10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 1-12911

GRANITE CONSTRUCTION INCORPORATED

State of Incorporation:	I.R.S. Employer Identification Number:
Delaware	77-0239383

Address of principal executive offices:

585 W. Beach Street

Watsonville, California 95076

(831) 724-1011

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒  Accelerated filer ☐  Non-accelerated filer ☐  Smaller reporting company ☐  Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 6, 2018.

Class	Outstanding
Common Stock, $0.01 par value	45,695,158

Index

PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets as of June 30, 2018, December 31, 2017 and June 31, 2017
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2018 and 2017
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017
		Notes to the Condensed Consolidated Financial Statements
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
	Item 4.	Controls and Procedures
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings
	Item 1A.	Risk Factors
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
	Item 4.	Mine Safety Disclosures
	Item 6.	Exhibits
SIGNATURES
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32
EXHIBIT 95
EXHIBIT 101.INS
EXHIBIT 101.SCH
EXHIBIT 101.CAL
EXHIBIT 101.DEF
EXHIBIT 101.LAB
EXHIBIT 101.PRE

2

PARTI.FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

	June 30, 2018		December 31, 2017		June 30, 2017
ASSETS
Current assets
Cash and cash equivalents ($82,047, $94,359 and $80,195 related to    consolidated construction joint ventures (“CCJVs”))	$	195,515	$	233,711	$	178,068
Short-term marketable securities		20,014		67,775		47,821
Receivables, net ($38,828, $52,031 and $42,099 related to CCJVs)		492,718		479,791		484,245
Contract assets ($24,479, $0 and $0 related to CCJVs)		265,190		—		—
Costs and estimated earnings in excess of billings ($0, $1,437 and    $3,124 related to CCJVs)		—		103,965		99,883
Inventories		96,024		62,497		65,495
Equity in construction joint ventures		252,467		247,826		230,448
Other current assets ($12,421, $10,384 and $7,190 related to CCJVs)		49,100		36,513		43,597
Total current assets		1,371,028		1,232,078		1,149,557
Property and equipment, net ($38,854, $38,361 and $28,398 related to CCJVs)		595,787		407,418		414,079
Long-term marketable securities		61,191		65,015		59,990
Investments in affiliates		99,495		38,469		37,170
Goodwill		246,881		53,799		53,799
Deferred income taxes, net		25,135		—		—
Other noncurrent assets		156,808		75,199		88,550
Total assets	$	2,556,325	$	1,871,978	$	1,803,145
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	207,982	$	46,048	$	14,796
Accounts payable ($35,375, $34,795 and $24,976 related to CCJVs)		303,885		237,673		252,527
Contract liabilities ($40,678, $0 and $0 related to CCJVs)		91,864		—		—
Billings in excess of costs and estimated earnings ($0, $37,701 and     $32,657 related to CCJVs)		—		135,146		114,180
Accrued expenses and other current liabilities ($2,147, $2,126 and $1,156    related to CCJVs)		293,959		236,407		231,048
Total current liabilities		897,690		655,274		612,551
Long-term debt		280,710		178,453		227,114
Deferred income taxes, net		5,759		1,361		5,420
Other long-term liabilities		71,180		44,085		47,983
Commitments and contingencies
Equity
Preferred stock, $0.01 par value, authorized 3,000,000 shares, none    outstanding		—		—		—
Common stock, $0.01 par value, authorized 150,000,000 shares; issued     and outstanding: 45,688,582 shares as of June 30, 2018, 39,871,314 shares as of December 31, 2017 and 39,837,295 shares as of June 30, 2017		457		399		398
Additional paid-in capital		516,680		160,376		155,476
Accumulated other comprehensive income		1,022		634		71
Retained earnings		737,417		783,699		715,451
Total Granite Construction Incorporated shareholders’ equity		1,255,576		945,108		871,396
Non-controlling interests		45,410		47,697		38,681
Total equity		1,300,986		992,805		910,077
Total liabilities and equity	$	2,556,325	$	1,871,978	$	1,803,145

