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What changed in GRANITE CONSTRUCTION INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GRANITE CONSTRUCTION INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+292 added−294 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-21)

Top changes in GRANITE CONSTRUCTION INC's 2023 10-K

292 paragraphs added · 294 removed · 222 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

56 edited+11 added−4 removed96 unchanged
Biggest changeThe degree and type of competition is influenced by the type and scope of construction projects within the individual markets. One of our significant competitive advantages is that we own and lease aggregate reserves and own processing plants that are vertically integrated into our construction operations.
Biggest changeOne of our significant competitive advantages is that we own and lease aggregate reserves and own processing plants that are vertically integrated into our construction operations. The construction materials produced by our Materials segment are used in nearly all types of public and private construction. Significant barriers to entry exist in most markets due to stringent zoning and permitting regulations.
The most significant of these include: • changes in costs of labor and/or materials; • subcontractor costs, availability and/or performance issues; • extended overhead and other costs due to owner, weather and other delays; • changes in productivity expectations; • changes from original design on design-build projects; • our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; • a change in the availability and proximity of equipment and materials; • complexity in original design; • length of time to complete the project; • the availability and skill level of workers in the geographic location of the project; • site conditions that differ from those assumed in the original bid; • costs associated with scope changes; and • the customer’s ability to properly administer the contract.
The most significant of these include: • changes in costs of labor and/or materials; • subcontractor costs, availability and/or performance issues; • extended overhead and other costs due to owner, weather and other delays; • changes in productivity expectations; • changes from original design on design-build projects; • our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; • a change in the availability and proximity of equipment and materials; • complexity in original design; • length of time to complete the project; • the availability and skill level of workers in the geographic location of the project; 8 Table of Contents • site conditions that differ from those assumed in the original bid; • costs associated with scope changes; and • the customer’s ability to properly administer the contract.
Larkin has also served as a director of our Board of Directors since June 2021 and has a term expiring at the 2023 annual meeting. Mr. Larkin holds a B.S. in Construction Management from California Polytechnic State University, San Luis Obispo and an M.B.A. from the University of Massachusetts, Amherst. Ms.
Larkin has also served as a director of our Board of Directors since June 2021 and has a term expiring at the 2026 annual meeting. Mr. Larkin holds a B.S. in Construction Management from California Polytechnic State University, San Luis Obispo and an M.B.A. from the University of Massachusetts, Amherst. Ms.
He also served as Regional Vice President from January 2015 to June 2022, as Large Project Executive from 2010 to 2015, as Operations Manager in Southern California from 2009 to 2010, as Manager of Construction in Southern California from 2007 to 2009, as Construction Manager in Sacramento from 2000 to 2007, as Senior Project Manager in Utah from 1998 to 2000, as Environmental Construction Manager in California from 1994 to 1998, as Estimator/Project Manager in Santa Barbara from 1989 to 1994, and as Large Project Engineer from 1987 to 1989.
He also served as Senior Vice President and Group Manager from June 2022 to January 2024, Regional Vice President from January 2015 to June 2022, as Large Project Executive from 2010 to 2015, as Operations Manager in Southern California from 2009 to 2010, as Manager of Construction in Southern California from 2007 to 2009, as Construction Manager in Sacramento from 2000 to 2007, as Senior Project Manager in Utah from 1998 to 2000, as Environmental Construction Manager in California from 1994 to 1998, as Estimator/Project Manager in Santa Barbara from 1989 to 1994, and as Large Project Engineer from 1987 to 1989.
As of December 31, 2022, three of our wholly-owned subsidiaries, Granite Construction Company, Layne Christensen Company and Granite Industrial, Inc., were parties to craft collective bargaining agreements in many areas in which they operate (see Note 16 of the “Notes to the Consolidated Financial Statements”).
As of December 31, 2023, three of our wholly-owned subsidiaries, Granite Construction Company, Layne Christensen Company and Granite Industrial, Inc., were parties to craft collective bargaining agreements in many areas in which they operate (see Note 16 of the “Notes to the Consolidated Financial Statements”).
Dowd joined Granite in 1986 and has served as Senior Vice President and California Group Manager since January 2021. He also served as Vice President and Regional Manager in Nevada from October 2017 to December 2020 and Vice President and Large Projects Business Development Manager from 2013 to 2017.
Dowd joined Granite in 1986 and has served as Senior Vice President, Construction since January 2024. He also served as Senior Vice President and California Group Manager from January 2021 to January 2024, Vice President and Regional Manager in Nevada from October 2017 to December 2020 and Vice President and Large Projects Business Development Manager from 2013 to 2017.
None of our customers had revenue that individually exceeded 10% of total revenue during the years ended December 31, 2021 and 2020. 3 Table of Contents Business Strategy Granite exists to satisfy society’s needs for mobility, power, water and other essential services that sustain living conditions and improve quality of life.
None of our customers had revenue that individually exceeded 10% of total revenue during the year ended December 31, 2021. 3 Table of Contents Business Strategy Granite exists to satisfy society’s needs for mobility, power, water and other essential services that sustain living conditions and improve quality of life.
During the years ended December 31, 2022, 2021 and 2020, our largest volume customer, including both prime and subcontractor arrangements, was the California Department of Transportation (“Caltrans”).
During the years ended December 31, 2023, 2022 and 2021, our largest volume customer, including both prime and subcontractor arrangements, was the California Department of Transportation (“Caltrans”).
Government Procurement: Approximately 70% of our construction-related revenue in 2022 was derived from contracts funded by federal, state and local government agencies and authorities. Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or implied certifications of compliance.
Government Procurement: Approximately 70% of our Construction Segment revenue in 2023 was derived from contracts funded by federal, state and local government agencies and authorities. Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or implied certifications of compliance.
We deliver infrastructure solutions for public and private clients primarily in the United States. We are one of the largest diversified infrastructure companies in the United States.
We deliver infrastructure solutions for public and private clients primarily in the United States. We are one of the largest diversified construction and construction materials companies in the United States.
Woolsey was the Vice President and Controller of the Energy, Infrastructure and Industrial Construction division of AECOM. Ms. Woolsey received a B.S. degree in Accounting from the University of Idaho and is a Certified Public Accountant. 9 Table of Contents
Woolsey was the Vice President and Controller of the Energy, Infrastructure and Industrial Construction division of AECOM. Ms. Woolsey received a B.S. degree in Accounting from the University of Idaho and is a Certified Public Accountant.
We have established employee resource groups that serve employees from a variety of backgrounds, and we have designated October as Inclusion month throughout our Company. We periodically conduct pay equity analyses to support our commitment to pay equity, regardless of race, gender, ethnicity or sexual orientation.
We have established employee resource groups that serve employees from a variety of backgrounds, and we have designated October as Inclusion month throughout our Company. We periodically conduct pay equity analyses to support our commitment to pay equity for similar job functions, regardless of race, gender, ethnicity or sexual orientation.
Radich served Granite as Project Engineer from 1980 to 1983, Project Manager from 1985 to 1990 for the Heavy Civil and Vertical Divisions and Chief Estimator from 1990 to 1993 in the Vertical Division. He received a B.S.C.E. from Santa Clara University and is a Registered Civil Engineer. Mr.
Radich served Granite as Project Engineer from 1980 to 1983, Project Manager from 1985 to 1990 for the Heavy Civil and 11 Table of Contents Vertical Divisions and Chief Estimator from 1990 to 1993 in the Vertical Division. He received a B.S.C.E. from Santa Clara University and is a Registered Civil Engineer. Mr.
Other than Caltrans, none of our customers, including both prime and subcontractor arrangements, had revenue that individually exceeded 10% of total revenue during the year ended December 31, 2022.
Other than Caltrans, none of our customers, including both prime and subcontractor arrangements, had revenue that individually exceeded 10% of total revenue during the years ended December 31, 2023 and December 31, 2022.
The information on our website is not incorporated into, and is not part of, this report. These reports, and any amendments to them, are also available on the SEC’s website, www.sec.gov. 8 Table of Contents Information About Executive Officers Information regarding our executive officers as of February 1, 2023 is set forth below. Name Age Position Kyle T.
The information on our website is not incorporated into, and is not part of, this report. These reports, and any amendments to them, are also available on the SEC’s website, www.sec.gov. Information About Executive Officers Information regarding our executive officers as of February 1, 2024 is set forth below. Name Age Position Kyle T.
It also provides construction of various complex projects including infrastructure / site development, mining, public safety, tunnel, solar, battery storage and other power-related projects. The Materials segment focuses on production of aggregates and asphalt production for internal use and for sale to third parties.
It also provides construction of various complex projects including infrastructure and site development, mining, public safety, tunnel, solar, battery storage and other power-related projects. The Materials segment focuses on production of aggregates, asphalt concrete, liquid asphalt and recycled materials for internal use in our construction projects and for sale to third parties.
The majority of both our salaried and hourly personnel were located in the United States during 2022.
The majority of both our salaried and hourly personnel were located in the United States during 2023.
He served as Vice President and Valley Region Manager from 2014 to 2019, Northern California Area Manager from 2012 to 2014, Design Build Project Executive from 2010 to 2012, Group Construction Manager from 2007 to 2010, Arizona Operations Manager from 2005 to 2007, Arizona Construction Manager from 2001 to 2005, Plants Manager from 1999 to 2001, Estimator/Project Manager from 1995 to 1999 and Project Engineer from 1993 to 1995.
He also served as Senior Vice President and Group Manager from January 2020 to January 2024, Vice President and Valley Region Manager from 2014 to 2019, Northern California Area Manager from 2012 to 2014, Design Build Project Executive from 2010 to 2012, Group Construction Manager from 2007 to 2010, Arizona Operations Manager from 2005 to 2007, Arizona Construction Manager from 2001 to 2005, Plants Manager from 1999 to 2001, Estimator/Project Manager from 1995 to 1999 and Project Engineer from 1993 to 1995.
Prior to joining Granite, he was employed at Oldcastle Tilcon from 1984 to 1991. Mr. Tatusko received a Construction Management degree from Southern Maine Tech. Mr. Williams joined Granite in 1987 and has served as Senior Vice President and Group Manager since June 2022.
Prior to joining Granite, he was employed at Oldcastle Tilcon from 1984 to 1991. Mr. Tatusko received a Construction Management degree from Southern Maine Tech. Mr. Williams joined Granite in 1987 and has served as Senior Vice President, Construction since January 2024.
We continued to execute on our inclusive diversity five-year strategic plan, which was established in 2020, with the following key goals: • increase representation of women throughout the organization from 13% in 2020 to 18% by 2025; • increase women in leadership from 14% in 2020 to 20% by 2025; • increase representation of persons of color in leadership throughout the organization from 15% in 2020 to 20% by 2025; and • increase inclusion index survey results from 71% in 2020 to 80% by 2025.
We continued to execute on our inclusive diversity five-year strategic plan, which was established in 2020, with the following key goals: • increase representation of women throughout the organization by 2025; • increase women in leadership by 2025; • increase representation of minorities in leadership throughout the organization by 2025; and • increase diversity and inclusion index survey results from 71% in 2020 to 80% by 2025.
Revenue recognized from contracts with Caltrans during the years ended December 31, 2022, 2021 and 2020 represented $348.0 million (10.5% of total revenue), $337.1 million (9.6% of total revenue) and $316.9 million (8.9% of total revenue), respectively, which was primarily in the Construction segment.
Revenue recognized from contracts with Caltrans during the years ended December 31, 2023, 2022 and 2021 represented $458.2 million (13.1% of total revenue), $348.0 million (10.5% of total revenue) and $337.1 million (9.6% of total revenue), respectively, which was primarily in the Construction segment.
Our managerial and supervisory personnel have an average tenure of 11 years with Granite, which demonstrates our workforce's strong dedication and great pride in our company. On December 31, 2022, we employed approximately 2,000 salaried employees who work in project, functional and business unit management, estimating and administrative capacities, plus approximately 1,800 hourly employees.
Our managerial and supervisory personnel have an average tenure of 12 years with Granite, which demonstrates our workforce's strong dedication to, and great pride in, our company. 4 Table of Contents On December 31, 2023, we employed approximately 2,100 salaried employees who work in project, functional and business unit management, estimating and administrative capacities, plus approximately 2,000 hourly employees.
In 2022, our employees completed over 25,000 training courses and more than 250 employees ranging from emerging leaders to senior leaders graduated from our multi-level leadership development program.
In 2023, our employees completed over 35,000 training courses and more than 300 employees ranging from emerging leaders to senior leaders graduated from our multi-level leadership development program.
Safety is one of our core values and we strive to continuously improve our safety program to better protect our people. We instill our culture of safety through relationship-based safety training, shared knowledge, and engagement at every level of our organization.
Health and Safety: Employee safety is our greatest priority and safety is ultimately about people, not statistics. Safety is one of our core values and we strive to continuously improve our safety program to better protect our people. We instill our culture of safety through relationship-based safety training, shared knowledge, and engagement at every level of our organization.
Williams 62 Senior Vice President and Group Manager Staci M. Woolsey 46 Chief Accounting Officer Mr. Larkin joined Granite in 1996, has served as President since September 2020 and as Chief Executive Officer since June 2021.
Williams 63 Senior Vice President, Construction Staci M. Woolsey 47 Chief Accounting Officer Mr. Larkin joined Granite in 1996, has served as President since September 2020 and as Chief Executive Officer since June 2021.
The percentage of fixed unit price contracts in our unearned revenue was 72.7% and 53.3% at December 31, 2022 and 2021, respectively.
The percentage of fixed unit price contracts in our unearned revenue was 63.5% and 72.7% at December 31, 2023 and 2022, respectively.
The percentage of fixed price contracts in our unearned revenue was 23.5% and 44.3% at December 31, 2022 and 2021, respectively. All other contract types represented 3.8% and 2.4% of our unearned revenue at December 31, 2022 and 2021, respectively.
The percentage of fixed price contracts in our unearned revenue was 30.5% and 23.5% at December 31, 2023 and 2022, respectively. All other contract types represented 6.0% and 3.8% of our unearned revenue at December 31, 2023 and 2022, respectively.
Joint Ventures We participate in various construction joint ventures with other construction companies of which we are a limited member (“joint ventures”) typically for large, technically complex projects, including design-build projects, where it is necessary or desirable to share expertise, risk and resources. Joint venture partners typically provide independently prepared estimates, shared equipment, and often bring local knowledge and expertise.
Joint Ventures We participate in various construction joint ventures with other construction companies of which we are a partner or limited member (“joint ventures”) typically for large, technically complex projects, including design-build projects, where it is necessary or desirable to share expertise, risk and resources.
Within these frameworks, we have selected industry-specific metrics that align with stakeholder expectations, are relevant to our business, and will have the most significant impact. We publish annual Sustainability Reports, which update stakeholders on our ESG performance.
For climate-related issues, we also utilize the recommendations from the Task Force on Climate-related Financial Disclosures. Within these frameworks, we have selected industry-specific metrics that align with stakeholder expectations, are relevant to our business, and will have the most significant impact. We publish annual Sustainability Reports, which update stakeholders on our ESG performance.
We continually monitor and adjust our fleet size so that it is consistent with the size of our business, considering both existing and expected future work. We lease or rent equipment to supplement our portfolio of equipment in response to construction activity cycles. In 2022 and 2021, we purchased $73.9 million and $60.1 million, respectively, of construction equipment and vehicles.
We pool certain equipment to maximize utilization. We continually monitor and adjust our fleet size so that it is consistent with the size of our business, considering both existing and expected future work. We lease or rent equipment to supplement our portfolio of equipment in response to construction activity cycles.
Many projects are added to CAP and completed within the same fiscal year and, therefore, may not be reflected in our beginning or year-end CAP. Our CAP was $4.5 billion and $4.0 billion as of December 31, 2022 and 2021 , respectively. Approximately $1.8 billion of the December 31, 2022 CAP is expected to be completed during 2023.
Many projects are added to CAP and completed within the same fiscal year and, therefore, may not be reflected in our beginning or year-end CAP. Our CAP wa s $5.5 billion and $4.5 billion a s of December 31, 2023 and 2022, respectively.
We strive to conduct timely internal investigations of potential violations and take appropriate action depending upon the outcome of the investigation. 6 Table of Contents Contract Provisions and Subcontracting Contracts with our customers are primarily “fixed unit price” or “fixed price.” Under fixed unit price contracts, we are committed to providing materials or services at fixed unit prices (for example, dollars per cubic yard of concrete placed or cubic yard of earth excavated).
Contract Provisions and Subcontracting Contracts with our customers are primarily “fixed unit price” or “fixed price.” Under fixed unit price contracts, we are committed to providing materials or services at fixed unit prices (for example, dollars per cubic yard of concrete placed or cubic yard of earth excavated).
Generally, each construction joint venture is formed as a partnership or limited liability company to accomplish a specific project and is jointly controlled by the joint venture partners.
Joint venture partners typically provide independently prepared estimates, shared equipment, and often bring local knowledge and expertise. Generally, each construction joint venture is formed as a partnership or limited liability company to accomplish a specific project and is jointly controlled by the joint venture partners.
