an extended competitive bidding environment that existed through the first half of 2021.

Additionally, the Central operating group revenue decreased as we remain disciplined in our project bidding selection criteria and certain projects neared completion.

These decreases were partially offset by increases in the Mountain operating group primarily driven by increased demand for water supply and maintenance services and mineral exploration, as well as lower activity levels in 2020 as a result of the COVID-19 pandemic which caused delays in awarded projects and deferrals in bidding processes. 

Materials revenue in 2021  

increased  $ 44.9  million, or 11.8% , when compared to 2020  from increased volumes in both aggregates and asphalt sales combined with increased pricing in certain markets.

Gross Profit:

 Construction gross profit for the year ended December 31, 2020 increased by $95.0 million, or 64.8%, when compared to 2019 primarily due to a decrease in net negative impact from revisions in estimates related to the Central operating group.

Materials gross profit for the year ended December 31, 2020 increased by $19.9 million, or 45.9%, when compared to 2019 driven by an increase in volume from favorable weather during 2020 resulting in lower per unit fixed costs.

 Construction gross profit for the year ended 

December 31,  

increased by $ 23.1  million, or 8.2% , when compared to 

2020 primarily due to a decrease in the negative net impact from revisions in estimates in our Central operating group (see Note 3 of “Notes to the Consolidated Financial Statements”), and increased activity in water supply and maintenance services and mineral exploration, partially offset by decreases in gross profit from our vertically-integrated businesses from an extended competitive bidding environment.

Materials gross profit for the year ended December 31,  

decreased  by $ 5.2 million, or 8.1% , when compared to 2020  driven primarily by higher fuel and liquid asphalt costs in 2021 compared to 2020 combined with lower volumes in California due to inclement weather during the fourth quarter of 2021.

Selling, General and Administrative Expenses:

Selling expenses for 2020 increased $6.7 million, or 9.8%, compared to 2019 primarily due to an increase in salaries and related expenses from increased bidding activities.

General and administrative expenses for 2020 increased $8.0 million, or 4.7%, compared to 2019 primarily due to increases in salaries and related expenses from an increase in employee benefits and compensation.

 Other costs for the year ended December 30, 2020 increased by $30.2 million when compared to 2019 primarily due to an increase in legal, accounting and investigation fees related to the lawsuits as discussed in Note 20 of “Notes to the Consolidated Financial Statements”

and to the Investigation undertaken by the Audit Committee as discussed in “Item 1A.

Risk Factors.”

Selling expenses for 2021  

decreased  $ 8.8 million, or 10.3% , compared to 2020  primarily due to reduced estimating and bidding activity following the implementation of our new project bidding selection criteria.

General and administrative expenses were relatively flat year over year.

Non-cash Impairment Charges: 

The change during 2021 was primarily due to goodwill impairment charges as well as an impairment in our investment in affiliates in 2020. 

 Other costs for the year ended December 31,2021  

increased  by $ 64.3  million when compared to 2020 primarily due to $66.0 million in net settlement charges incurred during 2021 as further described in Note 20 of "Notes to the Consolidated Financial Statements." Other costs also decreased  by $ 13.5  million in 2021 due to a reduction in non-recurring legal and accounting fees.

The majority of these non-recurring fees related to the lawsuits discussed in Note 20 of "Notes to the Consolidated Financial Statements." This decrease in non-recurring legal and accounting fees was offset by increases of $ 3.3  million in personnel costs incurred in connection with our operating group reorganization and $ 8.5  million of divestiture expenses related to the planned sale of the businesses within our former WMS operating group during 2021. 

Gain on Sales of Property and Equipment :

Gain on Sales of Property and Equipment increased $59.5 million compared to 

2020  primarily due to sales of properties in California related to our ongoing asset optimization plan. 

Other (Income) Expense:

 Interest income for 2020 decreased $4.2 million, or 58.4%, compared to 2019 primarily due to a decrease in interest rates associated with our marketable securities and cash equivalents.

Interest expense for 2020 increased $5.8 million, or 32.2%, when compared to 2019 primarily due to interest on the $230.0 million convertible senior notes that were issued in November 2019. Equity in income of affiliates for 2020 decreased $1.8 million, or 25.7%, compared to 2019 primarily due to a decrease in income from a real estate investment entity. Other income, net for 2020 decreased $1.2 million, or 23.3%, primarily due to changes in the fair market values of our Non-Qualified Deferred Compensation plan assets.

 Interest income for 2021  

decreased  $ 1.9  million, or 62.0% , compared to 2020  primarily due to the settlement of two notes receivable.

