GVA - Earnings call transcript Q4 2024 | Granite Construction Incorporated

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Operator

Good morning, everyone. My name is Jamie, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Inc. 2024 Fourth Quarter Conference Call. Today's event is being recorded. now President to Barker. of is over the It Vice to Investor Instructions] my turn pleasure floor [Operator Relations, Mike you may Sir, begin.

Michael Barker

to Woolsey. Larkin, and thank us. Vice President President and for Financial Executive Chief be Officer, Chief pleased Staci and Kyle morning, with here Officer, Good Executive and today you I'm joining

and begin and of our statements Investor Please note will measures. presentation regarding page earnings non-GAAP a be available discussion website. Presentations We today that today's on with brief the Events Relations forward-looking

Some Private Act forward-looking of of may within statements include the discussion Securities today the meaning of the Reform Litigation XXXX.

statements outcomes, regarding current expectations future outlook, and awarded guidance, forward-looking activities, CAP demand, and management opportunities, estimates occurrences, circumstances, senior growth, objectives, results. targets, committed of These reflecting or events, strategic projects are value, best and shareholder the plans, judgment performance,

Actual refer differ to statements. filings of statements, Please as these could by statements to and required update except made a affect Granite's risk more results today. XX-Q materially no obligation XX-K description company assumes complete that for recent could forward-looking from factors The law. most forward-looking

company adjusted Relations. are Certain adjusted time the presentations, EBITDA, Investor executives. non-GAAP call include, in regarding during discussed to, These earnings limited which are net margin, by income earnings our included available but graniteconstruction.com not disclosures releases per and under adjusted company's measures time from EBITDA press measures are adjusted share. be our as and non-GAAP The and required our may part of website, to on today's

call would Kyle like to I turn the over Now to Larkin.

Kyle Larkin

morning. Good

Their us success. year teams for the for work our thank record company year to dedication was outstanding want Granite. profitability an From revenue, cash safety and another achieve our and flow, hard truly enabling First, company. I drives for to the it to across

and the we our acknowledge fires we dive safe, moment take there that were employees California. in are impacts Southern Thankfully, results, by to all into I the terrible to impacted projects. are no people significant to want a Before fortunate the our

XXXX, Granite company. believe is to As that we it a to transformed ahead say fair look I is

businesses Our teams are profitability. cash focused generating strong growing and consistent on flow delivering while also our

to also acquisitions expand new We integrated and evaluate vertically our markets. opportunities potential explore into upon strategy as build we continue to

towards margin financial many we Construction in coming As we work and targets, have revenue both and increase years. over the and XXXX to our believe XXXX segments grow opportunities Materials the

with Now let's turn the the the to fourth starting segment. results from quarter, Construction

excluding have we we the previous throughout or my As state across supported that career, short-lived footprint. IIJA. believe These near housing Infrastructure Federal bubble. transportation record the State seen discussed to only in our that levels by budgets experience are market continue are the I quarters, Bill strongest budgets

key capital In fiscal meaningfully year budget the and California, our projects revenue the transportation in year of proposed from assistance forecast. increased XXXX the outlay local fiscal largest XXXX-XXXX state, areas to XXXX

payments is funding as will active ultimately are XXXX the contractors. transportation Gas made supported and further by in generate Tax allocations California opportunities growth and the projects and funding sources Infrastructure and beyond to for these move to Bill, as SBX

of the terminates be majority XXXX. believe of between to projects, on to spent Infrastructure industry support Regarding due bill Bill in when money continue is years timing difference many our the the to the with allocations the spent come, to the IIJA, when to and funds we funds states will the for of remaining

as consists constructing work, infrastructure, data rail our which publicly Construction from primarily XX% and markets outlook development as of our private The services, centers facilities. is of funded. commercial support drilling and These site infrastructure for including water remainder strong infrastructure intermodal comes our mines, approximately segment such

XXXX and grow These see and a to to of them number we our continue years, last several beyond. opportunities in markets strong been have presence over the in

word quarter, the a are we projects and our XXXX number awaiting again once projects included of on cap. formal not in we more where those During than are prior work fourth There year. and won bid have the been

the quarter. of pleased our teams performance very in the estimating am by I

saw third portfolio quarter, XXXX increase to quality the continue in the we should decrease we our history. what to and in CAP our best we expect Although since to improve to a strengthen backlog of the CAP be and project believe in

in front work With achieve organic position to opportunities the excess XXXX. us in of and schedule, in X% we margin the segment we the improvement realized of CAP expectations our and in growth in are that bid a on in gross have good

the year. adding our reorganized The to several better beginning of business. leadership modernized multiple completed aggregates efficiency align the Materials with XXXX organization XXXX new pivotal the automation asphalt, Materials and progress improved was projects. significant implemented a increases Materials operational structure to we the during by made we In price as both and in Moving segment. year, plants the

year increase great increases a the low segment, cash for digits asphalt. of margin. we and profit level year-over-year forward, price going even of higher All with It these starting XXXX, single single a a high and aggregates efforts gross for helped for a expect performance in Materials drive was digits

led we XX% Investment reserve plant by our enhancements. billion aggregate tons. and and in X.X increased to upgrades been our XXXX, year-over-year within our a In reserves Materials through has capital expansion allocation business as materials facilities strategy M&A, seen priority and

