Record CAP and Data Center Push Put Granite in a New Growth Class

Q2 revenue up 29% to $1.5B, data center backlog triples, guidance raised—but weather and one-offs cloud margins.

GVA · Earnings Call · 2026-07-30

A Record Backlog Anchors a Raised Outlook

Granite Construction delivered a standout Q2, with revenue up 29% to $1.5B and adjusted EBITDA up 22% to $186M, prompting management to raise full-year revenue guidance to $5.3–5.5B (from $5.2–5.4B) and lift its 2027 organic growth expectation from 6–8% to above 10%. The driver is a record record CAP of $7.4B, up $250M sequentially. As Kyle Larkin noted, “CAP growth continued to be strong, increasing $250 million sequentially to $7.4 billion as project wins outpaced revenue burn in what was a very strong growth quarter.” — Kyle Larkin, President and Chief Executive Officer · 2026-07-30 The backlog now provides "strong visibility" into 2027, a sharp contrast to the IIJA headwind narrative hanging over the sector.

The Data Center Pivot Is Real

The most notable strategic change is the company's deliberate expansion into mission-critical infrastructure. GVA launched a dedicated data center division earlier this year, and its data center CAP has tripled year-over-year. “Last year, at this time, we had CAP of around $65 million within the data center space. Today, it's around $225 million.” — Kyle Larkin, President and Chief Executive Officer · 2026-07-30 This is part of a broader push into federal, rail, and data centers, while remaining anchored in public transportation. The company is also benefiting from the draft BUILD America 250 Act, which emphasizes formula funding over discretionary mega-projects — a better fit for GVA's home-market model. CEO Kyle Larkin framed it as:

Our crews within our home markets can perform work on data centers, the streets, highways, airports, mine sites, refineries. So it gives us a lot of optionalities to be able to be flexible.
Kyle Larkin, President and Chief Executive Officer · 2026-07-30

Weather and One-Offs Create a Margin Pothole

Not everything was smooth. Severe weather in the Southeast cost roughly $10M, and quarry development added another $5M drag. As a result, Materials gross margin fell 800bp YoY. But management insists these are timing issues: "Those tons will shift to the right," Larkin said. The market is healthy, aggregate pricing is tracking mid-single digits, and the company reaffirmed its 2026–2027 margin targets.

Balance Sheet Engineering for Growth

GVA also completed a major capital structure overhaul: inaugural credit ratings from Moody's and S&P, a $600M senior notes offering, and redemption of its 3.75% convertible notes. The non-cash charges ($363M) distorted reported net income, but adjusted EBITDA tells the real story. Staci Woolsey highlighted the raise: “We are increasing our revenue guidance to a range of $5.3 billion to $5.5 billion from a range of $5.2 billion to $5.4 billion.” — Staci Woolsey, Executive Vice President and Chief Financial Officer · 2026-07-30 The company is positioning for more M&A — $200–400M of deals expected this year — and opportunistic buybacks.Revenue growth of 30% YoY in Q1 2026, with a full-year guide implying ~12% organic growth, shows the CAP conversion is starting. Given the record backlog and expansion into data centers, GVA is increasingly a play on AI-driven construction demand, not just traditional infrastructure. Prior quarters show this is building: “We are obviously very excited to have Kenny Sain Construction as part of our business moving forward.” — Kyle T. Larkin, President and Chief Executive Officer · 2026-04-30 And the company has been consistent on its growth trajectory for years: “We've seen that consistent theme now for a few years where we're just bidding more work, procuring more work and the margin associated with that work continues to improve.” — Kyle Larkin, President and Chief Executive Officer · 2025-11-06 Overall, this is a name at a strategic inflection — the market hasn't fully priced in the data center optionality, but the tape shows the stock is already down 23% from its June peak, creating a potential entry for investors who believe in the backlog.