Granite Construction Incorporated · NYSE:GVA
Granite Construction — Q3 2024 Earnings Presentation
25 slides from Granite Construction's earnings presentation, Oct 31, 2024
Slide 1: November 2024 Investor Presentation
November 2024 Investor Presentation © 2024 Granite Construction. All Rights Reserved.
Slide 2: Safe Harbor
Safe Harbor Any statements contained in this presentation that are not Reform Act of 1995. These forward-looking statements are revenue and allocations, capital allocation priorities, the based on historical facts, including statements regarding identified by words such as “future,” “outlook,” “assu
Slide 3: Company overview: founded in 1922, NYSE: GVA
• Founded in 1922 • Headquartered in Watsonville, CA • Publicly traded since 1990, NYSE: GVA • One of the largest diversified, vertically integrated civil contractors and construction materials producers in the U.S. • Geographically diverse public and private client base • Thoughtful project pursui
Slide 4: Our Markets & Customers
Our Markets & Customers Granite serves customers in both public and private sectors within our reportable business 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. ENR | E
Slide 5: Where We Work
Where We Work Home Markets Where we Work Materials: Aggregate Materials: Asphalt © 2024 Granite Construction. All Rights Reserved. 5
Slide 6: Home Market Strategy a Key Differentiator
Home Market Strategy a Key Differentiator Client Centric Focus 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 a
Slide 7: Strong Transportation Funding Supports California Growth
Strong Transportation Funding Supports California Growth • Caltrans (California Department of Transportation) capital project funding allocations stable and aligned with the agency’s project delivery capacity • Caltrans awards continued to grow significantly for the second consecutive calendar year,
Slide 8: California Senate Bill 1 (SB-1) 10 Year Revenue and Allocation
California Senate Bill 1 (SB-1) 10 Year Revenue and Allocation 10 Year SB-1 Revenue and Allocation $7,263 $6,947 $6,653 $7,163 $6,313 $6,847 $6,553 $6,213 $5,245 $5,235 $5,079 $5,169 $5,314 $4,280 $4,257 $4,980 $3,673 $4,180 $4,157 $3,384 $3,515 $3,199 $2,840 $2,844 $3,490 $2,489 $2,617 $3,332 $3,16
Slide 9: 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 » Ensure quality materials Operations » Leverage
Slide 10: Investment Framework Supports Long-term Growth
Investment Framework Supports Long-term Growth SUPPORT & Solidify and Bolster EXPAND & Expand Into New Core Competencies STRENGTHEN and Strengths TRANSFORM Geographies INVESTMENT CATEGORIES INVESTMENT CATEGORIES Strengthen & Bolt-on: Civil Automation Expand Home Construction & & Reserve VI Expansion
Slide 11: Granite Investment Framework – Expand and Transform
Granite Investment Framework – Expand and Transform Lehman-Roberts/MSG VI Expansion & Platform Operational Footprint Expanded Granite’s footprint and created a new platform in the Southeast (AR, TN, MS) through the acquisition of Lehman-Roberts, Memphis Stone & Gravel, and Dickerson & Bowen Profitab
Slide 12: $5.6B High-Quality CAP with Risk-adjusted Procurement Types
Bid-Build Procurement $5.6B High-Quality CAP with Risk-adjusted Procurement Types • Project duration typically several months to 3 years • Traditional method with owners preparing the design and construction and transportation management plans • Contractors compete on a competitive low-bid process •
Slide 13: Medium-Term Financial Growth Formula
Medium-Term Financial Growth Formula 2027 Targets Robust public funding environment led by the • 6% - 8% Organic Growth CAGR IIJA expected to continue to drive opportunities for organic growth. Private investment in Revenue • Continued Bolt-on M&A • Expectation for larger M&A with a 2.5x long-term l
Slide 14: Accelerating Organic Growth and Acquisitions
Accelerating Organic Growth and Acquisitions Accelerating Revenue Growth Strong public funding and resilient private $3.9 - $4.0 market supporting organic revenue growth $3.5 $3.3 $0.6 $0.5 $0.5 Infrastructure Bill is lifting the market and is $3.0 $3.3 - $3.4 expected to continue to build in signif
Slide 15: 2024 Guidance – Accelerating Growth and Shareholder Return
2024 Guidance – Accelerating Growth and Shareholder Return Revenue SG&A Adjusted EBITDA Margin* (Percentage of Revenue) $3.9 - $4.0 $3.5 8.4% 8.3% - 8.5% 10.0% - 11.0% 8.0% FY 2023 FY 2024F FY 2023 FY 2024F FY 2023 FY 2024F $ in billions * both years include stock-based compensation adjustment © 202
Slide 16: 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 Focused growth capex and M&A to drive growth and efficiencies 4 Target 2.5x long-term leverage 5 Opportunistic share repurchase when cash is in exc
Slide 17: Q3 2024 Results
Q3 2024 Results Q3 2024 YOY Change Total Revenue Total Revenue $1,276 M + $159 M Construction Revenue Construction Revenue $1,081 M + $135 M Materials Revenue Materials Revenue $195 M + $24 M Adjusted Net Income Adjusted Net Income $91 M + $14 M Adjusted Diluted EPS Adjusted Diluted EPS $2.05 + $0.3
Slide 18: Construction Segment
Construction Segment CAP History $5,585 $5,546 $5,575 $5,620 $88 $135 $5,498 $225 $95 $111 2% 2% 4% 2% $159 2% • CAP of $5.6 billion, increased $44 million sequentially $179 3% $160 $138 $174 3% and increased $35 million year-over-year 3% 3% 3% o Continue to lead with Best Value CAP $4,078 $52 1% $2
Slide 19: Materials Segment
Materials Materials Segment Segment Materials Gross Profit And Cash • Materials-focused acquisition of Dickerson and Bowen closed Gross Profit Margin* in August o Expands the Southeast home market south through 20.6% Mississippi 17.9% 15.8% 7.1% • Price increases meeting expectation targets through
Slide 20: Why Granite?
Why Granite? • Revenue growth continued in Q3’24 and expect to finish the year strong. • Healthy CAP supported by continued strong public and private market environment • Healthy state budgets across Granite's geographies • Narrowing adjusted EBITDA margin to 10.0% to 11.0% guidance and expect furth
Slide 21: Thank you. Questions?
Thank you. Questions? © 2024 Granite Construction. All Rights Reserved. 21
Slide 22: Appendix
Appendix The tables below contain financial information calculated • Loss on debt extinguishment, and Items that may have a significant impact on the Company's other than in accordance with U.S. generally accepted • Stock-based compensation expense. financial position, results of operations and cash
Slide 23: Materials Segment Cash Gross Profit
Materials Segment Cash Gross Profit GRANITE CONSTRUCTION INCORPORATED MATERIALS SEGMENT CASH GROSS PROFIT RECONCILIATION (Unaudited - in thousands) Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2022 2024 2023 2022 Gross profit $32,264 $29,481 $22,038 $59,060 $49,067 $40,
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation GRANITE CONSTRUCTION INCORPORATED EBITDA AND ADJUSTED EBITDA(1) (Unaudited - dollars in thousands) Three Months Ended Nine Months Ended (1) We define EBITDA as GAAP net income attributable to Granite Construction Incorporated, September 30, September 30, adjusted for n
Slide 25: Adjusted NI Reconciliation
Adjusted NI Reconciliation GRANITE CONSTRUCTION INCORPORATED (1) In the first quarter of 2024, we revised the adjusted net income calculation to ADJUSTED NET INCOME RECONCILIATION exclude the impact of stock-based compensation expense. The prior period (Unaudited - in thousands, except per share adj