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GRANITE CONSTRUCTION INC

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Business Summary

Granite Construction Incorporated is one of the largest diversified, vertically integrated civil contractors and construction materials producers in the United States, delivering infrastructure solutions for public and private clients primarily in the United States. Within the public sector, the company primarily concentrates on infrastructure projects including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, dams, power-related facilities, utilities, tunnels, water well drilling and other infrastructure-related projects. Within the private sector, the company performs various services such as site preparation, mining services and infrastructure services for commercial and industrial sites, railways, residential development, energy development, as well as construction management professional services. The five primary economic drivers of the business are the overall health of the U.S. economy including access to resources; federal, state and local public funding levels; population growth resulting in public and private development; the need to build, replace or repair aging infrastructure; and the pricing of certain commodity related products. At the federal level, the $1.2 trillion Infrastructure Investment and Jobs Act has increased federal highway, bridge and transit funding to its highest level in more than six decades with $550 billion in incremental funding over five years. In California, the state infrastructure spend is funded through Senate Bill 1, the Road Repair and Accountability Act of 2017, a 10-year, $54.2 billion program.

The company has multiple competitors in all the areas in which it works, and some competitors are larger and may have greater resources. One of the company's significant competitive advantages is that it owns and leases aggregate reserves and owns processing plants that are vertically integrated into its construction operations. Significant barriers to entry exist in many markets due to stringent zoning and permitting regulations. Factors influencing competitiveness include price, knowledge of local markets and conditions, financial strength, reputation for quality, aggregate materials availability and machinery and equipment. The company's largest volume customer, including both prime and subcontractor arrangements, was the California Department of Transportation, with revenue recognized from contracts with Caltrans during the year ended December 31, 2025 representing $446.6 million (10.1% of total revenue ).

The company generates revenue through two reportable segments: Construction and Materials. The Construction segment focuses on construction and rehabilitation of roads, pavement preservation, bridges, rail lines, airports, marine ports, dams, reservoirs, aqueducts, infrastructure and site development for use by the general public and water-related construction for municipal agencies, commercial water suppliers, industrial facilities and energy companies, as well as construction of various complex projects including infrastructure and site development, mining, public safety, tunnel, solar, battery storage and other power-related projects. The Materials segment focuses on production and delivery of aggregates, asphalt concrete, liquid asphalt and recycled materials for internal use in the company's construction projects and for sale to third parties. Revenue is primarily derived from construction contracts that can span several quarters or years in the Construction segment and from sales of construction related materials in the Materials segment. Revenue in the Construction segment is ordinarily recognized over time as control is transferred to the customers by measuring progress toward complete satisfaction of the performance obligation using an input cost to cost method. Contracts with customers in the Materials segment are typically valued at the contractual selling price per unit and revenue is recognized at a point in time when delivery to the customer occurs.

The Construction segment generated revenue of $3,654,880 thousand for the year ended December 31, 2025, compared to $3,415,225 thousand in 2024 and $2,992,254 thousand in 2023. Construction segment revenue in 2025 increased by $239.7 million, or 7.0% , compared to 2024, primarily driven by $112.1 million of construction revenue from recently acquired businesses Warren Paving and Papich Construction during 2025. Within the Construction segment, public sector revenue was $2,608,430 thousand (71.4% of segment revenue) and private sector revenue was $1,046,450 thousand (28.6% of segment revenue) for 2025. Approximately 70% of the company's construction revenue in 2025 was funded by federal, state and local government agencies and authorities. The Construction segment gross profit was $574,178 thousand for 2025, with a segment margin of 15.7% of segment revenue, compared to $491,002 thousand (14.4% ) in 2024 and $325,055 thousand (10.9% ) in 2023.

