Granite Construction — Third Quarter 2026 Earnings Summary

Financial Performance:

• Q3 2026 revenue increased 23% year-over-year to $1.77 billion (from $1.43 billion).
• Q3 2026 net income attributable to Granite was $3 million ($0.07 diluted EPS), compared to $103 million ($1.98 diluted EPS) in the prior year.
• Q3 2026 adjusted net income was $173 million ($3.81 adjusted diluted EPS), compared to $124 million ($2.70 adjusted diluted EPS) in the prior year.
• Q3 2026 adjusted EBITDA increased 32% year-over-year to $283 million (from $216 million).
• Nine months ended September 30, 2026 revenue increased to $4.13 billion (from $3.26 billion).
• Nine months ended September 30, 2026 net loss attributable to Granite was $317 million ($(7.23) diluted EPS), compared to net income of $141 million ($2.83 diluted EPS) in the prior year.
• Nine months ended September 30, 2026 adjusted net income was $287 million ($6.17 adjusted diluted EPS), compared to $211 million ($4.67 adjusted diluted EPS) in the prior year.
• Nine months ended September 30, 2026 adjusted EBITDA increased to $527 million (from $396 million).
• Year-to-date operating cash flow increased $114 million year-over-year to $404 million (from $290 million).
• Q3 2026 gross profit increased to $336 million (from $261 million); gross profit margin was 19.0%.
• Q3 2026 SG&A expenses were $104 million (5.9% of revenue), compared to $101.6 million (7.1% of revenue) in the prior year.
• Nine months 2026 gross profit increased to $684 million (from $543 million); gross profit margin was 16.6%.
• Nine months 2026 SG&A expenses were $353 million (8.5% of revenue), compared to $303 million (9.3% of revenue) in the prior year.
• Q3 2026 net income was unfavorably impacted by $162 million in net non-operating charges related to settling the conversions of 3.75% convertible notes.
• Nine months 2026 net loss was driven by $535 million in net non-operating charges associated with settling the conversions of 3.75% convertible notes.

Guidance and Future Outlook:

• 2026 fiscal year revenue guidance updated to a range of $5.4 billion to $5.5 billion (previously $5.3 billion to $5.5 billion).
• 2026 adjusted EBITDA margin guidance remains in a range of 12.25% to 13.25%.
• 2026 SG&A expense as a percent of revenue guidance remains in a range of 8.25% to 8.75%, inclusive of an estimated $48 million of stock-based compensation.
• 2026 effective tax rate for adjusted net income guidance remains in the mid-20s.
• 2026 capital expenditures guidance remains in a range of approximately $140 million to $160 million, including approximately $50 million in planned strategic materials investments.
• At the midpoint of updated 2026 revenue guidance, management expects approximately 15% organic revenue growth and an additional 9% contribution from acquired companies.
• 2029 financial targets include an expected organic revenue CAGR of 10% to 12%.
• 2029 targets include an adjusted EBITDA margin range of 14% to 16%.
• 2029 targets include SG&A expense as a percent of revenue of approximately 7.5%.
• 2029 targets include operating cash flow of approximately 13% of revenue and CAPEX of approximately 3% of revenue, resulting in free cash flow of approximately 10% of revenue.
• 2029 targets include a continued expansion through M&A with a 2.5x net leverage target.

Business Segments and Product Lines:

