Granite Construction Incorporated

Good morning. My name is Steve and I'll be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Incorporated 2025 Third Quarter Conference Call. This call is being recorded. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be question and answer period. To ask a question, please press star and 1. Please note, we will take one question and one follow-up question from each participant today. It is now my pleasure to turn the floor over to Vice President of Investment Relations, Mike Barker.

Good morning, and thank you for joining us. I'm pleased to be here today with President and Chief Executive Officer Kyle Larkin and Executive Vice President and Chief Financial Officer Stacey Woolsey. Please note that today's earnings presentation will be available on the events and presentations page of our investor relations website. We begin today with a brief discussion regarding forward-looking statements and non-GAAP measures. Some of the discussion today may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are estimates reflecting the current expectations and best judgment of senior management regarding future events, occurrences, Opportunities, Targets, Growth, Demand, Strategic Plans, Circumstances, Activities, Performance, Shareholder Value, Outcomes, Outlook, Guidance, Objectives, Committed and Awarded Projects or CAP, and Results. Actual results could differ materially from statements made today. Please refer to the grant's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these forward-looking statements. The company assumes no obligation to update forward-looking statements except as required by the law. Certain non-GAAP measures may be discussed during today's call and from time to time by the company's executives. These include but are not limited to adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, and cash growth problem. The required disclosures regarding our non-GAAP measures are included as part of our earnings press releases and in company presentations, which are available on our website, GraniteConstruction.com, under Investor Relations. Now, I'd like to turn the call over to Kyle Larkin.

Good morning. Before turning to our third quarter results, I wanted to highlight our most recent acquisition, Cinderlight, and discuss how it aligns with our broader investment strategy and our commitment to deploying capital in ways to support growth and enhance shareholder value. In 2022, we introduced an investment framework that is designed to guide our investment decision-making from how we allocate CapEx to M&A and help drive margin and revenue growth across our existing businesses. This investment framework is anchored by two pillars, support and strengthen, and expand and transform. When we are assessing investments that are designed to support and strengthen our business, we are focusing on our core competencies and our home markets. These types of investments include automation projects, new plants, aggregate reserves, and bolt-on acquisitions that complement our vertically integrated model. Since launching this framework, we've relied on it to assess and ultimately In 2023, we acquired the Brunswick Canyon Quarry and Asphalt Plant in Carson City, Nevada. This added 17 million tons of reserves and expanded our vertically integrated footprint in northern Nevada. We then acquired Coast Mountain Resources in British Columbia, introducing the potential to barge 40 million tons of high-quality reserves south to support our Pacific Northwest operations. This year, we added Pappage Construction to bolster our California operations while also adding 40 million tons of reserves. Under the expanded transform pillar over the last two years, we've applied our investment framework as we built out our southeastern platform with the acquisitions of Lehman Roberts, Memphis Stone & Gravel, Dickerson & Bowen, and just recently, at the beginning of the third quarter, Warren Pape. We're excited about our southeastern platform. It is a high-quality and profitable vertically integrated business with numerous opportunities for growth and further expansion. We expect to grow the platform organically with targeted investments to expand its distribution network, perhaps to the addition of more aggregate yards, or by purchasing other strategic assets that will bring further capabilities to the platform. We also expect to build on the southeastern platform with M&A that will expand our footprint in the new geographies and enable us to leverage the high-quality aggregates and distribution network of warm pavement. Most recently, in early October, we announced our newest acquisition of Cinderlight, a well-established construction materials, landscape supply, and transportation company based in Carson City, Nevada. Cinderlight operates five aggregate quarries and one recycling yard, and its operations are supported by a fleet of trucks and drivers. The acquisition complements our existing operations in northern Nevada and expands our reach in a high-growth region. The acquisition adds approximately 100 million tons of aggregate reserves and an annual production volume of 975,000 tons, significantly enhancing our material reserve base in the area. These acquisitions reflect our disciplined approach to M&A. targeting high-quality, material-focused businesses that strengthen our vertically integrated model and support long-term growth in line with our 2027 financial targets. Since 2021, we have more than doubled our average of reserves to a current total of approximately 2.1 billion tons. For the full year of our acquisitions, we have increased aggregate production to approximately 25 million tons from 16 million tons in 2021. These investments have allowed us to increase materials segment cash growth profit margin from 18% in fiscal year 2022 to 29% through the first nine months of 2025. The progress has been tremendous. We are excited to see materials become a larger component of our business. We continue to evaluate bolt-on opportunities to complement our operations and unlock synergies. Looking ahead, we'll also continue to evaluate investment opportunities to allow us to expand and transform our business by entering new geographies and building new vertically integrated platforms. We believe our disciplined approach to growth, grounded in our investment framework and supplemented with our operational excellence, positions Granite to deliver consistent profitability and sustainable value creation for years to come. Now, let's discuss our third quarter results, starting with the materials segment. The materials segment delivered an exceptional quarter. Impressive growth on both the top and bottom lines of our legacy business was bolstered by the inclusion of warm paving and package construction for the last two months of the quarter. As I talk with our teams, I am encouraged that demand remains strong, led by the public market. I believe this environment should support volume growth both in aggregates and asphalt in the 2026. With orders as of the end of the third quarter, Our materials business has shown strong improvement in a relatively short period of time following our realignment to place materials experts in charge of materials business and centralized management functions such as sales and quality control. We have made tremendous progress, but there's more to do to grow revenue and improve profitability in the segment. From capital projects, including investments in aggregate plant automation and aggregate and asphalt plant efficiency, to bolt-on acquisitions like Fender Light, to implementation of value-enhancing pricing across our geographies, I believe our materials business will continue to transform over the upcoming quarters and years. Now, let's move to the construction segment. We had another strong quarter with gains in revenue, gross profit, and cap. We ended the quarter with record high cap and ended it with a new record high cap of $6.3 billion, despite the third quarter being our highest revenue burned quarter. This underscores both the strength of the market and the talent of our project pursuit teams. We remain focused on best value projects, which now represent a significant portion of our cap. These projects allow us to collaborate with owners early in the process, identify and mitigate risks, and deliver work more efficiently. Best value delivery methods like construction manager, general contractor, or progressive design build are especially effective on complex projects. Our early involvement supports better planning, risk management, and cost control. Larger best value projects are often broken into smaller work packages as they are collaboratively reviewed through workshops, allowing for more informed construction of the projects. These projects are generally completed faster and with significantly fewer claims than traditional delivery methods. While the timing of the construction portion of best value projects can be difficult to predict, we've constructed more than 90 of them, and our confidence in the benefits of best value contracting continues to grow. In the third quarter, we had a number of projects ramping up, and I believe we should see revenue accelerate in the fourth quarter and into 2026 as these projects move forward. This continues to be the strongest market I've seen in my career. I believe we are positioned to grow our cap portfolio and increase bid-day margins in the fourth quarter and in 2026. With this market, I expect to achieve our organic growth targets of 6% to 8% through 2027. Now, I'll turn it over to Stacey to review our financial performance for the quarter.