Granite Construction Inc (GVA) 2024 Q2 法說會逐字稿

Good day. My name is Jason, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Incorporated 2024 second quarter conference call. This call is being recorded. (Operator Instructions) It is now my pleasure to turn the floor over to Vice President of Investor Relations, Mike Barker.

再會。我叫傑森，今天我將擔任你們的會議主持人。現在，我歡迎大家參加 Granite Construction Incorporated 2024 年第二季電話會議。此通話正在錄音。（操作員說明）現在我很高興將發言權交給投資者關係副總裁麥克·巴克（Mike Barker）。

Good morning, and thank you for joining us. I'm pleased to be here today with President and Chief Executive Officer, Kyle Larkin and Executive Vice President, and Chief Financial Officer, Lisa Curtis. Please note that today's earnings presentation will be available on the Events and Presentations page of our Investor Relations website.

早安，感謝您加入我們。我很高興今天能與總裁兼執行長凱爾·拉金 (Kyle Larkin) 和執行副總裁兼首席財務官麗莎·柯蒂斯 (Lisa Curtis) 一起出席。請注意，今天的收益演示將在我們投資者關係網站的活動和演示頁面上提供。

We begin today with a brief discussion regarding forward-looking statements and non-GAAP measures. Some of the discussion today may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are estimates reflecting the current expectations and best judgment of senior management regarding future events, occurrences, opportunities, targets, growth, demand, strategic plans, circumstances, activities, performance, shareholder value, outcomes, outlook, guidance, objectives, committed and awarded projects or CAP, and results.

今天我們首先簡要討論前瞻性陳述和非公認會計準則措施。今天的一些討論可能包括 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述。這些前瞻性陳述是反映高階管理層對未來事件、事件、機會、目標、成長、需求、策略規劃、情況、活動、績效、股東價值、成果、前景、指導、目標的當前預期和最佳判斷的估計、承諾和授予的項目或 CAP 以及結果。

Actual results could differ materially from statements made today. Please refer to Granite's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these forward-looking statements. The company assumes no obligation to update forward-looking statements except as required by law. Certain non-GAAP measures may be discussed during today's call and from time to time by the company's executives.

實際結果可能與今天的聲明有重大差異。請參閱 Granite 最近的 10-K 和 10-Q 文件，以了解可能影響這些前瞻性聲明的風險因素的更完整描述。除法律要求外，本公司不承擔更新前瞻性陳述的義務。公司高層可能會在今天的電話會議上不時討論某些非公認會計原則措施。

These include, but are not limited to adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted earnings per share, and materials segment cash gross profit. The required disclosures regarding our non-GAAP measures are included as part of our earnings press releases and in company presentations which are available on our website, graniteconstruction.com under Investor Relations.

這些包括但不限於調整後的 EBITDA、調整後的 EBITDA 利潤率、調整後的淨利潤、調整後的每股收益以及材料部門現金毛利潤。有關我們的非公認會計原則措施的必要披露已包含在我們的收益新聞稿和公司演示文稿中，這些演示文稿可在我們的網站 Graniteconstruction.com 的“投資者關係”下查看。

Now I would like to turn the call over to Kyle Larkin.

現在我想把電話轉給凱爾拉金 (Kyle Larkin)。

Good morning and welcome to our second quarter conference call. Before I discuss our financial results for the quarter, I want to mention an exciting development in our ongoing work to expand our vertically integrated operations. This week, we entered into an agreement to acquire Dickerson & Bowen, a leading regional aggregates, asphalt and highway construction company serving Central and Southern Mississippi.

早上好，歡迎參加我們的第二季電話會議。在討論本季的財務表現之前，我想提一下我們正在進行的擴大垂直整合業務工作中令人興奮的進展。本週，我們簽訂了收購 Dickerson & Bowen 的協議，該公司是一家服務於密西西比州中部和南部的領先區域骨料、瀝青和高速公路建設公司。

Subject to customary closing conditions, we expect the transaction to close in the third quarter. The acquisition is a highly complementary bolt-on to our 2023 acquisition, Lehman-Roberts and Memphis Stone & Gravel, as Dickerson & Bowen is also a materials-focused vertically integrated operation. The acquisition will add three sand and gravel pits and four asphalt plants to our Southeast home market, extending our footprint down the I-55 corridor through Jackson, Mississippi, and to the southern end of the state.

根據慣例成交條件，我們預計交易將於第三季完成。此次收購是對我們 2023 年收購 Lehman-Roberts 和 Memphis Stone & Gravel 的高度補充，因為 Dickerson & Bowen 也是一家以材料為重點的垂直整合業務。此次收購將為我們的東南部國內市場增加三個砂石坑和四個瀝青廠，從而將我們的足跡沿著 I-55 走廊延伸，穿過密西西比州傑克遜，直到該州南端。

This purchase continues our strength-and-expand capital allocation strategy by investing in the types of materials focused, vertically integrated operations that have been our core business for over 100 years. I expect Granite to continue to grow organically and through M&A because we continue the strategy. While we are very selective, we are continually evaluate M&A opportunities within our existing footprint as well as in our new geographies.

此次收購延續了我們的實力和擴張資本配置策略，投資於以材料為中心的垂直整合業務，這些業務在 100 多年來一直是我們的核心業務。我預計 Granite 將繼續透過併購來實現有機成長，因為我們將繼續執行這項策略。儘管我們非常挑剔，但我們仍在不斷評估現有業務範圍內以及新地區的併購機會。

Now let's jump into the quarter. I'm pleased with our strong second quarter. We are executing on our plan. We continue to build CAP. We organically grew revenue and our profitability increased. While we have made notable progress, we remain focused on driving even higher levels of execution on our projects and in our plants, we continue to work to raise the bar on profitability. The construction segment in the second quarter is typically when we see projects in the majority of our markets ramp up for the busy summer construction season. Entering Q2 with high levels of CAP across our markets allowed us to achieve a 22% increase in revenue over the prior year. Most of our businesses across our geographies posted revenue increases year over year. As we transition into the heart of the construction season, I expect this dynamic to continue through the third quarter.