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenue
Construction	$	432,225		$	429,269		$	701,468		$	656,118
Large Project Construction		273,946			254,463			522,360			461,496
Construction Materials		100,948			79,181			146,670			113,699
Total revenue		807,119			762,913			1,370,498			1,231,313
Cost of revenue
Construction		370,674			368,369			601,521			567,889
Large Project Construction		272,608			253,974			500,656			458,452
Construction Materials		83,468			66,000			131,669			105,276
Total cost of revenue		726,750			688,343			1,233,846			1,131,617
Gross profit		80,369			74,570			136,652			99,696
Selling, general and administrative expenses		61,316			51,388			122,568			113,225
Acquisition and integration expenses		26,287			—			34,696			—
Gain on sales of property and equipment		(1,505	)		(807	)		(2,048	)		(1,077	)
Operating (loss) income		(5,729	)		23,989			(18,564	)		(12,452	)
Other (income) expense
Interest income		(1,173	)		(1,164	)		(2,694	)		(2,215	)
Interest expense		3,203			2,694			5,638			5,437
Equity in income of affiliates		(3,534	)		(1,259	)		(3,758	)		(2,175	)
Other income, net		(940	)		(642	)		(672	)		(1,512	)
Total other income		(2,444	)		(371	)		(1,486	)		(465	)
(Loss) income before provision for (benefit from) income taxes		(3,285	)		24,360			(17,078	)		(11,987	)
Provision for (benefit from) income taxes		2,796			8,088			(1,335	)		(4,408	)
Net (loss) income		(6,081	)		16,272			(15,743	)		(7,579	)
Amount attributable to non-controlling interests		(2,304	)		(2,139	)		(4,065	)		(2,078	)
Net (loss) income attributable to Granite Construction Incorporated	$	(8,385	)	$	14,133		$	(19,808	)	$	(9,657	)
Net (loss) income per share attributable to common shareholders (see Note 15)
Basic	$	(0.20	)	$	0.35		$	(0.49	)	$	(0.24	)
Diluted	$	(0.20	)	$	0.35		$	(0.49	)	$	(0.24	)
Weighted average shares of common stock
Basic		41,044			39,827			40,074			39,738
Diluted		41,044			40,393			40,074			39,738
Dividends per common share	$	0.13		$	0.13		$	0.26		$	0.26

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited - in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net (loss) income	$	(6,081	)	$	16,272		$	(15,743	)	$	(7,579	)
Other comprehensive income (loss), net of tax:
Net unrealized loss on derivatives	$	(1,354	)	$	(261	)	$	(734	)	$	(209	)
Less: reclassification for net losses included in interest expense		1,602			47			1,562			116
Net change	$	248		$	(214	)	$	828		$	(93	)
Foreign currency translation adjustments, net		(421	)		542			(438	)		535
Other comprehensive (loss) income	$	(173	)	$	328		$	390		$	442
Comprehensive (loss) income	$	(6,254	)	$	16,600		$	(15,353	)	$	(7,137	)
Non-controlling interests in comprehensive loss		(2,304	)		(2,139	)		(4,065	)		(2,078	)
Comprehensive (loss) income attributable to Granite	$	(8,558	)	$	14,461		$	(19,418	)	$	(9,215	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

