Restatement

9 Months Ended

Sep. 30, 2023

Accounting Changes and Error Corrections [Abstract]

Restatement Background

As disclosed in our Annual Report, we identified errors during the preparation of the Annual Report related to deferred taxes and the calculation of income tax expense of $12.3 million in connection with the sale of Inliner, which was completed in the first quarter of 2022 and was classified in Other costs, net and Provision for income taxes in our condensed consolidated financial statements. As a result, our previously issued unaudited quarterly financial information

for each interim period within the nine months ended September 30, 2022 require restatement. The restated financial information also includes adjustments to correct other immaterial errors in the first three quarters of 2022, including certain errors (primarily in revenue and cost of revenue, as well as the associated tax impact) that had previously been adjusted for as out of period corrections in the periods identified.

Description of Restatement Tables

We have presented below a reconciliation from the previously reported to the restated amounts for the three and nine months ended September 30, 2022. The amounts labeled “As Previously Reported” were derived from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 filed on October 27, 2022.

The impacts to the condensed consolidated statements of shareholders’ equity and comprehensive income (loss) as a result of the restatement were due to the changes in net income for the three and nine months ended September 30, 2022. In addition, there was no impact to net cash provided by (used in) investing and financing activities for the nine months ended September 30, 2022 as a result of the restatement.

The effects of the prior-period errors on our condensed consolidated financial statements are as follows (in thousands, except per share data):


CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended September 30, 2022	As Previously Reported		Restatement Impacts		As Restated
Revenue
Construction	$	848,267	$	(896)	$	847,371
Materials	161,539		—		161,539
Total revenue	1,009,806		(896)		1,008,910
Cost of revenue
Construction	749,938		4,416		754,354
Materials	139,501		—		139,501
Total cost of revenue	889,439		4,416		893,855
Gross profit	120,367		(5,312)		115,055
Selling, general and administrative expenses	61,795		—		61,795
Other costs, net	(490)		—		(490)
Gain on sales of property and equipment, net	(949)		—		(949)
Operating income	60,011		(5,312)		54,699
Other (income) expense
Interest income	(1,894)		—		(1,894)
Interest expense	2,519		—		2,519
Equity in income of affiliates	(3,491)		—		(3,491)
Other expense, net	77		—		77
Total other (income), net	(2,789)		—		(2,789)
Income before income taxes	62,800		(5,312)		57,488
Benefit from income taxes	(6,489)		(1,221)		(7,710)
Net income	69,289		(4,091)		65,198
Amount attributable to non-controlling interests	4,104		—		4,104
Net income attributable to Granite Construction Incorporated	$	73,393	$	(4,091)	$	69,302

Net income per share attributable to common shareholders
Basic earnings per share	$	1.67	$	(0.09)	$	1.58
Diluted earnings per share	$	1.44	$	(0.08)	$	1.36
Weighted average shares outstanding:
Basic	43,973		—		43,973
Diluted	51,863		—		51,863


Nine months ended September 30, 2022	As Previously Reported		Restatement Impacts		As Restated
Revenue
Construction	$	2,141,009	$	(2,151)	$	2,138,858
Materials	373,185		—		373,185
Total revenue	2,514,194		(2,151)		2,512,043
Cost of revenue
Construction	1,903,949		3,161		1,907,110
Materials	332,220		—		332,220
Total cost of revenue	2,236,169		3,161		2,239,330
Gross profit	278,025		(5,312)		272,713
Selling, general and administrative expenses	192,036		—		192,036
Other costs, net	19,445		2,956		22,401
Gain on sales of property and equipment, net	(10,462)		—		(10,462)
Operating income	77,006		(8,268)		68,738
Other (income) expense
Interest income	(3,246)		—		(3,246)
Interest expense	10,003		—		10,003
Equity in income of affiliates	(9,656)		—		(9,656)
Other expense, net	4,646		—		4,646
Total other expense, net	1,747		—		1,747
Income before income taxes	75,259		(8,268)		66,991
Provision for (benefit from) income taxes	(777)		8,087		7,310
Net income	76,036		(16,355)		59,681
Amount attributable to non-controlling interests	1,569		—		1,569
Net income attributable to Granite Construction Incorporated	$	77,605	$	(16,355)	$	61,250

Net income per share attributable to common shareholders
Basic earnings per share	$	1.73	$	(0.36)	$	1.37
Diluted earnings per share	$	1.56	$	(0.31)	$	1.25
Weighted average shares outstanding:
Basic	44,739		—		44,739
Diluted	52,613		—		52,613


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine months ended September 30, 2022	As Previously Reported		Restatement Impacts		As Restated
Operating activities
Net income	$	76,036	$	(16,355)	$	59,681
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, depletion and amortization	61,714		—		61,714
Amortization related to long-term debt	1,901		—		1,901
Gain on sale of business	(6,234)		2,956		(3,278)
Gain on sales of property and equipment, net	(10,462)		—		(10,462)
Deferred income taxes	(17,819)		—		(17,819)
Stock-based compensation	6,151		—		6,151
Equity in net loss from unconsolidated joint ventures	23,585		1,481		25,066
Net income from affiliates	(9,656)		—		(9,656)
Other non-cash adjustments	38		—		38
Changes in assets and liabilities:
Receivables	(94,233)		—		(94,233)
Contract assets, net	(94,933)		3,831		(91,102)
Inventories	(8,795)		—		(8,795)
Contributions to unconsolidated construction joint ventures	(44,667)		—		(44,667)
Distributions from unconsolidated construction joint ventures and affiliates	7,960		—		7,960
Other assets, net	30,589		(2,956)		27,633
Accounts payable	60,973		—		60,973
Accrued expenses and other liabilities, net	3,221		11,043		14,264
Net cash used in operating activities	$	(14,631)	$	—	$	(14,631)