2 0 2 4 A N N U A L R E P O R T
ADDRESSING
AMERICA'S
INFRASTRUCTURE
NEEDS
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.
Note: See "Disclosure Regarding Forward-Looking Statements" in our Annual Report on Form 10-K included herein for information with respect to
forward-looking statements included in this 2024 Annual Report.
1
2024 ANNUAL REPORT
Across the country, roads, bridges, airports, rail systems,
and other critical infrastructure are in significant need
of improvement.
Throughout Granite's footprint across the U.S., these
infrastructure needs are recognized at the national, state,
and local levels. Maintenance on roads and bridges that
have been delayed are moving to execution. Projects that will
support our nation's growing population are being released
for construction. The country recognizes the great needs
and is acting.
1
2024 ANNUAL REPORT
2
GRANITE
Granite has an expanding network of construction and construction materials businesses organized in
home markets across the United States serving both the public and private markets. Across our footprint,
our expertise allows us to provide infrastructure solutions in a variety of markets as a diversified civil
contractor and leading construction materials provider. As America's Infrastructure Company, Granite
is well positioned to capitalize on the funding provided by the generational investment in America's
infrastructure from the Infrastructure Investment and Jobs Act or IIJA.
Robust Market Opportunities
Granite serves customers in both the public and private sectors within our reportable segments:
Construction and Materials. Our expertise allows us to provide infrastructure solutions in a range of
markets as a diversified civil contractor and materials producer.
■ Construction ■ Materials
HIGHWAYS
AND ROADS
AIRPORTS
BRIDGES
COMMERCIAL SITE
DEVELOPMENT
AGGREGATE
DAMS AND
CANALS
FEDERAL
MINING
PAVEMENT
PRESERVATION
ASPHALT
CONCRETE
RAIL
RENEWABLES
TUNNELING
WATER AND
WASTEWATER
RECYCLED
MATERIALS
GRANITE IS WELL
POSITIONED
TO BENEFIT
FROM THE STRONG MARKET
3
2024 ANNUAL REPORT
3
Alaska
Hawaii
Guam
2024 ANNUAL REPORT
1 In a home market, Granite has longstanding, trusted relationships with
vendors and subcontractors. Through our established presence, we have
developed market intelligence and insight, allowing us to identify the best
project opportunities and implement the most effective strategies to win
and execute work. In a home market, we have strong relationships with
owners and regulators, and a ready supply of human capital and essential
construction materials.
■ Where We Work
■ Home Markets1
● Materials: Aggregate
● Materials: Asphalt
Organic revenue growth driven by
the federal infrastructure bill
Public and private market
environment supporting
numerous opportunities
for sustainable growth for
years to come
Transformed Committed and
Awarded Projects (CAP) portfolio
supporting higher construction
segment gross profit margins
WHY INVEST
IN GRANITE?
Strengthened materials segment
delivering increased profitability
from targeted investment
M&A is a driver for growth
through both strengthening and
expanding our footprint
Strong cash generation and
liquidity providing flexibility to
maximize shareholder return
4
GRANITE
5
2024 ANNUAL REPORT
2024 ANNUAL REPORT
5
External AGG Sales
External Hot Mix Asphalt (HMA) Sales
Aggregate Production
HMA Production
Construction Operations
Liquid Asphalt
RAP
Millings
Backhaul
Vertical Integration Empowers Home Markets
Compete in markets where owning materials is necessary | Maximize productivity and scheduling
Ensure quality materials | Leverage lower production costs compared to external pricing
Leverage dump and recycle logistics | Tax advantages
6
GRANITE
LEADING
THROUGH
GROWTH AND
EXECUTION
Granite’s teams produced record results in 2024 by building on the foundations
that have driven our success for more than one hundred years. Our history
demonstrates that Granite is at its best when we focus on projects in our home
markets, use our vertically integrated model as a competitive advantage to
grow margin, and rely on our employees — which we believe are the best in the
industry — to deliver projects to our customers on time and on budget. These are
the pillars that have allowed Granite to flourish for so long; they are the pillars
that we built upon when we set out to transform Granite, returning to our past
successes with our redesigned Strategic Plan launched in 2022. We will leverage
these core strengths as we work to achieve our newly-introduced 2027 financial
targets: we have what we believe to be our strongest project portfolio in our
history, we continue to grow and strengthen our Construction Materials business,
and we are expanding our business into new markets.
The Right Projects
We have assembled what we believe to be Granite’s strongest project portfolio ever by pursuing the right
opportunities within our home markets. State transportation budgets across our geographies remain
at record or near record levels fueled by the IIJA. The strength of both the public and private funding
environments have fueled the growth of our Committed and Awarded Projects (CAP) over the past three
years. We expect further growth while being selective in the projects that we pursue. A key focus is on
best value, or collaborative contracting, procurement projects. These types of projects are awarded based
6
GRANITE
7
2024 ANNUAL REPORT
on a combination of contractor qualifications and price,
and Granite has demonstrated time and again that we can
effectively partner with owners to better collaborate and
mitigate construction risks during the design phase of
contracts. This allows us to deliver higher quality, complex
projects while minimizing disputes and claims. The
combination of these best value projects and traditional
bid-build procurement type projects in our transformed
portfolio has facilitated significant margin expansion in our
Construction segment, and we expect to see continued
growth and margin expansion through 2027.
Investing in Construction Materials
We have focused on investment and execution in our
Construction Materials business. Three years ago, we
shifted the focus of our capital expenditures to aggregate
reserves, new materials plants, and plant upgrades. We are
already seeing margin improvement from many of these
investments, including automation projects at aggregate
plants that increase production per labor hour. From 2022
to 2024, we added 426 million tons of aggregate reserves,
a 38% increase, and we have improved cash gross profit1
margin by 340 basis points in our Construction Materials
business. In 2024, we reorganized our operational structure
to better align management of our Construction Materials
business, centralizing functions like sales and quality control,
and allowing Materials leaders to make strategic decisions
to better leverage resources across Granite. In just one year
since the reorganization, we have already made significant
progress growing margin in our Construction business,
with much more expected in the future as we optimize the
performance of plants across our portfolio. With a renewed
emphasis on maximizing pull-through of aggregates into our
Construction business, our Construction Materials business
is positioned to support our 2027 financial targets.
Kyle T. Larkin, President and Chief Executive Officer (left)
Michael F. McNally, Board Chair
Revenue
($ in billions)
FY 2022
FY 2023
FY 2024
$3.3
$4.0
$3.5
1Cash gross profit margin is a non-GAAP financial measure. For additional information, see "Non-GAAP Financial Information" in this 2024 Annual Report.
8
GRANITE
Entering New Markets
In 2024, we added to our Southeastern home market with the purchase of
materials-led Dickerson & Bowen. Granite has historically grown through
acquisitions of materials-led, vertically integrated businesses. We are
returning to our roots and will continue to grow through acquisition. There
are many opportunities in the market, and we intend to be selective. We will
identify and pursue like-minded companies that have strong management
teams in growing markets that are immediately EBITDA margin accretive.
We expect to strengthen and expand our existing footprints with bolt-on
acquisitions, and to enter new geographies with new platform acquisitions. It
is an exciting time of growth for Granite.
Our decisions have been informed and intentional, and we are executing
on our strategy to position Granite for continued revenue growth, adjusted
EBITDA margin expansion, and transformative cash flow generation. We
believe that we will grow revenue organically 6% to 8% per year through 2027,
increase adjusted EBITDA margin to 12% to 14%1, generate operating cash
flow margin of 9% to 11%, and achieve free cash flow margin2 of 6% to 8%
in 2027. From the federal, state, and local levels, agencies across the nation
have recognized the monumental need for new and improved infrastructure,
and Granite is uniquely positioned to deliver solutions. As America’s
Infrastructure Company, Granite satisfies society’s needs for mobility, power,
water, and other essential services that sustain living conditions and improve
quality of life. With Granite’s earnings power, cash generation, and strong
balance sheet, we believe we are well positioned to capitalize on the long-
term generational investments in America’s infrastructure.
Thank you for your continued interest in Granite and trust in our leadership.
There is much to be excited about, and we are just getting started.
Kyle T. Larkin
President and
Chief Executive Officer
Michael F. McNally
Board Chair
FY 2022
FY 2023
10.0%
8.0%
Net Income and
Adjusted EBITDA Margin
■ Net Income Margin
■ Adjusted EBITDA Margin
6.6%
2.5%
1.2%
FY 2024
3.2%
2027 Targets
6%-8%
Organic Revenue CAGR
(From 2024 to 2027)
12%-14%
Adjusted EBITDA Margin1
9%-11%
Operating Cash Flow Margin
1 Adjusted EBITDA margin is a non-GAAP financial measure. The Company does 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 the Company 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, the Company is unable to assess the potential
significance of the unavailable information. For additional information, see "Non-GAAP Financial
Information" in this 2024 Annual Report.
2 Free cash flow margin is a non-GAAP financial measure and is calculated by subtracting CAPEX
from operating cash flow margin. We expect 2027 CAPEX to be 3% of revenue and operating cash
flow margin to be 9% to 11% of revenue.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Q
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
£
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 1-12911
Granite Construction Incorporated
(Exact name of registrant as specified in its charter)
Delaware
77-0239383
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
585 West Beach Street
Watsonville, California
95076
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (831) 724-1011
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common stock, $0.01 par value
GVA
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ý No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ý No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging
growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ý Accelerated filer Non-accelerated filer Smaller reporting
company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ý
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No ý
The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant was $2.7 billion as of June 30, 2024,
based upon the price at which the registrant’s common stock was last sold as reported on the New York Stock Exchange on such date.
At February 7, 2025, 43,434,583 shares of common stock, par value $0.01, of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Certain information called for by Part III is incorporated by reference to the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders of
Granite Construction Incorporated, which will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2024.
INDEX
Disclosure Regarding Forward-Looking Statements
1
PART I
Item 1.
Business
2
Item 1A. Risk Factors
11
Item 1B. Unresolved Staff Comments
23
Item 1C. Cybersecurity
24
Item 2.
Properties
25
Item 3.
Legal Proceedings
29
Item 4.
Mine Safety Disclosures
29
PART II
Item 5.
Market For Registrant’s Common Equity,
Related Stockholder Matters And Issuer
Purchases of Equity Securities
30
Item 6.
[Reserved]
32
Item 7.
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
32
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
41
Item 8.
Financial Statements and Supplementary Data
42
Item 9.
Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure
43
Item 9A. Controls and Procedures
43
Item 9B. Other Information
44
Item 9C. Disclosure Regarding Foreign Jurisdictions that
Prevent Inspections
44
PART III
Item 10. Directors, Executive Officers and Corporate
Governance
45
Item 11. Executive Compensation
45
Item 12. Security Ownership of Certain Beneficial
Owners And Management and
Related Stockholder Matters
45
Item 13. Certain Relationships and Related Transactions,
and Director Independence
45
Item 14. Principal Accounting Fees And Services
45
PART IV
Item 15. Exhibits And Financial Statement Schedules
46
EXHIBIT 21
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32
EXHIBIT 95
EXHIBIT 101.INS
EXHIBIT 101.SCH
EXHIBIT 101.CAL
EXHIBIT 101.DEF
EXHIBIT 101.LAB
EXHIBIT 101.PRE
EXHIBIT 104
2024 Annual Report 1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
From time to time, Granite makes certain comments and disclosures in reports and statements, including in this Annual Report
on Form 10-K, and its officers or directors make statements that are not based on historical facts, including statements regarding
future events, occurrences, circumstances, strategy, activities, performance, outlook, outcomes, targets, guidance, capital
expenditures, committed and awarded projects, and results, that may 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,” “target,” and the negatives thereof or other comparable terminology or by the context in which
they are made. In addition, other written or oral statements that constitute forward-looking statements have been made and may
in the future be made by or on behalf of Granite. These forward-looking statements are estimates reflecting the best judgment of
senior management and reflect our current expectations regarding future events, occurrences, circumstances, strategy, activities,
performance, outlook, outcomes, targets, guidance, capital expenditures, committed and awarded projects, 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 more
specifically described in this report under “Item 1A. Risk Factors.” 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 Annual Report on Form 10-K, and, except as
required by law, we undertake no obligation to revise or update any forward-looking statements for any reason.
2 Granite Construction Incorporated
PART I
Item 1. Business
Introduction
Granite Construction Company was incorporated in 1922. In 1990, Granite Construction Incorporated was formed as the
holding company for Granite Construction Company and its wholly-owned and consolidated subsidiaries and was incorporated
in Delaware. Unless otherwise indicated, the terms “we,” “us,” “our,” “Company” and “Granite” refer to Granite Construction
Incorporated and its wholly-owned and consolidated subsidiaries.
We deliver infrastructure solutions for public and private clients primarily in the United States. We are one of the largest diversified,
vertically integrated civil contractors and construction materials producers in the United States. Within the public sector, we
primarily concentrate 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, we perform various services such as site preparation, mining services and infrastructure services
for commercial and industrial sites, railways, residential development, energy development, as well as provide construction
management professional services. We own and lease aggregate reserves, and we own processing plants that are vertically
integrated into our construction operations. We also produce construction materials for sale to third parties.
We have vertically integrated operations across Alaska, Arizona, California, Mississippi, Nevada, Oregon, Tennessee, Utah and
Washington in addition to regional civil construction home markets in Illinois, Florida and Texas. Our Construction segment also
operates national businesses within the Tunnel division, the Rail division, the Federal division, which performs civil construction across
the continental United States and Guam, the Industrial & Energy division, which primarily focuses on commercial solar construction
projects, and the Layne division, which performs water well drilling, rehabilitation services and mineral exploration services.
Operating Structure
Our reportable segments are the same as our operating segments and correspond with how our chief operating decision maker,
or decision-making group (our “CODM”), regularly reviews financial information to allocate resources and assess performance. We
identified our CODM as our Chief Executive Officer and our Chief Operating Officer. Our reportable segments are: 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. It
also provides 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 of aggregates, asphalt
concrete, liquid asphalt and recycled materials for internal use in our construction projects and for sale to third parties. See Note
21 of “Notes to the Consolidated Financial Statements” for additional information about our reportable segments.
During the first quarter of 2024, we reorganized our operational structure to more closely align with our two reportable segments,
Construction and Materials. Previously, leaders within our three former operating groups of California, Central and Mountain
managed both Construction and Materials operations within each group. This change allows us to better leverage our expertise
within each reportable segment with leadership having direct oversight of their respective segment operations. As a result of
the reorganization, we will no longer disclose financial information by operating group. There were no material impacts to our
consolidated financial statements and no changes to our reportable segments.
Customers
Customers in our Construction segment are predominantly in the public sector and include certain federal agencies, state
departments of transportation, local transit authorities, county and city public works departments, school districts and developers,
utilities and private owners of industrial, commercial and residential sites. Customers of our Materials segment include internal
usage by our own construction projects, as well as third-party customers. Our third-party Materials segment customers include,
but are not limited to, contractors, landscapers, manufacturers of products requiring aggregate materials, retailers, homeowners,
farmers and brokers. The majority of both our public and private customers are located in the United States.
2024 Annual Report 3
During the years ended December 31, 2024, 2023 and 2022, our largest volume customer, including both prime and
subcontractor arrangements, was the California Department of Transportation (“Caltrans”). Revenue recognized from contracts
with Caltrans during the years ended December 31, 2024, 2023 and 2022 represented $567.6 million (14.2% of total revenue),
$458.2 million (13.1% of total revenue) and $348.0 million (10.5% of total revenue), respectively, which was primarily in the
Construction segment. Other than Caltrans, none of our customers, including both prime and subcontractor arrangements, had
revenue that individually exceeded 10% of total revenue during the years ended December 31, 2024, 2023 or 2022.
Business Strategy
As America’s Infrastructure Company (TM), Granite satisfies society’s needs for mobility, power, water and other essential services
that sustain living conditions and improve quality of life. Across our footprint of regional offices, we provide horizontal civil
infrastructure construction services and construction materials products to a diverse base of public, industrial and commercial
clients. These clients benefit from our home market strategy which includes local relationships, market intelligence and the
resources and expertise of one of the oldest and most respected U.S. contractors and materials producers.
Local market knowledge, relationships, and project management expertise, supported by the financial strength of a publicly traded
company with a strong balance sheet, provide a sustainable competitive advantage. By diversifying our revenue channels across
geographies and clients, and by taking measured risks within our construction capabilities, we simultaneously grow our business
and mitigate risk. Supported by proven operating processes, functional support systems and financial governance processes, our
growing network of regional businesses focus on local market conditions, client relationships, employee development, workforce
capabilities and investment opportunities to drive growth and efficiency within their home markets.
Additionally, the following continue to be key objectives in our strategic plan:
Selective Bidding
We focus our resources on bidding jobs that meet our bidding criteria, which include analyzing the risk of a potential job relative
to: (1) available personnel to estimate and prepare the proposal as well as to effectively manage and build the project; (2) project
procurement methodology; (3) the competitive environment; (4) our experience with the type of work and the owner; (5) local
resources and partnerships; (6) equipment resources; and (7) the size, duration, complexity and expected profitability of the job.
Risk-Balanced Growth
We intend to grow our business by strategically adding to our client base within our current geographic markets and expanding
into new geographic areas both organically and through acquisitions. Growth opportunities are evaluated relative to their
incremental impact to the execution risk and profitability profile of our operating portfolio.
Vertical Integration
We own and lease aggregate reserves and own processing plants that are vertically integrated into our construction operations.
By ensuring the availability of these resources through strategic expansion and providing quality products, we believe we have a
competitive advantage in many of our markets, as well as a source of revenue and earnings from the sale of construction materials
to third parties. We also look for additional vertical integration opportunities that complement our existing construction and
materials businesses. We expanded our vertically integrated home markets with the 2024 acquisition of Dickerson & Bowen, Inc.
(“D&B”), an aggregates, asphalt and highway construction company serving central and southern Mississippi.
Diversification
To mitigate the risks inherent in the construction business as the result of general economic factors, we pursue projects: (1) in both
the public and private sectors; (2) in diverse end markets such as federal, rail, power and water; (3) for a wide range of clients from
the federal government to small municipalities and from large corporations to small private customers; (4) in diverse geographic
markets; (5) with procurement methods that include construction management/general contractor (“CM/GC”), construction
management at-risk (“CMAR”), progressive design-build, bid-build and design-build; (6) that are executed according to a fixed
price, time and materials, cost reimbursable and fixed unit price; and (7) of various size, duration and complexity.
Performance-Based Incentives
Our incentive compensation plans align with the key objectives outlined in our strategic plan. Managers are incentivized with cash
compensation and equity awards payable upon the attainment of pre-established annual financial and non-financial metrics.
Code of Conduct and Core Values
We strive to maintain high ethical standards through an established Code of Conduct and a company-wide compliance program,
while always being guided by our core values which are integrity, safety, excellence, sustainability and inclusion.
4 Granite Construction Incorporated
Human Capital Resources
Employees
We believe our employees are our most valuable resource and are the primary factor in the successful implementation of our
business strategies. Significant resources are employed to attract, develop and retain extraordinary and diverse talent and optimize
each employee’s capabilities. Our focus on an inclusive work environment, talent development, talent acquisition, and succession
planning has allowed us to build a bench of talented employees. Our managerial and supervisory personnel have an average tenure
of 12 years with Granite, which demonstrates our workforce’s strong dedication to, and great pride in, our company.
On December 31, 2024, we employed approximately 2,300 salaried employees who work in project, functional and business unit
management, estimating and administrative capacities, plus approximately 2,100 hourly employees. These totals do not include
employees of unconsolidated joint ventures. The total number of hourly personnel fluctuates with the volume of work in progress
and is seasonal. During 2024, the number of hourly employees ranged from approximately 2,100 to 4,300. The majority of both our
salaried and hourly personnel were located in the United States during 2024. As of December 31, 2024, three of our wholly-owned
subsidiaries, Granite Construction Company, Layne Christensen Company and Granite Industrial, Inc., were parties to craft collective
bargaining agreements in many areas in which they operate (see Note 16 of the “Notes to the Consolidated Financial Statements”).
Health and Safety
Employee safety is our greatest priority and safety is ultimately about people, not statistics. Safety is one of our core values and we
strive to continuously improve our safety program to better protect our people. We instill our culture of safety through relationship-
based safety training, shared knowledge, and engagement at every level of our organization. A core part of our mission will always
be to provide a safe and healthy work environment for all our employees.
Inclusion
Our culture is underpinned by our core values, including an unwavering commitment to inclusion as exemplified by strategies
that address our guiding belief that diverse backgrounds, perspectives and experiences enhance creativity and innovation. We
have established employee resource groups that serve employees from a variety of backgrounds and we periodically conduct pay
analyses to support our commitment to legally-compliant pay practices for similar job functions.
We continued to execute on our five-year strategic plan regarding inclusion, which was established in 2020, working toward
increased representation of women and minorities throughout the organization (including in leadership) to be reflective of the
communities in which we operate.
In 2024, we continued to make progress through broadening the diversity of our pool of potential qualified applicants and
identifying and addressing any impediments to employment opportunity that may exist.
We also increased the number of colleges and universities we are targeting for our pool of qualified applicants. In 2024, we
employed 241 interns from 108 colleges and universities.
We remain fully committed to fairness and nondiscrimination in our employment practices by ensuring that the decision on who to
hire and promote are based purely on merit and made without consideration of race, gender or other protected characteristic.
Employee Development and Training
The development of our employees is critical to our success and is a key factor in our ability to attract and retain talent. Our
people are the foundation of our success, and we encourage every employee to actively participate in their own career growth
and development. We offer a wide variety of training opportunities to ensure our employees are supplementing their on-the-job
learning with in-person and online courses needed to promote performance and growth.
In 2024, our employees completed over 30,000 training courses and more than 300 employees ranging from emerging leaders to
senior leaders graduated from our multi-level leadership development program.
We have a robust talent and succession planning process and have established specialized programs to accelerate the development
of our talent pipeline for critical roles in general management, engineering, project management and operations. On an annual
basis, we conduct succession planning reviews with senior leaders focusing on our high performing and high potential talent and
succession for critical roles.
2024 Annual Report 5
Employee Engagement
We routinely engage independent third parties to conduct cultural and employee engagement surveys. These include corporate
culture assessments, as well as real-time feedback on employee engagement and on employee well-being which includes physical,
emotional, social and financial health.
Compensation and Benefits
Our compensation programs are designed to align the compensation of our employees with our financial and safety performance
and their individual performance to provide proper incentives to attract, retain and motivate employees to achieve superior
results. The structure of our compensation programs balances guaranteed base pay with incentive compensation opportunities.
Additionally, all employees are eligible for health insurance, physical, mental and financial wellness programs, paid and unpaid
leave, a retirement plan, life insurance and disability/accident coverage. We also offer a variety of voluntary benefits that allow
employees to select the options that meet their needs.
Sustainability
Sustainability is one of our core values and we are committed to contributing to the development of a more sustainable future. We are
a participating member of the United Nations Global Compact. Our sustainability objectives encompass corporate social responsibility,
environmental stewardship, dependable governance and the creation of enduring economic value. We envision Granite as the leading
provider of sustainable infrastructure solutions, differentiated by our pursuit of social, environmental and financial excellence.
To attain our objectives, we have a Sustainability department that develops, coordinates and communicates our initiatives across
the Company. Our Board of Directors oversees our sustainability program, including how we manage sustainability-related risks in
conjunction with our overall Enterprise Risk Management process.
We utilize the Global Reporting Initiative and Sustainability Accounting Standards Board standards as frameworks to support
performance, tracking and reporting, and responsible business behavior. For climate-related issues, we also utilize the
recommendations from the Task Force on Climate-related Financial Disclosures. Within these frameworks, we have selected
industry-specific metrics that align with stakeholder expectations, are relevant to our business, and will have the most significant
impact. We publish annual Sustainability Reports, which update stakeholders on our performance.
Our annual sustainability reports, along with additional information about our sustainability program, can be found on our website
at https://www.graniteconstruction.com/company/building-better-future-today. The information on our website and Granite’s
Sustainability Report are not incorporated into, and are not part of, this report.
Committed and Awarded Projects
Committed and Awarded Projects (“CAP”) consists of two components: (1) unearned revenue and (2) other awards. Unearned
revenue includes the 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. We generally include a project
in unearned revenue at the time a contract is awarded, the contract has been executed and to the extent we believe funding
is probable. Contract options and task orders are included in unearned revenue when exercised or issued, respectively. Certain
government contracts where funding is appropriated on a periodic basis are included in unearned revenue at the time of the award
when it is probable the contract value will be funded and executed.
Other awards include the general construction portion of CM/GC contracts and awarded contracts with unexercised contract
options or unissued task orders. The general construction portion of CM/GC contracts are included in other awards to the extent
contract execution and funding is probable. Contracts with unexercised contract options or unissued task orders are also included in
other awards to the extent option exercise or task order issuance is probable, respectively. All CAP is in the Construction segment.
Substantially all of the contracts in CAP may be canceled or modified at the election of the customer; however, we have not been
materially adversely affected by contract cancellations or modifications in the past (see “Contract Provisions and Subcontracting”).
Many projects are added to CAP and completed within the same fiscal year and, therefore, may not be reflected in our beginning
or year-end CAP. Our CAP was $5.3 billion and $5.5 billion as of December 31, 2024 and 2023, respectively. Approximately
$2.6 billion of the December 31, 2024 unearned revenue is expected to be completed during 2025.
6 Granite Construction Incorporated
Competition and Market Trends
In both our Construction and Materials segments, we have competitors within the individual markets and geographic areas in which
we operate, ranging from small, local companies to larger regional, national and international companies. Although the construction
business is highly competitive, there are few, if any, companies which compete in all of our market areas. The degree and type
of competition is influenced by the type and scope of construction projects within the individual markets. One of our significant
competitive advantages is that we own and lease aggregate reserves and own processing plants that are vertically integrated into
our construction operations. The construction materials produced by our Materials segment are used in nearly all types of public and
private construction. Significant barriers to entry exist in most markets due to stringent zoning and permitting regulations.
Factors influencing competitiveness in both of our segments include price, knowledge of local markets and conditions, financial
strength, reputation for quality, aggregate materials availability and machinery and equipment. Factors that also influence
competitiveness in our Construction segment are estimating abilities and project management.
Many of our Construction segment competitors have the ability to perform work in either the private or public sectors. When
opportunities for work in one sector are reduced, competitors tend to look for opportunities in the other sector. This migration has
the potential to reduce revenue growth and/or increase pressure on gross profit margins.
Capital requirements have not historically had a significant impact on our ability to compete in the marketplace. However, because
smaller projects within our Construction segment have not historically required large amounts of capital, the entry by companies
possessing acceptable qualifications into this market may be relatively easy. By contrast, larger projects typically require larger
amounts of capital that may make entry into the market by future competitors more difficult. Also, aggregate mining and asphalt
production require significant capital investment to purchase and maintain the necessary property and equipment which presents a
significant barrier to entry into the construction materials market.
See “Current Economic Environment and Outlook” under “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations” for further information on current market trends.
Government Regulations
Our business is impacted by environmental, health and safety, government procurement, anti-bribery and other government
regulations and requirements. Below is a summary of some of the significant regulations that impact our business.
Environmental
Our operations are subject to various federal, state, local and foreign laws and regulations relating to the environment, including
those relating to: (i) the discharge of materials into the air, such as equipment-related emissions and crystalline silica dust at
our aggregate processing facilities; (ii) the discharge of materials into water and land; (iii) the handling and disposal of solid
and hazardous waste; (iv) the handling of underground storage tanks; and (v) the cleanup of properties affected by hazardous
substances. Certain environmental laws impose substantial penalties for non-compliance and others, such as the federal
Comprehensive Environmental Response, Compensation and Liability Act, impose strict, retroactive, joint and several liability
upon persons responsible for releases of hazardous substances. We continually evaluate whether we must take additional steps
at our locations to ensure compliance with environmental laws and whether we can operate in a more sustainable manner. While
compliance with applicable regulatory requirements has not materially adversely affected our operations in the past, there can be
no assurance that these requirements will not change, and that compliance will not adversely affect our operations in the future.
Government Procurement
Approximately 75% of our Construction Segment revenue in 2024 was derived from contracts funded by federal, state and local
government agencies and authorities. Government contracts are subject to specific procurement regulations, contract provisions
and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often
include express or implied certifications of compliance.
Our operations are subject to various statutes and certain executive orders, as well as the rules and regulations promulgated by
the Occupational Safety and Health Administration and the Mine Safety and Health Administration. In addition, certain of our
contracts with government agencies contain minimum Disadvantaged Business Enterprise (“DBE”) participation clauses.
These laws and regulations affect how we transact business and, in some instances, impose additional costs on our business operations,
which may adversely affect our business, results of operations and financial condition. As further described in “Item 1A. Risk Factors,”
violation of specific laws and regulations could lead to fines, contract termination, debarment of contractors and/or suspension of future
contracts. Our government customers can also terminate, renegotiate or modify any of their contracts with us at their convenience.
2024 Annual Report 7
Anti-corruption and Bribery
We are subject to the Foreign Corrupt Practices Act (“FCPA”). The FCPA prohibits U.S. and other business entities from making
improper payments to foreign government officials, political parties or political party officials. We are also subject to the applicable
anti-corruption laws in the jurisdictions in which we operate, thus potentially exposing us to liability and potential penalties
in multiple jurisdictions. The anti-corruption provisions of the FCPA are enforced by the Department of Justice while other
state or federal agencies may seek recourse against us for issues related to the FCPA. In addition, the Securities and Exchange
Commission (“SEC”) requires strict compliance with certain accounting and internal control standards set forth under the FCPA.
Failure to comply with the FCPA and other laws can expose us and/or individual employees to potentially severe criminal and
civil penalties. Such penalties may have a material adverse effect on our business, results of operations and financial condition.
We devote resources to the development, maintenance, communication and enforcement of our Code of Conduct, our anti-
bribery compliance policies, our internal control processes and compliance related policies. We strive to conduct timely internal
investigations of potential violations and take appropriate action depending upon the outcome of the investigation.
Contract Provisions and Subcontracting
Contracts with our customers are primarily “fixed unit price” or “fixed price.” Under fixed unit price contracts, we are committed
to providing materials or services at fixed unit prices (for example, dollars per cubic yard of concrete placed or cubic yard of
earth excavated). The percentage of fixed unit price contracts in our unearned revenue was 59.1% and 63.5% at December 31,
2024 and 2023, respectively. While the fixed unit price contract shifts the risk of estimating the quantity of units required for a
particular project to the customer, any increase in our unit cost over the expected unit cost in the bid, whether due to inflation,
inefficiency, incorrect estimates or assumptions or other factors, is borne by us unless otherwise provided in the contract. Fixed
price contracts are priced on a lump-sum basis under which we bear the risk that we may not be able to perform the work for the
specified contract amount and any increase in our cost over budget, whether due to inflation, inefficiency, incorrect estimates or
assumptions or other factors, will reduce our profit on the project. The percentage of fixed price contracts in our unearned revenue
was 33.2% and 30.5% at December 31, 2024 and 2023, respectively. All other contract types represented 7.7% and 6.0% of our
unearned revenue at December 31, 2024 and 2023, respectively.
Within our Construction segment, we utilize several methods of project delivery including, but not limited to, bid-build, design-
build, CM/GC, CMAR and progressive design-build. Unlike traditional bid-build projects where owners first hire a design firm or
design a project themselves and then put the project out to bid for construction, the design portion of design-build projects is
typically only partially complete when going out to bid. This project delivery method expedites the bidding process for the owner
and provides the owner with a single point of responsibility and a single contact for both final design and construction. Under the
CM/GC and CMAR delivery methods, we contract with owners to assist during the design phase of the contract with construction
efficiencies and risk mitigation, with the understanding that we will negotiate a contract on the construction phase when the
collective design nears completion. The progressive design-build delivery method is similar to CM/GC and CMAR; however, we are
responsible for the design of the project and will subcontract with a design firm, with the understanding that we will negotiate a
contract that includes both the design and construction prices when the collective design nears completion.
With the exception of contract change orders and affirmative claims, our construction contracts are primarily obtained through
competitive bidding in response to solicitations by both public agencies and private parties and on a negotiated basis as a result
of solicitations from private parties. Project owners use a variety of methods to make contractors aware of new projects, including
posting bidding opportunities on agency websites, disclosing long-term infrastructure plans, advertising and other general
solicitations. Our bidding activity is affected by such factors as the nature and volume of advertising and other solicitations, current
CAP, available personnel, current utilization of equipment and other resources and competitive considerations. Our contract review
process includes identifying risks and opportunities during the bidding process and managing these risks through mitigation efforts
such as contract negotiation, bid/no bid decisions, insurance and pricing. Contracts fitting certain criteria of size, duration and
complexity are reviewed by various levels of management and, in some cases, by our Board of Directors or a committee thereof.
Bidding activity, CAP and revenue resulting from the award of new contracts may vary significantly from period to period.
There are a number of factors that can create variability in contract performance as compared to the original bid. Such factors can
positively or negatively impact costs and profitability and can create additional liability to the contractor. The most significant of
these include:
• changes in costs of labor and/or materials;
• subcontractor costs, availability and/or performance issues;
• extended overhead and other costs due to owner, weather and other delays;
• changes in productivity expectations;
• changes from original design on design-build projects;
8 Granite Construction Incorporated
• our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs;
• a change in the availability and proximity of equipment and materials;
• complexity in original design;
• length of time to complete the project;
• the availability and skill level of workers in the geographic location of the project;
• site conditions that differ from those assumed in the original bid;
• costs associated with scope changes; and
• the customer’s ability to properly administer the contract.
The ability to realize improvements on project profitability at times is more limited than the risk of lower profitability. For example,
design-build contracts carry additional risks such as those associated with design errors and estimating quantities and prices
before the project design is completed. We manage this additional risk by including contingencies in our bid amounts, obtaining
errors and omissions insurance and obtaining indemnifications from our design consultants where possible. However, there is no
guarantee that these risk management strategies will be successful.
Most of our contracts, including those with the government, provide for termination at the convenience of the contract owner,
with provisions to pay us for work performed through the date of termination. We have not been materially adversely affected
by these provisions in the past. Many of our contracts contain provisions that require us to pay liquidated damages if specified
completion schedule requirements are not met, and these amounts could be significant.
We act as prime contractor on most of our construction projects. We complete the majority of our projects with our own resources
and subcontract specialized activities such as electrical and mechanical work. As prime contractor, we are responsible for the
performance of the entire contract, including subcontract work. Thus, we may be subject to increased costs associated with
the failure of one or more subcontractors to perform as anticipated. Based on our analysis of their construction and financial
capabilities, among other criteria, we may require the subcontractor to furnish a bond or other type of security to guarantee their
performance and/or we retain payments, or some portion thereof, in accordance with contract terms until their performance is
complete. DBE regulations may require us to use our good faith efforts to subcontract a specified portion of contract work done
for governmental agencies to certain types of disadvantaged contractors or suppliers. As with all of our subcontractors, some may
not be able to obtain surety bonds or other types of performance security.
Joint Ventures
We participate in various construction joint ventures with other construction companies of which we are a partner or limited
member (“joint ventures”) typically for large, technically complex projects, including design-build projects, where it is necessary or
desirable to share expertise, risk and resources. Joint venture partners typically provide independently prepared estimates, shared
equipment, and often bring local knowledge and expertise. Generally, each construction joint venture is formed as a partnership
or limited liability company to accomplish a specific project and is jointly controlled by the joint venture partners. We select our
joint venture partners based on our analysis of their construction and financial capabilities, expertise in the type of work to be
performed and past working relationships, among other criteria.
Under each joint venture agreement, one partner is designated as the sponsor. The sponsoring partner typically provides all
administrative, accounting and most of the project management support for the project and generally receives a fee from the joint
venture for these services. We have been designated as the sponsoring partner in certain of our current joint venture projects and
are a non-sponsoring partner in others. In alignment with our strategic plan and project bidding criteria, when entering into new
joint venture agreements, we generally insist on being the sponsoring partner.
We consolidate joint ventures if we determine that, through our participation, we have a variable interest and are the primary
beneficiary as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810,
Consolidation, and related standards. If we have determined that we are not the primary beneficiary of a joint venture but do
exercise significant influence, we account for our share of the operations of unconsolidated construction joint ventures on a pro
rata basis in revenue and cost of revenue in the consolidated statements of operations. We record the corresponding investment
balance in equity in construction joint ventures in the consolidated balance sheets except when a project is in a loss position, the
investment balance is recorded as a deficit in unconsolidated construction joint ventures and is included in accrued expenses and
other current liabilities in the consolidated balance sheets. We account for non-construction unconsolidated joint ventures under
the equity method of accounting in accordance with ASC Topic 323, Investments - Equity Method and Joint Ventures and include
our share of the operations in equity in income of affiliates in the consolidated statements of operations and in investment in
affiliates in the consolidated balance sheets.
2024 Annual Report 9
We also participate in “line-item” joint venture agreements under which each partner is responsible for performing certain discrete
items of the total scope of contracted work. The revenue for each line-item joint venture partners’ discrete items of work is defined
in the contract with the project owner and each joint venture partner bears the profitability risk associated only with its own work.
