building value together - granite construction

BuildingValueTogether

INVESTOR UPDATE4Q | FY 2017

Statements made in this presentation are not based on historical facts, including statements regarding future events, occurrences, circumstances,

activities, performance, outcomes and results, that may be forward looking in nature. Under the Private Securities Litigation Reform Act of 1995, a

“safe harbor” may be provided to us for certain of these forward-looking statements. Words such as “future,” “outlook,” “believes,” “expects,”

“appears,” “may,” “will,” “should,” “anticipates,” “estimates,” “intends,” “plans,” “could,” “would,” “continue,” or the negative thereof or comparable

terminology, are intended to identify these forward-looking statements. In addition, other written or oral statements which constitute forward-

looking statements have been made and may in the future be made by or on behalf of Granite. These forward-looking statements are estimates

reflecting the best judgment of our senior management and are based on our current expectations and projections concerning future events, many of

which are outside of our control, and involve a number of risks and uncertainties that could cause actual results to differ materially from those

suggested by the forward-looking statements. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be

incorrect. Factors that might cause or contribute to such differences include, but are not limited to, those risks described in the Company’s Annual

Report on Form 10-K under “Item 1A. Risk Factors” and in “Part II, Item 1A. Risk Factors” in the Quarterly Report on Form 10-Q. Except as required by

law, we undertake no obligation to revise or update any forward-looking statements for any reason. As a result, the audience is cautioned not to place

undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Except as required by law, we undertake no

obligation to revise or update any forward-looking statements for any reason.

SAFEHARBOR

Safety ● Honesty ● Integrity ● Fairness ● Accountability

Consideration of Others ● Pursuit of Excellence ● Reliability ● Citizenship

CONSECUTIVE YEARS

Named as one of AMERICA’S 100 MOST

TRUSTWORTHY COMPANIES

Forbes 2015, 2016 & 2017

2020 STRATEGIC PLAN

CORE STRATEGYDevelop the entrepreneurial spirit of our

people to flawlessly execute highly profitable

market strategies that leverage the people,

resources, and core values of our company

to exceed stakeholder expectations.

MISSION STATEMENTBy December 31, 2020 Granite will:

Be recognized as the best value diversified

infrastructure provider in North America

Have efficient operating and management systems to

support current and future opportunities

Be the company of choice for clients and partners while

creating exceptional opportunities for employees

BuildingValue

Together

Excellence in Execution

Focus on our People

Business Growth & Sustainability

DIVERSE CAPABILITIES

Broad opportunities across geographies & end-markets

Granite is a proud recipient of the Diamond Achievement award for Quality, Paving and Sustainability at more than 90% of our plant and aggregate sites, year-over-year.

Our expert teams go above and beyond to provide high-quality, technical, logistics, and scheduling solutions to our internal and external construction materials customers.

Construction Materials & Asphalt

56 Asphalt Plants

55 Quarries

>680 Million Tons ofPermitted Reserves*

*Includes owned and leased reserves as of 12/31/2017

TOTAL COMPANY

RESULTSQ4 2017

REVENUE GROSS PROFIT SG&A

$667

$468

$763

$957

$801

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

$81

$25

$75

$115

$101

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

$59 $62

$51 $50

$59

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

9% 13% 7% 5% 7%

$ in millions

NET INCOME $ PER SHARE CASH &

$ in millions, except per share amounts

$16

($24)

$14

$46

$33

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

$0.40

($0.60)