Six Months Ended June 30,	2018			2017
Operating activities
Net loss	$	(15,743	)	$	(7,579	)
Adjustments to reconcile net loss to net cash (used in) provided by    operating activities:
Depreciation, depletion and amortization		43,547			31,148
Gain on sales of property and equipment, net		(2,048	)		(1,077	)
Stock-based compensation		10,193			11,224
Equity in net loss from unconsolidated joint ventures		13,418			8,249
Net income from affiliates		(3,758	)		(2,175	)
Changes in assets and liabilities, net of the effects of acquisitions in 2018:
Receivables		(24,821	)		(64,864	)
Costs and estimated earnings in excess of billings, net		—			(28,284	)
Contract assets, net		(76,166	)		—
Inventories		(9,526	)		(10,250	)
Contributions to unconsolidated construction joint ventures		(55,733	)		(750	)
Distributions from unconsolidated construction joint ventures		11,201			32,494
Other assets, net		4,192			(7,037	)
Accounts payable		24,559			52,417
Accrued expenses and other current liabilities, net		5,240			9,170
Net cash (used in) provided by operating activities		(75,445	)		22,686
Investing activities
Purchases of marketable securities		(9,952	)		(49,816	)
Maturities of marketable securities		60,000			70,000
Purchases of property and equipment ($11,369 and $7,492 related to CCJVs)		(36,471	)		(37,518	)
Proceeds from sales of property and equipment		2,704			2,585
Cash paid to purchase businesses, net of cash and restricted cash acquired		(55,030	)		—
Other investing activities, net		269			23
Net cash used in investing activities		(38,480	)		(14,726	)
Financing activities
Proceeds from long term debt		105,250			—
Long-term debt principal repayments		(1,250	)		(2,500	)
Cash dividends paid		(10,389	)		(10,327	)
Repurchases of common stock		(6,165	)		(6,568	)
Distributions to non-controlling partners		(6,400	)		—
Other financing activities, net		429			177
Net cash provided by (used in) financing activities		81,475			(19,218	)
Net decrease in cash, cash equivalents and restricted cash		(32,450	)		(11,258	)
Cash and cash equivalents at beginning of period		233,711			189,326
Cash, cash equivalents and restricted cash of $5,746 at end of period	$	201,261		$	178,068
Supplementary Information
Cash paid during the period for:
Interest	$	6,134		$	5,957
Income taxes		7,246			2,554
Other non-cash operating activities:
Performance guarantees	$	—		$	5,761
Non-cash investing and financing activities:
Common stock issued in acquisition	$	321,075		$	—
Premium on 8.0% Convertible Notes		30,702			—
Restricted stock units issued, net of forfeitures		13,022			11,254
Accrued cash dividends		5,940			5,179

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Granite Construction Incorporated (“we,” “us,” “our,” “the Company” or “Granite”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), are unaudited and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to state fairly our financial position at June 30, 2018 and 2017 and the results of our operations and cash flows for the periods presented. The December 31, 2017 condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP.

Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may alter our construction schedules and can create variability in our revenues and profitability. Therefore, the results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year.

We prepared the accompanying condensed consolidated financial statements on the same basis as our annual consolidated financial statements, except for the adoption during the three months ended March 31, 2018 of Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business and ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting, none of which had a material impact on our condensed consolidated financial statements. In addition, during the three months ended March 31, 2018, we adopted ASU No. 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.118, the impact of which is disclosed in Note 16 and on January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers and subsequently issued additional related ASUs (“Topic 606”), the impact of which is described in detail below.

On April 3, 2018, we acquired LiquiForce and on June 14, 2018, we completed the acquisition of Layne Christensen Company (“Layne”). See Note 3 for further information.

Foreign Currency Transactions and Translation:Through the acquisitions of Layne and LiquiForce, we now have operations in Latin America, Canada and Brazil which involve exposure to possible volatile movements in foreign currency exchange rates. We account for foreign currency exchange transactions and translation in accordance with ASC Topic 830, Foreign Currency Matters. Foreign currency transactions are remeasured into the functional currency with gains and losses included in other income, net in the condensed consolidated statements of operations. In Mexico, most of our customer contracts are denominated in U.S. dollars; therefore, the functional currency is U.S. dollars. In Canada and Brazil, the functional currency is the local currency. The impact from foreign currency transactions was immaterial for both the three and six months ended June 30, 2018. Assets and liabilities in functional currency are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated into U.S. dollars at average foreign currency exchange rates prevailing during the reporting periods. The translation adjustments from functional currency to U.S. dollars are reported in accumulated other comprehensive income on the condensed consolidated balance sheets.

7

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Cash, Cash Equivalents and Restricted Cash: In connection with the acquisition of Layne, we acquired restricted cash which is included in other noncurrent assets in the condensed consolidated balance sheets and consists of escrow funds and judicial deposits associated with tax related legal proceedings in Brazil. The table below presents changes in restricted cash and cash equivalents on the condensed consolidated statements of cash flows and a reconciliation to the amounts reported in the condensed consolidated balance sheets (in thousands).

