Granite Reports Second Quarter 2025 Results

Business Wire

07-08-2025

WATSONVILLE, Calif.--(BUSINESS WIRE)--Granite Construction Incorporated (NYSE: GVA) today announced results for the quarter ended June 30, 2025.
Second Quarter 2025 Results
Net income attributable to Granite totaled $72 million, or $1.42 per diluted share, compared to net income attributable to Granite of $37 million, or $0.76 per diluted share, for the same period in the prior year. Adjusted net income attributable to Granite (2) totaled $86 million, or $1.93 per diluted share, compared to adjusted net income attributable to Granite (2) of $77 million, or $1.73 per diluted share, for the same period in the prior year.
Revenue increased $43 million to $1.13 billion compared to $1.08 billion for the same period in the prior year.
Gross profit increased $34 million to $199 million compared to $165 million for the same period in the prior year.
Selling, general, and administrative ('SG&A') expenses increased $16 million to $86 million, or 7.6% of revenue, compared to $70 million, or 6.5% of revenue, for the same period in the prior year. The increase in SG&A expenses was primarily due to additional salaries and related expenses, coupled with a greater percentage of annual incentive compensation expense compared to the same period in the prior year.
Adjusted EBITDA (2) increased $22 million to $152 million compared to $130 million for the same period in the prior year.
"In the second quarter, we capitalized on the strong bidding opportunities we are seeing in both the public and private markets and increased our CAP to $6.1 billion, which is a new record,' said Kyle Larkin, Granite President and Chief Executive Officer. 'I am pleased with each of our segments' execution in the quarter, and we believe our continued focus on operational excellence should continue to produce margin expansion. We are also excited by the opportunities that come with the two acquisitions that we announced yesterday. The acquisition in the Southeast gives us a significant, high-quality aggregate supply on the Mississippi River and provides us with many opportunities to further leverage the supply network to grow our southeast platform. The acquisition in California strengthens our business in the central portion of the state with additional aggregates as we welcome a leading civil construction business into our portfolio. With our upsized credit facility and strong cash generation, I believe we will be able to continue to complete acquisitions to strengthen and expand our home markets in the upcoming quarters.'
Six Months Ended June 30, 2025 Results
Net income attributable to Granite totaled $38 million, or $0.84 per diluted share, compared to $6 million, or $0.13 per diluted share, for the same period in the prior year. Adjusted net income attributable to Granite (2) totaled $87 million, or $1.94 per diluted share, compared to $68 million, or $1.52 per diluted share, for the same period in the prior year.
Revenue increased $71 million to $1.83 billion, compared to $1.75 billion for the same period in the prior year.
Gross profit increased $64 million to $283 million, compared to $219 million for the same period in the prior year.
SG&A expenses increased $44 million to $202 million, or 11.1% of revenue, compared to $158 million, or 9.0% of revenue, for the same period in the prior year. The increase in SG&A expenses was primarily due to additional stock-based compensation expenses and salaries and related expenses, coupled with a greater percentage of annual incentive compensation expense compared to the same period in the prior year.
Adjusted EBITDA (2) increased $36 million to $180 million compared to $144 million for the same period in the prior year.
Year-to-date operating cash flow of $5 million and positioned to achieve our target of 9% operating cash flow as a percent of revenue for the year.
(1)
CAP is comprised of revenue we expect to record in the future on executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts, as well as the general construction portion of construction manager/general contractor, construction manager/at risk and progressive design build contracts to the extent contract execution and funding is probable.
(2)
Adjusted net income, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization ('EBITDA'), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures. Please refer to the description and reconciliation of non-GAAP measures in the attached tables.
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Revenue increased year-over-year, driven primarily by the newly acquired Dickerson & Bowen business. Revenue in the legacy business was consistent year-over-year and is expected to accelerate in the second half of the year as work commences on projects included within our record CAP. Gross profit increased year-over-year as a result of improved project execution across our higher quality project portfolio and favorable claim settlements.
CAP increased $324 million sequentially to $6.1 billion and increased $488 million year-over-year. The bidding pipeline continues to be robust across the company in both public and private markets. There are ample opportunities to build CAP over the remainder of 2025 and to drive organic growth in line with our expectations.
(1)
Materials segment cash gross profit and cash gross profit as a percent of revenue are non-GAAP measures. Please refer to the description and reconciliation of non-GAAP measures in the attached tables.
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Revenue, gross profit and cash gross profit improved year-over-year primarily driven by higher aggregates and asphalt volumes and higher aggregate sales prices.