There is not a single set of books and records for a line-item joint venture. Each partner accounts for its items of work individually
as it would for any self-performed contract. We account for our portion of these contracts as revenue and cost of revenue in the
consolidated statements of operations and in relevant balances in the consolidated balance sheets.
The agreements with our partner(s) for both construction joint ventures and line-item joint ventures define each partner’s
management role and financial responsibility in the project. The joint venture agreements typically provide that our interests in
any profits and assets, and our respective share in any losses and liabilities, that may result from the performance of the contracts
are limited to our stated percentage interest in the project. However, due to the joint and several nature of the performance
obligations under the related owner contracts, if any of the partners fail to perform, we and the remaining partners, if any, would
be responsible for performance of the outstanding work (i.e., we provide a performance guarantee). We estimate our liability for
performance guarantees for our unconsolidated and line-item joint ventures using estimated partner bond rates, which are Level
2 inputs, and include them in accrued expenses and other current liabilities with a corresponding increase in equity in construction
joint ventures in the consolidated balance sheets. We reassess our liability when and if changes in circumstances occur. The liability
and corresponding asset are removed from the consolidated balance sheets upon completion and customer acceptance of the
project. Circumstances that could lead to a loss under these agreements beyond our stated ownership interest include the failure
of a partner to contribute additional funds to the venture in the event the project incurs a loss or additional costs that we could
incur should a partner fail to provide the services and resources that it had committed to provide in the agreement. We are not
able to estimate amounts that may be required beyond the remaining cost of the work to be performed. These costs could be
offset by billings to the customer or by proceeds from our partners’ corporate and/or other guarantees.
At December 31, 2024, there was $100.6 million of remaining contract value on unconsolidated and line item construction joint
venture contracts, of which $35.6 million represented our share and is included in our CAP and the remaining $65.0 million
represented our partners’ share. See Note 9 of “Notes to the Consolidated Financial Statements” for more information.
Insurance and Bonding
We maintain insurance coverage and limits consistent with industry practice and in alignment with our overall risk management
strategy. Policies include general and excess liability, property, pollution, professional, cybersecurity, executive risk, workers’
compensation and employer’s liability. Further, our policies are placed with insurers that we believe are financially stable, often in a
layered or quota share arrangement which reduces the likelihood of an interruption or impact to operations.
In connection with our business, we generally are required to provide various types of surety bonds that provide an additional
measure of security for our performance under certain public and private sector contracts. Our ability to obtain surety bonds
depends upon our capitalization, working capital, past performance, management expertise and external factors, including the
capacity of the overall surety market. Surety companies consider such factors in light of the amount of our CAP that we have
currently bonded and their current underwriting standards, which may change from time to time. The capacity of the surety
market is subject to market-based fluctuations driven primarily by the level of surety industry losses and the degree of surety
market consolidation. When the surety market capacity shrinks, it results in higher premiums and increased difficulty obtaining
bonding, in particular for larger, more complex, multi-year projects throughout the market. To help mitigate this risk, we employ a
co-surety structure involving three sureties. Although we do not believe that fluctuations in surety market capacity have affected
our ability to grow our business, there is no assurance that it will not significantly affect our ability to obtain new contracts in the
future (see “Item 1A. Risk Factors”).
Raw Materials
We purchase raw materials, including but not limited to, aggregate products, cement, diesel and gasoline fuel, liquid asphalt,
natural gas, propane, resin and steel from numerous sources. Our owned and leased aggregate reserves supply a portion of the raw
materials needed in our construction projects. The price and availability of raw materials may vary from year to year due to market
conditions and production capacities. In recent years, inflation, supply chain and labor constraints have had a significant impact on the
global economy including the construction industry in the United States. While it is impossible to fully eliminate the impact of these
factors, where practicable, we have applied proactive measures 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.
10 Granite Construction Incorporated
Equipment
At December 31, 2024 and 2023, we owned the following number of construction equipment and vehicles:
December 31,
2024
2023
Heavy construction equipment
2,645
2,457
Trucks, truck-tractors, trailers and vehicles
4,725
4,686
Our portfolio of equipment includes backhoes, barges, bulldozers, cranes, excavators, loaders, motor graders, pavers, rollers,
scrapers, trucks, drilling rigs and tunnel boring machines that are used in both of our segments. We pool certain equipment
to maximize utilization. We continually monitor and adjust our fleet size so that it is consistent with the size of our business,
considering both existing and expected future work. We lease or rent equipment to supplement our portfolio of equipment in
response to construction activity cycles. The December 31, 2024 equipment count includes 189 pieces of heavy construction
equipment and 206 vehicles from the D&B acquisition. In 2024 and 2023, we purchased $59.2 million and $71.9 million,
respectively, of construction equipment and vehicles.
Seasonality
Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may
alter our construction schedules and can create variability in our revenues, profitability and the required number of employees.
Website Access
Our website address is www.graniteconstruction.com. On our website we make available, free of charge, our Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports as soon as
reasonably practicable after such material is electronically filed with or furnished to the SEC. The information on our website is
not incorporated into, and is not part of, this report. These reports, and any amendments to them, are also available on the SEC’s
website, www.sec.gov.
Information About Executive Officers
Information regarding our executive officers as of February 1, 2025 is set forth below.
Name
Age
Position
Kyle T. Larkin
53
President and Chief Executive Officer
Staci M. Woolsey
48
Executive Vice President and Chief Financial Officer
James A. Radich
66
Executive Vice President and Chief Operating Officer
Brian A. Dowd
61
Senior Vice President, Construction
Bradly J. Estes
46
Senior Vice President, Construction Materials
Michael G. Tatusko
60
Senior Vice President, Construction
Bradley J. Williams
64
Senior Vice President, Construction
Mr. Larkin joined Granite in 1996, has served as President since September 2020 and as Chief Executive Officer since June 2021.
He also served as Executive Vice President and Chief Operating Officer from February 2020 to September 2020, Senior Vice
President and Manager of Construction and Materials Operations from 2019 to 2020, Senior Vice President and Group Manager
from 2017 to 2019, Vice President and Regional Manager in Nevada from 2014 to 2017 and President of Granite’s wholly-owned
subsidiary, Intermountain Slurry Seal, Inc. from 2011 to 2014. He served as Manager of Construction at the Reno area office from
2008 to 2011, Chief Estimator from 2004 to 2008 and Project Manager, Project Engineer and Estimator at Granite’s Nevada Branch
between 1996 and 2003. Mr. Larkin has also served as a director of our Board of Directors since June 2021 and has a term expiring
at the 2026 annual meeting. Mr. Larkin holds a B.S. in Construction Management from California Polytechnic State University, San
Luis Obispo and an M.B.A. from the University of Massachusetts, Amherst.
Ms. Woolsey joined Granite in June 2021 and has served as Executive Vice President and Chief Financial Officer since September
2024. Ms. Woolsey also served as Chief Accounting Officer from January 2022 to September 2024 and served in a non-officer
role with accounting responsibilities since joining the Company in June 2021. Prior to joining the Company, Ms. Woolsey was the
Vice President and Corporate Controller from December 2018 to August 2020 and Vice President, Corporate Controller and Chief
2024 Annual Report 11
Accounting Officer from August 2020 to June 2021 of MDC Holdings, Inc. From February 2016 to December 2018, Ms. Woolsey
was the Vice President and Controller of the Energy, Infrastructure and Industrial Construction division of AECOM. Ms. Woolsey
received a B.S. degree in Accounting from the University of Idaho and is a Certified Public Accountant.
Mr. Radich first joined Granite in 1980 and rejoined the Company in 2011. He has served as Executive Vice President and Chief
Operating Officer since December 2020. He also served as Senior Vice President and Group Manager from January 2020 to December
2020, as Vice President and Coastal Region Manager from 2014 to 2019 and Vice President of the Northern California Region from
2011 to 2014. From 1993 to 2011, Mr. Radich was employed by Oldcastle Materials. Mr. Radich served Granite as Project Engineer
from 1980 to 1983, Project Manager from 1985 to 1990 for the Heavy Civil and Vertical Divisions and Chief Estimator from 1990 to
1993 in the Vertical Division. He received a B.S.C.E. from Santa Clara University and is a Registered Civil Engineer.
Mr. Dowd joined Granite in 1986 and has served as Senior Vice President, Construction since January 2024. He also served as
Senior Vice President and California Group Manager from January 2021 to January 2024, Vice President and Regional Manager in
Nevada from October 2017 to December 2020 and Vice President and Large Projects Business Development Manager from 2013
to 2017. He served as California Group Business Development Manager from 2012 to 2013, Sacramento Valley Region Manager
from 2007 to 2012, Vice President and Director of Human Resources from 2005 to 2007, Director of Employee Development from
2000 to 2005, San Diego Area Manager from 1994 to 2000, and Project Manager, Estimator and Project Engineer at Granite’s
Indio and Sacramento Branches between 1986 and 1994. Mr. Dowd holds a B.S. in Civil Engineering from the University of
California, Berkeley and is a Registered Engineer in the states of California and Nevada.
Mr. Estes joined Granite in 2003 and has served as Senior Vice President, Construction Materials since June 2023, as Vice President
of Construction Materials from January 2018 to June 2023, as Group Materials Manager from January 2017 to December 2017, as
Materials Manager in Washington from January 2012 to December 2016, as Plants Manager in Washington from November 2008
to December 2011, as Portable Plant Manager in Northern California from June 2005 to October 2008, and as Branch Division
Plant Engineer from June 2003 to May 2005. Mr. Estes holds a B.S. degree in Mining Engineering from Montana Technological
University.
Mr. Tatusko joined Granite in 1991 and has served as Senior Vice President, Construction since January 2024. He also served as
Senior Vice President and Group Manager from January 2020 to January 2024, Vice President and Valley Region Manager from
2014 to 2019, Northern California Area Manager from 2012 to 2014, Design Build Project Executive from 2010 to 2012, Group
Construction Manager from 2007 to 2010, Arizona Operations Manager from 2005 to 2007, Arizona Construction Manager from
2001 to 2005, Plants Manager from 1999 to 2001, Estimator/Project Manager from 1995 to 1999 and Project Engineer from 1993
to 1995. Prior to joining Granite, he was employed at Oldcastle Tilcon from 1984 to 1991. Mr. Tatusko received a Construction
Management degree from Southern Maine Tech.
Mr. Williams joined Granite in 1987 and has served as Senior Vice President, Construction since January 2024. He also served
as Senior Vice President and Group Manager from June 2022 to January 2024, Regional Vice President from January 2015 to
June 2022, as Large Project Executive from 2010 to 2015, as Operations Manager in Southern California from 2009 to 2010, as
Manager of Construction in Southern California from 2007 to 2009, as Construction Manager in Sacramento from 2000 to 2007,
as Senior Project Manager in Utah from 1998 to 2000, as Environmental Construction Manager in California from 1994 to 1998,
as Estimator/Project Manager in Santa Barbara from 1989 to 1994, and as Large Project Engineer from 1987 to 1989. Mr. Williams
holds a B.S. in Civil Engineering from Ohio Northern University.
Item 1A. Risk Factors
Set forth below and elsewhere in this report and in other documents we file with the SEC are various risks and uncertainties that
could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in
this report or otherwise adversely affect our business.
RISKS RELATED TO OUR BUSINESS
• Unfavorable economic conditions may have an adverse impact on our business. Volatility in the global financial
system, deterioration in general economic activity, inflation, rising or high interest rates, tariffs, supply chain issues, wars
or other geopolitical tensions, other political, social or economic uncertainties, and fiscal, monetary and other policies that
federal, state and local governments may enact, including infrastructure spending or deficit reduction measures, may have
an adverse impact on our business, financial position, results of operations, cash flows and liquidity. In particular, low tax
revenues, budget deficits, financing constraints, including timing of long-term federal, state and local funding releases,
12 Granite Construction Incorporated
and competing priorities could negatively impact the ability of government agencies to fund existing or new infrastructure
projects in the public sector. These factors could have a material adverse effect on the financial market and economic
conditions in the United States as well as throughout the world, which may limit our ability and the ability of our customers
to obtain financing and/or could impair our ability to execute our strategy.
• We work in a highly competitive marketplace. We have multiple competitors in all the areas in which we work, and
some of our competitors are larger than we are and may have greater resources than we do. Government funding for public
works projects is limited, contributing to competition. An increase in competition may result in a decrease in new awards, a
decrease in profit margins, or both. In addition, should downturns in residential and commercial construction activity occur,
the competition for available public sector work would intensify, which could impact our revenue, CAP and profit margins.
• Fixed price and fixed unit price contracts subject us to the risk of increased project cost. As more fully described
in “Contract Provisions and Subcontracting” under “Item 1. Business,” the profitability of our fixed price and fixed unit
price contracts can be adversely affected by a number of factors, including, among others, inflation, tariffs, inefficiency and
incorrect estimates or assumptions, that can cause our actual costs to materially exceed the costs estimated at the time of
our original bid. This could result in reduced profits or a loss for that project and there could be a material adverse impact to
our business, results of operations and financial condition.
• We derive a substantial amount of our revenue from federal, state and local government agencies, and
any disruption in government funding or in our relationship with those agencies could adversely affect our
business. For the year ended December 31, 2024, approximately 75% of our construction revenue was funded by
federal, state and local government agencies and authorities. A significant amount of this revenue is derived under multi-
year contracts, many of which are appropriated on an annual basis. As a result, at the beginning of a project, the related
contract may be only partially funded, and additional funding is normally committed only as appropriations are made in
each subsequent year. The success and further development of our business depends, in large part, upon the continued
funding of these government programs, and upon our ability to obtain contracts and perform well under these programs. A
significant reduction in government spending, the absence of a bipartisan agreement on the federal government budget, a
partial or full federal government shutdown or a change in budgetary priorities could reduce demand for our services, cancel
or delay projects and have a material adverse effect on our business, results of operations and financial condition.
There are several additional factors that could cause government agencies or authorities to delay or cancel programs, to
reduce their orders under existing contracts, to exercise their rights to terminate contracts or not to exercise contract options
for renewals or extensions. Such factors, which include the following, could have a material adverse effect on our business,
financial condition and results of operations or the timing of contract payments from government agencies or authorities:
o the failure of the U.S. government to complete its budget and appropriations process before its fiscal year-end;
o changes in and delays or cancellations of government programs, procurements, requirements or appropriations;
o budget constraints or policy changes resulting in delay or curtailment of expenditures related to the services we provide;
o re-competes of government contracts;
o the timing and amount of tax revenue received by federal, state and local governments, and the overall level of
government expenditures;
o curtailment in the use of government contracting firms;
o delays associated with insufficient numbers of government staff to oversee contracts;
o the preference by government agencies for contracting with small and disadvantaged businesses;
o competing political priorities and changes in the political climate regarding the funding or operation of the services
we provide;
o the adoption of new laws or regulations affecting our contracting relationships with the federal, state or local
governments;
o unsatisfactory performance on government contracts by us or one of our subcontractors, negative government audits or
other events that may impair our relationship with federal, state or local governments;
o a dispute with or improper activity by any of our subcontractors; and
o general economic or political conditions.
• Our U.S. federal government contracts may give government agencies the right to modify, delay, curtail,
renegotiate or terminate existing contracts at their convenience at any time prior to their completion, which
could have a material adverse effect on our business, financial condition and results of operations. U.S. federal
government projects in which we participate as a contractor or subcontractor may extend for several years. Generally,
government contracts include the right to modify, delay, curtail, renegotiate or terminate contracts and subcontracts at the
2024 Annual Report 13
government’s convenience any time prior to their completion. Any decision by a U.S. federal government client to modify,
delay, curtail, renegotiate or terminate our contracts at their convenience could have a material adverse effect on our
business, financial condition and results of operations.
• Our failure to win new contracts and renew existing contracts with private and public sector clients could have
a material adverse effect on our business, financial condition and results of operations. Our business depends on
our ability to win new contracts and renew existing contracts with private and public sector clients. Contract proposals and
negotiations are complex and frequently involve a lengthy bidding and selection process, which is affected by a number of
factors. These factors include market conditions, financing arrangements and required governmental approvals. If negative
market conditions arise, or if we fail to secure adequate financial arrangements or the required government approval, we
may not be able to pursue certain projects, which could have a material adverse effect on our business, financial condition
and results of operations.
• The U.S. government may adopt new contract rules and regulations or revise its procurement practices in a
manner adverse to us at any time. From time to time, new laws and regulations are enacted, and government agencies
adopt new interpretations and enforcement priorities relative to laws and regulations already in effect. Legislation,
regulations and initiatives dealing with procurement reform as well as any resulting shifts in the buying practices of U.S.
government agencies could have adverse effects on government contractors, including us.
• The timing of new contracts and termination of existing contracts may result in unpredictable fluctuations in our
cash flows and financial results. A substantial portion of our revenues are derived from project-based work that is awarded
through a competitive bid process. It is generally difficult to predict the timing and geographic distribution of the projects that
we will be awarded. The selection of, timing of, or failure to obtain projects, delays in awards of projects, the re-bidding or
termination of projects due to budget overruns, cancellations of projects or delays in completion of contracts could result in the
under-utilization of our assets, including our fleet of construction equipment, which could lower our overall profitability and
reduce our cash flows. Even if we are awarded contracts, we face additional risks that could affect when, or whether, work will
begin. This can present difficulty in matching workforce size and equipment location with contract needs. In some cases, we
may be required to bear the cost of a ready workforce and equipment that is larger than necessary, which could have a material
adverse effect on our business, financial condition and results of operations. If an expected contract award or the related work
release is delayed or not received, we could incur substantial costs without receipt of any corresponding revenues. Moreover,
construction projects for which our services are contracted may require significant expenditures by us prior to receipt of relevant
payments from the customer. Finally, the winding down or completion of work on significant projects that were active in
previous periods will reduce our revenue and earnings if such significant projects have not been replaced in the current period.
Many of our contracts may be canceled upon short notice, typically 30 to 90 days, even if we are not in default under the
contract, and we may be unsuccessful in replacing contracts, resulting in a decrease in our revenue, net income and liquidity.
Certain of our customers assign work to us on a project-by-project basis under master service agreements. Under these
agreements, our customers often have no obligation to assign a specific amount of work to us. Our operations could decline
significantly if the anticipated volume of work is not assigned to us or is canceled. Many of our contracts, including our
master service agreements, are open to competitive bidding at the expiration of their terms. There can be no assurance that
we will be the successful bidder on our existing contracts that come up for re-bid.
• Design-build contracts subject us to the risk of design errors and omissions. Design-build is a common method of
project delivery as it provides the owner with a single point of responsibility for both design and construction. We generally
subcontract design responsibility to architectural and engineering firms. However, in the event of a design error or omission
causing damages, there is risk that the subcontractor or their errors and omissions insurance would not be able to absorb
the liability. In this case, we may be responsible, resulting in a potentially material adverse effect on our business, results of
operations and financial condition.
• Many of our contracts have penalties for late completion. In some instances, including many of our fixed price
contracts, we guarantee that we will complete a project by a certain date. If we subsequently fail to complete the project as
scheduled, we may be held responsible for costs resulting from the delay, generally in the form of contractually agreed-upon
liquidated damages. To the extent these events occur, the total cost of the project could exceed our original estimate and
we could experience reduced profits or a loss on that project and there could be a material adverse impact to our business,
results of operations and financial condition.
14 Granite Construction Incorporated
• Our failure to adequately recover on affirmative claims brought by us against project owners or other project
participants (e.g., back charges against subcontractors) for additional contract costs could have a negative
impact on our liquidity and future operations. In certain circumstances, we assert affirmative claims to which we believe
we are entitled against project owners, engineers, consultants, subcontractors or others involved in a project for additional
costs exceeding the contract price or for amounts not included in the original contract price. These types of affirmative
claims occur due to matters such as delays or changes from the initial project scope, both of which may result in additional
costs. Often, these affirmative claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to
accurately predict when and on what terms they will be fully resolved. For additional information, see “—Accounting for
our revenues and costs involve significant estimates” risk factor below. The potential gross profit impact of recoveries for
affirmative claims may be material in future periods when they, or a portion of them, become probable and estimable or
are settled. When these types of events occur, we use working capital to cover cost overruns pending the resolution of the
relevant affirmative claims and may incur additional costs when pursuing such potential recoveries. A failure to recover on
these types of affirmative claims promptly and fully could have a negative impact on our business, results of operations and
financial condition. In addition, while clients and subcontractors may be obligated to indemnify us against certain liabilities,
such third parties may refuse or be unable to pay us.
• Unavailability of insurance coverage could have a negative effect on our operations and results. We maintain
insurance coverage as part of our overall risk management strategy and pursuant to requirements to maintain specific
coverage that are contained in our financing agreements and in most of our construction contracts. Although we have been
able to obtain reasonably priced insurance coverage to meet our requirements in the past, there is no assurance that we
will be able to do so in the future, and our inability to obtain such coverage could have an adverse impact on our ability to
procure new work, which could have a material adverse effect on our business, results of operations and financial condition.
• An inability to obtain bonding could have a negative impact on our operations and results. As more fully described
in “Insurance and Bonding” under “Item 1. Business,” we generally are required to provide surety bonds securing our
performance under the majority of our public and private sector contracts. Our inability to obtain reasonably priced surety
bonds in the future and, while we monitor the financial health of our insurers and the insurance market, catastrophic events
could reduce available limits or the breadth of coverage, both of which could significantly affect our ability to be awarded
new contracts and could, therefore, have a material adverse effect on our business, results of operations and financial
condition. If we are not able to maintain a sufficient level of bonding capacity in the future, it could preclude our ability to
bid for certain contracts or successfully contract with some customers. Additionally, even if we continue to be able to access
bonding capacity to sufficiently bond future work, we may be required to post collateral to secure bonds, which would
decrease the liquidity we would have available for other purposes.
• We use certain commodity products that are subject to significant price fluctuations. We are exposed to various
commodity price risks, including, but not limited to, diesel fuel, natural gas, propane, steel, cement and liquid asphalt arising
from transactions that are entered into in the normal course of business. We use petroleum-based products, such as fuels,
lubricants and liquid asphalt, to power or lubricate our equipment, operate our plants, and as a significant ingredient in the
asphaltic concrete we manufacture for sale to third parties and use in our asphalt paving construction projects. Although
we are partially protected by asphalt or fuel price escalation clauses in some of our contracts, many contracts provide no
such protection. We also use steel and other commodities in our construction projects that can be subject to significant price
fluctuations due to a number of factors, including inflation and tariffs. In order to manage or reduce commodity price risk,
we monitor the costs of these commodities at the time of bid and price them into our contracts accordingly. Additionally,
some of our contracts may include commodity price escalation clauses which partially protect us from increasing prices. At
times we enter into supply agreements or pre-purchase commodities to secure pricing and use financial contracts to further
manage a portion of the price risk. Significant price fluctuations could have a material adverse effect on our business, results
of operations and financial condition.
• Weather can significantly affect our revenues and profitability. Our ability to perform work is significantly affected by
weather conditions such as precipitation and temperature. Changes in weather conditions can cause delays and otherwise
significantly affect our project costs. The impact of weather conditions can result in variability in our quarterly revenues and
profitability, particularly in the first and fourth quarters of the year.
• Force majeure events, including natural disasters and terrorists’ actions, could negatively impact our business,
which may affect our financial condition, results of operations or cash flows. Force majeure or extraordinary events
beyond the control of the contracting parties, such as natural and man-made disasters, as well as terrorist actions, could
negatively impact the economies in which we operate. We typically negotiate contract language where we are allowed
certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure events
2024 Annual Report 15
in both public and private client contracts. We remain obligated to perform our services after most extraordinary events
subject to relief that may be available pursuant to a force majeure clause. If we are not able to react quickly to force majeure
events, our operations may be affected, which could have a material adverse effect on our business, results of operations
and financial condition.
• Public health events, including health epidemics or pandemics or other contagious outbreaks, could negatively
impact our business, financial condition and results of operations. Our ability to perform work may be significantly
affected by public health events. If a public health epidemic or pandemic or other contagious outbreak, including COVID-19,
interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform
our and their respective responsibilities and obligations relative to the conduct of our business, our operations may be
affected, which could have a material adverse effect on our business, results of operations and financial condition.
• Our CAP is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our
future earnings. We cannot guarantee that the revenues projected in our CAP will be realized or, if realized, will be
profitable. Projects reflected in our CAP may be affected by project cancellations, scope adjustments, time extensions or
other changes. Such changes may adversely affect the revenue and profit we ultimately realize on these projects.
• Economic factors, including inflation, rising and/or high interest rates and tariffs could have an adverse effect
on our business, financial condition and results of operations. Our costs were and may continue to be subject to
significant inflationary pressures and may be subject to tariff-related price increases, and we may not be able to fully offset
such higher costs through price increases. Our inability or failure to do so could have a material adverse effect on our
financial position, results of operations, cash flows and liquidity. In addition, increases in or sustained higher interest rates
will result in higher interest expense related to borrowings under our Fourth Amended and Restated Credit Agreement, as
amended (the “Credit Agreement”), which could have a material adverse effect on our business, results of operations and
financial condition.
• As part of our growth strategy, we have made and may make future acquisitions, and acquisitions involve many
risks and uncertainties. These risks and uncertainties include:
o our ability to complete acquisitions in accordance with our expected plans, on terms and conditions acceptable to us or
our anticipated time frame, or at all;
o difficulties identifying all significant risks during our due diligence activities;
o that acquisitions involve significant costs and require the time and attention of our management, which may divert
management’s attention from ongoing operations;
o potential difficulties and increased costs associated with completion of any assumed construction projects;
o our ability to successfully manage or achieve the results we expect to experience from the acquisitions and that we may
lose key employees or customers of the acquired companies;
o assumption of liabilities of an acquired business, including liabilities that were unknown at the time the acquisition was
negotiated;
o difficulties related to integrating the operations and internal controls, assimilating personnel, services, and systems of an
acquired business and to assimilating marketing and other operational capabilities;
o increased burdens on our staff and on our administrative, internal control and operating systems, which may hinder our
legal and regulatory compliance activities;
o if we issue additional equity securities, such issuances could have the effect of diluting our earnings per share as well as
our existing shareholders’ individual ownership percentages in the Company;
o the recording of goodwill or other non-amortizable intangible assets that will be subject to subsequent impairment
testing and potential impairment charges, as well as amortization expenses related to certain other intangible assets; and
o while we often obtain indemnification rights from the sellers of acquired businesses, such rights may be difficult to
enforce and the indemnitors may not have the ability to financially support the indemnity.
Failure to successfully manage and integrate acquisitions could harm our business, results of operations and financial
condition.
• As part of our strategy, we may make divestitures, and divestitures involve many risks and uncertainties. These
risks and uncertainties include:
o our ability to locate suitable acquirers for our divestitures;
o our ability to complete the divestitures in accordance with our expected plans or anticipated time frame, or at all;
o our ability to complete the divestitures on terms and conditions acceptable to us;
16 Granite Construction Incorporated
o difficulties separating the assets and personnel related to businesses that we expect to divest from the businesses we
expect to retain;
o that divestitures involve significant costs and require the time and attention of our management, which may divert
management’s attention from ongoing operations;
o our ability to successfully cause a buyer of a divested business to assume the liabilities of that business, or even if such
liabilities are assumed, we may have difficulties enforcing our rights, contractual or otherwise against the buyer;
o the need to obtain regulatory approvals and other third-party consents, which potentially could disrupt customer and
vendor relationships;
o potential additional tax obligations or the loss of tax benefits;
o the divestiture could negatively impact our profitability because of losses that may result from a sale, the loss of revenue
or a decrease in cash flows; and
o following the completion of a divestiture, we may have less diversity in our business and in the markets we serve as well
as our client base.
Failure to successfully manage divestitures may generate fewer benefits than expected and could harm our business, results
of operations and financial condition.
• In connection with acquisitions or divestitures, we may become subject to liabilities. In connection with any
acquisitions, we may acquire liabilities or defects such as legal claims, including but not limited to, third party liability and
other tort claims; claims for breach of contract; employment-related claims; environmental, health and safety liabilities,
conditions or damage; permitting, regulatory or other compliance with law issues; or tax liabilities. If we acquire any of
these liabilities, and they are not adequately covered by insurance or an enforceable indemnity or similar agreement from
a creditworthy counterparty, we may be responsible for significant out-of-pocket expenditures. In connection with any
divestitures, we may incur liabilities for breaches of representations and warranties or failure to comply with operating
covenants under any agreement for a divestiture. We may also retain exposure on financial or performance guarantees,
contractual, employment, pension and severance obligations or other liabilities of the divested business and potential
liabilities that may arise under law because of the disposition or the subsequent failure of an acquiror. As a result,
performance by the divested businesses or other conditions outside of our control could have a material adverse effect on
our business, financial condition and results of operations. In addition, we may indemnify a counterparty in a divestiture
for certain liabilities of the divested business or operations subject to the divestiture transaction. These liabilities, if they
materialize, could have a material adverse effect on our business, results of operations and financial condition.
RISKS RELATED TO OUR HUMAN CAPITAL, JOINT VENTURES AND SUBCONTRACTORS
• Our success depends on attracting and retaining qualified personnel, joint venture partners and subcontractors in
a competitive environment. The success of our business is dependent on our ability to attract, develop and retain qualified
personnel, joint venture partners, advisors and subcontractors. Changes in general or local economic conditions and the
resulting impact on the labor market and on our joint venture partners may make it difficult to attract or retain qualified
individuals in the geographic areas where we perform our work. If we are unable to provide competitive compensation
packages, high-quality training programs and attractive work environments or to establish and maintain successful
partnerships, our reputation, relationships and/or ability to profitably execute our work could be adversely impacted.
•
Failure to maintain safe work sites could result in significant losses. Construction, mining and maintenance sites are
potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment, moving
vehicles, chemical and manufacturing processes, and highly regulated materials. On many sites, we are responsible for safety and,
accordingly, must implement safety procedures. If we fail to implement these procedures or if the procedures we implement are
ineffective, we may suffer the loss of or injury to our employees, as well as expose ourselves to possible litigation. Our failure to
maintain adequate safety standards through our safety programs could result in reduced profitability or the loss of projects or
clients, and could have a material adverse impact on our financial position, results of operations, cash flows and liquidity.
• Strikes or work stoppages could have a negative impact on our operations and results. We are party to collective
bargaining agreements covering a portion of our craft workforce. Although strikes or work stoppages have not had
a significant impact on our operations or results in the past, such labor actions could have a significant impact on our
operations and results if they occur in the future.
• Failure of our subcontractors to perform as anticipated could have a negative impact on our results. As further
described in “Contract Provisions and Subcontracting” under “Item 1. Business,” we subcontract portions of many of
our contracts to specialty subcontractors, but we are ultimately responsible for the successful completion of their work.
2024 Annual Report 17
Although we seek to require bonding or other forms of guarantees, we are not always successful in obtaining those bonds
or guarantees from our higher-risk subcontractors. We may be responsible for the failures on the part of our subcontractors
to perform as anticipated, resulting in a potentially adverse impact on our cash flows and liquidity. In addition, the total costs
of a project could exceed our original estimates and we could experience reduced profits or a loss for that project, which
could have an adverse impact on our financial position, results of operations, cash flows and liquidity.
• Our joint venture contracts subject us to risks and uncertainties, some of which are outside of our control. As
further described in Note 1 of “Notes to the Consolidated Financial Statements” and in “Joint Ventures” under “Item 1.
Business,” we perform certain construction contracts as a limited or minority member of joint ventures. Participating in these
arrangements exposes us to risks and uncertainties, including the risk that if our partners fail to perform under joint and
several liability contracts, we could be liable for completion of the entire contract. In addition, if our partners are not able or
willing to provide their share of capital investment to fund the operations of the venture, there could be unanticipated costs
to complete the projects, financial penalties or liquidated damages. These situations could have a material adverse effect on
our financial position, results of operations, cash flows and liquidity.
To the extent we are not the controlling partner, we have limited control over many of the decisions made with respect to
the related construction projects. These joint ventures may not be subject to the same compliance requirements, including
those related to internal control over financial reporting. While we have controls to mitigate the risks associated with
reliance on their control environment and financial information, to the extent the controlling partner makes decisions that
negatively impact the joint venture or internal control problems arise within the joint venture, it could have a material
adverse impact on our business, financial position, results of operations, cash flows and liquidity.
• We may be unable to identify and contract with qualified DBE contractors to perform as subcontractors. Certain
of our government agency projects contain minimum DBE participation clauses. Although we have programs in place to
ensure compliance, if we fail to complete these projects with the minimum DBE participation, we may be held responsible
for breach of contract, which may include restrictions on our ability to bid on future projects as well as monetary damages.
To the extent we are responsible for monetary damages, the total costs of the project could exceed our original estimates,
we could experience reduced profits or a loss for that project and there could be a material adverse impact to our financial
position, results of operations, cash flows and liquidity.
• We may be required to contribute cash to meet our unfunded pension obligations in certain multi-employer
plans. As of December 31, 2024, three of our wholly-owned subsidiaries, Granite Construction Company, Layne
Christensen Company and Granite Industrial, Inc., participate in various domestic multi-employer pension plans on behalf of
union employees. Union employee benefits generally are based on a fixed amount for each year of service. We are required
to make contributions to certain plans in amounts established under collective bargaining agreements. Pension expense is
recognized as contributions are made. The domestic multi-employer pension plans are subject to the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). Under ERISA, a contributor to a multi-employer plan may be liable,
upon termination or withdrawal from a plan, for its proportionate share of a multi-employer plan’s unfunded vested liability.
While we currently have no intention of withdrawing from a plan and unfunded multi-employer pension obligations have
not significantly affected our operations in the past, there can be no assurance that we will not be required to make material
cash contributions to one or more of these plans to satisfy certain underfunded benefit obligations in the future.
RISKS RELATED TO LEGAL, REGULATORY, ACCOUNTING AND TAX ISSUES
• Government contractors are subject to suspension or debarment from government contracting. Government
contracts expose us to a variety of risks that differ from those associated with private sector contracts. Various statutes and
executive orders to which our operations are subject provide for mandatory suspension and/or debarment of contractors in
certain circumstances involving statutory violations. In addition, the Federal Acquisition Regulation and various state statutes
provide for discretionary suspension and/or debarment in certain circumstances that might call into question a contractor’s
willingness or ability to act responsibly, including as a result of being convicted of, or being found civilly liable for, fraud or a
criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract. The scope
and duration of any suspension or debarment may vary depending upon the facts and the statutory or regulatory grounds for
debarment and could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
• We are involved in lawsuits, legal proceedings and indemnity claims in the ordinary course of our business and
may in the future be subject to other litigation, legal proceedings and claims, and, if any of these are resolved
adversely against us, it could harm our business, financial condition and results of operations. Any litigation, other
legal proceedings or indemnity claim could result in an unfavorable judgment that may not be reversed upon appeal or in
payments of substantial monetary damages or fines, or we may decide to settle lawsuits on similarly unfavorable terms, any
18 Granite Construction Incorporated
of which could adversely affect our business, financial condition and results of operations. We could also suffer an adverse
impact on our reputation and a diversion of management’s attention and resources, which could have a material adverse
effect on our business, financial condition and results of operations.
• Government contracts generally have strict regulatory requirements. Approximately 75% of our construction-related
revenue in 2024 was derived from contracts funded by federal, state and local government agencies and authorities.
Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic
requirements relating to their formation, administration, performance and accounting and often include express or implied
certifications of compliance. Claims for civil or criminal fraud may be brought for violations of regulations, requirements or
statutes. We may also be subject to qui tam litigation brought by private individuals on behalf of the government under the
Federal Civil False Claims Act, which could include claims for up to treble damages. Further, if we fail to comply with any
of the regulations, requirements or statutes or if we have a substantial number of accumulated Occupational Safety and
Health Administration, Mine Safety and Health Administration or other workplace safety violations, our existing government
contracts could be terminated and we could be suspended from government contracting or subcontracting, including
federally funded projects at the state level. Should one or more of these events occur, it could have a material adverse effect
on our financial position, results of operations, cash flows and liquidity.
• We are subject to environmental, health and safety and other regulation. As more fully described in “Government
Regulations” under “Item 1. Business,” we are subject to a number of federal, state, local and foreign laws and
regulations relating to the environment, including the remediation of soil and groundwater contamination, emission and
discharge of materials into the environment, reclamation and closure of operations, workplace health and safety and a
variety of socioeconomic requirements and are required to obtain and maintain a number of environmental approvals,
permits and financial assurances. Noncompliance with such laws, regulations, approvals, permits and financial assurances
can result in, among other things, substantial penalties, or termination or suspension of government contracts or our
operations as well as civil and criminal liability. In addition, some environmental laws and regulations impose strict, joint
and several liability and responsibility on present and former owners, operators or users of facilities and sites, and entities
that disposed or arranged for the disposal of hazardous substances at a third-party site, for contamination at such facilities
and sites, without regard to causation or knowledge of contamination. We occasionally evaluate various alternatives
with respect to our facilities, including possible dispositions or closures. Investigations undertaken in connection with
these activities may lead to discoveries of contamination that must be remediated, and closures of facilities may trigger
compliance requirements, including reclamation requirements, that may not be applicable to operating facilities.