Construction will in to backlog an XXXX. Materials we As with that segment, ended in we the that encouraged drive the are believe revenue organic compared increase XXXX and we environment growth market

strategic further XXXX. In to we CapEx, within addition business through in I expect the investments Materials will M&A grow

completing We a southeastern footprints. have focus and or we western our X on year as strengthening target X deals of a

and to corporate in numerous to added development the experienced opportunities team ourselves we active There we are M&A as position M&A. leadership more our have market, in be

adjusted centralized will X XXXX EBITDA I consolidated of With M&A, over to margins work investment our leadership, target we to towards Materials margin CapEx years strategic expand of the the our our XX% efforts believe continue and next as XX%.

the review for to performance over Now to quarter. turn I'll it our financial Staci

Staci Woolsey

Thanks, Gross to XX% Kyle. of to Granite EBITDA and was to $XXX banner net million. $XXX million. year a $XXX million. Revenue XX% for Adjusted increases increased XX% areas. $X to XX% in XXX% million, cash profit operating $XXX with increased income a increased flow Adjusted increased year-over-year XXXX increased number to billion.

hard proud teams I'm the our XXXX our in in at the work have realignment strategic introduced the we organizational put financial of validate XXXX. our strong and results to These beginning of implement decisions strategy.

positioned the XXXX to financial With our well to guidance XXXX toward continue as we our taken, march we've achieve we steps are targets.

increase primarily acquired driven $XXX segment, In despite discussed let's project some was companies. Now a for by revenue Construction the revenue strong X% delays million. million $XX in This the was our last This discuss quarter. or the increased we year-over-year quarter. results result that to

to portfolio. $XX improved margin XX%. $XXX gross The million with profit by of gross our segment increase in significant higher-quality driven profit was segment Construction margin project gross million profit

maintained project pursuits. have on our discipline We

our risk. to on we markets deliver are focused while are larger projects value projects We home prioritizing where our established minimizing best we and relationships can leverage

resulted XXXX. strategy produced expansion has believe has in will continue which project an portfolio, into improved This margin we that

million $XX acquired the $XX XX% to up Materials with segment, was $XXX due in $X businesses. million year-over-year to gross Cash The to million. million increased to In $XX the million for or year-over-year revenue profit revenue increase slightly quarter. gross primarily profit Materials increased

amortization including resulted The our in investments in we and segment. are depreciation, M&A, depletion business, the have making additional Materials in

gross production to and in profit the we aggregate well a plant of as report margin As result, asphalt order depletion and impacts the without our pricing amortization. cash impact show as of our efficiencies depreciation,

following basis by year, year-over-year For advancement to first XXX year profit on points gross cash are improvement improved further This XX.X%. we the execute margin full looking reorganization as significant our we strategy. and operating is a in our our forward to

million, is XX%. $XXX an adjusted full EBITDA to million year Adjusted EBITDA of which for $XXX the increased margin

the reminder, adjusted EBITDA quarter. a not of As fully which had on realized margin guidance assumed assets, were our gains sales in

of Turning from ended revenue We generation and outstanding million cash flow X% or $XXX or to million had cash. is XX% quarter This revenue. with operating up in another of year of $XXX of the XXXX. cash

new strong process was reduction of business flow sales resulting a in in XXXX model the driven in by Our and improvements, our cash outstanding. implementation days substantial

profitability in to positions expected Our and transformed cash and is flow invest us generating the company. predictable business strategically the that we

cash our low X% is XXXX at of For range end X% target target flow margin the of to of revenue, already our operating XXXX, XX%.

