Latest news with #PapichConstruction
Yahoo
08-08-2025
- Business
- Yahoo
Granite Construction Inc (GVA) Q2 2025 Earnings Call Highlights: Strong Revenue Growth and ...
Revenue Increase: $43 million or 4% increase in the second quarter. Gross Profit Increase: $34 million or 21% increase. Adjusted Net Income Improvement: $9 million or 12% increase. Adjusted EBITDA Improvement: $22 million or 17% increase. Operating Cash Flow: $5 million year-to-date. Construction Segment Revenue: $937 million, a $19 million or 2% year-over-year increase. Construction Segment Gross Profit: $154 million with a gross profit margin of 16%. Materials Segment Aggregate Volume Increase: 11% for the quarter and 13% year-to-date. Cash and Marketable Securities: $483 million at the end of Q2. Total Debt Outstanding: Approximately $1.35 billion after recent transactions. Revised Annual Revenue Guidance: $4.35 billion to $4.55 billion. Revised Adjusted EBITDA Margin Guidance: 11.25% to 12.25%. SG&A as a Percent of Revenue: 9% (unchanged). CapEx Guidance: $140 million to $160 million (unchanged). Adjusted Effective Tax Rate: Mid-20s (unchanged). Warning! GuruFocus has detected 7 Warning Signs with BATRA. Release Date: August 07, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Granite Construction Inc (NYSE:GVA) announced the acquisitions of Warren Paving and Papich Construction, expected to contribute approximately $425 million in annual revenue with an adjusted EBITDA margin of 18%. The company's strategic focus on raising construction margins and driving organic growth is yielding significantly higher margins in both Construction and Materials segments. Granite Construction Inc (NYSE:GVA) reported a record high CAP of $6.1 billion, indicating a robust pipeline of projects across various regions. The Materials segment showed strong performance with year-over-year aggregate volumes increasing by 11% for the quarter, driven by strong demand. The company increased its annual revenue and adjusted EBITDA margin guidance for 2025, reflecting the positive impact of recent acquisitions. Negative Points The growth in the Construction segment was less robust in the first half of the year compared to market expectations, attributed to project starts and finishes. The company faces challenges in maintaining consistent cash flow in the first half of the year due to the seasonal nature of construction projects. Granite Construction Inc (NYSE:GVA) has increased its total debt to approximately $1.35 billion following the recent acquisitions. The private market demand remains relatively unchanged, with growth primarily driven by public market opportunities. The timing and size of future M&A deals remain unpredictable, which could impact the company's growth trajectory. Q & A Highlights Q: Can you comment on the pace of work in the Construction segment and how the recent acquisitions will impact the second half of the year? A: Kyle Larkin, CEO: The revenue growth in the first half was influenced by project starts and finishes. We expect acceleration in the second half due to our record cap of $6.1 billion. The acquisitions will contribute to our updated guidance for 2025, which includes their impact. Q: What factors contributed to the notable profit margin expansion in the Materials segment this quarter, and what is sustainable going forward? A: Kyle Larkin, CEO: The margin expansion is supported by increased volumes in asphalt and aggregates, driven by a healthy public market. We anticipated a 3% gross profit margin improvement for the year, and we are currently tracking ahead of that. Both Construction and Materials segments are performing well. Q: Can you elaborate on what Papich Construction excels at and how it complements Granite's operations? A: Kyle Larkin, CEO: Papich is similar to Granite, focusing on public works with a strong presence in California's Central Coast and Valley. It complements our footprint and enhances our materials business. We see opportunities to drive volume increases and leverage pricing strategies, benefiting both companies. Q: How do cap trends compare between the Western and Southeast regions? A: Kyle Larkin, CEO: The record cap of $6.1 billion is spread across our entire footprint, including recent successes in federal work and various states. The IIJA funding remains strong, and we expect continued cap growth, with spending likely peaking in 2026-2027. Q: Can you provide more details on the Warren Paving acquisition and its strategic fit? A: Kyle Larkin, CEO: Warren Paving is a high-performing, materials-centric business with a strong focus on aggregates. It complements our Southeast platform, offering opportunities for internal sales, distribution expansion, and pricing improvements. We also see potential in connecting it with our Federal division for shoreline protection projects. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Business Wire
06-08-2025
- Business
- Business Wire
Granite Completes Acquisitions of Warren Paving and Papich Construction to Strengthen and Expand Vertically-Integrated Home Markets
WATSONVILLE, Calif.--(BUSINESS WIRE)--Granite (NYSE: GVA) today announced that it has completed two acquisitions that strengthen its vertically-integrated home markets for a combined purchase price of $710 million, subject to customary closing adjustments. Together, the acquisitions are expected to contribute approximately $425 million in revenue annually with an expected adjusted EBITDA margin of approximately 18%. This implies a blended multiple of approximately 9.2x expected adjusted EBITDA. 'We are excited to welcome Warren Paving and Papich Construction,' said Granite President and Chief Executive Officer, Kyle Larkin. 