現在讓我們進入本季。我對我們第二季的強勁表現感到滿意。我們正在執行我們的計劃。我們繼續建構 CAP。我們的收入有機成長，獲利能力也有所提升。儘管我們取得了顯著進展，但我們仍然專注於推動專案和工廠更高水準的執行，我們將繼續努力提高獲利能力。第二季度的建築領域通常是我們看到大多數市場的項目在繁忙的夏季建築季節開始增加的時候。進入第二季度，我們各個市場的 CAP 水平都很高，這使我們的收入比上一年增長了 22%。我們在各個地區的大多數業務都實現了收入逐年增長。隨著我們進入施工季節的中心，我預計這種動態將持續到第三季。

In addition to a strong quarter of revenue growth, we also added $77 million in CAP during the quarter to end at $5.6 billion. This is an increase of $139 million from the second quarter of 2023 and $1.4 billion from the second quarter of 2022. Our markets continue to be robust. Through June, the amount that we have bid on projects for both the second quarter and first half 2024 exceeds the amount bid for the same period in 2023.

除了強勁的季度營收成長之外，我們還在本季增加了 7,700 萬美元的 CAP，最終達到 56 億美元。這比 2023 年第二季增加了 1.39 億美元，比 2022 年第二季增加了 14 億美元。我們的市場持續強勁。截至6月份，我們2024年第二季和上半年的專案投標金額都超過了2023年同期的投標金額。

As mentioned previously, we continue to be very selective in the projects that we bid, but the specific focus on new categories. First, we are focused on our home markets with owners, vendors, and subcontractors, along with a robust employee base that we already know well.

如前所述，我們在投標的項目中仍然非常挑剔，但特別關注新類別。首先，我們專注於擁有業主、供應商和分包商的國內市場，以及我們已經熟悉的強大的員工基礎。

Second, we are focused on best-value projects where we can leverage our established relationships and our home markets to deliver larger projects while minimizing risk. And this value projects represent $2.3 billion or 42% of our total CAP at the end of the quarter. This is an increase of $98 million from the second quarter of 2023 and $584 million from the second quarter of 2022.

其次，我們專注於最有價值的項目，我們可以利用我們已建立的關係和國內市場來交付更大的項目，同時最大限度地降低風險。截至本季末，這些價值項目相當於 23 億美元，占我們 CAP 總額的 42%。這比 2023 年第二季增加了 9,800 萬美元，比 2022 年第二季增加了 5.84 億美元。

The collaborative delivery methods utilized in best value projects like construction manager, general contractor or progressive design-build, better position us for success by allowing us to work with our clients early to identify and mitigate risk. Larger best-value projects are often separated into smaller work packages that review to multiple project workshops. This provides more opportunities to identify, assess, and address risks to large bid build projects. You have a history of successful best-value projects and generally find that these projects are constructing more efficiently and with significantly fewer claims compared to other contracting methods.

在施工經理、總承包商或漸進式設計建造等最佳價值項目中使用的協作交付方法，使我們能夠儘早與客戶合作，識別和降低風險，從而更好地為我們的成功做好準備。較大的最佳價值項目通常分為較小的工作包，並由多個專案研討會進行審查。這為識別、評估和解決大型投標建設專案的風險提供了更多機會。您擁有成功的最佳價值項目的歷史，通常會發現與其他承包方法相比，這些項目的建設效率更高，而且索賠明顯更少。

Our construction segment is growing, and I believe that in this market we are in a strong position to win, work, and drive growth for the remainder of 2024 and into 2025.

我們的建築領域正在成長，我相信在這個市場上，我們處於有利地位，能夠在 2024 年剩餘時間和 2025 年贏得勝利、努力並推動成長。

Moving to the materials segment. During the second quarter and through July, we continued to execute on the organizational changes announced last quarter. With the changes we centralized management functions such as sales and quality control, allowing for more consistency, both in pricing decisions and efforts to drive higher levels of efficiency and automation across our plants.

轉向材料領域。從第二季到七月，我們繼續執行上季宣布的組織變革。透過這些變化，我們集中了銷售和品質控制等管理職能，從而在定價決策和提高整個工廠的效率和自動化水平方面實現了更高的一致性。

Our teams across the business are executing. We are already seeing increased profitability. The exciting news is that we are just getting started. We have also continued our strategic investments in materials business that I'm led by the materials focused agreement to acquire Dickerson & Bowen in Mississippi.

我們整個業務的團隊正在執行。我們已經看到獲利能力的提高。令人興奮的消息是我們才剛開始。我們也繼續對材料業務進行策略性投資，以材料為重點的協議收購了密西西比州的 Dickerson & Bowen。

Growing our materials segment through vertical integration, both in new and existing markets is central to our strategy. Also in Q2, we announced a new lease that we entered into in southwest Washington that will serve as an asphalt plant site that will also allow us riverfront access to barge aggregates into the site via the Columbia River.

透過在新市場和現有市場的垂直整合來發展我們的材料部門是我們策略的核心。同樣在第二季度，我們宣布了在華盛頓西南部簽訂的一項新租約，該租約將作為瀝青廠場地，也將使我們能夠通過河濱通過哥倫比亞河將駁船骨料運入該場地。

In Salt Lake City, we placed a new aggregate plant into production to support the booming market there. We will continue to invest in our materials business, both organically and through M&A, driving further margin expansion. As previously discussed, a focus of our materials segment has been price increases in both aggregates and asphalt. In the first half of 2024, we are realizing our targeted price increases of 10% in aggregates and 5% in asphalt on average across the segments.

在鹽湖城，我們將一座新的骨材工廠投入生產，以支持那裡蓬勃發展的市場。我們將繼續透過有機方式和併購方式投資於我們的材料業務，推動利潤率進一步擴大。如前所述，我們材料部門的重點是骨材和瀝青的價格上漲。2024 年上半年，我們實現了骨材價格平均上漲 10%、瀝青價格平均上漲 5% 的目標。

We are also seeing the effects of these price increases and the impact of acquisitions in our second quarter results with profit margin decreasing 180 basis points year over year. Materials segment cash gross profit margin, which excludes materials segment depreciation and amortization from gross profit of $10 million, $6 million in the second quarter of 2024 in 2023, respectively increased to 24% and 20%. We are executing on our strategy and it is driving results.

