GRANITE CONSTRUCTION INC (GVA): Results of Operations and Financial Condition
GRANITE CONSTRUCTION INC (GVA) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Granite Reports Second Quarter 2026 Results • Raised 2026 revenue guidance by $100 million • Q2 revenue increased 29% year-over-year to $1.5 billion • Q2 net loss of $278 million compared to net income of $72 million for the same period in the prior year • Q2 adjuste
How this was made
The 30-second read
Why it matters
The most actionable elements are the raised 2026 revenue guidance (+$100M), improved adjusted EBITDA (+22% YoY to $186M), higher operating cash flow (+$136M YoY to $142M), and CAP growth to $7.4B, alongside a large GAAP net loss explained by convertible-debt transaction losses.
Market read
This is a company-specific earnings and guidance update with explicit operating cash flow and backlog (CAP) changes, but GAAP results are heavily impacted by convertible-debt settlement accounting.
What to watch
CAP includes $624M of tactical CBP infrastructure expected to be realized over 2026-2027; traders may want to assess timing risk versus the sequential CAP increase and the cash flow target lift to 11% of revenue.
Granite Reports Second Quarter 2026 Results
Revenue, adjusted earnings, adjusted EBITDA, operating cash flow and CAP increased, and Granite raised its 2026 revenue guidance. However, the company reported a Q2 net loss of $278 million driven by a $360 million non-operating loss on convertible debt transactions, while Materials margins declined because of severe weather and quarry-development costs.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenue, three months ended June 30, 2026GAAP | $1.46 billion | – | $330 million; 29% |
| Gross profit, three months ended June 30, 2026GAAP | $239 million | – | $40 million |
| Selling, general, and administrative expenses, three months ended June 30, 2026GAAP | $108 million, or 7.4% of revenue | – | $22 million |
| Net loss attributable to Granite, three months ended June 30, 2026GAAP | $278 million | – | – |
| Diluted EPS, three months ended June 30, 2026GAAP | $(6.36) per diluted share | – | – |
| Adjusted net income attributable to Granite, three months ended June 30, 2026non-GAAP | $101 million | – | – |
| Adjusted diluted EPS, three months ended June 30, 2026non-GAAP | $2.16 per diluted share | – | – |
| Adjusted EBITDA, three months ended June 30, 2026non-GAAP | $186 million | – | $34 million; 22% |
| Committed and Awarded Projectsother | $7.4 billion | increased sequentially $250 million | an increase of $1.4 billion year-over-year |
| Operating cash flow, year-to-dateGAAP | $142 million | – | $136 million |
| Revenue, six months ended June 30, 2026GAAP | $2.37 billion | – | $542 million |
| Gross profit, six months ended June 30, 2026GAAP | $349 million | – | $66 million |
| Selling, general, and administrative expenses, six months ended June 30, 2026GAAP | $249 million, or 10.5% of revenue | – | $47 million |
| Net loss attributable to Granite, six months ended June 30, 2026GAAP | $320 million | – | – |
| Diluted EPS, six months ended June 30, 2026GAAP | $(7.33) per diluted share | – | – |
| Adjusted net income attributable to Granite, six months ended June 30, 2026non-GAAP | $113 million | – | – |
| Adjusted diluted EPS, six months ended June 30, 2026non-GAAP | $2.41 per diluted share | – | – |
| Adjusted EBITDA, six months ended June 30, 2026non-GAAP | $244 million | – | $64 million |
| Construction Segment gross profit, three months ended June 30, 2026GAAP | $ 198,694 (dollars in thousands) | – | 29.3 % |
| Construction Segment gross profit as a % of revenue, three months ended June 30, 2026GAAP | 16.5 % | – | – |
| Construction Segment gross profit, six months ended June 30, 2026GAAP | $ 300,874 (dollars in thousands) | – | 25.8 % |
| Construction Segment gross profit as a % of revenue, six months ended June 30, 2026GAAP | 15.2 % | – | – |
| Materials Segment gross profit, three months ended June 30, 2026GAAP | $ 40,077 (dollars in thousands) | – | (11.8) % |
| Materials Segment gross profit as a % of revenue, three months ended June 30, 2026GAAP | 16.1 % | – | – |
| Materials Segment cash gross profit, three months ended June 30, 2026non-GAAP | $ 70,166 (dollars in thousands) | – | 18.9 % |
| Materials Segment cash gross profit as a % of revenue, three months ended June 30, 2026non-GAAP | 28.2 % | – | – |
| Materials Segment gross profit, six months ended June 30, 2026GAAP | $ 47,802 (dollars in thousands) | – | 9.0 % |
| Materials Segment gross profit as a % of revenue, six months ended June 30, 2026GAAP | 12.1 % | – | – |
