Business Wire | Jul 29, 2021 06:45AM EDT

Granite Reports Second Quarter 2021 Results

Jul. 29, 2021

WATSONVILLE, Calif.--(BUSINESS WIRE)--Jul. 29, 2021--Granite Construction Incorporated (NYSE: GVA) today announced results for the second quarter ended June 30, 2021.

Second Quarter 2021 Results

Net income increased to $54.5 million, or $1.14 per diluted share, compared to net income of $3.4 million, or $0.07 per diluted share, for the same period year-over-year. Adjusted net income(1), which excludes other costs(3), non-cash impairments of goodwill, transaction costs (4), gain on sale of property and amortization of debt discount related to our 2.75% convertible notes, totaled $42.3 million, or $0.91 per diluted share, compared to adjusted net income of $19.1 million, or $0.41 per diluted share, for the same period year-over-year.

* Revenue increased 5.3% to $964.2 million compared to $915.8 million for the same period year-over-year. * Gross profit increased to $116.9 million compared to $88.3 million for the same period year-over-year. * Selling, general, and administrative ("SG&A") expenses were $74.1 million or 7.7% of revenue, compared to $78.0 million or 8.5% of revenue for the same period year-over-year. * Diluted net income per share increased to $1.14 compared to $0.07 for the same period year-over-year. * Adjusted diluted net income per share increased to $0.91 compared to $0.41 for the same period year-over-year. * Adjusted EBITDA(1) increased to $79.9 million, compared to $49.9 million for the same period year-over-year. * Committed and Awarded Projects ("CAP") (5) totaled $4.4 billion, up $0.3 billion for the same period year-over-year, and down $6.6 million since the first quarter of 2021. * Cash and marketable securities increased $109.2 million to $404.0 million compared to $294.8 million for the same period year-over-year aided by a sale of a property during the quarter with proceeds of $40.8 million, while debt decreased $74.1 million to $339.9 million compared to $414.0 million for the same period year-over-year.

"I am pleased with the performance of the business this quarter as we work through the Heavy Civil Operating Group Old Risk Portfolio," said Kyle Larkin, Granite President and CEO.

"Our second quarter adjusted diluted net income per share of $0.91 and adjusted EBITDA of $79.9 million were propelled by strong results from our vertically-integrated businesses in the California and Northwest Operating Groups. Public and private markets are robust, as is demonstrated by the increases in transportation CAP within the vertically-integrated groups and in both the water and specialty segments for the same period year-over-year. Our cash and balance sheet remain strong as we head into the second half of the year."

(1) Adjusted net income (loss), adjusted diluted income (loss) per share, earnings before interest, taxes, depreciation, and amortization ("EBITDA"), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures. Please refer to the description and reconciliation of non-GAAP measures in the attached tables. (2) The Heavy Civil Operating Group Old Risk Portfolio includes projects with risk criteria that do not align with Granite's new project selection criteria for the Heavy Civil Operating Group. (3) Other costs includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of the Layne Christensen Company ("Layne") and restructuring charges related to our Heavy Civil Operating Group. (4) Transaction costs includes acquired intangible amortization expenses and acquisition related depreciation related to the acquisition of Layne and LiquiForce. (5) CAP is comprised of unearned revenue and other awards, as well as awarded construction management/general contractor, construction manager at-risk, and progressive design build projects for which contract execution and funding is probable.

Second Quarter 2021 Segment Results (Unaudited - dollars in thousands)

Transportation Segment

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

Revenue $ 525,235 $ 535,101 $ (9,866 ) (1.8 ) $ 876,264 $ 886,002 $ (9,738 ) (1.1 ) % %

Gross profit 59,517 31,197 28,320 90.8 % 95,383 56,566 38,817 68.6 %

Gross profitas a percent 11.3 % 5.8 % 10.9 % 6.4 % of revenue





June 30, March 31, Change - Quarter over June 30, Change - Year over Year 2021 2021 Quarter 2020

Committed and ) )Awarded $ 2,894,115 $ 3,028,893 $ (134,778 ) (4.4 % $ 3,251,646 $ (357,531 ) (11.0 % Projects

Transportation revenue in the second quarter decreased year-over-year as increases driven by the strong performance in the vertically-integrated California and Northwest Operating Groups were offset by decreased revenue in the Heavy Civil Operating Group. Second quarter gross profit increased for the same period year-over-year primarily due to a decrease in losses in the Heavy Civil Group Old Risk Portfolio.