The Materials segment generated revenue of $769,499 thousand for the year ended December 31, 2025, compared to $592,349 thousand in 2024 and $516,884 thousand in 2023. Materials revenue in 2025 increased by $177.2 million, or 29.9% , when compared to 2024, primarily driven by materials revenue from recently acquired businesses Warren Paving, Papich Construction and Cinderlite of $106.4 million during 2025, as well as higher sales volumes and prices in both aggregates and asphalt. Within the Materials segment, aggregates revenue was $308,781 thousand (40.1% of segment revenue) and asphalt revenue was $458,836 thousand (59.7% of segment revenue) for 2025. The Materials segment gross profit was $137,038 thousand for 2025, with a segment margin of 17.8% of segment revenue, compared to $81,695 thousand (13.8% ) in 2024 and $71,344 thousand (13.8% ) in 2023.

During 2025, the company completed three acquisitions. On August 5, 2025, the company completed the acquisition of Slats Lucas, LLC and Warren Paving, Inc. for $540.0 million in cash, a vertically-integrated asphalt contractor and aggregate producer with operations along the Gulf Coast and Mississippi River. On the same date, the company completed the acquisition of Papich Construction Company, Inc. for $170.0 million in cash, a provider of construction services and materials in California's Central Coast and Central Valley regions. On October 3, 2025, the company completed the acquisition of Cinderlite Trucking Corporation for $58.5 million in cash, a construction materials, landscape supply and transportation company in Carson City, Nevada. To finance these acquisitions, on August 5, 2025, the company entered into the Fifth Amended and Restated Credit Agreement, which provided for a $600.0 million senior secured revolving credit facility, a $600.0 million senior secured term loan and an additional $75.0 million senior secured delayed draw term loan. The company also repurchased 300,200 shares of common stock under the Board approved share repurchase program during 2025, and $157.6 million remained available under the 2022 authorization as of December 31, 2025. The company paid quarterly cash dividends of $0.52 per share during 2025.

Total revenue for the year ended December 31, 2025 was $4,424,379 thousand , compared to $4,007,574 thousand in 2024 and $3,509,138 thousand in 2023. Gross profit was $711,216 thousand for 2025, compared to $572,697 thousand in 2024 and $396,399 thousand in 2023, with gross profit margin of 16.1% of total revenue in 2025 versus 14.3% in 2024 and 11.3% in 2023. Operating income was $282,446 thousand for 2025, compared to $207,363 thousand in 2024 and $80,062 thousand in 2023. Net income attributable to Granite Construction Incorporated was $193,003 thousand for 2025, compared to $126,346 thousand in 2024 and $43,599 thousand in 2023. Diluted earnings per share attributable to common shareholders was $3.86 for 2025, compared to $2.62 in 2024 and $0.97 in 2023.

Business Outlook

The company's Committed and Awarded Projects balance was $7.0 billion at the end of the fourth quarter of 2025, supported by a positive public funding environment and strength in the private markets served, which the company believes will provide further opportunities for continued CAP growth in 2026. Approximately $3.0 billion of the December 31, 2025 unearned revenue is expected to be completed during 2026. The company currently anticipates 2026 capital expenditures to be between approximately $140 million and $160 million , including approximately $50 million in planned strategic materials investments.

The company's growth strategy includes expanding into new geographic areas both organically and through acquisitions, as demonstrated by the 2025 acquisitions of Warren Paving, Papich Construction and Cinderlite. The Warren Paving acquisition aligns with the strategy to expand presence into new geographies with future growth opportunities while supporting existing operations, particularly the Materials segment. The Papich Construction and Cinderlite acquisitions align with the strategy of enhancing vertical integration by strengthening existing home markets. The company also continues to pursue risk-balanced growth by strategically adding to its client base within current geographic markets.

The company's vertical integration strategy provides a competitive advantage by ensuring the availability of aggregate reserves and processing plants. The company owns and leases aggregate reserves and owns processing plants that are vertically integrated into its construction operations, and also looks for additional vertical integration opportunities that complement existing construction and materials businesses. As of December 31, 2025, the company had 116 quarry properties with total mineral reserves of approximately 1.4 billion tons and total mineral resources of approximately 697.7 million tons .

