GVA Granite Construction Inc

• Q3 revenue increased 14% year-over-year to $1.3 billion
• Q3 diluted EPS of $1.57 and adjusted diluted EPS (1) of $2.05, compared to $1.13 and $1.72 in the prior year, respectively
• Record Committed and Awarded Projects (“CAP”) (2) of $5.6 billion, a sequential increase of $44 million
• Year-to-date operating cash flow increased $249 million year-over-year
• Expanded southeast home market with acquisition of Dickerson & Bowen, Inc.

Granite Construction Incorporated (NYSE: GVA) today announced results for the quarter ended September 30, 2024.

Third Quarter 2024 Results

Net income attributable to Granite Construction Incorporated totaled $79 million, or $1.57 per diluted share, compared to $58 million, or $1.13 per diluted share, for the same period in the prior year. Adjusted net income attributable to Granite Construction Incorporated (1) totaled $91 million, or $2.05 per diluted share, compared to $77 million, or $1.72 per diluted share, for the same period in the prior year.

• Revenue increased $159 million to $1.3 billion, compared to $1.1 billion for the same period in the prior year. The Construction and Materials segments each posted year-over-year increases of 14%.
• Gross profit increased $36 million to $203 million, compared to $167 million for the same period in the prior year.
• Selling, general, and administrative (“SG&A”) expenses increased $17 million to $92 million, or 7.2% of revenue, compared to $75 million, or 6.7% of revenue, for the same period in the prior year.
• Adjusted EBITDA (1) totaled $149 million, compared to $126 million for the same period in the prior year.
• CAP (2) increased $44 million sequentially and $35 million year-over-year to $5.6 billion.

"In the third quarter, we continued to build on our momentum with revenue growth and margin expansion,” said Kyle Larkin, Granite President and Chief Executive Officer. “Revenue grew 14% year-over-year, resulting in another record quarter. The market continues to be robust, and we added to our CAP despite the third quarter being our highest revenue quarter. Our new business model is producing strong operating cash flow, and we expect to significantly exceed our target of 7% of revenue for the year.”

“For 2027, our financial targets contemplate organic growth at a CAGR of 6% to 8% and continued adjusted EBITDA margin expansion and operating cash flow growth. We believe we are still in the early stages of experiencing the benefits from the federal infrastructure bill that should continue to support the public market for years to come, and we see numerous opportunities to grow in a healthy private market over the next three years. I expect that our improved CAP, particularly when combined with initiatives underway in both the Materials and Construction segments, will continue to drive increases in gross profit margin. In addition, with our strong balance sheet, liquidity and cash generation, we will continue to pursue bolt-on and larger materials-focused, vertically-integrated acquisition opportunities, while also looking to return value to shareholders through share repurchases.”

Nine Months Ended September 30, 2024 Results

Net income attributable to Granite Construction Incorporated totaled $85 million, or $1.79 per diluted share, compared to $18 million, or $0.40 per diluted share, for the same period in the prior year. Adjusted net income attributable to Granite Construction Incorporated (1) totaled $158 million, or $3.56 per diluted share, compared to $110 million, or $2.47 per diluted share, for the same period in the prior year.

• Revenue increased $455 million to $3.0 billion, compared to $2.6 billion for the same period in the prior year. The Construction and Materials segments posted year-over-year increases of 18% and 16%, respectively.
• Gross profit increased $120 million to $422 million, compared to $302 million for the same period in the prior year.
• SG&A expenses increased $37 million to $250 million, or 8.2% of revenue, compared to $212 million, or 8.3% of revenue, for the same period in the prior year.
• Adjusted EBITDA (1) totaled $293 million compared to $204 million for the same period in the prior year.

(1) Adjusted net income attributable to Granite Construction Incorporated, 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.

(2) 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.