In the second quarter, the Old Risk Portfolio recognized $115.7 million of revenue and gross profit of $2.5 million compared to revenue of $120.8 million and gross loss of ($35.4) million for the same period in the prior year.

Despite an increase of $201.7 million in CAP in our vertically-integrated businesses for the same period year-over-year, segment CAP decreased $0.4 billion for the same period year-over-year to $2.9 billion as Heavy Civil Operating Group CAP decreased $566.2 million.

Water Segment

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

Revenue $ 113,432 $ 109,724 $ 3,708 3.4 % $ 213,185 $ 211,381 $ 1,804 0.9 %

Gross 10,563 12,579 (2,016 ) (16.0 ) 19,129 21,926 (2,797 ) (12.8 )profit % %

Grossprofit asa percent 9.3 % 11.5 % 9.0 % 10.4 % ofrevenue





June 30, March 31, Change - Quarter over June 30, Change - Year over 2021 2021 Quarter 2020 Year

Committedand $ 531,858 $ 339,030 $ 192,828 56.9 % $ 232,133 $ 299,725 129.1 % AwardedProjects

Water revenue in the second quarter increased year-over-year driven by the continued recovery from the pandemic and strong demand for water supply and maintenance services amidst the western U.S. drought conditions. Gross profit during the quarter decreased primarily due to $5.3 million in write downs on a Heavy Civil Operating Group project in the close-out phase and a California Operating Group project.

Segment CAP increased $299.7 million for the same period year-over-year to $531.9 million, reflecting strong backlog in the Water and Mineral Services Operating Group and the addition of the $160 million Leon Hurse Dam project within Heavy Civil Operating Group CAP.

Specialty Segment

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

Revenue $ 200,271 $ 174,914 $ 25,357 14.5 % $ 355,945 $ 307,953 $ 47,992 15.6 %

Gross 24,369 25,280 (911 ) (3.6 ) 41,694 14,561 27,133 186.3 %profit %

Grossprofit asa percent 12.2 % 14.5 % 11.7 % 4.7 % ofrevenue



June 30, March 31, Change - Quarter June 30, Change - Year over 2021 2021 over Quarter 2020 Year

Committedand $ 1,019,318 $ 1,083,971 $ (64,653 ) (6.0 ) $ 681,255 $ 338,063 49.6 % Awarded %Projects

Specialty revenue in the second quarter increased for the same period year-over-year, led by recovery of mineral exploration within the mining industry in the Water and Mineral Services Operating Group and project progression of a federal site development project in the Heavy Civil Operating Group. Gross profit decreased as disputed work continued on a previously reported tunnel project.

Segment CAP increased $338.1 million for the same period year-over-year to over $1.0 billion led by site development projects in our vertically-integrated California and Northwest Operating Groups and the addition of a previously reported tunnel project in the Midwest Operating Group.

Materials Segment

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

Revenue $ 125,234 $ 96,032 $ 29,202 30.4 % $ 188,691 $ 146,362 $ 42,329 28.9 %

Gross 22,497 19,287 3,210 16.6 % 24,058 19,089 4,969 26.0 %profit

Grossprofit as a 18.0 % 20.1 % 12.7 % 13.0 % percent ofrevenue

Materials revenue and gross profit in the second quarter increased year-over-year due to continued strong demand and higher volumes in both asphalt and aggregates in the vertically-integrated California and Northwest Operating Groups.

Outlook

The Company reaffirms our guidance for 2021:

- Low- to mid-single digit revenue growth - Adjusted EBITDA margin of 5.5% to 7.5%

Conference Call

Granite will conduct a conference call today, July 29, 2021, at 9:00 a.m. Pacific Time/12:00 p.m. Eastern Time to discuss the results of the quarter ended June 30, 2021. The Company invites investors to listen to a live audio webcast of the investor conference call on its Investor Relations website, https://investor.graniteconstruction.com. The investor conference call will also be available by calling 1-866-807-9684; international callers may dial 1-412-317-5415. An archive of the webcast will be available on Granite's Investor Relations website approximately one hour after the call. A replay will be available after the live call through August 5, 2021, by calling 1-877-344-7529, replay access code 10158812; international callers may dial 1-412-317-0088.

