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    GVA
    Earnings call· Mar 2026(Q1 FY26)

    GRANITE CONSTRUCTION Q1 FY26 earnings call GVA

    Apr 30, 2026 Source

    Executive summary

    Granite Q1 FY26 — Strong Start, Raised Guidance, and Strategic Acquisitions

    Granite delivered a strong first quarter, exceeding expectations and prompting an upward revision to its full-year revenue and adjusted EBITDA margin guidance, driven by strategic acquisitions and new tactical infrastructure projects. The company continues to build a high-quality project portfolio, focusing on federal, rail, and data center markets, while actively managing its capital structure and pursuing further M&A opportunities.

    Highlights

    5

    • Revenue increased 30% year-over-year to $912 million.

    • Adjusted EBITDA increased $30 million to $58 million.

    • Full-year revenue guidance raised by $300 million to $5.2 billion-$5.4 billion.

    • Adjusted EBITDA margin guidance increased to 12.25%-13.25% from 12%-13%.

    • CAP (Committed and Awarded Projects) grew by $200 million to $7.2 billion, despite a $300 million project cancellation.

    Concerns

    2

    • Operating cash flow used $31 million in the quarter, compared to an inflow of $4 million in the prior year, due to seasonal ramp-up.

    • Construction segment gross profit margin decreased year-over-year due to a non-recurring favorable claim settlement in the prior year, though adjusted for this, it improved 70 basis points.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $5.2 billion to $5.4 billion
    high materiality
    High
    Full-year 2026 SG&A as a percent of revenue
    8.25% to 8.75%
    medium materiality
    High
    Full-year 2026 Adjusted EBITDA Margin
    12.25% to 13.25%
    high materiality
    High
    Full-year 2026 Capital Expenditures
    $140 million to $160 million
    medium materiality
    High
    Full-year 2026 Adjusted Effective Tax Rate
    mid-20s
    low materiality
    High
    Full-year 2026 Operating Cash Flow
    approximately 10% of revenue
    medium materiality
    High
    Adjusted EBITDA Margin
    13.5%
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Construction
    Gross profit margin decreased due to a revision in estimate related to a favorable claim settlement in the prior year, which did not recur in the current year. Adjusted for this, gross profit margin was up 70 basis points year-over-year.
    Organic revenue growth: $108 millionAcquired business revenue contribution: $43 million
    		$766 million25%—Gross profit increased with higher revenue
    Materials
    Revenue increase primarily due to acquired businesses led by Warren Paving. Organic volume increases were ahead of expectations. Materials orders ahead of prior year, pricing meeting expectations.
    Acquired business revenue contribution: $50 millionCash gross profit: $26 millionCash gross profit as % of revenue: 18%
    		$146 million$61 million—Gross profit up $9 million to $8 million

    Operational metrics

    9
    Adjusted Net Income
    $12 millionincreased by $12 million YoY
    Q1 FY26

    Strong start to the year.

    Adjusted EBITDA
    $58 millionincreased by $30 million YoY
    Q1 FY26

    Building on momentum from Q4.

    Convertible Bonds Settled
    $100 million
    Q1 FY26

    Privately negotiated transactions to proactively manage capital structure.

    Total Debt Outstanding
    $1.4 billion
    Post Q1 FY26

    Following the quarter, utilized revolving credit facility to fund Kenny Sand Construction purchase.

    Available Revolving Credit Facility
    $415 million
    Post Q1 FY26

    After funding Kenny Sand Construction purchase.

    Federal Business Revenue Contribution
    more than 15%up from ~10% previously
    Future

    Expected to grow as capabilities and customer relationships expand.

    Mission-Critical Data Center Revenue Contribution
    around 10%
    Future

    Expected to grow with dedicated leadership and leveraging local business units.

    Tactical Infrastructure Project Burn Rate
    14 months
    Laredo project

    Fast burning project, requiring significant resources.

    Construction Gross Profit Margin
    up 70 bpsYoY
    Q1 FY26

    Trending well, on track for full-year targets.

    Industry KPIs

    4
    MetricValueDetails
    Total backlog$7.2 billionUSD
    End market pipeline—
    Acquisition contribution$150 millionUSD
    Same store organic revenue growth$108 millionUSD

    Orderbook & backlog

    2
    CAP (Committed and Awarded Projects)$7.2 billionQ1 FY26 end

    up $200 million from Q4

    Increased despite a $300 million reduction related to a California public sector highway project cancellation. Reflects robust bidding environment.

