Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 30, 2026 · Beat 4 of last 7 quarters
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Granite's record CAP and rapid growth in data center site development CAP ($223M, up from $65M a year ago) underscore the physical infrastructure buildout driven by AI and digital investment. The company's expansion into rail, federal, and data center end markets positions it to capture a broader share of the AI infrastructure supply chain, particularly in civil site work for hyperscale data centers.
Granite delivered strong Q2 growth: revenue rose 29% to $1.5B, adjusted EBITDA rose to $186M, and adjusted net income rose to $101M. Construction revenue grew 29% to $1.2B, with organic growth of 18% and $98M from acquisitions. Materials revenue grew to $248M, but gross profit margin fell 800 bps due to severe weather in the Southeast and quarry development costs. CAP reached a record $7.4B, including $223M in data center work. The company completed the Kenny Seng acquisition, issued $600M in senior notes, and called its convertible notes, reducing potential dilution.
Management raised 2026 revenue guidance to $5.3B–$5.5B (from $5.2B–$5.4B), reflecting ~12% organic growth and ~10% from acquisitions at the midpoint. They also increased 2027 organic growth expectations from 6%–8% to above 10%, citing record CAP, a strong bid pipeline, and healthy public/private demand. Adjusted EBITDA margin, SG&A, tax rate, and CapEx guidance were unchanged. Management expressed confidence in continued margin expansion in 2026 and 2027, with Materials margins expected to recover in the second half despite weather and quarry development headwinds. They expect to close additional M&A in 2026, with additional transactions expected to close in 2026, and see the BUILD America 250 Act as a positive shift toward formula-based funding that aligns with Granite's footprint.
“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.”
on Record CAP
“Data center-related CAP is increasing from $65 million 1 year ago to $223 million at the end of the second quarter.”
on Data center growth
“We are also increasing our organic revenue growth expectation for 2027 from a range of 6% to 8% to above 10%.”
on 2027 outlook
Thoughts on Materials second half margin recovery, given weather and other factors?
Kyle Larkin noted strong demand and pricing, with mid-single-digit aggregate price increases. Severe weather cost ~$10M in the quarter, but those tons will shift to the right, and they expect to be where they want to be by year-end.
What gives you confidence in raising 2027 organic growth to above 10% without a highway reauthorization in place?
Kyle Larkin pointed to record CAP and high visibility into 2027, combined with a healthy public and private market and strong bid opportunities.
Can you elaborate on data center CAP growth and potential?
Kyle Larkin said CAP grew from $65M to ~$225M year-over-year, with dedicated leadership. They expect it to reach 10% or more of annual revenue relatively quickly.