$0.35

$1.14

$0.81

Q416 Q1 17 Q2 17 Q3 17 Q4 17

$258 $297 $286 $303

$367

Q4 16 Q1 17 Q2 17 Q3 17 Q4 17

MARKETABLE SECURITIES

$2.37

$2.51

$2.99

2015 2016 2017

INCREASED

+18.9%IN 2017

TOTAL COMPANY

REVENUE

FY17 FINANCIAL PERFORMANCE

$ in billions as of 12/31

$299.8 $301.4 $314.9

12.6% 12.0%10.5%

2015 2016 2017

INCREASED

+4.5%IN 2017

TOTAL COMPANY

GROSS PROFIT


$ in millions as of 12/31percentages denote gross profit margin

BACKLOG

$2.05 $2.45

$2.82

$0.86

$1.03 $0.90

2015 2016 2017Large Projects Construction

$2.91

$3.48$3.72


INCREASED

+6.7%IN 2017

TOTAL COMPANY

BACKLOG$ in billions as of 12/31

APPENDIXNote: The reader is cautioned that any non-GAAP financial

measures provided by the Company are provided in addition to,

and not as alternatives for, the Company's reported results

prepared in accordance with GAAP. Items that may have a

significant impact on the Company's financial position, results of

operations and cash flows must be considered when assessing the

Company's actual financial condition and performance regardless

of whether these items are included in non-GAAP financial

measures. The methods used by the Company to calculate its non-

GAAP financial measures may differ significantly from methods

used by other companies to compute similar measures. As a result,

any non-GAAP financial measures provided by the Company may

not be comparable to similar measures provided by other

companies.

EBITDA RECONCILIATION

GRANITE CONSTRUCTION INCORPORATED

EBITDA(1)

(Unaudited - dollars in thousands)

Three Months Ended

December 31, Years Ended December 31,

2017 2016 2017 2016

Net income attributable to Granite Construction Incorporated $ 32,773 $ 16,173 $ 69,098 $ 57,122

Depreciation, depletion and amortization expense(2) 17,822 17,738 66,344 64,375

Provision for income taxes 11,821 10,622 28,662 30,162

Interest expense, net of interest income 1,317 2,295 6,058 9,141

EBITDA $ 63,733 $ 46,828 $ 170,162 $ 160,800

Consolidated EBITDA Margin(3) 8.0% 7.0% 5.7% 6.4%

Note:

(1)We define EBITDA as GAAP net income (loss) attributable to Granite Construction Incorporated, adjusted for interest, taxes,

depreciation, depletion and amortization. We believe this non-GAAP financial measure and the associated margin are useful in

evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in

reviewing the Company. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are

provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with GAAP. The methods

used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies

to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to

similar measures provided by other companies.(2)Amount includes the sum of depreciation, depletion and amortization which are classified as Cost of Revenue and Selling,

General and Administrative expenses in the consolidated statements of operations of Granite Construction Incorporated.

(3)Represents EBITDA divided by consolidated revenue. Consolidated revenue was $801,274 and $2,989,713 for three and twelve

months ended December 31, 2017, respectively, and $666,681 and $2,514,617 for three and twelve months ended December 31,

2016, respectively,

CONSOLIDATEDBALANCE SHEET


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

December 31, December 31,

2017 2016

ASSETS

Current assets

Cash and cash equivalents $ 233,711 $ 189,326

Short-term marketable securities 67,775 64,884

Receivables, net 479,791 419,345

Costs and estimated earnings in excess of billings 103,965 73,102

Inventories 62,497 55,245

Equity in construction joint ventures 247,826 247,182

Other current assets 36,513 39,908

Total current assets 1,232,078 1,088,992

Property and equipment, net 407,418 406,650

Long-term marketable securities 65,015 62,895

Investments in affiliates 38,469 35,668

Goodwill 53,799 53,799

Other noncurrent assets 75,199 85,449

Total assets $ 1,871,978 $ 1,733,453

LIABILITIES AND EQUITY

Current liabilities

Current maturities of long-term debt $ 46,048 $ 14,796

Accounts payable 237,673 199,029

Billings in excess of costs and estimated earnings 135,146 97,522

Accrued expenses and other current liabilities 236,407 218,587

Total current liabilities 655,274 529,934

Long-term debt 178,453 229,498

Deferred income taxes 1,361 5,441

Other long-term liabilities 44,085 45,989

Equity

Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding — —Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding 39,871,314

shares as of December 31, 2017 and 39,621,140 shares as of December 31, 2016 399 396

Additional paid-in capital 160,376 150,337

Accumulated other comprehensive income (loss) 634 (371)

Retained earnings 783,699 735,626

Total Granite Construction Incorporated shareholders’ equity 945,108 885,988

Non-controlling interests 47,697 36,603

Total equity 992,805 922,591

Total liabilities and equity $ 1,871,978 $ 1,733,453

CONSOLIDATEDSTATEMENT OF OPERATIONS


CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited - in thousands, except per share data)