| Materials Segment cash gross profit, six months ended June 30, 2026non-GAAP | $ 95,966 (dollars in thousands) | – | 38.1 % |
| Materials Segment cash gross profit as a % of revenue, six months ended June 30, 2026non-GAAP | 24.3 % | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Construction Segment, three months ended June 30, 2026Higher CAP entering the quarter and $98 million from recently acquired businesses, Warren Paving, Papich Construction, and Kenny Seng Construction. | $ 1,207,479 (dollars in thousands) | – | 28.8 % |
| Construction Segment, six months ended June 30, 2026Higher CAP entering the year and $142 million from recently acquired businesses, Warren Paving, Papich Construction, and Kenny Seng Construction. | $ 1,973,533 (dollars in thousands) | – | 27.2 % |
| Materials Segment, three months ended June 30, 2026Revenue from recently acquired businesses, Warren Paving, Papich Construction, Cinderlite, and Kenny Seng Construction, of $60 million. | $ 248,393 (dollars in thousands) | – | 31.7 % |
| Materials Segment, six months ended June 30, 2026Revenue from recently acquired businesses, Warren Paving, Papich Construction, Cinderlite, and Kenny Seng Construction, of $110 million. | $ 394,804 (dollars in thousands) | – | 44.4 % |
2026 fiscal year outlook
- Revenue$5.3 billion to $5.5 billion
- Operating expensesSG&A expense as a percent of revenue in a range of 8.25% to 8.75% of revenue, inclusive of an estimated $48 million of stock-based compensation expense
- Tax ratemid-20s
- NoteAdjusted EBITDA margin in a range of 12.25% to 13.25%
- NoteCapital expenditures in a range of approximately $140 million to $160 million, including approximately $50 million in planned strategic materials investments.
- NoteAnnual operating cash flow target from 10% to 11% of revenue.
What drove it
- Construction revenue growth was driven by higher CAP entering the quarter and year and contributions from recently acquired businesses.
- Construction gross profit and gross profit margin improved in the quarter because of higher revenue and improved execution across the project portfolio.
- Materials revenue growth was primarily driven by recently acquired businesses.
- CAP included $624 million of tactical infrastructure projects for U.S. Customs and Border Protection that should be substantially realized over 2026 and 2027.
- Management cited strength in public and private infrastructure markets and expects sustained elevated organic growth through the second half of 2026 and into 2027 and beyond.
Concerns
- Q2 net loss was driven by a $360 million non-operating loss on convertible debt transactions associated with the 3.75% convertible notes.
- The six-month net loss was driven by a $369 million non-operating loss on convertible debt transactions associated with the 3.75% convertible notes.
- Materials gross profit margin and cash gross profit margin declined because of severe weather in the southeast and higher production costs associated with quarry development activities.
- Construction gross profit margin for the six-month period decreased primarily due to a reduction in the favorable impact of claim settlements.
What to watch
- Execution against the increased 2026 revenue guidance range of $5.3 billion to $5.5 billion.
- Delivery of adjusted EBITDA margin in the range of 12.25% to 13.25%.
- Materials margin recovery following severe weather in the southeast and quarry development activities.
- Realization of the $624 million of tactical infrastructure projects for U.S. Customs and Border Protection over 2026 and 2027.
- Annual operating cash flow performance against the 11% of revenue target.
Balance sheet and cash flow
- Year-to-date operating cash flow increased to $142 million from $5 million for the same period in the prior year.
- Granite issued senior notes and called its 3.75% convertible notes for redemption.
- The company elected to settle conversions of the convertible notes primarily in cash in order to limit dilution to stockholders.
Analysis
Granite delivered substantial top-line growth in the second quarter, with revenue increasing $330 million to $1.46 billion and adjusted EBITDA increasing $34 million to $186 million. The six-month results similarly showed revenue up $542 million to $2.37 billion and adjusted EBITDA up $64 million to $244 million. Construction was the principal operational contributor, with three-month revenue of $ 1,207,479 in dollars in thousands and gross profit margin of 16.5 % compared with 16.4 % in the prior-year quarter.