Code of Conduct and Core Values: We strive to maintain high ethical standards through an established Code of Conduct and a company-wide compliance program, while always being guided by our core values which are integrity, safety, excellence, sustainability and inclusion. 4 Table of Contents Human Capital Resources Employees: We believe our employees are our most valuable resource and are the primary factor in the successful implementation of our business strategies.
Code of Conduct and Core Values: We strive to maintain high ethical standards through an established Code of Conduct and a company-wide compliance program, while always being guided by our core values which are integrity, safety, excellence, sustainability and inclusion.
Larkin 51 President and Chief Executive Officer Elizabeth L. Curtis 56 Executive Vice President and Chief Financial Officer James A. Radich 64 Executive Vice President and Chief Operating Officer Brian A. Dowd 59 Senior Vice President and Group Manager Michael G. Tatusko 58 Senior Vice President and Group Manager Bradley J.
Larkin 52 President and Chief Executive Officer Elizabeth L. Curtis 57 Executive Vice President and Chief Financial Officer James A. Radich 65 Executive Vice President and Chief Operating Officer Brian A. Dowd 60 Senior Vice President, Construction Bradly J. Estes 45 Senior Vice President, Construction Materials Michael G. Tatusko 59 Senior Vice President, Construction Bradley J.
See Note 9 of “Notes to the Consolidated Financial Statements” for more information. 7 Table of Contents Insurance and Bonding We maintain insurance coverage and limits consistent with industry practice and in alignment with our overall risk management strategy. Policies include general and excess liability, property, pollution, professional, cyber security, executive risk, workers’ compensation and employer’s liability.
Insurance and Bonding We maintain insurance coverage and limits consistent with industry practice and in alignment with our overall risk management strategy. Policies include general and excess liability, property, pollution, professional, cybersecurity, executive risk, workers’ compensation and employer’s liability.
Significant resources are employed to attract, develop and retain extraordinary and diverse talent and fully promote each employee’s capabilities. Our focus on inclusive diversity, talent development, talent acquisition, and succession planning has allowed us to build a bench of talented employees.
Our focus on inclusive diversity, talent development, talent acquisition, and succession planning has allowed us to build a bench of talented employees.
At December 31, 2022, there was $246.4 million of remaining contract value on unconsolidated and line item construction joint venture contracts, of which $110.9 million represented our share and is included in our CAP and the remaining $135.5 million represented our partners’ share.
At December 31, 2023, there was $195.6 million of remaining contract value on unconsolidated and line item construction joint venture contracts, of which $93.1 million represented our share and is included in our CAP and the remaining $102.5 million represented our partners’ share. See Note 9 of “Notes to the Consolidated Financial Statements” for more information.
Mr. Dowd holds a B.S. in Civil Engineering from the University of California, Berkeley and is a Registered Engineer in the states of California and Nevada. Mr. Tatusko joined Granite in 1991 and has served as Senior Vice President and Group Manager since January 2020.
Mr. Dowd holds a B.S. in Civil Engineering from the University of California, Berkeley and is a Registered Engineer in the states of California and Nevada. Mr.
Competition and Market Trends In both our Construction and Materials segments, we have competitors within the individual markets and geographic areas in which we operate, ranging from small, local companies to larger regional, national and international companies. Although the construction business is highly competitive, there are few, if any, companies which compete in all of our market areas.
Approximat ely $2.3 billion of the December 31, 2023 unearned revenue is expected to be completed during 2024. Competition and Market Trends In both our Construction and Materials segments, we have competitors within the individual markets and geographic areas in which we operate, ranging from small, local companies to larger regional, national and international companies.
These totals do not include employees of unconsolidated joint ventures. The total number of hourly personnel is subject to the volume of construction in progress and is seasonal. During 2022, the number of hourly employees ranged from approximately 1,800 to 3,800 and averaged approximately 3,400.
These totals do not include employees of unconsolidated joint ventures or employees of the newly acquired LRC/MSG businesses (see Note 2 of the “Notes to the Consolidated Financial Statements”). The total number of hourly personnel fluctuates with the volume of construction in progress and is seasonal. During 2023, the number of hourly employees ranged from approximately 1,800 to 4,000.
Compensation and Benefits: Our compensation programs are designed to align the compensation of our employees with our financial and safety performance and their individual performance to provide proper incentives to attract, retain and motivate employees to achieve superior results. The structure of our compensation programs balances guaranteed base pay with incentive compensation opportunities.
In 2023, we conducted a company-wide employee engagement survey and the results reflect improved engagement. 5 Table of Contents Compensation and Benefits: Our compensation programs are designed to align the compensation of our employees with our financial and safety performance and their individual performance to provide proper incentives to attract, retain and motivate employees to achieve superior results.
The agreements with our partner(s) for both construction joint ventures and line-item joint ventures define each partner’s management role and financial responsibility in the project.
We account for our portion of these contracts as revenue and cost of revenue in the consolidated statements of operations and in relevant balances in the consolidated balance sheets. 9 Table of Contents The agreements with our partner(s) for both construction joint ventures and line-item joint ventures define each partner’s management role and financial responsibility in the project.
We are also subject to the applicable anti-corruption laws in the jurisdictions in which we operate, thus potentially exposing us to liability and potential penalties in multiple jurisdictions. The anti-corruption provisions of the FCPA are enforced by the Department of Justice while other state or federal agencies may seek recourse against us for issues related to the FCPA.
We are also subject to the applicable anti-corruption laws in the jurisdictions in which we operate, thus potentially exposing us to liability and potential penalties in multiple jurisdictions.
We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs. 5 Table of Contents Environmental, Social and Governance Matters Sustainability is one of our core values and we are committed to contributing to the development of a more sustainable future. We are a participating member of the United Nations Global Compact.
Environmental, Social and Governance Matters Sustainability is one of our core values and we are committed to contributing to the development of a more sustainable future. We are a participating member of the United Nations Global Compact. Our sustainability objectives encompass corporate social responsibility, environmental stewardship, dependable governance and the creation of enduring economic value.
Government Regulations Our business is impacted by environmental, health and safety, government procurement, anti-bribery and other government regulations and requirements. Below is a summary of some of the significant regulations that impact our business.
Below is a summary of some of the significant regulations that impact our business.
Our sustainability objectives encompass corporate social responsibility, environmental stewardship, dependable governance and the creation of enduring economic value. We envision Granite as the leading provider of sustainable infrastructure solutions, differentiated by our pursuit of social, environmental and financial excellence.
We envision Granite as the leading provider of sustainable infrastructure solutions, differentiated by our pursuit of social, environmental and financial excellence. To attain our objectives, we have a Sustainability department that develops, coordinates and communicates our environmental, social and governance (“ESG”) initiatives across the Company.
Our portfolio of equipment includes backhoes, barges, bulldozers, cranes, excavators, loaders, motor graders, pavers, rollers, scrapers, trucks, drilling rigs and tunnel boring machines that are used in both of our segments. We pool certain equipment to maximize utilization.
Equipment At December 31, 2023 and 2022, we owned the following number of construction equipment and vehicles: December 31, 2023 2022 Heavy construction equipment 2,457 2,471 Trucks, truck-tractors, trailers and vehicles 4,686 5,059 10 Table of Contents Our portfolio of equipment includes backhoes, barges, bulldozers, cranes, excavators, loaders, motor graders, pavers, rollers, scrapers, trucks, drilling rigs and tunnel boring machines that are used in both of our segments.
Additionally, all employees are eligible for health insurance, physical, mental and financial wellness programs, paid and unpaid leave, a retirement plan, life insurance and disability/accident coverage.
The structure of our compensation programs balances guaranteed base pay with incentive compensation opportunities. Additionally, all employees are eligible for health insurance, physical, mental and financial wellness programs, paid and unpaid leave, a retirement plan, life insurance and disability/accident coverage. We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs.
Each partner accounts for its items of work individually as it would for any self-performed contract. We account for our portion of these contracts as revenue and cost of revenue in the consolidated statements of operations and in relevant balances in the consolidated balance sheets.
Each partner accounts for its items of work individually as it would for any self-performed contract.
These include corporate culture assessments, as well as real-time feedback on employee engagement and on employee well-being which includes physical, emotional, social and financial health. In 2022, we conducted a company-wide engagement survey and the results reflected improved engagement across each of our four key indices: trust, executive leadership, inclusive diversity and code of conduct.
These include corporate culture assessments, as well as real-time feedback on employee engagement and on employee well-being which includes physical, emotional, social and financial health.
Such penalties may have a material adverse effect on our business, results of operations and financial condition. We devote resources to the development, maintenance, communication and enforcement of our Code of Conduct, our anti-bribery compliance policies, our internal control processes and compliance related policies.
We devote resources to the development, maintenance, communication and enforcement of our Code of Conduct, our anti-bribery compliance policies, our internal control processes and compliance related policies. We strive to conduct timely internal investigations of potential violations and take appropriate action depending upon the outcome of the investigation.
To attain our objectives, we have a Sustainability department that develops, coordinates and communicates our environmental, social and governance (“ESG”) initiatives across the Company. Our Board of Directors oversees our sustainability program, including how we manage sustainability and ESG-related risks in conjunction with our overall Enterprise Risk Management process.
Our Board of Directors oversees our sustainability program, including how we manage sustainability and ESG-related risks in conjunction with our overall Enterprise Risk Management process. We utilize the Global Reporting Initiative and Sustainability Accounting Standards Board standards as frameworks to support performance, tracking and reporting, and responsible business behavior.
By contrast, larger projects typically require larger amounts of capital that may make entry into the market by future competitors more difficult. See “Current Economic Environment and Outlook” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further information on current market trends.
See “Current Economic Environment and Outlook” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further information on current market trends. Government Regulations Our business is impacted by environmental, health and safety, government procurement, anti-bribery and other government regulations and requirements.
In addition, the Securities and Exchange Commission (“SEC”) requires strict compliance with certain accounting and internal control standards set forth under the FCPA. Failure to comply with the FCPA and other laws can expose us and/or individual employees to potentially severe criminal and civil penalties.
The anti-corruption provisions of the FCPA are enforced by the Department of Justice while other state or federal agencies may seek recourse against us for issues related 7 Table of Contents to the FCPA. In addition, the Securities and Exchange Commission (“SEC”) requires strict compliance with certain accounting and internal control standards set forth under the FCPA.
In 2022 we continued to make progress towards our 2025 goals. Representation of women throughout the organization was maintained at 13%, women in leadership increased to 19%, representation of persons of color in leadership rose to 18% and our 2022 inclusion index survey results increased to 74%.
In 2023, we continued to make progress towards our 2025 goals through broadening the diversity of our pool of potential qualified applicants and identifying and addressing any impediments to employment opportunity that may exist. Representation of women throughout the organization was maintained and representation of women and minorities in leadership increased in 2023.
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We were also successful with our targeted talent acquisition plan focused on diverse colleges and universities. In 2022, we hired 195 interns from 65 colleges and universities. Of this, 52% were diverse. Health and Safety: Employee safety is our greatest priority and safety is ultimately about people, not statistics.
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In 2023, we strengthened and expanded our vertically integrated home markets with acquisitions of the Brunswick Canyon quarry and asphalt plant in Nevada; Coast Mountain Resources (2020) Ltd.
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We utilize the Global Reporting Initiative and Sustainability Accounting Standards Board standards as frameworks to support performance, tracking and reporting, and responsible business behavior. For climate-related issues, we also utilize the recommendations from the Task Force on Climate-related Financial Disclosures.
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("CMR"), a construction aggregate producer in British Columbia, Canada; and Lehman-Roberts Company and Memphis Stone & Gravel Company (collectively, "LRC/MSG"), asphalt paving and asphalt and aggregate producers and suppliers operating in the Memphis metropolitan market.
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Equipment At December 31, 2022 and 2021, we owned the following number of construction equipment and vehicles: December 31, 2022 2021 Heavy construction equipment 2,471 2,736 Trucks, truck-tractors, trailers and vehicles 5,059 5,460 The number of construction equipment and vehicles as of December 31, 2021 includes those related to the businesses that were classified as held for sale as of that date (see Note 1 and Note 2 of "Notes to Consolidated Financial Statements" for further information). 1,103 pieces of construction equipment and 1,861 vehicles were classified as held for sale as of December 31, 2021.
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Human Capital Resources Employees: We believe our employees are our most valuable resource and are the primary factor in the successful implementation of our business strategies. Significant resources are employed to attract, develop and retain extraordinary and diverse talent and optimize each employee’s capabilities.
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During the first quarter of 2022, 393 pieces of heavy construction equipment and 720 vehicles were sold as part of the sale of one of the held for sale businesses.
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Our 2022 diversity and inclusion index survey result was 74%. Survey results represent employee responses to questions regarding our diversity and inclusion practices. Our next survey will be completed in 2024. We were also successful with our targeted talent acquisition plan to increase the participation of diverse colleges and universities.
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In 2023, we employed 238 interns from 105 colleges and universities. We remain fully committed to fairness and nondiscrimination in our employment practices by ensuring that the decision on who to hire and promote are based purely on merit and made without consideration of race, gender or other protected characteristic.
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Although the construction business is highly competitive, there are few, if any, companies which compete in all of our market areas. The degree and type of competition is influenced by the type and scope of construction projects within the 6 Table of Contents individual markets.
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By contrast, larger projects typically require larger amounts of capital that may make entry into the market by future competitors more difficult. Also, aggregate mining and asphalt production require significant capital investment to purchase and maintain the necessary property and equipment which presents a significant barrier to entry into the construction materials market.
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Failure to comply with the FCPA and other laws can expose us and/or individual employees to potentially severe criminal and civil penalties. Such penalties may have a material adverse effect on our business, results of operations and financial condition.
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The December 31, 2023 equipment count includes 202 pieces of heavy construction equipment and 111 vehicles from the LRC/MSG acquisition. In 2023 and 2022, we purchased $71.9 million and $73.9 million, respectively, of construction equipment and vehicles.
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Estes joined Granite in 2003 and has served as Senior Vice President, Construction Materials since June 2023, as Vice President of Construction Materials from January 2018 to June 2023, as Group Materials Manager from January 2017 to December 2017, as Materials Manager in Washington from January 2012 to December 2016, as Plants Manager in Washington from November 2008 to December 2011, as Portable Plant Manager in Northern California from June 2005 to October 2008, and as Branch Division Plant Engineer from June 2003 to May 2005.
Added
Mr. Estes holds a B.S.degree in Mining Engineering from Montana Technological University. Mr. Tatusko joined Granite in 1991 and has served as Senior Vice President, Construction since January 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+18 added−11 removed94 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations,” accounting for our contract-related revenues and costs, as well as other expenses, requires management to make a variety of significant estimates and assumptions. These assumptions and estimates may change significantly in the future and could result in the reversal of previously recognized revenue and profit.
Biggest changeManagement’s Discussion and Analysis of 20 Table of Contents Financial Condition and Results of Operations,” and in "Use of Estimates in Preparation of Financial Statements," "Revenue Recognition" and "Goodwill" within Note 1 of the "Notes to the Consolidated Financial Statements," accounting for our contract-related revenues and costs, as well as other expenses, goodwill and acquired intangible assets requires management to make a variety of significant estimates and assumptions.
Under ERISA, a contributor to a multi-employer plan may be liable, upon termination or withdrawal from a plan, for its proportionate share of a plan’s unfunded vested liability.
Under ERISA, a contributor to a multi-employer plan may be liable, upon termination or withdrawal from a plan, for its proportionate share of a multi-employer plan’s unfunded vested liability.
Business,” we are subject to a number of federal, state, local and foreign laws and regulations relating to the environment, including the remediation of soil and groundwater contamination, emission and discharge of materials into the environment and reclamation and closure of operations, workplace health and safety and a variety of socioeconomic requirements and are required to obtain and maintain a number of environmental approvals, permits and financial assurances.
Business,” we are subject to a number of federal, state, local and foreign laws and regulations relating to the environment, including the remediation of soil and groundwater contamination, emission and discharge of materials into the environment, reclamation and closure of operations, workplace health and safety and a variety of socioeconomic requirements and are required to obtain and maintain a number of environmental approvals, permits and financial assurances.
In addition, the sale or the availability for sale of a large number of shares of common stock in the public market may cause the price of our common stock to decline. • Delaware law and our charter documents may impede or discourage a takeover, which could reduce potential increases in the market price of our common stock.
In addition, the sale or the availability for sale of a large number of shares of common stock in the public market could cause the price of our common stock to decline. • Delaware law and our charter documents may impede or discourage a takeover, which could reduce potential increases in the market price of our common stock.
Congress and in the legislatures of various states in which we operate, and there has been a wide-ranging policy debate, both in the United States and internationally, regarding the regulation of greenhouse gas emissions.
Congress and the legislatures of various states in which we operate, and there has been a wide-ranging policy debate, both in the United States and internationally, regarding the regulation of greenhouse gas emissions.
If we are unable to service our debt obligations as a result of rising interest rates or any other reason or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us.
If we are unable to service our debt obligations as a result of rising or higher interest rates or any other reason or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us.