About Granite

Granite is America's Infrastructure Company(tm). Incorporated since 1922, Granite (NYSE:GVA) is one of the largest diversified construction and construction materials companies in the United States as well as a full-suite provider in the transportation, water infrastructure and mineral exploration markets. Granite's Code of Conduct and strong Core Values guide the Company and its employees to uphold the highest ethical standards. Granite is an industry leader in safety and an award-winning firm in quality and sustainability. For more information, visit the Granite website, and connect with Granite on LinkedIn, Twitter, Facebook and Instagram.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, Committed and Awarded Projects ("CAP") and results, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as "future," "outlook," "assumes," "believes," "expects," "estimates," "anticipates," "intends," "plans," "appears," "may," "will," "should," "could," "would," "continue," "guidance" and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, CAP and results. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

June 30, December June 30, 2021 31, 2020 2020

ASSETS

Current assets

Cash and cash equivalents $ 393,181 $ 436,136 $ 288,922

Receivables, net 646,940 540,812 596,922

Contract assets 194,483 164,939 191,919

Inventories 88,424 82,362 105,023

Equity in construction joint 195,430 188,798 183,542 ventures

Other current assets 47,976 42,199 57,614

Total current assets 1,566,434 1,455,246 1,423,942

Property and equipment, net 517,143 527,016 540,053

Long-term marketable securities 10,850 5,200 5,896

Investments in affiliates 75,625 75,287 74,511

Goodwill 116,839 116,777 248,690

Right of use assets 59,219 62,256 72,244

Deferred income taxes, net 41,085 41,839 40,926

Other noncurrent assets 91,703 96,375 102,392

Total assets $ 2,478,898 $ 2,379,996 $ 2,508,654



LIABILITIES AND EQUITY

Current liabilities

Current maturities of long-term $ 8,709 $ 8,278 $ 8,253 debt

Accounts payable 379,008 359,160 358,401

Contract liabilities 174,850 171,321 159,818

Accrued expenses and other 485,718 404,497 363,128 current liabilities

Total current liabilities 1,048,285 943,256 889,600

Long-term debt 331,222 330,522 405,770

Long-term lease liabilities 41,816 46,769 56,071

Deferred income taxes, net 3,166 3,155 3,335

Other long-term liabilities 66,167 64,684 63,118

Commitments and contingencies

Equity

Preferred stock, $0.01 parvalue, authorized 3,000,000 - - - shares, none outstanding

Common stock, $0.01 par value,authorized 150,000,000 shares;issued and outstanding:45,818,719 shares as of June 458 457 458 30, 2021, 45,668,541 shares asof December 31, 2020 and45,651,914 shares as of June30, 2020

Additional paid-in capital 556,615 555,407 553,038

Accumulated other comprehensive (2,750 ) (5,035 ) (5,800 )loss

Retained earnings 401,061 424,835 520,025

Total Granite ConstructionIncorporated shareholders' 955,384 975,664 1,067,721 equity

Non-controlling interests 32,858 15,946 23,039

Total equity 988,242 991,610 1,090,760

Total liabilities and equity $ 2,478,898 $ 2,379,996 $ 2,508,654

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenue

Transportation

$

525,235

$

535,101

$

876,264

$

886,002

Water

113,432

109,724

213,185

211,381

Specialty

200,271

174,914

355,945

307,953

Materials

125,234

96,032

188,691

146,362

Total revenue

964,172

915,771

1,634,085

1,551,698

Cost of revenue

Transportation

465,718

503,904

780,881

829,436

Water

102,869

97,145

194,056

189,455

Specialty

175,902

149,634

314,251

293,392

Materials

102,737

76,745

164,633

127,273

Total cost of revenue

847,226

827,428

1,453,821

1,439,556

Gross profit

116,946

88,343

180,264

112,142

Selling, general and administrative expenses

74,069

78,023

149,797

151,239

Non-cash impairment charges

-

-

-

24,413

Other costs

5,953

13,659

81,788

18,824

Gain on sales of property and equipment, net

(31,636

)