Outlook
With the acquisitions announced this week, we are updating our 2025 fiscal year guidance as noted below:
Revenue in the range of $4.35 billion to $4.55 billion with revenue from the new acquisitions of approximately $150 million
Adjusted EBITDA margin increased to a range of 11.25% to 12.25%
SG&A expense unchanged at approximately 9.0% of revenue, inclusive of an estimated $40 million of stock-based compensation expense
Effective tax rate for adjusted net income unchanged in the Mid-20s
Capital expenditures unchanged with a range of $140 million to $160 million
We do not provide a reconciliation of forward-looking adjusted EBITDA margin or the most directly comparable forward-looking GAAP measure of net income attributable to Granite because we cannot predict with a reasonable degree of certainty and without unreasonable efforts certain components or excluded items that are inherently uncertain and depend on various factors. For these reasons, we are unable to assess the potential significance of the unavailable information.
'Our updated guidance reflects the inclusion of the new acquisitions in our 2025 results for the remainder of the third quarter and fiscal year,' stated Staci Woolsey, Granite Executive Vice President and Chief Financial Officer. 'These acquisitions are in alignment with our capital allocation strategy to invest in high quality businesses that will strengthen and expand our home markets and be immediately accretive to adjusted EBITDA margin and cash flows. Our pro-forma leverage is well within our target and with our expanded credit facility, we are well positioned to act on M&A opportunities in the future.'
Conference Call
Granite will conduct a conference call today, August 7, 2025, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter ended June 30, 2025. The Company invites investors to listen to a live audio webcast of the investor conference call on its Investor Relations website, https://investor.graniteconstruction.com. The investor conference call will also be available by calling 1-877-328-5503; international callers may dial 1-412-317-5472. An archive of the webcast will be available on Granite's Investor Relations website approximately one hour after the call. A replay will be available after the live call through August 14, 2025, by calling 1-877-344-7529, replay access code 6869375; international callers may dial 1-412-317-0088.
About Granite
Granite is America's Infrastructure Company™. Incorporated since 1922, Granite (NYSE:GVA) is one of the largest diversified vertically-integrated civil contractors and construction materials producers in the United States. Granite's Code of Conduct and strong Core Values guide the Company and its employees to uphold the highest ethical standards. Granite is an industry leader in safety and an award-winning firm in quality and sustainability. For more information, visit graniteconstruction.com, and connect with Granite on LinkedIn, X, Facebook, and Instagram.
Forward-looking Statements
Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2025 fiscal year guidance for revenue, including revenue from new acquisitions, adjusted EBITDA margin, SG&A expense, stock-based compensation expense, effective tax rate, and capital expenditures, the expectation that we will continue to produce margin expansion, opportunities resulting from the new acquisitions, the many opportunities to further leverage the newly acquired business' supply network to grow our Southeast platform, our ability to complete acquisitions in the upcoming quarters, target of 9% operating cash flow as a percent of revenue for the year, construction revenue is expected to accelerate in the second half of the year, ample opportunities to build CAP over the remainder of 2025 and drive organic growth in line with expectations, our pro forma leverage target, M&A opportunities in the future, our capital allocation strategy, CAP and results constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as 'future,' 'outlook,' 'assumes,' 'believes,' 'expects,' 'estimates,' 'anticipates,' 'intends,' 'plans,' 'appears,' 'may,' 'will,' 'should,' 'could,' 'would,' 'continue,' "guidance" and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are based on management's current beliefs, assumptions and estimates. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2025
2024
2025
2024
Revenue
$
1,125,964
$
1,082,486
$
1,825,511
$
1,754,761
Cost of revenue
926,865
917,775
1,542,563
1,535,765
Gross profit
199,099
164,711
282,948
218,996
Selling, general and administrative expenses
85,887
70,052
201,798
158,045
Other costs, net
13,253
10,225
22,679
21,235
Gain on sales of property and equipment, net
(3,606
)
(1,387
)
(5,343
)
(2,805
)
Operating income
103,565
85,821
63,814
42,521
Other (income) expense
Loss on debt extinguishment
—
27,824
—
27,824
Interest income
(5,761
)
(3,600
)
(12,029
)
(10,302
)
Interest expense
7,927
5,337
15,684
13,420
Equity in income of affiliates, net
(3,698
)
(4,557
)
(4,792
)
(8,527
)
Other (income) expense, net
(2,462
)
1,267
(2,525
)
(476
)
Total other (income) expense, net
(3,994
)
26,271
(3,662
)
21,939
Income before income taxes
107,559
59,550
67,476