Such factors, which include the following, could have a material adverse effect on our business, financial condition and results of operations or the timing of contract payments from government agencies or authorities: • the failure of the U.S. government to complete its budget and appropriations process before its fiscal year-end; • changes in and delays or cancellations of government programs, procurements, requirements or appropriations; • budget constraints or policy changes resulting in delay or curtailment of expenditures related to the services we provide; • re-competes of government contracts; • the timing and amount of tax revenue received by federal, state and local governments, and the overall level of government expenditures; • curtailment in the use of government contracting firms; • delays associated with insufficient numbers of government staff to oversee contracts; • the increasing preference by government agencies for contracting with small and disadvantaged businesses; • competing political priorities and changes in the political climate regarding the funding or operation of the services we provide; • the adoption of new laws or regulations affecting our contracting relationships with the federal, state or local governments; • unsatisfactory performance on government contracts by us or one of our subcontractors, negative government audits or other events that may impair our relationship with federal, state or local governments; • a dispute with or improper activity by any of our subcontractors; and • general economic or political conditions. • Our U.S. federal government contracts may give government agencies the right to modify, delay, curtail, renegotiate or terminate existing contracts at their convenience at any time prior to their completion, which could have a material adverse effect on our business, financial condition and results of operations.
Such factors, which include the following, could have a material adverse effect on our business, financial condition and results of operations or the timing of contract payments from government agencies or authorities: • the failure of the U.S. government to complete its budget and appropriations process before its fiscal year-end; • changes in and delays or cancellations of government programs, procurements, requirements or appropriations; • budget constraints or policy changes resulting in delay or curtailment of expenditures related to the services we provide; • re-competes of government contracts; • the timing and amount of tax revenue received by federal, state and local governments, and the overall level of government expenditures; • curtailment in the use of government contracting firms; • delays associated with insufficient numbers of government staff to oversee contracts; • the increasing preference by government agencies for contracting with small and disadvantaged businesses; • competing political priorities and changes in the political climate regarding the funding or operation of the services we provide; • the adoption of new laws or regulations affecting our contracting relationships with the federal, state or local governments; • unsatisfactory performance on government contracts by us or one of our subcontractors, negative government audits or other events that may impair our relationship with federal, state or local governments; • a dispute with or improper activity by any of our subcontractors; and • general economic or political conditions. • Our U.S. federal government contracts may give government agencies the right to modify, delay, curtail, renegotiate or terminate existing contracts at their convenience at any time prior to their completion, which 13 Table of Contents could have a material adverse effect on our business, financial condition and results of operations.
The option counterparties may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions. This activity could cause an increase or a decrease in the market price of our common stock.
The option counterparties may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions. This activity could cause or hinder an increase or a decrease in the market price of our common stock.
These risks and uncertainties include: • our ability to locate suitable acquirers for our divestitures; • our ability to complete the divestitures in accordance with our expected plans or anticipated time frame, or at all; • our ability to complete the divestitures on terms and conditions acceptable to us; • difficulties separating the assets and personnel related to businesses that we expect to divest from the businesses we expect to retain; • that divestitures involve significant costs and require the time and attention of our management, which may divert management’s attention from ongoing operations; • our ability to successfully cause a buyer of a divested business to assume the liabilities of that business, or even if such liabilities are assumed, we may have difficulties enforcing our rights, contractual or otherwise against the buyer; • the need to obtain regulatory approvals and other third-party consents, which potentially could disrupt customer and vendor relationships; • potential additional tax obligations or the loss of tax benefits; • the divestiture could negatively impact our profitability because of losses that may result from a sale, the loss of revenue or a decrease in cash flows; and • following the completion of a divestiture, we may have less diversity in our business and in the markets we serve as well as our client base.
These risks and uncertainties include: • our ability to locate suitable acquirers for our divestitures; 16 Table of Contents • our ability to complete the divestitures in accordance with our expected plans or anticipated time frame, or at all; • our ability to complete the divestitures on terms and conditions acceptable to us; • difficulties separating the assets and personnel related to businesses that we expect to divest from the businesses we expect to retain; • that divestitures involve significant costs and require the time and attention of our management, which may divert management’s attention from ongoing operations; • our ability to successfully cause a buyer of a divested business to assume the liabilities of that business, or even if such liabilities are assumed, we may have difficulties enforcing our rights, contractual or otherwise against the buyer; • the need to obtain regulatory approvals and other third-party consents, which potentially could disrupt customer and vendor relationships; • potential additional tax obligations or the loss of tax benefits; • the divestiture could negatively impact our profitability because of losses that may result from a sale, the loss of revenue or a decrease in cash flows; and • following the completion of a divestiture, we may have less diversity in our business and in the markets we serve as well as our client base.
Such changes may adversely affect the revenue and profit we ultimately realize on these projects. • Rising inflation and/or interest rates could have an adverse effect on our business, financial condition and results of operations. Economic factors, including inflation and rising interest rates, could have a negative impact on our business.
Such changes may adversely affect the revenue and profit we ultimately realize on these projects. • Rising or high inflation and/or interest rates could have an adverse effect on our business, financial condition and results of operations. Economic factors, including inflation and rising and/or high interest rates, could have a negative impact on our business.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 2.75% Convertible Notes and the obligations under our Credit Agreement, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 2.75% Convertible Notes and our 3.75% Convertible Notes and the obligations under our Credit Agreement, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Construction and maintenance sites are potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes, and highly regulated materials. On many sites, we are responsible for safety and, accordingly, must implement safety procedures.
Construction, mining and maintenance sites are potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes, and highly regulated materials. On many sites, we are responsible for safety and, accordingly, must implement safety procedures.
Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes or our Credit Agreement would constitute an event of default under the indenture governing our 2.75% Convertible Notes or the Credit Agreement.
Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes, our 3.75% Convertible Notes or our Credit Agreement would constitute an event of default under the indenture governing our 2.75% Convertible Notes, the indenture governing our 3.75% Convertible Notes or the Credit Agreement.
Approximately 70% of our construction-related revenue in 2022 was derived from contracts funded by federal, state and local government agencies and authorities. Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or implied certifications of compliance.
Approximately 70% of our construction-related revenue in 2023 was derived from contracts funded by federal, state and local government agencies and authorities. Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or implied certifications of compliance.
These disruptions could increase our operational expense as well as impact the management of our business operations, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity. • Cybersecurity attacks on or breaches of our information technology environment could result in business interruptions, remediation costs and/or legal claims .
These disruptions could increase our operational expense as well as impact the management of our business operations, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity. • Cybersecurity incidents or breaches of our information technology environment could result in business interruptions, remediation costs and/or legal claims .
A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility; (iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed under the Credit Agreement; and/or (v) foreclosure on any lien securing the obligations under such facility.
A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility; (iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed under the Credit Agreement; and/or (v) foreclosure on any collateral securing the obligations under such facility.
In connection with any acquisitions, we may acquire liabilities or defects such as legal claims, including but not limited to third party liability and other tort claims; claims for breach of contract; employment-related claims; environmental liabilities, conditions or damage; permitting, regulatory or other compliance with law issues; or tax liabilities.
In connection with any acquisitions, we may acquire liabilities or defects such as legal claims, including but not limited to, third party liability and other tort claims; claims for breach of contract; employment-related claims; environmental, health and safety liabilities, conditions or damage; permitting, regulatory or other compliance with law issues; or tax liabilities.
As of December 31, 2022, three of our wholly-owned subsidiaries, Granite Construction Company, Layne Christensen Company and Granite Industrial, Inc., participate in various domestic multi-employer pension plans on behalf of union employees. Union employee benefits generally are based on a fixed amount for each year of service.
As of December 31, 2023, three of our wholly-owned subsidiaries, Granite Construction Company, Layne Christensen Company and Granite Industrial, Inc., participate in various domestic multi-employer pension plans on behalf of union employees. Union employee benefits generally are based on a fixed amount for each year of service.
We were involved in, and may in the future be subject to, litigation, regulatory examinations, investigations, proceedings or orders, the assessment of civil monetary penalties, or equitable remedies, and the expenses associated with such matters as a result of or relating to the restatement of our financial statements and reported material weaknesses.
We were involved in, and may in the future be subject to, litigation, regulatory examinations, investigations, proceedings or orders, the assessment of civil monetary penalties, equitable remedies or indemnification claims, and the expenses associated with such matters as a result of or relating to the restatement of our financial statements and reported material weaknesses.
Should one or more of these events occur, it could have a material adverse effect on our financial position, results of operations, cash flows and liquidity. • We are subject to environmental and other regulation. As more fully described in “Government Regulations” under “Item 1.
Should one or more of these events occur, it could have a material adverse effect on our financial position, results of operations, cash flows and liquidity. • We are subject to environmental, health and safety and other regulation. As more fully described in “Government Regulations” under “Item 1.
The effect, if any, of these transactions and activities on the market price of our common stock will depend in part on market conditions and cannot be ascertained at this time, but these activities could adversely affect the market price of our common stock. • We are subject to counterparty risk with respect to the convertible note hedge transactions.
The effect, if any, of these transactions and activities on the market price of our common stock will depend in part on market conditions and cannot be ascertained at this time, but these activities could adversely affect the market price of our common stock. • We are subject to counterparty risk with respect to the capped call transactions and the convertible note hedge transactions.
These risks and uncertainties include, but are not limited to: our ability to execute our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of alternative fuels, availability of renewable energy; unforeseen design, operational and technological difficulties; the outcome of research efforts and future technology developments; compliance with, and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals; labor-related regulations and requirements that restrict or prohibit our ability to impose requirements on third party contractors; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; and the actions of competitors and competitive pressures.
These risks and uncertainties include, but are not limited to: our ability to execute our operational strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of alternative fuels and electric vehicles, availability of renewable energy; unforeseen design, operational and technological difficulties; the outcome of research efforts and future technology developments; compliance with, and changes or additions to, global, national, regional and local regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals; labor-related regulations and requirements that restrict or prohibit our ability to impose requirements on third party contractors; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; and the actions of competitors and competitive pressures.
For the year ended December 31, 2022, approximately 70% of our construction revenue was funded by federal, state and local government agencies and authorities. A significant amount of this revenue is derived under multi-year contracts, many of which are appropriated on an annual basis.
For the year ended December 31, 2023, approximately 70% of our construction revenue was funded by federal, state and local government agencies and authorities. A significant amount of this revenue is derived under multi-year contracts, many of which are appropriated on an annual basis.
Physical risks related to climate change, such as changing sea levels, temperature fluctuations, severe storms, and energy and technological disruptions, could cause delays and increases in project costs, resulting in variability in our revenue and profitability, as well as potentially adverse impacts to our operating results and financial condition.
Physical risks related to climate change, such as changing sea levels, temperature fluctuations, severe storms, and energy, supply chain and technological disruptions, could cause delays and increases in project costs, resulting in variability in our revenue and profitability, as well as potentially adverse impacts to our operating results and financial condition.
Such changes could have a material adverse effect on our financial position and results of operations. • A change in tax laws or regulations of any federal, state or international jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our financial position, results of operations, cash flows and liquidity.
Such changes or impairment charges could have a material adverse effect on our financial position and results of operations. • A change in tax laws or regulations of any federal, state or international jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our financial position, results of operations, cash flows and liquidity.
Volatility in the global financial system, deterioration in general economic activity, inflation, rising interest rates, supply chain issues, the War in Ukraine, other political, social or economic uncertainties, and fiscal, monetary and other policies that federal, state and local governments may enact, including infrastructure spending or deficit reduction measures, may have an adverse impact on our business, financial position, results of operations, cash flows and liquidity.
Volatility in the global financial system, deterioration in general economic activity, inflation, rising or high interest rates, supply chain issues, the War in Ukraine, the Israel-Hamas War, other political, social or economic uncertainties, and fiscal, monetary and other policies that federal, state and local governments may enact, including infrastructure spending or deficit reduction measures, may have an adverse impact on our business, financial position, results of operations, cash flows and liquidity.
In addition, growing public concern about climate change has resulted in the increased focus of local, state, regional, national and international regulatory bodies on greenhouse gas emissions and climate change issues. Legislation to regulate greenhouse gas emissions has periodically been introduced in the U.S.
In addition, growing public concern about climate change has resulted in the increased focus of local, state, regional, national and international regulatory bodies on greenhouse gas emissions and climate change issues. Legislation to regulate greenhouse gas emissions has periodically been introduced and passed by the U.S.
In addition, the Federal Acquisition Regulation and various state statutes provide for discretionary suspension and/or debarment in certain circumstances that might call into question a contractor’s willingness or ability to act responsibly, including as a result of being convicted of, or being found civilly liable for, fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract.
In addition, the Federal Acquisition Regulation 19 Table of Contents and various state statutes provide for discretionary suspension and/or debarment in certain circumstances that might call into question a contractor’s willingness or ability to act responsibly, including as a result of being convicted of, or being found civilly liable for, fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract.
The FCPA generally prohibits companies and their affiliates from making improper payment to non-U.S. officials for the purpose of obtaining or retaining business. Our internal policies, procedures and Code of Conduct mandate compliance with these anti-corruption laws. However, we operate in some countries known to experience corruption.
The FCPA generally prohibits companies and their affiliates from making improper payment to non-U.S. officials for the purpose of obtaining or retaining business. Our internal policies, procedures and Code of Conduct mandate compliance with these anti-corruption laws. However, we operate in one or more countries known to experience corruption.
Additionally, in connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the option counterparties may have entered into various derivative transactions with respect to our common stock.
Additionally, in connection with establishing their initial hedge of the convertible note hedge and warrant transactions and the capped call transactions, the option counterparties may have entered into various derivative transactions with respect to our common stock.
If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
Our costs were and may continue to be subject to significant inflationary pressures, and we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
These liabilities, if they materialize, could have a material adverse effect on our business, results of operations and financial condition. 12 Table of Contents RISKS RELATED TO OUR HUMAN CAPITAL, JOINT VENTURES AND SUBCONTRACTORS • Our success depends on attracting and retaining qualified personnel, joint venture partners and subcontractors in a competitive environment .
These liabilities, if they materialize, could have a material adverse effect on our business, results of operations and financial condition. RISKS RELATED TO OUR HUMAN CAPITAL, JOINT VENTURES AND SUBCONTRACTORS • Our success depends on attracting and retaining qualified personnel, joint venture partners and subcontractors in a competitive environment .
However, the warrant transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants ($53.44 per share) and we deliver shares of our common stock upon exercise of such warrants instead of paying cash.
However, the warrant transactions could separately have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the warrants ($53.44 per share) 22 Table of Contents and we deliver shares of our common stock upon exercise of such warrants instead of paying cash.
Although strikes or work stoppages have not had a significant impact on our operations or results in the past, such labor actions could have a significant impact on our operations and results if they occur in the future. • Failure of our subcontractors to perform as anticipated could have a negative impact on our results.
Although strikes or work stoppages have not had 17 Table of Contents a significant impact on our operations or results in the past, such labor actions could have a significant impact on our operations and results if they occur in the future. • Failure of our subcontractors to perform as anticipated could have a negative impact on our results.
See definition of Credit Agreement and 2.75% Convertible Notes in Note 14 to “Notes to the Consolidated Financial Statements.” • Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.
See definition of 2.75% Convertible Notes and 3.75% Convertible Notes in Note 14 to “Notes to the Consolidated Financial Statements.” • Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.
In addition, levels of new commercial and residential construction projects could be adversely affected by oversupply of existing inventories of commercial and residential properties, low property values and a restrictive financing environment. • We work in a highly competitive marketplace.
In addition, levels of new commercial and residential construction 12 Table of Contents projects could be adversely affected by oversupply of existing inventories of commercial and residential properties, low property values and a restrictive financing environment. • We work in a highly competitive marketplace.
In addition, increases in interest rates will result in higher interest expense related to borrowings under our Fourth Amended and Restated Credit Agreement (the “Credit Agreement”), which could have a material adverse effect on our business, results of operations and financial condition. 11 Table of Contents • As part of our growth strategy, we have made and may make future acquisitions, and acquisitions involve many risks and uncertainties.
In addition, increases in or sustained higher interest rates will result in higher interest expense related to borrowings under our Fourth Amended and Restated Credit Agreement, as amended (the “Credit Agreement”), which could have a material adverse effect on our business, results of operations and financial condition. • As part of our growth strategy, we have made and may make future acquisitions, and acquisitions involve many risks and uncertainties.
Such policy changes, including any enactment of increasingly stringent emissions or other environmental regulations, could increase the costs of projects for us and for our clients and, in some cases, delay or even prevent a project from going forward, thereby potentially reducing demand for our services.
Such policy changes, including any enactment of increasingly stringent emissions or other environmental regulations, could increase the costs of supplies or projects for us and for our clients and, in some cases, delay or even prevent a project from going 23 Table of Contents forward, thereby potentially reducing demand for our services.
The convertible note hedge transactions are expected generally to reduce the potential dilution to our common stock upon conversion of the 2.75% Convertible Notes and/or offset any cash payments we elect to make in excess of the principal amount of converted notes, as the case may be.
The convertible note hedge transactions and the capped call transactions are expected generally to reduce the potential dilution to our common stock upon conversion of the 2.75% Convertible Notes and the 3.75% Convertible Notes and/or offset any cash payments we elect or are required to make in excess of the principal amount of converted notes, as the case may be.
Additionally, we previously restated certain periods in 2019 and prior to correct misstatements associated with project forecasts in our former Heavy Civil operating group, which is now part of our Central operating group.
