Granite Construction (GVA 7.79%), a leading provider of infrastructure solutions across the United States, released its Q2 2025 earnings on August 7, 2025. The company reported adjusted earnings per share of $1.93, decisively beating analyst estimates of $1.51 (non-GAAP), while revenue (GAAP) reached $1.13 billion, slightly missing the $1.16 billion GAAP consensus. The period saw continued improvement in profitability, largely from gains in construction and materials margins, against a backdrop of record order backlog and rising operating expenses. Overall, the quarter was marked by strong execution and strategic progress, though top-line growth lagged behind expectations, as GAAP revenue of $1.13 billion was 2.2% below analyst estimates.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.93 | $1.52 | $1.73 | 12.0 % |
| EPS (GAAP) | $1.42 | $0.76 | 86.8 % | |
| Revenue | $1.13 billion | $1,155.16 million | $1.08 billion | 4.6 % |
| Adjusted EBITDA | $152 million | $130 million | 16.9 % | |
| Gross Profit | $199 million | $165 million | 20.6% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
What Granite Construction Does and Its Key Focus Areas
Granite Construction specializes in large-scale civil construction and materials production, serving both public and private infrastructure projects. The company operates two core businesses: construction, focused on heavy civil and transportation projects like highways and bridges, and materials, which supplies aggregates and asphalt essential to those projects.
Its business relies on securing major contracts from public-sector clients, especially state departments of transportation. Key success factors include maintaining a strong order book, managing project risk, growing its vertically integrated materials segment, and executing efficiently. The company’s recent strategy centers on selective bidding, vertical integration, and acquisitions to expand its footprint and improve margins.
Highlights and Key Developments in the Quarter
The construction segment saw steady revenue but notable margin gains. Segment revenue increased 2.1% year over year, spurred by improved project delivery and favorable claim resolutions. Gross margin in construction reached 16.4%, up from 14.7% (GAAP) the previous year, reflecting the company’s move toward higher-quality projects and improved risk screening. However, growth in legacy construction revenue was flat, and management expects acceleration in the second half of 2025 as recently awarded projects ramp up.
The materials segment delivered solid growth, with revenue up 14.6% and gross profit rising 54.9% (GAAP). This segment, which produces and sells aggregate (crushed stone, sand, gravel) and asphalt (used for road paving), benefited from both higher volumes and increased selling prices. The materials business is central to Granite’s vertical integration strategy, providing better cost control and direct supply to internal and external customers. Margin expansion in materials was supported by recent acquisitions, pricing discipline, and operational improvements, evidenced by cash gross margin (non-GAAP) reaching 31.3%, up from 23.9% in Q2 2024.
Granite reported a record Committed and Awarded Projects (CAP) backlog of $6.1 billion, increasing by $324 million from the prior quarter and $488 million year over year. CAP measures the total value of projects secured but not yet completed, serving as a forward indicator of future revenue. This growth supports the company’s revenue visibility, as it signals a strong pipeline of work. Management points to robust bidding activity and a favorable market for public infrastructure spending as drivers of this expansion.
Mergers and acquisitions continued to play an active role. Granite announced two new acquisitions: Warren Paving, adding high-quality aggregate reserves in the Southeast, and Papich Construction, strengthening its business in California. The acquisitions are expected to contribute about $150 million to FY2025 revenue and are expected to be immediately accretive to adjusted EBITDA margin and cash flows. However, Selling, general, and administrative (SG&A) expenses increased by $16 million to $86 million, primarily due to additional staffing and higher incentive compensation, now equaling 7.6% of revenue, up from 6.5% a year ago. This expense growth is partly linked to higher incentive compensation and additional salaries.
Looking Ahead and Management Guidance
The company raised its full-year 2025 guidance, now projecting revenue of $4.35–$4.55 billion, incorporating $150 million from acquisitions. Adjusted EBITDA margin guidance stands at 11.25–12.25% for 2025. Other targets, such as operating cash flow at 9% of revenue and capital expenditures between $140–$160 million, remain unchanged for 2025. Management did not announce any change in its approach to cost controls, but it maintained a target for SG&A near 9% of revenue for FY2025.
Investors should watch for further updates on project backlog growth, integration of recent acquisitions, and trends in legacy construction segment revenue. Areas of focus include margin retention as operating expenses rise and the pace at which new projects turn into top-line growth.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