Three Months Ended December 31, Years Ended December 31,

2017 2016 2017 2016

Revenue

Construction $ 429,444 $ 359,741 $ 1,664,708 $ 1,365,198

Large Project Construction 290,888 246,077 1,032,229 888,193

Construction Materials 80,942 60,863 292,776 261,226

Total revenue 801,274 666,681 2,989,713 2,514,617

Cost of revenue

Construction 364,231 298,045 1,417,694 1,155,983

Large Project Construction 270,530 232,618 1,002,436 824,056

Construction Materials 65,806 54,768 254,650 233,208

Total cost of revenue 700,567 585,431 2,674,780 2,213,247

Gross profit 100,707 81,250 314,933 301,370

SG&A expenses 59,068 59,342 222,811 219,299

Restructuring and impairment gains (1,394) (1,000) (2,411) (1,925)

Gain on sales of property and equipment (1,352) (5,994) (4,182) (8,358)

Operating income 44,385 28,902 98,715 92,354

Other (income) expense

Interest income (1,386) (801) (4,742) (3,225)

Interest expense 2,703 3,096 10,800 12,366

Equity in income of affiliates (2,200) (2,594) (7,107) (7,177)

Other income, net (1,878) (685) (4,699) (5,972)

Total other income (2,761) (984) (5,748) (4,008)

Income before provision for income taxes 47,146 29,886 104,463 96,362

Provision for income taxes 11,821 10,622 28,662 30,162

Net income 35,325 19,264 75,801 66,200

Amount attributable to non-controlling interests (2,552) (3,091) (6,703) (9,078)

Net income attributable to Granite Construction

Incorporated $ 32,773 $ 16,173 $ 69,098 $ 57,122

Net income per share attributable to common

shareholders:

Basic $ 0.82 $ 0.41 $ 1.74 $ 1.44

Diluted $ 0.81 $ 0.40 $ 1.71 $ 1.42

Weighted average shares of common stock:

Basic 39,857 39,610 39,795 39,557

Diluted 40,387 40,306 40,372 40,225

CONSOLIDATEDSTATEMENT OF CASH FLOWS


CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited - in thousands)

Years Ended December 31, 2017 2016

Operating activities

Net income $ 75,801 $ 66,200

Adjustments to reconcile net income to net cash provided by operating activities:

Non-cash restructuring and impairment gains (939) (1,000)

Depreciation, depletion and amortization 66,344 64,375

Gain on sales of property and equipment (4,182) (8,358)

Change in deferred income taxes (4,824) 9,842

Stock-based compensation 15,764 13,383

Equity in net loss (income) from unconsolidated joint ventures 14,637 (15,614)

Net income from affiliates (7,107) (7,177)

Changes in assets and liabilities: (11,129) (48,505)

Net cash provided by operating activities 144,365 73,146

Investing activities

Purchases of marketable securities (124,543) (129,685)

Maturities of marketable securities 120,000 50,000

Proceeds from called marketable securities — 55,000

Purchases of property and equipment (67,695) (90,970)

Proceeds from sales of property and equipment 10,202 12,946

Collection of notes receivable 1,952 4,331

Other investing activities, net 2,698 1,988

Net cash used in investing activities (57,386) (96,390)

Financing activities

Proceeds from long-term debt 25,000 30,000

Debt principal payments (45,000) (45,025)

Cash dividends paid (20,687) (20,563)

Purchases of common stock (6,977) (5,227)

Contributions from non-controlling partners 11,500 5,250

Distributions to non-controlling partners (7,109) (5,258)

Other financing activities 679 557

Net cash used in financing activities (42,594) (40,266)

Increase (decrease) in cash and cash equivalents 44,385 (63,510)

Cash and cash equivalents at beginning of year 189,326 252,836

Cash and cash equivalents at end of year $ 233,711 $ 189,326

Investor Contact:

Q4 2017

INVESTOR UPDATE

BuildingValue

Together

[email protected]

Ron BotoffVice President, Investor Relations & Government Affairs

(831) 728-7532

Corporate Office:

585 West Beach St.Watsonville, CA 95076

(831) 724-1011

www.graniteconstruction.com

building value together - granite construction

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