Granite Construction Incorporated

Second-quarter revenue increased 29% year over year to $1.5 billion. Gross profit rose 20% to $239 million, adjusted net income increased by $15 million to $101 million, and adjusted EBITDA increased by $34 million to $186 million. Construction revenue increased $270 million, or 29%, to $1.2 billion, while Materials revenue increased $60 million to $248 million. Construction gross profit margin improved slightly year over year, while Materials gross profit margin declined 800 basis points and cash gross profit margin declined 310 basis points. Year-to-date operating cash flow was $142 million versus $5 million a year ago. Guidance was raised for 2026 revenue to $5.3 billion-$5.5 billion from $5.2 billion-$5.4 billion; annual adjusted EBITDA margin, SG&A as a percent of revenue, adjusted effective tax rate, and CapEx guidance were unchanged. Management also increased its 2027 organic revenue growth expectation from 6%-8% to above 10%, and raised its annual operating cash flow target from 10% to 11% of revenue.

Kyle Larkin emphasized that Granite’s record $7.4 billion CAP, healthy bid environment, and expanding exposure to rail, federal, and data center work give the company strong visibility into future revenue. He framed the company’s strategy as combining public transportation strength with broader end markets and disciplined geographic expansion, including acquisitions. His tone was confident and constructive, repeatedly pointing to long-term growth, improved predictability, and margin expansion from the company’s more diversified platform.

Staci Woolsey focused on the quarter’s financial acceleration and balance-sheet actions. She cited revenue of $1.5 billion, gross profit of $239 million, adjusted net income of $101 million, adjusted EBITDA of $186 million, and year-to-date operating cash flow of $142 million. She also highlighted the $600 million senior unsecured notes offering, the planned settlement of the remaining 3.75% convertible notes, approximately $570 million of cash expected to be used net of capped call unwind proceeds, and about 2 million shares of expected dilution reduction. She said the company expects second-half operating cash flow to follow normal seasonality and has a strong pipeline for additional acquisitions.

Analysts focused on Materials margin recovery, 2027 organic growth, data center backlog, infrastructure funding, and M&A. Management said the Materials margin pressure was largely tied to severe weather in the Southeast, estimated at about $10 million in the quarter, plus about a $5 million plant setup/redevelopment impact, and that those drags should not recur at the same level in Q3 or Q4. On growth, management said record CAP, strong bid pipelines, and a still-healthy public/private market backdrop support the move to above 10% organic growth in 2027. On M&A, Granite said the pipeline remains strong, about 3/4 self-sourced, with expected 2026 spend of $200 million to $400 million.