Granite Construction's Q4 2024 Earnings Call: A Deep Dive into the Company's Performance and Future Growth Prospects

Granite Construction Incorporated (NYSE: GVA) recently reported its Q4 2024 earnings, providing valuable insights into the company's performance and future growth prospects. The earnings call revealed several key financial metrics and trends that investors should be aware of.



Revenue Growth and Gross Profit Margin Improvement

Granite Construction's revenue increased by 5% year-over-year (YoY) in Q4 2024, driven by a strong market environment, revenue from acquired companies, and favorable weather conditions early in the year. The company's construction revenue grew by 3% YoY, while materials revenue increased by 11% YoY. Notably, the construction segment's gross profit margin improved significantly, increasing from 9.1% in Q4 2023 to 15.6% in Q4 2024. This improvement was driven by increased revenue and improved project execution across the higher quality project portfolio.



Committed and Awarded Projects (CAP) and Future Growth Prospects

Granite Construction's Committed and Awarded Projects (CAP) totaled $5.3 billion at the end of 2024, a decrease of 5% YoY. This decline was primarily due to the timing of project awards, as management expects CAP to grow in 2025 driven by a robust public and private market environment. Despite the decline, Granite Construction's markets continue to be robust, with high levels of public funding and strong private investment creating attractive opportunities for both its construction and materials segments. The company's strong balance sheet and liquidity position, with $586 million in cash and marketable securities and revolver borrowing capacity, enables it to capitalize on M&A opportunities and strategic investments.



Adjusted EBITDA Margin and Operating Cash Flow

Granite Construction's adjusted EBITDA margin was 11.1% in Q4 2024, up 300 basis points (bps) YoY. For the full year, adjusted EBITDA margin was 10.0%, up 200 bps YoY. The company's operating cash flow reached $456 million in 2024, or 11.4% of revenue, up 148% YoY. This strong cash flow generation reflects the company's robust financial performance and ability to execute on its strategic initiatives.



Conclusion

Granite Construction's Q4 2024 earnings call demonstrated the company's strong performance in both the construction and materials sectors, driven by factors such as revenue growth, improved profitability, and a robust backlog. Despite a decline in CAP due to timing, management expects CAP to grow in 2025, supported by a strong market environment and the company's ability to capitalize on M&A opportunities and strategic investments. Granite Construction's positive outlook and strong cash flow position further support its ability to execute on its strategic initiatives and drive future growth. Investors should closely monitor the company's progress as it continues to execute on its growth strategy.