Acquisitions contributed materially to growth in both operating segments. Recently acquired businesses contributed $98 million to quarterly Construction revenue and $60 million to quarterly Materials revenue. Construction also benefited from higher CAP entering the period and improved project execution. CAP reached $7.4 billion after increasing sequentially $250 million and included $624 million of tactical infrastructure projects for U.S. Customs and Border Protection that should be substantially realized over 2026 and 2027.
The reported GAAP loss obscured improved underlying operating results. Granite posted a Q2 net loss attributable to Granite of $278 million, or $(6.36) per diluted share, because of a $360 million non-operating loss on convertible debt transactions. The company excluded these losses from adjusted net income and adjusted EBITDA, reporting adjusted net income of $101 million and adjusted diluted EPS of $2.16 per diluted share. The company also said it elected primarily cash settlement of conversions to limit dilution to stockholders.
Margin performance was uneven across the portfolio. Materials quarterly revenue rose to $ 248,393 in dollars in thousands, but gross profit declined to $ 40,077 in dollars in thousands and gross profit margin fell to 16.1 % from 24.1 %. Management attributed the margin pressure to severe weather in the southeast and higher quarry-development production costs. Cash generation improved materially, with year-to-date operating cash flow increasing to $142 million from $5 million.
Management raised fiscal 2026 revenue guidance to $5.3 billion to $5.5 billion from $5.2 billion to $5.4 billion, while leaving its other stated guidance unchanged. The company continues to guide for adjusted EBITDA margin of 12.25% to 13.25%, SG&A expense of 8.25% to 8.75% of revenue, and capital expenditures of approximately $140 million to $160 million. The operating priorities for the balance of the year are sustaining construction execution and CAP conversion while recovering Materials profitability and achieving the increased operating cash flow target of 11% of revenue.
Management, verbatim
Despite headwinds created by severe weather in the southeast, we generated strong organic revenue growth, increased adjusted EBITDA and operating cash flow, completed the acquisition of Kenny Seng Construction, and strengthened our capital structure by issuing senior notes and calling our 3.75% convertible notes for redemption.
Kyle Larkin, Granite President and Chief Executive Officer
With our performance through the second quarter and opportunities ahead, we are raising our annual revenue guidance range by $100 million.
Staci Woolsey, Executive Vice President and Chief Financial Officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so actual performance cannot be compared with prior guidance.
- GAAP operating income and operating margin were not included in the provided filing text.
- Consolidated gross margin was not included in the provided filing text.
- Cash balance, total debt, free cash flow, debt issuance amounts, share repurchases and dividends were not included in the provided filing text.
- Quarterly sequential comparisons for revenue, earnings, margins and segment results were not included in the provided filing text.
- Actual capital expenditures and an adjusted EBITDA reconciliation were not included in the provided filing text.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Granite filed an SEC 8-K with Exhibit 99.1 reporting Q2 2026 results for the quarter ended June 30, 2026, including guidance and cash flow targets.
Ticker impact
Granite reported Q2 revenue up 29% to $1.5B, raised 2026 revenue guidance by $100M, and detailed a $360M non-operating convertible-debt loss.
Near-term trading likely hinges on whether investors focus on raised revenue guidance and cash flow versus the magnitude of GAAP loss from convertible debt.
The filing provides multiple decision-relevant datapoints: raised revenue guidance, CAP build to $7.4B, operating cash flow up to $142M, and explicit explanation that the GAAP loss is largely non-operating and excluded from adjusted measures.
Market effects
Signals continued demand and backlog strength for US infrastructure contractors, with emphasis on federal, rail/transit, and data-center related work.
Mentions severe weather headwinds in the US southeast, implying regional project execution variability.
Limited direct global linkage; primarily US public-funding and construction execution dynamics.
Counterpoint
Investors may discount the guidance raise if the GAAP loss and convertible-debt settlement costs dominate sentiment, or if adjusted metrics are less durable than backlog growth.
Key entities
- companyGranite Construction Inc
Reported Q2 2026 results, raised 2026 revenue guidance by $100M, and described convertible-debt settlement losses driving GAAP net loss.
- acquired businessKenny Seng Construction
Acquisition completed during the quarter, contributing to revenue growth (referenced in the filing).
- debt instrument3.75% convertible notes
Granite elected to settle conversions primarily in cash, leading to a $360M non-operating loss in Q2.