We ended we and cash securities in and $XXX our revolving in marketable the $XXX under year facility. have million availability with million credit

dividend position offset and execute We share a maintenance our to on are investments, to include and growth our capital which repurchases stock-based in maintaining M&A, compensation. priorities, from dilution great allocation capital

repurchases during earnings during Board-approved quarter. return expected said we to repurchases, shareholders shares. share repurchased fourth XXX,XXX XXX,XXX we to call, our plan we on our through last value brought This total As the share shares under our quarterly and repurchase XXXX to

Now XXXX guidance. let's turn our to

line $X.X grow X% to We to Dickerson our This captures billion $X.X growth includes a of revenue billion. expect in and full for target guidance & to year. with of X% the results to Bowen of range a organic

We us. and of strong bidding ahead have a entered XXXX CAP opportunities with robust portfolio

inclusive million efficiency across increased expect the of be $XX XXXX, XXXX continue performance revenue, stock-based estimated in expense priority we we approximately the company. to appreciation. anticipate by an in share driven of grow, a and As SG&A improved We compensation our of In price expense. stock-based X% our is to compensation SG&A

portfolio, With gross improved to range market macro in our to execution adjusted to environment strong high-performing business, of our margin adjusted We Construction be expect margin EBITDA across Materials XX% EBITDA we profit transformed increase margin an project realize our expect achieve to range. revenue. and XX%

million to million. complete $XX Materials This expand business to reserves work $XXX strategic expect to in automation grow as through projects further of range the we our investments $XXX invest and range to the million we business. CapEx Finally, of contemplates in approximately Materials

it Now I'll to Kyle. turn back over

Kyle Larkin

the Thanks, close with following I'll points. Staci.

XXXX CAP and strong opportunities us year. of a the Our while also new about XXXX, reflected in organically and our construction with revenue ahead in teams in market in guidance. We're to build our tremendous did growing alignment job excited that's record the

and out We changes airports. support believe ports are maintain Washington there tremendous and highways, coming to that improve roads, nation's bridges, is following the and of our

to current for level this critical infrastructure We IIJA. well continue beyond the of expect the funding

XXXX. of Our adjusted we to for XXXX XX% guidance from to represents where XX% margin EBITDA XX% XX% ended increase a

earnings the to of model. While vertically made this we are the year, power over in our X years, integrated last strides I starting show that just believe we tremendous past have particularly

cash we to to in Our and XXXX be leader been strategic and XXXX years. coming industry the have in generation over an and market the exceptional, CAP, plan continue has

and of to Finally, as strengthen while confident business ability prospects I'm opportunities our in organically, excited through equally in the markets our platform continue our company. evaluating markets existing we about growing America's infrastructure M&A. position bolt-ons We're in our also I am grow to new as

will I questions. Operator, turn you it back to now for

Operator

Research Thompson from Ramsey Steven from comes today question Group. first our And Instructions] [Operator

Steven Ramsey

of and start end to implies even a implies that low meaningful end low at EBITDA still with end Maybe modest the the low decline sales the expansion. margin of sales, guidance of

you can low expansion? what to the So to would of drive that, scenario, sales what in would occur that talk and maybe the margin then drive end

Kyle Larkin

when so out out put through growth look organic we rate that that line the that we is XXXX. X% it's XXXX, to Steven, of at I our in put longer-term X.X% guidance think with -- midpoint X% for we

I low any So midpoint on the doesn't for end And is good we include X.X the today. acquisitions $X.X pretty feel just billion remind about would M&A it -- company. everybody, I today that midpoint think because inorganic that somewhere

company. what that the somewhat is think we is of believe I for base a So case

our when we think is look really margin expansion, I EBITDA strong. at CAP

higher As we came construction We Percent, going last into mentioned, talked to quality our highest increase. on a had about XXXX. but history. in are call company as we our our we've margins CAP, bit really how believe we little the it's

think I certainly guidance improvement. reflects that So our

margin We're pricing, perspective. been operational efforts do looking We've also investments seeing as an driving standardizing and materials expansion how our business business and Materials those at investments, pay automation off from our we through well. excellence

a through where into So directionally XXXX. it's with XX.X% midpoint step we we in nice think getting up up. of still line that headed again, is And

Steven Ramsey

X does targets Maybe that XX%. is scenario closer the how And depends XXXX there. hit Okay. to the that you targets? you if the raise XX%, great. end But that's high the the hit you then targets years it low confidence on XXXX to end where the ahead you guide, high on give of potentially get the the That's that end of of

Kyle Larkin

the our I marketplace mean, at in still margins. range higher looking think We to what into help perform going in have we that I we're XX%. at level. is business raise to XX% a Maybe. That's opportunities have get opportunities our us really towards XX% of to up to still

for even the cash in really higher, to continue. to that going right balanced capital this strong expect make that's to be to to business, our cash take us to going operating XX% or think really generated to I that and investments into year, is get have up be we're we flows which that

in We if markets strengthen we can deals markets. should the in home in, get those us to that market allow which margin really our right reinvest expansion existing do we're the positions, some

still platform. we're of that looking EBITDA accretive. part That that opportunities, Southeast We're business. to margins out really in And looking build for EBITDA that would be margin strong our other has

if So the investments future push think in what's I we us right and that XX%. that's to the our business make businesses, above going existing