(1,190

)

(34,190

)

(1,813

)

Operating income (loss)

68,560

(2,149

)

(17,131

)

(80,521

)

Other (income) expense

Interest income

(188

)

(767

)

(444

)

(2,058

)

Interest expense

5,507

6,549

10,888

11,543

Equity in income of affiliates, net

(6,231

)

(2,016

)

(8,039

)

(2,062

)

Other (income) expense, net

(1,894

)

(3,160

)

(3,124

)

2,059

Total other (income) expense

(2,806

)

606

(719

)

9,482

Income (loss) before provision for (benefit from) income taxes

71,366

(2,755

)

(16,412

)

(90,003

)

Provision for (benefit from) income taxes

15,619

(1,782

)

(6,836

)

(16,492

)

Net income (loss)

55,747

(973

)

(9,576

)

(73,511

)

Amount attributable to non-controlling interests

(1,286

)

4,378

(2,158

)

11,546

Net income (loss) attributable to Granite Construction Incorporated

$

54,461

$

3,405

$

(11,734

)

$

(61,965

)

Net income (loss) per share attributable to common shareholders

Basic

$

1.19

$

0.07

$

(0.26

)

$

(1.36

)

Diluted

$

1.14

$

0.07

$

(0.26

)

$

(1.36

)

Weighted average shares of common stock

Basic

45,798

45,620

45,748

45,570

Diluted

47,798

46,281

45,748

45,570

Dividends per common share

$

0.13

$

0.13

$

0.26

$

0.26

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

Three Months Ended June Six Months Ended June 30, 30,

2021 2020 2021 2020

Revenue

Transportation $ 525,235 $ 535,101 $ 876,264 $ 886,002

Water 113,432 109,724 213,185 211,381

Specialty 200,271 174,914 355,945 307,953

Materials 125,234 96,032 188,691 146,362

Total revenue 964,172 915,771 1,634,085 1,551,698

Cost of revenue

Transportation 465,718 503,904 780,881 829,436

Water 102,869 97,145 194,056 189,455

Specialty 175,902 149,634 314,251 293,392

Materials 102,737 76,745 164,633 127,273

Total cost of 847,226 827,428 1,453,821 1,439,556 revenue

Gross profit 116,946 88,343 180,264 112,142

Selling, generaland administrative 74,069 78,023 149,797 151,239 expenses

Non-cash impairment - - - 24,413 charges

Other costs 5,953 13,659 81,788 18,824

Gain on sales ofproperty and (31,636 ) (1,190 ) (34,190 ) (1,813 )equipment, net

Operating income 68,560 (2,149 ) (17,131 ) (80,521 )(loss)

Other (income) expense

Interest income (188 ) (767 ) (444 ) (2,058 )

Interest expense 5,507 6,549 10,888 11,543

Equity in income of (6,231 ) (2,016 ) (8,039 ) (2,062 )affiliates, net

Other (income) (1,894 ) (3,160 ) (3,124 ) 2,059 expense, net

Total other (2,806 ) 606 (719 ) 9,482 (income) expense

Income (loss)before provision 71,366 (2,755 ) (16,412 ) (90,003 )for (benefit from)income taxes

Provision for(benefit from) 15,619 (1,782 ) (6,836 ) (16,492 )income taxes

Net income (loss) 55,747 (973 ) (9,576 ) (73,511 )

Amount attributableto non-controlling (1,286 ) 4,378 (2,158 ) 11,546 interests

Net income (loss)attributable toGranite $ 54,461 $ 3,405 $ (11,734 ) $ (61,965 )ConstructionIncorporated



Net income (loss)per share attributable tocommon shareholders

Basic $ 1.19 $ 0.07 $ (0.26 ) $ (1.36 )

Diluted $ 1.14 $ 0.07 $ (0.26 ) $ (1.36 )

Weighted averageshares of common stock

Basic 45,798 45,620 45,748 45,570

Diluted 47,798 46,281 45,748 45,570

Dividends per $ 0.13 $ 0.13 $ 0.26 $ 0.26 common share

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

Six Months Ended June 30,

2021

2020

Operating activities

Net loss

$

(9,576

)

