Granite Construction (GVA) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 14% year-over-year to $1.3 billion, with net income up 37% to $79 million and adjusted diluted EPS at $2.05, both up from prior year.

• Gross profit margin improved to 15.9% in Q3 2024, driven by higher revenue and less negative impact from estimate revisions.

• Acquisitions of Dickerson & Bowen and LRC/MSG expanded the southeast presence and contributed to revenue and profit growth.

• Record Committed and Awarded Projects (CAP) reached $5.6 billion, up $44 million sequentially, supported by strong public funding and resilient private markets.

• Year-to-date operating cash flow increased $249 million year-over-year, reaching $283.5 million.

Financial highlights

• Gross profit for Q3 increased $36 million to $203 million; adjusted EBITDA was $149 million, up from $126 million, with a margin of 11.7%.

• Cash and cash equivalents at quarter-end totaled $462.3 million, with total liquidity including marketable securities at $472.4 million.

• SG&A expenses were 7.2% of revenue in Q3 2024, up from 6.7% in Q3 2023, reflecting higher incentive compensation.

• For the nine months ended September 30, revenue grew 18% in Construction and 16% in Materials segments.

• Capital expenditures for 2024 expected to be approximately $130 million.

Outlook and guidance

• 2024 revenue guidance remains $3.9–$4.0 billion, with adjusted EBITDA margin narrowed to 10–11%.

• SG&A expense expected at 8.3–8.5% of revenue for 2024, up due to higher incentive compensation.

• Organic revenue growth targeted at 6–8% CAGR through 2027, with Adjusted EBITDA margin expected to reach 12–14% by 2027.

• Free cash flow margin targeted at 6–8% of revenue by 2027.

• Effective tax rate for adjusted net income projected in the mid-20s.