我們也看到了價格上漲和收購對第二季業績的影響，利潤率較去年同期下降了 180 個基點。材料部門現金毛利率（不含材料部門折舊及攤提）2024年第二季毛利為1,000萬美元，2023年為600萬美元，分別增加至24%及20%。我們正在執行我們的策略，它正在推動結果。

Now I'll turn it over to Lisa to discuss our financial performance for the quarter.

現在我將把它交給麗莎討論我們本季的財務表現。

Thank you, Kyle. In the second quarter of 2024, our strong performance continued from the first quarter. Revenue increased $184 million or 20%. Gross profit increased $62 million or 60%. Adjusted net income improved $30 million. Adjusted EBITDA improved $48 million and for the first half of 2024, operating cash flow improved $141 million. In the construction segment, revenue increased $169 million or 22% year over year to $918 million, primarily driven by higher levels of CAP.

謝謝你，凱爾。2024年第二季度，我們延續了第一季的強勁表現。營收增加 1.84 億美元，即 20%。毛利增加了 6,200 萬美元，即 60%。調整後淨利潤增加了 3000 萬美元。調整後 EBITDA 增加了 4,800 萬美元，2024 年上半年營運現金流增加了 1.41 億美元。在建築領域，營收年增 1.69 億美元，達到 9.18 億美元，增幅為 22%，主要是由於 CAP 水準提高所致。

Increase also includes approximately $30 million of incremental revenue from acquisitions. Multiple markets across the company entered the quarter with higher levels of CAP and our teams quickly ramped up work on projects. Increases in revenue were led by California, Nevada, and Alaska. Construction segment gross profit improved $56 million for the segment gross profit margin of 15%. The increase in gross profit margin was largely driven by the transition to our higher quality project portfolio, which has been bolstered by our focus on project execution.

成長還包括約 3000 萬美元的收購增量收入。當公司多個市場進入本季時，CAP 水準較高，我們的團隊迅速加大了專案工作力度。收入成長主要由加州、內華達州和阿拉斯加州帶動。建築部門毛利提高了 5,600 萬美元，毛利率提高了 15%。毛利率的成長主要是由於我們向更高品質的專案組合的過渡，而我們對專案執行的關注也增強了這一點。

In the materials segment, revenue increased $15 million year over year to $165 million, with gross profit at $5 million to $29 million. The increase in materials revenue was primarily due to acquired businesses as well as increased sales prices offsetting lower volumes. The increase in gross profit was led by increased margins resulting from higher sales prices in both aggregates and asphalt.

在材料領域，營收年增1,500萬美元，達到1.65億美元，毛利為500萬美元至2,900萬美元。材料收入的成長主要是由於收購的業務以及銷售價格的上漲抵消了銷售量的下降。毛利的成長是由於骨材和瀝青銷售價格上漲導致利潤率增加。

Cash gross profit margins during the quarter increased from 20% in 2023 to 24% in 2024. Our investments and focus on the materials segment are paying off, and we expect to see further gains in the future.

本季現金毛利率從 2023 年的 20% 增至 2024 年的 24%。我們對材料領域的投資和關注正在取得回報，我們預計未來將看到進一步的收益。

Turning to cash, our operating cash flows significantly improved compared to the first half of 2023, with operating cash flow of $22 million for a $141 million improvement year over year. Historically, the second quarter is seasonally our lowest cash period of the year as many projects are ramping up for the summer construction season. We saw this dynamic again in the quarter, but we continued making important strides in this area. Cash generation is a key focus at all levels of Granite.

說到現金，我們的營運現金流與 2023 年上半年相比顯著改善，營運現金流為 2,200 萬美元，年增 1.41 億美元。從歷史上看，第二季度是我們一年中現金最低的時期，因為許多項目正在夏季施工季節增加。我們在本季度再次看到了這種動態，但我們繼續在這一領域取得重要進展。現金產生是 Granite 各個層面的重點。

But our performance in the first half of the year, I believe we remain on track to meet our operating cash flow target of 7% of revenue for 2024. During the quarter, total debt increased to $186 million with the issuance of our three and a quarter, 2030 convertible notes. We executed the convertible note transaction action during the quarter in order to take advantage of the positive convertible bond market and attractive interest rates.

但從我們上半年的表現來看，我相信我們仍有望實現 2024 年營運現金流佔 7% 收入的目標。本季度，隨著我們發行 2030 年三又四分之一可轉換票據，總債務增加至 1.86 億美元。我們在本季執行了可轉換票據交易行動，以利用積極的可轉換債券市場和有吸引力的利率。

Following the transaction, we no longer have any borrowings on our credit facility with revolver availability of $333 million. As Kyle mentioned earlier, we are excited to announce the agreement to acquire Dickerson & Bowen. We plan to fund the transaction using our cash on hand. With our cash generation, strong balance sheet, and secured borrowing capacity, we can be flexible and execute on further M&A opportunities in the future.

交易完成後，我們的信用額度中不再有任何借款，可用循環資金為 3.33 億美元。正如 Kyle 之前提到的，我們很高興宣布達成收購 Dickerson & Bowen 的協議。我們計劃使用手頭現金為交易提供資金。憑藉我們的現金產生能力、強大的資產負債表和有保障的借貸能力，我們可以靈活地執行未來的進一步併購機會。

Now I'll briefly touch on an update to our guidance for 2024. With the strong performance of our teams across the company through the first half of the year, we are narrowing the revenue guidance range to the upper half of the previously communicated range. Our revised revenue range for 2024 is now $3.9 billion to $4 billion. With our CAP entering the busy second half of the year, I expect further organic revenue growth, both in the remainder of 2024 and in 2025. There are no changes to our remaining guidance, including our adjusted EBITDA margin guidance range of 9.5% to 11.5%. We believe we are on track to meet that range with what are usually our busiest months ahead.

現在我將簡要介紹 2024 年指南的更新。鑑於我們整個公司的團隊在今年上半年的強勁表現，我們將收入指導範圍縮小到先前溝通的範圍的上半部分。我們修訂後的 2024 年收入範圍目前為 39 億美元至 40 億美元。隨著我們的 CAP 進入繁忙的下半年，我預計在 2024 年剩餘時間和 2025 年，有機收入將進一步增長。我們的其餘指引沒有變化，包括調整後的 EBITDA 利潤率指引範圍為 9.5% 至 11.5%。我們相信，我們有望在未來最繁忙的幾個月中達到這一目標。

Before I turn it back over to Kyle, since this is my last earnings call, I would like to thank our teams across the company as well as all of Granite's external stakeholders.

