Granite shrugs off tariff impacts, hints at new IIJA

Dive Transient:

• Granite Development paved its strategy to elevated income and backlog within the first quarter of 2025, at the same time as its web loss widened from a yr in the past and tariff worries cropped up on its radar. 
• The Watsonville, California-based contractor, which has a powerful concentrate on roadbuilding and combination manufacturing and gross sales, stated it hasn’t been considerably negatively impacted by the Trump administration’s tariffs to this point. Nevertheless it additionally stated these insurance policies may result in greater prices for its tools outlays within the coming months.
• “We do anticipate there to be some tools price will increase, components will increase, some restore price will increase,” CEO Kyle Larkin advised analysts on a conference call to discuss Q1 results. “So these issues are going to occur and we have been navigating that setting.”

Dive Perception:

Past these added prices, nonetheless, Larkin remained optimistic about federal outlays, even because the Trump administration has halted the disbursement of funds in some areas.

“Regardless of experiences of challenge disruptions on sure federally funded work, the change in administration, we now have not skilled any delays,” Larkin stated. 

That stated, tariffs had been on his thoughts. 

“Concern over tariffs has been a serious supply of uncertainty,” Larkin stated. “Granite, like all corporations, shouldn’t be resistant to the direct and oblique impacts of tariffs. Nevertheless, to this point, they haven’t considerably impacted our outcomes or our technique.”

He stated the agency would proceed to carefully monitor the scenario and work to mitigate damaging impacts the place doable. 

One other IIJA?

Larkin’s upbeat outlook regardless of the uncertainty got here from the massive quantity of labor the corporate continues to see from the $1.2 trillion Infrastructure Funding and Jobs Act of 2021, in addition to the potential of follow-on laws as soon as it lapses. 

Handed and carried out throughout former President Joe Biden’s time period — and thus a possible goal for President Donald Trump — Larkin stated that IIJA cash has continued to movement, with solely a couple of third of funding spent to this point. Attributable to that cadence and the timing of cash attending to state DOTs, he stated {dollars} will maintain coming for tasks below the legislation nicely previous its 2026 sundown. 

“The IIJA continues to supply actually sturdy spending, actually throughout all of our geographies,” Larkin stated. “We imagine there’s nonetheless a number of years of spending below the IIJA.”

He additionally stated there’s doubtlessly extra the place that got here from, with political will in Congress to cross a follow-on invoice after the unique IIJA’s window closes. 

“We additionally imagine that there is bipartisan help and a whole lot of momentum round one other invoice that may come on following the IIJA that may have spending ranges equal to or better than what we see round highways, bridges and roads,” Larkin stated. “We’ll see if we will get that handed, however actually that might be excellent news for our business and excellent news for Granite.”

He added that “we do suppose that with the present administration, there are a whole lot of alternatives for us within the federal area.”

By the numbers

Granite reported a web lack of $33.7 million for the quarter, up from a $31 million loss a yr in the past. Income, nonetheless, elevated about 4% to $699.5 million from $672.3 million throughout the identical interval in 2024. 

The agency’s backlog, which it refers to as dedicated and awarded tasks, or CAP, elevated $241 million yr over yr to $5.74 billion, additionally a 4% achieve. 

These outcomes prodded the corporate to keep up its steerage of $4.2 billion to $4.4 billion of income in 2025.

Larkin additionally stated the agency continued to see wholesome bidding, significantly in California and Texas, and hopes to construct on its backlog in 2025. 

“Coming into 2025, we anticipated a powerful bidding setting with federal and state funding fueling alternatives throughout the general public sector,” Larkin stated. “At this level, the market has met our expectations and we now have received extra work than within the first 4 months of 2024.