Six Months Ended June 30,	2018			2017
Cash and cash equivalents, beginning of period	$	233,711		$	189,326
End of the period
Cash and cash equivalents		195,515			178,068
Restricted cash		5,746			—
Total cash, cash equivalents and restricted cash, end of period		201,261			178,068
Net decrease in cash, cash equivalents and restricted cash	$	(32,450	)	$	(11,258	)

Inventories: Inventories consist primarily of quarry products, contract-specific materials, water well drilling materials, and sewer remediation materials that are located in the U.S. and mineral extraction and drilling supplies located in the U.S. and foreign countries, primarily Brazil and Mexico. Cost of U.S. and foreign inventories are valued at the lower of average cost or net realizable value. We reserve quarry products based on estimated quantities of materials on hand in excess of approximately one year of demand. As of June 30, 2018, inventory included $19.1 million of supplies related to the Water and Mineral Services operating group.

Reclassifications: Certain immaterial reclassifications of prior period amounts have been made to conform to the current period presentation.

Effect of adopting Topic 606

The core principle of Topic 606 is that revenue will be recognized when promised goods or services are transferred to customers in an amount that reflects consideration for which entitlement is expected in exchange for those goods or services. We adopted Topic 606 using a modified retrospective transition approach and elected to apply Topic 606 to contracts with customers that are not substantially complete, i.e. less than 90% complete, as of January 1, 2018.

While the adoption of Topic 606 did not have an impact on revenue of our Construction Materials segment, it did impact revenue of our Construction and Large Project Construction segments specifically in the following areas:

• Multiple performance obligations – In accordance with Topic 606, we reviewed construction contracts with customers, including those related to contract modifications, to determine if there are multiple performance obligations. Based on this review, we identified one unconsolidated joint venture contract in our Large Project Construction segment that has multiple performance obligations.

• Multiple contracts – We reviewed contracts containing task orders and identified one Construction segment master contract that consists of multiple individual contracts as defined by Topic 606. Previously, revenue for this contract was forecasted and recorded at the master contract level.

• Revenue recognition – We identified one contract in our Large Project Construction segment where performance obligations are satisfied and control of the promised goods and services are transferred to the customer upon delivery of goods rather than over time. Previously, revenue for this contract was recognized over time.

• Provisions for losses – We identified one unconsolidated joint venture contract in our Large Project Construction segment that has actual and provisions for losses at the performance obligation level related to completed and uncompleted performance obligations, respectively. Previously, provisions for losses were recorded at the contract level.

The impact to retained earnings as of January 1, 2018 from the adoption of Topic 606 related to the items noted above was a net cumulative decrease of $15.2 million.

8

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

In addition, as of January 1, 2018, we began to separately present contract assets and liabilities on the condensed consolidated balance sheets. Contract assets include amounts due under contractual retainage provisions that were previously included in accounts receivable as well as costs and estimated earnings in excess of billings that were previously separately presented. Contract liabilities include billings in excess of costs and estimated earnings that were previously separately presented as well as provisions for losses that were previously included in accrued expenses and other current liabilities. See Note 7 for further information.

Disclosures included in Notes 5, 6 and 7 are related to the adoption of Topic 606 and are revenue disaggregated by operating group, information about unearned revenue and contract assets and liabilities, respectively.

The accounting policies that were affected by Topic 606 and the changes thereto are as follows:

Revenue Recognition: Our revenue is primarily derived from construction contracts that can span several quarters or years and from sales of construction materials. We recognize revenue in accordance with Topic 606. Topic 606 provides for a five-step model for recognizing revenue from contracts with customers as follows:

1. Identify the contract

2. Identify performance obligations

3. Determine the transaction price

4. Allocate the transaction price

5. Recognize revenue

Generally, our contracts contain one performance obligation.

Contracts with customers in our Construction Materials segment are typically defined by our customary business practices and are valued at the contractual selling price per unit. Our customary business practices are for the delivery of a separately identifiable good at a point in time which is typically when delivery to the customer occurs.

Contracts in our Construction and Large Project Construction segments may contain multiple distinct promises or multiple contracts within a master agreement (e.g. contracts that cross multiple locations/geographies and task orders), which we review at contract inception to determine if they represent multiple performance obligations or multiple separate contracts. This review consists of determining if promises or groups of promises are distinct within the context of the contract, including whether contracts are physically contiguous, contain task orders, purchase orders or sales orders, contain termination clauses and/or contain elements not related to design and/or build.