• Construction Segment: Q3 2026 revenue was $1.47 billion (up 26.8% year-over-year); Gross profit was $274 million (up 42.6% year-over-year); Gross profit margin was 18.6% (up from 16.5%). Nine months 2026 revenue was $3.45 billion (up 27.0%); Gross profit was $575 million (up 33.3%); Gross profit margin was 16.7% (up from 15.9%).
• Materials Segment: Q3 2026 revenue was $292 million (up 7.9% year-over-year); Gross profit was $61 million (down 9.9% year-over-year); Gross profit margin was 21.0% (down from 25.2%). Nine months 2026 revenue was $687 million (up 26.2%); Gross profit was $109 million (down 2.5%); Gross profit margin was 15.9% (down from 20.6%).
• Materials segment revenue growth was driven by revenue from recently acquired businesses.
• Materials segment gross profit margin and cash gross profit margin decreases were primarily due to the margin impact of energy surcharges offsetting elevated diesel costs.
• Materials segment cash gross profit for Q3 2026 was $89.8 million (up 4.5%); for nine months 2026 was $185.8 million (up 19.5%).
• Q3 2026 Aggregate product line external revenue was $121.7 million; Asphalt product line external revenue was $170.6 million.
• Nine months 2026 Aggregate product line external revenue was $328.5 million; Asphalt product line external revenue was $357.9 million.

Market and Competitive Landscape:

• Committed and Awarded Projects (CAP) increased sequentially by $37 million to a record high of $7.5 billion.
• CAP increased $1.1 billion year-over-year.
• Federal CAP was $1.3 billion as of September 30, 2026, including $569 million of tactical infrastructure projects for U.S. Customs and Border Protection expected to be substantially realized through the second quarter of 2028.
• Management identified attractive opportunities in core transportation markets and expansion in federal, mission-critical infrastructure, rail, and other targeted end markets.
• Revenue growth for the three and nine-month periods was driven by higher CAP entering the quarter and incremental revenue from acquisitions.
• Excluding acquisitions, revenue increased approximately 20% for the three and nine-month periods, reflecting strong organic growth.

Risks and Challenges:

• Net income results were significantly impacted by non-operating charges associated with the settlement of convertible note conversions.
• Materials segment margins were negatively impacted by energy surcharges and elevated diesel costs.
• Forward-looking statements involve risks and uncertainties, including those described in the company's SEC filings (Form 10-K and 10-Q), which could result in expectations not being realized.
• Specific risks include business and operations uncertainties beyond the company's control that could materially affect financial condition, results of operations, cash flows, and liquidity.

Management Commentary and Tone:

• Kyle Larkin, President and CEO, stated the company delivered "excellent third quarter results" reflecting strong execution and progress on strategy.
• Larkin noted that investments to strengthen and expand the business are creating new opportunities and that the record CAP and strong market outlook position the company well for 2027.
• Staci Woolsey, Executive Vice President and CFO, stated that strong performance through the first nine months of 2026 reinforces confidence in the full-year outlook and 2029 financial targets.
• Woolsey highlighted that strong cash flow generation provides financial flexibility to continue investing in organic growth while pursuing strategic opportunities through disciplined capital allocation.

Other Key Points:

• The company elected to settle the conversions of its 3.75% convertible notes primarily in cash to limit dilution to stockholders.
• The impact of the convertible note conversions and related transactions has been excluded from adjusted net income and adjusted EBITDA.
• Nine months 2026 acquisitions of businesses, net of cash acquired, totaled $184 million.
• Nine months 2026 repurchases of common stock totaled $55.8 million.
• Nine months 2026 cash dividends paid totaled $17.0 million.
• Nine months 2026 proceeds from long-term debt were $770 million; debt repayments were $1.18 billion.
• Nine months 2026 proceeds from the unwind of capped calls totaled $203.8 million.
• Nine months 2026 stock-based compensation expense was $46.6 million.
• Nine months 2026 amortization of convertible debt discount was $273.7 million.
• Nine months 2026 gain on remeasurement of previously held equity method investment was $13.5 million.
• Nine months 2026 loss on derivative remeasurement related to convertible notes was $255 million.
• Nine months 2026 interest expense included $273.7 million related to the amortization of convertible debt discount.
• The Materials segment includes product lines for Aggregate (aggregates, barge delivery, recycled materials) and Asphalt (asphalt concrete, liquid asphalt).
• Intersegment revenues for the nine months ended September 30, 2026 were $312.6 million.
• Non-GAAP measures provided include Adjusted EBITDA, Adjusted Net Income, Cash Gross Profit, Free Cash Flow as a percent of revenue, and Net Leverage Ratio.