在我將其轉回凱爾之前，由於這是我最後一次財報電話會議，我要感謝我們整個公司的團隊以及 Granite 的所有外部利益相關者。

Granite is a special organization, and I have been honored to be a CFO for the last several years. Compared to where we were only three years ago, Granite is a transformed company. I couldn't be more proud and excited for where Granite is headed. I have worked with my successor, Staci Woolsey very closely for years. She is ready for the role and we will have a seamless transition.

Granite 是一個特別的組織，過去幾年我很榮幸能擔任財務長。與三年前相比，Granite 已經是一家轉型公司。對於 Granite 的發展方向，我感到非常自豪和興奮。多年來，我一直與我的繼任者 Staci Woolsey 密切合作。她已經準備好擔任這個角色，我們將實現無縫過渡。

And now I'll turn it back over to Kyle for closing remarks.

現在我將把它轉回給凱爾做總結發言。

Thanks, Lisa. I can say on behalf of the Board and all Granite team members that we thank you for everything you've done to lead Granite. We'll miss you and wish you all the best in retirement. I'll close with the following points. As expected, we experienced strong revenue growth in the second quarter, largely as a result of the high level of CAP we carried into the quarter. We expect our revenue growth to continue and updated our 2024 guidance to a range of $3.9 billion to $4 billion.

謝謝，麗莎。我可以代表董事會和所有 Granite 團隊成員對您為領導 Granite 所做的一切表示感謝。我們會想念您並祝您退休後一切順利。我將以以下幾點作為結束語。正如預期的那樣，我們在第二季度實現了強勁的收入成長，這主要是由於我們進入本季的高水準 CAP。我們預計我們的收入將繼續成長，並將 2024 年指引更新為 39 億美元至 40 億美元。

Our CAP of $5.6 billion is a testament to the continued strong public and private market environment, supported by the IIJA healthy state budgets across our geographies and our experienced teams winning work in our home markets. I believe there are opportunities available in the coming months for us to continue to build CAP in the remainder of 2024 and 2025. Our adjusted EBITDA margin guidance for 2024 is unchanged for this quarter. We are executing in both the construction and materials segments, and I believe we are on track to meet our guidance.

我們 56 億美元的 CAP 證明了持續強勁的公共和私人市場環境，這得到了 IIJA 各地區健康的國家預算以及我們經驗豐富的團隊在國內市場贏得工作的支持。我相信，未來幾個月我們有機會在 2024 年剩餘時間和 2025 年繼續建立 CAP。本季我們調整後的 2024 年 EBITDA 利潤率指引保持不變。我們正在建築和材料領域執行任務，我相信我們有望達到我們的指導方針。

With our de-risked portfolio, we are seeing improvement in our ability to generate cash. We are well ahead of the prior year and operating cash flow, and I expect to reach our target of operating cash flow of 7% of revenue for 2024.

透過我們的去創投組合，我們看到我們創造現金的能力有所提升。我們的營運現金流遠遠領先去年，我預計到 2024 年將實現營運現金流佔 7% 收入的目標。

Finally, I'm very excited to be able to welcome the team members from Dickerson & Bowen to Granite soon. This is another important materials focused acquisition for Granite to further expand our reach in the southeastern market. We're continually assessing further opportunities to strengthen and expand our footprint. Our strategy is working, and I believe our M&A will drop by increased cash flows and shareholder value.

最後，我非常高興很快就能歡迎 Dickerson & Bowen 的團隊成員來到 Granite。這是 Granite 的另一項以材料為重點的重要收購，旨在進一步擴大我們在東南市場的影響力。我們正在不斷評估進一步加強和擴大我們足跡的機會。我們的策略正在發揮作用，我相信我們的併購將會隨著現金流和股東價值的增加而下降。

Operator, I'll now turn it back to you for questions.

接線員，我現在將其轉回給您詢問問題。

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Brent Thielman, D.A. Davidson.

謝謝。我們現在開始問答環節。（操作員說明）Brent Thielman，D.A.戴維森。

Hey, thanks. Lisa. Obviously, huge difference in where Granite is today versus when you came into the role. So fantastic job and congrats.

嘿，謝謝。麗莎。顯然，Granite 現在的處境與你剛入職時的處境有巨大差異。太棒了，恭喜你。

Thank you, Brent.

謝謝你，布倫特。

First question would just be on outlook. It's looks like Granite's really moved past this ORP portfolio overhang. It seems like you're seeing better leverage of the new work you've added in recent years.

第一個問題只是關於前景。看起來 Granite 確實已經擺脫了 ORP 產品組合的困境。您似乎看到了近年來添加的新工作得到了更好的利用。

Kyle, maybe just your assessment of the progress in that part of the portfolio in terms of margins. And I guess, just on the overall bid margin environment as you see it today for the construction segment, is it advantageous? Is it more advantageous if you could just talk around that?

凱爾，也許只是您對這部分投資組合的利潤率進展的評估。我想，就您今天所看到的建築領域的整體投標保證金環境而言，它是否有利？如果你能直接討論這個問題是不是比較有利？

Yes. Thanks, Brent, and thanks certainly for recognizing Lisa, as well. So as she mentioned in her remarks, we are a transformed company. And so we're in a much better position today than we were last year and certainly two or three years ago. And so what I think the performance you're seeing today really reflects that.

是的。謝謝布倫特，當然也謝謝您認識麗莎。正如她在演講中提到的，我們是一家轉型後的公司。因此，我們今天的處境比去年、尤其是兩三年前好得多。所以我認為你們今天看到的表現確實反映了這一點。

As we look at the CAP we have in our portfolio have certainly derisked. It's of higher quality. We've been able to fully replace the risky type of projects you are pursuing years ago. And that's really allowing us to drive higher profitability and consistent profitability as a company. I would say that the bid environment remains extremely strong, and we have a healthy pipeline of bid opportunities in front of us.