$

(73,511

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation, depletion and amortization

52,853

57,269

Amortization related to the 2.75% Convertible Notes

4,666

4,255

Gain on sales of property and equipment, net

(34,190

)

(1,813

)

Stock-based compensation

3,642

3,936

Equity in net (income) loss from unconsolidated joint ventures

(6,972

)

30,506

Net income from affiliates

(8,039

)

(2,062

)

Non-cash impairment charges

-

24,413

Other non-cash adjustments

1,483

1,832

Changes in assets and liabilities

(34,871

)

(32,342

)

Net cash (used in) provided by operating activities

(31,004

)

12,483

Investing activities

Purchases of marketable securities

(5,000

)

(4,996

)

Maturities of marketable securities

-

10,000

Proceeds from called marketable securities

-

20,000

Purchases of property and equipment

(46,437

)

(52,236

)

Proceeds from sales of property and equipment

48,517

7,278

Other investing activities, net

4,581

(1,453

)

Net cash provided by (used in) investing activities

1,661

(21,407

)

Financing activities

Proceeds from debt

-

50,000

Debt principal repayments

(4,677

)

(4,212

)

Cash dividends paid

(11,890

)

(11,842

)

Repurchases of common stock

(2,497

)

(728

)

Contributions from non-controlling partners

11,350

5,500

Distributions to non-controlling partners

(5,836

)

(7,860

)

Other financing activities, net

(62

)

392

Net cash (used in) provided by financing activities

(13,612

)

31,250

Net (decrease) increase in cash, cash equivalents and restricted cash

(42,955

)

22,326

Cash, cash equivalents and $1,512 and $5,835 in restricted cash at beginning of period

437,648

268,108

Cash, cash equivalents and $1,512 in restricted cash at end of both periods

$

394,693

$

290,434

Non-GAAP Financial Information

The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Specifically, management believes that non-GAAP financial measures such as EBITDA and EBITDA margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing adjusted EBITDA and adjusted EBITDA margin non-GAAP measures to indicate the impact of:

* Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of Layne and restructuring charges related to our Heavy Civil Operating Group; * Non-cash impairments related to goodwill and investments in affiliates in 2020; and * Gain on sale of a property.

We provide adjusted net income (loss) before provision for (benefit from) income taxes, adjusted provision for (benefit from) income taxes, adjusted net income (loss) attributable to Granite Construction Incorporated, adjusted diluted weighted average shares of common stock, and adjusted diluted net income (loss) per share, non-GAAP measures, to indicate the impact of the following:

* Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of the Layne and restructuring charges related to our Heavy Civil Operating Group; * Non-cash impairments related to goodwill and investments in affiliates in 2020; * Gain on sale of a property; * Transaction costs which includes acquired intangible amortization expenses and acquisition related depreciation related to the acquisition of Layne and LiquiForce; * Amortization of debt discount related to our 2.75% convertible notes; and * The impact of the purchased equity derivative instrument which offsets any potential- dilution from the 2.75% convertible notes above the $31.47 conversion price up to a share price of $53.44.

Management believes that these additional non-GAAP financial measures facilitate comparisons between industry peer companies and management uses these non-GAAP financial measures in evaluating the Company's performance. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with U.S. GAAP. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to similar measures provided by other companies. The Company does not provide a reconciliation of forward-looking adjusted EBITDA margin to the most directly comparable forward-looking GAAP measure of net income (loss) attributable to Granite Construction Incorporated because the timing and amount of the excluded items are unreasonably difficult to fully and accurately estimate.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

Six Months Ended June 30, 2021 2020

Operating activities

Net loss $ (9,576 ) $ (73,511 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Depreciation, depletion and amortization 52,853 57,269

Amortization related to the 2.75% Convertible 4,666 4,255 Notes

Gain on sales of property and equipment, net (34,190 ) (1,813 )

Stock-based compensation 3,642 3,936

Equity in net (income) loss from unconsolidated (6,972 ) 30,506 joint ventures

Net income from affiliates (8,039 ) (2,062 )

Non-cash impairment charges - 24,413

Other non-cash adjustments 1,483 1,832

Changes in assets and liabilities (34,871 ) (32,342 )