Three and Nine Months ended September 30, 2024 (Unaudited - dollars in thousands)

 

Construction Segment

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2024

2023

Change

 

2024

2023

Change

Revenue

$

1,080,705

 

$

945,698

 

$

135,007

14.3

%

 

$

2,593,872

 

$

2,198,527

 

$

395,345

18.0

%

Gross profit

$

170,685

 

$

137,162

 

$

33,523

24.4

%

 

$

362,885

 

$

253,021

 

$

109,864

43.4

%

Gross profit as a percent of revenue

 

15.8

%

 

14.5

%

 

 

 

 

14.0

%

 

11.5

%

 

 

For the three and nine months ended September 30, 2024, revenue increased year-over-year by $135 million and $395 million, respectively, due to higher levels of CAP, more favorable weather conditions early in 2024 and revenue from acquired businesses. For the three and nine months ended September 30, 2024, gross profit increased year-over-year as a result of increases in revenue and an increase in net positive revisions in estimates.

CAP increased $44 million sequentially to $5.6 billion and increased $35 million year-over-year. Public and private markets are strong with opportunities to continue to build CAP in the fourth quarter.

Materials Segment

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

2023

Change

 

2024

2023

Change

Revenue

$

194,805

 

$

171,122

 

$

23,683

13.8

%

 

$

436,399

 

$

376,913

 

$

59,486

15.8

%

Gross profit

$

32,264

 

$

29,481

 

$

2,783

9.4

%

 

$

59,060

 

$

49,067

 

$

9,993

20.4

%

Gross profit as a percent of revenue

 

16.6

%

 

17.2

%

 

 

 

 

13.5

%

 

13.0

%

 

 

Cash gross profit (1)

$

43,202

 

$

36,203

 

$

6,999

19.3

%

 

$

89,718

 

$

67,581

 

$

22,137

32.8

%

Cash gross profit as a percent of revenue (1)

 

22.2

%

 

21.2

%

 

 

 

 

20.6

%

 

17.9

%

 

 

(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.

For the three and nine months ended September 30, 2024, revenue increased year-over-year by $24 million and $59 million, respectively, driven by revenue from acquired businesses as well as higher asphalt and aggregate sales prices, which offset decreased asphalt volumes. Gross profit in the three and nine months ended September 30, 2024, increased due primarily to inclusion of the results of acquired businesses and higher materials sales prices. The impact to gross profit for the three and nine month periods ended September 30, 2024 from purchase accounting-related step-up depreciation and intangible asset amortization was $0.4 million and $3 million, respectively. Materials segment cash gross profit (1), which excludes the segment’s depreciation, depletion and amortization, also increased for the same period year-over-year.

Outlook

Our updated guidance for 2024 is noted below:

• Revenue unchanged in the range of $3.9 billion to $4.0 billion
• Adjusted EBITDA margin in the range of 10% to 11%, narrowed from 9.5% to 11.5%
• SG&A expense in a range from 8.3% to 8.5% of revenue from a range of 7.5% to 8.0% of revenue due to increased incentive compensation
• Mid-20s effective tax rate for adjusted net income
• Capital expenditures expected to be approximately $130 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 Construction Incorporated 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.

For a discussion of our 2027 targets, see the presentation posted on our Investor Relations website following our conference call.

Conference Call

Granite will conduct a conference call today, October 31, 2024, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter ended September 30, 2024. 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 November 7, 2024, by calling 1-877-344-7529, replay access code 8631298; 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 construction and construction materials companies in the United States as well as a full-suite civil construction provider. 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, 2024 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, our expectation that we significantly exceed our operating cash flow target of 7% for the year, our 2027 financial target assumptions, the federal infrastructure bill should continue to support the public markets for years to come, numerous opportunities to grow in a healthy private market over the next three years, improved CAP with initiatives underway will continue to drive increase in gross profit margin, pursuit of bolt-on and larger materials-focused, vertically integrated acquisition opportunities, returning value to shareholders through share repurchases, opportunities to build CAP in the fourth quarter, 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 estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2024 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, our expectation that we significantly exceed our operating cash flow target of 7% for the year, our 2027 financial target assumptions, the federal infrastructure bill should continue to support the public markets for years to come, numerous opportunities to grow in a healthy private market over the next three years, improved CAP with initiatives underway will continue to drive increase in gross profit margin, pursuit of bolt-on and larger materials-focused, vertically integrated acquisition opportunities, returning value to shareholders through share repurchases, opportunities to build CAP in the fourth quarter, CAP and results. 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 BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

