Granite Construction Incorporated

Good morning. My name is Myron, and I will be the conference facilitator today. At this time, I would like to welcome everyone to the Granite 2026 first 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 a question and answer period. To ask a question, please press star and 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 your host of Granite Construction Incorporated Vice President of Investor Relations, Mike Barker. Thank you and over to you.

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 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, cash gross profit, and cash gross profit per ton. 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 would like to turn the call over to Kyle Larkin.

Thanks, Mike. Before turning to our first quarter results, I want to take a moment to discuss our recent acquisitions. As a reminder, our approach to M&A is guided by a disciplined investment framework that we use to allocate capital across CapEx and M&A in ways to support growth and enhance shareholder value. That framework is anchored by two pillars, support and strengthen, and expand and transform. Over the last several years, we completed numerous acquisitions to strengthen our Western businesses, while also building and expanding our Southeastern platform through discipline, materials-focused acquisitions, and targeted investments. With an expanded corporate development team, a dedicated integration management office, strong operational engagement, a solid balance sheet, and strong cash flow, our approach to M&A has fundamentally changed from the past. The ability to self-source and integrate bolt-on transactions while simultaneously pursuing larger bank-led deals is a differentiator that allows us to accelerate our growth through acquisitions. Consistent with this strategy, we recently announced the acquisition of Kenny Sane Construction. Kenny Sane Construction is a leading provider of infrastructure construction services and construction materials in Utah County, Utah. Founded in 1985, the company has built a strong reputation for operational excellence and end-to-end project delivery across a diverse set of infrastructure and markets. Kenny Sane Construction operates a vertically integrated business model with capabilities that include earthwork and site preparation, concrete work, utility installation, project management and contracting, aggregate production, and materials processing. The business brings end-market diversification with over half of its revenue derived from education infrastructure and the remainder from civil infrastructure and private sector work. These markets align well with our focus on public funding and infrastructure demand. We expect Kenny Sane Construction to add approximately $150 million in revenue annually with an accretive adjusted EBITDA margin in the high teens. This acquisition expands our home market presence and a strong Utah market, while deepening our capabilities in attractive end markets. We're excited to welcome the team to Grant. Now, let's move to the construction segment. We ended the quarter with a cap of $7.2 billion, a $200 million increase from the fourth quarter. CAP increased despite a reduction of approximately $300 million related to the cancellation of a public sector highway project in California where expanded scope exceeded available funding. While cancellation of a project in CAP can occur and happen in this circumstance, it is very rare in our experience. The increase of CAP reflects a bidding environment that remains robust at the federal, state, and local, and private levels. We added a second tactical infrastructure project to CAP and ended the quarter with $1.3 billion of federal cap, of which $640 million is related to tactical infrastructure projects. We are proud to support the infrastructure needs of the various branches of the federal government. We have made significant investments in our federal business and expanded this platform significantly over the last several years. These projects are evidence of the progress we have made building capabilities and customer relationships over time. Looking forward, I believe that our federal business is positioned to generate more than 15% of our construction segment revenue as we continue to grow this part of our business. At the state level, funding and bidding opportunities remain strong. As we ramp up for our busy season, our cap and potential new projects gives us confidence that we will meet our organic growth expectations for the year. In the private sector, we are focused on end markets that can drive growth and further improve the quality of cap. First, we are seeing opportunities in the rail market, including intermodal facilities for Class I railroads. We have relevant experience and strong customer relationships in this end market, and we have successfully completed multiple intermodal projects for rail clients. Second, we are seeing growing opportunities in mission-critical data center projects, which includes civil site development, as well as water and solar power generation for the data centers. We have formed a dedicated team to oversee and focus on key client relationships and support our regional teams from pursuit to execution when pursuing or building projects with these clients. We have completed numerous data center projects in several of our home markets, and we believe Grant is uniquely positioned to construct these schedule-intensive projects. Overall, we believe we have a great opportunity to continue to build CAP. We have built what we believe is the highest quality project portfolio in grants history by focusing on our home markets and best value projects that better position us for success. With our cap, the opportunities ahead of us, and the continued emphasis on operational excellence, we believe the construction segment is well positioned to deliver sustainable growth and margin expansion. I'll now turn to the materials segment, which had a fantastic start to the year. While the first quarter has traditionally been seasonally slower, we are encouraged by demand across our geographies and by the performance of our newly acquired companies, led by Warren Patey. Our margin improvement expectations for 2026 were based on the inclusion of acquired businesses for a full year, modest volume growth across the company, mid-single-digit aggregate price increases, and improved cost efficiency through plant automation and process improvements. Through the first four months of the year, I believe we are on track to meet or exceed our expectations. Aggregate and asphalt orders are ahead of our year, and we are meeting our pricing expectations. During the quarter, oil prices increased due to the conflict in Iraq. Granite's primary oil exposures are through purchases of liquid asphalt, diesel usage and equipment, and bars transported. We regularly work to mitigate exposure to pricing fluctuations in the energy sector. For instance, we enter into fixed forward contracts, maintain physical storage, apply financial hedges, and include energy surcharges for material sales. While we will continue to monitor the market closely, we do not presently expect that the current increases in oil prices will have significant impact to our annual outlook. Overall, we believe the materials segment is well positioned for continued growth and transformation. Now, I'll turn it over to Stacy to do our financial performance for the quarter.