當我們審視我們投資組合中的 CAP 時，我們肯定已經消除了風險。它的品質更高。我們已經能夠完全取代您幾年前所追求的高風險專案類型。這確實使我們能夠提高公司的盈利能力並保持穩定的盈利能力。我想說的是，競標環境仍然非常強勁，我們面前有大量的競標機會。

We bid more work, as you mentioned, already this year than we did last year, and we were able to raise our margins as well. And we will do that pretty consistently now since about 2021. So that's certainly helping improve the CAP and giving us what we believe to be the highest quality CAP we've had in history of the company. So we continue to work through newer CAP.

正如您所提到的，今年我們投標的工作量已經比去年多了，而且我們也能夠提高利潤。自 2021 年左右以來，我們將始終如一地這樣做。因此，這無疑有助於改進 CAP，並為我們提供了我們認為是公司歷史上最高品質的 CAP。因此，我們繼續透過新的 CAP 開展工作。

And of course, that's higher-quality CAP. And we think that's going to help drive improved margin progression for this year and into 2025 and beyond.

當然，這是更高品質的 CAP。我們認為這將有助於推動今年以及 2025 年及以後的利潤成長。

Okay. And then I guess just start this call, it sounds like Dickerson & Bowen acquisition isn't quite complete and presumably may not be in the guidance. Maybe it is, but I mean, any kind of financial details, things we can chew on just around that acquisition and what it could contribute? I guess I didn't see anything here in that release in this presentation that I could find.

好的。然後我想就開始這個電話會議吧，聽起來 Dickerson & Bowen 的收購還沒有完全完成，大概可能不在指導中。也許是，但我的意思是，任何類型的財務細節，我們可以圍繞這次收購進行思考的事情以及它可以做出什麼貢獻？我想我在簡報中沒有看到任何我能找到的內容。

Yeah. Brent let me add a little bit. I mean, first off, we're really excited about Dickerson & Bowen and having that business part of our Granite team. And it's really just executing on that platform strategy that started last year with Lehman-Roberts and Memphis Stone & Gravel. And so out of that business, Dickerson & Bowen's annual revenue is around $80 million to $100 million. And to your point, that is not in our guidance that we narrow the range on.

是的。布倫特讓我補充一點。我的意思是，首先，我們對 Dickerson & Bowen 以及該業務成為我們 Granite 團隊的一部分感到非常興奮。它實際上只是在執行去年與 Lehman-Roberts 和 Memphis Stone & Gravel 啟動的平台策略。因此，Dickerson & Bowen 在該業務中的年收入約為 8,000 萬至 1 億美元。就您的觀點而言，我們的指導中並沒有縮小範圍。

So we expect that to close in the quarter, now being Q3 and depending on the timing of that, it could add around $30 million to the range. And so we'll take a look at the timing. We'll look at our progression in Q3 and if we had the opportunity to raise the high end of our range after Q3, then we'll take a look at doing that.

因此，我們預計該交易將在本季度完成，現在是第三季度，根據具體時間，該範圍可能會增加約 3,000 萬美元。所以我們會看看時間安排。我們將看看第三季的進展，如果我們有機會在第三季之後提高我們範圍的高端，那麼我們將考慮這樣做。

Got it. Okay. I'll pass it along. Thank you.

知道了。好的。我會把它傳遞下去。謝謝。

Thank you, Brent.

謝謝你，布倫特。

Thank you.

謝謝。

Steven Ramsey, Thompson Research Group.

史蒂文·拉姆齊，湯普森研究小組。

Good morning, and want to echo the best wishes to you, Lisa, on the next chapter. And let me just start with you on Western markets, clearly still a big focus for you channel checks that we've done in large rental company publicly traded called out the West. The demand there had slowed a little bit, not in a dramatic way, but it slowed a little bit in trying to connect the dots to your results with lower material volumes, but CAP still growing. Curious your assessment of Western markets demand, how it's shaping up year to date and looking forward?

早安，麗莎，我想在下一章向你致以最美好的祝愿。讓我從西方市場開始，顯然仍然是你們的一個重點，我們在大型租賃公司公開交易中所做的通路檢查稱為西方市場。那裡的需求已經放緩了一點，但不是以一種戲劇性的方式放緩，但在嘗試用較低的材料量將這些點與結果聯繫起來時，需求放緩了一點，但 CAP 仍在增長。想知道您對西方市場需求的評估、今年迄今為止的情況以及未來的展望嗎？

Yes. I mean, I think the bottom line is we see demand remain very strong. And I think you can see that certainly in our GAAP results. I don't know how to reconcile perhaps what you're seeing from the rental companies. It could be more on the private side, certainly maybe tied to residential, which is not a market that we're really correlated with certainly on the construction side. So yeah, we still see it being really strong. As I mentioned, we're bidding more work today through the first half of the year than we did last year. And it's not because our teams are casting a wider net.

是的。我的意思是，我認為最重要的是我們看到需求仍然非常強烈。我認為您可以在我們的 GAAP 業績中看到這一點。我不知道如何協調您從租賃公司看到的情況。它可能更多地在私人方面，當然可能與住宅有關，這不是我們在建築方面真正與之相關的市場。所以是的，我們仍然看到它非常強大。正如我所提到的，今年上半年我們招標的工作比去年更多。這並不是因為我們的團隊正在撒更大的網。

We were still staying very disciplined, focused. We're still taking advantage of our home market strategy. So yeah, we're not necessarily seeing that. I know some questions have always seem to come up around California, specifically. And certainly our California market continues to be strong as well over the last three budget cycles. Now we've seen the Caltrans budget for local assistance and capital outlay projects on the increase.

我們仍然保持非常自律、專注。我們仍在利用我們的國內市場策略。所以是的，我們不一定會看到這一點。我知道在加州似乎總是會出現一些問題。當然，我們的加州市場在過去三個預算週期中也持續保持強勁。現在我們看到加州交通局用於地方援助和資本支出項目的預算正在增加。

So that budget continues to increase certainly in the budget cycle that we're into now. So that's really encouraging for us. If you look at it, when it gets interesting for last year's, they actually allocated more funds than what they originally budgeted, which are projects we're actually pursuing today.

