Granite Construction Incorporated

Good morning. My name is Bailey and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite 2025 fourth quarter conference call. This call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. To ask a question, please press star then one. 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 Investor 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 Granite'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 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 gross profit. 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 we turn to the segment discussions, I'd like to discuss the progress we've been making to deliver on our strategic priorities. In 2025, we continue to focus on bidding and building the right projects, investing in our materials business, and expanding our geographic footprint through targeted M&A. Our strategy to drive consistent, predictable financial performance across the company is working. We remain highly selective in the work we pursue, emphasizing best value and high-quality bid-build opportunities in our home markets, where we believe we can earn an appropriate return for the risks we assume in constructing these projects. This disciplined approach, combined with a strong funding environment, underpinned our efforts to build a strong project portfolio, even as we grew our cap to a record $7 billion at year-end 2025, the highest in our history. Since 2020, Our teams across the company have focused on pursuing the projects where we can leverage our home market advantages and consistently deliver higher margin work. This strategy enabled us to drive significant improvement in profitability from 8.8% construction segment gross profit margin in 2020 to 15.7% in 2025, all by demonstrating the ability to organically grow the top line across our footprint. As I look at the landscape of the construction business entering 2026, I believe there are still significant public and private opportunities to capture work in our home markets, even as we maintain discipline and work to continually drive excellence in execution in the bid room and every day on our job sites. During 2025, we also continue to invest in our materials business, both through acquisitions and CapEx. We've now completed the second year following our internal reorganization, where we restructure our businesses to place materials leaders over our materials business. This change has allowed these teams to direct our strategy across the segment as we work to unlock value through market-based pricing and through application of efficiencies across the segment. Over the last several years, we have focused our CapEx spend on the materials segment to improve plant performance, acquire additional aggregate reserves, and expand our footprint. We have improved materials segment cash growth profit from 19% in 2023 to 26% in 2025. The return on our investments has been exceptional. The team has many more initiatives in process, including partnering with our construction teams to drive more tons to our plants by leveraging our vertical integration, and we expect to spend another $50 million in strategic CapEx and materials business in 2026 to continue the strong momentum we built. In 2025, we completed three acquisitions, both expanding and strengthening our Southeast platform with the Warren Paving Acquisition and strengthening the home markets in California and Nevada with the acquisitions of Pappage Construction and Cinderlight. These margin and creative acquisitions and strong and growing markets are representative of the acquisitions I expect to continue to complete in 2026 and the future. We expect acquisitions will continue to be a major component of our growth that should enhance the performance of the business, the existing home markets, and expand our footprint to new geographies. We expect to drive further gains and deliver significant shareholder value as we continue to execute on our strategic plan. We continue to build a larger, higher-quality project portfolio, even as we invest in and grow our vertically integrated model. These efforts position Granite for continued organic growth, margin expansion, and strong cash generation. We believe we are on track to achieve our 2027 financial targets, supported by favorable market conditions, robust infrastructure funding, and consistent execution across the business. Turning now to the construction segment, First, I want to say how excited I am about the performance of our construction teams across the company. Their execution throughout the year was outstanding and a key driver of our strong finish to 2025. We entered the fourth quarter with record cap, and despite some delays on certain projects and wet weather at the end of the quarter, year-over-year revenue growth accelerated as expected. We continue to see sustained market strength and a healthy bidding environment across our footprint, with California and Nevada leading the way. With several significant awards in the quarter, cap increased sequentially by $632 million, ending the year with $7 billion, a new record. In California, the newly proposed California budget for the 2026 to 2027 fiscal year represents a significant increase in the key capital outlay projects and local assistance components of the transportation funding for the original 2025 to 2026 budget, which itself was increased significantly in the latest January forecast update. Stable and protected funding for transportation infrastructure in California continues to grow despite concerns about overall deficits. The strength of state transportation budgets is broad, and we see many meaningful opportunities across our regions to continue to grow CAP on the first quarter of 2026 and throughout the year. Best value work continues to grow as a percentage of our portfolio ending the quarter at 48% of CAP. As we discussed in past quarters, best value procurement plays to Granite's home market strengths. These projects tend to be awarded to teams with strong qualifications. The process is designed to promote risk mitigation during design and to reward collaboration, thereby enabling us to better manage construction risk, reduce disputes, and deliver high-quality, complex projects more efficiently. Best value construction remains a key driver of our sustainable margin expansion strategy. This growth in best value work has been a core contributor to our de-risk project portfolio and has allowed us to achieve consistent, predictable increases in our construction margins over the past several years, and we expect that trend to continue as more states adopt these procurement methods. The high-quality cap portfolio we have built helped deliver the gross profit margin increase that we expected in 2025. We expect continued gross profit improvement in 2026, consistent with our 2027 financial targets. Overall, performance in this segment has improved meaningfully, and with record level, higher quality cap, and favorable market conditions, we expect continued revenue growth and construction margin expansion in 2026 in line with our long-term financial targets. Moving to the materials segment, 2025 was a transformational year for our materials business. We delivered both organic top-line and bottom-line growth, and we significantly expanded our addressable market through acquisitions. most notably through the acquisition of Warren Paving, which significantly expands our reserves and resources in the southeast. This was our first full quarter including Warren Paving, and we see the numerous opportunities as we continue to integrate it into our southeast platform. We expect to continue growing this platform organically as we work to expand its distribution network, improve logistics efficiency, and leverage Warren's marine and river-based transportation capabilities. Expansion opportunities include potentially adding additional aggregate yards, requiring strategic assets to enhance both scale and margin profile of the platform. With the addition of Warren, along with the acquisitions of Cinderlight and Pappage Construction, our aggregate reserves and resources increased 34% year-over-year to 2.1 billion tons, more than doubling grants reserves in the last five years. This growth in long life reserves provides a strong foundation for sustained margin expansion in the materials segment. We expect the growth of our materials business to continue throughout 2026 and in the years to follow, supported by strong market conditions, our proven vertically integrated operational model, and our ongoing commitment to disappointed investment. Now, I'll turn it over to Stacey to review our financial performance for the quarter.