Environmental, health and safety requirements, laws and regulations are becoming increasingly more stringent and
there can be no assurance that these requirements, laws or regulations will not change and that compliance with these
requirements, laws and regulations will not materially adversely affect our operations in the future. Furthermore, from
time to time, we have been involved in remediation activities and we cannot provide assurance that existing or future
circumstances or developments with respect to contamination will not require us to make significant remediation or
restoration expenditures.
• Increasing restrictions on securing aggregate reserves could negatively affect our future operations and results.
Tighter regulations and the finite nature of property containing suitable aggregate reserves are making it increasingly
challenging and costly to secure aggregate reserves. Although we have thus far been able to secure reserves to support our
business, our financial position, results of operations, cash flows and liquidity may be adversely affected by an increasingly
difficult permitting process.
• Accounting for our revenues and cost involves significant estimates. As further described in “Critical Accounting
Estimates” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and
in “Use of Estimates in Preparation of Financial Statements,” and “Revenue Recognition” within Note 1 of the “Notes to
the Consolidated Financial Statements,” accounting for our contract-related revenues and costs, as well as other expenses
requires management to make a variety of significant estimates and assumptions. These assumptions and estimates may
change significantly in the future and could result in the reversal of previously recognized revenue and profit. Such changes
could have a material adverse effect on our financial position and results of operations.
• A change in tax laws or regulations of any federal, state or international jurisdiction in which we operate could
increase our tax burden and otherwise adversely affect our financial position, results of operations, cash flows
and liquidity. We continue to assess the impact of various U.S. federal, state, local and international legislative proposals
that could result in a material increase to our U.S. federal, state, local and/or international taxes. We cannot predict whether
any specific legislation will be enacted or the terms of any such legislation. However, if such proposals were to be enacted,
2024 Annual Report 19
or if modifications were to be made to certain existing regulations, the consequences could have a material adverse impact
on us, including increasing our tax burden, increasing our cost of tax compliance or otherwise adversely affecting our
financial position, results of operations, cash flows and liquidity.
• We may be exposed to liabilities under the FCPA and any determination that we or any of our subsidiaries has
violated the FCPA could have a material adverse effect on our business. The FCPA generally prohibits companies and
their affiliates from making improper payment to non-U.S. officials for the purpose of obtaining or retaining business. Our
internal policies, procedures and Code of Conduct mandate compliance with these anti-corruption laws. However, we operate
in one or more countries known to experience corruption. Despite our training and compliance programs, we cannot provide
assurance that our internal policies and procedures will always protect us from violation of such anti-corruption laws committed
by our affiliated entities or their respective officers, directors, employees and agents. We could also face fines, sanctions and
other penalties from authorities in the relevant foreign jurisdictions, including prohibition of participating in or curtailment of
business operations in those jurisdictions and the seizure of certain of our assets. Our customers in those jurisdictions could
also seek to impose penalties or take other actions adverse to our interest. In addition, we could face other third-party claims
by, among others, our stockholders, debt holders or other interest holders or constituents. Violations of FCPA laws, allegations
of such violations and/or disclosure related to any relevant investigation could have a material adverse impact on our financial
position, results of operations, cash flows and liquidity for reasons including, but not limited to, an adverse effect on our
reputation, our ability to obtain new business or retain existing business, to attract and retain employees, to access the capital
markets and/or could give rise to an event of default under the agreements governing our debt instruments.
• We restated our consolidated financial statements for certain prior periods, which affected and may continue to
affect our business, results of operations and financial condition. We previously restated unaudited quarterly financial
information for the first three quarters of the year ended December 31, 2022 to correct (a) errors related to deferred taxes and
the calculation of income tax expense in connection with the sale of our trenchless and pipe rehabilitation services business
and (b) other immaterial errors. Additionally, we previously restated certain periods in 2019 and prior to correct misstatements
associated with project forecasts in our former Heavy Civil operating group. Taken collectively, such restatements:
o had and may continue to have the effect of eroding investor confidence in us and our financial reporting and accounting
practices and processes;
o negatively impacted and may continue to negatively impact the trading price of our common stock;
o required that we incur significant expenses and may require that we incur significant additional expenses relating to any
litigation or regulatory examinations, investigations, proceedings, orders or indemnification claims;
o may make it more difficult, expensive and time consuming for us to raise capital, if necessary, on acceptable terms, if at all;
o may make it more difficult to pursue transactions or implement business strategies that might otherwise be beneficial to
our business; and
o may negatively impact our reputation with our customers.
The occurrence or continued occurrence of any of the foregoing could have a material adverse effect on our business, results
of operations and financial condition.
• In prior years we identified material weaknesses in our internal control over financial reporting in our Annual
Reports on Form 10-K, which have been remediated. If we identify material weaknesses in the future or
otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely
report our financial results, investors may lose confidence in us and the market price of our common stock may
decrease. As disclosed in our Annual Reports on Form 10-K for the years ended December 31, 2019, 2020 and 2022,
we identified material weaknesses, all of which have now been remediated. We may not be able to accurately and timely
report our financial results and/or we may not be able to detect errors on a timely basis if in the future we: (1) identify one
or more material weaknesses in our internal control over financial reporting; (2) are unable to successfully remediate any
future material weaknesses; (3) are unable to comply with the requirements of Section 404 in a timely manner; or (4) are
unable to assert, or our independent registered public accounting firm is unable to attest, that our internal control over
financial reporting is effective. This could result in: (i) our financial statements being materially misstated; (ii) investors losing
confidence in the accuracy and completeness of our financial reports; (iii) the market price of our common stock decreasing;
(iv) our liquidity and access to the capital markets being adversely affected; and (v) our inability to maintain compliance
with applicable stock exchange listing requirements and debt covenants. We could also become subject to stockholder or
other third-party litigation as well as investigations by the stock exchange on which our securities are listed, the SEC or
other regulatory authorities, which could require additional financial and management resources and could result in fines,
penalties, trading suspensions or other remedies.
20 Granite Construction Incorporated
Further, because of its inherent limitations, even our remediated and effective internal control over financial reporting may
not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in our conditions, or that the degree of compliance with
our policies or procedures may deteriorate.
• We were involved in, and may in the future be subject to, litigation, regulatory examinations, investigations,
proceedings or orders as a result of or relating to the restatement of our financial statements and if any of these
are resolved adversely against us, it could harm our business, results of operations and financial condition. We
were involved in, and may in the future be subject to, litigation, regulatory examinations, investigations, proceedings or
orders, the assessment of civil monetary penalties, equitable remedies or indemnification claims, and the expenses associated
with such matters as a result of or relating to the restatement of our financial statements and reported material weaknesses.
Our management may be required to devote significant time and attention to these matters. We had, and may in the future
have, to incur significant expenses related to these matters and if any of these matters are resolved adversely against us, it
could harm our business, results of operations and financial condition.
RISKS RELATED TO INFORMATION TECHNOLOGY
• Changes to our outsourced software or infrastructure vendors as well as any sudden loss, breach of security,
disruption or unexpected data or vendor loss associated with our information technology systems could have
a material adverse effect on our business. We rely on third-party software and infrastructure to run critical accounting,
project management and financial information systems. If software or infrastructure vendors decide to discontinue further
development, integration or long-term maintenance support for our information systems, or there is any system interruption,
delay, breach of security, loss of data or loss of a vendor, we may need to migrate some or all of our accounting, project
management and financial information to other systems. These disruptions could increase our operational expense as well
as impact the management of our business operations, which could have a material adverse effect on our financial position,
results of operations, cash flows and liquidity.
• Cybersecurity incidents or breaches of our information technology environment could result in business
interruptions, remediation costs and/or legal claims. We have experienced and may continue to face cybersecurity
incidents, including ransomware and unauthorized access, aimed at misappropriating information, corrupting data or
causing operational disruptions. Additionally, the increased prevalence and use of artificial intelligence may heighten the risk
that we may be subject to cybersecurity incidents in the future. If a failure of our cybersecurity defense measures were to
occur, or if software or third-party vendors that support our information technology environment are compromised, it could
have a negative impact to our business and result in business interruptions, remediation costs and/or legal claims, which
could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
• Artificial intelligence presents risks and challenges that could have a material adverse effect on our business,
results of operations and financial condition. As of the date of this filing, we have developed pilot programs to
implement certain third-party generative artificial intelligence (“AI”) and predictive analytics tools into our systems for specific
purposes. These tools presently include, without limitation, (i) a knowledge retention tool, (ii) a risk detection tool and (iii) a
virtual assistant tool. There is a risk that such AI tools (or AI tools used without Company approval) will be used in a manner
that does not adhere to our AI policy and/or may be misused by our employees, vendors, or other third parties engaged
by us. This, in turn, could result in the loss of confidential or proprietary information and subject us to competitive or
reputational harm, as well as potential regulatory investigations/actions and/or legal liability. Additionally, we may not be able
to control – and may lack visibility into – how third-party AI tools use, or AI features incorporated into third-party products
that we use, are developed or maintained, or how such tools use, disclose and/or protect the data we input, even where
we have sought contractual protections with respect to these matters. Further, AI algorithms may be flawed, and the data
used to train AI tools may be inaccurate, incomplete or biased. As a result, the content, analysis or recommendations that
these tools produce may be inaccurate, incomplete or biased and our use of this information may have a material adverse
effect on our business, results of operations and financial condition. Similarly, given the emerging ethical issues presented
by the development and use of AI tools, we expect that there will continue to be new laws or regulations concerning the
use of AI that could impose on us certain obligations and costs related to monitoring and compliance. Finally, we may not
be successful in, and may lack sufficient resources to pursue, adopting and implementing AI tools to the same extent as our
competitors. If we are unable to adopt and implement these tools in a cost-effective, timely manner or at all, it could cause
competitive harm and/or have a material adverse effect on our business, results of operations and financial condition.
2024 Annual Report 21
RISKS RELATED TO OUR CAPITAL STRUCTURE
• Failure to remain in compliance with covenants under our Credit Agreement, service our indebtedness, or fund
our other liquidity needs could adversely impact our business. Our failure to comply with any of the restrictive or
financial covenants would constitute an event of default under our Credit Agreement. Our failure to pay principal, interest
or other amounts when due or within the relevant grace period on our 3.25% Convertible Notes, our 3.75% Convertible
Notes or our Credit Agreement would constitute an event of default under the indenture governing our 3.25% Convertible
Notes, the indenture governing our 3.75% Convertible Notes or the Credit Agreement. A default under our Credit
Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility;
(iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed
under the Credit Agreement; and/or (v) foreclosure on any collateral securing the obligations under such facility. A default
under the indenture governing our 3.25% Convertible Notes or the indenture governing our 3.75% Convertible Notes could
result in acceleration of the maturity of the notes. If we are unable to service our debt obligations as a result of rising or high
interest rates or any other reason or fund our other liquidity needs, we could be forced to curtail our operations, reorganize
our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that
could cause holders of our securities to experience a partial or total loss of their investment in us. See definition of 3.25%
Convertible Notes and 3.75% Convertible Notes in Note 14 to “Notes to the Consolidated Financial Statements.”
• Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our
business to pay our debt. Our ability to make scheduled payments of the principal of, to pay interest on or to refinance
our indebtedness, including our 3.25% Convertible Notes and our 3.75% Convertible Notes and the obligations under
our Credit Agreement, depends on our future performance, which is subject to economic, financial, competitive and other
factors beyond our control. Additionally, borrowings under our Credit Agreement bear interest at a variable rate. As interest
rates increase or remain high, our interest expense will also increase or remain high if we continue to borrow or increase our
borrowings under the credit facility. Our business may not continue to generate sufficient cash flow from operations in the
future to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be
required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital
on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the financial
markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these
activities on desirable terms, which could result in a default on our debt obligations.
• Conversion of our 3.25% Convertible Notes and our 3.75% Convertible Notes may dilute the ownership interest
of existing stockholders and may affect the trading price of our common stock. The 3.25% Convertible Notes and
the 3.75% Convertible Notes are convertible at the option of the holders upon the occurrence of certain events and/or during
certain periods. Upon conversion of the 3.75% Convertible Notes, we will pay or deliver, as the case may be, cash, shares of
our common stock or a combination of cash and shares of our common stock, at our election. Upon conversion of the 3.25%
Convertible Notes, we will settle the principal amount of the 3.25% Convertible Notes in cash, and any conversion premium
in excess of the principal amount in cash, shares of our common stock or a combination of cash and shares of our common
stock, at our election. The issuance of shares of our common stock upon conversion of our 3.25% Convertible Notes and our
3.75% Convertible Notes may dilute the ownership interests of existing stockholders. Any sales in the public market of our
common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
• The capped call transactions related to our 3.25% Convertible Notes and our 3.75% Convertible Notes may
affect the value of our common stock. In connection with our 3.25% Convertible Notes offering and our 3.75%
Convertible Notes offering, we entered into capped call transactions with option counterparties. The capped call transactions
are expected generally to reduce the potential dilution to our common stock upon conversion of the 3.25% Convertible
Notes and the 3.75% Convertible Notes and/or offset any cash payments we elect or are required to make in excess of the
principal amount of converted notes, as the case may be. Further, if the market price per share of our common stock exceeds
the cap price of the capped call transactions ($79.83 for the capped call transactions related to the 3.75% Convertible Notes
and $119.82 for the capped call transactions related to our 3.25% Convertible Notes), there would nevertheless be dilution
and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds
the cap price of the capped call transactions. Additionally, in connection with establishing the capped call transactions, the
option counterparties may have entered into various derivative transactions with respect to our common stock. The option
counterparties may modify their hedge positions by entering into or unwinding various derivatives with respect to our
common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions.
This activity could cause or hinder an increase or a decrease in the market price of our common stock. The effect, if any, of
these transactions and activities on the market price of our common stock will depend in part on market conditions and
cannot be ascertained at this time, but these activities could adversely affect the market price of our common stock.
22 Granite Construction Incorporated
• We are subject to counterparty risk with respect to the capped call transactions. The option counterparties are
financial institutions or affiliates of financial institutions, and we are subject to the risk that one or more of such option
counterparties may default under the capped call transactions. Our exposure to the credit risk of the option counterparties
is not secured by any collateral. Past global economic conditions, including recent increases in prevailing interest rates, have
resulted in the actual or perceived failure or financial difficulties of many financial institutions. If any option counterparty
becomes subject to bankruptcy or other insolvency proceedings, we will become an unsecured creditor in those proceedings
with a claim equal to our exposure at that time under the capped call transaction with such option counterparty. Our
exposure will depend on many factors but, generally, an increase in our exposure will be positively correlated to an increase
in our common stock market price and in the volatility of the market price of our common stock. In addition, upon a default
by an option counterparty, we may suffer adverse tax consequences and dilution with respect to our common stock. We can
provide no assurance as to the financial stability or viability of any option counterparty.
• The price of our common stock historically has been volatile. Our stock price may continue to be volatile and subject
to significant price and volume fluctuations in response to market and other factors, including the other factors discussed in
“Risks Factors;” variations in our quarterly operating results from our expectations or those of securities analysts or investors;
downward revisions in securities analysts’ estimates; and announcement by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments. In addition, the sale or the availability for sale of a large
number of shares of common stock in the public market could cause the price of our common stock to decline.
• Delaware law and our charter documents may impede or discourage a takeover, which could reduce potential
increases in the market price of our common stock. We are a Delaware corporation, and the anti-takeover provisions of
Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change in control
would be beneficial to our existing stockholders. In addition, our Board of Directors has the power, without stockholder
approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock. The ability
of our Board of Directors to create and issue a new series of preferred stock and certain provisions of Delaware law and
our certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving us
or discourage a potential acquirer from making a tender offer for our common stock, which, under certain circumstances,
could reduce potential increases in the market price of our common stock.
• Our bylaws include a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial
forum for disputes with us. Unless we consent in writing to the selection of an alternative forum, the Court of Chancery of
the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any
state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal
district court for the District of Delaware) shall be the sole and exclusive forum for the following types of actions or proceedings
under Delaware statutory or common law: (a) any derivative action or proceeding brought on behalf of Granite; (b) any action
asserting a breach of a fiduciary duty owed by any director, officer or other employee of Granite to Granite or its stockholders;
(c) any action asserting a claim against Granite or any director or officer or other employee of Granite arising pursuant to any
provision of the Delaware General Corporation Law, Granite’s certificate of incorporation or bylaws; (d) any action or proceeding
to interpret, apply, enforce or determine the validity of Granite’s certificate of incorporation or bylaws (including any right,
obligation, or remedy thereunder); (e) any action or proceeding as to which the Delaware General Corporation Law confers
jurisdiction to the Court of Chancery of the State of Delaware; or (f) any action asserting a claim against Granite or any director
or officer or other employee of Granite that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted
by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants, except that
the foregoing does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for
which the federal courts have exclusive jurisdiction. Additionally, unless we consent in writing to the selection of an alternative
forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint
asserting a cause of action arising under the Securities Act of 1933, subject to and contingent upon a final adjudication in the
State of Delaware of the enforceability of such exclusive forum provision. The forum selection provision in our bylaws may limit
our stockholders’ ability to pursue claims in a judicial forum of their choosing for disputes with us, our directors, officers or
employees. It is possible that, notwithstanding the forum selection clause included in our bylaws, a court could rule in specific
circumstances that such a provision is inapplicable or unenforceable, which could require that we defend claims in other forums.
RISKS RELATED TO CLIMATE CHANGE
• Physical, transition and regulatory risks related to climate change could have a material adverse impact on our
business, financial condition and results of operations. Physical risks related to climate change, such as changing sea
levels, temperature fluctuations, severe storms, and energy, supply chain and technological disruptions, could cause delays
and increases in project costs, resulting in variability in our revenue and profitability, as well as potentially adverse impacts
2024 Annual Report 23
to our operating results and financial condition. In addition, growing public concern about climate change has resulted in
the increased focus of local, state, regional, national and international regulatory bodies on greenhouse gas emissions and
climate change issues. Legislation to regulate greenhouse gas emissions has periodically been introduced and passed by the
U.S. Congress and the legislatures of various states in which we operate, and there has been a wide-ranging policy debate,
both in the United States and internationally, regarding the regulation of greenhouse gas emissions. Such policy changes,
including any enactment of increasingly stringent emissions or other environmental regulations, could increase the costs
of supplies or projects for us and for our clients and, in some cases, delay or even prevent a project from going forward,
thereby potentially reducing demand for our services. Consequently, this could have a material adverse effect on our
business, financial condition and results of operations.
•
We may be unable to achieve our sustainability commitments and targets which could result in the loss of investors
and customers, a negative impact to our stock price and damage to our reputation. We are committed to advancing our
sustainability strategy. However, achievement of our sustainability commitments and targets is subject to risks and uncertainties,
many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to execute
our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; the
availability and cost of alternative fuels and electric vehicles, availability of renewable energy; unforeseen design, operational and
technological difficulties; the outcome of research efforts and future technology developments; compliance with, and changes
or additions to, global, national, regional and local regulations, taxes, charges, mandates or requirements relating to greenhouse
gas emissions, carbon costs or climate-related goals; labor-related regulations and requirements that restrict or prohibit our ability
to impose requirements on third party contractors; adapting products to customer preferences and customer acceptance of
sustainable supply chain solutions; and the actions of competitors and competitive pressures.
There is no assurance that we will be able to successfully implement our strategies and achieve our targets. If we are
unable to meet our commitments and targets and appropriately address sustainability enhancement, we may lose investors,
customers or partners, our stock price may be negatively impacted, our reputation may be negatively affected and it may
be more difficult for us to compete effectively, all of which could have an adverse effect on our business, financial condition
and results of operations, as well as on the price of our common stock.
In addition, new laws, regulations and policies relating to matters such as sustainability, climate change, human capital and
diversity, are being developed and formalized in the United States, which may entail specific, target-driven frameworks
and/or disclosure requirements. Any failure, or perceived failure, by us to comply fully with developing interpretations of
such laws and regulations could harm our business, reputation, financial condition and results of operations and require
significant time and resources to make the necessary adjustments.
The foregoing list is not all-inclusive. There can be no assurance that we have correctly identified and appropriately assessed
all factors affecting our business or that the publicly available and other information with respect to these matters is complete
and correct. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may
also adversely affect us. These developments could have material adverse effects on our business, financial condition, results of
operations and liquidity. For these reasons, the reader is cautioned not to place undue reliance on our forward-looking statements.
Item 1B. Unresolved Staff Comments
None.
24 Granite Construction Incorporated
Item 1C. Cybersecurity
Our Board of Directors views the identification and effective management of cybersecurity threats as a critical component of overall
risk management and oversight responsibilities and has delegated responsibility for oversight of this risk to the Audit/Compliance
Committee of the Board of Directors (the “Audit Committee”). The Audit Committee oversees the management of risks arising
from cybersecurity threats and regularly reports to the Board of Directors regarding cybersecurity. Our Risk Committee of the Board
of Directors oversees our enterprise risk management (“ERM”) process, and cybersecurity represents an important component of
our overall approach to ERM. Our cybersecurity policies, standards, processes and practices are based on recognized frameworks
established by the National Institute of Standards and Technology and other applicable industry standards. In general, we seek to
address cybersecurity risks through a comprehensive, cross-functional approach that is focused on identifying, assessing, preventing
and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
Risk Management and Strategy
Our cybersecurity program is focused on the following key areas:
Governance
As discussed in more detail under the heading “Governance” below, the Board of Directors’ oversight of cybersecurity risk
management is supported by the Audit Committee, the Risk Committee, our Chief Information Officer (“CIO”), other members of
management and management’s Cybersecurity Committee.
Technical Safeguards
We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including
firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and
improved through vulnerability assessments and cybersecurity threat intelligence.
Incident Response Planning
We have established and maintain an incident response plan that outlines our response in the event of a cybersecurity incident.
Third-Party Assessments
We periodically assess and test our policies, standards, processes and practices that are designed to address cybersecurity threats
and incidents. These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling,
vulnerability testing and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning. We
regularly engage third parties to perform assessments on our cybersecurity measures, including information security maturity
assessments, audits and independent reviews of our information security control environment and operating effectiveness. The
results of such assessments, audits and reviews are reported to the Audit Committee and, if warranted, the Board of Directors, and
we adjust our cybersecurity policies, standards, processes and practices as necessary based on the information provided by these
assessments, audits and reviews.
Third-Party Risk Management
We review and evaluate material cybersecurity risks related to the use of third parties, including vendors, service providers and
other external users of our systems.
Education and Awareness
We provide regular training regarding cybersecurity threats as a means to equip our employees with effective tools to address
cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices.
Governance
The Audit Committee receives regular presentations and reports from management on cybersecurity risks, which address a
wide range of topics including recent developments, evolving standards, vulnerability assessments, third-party and independent
reviews, the threat environment, technological trends and information security considerations. The Audit Committee then provides
regular reports to the Board of Directors. The Risk Committee also receives timely updates on material and potentially material
cybersecurity matters from management as part of the ERM process. The Audit Committee and the Board of Directors also receive
timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates
regarding any such incident until it has been resolved.
2024 Annual Report 25
The CIO, who acts as our chief information security officer, leads our Cybersecurity Committee. The Cybersecurity Committee is a
multidisciplinary team of corporate and operational leaders who work collaboratively to implement a program designed to protect
our information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with
our incident response plan. The Cybersecurity Committee reports to our Chief Executive Officer (“CEO”), Chief Financial Officer
(“CFO”), Chief Operating Officer (“COO”), Senior Vice President, Human Resources (“SVP HR”) and Senior Vice President and
General Counsel. The CIO, working together with a team of cybersecurity professionals and third-party consultants, monitors the
prevention, detection, mitigation and remediation of cybersecurity threats and incidents, and reports such threats and incidents to
the senior leadership team when appropriate.
Our CIO has served in various roles in information technology and information security for over 25 years, including serving as
the Head of Cybersecurity for public and private companies. Our CIO holds an undergraduate degree in computer science and
has attained a professional certification in Cybersecurity Governance. The Cybersecurity team (including the CIO) has extensive
cybersecurity experience and hold multiple certifications across the cybersecurity landscape. Our CEO, CFO, COO, SVP HR and
Senior Vice President and General Counsel each hold undergraduate degrees, graduate degrees or professional certifications in
their respective fields, and each have significant experience managing risk.
Risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected, and
we do not believe are reasonably likely to materially affect, us, including our business strategy, results of operations or financial
condition. However, due to evolving cybersecurity threats, it may not be possible to anticipate, prevent or stop future cybersecurity
incidents, including attacks on our information systems and data or those of our relevant business partners. See “Risks Related to
Information Technology” in Item 1A. Risk Factors.
Item 2. Properties
Quarry Properties
We own or lease quarry properties that contain mineral resources that we extract and process into construction materials.
As defined by the SEC, mineral resources are a concentration or occurrence of material of economic interest in or on the earth’s
crust in such form, grade or quality and quantity that there are reasonable prospects for economic extraction. A mineral resource
is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions,
location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part,
become economically extractable.
As defined by the SEC, mineral reserves are an estimate of tonnage and grade or quality of indicated and measured mineral
resources that, in the opinion of a qualified person, as defined by the SEC, can be the basis of an economically viable project. More
specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and
allowances for losses that may occur when the material is mined or extracted.
Our mineral resources and reserves are based on estimates made by qualified persons who are employees of the Company and are
based primarily on geological evidence, sampling and testing and appropriate modifying factors. Amounts presented in the tables
below are based on various assumptions to determine estimated economically mineable tons including site specific prices for sand
and gravel and hard rock between $5 - $40 per ton. The price per ton estimates use a saleable product (i.e., materials that are ready
for sale) as a point of reference and are escalated over time by the Producer’s Price Index for Construction Sand, Gravel and Crushed
Stone (product 1321). Pricing for aggregates tend to remain similar for long periods of time; therefore, we use current pricing to
estimate prices and we reassess at least annually to verify there have not been material changes. Changes to the estimates and
assumptions from those currently anticipated could have a material impact on the mineral resource and mineral reserve estimates.
As of December 31, 2024, we had open pit quarry properties available for the extraction of sand, gravel and hard rock. Our
Materials segment uses these quarry properties to extract and process sand, gravel and hard rock into construction material for
internal use in our construction projects and for sale to third parties. As of December 31, 2024, we had all the permits necessary
to mine and process sand, gravel and hard rock at our active quarry properties. As of December 31, 2024, no individual mining
operation was considered material to our business or financial condition. Annual production of aggregates for all mining properties
was 18.7 million tons, 17.5 million tons, and 16.3 million tons during the years ended December 31, 2024, 2023 and 2022,
respectively. The following map shows the approximate locations of our permitted quarry properties as of December 31, 2024:
26 Granite Construction Incorporated
California and Utah are the only states/provinces that individually comprise more than 10% of our total mining operations. The
following tables present information about our quarry properties as of December 31, 2024 (tons in millions):
Resources and Reserves
for Each Product Type
(tons)
Percentage of Resources and
Reserves Owned and Leased
State/Province
Number of
Properties
Sand &
Gravel
Hard Rock
Owned(1)
Leased(2)
Acreage
California
31
505.4
430.2
63%
37%
10,352
Utah
10
111.9
36.7
67%
33%
1,497
All other states/provinces
62
208.6
259.5
45%
55%
17,349
Total
103
825.9
726.4
58%
42%
29,198
(1) Owned properties are properties we own or in which we have, or it is probable that we will have, a direct or indirect economic interest.
(2) Leases are defined as properties where we operate, or it is probable we will operate, under a lease or other legal agreement that grants us
ownership or similar rights that authorize us, as principal, to sell or otherwise dispose of the mineral and includes properties that we sublease
and from which we receive royalties, which are both considered immaterial. Our leases have terms which range from month-to-month to 50
years with most including an option to renew.
The life cycle of mining sand, gravel and hard rock begins with exploration and continues through development and production. After
a sand, gravel and hard rock deposit has been identified through exploration, the mine is developed before production begins. The
following table presents the number of properties in each respective stage as of December 31, 2024 for all mining properties:
State/Province
Exploration
Development
Production
California
5
4
22
Utah
1
2
7
All other states/provinces
6
9
47
Total
12
15
76
2024 Annual Report 27
Mineral Resources
The table below presents information on measured, indicated and inferred mineral resources. Estimates of measured mineral
resources are based on conclusive geological evidence, sampling and testing and may be converted to a proven mineral reserve
or to a probable mineral reserve. Estimates of indicated mineral resources are based on adequate geological evidence, sampling
and testing and may only be converted to a probable mineral reserve when sufficient evidence is identified including consideration
of modifying factors such as mining, processing, economic and environmental factors. Modifying factors are the factors that a
qualified person must apply to indicated and measured mineral resources and then evaluate to establish the economic viability
of mineral reserves. Estimates of inferred mineral resources have significant geological uncertainty based on limited geological
evidence, sampling and testing and therefore may not be converted to a mineral reserve.
As of December 31, 2024, our qualified persons estimated our measured, indicated and inferred resources to be approximately
494.9 million tons. As of December 31, 2024, California and Utah were the only individual states/provinces that comprised more than
10% of our total mining operations. The Wine Group, Aerojet North White Rock and Coalinga Section 30 were the only mines that
comprised 10% or more of our combined measured and indicated mineral resources for sand and gravel and the Euer Ranch and
Bamberton Quarry were the only mines that comprised 10% or more of our combined measured and indicated mineral resources for
hard rock. The following table presents information about our mineral resources at December 31, 2024 (tons in millions):
Measured
Mineral Resources
Indicated
Mineral Resources
Measured + Indicated
Mineral Resources
Inferred
Mineral Resources
Amount
(tons)
Grades/
qualities(1)
Amount
(tons)
Grades/
qualities(1)
Amount
(tons)
Grades/
qualities(1)
Amount
(tons)
Grades/
qualities(1)
Sand and Gravel:
California
The Wine Group
—
—
51.4
Sand and Gravel
51.4 Sand and Gravel
—
—
Aerojet North White Rock
32.0
Sand and Gravel
—
—
32.0
Sand and Gravel
—
—
Coalinga Section 30
—
—
18.0
Sand and Gravel
18.0
Sand and Gravel
—
—
All other California
15.4
Sand and Gravel
1.6
Sand and Gravel
17.0 Sand and Gravel
—
—
Total California
47.4
—
71.0
—
118.4
—
—
—
All other states/provinces
12.6
Sand and Gravel
8.6
Sand and Gravel
21.2 Sand and Gravel
0.7
Sand and Gravel
Total
60.0
—
79.6
—
139.6
—
0.7
—
Hard Rock:
California
Euer Ranch
218.1
Hard Rock
—
—
218.1
Hard Rock
—
—
All other California
9.9
Hard Rock
—
—
9.9
Hard Rock
—
—
Total California
228.0
—
—
—
228.0
—
—
—
Utah
9.6
Hard Rock
—
—
9.6
Hard Rock
—
—
Bamberton Quarry (Canada)
42.4
Hard Rock
2.3
Hard Rock
44.7
Hard Rock
39.3
Hard Rock
All other states/provinces
—
—
—
—
—
—
33.0
Hard Rock
Total
280.0
—
2.3
—
282.3
—
72.3
—
Grand Total
340.0
—
81.9
—
421.9
—
73.0
—
(1) The grade of product produced is contingent on market needs. Sites typically sell base products that range from low to high grades including fill
materials, base aggregates, hot mix aggregates and concrete aggregates.
Mineral Reserves
Mineral reserves are divided into proven and probable mineral reserves. Proven mineral reserves are the economically mineable part
of a measured mineral resource and can only result from the conversion of a measured mineral resource. Proven mineral resources
are determined by a qualified person through the testing of samples obtained from closely spaced subsurface drilling and/or
exposed pit faces, and are sufficiently understood so that quantity, quality and engineering conditions are known with sufficient
accuracy to be mined without the need for any further subsurface work. Probable mineral reserves are the economically mineable
part of an indicated, and in some cases, a measured mineral resource. Probable mineral reserves are determined through the
testing of samples obtained from subsurface drilling, but the sample points are too widely spaced to allow detailed prediction of
quantity, quality and engineering conditions. Additional subsurface work may be needed prior to mining the reserve.
28 Granite Construction Incorporated
The modifying factors applied in the conversion of measured and indicated mineral resources to proven and probable mineral
reserves during the year ended December 31, 2024 included various relevant technical and economic factors, including site
infrastructure, mine design and planning, processing plant and environmental compliance and permitting. The basis of determining
the modifying factors was a combination of historical experience mining aggregates and observation.
As of December 31, 2024, our qualified persons estimated our proven and probable reserves to be approximately 1.1 billion tons.
Waste factors for proven and probable reserves range up to 44% depending on the deposit type, market characteristics and
extraction feasibility. As of December 31, 2024, California and Utah were the only individual states/provinces that comprised more
than 10% of our total mining operations, Coalinga, Solari and Grantsville were the only mines that comprised 10% or more of
our mineral reserves for sand and gravel and Handley Quarry, Lockwood Mustang and Bamberton Quarry were the only mines that
comprised 10% or more of our mineral reserves for hard rock. The following table presents information about mineral reserves at
December 31, 2024 (tons in millions):
Proven Mineral Reserves
Probable Mineral Reserves
Total Mineral Reserves
Amount
(tons)
Grades/qualities(1)
Amount
(tons)
Grades/qualities(1)
Amount
(tons)
Grades/qualities(1)
Sand and Gravel:
California
Coalinga
115.5
Sand and Gravel
—
—
115.5
Sand and Gravel
Solari
106.4
Sand and Gravel
8.2
Sand and Gravel
114.6
Sand and Gravel
All other California
148.1
Sand and Gravel
8.8
Sand and Gravel
156.9
Sand and Gravel
Total California
370.0
—
17.0
—
387.0
—
Utah
Grantsville
99.0
Sand and Gravel
—
—
99.0
Sand and Gravel
All other Utah
12.8
Sand and Gravel
0.1
Sand and Gravel
12.9
Sand and Gravel
Total Utah
111.8
—
0.1
—
111.9
—
All other states/provinces
130.6
Sand and Gravel
56.1
Sand and Gravel
186.7
Sand and Gravel
Total
612.4
—
73.2
—
685.6
—
Hard Rock:
California
Handley Quarry
144.0
Hard Rock
—
—
144.0
Hard Rock
All other California
58.2
Hard Rock
—
—
58.2
Hard Rock
Total California
202.2
—
—
—
202.2
—
Utah
27.1
Hard Rock
—
—
27.1
Hard Rock
Lockwood Mustang (Nevada)
17.7
Hard Rock
32.0
Hard Rock
49.7
Hard Rock
Bamberton Quarry (Canada)
39.8
Hard Rock
—
—
39.8
Hard Rock
All other states/provinces
20.6
Hard Rock
32.4
Hard Rock
53.0
Hard Rock
Total
307.4
—
64.4
—
371.8
—
Grand Total
919.8
—
137.6
—
1,057.4
—
(1) The grade of product produced is contingent on market needs. Sites typically sell base products that range from low to high grades including fill
materials, base aggregates, hot mix aggregates and concrete aggregates.
Internal controls
Mining operations include risk in estimation of mineral reserves and mineral resources that could be impacted by unforeseen
geologic circumstances, changes in regulation or changes in sales and customers. The risk that these estimates would be
unreasonable based on the known information is mitigated by the following internal controls that we use in our exploration and
mineral resource and mineral reserve estimation efforts:
• quality control and quality assurance programs including management identifying the qualified person(s) with the
appropriate background and qualifications to prepare the information used for disclosure purposes;
2024 Annual Report 29
• verification of analytical procedures including management reviewing the mineral resource and reserve report information for
completeness, accuracy and appropriateness, such as categorization, inclusion of technical, economic and operational factors,
discounted cash flow analysis inputs, assumptions and calculations, and mining, metallurgical, legal, environmental compliance
and governmental modifying factors as well as comparison of estimates to historic production and prior period estimates; and
• review of disclosures to ensure compliance with requirements.
Plant Properties
We operate plants at our quarry sites to process aggregates into construction materials. Some of our sites may have more than one
crushing, concrete or asphalt processing plant. The following table presents the number of plants we owned and leased as of the
respective dates:
December 31,
2024
2023
Aggregate crushing plants
40
35
Asphalt concrete plants(1)
59
59
Cement concrete batch plants
10
6
Asphalt rubber plants
4
4
Lime slurry plants
6
6
(1) Three of our asphalt concrete plants were operated under lease agreements for the years ended December 31, 2024 and 2023.
These plants are used by both of our reportable segments.
Item 3. Legal Proceedings
The description of the matters set forth in Note 20 of “Notes to the Consolidated Financial Statements” is incorporated herein by
reference.
Item 4. Mine Safety Disclosures
The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17CFR 229.104) is included in Exhibit 95 to this
Annual Report on Form 10-K.
30 Granite Construction Incorporated
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder
Matters And Issuer Purchases Of Equity Securities
Our common stock trades on the New York Stock Exchange under the ticker symbol GVA. As of February 7, 2025, 43,434,583
shares of our common stock were outstanding and held by 595 shareholders of record. We have paid quarterly cash dividends
since the second quarter of 1990, and we expect to continue to do so.