因此，在我們現在進入的預算週期中，預算肯定會繼續增加。這對我們來說確實令人鼓舞。如果你看一下，當去年的情況變得有趣時，他們實際上分配的資金比最初的預算更多，而這正是我們今天實際上正在追求的項目。

So if you look at it just simply year over year, it could show a little bit of a slow, but that's actually a little misleading. Year over year, the budgets have only increased.

因此，如果你只是簡單地逐年查看它，它可能會顯示出一點點緩慢，但這實際上有點誤導。年復一年，預算只增不減。

Okay. That's great. And then thinking about the materials segment, the lower volume and better pricing, can you talk if that dynamic was in both the West and Southeast operations? And do you think the second half has the same drivers or do volumes and pricing both becomes positive?

好的。那太棒了。然後考慮材料領域，較低的產量和更好的定價，你能談談這種動態是否在西部和東南部業務中都有嗎？您認為下半年是否有相同的驅動因素，或者銷售和定價是否都變得積極？

Obviously, it's across the board. I would say that certainly what we're seeing on the pricing side of things. We came out this year and we were looking to have price increases of 10% on aggregates and 5% on asphalt. And we've been able to get that done. And we of course, we still see some opportunities in certain markets to raise prices still this year and we'll obviously continue to do that.

顯然，這是全面的。我想說這當然是我們在定價方面所看到的。我們今年推出，希望骨材價格上漲 10%，瀝青價格上漲 5%。我們已經能夠做到這一點。當然，我們今年仍然在某些市場上看到了一些漲價的機會，我們顯然會繼續這樣做。

But from a volume perspective, we expected our aggregates business to be relatively flat this year relative to last year and last year was a healthy year from a volume perspective. We do believe that that's going to be flat, if not maybe a little bit down overall and this is kind of across the board.

但從銷售角度來看，我們預期今年的骨材業務與去年相比將相對持平，從銷售角度來看，去年是健康的一年。我們確實相信，這將是持平的，如果不是整體上可能會有所下降，而且這是全面的。

On the asphalt side, we expected it to be a little bit up and mostly out in the West. We've thought our California market would have higher volumes on the asphalt, and we still believe that to be the case along the way this year. So I guess, bottom line is it's really across-the-board, actually flat, maybe a little bit down.

在瀝青方面，我們預計價格會略有上漲，並且大部分在西部地區。我們認為加州市場的瀝青銷量將會更高，而且我們仍然相信今年的情況會如此。所以我想，底線是它真的是全面的，實際上是平坦的，也許有點下降。

Asphalt should be flat, if anything, a little bit up.

瀝青應該是平的，如果有的話，稍微高一點。

Excellent. And then one last quick one for me. You're tightening the full year sales range to a pretty narrow $100 million or so yet the margin profile being at a pretty wide range. Can you talk to the dynamic there of why you're keeping it wide? Maybe how much is just Q4 weather swinging things or any other key impacts to that margin rate?

出色的。然後是我的最後一個快速的。您將全年銷售額範圍縮小到 1 億美元左右，但利潤率卻處於相當大的範圍內。您能談談為什麼要保持廣泛的動態嗎？也許第四季的天氣波動或任何其他對利潤率的關鍵影響有多大？

Yes, I would say that we certainly if you look at the revenue growth in Q2, and kind of the progression through the first half of the year, we do have a lot of confidence that we'll be in the higher end of the previously disclosed range. So that's why we narrow that up. Again, it doesn't include Dickerson & Bowen. And so depending on the timing of that deal and our momentum in our business, we'll take another look at the top end of our range in Q3. I would say from a margin perspective, we feel good. We think that the range still is a good reflection of where we're headed directionally for the year.

是的，我想說，如果你看看第二季的收入成長以及今年上半年的進展，我們確實有很大信心，我們將處於之前的較高水平披露的範圍。這就是我們縮小範圍的原因。同樣，它不包括 Dickerson & Bowen。因此，根據該交易的時間和我們業務的勢頭，我們將在第三季再次審視我們範圍的高端。我想說，從利潤率的角度來看，我們感覺很好。我們認為該範圍仍然很好地反映了我們今年的發展方向。

I would say that weather is definitely the number one factor that could impact things one way or the other as it always does. And Q4, we expect to have some weather. It just comes down to whether it's going to be abnormally wet or abnormally dry or pretty much what we expect. So more to come in Q4. I would say execution is really the other piece that we have to consider. So we have opportunities on our projects and we also have risks. So I think the good news for us because we're not the same company that we used to be. So although we do have execution risk in our business, it's not the risk that we have kind of seen, maybe one, two or three years ago.

我想說，天氣絕對是影響事物的第一因素，一如既往。第四季度，我們預計會有一些天氣。這只是取決於天氣是否會異常潮濕或異常乾燥或幾乎與我們預期的一樣。第四季還會有更多內容。我想說執行確實是我們必須考慮的另一部分。所以我們的專案有機會，也有風險。所以我認為這對我們來說是個好消息，因為我們已經不再是以前的同一家公司了。因此，儘管我們的業務確實存在執行風險，但這並不是我們在一、兩年或三年前看到的風險。

That's excellent. Thank you.

那太好了。謝謝。

Thank you.

謝謝。

Michael Dudas, Vertical Research Partners.

麥可‧杜達斯 (Michael Dudas)，垂直研究合作夥伴。

Good morning, everybody. And well done, Lisa.

大家早安。幹得好，麗莎。

Good morning. Thank you.

早安.謝謝。

Two questions. One, Kyle, maybe some thoughts on, you talked about driving your business, the home markets and your mix of business on the best value. Could you maybe look for the next several quarters, what whole markets better than others? And how much more of a mix do you anticipate working through on the best value projects?

兩個問題。第一，凱爾，也許有一些想法，您談到如何推動您的業務、國內市場和業務組合實現最佳價值。您能否看看接下來的幾個季度，哪些整個市場比其他市場更好？您預計在最有價值的項目上還要進行多少組合？

So unfortunately, all of our home markets are performing very well. So I think that we were comfortable with certainly the home markets than we have maybe in terms of just legacy home markets. I think our teams have certainly embraced the concept for those that maybe weren't home-market based that's historically large project-based. We continue to see that transformation, I would say, particularly in Texas. So our office in Dallas, Fort Worth, as well as Houston. We're seeing the benefits of that shift and that's paying off for us. When it comes to the balance of the work around best value. We've been pretty consistent now with best value being just under 50% of our CAP.

