Granite to expand Southern Nevada Water Infrastructure award
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Yahoo
18 hours ago
- Yahoo
GVA Q2 Deep Dive: Margin Expansion and M&A Drive Upbeat Outlook
Construction and construction materials company Granite Construction (NYSE:GVA) fell short of the market's revenue expectations in Q2 CY2025 as sales rose 4% year on year to $1.13 billion. On the other hand, the company's full-year revenue guidance of $4.45 billion at the midpoint came in 3.5% above analysts' estimates. Its non-GAAP profit of $1.93 per share was 13.9% above analysts' consensus estimates. Is now the time to buy GVA? Find out in our full research report (it's free). Granite Construction (GVA) Q2 CY2025 Highlights: Revenue: $1.13 billion vs analyst estimates of $1.16 billion (4% year-on-year growth, 3% miss) Adjusted EPS: $1.93 vs analyst estimates of $1.70 (13.9% beat) Adjusted EBITDA: $152.4 million vs analyst estimates of $143.2 million (13.5% margin, 6.4% beat) The company lifted its revenue guidance for the full year to $4.45 billion at the midpoint from $4.3 billion, a 3.5% increase Operating Margin: 9.2%, up from 7.9% in the same quarter last year Market Capitalization: $4.64 billion StockStory's Take Granite Construction delivered second quarter results that were well received by the market, despite missing Wall Street's revenue expectations. Management pointed to strong execution in both its Construction and Materials segments, with significant margin expansion attributable to operational improvements, higher aggregate volumes, and disciplined project selection. CEO Kyle Larkin highlighted that the company's vertically integrated model and focus on public infrastructure funding helped drive robust performance, stating, 'We are showing the earnings power of our company in our vertically integrated model.' Looking ahead, Granite Construction's increased full-year revenue guidance reflects confidence in the integration of newly acquired businesses and continued public sector investment. Management emphasized that the acquisitions of Warren Paving and Papich Construction are expected to significantly enhance the company's scale and profitability, especially in underpenetrated markets. CFO Staci Woolsey noted, 'With our expanded revolver, additional available term loans and cash flow generation, we are in a great position to act on future M&A opportunities that bolt on to a home market or further expand our geographic reach.' Key Insights from Management's Remarks Management attributed the quarter's performance to margin gains in both core segments, M&A execution, and strategic investments in plant automation and integration frameworks. M&A as a growth lever: The acquisitions of Warren Paving and Papich Construction add scale in the Southeast and Central California, respectively, and are expected to contribute $425 million in annual revenue with higher-than-average margins. Management stressed that these deals expand Granite's home markets and increase its aggregate reserves by more than 30%. Materials segment margin expansion: Volume growth in aggregates and asphalt, combined with price increases and operational improvements like plant automation, drove significant margin gains. Management credited centralized oversight and a new materials playbook for the improved profitability in this segment. Construction segment project wins: The Construction segment benefited from robust bidding activity, especially in Nevada, Utah, California, and Alaska. The company achieved a record committed and awarded projects (CAP) backlog of $6.1 billion, positioning it for revenue acceleration in the second half of the year. Public funding environment: Management underscored that public infrastructure funding, particularly from federal and state sources, remains strong and is expected to grow. The company sees the Southeast region as a historical underinvested area now benefiting from increased legislative support for infrastructure investment. Integration and efficiency initiatives: Realignment of operational leadership, investment in automation, and the rollout of best practices have improved project execution and cash generation. Management expects these frameworks to support additional margin expansion and future M&A integration. Drivers of Future Performance Granite Construction anticipates that revenue and margin growth will be driven by recently closed acquisitions, robust public funding, and continued operational discipline. Acquisitions to boost scale and margins: The addition of Warren Paving and Papich Construction is expected to immediately increase adjusted EBITDA margin by approximately 60 basis points and provide a foundation for further growth in both the Southeast and California markets. Management expects these deals to generate compounding benefits as distribution networks and internal sales channels expand. Sustained public infrastructure demand: The company sees a long runway for growth fueled by federal and state infrastructure programs, particularly the Infrastructure Investment and Jobs Act (IIJA). Management estimates that less than half of IIJA funds have been spent, suggesting multi-year tailwinds for project bidding and backlog growth. Operational improvements and integration: Initiatives such as plant automation, centralized quality control, and standardized