Granite Construction Incorporated · NYSE:GVA
Granite Construction — Investor Presentation (September 2022)
27 slides from Granite Construction's investor presentation, September 2022
Slide 1: Granite Construction September 2022 Investor Presentation
Granite Construction September 2022 Investor Presentation © 2022 Granite Construction. All Rights Reserved.
Slide 2: Safe Harbor
Safe Harbor Any statements contained in this presentation “appears,” “may,” “will,” “should,” “could,” of these expectations may be based on beliefs, that are not based on historical facts, including “would,” "guidance," “continue,” and the assumptions or estimates that may prove to be statements re
Slide 3: Company Overview
Company Overview © 2022 Granite Construction. All Rights Reserved.
Slide 4: Granite is America's Infrastructure Company
Granite is America’s Infrastructure Company ™ Headquarters Watsonville, CA GVA Founded in LISTED 1922 since 1990 NYSE One of the largest diversified heavy civil contractors and construction materials producers in the U.S. Proven vertically-integrated civil contractor BUILDING Intricate & thoughtf
Slide 5: What We Do
What We Do Construction Materials PAVEMENT TRANSPORTATION FEDERAL Infrastructure that Projects built for PRESERVATION AGGREGATES Roadway solutions for drives the movement those who protect and residential street, highway, of goods and people serve our community and commercial clients INDUSTRIAL WATE
Slide 6: Operating Footprint
Operating Footprint California Group, Brian Dowd, SVP Mountain Group, Mike Tatusko, SVP Central Group, Brad Williams, SVP Offices © 2022 Granite Construction. All Rights Reserved. 6
Slide 7: Strategic Update
Strategic Update © 2022 Granite Construction. All Rights Reserved.
Slide 8: Significant Accomplishments Already Made
Significant Accomplishments Already Made Shifted risk profile Exiting non-core Modified Operating Focused Core of our portfolio businesses Structure Investments • Transformed our CAP • Sold trenchless • New executive team • Continued investment in through decreasing rehabilitation and making difficu
Slide 9: © 2022 Granite Construction. All Rights Reserved.
© 2022 Granite Construction. All Rights Reserved. 9
Slide 10: Home Market Strategy a Key Differentiator
Home Market Strategy a Key Differentiator Home Market Community Engagement Market Intelligence & Insight Blended Project Portfolio Owner and Regulator Relationships Readily Available Resources We will focus on home markets where these attributes exist, among others. With these attributes, we believe
Slide 11: Vertical Integration Empowers Home Markets
Vertical Integration Empowers Home Markets Why Vertical Integration Compete in markets where owning materials is necessary External AGG Sales External HMA Sales Maximize productivity and scheduling Aggregate Production HMA Production Construction Operations Ensure quality materials Leverage lower pr
Slide 12: Investment Framework for Expanding Home Market Strategy
Investment Framework for Expanding Home Market Strategy 2022-2024 2024 & Beyond SUPPORT & Solidify and Bolster Core Competencies EXPAND & Expand Into New STRENGTHEN and Strengths TRANSFORM Geographies INVESTMENT CATEGORIES INVESTMENT CATEGORIES Automation Bolt-on: Civil Home Market VI Expansion & Pl
Slide 13: Strategy to Support Long-Term Organic Revenue Growth
Strategy to Support Long-Term Organic Revenue Growth Impact of federal $3.4 - $3.6 infrastructure bill on revenue expected to $3.0 $3.0 - $3.1 $0.5 begin 2023 $0.4 $0.4 $0.2 $0.1 $2.9 $2.6 California and Mountain Group capitalize on healthy $2.6 public funding and private expansion FY 2021 FY 2022F
Slide 14: Increase in Profitability through Execution
Increase in Profitability through Execution Construction Materials $500 30.0% $90 30.0% $400 - $500 $75 - $85 $450 $80 25.0% 25.0% $400 $344 $70 $63 $350 $301 $57 15.0% - 20.0% $60 20.0% $103 $281 14.0%- 17.3% 17.0% $300 16.0% 15.3% 14.9% $33 $50 $43 14.0% $250 12.7% 15.0% 15.0% $40 $200 $155 12.8%