不幸的是，我們所有的國內市場都表現良好。因此，我認為我們對本土市場的滿意度肯定比對傳統本土市場的滿意度更高。我認為我們的團隊肯定已經接受了那些可能不是基於國內市場而是基於歷史大型專案的概念。我想說，我們繼續看到這種轉變，特別是在德克薩斯州。我們的辦公室位於達拉斯、沃斯堡以及休士頓。我們看到了這種轉變的好處，並且為我們帶來了回報。當談到圍繞最佳價值的工作平衡時。我們現在已經相當穩定，最佳價值略低於 CAP 的 50%。

We'll kind of see where that thing progresses over time, but I think it'll kind of hang in there pretty close to around 50%.

隨著時間的推移，我們會看到事情的進展，但我認為它會保持在接近 50% 左右的水平。

And I think that's a good balance between most of our projects being bid build. And our typical projects that we burn within, say 12 months or so, and your average job size is around $5 million. And we have some more complex projects that we get to talk, broken down into smaller contracts, so we can manage better and manage that risk through best value.

我認為這是我們大多數投標建設項目之間的良好平衡。我們通常會在 12 個月左右的時間內完成項目，平均工作規模約為 500 萬美元。我們有一些更複雜的項目需要討論，這些項目被分解為更小的合同，這樣我們就可以更好地管理並透過最佳價值來管理風險。

So I think what you see today in terms of our CAP and our spread between the two, I think it should be pretty consistent moving forward.

因此，我認為您今天所看到的 CAP 以及兩者之間的差距，我認為向前發展應該是相當一致的。

That's great. Thanks, Kyle.

那太棒了。謝謝，凱爾。

Thank you.

謝謝。

Thank you.

謝謝。

Jerry Revich, Goldman Sachs.

傑瑞·雷維奇，高盛。

Yes, hi. Good morning, everyone. And Lisa, congratulations. Good morning, Kyle. Kind of wondering if you could just update us on your expectations for free cash flow conversion as you folks close out the prior risk projects completely? What should we be looking for in terms of EBITDA to free cash flow this year and the updated guidance? And how does that -- what's the range of outcomes in 2025 as you get more concessions?

是的，嗨。大家早安。還有麗莎，恭喜你。早安，凱爾。有點想知道，當你們完全結束之前的風險項目時，你們是否可以向我們更新你們對自由現金流轉換的期望？就今年的 EBITDA 與自由現金流以及更新後的指導而言，我們應該尋找什麼？當你獲得更多讓步時，2025 年的結果範圍是什麼？

Yeah, so we've been communicating that we're targeting 7% operating cash flow for the year. And clearly, you saw our cash results in the quarter. We're progressing quite nicely in terms of really generating higher operating cash flow as a company. So I think that we still feel very confident around that 7%.

是的，我們一直在溝通，今年的營運現金流目標是 7%。顯然，您看到了我們本季的現金業績。作為一家公司，我們在真正產生更高的營運現金流方面取得了相當大的進展。所以我認為我們對這 7% 仍然非常有信心。

And the team has done a really nice job of taking care of the fundamentals and the operations. I think our business model is also shifting away from these claims and the reclaim positions on projects, which is going to help drive continued results. And our CapEx is just over 3% of revenue.

該團隊在基礎知識和營運方面做得非常出色。我認為我們的商業模式也正在擺脫這些主張和專案的回收立場，這將有助於推動持續的成果。我們的資本支出僅佔收入的 3% 多一點。

So you look at it from a 3% and of around 4%. And so it's around 40% conversion to our EBITDA margin, if that helps. And so I think as we look forward, I think there's still an opportunity for us to improve.

所以你從 3% 到 4% 左右來看。因此，如果有幫助的話，我們的 EBITDA 利潤率大約有 40% 的轉換率。所以我認為，當我們展望未來時，我認為我們仍然有機會改進。

Certainly as we continue down with our new business model, we think we can get to a range higher than the 7%. And I think I know a lot of questions are out there around just guidance for 2025 or 2026 and 2027. And so one of the things we're going to come back with in Q3 is, some targets just as we did in Q1 2022 will worsen targets in 2025 and 2026, 2027, that we believe we can deliver on. So we'll come back in Q3 with those we'll include an outlook around operating cash flow.

當然，隨著我們繼續推行新的業務模式，我們認為我們可以達到高於 7% 的範圍。我想我知道圍繞 2025 年、2026 年和 2027 年的指導存在很多問題。因此，我們將在第三季提出的一件事是，正如我們在2022 年第一季所做的那樣，一些目標將使2025 年、2026 年、2027 年的目標變得更糟，但我們相信我們可以實現這些目標。因此，我們將在第三季回來，其中包括對營運現金流的展望。

Got it. As you folks are putting out, bids for contract work in 2025 at this point, can you just talk about what level of construction materials aggregates asphalt price increases you're putting through and areas where you are vertically integrated and what sort of price increases are you pricing in areas where you're sourcing third-party materials for bids that are starting work in 2025?

知道了。正如你們現在正在對 2025 年合約工作進行投標一樣，你們能談談你們正在經歷的建築材料骨料瀝青價格上漲的程度以及你們垂直整合的領域以及什麼樣的價格上漲你們在為2025 年開始工作的投標採購第三方資料的領域進行定價嗎？

Yes. So when it comes to our pricing materials into the bids that we have, we're taking the pricing which we tend to get those fixed on the day. So we'll get quotes from third-party suppliers. And those will be firm quotes for the contracts where they might have escalators built in, but that would be included in the bid. Last year, we did price increases in October. That's when we started for our following year, our price increases and we haven't solidified those yet. So we'll have to come back and we can speak better to those price increases probably in Q3.

是的。因此，當我們將定價材料納入我們的出價時，我們會採用當天固定的定價。因此我們將從第三方供應商那裡獲得報價。這些將是可能內建自動扶梯的合約的確定報價，但這將包含在投標中。去年，我們在十月漲價了。那時我們開始了下一年的價格上漲，但我們還沒有鞏固這些價格。因此，我們必須回來，我們可以更好地討論可能在第三季的價格上漲。

Super. And lastly, the California initial budget for fiscal 2025 is down year over year from obviously really high levels that we've seen in and it takes a while to flow into bids. But I'm wondering what's your view on opportunities for that California fiscal 25 budget to be revised higher over time? Are there discrete initial additional funding mechanisms that are being discussed? Can you step us through that?

