Granite Construction Raises 2026 Revenue Floor After Record Q3

Granite Construction Incorporated (NYSE: GVA) reported record third-quarter revenue and adjusted EBITDA, supported by organic construction growth, acquired businesses and stronger project execution. The company also raised the low end of its 2026 revenue guidance and ended the quarter with a record $7.5 billion of Committed and Awarded Projects, or CAP, providing visibility across its core public infrastructure business and expanding federal and mission-critical operations.

Revenue for the quarter ended September 30, 2026, increased 23% year over year to $1.77 billion. Adjusted EBITDA rose by $67 million to $283 million, while adjusted EBITDA margin expanded 100 basis points to 16.0%. Adjusted net income increased by $49 million to $173 million, and adjusted diluted earnings per share rose by $1.11 to $3.81.

The earnings measures are non-GAAP figures that exclude items including stock-based compensation, certain convertible-debt effects, acquired intangible asset amortization and acquisition-related costs.

Construction growth and project execution

Construction revenue increased 27% to $1.47 billion, with organic growth contributing 21 percentage points of the increase. Granite said the segment delivered record quarterly revenue and gross profit, while its margin improved by 210 basis points from the prior-year period because of a stronger project portfolio and disciplined execution.

Construction CAP increased by $37 million sequentially to a company record of $7.5 billion, up $1.1 billion year over year. Bid-build work represented $3.75 billion, or 50%, of the total, while collaborative contracting accounted for $2.96 billion, or 40%. Tactical infrastructure contributed $569 million, with design-build and other work making up the remainder.

Federal CAP reached $1.3 billion. That amount included the $569 million of tactical infrastructure projects, which Granite expects to work through the second quarter of 2028. Mission-critical CAP, covering projects associated with artificial-intelligence infrastructure and space development, rose to $331 million.

The company said bidding remained robust across federal, state, local and private markets, with opportunities and contract wins exceeding the prior-year level. Its growth strategy continues to center on established home markets while expanding capabilities in federal, rail and mission-critical infrastructure.

Materials pricing offsets energy pressure

Materials revenue increased by $21 million to $292 million. Granite described demand across its regions and end markets as healthy and said surcharges, hedging and price increases largely offset higher fuel costs.

Aggregate sales volume rose 9.9% year over year to 8.55 million tons, while the average selling price excluding barge-delivery revenue increased 4.8% to $19.29 per ton. Asphalt volume was nearly unchanged at 3.22 million tons, but its average selling price increased 7.5% to $90.66 per ton.

For the first nine months of 2026, aggregate volume increased 22.2% and asphalt volume rose 9.1%. Granite expects pricing momentum in its materials business to continue into 2027, supported by mid-single-digit aggregate price increases.

The company is directing materials investment toward expanding aggregate sales in Western markets, increasing Pacific Northwest waterborne capacity, developing its Southeast logistics network and improving vertical integration. Granite also aims to automate about 45% of eligible aggregate facilities by the end of 2026, compared with 30% currently automated. Management estimates automation could provide a benefit of approximately $1 per ton through greater efficiency, lower costs and more consistent plant performance.

Cash flow and guidance

Year-to-date operating cash flow increased by $114 million to $404 million. Granite said it remains on track for a 2026 operating cash flow margin of approximately 11%. Cash and marketable securities totaled $525 million, down $91 million year over year.

The company completed the redemption of its remaining 3.75% convertible notes due in 2028, a step intended to reduce potential future dilution. Management said cash generation and balance-sheet capacity support continued investment, acquisitions and other capital-allocation priorities.

Granite now expects 2026 revenue of $5.4 billion to $5.5 billion after raising the lower end of its range. It maintained an adjusted EBITDA margin outlook of 12.25% to 13.25%. Full-year capital expenditures are expected to be approximately $140 million to $160 million, with selling, general and administrative expenses equal to 8.25% to 8.75% of revenue and an adjusted effective tax rate in the mid-20% range.

For 2027, the company targets organic revenue growth of 10% to 12%, an adjusted EBITDA margin of 12.5% to 14.5%, and a free cash flow margin of 6.5% to 8.5%. Its longer-term 2029 targets include a 10% to 12% organic revenue compound annual growth rate, a 14% to 16% adjusted EBITDA margin and free cash flow equal to 10% of revenue.

Those targets depend on continued infrastructure funding, project selection and execution, materials pricing, operating efficiency and the performance of future investments and acquisitions. Granite also noted that higher energy costs remain a pressure on the materials business, even though mitigation measures largely offset their effect during the third quarter. The company cautioned that its funding, growth, acquisition and margin expectations are forward-looking and subject to risks and uncertainties.