'Their management teams have strong track records of success, and we look forward to combining our businesses. These acquisitions mark another significant step forward as we continue to grow our industry–leading, vertically-integrated business. With our strong cash generation and robust acquisition pipeline, I expect to continue to grow our home markets through bolt-on transactions and expansion into new markets.' Acquisition of Warren Paving Business Warren Paving is a leading aggregates producer with vertically-integrated operations in the Mississippi River and Gulf Coast regions, operating a network of strategically located assets, including one quarry, one sand and gravel operation, 11 aggregate yards, three asphalt plants and a fleet of 168 owned and leased barges. This acquisition adds over 400 million tons of aggregate reserves and resources and is a transformative opportunity to own and operate one of the largest and most attractive quarry and distribution networks in the Southeast. Warren Paving's assets are highly complementary to our Southeastern platform's plant networks across Mississippi and is expected to generate annual revenue and adjusted EBITDA of approximately $275 million and $52 million, respectively, representing an expected adjusted EBITDA margin of approximately 19%. Acquisition of Papich Construction Business Papich Construction specializes in infrastructure projects, including road, rail and highway construction and supplies both internal projects and third-party customers with a full suite of asphalt and aggregates products, including sand, gravel and crushed rock. The acquisition includes a gravel mine, two quarries and two asphalt plants. Strategic and Financial Rationale for the Acquisitions Strengthens Vertical Integration with Enhanced Scale: The acquisitions strengthen our vertical integration in both the California and Southeast markets. The barge network in the Southeast presents significant opportunities to supply additional locations as we continue to expand and work to increase volumes. Increases Exposure to Aggregates: These acquisitions increase our aggregates reserves and resources by approximately 30% and annual aggregate production by approximately 5 million tons, or 27%. Enhances Financial Profile: The acquisitions are expected to be immediately adjusted EBITDA margin accretive, with an estimated annual uplift of approximately 60 basis points driven by the increased aggregates exposure. Capitalizes on Strong Financial Position: The strength of our balance sheet and underlying operations, supplemented by the amended and restated credit facility position us to continue to invest in organic growth and strategic acquisitions. Financing The acquisitions were financed through a new 5-year $600 million term loan, $100 million of cash on hand and $10 million drawn on an upsized revolver of $600 million. Our pro forma net leverage ratio 1 for an annual period, inclusive of the acquisitions, is well below our target of 2.5x. "These acquisitions are in line with our capital allocation strategy and reinforce our focus on driving sustainable, long-term value creation for our shareholders,' said Granite Executive Vice President and Chief Financial Officer, Staci Woolsey. 'Our cash generation and upsized credit facility allow us to continue to execute on high quality M&A transactions while maintaining a prudent leverage ratio.' Further details on these transactions as well as second quarter results and revised 2025 guidance will be provided on our next earnings call on Thursday, August 7, 2025, at 8:00 am Pacific Time. Advisors Barclays served as exclusive financial advisor to Granite on the acquisition of Warren Paving. A&O Shearman served as legal advisor to Granite on the acquisitions of Warren Paving and Papich Construction. About Granite Granite is America's Infrastructure Company™. Incorporated since 1922, Granite (NYSE:GVA) is one of the largest 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 the Granite website, 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 that the acquisitions create opportunities for commercial and operational synergies, the acquisitions are expected to be immediately accretive to adjusted EBITDA margins, the acquisitions are expected to contribute approximately $425 million of revenue annually with an expected adjusted EBITDA margin of approximately 18%, expected adjusted EBITDA, combining our businesses, the expectation that we continue to grow our home markets through bolt on transactions and expansion into new markets, Warren Paving is expected to annually generate revenue and adjusted EBITDA of approximately $275 million and $52 million, respectively, representing an expected adjusted EBITDA margin of approximately 19%, the barge network in the Southeast presents significant opportunities to supply additional locations as we continue to expand and work to increase volumes, the acquisitions are expected to be immediately adjusted EBITDA margin accretive, with an estimated annual uplift of approximately 60 basis points to adjusted EBITDA margins driven by the increased aggregates exposure, continued investment in organic growth and strategic acquisitions, pro forma net leverage ratio, that we will continue to execute on high quality M&A transactions while maintaining a prudent leverage ratio and our capital allocation strategy constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. Non-GAAP Financial Information This news release contains 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 also include adjusted EBITDA and adjusted EBITDA margin, non-GAAP measures, to indicate the impact of loss on debt extinguishment, stock-based compensation expense 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 non-cash impairment charges. We also believe net leverage to adjusted EBITDA ratio is useful in evaluating debt levels. Net leverage is calculated by subtracting cash and cash equivalents and marketable securities from total debt. Management believes that these non-GAAP financial measures facilitate comparisons between industry peer companies, and management uses these non-GAAP financial measures in evaluating performance and debt levels. 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. We do not provide a reconciliation of forward-looking adjusted EBITDA, adjusted EBITDA margin or net leverage to adjusted EBITDA ratio 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. 1 Adjusted EBITDA, adjusted EBITDA margin and net leverage ratio are non-GAAP measures. Please see "Non-GAAP Financial Information" for additional information.