Net cash (used in) provided by operating (31,004 ) 12,483 activities

Investing activities

Purchases of marketable securities (5,000 ) (4,996 )

Maturities of marketable securities - 10,000

Proceeds from called marketable securities - 20,000

Purchases of property and equipment (46,437 ) (52,236 )

Proceeds from sales of property and equipment 48,517 7,278

Other investing activities, net 4,581 (1,453 )

Net cash provided by (used in) investing 1,661 (21,407 )activities

Financing activities

Proceeds from debt - 50,000

Debt principal repayments (4,677 ) (4,212 )

Cash dividends paid (11,890 ) (11,842 )

Repurchases of common stock (2,497 ) (728 )

Contributions from non-controlling partners 11,350 5,500

Distributions to non-controlling partners (5,836 ) (7,860 )

Other financing activities, net (62 ) 392

Net cash (used in) provided by financing (13,612 ) 31,250 activities

Net (decrease) increase in cash, cash equivalents (42,955 ) 22,326 and restricted cash

Cash, cash equivalents and $1,512 and $5,835 in 437,648 268,108 restricted cash at beginning of period

Cash, cash equivalents and $1,512 in restricted $ 394,693 $ 290,434 cash at end of both periods

Non-GAAP Financial Information

The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Specifically, management believes that non-GAAP financial measures such as EBITDA and EBITDA margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing adjusted EBITDA and adjusted EBITDA margin non-GAAP measures to indicate the impact of:

* Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of Layne and restructuring charges related to our Heavy Civil Operating Group; * Non-cash impairments related to goodwill and investments in affiliates in 2020; and * Gain on sale of a property.

We provide adjusted net income (loss) before provision for (benefit from) income taxes, adjusted provision for (benefit from) income taxes, adjusted net income (loss) attributable to Granite Construction Incorporated, adjusted diluted weighted average shares of common stock, and adjusted diluted net income (loss) per share, non-GAAP measures, to indicate the impact of the following:

* Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of the Layne and restructuring charges related to our Heavy Civil Operating Group; * Non-cash impairments related to goodwill and investments in affiliates in 2020; * Gain on sale of a property; * Transaction costs which includes acquired intangible amortization expenses and acquisition related depreciation related to the acquisition of Layne and LiquiForce; * Amortization of debt discount related to our 2.75% convertible notes; and * The impact of the purchased equity derivative instrument which offsets any potential- dilution from the 2.75% convertible notes above the $31.47 conversion price up to a share price of $53.44.

Management believes that these additional non-GAAP financial measures facilitate comparisons between industry peer companies and management uses these non-GAAP financial measures in evaluating the Company's performance. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with U.S. GAAP. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to similar measures provided by other companies. The Company does not provide a reconciliation of forward-looking adjusted EBITDA margin to the most directly comparable forward-looking GAAP measure of net income (loss) attributable to Granite Construction Incorporated because the timing and amount of the excluded items are unreasonably difficult to fully and accurately estimate.

GRANITE CONSTRUCTION INCORPORATED

EBITDA AND ADJUSTED EBITDA(1)

(Unaudited - dollars in thousands)

Three Months Ended Six Months Ended June June 30, 30,

2021 2020 2021 2020

Net income (loss)attributable to Granite $ 54,461 $ 3,405 $ (11,734 ) $ (61,965 )ConstructionIncorporated

Depreciation, depletionand amortization expense 28,272 28,822 52,853 57,269 (2)

Provision for (benefit 15,619 (1,782 ) (6,836 ) (16,492 )from) income taxes

Interest expense, net of 5,319 5,782 10,444 9,485 interest income

EBITDA(1) $ 103,671 $ 36,227 $ 44,727 $ (11,703 )

EBITDA margin(1)(3) 10.8 % 4.0 % 2.7 % -0.8 %



Other costs $ 5,953 $ 13,659 $ 81,788 $ 18,824

Non-cash impairment - - - 24,413 charges

Gain on sale of property (29,688 ) - (29,688 ) -

Adjusted EBITDA(1) $ 79,936 $ 49,886 $ 96,827 $ 31,534

Adjusted EBITDA margin 8.3 % 5.4 % 5.9 % 2.0 %(1)(3)

