Granite Construction’s first quarter saw revenue growth fall short of Wall Street expectations, but management attributed the performance to strong execution in its project portfolio and improvements in its Materials segment. CEO Kyle Larkin noted that project wins and higher-margin bidding, especially in public markets, supported profitability despite weather-related construction delays in March. Management emphasized that margin gains reflected both operational discipline and a strategic shift away from riskier, long-term contracts. CFO Staci Woolsey highlighted that improved execution and a higher-quality project mix resulted in better gross profit and positive operating cash flow, even in a typically slow quarter.
Is now the time to buy GVA? Find out in our full research report (it’s free).
Granite Construction (GVA) Q1 CY2025 Highlights:
- Revenue: $699.5 million vs analyst estimates of $705.9 million (4.1% year-on-year growth, 0.9% miss)
- Adjusted EPS: $0.01 vs analyst estimates of -$0.46 (significant beat)
- Adjusted EBITDA: $28.07 million vs analyst estimates of $12.05 million (4% margin, significant beat)
- The company reconfirmed its revenue guidance for the full year of $4.3 billion at the midpoint
- Operating Margin: -5.7%, in line with the same quarter last year
- Market Capitalization: $3.96 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Granite Construction’s Q1 Earnings Call
- Brent Thielman (D.A. Davidson) asked about the trajectory of Granite’s backlog (CAP) and bidding environment. CEO Kyle Larkin responded that public markets remain particularly strong and that CAP is expected to keep rising with increased high-margin project wins.
- Brent Thielman (D.A. Davidson) followed up on Construction segment margins, questioning drivers behind margin improvement despite limited revenue growth. Larkin attributed this to improved execution and a higher-quality project mix, with expectations for continued margin gains.
- Steven Ramsey (Thompson Research Group) inquired about the relative share of Materials revenue and future growth. Larkin said the Materials segment should remain 17–18% of construction revenue in 2025, with potential for longer-term expansion through investment and M&A.
- Michael Dudas (Vertical Research) asked about the performance of recent Southeast acquisitions and federal project opportunities. Larkin highlighted successful integration and strong leadership in the Southeast, as well as continued momentum in federal projects, including Guam and Texas.
- Jerry Revich (Goldman Sachs) questioned Materials segment profitability compared to peers and prospects for margin improvement. Larkin explained that differences are driven by geography and product mix, but emphasized recent gains and ongoing opportunities for cash gross profit margin expansion.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of new project awards and growth in the committed and awarded projects (CAP) backlog, (2) further progress in Materials segment margin expansion through price increases and automation, and (3) successful execution and integration of targeted M&A. Monitoring tariff impacts on procurement and capital expenditures will also be critical for assessing Granite’s ability to sustain profitability.
Granite Construction currently trades at $90.52, up from $81.30 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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