 

 

September 30, 2024

December 31, 2023

ASSETS

 

 

Current assets:

 

 

Cash and cash equivalents

$

462,286

$

417,663

Short-term marketable securities

 

10,147

 

35,863

Receivables, net

 

733,018

 

598,705

Contract assets

 

321,653

 

262,987

Inventories

 

107,973

 

103,898

Equity in construction joint ventures

 

144,097

 

171,233

Other current assets

 

34,928

 

53,102

Total current assets

 

1,814,102

 

1,643,451

Property and equipment, net

 

719,678

 

662,864

Investments in affiliates

 

94,921

 

92,910

Goodwill

 

211,624

 

155,004

Intangible assets

 

131,579

 

117,322

Right of use assets

 

86,299

 

78,176

Deferred income taxes, net

 

4,990

 

8,179

Other noncurrent assets

 

67,732

 

55,634

Total assets

$

3,130,925

$

2,813,540

 

 

 

LIABILITIES AND EQUITY

 

 

Current liabilities:

 

 

Current maturities of long-term debt

$

1,099

$

39,932

Accounts payable

 

509,976

 

408,363

Contract liabilities

 

292,641

 

243,848

Accrued expenses and other current liabilities

 

361,110

 

337,740

Total current liabilities

 

1,164,826

 

1,029,883

Long-term debt

 

737,458

 

614,781

Long-term lease liabilities

 

70,981

 

63,548

Deferred income taxes, net

 

3,420

 

3,708

Other long-term liabilities

 

84,561

 

74,654

Commitments and contingencies

 

 

Equity:

 

 

Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding

 

—

 

—

Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding: 43,704,841 shares as of September 30, 2024 and 43,944,118 shares as of December 31, 2023

 

437

 

439

Additional paid-in capital

 

437,343

 

474,134

Accumulated other comprehensive income

 

437

 

881

Retained earnings

 

568,877

 

501,844

Total Granite Construction Incorporated shareholders’ equity

 

1,007,094

 

977,298

Non-controlling interests

 

62,585

 

49,668

Total equity

 

1,069,679

 

1,026,966

Total liabilities and equity

$

3,130,925

$

2,813,540

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Revenue:

 

 

 

 

 

 

 

Construction

$

1,080,705

 

 

$

945,698

 

 

$

2,593,872

 

 

$

2,198,527

 

Materials

 

194,805

 

 

 

171,122

 

 

 

436,399

 

 

 

376,913

 

Total revenue

 

1,275,510

 

 

 

1,116,820

 

 

 

3,030,271

 

 

 

2,575,440

 

Cost of revenue:

 

 

 

 

 

 

 

Construction

 

910,020

 

 

 

808,536

 

 

 

2,230,987

 

 

 

1,945,506

 

Materials

 

162,541

 

 

 

141,641

 

 

 

377,339

 

 

 

327,846

 

Total cost of revenue

 

1,072,561

 

 

 

950,177

 

 

 

2,608,326

 

 

 

2,273,352

 

Gross profit

 

202,949

 

 

 

166,643

 

 

 

421,945

 

 

 

302,088

 

Selling, general and administrative expenses

 

91,650

 

 

 

74,794

 

 

 

249,695

 

 

 

212,479

 

Other costs, net

 

8,543

 

 

 

19,843

 

 

 

29,778

 

 

 

37,973

 

Gain on sales of property and equipment, net

 

(1,542

)

 

 

(1,812

)

 

 

(4,347

)

 

 

(7,793

)

Operating income

 

104,298

 

 

 

73,818

 

 

 

146,819

 

 

 

59,429

 

Other (income) expense:

 

 

 

 

 

 

 

(Gain) loss on debt extinguishment

 

(272

)

 

 

—

 

 

 

27,552

 

 

 

51,052

 

Interest income

 

(7,513

)

 

 

(4,293

)

 

 

(17,815

)

 

 

(11,287

)

Interest expense

 

7,905

 

 

 

4,877

 

 

 

21,325

 

 

 

11,899

 

Equity in income of affiliates, net

 

(4,394

)