The following table sets forth information regarding the repurchase of shares of our common stock during the three months ended
December 31, 2024:
Period
Total number of
shares purchased(1)
Average price
paid per share
Total number of
shares purchased
as part of publicly
announced plans
or programs
Approximate dollar
value of shares
that may yet be
purchased under the
plans or programs(2)
October 1, 2024 through October 31, 2024
2,946
$ 82.05
—
$ 218,187,374
November 1, 2024 through November 30, 2024
66,405
$ 96.69
65,625
$ 211,834,376
December 1, 2024 through December 31, 2024
237,378
$ 95.13
234,175
$ 189,545,664
306,729
$ 95.34
299,800
(1) Includes 2,946, 780 and 3,203 shares purchased during October, November and December, respectively, in connection with employee tax
withholding for restricted stock units vested under our equity incentive plans.
(2) As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our
common stock at management’s discretion. The specific timing and amount of any future purchases will vary based on market conditions,
securities law limitations and other factors.
2024 Annual Report 31
Performance Graph
The following graph compares the cumulative five-year total return provided to Granite Construction Incorporated’s common
stockholders relative to the cumulative total returns of the S&P 500 index and the Dow Jones U.S. Heavy Construction index. The
Dow Jones U.S. Heavy Construction index includes the following companies: AECOM, APi Group Corporation, EMCOR Group
Inc, MDU Resources Group Inc, MasTec Inc, Quanta Services Inc, Valmont Industries Inc and Willscot Mobile Mini Holdings Corp.
Certain of these companies differ from Granite in that they derive more revenue and profit from non-U.S. operations and have
customers in different markets. The graph tracks the performance of a $100 investment in our common stock and in each index
(with the reinvestment of all dividends) from December 31, 2019 through December 31, 2024.
$400
$350
$300
$250
$150
$200
$100
$0
$50
12/19
12/20
12/21
12/22
12/23
12/24
Granite Construction Incorporated
S&P 500
Dow Jones US Heavy Construction
*$100 invested on 12/31/19 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
Among Granite Construction Incorporated, the S&P 500 Index
and the Dow Jones U.S. Heavy Construction Index
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
32 Granite Construction Incorporated
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
General
We deliver infrastructure solutions for public and private clients primarily in the United States. We are one of the largest diversified,
vertically integrated civil contractors and construction materials producers in the United States. Within the public sector, we
primarily concentrate 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, we perform various services such as site preparation, mining services and infrastructure services
for commercial and industrial sites, railways, residential development, energy development, as well as provide construction
management professional services. We own and lease aggregate reserves and own processing plants that are vertically integrated
into our construction operations and we also produce construction materials for sale to third parties.
We have vertically integrated operations across Alaska, Arizona, California, Mississippi, Nevada, Oregon, Tennessee, Utah and
Washington in addition to regional civil construction home markets in Illinois, Florida and Texas. Our Construction segment also
operates national businesses within the Tunnel division, the Rail division, the Federal division, which performs civil construction across
the continental United States and Guam, the Industrial & Energy division, which primarily focuses on commercial solar construction
projects, and the Layne division, which performs water well drilling, rehabilitation services and mineral exploration services.
Our reportable segments are the same as our operating segments and correspond with how our chief operating decision maker,
or decision-making group (our “CODM”), regularly reviews financial information to allocate resources and assess performance. We
identified our CODM as our Chief Executive Officer and our Chief Operating Officer. Our reportable segments are: 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. It
also provides construction of various complex projects including infrastructure / site development, mining, public safety, tunnel,
solar, battery storage and other power-related projects. The Materials segment focuses on production of aggregates, asphalt
concrete, liquid asphalt and recycled materials production for internal use in our construction projects and for sale to third parties.
See Note 21 of “Notes to the Consolidated Financial Statements” for additional information about our reportable segments.
During the first quarter of 2024, we reorganized our operational structure to more closely align with our two reportable segments,
Construction and Materials. Previously, leaders within our three former operating groups of California, Central and Mountain
managed both Construction and Materials operations within each group. This change allows us to better leverage our expertise
within each reportable segment with leadership having direct oversight of their respective segment operations. As a result of
the reorganization, we will no longer disclose financial information by operating group. There were no material impacts to our
consolidated financial statements and no changes to our reportable segments.
The five primary economic drivers of our business are (i) the overall health of the U.S. economy including access to resources
(labor, supplies and subcontractors); (ii) federal, state and local public funding levels; (iii) population growth resulting in public and
private development; (iv) the need to build, replace or repair aging infrastructure; and (v) the pricing of certain commodity related
products. A stagnant or declining economy will generally result in reduced demand for construction and construction materials
in the private sector. This reduced demand increases competition for private sector projects and will ultimately also increase
competition in the public sector as companies migrate from bidding on scarce private sector work to projects in the public sector.
In addition, a stagnant or declining economy tends to produce less tax revenue for public agencies, thereby decreasing a source of
funds available for spending on public infrastructure improvements. Some funding sources that have been specifically earmarked
for infrastructure spending, such as diesel and gasoline taxes, are not as directly affected by a stagnant or declining economy,
unless actual consumption is reduced or gasoline sales tax revenues decline consistent with fuel prices. However, even these can
be temporarily at risk as federal, state and local governments take actions to balance their budgets. Conversely, increased levels
of public funding as well as an expanding or robust economy will generally increase demand for our services and products and
provide opportunities for revenue growth and margin improvement.
2024 Annual Report 33
Critical Accounting Estimate
The financial statements included in “Item 8. Financial Statements and Supplementary Data” have been prepared in accordance
with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial
statements requires management to make estimates that affect the reported amounts of assets and liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. Our estimates and related judgments and assumptions are
continually evaluated based on available information and experiences; however, actual amounts could differ from those estimates.
We consider revenue recognition a critical accounting estimate. It involves significant management judgment and can significantly
affect our reported results of operations.
Revenue Recognition
Our revenue is primarily derived from construction contracts that can span several quarters or years in our Construction segment
and from sales of construction related materials in our Materials segment. We recognize revenue in accordance with ASC Topic
606, Revenue from Contracts with Customers, and subsequently issued additional related ASUs. The accuracy of our revenue and
profit recognition in a given period depends on the accuracy of our estimates of the forecasted revenue and cost to complete each
project. Cost estimates for all of our significant projects use a detailed “bottom up” approach. There are a number of factors that
can contribute to changes in estimates of contract cost and profitability. The most significant of these include:
• changes in costs of labor and/or materials;
• subcontractor costs, availability and/or performance issues;
• extended overhead and other costs due to owner, weather and other delays;
• changes in productivity expectations;
• changes from original design on design-build projects;
• our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs;
• a change in the availability and proximity of equipment and materials;
• complexity in original design;
• length of time to complete the project;
• the availability and skill level of workers in the geographic location of the project;
• site conditions that differ from those assumed in the original bid;
• costs associated with scope changes; and
• the customer’s ability to properly administer the contract.
The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins
may cause fluctuations in gross profit and gross profit margin from period to period. Significant changes in revenue and cost
estimates, particularly in our larger, more complex, multi-year projects have had, and in the future could have, a significant effect
on our profitability. Due to the number of factors that can contribute to changes in estimates of contract cost and profitability, the
sensitivity of reported amounts to the assumptions underlying the estimate’s calculation is not reasonably available or meaningful.
However, Note 3 of “Notes to the Consolidated Financial Statements” presents the impact material revisions in estimates had on
the periods covered by this report.
Current Economic Environment and Outlook
Funding for our public work projects, which account for approximately 80% of our portfolio, is dependent on federal, state,
regional and local revenues. At the federal level, the continued rollout of the $1.2 trillion Infrastructure Investment and Jobs Act
(“IIJA”) 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. The increased multi-year spending commitment has improved the programming visibility for
state and local governments and has driven an increase in project lettings that started in 2023, continued in 2024 and we believe
will carry into 2025 and beyond.
At state, regional and local levels, voter-approved state and local transportation measures continue to support infrastructure
spending. While each market is unique, we see a strong funding environment at the state and local levels aided by the IIJA. In
California, our top revenue-generating state, despite overall budgetary concerns, a significant part of the state infrastructure spend
is funded through Senate Bill 1 (SB-1), the Road Repair and Accountability Act of 2017, a 10-year, $54.2 billion program, which
may only be used for transportation-related purposes, without any sunset provisions.
34 Granite Construction Incorporated
Over the last several years, inflation, supply chain and labor constraints have had a significant impact on the global economy
including the construction industry in the United States. While it is impossible to fully eliminate the impact of these factors, where
practicable, we have applied proactive measures 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. While we actively work to
mitigate the impacts of oil price inflation, further price increases may adversely impact us in the future.
Our Committed and Awarded Projects (“CAP”) balance continues to be strong at $5.3 billion at the end of the fourth quarter of
2024. Our CAP is supported by a positive public funding environment and resilient private market which we believe will provide
further opportunities for continued CAP growth in 2025.
Acquisitions
On August 9, 2024, we acquired Dickerson & Bowen, Inc. (“D&B”). D&B is an aggregates, asphalt, and highway construction
company serving central and southern Mississippi.
On November 30, 2023, we acquired Lehman-Roberts Company and Memphis Stone & Gravel Company (collectively, “LRC/MSG”).
LRC/MSG operates strategically located asphalt plants and sand and gravel mines serving the greater Memphis area and northern
Mississippi.
On April 24, 2023, we acquired Coast Mountain Resources (2020) Ltd. which changed its name to Granite Infrastructure Canada,
Ltd. (“Granite Canada”) on May 13, 2024. Granite Canada is a construction aggregate producer based in British Columbia,
Canada operating on Malahat First Nation land.
The results of operations of these businesses are included in our consolidated financial statements from the dates of acquisition
which impacts comparability to the applicable prior periods.
See Note 1 and Note 2 of “Notes to the Consolidated Financial Statements” for further information.
Results of Operations
Our operations are typically affected more by inclement weather conditions during the first and fourth quarters of our fiscal year
which may alter our construction schedules and can create variability in our revenues and profitability.
Years Ended December 31,
2024
2023
2022
(in thousands)
Total revenue
$4,007,574
$ 3,509,138
$ 3,301,256
Gross profit
$
572,697
$
396,399
$
369,494
Selling, general and administrative expenses
$
334,162
$
294,466
$
272,610
Other costs, net (see Note 1 of “Notes to the Consolidated Financial Statements”)
$
39,936
$
50,217
$
24,120
Gain on sales of property and equipment, net
$
(8,764) $
(28,346) $
(12,617)
Operating income
$
207,363
$
80,062
$
85,381
Total other (income) expense, net
$
11,171
$
20,208 $
(6,436)
Amount attributable to non-controlling interests
$
(14,097) $
14,012
$
4,445
Net income attributable to Granite Construction Incorporated
$
126,346
$
43,599
$
83,302
Revenue
TOTAL REVENUE BY SEGMENT
Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Construction
$ 3,415,225
85.2%
$ 2,992,254
85.3%
$ 2,803,935
84.9%
Materials
592,349
14.8
516,884
14.7
497,321
15.1
Total
$ 4,007,574
100.0%
$ 3,509,138
100.0%
$ 3,301,256
100.0%
2024 Annual Report 35
CONSTRUCTION REVENUE
Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Public
$ 2,531,379
74.1%
$ 2,064,078
69.0%
$ 1,891,338
67.5%
Private
883,846
25.9
928,176
31.0
912,597
32.5
Total
$ 3,415,225
100.0%
$ 2,992,254
100.0%
$ 2,803,935
100.0%
Construction revenue in 2024 increased by $423.0 million, or 14.1%, compared to 2023, primarily due to a higher level of CAP to
start the year, more favorable weather conditions early in 2024 and increased revenue from acquired businesses of $114.7 million
due to the timing of the acquisition of LRC/MSG in 2023 and the acquisition of D&B in 2024.
MATERIALS REVENUE
Materials revenue in 2024 increased by $75.5 million, or 14.6%, when compared to 2023, driven primarily by increases in revenue
from newly acquired businesses of $66.9 million, in addition to higher asphalt and aggregate sales prices.
Committed and Awarded Projects
CAP consists of two components: (1) unearned revenue and (2) other awards. Unearned revenue includes the 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. We generally include a project in unearned revenue at the time a contract is
awarded, the contract has been executed and to the extent we believe funding is probable. Contract options and task orders are
included in unearned revenue when exercised or issued, respectively. Certain government contracts where funding is appropriated
on a periodic basis are included in unearned revenue at the time of the award when it is probable the contract value will be funded
and executed.
Other awards include the general construction portion of construction management/general contractor (“CM/GC”) contracts and
awarded contracts with unexercised contract options or unissued task orders. The general construction portion of CM/GC contracts
are included in other awards to the extent contract execution and funding is probable. Contracts with unexercised contract options
or unissued task orders are included in other awards to the extent option exercise or task order issuance is probable. All CAP is in
the Construction segment.
December 31,
2024
2023
(dollars in thousands)
Unearned revenue
$ 3,584,378
67.7%
$ 3,596,676
64.9%
Other awards
1,711,689
32.3
1,949,078
35.1
Total
$ 5,296,067
100.0%
$ 5,545,754
100.0%
December 31,
2024
2023
(dollars in thousands)
Public
$ 4,120,821
77.8%
$ 4,368,904
78.8%
Private
1,175,246
22.2
1,176,850
21.2
Total
$ 5,296,067
100.0%
$ 5,545,754
100.0%
CAP of $5.3 billion at December 31, 2024 was $0.2 billion, or 5% lower than December 31, 2023 due to higher revenue in 2024
and lower additions to CAP in 2024. Bidding activity remained robust in 2024, and several significant project awards are expected
to be added to CAP during the first half of 2025. The most significant additions to CAP during 2024 included $196 million for six
highway projects in California, $180 million for a pumping station project in Nevada, $158 million of Federal work in Guam and
$114 million for a bridge project in Michigan.
Non-controlling partners’ share of CAP as of December 31, 2024 and 2023 was $331.1 million and $243.8 million, respectively.
At December 31, 2024 and 2023, one and six contracts with remaining CAP of $10.0 million or more per project had total
forecasted losses with remaining revenue of $64.4 million, or 1.2% of total CAP, and $188.9 million, or 3.4% of total CAP,
respectively. Provisions are recognized in the consolidated statements of operations for the full amount of estimated losses on
uncompleted contracts whenever evidence indicates that the estimated total cost of a contract exceeds its estimated total revenue.
36 Granite Construction Incorporated
Gross Profit
The following table presents gross profit by reportable segment for the respective periods:
Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Construction
$ 491,002
$325,055
$303,881
Percent of segment revenue
14.4%
10.9%
10.8%
Materials
81,695
71,344
65,613
Percent of segment revenue
13.8
13.8
13.2
Total gross profit
$ 572,697
$396,399
$369,494
Percent of total revenue
14.3%
11.3%
11.2%
Construction gross profit for the year ended December 31, 2024 increased by $165.9 million, or 51.1%, when compared to 2023,
primarily due to higher revenue and improved project execution across our project portfolio resulting in net increases from revisions
in estimates in the current period compared to net decreases in the prior period. For further discussion of projects with revisions
in estimates which individually had an impact of $5.0 million or more on gross profit, see Note 3 of “Notes to the Consolidated
Financial Statements.” Additionally, gross profit from acquired businesses increased by $11.5 million for the year ended
December 31, 2024, including $8.1 million of purchase accounting related depreciation and intangible asset amortization.
Materials gross profit for the year ended December 31, 2024 increased by $10.4 million, or 14.5%, when compared to 2023 and
gross profit margin remained consistent at 13.8%. The improvement in gross profit was primarily due to the results of acquired
businesses as well as higher revenue. Materials gross profit from acquired businesses increased by $7.8 million for the year ended
December 31, 2024, including $4.1 million of purchase accounting related depreciation and intangible asset amortization.
Selling, General and Administrative Expenses
The following table presents the components of selling, general and administrative expenses for the respective periods:
Years Ended December 31,
2024
2023
2022
(dollars in thousands)
Salaries and related expenses
$ 171,835
$ 157,239
$ 161,082
Incentive compensation
32,094
29,364
16,424
Stock-based compensation
17,826
9,753
6,361
Other selling, general and administrative expenses
112,407
98,110
88,743
Total selling, general and administrative expenses
$ 334,162
$ 294,466
$ 272,610
Percent of revenue
8.3%
8.4%
8.3%
Selling, general and administrative (“SG&A”) expenses include the costs for estimating and bidding, including offsetting customer
reimbursements for portions of our selling/bid submission expenses (i.e., stipends), business development, materials facility permits,
and costs related to our operational offices that are not allocated to direct contract costs and expenses related to our corporate
functions. Other SG&A expenses include travel and entertainment, outside services, information technology, depreciation,
occupancy, training, office supplies, changes in the fair market value of our Non-Qualified Deferred Compensation plan liability
and other miscellaneous expenses. SG&A expenses can vary depending on the volume of projects in process and the number
of employees assigned to estimating and bidding activities. As projects are completed or the volume of work slows down, we
temporarily redeploy project employees to bid on new projects, moving their salaries and related costs from cost of revenue to
selling expenses. SG&A expenses for 2024 increased $39.7 million compared to 2023, primarily due to a $17.0 million increase in
SG&A expenses from acquired businesses, including $6.3 million of purchase accounting related depreciation and intangible asset
amortization. The remaining increase was due to higher stock-based compensation and incentive compensation due to improved
financial performance, as well as higher salaries and related expenses due to increased labor costs.
Other Costs, net
The following table presents other costs, net for the respective periods:
Years Ended December 31,
2024
2023
2022
(in thousands)
Other costs, net
$ 39,936
$ 50,217
$ 24,120
2024 Annual Report 37
Other costs for the year ended December 31, 2024 decreased by $10.3 million when compared to 2023 primarily due to a $20.0
million litigation charge in the prior year that did not recur in the current year, partially offset by an increase in costs in the current
year associated with the defense of a former Company officer in his ongoing civil litigation with the Securities and Exchange
Commission.
Gain on Sales of Property and Equipment, net
The following table presents the gain on sales of property and equipment, net for the respective periods:
Years Ended December 31,
2024
2023
2022
(in thousands)
Gain on sales of property and equipment, net
$
(8,764)
$ (28,346)
$ (12,617)
Gain on sales of property and equipment, net for the year ended December 31, 2024 decreased by $19.6 million when compared
to 2023 primarily due to the sale of a property in Texas in 2023.
Other (Income) Expense
The following table presents the components of other (income) expense, net for the respective periods:
Years Ended December 31,
2024
2023
2022
(in thousands)
Loss on debt extinguishment
$ 27,552
$ 51,052
$
—
Interest income
(24,349)
(17,538)
(6,528)
Interest expense
29,188
18,462
12,624
Equity in income of affiliates, net
(16,982)
(25,748)
(13,571)
Other (income) expense, net
(4,238)
(6,020)
1,039
Total other (income) expense, net
$ 11,171
$ 20,208
$ (6,436)
During 2024, we repurchased approximately $30.2 million in aggregate principal amount of our 2.75% Convertible Notes and
incurred a $27.6 million loss on debt extinguishment, which was $23.5 million less than the 2023 extinguishment charge. During
2024, interest expense, net of interest income, increased $3.9 million, as a result of increased borrowings, partially offset by higher
interest income due to higher cash balances. Equity in income of affiliates, net decreased by $8.8 million when compared to 2023
primarily due to lower net income of our affiliates.
Income Taxes
The following table presents the provision for income taxes for the respective periods:
Years Ended December 31,
2024
2023
2022
(in thousands)
Provision for income taxes
$ 55,749
$ 30,267
$ 12,960
Effective tax rate
28.4%
50.6%
14.1%
Our effective tax rate decreased from 50.6% to 28.4% when compared to 2023 primarily due to a decrease in nondeductible debt
extinguishment costs along with a favorable adjustment for non-controlling interest in the current year.
Amount Attributable to Non-controlling Interests
The following table presents the amount attributable to non-controlling interests in consolidated subsidiaries for the respective
periods:
Years Ended December 31,
2024
2023
2022
(in thousands)
Amount attributable to non-controlling interests
$ (14,097)
$ 14,012
$
4,445
The amount attributable to non-controlling interests represents the non-controlling owners’ share of the net (income) loss of our
consolidated construction joint ventures. The increase during 2024 was primarily due to the impact of less negative revisions in
estimates related to consolidated construction joint ventures (see Note 3 of “Notes to the Consolidated Financial Statements”).
38 Granite Construction Incorporated
Prior Years Comparison (2023 to 2022)
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on
Form 10-K filed with the SEC on February 23, 2024.
Liquidity and Capital Resources
Our primary sources of liquidity are cash and cash equivalents, investments, available borrowing capacity under our credit facility
and cash generated from operations. We may also from time to time issue and sell equity, debt or hybrid securities or engage in
other capital markets transactions or sell one or more business units or assets. See Note 14 of the “Notes to the Consolidated
Financial Statements” for information on our long-term debt.
Our material cash requirements include paying the costs and expenses associated with our operations, servicing outstanding
indebtedness, making capital expenditures and paying dividends on our capital stock. We may also from time to time prepay
or repurchase outstanding indebtedness, repurchase shares of our common stock or acquire assets or businesses that are
complementary to our operations. See Note 2 and Note 17 of the “Notes to the Consolidated Financial Statements” for
information on our acquisitions and share repurchases, respectively.
Our primary contractual obligations are as follows and are further discussed in the referenced “Notes to the Consolidated Financial
Statements:”
• Asset retirement obligations - see Note 11, Property and Equipment, net
• Long-term debt and the associated interest payments – see Note 14, Long-Term Debt
• Operating lease and royalty future minimum payments – see Note 15, Leases
• Non-Qualified Deferred Compensation Plan obligations – see Note 16, Employee Benefit Plans
In addition to the obligations referenced above, as of December 31, 2024 we had $16.4 million of purchase commitments for
equipment and other goods and services not directly connected with our construction contracts, which are individually greater
than $50,000 and have an expected fulfillment date after December 31, 2024. Of this, approximately $15.0 million, $1.0 million
and $0.4 million will be paid in 2025, 2026 and 2027, respectively. There are no material purchase commitments in the periods
thereafter.
We believe our primary sources of liquidity will be sufficient to meet our expected working capital needs, capital expenditures,
financial commitments, cash dividend payments and other liquidity requirements associated with our existing operations for the
next twelve months. We also believe our primary sources of liquidity, access to debt and equity capital markets and cash expected
to be generated from operations will be sufficient to meet our long-term requirements and plans. However, there can be no
assurance that sufficient capital will continue to be available or that it will be available on terms acceptable to us.
Cash, cash equivalents and marketable securities as of December 31, 2024 increased $132.1 million to $585.6 million from the
prior year end. In addition to meeting our liquidity requirements listed above, our increased cash balances are expected to be used
to invest in our business through strategic capital expenditures in 2025 and we will continue to explore acquisition opportunities in
alignment with our strategic plan.
As of December 31, 2024, our cash and cash equivalents consisted of deposits and money market funds held with established
national financial institutions and marketable securities consisting primarily of U.S. Government and agency obligations.
As of December 31, 2024, the total unused availability under our Credit Agreement was $333.7 million, resulting from $16.3
million in issued and outstanding letters of credit and nothing drawn on the Revolver. See Note 14 of “Notes to the Consolidated
Financial Statements.”
As of December 31, 2024, we had $1.3 million of receivables and $29.2 million of contract retention receivables from Brightline
Trains Florida LLC (“Brightline”) (see Note 6 of “Notes to the Consolidated Financial Statements”), all of which has been collected
as of the date of this report.
2024 Annual Report 39
In evaluating our liquidity position and needs, we also consider cash and cash equivalents held by our consolidated construction
joint ventures (“CCJVs”). The following table presents our cash, cash equivalents and marketable securities, including amounts
from our CCJVs, as of the respective dates:
December 31,
2024
2023
(in thousands)
Cash and cash equivalents excluding CCJVs
$404,436
$297,439
CCJV cash and cash equivalents(1)
173,894
120,224
Total consolidated cash and cash equivalents
578,330
417,663
Short-term marketable securities(2)
7,311
35,863
Total cash, cash equivalents and marketable securities
$ 585,641
$ 453,526
(1) The volume and stage of completion of contracts from our CCJVs may cause fluctuations in joint venture cash and cash equivalents between
periods. The assets of each consolidated and unconsolidated construction joint venture relate solely to that joint venture. The decision to
distribute joint venture assets must generally be made jointly by a majority of the members and, accordingly, these assets, including those
associated with estimated cost recovery of customer affirmative claims and back charge claims, are generally not available for the working
capital needs of Granite until distributed.
(2) All marketable securities were classified as held-to-maturity and consisted of U.S. Government and agency obligations as of all periods presented.
Granite’s portion of CCJV cash and cash equivalents was $106.0 million and $73.1 million as of December 31, 2024 and 2023,
respectively. Excluded from the table above is $28.7 million and $34.2 million as of December 31, 2024 and 2023, respectively, of
Granite’s portion of unconsolidated construction joint venture cash and cash equivalents.
Capital Expenditures
Major capital expenditures are typically for aggregate and asphalt production facilities, aggregate reserves, construction equipment,
buildings and leasehold improvements and investments in our information technology systems. The timing and amount of such
expenditures can vary based on the progress of planned capital projects, the type and size of construction projects, changes in
business outlook and other factors. During the year ended December 31, 2024, we had capital expenditures of $136.4 million,
compared to $140.4 million during 2023, a decrease of $4.0 million. We currently anticipate 2025 capital expenditures to be between
approximately $140 million and $160 million, including approximately $50 million in planned strategic materials investments.
Cash Flows
Years Ended December 31,
2024
2023
2022
(in thousands)
Net cash provided by (used in):
Operating activities
$ 456,343
$ 183,707
$
55,647
Investing activities
$ (228,556)
$ (359,290)
$ (11,000)
Financing activities
$ (67,120)
$ 299,255
$(164,311)
Operating activities
As a large infrastructure contractor and construction materials producer, our revenue, gross profit and the resulting operating cash
flows can differ significantly from period to period due to a variety of factors, including project progression toward completion,
outstanding contract change orders and affirmative claims, and the payment terms of our contracts. Additionally, operating cash
flows are impacted by the timing related to funding construction joint ventures and the resolution of uncertainties inherent in the
complex nature of the construction work we perform, including claim and back charge settlements. Our working capital assets
result from both public and private sector projects. Customers in the private sector can be slower paying than those in the public
sector; however, private sector projects generally have higher gross profit as a percentage of revenue. While we typically invoice
our customers on a monthly basis, our construction contracts frequently provide for retention that is a specified percentage
withheld from each payment by our customers until the contract is completed and the work accepted by the customer.
Cash provided by operating activities of $456.3 million during 2024 represents a $272.6 million increase in cash provided by
operating activities when compared to 2023. The change was primarily attributable to a $132.8 million increase in net income
after adjusting for non-cash items and a $121.7 million increase in cash provided by working capital, which includes receivables,
net contract assets, inventories, other assets, accounts payable and accrued expenses and other liabilities. Additionally, distributions
from, net of contributions to, unconsolidated construction joint ventures and affiliates increased $18.1 million from 2023.
40 Granite Construction Incorporated
Investing activities
Cash used in investing activities of $228.6 million during 2024 represents a $130.7 million decrease in cash used in investing
activities when compared to 2023. The change was primarily due to a $159.7 million decrease in cash used related to business
acquisitions (see Note 3 of “Notes to the Consolidated Financial Statements”), partially offset by a $24.3 million decrease in
proceeds from sales of property and equipment.
Financing activities
Cash used in financing activities of $67.1 million during 2024 represents a $366.4 million increase in cash used in financing
activities when compared to 2023. The change was primarily due to a $290.3 million decrease in proceeds from debt issuances,
net of debt repayments and related charges. See Note 14 to “Notes to the Consolidated Financial Statements” for further
information about our long-term debt transactions and our credit facility. The year over year increase in cash used in financing
activities was also due to $46.5 million increase in repurchases of common stock as well as a decrease in contributions from non-
controlling partners, net of distributions, of $30.7 million.
Derivatives
We recognize derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value using Level 2
inputs. See Note 8 to “Notes to the Consolidated Financial Statements” for further information. The capped call transactions
related to the 3.75% Convertible Notes and 3.25% Convertible Notes were recorded to equity on our consolidated balance sheets
based on the cash proceeds. See Note 14 to “Notes to the Consolidated Financial Statements” for further information.
Surety Bonds and Real Estate Mortgages
We are generally required to provide various types of surety bonds that provide an additional measure of security under certain
public and private sector contracts. At December 31, 2024, approximately $3.2 billion of our $5.3 billion CAP was bonded.
Performance bonds do not have stated expiration dates; rather, we are generally released from the bonds when the obligations of
the underlying contract have been fulfilled. The ability to maintain bonding capacity requires that we maintain cash and working
capital balances satisfactory to our sureties.
Our investments in real estate ventures are subject to mortgage indebtedness. This indebtedness is non-recourse to Granite but
is recourse to the real estate venture. The terms of this indebtedness are typically renegotiated to reflect the evolving nature of
the real estate projects as they progress through acquisition, entitlement, development and leasing. Modification of these terms
may include changes in loan-to-value ratios requiring the real estate venture to repay portions of the debt. Our unconsolidated
investments in our foreign affiliates are subject to local bank debt primarily for equipment purchases and working capital. This debt
is non-recourse to Granite, but it is recourse to the affiliates. The debt associated with our unconsolidated non-construction entities
is included in Note 9 of “Notes to the Consolidated Financial Statements.”
Covenants and Events of Default
Our Credit Agreement requires us to comply with various affirmative, restrictive and financial covenants, including the financial
covenants described below. Our failure to comply with these covenants would constitute an event of default under the Credit
Agreement. Additionally, the 3.25% Convertible Notes and 3.75% Convertible Notes are governed by the terms and conditions
of their respective indentures. Our failure to pay principal, interest or other amounts when due or within the relevant grace period
on our 3.25% Convertible Notes, our 3.75% Convertible Notes or our Credit Agreement would constitute an event of default
under the 3.25% Convertible Notes indenture, the 3.75% Convertible Notes indenture or the Credit Agreement. A default under
our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility;
(iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed under the
Credit Agreement; and/or (v) foreclosure on any collateral securing the obligations under such facility. A default under the 3.25%
Convertible Notes indenture or the 3.75% Convertible Notes indenture could result in acceleration of the maturity of the notes.
The most significant financial covenants under the terms of our Credit Agreement require the maintenance of a minimum
Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio. As of December 31, 2024, we were in
compliance with the covenants in the Credit Agreement.
2024 Annual Report 41
Share Repurchase Program
As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million
of our common stock at management’s discretion (the “2022 authorization”). During the year ended December 31, 2024, we
repurchased 524,800 shares under the 2022 authorization and $189.5 million remained available under the 2022 authorization as
of December 31, 2024.
The specific timing and amount of any future repurchases will vary based on market conditions, securities law limitations and other
factors.
Recently Issued and Adopted Accounting Pronouncements
See Note 1 of “Notes to the Consolidated Financial Statements” under the caption Recently Issued and Adopted Accounting
Pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We maintain an investment portfolio of various holdings, types and maturities. We purchase instruments that meet high credit
quality standards, as specified in our investment policy. Our investment policy also limits the amount of credit exposure to any one
issue, issuer or type of instrument. The portfolio and accompanying cash balances are targeted to an average maturity of no more
than one year from the date the purchase is settled. On an ongoing basis we monitor credit ratings, financial condition and other
factors that could affect the carrying amount of our investment portfolio.
Marketable securities, consisting of U.S. government and agency obligations, are classified as held-to-maturity and are stated at
cost, adjusted for amortization of premiums and discounts to maturity.
Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents,
marketable securities, and accounts receivable. We maintain our cash and cash equivalents and our marketable securities with
several financial institutions.
Given the short-term nature of certain investments, the related income is subject to the general level of interest rates in the United
States at the time of maturity and reinvestment. We manage investment interest rate market risk primarily by managing portfolio
maturity.
Operating in international markets involves exposure to possible volatile movements in currency exchange rates. Our Materials
Segment has an insignificant amount of operations in Canada and we also have affiliates that operate in Latin America (see Note
10 of “Notes to the Consolidated Financial Statements” for further information on our affiliates). As of December 31, 2024, we
do not have any outstanding foreign currency option contracts. If the volume of our international operations increases and foreign
currency exchange rates change, the impact to our consolidated statements of operations could be significant and may affect
year-to-year comparability of operating results. The impact from foreign currency transactions during 2024, 2023 and 2022 was
immaterial.
We may borrow on the Revolver, at our option, at either (a) the SOFR term rate plus a credit adjustment spread plus applicable
margin ranging from 1.0% to 2.0%, or (b) a base rate plus an applicable margin ranging from 0.0% to 1.0%. The applicable
margin is based on our Consolidated Leverage Ratio (as defined in our Credit Agreement), calculated quarterly.
As of December 31, 2024, there was nothing drawn on the Revolver.
See Note 14 of “Notes to the Consolidated Financial Statements” for further discussion on the 3.25% Convertible Notes, 3.75%
Convertible Notes and Credit Agreement.
42 Granite Construction Incorporated
The table below presents principal amounts due by year and related weighted average interest rates for our cash and cash
equivalents, held-to-maturity investments and significant debt obligations, excluding debt issuance costs, as of December 31, 2024
(dollars in thousands):
2025
2026
2027
2028
2029
Thereafter
Total
Assets
Cash, cash equivalents,
held-to-maturity investments
$585,641
$
—
$
—
$
—
$
—
$
—
$585,641
Weighted average interest rate
4.34%
—%
—%
—%
—%
—%
4.34%
Liabilities
Debt
3.75% Convertible Notes
$
—
$
—
$
—
$ 373,750
$
—
$
—
$373,750
Coupon rate
3.75%
3.75%
3.75%
3.75%
—%
—%
3.75%
3.25% Convertible Notes
$
—
$
—
$—
$
—
$
—
$ 373,750
$373,750
Coupon rate
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
The estimated fair value of our cash and cash equivalents approximates the principal amounts reflected above based on the
generally short maturities of these financial instruments. The fair value of the 3.75% Convertible Notes was approximately $738.7
million and $475.6 million as of December 31, 2024 and 2023, respectively. The fair value of 3.25% Convertible Notes was
approximately $491.6 million as of December 31, 2024.
Item 8. Financial Statements And Supplementary Data
The following consolidated financial statements of Granite and the independent registered public accounting firm’s report are
incorporated by reference from Part IV, Item 15(a)(1) and (2):
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
2024 Annual Report 43
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange
Act) as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 of the Exchange Act, our principal executive officer and principal
financial officer have concluded that our disclosure controls and procedures were effective as of December 31, 2024, the end of
the period covered by this report.
Management’s Report on Internal Control Over Financial Reporting
Our management, including our principal executive and principal financial officers, is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d -15(f). Internal control over
financial reporting is defined as a process designed by, or under the supervision of, the issuer’s principal executive and principal
financial officers, or persons performing similar functions, and effected by the issuer’s board of directors, management and
other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles and includes those policies and
procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of the assets of the issuer; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
issuer’s assets that could have a material effect on the financial statements.
Our management, under the supervision and with the participation of our principal executive and principal financial officers,
has conducted an evaluation of the effectiveness of our internal control over financial reporting, using the criteria established
in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of
December 31, 2024.
PricewaterhouseCoopers LLP, our independent registered public accounting firm, has audited the effectiveness of our internal
control over financial reporting as of December 31, 2024. Their report is included in Part IV, Item 15(a) of this Form 10-K under the
heading “Report of Independent Registered Public Accounting Firm.”
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
44 Granite Construction Incorporated
Item 9B. Other Information
Trading Arrangements
During the three months ended December 31, 2024, the following directors or officers, as defined in Rule 16a-1(f) of the Exchange
Act, adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as
each term is defined in Item 408 of Regulation S-K (“Item 408”).
On November 5, 2024, Mr. Larkin’s Rule 10b5-1 trading arrangement, as such term is defined in Item 408, that he entered into
on August 6, 2024 that provided for the sale of 30,000 shares automatically terminated pursuant to its terms. Mr. Larkin is the
Company’s President and Chief Executive Officer.
On November 13, 2024, Mr. Radich, the Company’s Executive Vice President and Chief Operating Officer, adopted a Rule 10b5-1
trading arrangement, as such term is defined in Item 408. The aggregate number of shares which may be sold under the plan is
10,000. The plan will terminate upon the earlier of February 6, 2026 or the completion of all the sales under the plan.
On November 19, 2024, Mr. Dowd, the Company’s Senior Vice President, Construction, adopted a Rule 10b5-1 trading
arrangement, as such term is defined in Item 408. The aggregate number of shares which may be sold under the plan is 6,075.
The plan will terminate upon the earlier of December 31, 2025 or the completion of all the sales under the plan.
On December 12, 2024, Mr. Larkin adopted a Rule 10b5-1 trading arrangement, as such term is defined in Item 408. The
aggregate number of shares which may be sold under the plan is equal to 80% of the net shares Mr. Larkin will receive upon
vesting of his TSR award that will be paid out in March 2025 and 80% of the net shares Mr. Larkin will receive upon vesting of his
time-based restricted stock unit awards that will vest on March 14, 2025, including dividend equivalents. The plan will terminate
upon the earlier of December 31, 2025 or the completion of all the sales under the plan.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
None.
