Granite shrugs off tariff impacts, hints at new IIJA

Dive Temporary:

• Granite Development paved its technique to elevated income and backlog within the first quarter of 2025, whilst its internet loss widened from a 12 months in the past and tariff worries cropped up on its radar. 
• The Watsonville, California-based contractor, which has a powerful concentrate on roadbuilding and mixture manufacturing and gross sales, mentioned it hasn’t been considerably negatively impacted by the Trump administration’s tariffs to this point. But it surely additionally mentioned these insurance policies may result in larger prices for its tools outlays within the coming months.
• “We do anticipate there to be some tools price will increase, elements will increase, some restore price will increase,” CEO Kyle Larkin informed analysts on a conference call to discuss Q1 results. “So these issues are going to occur and we have been navigating that atmosphere.”

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 reviews of undertaking disruptions on sure federally funded work, the change in administration, we now have not skilled any delays,” Larkin mentioned. 

That mentioned, tariffs had been on his thoughts. 

“Concern over tariffs has been a significant supply of uncertainty,” Larkin mentioned. “Granite, like all corporations, is just not proof against the direct and oblique impacts of tariffs. Nevertheless, to this point, they haven’t considerably impacted our outcomes or our technique.”

He mentioned the agency would proceed to carefully monitor the scenario and work to mitigate detrimental impacts the place attainable. 

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 opportunity of follow-on laws as soon as it lapses. 

Handed and applied throughout former President Joe Biden’s time period — and thus a possible goal for President Donald Trump — Larkin mentioned that IIJA cash has continued to move, with solely a few third of funding spent to this point. Resulting from that cadence and the timing of cash attending to state DOTs, he mentioned {dollars} will preserve coming for tasks below the legislation effectively previous its 2026 sundown. 

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

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

“We additionally imagine that there is bipartisan assist and numerous 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 mentioned. “We’ll see if we are able to get that handed, however actually that will be excellent news for our business and excellent news for Granite.”

He added that “we do assume that with the present administration, there are numerous alternatives for us within the federal house.”

By the numbers

Granite reported a internet lack of $33.7 million for the quarter, up from a $31 million loss a 12 months 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 12 months over 12 months 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 mentioned the agency continued to see wholesome bidding, notably in California and Texas, and hopes to construct on its backlog in 2025. 

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