20,582
Provision for income taxes
27,214
20,693
15,458
11,167
Net income
80,345
38,857
52,018
9,415
Amount attributable to non-controlling interests
(8,645
)
(1,962
)
(13,974
)
(3,503
)
Net income attributable to Granite Construction Incorporated
$
71,700
$
36,895
$
38,044
$
5,912
Net income per share attributable to common shareholders:
Diluted
$
1.42
$
0.76
$
0.84
$
0.13
Weighted average shares outstanding:
Basic
43,746
44,060
43,605
44,024
Diluted
52,755
52,727
52,616
44,593
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GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Six Months Ended June 30,
2025
2024
Operating activities:
Net income
$
52,018
$
9,415
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization
65,368
58,468
Amortization related to long-term debt
2,163
2,334
Non-cash loss on debt extinguishment
—
27,824
Gain on sales of property and equipment, net
(5,343
)
(2,805
)
Stock-based compensation
34,632
15,084
Equity in net income from unconsolidated construction joint ventures
(3,814
)
(752
)
Net income from affiliates
(4,792
)
(8,527
)
Other non-cash adjustments
(207
)
(348
)
Changes in assets and liabilities
(134,587
)
(78,609
)
Net cash provided by operating activities
$
5,438
$
22,084
Investing activities:
Purchases of marketable securities
(172,578
)
—
Maturities of marketable securities
17,600
25,000
Purchases of property and equipment
(61,022
)
(66,861
)
Proceeds from sales of property and equipment
8,346
4,229
Cash paid for purchase price adjustments on business acquisition
—
(13,183
)
Other investing activities
399
693
Net cash used in investing activities
$
(207,255
)
$
(50,122
)
Financing activities:
Proceeds from issuance of convertible notes
—
373,750
Debt principal repayments
(552
)
(309,808
)
Capped call transactions
—
(46,046
)
Debt issuance costs
—
(9,654
)
Cash dividends paid
(11,338
)
(11,452
)
Repurchases of common stock
(15,317
)
(21,144
)
Contributions from non-controlling partners
—
17,000
Distributions to non-controlling partners
(27,250
)
(16,372
)
Other financing activities, net
(39
)
847
Net cash used in financing activities
$
(54,496
)
$
(22,879
)
Net decrease in cash and cash equivalents
(256,313
)
(50,917
)
Cash and cash equivalents at beginning of period
578,330
417,663
Cash and cash equivalents at end of period
$
322,017
$
366,746
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Non-GAAP Financial Information
The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles ('GAAP'). Specifically, management believes that non-GAAP financial measures such as EBITDA and EBITDA margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing adjusted EBITDA and adjusted EBITDA margin, non-GAAP measures, to indicate the impact of stock-based compensation expense, loss on debt extinguishment in 2024 and other costs, net, which include legal fees for the defense of a former company officer in his ongoing civil litigation with the Securities and Exchange Commission, reorganization costs, strategic acquisition and integration expenses and, in 2024, non-cash impairment charges.
We provide adjusted income before income taxes, adjusted provision for income taxes, adjusted net income attributable to Granite, adjusted diluted weighted average shares of common stock and adjusted diluted earnings per share attributable to common shareholders, non-GAAP measures, to indicate the impact of the following:
Other costs, net as described above;
Transaction costs which include acquired intangible asset amortization expense and acquisition-related depreciation;
Stock-based compensation expense; and
Loss on debt extinguishment.
We also provide materials segment cash gross profit and materials segment cash gross profit by product line and the related margins to exclude the impact of the segment's and product line's depreciation, depletion and amortization from the segment's and product line's gross profit. To better illustrate the operational performance generated by the assets of the materials segment, and its product lines, our calculation adds back all depreciation, depletion and amortization to the materials segment and its product lines and does not eliminate any in consolidation. Management believes that non-GAAP financial measures such as materials segment cash gross profit and materials segment cash gross profit by product line and the related margins are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures.
Management believes that these additional non-GAAP financial measures facilitate comparisons between industry peer companies, and management uses these non-GAAP financial measures in evaluating performance. However, the reader is cautioned that any non-GAAP financial measures provided by us are provided in addition to, and not as alternatives for, our reported results prepared in accordance with GAAP. Items that may have a significant impact on our financial position, results of operations and cash flows must be considered when assessing our actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. The methods used by us to calculate non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by us may not be comparable to similar measures provided by other companies.
