Granite Construction made gains in its materials business during the second quarter, noting that revenue and gross profit increased compared to the same period of the prior year.
Higher aggregate and asphalt pricing, as well as increased aggregate sales volumes, were factors in the gains. Aggregate sales volumes increased 9 percent year over year, Granite says, while asphalt sales volumes in the second quarter were flat.
“Our materials business, which is integral to our home market strategy, showed impressive revenue and gross profit margin growth over the prior year as we recovered from a weather-impacted first quarter of 2023,” says Kyle Larkin, president and CEO at Granite. “I expect we will see continued year-over-year improvement in materials and construction revenue and gross profit in the second half of the year.”
Granite also achieved a record in committed and award projects (CAP) at $5.4 billion. The CAP is a $1.2 billion year-over-year increase, the company says.
“Our public and private markets remain very strong across our geographies, and we believe we are winning the work necessary to meet our 2024 growth and margin targets,” Larkin says. “In the second quarter, as we expected, the California and Mountain Groups grew construction revenue year over year, more than offsetting the decrease in revenue in the Central Group.”
Still, Larkin issued a word of caution as he looks to the coming months.
“Although our teams recovered well from the wet first quarter and continued to win work across the company, we are lowering our expectation for the amount of work that will be completed in 2023,” he says.
Granite, however, believes its record CAP will drive revenue growth in 2024 and 2025.
“We are narrowing the range of our guidance for adjusted EBITDA margin to 7.5 percent to 8.5 percent for 2023 primarily due to the losses incurred on the I-64 high-rise bridge project,” Larkin says. “As I have discussed in the past, we are executing on our plan and believe that the work we have been adding to CAP supports our 2024 target of 9 to 11 percent adjusted EBITDA margin.”