The transaction price is the amount of consideration to which we expect to be entitled in exchange for transferring goods and services to the customer. The consideration promised in a contract with customers of our Construction and Large Project Construction segments may include both fixed amounts and variable amounts (e.g. bonuses/incentives or penalties/liquidated damages) to the extent that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved (i.e., probable and estimable). When a contract has a single performance obligation, the entire transaction price is attributed to that performance obligation. When a contract has more than one performance obligation, the transaction price is allocated to each performance obligation based on estimated relative standalone selling pricesof the goods or services at the inception of the contract, which typically is determined using cost plus an appropriate margin.

Subsequent to the inception of a contract in our Construction and Large Project Construction segments, the transaction price could change for various reasons, including the executed or estimated amount of change orders and unresolved contract modifications and claims to or from owners. Changes that are accounted for as an adjustment to existing performance obligations are allocated on the same basis at contract inception. Otherwise, changes are accounted for as separate performance obligation(s) and the separate transaction price is allocated as discussed above.

Changes are made to the transaction price from unapproved change orders to the extent the amount can be reasonably estimated and recovery is probable.

On certain projects we have submitted and have pending unresolved contract modifications and affirmative claims (“affirmative claims”) to recover additional costs and the associated profit, if applicable, to which the Company believes it is entitled under the terms of contracts with customers, subcontractors, vendors or others. The owners or their authorized representatives and/or other third parties may be in partial or full agreement with the modifications or affirmative claims, or may have rejected or disagree entirely or partially as to such entitlement.

9

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Changes are made to the transaction price from affirmative claims with customers to the extent that additional revenue on a claim settlement with a customer is probable and estimable. A reduction to costs related to affirmative claims with non-customers with whom we have a contractual arrangement (“back charges”) is recognized when the estimated recovery is probable and the amount can be reasonably estimated. Except for contractual back charges, affirmative claims against non-customers that are unrelated to jobs are recognized as a reduction to cost or increase to other income when the claims are settled. Recognizing affirmative claims and back charge recoveries requires significant judgments of certain factors including, but not limited to, dispute resolution developments and outcomes, anticipated negotiation results, and the cost of resolving such matters and estimates.

Certain construction contracts include retention provisions to provide assurance to our customers that we will perform in accordance with the contract terms and are therefore not considered a financing benefit. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work or products by the customer. We have determined there are no significant financing components in our contracts during the six months ended June 30, 2018.

Typically, performance obligations related to contracts in our Construction and Large Project Construction segments are satisfied over time because our performance typically creates or enhances an asset that the customer controls as the asset is created or enhanced. We recognize revenue as performance obligations are satisfied and control of the promised good and service is transferred to the customer. Revenue in our Construction and Large Project Construction segments is ordinarily recognized over time as control is transferred to the customers by measuring the progress toward complete satisfaction of the performance obligation(s) using an input (i.e., “cost to cost”) method. Under the cost to cost method, costs incurred to-date are generally the best depiction of transfer of control.

All contract costs, including those associated with affirmative claims, change orders and back charges, are recorded as incurred and revisions to estimated total costs are reflected as soon as the obligation to perform is determined. Contract costs consist of direct costs on contracts, including labor and materials, amounts payable to subcontractors, direct overhead costs and equipment expense (primarily depreciation, fuel, maintenance and repairs).

The accuracy of our revenue and profit recognition in a given period depends on the accuracy of our estimates of the cost to complete each project. Cost estimates for all of our significant projects use a detailed “bottom up” approach, and we believe our experience allows us to create materially reliable estimates. There are a number of factors that can contribute to changes in estimates of contract cost and profitability. The most significant of these include:

• the completeness and accuracy of the original bid;

• costs associated with scope changes;

• changes in costs of labor and/or materials;

• extended overhead and other costs due to owner, weather and other delays;

• subcontractor performance issues;

• changes in productivity expectations;

• site conditions that differ from those assumed in the original bid;

• changes from original design on design-build projects;

• the availability and skill level of workers in the geographic location of the project;

• a change in the availability and proximity of equipment and materials;

• our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; and

• the customer’s ability to properly administer the contract.