(1)
We define EBITDA as GAAP net income attributable to Granite Construction Incorporated, adjusted for net interest expense, taxes, depreciation, depletion and amortization. Adjusted EBITDA and adjusted EBITDA margin exclude the impact of other costs, net, stock-based compensation and loss on debt extinguishment as described above.
(2)
Represents net income, EBITDA and adjusted EBITDA divided by consolidated revenue of $1.13 billion and $1.08 billion for the three months ended June 30, 2025 and 2024, respectively, and $1.83 billion and $1.75 billion for the six months ended June 30, 2025 and 2024, respectively.
(3)
Amount includes the sum of depreciation, depletion and amortization which are classified as cost of revenue and selling, general and administrative expenses in the condensed consolidated statements of operations.
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ADJUSTED NET INCOME RECONCILIATION
(Unaudited - in thousands, except per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2025
2024
2025
2024
Income before income taxes
$
107,559
$
59,550
$
67,476
$
20,582
Other costs, net
13,253
10,225
22,679
21,235
Transaction costs
3,992
4,313
7,979
9,940
Stock-based compensation
2,415
2,189
34,632
15,084
Loss on debt extinguishment
—
27,824
—
27,824
Adjusted income before income taxes
$
127,219
$
104,101
$
132,766
$
94,665
Provision for income taxes
$
27,214
$
20,693
$
15,458
$
11,167
Tax effect of adjusting items(1)
5,062
4,469
16,812
12,147
Adjusted provision for income taxes
$
32,276
$
25,162
$
32,270
$
23,314
Net income attributable to Granite Construction Incorporated
$
71,700
$
36,895
$
38,044
$
5,912
After-tax adjusting items
14,598
40,082
48,478
61,936
Adjusted net income attributable to Granite Construction Incorporated
$
86,298
$
76,977
$
86,522
$
67,848
Diluted weighted average shares of common stock
52,755
52,727
52,616
44,593
Add: dilutive effect of Convertible Notes(2)
—
35
—
8,138
Less: dilutive effect of Convertible Notes(3)
(8,040
)
(8,138
)
(8,055
)
(8,138
)
Adjusted diluted weighted average shares of common stock
44,715
44,624
44,561
44,593
Diluted net income per share attributable to common shareholders
$
1.42
$
0.76
$
0.84
$
0.13
After-tax adjusting items per share attributable to common shareholders
0.51
0.97
1.10
1.39
Adjusted diluted earnings per share attributable to common shareholders
$
1.93
$
1.73
$
1.94
$
1.52
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(1)
The tax effect of adjusting items was calculated using our estimated annual statutory tax rate. The tax effect of adjusting items for the three and six months ended June 30, 2024 excludes the $27 million loss on debt extinguishment as it was almost entirely non-tax deductible.
(2)
The dilutive effect of the 2.75% Convertible Notes and the 3.75% Convertible Notes was 35,000 and 8,138,000 shares for the three and six months ended June 30, 2024, respectively.
(3)
When calculating diluted net income attributable to common shareholders, GAAP requires that we include potential share dilution from the convertible notes when not antidilutive. We entered into capped call transactions relating to both the 3.75% and 3.25% convertible notes to offset the dilutive impact of the convertible notes. The impact of the capped call transactions was excluded from the GAAP diluted net income attributable to common shareholders calculation as the impact would be antidilutive. For the purpose of calculating our adjusted diluted net income per share attributable to common shareholders, the dilutive effect of the convertible notes is removed to reflect the impact of the capped call transactions.
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NM - not meaningful
(1)
The Aggregate product line includes aggregates and recycled materials. The Asphalt product line includes asphalt concrete and liquid asphalt. External revenue and average selling price include freight and delivery costs that we pass along to our customers.
(2)
Represents our other product line which is comprised of immaterial amounts of products and services that are not considered core product lines, as well as eliminations of interproduct and intersegment transactions.
(3)
Includes both intersegment and interproduct revenues. Intersegment revenues for the three months ended June 30, 2025 and June 30, 2024 were $63.3 million and $74.9 million, respectively.
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NM - not meaningful
(1)
The Aggregate product line includes aggregates and recycled materials. The Asphalt product line includes asphalt concrete and liquid asphalt. External revenue and average selling price include freight and delivery costs that we pass along to our customers.
(2)
Represents our other product line which is comprised of immaterial amounts of products and services that are not considered core product lines, as well as eliminations of interproduct and intersegment transactions.
(3)
Includes both intersegment and interproduct revenues. Intersegment revenues for the six months ended June 30, 2025 and June 30, 2024 were $84.0 million and $86.6 million, respectively.
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