Interest expense for 2021  

decreased  $ 3.5  million, or 14.3% , when compared to 2020  as no amount was drawn on the revolver in 2021 and due to a decrease in the effective interest rate on our credit facility. Equity in income of affiliates for 2021  

increased  $ 3.8  million, or 43.3% , compared to 2020  primarily due to an increase in income from our foreign affiliates, which was partially offset by a decrease in income from a real estate investment entity. 

Income Taxes:

 Our tax rate increased by 91.4% from 30.5% to 121.9% when compared to 2019 primarily due to the impact of non-controlling interest and the valuation allowance on capital losses recorded in 2020 relative to the insignificant income before provision for income taxes in 2020.

 Our tax rate increased  

from 0.2%  to 

89.1 % when compared to 2020 .

The change in tax rate was due primarily to the tax expense associated with the non-cash impairment charges in 2020 (see Note 1 of "Notes to the Consolidated Financial Statements") and the income tax expense associated with the held for sale classification of the assets and liabilities of the former WMS operating group in 2021.

Amount Attributable to Non-controlling Interests:

 The change during 2020 was primarily due to a net negative impact from revisions in estimates on one project in the Central operating group.

Net Income ( Loss)  

from Discontinued Operations :

Net loss from discontinued operations for the year ended December 31, 2020 increased $135.6 million when compared to 2019 due to goodwill impairment charges in 2020.

 The change during 2021 was primarily due to a decrease in the net negative impact from revisions in estimates on two projects (see Note 3 of "Notes to the Consolidated Financial Statements").

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, available borrowing capacity and cash generated from operations.

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

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

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

Our material cash requirements include paying the costs and expenses associated with our operations, servicing outstanding indebtedness, making capital expenditures and paying dividends on our capital stock. We may also from time to time prepay or repurchase outstanding indebtedness and acquire assets or businesses that are complementary to our operations.

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see Note 16, Employee Benefit Plans

We believe our cash and cash equivalents, available borrowing capacity and cash expected to be generated from operations will be sufficient to meet our expected working capital needs, capital expenditures, financial commitments, cash dividend payments, and other liquidity requirements associated with our existing operations for the next twelve months.

We believe our cash and cash equivalents, investments, available borrowing capacity, access to the debt and equity capital markets, proceeds from the sales of the WMS businesses and cash expected to be generated from operations will be sufficient to meet our long-term requirements and plans. However, there can be no assurance that sufficient capital will continue to be available or that it will be available on terms acceptable to us.

As of December 31, 2021, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisted of U.S. Government and agency obligations.

Our credit facility consists of a term loan and a revolving credit facility.

Of the $275.0 million revolving credit facility, $232.0 million was available for borrowing at December 31, 2021. See Note 14 of “Notes to the Consolidated Financial Statements”

for further discussion regarding the revolving credit facility.

We believe our primary sources of liquidity will be sufficient to meet our expected working capital needs, capital expenditures, financial commitments, cash dividend payments, and other liquidity requirements associated with our existing operations for the next twelve months.

We believe our primary sources of liquidity, access to the debt and equity capital markets and cash expected to be generated from operations will be sufficient to meet our long-term requirements and plans. However, there can be no assurance that sufficient capital will continue to be available or that it will be available on terms acceptable to us.

December 31,  

2022 , our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisting primarily of U.S. Government and agency obligations and corporate commercial paper.

At the end of the second quarter of 2022, we had $16.5 million of past due receivables and $27.1 million of contract retention receivable from Brightline Trains Florida LLC ("Brightline") and they were experiencing delays in securing additional funding at that time.

During the third quarter of 2022, Brightline obtained additional funding and paid their past due receivables balances.

As of December 31,  

2022 , we had $6.8 million of receivables and $28.4 million of contract retention receivable from Brightline (see Note 6 of “Notes to the Consolidated Financial Statements”).

$3.4 million of the receivables were past due as of December 31, 2022 but were paid in January 2023 .

Brightline continues to experience challenges and delays in securing additional funding.

As of the date of this report, the remaining $3.4 million that was due in January is past due and $2.8 million has been billed since December 31, 2022. The timing and probability of future payments may be affected and our liquidity impacted if Brightline faces additional funding difficulties.

During the first half of 2022, we prepaid 100% of our outstanding term loan and replaced the Third Amended and Restated Credit Agreement dated May 31, 2018 with the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) maturing June 2, 2027.

The Credit Agreement is a $350.0 million senior secured, five-year revolving credit facility (the “Revolver”).