The company's gross profit margin improved to 16.1% of total revenue in 2025 from 14.3% in 2024 and 11.3% in 2023. Construction gross profit margin improved to 15.7% of segment revenue in 2025 from 14.4% in 2024. Materials gross profit margin improved to 17.8% of segment revenue in 2025 from 13.8% in 2024. Selling, general and administrative expenses were $407,561 thousand for 2025, or 9.2% of revenue, compared to $334,162 thousand (8.3% ) in 2024 and $294,466 thousand (8.4% ) in 2023.

The company's operations are typically affected more by weather conditions during the first and fourth quarters of the fiscal year which may alter construction schedules and create variability in revenues, profitability and the required number of employees. The company employs approximately 2,500 salaried employees and approximately 3,300 hourly employees as of December 31, 2025. During 2025, the number of hourly employees ranged from approximately 2,500 to 5,200 . The company's managerial and supervisory personnel have an average tenure of 12 years with Granite.

As of December 31, 2025, the company had cash and cash equivalents of $529,220 thousand , short-term marketable securities of $71,021 thousand , and long-term marketable securities of $49,534 thousand . Total cash, cash equivalents and marketable securities were $649,775 thousand . The company had $600.0 million outstanding on the Initial Term Loan under the Credit Agreement and total unused availability under the Revolver of $583.2 million as of December 31, 2025. The company's CAP was $7.0 billion at December 31, 2025, compared to $5.3 billion at December 31, 2024. The company believes its primary sources of liquidity will be sufficient to meet expected working capital needs, capital expenditures, financial commitments, cash dividend payments and other liquidity requirements associated with existing operations for the next twelve months.

The company faces headwinds from inflation, supply chain and labor constraints that have had a significant impact on the global economy including Granite and others in the construction industry in the United States. Recently, concerns over tariffs have been a major source of uncertainty in the economy, though to date the company has not experienced a material financial impact due to tariffs. The company has applied proactive measures to mitigate these macro-economic factors, such as fixed forward purchase contracts of oil related inputs, energy surcharges, and adjustment of project schedules for constraints related to construction materials such as concrete. The company's costs were and may continue to be subject to significant inflationary pressures and may be subject to tariff-related price increases, and the company may not be able to fully offset such higher costs through price increases.

Risk Factors

The company derives a substantial amount of revenue from federal, state and local government agencies, with approximately 70% of construction revenue in 2025 funded by such agencies, and any disruption in government funding or a significant reduction in government spending could cancel or delay projects and have a material adverse effect. Fixed price and fixed unit price contracts, which represented 56.9% and 34.6% of unearned revenue at December 31, 2025 respectively, subject the company to the risk of increased project costs due to factors including inflation, tariffs, inefficiency and incorrect estimates, which could result in reduced profits or a loss. The company's CAP of $7.0 billion at December 31, 2025 is subject to unexpected adjustments and cancellations, and the company cannot guarantee that the revenues projected in CAP will be realized or profitable. The company is subject to environmental, health and safety regulations, and some environmental laws impose strict, joint and several liability for contamination without regard to causation or knowledge. The company's failure to win new contracts and renew existing contracts with private and public sector clients could have a material adverse effect, as contract proposals and negotiations are complex and frequently involve a lengthy bidding and selection process affected by market conditions, financing arrangements and required governmental approvals.