Additionally, we previously restated certain periods in 2019 and prior to correct misstatements associated with project forecasts in our former 18 Table of Contents Heavy Civil operating group, which is now part of our Central operating group.
Taken collectively, such restatements: • had and may continue to have the effect of eroding investor confidence in us and our financial reporting and accounting practices and processes; • negatively impacted and may continue to negatively impact the trading price of our common stock; • diverted and may continue to divert management’s attention from the operation of our business; • required that we incur significant expenses and may require that we incur significant additional expenses relating to any litigation or regulatory examinations, investigations, proceedings or orders; • may make it more difficult, expensive and time consuming for us to raise capital, if necessary, on acceptable terms, if at all; • may make it more difficult to pursue transactions or implement business strategies that might otherwise be beneficial to our business; and • may negatively impact our reputation with our customers.
Taken collectively, such restatements: • had and may continue to have the effect of eroding investor confidence in us and our financial reporting and accounting practices and processes; • negatively impacted and may continue to negatively impact the trading price of our common stock; • required that we incur significant expenses and may require that we incur significant additional expenses relating to any litigation or regulatory examinations, investigations, proceedings, orders or indemnification claims; • may make it more difficult, expensive and time consuming for us to raise capital, if necessary, on acceptable terms, if at all; • may make it more difficult to pursue transactions or implement business strategies that might otherwise be beneficial to our business; and • may negatively impact our reputation with our customers.
Noncompliance with such laws, regulations and permits can result in, among other things, substantial penalties, or termination or suspension of government contracts or our operations as well as civil and criminal liability.
Noncompliance with such laws, regulations, approvals, permits and financial assurances can result in, among other things, substantial penalties, or termination or suspension of government contracts or our operations as well as civil and criminal liability.
A default under the indenture governing our 2.75% Convertible Notes could result in acceleration of the maturity of the notes.
A default under the indenture governing our 2.75% Convertible Notes or the indenture governing our 3.75% Convertible Notes could result in acceleration of the maturity of the notes.
Although we have thus far been able to secure reserves to support our business, our financial position, results of operations, cash flows and liquidity may be adversely affected by an increasingly difficult permitting process. • Accounting for our revenues and costs involves significant estimates. As further described in “Critical Accounting Estimate” under “Item 7.
Although we have thus far been able to secure reserves to support our business, our financial position, results of operations, cash flows and liquidity may be adversely affected by an increasingly difficult permitting process. • Accounting for our revenues, costs, goodwill and acquired intangible assets involves significant estimates. As further described in “Critical Accounting Estimates” under “Item 7.
We are required to make contributions to the plans in amounts established under collective bargaining agreements. Pension expense is recognized as contributions are made. The domestic pension plans are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”).
We are required to make contributions to certain plans in amounts established under collective bargaining agreements. Pension expense is recognized as contributions are made. The domestic multi-employer pension plans are subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
The option counterparties are financial institutions, and we will be subject to the risk that one or more of such option counterparties may default under the convertible note hedge transactions. Our exposure to the credit risk of the option counterparties is not, and will not be, secured by any collateral.
The option counterparties are financial institutions or affiliates of financial institutions, and we are subject to the risk that one or more of such option counterparties may default under the capped call transactions or convertible note hedge transactions. Our exposure to the credit risk of the option counterparties is not secured by any collateral.
Furthermore, we cannot provide assurance that existing or future circumstances or developments with respect to contamination will not require us to make significant remediation or restoration expenditures. • Increasing restrictions on securing aggregate reserves could negatively affect our future operations and results.
Furthermore, from time to time, we have been involved in remediation activities and we cannot provide assurance that existing or future circumstances or developments with respect to contamination will not require us to make significant remediation or restoration expenditures. • Increasing restrictions on securing aggregate reserves could negatively affect our future operations and results.
If any option counterparty becomes subject to bankruptcy or other insolvency proceedings with respect to such option counterparty’s obligations under the relevant convertible note hedge transaction, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under such transaction.
If any option counterparty becomes subject to bankruptcy or other insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the capped call transaction or convertible note hedge transaction with such option counterparty, respectively.
However, in the event of a design error or omission causing damages, there is risk that the subcontractor or their errors and omissions insurance would not be able to absorb the liability.
We generally subcontract design responsibility to architectural and engineering firms. However, in the event of a design error or omission causing damages, there is risk that the subcontractor or their errors and omissions insurance would not be able to absorb the liability.
Consequently, this could have a material adverse effect on our business, financial condition and results of operations. • We may be unable to achieve our sustainability commitments and targets which could result in the loss of investors and customers and damage to our reputation. We are committed to advancing our environmental, social and governance strategy.
Consequently, this could have a material adverse effect on our business, financial condition and results of operations. • We may be unable to achieve our sustainability commitments and targets which could result in the loss of investors and customers, a negative impact to our stock price and damage to our reputation.
However, if such proposals were to be enacted, or if modifications were to be made to certain existing regulations, the consequences could have a material adverse impact on us, including increasing our tax burden, increasing our cost of tax compliance or otherwise adversely affecting our financial position, results of operations, cash flows and liquidity. • We may be exposed to liabilities under the FCPA and any determination that we or any of our subsidiaries has violated the FCPA could have a material adverse effect on our business.
However, if such proposals were to be enacted, or if modifications were to be made to certain existing regulations, the consequences could have a material adverse impact on us, including increasing our tax burden, increasing our cost of tax compliance or otherwise adversely affecting our financial position, results of operations, cash flows and liquidity.
The ability of our Board of Directors to create and issue a new series of preferred stock and certain provisions of Delaware law and our certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce potential increases in the market price of our common stock. 15 Table of Contents RISKS RELATED TO CLIMATE CHANGE • Physical, transition and regulatory risks related to climate change could have a material adverse impact on our business, financial condition and results of operations.
The ability of our Board of Directors to create and issue a new series of preferred stock and certain provisions of Delaware law and our certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce potential increases in the market price of our common stock.
In connection with our 2.75% Convertible Notes offering, we entered into convertible note hedge transactions with option counterparties. We also entered into warrant transactions with the option counterparties.
In connection with our 2.75% Convertible Notes offering, we entered into convertible note hedge transactions and warrant transactions with option counterparties. Additionally, in connection with our 3.75% Convertible Notes offering, we entered into capped call transactions with option counterparties.
However, achievement of our sustainability commitments and targets is subject to risks and uncertainties, many of which are outside of our control.
We are committed to advancing our environmental, social and governance strategy. However, achievement of our sustainability commitments and targets is subject to risks and uncertainties, many of which are outside of our control.
Violations of FCPA laws, allegations of such violations and/or disclosure related to any relevant investigation could have a material adverse impact on our financial position, results of operations, cash flows and liquidity for reasons including, but not limited to, an adverse effect on our reputation, our ability to obtain new business or retain existing business, to attract and retain employees, to access the capital markets and/or could give rise to an event of default under the agreements governing our debt instruments. 14 Table of Contents RISKS RELATED TO INFORMATION TECHNOLOGY • Changes to our outsourced software or infrastructure vendors as well as any sudden loss, breach of security, disruption or unexpected data or vendor loss associated with our information technology systems could have a material adverse effect on our business.
Violations of FCPA laws, allegations of such violations and/or disclosure related to any relevant investigation could have a material adverse impact on our financial position, results of operations, cash flows and liquidity for reasons including, but not limited to, an adverse effect on our reputation, our ability to obtain new business or retain existing business, to attract and retain employees, to access the capital markets and/or could give rise to an event of default under the agreements governing our debt instruments.
For additional information, see "—Accounting for our revenues and costs involve significant estimates" risk factor below. The potential gross profit impact of recoveries for affirmative claims may be material in future periods when they, or a portion of them, become probable and estimable or are settled.
The potential gross profit impact of recoveries for affirmative claims may be material in future periods when they, or a portion of them, become probable and estimable or are settled.
While compliance with these laws and regulations has not materially adversely affected our operations in the past, there can be no assurance that these requirements, laws or regulations will not change and that compliance will not adversely affect our operations in the future.
Environmental, health and safety requirements, laws and regulations are becoming increasingly more stringent and there can be no assurance that these requirements, laws or regulations will not change and that compliance with these requirements, laws and regulations will not materially adversely affect our operations in the future.
Although we believe that our sustainability commitments and targets are achievable, there is no assurance that we will be able to successfully implement our strategies and achieve our targets. Investors have recently increased their focus on environmental, social and governance matters, including practices related to greenhouse gas emissions and climate change.
There is no assurance that we will be able to successfully implement our strategies and achieve our targets. Investors have recently increased their focus on environmental, social and governance matters, including practices related to greenhouse gas emissions and climate change. Additionally, an increasing percentage of the investment community considers sustainability factors in making investment decisions.
While we currently have no intention of withdrawing from a plan and unfunded pension obligations have not significantly affected our operations in the past, there can be no assurance that we will not be required to make material cash contributions to one or more of these plans to satisfy certain underfunded benefit obligations in the future. 13 Table of Contents RISKS RELATED TO THE RESTATEMENT • We have restated our consolidated financial statements for certain prior periods, which has affected and may continue to affect our business, results of operations and financial condition.
While we currently have no intention of withdrawing from a plan and unfunded multi-employer pension obligations have not significantly affected our operations in the past, there can be no assurance that we will not be required to make material cash contributions to one or more of these plans to satisfy certain underfunded benefit obligations in the future.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. • The convertible note hedge and warrant transactions may affect the value of our common stock.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. • Conversion of our 2.75% Convertible Notes and our 3.75% Convertible Notes may dilute the ownership interest of existing stockholders and may affect the trading price of our common stock.
In certain circumstances, we assert affirmative claims to which we believe we are entitled against project owners, engineers, consultants, subcontractors or others involved in a project for additional costs exceeding the contract price or for amounts not included in the original contract price.
In certain circumstances, we assert affirmative claims to which we believe we are entitled against project owners, engineers, consultants, subcontractors or others involved in a project for additional costs exceeding the contract price or for amounts not included in the original contract price. 14 Table of Contents These types of affirmative claims occur due to matters such as delays or changes from the initial project scope, both of which may result in additional costs.
If a public health epidemic or pandemic or other contagious outbreak, including COVID-19, interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business, our operations may be affected, which could have a material adverse effect on our business, results of operations and financial condition. • We derive a substantial amount of our revenue from federal, state and local government agencies, and any disruption in government funding or in our relationship with those agencies could adversely affect our business.
If a public health epidemic or pandemic or other contagious outbreak, including COVID-19, interferes with our ability, or that of our employees, contractors, suppliers, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business, our operations may be affected, which could have a material adverse effect on our business, results of operations and financial condition. • Our CAP is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our future earnings.
There can be no assurance that we will be the successful bidder on our existing contracts that come up for re-bid. 10 Table of Contents • Design-build contracts subject us to the risk of design errors and omissions.
There can be no assurance that we will be the successful bidder on our existing contracts that come up for re-bid. • Design-build contracts subject us to the risk of design errors and omissions. Design-build is a common method of project delivery as it provides the owner with a single point of responsibility for both design and construction.
We typically negotiate contract language where we are allowed certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure events in both public and private client contracts. We remain obligated to perform our services after most extraordinary events subject to relief that may be available pursuant to a force majeure clause.
We typically negotiate contract language where we are allowed certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure events in both public and private client contracts.
We may be subject to cybersecurity attacks, including through the use of ransomware and other forms of unauthorized access of our digital data with the intent to misappropriate information, corrupt data or cause operational disruptions.
We have been and may in the future be subject to cybersecurity incidents, which may be through the use of ransomware and other forms of unauthorized access of our digital data with the intent to misappropriate information, corrupt data or cause operational disruptions. 21 Table of Contents Additionally, the increased prevalence and use of artificial intelligence may heighten the risk that we may be subject to cybersecurity incidents in the future.
Our management may be required to devote significant time and attention to these matters. If any of these matters are resolved adversely against us, it could harm our business, results of operations and financial condition. RISKS RELATED TO LEGAL, REGULATORY, ACCOUNTING AND TAX ISSUES • Government contractors are subject to suspension or debarment from government contracting.
Our management may be required to devote significant time and attention to these matters. We had, and may in the future have, to incur significant expenses related to these matters and if any of these matters are resolved adversely against us, it could harm our business, results of operations and financial condition.
In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and dilution with respect to our common stock.
In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and dilution with respect to our common stock. We can provide no assurance as to the financial stability or viability of any option counterparty. • The price of our common stock historically has been volatile.
Additionally, borrowings under our Credit Agreement bear interest at a variable rate. As interest rates increase, our interest expense will also increase if we continue to borrow or increase our borrowings under the credit facility. Our business may not continue to generate sufficient cash flow from operations in the future to service our debt and make necessary capital expenditures.
Additionally, borrowings under our Credit Agreement bear interest at a variable rate. As interest rates increase or remain high, our interest expense will also increase or remain high if we continue to borrow or increase our borrowings under the credit facility.
Government contracts expose us to a variety of risks that differ from those associated with private sector contracts.
RISKS RELATED TO LEGAL, REGULATORY, ACCOUNTING AND TAX ISSUES • Government contractors are subject to suspension or debarment from government contracting. Government contracts expose us to a variety of risks that differ from those associated with private sector contracts.
These types of affirmative claims occur due to matters such as delays or changes from the initial project scope, both of which may result in additional costs. Often, these affirmative claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to accurately predict when and on what terms they will be fully resolved.
Often, these affirmative claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to accurately predict when and on what terms they will be fully resolved. For additional information, see "—Accounting for our revenues and costs involve significant estimates" risk factor below.
The occurrence or continued occurrence of any of the foregoing could have a material adverse effect on our business, results of operations and financial condition. • We have identified a material weakness in our internal control over financial reporting which could, if not remediated, adversely impact the reliability of our financial statements , result in material misstatements in our financial statements and cause current and potential stockholders to lose confidence in our financial reporting, which in turn could adversely affect the trading price of our common stock.
The occurrence or continued occurrence of any of the foregoing could have a material adverse effect on our business, results of operations and financial condition. • In prior years we identified material weaknesses in our internal control over financial reporting in our Annual Reports on Form 10-K, which have been remediated.
This could result in reduced profits or a loss for that project and there could be a material adverse impact to our business, results of operations and financial condition. • Public health events, including health epidemics or pandemics or other contagious outbreaks, could negatively impact our business, financial condition and results of operations.
This could result in reduced profits or a loss for that project and there could be a material adverse impact to our business, results of operations and financial condition. • We derive a substantial amount of our revenue from federal, state and local government agencies, and any disruption in government funding or in our relationship with those agencies could adversely affect our business.
If we are not able to react quickly to force majeure events, our operations may be affected, which could have a material adverse effect on our business, results of operations and financial condition. • Our CAP is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our future earnings.
We remain obligated to perform our services after most extraordinary events subject to relief that may be available pursuant to a force majeure clause. 15 Table of Contents If we are not able to react quickly to force majeure events, our operations may be affected, which could have a material adverse effect on our business, results of operations and financial condition. • Public health events, including health epidemics or pandemics or other contagious outbreaks, could negatively impact our business, financial condition and results of operations.
This Form 10-K includes restated unaudited quarterly financial information for the Restated Periods that corrects (a) errors related to deferred taxes and the calculation of income tax expense in connection with the sale of Inliner and (b) other immaterial errors. For additional information, see the Supplementary Data included in Part IV, Item 15(a) of this Form 10-K.
We previously restated unaudited quarterly financial information for the first three quarters of the year ended December 31, 2022 to correct (a) errors related to deferred taxes and the calculation of income tax expense in connection with the sale of our trenchless and pipe rehabilitation services business and (b) other immaterial errors.
Removed
Design-build is a common method of project delivery as it provides the owner with a single point of responsibility for both design and construction. We generally subcontract design responsibility to architectural and engineering firms.
Added
RISKS RELATED TO RESTATEMENTS • We have restated our consolidated financial statements for certain prior periods, which has affected and may continue to affect our business, results of operations and financial condition.
Removed
We have concluded that there is a material weakness in our internal control over financial reporting. For additional information on the material weakness identified and our remedial efforts, see “Item 9A, Controls and Procedures.” The material weakness resulted in the restatement of our consolidated financial statements and related disclosures for the Restated Periods.
Added
If we identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately and timely report our financial results, investors may lose confidence in us and the market price of our common stock may decrease.
Removed
Thus, management has determined that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2022.
Added
As disclosed in our Annual Reports on Form 10-K for the years ended December 31, 2019, 2020 and 2022, we identified material weaknesses, all of which have now been remediated.