2024 Annual Report 45
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required in response to this Item 10 is incorporated herein by reference to our definitive proxy statement to be
filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the
fiscal year covered by this Annual Report on Form 10-K.
Item 11. Executive Compensation
The information required in response to this Item 11 is incorporated herein by reference to our definitive proxy statement to be
filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the
fiscal year covered by this Annual Report on Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
The information required in response to this Item 12 is incorporated herein by reference to our definitive proxy statement to be
filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the
fiscal year covered by this Annual Report on Form 10-K.
Item 13. Certain Relationships and Related Transactions, and Director
Independence
The information required in response to this Item 13 is incorporated herein by reference to our definitive proxy statement to be
filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the
fiscal year covered by this Annual Report on Form 10-K.
Item 14. Principal Accountant Fees and Services
The information required in response to this Item 14 is incorporated herein by reference to our definitive proxy statement to be
filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act not later than 120 days after the end of the
fiscal year covered by this Annual Report on Form 10-K.
46 Granite Construction Incorporated
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this report:
1. Financial Statements. The following consolidated financial statements and related documents are filed as part of this report:
Financial Statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
F-1 to F-2
Consolidated Balance Sheets
F-3
Consolidated Statements of Operations
F-4
Consolidated Statements of Comprehensive Income
F-5
Consolidated Statements of Shareholders’ Equity
F-6
Consolidated Statements of Cash Flows
F-8
Notes to the Consolidated Financial Statements
F-10 to F-49
2. Financial Statement Schedules. Schedules are omitted because they are not required or applicable, or the required
information is included in the Financial Statements or related notes.
3. Exhibits. The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of, or furnished
with, this report.
2024 Annual Report 47
(b)
INDEX TO 10-K EXHIBITS
Exhibit No.
Exhibit Description
2.1
*
Equity Purchase Agreement by and among Granite Construction Incorporated, Roberts Family
Companies, Inc., Lehman-Roberts Company, Memphis Stone & Gravel Company, Patrick Nelson, as
sellers’ representative, and the entities and individuals party thereto [Exhibit 2.1 to the Company’s
Current Report on Form 8-K filed on December 5, 2023]
3.1
*
Certificate of Incorporation of Granite Construction Incorporated, as amended [Exhibit 3.1.b to the
Company’s Form 10-Q for the quarter ended June 30, 2006]
3.2
*
Certificate of Amendment to the Certificate of Incorporation of Granite Construction Incorporated
[Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 9, 2023]
3.3
*
Amended and Restated Bylaws of Granite Construction Incorporated [Exhibit 3.1 to the Company’s
Form 8-K filed on April 7, 2023]
4.1
*
Indenture (including Form of Note) with respect to Granite Construction Incorporated’s 3.75%
Convertible Senior Notes due 2028, dated May 11, 2023, by and between Granite Construction
Incorporated and Wilmington Trust, National Association, as trustee [Exhibit 4.1 to the Company’s
Form 8-K filed on May 11, 2023]
4.2
*
Indenture (including Form of Note) with respect to Granite Construction Incorporated’s 3.25%
Convertible Senior Notes due 2030, dated June 11, 2024, by and between Granite Construction
Incorporated and Wilmington Trust, National Association, as trustee [Exhibit 4.1 to the Company’s
Form 8-K filed on June 12, 2024]
4.3
*
Description of Common Stock [Exhibit 4.2 to the Company’s Form 10-K for the year ended
December 31, 2019]
10.1
***
Key Management Deferred Compensation Plan II, as amended [Exhibit 10.1 to the Company’s Form
10-K filed on February 23, 2024]
10.2
* **
Form of Amended and Restated Director and Officer Indemnification Agreement [Exhibit 10.10 to the
Company’s Form 10-K for the year ended December 31, 2002]
10.3
* **
Granite Construction Incorporated Annual Incentive Plan adopted by the Board of Directors on
March 30, 2022 [Exhibit 10.1 to the Company’s Form 8-K filed on April 1, 2022]
10.4
* **
Form of Annual Incentive Plan Participation Agreement [Exhibit 10.2 to the Company’s Form 8-K filed
on April 1, 2022]
10.5
*
Fourth Amended and Restated Credit Agreement, dated June 2, 2022, by and among Granite
Construction Incorporated, Granite Construction Company, GILC Incorporated, Bank of America,
N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer, and the lenders
and other parties thereto [Exhibit 10.1 to the Company’s Form 8-K filed on June 6, 2022]
10.6
*
Amendment No. 1 to Fourth Amended and Restated Credit Agreement, dated May 8, 2023, by and
among the Company, Granite Construction Company, and GILC Incorporated, as borrowers, Bank of
America, N.A., as administrative agent, and the lenders party thereto [Exhibit 10.1 to the Company’s
Form 8-K filed on May 9, 2023]
10.7
*
Amendment No. 2 to Fourth Amended and Restated Credit Agreement, dated November 30, 2023,
by and among the Company, Granite Construction Company and GILC Incorporated, as borrowers,
Layne Christensen Company, as a guarantor, the lenders party thereto, and Bank of America, N.A., as
administrative agent [Exhibit 10.1 to the Company’s Form 8-K filed on December 5, 2023]
10.8
*
Fourth Amended and Restated Guaranty Agreement, dated June 2, 2022, by and among Granite
Construction Incorporated, the guarantors party thereto and Bank of America, N.A., as Administrative
Agent [Exhibit 10.2 to the Company’s Form 8-K filed on June 6, 2022]
48 Granite Construction Incorporated
Exhibit No.
Exhibit Description
10.9
*
Form of 2023 Capped Call Confirmation [Exhibit 10.1 to the Company’s Form 8-K filed on May 11, 2023]
10.10
*
Form of 2024 Capped Call Confirmation [Exhibit 10.1 to the Company’s Form 8-K filed on June 12, 2024]
10.11
***
Executive Retention and Severance Plan III and Participation Agreement, as amended [Exhibit 10.13 to
the Company’s Form 10-K filed on February 23, 2024]
10.12
* **
Long Term Incentive Plan, effective January 1, 2020 [Exhibit 10.2 to the Company’s Form 8-K filed on
March 30, 2020]
10.13
†**
Form of Long Term Incentive Plan Award Agreement
10.14
***
Granite Construction Incorporated 2021 Equity Incentive Plan [Exhibit 10.2 to the Company’s Form
8-K filed on June 4, 2021]
10.15
***
Form of Employee Service Award Restricted Stock Unit Agreement (2021 Equity Incentive Plan)
[Exhibit 10.4 to the Company’s Form 8-K filed on June 4, 2021]
10.16
***
Form of Employee TSR Award Restricted Stock Unit Agreement (2021 Equity Incentive Plan) [Exhibit
10.5 to the Company’s Form 8-K filed on June 4, 2021]
10.17
***
Form of Executive Officer Acknowledgement & Agreement Pertaining to the Granite Construction
Incorporated Clawback Policy [Exhibit 10.2 to the Company’s Form 8-K filed on October 13, 2023]
10.18
***
Granite Construction Incorporated 2024 Equity Incentive Plan [Exhibit 10.2 to the Company’s Form
8-K filed on June 6, 2024]
10.19
***
Form of Non-Employee Director Restricted Stock Unit Agreement [Exhibit 10.3 to the Company’s Form
8-K filed on June 6, 2024]
10.20
***
Form of Employee Service Award Restricted Stock Unit Agreement [Exhibit 10.4 to the Company’s
Form 8-K filed on June 6, 2024]
10.21
***
Form of Employee LTIP Award Restricted Stock Unit Agreement [Exhibit 10.5 to the Company’s Form
8-K filed on June 6, 2024]
10.22
***
Separation and Transition Agreement dated September 16, 2024 by and between the Company and
Ms. Curtis [Exhibit 10.1 to the Company’s Form 8-K filed on September 16, 2024]
19
*
Insider Trading Policy [Exhibit 19 to the Company’s Form 10-K filed on February 23, 2024]
21
†
List of Subsidiaries of Granite Construction Incorporated
23.1
†
Consent of PricewaterhouseCoopers LLP
31.1
†
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
†
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32
††
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95
†
Mine Safety Disclosure
97
* **
Clawback Policy [Exhibit 10.1 to the Company’s Form 8-K filed on October 13, 2023]
101.INS
†
Inline XBRL Instance Document
101.SCH
†
Inline XBRL Taxonomy Extension Schema
101.CAL
†
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
†
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB
†
Inline XBRL Taxonomy Extension Label Linkbase
2024 Annual Report 49
Exhibit No.
Exhibit Description
101.PRE
†
Inline XBRL Taxonomy Extension Presentation Linkbase
104
†
The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31,
2024, formatted in Inline XBRL (included within the Exhibit 101 attachments).
* Incorporated by reference
** Compensatory plan or management contract
† Filed herewith
†† Furnished herewith
50 Granite Construction Incorporated
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
GRANITE CONSTRUCTION INCORPORATED
By: /s/ Staci M. Woolsey
Staci M. Woolsey
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
Date: February 13, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant in the capacities indicated and on the dates indicated.
/s/ Michael F. McNally
Michael F. McNally, Chairman of the Board and Director
February 13, 2025
/s/ Kyle T. Larkin
Kyle T. Larkin, President, Chief Executive Officer and Director
(Principal Executive Officer)
February 13, 2025
/s/ Staci M. Woolsey
Staci M. Woolsey, Executive Vice President and Chief Financial
Officer (Principal Financial Officer and Principal Accounting
Officer)
February 13, 2025
/s/ Louis E. Caldera
Louis E. Caldera, Director
February 13, 2025
/s/ Molly C. Campbell
Molly C. Campbell, Director
February 13, 2025
/s/ David C. Darnell
David C. Darnell, Director
February 13, 2025
/s/ Carlos M. Hernandez
Carlos M. Hernandez, Director
February 13, 2025
/s/ Alan P. Krusi
Alan P. Krusi, Director
February 13, 2025
/s/ Celeste B. Mastin
Celeste B. Mastin, Director
February 13, 2025
/s/ Laura M. Mullen
Laura M. Mullen, Director
February 13, 2025
2024 Annual Report F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Granite Construction Incorporated
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Granite Construction Incorporated and its subsidiaries (the
“Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive
income (loss), of shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2024,
including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the
Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 31, 2024, based on criteria established in Internal Control—Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based
on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
F-2 Granite Construction Incorporated
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts
or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective,
or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition—Estimates of the Forecasted Revenue and Costs to Complete for Multi-Year Fixed Price
Contracts in the Construction Segment
As described in Notes 1, 3, and 4 to the consolidated financial statements, the revenue for the construction segment for the
year ended December 31, 2024 was $3.415 billion, a portion of which related to multi-year fixed price contracts. Revenue in
the Construction segment is ordinarily recognized over time as control is transferred to the customers by measuring the progress
toward complete satisfaction of the performance obligation(s) using an input (i.e., cost to cost) method. Under the cost to cost
method, costs incurred to date are generally the best depiction of transfer of control. The accuracy of the Company’s revenue and
profit recognition in a given period depends on the accuracy of management’s estimates of the forecasted revenue and cost to
complete each project. Cost estimates for all significant projects use a detailed bottom up approach in which there are a number
of factors that can contribute to revisions in estimates of contract cost and profitability. Provisions for losses are recognized at the
uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the
estimated total cost of a performance obligation exceeds its estimated total revenue. The estimates of transaction price and costs
to complete can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, and
uncertainties are resolved. When the Company experiences significant revisions in estimates, management undergoes a process
that includes reviewing the nature of the changes to ensure that no material amounts should have been recorded in a prior period
rather than as a revision in estimate for the current period. Management generally uses the cumulative catch-up method for
changes to the transaction price that are part of a single performance obligation. Under this method, revisions in estimates are
accounted for in their entirety in the period of change.
The principal considerations for our determination that performing procedures relating to estimates of the forecasted revenue and
costs to complete for multi-year fixed price contracts in the Construction segment is a critical audit matter are (i) the significant
judgment by management when determining the estimates of forecasted revenue and costs to complete, and revisions in those
estimates and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit
evidence related to management’s estimates of forecasted revenue and costs to complete for multi-year fixed price contracts in the
Construction segment, and revisions in those estimates.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the
revenue recognition process, including controls over management’s estimates of forecasted revenue and costs to complete for
multi-year fixed price contracts in the Construction segment, and revisions in those estimates. These procedures also included,
among others, for a sample of multi-year fixed price contracts, testing management’s process for determining the estimates of
forecasted revenue and costs to complete, which included (i) assessing management’s ability to reasonably estimate the forecasted
revenue and costs to complete by evaluating management’s methodology and assessing the consistency of management’s
approach over the life of the contract and (ii) evaluating the timely identification of circumstances that may warrant a modification
to estimated forecasted revenue and costs to complete.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 13, 2025
We have served as the Company’s auditor since 1982.
2024 Annual Report F-3
GRANITE CONSTRUCTION INCORPORATED
Consolidated Balance Sheets
(dollars in thousands, except share and per share data)
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents ($173,894 and $120,224 related to consolidated construction
joint ventures (“CCJVs”))
$
578,330
$
417,663
Short-term marketable securities
7,311
35,863
Receivables, net ($33,708 and $62,040 related to CCJVs)
511,742
598,705
Contract assets ($115,834 and $68,520 related to CCJVs)
328,353
262,987
Inventories
108,175
103,898
Equity in unconsolidated construction joint ventures
140,928
171,233
Other current assets ($3,982 and $5,590 related to CCJVs)
41,824
53,102
Total current assets
1,716,663
1,643,451
Property and equipment, net ($6,792 and $7,557 related to CCJVs)
716,184
662,864
Investments in affiliates
94,031
92,910
Goodwill
214,465
155,004
Intangible assets
127,886
117,322
Right of use assets
89,791
78,176
Deferred income taxes, net
—
8,179
Other noncurrent assets
66,635
55,634
Total assets
$ 3,025,655
$ 2,813,540
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt
$
1,109
$
39,932
Accounts payable ($74,745 and $62,755 related to CCJVs)
407,223
408,363
Contract liabilities ($80,096 and $50,929 related to CCJVs)
299,671
243,848
Accrued expenses and other current liabilities ($4,706 and $5,426 related to CCJVs)
323,956
337,740
Total current liabilities
1,031,959
1,029,883
Long-term debt
737,939
614,781
Long-term lease liabilities
73,638
63,548
Deferred income taxes, net
13,874
3,708
Other long-term liabilities
88,882
74,654
Commitments and contingencies (see Note 20)
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:
43,424,646 shares as of December 31, 2024 and 43,944,118 shares as of December 31, 2023
434
439
Additional paid-in capital
410,739
474,134
Accumulated other comprehensive income (loss)
(582)
881
Retained earnings
604,635
501,844
Total Granite Construction Incorporated shareholders’ equity
1,015,226
977,298
Non-controlling interests
64,137
49,668
Total equity
1,079,363
1,026,966
Total liabilities and equity
$ 3,025,655
$2,813,540
The accompanying notes are an integral part of these consolidated financial statements.
F-4 Granite Construction Incorporated
GRANITE CONSTRUCTION INCORPORATED
Consolidated Statements of Operations
(dollars in thousands, except share and per share data)
Years Ended December 31,
2024
2023
2022
Revenue
$ 4,007,574
$ 3,509,138
$ 3,301,256
Cost of revenue
3,434,877
3,112,739
2,931,762
Gross profit
572,697
396,399
369,494
Selling, general and administrative expenses
334,162
294,466
272,610
Other costs, net (see Note 1)
39,936
50,217
24,120
Gain on sales of property and equipment, net
(8,764)
(28,346)
(12,617)
Operating income
207,363
80,062
85,381
Other (income) expense:
Loss on debt extinguishment
27,552
51,052
—
Interest income
(24,349)
(17,538)
(6,528)
Interest expense
29,188
18,462
12,624
Equity in income of affiliates, net
(16,982)
(25,748)
(13,571)
Other (income) expense, net
(4,238)
(6,020)
1,039
Total other (income) expense, net
11,171
20,208
(6,436)
Income before income taxes
196,192
59,854
91,817
Provision for income taxes
55,749
30,267
12,960
Net income
140,443
29,587
78,857
Amount attributable to non-controlling interests
(14,097)
14,012
4,445
Net income attributable to Granite Construction Incorporated
$
126,346
$
43,599
$
83,302
Net income per share attributable to common shareholders (see Note 18):
Basic earnings per share
$
2.88
$
0.99
$
1.87
Diluted earnings per share
$
2.62
$
0.97
$
1.70
Weighted average shares outstanding:
Basic
43,846
43,879
44,485
Diluted
52,514
52,565
52,326
The accompanying notes are an integral part of these consolidated financial statements.
2024 Annual Report F-5
GRANITE CONSTRUCTION INCORPORATED
Consolidated Statements of Comprehensive Income
(in thousands)
Years Ended December 31,
2024
2023
2022
Net income
$ 140,443
$ 29,587
$ 78,857
Other comprehensive income (loss), net of tax
Net realized and unrealized gain (loss) on cash flow hedges, net of tax
$
93
$
(184)
$
275
Less: reclassification for net gains included in interest expense, net of tax
—
—
3,042
Net change
$
93
$
(184)
$ 3,317
Foreign currency translation adjustments, net
(1,556)
277
830
Other comprehensive income (loss), net of tax
$
(1,463)
$
93
$ 4,147
Comprehensive income, net of tax
$ 138,980
$ 29,680
$ 83,004
Non-controlling interests in comprehensive (income) loss, net of tax
(14,097)
14,012
4,445
Comprehensive income attributable to Granite Construction Incorporated, net of tax
$ 124,883
$ 43,692
$ 87,449
The accompanying notes are an integral part of these consolidated financial statements.
F-6 Granite Construction Incorporated
GRANITE CONSTRUCTION INCORPORATED
Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
Outstanding
Shares
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total Granite
Shareholders’
Equity
Non-
Controlling
Interests
Total
Equity
Balances at December 31, 2021
45,840,260
$
458
$ 559,752 $
(3,359) $
410,831
$
967,682
$
27,881
$
995,563
Cumulative effect of newly adopted
accounting standard (see Note 1)
—
—
(26,961)
—
10,543
(16,418)
—
(16,418)
Balances at January 1, 2022
45,840,260
$
458
$ 532,791 $
(3,359) $
421,374
$
951,264
$
27,881
$
979,145
Net income
—
—
—
—
83,302
83,302
(4,445)
78,857
Other comprehensive income
—
—
—
4,147
—
4,147
—
4,147
Repurchases of common stock(1)
(2,376,020)
(24)
(70,877)
—
—
(70,901)
—
(70,901)
RSUs vested
262,748
3
(3)
—
—
—
—
—
Dividends on common stock
($0.52 per share)
—
—
—
—
(23,292)
(23,292)
—
(23,292)
Transactions with non-controlling
interests, net
—
—
—
—
—
—
8,693
8,693
Stock-based compensation expense and
other
16,919
—
8,496
—
—
8,496
—
8,496
Balances at December 31, 2022
43,743,907
$
437
$ 470,407 $
788
$
481,384
$
953,016
$
32,129
$
985,145
Net income
—
$
—
$
—
$
—
$
43,599
$
43,599
$
(14,012) $
29,587
Other comprehensive income
—
$
—
$
—
$
93
$
—
$
93
$
—
$
93
Repurchases of common stock(1)
(102,413) $
(1) $
(4,124) $
—
$
—
$
(4,125) $
—
$
(4,125)
RSUs vested
288,876
$
3
$
(3) $
—
$
—
$
—
$
—
$
—
Dividends on common stock
($0.52 per share)
—
$
—
$
301
$
—
$
(23,139) $
(22,838) $
—
$
(22,838)
Capped call transactions
—
$
—
$ (39,641) $
—
$
—
$
(39,641) $
—
$
(39,641)
Redemption of warrants
—
$
—
$ (13,201) $
—
$
—
$
(13,201) $
—
$
(13,201)
Common stock issued in debt
extinguishment
1,390,500
$
14
$
49,321 $
—
$
—
$
49,335
$
—
$
49,335
Exercise of bond hedge
(1,390,516) $
(14) $
14
$
—
$
—
$
—
$
—
$
—
Transactions with non-controlling
interests, net
—
$
—
$
—
$
—
$
—
$
—
$
31,551
$
31,551
Stock-based compensation expense and
other
13,764
$
—
$
11,060 $
—
$
—
$
11,060
$
—
$
11,060
Balances at December 31, 2023
43,944,118
$
439
$ 474,134 $
881
$
501,844
$
977,298
$
49,668
$ 1,026,966
(1) During the years ended December 31, 2023 and 2022, there were 102,413 shares and 75,303 shares, respectively, withheld related to employee
taxes for RSUs vested under our equity incentive plans. During the year ended December 31, 2022, we also repurchased 2,298,353 shares under
the Board approved share repurchase program.
2024 Annual Report F-7
Outstanding
Shares
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Total Granite
Shareholders’
Equity
Non-
Controlling
Interests
Total
Equity
Balances at December 31, 2023
43,944,118
$
439
$ 474,134 $
881
$
501,844
$
977,298
$
49,668
$ 1,026,966
Net income
—
—
—
—
126,346
126,346
14,097
140,443
Other comprehensive loss
—
—
—
(1,463)
—
(1,463)
—
(1,463)
Repurchases of common stock(1)
(676,842)
(6)
(50,120)
—
(505)
(50,631)
—
(50,631)
RSUs vested
398,510
4
(4)
—
—
—
—
—
Dividends on common stock
($0.52 per share)
—
—
297
—
(23,050)
(22,753)
—
(22,753)
Capped call transactions
—
—
(34,228)
—
—
(34,228)
—
(34,228)
Redemption of warrants
—
—
466
—
—
466
—
466
Common stock issued in debt
redemption
11,665
0
(0)
—
—
—
—
—
Exercise of bond hedge
(260,883)
(3)
3
—
—
—
—
—
Transactions with non-controlling
interests
—
—
—
—
—
—
372
372
Stock-based compensation expense and
other
8,078
—
20,191
—
—
20,191
—
20,191
Balances at December 31, 2024
43,424,646
$
434
$ 410,739 $
(582) $
604,635
$
1,015,226
$
64,137
$ 1,079,363
(1) During the year ended December 31, 2024, there were 152,042 shares withheld related to employee taxes for RSUs vested under our equity
incentive plans and 524,800 shares repurchased under the Board approved share repurchase program.
The accompanying notes are an integral part of these consolidated financial statements.
F-8 Granite Construction Incorporated
GRANITE CONSTRUCTION INCORPORATED
Consolidated Statements Of Cash Flows
(in thousands)
Years Ended December 31,
2024
2023
2022
Operating activities:
Net income
$ 140,443
$
29,587
$
78,857
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization
126,331
92,270
82,569
Amortization related to long-term debt
4,501
2,390
2,366
Loss on debt extinguishment
27,552
51,052
—
Gain on sales of property and equipment, net
(8,764)
(28,346)
(12,617)
Deferred income taxes
13,655
26,556
5,447
Stock-based compensation
19,595
10,477
7,765
Equity in net loss from unconsolidated construction joint ventures
5,102
18,617
19,676
Net income from affiliates
(16,982)
(25,748)
(13,571)
Other non-cash adjustments
3,958
5,695
222
Changes in assets and liabilities:
Receivables
102,891
(128,099)
59,623
Contract assets, net
(11,468)
49,691
(113,410)
Inventories
(2,862)
(1,430)
(14,307)
Contributions to unconsolidated construction joint ventures
(7,718)
(21,323)
(53,787)
Distributions from unconsolidated construction joint ventures and affiliates
33,836
29,337
19,223
Deposit for legal settlement
—
—
129,000
Other assets, net
9,534
(17,718)
16,868
Accounts payable
420
66,828
(9,778)
Accrual for legal settlement
—
—
(129,000)
Accrued expenses and other liabilities, net
16,319
23,871
(19,499)
Net cash provided by operating activities
$ 456,343
$ 183,707
$
55,647
Investing activities:
Purchases of marketable securities
(10,977)
(9,740)
(94,104)
Maturities of marketable securities
38,000
40,000
45,000
Purchases of property and equipment
(136,405)
(140,384)
(121,612)
Proceeds from sales of property and equipment
13,852
38,109
26,064
Proceeds from the sale of business
—
—
140,576
Acquisitions of businesses, net of cash acquired (see Note 2)
(121,178)
(294,018)
—
Cash paid for purchase price adjustments on business acquisition (see Note 2)
(13,183)
—
—
Issuance of notes receivable
—
—
(7,560)
Collection of notes receivable
—
5,198
630
Other investing activities
1,335
1,545
6
Net cash used in investing activities
$ (228,556)
$ (359,290)
$ (11,000)
(Continued)
2024 Annual Report F-9
Years Ended December 31,
2024
2023
2022
Financing activities:
Proceeds from issuance of convertible notes
373,750
373,750
—
Proceeds from long-term debt
—
305,000
50,000
Debt principal repayments
(310,498)
(305,118)
(125,164)
Capped call transactions
(46,046)
(53,035)
—
Redemption of warrants
(497)
(13,201)
—
Debt issuance costs
(10,474)
(10,865)
—
Cash dividends paid
(22,813)
(22,811)
(23,271)
Repurchases of common stock (see Note 17)
(50,631)
(4,124)
(70,898)
Contributions from non-controlling partners
24,000
43,300
13,150
Distributions to non-controlling partners
(25,587)
(14,224)
(8,567)
Other financing activities, net
1,676
583
439
Net cash provided by (used in) financing activities
$ (67,120)
$ 299,255
$ (164,311)
Net increase (decrease) in cash, cash equivalents and restricted cash
160,667
123,672
(119,664)
Cash, cash equivalents and $0, $0 and $1,512 in restricted cash at beginning of period
417,663
293,991
413,655
Cash, cash equivalents and no restricted cash at end of any period
$ 578,330
$ 417,663
$ 293,991
Supplementary Information:
Right of use assets obtained in exchange for lease obligations
$
32,095
$
39,361
$
17,547
Cash paid during the period for:
Operating lease liabilities
$
23,707
$
21,458
$
22,611
Interest
$
26,072
$
15,640
$
11,511
Income taxes
$
31,938
$
15,381
$
3,768
Other non-cash operating activities:
Deferred taxes related to capped call transactions
$
11,818
$
13,394
$
—
Non-cash investing and financing activities:
RSUs issued, net of forfeitures
$
20,873
$
11,649
$
8,694
Dividends declared but not paid
$
5,652
$
5,713
$
5,687
Contributions from non-controlling partners
$
1,959
$
2,475
$
4,110
The accompanying notes are an integral part of these consolidated financial statements.
F-10 Granite Construction Incorporated
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Description of Business
Granite Construction Incorporated is one of the largest diversified, vertically integrated civil contractors and construction materials
producers in the United States, engaged in 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, site preparation, mining services and infrastructure services for commercial and industrial sites,
railways, residential development, energy development, as well as construction management professional services. We own and
lease aggregate reserves and own processing plants that are vertically integrated into our construction operations and we also
produce construction materials for sale to third parties. Our operations have primary offices located in Alaska, Arizona, California,
Canada, Colorado, Florida, Guam, Illinois, Mississippi, Nevada, Tennessee, Texas, Utah and Washington. Unless otherwise indicated,
the terms “we,” “us,” “our,” “Company” and “Granite” refer to Granite Construction Incorporated and its wholly-owned and
consolidated subsidiaries.
Basis of Presentation
During the first quarter of 2024, we reorganized our operational structure to more closely align with our two reportable segments,
Construction and Materials. Previously, leaders within our three operating groups of California, Central and Mountain managed
both Construction and Materials operations within each group. This change will allow us to better leverage our expertise
within each reportable segment with leadership having direct oversight of their respective segment operations. As a result of
the reorganization, we will no longer disclose financial information by operating group. There were no material impacts to our
consolidated financial statements and no changes to our reportable segments.
Acquisitions and Divestitures
On August 9, 2024, we acquired Dickerson & Bowen, Inc. (“D&B”). D&B is an aggregates, asphalt, and highway construction
company serving central and southern Mississippi. See Note 2 for more information.
On November 30, 2023, we acquired Lehman-Roberts Company and Memphis Stone & Gravel Company (collectively, “LRC/MSG”).
LRC/MSG operates strategically located asphalt plants and sand and gravel mines serving the greater Memphis area and northern
Mississippi. See Note 2 for more information.
On April 24, 2023, we acquired Coast Mountain Resources (2020) Ltd. which changed its name to Granite Infrastructure Canada,
Ltd. (“Granite Canada”) on May 13, 2024. Granite Canada is a construction aggregate producer based in British Columbia,
Canada operating on Malahat First Nation land. See Note 2 for more information.
On March 16, 2022, we sold our trenchless and pipe rehabilitation services business, Inliner, for a purchase price of $159.7 million,
subject to certain adjustments. As a result of the sale and post-closing adjustments, we received cash proceeds of $140.6 million
and recognized a gain of $1.8 million. This gain is included in Other costs, net in the consolidated statements of operations for the
year ended December 31, 2022.
Principles of Consolidation
The consolidated financial statements include the accounts of Granite Construction Incorporated and its wholly-owned and
consolidated subsidiaries. All material inter-company transactions and accounts have been eliminated. Additionally, we participate
in various construction joint ventures of which we are a limited member (“joint ventures”). Generally, each construction joint
venture is formed to accomplish a specific project and is jointly controlled by the joint venture partners. The joint venture
agreements typically provide that our interests in any profits and assets and our respective share in any losses and liabilities that
may result from the performance of the contracts are limited to our stated percentage interest in the project. However, due
to the joint and several nature of the performance obligations under the related owner contracts, if any of the partners fail to
perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a
performance guarantee). Under our joint venture contractual arrangements, we provide capital to these joint ventures in return for
an ownership interest. In addition, partners dedicate resources to the joint ventures necessary to complete the contracts and are
reimbursed for their cost. The operational risks of each construction joint venture are passed along to the joint venture members.
As we absorb our share of these risks, our investment in each venture is exposed to potential gains and losses. We consolidate
2024 Annual Report F-11
joint ventures if we determine that through our participation we have a variable interest and are the primary beneficiary as defined
by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, and
related standards. The factors we use to determine the primary beneficiary of a variable interest entity (“VIE”) may include the
decision authority of each partner, which partner manages the day-to-day operations of the project and the amount of our equity
investment in relation to that of our partners. Although not applicable for any of the years presented, if we determine that the
power to direct the significant activities is shared equally by two or more joint venture parties, then there is no primary beneficiary
and no party consolidates the VIE.
If we have determined we are not the primary beneficiary of a joint venture but do exercise significant influence, we account for
our share of the operations of the unconsolidated construction joint ventures on a pro rata basis in revenue and cost of revenue
in the consolidated statements of operations. We record the corresponding investment balance in equity in construction joint
ventures in the consolidated balance sheets except when a project is in a loss position, the investment balance is recorded as
a deficit in unconsolidated construction joint ventures and is included in accrued expenses and other current liabilities in the
consolidated balance sheets. Our investment in unconsolidated construction joint ventures could extend beyond one year and
is within the normal operating cycle of the associated construction projects. We account for non-construction unconsolidated
joint ventures under the equity method of accounting in accordance with ASC Topic 323, Investments—Equity Method and Joint
Ventures, and include our share of the operations in equity in income of affiliates in the consolidated statements of operations and
in investment in affiliates in the consolidated balance sheets.
We also participate in “line-item” joint venture agreements under which each partner is responsible for performing certain discrete
items of the total scope of contracted work. The revenue for each line-item joint venture partners’ discrete items of work is defined
in the contract with the project owner and each joint venture partner bears the profitability risk associated only with its own work.
There is not a single set of books and records for a line-item joint venture. Each partner accounts for its items of work individually
as it would for any self-performed contract. We account for our portion of these contracts as revenue and cost of revenue in the
consolidated statements of operations and in relevant balances in the consolidated balance sheets.
Use of Estimates in the Preparation of Financial Statements
The financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates that affect
the reported amounts of assets and liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
Our estimates and related judgments and assumptions are continually evaluated based on available information and experiences;
however, actual amounts could differ from those estimates.
Revenue Recognition
Our revenue is primarily derived from construction contracts that can span several quarters or years in our Construction segment
and from sales of construction related materials in our Materials segment. We recognize revenue in accordance with ASC Topic
606, Revenue from Contracts with Customers, and subsequently issued additional related Accounting Standards Updates (“ASU”s)
(“Topic 606”). Topic 606 provides for a five-step model for recognizing revenue from contracts with customers as follows:
1. Identify the contract
2. Identify performance obligations
3. Determine the transaction price
4. Allocate the transaction price
5. Recognize revenue
Generally, our contracts contain one performance obligation. Contracts with customers in our Materials segment are typically
defined by our customary business practices and are valued at the contractual selling price per unit. Our customary business
practices are for the delivery of a separately identifiable good at a point in time which is typically when delivery to the customer
occurs. Contracts in our Construction segment may contain multiple distinct promises or multiple contracts within a master
agreement (e.g., contracts that cross multiple locations/geographies and task orders), which we review at contract inception to
determine if they represent multiple performance obligations or multiple separate contracts. This review consists of determining
if promises or groups of promises are distinct within the context of the contract, including whether contracts are physically
contiguous, contain task orders, purchase or sales orders, termination clauses and/or elements not related to design and/or build.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-12 Granite Construction Incorporated
The transaction price is the amount of consideration to which we expect to be entitled in exchange for transferring goods and
services to the customer. The contractual consideration from customers of our Construction segment may include both fixed
amounts and variable amounts (e.g., bonuses/incentives or penalties/liquidated damages) to the extent that a significant reversal
of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently
resolved (i.e., probable and estimable). When a contract has a single performance obligation, the entire transaction price is
attributed to that performance obligation. When a contract has more than one performance obligation, the transaction price is
allocated to each performance obligation based on estimated relative standalone selling prices of the goods or services at the
inception of the contract, which typically is determined using cost plus an appropriate margin.
Subsequent to the inception of a contract in our Construction segment, the transaction price could change for various reasons,
including executed or unapproved change orders, and unresolved contract modifications and/or affirmative claims. Changes that
are accounted for as an adjustment to existing performance obligations are allocated on the same basis at contract inception.
Otherwise, changes are accounted for as separate performance obligation(s) and the separate transaction price is allocated as
discussed above.
Changes are made to the transaction price from unapproved change orders to the extent the amount can be reasonably estimated
and recovery is probable.
On certain projects we have submitted and have pending unresolved contract modifications and/or affirmative claims (“affirmative
claims”) to recover additional costs and the associated profit, if applicable, to which we believe we are entitled under the terms
of contracts with customers, subcontractors, vendors or others. The owners or their authorized representatives and/or other third
parties may be in partial or full agreement with the modifications or affirmative claims, or may have rejected or disagree entirely or
partially as to such entitlement.
Changes are made to the transaction price from affirmative claims with customers to the extent that additional revenue on a claim
settlement with a customer is probable and estimable. A reduction to costs related to affirmative claims with non-customers with
whom we have a contractual arrangement (“back charges”) is recognized when the estimated recovery is probable and estimable.
Recognizing affirmative claims and back charge recoveries requires significant judgments of certain factors including, but not
limited to, dispute resolution developments and outcomes, anticipated negotiation results, and the cost of resolving such matters.
Generally, performance obligations related to contracts in our Construction segment are satisfied over time because our
performance typically creates or enhances an asset that the customer controls as the asset is created or enhanced. We recognize
revenue as performance obligations are satisfied and control of the promised good and/or service is transferred to the customer.
Revenue in our Construction segment is ordinarily recognized over time as control is transferred to the customers by measuring the
progress toward complete satisfaction of the performance obligation(s) using an input (i.e., “cost to cost”) method. Under the cost
to cost method, costs incurred to-date are generally the best depiction of transfer of control.
All contract costs, including those associated with affirmative claims, change orders and back charges, are recorded as incurred
and revisions to estimated total costs are reflected as soon as the obligation to perform is determined. Contract costs consist of
direct costs on contracts, including labor and materials, amounts payable to subcontractors, direct overhead costs and equipment
expense (primarily depreciation, fuel, maintenance and repairs).
The accuracy of our revenue and profit recognition in a given period depends on the accuracy of our estimates of the forecasted
revenue and cost to complete each project. Cost estimates for all of our significant projects use a detailed “bottom up” approach.
There are a number of factors that can contribute to revisions in estimates of contract cost and profitability. The most significant of
these include:
• changes in costs of labor and/or materials;
• subcontractor costs, availability and/or performance issues;
• extended overhead and other costs due to owner, weather and other delays;
• changes in productivity expectations;
• changes from original design on design-build projects;
• our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs;
• a change in the availability and proximity of equipment and materials;
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-13
• complexity in original design;
• length of time to complete the project;
• the availability and skill level of workers in the geographic location of the project;
• site conditions that differ from those assumed in the original bid;
• costs associated with scope changes; and
• the customer’s ability to properly administer the contract.