(1) We define EBITDA as U.S. GAAP net income (loss) attributable to Granite Construction Incorporated, adjusted for net interest expense, taxes, depreciation, depletion and amortization. Adjusted EBITDA and adjusted EBITDA margin exclude the impact of other costs, non-cash impairment charges, and a gain on sale of property. (2) Amount includes the sum of depreciation, depletion and amortization which are classified as cost of revenue and selling, general and administrative expenses in the condensed consolidated statements of operations of Granite Construction Incorporated. (3) Represents EBITDA and Adjusted EBITDA divided by consolidated revenue of $1.0 billion and $0.9 billion for the three months ended June 30, 2021 and 2020, respectively, and $1.6 billion for both the six months ended June 30, 2021 and 2020.

GRANITE CONSTRUCTION INCORPORATED

Adjusted Net Income (Loss) Reconciliation

(Unaudited - in thousands, except per share data)

Three Months Ended Six Months Ended June June 30, 30,

2021 2020 2021 2020

Income (loss) beforeprovision for (benefit $ 71,366 $ (2,755 ) $ (16,412 ) $ (90,003 )from) income taxes

Other costs 5,953 13,659 81,788 18,824

Non-cash impairment - - - 24,413 charges

Transaction costs 5,516 5,874 10,766 11,788

Amortization of debt 1,753 1,642 3,468 3,249 discount

Gain on sale of property (29,688 ) - (29,688 ) -

Adjusted income (loss)before provision for $ 54,900 $ 18,420 $ 49,922 $ (31,729 )(benefit from) incometaxes



Provision for (benefit $ 15,619 $ (1,782 ) $ (6,836 ) $ (16,492 )from) income taxes

Tax effect of adjusting (4,281 ) 5,506 17,247 8,804 items (1)

Adjusted provision for(benefit from) income $ 11,338 $ 3,724 $ 10,411 $ (7,688 )taxes



Net income (loss)attributable to Granite $ 54,461 $ 3,405 $ (11,734 ) $ (61,965 )ConstructionIncorporated

After-tax adjusting (12,185 ) 15,669 49,087 49,470 items

Adjusted net income(loss) attributable to $ 42,276 $ 19,074 $ 37,353 $ (12,495 )Granite ConstructionIncorporated



Diluted weighted average 47,798 46,281 45,748 45,570 shares of common stock

Add: dilutive effect ofrestricted stock units - - 1,569 - and 2.75% ConvertibleNotes (2)

Less: 2.75% ConvertibleNotes dilutive effect (1,546 ) - (1,066 ) - (3)

Adjusted dilutedweighted average shares 46,252 46,281 46,251 45,570 of common stock



Diluted net income(loss) per share $ 1.14 $ 0.07 $ (0.26 ) $ (1.36 )attributable to commonshareholders

After-tax adjustingitems per share (0.23 ) 0.34 1.07 1.09 attributable to commonshareholders

Adjusted diluted netincome (loss) per share $ 0.91 $ 0.41 $ 0.81 $ (0.27 )attributable to commonshareholders

(1) The tax effect of adjusting items was calculated using the Company's estimated annual statutory tax rate. (2) Represents the dilutive effect on adjusted net income attributable to Granite Construction Incorporated for the six months ended June 30, 2021 of 503,000 shares related to restricted stock units and 1,066,000 shares related to the 2.75% Convertible Notes potentially converting into shares. (3) When calculating diluted net income (loss) per share attributable to common shareholders, U.S. GAAP requires that we include potential share dilution from the 2.75% Convertible Notes when our average share price during the period is above the conversion price of $31.47. During the three and six months ended June 30, 2021, our average share price was above the conversion price resulting in accounting dilution under U.S. GAAP of 1,546,000 and 1,066,000 shares, respectively. For the purposes of calculating adjusted diluted net income (loss) per share attributable to common shareholders, the dilutive effect from the 2.75% convertible notes is removed to reflect the impact of the purchased equity derivative instrument which offsets any potential share dilution from the 2.75% Convertible Notes above the $31.47 conversion price up to a share price of $53.44. The average share price did not exceed $53.44 in any period.

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