    Federal CAP$1.3 billionQ1 FY26 end

    Includes $640 million related to tactical infrastructure projects.

    Deals & partnerships

    1
    Kenny Sand ConstructionLeading provider of infrastructure construction services and construction materials in Utah County, Utah. Vertically integrated business model with earthwork, site prep, concrete, utility, project management, aggregate production, materials processing.

    Expands home market presence in Utah, deepens capabilities in education infrastructure, civil infrastructure, and private sector work. Funded by revolving credit facility.

    Risks & headwinds

    3
    Cancellation of public sector highway project in CaliforniaQ1 FY26

    approximately $300 million reduction in CAP

    Mitigation: Management believes the project will return in some form, but size and scope are TBD. Acknowledged as rare and due to expanded scope exceeding available funding from 2020.

    Oil price increases due to conflict in IraqFY26

    not presently expected to have a significant impact to annual outlook

    Mitigation: Mitigated through fixed forward contracts, physical storage, financial hedges, energy surcharges for material sales, and public owner escalators/de-escalators.

    Execution risks for tactical infrastructure projectsFY26-FY27

    Laredo project is $500 million, 14-month burn, 40% complete in 2026

    Mitigation: Mitigation strategies for schedule (fast burn), remoteness (access, logistics, recruiting), and subcontractor/supplier capacity (selective partnering, dedicated resources).

    What to watch in Q2 FY26

    5

    Federal Business Revenue Contribution

    Future quarters
    Current~10% of Construction revenue
    Target>15% of Construction revenue

    Why it matters

    Indicates successful execution of end-market strategy and diversification of Construction segment revenue.

    Looking forward, I believe that our federal business is positioned to generate more than 15% of our Construction segment revenue as we continue to grow this part of our business.

    Q&A highlights

    6

    How will Granite drive revenue and margin growth for KSC, leveraging existing operations and what value does Granite bring?

    KSC is a high EBITDA margin business, expected to add $100M revenue in 2026. Granite will support KSC's scale, grow its materials business, and diversify end markets into education, healthcare, and mission-critical data centers, sharing client bases.

    “One is we can support their scale in the market. We think that their materials business is an opportunity for us to also scale and grow. And then they just bring a different end market to us within our Utah business around education, health care and even some mission-critical work around data centers as opportunities.”

    asked by Steven Ramsey · answered by Kyle Larkin

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic M&A Framework

    Granite's M&A strategy is guided by a disciplined investment framework with two pillars: "support and strengthen" and "expand and transform." The company has expanded its corporate development team and integration management office, enabling it to self-source bolt-on transactions and pursue larger bank-led deals. This approach has fundamentally changed, leveraging a solid balance sheet and strong cash flow to accelerate growth through acquisitions.

    02

    Federal Business Expansion

    The federal business has grown significantly, now contributing around 10% of revenue and projected to exceed 15% of Construction segment revenue. This growth is driven by tactical infrastructure projects, including a recent $500 million Laredo project, and opportunities in Guam, military installations, and shoreline protection. Management views this as a successful overlay of an end-market strategy onto its geographical home market strategy.

    03

    Private Sector Growth Drivers

    Granite is actively pursuing growth in specific private sector end markets, including rail (intermodal facilities for Class 1 roads) and mission-critical data centers. A dedicated team focuses on client relationships and supports regional teams from pursuit to execution for data center projects, which include civil site development, water, and solar power generation. These data center opportunities are expected to grow to approximately 10% of overall revenues.

    04

    Materials Segment Transformation

    The Materials segment had a strong start to the year, with demand exceeding original expectations. The acquisition of Warren Paving has been particularly successful, driving significant revenue and cash gross profit growth. The segment is benefiting from modest volume growth, mid-single-digit aggregate price increases, and improved cost efficiency through plant automation, with orders ahead of the prior year and pricing meeting expectations.

    05

    Oil Price Mitigation

    Despite increases in oil prices due to global conflicts, Granite does not expect a significant impact on its annual outlook. The company employs various mitigation strategies, including fixed forward contracts, physical storage, financial hedges, and energy surcharges for material sales. Public owners also provide escalators and de-escalators for liquid asphalt and diesel, further protecting margins.

    06

    Capital Structure Management

    Granite proactively manages its capital structure, recently settling $100 million principal amount of convertible bonds due in 2028, using $233 million in cash. This leaves $274 million outstanding. The company continues to evaluate capital markets for opportunities to optimize its balance sheet, which remains well-positioned to support its capital allocation priorities.

    AI-generated summary of the company’s earnings call. Not investment advice.