The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins may
cause fluctuations in gross profit and gross profit margin from period to period. Significant changes in revenue and cost estimates,
particularly in our larger, more complex, multi-year projects have had, and can in future periods have, a significant effect on our
profitability.
All state and federal government contracts and many of our other contracts provide for termination of the contract at the
convenience of the party contracting with us, with provisions to pay us for work performed through the date of termination
including demobilization cost.
Costs to obtain our contracts (“pre-bid costs”) that are not expected to be recovered from the customer are expensed as incurred
and included in selling, general and administrative expenses in our consolidated statements of operations. Although unusual, pre-
bid costs that are explicitly chargeable to the customer even if the contract is not obtained are included in accounts receivable in
our consolidated balance sheets when we are notified that we are not the low bidder with a corresponding reduction to selling,
general and administrative expenses in our consolidated statements of operations.
Unearned Revenue
Unearned revenue represents the aggregate amount of the transaction price allocated to unsatisfied or partially unsatisfied
performance obligations at the end of a reporting period. We generally include a project in our unearned revenue at the time
a contract is awarded, the contract has been executed and to the extent we believe funding is probable. Certain contracts
contain contract options that are exercisable at the option of our customers without requiring us to go through an additional
competitive bidding process or contain task orders related to master contracts under which we perform work only when the
customer awards specific task orders to us. Contract options and task orders are included in unearned revenue when exercised
or issued, respectively. As of December 31, 2024 and 2023, unearned revenue was $3.6 billion. Approximately $2.6 billion of the
December 31, 2024 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will
be recognized thereafter. Substantially all of the contracts in our unearned revenue may be canceled or modified at the election of
the customer; however, we have not been materially adversely affected by contract cancellations or modifications in the past. Many
projects are added to unearned revenue and completed within the same fiscal quarter or year and, therefore, may not be reflected
in our beginning or ending unearned revenue.
Balance Sheet Classifications
Prepaid expenses and amounts receivable and payable under construction contracts (principally retentions) that may exist over the
duration of the contract and could extend beyond one year are included in current assets and liabilities. A one-year time period is
used as the basis for classifying all other current assets and liabilities.
Cash and Cash Equivalents
Cash equivalents are securities having maturities of three months or less from the date of purchase. Our access to joint venture
cash may be limited by the provisions of the joint venture agreements.
Contract Assets
Our contract assets include costs and estimated earnings in excess of billings as well as amounts due under contractual retention
provisions. Costs and estimated earnings in excess of billings represent amounts earned and reimbursable under contracts,
including customer affirmative claim recovery estimates, and have a conditional right for billing and payment such as achievement
of milestones or completion of the project. Generally, with the exception of customer affirmative claims, such unbilled amounts will
become billable according to the contract terms and generally will be billed and collected over the next twelve months. Settlement
with the customer of outstanding affirmative claims is dependent on the claims resolution process and could extend beyond one
year. Based on our historical experience, we generally consider the collection risk related to billable amounts to be low. However,
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-14 Granite Construction Incorporated
when events or conditions indicate that it is probable that the amounts become unbillable, the transaction price and associated
contract asset is reduced. Certain contracts in our Construction segment include retention provisions to provide assurance to our
customers that we will perform in accordance with the contract terms and are not considered a financing benefit under ASC Topic
606. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and
acceptance of the project work or products by the customer.
Marketable Securities
We determine the classification of our marketable securities at the time of purchase and re-evaluate these determinations at each
balance sheet date. Our marketable securities are fixed income marketable securities and are classified as held-to-maturity as we
have the positive intent and ability to hold the securities to maturity. Held-to-maturity investments are stated at amortized cost
and are periodically assessed for other-than-temporary impairment. Amortized cost of debt securities is adjusted for amortization
of premiums and accretion of discounts to maturity and is included in interest income. The cost of securities redeemed or called is
based on the specific identification method.
Derivative Instruments
We recognize derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value using Level 2
inputs. To receive hedge accounting treatment, derivative instruments that are designated as cash flow hedges must be highly
effective in offsetting changes to expected future cash flows on hedged transactions. We formally document our hedge
relationships at inception, including identification of the hedging instruments and the hedged items, our risk management
objectives and strategies for undertaking the hedge transaction, and the initial quantitative assessment of the hedging instrument’s
effectiveness in offsetting changes in the fair value of the hedged items. The effective portion of the gain or loss on cash flow
hedges is reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified to the
consolidated statements of operations when the periodic hedged cash flows are settled. Adjustments to fair value on derivative
instruments that are not part of a designated hedging relationship are reported through the consolidated statements of operations.
We do not enter into derivative instruments for speculative or trading purposes.
The 2023 capped call transactions associated with the 3.75% convertible senior notes due 2028 (the “3.75% Convertible Notes”)
and the 2024 capped call transactions associated with the 3.25% convertible senior notes due 2030 (the “3.25% Convertible
Notes”) are indexed to our stock and meet the equity classification requirements per ASC Topic 815, Derivatives and Hedging.
These capped call transactions were recorded to equity in our consolidated balance sheets and are not accounted for as a
bifurcated derivative. They will not be remeasured as long as they continue to meet the conditions for equity classification.
Fair Value of Financial Assets and Liabilities
We measure and disclose certain financial assets and liabilities at fair value. ASC Topic 820, Fair Value Measurements and
Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. ASC Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 describes three levels of inputs that
may be used to measure fair value:
Level 1–Quoted prices in active markets for identical assets or liabilities.
Level 2–Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3–Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
We utilize the active market approach to measure fair value for our financial assets and liabilities. We report separately each class
of assets and liabilities measured at fair value on a recurring basis and include assets and liabilities that are disclosed but not
recorded at fair value in the fair value hierarchy.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-15
Allowance for Credit Losses
Financial assets, which potentially subject us to credit losses, consist primarily of short and long-term marketable securities,
receivables, contract assets and long-term notes receivables included in other noncurrent assets in our consolidated balance sheets.
We measure expected credit losses of financial assets based on historical loss and other information available to management using
a loss rate method applied to asset groups with categorically similar risk characteristics. These expected credit losses are recorded
to an allowance for credit losses valuation account that is deducted from receivables and contract assets to present the net amount
expected to be collected on the financial asset in the consolidated balance sheets.
Concentrations of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents,
marketable securities, accounts receivable and contract assets. We maintain our cash and cash equivalents and our marketable
securities with several financial institutions. We invest with high credit quality financial institutions and, by policy, limit the amount
of credit exposure to any one financial institution. During the years ended December 31, 2024, 2023 and 2022, our largest
volume customer, including both prime and subcontractor arrangements, was the California Department of Transportation
(“Caltrans”). Revenue recognized from contracts with Caltrans during the years ended December 31, 2024, 2023 and 2022
represented $567.6 million (14.2% of total revenue), $458.2 million (13.1% of total revenue), and $348.0 million (10.5% of total
revenue), respectively, which was primarily in the Construction segment. Other than Caltrans, none of our customers, including
both prime and subcontractor arrangements, had revenue that individually exceeded 10% of total revenue during the year ended
December 31, 2024, December 31, 2023, or December 31, 2022.
The majority of our receivables are from customers concentrated in the United States. None of our customers had a receivable
balance in excess of 10% of our total net receivables as of December 31, 2024 and 2023. Certain construction contracts include
retention provisions that were included in contract assets as of December 31, 2024 and 2023 in our consolidated balance sheets.
The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance
of the project work or products by the owners. The majority of the December 31, 2024 contract retention balance disclosed in
Note 6 is expected to be collected within one year. We perform ongoing credit evaluations of our customers and generally do not
require collateral, although the law provides us the ability to file mechanics’ liens on real property improved for private customers
in the event of non-payment by such customers.
Foreign Currency Transactions and Translation
In the periods presented we had operations in Mexico and Canada which involved exposure to possible volatile movements in
foreign currency exchange rates. We account for foreign currency exchange transactions and translation in accordance with ASC
Topic 830, Foreign Currency Matters. In the third quarter of 2023, we began the wind down of our international mineral services
operations which operated in Mexico and Canada. Our Materials Segment continues to have international operations in Canada.
In Mexico, most of our customer contracts and a significant portion of our costs were denominated in U.S. dollars; therefore,
the functional currency was U.S. dollars. In Canada, the functional currency is the local currency. Foreign currency transactions
are remeasured into the functional currency with gains and losses included in other income, net in the consolidated statements
of operations. The impact from foreign currency transactions was immaterial for 2024, 2023 and 2022. Assets and liabilities in
functional currency are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses
are translated into U.S. dollars at average foreign currency exchange rates prevailing during the reporting periods. The translation
adjustments from functional currency to U.S. dollars are reported in accumulated other comprehensive income on the consolidated
balance sheets.
Inventories
Inventories relating to our operations consist primarily of quarry products, contract-specific materials and water well drilling
materials, supplies, as well as mineral extraction and drilling supplies located primarily in the U.S. Cost of inventories are valued at
the lower of average cost or net realizable value. We reserve quarry products based on estimated quantities of materials on hand in
excess of approximately one year of demand.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-16 Granite Construction Incorporated
Investments in Affiliates
Each investment accounted for under the equity method of accounting is reviewed for impairment in accordance with ASC Topic
323, Investments—Equity Method and Joint Ventures. We account for our share of the operating results of the equity method
investments in equity in income from affiliates, net in the consolidated statements of operations and as a single line item in the
consolidated balance sheets as investments in affiliates. Our investments in affiliates include foreign entities, real estate ventures
and an asphalt terminal entity. These investments are evaluated for impairment using the other-than-temporary impairment model,
which requires an impairment charge to be recognized if our investment’s carrying amount exceeds its fair value, and the decline
in fair value is deemed to be other than temporary. Recoverability is measured by comparison of carrying amounts to future
undiscounted cash flows the investments are expected to generate. Events or changes in circumstances which would cause us to
review undiscounted future cash flows include, but are not limited to:
• significant adverse changes in legal factors or the business climate and
• current period cash flow or operating losses combined with a history of losses, or a forecast of continuing losses associated
with the use of the asset.
In addition, events or changes in circumstances specifically related to our real estate ventures, include:
• significant decreases in the market price of the asset;
• accumulation of costs significantly in excess of the amount originally expected for the acquisition, development or
construction of the asset; and
• significant changes to the development or business plans of a project.
Future undiscounted cash flows and fair value assessments for our foreign entities and for the asphalt terminal entity are estimated
based on market conditions and the political climate. Future undiscounted cash flows and fair value assessments for our real estate
ventures are estimated based on entitlement status, market conditions, cost of construction, debt load, development schedules,
status of joint venture partners and other factors applicable to the specific project. Fair value is estimated based on the expected
future cash flows attributable to the asset or group of assets and on other assumptions that market participants would use in
determining fair value, such as market discount rates, transaction prices for other comparable assets, and other market data. Our
estimates of cash flows may differ from actual cash flows due to, among other things, fluctuations in interest rates, decisions made
by jurisdictional agencies, economic conditions, or changes to our business operations.
Property and Equipment
Property and equipment are stated at cost. Depreciation for construction and other equipment is calculated using accelerated
methods over lives ranging from three to ten years, and the straight-line method over lives from two to twenty years for the
remaining depreciable assets. We believe that accelerated methods best approximate the service provided by the construction
and other equipment. Depletion of quarry property is based on the usage of depletable reserves. We frequently sell property and
equipment that has reached the end of its useful life or no longer meets our needs, including depleted quarry property. At the
time that an asset or an asset group meets the held for sale criteria as defined by ASC Topic 360, Property, Plant, and Equipment,
depreciation is discontinued and we write it down to fair value less cost to sell, if the fair value is below the carrying value. Fair
value is estimated by a variety of factors including, but not limited to, market comparative data, historical sales prices, broker
quotes and third-party valuations. If material, such property is separately disclosed in the consolidated balance sheets, otherwise
it is held in property and equipment until sold. The cost and accumulated depreciation or depletion of property sold or retired is
removed from the consolidated balance sheets and the resulting gains or losses, if any, are reflected in operating income in the
consolidated statements of operations for the period. In the case that we abandon an asset, an amount equal to the carrying
amount of the asset, less salvage value, if any, will be recognized as expense in the period that the asset was abandoned. Repairs
and maintenance are expensed as incurred.
Costs related to the development of internal-use software during the preliminary project and post-implementation stages are
expensed as incurred. Costs incurred during the application development stage are capitalized. These costs consist primarily of
software, hardware and consulting fees, as well as salaries and related costs. Amounts capitalized are reported as a component of
office furniture and equipment within property and equipment in the consolidated balance sheets. Capitalized software costs are
depreciated using the straight-line method over the estimated useful life of the related software, which ranges from three to seven
years. During the years ended December 31, 2024, 2023 and 2022, we capitalized $6.9 million, $10.1 million, $11.4 million and,
respectively, of internal-use software development and related hardware costs.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-17
Long-lived Assets
We review property and equipment and identifiable intangible assets for impairment at an asset group level whenever events or
changes in circumstances indicate the carrying amount of an asset group may not be recoverable. Recoverability of these asset
groups is measured by comparison of their carrying amounts to the future undiscounted cash flows the asset groups are expected
to generate. If the asset groups are considered to be impaired, an impairment charge will be recognized equal to the amount by
which the carrying amount of the asset group exceeds fair value. We group construction and plant equipment assets at the lowest
level for which identifiable cash flows are largely independent of the cash flows of other groups of assets. When an individual asset
or group of assets is determined to no longer contribute to its vertically integrated construction and plant equipment asset group,
it is assessed for impairment independently.
As of December 31, 2024, identifiable intangible assets, which primarily include customer relationships, trademarks/trade names
and permits, are being amortized over useful lives of one to thirty years. All identifiable intangible assets are amortized on a
straight-line basis.
Goodwill
During the first quarter of 2024, we reorganized our operational structure to more closely align with our two reportable segments,
Construction and Materials. We performed quantitative goodwill impairment tests on the affected reporting units immediately
before and after the reorganization. These reporting units previously aligned with our operating group structure, but have now
been combined into two legacy reporting units, Construction and Materials. For each of the affected reporting units, we calculated
the estimated fair value consistent with the annual impairment assessment using the discounted cash flows and market multiple
methods. These tests indicated that the estimated fair values of the affected reporting units exceeded their carrying amounts. The
LRC/MSG reporting units were not impacted by the reorganization. The newly acquired D&B business has been combined with
LRC/MSG to form the Granite Southeast reporting units.
As of December 31, 2024, we had four reporting units in which goodwill was recorded as follows:
• Legacy Construction
• Legacy Materials
• Granite Southeast Construction
• Granite Southeast Materials
We perform our goodwill impairment tests annually as of November 1 and more frequently when events and circumstances occur
that indicate a possible impairment of goodwill. Examples of such events or circumstances include, but are not limited to, the
following:
• a significant adverse change in the business climate;
• a significant adverse change in legal factors or an adverse action or assessment by a regulator;
• a more likely than not expectation that a segment or a significant portion thereof will be sold; or
• the testing for recoverability of a significant asset group within the segment.
In accordance with ASC Topic 350, Intangibles—Goodwill and Other, we can elect to perform a qualitative assessment to test
a reporting unit’s goodwill for impairment or perform a quantitative impairment test. Based on a qualitative assessment, if we
determine that the fair value of a reporting unit is more likely than not to be less than its carrying amount, the quantitative
impairment test will be performed.
In performing the quantitative goodwill impairment tests, we calculate the estimated fair value of the reporting unit in which
the goodwill is recorded using the discounted cash flows and market multiple methods. The estimated fair value is compared to
the carrying amount of the reporting unit, including goodwill. If the fair value of the reporting unit exceeds its carrying amount,
goodwill of the reporting unit is considered not impaired. If the fair value of the reporting unit is less than its carrying amount,
goodwill is impaired and the excess of the reporting unit’s carrying amount over the fair value is recognized as a non-cash
impairment charge.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-18 Granite Construction Incorporated
Judgments inherent in these methods include the determination of appropriate discount rates, the amount and timing of
expected future cash flows, revenue and margin growth rates, and appropriate benchmark companies. The cash flows used in
our discounted cash flow model are based on five-year financial forecasts developed internally by management adjusted for
market participant-based assumptions. Our discount rate assumptions are based on an assessment of the equity cost of capital
and appropriate capital structure for our reporting units. To assess for reasonableness, we compare the estimated fair values of the
reporting units to our current market capitalization.
For our 2024 annual goodwill impairment test, we elected to perform a qualitative assessment on our Legacy Construction and
Legacy Materials reporting units and it was determined that no impairment indicators existed and it was more likely than not that
the fair values were greater than the carrying amounts; therefore, no quantitative goodwill impairment test was performed for
these reporting units. Factors we considered in our qualitative assessment were macroeconomic conditions, industry and market
considerations, cost factors, overall financial performance, changes in management or key personnel, changes in strategy, changes
in customers and changes in the composition or carrying amount of the reporting unit’s net assets. We performed quantitative
goodwill impairment tests on both of our Granite Southeast reporting units. We calculated the estimated fair value using the
discounted cash flows and market multiple methods. These tests indicated that the estimated fair values of these reporting units
exceeded their carrying amounts and we concluded that goodwill was not impaired.
For our 2023 annual goodwill impairment test, we elected to perform a qualitative assessment on each of our reporting units
and we determined that it was more likely than not that the fair values were greater than the carrying amounts; therefore, no
quantitative goodwill impairment test was performed for these reporting units. Factors we considered in our qualitative assessment
were macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in
management or key personnel, changes in strategy, changes in customers and changes in the composition or carrying amount of
the reporting unit’s net assets.
In the third quarter of 2023, in connection with our decision to wind down our international mineral services operations, we
performed an interim goodwill impairment test on the former Mountain Group Construction reporting unit, which resulted in a
$4.5 million non-cash impairment charge. This charge is included in Other costs, net in the consolidated statements of operations.
Right of use Assets and Lease Liabilities
A lease contract conveys the right to use an underlying asset for a period of time in exchange for consideration. At inception, we
determine whether a contract contains a lease by determining if there is an identified asset and if the contract conveys the right to
control the use of the identified asset in exchange for consideration over a period of time.
At lease commencement, we measure and record a lease liability equal to the present value of the remaining lease payments, generally
discounted using the borrowing rate on our secured debt as the implicit rate is not readily determinable on many of our leases. We use
a quarterly maturity discount rate if it is not materially different than the discount rates applied to each of the leases in the portfolio.
On the lease commencement date, the amount of the right of use assets consists of the following:
• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date, minus any lease incentives received; and
• any initial direct costs incurred.
On a quarterly basis, we determine if subcontractor, vendor or service provider agreements contain embedded leases by assessing if
an asset is explicitly or implicitly specified in the agreement and the counterparty has the right to substitute the asset. Most of our
lease contracts do not have the option to extend or renew. We assess the option for individual leases, and we generally consider
the base term to be the term of lease contracts. Lease contracts may contain non-lease components for which we elected to
include both the lease and non-lease components as a single component and account for it as a lease.
Contract Liabilities
Our contract liabilities consist of billings in excess of costs and estimated earnings, net of the related contract retention and
provisions for losses. Billings in excess of costs and estimated earnings are billings to customers on contracts in advance of work
performed, including advance payments negotiated as a contract condition. Generally, unearned project-related costs will be
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-19
earned over the next twelve months. Provisions for losses are recognized in the consolidated statements of operations at the
uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the
estimated total cost of a performance obligation exceeds its estimated total revenue.
Asset Retirement Obligations
We account for the costs related to legal obligations to reclaim aggregate mining sites and other facilities by recording our
estimated asset retirement obligation at fair value using Level 3 inputs, capitalizing the estimated liability as part of the related
asset’s carrying amount and allocating it to expense over the asset’s useful life.
Warranties
Many of our construction contracts contain warranty provisions covering defects in equipment, materials, design or workmanship
that generally run for less than two years after our customer accepts the contract. Because of the nature of our projects, including
contract owner inspections of the work both during construction and prior to acceptance, we have not experienced material
warranty costs for these short-term warranties and, therefore, do not believe an accrual for these costs is necessary. Certain
construction contracts carry longer warranty periods, ranging from two to ten years, for which we have accrued an estimate of
warranty cost. Our warranty liability is estimated based on our experience with the type of work and any known risks relative to
the project. Total warranty liability was not material as of December 31, 2024 and 2023.
Accrued Insurance Costs
We carry insurance policies to cover various risks, including general liability, automobile liability, workers compensation and
employee medical expenses under which we are liable to reimburse the insurance company for certain losses. The amounts for
which we are liable range from the first $0.5 million to $1.5 million per occurrence. We accrue for probable losses, both reported
and unreported, that are reasonably estimable using actuarial methods based on historic trends, modified, if necessary, by recent
events. The establishment of accruals for estimated losses associated with our insurance policies are based on actuarial studies
that include known facts and interpretations of circumstances, including our experience with similar cases and historical trends
involving claim payment patterns, pending levels of unpaid claims, claim severity, frequency patterns and changing regulatory and
legal environments. Changes in our loss assumptions caused by changes in actual experience would affect our assessment of the
ultimate liability and could have an effect on our operating results and financial position.
Surety Bonds
We generally are required to provide various types of surety bonds that provide an additional measure of security for our
performance under certain public and private sector contracts. Performance bonds do not have stated expiration dates; rather, we
are generally released from the bonds after the owner accepts the work performed under contract. The ability to maintain bonding
capacity to support our current and future level of contracting requires that we maintain cash and working capital balances
satisfactory to our sureties.
Performance Guarantees
The agreements with our joint venture partners (“partner(s)”) for both construction joint ventures and line item joint ventures
define each partner’s management role and financial responsibility in the project. The amount of operational exposure is generally
limited to our stated ownership interest. However, due to the joint and several nature of the performance obligations under
the related owner contracts, if any of the partners fail to perform, we and the remaining partners, if any, would be responsible
for performance of the outstanding work (i.e., we provide a performance guarantee). We estimate our liability for performance
guarantees for our unconsolidated and line item joint ventures using estimated partner bond rates, which are Level 2 inputs,
and include them in accrued expenses and other current liabilities with a corresponding increase in equity in construction joint
ventures in the consolidated balance sheets. We reassess our liability when and if changes in circumstances occur. The liability and
corresponding asset are removed from the consolidated balance sheets upon completion and customer acceptance of the project.
Circumstances that could lead to a loss under these agreements beyond our stated ownership interest include the failure of a
partner to contribute additional funds to the venture in the event the project incurs a loss or additional costs that we could incur
should a partner fail to provide the services and resources that it had committed to provide in the agreement. We are not able to
estimate amounts that may be required beyond the remaining cost of the work to be performed. These costs could be offset by
billings to the customer or by proceeds from our partners’ corporate and/or other guarantees.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-20 Granite Construction Incorporated
Contingencies
We are currently involved in various claims and legal proceedings. Loss contingency provisions are recorded if the potential loss
from any asserted or un-asserted claim or legal proceeding is considered probable and the amount can be reasonably estimated.
If a potential loss is considered probable but only a range of loss can be determined, the low-end of the range is recorded. These
accruals represent management’s best estimate of probable loss. Disclosure is also provided when it is reasonably possible and
estimable that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the amount recorded.
Significant judgment is required in both the determination of probability of loss and the determination as to whether an exposure
is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available
at the time. As additional information becomes available, we reassess the potential liability related to claims and litigation and may
revise our estimates. We expense associated legal costs as they are incurred. See Note 20 for additional information.
Stock-Based Compensation
We measure and recognize compensation expense, net of forfeitures, over the requisite vesting periods for all stock-based
payment awards made and we recognize forfeitures as they occur. Stock-based compensation is included in selling, general and
administrative expenses and cost of revenue on our consolidated statements of operations.
Other Costs
Other costs, net in the consolidated statements of operations are expensed as they are incurred and 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 non-cash impairment charges. In addition to the aforementioned costs,
2023 also included a litigation charge and 2022 included a gain on sale of a business.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences
and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and liabilities in the consolidated financial statements and
their respective tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is
more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment. Disproportionate income tax effects which are stranded
in accumulated other comprehensive income will be released using the item-by-item approach.
We report a liability in accrued expenses and other current liabilities and in other long-term liabilities in the consolidated balance
sheets for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. We
recognize interest and penalties, if any, related to unrecognized tax benefits in interest expense and other income, net in the
consolidated statements of operations.
Computation of Earnings per Share
Basic net income per share is computed using the weighted-average number of common shares outstanding during the period.
Diluted net income per share is computed using the weighted-average number of common shares and dilutive potential common
shares outstanding during the period. Dilutive potential common shares include common share equivalents under the equity
incentive plans and common share equivalents issuable under our 3.25% Convertible Notes, 3.75% Convertible Notes and 2.75%
Convertible Notes using the if-converted method. See Note 14 for further discussion of the convertible notes.
Convertible Notes
ASU 2020-06 simplified the accounting for convertible instruments resulting in accounting for convertible debt instruments
as a single liability measured at its amortized cost. We adopted ASU 2020-06 effective January 1, 2022, using the modified
retrospective transition approach under which financial results reported in prior periods were not adjusted. Upon adoption of this
new accounting guidance, the 2.75% Convertible Notes were accounted for entirely as a liability, and the issuance costs were
accounted for wholly as debt issuance costs.
Recently Issued Accounting Pronouncements
We closely monitor all ASUs issued by the FASB and other authoritative guidance.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-21
In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition
and Initial Measurement, which requires that a joint venture apply a new basis of accounting upon formation. As a result, a
newly formed joint venture, upon formation, would initially measure its assets and liabilities at fair value. This ASU is effective
prospectively for all joint venture formations with a formation date on or after January 1, 2025. We do not expect this ASU to have
a material impact on our consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is
intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation
of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other
amendments intended to improve the effectiveness of income tax disclosures. These new disclosure requirements are effective
prospectively commencing with our annual report for the year ending December 31, 2025. We do not expect the adoption of this
ASU to have a material impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public companies to
disclose additional information about certain expenses in the notes to financial statements, enhancing transparency and providing
more detailed insights for investors and other stakeholders. This ASU is effective commencing with our annual report for the
year ending December 31, 2027, and quarterly periods thereafter. We are currently evaluating the impact of this standard on our
consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-04, Induced Conversions of Convertible Debt Instruments. The new guidance
clarifies the assessment of whether a transaction should be accounted for as an induced conversion or extinguishment of
convertible debt when changes are made to conversion features as part of an offer to settle the instrument. The guidance is
effective for fiscal years beginning after December 15, 2025, with early adoption permitted, and it can be adopted either on a
prospective or retrospective basis. We are currently evaluating the impact of this standard on our consolidated financial statements
and related disclosures.
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures, which
enhances the disclosures regarding an entity’s reportable segments and addresses requests from investors and other allocators of
capital for additional, more detailed information about a reportable segment’s expenses. We adopted this ASU retrospectively for
the year ended December 31, 2024. See Note 21 for more information.
2. Acquisitions
Dickerson & Bowen, Inc.
On August 9, 2024, we completed the acquisition of Dickerson & Bowen, Inc. (“D&B”) for $125.5 million in cash, subject to
customary closing adjustments. D&B is an aggregates, asphalt and highway construction company serving central and southern
Mississippi which expands our footprint in that region. D&B’s customers are in both the public and private sectors. We have
accounted for this transaction in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations
(“ASC 805”).
D&B’s results have been included in the Construction and Materials segments since the acquisition date. Revenue and gross profit
attributable to D&B for the year ended December 31, 2024 were $37.8 million and $9.5 million, respectively.
Pro Forma Financial Information (Unaudited)
The unaudited pro forma financial information in the table below summarizes the combined results of operations of Granite and
D&B as though the companies had been combined as of January 1, 2023. The pro forma financial information is presented for
informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had
taken place on January 1, 2023, nor does it intend to be a projection of future results.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-22 Granite Construction Incorporated
Years Ended December 31,
2024
2023
(unaudited, in thousands, except per share amounts)
Revenue
$
4,062,791
$ 3,614,443
Net income attributable to Granite Construction Incorporated
$
134,470
$
41,119
Basic net income per share attributable to common shareholders
$
3.07
$
0.94
Diluted net income per share attributable to common shareholders
$
2.56
$
0.78
These amounts have been calculated after applying Granite’s accounting policies and adjusting the results of D&B to reflect the
additional depreciation and amortization that would have been recorded assuming the fair value adjustments to property and
equipment and intangible assets had been applied starting on January 1, 2023. Acquisition and integration expenses related to
D&B that were incurred during the year ended December 31, 2024 are reflected in the year ended December 31, 2023 due to the
assumed timing of the transaction. The statutory tax rate of 26% was used for both 2024 and 2023 for the pro forma adjustments.
During the year ended December 31, 2024, we incurred $2.5 million of acquisition and integration expenses included in Other
costs, net associated with the D&B acquisition which were primarily related to professional services.
Preliminary Purchase Price Allocation
In accordance with ASC 805, the preliminary purchase price was allocated to assets acquired and liabilities assumed based on their
estimated fair values as of August 9, 2024. These estimates are subject to revision, which may result in adjustments to the values
disclosed below. There are certain provisional estimates that are subject to finalization. As we continue to integrate the acquired
business, we may obtain additional information which may result in revisions to preliminary valuation assumptions, estimates and
the resulting fair values presented herein. We expect to finalize these amounts within 12 months from the acquisition date.
For the purpose of this allocation, the contractual purchase price has been adjusted to exclude cash acquired and include closing
adjustments, resulting in a preliminary purchase price of $121.2 million. The tangible and identifiable intangible assets acquired,
net of liabilities assumed, were $25.4 million and $27.9 million, respectively. This generated acquired goodwill of $67.9 million,
none of which is tax deductible. The most significant assets acquired were $38.1 million of property and equipment and a
$18.2 million customer relationship intangible asset.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible
assets. Of the acquired goodwill, $47.2 million is in the Materials segment and $20.7 million is in the Construction segment. The
factors that contributed to the recognition of goodwill from this acquisition include strengthening and expanding our vertically
integrated southeast home market as well as expected synergies.
Identifiable Intangible Assets
The following table lists identifiable intangible assets from the D&B acquisition that are included in intangible assets in the
consolidated balance sheets as of December 31, 2024 (in thousands):
Useful Lives
(Years)
Gross Value
Accumulated
Amortization
Net Value
Customer relationships
20
$
18,200
$
(379)
$
17,821
Backlog
1
600
(231)
369
Trademarks/trade name
10
7,500
(312)
7,188
Permits
10
1,600
(58)
1,542
Total intangible assets
$
27,900
$
(980)
$
26,920
The fair value of customer relationships was estimated as of the acquisition date utilizing the multi-period excess earnings method.
This method discounts to present value the projected cash flows attributable to the customer relationships. The significant
estimates and assumptions used in determining the fair value included discount rates, revenue growth rates, projected earnings
before interest, taxes, depreciation and amortization (“EBITDA”) margins and customer revenue attrition rates.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-23
The amortization expense related to the acquired identifiable intangible assets for the year ended December 31, 2024 was
included in cost of revenue and selling, general and administrative expenses in the consolidated statements of operations. All of
the acquired identifiable intangible assets will be amortized on a straight-line basis. Amortization expense related to the acquired
identifiable intangible asset balances at December 31, 2024 is expected to be recorded in the future as follows: $2.2 million in
2025; $1.8 million in each year from 2026 to 2029; and $17.5 million thereafter.
LRC/MSG
On November 30, 2023, we completed the acquisition of LRC/MSG for $278.0 million, subject to customary closing adjustments,
plus an estimated amount related to tax make-whole agreements with the seller. We purchased all of the outstanding equity
interests in LRC/MSG and the purchase price was funded by a new $150.0 million senior secured term loan, a draw of $100 million
under our existing revolver and the remainder from cash on hand. Both the senior secured term loan and the draw under the
revolver were fully repaid during the first half of 2024.
The acquired businesses are longstanding asphalt paving and asphalt and aggregates producers and suppliers. LRC/MSG operates
strategically located asphalt plants and sand and gravel mines serving the greater Memphis area and northern Mississippi.
LRC/MSG’s results have been included in the Construction and Materials segments since the acquisition date. LRC/MSG’s customers
are in both the public and private sectors. Revenue attributable to LRC/MSG for the years ended December 31, 2024 and 2023
was $147.3 million and $7.7 million, respectively. Gross profit (loss) attributable to LRC/MSG for the years ended December 31,
2024 and 2023 was a profit of $8.7 million and loss of $1.5 million, respectively.
Pro Forma Financial Information (Unaudited)
The unaudited pro forma financial information in the table below summarizes the combined results of operations of Granite and
LRC/MSG as though the companies had been combined as of January 1, 2022. The Granite Canada acquisition discussed below is
not included in the pro forma financial information as the effects of the business would not have a material impact. The pro forma
financial information is presented for informational purposes only and is not indicative of the results of operations that would have
been achieved if the acquisition had taken place on January 1, 2022, nor does it intend to be a projection of future results.
Years Ended December 31,
2023
2022
(unaudited, in thousands, except per share amounts)
Revenue
$ 3,720,449
$ 3,485,186
Net income
$
55,025
$
72,219
Basic net income per share attributable to common shareholders
$
1.25
$
1.62
Diluted net income per share attributable to common shareholders
$
1.19
$
1.49
These amounts have been calculated after applying Granite’s accounting policies and adjusting the results of LRC/MSG to reflect
the additional depreciation and amortization that would have been recorded assuming the fair value adjustments to property and
equipment and intangible assets had been applied starting on January 1, 2022. Additionally, these amounts reflect adjustment
for additional interest that would have been incurred as a result of incurring debt for the acquisition over the periods in the pro
forma financial information. Acquisition and integration expenses related to LRC/MSG that were incurred during the year ended
December 31, 2023 are reflected in the year ended December 31, 2022 due to the assumed timing of the transaction. The
statutory tax rate of 26% was used for both 2023 and 2022 for the pro forma adjustments.
During the year ended December 31, 2023, we incurred $5.0 million of acquisition and integration expenses included in Other
costs, net associated with the LRC/MSG and Granite Canada acquisitions which were primarily related to professional services.
Purchase Price Allocation
In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable
intangible assets based on their estimated fair values as of the acquisition date, as presented in the table below.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-24 Granite Construction Incorporated
We recorded a $22.0 million provisional estimate related to tax make-whole agreements with the seller at the time of the
acquisition. In the second quarter of 2024, the former owners of LRC/MSG determined their personal tax burden related to the
sale of the businesses which allowed us to finalize our tax make-whole obligation. Our obligation was $7.1 million, which was paid
in June 2024.
During 2024, we made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date.
These adjustments included a $4.6 million net increase from net working capital adjustments and a $2.2 million net decrease in the
value of the net tangible and identifiable intangible assets acquired, offset by a $14.9 million decrease in the estimated obligation
associated with the tax make-whole agreements noted above. The impact of these adjustments was a decrease in goodwill of
$8.1 million. We paid $13.2 million during the 2024 associated with the acquisition of LRC/MSG, which includes $6.1 million for
working capital adjustments and $7.1 million for the tax make-whole obligation.
We finalized the purchase price allocation during the third quarter of 2024.
The following table presents the final purchase price allocation:
(in thousands)
Assets
Cash and cash equivalents
$
12,798
Receivables
18,373
Contract assets
3,388
Inventories
13,738
Other current assets
1,032
Property and equipment
86,329
Right of use assets
15,539
Other noncurrent assets
3,718
Total tangible assets
$
154,915
Identifiable intangible assets
$
107,460
Liabilities
Accounts payable
$
6,806
Contract liabilities
3,213
Accrued expenses and other current liabilities
10,166
Long-term lease liabilities
15,558
Other long-term liabilities
5,960
Total liabilities assumed
$
41,703
Total tangible and identifiable net assets acquired
$
220,672
Goodwill
72,744
Purchase price
$
293,416
Goodwill
The primary factor that contributed to the recognition of goodwill from the acquisition of LRC/MSG was expansion of our vertically
integrated home market strategy into the southeastern United States. For the LRC/MSG acquisition, we recorded $72.7 million
of goodwill which will be deductible for tax purposes. $46.7 million and $26.0 million were allocated to our Construction and
Materials segments, respectively.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-25
Identifiable Intangible assets
The following table lists identifiable intangible assets from the LRC/MSG acquisition that are included in intangible assets in the
consolidated balance sheets as of December 31, 2024 (in thousands):
Useful Lives
(Years)
Gross Value
Accumulated
Amortization
Net Value
Customer relationships
20
$
78,860
$
(4,272)
$
74,588
Backlog
1
6,500
(6,500)
—
Trademarks/trade name
10
15,100
(1,636)
13,464
Permits
10
7,000
(758)
6,242
Total intangible assets
$ 107,460
$
(13,166)
$
94,294
The fair value of customer relationships was estimated as of the acquisition date utilizing the multi-period excess earnings method.
This method discounts to present value the projected cash flows attributable to the customer relationships. The significant
estimates and assumptions used in determining the fair value included discount rates, revenue growth rates, projected EBITDA
margins and customer revenue attrition rates.
The amortization expense related to the acquired identifiable intangible assets for the year ended December 31, 2024 was
included in cost of revenue and selling, general and administrative expenses in the consolidated statements of operations. All of
the acquired identifiable intangible assets will be amortized on a straight-line basis. Amortization expense related to the acquired
identifiable intangible asset balances is expected to be recorded in the future as follows: $6.2 million in each year from 2025 to
2029; and $63.5 million thereafter.