As of December 31, 2022 , the total unused availability under the Credit Agreement was $ 269.3  million, resulting from $ 30.7  million in issued and outstanding letters of credit and $ 50.0  million drawn under the Revolver.

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

for further discussion regarding the Revolver.

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

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

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

(in thousands)

Cash and cash equivalents excluding CCJVs

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(2) All marketable securities were classified as held-to-maturity and consisted of U.S.

and agency obligations as of all periods presented.

and agency obligations and corporate commercial paper as of all periods presented.

Granite’s portion of CCJV cash and cash equivalents was $62.5 million and $54.4 million as of December 31, 2022 and 2021, respectively.

Excluded from the table above is:

$56.5 million and $58.9 million as of December 31, 2021 and 2020, respectively, in Granite’s portion of unconsolidated construction joint venture cash and cash equivalents and

$16.5 million and $10.8 million of cash and cash equivalents as of December 31, 2021 and 2020, respectively, that is included in current assets held-for-sale.

$ 40.4  million and $ 56.5  million as of December 31,  

2022  and 2021 , respectively, in Granite’s portion of unconsolidated construction joint venture cash and cash equivalents and

$16.5 million of cash and cash equivalents as of 

December 31,  

2021  that was included in current assets held for sale.

Capital Expenditures

During the year ended December 31, 2021, we had capital expenditures of $94.8 million, including $12.0 million related to discontinued operations, compared to $93.3 million, including $16.7 million related to discontinued operations, during 2020.

Major capital expenditures are typically for aggregate and asphalt production facilities, aggregate reserves, construction equipment, buildings and leasehold improvements and investments in our information technology systems.

The timing and amount of such expenditures can vary based on the progress of planned capital projects, the type and size of construction projects, changes in business outlook and other factors. We currently anticipate 2022 capital expenditures for continuing operations to be between approximately $100 million and $115 million.

The timing and amount of such expenditures can vary based on the progress of planned capital projects, the type and size of construction projects, changes in business outlook and other factors. During the year ended December 31, 2022, we had capital expenditures of $121.6 million, compared to $94.8 million during 2021 for an increase of $26.8 million.

The increase year over year is primarily due to acquisitions of materials reserves in 2022.

We currently anticipate 2023 capital expenditures to be between approximately $100 million and $120 million.

Years Ended December 31,

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While we typically invoice our customers on a monthly basis, our contracts frequently provide for retention that is a specified percentage withheld from each payment by our customers until the contract is completed and the work accepted by the customer.

Cash provided by operating activities of $21.9 million during 2021 represents a $246.5 million decrease when compared to 2020. The change was primarily due to a $99.2 million decrease in cash provided by net income (including $66 million in net securities litigation settlement charges discussed below) after adjusting for non-cash items and a $147.4 million decrease in cash provided by working capital.

The decrease in cash provided by working capital was primarily due to a decrease in cash provided by contract assets, net from payment timing differences as well as decreases from CCJVs. 

Related to the securities litigation settlement, the settlement amount of $129.0 million, including the amount remitted by insurance, was paid into a settlement escrow fund in October 2021.

The funds are expected to be released from escrow when the case is no longer subject to further appeal or other review.

The amount paid by the Company of $66 million was included in cash provided by operating activities on the consolidated statements of cash flows for the year ended December 31, 2021. See Note 20 of “Notes to the Consolidated Financial Statements.”

Cash provided by operating activities of $55.6 million during 2022 represents a $33.7 million increase when compared to 2021. The change was primarily due to a $105.1 million increase in cash provided by net income after adjusting for non-cash items and a $76.6 million decrease in cash provided by working capital.

The decrease in cash provided by working capital was primarily due to an increase in contract assets, largely due to unresolved disputed work, as well as increased retention balances related to certain ongoing projects. This was partially offset by a decrease in receivables due to improvement in our billing and collection timing.

Investing activities

Cash used in investing activities of $21.5 million during 2021 represents a $19.8 million decrease when compared to 2020 primarily due to proceeds from the sale of three properties in California during 2021, partially offset by a decrease in maturities and proceeds from the sale of marketable securities and the issuance of a note receivable, net of collections.

Cash used in investing activities of $ 11.0  million during 2022  represents a $ 10.5 million 

decrease  when compared to 2021 .

The change was primarily due to proceeds from the sale of the Inliner business in March 2022, partially offset by a decrease in proceeds from sales of property and equipment as well as increased purchases of marketable securities and property and equipment in the current year.

Financing activities

Cash used in financing activities of $24.4 million during 2021 represents a $33.2 million decrease when compared to 2020.

