Granite Construction Stock Earnings Reports

Key points for investors:

- Strong top-line growth and backlog: Revenue rose 29% year-over-year to $1.5 billion in Q2. Construction backlog (CAP) reached a record $7.4 billion, up $250 million sequentially, driven by wins and the Kenny Seng acquisition (Kenny Seng CAP ~ $150M).

- Improved profitability and cash generation: Adjusted net income increased to $101 million and adjusted EBITDA to $186 million. Year-to-date operating cash flow was $142 million (vs. $5M prior year); company raised its annual operating cash flow target from 10% to 11% of revenue.

- Guidance and outlook: 2026 revenue guidance increased to $5.3–$5.5 billion. Organic revenue growth outlook for 2027 raised from 6–8% to above 10%, citing strong CAP visibility, healthy public/private markets, and robust bidding activity.

- Materials business: Aggregate and asphalt volumes rose (partly from acquisitions); aggregate pricing is tracking mid-single-digit increases. Q2 margins were pressured (gross profit margin down ~800 bps; cash gross profit margin down ~310 bps) due to severe weather in the Southeast (estimated ~$10M impact) and quarry/plant development costs (~$5M impact). Management expects volumes to shift later in the year and to be on track for margin recovery.

- Strategic diversification and growth markets: Management is expanding beyond core publicly funded transportation into federal work, Class 1 rail/intermodal, and data center site development (data center CAP increased from ~$65M a year ago to ~$225M). They launched a dedicated data center division and target ~10% of annual revenue from data center work over time.

- Capital structure and M&A: Company secured inaugural Moody’s and S&P ratings, issued $600M senior unsecured notes, and is settling/calling remaining 3.75% convertible notes. Nonoperating charges of $363M were recorded in Q2 related to the convertible notes (excluded from adjusted metrics); remaining debt discount of $270M will be recognized as interest in Q3. Management plans to use ~ $570M cash to settle most conversions (reducing adjusted diluted shares by ~2M) and remains active on disciplined M&A with a healthy pipeline. Management expects to complete additional acquisitions in 2026 and projects M&A spend in the near term in the low hundreds of millions (and a multi-year historical range of ~$300M–$800M).