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Item 2. Properties

Properties — owned and leased real estate

20 edited+0 added−4 removed14 unchanged
Biggest changeThe following table presents information about mineral reserves at December 31, 2022 (tons in millions): Proven Mineral Reserves Probable Mineral Reserves Total Mineral Reserves Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Sand and Gravel: California Coalinga 117.9 Sand and Gravel — — 117.9 Sand and Gravel All other California 210.5 Sand and Gravel 24.1 Sand and Gravel 234.6 Sand and Gravel Total California 328.4 — 24.1 — 352.5 — Utah Grantsville 99.0 Sand and Gravel — — 99.0 Sand and Gravel All other Utah 4.4 Sand and Gravel 0.1 Sand and Gravel 4.5 Sand and Gravel Total Utah 103.4 — 0.1 — 103.5 — Washington 45.8 Sand and Gravel — — 45.8 Sand and Gravel All other states 33.8 Sand and Gravel 18.2 Sand and Gravel 52.0 Sand and Gravel Total 511.4 — 42.4 — 553.8 — Hard Rock: California Handley Quarry 144.6 Hard Rock — — 144.6 Hard Rock All other California 59.8 Hard Rock — — 59.8 Hard Rock Total California 204.4 — — — 204.4 — Utah 23.6 Hard Rock — — 23.6 Hard Rock Washington 5.3 Hard Rock 33.2 Hard Rock 38.5 Hard Rock All other states 25.9 Hard Rock 33.1 Hard Rock 59.0 Hard Rock Total 259.2 — 66.3 — 325.5 — Grand Total 770.6 — 108.7 — 879.3 — (1) The grade of product produced is contingent on market needs.
Biggest changeThe following table presents information about mineral reserves at December 31, 2023 (tons in millions): Proven Mineral Reserves Probable Mineral Reserves Total Mineral Reserves Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Sand and Gravel: California Coalinga 116.8 Sand and Gravel — — 116.8 Sand and Gravel All other California 232.6 Sand and Gravel 7.6 Sand and Gravel 240.2 Sand and Gravel Total California 349.4 — 7.6 — 357.0 — Utah 113.3 Sand and Gravel 0.1 Sand and Gravel 113.4 Sand and Gravel All other states/provinces 151.8 Sand and Gravel 15.2 Sand and Gravel 167.0 Sand and Gravel Total 614.5 — 22.9 — 637.4 — Hard Rock: California Handley Quarry 144.3 Hard Rock — — 144.3 Hard Rock All other California 59.1 Hard Rock — — 59.1 Hard Rock Total California 203.4 — — — 203.4 — Utah 27.8 Hard Rock — — 27.8 Hard Rock All other states/provinces 78.5 Hard Rock 65.6 Hard Rock 144.1 Hard Rock Total 309.7 — 65.6 — 375.3 — Grand Total 924.2 — 88.5 — 1,012.7 — (1) The grade of product produced is contingent on market needs.
Sites typically sell base products that range from low to high grades including fill materials, base aggregates, hot mix aggregates and concrete aggregates. 20 Internal controls Mining operations include risk in estimation of mineral reserves and mineral resources that could be impacted by unforeseen geologic circumstances, changes in regulation or changes in sales and customers.
Sites typically sell base products that range from low to high grades including fill materials, base aggregates, hot mix aggregates and concrete aggregates. Internal controls Mining operations include risk in estimation of mineral reserves and mineral resources that could be impacted by unforeseen geologic circumstances, changes in regulation or changes in sales and customers.
Additional subsurface work may be needed prior to mining the reserve. The modifying factors applied in the conversion of measured and indicated mineral resources to proven and probable mineral reserves during the year ended December 31, 2022 included various relevant technical and economic factors, including site infrastructure, mine design and planning, processing plant and environmental compliance and permitting.
Additional subsurface work may be needed prior to mining the reserve. The modifying factors applied in the conversion of measured and indicated mineral resources to proven and probable mineral reserves during the year ended December 31, 2023 included various relevant technical and economic factors, including site infrastructure, mine design and planning, processing plant and environmental compliance and permitting.
Our leases have terms which range from month-to-month to 42 years with most including an option to renew. The life cycle of mining sand, gravel and hard rock begins with exploration and continues through development and production. After a sand, gravel and hard rock deposit has been identified through exploration, the mine is developed before production begins.
Our leases have terms which range from month-to-month to 50 years with most including an option to renew. The life cycle of mining sand, gravel and hard rock begins with exploration and continues through development and production. After a sand, gravel and hard rock deposit has been identified through exploration, the mine is developed before production begins.
As of December 31, 2022, we had all the permits necessary to mine and process sand, gravel and hard rock at our active quarry properties. As of December 31, 2022, no individual mining operation was considered material to our business or financial condition.
As of December 31, 2023, we had all the permits necessary to mine and process sand, gravel and hard rock at our active quarry properties. As of December 31, 2023, no individual mining operation was considered material to our business or financial condition.
Amounts presented in the tables below are based on various assumptions to determine estimated economically mineable tons including site specific prices for sand and gravel and hard rock between $5 - $15 per ton.
Amounts presented in the tables below are based on various assumptions to determine estimated economically mineable tons including site specific prices for sand and gravel and hard rock between $5 - $40 per ton.
LEGAL PROCEEDINGS The description of the matters set forth in Note 20 of “Notes to the Consolidated Financial Statements” is incorporated herein by reference.
Item 3. LEGAL PROCEEDINGS The description of the matters set forth in Note 20 of “Notes to the Consolidated Financial Statements” is incorporated herein by reference.
The Wine Group and Aerojet North White Rock were the only mines that comprised 10% or more of our combined measured and indicated mineral resources for sand and gravel and the Euer Ranch was the only mine that comprised 10% or more of our combined measured and indicated mineral resources for hard rock.
The Wine Group and Aerojet North White Rock were the only mines that comprised 10% or more of our combined measured and indicated mineral resources for sand and gravel and the Euer Ranch was the only mine that comprised 10% or more of our combined measured and indicated mineral 27 Table of Contents resources for hard rock.
The following map shows the approximate locations of our permitted quarry properties as of December 31, 2022: 17 Table of Contents California, Utah and Washington are the states that individually comprise more than 10% of our total mining operations.
The following map shows the approximate locations of our permitted quarry properties as of December 31, 2023: 26 Table of Contents California and Utah are the only states/provinces that individually comprise more than 10% of our total mining operations.
As of December 31, 2022, California, Utah and Washington were the only individual states that comprised more than 10% of our total mining operations, Coalinga and Grantsville were the only mines that comprised 10% or more of our mineral reserves for sand and gravel and Handley Quarry was the only mine that comprised 10% or more of our mineral reserves for hard rock.
As of December 31, 2023, California and Utah were the only individual states/provinces that comprised more than 10% of our total mining operations, Coalinga was the only mine that comprised 10% or more of our mineral reserves for sand and gravel and Handley Quarry was the only mine that comprised 10% or more of our mineral 28 Table of Contents reserves for hard rock.
As of December 31, 2022, we had open pit quarry properties available for the extraction of sand, gravel and hard rock. Both of our reportable segments use these quarry properties to extract and process sand, gravel and hard rock into construction material for internal use and for sale to third parties.
As of December 31, 2023, we had open pit quarry properties available for the extraction of sand, gravel and hard rock. Our Materials segment uses these quarry properties to extract and process sand, gravel and hard rock into construction material for internal use in our construction projects and for sale to third parties.
The following table presents the number of properties in each respective stage as of December 31, 2022 for all mining properties: State Exploration Development Production California 8 3 20 Utah 1 - 8 Washington 10 1 17 All Other States 3 - 12 18 Mineral Resources The table below presents information on measured, indicated and inferred mineral resources.
The following table presents the number of properties in each respective stage as of December 31, 2023 for all mining properties: State/Province Exploration Development Production California 8 3 20 Utah 1 2 7 All other states/provinces 11 7 39 Total 20 12 66 Mineral Resources The table below presents information on measured, indicated and inferred mineral resources.
The following table presents information about our mineral resources at December 31, 2022 (tons in millions): Measured Mineral Resources Indicated Mineral Resources Measured + Indicated Mineral Resources Inferred Mineral Resources Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Sand and Gravel: California The Wine Group — — 51.4 Sand and Gravel 51.4 Sand and Gravel — — Aerojet North White Rock 32.0 Sand and Gravel — — 32.0 Sand and Gravel — — All other California — — 35.1 Sand and Gravel 35.1 Sand and Gravel — — Total California 32.0 — 86.5 — 118.5 — — — Washington — — 3.0 Sand and Gravel 3.0 Sand and Gravel — — All other states 0.6 Sand and Gravel — — 0.6 Sand and Gravel — — Total 32.6 — 89.5 — 122.1 — — — Hard Rock: California Euer Ranch 71.7 Hard Rock — — 71.7 Hard Rock — — All other California 9.9 Hard Rock — — 9.9 Hard Rock — — Total California 81.6 — — — 81.6 — — — Utah 9.6 Hard Rock — — 9.6 Hard Rock — — Washington — — — — — — 33.0 Hard Rock Total 91.2 — — — 91.2 — 33.0 — Grand Total 123.8 — 89.5 — 213.3 — 33.0 — (1) The grade of product produced is contingent on market needs.
The following table presents information about our mineral resources at December 31, 2023 (tons in millions): Measured Mineral Resources Indicated Mineral Resources Measured + Indicated Mineral Resources Inferred Mineral Resources Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Amount (tons) Grades / qualities (1) Sand and Gravel: California The Wine Group — — 51.4 Sand and Gravel 51.4 Sand and Gravel — — Aerojet North White Rock 32.0 Sand and Gravel — — 32.0 Sand and Gravel — — All other California 15.4 Sand and Gravel 19.5 Sand and Gravel 34.9 Sand and Gravel — — Total California 47.4 — 70.9 — 118.3 — — — Utah 3.9 Sand and Gravel — — 3.9 Sand and Gravel — — All other states/provinces 9.0 Sand and Gravel 3.0 Sand and Gravel 12.0 Sand and Gravel 8.4 Sand and Gravel Total 60.3 — 73.9 — 134.2 — 8.4 — Hard Rock: California Euer Ranch 71.7 Hard Rock — — 71.7 Hard Rock — — All other California 9.9 Hard Rock — — 9.9 Hard Rock — — Total California 81.6 — — — 81.6 — — — Utah 9.6 Hard Rock — — 9.6 Hard Rock — — All other states/provinces 10.2 Hard Rock — — 10.2 Hard Rock 33.0 Hard Rock Total 101.4 — — — 101.4 — 33.0 — Grand Total 161.7 — 73.9 — 235.6 — 41.4 — (1) The grade of product produced is contingent on market needs.
Aggregate annual production for all mining properties was 16.3 million tons, 16 million tons, and 14.3 million tons during the years ended December 31, 2022, 2021 and 2020, respectively.
Annual production of aggregates for all mining properties was 17.5 million tons, 16.3 million tons, and 16.0 million tons during the years ended December 31, 2023, 2022 and 2021, respectively.
Sites typically sell base products that range from low to high grades including fill materials, base aggregates, hot mix aggregates and concrete aggregates. 19 Mineral Reserves Mineral reserves are divided into proven and probable mineral reserves.
Sites typically sell base products that range from low to high grades including fill materials, base aggregates, hot mix aggregates and concrete aggregates. Mineral Reserves Mineral reserves are divided into proven and probable mineral reserves. Proven mineral reserves are the economically mineable part of a measured mineral resource and can only result from the conversion of a measured mineral resource.
A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable.
A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. 25 Table of Contents As defined by the SEC, mineral reserves are an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of a qualified person, as defined by the SEC, can be the basis of an economically viable project.
As of December 31, 2022 , our qualified persons estimated our measured, indicated and inferred resources to be approximately 246.3 million tons with an average permitted life of approximately 16 years at present operating levels. As of December 31, 2022 , California, Utah and Washington were the only individual states that comprised more than 10% of our total mining operations.
As of December 31, 2023, our qualified persons estimated our measured, indicated and inferred resources to be approximately 277.0 million tons. As of December 31, 2023, California and Utah were the only individual states/provinces that comprised more than 10% of our total mining operations.
The following table presents the number of plants we owned as of the respective dates: December 31, 2022 2021 Aggregate crushing plants 28 29 Asphalt concrete plants 48 49 Cement concrete batch plants 5 5 Asphalt rubber plants 5 5 Lime slurry plants 6 6 These plants are used by both of our reportable segments.
The following table presents the number of plants we owned as of the respective dates: December 31, 2023 2022 Aggregate crushing plants 35 28 Asphalt concrete plants 59 48 Cement concrete batch plants 6 5 Asphalt rubber plants 4 5 Lime slurry plants 6 6 These plants are used by both of our reportable segments. 29 Table of Contents Other Properties The following table provides our estimate of certain information about other properties as of December 31, 2023: Land Area (acres) Buildings (square feet) Office and shop space (owned and leased) 1,217 1,617,556 The office and shop space is used by both of our reportable segments.
The following tables present information about our quarry properties as of December 31, 2022 (tons in millions): Resources and Reserves for Each Product Type (tons) Percentage of Resources and Reserves Owned and Leased State Number of Properties Sand & Gravel Hard Rock Owned (1) Leased (2) Acreage California 31 471.0 286.0 59 % 41 % 10,381 Utah 9 103.5 33.2 72 % 28 % 1,333 Washington 28 48.8 71.5 32 % 68 % 5,651 All Other States 15 52.6 59.0 89 % 11 % 3,674 Total 83 675.9 449.7 61 % 39 % 21,039 (1) Owned properties are properties we own or in which we have, or it is probable that we will have, a direct or indirect economic interest.
The following tables present information about our quarry properties as of December 31, 2023 (tons in millions): Resources and Reserves for Each Product Type (tons) Percentage of Resources and Reserves Owned and Leased State/Province Number of Properties Sand & Gravel Hard Rock Owned (1) Leased (2) Acreage California 31 475.3 285.0 58 % 42 % 10,498 Utah 10 117.3 37.4 64 % 36 % 1,497 All other states/provinces 57 187.4 187.3 53 % 47 % 14,712 Total 98 780.0 509.7 61 % 39 % 26,707 (1) Owned properties are properties we own or in which we have, or it is probable that we will have, a direct or indirect economic interest.
The basis of determining the modifying factors was a combination of historical experience mining aggregates and observation. As of December 31, 2022, our qualified persons estimated our proven and probable reserves to be approximately 879.3 million tons with an average permitted life of approximately 28 years at present operating levels.
The basis of determining the modifying factors was a combination of historical experience mining aggregates and observation. As of December 31, 2023, our qualified persons estimated our proven and probable reserves to be approximately 1.0 billion tons. Waste factors for proven and probable reserves range up to 44% depending on the deposit type, market characteristics and extraction feasibility.
Removed
As defined by the SEC, mineral reserves are an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of a qualified person, as defined by the SEC, can be the basis of an economically viable project.
Removed
Proven mineral reserves are the economically mineable part of a measured mineral resource and can only result from the conversion of a measured mineral resource.
Removed
Waste factors for proven and probable reserves range up to 45% depending on the deposit type, market characteristics and extraction feasibility.
Removed
Other Properties The following table provides our estimate of certain information about other properties as of December 31, 2022: Land Area (acres) Buildings (square feet) Office and shop space (owned and leased) 1,216 1,465,857 The office and shop space is used by both of our reportable segments. 21 Table of Contents Item 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+1 added−0 removed1 unchanged
Biggest changeThe specific timing and amount of any future purchases will vary based on market conditions, securities law limitations and other factors. 22 Table of Contents Performance Graph The following graph compares the cumulative five-year total return provided to Granite Construction Incorporated’s common stockholders relative to the cumulative total returns of the S&P 500 index and the Dow Jones U.S.
Biggest changePerformance Graph The following graph compares the cumulative five-year total return provided to Granite Construction Incorporated’s common stockholders relative to the cumulative total returns of the S&P 500 index and the Dow Jones U.S. Heavy Construction index. The Dow Jones U.S.
Heavy Construction index. The Dow Jones U.S. Heavy Construction index includes the following companies: AECOM, EMCOR Group Inc., MDU Resources Group Inc, MasTec Inc., Quanta Services Inc., Valmont Industries Inc. and WillScot Mobile Mini Holdings Corp. Certain of these companies differ from Granite in that they derive more revenue and profit from non-U.S. operations and have customers in different markets.
Heavy Construction index includes the following companies: AECOM, APi Group Corporation, EMCOR Group Inc, MDU Resources Group Inc, MasTec Inc, Quanta Services Inc, Valmont Industries Inc and Willscot Mobile Mini Holdings Corp. Certain of these companies differ from Granite in that they derive more revenue and profit from non-U.S. operations and have customers in different markets.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the New York Stock Exchange under the ticker symbol GVA. As of February 15, 2022, 43,744,536 shares of our common stock were outstanding and held by 653 shareholders of record.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the New York Stock Exchange under the ticker symbol GVA. As of February 16, 2024, 43,972,294 shares of our common stock were outstanding and held by 636 shareholders of record.
The following table sets forth information regarding the repurchase of shares of our common stock during the three months ended December 31, 2022: Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (2) October 1, 2022 through October 31, 2022 3,156 $ 27.40 — $ 231,535,405 November 1, 2022 through November 30, 2022 320 $ 32.22 — $ 231,535,405 December 1, 2022 through December 31, 2022 2,168 $ 35.64 — $ 231,535,405 5,644 $ 30.84 — (1) The number of shares purchased was in connection with employee tax withholding for restricted stock units vested under our equity incentive plans.
