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SEC filingRevenue surged 30% to $912M, but net loss widened to $41.7M due to higher SG&A and other expenses; CAP at $7.2B.
Granite Construction's first quarter of 2026 saw total revenue increase 30.4% to $912.5 million from $699.5 million in the prior year, primarily driven by acquisitions (Warren Paving, Papich Construction, Cinderlite) that contributed $93.4 million to revenue and higher Committed and Awarded Projects (CAP) entering the quarter. Gross profit rose 31.0% to $109.9 million, with gross margin unchanged at 12.0%. Construction gross margin contracted 60 basis points to 13.3% due to a non-recurring prior-year claim settlement, while materials gross margin improved to 5.3% from a loss of 1.9% on higher volumes and prices. Operating loss narrowed to $31.1 million from $39.8 million, benefiting from a $6.4 million decrease in other costs (legal costs resolved) and a $4.9 million reduction in acquisition/integration costs. However, net loss attributable to Granite widened to $41.7 million from $33.7 million, largely due to a $17.0 million increase in other expense, net, driven by $9.7 million in costs from repurchasing a portion of the 3.75% Convertible Notes and $8.6 million higher interest expense from increased borrowings.
Construction segment revenue grew 24.6% to $766.1 million, with public revenue up 39% (to $548.3 million) and private revenue flat. The increase was driven by a higher CAP backlog and contributions from Warren Paving and Papich Construction. Construction gross profit rose to $102.2 million but margin slipped to 13.3% due to the prior-year claim settlement. Materials segment revenue surged 72.4% to $146.4 million, with aggregates revenue more than doubling to $91.0 million and asphalt revenue up 26%. The improvement reflected strong volumes, pricing, and $50.3 million in revenue from acquisitions. Materials gross profit turned positive at $7.7 million (5.3% margin), compared to a $1.6 million loss in the prior year, driven by organic growth and $4.9 million in acquired gross profit (albeit with $4.4 million of purchase accounting charges).
Management highlighted a strong public funding environment, with 85% of CAP from public sources, supported by the Infrastructure Investment and Jobs Act (IIJA) through September 2026. CAP totaled $7.2 billion at March 31, 2026, up 2.9% from year-end, with significant additions from a $495 million Texas infrastructure project, a $115 million California reservoir, and a $114 million California highway, partially offset by a $296 million cancellation. The acquisition of Kenny Seng Construction in Utah for $164.1 million on April 23, 2026 (post-quarter-end) aligns with vertical integration strategy. No specific revenue or earnings guidance was provided, but capital expenditures are expected between $140 million and $160 million for 2026, including $50 million in planned strategic materials investments. Management expressed confidence in liquidity, noting $414.9 million unused under the revolver after the draw, but flagged uncertainties from tariffs and geopolitical risks.
Net loss of $36.4M drove negative CFO of $30.9M, compared to positive CFO of $3.6M in the prior year despite a smaller net loss ($28.3M). The deterioration was primarily due to unfavorable working capital movements: a large outflow from accrued expenses ($37.2M), inventory buildup ($25.7M), and contract assets ($17.6M) contrasted with prior-year inflows. Depreciation and stock-based compensation were similar.
Capex of $26.1M was moderate and slightly below prior year ($32.2M), leading to negative free cash flow (CFO minus capex) of -$57.0M. Capital returns of $24.1M (dividends and buybacks) exceeded cash from operations, financed by debt proceeds and investing inflows.
Anomalies include a convertible debt inducement expense of $9.7M (non-cash) and a $56.7M proceeds from capped call unwind in financing. Working capital swings were heavily influenced by receivable and payable timing. The acquisition of Kenny Seng Construction for $164.1M in April 2026 will further impact future cash flows.