Granite Reports Third Quarter 2026 Results and Introduces 2029 Targets
GRANITE CONSTRUCTION INC (GVA) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Granite Reports Third Quarter 2026 Results and Introduces 2029 Targets • Introducing 2029 financial targets reflecting an expected organic revenue CAGR of 10% to 12% • Q3 revenue increased 23% year-over-year to $1.8 billion • Q3 net income of $3 million compared to $
How this was made
The 30-second read
Why it matters
The earnings release shows strong top‑line growth but a steep net‑income decline due to non‑operating charges, likely prompting a modest sell‑off.
Market read
First‑time disclosure of Q3 results; investors will react to the net loss and unchanged guidance.
What to watch
The $1.3B federal CAP pipeline and upcoming 2029 targets may provide future earnings upside not reflected in the short‑term reaction.
Granite Reports Third Quarter 2026 Results and Introduces 2029 Targets
Revenue, gross profit, adjusted net income, adjusted EBITDA and operating cash flow increased year-over-year, supported by Construction execution and acquisitions. Reported GAAP net income fell to $3 million because of net non-operating charges associated with settling convertible-note conversions, while Materials gross profit and margins declined.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 revenueGAAP | $1.77B | – | increased $333 million |
| Q3 gross profitGAAP | $336M | – | increased $75 million |
| Q3 selling, general and administrative expensesGAAP | $104M | – | increased slightly |
| Q3 SG&A as a percent of revenueGAAP | 5.9% | – | – |
| Q3 operating incomeGAAP | $224.3M | – | – |
| Q3 net income attributable to GraniteGAAP | $3M | – | – |
| Q3 diluted earnings per share attributable to common shareholdersGAAP | $0.07 per diluted share | – | – |
| Q3 adjusted net income attributable to Granitenon-GAAP | $173M | – | – |
| Q3 adjusted diluted earnings per share attributable to common shareholdersnon-GAAP | $3.81 per diluted share | – | – |
| Q3 adjusted EBITDAnon-GAAP | $283M | – | increased $67 million |
| Q3 adjusted EBITDA marginnon-GAAP | 16.0% | – | – |
| Committed and Awarded Projectsother | $7.5B | increased sequentially $37 million | an increase of $1.1 billion year-over-year |
| Nine-month revenueGAAP | $4.13B | – | increased $876 million |
| Nine-month gross profitGAAP | $684M | – | increased $141 million |
| Nine-month selling, general and administrative expensesGAAP | $353M | – | increased $50 million |
| Nine-month SG&A as a percent of revenueGAAP | 8.5% | – | – |
| Nine-month operating incomeGAAP | $320.0M | – | – |
| Nine-month net loss attributable to GraniteGAAP | $317M | – | – |
| Nine-month diluted loss per share attributable to common shareholdersGAAP | $(7.23) per diluted share | – | – |
| Nine-month adjusted net income attributable to Granitenon-GAAP | $287M | – | – |
| Nine-month adjusted diluted earnings per share attributable to common shareholdersnon-GAAP | $6.17 per diluted share | – | – |
| Nine-month adjusted EBITDAnon-GAAP | $527M | – | increased $131 million |
| Nine-month adjusted EBITDA marginnon-GAAP | 12.7% | – | – |
| Nine-month operating cash flowGAAP | $404M | – | increased $114 million |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Construction Segment Q3Higher CAP entering the quarter and incremental revenue from acquisitions; excluding acquisitions, revenue increased approximately 20%, reflecting strong organic growth. | $1.47B | – | 26.8% |
| Materials Segment Q3Revenue from recently acquired businesses. Gross profit margin and cash gross profit margin decreased primarily due to the margin impact of energy surcharges offsetting elevated diesel costs. | $292.3M | – | 7.9% |
| Construction Segment nine monthsHigher CAP entering the quarter and incremental revenue from acquisitions; excluding acquisitions, revenue increased approximately 20%, reflecting strong organic growth. | $3.45B | – | 27.0% |
| Materials Segment nine monthsRevenue from recently acquired businesses. Gross profit margin and cash gross profit margin decreased primarily due to the margin impact of energy surcharges offsetting elevated diesel costs. | $687.1M | – | 26.2% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Fiscal year 2026 outlook
- Revenue$5.4 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.