Steven Ramsey

of the basis? of vertically order Maybe trended the grows one revenue in for faster And XXXX? integrated from and then total sales great. do a integrated kind I pace the That's magnitude, how last more revenue just Okay. growth think you're of than integrated achieving category me. a about that XXXX think the business. you to of guidance on at vertically vertically year-over-year And in revenue company wanted

Kyle Larkin

Yes. I business. it's with overall the that consistent would pretty say

we to you just The VI is information budget a and market strong. environment 'XX, continues at the example 'XX certainly some if for fast revenue regarding anticipate Our A be we look growing the good Caltrans California is today is really at what up XX%. for pace. market, provided

strong that see So entire businesses. we we across do really of our network think really markets

to should for and so that And continue follow. would grow I VI businesses expect our to market us

Operator

from Vertical Research from Michael comes Dudas Partners. our question next And

Michael Dudas

maybe you out. obviously, look markets your roll and have, from share home supportive. some should Kyle, of guidance, at in overall markets the and takes the of you us with you how as regionally XXXX Generally, it's growing could some puts quite on

up where demand across better, It some of what of in might faster businesses would but opportunities stronger little the a things and board, you where of market. maybe a could grow things be because maybe for of thought be than rate sense your the seems catch like to have it bit could at the you

Kyle Larkin

strong think some for is Well, market which -- I the public the again, while time. public we just strong market that all to and reflective of for I our market we now it's of strong really really the think strong a geographies, across quite expect that see see

as for to us be we the mentioned, market As private continues robust well.

that a is more for in the was relative QX quarter were really us, up I I strong XXXX. things think actually highlight and one picked big to $XXX of where want bids we to QX around million we in low

projects So flow and in -- we awarded, expect get and QX. that those QX would into our to even CAP they would

we be to to So strong. really the back up. market expect our we building Again, CAP to continue start expect

the trend Over our haul, CAP we to long to do continue upwards. expect

the board, So good just across I we think the markets. really feel about

Michael Dudas

than it's versus executing the I'm the to sure margin trend aided margin And could had would the P&L a a as-sold helpful you're out, certainly targets ago? you the better at margin you months what the trend several quicker to been front, to improvement? best then through that going and value will has be there that's keep rate continue something improve the projects? a into Is aid And at that the help shifting on of deal. the it. is putting margin just anticipated that the seems least moving than there Is date,

Kyle Larkin

Mike? the what I'm asking. you Yes. not your sure half What was question were got second of there, I

Michael Dudas

Is you produce to What to from from levels, -- margins the that above you'll -- have levels, be through book P&L, expanding that of the achieving below executing backlog? on could at the backlog the the be helpful a like trend you conversion you whatever executing to levels? that the margin and are relative

Kyle Larkin

Yes.

Okay. clarifying Yes. Thanks that. for

last the versus So we back of a and from kind And lot a things balance, value did XXXX, I added of best CAP. overall you the an if 'XX and we between it's value bid best cap the that 'XX, look pretty build, into projects think as our years. up one with of type consistent of step in couple

those of years the average we contractor to of do into As an we've go where manager previously, portion the for general couple as and the actually from contract construction the construction work. a takes it spoken projects portion

So over converting those we're seeing today. lot a of

to more going as forward. that's move we to those of best us allow So contracts perform value

a design from the in build perspective, more think on the of can margin I yes, larger do we larger, past. saw the that complex taking risk some without profile projects we contracts with certainly

all, that's we of and our success as an as derisking going teams feel business and really for really organization. the though and And back the improved. in execution So combination our up has all in backlog on a do setting time projects

So we any where have not our risk comparable execution year, we is execution were X, in risk ago. to we given X still the even today years that have business but in

Operator

And our Revich final from question Jerry today comes from Goldman Sachs.

Jerry Revich

cash talk How outcomes, you just look if bracketing 'XX of the to wondering free 'XX. in can do conversion, expect if of I'm the range flow mind you for 'XX? good about cash Really wouldn't expectations free it? you range

Staci Woolsey

Yes.