The following table sets forth information regarding the repurchase of shares of our common stock during the three months ended December 31, 2023: Period Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (2) October 1, 2023 through October 31, 2023 3,454 $ 36.26 — $ 231,535,405 November 1, 2023 through November 30, 2023 572 $ 45.63 — $ 231,535,405 December 1, 2023 through December 31, 2023 1,451 $ 50.08 — $ 231,535,405 5,477 $ 40.90 — (1) The number of shares purchased was in connection with employee tax withholding for restricted stock units vested under our equity incentive plans.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2017 through December 31, 2022. 23 Table of Contents Item 6. RESERVED
The graph tracks the 30 Table of Contents performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2018 through December 31, 2023.
(2) As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion.
(2) As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion. The specific timing and amount of any future purchases will vary based on market conditions, securities law limitations and other factors.
Added
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Granite Construction Incorporated, the S&P 500 Index and the Dow Jones US Heavy Construction Index * $100 invested on 12/31/18 in stock or index, including reinvestment of dividends. Fiscal year ending December 31. Item 6. RESERVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+39 added−51 removed34 unchanged
Biggest changeYears Ended December 31, 2022 2021 2020 (in thousands) Total revenue $ 3,301,256 $ 3,501,865 $ 3,562,459 Gross profit $ 369,494 $ 362,645 $ 344,788 Selling, general and administrative expenses $ 272,610 $ 303,015 $ 316,284 Non-cash impairment charges (see Note 1 of “Notes to the Consolidated Financial Statements”) $ — $ — $ 156,690 Other costs, net (see Note 1 of “Notes to the Consolidated Financial Statements”) $ 24,120 $ 101,351 $ 37,089 Gain on sales of property and equipment, net (see Note 11 of “Notes to the Consolidated Financial Statements”) $ (12,617 ) $ (66,439 ) $ (6,930 ) Operating income (loss) $ 85,381 $ 24,718 $ (158,345 ) Total other (income) expense, net $ (6,436 ) $ 2,591 $ 8,118 Amount attributable to non-controlling interests $ 4,445 $ 7,682 $ 21,064 Net income (loss) attributable to Granite Construction Incorporated $ 83,302 $ 10,096 $ (145,117 ) 26 Table of Contents Revenue Total Revenue by Segment Years Ended December 31, 2022 2021 2020 (dollars in thousands) Construction $ 2,803,935 85.0 % $ 3,076,190 87.8 % $ 3,181,697 89.4 % Materials 497,321 15.0 425,675 12.2 380,762 10.6 Total $ 3,301,256 100.0 % $ 3,501,865 100.0 % $ 3,562,459 100.0 % Construction Revenue Years Ended December 31, 2022 2021 2020 (dollars in thousands) California $ 811,623 28.9 % $ 822,448 26.7 % $ 928,193 29.2 % Central 851,779 30.4 1,058,448 34.4 1,145,725 36.0 Mountain 1,140,533 40.7 1,195,294 38.9 1,107,779 34.8 Total $ 2,803,935 100.0 % $ 3,076,190 100.0 % $ 3,181,697 100.0 % Construction revenue in 2022 decreased by $ 272.3 million, or 8.9% , compared to 2021 primarily due to the wind down of several large projects in the Central operating group, as well as the sale of Inliner in the first quarter of 2022.
Biggest changeYears Ended December 31, 2023 2022 2021 (in thousands) Total revenue $ 3,509,138 $ 3,301,256 $ 3,501,865 Gross profit $ 396,399 $ 369,494 $ 362,645 Selling, general and administrative expenses $ 294,466 $ 272,610 $ 303,015 Other costs, net (see Note 1 of “Notes to the Consolidated Financial Statements”) $ 50,217 $ 24,120 $ 101,351 Gain on sales of property and equipment, net $ (28,346) $ (12,617) $ (66,439) Operating income $ 80,062 $ 85,381 $ 24,718 Total other (income) expense, net $ 20,208 $ (6,436) $ 2,591 Amount attributable to non-controlling interests $ 14,012 $ 4,445 $ 7,682 Net income attributable to Granite Construction Incorporated $ 43,599 $ 83,302 $ 10,096 Revenue Total Revenue by Segment Years Ended December 31, 2023 2022 2021 (dollars in thousands) Construction $ 2,992,254 85.3 % $ 2,803,935 84.9 % $ 3,076,190 87.8 % Materials 516,884 14.7 497,321 15.1 425,675 12.2 Total $ 3,509,138 100.0 % $ 3,301,256 100.0 % $ 3,501,865 100.0 % 34 Table of Contents Construction Revenue Years Ended December 31, 2023 2022 2021 (dollars in thousands) California $ 1,029,410 34.4 % $ 811,623 28.9 % $ 822,448 26.7 % Central 765,560 25.6 851,779 30.4 1,058,448 34.4 Mountain 1,197,284 40.0 1,140,533 40.7 1,195,294 38.9 Total $ 2,992,254 100.0 % $ 2,803,935 100.0 % $ 3,076,190 100.0 % Construction revenue in 2023 increased by $188.3 million, or 6.7%, compared to 2022.
The most significant of these include: • changes in costs of labor and/or materials; • subcontractor costs, availability and/or performance issues; • extended overhead and other costs due to owner, weather and other delays; • changes in productivity expectations; • changes from original design on design-build projects; • our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; • a change in the availability and proximity of equipment and materials; • complexity in original design; • length of time to complete the project; • the availability and skill level of workers in the geographic location of the project; • site conditions that differ from those assumed in the original bid; • costs associated with scope changes; and • the customer’s ability to properly administer the contract.
The most significant of these include: • changes in costs of labor and/or materials; • subcontractor costs, availability and/or performance issues; • extended overhead and other costs due to owner, weather and other delays; • changes in productivity expectations; • changes from original design on design-build projects; • our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; • a change in the availability and proximity of equipment and materials; • complexity in original design; • length of time to complete the project; • the availability and skill level of workers in the geographic location of the project; 32 Table of Contents • site conditions that differ from those assumed in the original bid; • costs associated with scope changes; and • the customer’s ability to properly administer the contract.
A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility; (iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed under the Credit Agreement; and/or (v) foreclosure on any lien securing the obligations under such facility.
A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility; (iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed under the Credit Agreement; and/or (v) foreclosure on any collateral securing the obligations under such facility.
Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes or our Credit Agreement would constitute an event of default under the 2.75% Convertible Notes indenture or the Credit Agreement.
Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes, our 3.75% Convertible Notes or our Credit Agreement would constitute an event of default under the 2.75% Convertible Notes indenture, the 3.75% Convertible Note indenture or the Credit Agreement.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General We deliver infrastructure solutions for public and private clients primarily in the United States. We are one of the largest diversified infrastructure companies in the United States.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General We deliver infrastructure solutions for public and private clients primarily in the United States. We are one of the largest diversified construction and construction materials companies in the United States.
While we actively work to mitigate the impacts of oil price inflation, further price increases may adversely impact us in the future. Our Committed and Awarded Projects (“CAP”) continues to be strong with $4.5 billion at the end of the fourth quarter of 2022.
While we actively work to mitigate the impacts of oil price inflation, further price increases may adversely impact us in the future. Our Committed and Awarded Projects (“CAP”) continues to be strong with $5.5 billion at the end of the fourth quarter of 2023.
The debt associated with our unconsolidated non-construction entities is included in Note 10 of “Notes to the Consolidated Financial Statements.” Covenants and Events of Default Our Credit Agreement requires us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below.
The debt associated with our unconsolidated non-construction entities is included in Note 10 of “Notes to the Consolidated Financial Statements.” 41 Table of Contents Covenants and Events of Default Our Credit Agreement requires us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below.
Surety Bonds and Real Estate Mortgages We are generally required to provide various types of surety bonds that provide an additional measure of security for our performance under certain public and private sector contracts. At December 31, 2022, approximately $2.5 billion of our $4.5 billion CAP was bonded.
Surety Bonds and Real Estate Mortgages We are generally required to provide various types of surety bonds that provide an additional measure of security for our performance under certain public and private sector contracts. At December 31, 2023, approximately $3.2 billion of our $5.5 billion CAP was bonded.
See Note 8 to “Notes to the Consolidated Financial Statements” for further information. The hedge option and warrant derivative transactions related to the 2.75% Convertible Notes were recorded to equity on our consolidated balance sheets based on the cash proceeds. See Note 14 to “Notes to the Consolidated Financial Statements” for further information.
The hedge option and warrant derivative transactions related to the 2.75% Convertible Notes and the Capped Call transactions related to the 3.75% Convertible Notes were recorded to equity on our condensed consolidated balance sheets based on the cash proceeds. See Note 14 to “Notes to the Consolidated Financial Statements” for further information.
Our failure to comply with these covenants would constitute an event of default under the Credit Agreement. Additionally, the 2.75% Convertible Notes are governed by the terms and conditions of the indenture.
Our failure to comply with these covenants would constitute an event of default under the Credit Agreement. Additionally, the 2.75% Convertible Notes and 3.75% Convertible Notes are governed by the terms and conditions of their respective indentures.
It also provides construction of various complex projects including infrastructure / site development, mining, public safety, tunnel, solar, battery storage and other power-related projects. The Materials segment focuses on production of aggregates and asphalt production for internal use and for sale to third parties.
It also provides construction of various complex projects including infrastructure / site development, mining, public safety, tunnel, solar, battery storage and other power-related projects. The Materials segment focuses on production of aggregates, asphalt concrete, liquid asphalt and recycled materials production 31 Table of Contents for internal use in our construction projects and for sale to third parties.
As of December 31, 2022 , the total unused availability under the Credit Agreement was $ 269.3 million, resulting from $ 30.7 million in issued and outstanding letters of credit and $ 50.0 million drawn under the Revolver. See Note 14 of “Notes to the Consolidated Financial Statements” for further discussion regarding the Revolver.
As of December 31, 2023, the total unused availability under our Credit Agreement was $230.7 million, resulting from $19.3 million in issued and outstanding letters of credit and $100.0 million drawn on the Revolver. See Note 14 of “Notes to the Consolidated Financial Statements” for further discussion regarding the Revolver.
(2) All marketable securities were classified as held-to-maturity and consisted of U.S. and agency obligations and corporate commercial paper as of all periods presented. Granite’s portion of CCJV cash and cash equivalents was $62.5 million and $54.4 million as of December 31, 2022 and 2021, respectively.
(2) All marketable securities were classified as held-to-maturity and consisted of U.S. and agency obligations as of all periods presented. Granite’s portion of CCJV cash and cash equivalents was $73.1 million and $62.5 million as of December 31, 2023 and 2022, respectively.
We currently anticipate 2023 capital expenditures to be between approximately $100 million and $120 million. 31 Table of Contents Cash Flows Years Ended December 31, 2022 2021 2020 (in thousands) Net cash provided by (used in): Operating activities $ 55,647 $ 21,931 $ 268,460 Investing activities $ (11,000 ) $ (21,478 ) $ (41,262 ) Financing activities $ (164,311 ) $ (24,446 ) $ (57,658 ) Operating activities As a large infrastructure contractor and construction materials producer, our revenue, gross profit and the resulting operating cash flows can differ significantly from period to period due to a variety of factors, including seasonal cycles, project progression toward completion, outstanding contract change orders and affirmative claims, and the payment terms of our contracts.
Cash Flows Years Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by (used in): Operating activities $ 183,707 $ 55,647 $ 21,931 Investing activities $ (359,290) $ (11,000) $ (21,478) Financing activities $ 299,255 $ (164,311) $ (24,446) 40 Table of Contents Operating activities As a large infrastructure contractor and construction materials producer, our revenue, gross profit and the resulting operating cash flows can differ significantly from period to period due to a variety of factors, including seasonal cycles, project progression toward completion, outstanding contract change orders and affirmative claims, and the payment terms of our contracts.
At December 31, 2022 and 2021 , five and three contracts with remaining CAP of $10 million or more per project had total forecasted losses with remaining revenue of $134.2 million, or 3.0% of total CAP, and $204.2 million, or 5.1% of total CAP, respectively.
At December 31, 2023 and 2022, six and five contracts with remaining CAP of $10.0 million or more per project had total forecasted losses with remaining revenue of $188.9 million, or 3.4% of total CAP, and $134.2 million, of 3.0% of total CAP, respectively.
The following table presents our cash, cash equivalents and marketable securities, including amounts from our CCJVs, as of the respective dates: December 31, 2022 2021 (in thousands) Cash and cash equivalents excluding CCJVs $ 191,444 $ 302,864 CCJV cash and cash equivalents (1) 102,547 92,783 Total consolidated cash and cash equivalents 293,991 395,647 Short-term and long-term marketable securities (2) 65,943 15,600 Total cash, cash equivalents and marketable securities $ 359,934 $ 411,247 (1) The volume and stage of completion of contracts from our CCJVs may cause fluctuations in joint venture cash and cash equivalents between periods.
The following table presents our cash, cash equivalents and marketable securities, including amounts from our CCJVs, as of the respective dates: December 31, 2023 2022 (in thousands) Cash and cash equivalents excluding CCJVs $ 297,439 $ 191,444 CCJV cash and cash equivalents (1) 120,224 102,547 Total consolidated cash and cash equivalents 417,663 293,991 Short-term and long-term marketable securities (2) 35,863 65,943 Total cash, cash equivalents and marketable securities $ 453,526 $ 359,934 (1) The volume and stage of completion of contracts from our CCJVs may cause fluctuations in joint venture cash and cash equivalents between periods.
Unearned revenue includes the revenue we expect to record in the future on executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts.
Committed and Awarded Projects CAP consists of two components: (1) unearned revenue and (2) other awards. Unearned revenue includes the revenue we expect to record in the future on executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts.
Our estimates and related judgments and assumptions are continually evaluated based on available information and experiences; however, actual amounts could differ from those estimates. We consider revenue recognition a critical accounting estimate. It involves significant management judgment and can significantly affect our reported results of operations.
Our estimates and related judgments and assumptions are continually evaluated based on available information and experiences; however, actual amounts could differ from those estimates. The following are our most critical accounting estimates that involve management judgment and can have significant effects on our reported results of operations.
While each market is unique, we see a strong funding environment at the state and local levels currently and we expect that environment to improve with the impact of the IIJA.
While each market is unique, we see a strong funding environment at the state and local levels aided by the IIJA.
While we typically invoice our customers on a monthly basis, our contracts frequently provide for retention that is a specified percentage withheld from each payment by our customers until the contract is completed and the work accepted by the customer. Cash provided by operating activities of $55.6 million during 2022 represents a $33.7 million increase when compared to 2021.
While we typically invoice our customers on a monthly basis, our contracts frequently provide for retention that is a specified percentage withheld from each payment by our customers until the contract is completed and the work accepted by the customer.
Amount Attributable to Non-controlling Interests The following table presents the amount attributable to non-controlling interests in consolidated subsidiaries for the respective periods: Years Ended December 31, 2022 2021 2020 (in thousands) Amount attributable to non-controlling interests $ 4,445 $ 7,682 $ 21,064 The amount attributable to non-controlling interests represents the non-controlling owners’ share of the net loss of our consolidated construction joint ventures.
The decrease in year-over-year income before income taxes was primarily due to the loss in the current year related to debt extinguishment. 38 Table of Contents Amount Attributable to Non-controlling Interests The following table presents the amount attributable to non-controlling interests in consolidated subsidiaries for the respective periods: Years Ended December 31, 2023 2022 2021 (in thousands) Amount attributable to non-controlling interests $ 14,012 $ 4,445 $ 7,682 The amount attributable to non-controlling interests represents the non-controlling owners’ share of the net loss of our consolidated construction joint ventures.
In California, our top revenue-generating state, a significant part of the state infrastructure spend is funded through Senate Bill 1 (SB-1), the Road Repair and Accountability Act of 2017, which is a 10-year, $54.2 billion program without any sunset provisions.
In California, our top revenue-generating state, a significant part of the state infrastructure spend is funded through Senate Bill 1 (SB-1), the Road Repair and Accountability Act of 2017, which is a 10-year, $54.2 billion program without any sunset provisions. 33 Table of Contents Over the recent years, inflation, supply chain and labor constraints have had a significant impact on the global economy including the construction industry in the United States.
We continue to believe that the increased multi-year spending commitment will improve the programming visibility for state and local governments and drive an increase in project lettings starting in 2023 and then more meaningfully in 2024 and beyond.
We believe that the increased multi-year spending commitment has improved the programming visibility for state and local governments and drove an increase in project lettings starting in 2023 that will continue in 2024 and beyond. At state, regional and local levels, voter-approved state and local transportation measures continue to support infrastructure spending.
The properties sold were part of our ongoing asset optimization plan.
The sale was part of our ongoing asset optimization plan.
Conversely, increased levels of public funding as well as an expanding or robust economy will generally increase demand for our services and provide opportunities for revenue growth and margin improvement. 24 Table of Contents Critical Accounting Estimate The financial statements included in “Item 8.
However, even these can be temporarily at risk as federal, state and local governments take actions to balance their budgets. Conversely, increased levels of public funding as well as an expanding or robust economy will generally increase demand for our services and provide opportunities for revenue growth and margin improvement. Critical Accounting Estimates The financial statements included in “Item 8.
The change during 2022 was primarily due to increased profits from new and existing joint ventures, partially offset by a net negative impact from revisions in estimates on one project. (See Note 3 of “Notes to the Consolidated Financial Statements”) .
