granite construction

© 2021 Granite Construction. All Rights Reserved.

Q1 | FY 2021 Earnings Conference Call

Granite Construction


Any statements contained in this presentation that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, Committed and Awarded Projects (CAP), and results, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking

statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, CAP, and results. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those

described in greater detail in our filings with the Securities and Exchange Commission, particularly those specifically described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this presentation and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.

Safe Harbor

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Company Update Kyle Larkin, President


Core Values


Safety and well-being of our people, our partners, and the public is our greatest responsibility.

Three Pillars of Safety Success

✓ Peer-to-peer accountability and ownership

✓ A consistent, integrated approach

✓ Value creation at project level

Engagement

Engage every level of organization in safety culture

Planning

Approach every task with safety planned into process

Safety by Choice

Training

Educate and Empower Employees to make Safe Choices


Inclusive Diversity – Is about all of us

We embrace individual differences and similarities and are committed to our inclusive environment where everyone is welcomed.

Recent Progress

✓ Established executive inclusive diversity and multicultural councils

✓ Hosting Inclusive Diversity Leadership Training

✓ Established relationships with historically black colleges and universities

Create Clarity

Build internal and external understanding

Build Capability

Train leaders and employees

Develop Talent

Strengthen talent pipeline with a focus on Women and People of Color

*This photo was taken pre-Covid


37%

19%6%

28%

9%

Q1’21 CAP

Transportation Segment

• Continued transformation of Transportation CAP

• Execution in Old Risk Portfolio on track

• Robust bid schedule in a competitive environment

• Improving Federal, State, and Local funding environment

7

Q1’21 Revenue

$3,029M

32%

30%

13%

20%

5%

$351M

California

Northwest

Midwest

Heavy Civil Old Risk Portfolio Federal

Heavy Civil New Risk Portfolio

Percentages may not total 100 due to rounding.


Water Segment Overview

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• Gradual recovery from COVID-19 pandemic

• Positive bidding environment

• Water CAP continues to grow with recently awarded $160 million Texas dam project to be added to Q2 CAP

8%2%

7%

83%

$339M

11%

7% 2%

80%

$100M

Heavy Civil

NorthwestCalifornia

Water & Mineral Federal

Q1’21 CAPQ1’21 Revenue


Specialty Segment Overview

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• All operating groups contributing to revenue growth in the segment

• Continued strong market for site development work in public and private markets

• Growth in CAP with $267 million Ohio tunnel project added in Q1

15%

18%

23%

33%

11%

29%

14%

17%

13%

13%

14%

$156M

Northwest

Midwest

California

Heavy Civil Federal

Water & Mineral

Q1’21 CAPQ1’21 Revenue

$1,084M


• Exceptional performance in our seasonally slowest quarter

• Materials orders in 2021 continue to outpace 2020

• Volume growth in both aggregates and asphalt year-over-year

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*Revenue includes external, intersegment, and intra-segment sales of materials.

13%

66%

3%1% 3%

6%8%

California

Washington

Nevada

Other

Alaska

Oregon

Arizona

Utah

Q1’21 Revenue*

Materials Segment Overview

Q12021


Q1 2021 Financial ResultsLisa Curtis, EVP, Chief Financial Officer


$ in millions

Q1 2021 Financial Highlights

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Note: Numbers may not add up due to rounding.

$25$36

$9

$9$2

-$11

$17

Gross Profit

+166%

$351 $351

$102 $100

$50 $63

$133 $156

$670$636

$24

$63

Q1 2020 Q1 2021 Q1 2020 Q1 2021

Revenue

+5%Transportation

• Increase in California Operating Group revenue offset by decrease in Heavy Civil Operating Group

• Decreased losses from Old Risk Portfolio

Water

• Continued recovery from COVID-19

Specialty

• Revenue growth through a Heavy Civil Operating Group site development project

• Absence of significant write downs in Q1 2021

Materials

• Strong volumes driving top- and bottom-line growth


Key Non-GAAP 1 MetricsQ1

2021Q1

2020

Adjusted EBITDA $16.9 ($18.4)

Adjusted EBITDA Margin 2.5% (2.9%)

Adjusted Net Income (Loss) ($4.9) ($31.6)

Adjusted EPS ($0.11) ($0.69)

Q1 2021 Financial Performance

$ in millions except per share1See appendix for reconciliation of these Non-GAAP figures

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Balance Sheet and Cash Flow

15

$ in millions

$364 $340

Total Debt

$248 $464

$244

$227 $492

$691

Liquidity

($20)

$38

Operating Cash Flow

Revolver AvailabilityCash and Marketable Securities

Q1 2020 Q1 2021 Q1 2020 Q1 2021 Q1 2020 Q1 2021


Concluding RemarksKyle Larkin, President


Concluding Remarks

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• Strong Q1 performance

• Litigation settlement cleared way for focus on execution

• Bidding environment active

• Funding outlook positive

Concluding Remarks


Q&A


Non-GAAP Financial InformationThe tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Specifically, management believes that non-GAAP financial measures such as EBITDA and EBITDA margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing adjusted EBITDA and adjusted EBITDA margin non-GAAP measures to indicate the impact of:

• Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of the Layne Christensen Company (“Layne”) and restructuring charges related to our Heavy Civil Operating Group;

• Non-cash impairments related to goodwill and investments in affiliates in 2020;

We provide adjusted loss before benefit from income taxes, adjusted benefit from income taxes, adjusted net loss attributable to Granite Construction Incorporated and adjusted diluted

net loss per share, non-GAAP measures, to indicate the impact of the following:

• Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of the Layne and restructuring charges related to our Heavy Civil Operating Group;

• Non-cash impairments related to goodwill and investments in affiliates in 2020;

• Transaction costs which includes acquired intangible amortization expenses and acquisition related depreciation related to the acquisition of Layne and LiquiForce; and

• Amortization of debt discount related to our 2.75% convertible notes.

Management believes that these additional non-GAAP financial measures facilitate comparisons between industry peer companies and management uses these non-GAAP financial measures in evaluating the Company's performance. 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 U.S. 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. The Company does not provide a reconciliation of forward-looking adjusted EBITDA margin to the most directly comparable forward-looking GAAP measure of net income (loss) attributable to Granite Construction Incorporated because the timing and amount of the excluded items are unreasonably difficult to fully and accurately estimate.

Appendix

19


Adjusted EBITDA and NI Reconciliations

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