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During the California Gold Rush of the 1850s, there were two broad paths to riches: go looking for gold and strike it rich, or take the pick-and-shovel approach by selling tools and supplies to prospectors.
More than a century and a half later, Granite Construction pursues a blend of the two approaches. The Watsonville, Calif.-based civil contractor and road builder is looking for gold in infrastructure projects, which can provide steady income and backlogs for years to come.
In that regard, Kyle Larkin, CEO and president of Granite, called this “the strongest market I’ve seen in my career,” during a Nov. 6 call discussing company’s third quarter results.
As for picks and shovels, Granite’s materials business is selling the supplies needed to build infrastructure. It provides asphalt and aggregates to other horizontal contractors while also supplying its own projects. The company continues to accumulate more and more volume by taking on smaller suppliers in different regions.
The third quarter of 2025 was no exception. He completed the acquisitions of two aggregate producers for a combined price of $710 million in August.
Then, in October, the company bought Carson City, Nevada-based Cinderlite Truckingwhich operates five aggregate yards, for an undisclosed amount. With this and other screw acquisitions Over the past few years, Granite has increased its total production volume to 25 million tons, up from 16 million tons in 2021, Larkin said on the call.
Granite is not alone in its strategy of growth through acquisition. M&A activity has increased in the sector lately, for builders and consultants, as well as the contech companies that sell them.
Granite’s pick-and-shovel strategy is also helping it hit the dirt beyond pure infrastructure jobs by tapping into the data center construction boom, which also needs roads and parking lots.
For example, Larkin said on the call that the company was experiencing particularly strong demand for aggregates in the Southeast.
“It’s that significant private investment that we knew was already happening in the Southeast, and that’s proving to be the case,” Larkin said. “There’s a lot of demand associated with data center infrastructure improvements and expansion and development, so we’re already looking at ways to meet that demand.”
By the numbers
Granit’s total revenue rose to $1.43 billion, up 12% from $1.28 billion in the third quarter of 2024. Net income was also higher at $102.93 million, up 30% from $78.95 million a year ago.
The portfolio, which the company refers to as Committed and Awarded Projects, or CAP, reached $6.3 billion, a company record. This was an increase of $718 million from a year ago, representing a gain of 12.9%.
Revenue from its materials segment grew 39.1% to $270.99 million, up from $194.81 million a year earlier, according to its earnings release.
Construction revenue came in at $1.16 billion, up 7.6% from $1.08 billion a year ago.
Some projects “move to the right”
While improvements in the materials business were the focus of the call, the risks inherent in large-scale construction projects also came up. Granite lowered the upper end of its revenue guidance for 2025. It now projects a range of $4.35 billion to $4.45 billion, down from its previous range of $4.35 billion to $4.55 billion.
Granite had “some shift work to the right,” Larkin said, meaning the revenue it thought would come in the third quarter was moved to the end of the year. He explained that the delay materialized as some projects took longer than expected in their pre-construction phases.
“It’s always hard to predict the timing of these things,” Larkin said. “Sometimes these pre-construction services can take longer than the typical two years that we’ve talked about. In fact, we’re looking at a couple of contracts today that we’ve had four and five years in pre-construction, so it can take a while to navigate through all of those.”
As some projects struggled to get off the ground, money from the Jobs and Infrastructure Investments Act still promises a long way to go.. Larkin told investors that only half of that money has been used so far.
“We checked with ARTBA, the American Highway Transportation Builders Association, and right now it looks like IIJA’s spending to date is about 50 percent through August,” Larkin said. “So there will be opportunities in the market even beyond its expiration next September.”
