Granite Construction reported strong third-quarter revenue and adjusted earnings growth, while a large charge tied to settling conversions of its convertible notes pushed reported net income close to breakeven. The contractor also introduced a 2029 target calling for organic revenue growth of 10% to 12% annually.
Its project pipeline reached a record, and year-to-date operating cash flow rose from a year earlier. The company said it expects to build on its position in transportation while expanding in areas including federal and mission-critical infrastructure and rail.
Key details
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Third-quarter revenue rose 23% to $1.77 billion, up $333 million from a year earlier. Gross profit increased to $336 million from $261 million.
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Reported net income was $3 million, or 7 cents a diluted share, compared with $103 million, or $1.98 a share, in the year-earlier quarter. Granite attributed the decline to $162 million in net non-operating charges associated with settling conversions of its 3.75% convertible notes.
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Granite’s adjusted net income was $173 million, or $3.81 a diluted share, versus $124 million, or $2.70 a share, a year earlier. Adjusted EBITDA rose 32% to $283 million from $216 million. The company excludes the note-conversion charges and related transactions from these adjusted measures.
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Granite said it settled the note conversions primarily in cash to limit dilution to shareholders.
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Selling, general and administrative costs edged up to $104 million, but fell to 5.9% of revenue from 7.1% a year earlier.
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Committed and awarded projects reached a record $7.5 billion, increasing $37 million sequentially. The measure includes expected future revenue on executed contracts and certain other projects where execution and funding are considered probable.
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For the first nine months of 2026, revenue grew to $4.13 billion from $3.26 billion, and adjusted EBITDA increased to $527 million from $396 million. Adjusted net income rose to $287 million, or $6.17 a diluted share, from $211 million, or $4.67 a share.
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Granite reported a nine-month net loss of $317 million, compared with net income of $141 million in the prior-year period. It attributed the loss to $535 million in net non-operating charges related to the convertible-note conversions and excluded those charges and related transactions from adjusted results.
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Operating cash flow for the first nine months increased to $404 million from $290 million a year earlier.
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The company’s new 2029 target is organic revenue growth of 10% to 12% on a compound annual basis.
Plain-English implications
Granite’s reported earnings for both the quarter and year to date were heavily affected by charges tied to its convertible notes, while adjusted earnings and operating measures improved. Its decision to settle the conversions primarily in cash was intended to limit shareholder dilution. The record project pipeline and new revenue-growth target signal the company’s stated ambition to expand while pursuing opportunities in its core transportation business and selected adjacent markets.