playbooks are expected to drive further efficiency and profitability. Management highlighted that continued execution against these programs, alongside selective M&A, is key to meeting its margin and free cash flow targets through 2027. Catalysts in Upcoming Quarters Looking forward, the StockStory team will monitor (1) the integration progress and revenue contribution from Warren Paving and Papich Construction, (2) the pace of project ramp-up and backlog conversion in the Construction segment, and (3) continued margin expansion from operational improvements and best practice adoption. Ongoing public funding trends and the company's ability to execute additional strategic acquisitions will also be important indicators of future performance. Granite Construction currently trades at $107.00, up from $93.40 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it's free). Now Could Be The Perfect Time To Invest In These Stocks When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that's already erased most losses. Don't let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. 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Yahoo
a day ago
- Yahoo
Granite continues buying spree as backlog hits $6.1B
This story was originally published on Construction Dive. To receive daily news and insights, subscribe to our free daily Construction Dive newsletter. Granite Construction continued paving a profitable path in the second quarter while racking up a record amount of backlog and buying two aggregate suppliers. The Watsonville, California-based road builder, materials supplier and infrastructure firm purchased Hattiesburg, Mississippi-based Warren Paving and Arroyo Grande, California-headquartered Papich Construction for a combined price of $710 million. Granite's continued investment in material suppliers reflects the firm's bullishness on both public and private infrastructure work, along with the booming data center market. Those facilities, along with computer chips and racks of servers, need roads and parking lots to access them as well. Two aggregate purchases Warren Paving, which owns a quarry, 11 aggregate yards and three asphalt plants along with 170 owned and leased barges on the Mississippi River system, will expand Granite's materials business in the Southeast, while building on its buying spree in the region. In late 2023, Granite scooped up Lehman-Roberts and Memphis Stone & Gravel, both of Memphis, for a combined $278 million. Then last year, it acquired Brookhaven, Mississippi-based aggregate supplier Dickerson & Bowen. On an earnings call Aug. 7 to discuss the firm's second-quarter results, CEO Kyle Larkin said Warren Paving will complement those previous purchases. 'Warren Paving's logistics expertise should allow us to supply materials to certain Lehman-Roberts and Dickerson & Bowen asphalt plants and positions us to expand the distribution network as we continue to grow our Southeast platform investment,' Larkin said on the call. He also highlighted opportunities to supply data center jobsites in the region, which has been attractive to owners looking for cheap land, plentiful power and water and a robust labor pool. 'We believe private investment will ramp up in the region, whether through data centers or other large commercial developments.' In California, Papich will expand Granite's operations along the state's Central Coast and Valley, an area where it currently has less of a presence. 'It's complementary to our current footprint,' Larkin said. The addition of the two businesses will add approximately $425 million to Granite's revenue annually, the company said. It raised its revenue guidance for 2025 accordingly to between $4.35 billion and $4.55 billion and anticipates approximately $150 million in revenue from the units in the remainder of the year. By the numbers The deal was the highlight of a quarter that also saw Granite grow its backlog — which the company calls Committed or Awarded Projects — to $6.1 billion, a company high. That's $488 million more, or 9% higher, than a year ago. Revenue of $1.13 billion increased 4% from $1.08 billion a year ago. The company also grew profits to $71.7 million, nearly doubling the $36.9 million of net income it reported for 2024's second quarter. Larkin attributed the higher revenue, backlog and profits to a robust bidding and funding environment, particularly in the company's core infrastructure markets, as well as more efficient operations and integration within the company. 'In California and across our footprint, we continue to see a healthy list of project bidding opportunities in both the public and private markets,' Larkin said. He also said money from the Infrastructure Investment and Jobs Act, passed in 2021, hasn't reached its apex, which he expects to come in 2026 or 2027. 'IIJA funding continues to be strong,' Larkin said. 'I think that's pretty universal in all the markets that we're in. And just as a reminder, the spending to date on the IIJA is still less than 50%. And so we haven't seen, in our opinion, that peak yet.' Recommended Reading Granite JV lands $158M missile defense project
News24
5 days ago
- News24
Renovation: ‘I do what I love' in Franschhoek
Kitchen cabinets from Kitchen & Cupboard Studio; granite slabs from Paarl Rock Stoneworx; lights from Takealot; aluminium doors from GAP Services