-- overall happy total for a year. have pretty with and really was the at flow our flow our cash free high we're conversion We cash performance

in flow, cash of the to at EBITDA And X% And end that flow our XXXX. level. were for revenue look free of good XX% at sheet around you XXXX targeting about targeting of we had of the we're receivables year, for really normalized amount range operating If collect now forward. a of cash able and of more the going have we and a first last strong balance performance half our at

Jerry Revich

low you just were along of closeouts much end how flow? expectation generation, or at linkage about the Can range. cash in anything was closeouts if Super. quarter, strong that? on you wondering -- there Or because fourth in any then I I'm terms talk project that cash the any those worked of free really think lines And to to the drive of margins were project receivables. there's

Staci Woolsey

big milestone unusual. the did In are some December, other bit there a to able that. the on wasn't -- to closeout we related quarter, project further things, to there closeout far was work into collect there significant that or related ongoing any one milestone being We as were sometimes one-off related in or little and as fourth payments, anything and payment really weather. an items to larger wasn't claims large But quarter that

Jerry Revich

Kyle, expectations for talk you Super. Okay. and inflation just and bidding out about lastly, 'XX labor, bidding on? what into based contracts, in are just you us Can your can are flesh for what seeing you folks folks And you materials?

Kyle Larkin

Yes.

general, inflation in little dropping we that X%. right to it's being think bit. around. we anticipate just a see But think I down closer I mean, obviously, inflation I moving now,

lot increases would is side that of certainly the a of we factored into be price things put that inflation. and So considering already pricing, our the asphalt on out already

all, contracting different. in again, very all today it's our But

that So we -- all are on sure, side the for of our designed. XXX% get we into construction contracts

on when coverage certainly from regards really side, relates it in price the fluctuations contractor protects side, some have supplier us the which We to inflation.

So bit but year. up to feel go do we a ability this little risk, expect that inflation good we about our really mitigate to

Operator

Davidson. question from from do we Jean an have D.A. And additional Veliz

Jean Paul Ramirez

of mentioned was of the on previously assets expected $XX fourth quarter. You It million realized. though doesn't in that as look an sales gain

if -- out pushed how so, clarify XXXX and much get and in you there large something does So can in when?

Kyle Larkin

that's right. Yes, Yes.

our certain that considered of that on sale gain we QX, XXXX. completed expect asset not expect that's and And isn't we did be in in completed, today. in guidance to So get to going a a

sale items of XXXX. in our up terms be That will completes move us of would that in one the guidance. So that

Jean Paul Ramirez

margins EBITDA Construction you adjusted points. segment the XXX at to Materials delivering is basis Can about from come bridge the back going expect segment versus you midpoint to talk of in what And that?

Kyle Larkin

Yes.

quarter, come last just Materials. or over mentioned of I so out come of the balance would X% As Construction, out

market We continue to high-quality feel is that about still on feel CAP the our good We we we're can about So Construction raise environment the really good in. think it. We prices CAP. side.

that pretty about improvement feel we X.X% So year-over-year. good

Jean Paul Ramirez

me. for one last just And it. Got

also you burn more Just the provide CAP on given on a in it's little And that XXXX. you're seen little you a improvements into seeing the far slower quarter? outlook Can quarter. so account, rate revenue it's a color more context taken have in the in first

Kyle Larkin

the outlook expect Well, CAP I think positive. really we at to be long-term

work. As continue the been market has healthy, we win to

QX mentioned, in million as again, So bids the QX year pretty prior additional is $XXX significant. low in in I versus

expect we CAP to So that in QX QX. and get into

based and come Obviously, CAP we're over projects to our haul, continue But X to or build we these up gotten market them, stronger believe of can expect lumpy. bit best it the to continue years, in and on stronger going this we long little X can we down has healthy CAP the a when be to value CAP win our CAP. over environment. And and and stronger last get some

year. that the have for quarter. so of see shake a QX for the been weather-wise burn one got of QX, weather. to But course, turns average us. see think how to And on it's But far, of yes, always variabilities perspective, From us terms far go in this in it's XXXX. some we're to out out the out West ways still we weather track today I how We'll and is the certainly a for so of and rest for pretty things revenue QX this getting we're in And week.

Operator

with be concluding gentlemen, to and floor closing ladies to remarks. back like any today's turn we'll session. over question-and-answer the And I'd for that, Kyle

Kyle Larkin

today. year another was call and Okay. the you Well, XXXX for safety financial thank joining for performance. record

and continue did teams XXXX thank soon. they always, interest joining to want we excited Granite. bar with all your make raise Thank the we I We are speaking to forward look all in such you the As know our XXXX. you call in success. a to to to for for everything

Operator

call. do today's Ladies and We joining. thank presentation for conclude and you gentlemen, that conference does

lines. may your disconnect You now

Granite Construction (GVA) 13 Feb 252024 Q4 Earnings call transcript