- Note2029 organic revenue CAGR in a range of 10% to 12%
- Note2029 adjusted EBITDA margin in a range of 14% to 16%
- Note2029 SG&A expense as a percent of revenue of approximately 7.5%
- Note2029 operating cash flow of approximately 13% of revenue and CAPEX of approximately 3% of revenue resulting in free cash flow of approximately 10% of revenue
- Note2029 continued expansion through M&A with a 2.5x net leverage target
Capital returns
- Cash dividends paid of $17,031 (in thousands) for the nine months ended September 30, 2026.
- Repurchases of common stock of $55,772 (in thousands) for the nine months ended September 30, 2026.
What drove it
- Construction Q3 gross profit was $274,339 (in thousands), compared to $192,346 (in thousands), while gross profit as a percent of revenue was 18.6% compared to 16.5%.
- Construction nine-month gross profit was $575,213 (in thousands), compared to $431,450 (in thousands), while gross profit as a percent of revenue was 16.7% compared to 15.9%.
- Federal CAP was $1.3 billion as of September 30, 2026 and included $569 million of tactical infrastructure projects for U.S. Customs and Border Protection that should be substantially realized through the second quarter of 2028.
- At the midpoint of updated 2026 revenue guidance, management expects approximately 15% organic revenue growth, with an additional 9% contribution from acquired companies.
- Q3 adjusted EBITDA margin increased to 16.0% from 15.0%.
Concerns
- Q3 net income attributable to Granite declined to $3 million from $103 million and Q3 diluted EPS declined to $0.07 from $1.98, due to $162 million of net non-operating charges associated with settling conversions of the 3.75% convertible notes.
- Nine-month net loss attributable to Granite was $317 million, compared to net income attributable to Granite of $141 million, driven by $535 million of net non-operating charges associated with settling the conversions of the 3.75% convertible notes.
- Materials Q3 gross profit declined to $61,421 (in thousands) from $68,202 (in thousands), and gross profit as a percent of revenue declined to 21.0% from 25.2%.
- Materials nine-month gross profit declined to $109,223 (in thousands) from $112,046 (in thousands), and gross profit as a percent of revenue declined to 15.9% from 20.6%.
- Long-term debt increased to $1,174,339 (in thousands) at September 30, 2026 from $963,233 (in thousands) at December 31, 2025.
What to watch
- Execution against the updated fiscal 2026 revenue range of $5.4 billion to $5.5 billion and adjusted EBITDA margin range of 12.25% to 13.25%.
- Construction CAP conversion, including the $569 million of tactical infrastructure projects for U.S. Customs and Border Protection.
- Materials margin performance following the stated impact of energy surcharges offsetting elevated diesel costs.
- Operating cash flow, capital expenditures, acquisition spending and progress toward the 2.5x net leverage target.
- Progress toward the 2029 targets for organic revenue CAGR, adjusted EBITDA margin, SG&A ratio, operating cash flow, CAPEX and free cash flow.
Balance sheet and cash flow
- Cash and cash equivalents were $480,289 (in thousands) as of September 30, 2026, compared to $529,220 (in thousands) as of December 31, 2025.
- Current maturities of long-term debt were $381,686 (in thousands) and long-term debt was $1,174,339 (in thousands) as of September 30, 2026.
- Net cash provided by operating activities was $404,270 (in thousands) for the nine months ended September 30, 2026, compared to $289,612 (in thousands).
- Purchases of property and equipment were $89,879 (in thousands) for the nine months ended September 30, 2026.
- Acquisitions of businesses, net of cash acquired, were $184,314 (in thousands) for the nine months ended September 30, 2026.
- Net cash used in investing activities was $(155,857) (in thousands), and net cash used in financing activities was $(297,344) (in thousands), for the nine months ended September 30, 2026.