Management Priorities

Management's message emphasizes that the company's CAP balance continues to be strong with $7.0 billion at the end of the fourth quarter of 2025, supported by a positive public funding environment and strength in the private markets served, which the company believes will provide further opportunities for continued CAP growth in 2026. Management highlights that the company currently anticipates 2026 capital expenditures to be between approximately $140 million and $160 million , including approximately $50 million in planned strategic materials investments. The strategic priorities emphasized for the period ahead include continuing to strengthen and expand vertically integrated home markets through acquisitions, selective bidding focused on jobs that meet bidding criteria, risk-balanced growth by strategically adding to the client base within current geographic markets and expanding into new geographic areas both organically and through acquisitions, and diversification across public and private sectors, diverse end markets, geographic markets, and procurement methods to mitigate risks inherent in the construction business.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 1, Business — Customers
  2. [2] Item 1, Business — Customers
  3. [3] Item 7, MD&A — Revenue; Item 8, Note 21 — Segment Information
  4. [4] Item 7, MD&A — Revenue; Item 8, Note 21 — Segment Information
  5. [5] Item 7, MD&A — Revenue; Item 8, Note 21 — Segment Information
  6. [6] Item 7, MD&A — Construction Revenue
  7. [7] Item 7, MD&A — Construction Revenue
  8. [8] Item 7, MD&A — Construction Revenue; Item 8, Note 4 — Disaggregation of Revenue
  9. [9] Item 7, MD&A — Construction Revenue
  10. [10] Item 7, MD&A — Construction Revenue; Item 8, Note 4 — Disaggregation of Revenue
  11. [11] Item 7, MD&A — Construction Revenue
  12. [12] Item 1, Business — Government Regulations
  13. [13] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information
  14. [14] Item 7, MD&A — Gross Profit
  15. [15] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information
  16. [16] Item 7, MD&A — Gross Profit
  17. [17] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information
  18. [18] Item 7, MD&A — Gross Profit
  19. [19] Item 7, MD&A — Revenue; Item 8, Note 21 — Segment Information
  20. [20] Item 7, MD&A — Revenue; Item 8, Note 21 — Segment Information
  21. [21] Item 7, MD&A — Revenue; Item 8, Note 21 — Segment Information
  22. [22] Item 7, MD&A — Materials Revenue
  23. [23] Item 7, MD&A — Materials Revenue
  24. [24] Item 7, MD&A — Materials Revenue; Item 8, Note 4 — Disaggregation of Revenue
  25. [25] Item 7, MD&A — Materials Revenue
  26. [26] Item 7, MD&A — Materials Revenue; Item 8, Note 4 — Disaggregation of Revenue
  27. [27] Item 7, MD&A — Materials Revenue
  28. [28] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information
  29. [29] Item 7, MD&A — Gross Profit
  30. [30] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information
  31. [31] Item 7, MD&A — Gross Profit
  32. [32] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information
  33. [33] Item 7, MD&A — Gross Profit
  34. [34] Item 7, MD&A — Acquisitions; Item 8, Note 2 — Acquisitions
  35. [35] Item 7, MD&A — Acquisitions; Item 8, Note 2 — Acquisitions
  36. [36] Item 7, MD&A — Acquisitions; Item 8, Note 2 — Acquisitions
  37. [37] Item 7, MD&A — 2025 Acquisition Financing; Item 8, Note 14 — Debt
  38. [38] Item 7, MD&A — 2025 Acquisition Financing; Item 8, Note 14 — Debt
  39. [39] Item 7, MD&A — 2025 Acquisition Financing; Item 8, Note 14 — Debt
  40. [40] Item 7, MD&A — Share Repurchase Program; Item 8, Note 17 — Shareholders' Equity
  41. [41] Item 7, MD&A — Share Repurchase Program
  42. [42] Item 8, Consolidated Statements of Shareholders' Equity
  43. [43] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  44. [44] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  45. [45] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  46. [46] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  47. [47] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  48. [48] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  49. [49] Item 7, MD&A — Gross Profit
  50. [50] Item 7, MD&A — Gross Profit
  51. [51] Item 7, MD&A — Gross Profit