極好的。最後，加州 2025 財年的初始預算比我們所看到的明顯高水準逐年下降，並且需要一段時間才能進入投標階段。但我想知道您對加州 25 財年預算隨著時間的推移而上調的機會有何看法？是否有正在討論的離散初始額外融資機制？你能引導我們解決這個問題嗎？

Well, the current budget cycle that we're in is higher than the original budget prepared for the prior budget cycle, which is in 2023, 2024.

嗯，我們目前的預算週期高於為上一個預算週期（即 2023 年、2024 年）準備的原始預算。

So as I mentioned, we've seen consistent budget allocation increases over the last three budget cycles and for what happened in the last budget cycle is the state over allocated. So they went above what was budgeted and forecasted, which is good news for us again because we're starting to see a ramp up in terms of projects and lettings for us to pursue and ultimately build. So it does create the step down, but it's really it's really only because there was a spike in spending in 2023, 2024. So we continue to see really healthy market in terms of what we see in California, and we have really a lot of opportunity in front of us and expect to continue to build our CAP in that state specifically.

正如我所提到的，我們看到過去三個預算週期中預算分配持續增加，而上一個預算週期中發生的情況是分配過度的狀態。因此，它們超出了預算和預測，這對我們來說又是個好消息，因為我們開始看到我們追求並最終建造的項目和租賃量增加。所以它確實造成了下降，但實際上這只是因為 2023 年、2024 年支出激增。因此，就我們在加州看到的情況而言，我們繼續看到非常健康的市場，我們面前確實有很多機會，並期望繼續在該州建立我們的 CAP。

I appreciate it. Thank you.

我很感激。謝謝。

Thank you.

謝謝。

Thank you.

謝謝。

Brent Thielman, D.A. Davidson.

布倫特·蒂爾曼，D.A.戴維森。

Hey, Kyle. Just a follow-up on materials. I mean you're putting some real money to work to expand operation here. Maybe overall, just more of an emphasis on commercial discipline that maybe seen in the past and also looks like some additional emphasis on KPIs like cash gross profit. Obviously some of your peers provide that. Maybe just an update strategically, where do you envision this business becoming over the next few years as we think about kind of the overall thesis for Granite?

嘿，凱爾。只是材料的後續。我的意思是你投入了一些真金白銀來擴大這裡的業務。也許整體而言，只是更強調過去可能看到的商業紀律，而且看起來也額外強調現金毛利等關鍵績效指標。顯然你的一些同行提供了這一點。也許只是策略上的更新，當我們考慮 Granite 的整體論文時，您預計這項業務在未來幾年會發展到什麼程度？

Yes. So if you remember, last quarter, we announced how we reorganized realigned our business up better around construction and materials, and that was -- it was very intentional. We wanted to get our construction experts leading construction, and we wanted our materials expertise to lead materials. So we can do a couple of things. It was going to let them our construction teams, focus on growth and continued operational excellence in the business and really finding ways we can serve national clients who really go across all of our geographies better.

是的。因此，如果您還記得，上個季度，我們宣布瞭如何重組，以便更好地圍繞建築和材料調整我們的業務，那就是——這是非常有意的。我們希望讓我們的建築專家主導建設，我們希望我們的材料專業知識主導材料。所以我們可以做幾件事。這將使他們成為我們的施工團隊，專注於業務的成長和持續卓越的運營，並真正找到我們可以為真正更好地跨越我們所有地區的全國客戶提供服務的方法。

But it was really also going to allow our materials teams to focus on centralizing functions, sales or quality. So we're already seeing the benefits, certainly the price increases. That's one of the primary drivers that's helping drive that cash gross profit improvement that we shared with all of you today. And then there's still opportunities for operational excellence within the materials business and then we continue to make the investments.

但這也確實讓我們的材料團隊能夠專注於集中功能、銷售或品質。所以我們已經看到了好處，當然是價格上漲。這是我們今天與大家分享的幫助推動現金毛利改善的主要驅動因素之一。然後，材料業務中仍然存在卓越的營運機會，然後我們將繼續進行投資。

One thing I do want to point out is we are definitely a vertically-integrated business and we think this is really only enhances the value of our vertically-integrated model in that way. So I think overall, we want to come back again in Q3. I think that's going to help us put some targets out there for again, 2025, 2026, and 2027. But what I can tell you is we expect top and bottom line growth. I think you can expect that. I want to hold off on and really put out there what we think we can do. I will also add that one of the things we're looking to do in 2025 is increasing disclosures around materials.

我確實想指出的一件事是，我們絕對是一家垂直整合的企業，我們認為這實際上只會以這種方式增強我們垂直整合模型的價值。所以我認為總的來說，我們希望在第三季再次回歸。我認為這將有助於我們再次製定 2025 年、2026 年和 2027 年的一些目標。但我可以告訴你的是，我們預計收入和利潤都會成長。我想你可以期待這一點。我想推遲一下，真正把我們認為可以做的事情拿出來。我還要補充一點，我們希望在 2025 年做的事情之一是增加有關材料的披露。

So we do think there's an opportunity for us to share more information around our materials business and really get greater visibility into our financial performance.

因此，我們確實認為我們有機會分享有關材料業務的更多信息，並真正更好地了解我們的財務業績。

Very good. Thank you.

非常好。謝謝。

Thanks, Brent.

謝謝，布倫特。

This concludes our question-and-answer session. I would like to turn the conference back over to Kyle Larkin for any closing remarks.

我們的問答環節到此結束。我想將會議轉回凱爾·拉金 (Kyle Larkin) 發表閉幕詞。

Okay. Well, thank you for joining the call today. As always, we want to thank all of our employees for the work they do every day and for delivering a great second quarter and first half of the year. Thank you for your interest in Granite. We look forward to speaking with you all soon.

好的。好的，感謝您今天加入通話。一如既往，我們要感謝所有員工每天所做的工作，並感謝他們在第二季和上半年取得了出色的成績。感謝您對花崗岩的興趣。我們期待盡快與大家交談。

Conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。