Slide 15: Reduction in SG&A as a % of Revenue to Continue
Reduction in SG&A as a % of Revenue to Continue 300 10.0% $270 - $275 $253 9.5% $238 $243 250 9.0% Focused Operations and Efficiencies 8.2% 8.1% 8.1% 7.5% - 8.5% 200 Focus on core civil construction 8.0% 8.0% 1 and materials business 150 7.5% 7.0% 100 2 Standardized processes and 6.5% best practices
Slide 16: EBITDA Margin Improvement Drivers
EBITDA Margin Improvement Drivers Tailwinds & Opportunities • Central Group margin normalization 10 - 45 bps 9.0% - 11.0% 115 - 255 bps 15 - 40 bps o ORP materially complete in 2022 220 bps • Impact of standardization on project margin fade • Impact of investment in materials to reduce cost 5.4% Hea
Slide 17: Capital Allocation Priorities
Capital Allocation Priorities 1 Maintain current level of dividend 2 Support business operations via maintenance capex (1.5% - 2.0% of annual revenue) 3 Optimize gross debt-to-capital ratio to 20%-30% through debt repayment 4 Focused growth capex and M&A to drive growth and efficiencies 5 Opportunis
Slide 18: 2022 Guidance & 2024 Targets
2022 Guidance & 2024 Targets Revenue Adjusted EBITDA Margin SG&A % Revenue $3.4 - $3.6 9.0% - 11.0% $3.0 - $3.1 8.0% - 8.5% 7.5% - 8.0% 5.5% - 6.5% FY 2022F FY 2024F FY 2022F FY 2024F FY 2022F FY 2024F $ in billions © 2022 Granite Construction. All Rights Reserved. 18
Slide 19: Q2 2022 Review
Q2 2022 Review © 2022 Granite Construction. All Rights Reserved.
Slide 20: Construction Segment Overview
Construction Segment Overview • Continued revenue growth of the Mountain Group in Q2 • California group Q2 revenue decline due to an extension of the timing of project starts • Strong second half of the year expected • Significant decline in Central Q2 revenue as projects continue to wrap up • Biddi
Slide 21: Reshaping the Project Portfolio, Q2 CAP at $4.2B
Reshaping the Project Portfolio, Q2 CAP at $4.2B Diverse Geographically Balanced Procurement Type Operating Groups 3% 27% 22% 31% Q2 47% Q2 2020 2020 21% 28% 21% Bid Build Best Value California Mountain 1% Design Build Other Old Risk Portfolio Central 7% 32% 38% Q2 Q2 50% 42% 2022 2022 5% 25% *Best
Slide 22: Materials Segment Overview
Materials Segment Overview • Increased Q2 revenue driven by price increases offsetting lower volumes • Volumes impacted by project timing but strong second half expected • Increased cost pressure in Q2 with pre-energy surcharge orders fulfilled during the quarter Q2’22 Revenue Q2’22 Revenue by Produ
Slide 23: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Operating Cash Flow Liquidity Total Debt $615 $340 $509 $288 $227 $267 $388 $242 ($31) ($103) YTD 2021 YTD 2022 Q2 2021 Q2 2022 Q2 2021 Q2 2022 Revolver Availability Cash and Marketable Securities $ in millions © 2022 Granite Construction. All Rights Reserved. 23
Slide 24: Concluding Remarks Highlights
Concluding Remarks Highlights • Executing on our Strategic Plan that will drive consistent profitability and sustainable growth • Investing in our material business and strengthening our home markets • ORP burn is on track for completion of projects with expected CAP carrying into 2023 unchanged • G
Slide 25: Appendix
Appendix The tables below contain financial information • Other costs which include a legal settlement Company to calculate its non-GAAP financial calculated other than in accordance with U.S. charge, legal and accounting investigation fees, an measures may differ significantly from methods used gen
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation © 2022 Granite Construction. All Rights Reserved. 26
Slide 27: Adjusted NI Reconciliation
Adjusted NI Reconciliation © 2022 Granite Construction. All Rights Reserved. 27
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