Granite Construction (GVA) Q4 2023 earnings summary

Executive summary

• FY 2023 revenue rose 6% YoY to $3.509B; adjusted EBITDA was $269M, with a 7.7% margin, or 8.9% excluding legacy I-64 and Tappan Zee projects.

• Year-end CAP reached $5.546B, up $1.1B YoY; management expected significant revenue growth and higher cash generation in 2024.

Financial highlights

• Q4 revenue was $934M; adjusted net income was $36M, adjusted diluted EPS $0.82, adjusted EBITDA $74M and adjusted EBITDA margin 7.9%.

• FY 2023 adjusted net income was $140M and adjusted diluted EPS was $3.14; adjusted EBITDA margin was 7.7%, versus 6.4% in FY 2022.

• Q4 operating cash flow was $150M; FY operating cash flow was $184M, or 5.2% of revenue. Cash and marketable securities totaled $454M at Q4 end.

• FY net income was $44M, or $0.97 diluted EPS; gross profit was $396M and SG&A was $294M, primarily reflecting higher incentive and deferred compensation expense.

Outlook and guidance

• FY 2024 revenue guidance is $3.8B–$4.0B, including $3.2B–$3.4B from Construction and $0.6B from Materials; adjusted EBITDA margin guidance is 9.0%–11.0%.

• FY 2024 SG&A guidance is 7.5%–8.0% of revenue; capital expenditures are projected at $130M–$150M.

• Higher CAP, robust markets and acquisitions are expected to drive 2024 revenue growth; further operating cash flow improvement is expected.

• Planned capex includes ~$50M for strategic materials investments and ~$20M for a project-specific tunnel boring machine.