Coast Mountain Resources
On April 24, 2023, we acquired Coast Mountain Resources (2020) Ltd. which changed its name to Granite Infrastructure Canada,
Ltd. (“Granite Canada”) on May 13, 2024. Granite Canada is a construction aggregate producer based in British Columbia,
Canada operating on Malahat First Nation land. Granite Canada results are reported in the Materials segment. This acquisition did
not have a material impact on our financial statements. The primary factor that contributed to the recognition of goodwill from the
acquisition of Granite Canada was strengthening our existing vertically integrated home markets in the western United States. For
the Granite Canada acquisition, we recorded $5.1 million in goodwill that was allocated to our Materials segment and will not be
tax deductible for income tax purposes.
3. Revisions in Estimates
Our profit recognition related to construction contracts is based on estimates of transaction price and costs to complete each
project. These estimates can vary significantly in the normal course of business as projects progress, circumstances develop and
evolve, and uncertainties are resolved. Changes in estimates of transaction price and costs to complete may result in the reversal
of previously recognized revenue if the current estimate adversely differs from the previous estimate. In addition, the estimated
or actual recovery related to estimated costs associated with unresolved affirmative claims and back charges may be recorded in
future periods or may be at values below the associated cost, which can cause fluctuations in the gross profit impact from revisions
in estimates.
When we experience significant revisions in our estimates, we undergo a process that includes reviewing the nature of the changes
to ensure that there are no material amounts that should have been recorded in a prior period rather than as revisions in estimates
for the current period. For revisions in estimates, generally we use the cumulative catch-up method for changes to the transaction
price that are part of a single performance obligation. Under this method, revisions in estimates are accounted for in their entirety
in the period of change. There can be no assurance that we will not experience further changes in circumstances or otherwise be
required to revise our estimates in the future.
In our review of these changes for the years ended December 31, 2024, 2023 and 2022, we did not identify any material amounts
that should have been recorded in a prior period.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-26 Granite Construction Incorporated
The projects with increases and decreases from revisions in estimates, which individually had an impact of $5.0 million or more on
gross profit, are summarized as follows (dollars in millions, except per share data):
Increases
Years Ended December 31,
2024
2023
2022
Number of projects with upward estimate changes
3
1
2
Range of increase in gross profit from each project, net
$6.1 – 10.3
$
8.1
$ 5.4 – 6.8
Increase to project profitability, net
$
25.6
$
8.1
$
12.1
Increase to net income
$
18.3
$
6.9
$
9.7
Amounts attributable to non-controlling interests
$
—
$
3.2
$
2.7
Increase to net income attributable to Granite Construction Incorporated
$
18.3
$
3.6
$
7.0
Increase to net income per diluted share attributable to common shareholders
$
0.35
$
0.07
$
0.13
The increases during the year ended December 31, 2024 were due to changes in the estimated amount of probable recovery
on outstanding claims, production at a higher rate than anticipated and changes in the estimated transaction price related to
contract modifications resulting from revisions to project work plans, permitting and scheduling. The increase during the year
ended December 31, 2023 was due to decreases in estimated costs from mitigated risks. The increases during the year ended
December 31, 2022 were due to production at a higher rate than anticipated and a decrease in estimated cost from mitigated risks.
Decreases
Years Ended December 31,
2024
2023
2022
Number of projects with downward estimate changes
4
6
8
Range of reduction in gross profit from each project, net
$5.6 – 24.2
$5.1 – 54.9
$5.6 – 32.2
Decrease to project profitability, net
$
50.2
$
96.9
$
92.2
Decrease to net income
$
37.0
$
79.6
$
74.1
Amounts attributable to non-controlling interests
$
3.9
$
29.8
$
21.7
Decrease to net income attributable to Granite Construction Incorporated
$
33.1
$
49.8
$
52.4
Decrease to net income per diluted share attributable to common shareholders
$
0.63
$
0.95
$
1.00
The decreases during the year ended December 31, 2024 were due to additional costs related to changes in project duration,
lower productivity than originally anticipated and increased labor and materials costs. The decreases during the year ended
December 31, 2023 were due to a change in the estimated amount of probable recovery on an outstanding claim, additional
costs related to changes in project durations, lower productivity than originally anticipated, increased labor and materials costs and
disputed work being performed where there are ongoing legal claims. The decreases during the year ended December 31, 2022
were due to additional costs related to extended project duration, increased labor and materials costs, and disputed work being
performed where there are ongoing legal claims.
4. Disaggregation of Revenue
As discussed in Note 1, during the first quarter of 2024, we reorganized our operational structure to more closely align with our
two reportable segments, Construction and Materials. Previously, leaders within our three former operating groups of California,
Central and Mountain managed both Construction and Materials operations within each group. As a result of the reorganization,
we will no longer disclose financial information by operating group and we have updated our presentation of disaggregated
revenue. The prior years’ disaggregation of revenue amounts have been recast to conform with the current period presentation.
Revenue is disaggregated by reportable segment (see Note 21) and customer type, which we believe best depicts how the nature,
amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-27
Customer Type
Customers in our Construction segment are predominantly in the public sector which includes certain federal agencies, state
departments of transportation, local transit authorities, county and city public works departments and school districts. Our
private sector customers include, but are not limited to, developers, utilities and private owners of industrial, commercial and
residential sites. Customers of our Materials segment include internal usage by our own construction projects, as well as third-party
customers. Based on the nature of the Materials business, it is not meaningful to disaggregate revenue by customer type.
The following table presents our revenue disaggregated by reportable segment and by customer type for the Construction
segment:
Years ended December 31,
(in thousands)
2024
2023
2022
Construction segment revenue:
Public
$ 2,531,379
$ 2,064,078
$ 1,891,338
Private
883,846
928,176
912,597
Total Construction segment revenue
3,415,225
2,992,254
2,803,935
Materials segment revenue
592,349
516,884
497,321
Total revenue
$ 4,007,574
$ 3,509,138
$ 3,301,256
5. Unearned Revenue
The following table presents our unearned revenue as of the respective periods:
(in thousands)
December 31,
2024
December 31,
2023
Public
$
2,801,273
$
2,892,255
Private
783,105
704,421
Total
$
3,584,378
$
3,596,676
All unearned revenue is in the Construction segment. Approximately $2.6 billion of the December 31, 2024 unearned revenue is
expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.
6. Contract Assets and Liabilities
As a result of changes in contract transaction price related to performance obligations that were satisfied or partially satisfied prior
to the end of the periods we recognized revenue of $220.7 million, $147.4 million and $182.8 million during the years ended
December 31, 2024, 2023 and 2022, respectively. The changes in contract transaction price were from items such as executed or
estimated change orders and unresolved contract modifications and claims.
As of December 31, 2024 and 2023, the aggregate claim recovery estimates included in contract asset and liability balances were
approximately $46.6 million and $77.9 million, respectively.
The components of the contract asset balances as of the respective dates were as follows:
(in thousands)
December 31,
2024
December 31,
2023
Costs in excess of billings and estimated earnings
$
139,436
$
100,106
Contract retention
188,917
162,881
Total contract assets
$
328,353
$
262,987
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-28 Granite Construction Incorporated
The increase in contract assets is primarily due to increasing costs in excess of billings and estimated earnings balances from
unresolved disputed work related to certain ongoing projects and increased retention balances from ongoing projects. As of
December 31, 2024, no contract retention receivable individually exceeded 10% of total contract assets. As of December 31,
2023, contract retention receivable from Brightline Trains Florida LLC represented 11.1% of total contract assets and no other
contract retention receivable individually exceeded 10% of total contract assets. The majority of the contract retention balance is
expected to be collected within one year.
As work is performed, revenue is recognized and the corresponding contract liabilities are reduced. During the years ended
December 31, 2024 and 2023 and 2022, we recognized revenue of $276.6 million, $191.8 million and $223.7 million,
respectively, that was included in the contract liability balances at December 31, 2023, 2022 and 2021, respectively.
The components of the contract liability balances as of the respective dates were as follows:
(in thousands)
December 31,
2024
December 31,
2023
Billings in excess of costs and estimated earnings
$
288,495
$
227,913
Provisions for losses
11,176
15,935
Total contract liabilities
$
299,671
$
243,848
The increase in contract liabilities is primarily due to increases in billings in excess of costs on new projects partially offset by
reductions in provisions for losses as certain loss projects progress towards completion.
7. Receivables, net
Receivables include billed and unbilled amounts for services provided to clients for which we have an unconditional right to
payment as of the end of the applicable period and generally do not bear interest. The following table presents major categories of
receivables:
(in thousands)
December 31,
2024
December 31,
2023
Contracts completed and in progress:
Billed
$
250,656
$
343,190
Unbilled
127,776
119,170
Total contracts completed and in progress
378,432
462,360
Materials sales
55,770
61,808
Other
78,309
76,084
Total gross receivables
512,511
600,252
Less: allowance for credit losses
769
1,547
Total net receivables
$
511,742
$
598,705
Included in other receivables at December 31, 2024 and 2023 were items such as estimated recovery from back charge claims,
notes receivable, fuel tax refunds and income tax refunds. Other receivables at both December 31, 2024 and 2023 also included
$25.0 million of working capital contributions in the form of a loan to a partner in one of our unconsolidated joint ventures, plus
accrued interest. No receivable individually exceeded 10% of total net receivables at any of these dates.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-29
8. Fair Value Measurement
The following tables summarize significant assets and liabilities measured at fair value in the consolidated balance sheets on a
recurring basis for each of the fair value levels (in thousands):
Fair Value Measurement at Reporting Date Using
December 31, 2024
Level 1
Level 2
Level 3
Total
Cash equivalents:
Money market funds
$
73,031
$
—
$
—
$
73,031
Total assets
$
73,031
$
—
$
—
$
73,031
Accrued and other current liabilities:
Heating oil swaps
$
—
$
531
$
—
$
531
Diesel collars
—
177
—
177
Total liabilities
$
—
$
708
$
—
$
708
December 31, 2023
Cash equivalents:
Money market funds
$
101,275
$
—
$
—
$
101,275
Total assets
$
101,275
$
—
$
—
$
101,275
Accrued and other current liabilities:
Interest rate swap
$
—
$
126
$
—
$
126
Heating oil swaps
—
153
—
153
Diesel collars
—
802
—
802
Total liabilities
$
—
$
1,081
$
—
$
1,081
Interest Rate Swap
In connection with entering into Amendment No. 2 of the Fourth Amended and Restated Credit Agreement in November 2023,
we entered into an interest rate swap designated as a cash flow hedge with an initial notional amount of $75.0 million and an
effective date of December 2023 and a maturity date of June 2027. In conjunction with the payoff of our term loan in June 2024,
the interest rate swap was terminated resulting in an immaterial gain.
Commodity Derivatives
In 2023 and 2024, we entered into collar contracts and commodity swaps to reduce our price exposure on diesel consumption
and heating oil consumption, respectively. The collars and swaps were not designated as hedges and will be treated as a mark-to-
market derivative instruments through their maturity dates. The financial statement impact of the collar contracts and commodity
swaps was immaterial for the years ended December 31, 2024 and 2023.
In April 2024 and December 2022, we entered into commodity swaps designated as cash flow hedges to reduce our price
exposure on crude oil with maturity dates of October 31, 2024 and October 31, 2023, respectively. The financial statement impact
of these swaps was immaterial during the years ended December 31, 2024, 2023 and 2022.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-30 Granite Construction Incorporated
Other Assets and Liabilities
The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in the
consolidated balance sheets were as follows (in thousands):
December 31, 2024
December 31, 2023
(in thousands)
Fair Value
Hierarchy
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Assets:
Held-to-maturity marketable securities(1)
Level 1
$ 7,311
$ 7,312
$ 35,863
$ 35,357
Liabilities (including current maturities):
3.75% Convertible Notes(2)
Level 2
$373,750
$738,724
$373,750
$475,601
3.25% Convertible Notes(2)
Level 2
$373,750
$491,582
$ —
$ —
2.75% Convertible Notes(2)
Level 2
$ —
$ —
$ 31,338
$ 51,045
Credit Agreement—Term Loan(2)
Level 3
$ —
$ —
$150,000
$153,585
Credit Agreement—Revolver(2)
Level 3
$ —
$ —
$100,000
$102,317
(1) All marketable securities were classified as held-to-maturity and consisted of U.S. Government and agency obligations as of December 31, 2024
and 2023.
(2) The fair values of our 3.25% convertible senior notes due 2030 (the "3.25% Convertible Notes"), our 3.75% convertible senior notes due
2028 (the "3.75% Convertible Notes") and our 2.75% convertible senior notes due 2024 (the "2.75% Convertible Notes") are based on the
median price of the notes in an active market. The fair value of the Credit Agreement is based on borrowing rates available to us for long-term
loans with similar terms, average maturities, and credit risk. See Note 14 for more information about our convertible notes and the Credit
Agreement.
The carrying value of marketable securities approximates their fair value as determined by market quotes. Rates currently available
to us for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The carrying value
of receivables and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one
year, is estimated to approximate fair value.
At least annually, we measure certain nonfinancial assets and liabilities at fair value on a nonrecurring basis. As of December 31,
2024 and 2023, the nonfinancial assets and liabilities included our asset retirement and reclamation obligations, as well as assets
and corresponding liabilities associated with performance guarantees. Asset retirement and reclamation obligations were measured
using Level 3 inputs and performance guarantees were measured using Level 2 inputs.
Asset retirement and reclamation obligations were initially measured using internal discounted cash flow calculations based upon our
estimates of future retirement costs. To determine the fair value of the obligation, we estimate the cost for a third-party to perform
the legally required reclamation including a reasonable profit margin. This cost is then increased for future estimated inflation based
on the estimated years to complete and discounted to fair value using present value techniques with a credit-adjusted, risk-free rate.
In estimating the settlement date, we evaluate the current facts and conditions to determine the most likely settlement date. We
review reclamation obligations at least annually for a revision to the cost or a change in the estimated settlement date. Additionally,
reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a
change in the estimated settlement date. See Note 11 for details of the asset retirement obligation balances.
We estimate our liability for performance guarantees for our unconsolidated construction joint ventures and line item joint ventures
using estimated partner bond rates, which are Level 2 inputs, and include them in accrued expenses and other current liabilities
(see Note 13) with a corresponding increase in equity in construction joint ventures in the consolidated balance sheets. See Note 1
for further discussion of performance guarantees.
During the years ended December 31, 2024 and 2023, we had no material nonfinancial asset and liability fair value adjustments.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-31
9. Construction Joint Ventures
We participate in various construction joint ventures. As discussed in Note 1, we have determined that certain of these joint
ventures are consolidated because they are VIEs and we are the primary beneficiary. We continually evaluate whether there are
changes in the status of the VIEs or changes to the primary beneficiary designation of the VIE. Based on our assessments during
the years ended December 31, 2024, 2023 and 2022, we determined no change was required for existing joint ventures.
Due to the joint and several nature of the performance obligations under the related owner contracts, if any of our partners fail to
perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide
a performance guarantee). At December 31, 2024, there was $100.6 million of remaining contract value on unconsolidated
and line item construction joint venture contracts of which $35.6 million represented our share and the remaining $65.0 million
represented our partners’ share. We are not able to estimate amounts that may be required beyond the current remaining
forecasted cost of the work to be performed. These forecasted costs could be offset by billings to the customer or by proceeds
from our partners’ corporate and/or other guarantees. See Note 13 for disclosure of the performance guarantee amounts recorded
in the consolidated balance sheets and Note 1 for additional discussion regarding performance guarantees.
Consolidated Construction Joint Ventures
At December 31, 2024, we were engaged in nine active CCJV projects. Our proportionate share of the equity in these joint
ventures was between 50.0% and 70.0%. During the years ended December 31, 2024, 2023 and 2022, total revenue from CCJVs
was $349.5 million, $307.2 million and $437.1 million, respectively. During the years ended December 31, 2024, 2023 and 2022,
CCJVs provided $69.8 million, and used $38.1 million and $5.7 million of operating cash flows, respectively. As of December 31,
2024, our share of revenue remaining to be recognized on these CCJVs was $337.7 million and ranged from $1.9 million to
$132.9 million by project.
Unconsolidated Construction Joint Ventures
As discussed in Note 1, where we have determined we are not the primary beneficiary of a joint venture but do exercise significant
influence, we account for our share of the operations of unconsolidated construction joint ventures on a pro rata basis in revenue
and cost of revenue in the consolidated statements of operations and in equity in construction joint ventures or accrued expenses
and other current liabilities in the consolidated balance sheets.
As of December 31, 2024, we were engaged in five active unconsolidated construction joint venture projects. Our proportionate
share of the equity in these unconsolidated construction joint ventures ranged from 30.0% to 50.0%. As of December 31, 2024,
our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $26.1 million and
ranged from $0.4 million to $21.3 million by project.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-32 Granite Construction Incorporated
The following is summary financial information related to unconsolidated construction joint ventures:
(in thousands)
December 31,
2024
December 31,
2023
Assets:
Cash, cash equivalents and marketable securities
$
94,856
$
117,962
Other current assets(1)
599,625
666,536
Noncurrent assets
35,886
52,580
Less: partners’ interest
498,872
574,723
Granite’s interest(1),(2)
$
231,495
$
262,355
Liabilities:
Current liabilities
$
151,655
$
191,175
Less: partners’ interest and adjustments(3)
57,437
85,131
Granite’s interest
$
94,218
$
106,044
Equity in construction joint ventures(4)
$
137,277
$
156,311
(1) Included in this balance and in accrued expenses and other current liabilities on the consolidated balance sheets as of December 31, 2024 and
2023 was $55.5 million and $57.8 million, respectively, related to performance guarantees (see Note 13).
(2) Included in this balance as of December 31, 2024 and 2023 was $66.9 million and $66.6 million, respectively, related to Granite’s share of
estimated cost recovery of customer affirmative claims. In addition, this balance included $1.7 million related to Granite’s share of estimated
recovery of back charge claims as of December 31, 2024 and 2023.
(3) Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to
reflect our accounting policies and estimates primarily related to contract forecast differences.
(4) Included in this balance and in accrued expenses and other current liabilities on our consolidated balance sheets was $3.7 million and $14.9
million as of December 31, 2024 and 2023, respectively, related to deficits in unconsolidated construction joint ventures which includes
provisions for losses.
Years Ended December 31,
2024
2023
2022
(in thousands)
Revenue
Total
$ 66,871
$ 66,738
$
330,835
Less: partners’ interest and adjustments(1)
39,081
42,230
210,678
Granite’s interest
$ 27,790
$ 24,508
$
120,157
Cost of revenue
Total
$ 95,448
$ 95,448
$
378,237
Less: partners’ interest and adjustments(1)
60,603
51,359
238,699
Granite’s interest
$ 34,845
$ 44,089
$
139,538
Granite’s interest in gross loss
$
(7,055)
$ (19,581)
$
(19,381)
Net Loss
Total
$ (21,837)
$ (24,843)
$
(47,904)
Less: partners’ interest and adjustments(1)
(16,735)
(6,226)
(28,228)
Granite’s interest in net loss(2)
$
(5,102)
$ (18,617)
$
(19,676)
(1) Partners’ interest and adjustments includes amounts to reconcile total revenue and total cost of revenue as reported by our partners to
Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast and/or actual differences.
(2) These joint ventures' net loss amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the
extent the applicable states have joint venture level taxes.
Line Item Joint Ventures
As of December 31, 2024, we were engaged in one active line item joint venture construction project with an immaterial total
contract value. During the years ended December 31, 2024, 2023 and 2022, our portion of revenue from line item joint ventures
was $7.4 million, $5.3 million and $35.4 million, respectively.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-33
10. Investments in Affiliates
Our investments in affiliates balance is related to our investments in unconsolidated non-construction entities that we account for
using the equity method of accounting, including investments in foreign affiliates, real estate ventures and an asphalt terminal entity.
The foreign affiliates in which we are invested are engaged in mineral drilling services and the manufacture and supply of
drilling equipment, parts and supplies in Latin America. The real estate ventures were formed to accomplish specific real estate
development projects in which our wholly owned subsidiary, Granite Land Company, participates with third-party partners. The
asphalt terminal entity is a 50% interest in a limited liability company which owns and operates an asphalt terminal and operates
an emulsion plant in Nevada.
We have determined that the real estate ventures are not consolidated because although they are VIEs, we are not the primary
beneficiary. We have determined that the foreign affiliates and the asphalt terminal entity are not consolidated because they are
not VIEs and we do not hold the majority voting interest. As such, these entities are accounted for using the equity method.
Our investments in affiliates balance consists of equity method investments in the following types of entities:
(in thousands)
December 31,
2024
December 31,
2023
Foreign
$
72,075 $
68,407
Real estate
4,552
7,136
Asphalt terminal
17,404
17,367
Total investments in affiliates
$
94,031 $
92,910
The following table provides summarized balance sheet information for our affiliates accounted for under the equity method on a
combined basis:
(in thousands)
December 31,
2024
December 31,
2023
Current assets
$
205,235
$
204,897
Noncurrent assets
130,451
159,694
Total assets
$
335,686
$
364,591
Current liabilities
$
68,679
$
81,899
Long-term liabilities(1)
45,007
54,591
Total liabilities
$
113,686
$
136,490
Net assets
$
222,000
$
228,101
Granite’s share of net assets
$
94,031
$
92,910
(1) This balance is primarily related to local bank debt for equipment purchases, working capital in our foreign affiliates and debt associated with
our real estate investments.
Of the $335.7 million in total assets as of December 31, 2024, we had investments in two real estate ventures with total assets of
$29.9 million and $5.3 million, our foreign affiliates had total assets of $258.3 million, and the asphalt terminal entity had total
assets of $42.2 million. As of December 31, 2024 and 2023, all of the equity method investments in real estate ventures were in
residential real estate in Texas and California. As of December 31, 2024, our percent ownership in the real estate ventures ranged
from 10% to 25%. We have direct and indirect investments in our foreign affiliates, and our percent ownership in foreign affiliates
ranged from 25% to 50% as of December 31, 2024.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-34 Granite Construction Incorporated
The following table provides summarized statements of operations information for our affiliates accounted for under the equity
method on a combined basis (in thousands):
Years Ended December 31,
2024
2023
2022
(in thousands)
Revenue
$
395,492
$
476,361
$
377,256
Gross profit
$
94,618
$
142,139
$
95,816
Income before taxes
$
58,080
$
99,108
$
60,513
Net income
$
49,521
$
86,124
$
47,331
Granite’s interest in affiliates’ net income
$
16,982
$
25,748
$
13,571
11. Property and Equipment, net
The following table presents the major classes of assets and total accumulated depreciation and depletion:
(in thousands)
December 31,
2024
December 31,
2023
Equipment and vehicles
$ 1,211,208
$ 1,140,195
Quarry property
256,043
251,922
Land and land improvements
128,124
105,872
Buildings and leasehold improvements
115,147
102,676
Office furniture and equipment
75,078
72,098
Property and equipment
1,785,600
1,672,763
Less: accumulated depreciation and depletion
1,069,416
1,009,899
Property and equipment, net
$
716,184
$
662,864
Depreciation and depletion expense primarily included in cost of revenue in our consolidated statements of operations was $110.6
million, $89.2 million and $79.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.
As discussed in Note 1, we have asset retirement obligations, which are liabilities associated with our legally required obligations to
reclaim owned and leased quarry property and related facilities. As of December 31, 2024 and 2023, $6.6 million and $5.8 million,
respectively, of our asset retirement obligations were included in accrued expenses and other current liabilities and $37.8 million
and $32.7 million, respectively, were included in other long-term liabilities in the consolidated balance sheets. Of the amount
included in other long-term liabilities as of December 31, 2024, $5.9 million is expected to be settled in 2026, $8.2 million in
2027, $1.2 million in 2028, $3.4 million in 2029 and the remaining $19.1 million is expected to be settled thereafter.
The following table summarizes the asset retirement obligation balances for the periods presented (in thousands):
Years Ended December 31,
2024
2023
Beginning balance
$
38,529
$
29,190
Acquisition additions
2,500
6,422
Revisions to estimates
3,996
1,726
Liabilities settled
(2,351)
(371)
Accretion
1,728
1,562
Ending balance
$
44,402
$
38,529
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-35
12. Intangible Assets
Indefinite-lived Intangible Assets
Indefinite-lived intangible assets primarily consist of goodwill. The following table presents the goodwill balance by reportable
segment:
(in thousands)
December 31,
2024
December 31,
2023
Construction
$
134,977
$
130,569
Materials
79,488
24,435
Total goodwill
$
214,465
$
155,004
During 2024, total goodwill increased by approximately $67.9 million related to the acquisition of D&B. This increase was partially
offset by a decrease of $8.1 million in goodwill as a result of our finalization of the LRC/MSG acquisition purchase price allocation
in the third quarter of 2024. See Note 2 for additional information.
Identifiable Intangible Assets
As of December 31, 2024 and 2023, net identifiable intangible assets were $127.9 million and $117.2 million, respectively, net
of accumulated amortization of $38.9 million and $24.8 million, respectively. The intangible assets balances in the consolidated
balance sheets as of December 31, 2024 and 2023 also included an immaterial amount of indefinite-lived intangible assets.
The increase in the 2024 identifiable intangible assets balance was primarily related to the D&B acquisition (see Note 2) which
contributed $27.9 million of identifiable intangible assets. Of this, $18.2 million were customer relationship intangibles.
The net amortization expense related to identifiable intangible assets for each of the years ended December 31, 2024, 2023
and 2022 was $14.1 million, $2.3 million and $2.0 million, respectively, and was primarily included in cost of revenue in the
consolidated statements of operations. Amortization expense based on the identifiable intangible assets balance at December 31,
2024 is expected to be $9.4 million in 2025, $9.0 million in 2026, $8.6 million in 2027, $8.4 million in 2028, $8.4 million in 2029
and $84.1 million thereafter.
13. Accrued Expenses and Other Current Liabilities
(in thousands)
December 31,
2024
December 31,
2023
Accrued insurance
$
80,797
$
81,936
Deficits in unconsolidated construction joint ventures
3,653
14,921
Payroll and related employee benefits
119,510
105,418
Performance guarantees
55,488
57,849
Short-term lease liabilities
20,165
16,826
Other
44,343
60,790
Total
$
323,956
$
337,740
Other includes dividends payable, warranty reserves, asset retirement obligations, remediation reserves, taxes payable and other
miscellaneous accruals, none of which are greater than 5% of total current liabilities. At December 31, 2023, the “other” balance
above included the estimated LRC/MSG tax make-whole liability (see Note 2) which was finalized and paid in June 2024.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-36 Granite Construction Incorporated
14. Long-Term Debt
(in thousands)
December 31,
2024
December 31,
2023
3.25% Convertible Notes due 2030
$
373,750
$
—
3.75% Convertible Notes due 2028
373,750
373,750
2.75% Convertible Notes
—
31,338
Credit Agreement—Term Loan
—
150,000
Credit Agreement—Revolver
—
100,000
Debt issuance costs and other
(8,452)
(375)
Total debt
$
739,048
$
654,713
Less: current maturities
1,109
39,932
Total long-term debt
$
737,939
$
614,781
Credit Agreement
In June 2022, we entered into the Credit Agreement which matures on June 2, 2027. The Credit Agreement consisted of a $350.0
million senior secured, five-year revolving credit facility (the “Revolver”), including an accordion feature allowing us to increase
borrowings up to the greater of (a) $200.0 million and (b) 100% of twelve-month trailing consolidated EBITDA, subject to lender
approval. The Credit Agreement includes a $150.0 million sublimit for letters of credit ($75.0 million for financial letters of credit)
and a $20.0 million sublimit for swingline loans.
In May 2023, we entered into Amendment No. 1 to the Credit Agreement (“Amendment No. 1”). Amendment No. 1 amended
the Credit Agreement to, among other things, permit us to exchange our 2.75% Convertible Notes for cash and shares of our
common stock and to clarify that (i) the issuance of the 3.75% Convertible Notes was permitted under the terms of the Credit
Agreement and (ii) that a Swap Contract (as defined in the Credit Agreement) does not include any Permitted Call Spread
Transaction (as defined in the Credit Agreement).
In November 2023, we entered into Amendment No. 2 to the Credit Agreement (“Amendment No. 2”) which amended the
Credit Agreement to, among other things, provide for a $150.0 million senior secured term loan (the “Term Loan”), which was
fully drawn on closing to fund the LRC/MSG acquisition. The Term Loan was scheduled to mature on June 2, 2027 and amortize
5% per year, payable in quarterly installments beginning in the first quarter of 2024. The Term Loan was fully repaid with the net
proceeds from our 3.25% Convertible Notes in the second quarter of 2024.
We may borrow on the Revolver, at our option, at either (a) the Secured Overnight Financing Rate (“SOFR”) term rate plus a credit
adjustment spread plus applicable margin ranging from 1.0% to 2.0%, or (b) a base rate plus an applicable margin ranging from
zero to 1.0%. The applicable margin is based on our Consolidated Leverage Ratio (as defined in our Credit Agreement), calculated
quarterly. As of December 31, 2024, the total unused availability under the Credit Agreement was $333.7 million, resulting
from $16.3 million in issued and outstanding letters of credit and no amount drawn under the Revolver. The letters of credit had
expiration dates between March 2025 and November 2025.
3.25% Convertible Notes
On June 11, 2024, we issued $373.8 million aggregate principal amount of our 3.25% Convertible Notes. The 3.25% Convertible
Notes bear interest at a rate of 3.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year,
beginning on December 15, 2024. The 3.25% Convertible Notes mature on June 15, 2030, unless earlier converted, redeemed or
repurchased. Prior to the close of business on the business day immediately preceding December 15, 2029, the 3.25% Convertible
Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods.
Thereafter, the 3.25% Convertible Notes will be convertible at the option of the holders at any time until the close of business on
the second scheduled trading day immediately preceding their maturity date.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-37
The 3.25% Convertible Notes have an initial conversion rate of 12.8398 shares of our common stock per $1,000 principal amount
of the 3.25% Convertible Notes, which is equivalent to an initial conversion price of approximately $77.88 per share of our
common stock, subject to adjustment if certain events occur. Upon conversion, we will settle the principal amount of the 3.25%
Convertible Notes in cash, and any conversion premium in excess of the principal amount in cash, or a combination of cash and
shares of common stock, at our election.
In addition, upon the occurrence of a “fundamental change” as defined in the indenture governing the 3.25% Convertible
Notes, holders may require us to repurchase for cash all or any portion of their 3.25% Convertible Notes at a fundamental change
repurchase price equal to 100% of the principal amount of the 3.25% Convertible Notes to be repurchased plus any accrued and
unpaid interest to, but excluding, the fundamental change repurchase date. If certain corporate events that constitute a “make-
whole fundamental change” as set forth in the indenture governing the 3.25% Convertible Notes occur prior to the maturity date
of the 3.25% Convertible Notes or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion
rate for a holder who elects to convert its 3.25% Convertible Notes in connection with such event or notice of redemption.
We will not be able to redeem the 3.25% Convertible Notes prior to June 21, 2027. On or after June 21, 2027, we will be able to
redeem for cash all or any portion of the 3.25% Convertible Notes, at our option, if the last reported sale price of Granite’s common
stock is equal to or greater than 130% of the conversion price for a specified period of time at a redemption price equal to 100%
of the principal amount of the 3.25% Convertible Notes to be redeemed, plus accrued but unpaid interest to, but excluding, the
redemption date. The indenture governing the 3.25% Convertible Notes contains customary events of default. In the case of
an event of default arising from certain events of bankruptcy, insolvency or reorganization, with respect to us or our significant
subsidiaries, all outstanding 3.25% Convertible Notes will become due and payable immediately without further action or notice. If
any other event of default occurs and is continuing, then the trustee or the holders of at least 25% in aggregate principal amount of
the 3.25% Convertible Notes then outstanding may declare the 3.25% Convertible Notes due and payable immediately.
The net proceeds from the sale of the 3.25% Convertible Notes were approximately $365.0 million, after deducting the initial
purchasers’ discount. We used approximately $46.0 million of the net proceeds from the 3.25% Convertible Notes offering
to pay the cost of entering into capped call transactions in connection with the 3.25% Convertible Notes. In addition, we
paid approximately $57.6 million of the net proceeds from the 3.25% Convertible Notes offering to repurchase approximately
$30.2 million in aggregate principal amount of our 2.75% Convertible Notes in separate and individually negotiated transactions
entered into concurrently with the pricing of the offering; repaid amounts outstanding under our Term Loan of $148.1 million;
repurchased $13.3 million of shares under our authorized share repurchase program; with the remainder of the net proceeds
available for general corporate purposes, which may include acquisitions.
2024 Capped Call Transactions
In June 2024, we entered into privately negotiated capped call transactions in connection with the offering of the 3.25%
Convertible Notes (the “2024 capped call transactions”). The 2024 capped call transactions are expected generally to reduce the
potential dilution to our common stock upon any conversion of the 3.25% Convertible Notes and/or offset any cash payments we
are required to make in excess of the principal amount of converted 3.25% Convertible Notes, as the case may be. If, however, the
market price per share of our common stock, as measured under the terms of the 2024 capped call transactions, exceeds the cap
price of $119.82 of the 2024 capped call transactions, there would nevertheless be dilution and/or there would not be an offset of
such cash payments, in each case, to the extent that such market price exceeds the cap price of the 2024 capped call transactions.
3.75% Convertible Notes
On May 11, 2023, we issued $373.8 million aggregate principal amount of our 3.75% Convertible Notes. The 3.75% Convertible
Notes bear interest at a rate of 3.75% per annum payable semiannually in arrears on May 15 and November 15 of each year,
beginning on November 15, 2023 and mature on May 15, 2028, unless earlier converted, redeemed or repurchased. Prior to the
close of business on the business day immediately preceding November 15, 2027, the 3.75% Convertible Notes will be convertible
at the option of the holders only upon the occurrence of certain events and during certain periods. Thereafter, the 3.75%
Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled
trading day immediately preceding the maturity date.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-38 Granite Construction Incorporated
The initial conversion rate applicable to the 3.75% Convertible Notes is 21.6807 shares of our common stock per $1,000 principal
amount of the 3.75% Convertible Notes, which is equivalent to an initial conversion price of approximately $46.12 per share of
our common stock, subject to adjustment if certain events occur. Upon conversion, we will pay or deliver, as the case may be, cash,
shares of our common stock or a combination of cash and shares of our common stock, at our election. In addition, upon the
occurrence of a “fundamental change” as defined in the indenture governing the 3.75% Convertible Notes, holders may require
us to repurchase for cash all or any portion of their 3.75% Convertible Notes at a fundamental change repurchase price equal
to 100% of the principal amount of the 3.75% Convertible Notes to be repurchased plus any accrued and unpaid interest to,
but excluding, the fundamental change repurchase date. If certain corporate events that constitute a “make-whole fundamental
change” as set forth in the indenture governing the 3.75% Convertible Notes occur prior to the maturity date of the 3.75%
Convertible Notes or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a
holder who elects to convert its 3.75% Convertible Notes in connection with such event or notice of redemption.
We will not be able to redeem the 3.75% Convertible Notes prior to May 20, 2026. On or after May 20, 2026, we have the
option to redeem for cash all or any portion of the 3.75% Convertible Notes if the last reported sale price of our common stock
is equal to or greater than 130% of the conversion price for a specified period of time at a redemption price equal to 100% of
the principal amount of the 3.75% Convertible Notes to be redeemed, plus any accrued but unpaid interest to, but excluding,
the redemption date. The indenture governing the 3.75% Convertible Notes contains customary events of default. In the case of
an event of default arising from certain events of bankruptcy, insolvency or reorganization, with respect to us or our significant
subsidiaries, all outstanding 3.75% Convertible Notes will become due and payable immediately without further action or notice. If
any other event of default occurs and is continuing, then the trustee or the holders of at least 25% in aggregate principal amount
of the 3.75% Convertible Notes then outstanding may declare the 3.75% Convertible Notes due and payable immediately.
The net proceeds from the sale of the 3.75% Convertible Notes were approximately $364.4 million after deducting the initial
purchasers’ discount. We used approximately $53.0 million of the net proceeds from the offering to pay the cost of the 2023
capped call transactions (as described below). In addition, we used approximately $198.8 million of the net proceeds and issued
1,390,500 shares of Granite common stock in exchange for approximately $198.7 million aggregate principal amount of our
2.75% Convertible Notes concurrent with the offering in separate and individually negotiated transactions (the “Exchange
Transaction”). In connection with the Exchange Transaction, we entered into partial unwind agreements (the “Unwind
Agreements”) with certain financial institutions to unwind a portion of the convertible note hedge and warrant transactions
entered into in connection with the offering of the 2.75% Convertible Notes. Pursuant to the Unwind Agreements, we received
1,390,516 shares of our common stock (and cash in lieu of any fractional shares) in respect of the unwind of the portion of the
existing convertible note hedge transactions that correspond to the 2.75% Convertible Notes that were exchanged in the Exchange
Transaction described above and paid $13.2 million in cash in respect of the unwind of the portion of the existing warrant
transactions that correspond to the 2.75% Convertible Notes that were exchanged in the Exchange Transaction described above.