The change was primarily due to a decrease in debt principal repayments, partially offset by a decrease in proceeds from debt.

Cash used in financing activities of $ 164.3 million during 

2022  represents a $ 139.9  million 

increase  when compared to 

The change was primarily due to the prepayment of our term loan of $123.8 million in the first half of 2022 and repurchases of common stock (inclusive of our accelerated share repurchase) of $70.9 million, partially offset by $50.0 million drawn on our Revolver.

The net debt paydown was completed at the time the Credit Agreement was entered (see Note 14 to “Notes to the Consolidated Financial Statements”

for further information), to bring our cash balance in line with projected cash needs for the rest of 2022.

We recognize derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value using Level 2 inputs. See Note 8 to “Notes to the Consolidated Financial Statements”

for further information. The hedge option and warrant derivative transactions, related to the $230.0 million convertible senior notes that were issued in November 2019, were recorded to equity on our consolidated balance sheets based on the cash proceeds.

for further information. The hedge option and warrant derivative transactions related to the 2.75% Convertible Notes were recorded to equity on our consolidated balance sheets based on the cash proceeds.

See Note 14 to “Notes to the Consolidated Financial Statements”

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Surety Bonds and Real Estate Mortgages

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.

We are generally 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.

At December 31, 2022, approximately  $2.5 billion 

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Covenants and Events of Default

Our Third Amended and Restated Credit Agreement dated May 18, 2021, as subsequently amended (the “Credit Agreement”) requires us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below.

Our Credit Agreement requires us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below.

Our failure to comply with these covenants would constitute an event of default under the Credit Agreement.

Additionally, the $230.0 million principal amount of convertible senior notes that were issued in November 2019 at an interest rate of 2.75% per annum and are payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2020 (the “2.75% Convertible Notes”) is governed by the terms and conditions of the indenture.

Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes or our Credit Agreement would constitute an event of default under the 2.75% Convertible Notes indenture or the Credit Agreement. A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility;

Additionally, the 2.75% Convertible Notes are governed by the terms and conditions of the indenture. Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes or our Credit Agreement would constitute an event of default under the 2.75% Convertible Notes indenture or the Credit Agreement. A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility;

(ii) termination of such facility;

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and/or (v) foreclosure on any lien securing the obligations under such facility.

A default under the 2.75% Convertible Notes indenture could result in acceleration of the maturity of the notes.

The most significant financial covenants under the terms of our Credit Agreement require the maintenance of a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio. As of December 31, 2021, the Consolidated Leverage Ratio was 2.39, which did not exceed the maximum of 3.00.

A default under the 2.75% Convertible Notes indenture could result in acceleration of the maturity of the notes.

2022 , the Consolidated Leverage Ratio was 1.46 , which did not exceed the maximum of 3.25.

Our Consolidated Interest Coverage Ratio was 15.06 , which exceeded the minimum of 3.00. 

Share Purchase Program

As announced on April 29, 2016, on April 7, 2016, the Board of Directors authorized us to repurchase up to $200.0 million of our common stock at management’s discretion (the “2016 authorization”).

As part of the 2016 authorization, we established a plan to facilitate common stock repurchases.

We did not purchase shares under the share purchase plan in 2021 or 2020 .

As of December 31, 2021 , $157.2 million of the 2016 authorization remained available.

 As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion (the “2022 authorization”).

The 2022 authorization replaced the 2016 authorization, including the amount available for repurchase, and no further repurchases will take place under the 2016 authorization. 

As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion. In March 2022 we repurchased 611,000 shares under this authorization.

On May 2, 2022, we entered into an accelerated share repurchase transaction with Bank of Montreal.

The Accelerated Share Repurchase was entered into pursuant to the existing share repurchase program.

On May 2, 2022, we paid $50.0 million to the bank and received 80% of the notional amount, or $40.0 million, in shares using the closing price on the trade date.

This equated to approximately 1.32 million shares, which were immediately retired.

On August 31, 2022, the reference period ended and on September 2, 2022 we received an additional 0.37 million shares, which were immediately retired.

The final share delivery was based on the average of the daily volume-weighted average price of Granite's common stock, less a discount, during the reference period.

The average price of all shares purchased under the Accelerated Share Repurchase was $29.63.

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

Recently Issued Accounting Pronouncements

Recently Issued and Adopted Accounting Pronouncements

See Note 1 of “Notes to the Consolidated Financial Statements”

under the caption Recently Issued Accounting Pronouncements.

under the caption Recently Issued and Adopted Accounting Pronouncements.

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 5. Market for Registrant’s Common Equity