Granite shrugs off tariff impacts, hints at new IIJA

Dive Brief:

• Granite Construction paved its way to increased revenue and backlog in the first quarter of 2025, even as its net loss widened from a year ago and tariff worries cropped up on its radar. 
• The Watsonville, California-based contractor, which has a strong focus on roadbuilding and aggregate production and sales, said it hasn’t been significantly negatively impacted by the Trump administration’s tariffs to date. But it also said those policies could lead to higher costs for its equipment outlays in the coming months.
• “We do expect there to be some equipment cost increases, parts increases, some repair cost increases,” CEO Kyle Larkin told analysts on a conference call to discuss Q1 results. “So those things are going to happen and we’ve been navigating that environment.”

Dive Insight:

Beyond those added costs, however, Larkin remained optimistic about federal outlays, even as the Trump administration has halted the disbursement of funds in some areas.

“Despite reports of project disruptions on certain federally funded work, the change in administration, we have not experienced any delays,” Larkin said. 

That said, tariffs were on his mind. 

“Concern over tariffs has been a major source of uncertainty,” Larkin said. “Granite, like all companies, is not immune to the direct and indirect impacts of tariffs. However, to date, they have not significantly impacted our results or our strategy.”

He said the firm would continue to closely monitor the situation and work to mitigate negative impacts where possible. 

Another IIJA?

Larkin’s upbeat outlook despite the uncertainty came from the large amount of work the company continues to see from the $1.2 trillion Infrastructure Investment and Jobs Act of 2021, as well as the possibility of follow-on legislation once it lapses. 

Passed and implemented during former President Joe Biden’s term — and thus a potential target for President Donald Trump — Larkin said that IIJA money has continued to flow, with only about a third of funding spent to date. Due to that cadence and the timing of money getting to state DOTs, he said dollars will keep coming for projects under the law well past its 2026 sunset. 

“The IIJA continues to provide really strong spending, really across all of our geographies,” Larkin said. “We believe there’s still several years of spending under the IIJA.”

He also said there’s potentially more where that came from, with political will in Congress to pass a follow-on bill after the original IIJA’s window closes. 

“We also believe that there’s bipartisan support and a lot of momentum around another bill that will come on following the IIJA that will have spending levels equal to or greater than what we see around highways, bridges and roads,” Larkin said. “We’ll see if we can get that passed, but certainly that would be good news for our industry and good news for Granite.”

He added that “we do think that with the current administration, there are a lot of opportunities for us in the federal space.”

By the numbers

Granite reported a net loss of $33.7 million for the quarter, up from a $31 million loss a year ago. Revenue, however, increased about 4% to $699.5 million from $672.3 million during the same period in 2024. 

The firm’s backlog, which it refers to as committed and awarded projects, or CAP, increased $241 million year over year to $5.74 billion, also a 4% gain. 

Those results prodded the company to maintain its guidance of $4.2 billion to $4.4 billion of revenue in 2025.

Larkin also said the firm continued to see healthy bidding, particularly in California and Texas, and hopes to build on its backlog in 2025. 

“Coming into 2025, we expected a strong bidding environment with federal and state funding fueling opportunities across the public sector,” Larkin said. “At this point, the market has met our expectations and we have won more work than in the first four months of 2024.