Analysis
Granite reported a strong underlying third quarter. Revenue increased $333 million to $1.77 billion, gross profit increased $75 million to $336 million and adjusted EBITDA increased $67 million to $283 million. Adjusted EBITDA margin rose to 16.0% from 15.0%. The Construction segment drove the period, with revenue of $1,474,017 (in thousands), up 26.8%, and gross profit margin of 18.6%, compared with 16.5% a year earlier.
Reported GAAP earnings were materially affected by convertible-note settlement activity. Net income attributable to Granite was $3 million, or $0.07 per diluted share, versus $103 million, or $1.98 per diluted share, a year earlier. Granite cited $162 million of net non-operating charges associated with settling conversions of its 3.75% convertible notes. Those conversion effects were excluded from adjusted measures, under which adjusted net income was $173 million and adjusted diluted EPS was $3.81, compared with $124 million and $2.70.
The nine-month results show the same contrast between operating momentum and reported earnings. Revenue increased $876 million to $4.13 billion, gross profit increased $141 million to $684 million and adjusted EBITDA rose $131 million to $527 million. However, the company reported a net loss attributable to Granite of $317 million, driven by $535 million of net non-operating charges tied to convertible-note conversions. Nine-month operating cash flow improved to $404 million from $290 million despite the reported loss.
Mix was favorable in Construction but less favorable in Materials. Construction revenue growth reflected higher CAP entering the quarter, acquisitions and approximately 20% organic revenue growth excluding acquisitions. Materials revenue rose, driven by acquired businesses, but Q3 gross profit fell to $61,421 (in thousands) from $68,202 (in thousands), and gross margin declined to 21.0% from 25.2%. Granite attributed the margin compression to energy surcharges offsetting elevated diesel costs.
CAP reached a record $7.5 billion, up sequentially $37 million and year-over-year $1.1 billion. Federal CAP was $1.3 billion, including $569 million of tactical infrastructure projects for U.S. Customs and Border Protection. Granite raised the low end of its fiscal 2026 revenue range to $5.4 billion from $5.3 billion while retaining the $5.5 billion high end and left the remaining fiscal 2026 guidance unchanged. The company also introduced 2029 targets, including 10% to 12% organic revenue CAGR, 14% to 16% adjusted EBITDA margin and approximately 10% free cash flow as a percent of revenue.
Management, verbatim
We delivered excellent third quarter results, reflecting strong execution across our business and continued progress on our strategy.
Kyle Larkin, Granite President and Chief Executive Officer
Our record CAP and strong market outlook position us well as we enter 2027.
Kyle Larkin, Granite President and Chief Executive Officer
Our strong performance through the first nine months of 2026 reinforces our confidence in both our full-year outlook and the longer-term financial targets we are announcing today.
Staci Woolsey, Executive Vice President and Chief Financial Officer
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so no comparison of actual results with prior guidance is available.
- Consolidated Q3 gross margin was not reported as a line item.
- Consolidated nine-month gross margin was not reported as a line item.
- Q3 operating cash flow was not reported.
- Q3 free cash flow was not reported.
- Fiscal 2026 GAAP net income guidance was not provided.
- Fiscal 2026 GAAP earnings per share guidance was not provided.
- Fiscal 2026 free cash flow guidance was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. 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 Construction filed a Form 8‑K announcing its third‑quarter 2026 financial results and reaffirmed FY2026 guidance.
Ticker impact
Granite Construction reported Q3 2026 results with revenue up 23% YoY to $1.8B but net income fell to $3M, and reaffirmed FY2026 guidance.
likely pressure as investors price in the net loss and unchanged guidance
The 8‑K filing is the first public disclosure of the quarter's numbers; the sharp drop in net income and lack of guidance lift suggest downside risk.
Market effects
Construction sector may see scrutiny on profit margins after Granite's loss.
U.S. infrastructure investors could reassess exposure to contractors with similar cost structures.
Limited; impact confined to U.S. construction equities.
Counterpoint
Despite the loss, the 23% revenue growth and record CAP could support a longer‑term upside thesis.
Key entities
- CompanyGranite Construction Inc.
U.S. construction contractor listed on NYSE (GVA).