The change during 2023 was primarily due to increased losses due to downward revisions in estimates from an existing joint venture, partially offset by increased profits from new joint ventures. (see Note 3 of “Notes to the Consolidated Financial Statements”). Prior Years Comparison (2022 to 2021) See Item 7.
As of December 31, 2022 , our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisting primarily of U.S. Government and agency obligations and corporate commercial paper.
As of December 31, 2023, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisting primarily of U.S. Government and agency obligations. In June 2022, we entered into the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) maturing June 2, 2027.
Other income, net decreased by $5.4 million primarily due to increases in the fair market value of our company owned life insurance policy, which is mostly offset in general and administrative expenses through our Non-Qualified Deferred Compensation plan liability.
The increase was also attributable to stock-based compensation and increases in the fair market value of our Non-Qualified Deferred Compensation plan liability, which is mostly offset in Other (income) expense, net, through investments held within our own company-owned life insurance policy.
At the federal level, the rollout of the $1.2 trillion Infrastructure Investment and Jobs Act (“IIJA”) has started with the appropriation of funds included in the 2022 federal spending bill enacted in March 2022. The five-year IIJA provides the largest increase in federal highway, bridge and transit funding in more than six decades and includes $550 billion in incremental funding.
At the federal level, the continued rollout of the $1.2 trillion Infrastructure Investment and Jobs Act (“IIJA”) has increased federal highway, bridge and transit funding to its highest level in more than six decades with $550 billion in incremental funding over five years.
We may also from time to time issue and sell equity, debt or hybrid securities or engage in other capital markets transactions or sell one or more business units or assets. Our material cash requirements include paying the costs and expenses associated with our operations, servicing outstanding indebtedness, making capital expenditures and paying dividends on our capital stock.
Our material cash requirements include paying the costs and expenses associated with our operations, servicing outstanding indebtedness, making capital expenditures and paying dividends on our capital stock. We may also from time to time prepay or repurchase outstanding indebtedness and acquire assets or businesses that are complementary to our operations.
Gross Profit The following table presents gross profit by reportable segment for the respective periods: Years Ended December 31, 2022 2021 2020 (dollars in thousands) Construction $ 303,881 $ 303,228 $ 280,169 Percent of segment revenue 10.8 % 9.9 % 8.8 % Materials 65,613 59,417 64,619 Percent of segment revenue 13.2 14.0 17.0 Total gross profit $ 369,494 $ 362,645 $ 344,788 Percent of total revenue 11.2 % 10.4 % 9.7 % Construction gross profit for the year ended December 31, 2022 increased by $0.7 million, or 0.2% , when compared to 2021 primarily driven by strong performance in the vertically integrated businesses in the California and Mountain operating groups.
Gross Profit The following table presents gross profit by reportable segment for the respective periods: Years Ended December 31, 2023 2022 2021 (dollars in thousands) Construction $ 325,055 $ 303,881 $ 303,228 Percent of segment revenue 10.9 % 10.8 % 9.9 % Materials 71,344 65,613 59,417 Percent of segment revenue 13.8 13.2 14.0 Total gross profit $ 396,399 $ 369,494 $ 362,645 Percent of total revenue 11.3 % 11.2 % 10.4 % Construction gross profit for the year ended December 31, 2023 increased by $21.2 million, or 7.0%, when compared to 2022, primarily driven by strong performance in the vertically integrated Mountain operating group, partially offset by a decrease in the estimated amount of probable recovery on an outstanding claim in our Central operating group, as well as the impact of other downward revisions in estimates (see Note 3 of “Notes to the Consolidated Financial Statements”).
The net debt paydown was completed at the time the Credit Agreement was entered (see Note 14 to “Notes to the Consolidated Financial Statements” for further information), to bring our cash balance in line with projected cash needs for the rest of 2022. 32 Table of Contents Derivatives We recognize derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value using Level 2 inputs.
Derivatives We recognize derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value using Level 2 inputs. See Note 8 to “Notes to the Consolidated Financial Statements” for further information.
Although fuel and liquid asphalt costs increased in 2022 as compared to 2021, we implemented energy surcharges in the second quarter of 2022 to cover these increases on new orders. 28 Table of Contents Selling, General and Administrative Expenses The following table presents the components of selling, general and administrative expenses for the respective periods: Years Ended December 31, 2022 2021 2020 (dollars in thousands) Selling Salaries and related expenses $ 57,921 $ 65,758 $ 69,530 Incentive compensation 4,316 5,160 5,297 Restricted stock unit amortization 1,277 1,415 1,280 Other selling expenses 8,627 4,632 9,661 Total selling 72,141 76,965 85,768 General and administrative Salaries and related expenses 103,161 111,149 111,188 Incentive compensation 12,108 8,908 10,519 Restricted stock unit amortization 5,084 3,792 3,408 Other general and administrative expenses 80,116 102,201 105,401 Total general and administrative 200,469 226,050 230,516 Total selling, general and administrative $ 272,610 $ 303,015 $ 316,284 Percent of revenue 8.3 % 8.7 % 8.9 % Selling Expenses Selling expenses include the costs for estimating and bidding, including offsetting customer reimbursements for portions of our selling/bid submission expenses (i.e., stipends), business development and materials facility permits.
Our newly acquired operations produced a gross loss of $3.6 million, including the impact of purchase accounting primarily related to LRC/MSG. 36 Table of Contents Selling, General and Administrative Expenses The following table presents the components of selling, general and administrative expenses for the respective periods: Years Ended December 31, 2023 2022 2021 (dollars in thousands) Selling Salaries and related expenses $ 58,617 $ 57,921 $ 65,758 Incentive compensation 5,784 4,316 5,160 Stock-based compensation 1,595 1,277 1,415 Other selling expenses 5,964 8,627 4,632 Total selling 71,960 72,141 76,965 General and administrative Salaries and related expenses 98,622 103,161 111,149 Incentive compensation 23,580 12,108 8,908 Stock-based compensation 8,158 5,084 3,792 Other general and administrative expenses 92,146 80,116 102,201 Total general and administrative 222,506 200,469 226,050 Total selling, general and administrative $ 294,466 $ 272,610 $ 303,015 Percent of revenue 8.4 % 8.3 % 8.7 % Selling Expenses Selling expenses include the costs for estimating and bidding, including offsetting customer reimbursements for portions of our selling/bid submission expenses (i.e., stipends), business development and materials facility permits.
Our primary contractual obligations are as follows and are further discussed in the referenced “Notes to the Consolidated Financial Statements:” • Asset retirement obligations - see Note 11, Property and Equipment, net • Long-term debt and the associated interest payments – see Note 14, Long-Term Debt • Operating lease and royalty future minimum payments - see Note 15, Leases • Non-Qualified Deferred Compensation Plan obligations – see Note 16, Employee Benefit Plans We believe our primary sources of liquidity will be sufficient to meet our expected working capital needs, capital expenditures, financial commitments, cash dividend payments, and other liquidity requirements associated with our existing operations for the next twelve months.
Our primary contractual obligations are as follows and are further discussed in the referenced “Notes to the Consolidated Financial Statements:” • Asset retirement obligations - see Note 11, Property and Equipment, net • Long-term debt and the associated interest payments – see Note 14, Long-Term Debt • Operating lease and royalty future minimum payments – see Note 15, Leases • Non-Qualified Deferred Compensation Plan obligations – see Note 16, Employee Benefit Plans In addition to the obligations referenced above, as of December 31, 2023 we had $18.6 million of purchase commitments for equipment and other goods and services not directly connected with our construction contracts, which are individually greater than $50,000 and have an expected fulfillment date after December 31, 2023.
Share Purchase Program As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion. In March 2022 we repurchased 611,000 shares under this authorization. On May 2, 2022, we entered into an accelerated share repurchase transaction with Bank of Montreal.
Share Purchase Program As announced on February 3, 2022, on February 1, 2022, the Board of Directors authorized us to purchase up to $300.0 million of our common stock at management’s discretion (the “2022 authorization”). We did not purchase shares under the share purchase program in 2023. As of December 31, 2023, $231.5 million of the 2022 authorization remained available.
Gain on Sales of Property and Equipment, net The following table presents the gain on sales of property and equipment, net for the respective periods: Years Ended December 31, 2022 2021 2020 (in thousands) Gain on sales of property and equipment, net $ (12,617 ) $ (66,439 ) $ (6,930 ) Gain on sales of property and equipment, net for the year ended December 31, 2022 decreased by $53.8 million when compared to 2021 due to fewer properties sold and lower gains per property sold in 2022.
See Note 1 of "Notes to the Consolidated Financial Statements" for more information. 37 Table of Contents Gain on Sales of Property and Equipment, net The following table presents the gain on sales of property and equipment, net for the respective periods: Years Ended December 31, 2023 2022 2021 (in thousands) Gain on sales of property and equipment, net $ (28,346) $ (12,617) $ (66,439) Gain on sales of property and equipment, net for the year ended December 31, 2023 increased by $15.7 million when compared to 2022 primarily due to the sale of a property in Texas in 2023.
However, Note 3 of “Notes to the Consolidated Financial Statements” presents the impact material revisions in estimates had on the periods covered by this report. 25 Table of Contents Current Economic Environment and Outlook Funding for our public work projects, which accounts for approximately 70% of our portfolio, is dependent on federal, state, regional and local revenues.
Current Economic Environment and Outlook Funding for our public work projects, which accounts for approximately 80% of our portfolio, is dependent on federal, state, regional and local revenues.
Recently Issued and Adopted Accounting Pronouncements See Note 1 of “Notes to the Consolidated Financial Statements” under the caption Recently Issued and Adopted Accounting Pronouncements. 33 Table of Contents
The specific timing and amount of any future repurchases will vary based on market conditions, securities law limitations and other factors. Recently Issued and Adopted Accounting Pronouncements See Note 1 of “Notes to the Consolidated Financial Statements” under the caption Recently Issued and Adopted Accounting Pronouncements.
Income Taxes The following table presents the provision for (benefit from) income taxes for the respective periods: Years Ended December 31, 2022 2021 2020 (dollars in thousands) Provision for (benefit from) income taxes $ 12,960 $ 19,713 $ (282 ) Effective tax rate 14.1 % 89.1 % 0.2 % Our effective tax rate decreased from 89.1 % to 14.1 % when compared to 2021 primarily due to the tax benefit associated with the reversal of net deferred tax liabilities related to businesses no longer held for sale and the release of valuation allowances related to the utilization of capital loss carryforwards.
Income Taxes The following table presents the provision for income taxes for the respective periods: Years Ended December 31, 2023 2022 2021 (in thousands) Provision for income taxes $ 30,267 $ 12,960 $ 19,713 Effective tax rate 50.6 % 14.1 % 89.1 % Our effective tax rate increased from 14.1% to 50.6% when compared to 2022 due to increases in our provision for income taxes relative to lower income before income taxes.
Risk Factors - We are involved in lawsuits and legal proceedings in the ordinary course of our business and may in the future be subject to other litigation and legal proceedings, and, if any of these are resolved adversely against us, it could harm our business, financial condition and results of operations.” Results of Operations Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may alter our construction schedules and can create variability in our revenues and profitability.
See Note 1 and Note 2 of “Notes to the Consolidated Financial Statements” for further information. Results of Operations Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may alter our construction schedules and can create variability in our revenues and profitability.
In evaluating our liquidity position and needs, we also consider cash and cash equivalents held by our consolidated construction joint ventures (“CCJVs”).
Brightline has experienced delays in securing additional funding in the past, therefore the timing and probability of future payments may be affected, and our liquidity impacted if Brightline faces future funding difficulties. In evaluating our liquidity position and needs, we also consider cash and cash equivalents held by our consolidated construction joint ventures (“CCJVs”).
A default under the 2.75% Convertible Notes indenture could result in acceleration of the maturity of the notes. The most significant financial covenants under the terms of our Credit Agreement require the maintenance of a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio.
A default under the 2.75% Convertible Notes indenture or the 3.75% Convertible Notes indenture could result in acceleration of the maturity of the notes. The Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default.
Materials Revenue Years Ended December 31, 2022 2021 2020 (dollars in thousands) California $ 273,314 54.9 % $ 242,552 57.0 % $ 222,021 58.3 % Central 46,531 9.4 33,270 7.8 25,181 6.6 Mountain 177,476 35.7 149,853 35.2 133,560 35.1 Total $ 497,321 100.0 % $ 425,675 100.0 % $ 380,762 100.0 % Materials revenue in 2022 increased by $71.6 million, or 16.8%, when compared to 2021 driven by price increases inclusive of energy surcharges and overall market demands driving higher sales volumes of aggregates, slightly offset by decreased sales volumes for asphalt. 27 Table of Contents Committed and Awarded Projects CAP consists of two components: (1) unearned revenue and (2) other awards.
Materials Revenue Years Ended December 31, 2023 2022 2021 (dollars in thousands) California $ 258,725 50.0 % $ 273,314 54.9 % $ 242,552 57.0 % Central 55,125 10.7 46,531 9.4 33,270 7.8 Mountain 203,034 39.3 177,476 35.7 149,853 35.2 Total $ 516,884 100.0 % $ 497,321 100.0 % $ 425,675 100.0 % Materials revenue in 2023 increased by $19.6 million, or 3.9%, when compared to 2022, driven primarily by sales from facilities and businesses acquired in 2023.
See Note 11 of “Notes to the Consolidated Financial Statements” for more information. 29 Table of Contents Other (Income) Expense The following table presents the components of other (income) expense, net for the respective periods: Years Ended December 31, 2022 2021 2020 (in thousands) Interest income $ (6,528 ) $ (1,176 ) $ (3,096 ) Interest expense 12,624 20,739 24,200 Equity in income of affiliates (13,571 ) (12,586 ) (8,783 ) Other income, net 1,039 (4,386 ) (4,203 ) Total other (income) expense, net $ (6,436 ) $ 2,591 $ 8,118 Interest income for 2022 increased by $5.4 million when compared to 2021 primarily due to higher interest rates on our investments.
Other (Income) Expense The following table presents the components of other (income) expense, net for the respective periods: Years Ended December 31, 2023 2022 2021 (in thousands) Loss on debt extinguishment $ 51,052 $ — $ — Interest income (17,538) (6,528) (1,176) Interest expense 18,462 12,624 20,739 Equity in income of affiliates, net (25,748) (13,571) (12,586) Other (income) expense, net (6,020) 1,039 (4,386) Total other (income) expense, net $ 20,208 $ (6,436) $ 2,591 We incurred a $51.1 million loss on debt extinguishment in the second quarter of 2023 related to the refinancing of a portion of our 2.75% Convertible Notes.
Materials gross profit for the year ended December 31, 2022 increased by $6.2 million, or 10.4%, when compared to 2021 due to higher revenue and greater volumes while gross profit margin decreased due to the impact of higher fuel and energy costs earlier in the year.
Materials gross profit for the year ended December 31, 2023 increased by $5.7 million, or 8.7%, when compared to 2022 and gross profit margin increased to 13.8% in the current year from 13.2% in the prior year. These improvements were primarily due to price increases as well as normalized fuel and energy costs in 2023.
Our CAP is supported by a positive public funding environment and resilient private market which we believe will provide further opportunities in 2023 to continue to grow CAP.
Our CAP is supported by a positive public funding environment and resilient private market which we believe will provide further opportunities for continued CAP growth in 2024. Strategic Actions On March 16, 2022, we sold our trenchless and pipe rehabilitation services business (“Inliner”) for a purchase price of $159.7 million, subject to certain adjustments.
Excluded from the table above is: • $ 40.4 million and $ 56.5 million as of December 31, 2022 and 2021 , respectively, in Granite’s portion of unconsolidated construction joint venture cash and cash equivalents and • $16.5 million of cash and cash equivalents as of December 31, 2021 that was included in current assets held for sale.
Excluded from the table above is $34.2 million and $40.4 million as of December 31, 2023 and 2022, respectively, in Granite’s portion of unconsolidated construction joint venture cash and cash equivalents. Capital Expenditures Major capital expenditures are typically for aggregate and asphalt production facilities, aggregate reserves, construction equipment, buildings and leasehold improvements and investments in our information technology systems.
The change was primarily due to proceeds from the sale of the Inliner business in March 2022, partially offset by a decrease in proceeds from sales of property and equipment as well as increased purchases of marketable securities and property and equipment in the current year.
The change was primarily due to the acquisition of LRC/MSG which resulted in a $294.0 million cash outflow during 2023. In addition, net cash used in investing activities in 2022 included $140.6 million of proceeds from the sale of the Inliner business in March 2022. These changes were partially offset by decreased purchases of marketable securities in the current year.
As of December 31, 2022 , we had $6.8 million of receivables and $28.4 million of contract retention receivable from Brightline (see Note 6 of “Notes to the Consolidated Financial Statements”). $3.4 million of the receivables were past due as of December 31, 2022 but were paid in January 2023 .
As of December 31, 2023, we had $2.0 million of receivables and $29.1 million of contract retention receivables from Brightline Trains Florida LLC ("Brightline") (see Note 6 of “Notes to the Consolidated Financial Statements”). As of the date of this report, $1.9 million of the receivables outstanding at year-end have been collected.
General and Administrative Expenses General and administrative expenses include costs related to our operational offices that are not allocated to direct contract costs and expenses related to our corporate functions.