The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins may cause fluctuations in gross profit and gross profit margin from period to period. Significant changes in cost estimates, particularly in our larger, more complex projects have had, and can in future periods have, a significant effect on our profitability.  

All state and federal government contracts and many of our other contracts provide for termination of the contract at the convenience of the party contracting with us, with provisions to pay us for work performed through the date of termination including demobilization cost.

10

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Generally, costs to obtain our contracts (“pre-bid costs”) that are not expected to be recovered from the customer are expensed as incurred and included in selling, general and administrative expenses on our consolidated statements of operations. Although unusual, pre-bid costs that are explicitly chargeable to the customer even if the contract is not obtained are included in accounts receivable on our consolidated balance sheets when we are notified that we are not the low bidder with a corresponding reduction to selling, general and administrative expenses on our consolidated statements of operations.

Unearned Revenue: Unearned revenue represents the aggregate amount of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations at the end of a reporting period. We generally include a project in our unearned revenue at the time a contract is awarded, the contract has been executed and to the extent we believe funding is probable. Certain contracts contain contract options that are exercisable at the option of our customers without requiring us to go through an additional competitive bidding process or contain task orders related to master contracts under which we perform work only when the customer awards specific task orders to us. Contract options and task orders are included in unearned revenue when exercised or issued, respectively.

Substantially all of the contracts in our unearned revenue may be canceled or modified at the election of the customer; however, we have not been materially adversely affected by contract cancellations or modifications in the past. Many projects in our Construction segment are added to unearned revenue and completed within the same fiscal quarter or year and, therefore, may not be reflected in our beginning or ending unearned revenue. Approximately $2.2 billion of the June 30, 2018 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter. Unearned revenue is presented by segment and operating group in Note 6.

Contract Assets: Our contract assets include amounts due under contractual retainage provisions as well as costs and estimated earnings in excess of billings. The balances billed but not paid by customers pursuant to retainage provisions generally become due upon completion and acceptance of the project work or products by the owners. Costs and estimated earnings in excess of billings also represent amounts earned and reimbursable under contracts, including claim recovery estimates, but have a conditional right for billing and payment such as achievement of milestones or completion of the project. With the exception of customer affirmative claims, generally, such unbilled amounts will become billable according to the contract terms and generally will be billed and collected over the next twelve months. Settlement with the customer of outstanding affirmative claims is dependent on the claims resolution process and could extend beyond one year or the project operating cycle. Based on our historical experience, we generally consider the collection risk related to billable amounts to be low. When events or conditions indicate that it is probable that the amounts outstanding become unbillable, the transaction price and associated contract asset is reduced.

Costs to mobilize equipment and labor to a job site prior to substantive work beginning (“mobilization costs”) are capitalized as incurred and amortized over the expected duration of the contract. As of June 30, 2018 and January 1, 2018, we had no material capitalized mobilization costs.

Contract Liabilities: Our contract liabilities consist of provisions for losses and billings in excess of costs and estimated earnings. Provisions for losses are recognized in the consolidated statements of operations at the uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue. Billings in excess of costs and estimated earnings are billings to customers on contracts in advance of work performed, including advance payments negotiated as a contract condition. Generally, unearned project-related costs will be earned over the next twelve months.

The amounts by which each condensed consolidated balance sheet line item as of June 30, 2018 and condensed consolidated statement of operations line item for the three and six months ended June 30, 2018 was affected by the adoption of Topic 606 relative to the previous revenue guidance are presented in the tables below (in thousands). The changes are primarily related to reclassifications on the condensed consolidated balance sheet and the impact on the condensed consolidated statement of operations from the new requirements under Topic 606. The change in retained earnings is net of the cumulative effect of initially applying Topic 606.