 

 

(7,147

)

 

 

(12,921

)

 

 

(19,378

)

Other (income) expense, net

 

(874

)

 

 

462

 

 

 

(1,350

)

 

 

(2,713

)

Total other (income) expense, net

 

(5,148

)

 

 

(6,101

)

 

 

16,791

 

 

 

29,573

 

Income before income taxes

 

109,446

 

 

 

79,919

 

 

 

130,028

 

 

 

29,856

 

Provision for income taxes

 

25,469

 

 

 

22,423

 

 

 

36,636

 

 

 

21,978

 

Net income

 

83,977

 

 

 

57,496

 

 

 

93,392

 

 

 

7,878

 

Amount attributable to non-controlling interests

 

(5,026

)

 

 

128

 

 

 

(8,529

)

 

 

9,723

 

Net income attributable to Granite

$

78,951

 

 

$

57,624

 

 

$

84,863

 

 

$

17,601

 

 

 

 

 

 

 

 

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic

$

1.81

 

 

$

1.31

 

 

$

1.93

 

 

$

0.40

 

Diluted

$

1.57

 

 

$

1.13

 

 

$

1.79

 

 

$

0.40

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

43,696

 

 

 

43,924

 

 

 

43,914

 

 

 

43,861

 

Diluted

 

52,366

 

 

 

53,612

 

 

 

52,585

 

 

 

44,447

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 

Nine Months Ended September 30,

2024

 

2023

Operating activities:

 

 

 

Net income

$

93,392

 

 

$

7,878

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation, depletion and amortization

 

92,283

 

 

 

65,298

 

Amortization related to long-term debt

 

3,400

 

 

 

1,689

 

Loss on debt extinguishment

 

27,552

 

 

 

51,052

 

Gain on sales of property and equipment, net

 

(4,347

)

 

 

(7,793

)

Deferred income taxes

 

—

 

 

 

1,542

 

Stock-based compensation

 

17,325

 

 

 

8,630

 

Equity in net (income) loss from unconsolidated construction joint ventures

 

651

 

 

 

(4,535

)

Net income from affiliates

 

(12,921

)

 

 

(19,378

)

Other non-cash adjustments

 

(165

)

 

 

5,659

 

Changes in assets and liabilities

 

66,379

 

 

 

(75,844

)

Net cash provided by operating activities

$

283,549

 

 

$

34,198

 

Investing activities:

 

 

 

Purchases of marketable securities

 

(6,977

)

 

 

(9,740

)

Maturities of marketable securities

 

31,500

 

 

 

40,000

 

Purchases of property and equipment

 

(108,167

)

 

 

(108,963

)

Proceeds from sales of property and equipment

 

6,739

 

 

 

14,613

 

Acquisitions of businesses

 

(122,448

)

 

 

(26,933

)

Cash paid for purchase price adjustments on business acquisition

 

(13,183

)

 

 

—

 

Proceeds from company owned life insurance

 

—

 

 

 

1,545

 

Return of investment in affiliates

 

1,429

 

 

 

—

 

Collection of notes receivable

 

—

 

 

 

208

 

Net cash used in investing activities

$

(211,107

)

 

$

(89,270

)

Financing activities:

 

 

 

Proceeds from issuance of convertible notes

 

373,750

 

 

 

373,750

 

Proceeds from long-term debt

 

—

 

 

 

55,000

 

Debt principal repayments

 

(310,226

)

 

 

(304,851

)

Capped call transactions

 

(46,046

)

 

 

(53,035

)

Redemption of warrants

 

(497

)

 

 

(13,201

)

Debt issuance costs

 

(10,053

)

 

 

(10,024

)

Cash dividends paid

 

(17,131

)

 

 

(17,101

)

Repurchases of common stock

 

(21,384

)

 

 

(3,900

)

Contributions from non-controlling partners

 

20,500

 

 

 

35,400

 

Distributions to non-controlling partners

 

(18,072

)

 

 

(9,100

)

Other financing activities, net

 

1,340

 

 

 

267

 

Net cash provided by (used in) financing activities

$

(27,819

)

 

$

53,205

 

Net increase (decrease) in cash and cash equivalents

 

44,623

 

 

 

(1,867

)

Cash and cash equivalents at beginning of period

 

417,663

 

 

 

293,991

 

Cash and cash equivalents at end of period

$

462,286

 

 

$

292,124

 

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 (gain) 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 divestiture expenses, and a litigation charge and non-cash impairment charges in 2023.