2023 Capped Call Transactions
In May 2023, we entered into capped call transactions (the “2023 capped call transactions”) in connection with the offering of
the 3.75% Convertible Notes. The 2023 capped call transactions are expected generally to reduce the potential dilution to our
common stock upon conversion of the 3.75% Convertible Notes and/or offset any cash payments we are required to make in
excess of the principal amount of converted 3.75% Convertible Notes, as the case may be. If, however, the market price per share
of our common stock, as measured under the terms of the 2023 capped call transactions, exceeds the cap price of $79.83 of the
2023 capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in
each case, to the extent that such market price exceeds the cap price of the 2023 capped call transactions.
2.75% Convertible Notes
The 2.75% Convertible Notes were issued in November 2019 in an aggregate principal amount of $230.0 million, with an interest
rate of 2.75% and a maturity date of November 1, 2024, unless earlier converted, redeemed or repurchased.
In June 2024, we called the 2.75% Convertible Notes for redemption. As of December 31, 2024, no 2.75% Convertible Notes
remained outstanding.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-39
Real Estate Indebtedness
Our unconsolidated investments in real estate ventures are subject to mortgage indebtedness. This indebtedness is non-recourse to
Granite but is recourse to the real estate venture. The terms of this indebtedness are typically renegotiated to reflect the evolving
nature of the real estate project as it progresses through acquisition, entitlement, development and leasing. Modification of
these terms may include changes in loan-to-value ratios requiring the real estate venture to repay portions of the debt. The debt
associated with our unconsolidated non-construction entities is disclosed in Note 10.
Covenants and Events of Default
Our Credit Agreement requires us to comply with various affirmative, restrictive and financial covenants, including the financial
covenants described below. Our failure to comply with these covenants would constitute an event of default under the Credit
Agreement. Additionally, the 3.25% Convertible Notes and 3.75% Convertible Notes are governed by the terms and conditions
of their respective indentures. Our failure to pay principal, interest or other amounts when due or within the relevant grace period
on our 3.25% Convertible Notes, our 3.75% Convertible Notes or our Credit Agreement would constitute an event of default
under the 3.25% Convertible Notes indenture, the 3.75% Convertible Notes indenture or the Credit Agreement. A default under
our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility;
(iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed under the
Credit Agreement; and/or (v) foreclosure on any collateral securing the obligations under such facility. A default under the 3.25%
Convertible Notes indenture or the 3.75% Convertible Notes indenture could result in acceleration of the maturity of the notes.
The most significant financial covenants under the terms of our Credit Agreement require the maintenance of a minimum
Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio. As of December 31, 2024, we were in
compliance with all covenants contained in the Credit Agreement. We are not aware of any non-compliance by any of our
unconsolidated real estate ventures with the covenants contained in their debt agreements.
Debt Issuance Costs
During the years ended December 31, 2024 and December 31, 2023, we capitalized $10.5 million and $10.9 million, respectively,
in third party offering costs related to the issuance of the 3.25% Convertible Notes, 3.75% Convertible Notes and the Term Loan.
Capitalized issuance costs are amortized over the life of the related debt.
During the years ended December 31, 2024, 2023 and 2022, we recorded $3.9 million, $3.5 million and $2.5 million, respectively,
of amortization related to debt issuance costs. The years ended December 31, 2024 and 2023 included an immaterial amount and
$1.7 million, respectively, of accelerated amortization of debt issuance costs associated with the 2.75% Convertible Notes that
were repaid and are included in the loss on debt extinguishment.
15. Leases
We have leases for office and shop space, as well as for equipment primarily utilized in our construction projects. As of
December 31, 2024, our lease contracts were primarily classified as operating leases and had terms ranging from month-to-month
to 31 years. As of December 31, 2024 and 2023, right of use assets and long term lease liabilities were separately presented and
short term lease liabilities of $20.2 million and $16.8 million, respectively, were included in accrued expenses and other current
liabilities in our consolidated balance sheets. As of December 31, 2024, we had no lease contracts that had not yet commenced
but created significant rights and obligations. Lease expense was $24.5 million, $21.4 million, $21.9 million for the years ended
December 31, 2024, 2023 and 2022, respectively.
As of December 31, 2024 and 2023 our weighted-average remaining lease term was 8.4 years and 9.4 years, respectively, and the
weighted-average discount rate was 5.34% and 4.92%, respectively.
As of December 31, 2024, the lease liability is equal to the present value of the remaining lease payments, discounted using the
incremental borrowing rate on our secured debt, using one maturity discount rate that is updated quarterly, as it is not materially
different than the discount rates applied to each of the leases in the portfolio.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-40 Granite Construction Incorporated
The following table summarizes the maturities of our undiscounted lease liabilities outstanding as of December 31, 2024 (in
thousands):
2025
$ 24,827
2026
21,684
2027
15,635
2028
11,388
2029
6,838
Thereafter
44,643
Total future minimum lease payments
$ 125,015
Less: imputed interest
(31,212)
Total
$ 93,803
Royalties
Excluded from the table above are minimum royalty requirements under all contracts, primarily quarry property, in effect at
December 31, 2024 which are payable as follows: $2.3 million in 2025; $2.2 million in 2026; $2.0 million in 2027; $1.9 million in
2028; $1.8 million in 2029; and $25.1 million thereafter.
16. Employee Benefit Plans
Granite Construction Profit Sharing and 401(k) Plan
The Granite Construction Profit Sharing and 401(k) Plan (the “401(k) Plan”) is a defined contribution plan covering all employees
except employees covered by collective bargaining agreements and certain employees of our CCJVs, LRC/MSG and D&B. Our
401(k) matching contributions can be up to 6% of an employee’s gross pay at the discretion of the Board of Directors. Our
401(k) matching contributions to the 401(k) Plan for the years ended December 31, 2024, 2023 and 2022 were $20.0 million,
$18.6 million, and $17.7 million, respectively. Profit sharing contributions from us may be made to the 401(k) Plan in an amount
determined by the Board of Directors. We made no profit sharing contributions during the years ended December 31, 2024, 2023
and 2022.
Lehman-Roberts/Memphis Stone & Gravel 401(k) Retirement Plan
The Lehman-Roberts Company sponsors a defined contribution plan for the benefit of its employees. Matching contributions to
this plan were immaterial for the year ended December 31, 2024, as well as the period between our acquisition of LRC/MSG (see
Note 2) and December 31, 2023. This plan also covers the employees of D&B.
Non-Qualified Deferred Compensation Plan
We offer a Non-Qualified Deferred Compensation Plan (“NQDC Plan”) to a select group of our highly compensated employees and
non-employee directors. The NQDC Plan provides participants the opportunity to defer payment of certain compensation as defined
in the NQDC Plan. Our NQDC Plan obligations are funded through a Rabbi Trust which was fully funded as of December 31, 2024.
The assets held by the Rabbi Trust at December 31, 2024 and 2023 are substantially in the form of Company-owned life insurance
and are included in other noncurrent assets in the consolidated balance sheets. As of December 31, 2024, there were 68 active
participants in the NQDC Plan. NQDC Plan obligations were $27.8 million and $25.2 million as of December 31, 2024 and 2023,
respectively, and were primarily included in other long-term liabilities in the consolidated balance sheets. In addition, we had
supplemental retirement benefits of $3.4 million and $3.7 million in other long-term liabilities in the consolidated balance sheets
as of December 31, 2024 and 2023, respectively. Our significant obligations related to the NQDC Plan are $3.6 million in 2025,
$2.5 million in 2026, $2.3 million in 2027, $2.2 million in 2028, $1.3 million in 2029 and $15.9 million thereafter.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-41
Multi-employer Pension Plans
As of December 31, 2024, three of our wholly-owned subsidiaries, Granite Construction Company, Layne Christensen Company
and Granite Industrial, Inc. contribute to various multi-employer pension plans on behalf of union employees. The risks of
participating in these multi-employer plans are different from single-employer plans in the following aspects:
• Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other
participating employers.
• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the
remaining participating employers.
• If we chose to stop participating in some of the multi-employer plans, we may be required to pay those plans an amount
based on the underfunded status of the plan, referred to as a withdrawal liability.
The following table presents our participation in these plans (dollars in thousands):
Pension
Protection
Act (“PPA”)
Certified Zone
Status(1)
Expiration
Date of
Collective
Bargaining
Agreement(3)
Pension Plan
Employer
Identification
Number
FIP/RP Status
Pending/
Implemented(2)
Contributions
Surcharge
Imposed
Pension Trust Fund
2024
2023
2024
2023
2022
Pension Trust Fund
for Operating
Engineers
94-6090764 Green Yellow
Yes
$ 10,972 $ 10,434 $
9,783
No
3/31/2025
3/31/2026
6/30/2026
9/30/2026
1/31/2027
10/31/2027
Locals 302 and 612
IUOE-Employers
Construction
Industry Retirement
Plan
91-6028571 Green Green
No
6,976
6,520
5,204
No
3/31/2026
5/31/2028
Operating Engineers
Pension Trust Fund
95-6032478 Green Green
No
5,759
5,357
4,768
No
6/30/2025
All other funds (44 as
of December 31,
2024)
22,105
20,466
18,270
Total contributions: $ 45,811 $ 42,777 $ 38,025
(1) The most recent PPA zone status available in 2024 and 2023 is for the plan’s year-end during 2023 and 2022, respectively. The zone status
is based on information that we received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are
generally less than 65 percent funded, plans in the orange zone are less than 80 percent funded and have an Accumulated Funding Deficiency in
the current year or projected into the next six years, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at
least 80 percent funded.
(2) The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”)
is either pending or has been implemented.
(3) Lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject. Pension trust funds with a range of
expiration dates have various collective bargaining agreements.
Based upon the most recently available annual reports, our contribution to each of the individually significant plans listed in the
table above was less than 5% of each plan’s total contributions. We currently have no intention of withdrawing from any of the
multi-employer pension plans in which we participate that would result in a significant withdrawal liability. In addition, we do not
have any significant future obligations or funding requirements related to these plans other than the ongoing contributions that
are paid as hours are worked by plan participants.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-42 Granite Construction Incorporated
17. Shareholders’ Equity
Stock-based Compensation
On June 2, 2021, our stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”), which replaced the Amended and
Restated 2012 Equity Incentive Plan (the “2012 Plan”) and no further awards may be granted under the 2012 Plan. The 2021
Plan provides for the issuance of restricted stock, RSUs and stock options to eligible employees and to members of our Board of
Directors. During the years ended December 31, 2024, 2023 and 2022, we did not grant any stock options or restricted stock
awards and as of December 31, 2024, there were no stock options or restricted stock awards outstanding.
On June 5, 2024, our stockholders approved the 2024 Equity Incentive Plan (the “2024 Plan”), which replaced the 2021 Plan and
no further awards may be granted under the 2021 Plan. The 2024 Plan provides for the issuance of restricted stock, RSUs and
stock options to eligible employees and to members of our Board of Directors. During the year ended December 31, 2024, we
did not grant any stock options or restricted stock awards and as of December 31, 2024, there were no stock options or restricted
stock awards outstanding. A total of 2,249,883 shares of our common stock were reserved for issuance under the 2024 Plan of
which 2,211,325 remained available as of December 31, 2024.
Restricted Stock Units
RSUs are issued for compensatory purposes. RSU stock compensation cost is measured at our common stock’s fair value based on
the market price at the date of grant. We recognize stock compensation cost only for RSUs that we estimate will ultimately vest.
We estimate the number of shares that will ultimately vest at each grant date based on our historical experience and adjust stock
compensation cost based on changes in those estimates over time.
RSU stock compensation cost is recognized ratably over the shorter of the vesting period (generally ranging from immediate vesting
to three years) or the period from grant date to the first date after the holder reaches age 62 and has completed certain specified
years of service, when all RSUs become fully vested. Vesting of RSUs is not subject to any market or performance conditions and
vesting provisions are at the discretion of the Compensation Committee. A recipient of RSUs may not sell or otherwise transfer
unvested RSUs and, in the event a recipient’s employment or board service is terminated prior to the end of the vesting period, any
unvested RSUs are surrendered to us, subject to limited exceptions.
A summary of the changes in our RSUs during the years ended December 31, 2024, 2023 and 2022 is as follows (shares in
thousands):
Years Ended December 31,
2024
2023
2022
RSUs
Weighted-
Average
Grant-Date
Fair Value
per RSU
RSUs
Weighted-
Average
Grant-Date
Fair Value
per RSU
RSUs
Weighted-
Average
Grant-Date
Fair Value
per RSU
Outstanding, beginning balance
568
$
37.05
568
$
31.64
553
$
30.09
Granted
394
55.57
315
40.86
311
31.70
Vested
(399)
45.84
(289)
30.83
(263)
28.98
Forfeited
(16)
42.63
(27)
36.09
(33)
28.21
Outstanding, ending balance
546
$
43.97
568
$
37.05
568
$
31.64
Compensation cost related to RSUs was $19.6 million ($14.5 million net of statutory tax rate), $10.5 million ($7.8 million net of
statutory tax rate), and $7.5 million ($5.6 million net of statutory tax rate) for the years ended December 31, 2024, 2023 and
2022, respectively. The grant date fair value of RSUs vested during the years ended December 31, 2024, 2023 and 2022 was
$18.3 million, $8.9 million and $7.6 million, respectively. As of December 31, 2024, there was $10.6 million of unrecognized
compensation cost related to RSUs which will be recognized over a remaining weighted-average period of 1.4 years.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-43
401(k) Plan
As of December 31, 2024, the 401(k) Plan owned 634,808 shares of our common stock. Dividends on shares held by the 401(k)
Plan are charged to retained earnings and all shares held by the 401(k) Plan are treated as outstanding in computing our earnings
per share.
Share Repurchase Program
As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million
of our common stock at management’s discretion. During the year ended December 31, 2024, we repurchased 524,800 shares for
$42.0 million under this authorization. As of December 31, 2024, $189.5 million of the authorization remained available.
The specific timing and amount of any future repurchases will vary based on market conditions, securities law limitations and
other factors.
18. Weighted Average Shares Outstanding and Net Income Per Share
The following table presents a reconciliation of net income and the weighted average shares of common stock used in calculating
basic and diluted net income per share as well as the calculation of basic and diluted net income per share.
Years Ended December 31,
2024
2023
2022
Numerator
Net income attributable to common shareholders for basic earnings per share
$126,346
$43,599
$
83,302
Add: Interest expense, net of tax, related to Convertible Notes (1)
11,472
7,622
5,890
Net income attributable to common shareholders for diluted earnings per share
$137,818
$51,221
$
89,192
Denominator
Weighted average common shares outstanding, basic
43,846
43,879
44,485
Add: Dilutive effect of RSUs
565
583
532
Add: Dilutive effect of Convertible Notes(1)
8,103
8,103
7,309
Weighted average common shares outstanding, diluted
52,514
52,565
52,326
Net income per share, basic
$
2.88
$
0.99
$
1.87
Net income per share, diluted
$
2.62
$
0.97
$
1.70
(1) The dilutive effect of the convertible notes was determined using the if-converted method. As the 3.75% Convertible Notes will be convertible
into cash, shares of our common stock or a combination thereof at our election, the 3.75% Convertible Notes are assumed to be converted into
common stock at the beginning of the reporting period, and the resulting shares are included in the denominator of the calculation. In addition,
interest charges, net of any income tax effects are added back to the numerator of the calculation. For the 3.25% Convertible Notes, we are
required to settle the principal amount in cash and any conversion premium in excess of the principal amount in cash, shares of common stock,
or a combination of cash and shares of common stock, at our election. As such, the 3.25% Convertible Notes only have an impact on diluted
earnings per share when the average share price of our common stock exceeds the conversion price. The 2.75% Convertible Notes will be
convertible into cash, shares of our common stock or a combination thereof at our election. The shares associated with the 2.75% Convertible
Notes were not included in our calculation of diluted net income per share for the year ended December 31, 2023 because their effect would
have been anti-dilutive. The number of shares used in calculating diluted net income per share for the year ended December 31, 2022 includes
the dilutive effect of the 2.75% Convertible Notes.
In connection with the issuance of the 3.25% Convertible Notes and 3.75% Convertible Notes, we entered into the 2024 capped
call transactions and 2023 capped call transactions, respectively, which were not included for purposes of calculating the number
of diluted shares outstanding, as their effect would have been anti-dilutive.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-44 Granite Construction Incorporated
19. Income Taxes
The following is a summary of income before income taxes (in thousands):
Years Ended December 31,
2024
2023
2022
Domestic
$195,059 $ 92,552 $
97,235
Foreign
1,133
(32,698)
(5,418)
Total income before income taxes
$196,192 $ 59,854 $
91,817
The following is a summary of the provision for income taxes (in thousands):
Years Ended December 31,
2024
2023
2022
Federal:
Current
$ 29,754
$ 1,579
$ 255
Deferred
11,803
23,331
10,326
Total federal
41,557
24,910
10,581
State:
Current
10,612
3,565
5,721
Deferred
2,363
1,362
(1,691)
Total state
12,975
4,927
4,030
Foreign:
Current
1,824
(1,432)
1,951
Deferred
(607)
1,862
(3,602)
Total foreign
1,217
430
(1,651)
Total provision for income taxes
$ 55,749
$ 30,267
$ 12,960
The following is a reconciliation of our provision for income taxes based on the Federal statutory tax rate to our effective tax rate
(dollars in thousands):
Years Ended December 31,
2024
2023
2022
Federal statutory tax
$ 41,200
21.0%
$ 12,569
21.0%
$ 19,282
21.0%
State taxes, net of federal tax benefit
9,693
4.9
5,171
8.6
2,761
3.0
Non-controlling interests
(2,960)
(1.5)
2,942
4.9
933
1.0
Equity in income of affiliates
(2,490)
(1.2)
(3,419)
(5.7)
(2,629)
(2.9)
Change in valuation allowance, net
1,855
0.9
3,163
5.3
(3,212)
(3.5)
Nondeductible debt extinguishment costs
5,537
2.8
10,360
17.3
—
—
Nondeductible executive compensation
2,314
1.2
790
1.3
801
0.9
Nondeductible meals and entertainment
1,408
0.7
1,407
2.4
972
1.1
Percentage depletion deduction
(1,304)
(0.7)
(1,119)
(1.9)
(1,062)
(1.2)
Nondeductible goodwill
—
—
945
1.6
8,212
8.9
Assets held for sale
—
—
—
—
(14,427)
(15.7)
Return to provision adjustments
1,288
0.7
(1,250)
(2.1)
(1,102)
(1.2)
Other nontaxable/nondeductible items
(792)
(0.4)
(1,292)
(2.2)
2,431
2.7
Total
$ 55,749
28.4%
$ 30,267
50.6%
$ 12,960
14.1%
The variance from the U.S. federal statutory tax rate in 2024 is due primarily to the tax expense associated with nondeductible debt
extinguishment costs and state and local income taxes.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-45
The following is a summary of the deferred tax assets and liabilities:
(in thousands)
December 31,
2024
December 31,
2023
Deferred tax assets:
Receivables
$ 1,270
$ 1,328
Insurance
15,307
15,018
Deferred compensation
11,884
10,424
Convertible debt—capped call amortization
19,852
11,963
Accrued compensation
5,048
3,811
Other accrued liabilities
2,073
1,218
Contract income recognition
16,822
16,986
Lease liabilities
19,678
16,272
Net operating loss carryforwards
29,182
40,541
Valuation allowance
(23,450)
(24,569)
Other
4,199
3,587
Total deferred tax assets
101,865
96,579
Deferred tax liabilities:
Property and equipment
96,908
76,067
Right of use assets
18,831
16,041
Total deferred tax liabilities
115,739
92,108
Net deferred tax assets (liabilities)
$ (13,874)
$ 4,471
The following is a summary of the net operating loss carryforwards at December 31, 2024:
(in thousands)
Expiration
Gross
Carryforward
Tax Effected
Carryforward
Federal net operating loss carryforwards
N/A
$ 10,793
$ 2,267
State net operating loss carryforwards
2025–2044
$ 238,153
11,005
Foreign tax loss carryforwards
2025–2044
$ 54,135
15,910
Total net operating loss carryforwards
$ 29,182
The federal, state and foreign net operating loss carryforwards above include unrecognized tax benefits taken in prior years and
the net operating loss carryforward deferred tax asset is presented net of these unrecognized tax benefits in accordance with ASC
Topic 740, Income Taxes. The federal and state net operating losses acquired during the Layne Christensen Company acquisition in
2018 are subject to Internal Revenue Code Section 382 limitations and may be limited in future periods and a portion may expire
unused. As we expect to use the federal net operating loss carryforwards prior to expiration we believe that it is more likely than
not that these deferred tax assets will be realized and no valuation allowance was deemed necessary. We have provided a valuation
allowance on the net operating loss deferred tax asset or the net deferred tax assets for certain foreign, state and local jurisdictions
because we do not believe it is more likely than not that they will be realized.
The following is a summary of the change in valuation allowance:
(in thousands)
December 31,
2024
December 31,
2023
Beginning balance
$ 24,569
$ 19,919
Additions (deductions), net
(1,119)
4,650
Ending balance
$ 23,450
$ 24,569
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-46 Granite Construction Incorporated
The change in the valuation allowance in 2024 is mainly due to the reversal of valuation allowances related to the utilization of
state and local net operating loss carryforwards and a decrease in net deferred tax assets associated with our foreign operations
which we do not believe are more likely than not to be used in future years.
We intend to indefinitely reinvest certain earnings of our foreign subsidiaries and affiliates. There are generally no federal income
taxes on dividends from foreign subsidiaries therefore we would only be subject to other taxes, such as withholding and local
taxes, upon distribution of these earnings. We have $54.4 million of accumulated undistributed earnings that we consider
indefinitely reinvested as of December 31, 2024. It is not practicable to determine the amount of taxes that would be payable
upon remittance of these earnings. Deferred foreign withholding taxes have been provided on undistributed earnings of certain
foreign subsidiaries and foreign affiliates where the earnings are not considered to be invested indefinitely.
Uncertain tax positions
We file income tax returns in the U.S. and various state and local jurisdictions. We are currently under examination by various state
taxing authorities for various tax years. We do not anticipate that any of these audits will result in a material change in our financial
position. We are no longer subject to U.S. federal examinations by tax authorities for years before 2021 except for the 2018 tax
year. With few exceptions, as of December 31, 2024, we are no longer subject to state examinations by taxing authorities for years
before 2018.
We file income tax returns in foreign jurisdictions where we operate. The returns are subject to examination which may be ongoing
at any point in time and tax liabilities are recorded based on estimates of additional taxes which will be due upon settlement of
those examinations. The tax years subject to examination by foreign tax authorities vary by jurisdiction, but generally we are no
longer subject to examinations by taxing authorities for years before 2016.
We had approximately $22.4 million and $22.6 million of total gross unrecognized tax benefits as of December 31, 2024 and
2023, respectively. There were approximately $5.2 million and $5.5 million of unrecognized tax benefits that would affect the
effective tax rate in any future period at December 31, 2024 and 2023, respectively. It is reasonably possible that our unrecognized
tax benefit could decrease by approximately $1.2 million in 2025, which would impact our effective tax rate in 2025. The decrease
relates to anticipated statute expirations and anticipated resolution of outstanding unrecognized tax benefits.
The following is a tabular reconciliation of unrecognized tax benefits (in thousands). The balances in the reconciliation are the gross
amounts before considering reductions related to available net operating losses. The balance of unrecognized tax benefits net
of available net operating losses is included in other long-term liabilities and accrued expenses and other current liabilities in the
consolidated balance sheets:
December 31,
2024
2023
2022
Beginning balance
$ 22,591
$ 22,756
$ 22,724
Gross increases—current period tax positions
—
—
—
Gross decreases—current period tax positions
—
—
—
Gross increases—prior period tax positions
—
—
—
Gross decreases—prior period tax positions
(162)
77
(426)
Settlements with taxing authorities/lapse of statute of limitations
(70)
(242)
(60)
Reclassification of balances from held for sale
—
—
518
Ending balance
$ 22,359
$ 22,591
$ 22,756
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-47
20. Contingencies—Legal Proceedings
Liabilities relating to legal proceedings and government inquiries, to the extent that we have concluded such liabilities are probable
and the amounts of such liabilities are reasonably estimable, are recorded in the consolidated balance sheets. It is possible that
future developments in our legal proceedings and inquiries could require us to (i) adjust or reverse existing accruals, or (ii) record
new accruals that we did not originally believe to be probable or that could not be reasonably estimated. Such changes could be
material to our financial condition, results of operations and/or cash flows in any particular reporting period. In addition, disclosure
is required when a material loss is probable but not reasonably estimable, a material loss is reasonably possible but not probable, or
when it is reasonably possible that the amount of a loss will exceed the amount recorded.
The total liabilities for legal proceedings were immaterial as of December 31, 2024 and 2023. The total range of possible loss
related to (i) matters considered reasonably possible, and (ii) reasonably possible amounts in excess of accrued losses recorded
for probable loss contingencies, including those related to liquidated damages, could have a material impact on our consolidated
financial statements if they become probable and the reasonably estimable amount is determined.
Ordinary Course Legal Proceedings
In the ordinary course of business, we and our affiliates are involved in various legal proceedings alleging, among other things,
liability issues or breach of contract or tortious conduct in connection with the performance of services and/or materials provided,
the various outcomes of which often cannot be predicted with certainty. For information on our accounting policies regarding
affirmative claims and back charges that we are party to in the ordinary course of business, see Note 1. We and our affiliates
are also subject to government inquiries in the ordinary course of business seeking information concerning our compliance with
government construction contracting requirements and various laws and regulations, the outcomes which often cannot be
predicted with certainty.
Some of the matters in which we or our joint ventures and affiliates are involved may involve compensatory, punitive, or other
claims or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that are not probable
to be incurred or cannot currently be reasonably estimated. In addition, in some circumstances our government contracts could be
terminated, we could be suspended, debarred or incur other administrative penalties or sanctions, or payment of our costs could
be disallowed. While any of our pending legal proceedings may be subject to early resolution as a result of our ongoing efforts to
resolve the proceedings, whether or when any legal proceeding will be resolved is neither predictable nor guaranteed.
21. Reportable Segment Information
We manage our operations under two reportable segments, Construction and Materials, which are distinguished by differences in
business activities. Our reportable segments are the same as our operating segments and correspond with how our chief operating
decision maker, or decision-making group (our “CODM”) regularly reviews financial information to allocate resources and assess
performance. We identified our CODM as our Chief Executive Officer and our Chief Operating Officer.
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. It also provides
construction of various complex projects including infrastructure / site development, mining, public safety, tunnel, solar, battery
storage and other power-related projects. The Materials segment focuses on production of aggregates, asphalt concrete, liquid
asphalt and recycled materials production for internal use in our construction projects and for sale to third parties.
The accounting policies of the segments are the same as those described in the Summary of Significant Accounting Policies (see
Note 1). In connection with our adoption of ASU 2023-07, Segment Reporting—Improvements to Reportable Segment Disclosures
(see Note 1), we have enhanced our segment disclosures about significant segment expenses. Our CODM evaluates segment
performance and makes business decisions based on operating income, which excludes non-operating income or expense.
Segment assets include property and equipment, intangibles, goodwill, inventory and equity in construction joint ventures.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
F-48 Granite Construction Incorporated
Summarized segment information is as follows (in thousands):
Years Ended December 31,
Construction
Materials
Total
2024
Total revenue from reportable segments
$ 3,415,225
$ 839,176
$ 4,254,401
Elimination of intersegment revenue
—
(246,827)
(246,827)
Revenue
3,415,225
592,349
4,007,574
Cost of revenue
2,924,223
510,654
3,434,877
Gross profit
491,002
81,695
572,697
Selling, general and administrative expenses
189,078
29,205
218,283
Gain on sales of property and equipment, net
(9,206)
(835)
(10,041)
Operating income from reportable segments
$
311,130
$
53,325
$
364,455
Depreciation, depletion and amortization
$
71,634
$
45,036
$
116,670
Segment assets as of period end
$
603,913
$ 673,444
$ 1,277,357
2023
Total revenue from reportable segments
$ 2,992,254
$ 717,369
$ 3,709,623
Elimination of intersegment revenue
—
(200,485)
(200,485)
Revenue
2,992,254
516,884
3,509,138
Cost of revenue
2,667,199
445,540
3,112,739
Gross profit
325,055
71,344
396,399
Selling, general and administrative expenses
177,040
12,730
189,770
Gain on sales of property and equipment, net
(24,913)
(3,274)
(28,187)
Operating income from reportable segments
$
172,928
$
61,888
$
234,816
Depreciation, depletion and amortization
$
43,828
$
29,718
$
73,546
Segment assets as of period end
$
598,078
$ 539,071
$ 1,137,149
2022
Total revenue from reportable segments
$ 2,803,935
$ 671,428
$ 3,475,363
Elimination of intersegment revenue
—
(174,107)
(174,107)
Revenue
2,803,935
497,321
3,301,256
Cost of revenue
2,500,054
431,708
2,931,762
Gross profit
303,881
65,613
369,494
Selling, general and administrative expenses
179,147
10,133
189,280
Gain on sales of property and equipment, net
(12,820)
(926)
(13,746)
Operating income from reportable segments
$
137,554
$
56,406
$
193,960
Depreciation, depletion and amortization
$
41,836
$
26,500
$
68,336
As of December 31, 2024, 2023 and 2022 segment assets included $18.8 million, $25.1 million and $4.7 million, respectively, of
property and equipment located in foreign countries (primarily Canada). During the years ended December 31, 2024, 2023 and
2022 less than 5% of our revenue was derived from foreign operations.
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
2024 Annual Report F-49
A reconciliation of operating income from reportable segments to consolidated income before income taxes is as follows (in
thousands):
Years Ended December 31,
2024
2023
2022
Total operating income from reportable segments
$ 364,455
$ 234,816
$ 193,960
Corporate selling, general and administrative expenses
115,879
104,696
83,330
Corporate (gain) loss on sales of property and equipment, net
1,277
(159)
1,129
Other costs, net
39,936
50,217
24,120
Total operating income
207,363
80,062
85,381
Total other (income) expense, net
11,171
20,208
(6,436)
Income before income taxes
$ 196,192
$ 59,854
$ 91,817
A reconciliation of segment assets to consolidated total assets is as follows:
(in thousands)
December 31,
2024
December 31,
2023
Total assets for reportable segments
$ 1,277,357
$ 1,137,149
Assets not allocated to segments:
Cash and cash equivalents
578,330
417,663
Receivables, net
511,742
598,705
Other current assets, excluding segment assets
369,804
316,552
Property and equipment, net, excluding segment assets
30,654
72,709
Short-term marketable securities
7,311
35,863
Investments in affiliates
94,031
92,910
Right of use assets
89,791
78,176
Deferred income taxes, net
—
8,179
Other noncurrent assets
66,635
55,634
Consolidated total assets
$ 3,025,655
$ 2,813,540
GRANITE CONSTRUCTION INCORPORATED
Notes to the Consolidated Financial Statements (Continued)
This page intentionally left blank
Granite Construction Incorporated
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 a loss on debt extinguishment in 2023 and 2024, 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 non-cash impairment charges. In addition to
the aforementioned costs, 2023 also included a litigation charge and 2022 include a gain on sale of a business.
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
2024 Annual Report
GRANITE CONSTRUCTION INCORPORATED EBITDA AND ADJUSTED EBITDA(1)
(Unaudited - dollars in thousands)
Years Ended December 31,
2024
2023
2022
EBITDA:
Net income attributable to Granite Construction Incorporated
$ 126,346
$ 43,599
$ 83,302
Net income margin(2)
3.2%
1.2%
2.5%
Depreciation, depletion and amortization expense(3)
127,721
92,866
83,618
Provision for income taxes
55,749
30,267
12,960
Interest expense, net
4,839
924
6,096
EBITDA(1)
$ 314,655
$ 167,656
$ 185,976
EBITDA margin(1)(2)
7.9%
4.8%
5.6%
ADJUSTED EBITDA:
Other costs, net
$ 39,936
$ 50,217
$ 24,120
Stock-based compensation(4)
19,595
10,477
7,765
Loss on debt extinguishment
27,552
51,052
—
Adjusted EBITDA(1)
$ 401,738
$ 279,402
$ 217,861
Adjusted EBITDA margin(1)(2)
10.0%
8.0%
6.6%
(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, loss on debt
extinguishment and stock-based compensation, as described above.
(2) Represents net income, EBITDA and adjusted EBITDA divided by consolidated revenue of $4.0 billion, $3.5 billion, and $3.3 billion for the fiscal
years ended, December 31, 2024, 2023 and 2022, 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 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. Prior
period adjusted EBITDA calculations have been recast to conform to current presentation.
GRANITE CONSTRUCTION INCORPORATED MATERIALS SEGMENT CASH
GROSS PROFIT RECONCILIATION
(Unaudited - in thousands)
Years Ended December 31,
2024
2023
2022
Gross profit
$ 81,695
$ 71,344
$ 65,613
Gross profit as a percent of revenue
13.8%
13.8%
13.2%
Depreciation, depletion and amortization
45,091
26,766
23,948
Cash gross profit
$126,786
$ 98,110
$ 89,561
Cash gross profit as a percent of revenue
21.4%
19.0%
18.0%
BOARD OF DIRECTORS
Michael F. McNally
Chair of the Board
Retired President and Chief Executive Officer
Skanska USA Incorporated
Kyle T. Larkin
President and Chief Executive Officer
Granite Construction Incorporated
Louis E. Caldera
Former Secretary of the Army
Department of Defense
Molly C. Campbell
Infrastructure Advisor
Former Director of the Port of New York
and New Jersey
David C. Darnell
Retired Vice Chair
Global Wealth & Investment Management
Bank of America Corporation
Carlos M. Hernandez
Retired President and Chief Executive Officer
Fluor Corporation
Alan P. Krusi
Retired President, Strategic Development
AECOM Technology Corporation
Celeste B. Mastin
President and Chief Executive Officer
H.B. Fuller Company
Laura M. Mullen
Retired Partner
KPMG LLP
ANNUAL MEETING OF SHAREHOLDERS
Granite’s Annual Meeting of Shareholders will
be held virtually at 10:30 a.m. PT on Thursday,
June 5, 2025. Proxy materials are available on
our website at investor.graniteconstruction.com
or upon written request to:
Investor Relations
Granite Construction Incorporated
Box 50085
Watsonville, CA 95077-5085
OFFICERS
Kyle T. Larkin
President and Chief Executive Officer
Staci M. Woolsey
Executive Vice President and
Chief Financial Officer
James A. Radich
Executive Vice President and
Chief Operating Officer
Timothy W. Gruber
Executive Vice President and
Chief Human Resources Officer
M. Craig Hall
Executive Vice President
and Chief Legal Officer,
Corporate Compliance Officer,
and Secretary
Andrew C. Brock
Senior Vice President,
Strategy and Corporate Development
Kimberly K. Craig
Senior Vice President of
Corporate Finance and Treasurer
Brian R. Dowd
Senior Vice President, Construction
Bradly J. Estes
Senior Vice President, Construction Materials
Michael G. Tatusko
Senior Vice President, Construction
Bradley J. Williams
Senior Vice President, Construction
Michael W. Barker
Vice President, Investor Relations
Nicholas B. Blackburn
Vice President, Tax
Nicole E. Prettol
Vice President, Corporate Controller
ELECTRONIC DEPOSIT OF DIVIDENDS
Registered holders may have their quarterly
dividends deposited to their checking
or savings account free of charge. Call
Computershare at (877) 520-8549 for U.S.
residents, or (781) 575-2879 for non-U.S.
residents to enroll.
FORM 10-K
A copy of the Company’s Annual Report on
Form 10-K, which is filed with the Securities and
Exchange Commission, is available free of charge
on our website or upon written request to:
Investor Relations
Granite Construction Incorporated
Box 50085
Watsonville, CA 95077-5085
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers LLP
1000 Louisiana Street, Suite 5800
Houston, TX 77002
REGISTRAR AND TRANSFER AGENT
Computershare
150 Royall Street, Suite 101
Canton, MA 02021
Call Computershare at (877) 520-8549
for U.S. residents, or (781) 575-2879 for
non-U.S. residents.
SHAREHOLDER INQUIRIES
Michael W. Barker
Vice President, Investor Relations
Mike.Barker@gcinc.com
CERTIFICATIONS
Granite’s Chief Executive Officer (CEO) and
Chief Financial Officer (CFO) have each
submitted certifications concerning the
accuracy of financial and other information
in Granite’s Annual Report on Form 10-K as
required by Section 302(a) of the Sarbanes-
Oxley Act of 2002.
After our 2025 Annual Meeting of Shareholders,
we intend to file with the New York Stock
Exchange (NYSE) the CEO certification
regarding our compliance with the NYSE’s
corporate governance listing standards as
required by NYSE Rule 303A.12(a). Last year’s
certification was approved on June 7, 2024.
© 2025 Granite Construction Incorporated. All rights reserved.
585 West Beach Street
Watsonville, CA 95076
graniteconstruction.com