Selling expenses for 2023 decreased $0.2 million compared to 2022. Increased selling incentive and stock-based compensation resulting from improved financial performance was offset by a decrease in other selling expenses. General and Administrative Expenses General and administrative expenses include costs related to our operational offices that are not allocated to direct contract costs and expenses related to our corporate functions.
Financing activities Cash used in financing activities of $ 164.3 million during 2022 represents a $ 139.9 million increase when compared to 2021 .
Additionally, distributions from, net of contributions to, unconsolidated joint ventures and affiliates increased $42.6 million from 2022. Investing activities Cash used in investing activities of $359.3 million during 2023 represents a $348.3 million increase in cash used in investing activities when compared to 2022.
California operating group revenue decreased $10.8 million in 2022, mainly due to delays in project starts and less favorable weather conditions in the first quarter of 2022. During 2022 and 2021 , approximately 70% and 75%, respectively, of revenue earned in the Construction segment was from the public sector.
During both 2023 and 2022, approximately 70% of revenue earned in the Construction segment was from the public sector.
Non-controlling partners’ share of CAP as of December 31, 2022 and 2021 was $85.0 million and $214.3 million, respectively.
The most significant new addition to CAP during the fourth quarter of 2023 was $344.5 million related to a private rail facility project in California. Non-controlling partners’ share of CAP as of December 31, 2023 and 2022 was $243.8 million and $85.0 million, respectively.
Capital Expenditures Major capital expenditures are typically for aggregate and asphalt production facilities, aggregate reserves, construction equipment, buildings and leasehold improvements and investments in our information technology systems. The timing and amount of such expenditures can vary based on the progress of planned capital projects, the type and size of construction projects, changes in business outlook and other factors.
The timing and amount of such expenditures can vary based on the progress of planned capital projects, the type and size of construction projects, changes in business outlook and other factors. During the year ended December 31, 2023, we had capital expenditures of $140.4 million, compared to $121.6 million during 2022, an increase of $18.8 million.
Revenue from the Mountain operating group decreased $54.8 million primarily due to the sale of Inliner which contributed $33 million in 2022 prior to its sale compared to $206 million in 2021. This decrease was partially offset by increased revenue driven by higher beginning CAP levels and stronger market conditions in the current year.
Mountain operating group revenue increased $56.8 million, which includes Inliner in the prior year that contributed $33.2 million prior to its sale in April 2022. The increase in revenue is primarily due to new work in Alaska, Nevada and the Pacific Northwest.
Other Costs, net The following table presents other costs for the respective periods: Years Ended December 31, 2022 2021 2020 (in thousands) Other costs, net $ 24,120 $ 101,351 $ 37,089 Other costs for the year ended December 31, 2022 decreased by $77.2 million when compared to 2021 primarily due to the securities litigation settlement charge of $66.0 million that occurred in 2021, settlement of the shareholder derivative lawsuit and related receipt of $5.0 million in 2022 as well as decreases in non-recurring legal and accounting fees of $7.4 million, net divestiture expenses of $8.0 million and personnel costs in connection with our operating group reorganization during 2021 of $2.8 million.
Other Costs, net The following table presents other costs for the respective periods: Years Ended December 31, 2023 2022 2021 (in thousands) Other costs, net $ 50,217 $ 24,120 $ 101,351 Other costs for the year ended December 31, 2023 increased by $26.1 million when compared to 2022 primarily due to the settlement of the Salesforce Tower matter in October 2023.
December 31, 2022 2021 (1) (dollars in thousands) Unearned revenue $ 2,877,478 64.2 % $ 2,595,085 64.7 % Other awards 1,607,661 35.8 1,414,979 35.3 Total $ 4,485,139 100.0 % $ 4,010,064 100.0 % December 31, 2022 2021 (1) (dollars in thousands) California $ 1,747,163 39.0 % $ 1,476,066 36.8 % Central 1,661,613 37.0 1,585,309 39.5 Mountain 1,076,363 24.0 948,689 23.7 Total $ 4,485,139 100.0 % $ 4,010,064 100.0 % (1) These balances do not include amounts held for sale (see Note 2 of "“Notes to the Consolidated Financial Statements”).
December 31, 2023 2022 (dollars in thousands) Unearned revenue $ 3,596,676 64.9 % $ 2,877,478 64.2 % Other awards 1,949,078 35.1 1,607,661 35.8 Total $ 5,545,754 100.0 % $ 4,485,139 100.0 % 35 Table of Contents December 31, 2023 2022 (dollars in thousands) California $ 2,436,521 43.9 % $ 1,747,163 39.0 % Central 1,707,862 30.8 1,661,613 37.0 Mountain 1,401,371 25.3 1,076,363 24.0 Total $ 5,545,754 100.0 % $ 4,485,139 100.0 % CAP of $5.5 billion at December 31, 2023 was $1.1 billion, or 24% higher than 2022 primarily due to higher award volume throughout 2023, specifically in our California and Mountain operating groups which increased $689.4 million and $325.0 million, respectively, between December 31, 2022 and 2023.
The change was primarily due to a $105.1 million increase in cash provided by net income after adjusting for non-cash items and a $76.6 million decrease in cash provided by working capital.
Cash provided by operating activities of $183.7 million during 2023 represents a $128.1 million increase in cash provided by operating activities when compared to 2022. The change was primarily due to a $73.6 million increase in cash provided by working capital, which includes receivables, net contract assets, inventories, other assets, accounts payable and accrued expenses and other liabilities.
Removed
However, even these can be temporarily at risk as federal, state and local governments take actions to balance their budgets.
Added
However, Note 3 of “Notes to the Consolidated Financial Statements” presents the impact material revisions in estimates had on the periods covered by this report. Goodwill and Acquired Intangible Assets Goodwill represents the excess of amounts paid over the fair value of net assets acquired from an acquisition.
Removed
In October 2022, the U.S. Department of Transportation announced that it released $59.9 billion in Fiscal Year 2023 apportionments directly to all 50 states, all of which is available for states to authorize following the passing of the FY 2023 omnibus appropriations bill in December 2022.
Added
In order to determine the amount of goodwill resulting from an acquisition, we perform an assessment to determine the value of the acquired company’s tangible and identifiable intangible assets and liabilities. In our assessment, we determine whether identifiable intangible assets exist, which typically include customer relationships, backlog and trademarks/trade names.
Removed
We anticipate the impact to our financial statements to gradually grow in 2023 and beyond as funds are allocated first to quicker turn projects and then later to more complex larger projects. At state, regional and local levels, voter-approved state and local transportation measures continue to support infrastructure spending.
Added
The determination of fair values of assets acquired and liabilities assumed requires us to make estimates and use valuation techniques when a market value is not readily available. We test goodwill for impairment annually, as of November 1, for each reporting unit and more frequently when events occur or circumstances change which suggest that goodwill should be evaluated.
Removed
Over the recent years, inflation, supply chain and labor constraints have had a significant impact on the global economy including the construction industry in the United States.
Added
Examples of such events or circumstances include, but are not limited to, the following: • a significant adverse change in the business climate; • a significant adverse change in legal factors or an adverse action or assessment by a regulator; • a more likely than not expectation that a segment or a significant portion thereof will be sold; or • the testing for recoverability of a significant asset group within the segment.
Removed
Strategic Actions During the fourth quarter of 2021, we concluded that the assets and liabilities of our former Water and Mineral Services operating group (“WMS”) met the criteria for classification as held for sale and the results of operations were presented as discontinued operations at that time.
Added
Goodwill is evaluated for impairment either by assessing qualitative factors or by performing a quantitative assessment. Qualitative factors, such as overall financial performance, industry or market considerations, or other relevant events, are assessed to determine if it is more likely than not that the fair value of the reporting units is less than their carrying amounts.
Removed
This included: our trenchless and pipe rehabilitation services business (“Inliner”); our water supply, treatment, delivery and maintenance business (“Water Resources”); and our mineral exploration drilling business (“Mineral Services”). The sale of Inliner was completed on March 16, 2022 for a purchase price of $159.7 million, subject to certain adjustments.
Added
During a quantitative impairment test, we calculate the estimated fair value of the reporting unit in which the goodwill is recorded using the discounted cash flows and market multiple methods, and compare that amount to the carrying value of that reporting unit.
Removed
As a result of the sale and post-closing adjustments, we received cash proceeds of $140.6 million and recognized a gain of $1.8 million. In September 2022, we announced our decision to retain the Water Resources and Mineral Services businesses that were previously classified as held for sale and reported in discontinued operations.
Added
In the event the fair value of the reporting unit is determined to be less than the carrying value, goodwill is impaired, and an impairment loss is recognized equal to the excess, limited to the total amount of goodwill allocated to the reporting unit.
Removed
This change to our plan of sale was due to unfavorable market conditions which undermined our efforts to secure an appropriate value for the businesses.
Added
The impairment evaluation process includes, among other things, making assumptions about variables such as the determination of appropriate discount rates, the amount and timing of expected future cash flows, revenue and margin growth rates, and appropriate benchmark companies, which are subject to a high degree of judgment.
Removed
In connection with the reclassification of the WMS businesses from discontinued operations to continuing operations, the Consolidated Statements of Operations have been revised to include Inliner through the date of sale, as well as the ongoing operations of Water Resources and Mineral Services in the Mountain operating group for all periods presented.
Added
There are inherent uncertainties related to each of the above listed assumptions, and our judgment in applying them. Changes in the assumptions used in our goodwill and intangible assets valuations could result in impairment charges that could be material to our consolidated financial statements in any given period.
Removed
The Water Resources and Mineral Services businesses are included in the Construction segment. Inliner had both Construction and Materials operations. See Note 1 and Note 2 of “Notes to the Consolidated Financial Statements” for further information.
Added
Note 1 of “Notes to the Consolidated Financial Statements” includes further information about our long-lived assets and goodwill including the impact of impairments on the periods covered by this report, which are not material. We have not materially changed our estimation methodology during the periods presented.
Removed
Litigation Matter As further discussed in Note 20 of “Notes to the Consolidated Financial Statements,” our wholly owned subsidiary, Layne Christensen Company (“Layne”), has been sued for $100 million relating to Layne’s work on the Salesforce Tower foundation.
Added
As a result of the sale and post-closing adjustments, we received cash proceeds of $140.6 million and recognized a gain of $1.8 million. On April 24, 2023, we completed the purchase of Coast Mountain Resources (2020) Ltd. (“CMR”) for $26.6 million. CMR is a construction aggregate producer based in British Columbia, Canada operating on Malahat First Nation land.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe table below presents principal amounts due by year and related weighted average interest rates for our cash and cash equivalents, held-to-maturity investments and significant debt obligations, excluding debt issuance costs, as of December 31, 2022 (dollars in thousands): 2023 2024 2025 2026 2027 Thereafter Total Assets Cash, cash equivalents, held-to-maturity investments $ 333,365 $ 26,569 $ — $ — $ — $ — $ 359,934 Weighted average interest rate 3.83 % 1.51 % — % — % — % — % 3.66 % Liabilities Fixed rate debt Credit Agreement Revolver Loan $ — $ — $ — $ — $ 50,000 $ — $ 50,000 Effective interest rate (1) 5.92 % 5.92 % 5.92 % 5.92 % 5.92 % — % 5.92 % 2.75% Convertible Notes $ — $ 230,000 $ — $ — $ — $ — $ 230,000 Coupon rate 2.75 % 2.75 % — % — % — % — % 2.75 % (1) The effective interest rate was calculated using one-month SOFR plus 10 basis points plus the applicable margin.
Biggest changeThe table below presents principal amounts due by year and related weighted average interest rates for our cash and cash equivalents, held-to-maturity investments and significant debt obligations, excluding debt issuance costs, as of December 31, 2023 (dollars in thousands): 2024 2025 2026 2027 2028 Thereafter Total Assets Cash, cash equivalents, held-to-maturity investments $ 453,526 $ — $ — $ — $ — $ — $ 453,526 Weighted average interest rate 4.89 % — % — % — % — % — % 4.89 % Liabilities Debt Credit Agreement Revolver Loan $ — $ — $ — $ 100,000 $ — $ — $ 100,000 Effective interest rate (1) 7.46 % 7.46 % 7.46 % 7.46 % — % — % 7.46 % Credit Agreement Term Loan $ 7,500 $ 7,500 $ 7,500 $ 127,500 $ — $ — $ 150,000 Effective interest rate (2) 6.65 % 6.65 % 6.65 % 6.65 % — % — % 6.65 % 3.75% Convertible Notes $ — $ — $ — $ — $ 373,750 $ — $ 373,750 Coupon rate 3.75 % 3.75 % 3.75 % 3.75 % 3.75 % — % 3.75 % 2.75% Convertible Notes $ 31,338 $ — $ — $ — $ — $ — $ 31,338 Coupon rate 2.75 % — % — % — % — % — % 2.75 % (1) The effective interest rate was calculated using one-month SOFR plus 10 basis points plus the applicable margin.
The applicable margin is based on our Consolidated Leverage Ratio (as defined in our Credit Agreement), calculated quarterly. As of December 31, 2022 , there was $ 50.0 million drawn under the Revolver. See Note 14 of “Notes to the Consolidated Financial Statements” for further discussion on the 2.75% Convertible Notes and Credit Agreement.
The applicable margin is based on our Consolidated Leverage Ratio (as defined in our Credit Agreement), calculated quarterly. As of December 31, 2023, there was $100 million drawn on the Revolver. See Note 14 of “Notes to the Consolidated Financial Statements” for further discussion on the 2.75% Convertible Notes, 3.75% Convertible Notes and Credit Agreement.
If the volume of our international operations increases and foreign currency exchange rates change, the impact to our consolidated statements of operations could be significant and may affect year-to-year comparability of operating results. The impact from foreign currency transactions during 2022 , 2021 and 2020 was immaterial.
If the volume of our international operations increases and foreign currency exchange rates change, the impact to our consolidated statements of operations could be significant and may affect year-to-year comparability of operating results.
The fair value of our long-term held-to-maturity investment portfolio may be affected by changes in interest rates. Operating in international markets involves exposure to possible volatile movements in currency exchange rates. Our Mountain operating group has international operations in Mexico and Canada.
The fair value of our long-term held-to-maturity investment portfolio may be affected by changes in interest rates. Operating in international markets involves exposure to possible volatile movements in currency exchange rates. In the third quarter of 2023 we began the wind down of our international Minerals Services operations which operated in Mexico and Canada.
We may borrow on the Revolver, at our option, at either (a) the SOFR term rate plus a credit adjustment spread plus applicable margin ranging from 1.0% to 2.0%, or (b) a base rate plus an applicable margin ranging from 0.0% to 1.0%.
The impact from foreign currency transactions during 2023, 2022 and 2021 was immaterial. 42 Table of Contents We may borrow on the Revolver, at our option, at either (a) the SOFR term rate plus a credit adjustment spread plus applicable margin ranging from 1.0% to 2.0%, or (b) a base rate plus an applicable margin ranging from 0.0% to 1.0%.
We also have affiliates that operate in Latin America (see Note 10 of “Notes to the Consolidated Financial Statements”). The majority of the customer contracts in Mexico are U.S. dollar-based, reducing the exposure to currency fluctuations. As of December 31, 2022, we do not have any outstanding foreign currency option contracts.
Our Materials Segment continues to have international operations in Canada. We also have affiliates that operate in Latin America (see Note 10 of “Notes to the Consolidated Financial Statements”). As of December 31, 2023, we do not have any outstanding foreign currency option contracts.
Future interest payments may differ from actual results. The estimated fair value of our cash and cash equivalents approximates the principal amounts reflected above based on the generally short maturities of these financial instruments. The fair value of 2.75% Convertible Notes was approximately $281.4 million and $313.8 million as of December 31, 2022 and 2021, respectively. 34 Table of Contents
The estimated fair value of our cash and cash equivalents approximates the principal amounts reflected above based on the generally short maturities of these financial instruments. The fair value of the 3.75% Convertible Notes was approximately $475.6 million as of December 31, 2023.
As of December 31, 2022 and 2021 , the balance in long-term debt in our consolidated balance sheets of the 2.75% Convertible Notes, excluding debt issuance costs, and including $ 14.8 million of amortized debt discount in 2021 , was $ 230.0 million and $ 207.4 million, respectively.
The fair value of 2.75% Convertible Notes was approximately $51.0 million and $281.4 million as of December 31, 2023 and 2022, respectively. 43 Table of Contents
Removed
Due to the adoption of ASU 2020-06 (see Note 1 of "Notes to the Consolidated Financial Statements"), we did not record amortization of debt discount related to our 2.75% Convertible Notes during 2022 .
Added
(2) The effective interest rate was calculated using a blended rate based on the fixed rate associated with the cash flow hedge (see Note 8 of “Notes to the Consolidated Financial Statements”) of 3.73% plus 10 basis points plus applicable margin and the one-month SOFR plus 10 basis points plus the applicable margin for the remaining amount of the Term Loan not covered by the hedge.
Removed
As of December 31, 2021 , the remaining unamortized debt discount was $ 22.6 million but was reduced to zero upon adoption of ASU 2020-06 on January 1, 2022 .

Other GVA 10-K year-over-year comparisons