We provide adjusted income before income taxes, adjusted provision for income taxes, adjusted net income attributable to Granite Construction Incorporated, 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 amortization expense and acquisition-related depreciation;
• Stock-based compensation expense;
• (Gain) loss on debt extinguishment; and
• Income taxes related to establishment of valuation allowance in 2023.

We also provide materials segment cash gross profit to exclude the impact of the segment’s depreciation, depletion and amortization from the segment’s gross profit. Management believes that non-GAAP financial measures such as materials segment cash gross profit 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 the Company's performance. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with GAAP. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. The methods used by the Company to calculate its 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 the Company may not be comparable to similar measures provided by other companies.

GRANITE CONSTRUCTION INCORPORATED

EBITDA AND ADJUSTED EBITDA(1)

(Unaudited - dollars in thousands)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

EBITDA:

 

 

 

 

 

 

 

Net income attributable to Granite Construction

$

78,951

 

 

$

57,624

 

 

$

84,863

 

 

$

17,601

 

Net income margin (2)

 

6.2

%

 

 

5.2

%

 

 

2.8

%

 

 

0.7

%

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization expense (3)

 

33,956

 

 

 

23,911

 

 

 

93,532

 

 

 

65,722

 

Provision for income taxes

 

25,469

 

 

 

22,423

 

 

 

36,636

 

 

 

21,978

 

Interest expense, net

 

392

 

 

 

584

 

 

 

3,510

 

 

 

612

 

EBITDA(1)

$

138,768

 

 

$

104,542

 

 

$

218,541

 

 

$

105,913

 

EBITDA margin(1)(2)

 

10.9

%

 

 

9.4

%

 

 

7.2

%

 

 

4.1

%

 

 

 

 

 

 

 

 

ADJUSTED EBITDA:

 

 

 

 

 

 

 

Other costs, net

 

8,543

 

 

 

19,843

 

 

 

29,778

 

 

 

37,973

 

Stock-based compensation (4)

 

2,241

 

 

 

1,928

 

 

 

17,325

 

 

 

8,630

 

(Gain) loss on debt extinguishment

 

(272

)

 

 

—

 

 

 

27,552

 

 

 

51,052

 

Adjusted EBITDA(1)

$

149,280

 

 

$

126,313

 

 

$

293,196

 

 

$

203,568

 

Adjusted EBITDA margin(1)(2)

 

11.7

%

 

 

11.3

%

 

 

9.7

%

 

 

7.9

%

(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, (gain) loss on debt extinguishment and stock-based compensation expense, as described above.

(2) Represents net income, EBITDA and adjusted EBITDA divided by consolidated revenue of $1.3 billion and $1.1 billion, for the three months ended September 30, 2024 and 2023, respectively and $3.0 billion and $2.6 billion for the nine months ended September 30, 2024 and 2023, 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.

(4) In the first quarter of 2024, we revised the adjusted EBITDA calculation to exclude the impact of stock-based compensation expense. The prior period adjusted EBITDA has been recast to conform to current presentation.

GRANITE CONSTRUCTION INCORPORATED

ADJUSTED NET INCOME RECONCILIATION

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2024

 

2023

Income before income taxes

$

109,446

 

 

$

79,919

 

 

$

130,028

 

 

$

29,856

 

Other costs, net

 

8,543

 

 

 

19,843

 

 

 

29,778

 

 

 

37,973

 

Transaction costs

 

5,546

 

 

 

92

 

 

 

15,378

 

 

 

5,046

 

Stock-based compensation (1)

 

2,241

 

 

 

1,928

 

 

 

17,325

 

 

 

8,630

 

(Gain) loss on debt extinguishment

 

(272

)

 

 

—

 

 

 

27,552

 

 

 

51,052

 

Adjusted income before income taxes

$

125,504

 