  52. [52] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  53. [53] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  54. [54] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  55. [55] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  56. [56] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  57. [57] Item 7, MD&A — Results of Operations; Item 8, Consolidated Statements of Operations
  58. [58] Item 8, Consolidated Statements of Operations
  59. [59] Item 8, Consolidated Statements of Operations
  60. [60] Item 8, Consolidated Statements of Operations
  61. [61] Item 7, MD&A — Current Economic Environment and Outlook
  62. [62] Item 1, Business — Committed and Awarded Projects
  63. [63] Item 7, MD&A — Capital Expenditures
  64. [64] Item 7, MD&A — Capital Expenditures
  65. [65] Item 2, Properties — Quarry Properties
  66. [66] Item 2, Properties — Mineral Reserves
  67. [67] Item 2, Properties — Mineral Resources
  68. [68] Item 7, MD&A — Gross Profit
  69. [69] Item 7, MD&A — Gross Profit
  70. [70] Item 7, MD&A — Gross Profit
  71. [71] Item 7, MD&A — Gross Profit
  72. [72] Item 7, MD&A — Gross Profit
  73. [73] Item 7, MD&A — Gross Profit
  74. [74] Item 7, MD&A — Gross Profit
  75. [75] Item 7, MD&A — Selling, General and Administrative Expenses
  76. [76] Item 7, MD&A — Selling, General and Administrative Expenses
  77. [77] Item 7, MD&A — Selling, General and Administrative Expenses
  78. [78] Item 7, MD&A — Selling, General and Administrative Expenses
  79. [79] Item 7, MD&A — Selling, General and Administrative Expenses
  80. [80] Item 7, MD&A — Selling, General and Administrative Expenses
  81. [81] Item 1, Business — Human Capital Resources
  82. [82] Item 1, Business — Human Capital Resources
  83. [83] Item 1, Business — Human Capital Resources
  84. [84] Item 1, Business — Human Capital Resources
  85. [85] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Consolidated Balance Sheets
  86. [86] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Consolidated Balance Sheets
  87. [87] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Consolidated Balance Sheets
  88. [88] Item 7, MD&A — Liquidity and Capital Resources
  89. [89] Item 7, MD&A — Liquidity and Capital Resources; Item 8, Note 14 — Debt
  90. [90] Item 7, MD&A — Liquidity and Capital Resources
  91. [91] Item 7, MD&A — Committed and Awarded Projects
  92. [92] Item 7, MD&A — Committed and Awarded Projects
  93. [93] Item 1A, Risk Factors
  94. [94] Item 1, Business — Contract Provisions and Subcontracting
  95. [95] Item 1, Business — Contract Provisions and Subcontracting
  96. [96] Item 1, Business — Committed and Awarded Projects
  97. [97] Item 7, MD&A — Current Economic Environment and Outlook
  98. [98] Item 7, MD&A — Capital Expenditures
  99. [99] Item 7, MD&A — Capital Expenditures
  100. [100] Item 8, Consolidated Statements of Operations
  101. [101] Item 8, Consolidated Statements of Operations
  102. [102] Item 8, Consolidated Statements of Operations
  103. [103] Item 8, Consolidated Statements of Operations
  104. [104] Item 8, Consolidated Statements of Operations
  105. [105] Item 8, Consolidated Statements of Operations
  106. [106] Item 8, Consolidated Statements of Operations
  107. [107] Item 8, Consolidated Statements of Operations
  108. [108] Item 8, Consolidated Statements of Operations
  109. [109] Item 8, Consolidated Statements of Operations
  110. [110] Item 7, MD&A — Gross Profit
  111. [111] Item 7, MD&A — Gross Profit
  112. [112] Item 8, Consolidated Statements of Cash Flows
  113. [113] Item 8, Consolidated Statements of Cash Flows
  114. [114] Item 7, MD&A — Liquidity and Capital Resources
  115. [115] Item 7, MD&A — Liquidity and Capital Resources
  116. [116] Item 8, Consolidated Balance Sheets
  117. [117] Item 8, Consolidated Balance Sheets
  118. [118] Item 8, Consolidated Statements of Operations
  119. [119] Item 8, Consolidated Statements of Operations
  120. [120] Item 7, MD&A — Income Taxes
  121. [121] Item 7, MD&A — Income Taxes
  122. [122] Item 7, MD&A — Income Taxes
  123. [123] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information
  124. [124] Item 7, MD&A — Gross Profit; Item 8, Note 21 — Segment Information

Analysis on 9/28/2026