 

$

101,782

 

 

$

220,061

 

 

$

132,557

 

 

 

 

 

 

 

 

 

Provision for income taxes

$

25,469

 

 

$

22,423

 

 

$

36,636

 

 

$

21,978

 

Tax expense to establish valuation allowance

 

—

 

 

 

(1,542

)

 

 

—

 

 

 

(1,542

)

Tax effect of adjusting items (2)

 

4,474

 

 

 

4,375

 

 

 

16,593

 

 

 

12,120

 

Adjusted provision for income taxes

$

29,943

 

 

$

25,256

 

 

$

53,229

 

 

$

32,556

 

 

 

 

 

 

 

 

 

Net income attributable to Granite Construction

$

78,951

 

 

$

57,624

 

 

$

84,863

 

 

$

17,601

 

After-tax adjusting items

 

11,584

 

 

 

19,030

 

 

 

73,440

 

 

 

92,123

 

Adjusted net income attributable to Granite

$

90,535

 

 

$

76,654

 

 

$

158,303

 

 

$

109,724

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of common stock

 

52,366

 

 

 

53,612

 

 

 

52,585

 

 

 

44,447

 

Less: dilutive effect of Convertible Notes (3)

 

(8,103

)

 

 

(9,099

)

 

 

(8,103

)

 

 

—

 

Adjusted diluted weighted average shares of common stock

 

44,263

 

 

 

44,513

 

 

 

44,482

 

 

 

44,447

 

 

 

 

 

 

 

 

 

Diluted net income per share attributable to common shareholders

$

1.57

 

 

$

1.13

 

 

$

1.79

 

 

$

0.40

 

After-tax adjusting items per share attributable to common shareholders

 

0.48

 

 

 

0.59

 

 

 

1.77

 

 

 

2.07

 

Adjusted diluted earnings per share attributable to common shareholders

$

2.05

 

 

$

1.72

 

 

$

3.56

 

 

$

2.47

 

(1) In the first quarter of 2024, we revised the adjusted net income calculation to exclude the impact of stock-based compensation expense. The prior period adjusted net income and diluted loss per share calculations have been recast to conform to current presentation.

(2) The tax effect of adjusting items was calculated using the Company’s estimated annual statutory tax rate. The tax effect of adjusting items for the three and nine months ended September 30, 2024 includes an immaterial amount of the (gain) loss on debt extinguishment as it was almost entirely non-tax deductible. The nine months ended September 30, 2023 excludes the $51 million loss on debt extinguishment and three and nine months ended September 30, 2023 exclude $5.0 million of non-cash impairment charges included in “Other costs, net” which was non-tax deductible.

(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. For the nine months ended September 30, 2023, the potential share dilution from the convertible notes would have been antidilutive and therefore was excluded from the calculation. For the purposes of calculating 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 purchased equity derivative instruments which economically offsets dilution risk.

GRANITE CONSTRUCTION INCORPORATED

MATERIALS SEGMENT CASH GROSS PROFIT RECONCILIATION

(Unaudited - in thousands)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2024

 

2023

 

2022

 

2024

 

2023

 

2022

Gross profit

$

32,264

 

 

$

29,481

 

 

$

22,038

 

 

$

59,060

 

 

$

49,067

 

 

$

40,965

 

Gross profit as a percent of revenue

 

16.6

%

 

 

17.2

%

 

 

13.6

%

 

 

13.5

%

 

 

13.0

%

 

 

11.0

%

Depreciation, depletion and amortization

 

10,938

 

 

 

6,722

 

 

 

6,211

 

 

 

30,658

 

 

 

18,514

 

 

 

18,163

 

Cash gross profit

$

43,202

 

 

$

36,203

 

 

$

28,249

 

 

$

89,718

 

 

$

67,581

 

 

$

59,128

 

Cash gross profit as a percent of revenue

 

22.2

%

 

 

21.2

%

 

 

17.5

%

 

 

20.6

%

 

 

17.9

%

 

 

15.8

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241030745262/en/

Investors Wenjun Xu, 831-761-7861

Or

Media Erin Kuhlman, 831-768-4111