11

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

June 30, 2018

Condensed Consolidated Balance Sheet	As Reported		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Assets
Receivables, net	$	492,718	$	615,782	$	(123,064	)
Contract assets		265,190		—		265,190
Costs and estimated earnings in excess of billings		—		175,265		(175,265	)
Other current assets		49,100		49,813		(713	)
Deferred income taxes, net		25,135		19,863		5,272
Liabilities and equity
Contract liabilities	$	91,864	$	—	$	91,864
Billings in excess of costs and estimated earnings		—		119,335		(119,335	)
Accrued expenses and other current liabilities		293,959		282,222		11,737
Deferred income taxes, net		5,759		5,759		—
Retained earnings		737,417		750,263		(12,846	)

Three Months Ended June 30, 2018

Condensed Consolidated Statement of Operations	As Reported			Balances Without Adoption of Topic 606			Effect of Change Higher/(Lower)
Revenue
Construction	$	432,225		$	433,509		$	(1,284	)
Large Project Construction		273,946			274,228			(282	)
Cost of revenue
Construction	$	370,674		$	370,674		$	—
Large Project Construction		272,608			274,450			(1,842	)
Gross profit		80,369			80,093			276
Operating (loss) income		(5,729	)		(6,005	)		276
Provision for income taxes		2,796			2,746			50
Net (loss) income		(6,081	)		(6,307	)		226
Net (loss) income attributable to Granite Construction Incorporated		(8,385	)		(8,611	)		226

12

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Six Months Ended June 30, 2018

Condensed Consolidated Statement of Operations	As Reported			Balances Without Adoption of Topic 606			Effect of Change Higher/(Lower)
Revenue
Construction	$	701,468		$	702,989		$	(1,521	)
Large Project Construction		522,360			520,849			1,511
Cost of revenue
Construction	$	601,521		$	601,521		$	—
Large Project Construction		500,656			503,734			(3,078	)
Gross profit		136,652			133,584			3,068
Operating (loss) income		(18,564	)		(21,632	)		3,068
(Benefit from) provision for income taxes		(1,335	)		(2,048	)		713
Net (loss) income		(15,743	)		(18,098	)		2,355
Net (loss) income attributable to Granite Construction Incorporated		(19,808	)		(22,163	)		2,355

2.  Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) and subsequently issued a related ASU, which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The ASU will be effective commencing with our quarter ending March 31, 2019. We expect the adoption of this ASU to have a material increase to assets and liabilities on our consolidated balance sheets.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows companies to reclassify stranded tax affects resulting from the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”), from accumulated other comprehensive income to retained earnings. In addition, the ASU requires certain new disclosures regardless of the election. This ASU will be effective commencing with our quarter ending March 31, 2019. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

3.  Acquisitions

On June 14, 2018, we completed the $349.8 million acquisition of Layne, a U.S.-based global water management, infrastructure services and drilling company in a stock-for-stock merger which was comprised of $321.0 million in Company common stock and $28.8 million in cash to settle all outstanding stock options, restricted stock awards and unvested performance shares of Layne. In addition to issuances of Granite common stock and the settlement of various equity awards, we assumed $191.5 million in convertible notes at fair value. See Note 14 for further discussion of the assumed convertible notes.

Layne will operate as a wholly owned subsidiary of Granite Construction Incorporated and its results will be reported in the newly formed Water and Mineral Services operating group in the Construction and Construction Materials segments. Layne’s customers are in both the public and private sector. Layne is a leader in water management and drilling and therefore this acquisition significantly enhances Granite’s presence in the water infrastructure market. Layne has a network of 52 offices located throughout North and Latin America. We have accounted for this transaction in accordance with ASC Topic 805, Business Combinations (“ASC 805”).

Included in the condensed consolidated statements of operations for three and six months ending June 30, 2018 is approximately two weeks of Layne revenue and net loss before taxes of $21.5 million and $15.1 million, respectively, following the June 14, 2018 acquisition date. The loss before taxes includes Layne’s portion of total acquisition and integration expenses of $14.7 million for three and six months ending June 30, 2018.

13

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Preliminary Purchase Price Allocation

In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable intangible assets based on their estimated fair values as of June 14, 2018 as presented in the table below (in thousands). These estimates are subject to revision, which may result in adjustments to the values presented below. We expect to finalize these amounts within 12 months from the acquisition date.

Assets
Cash	$	2,995
Receivables		70,160
Contract assets		44,947
Inventories		23,424
Other current assets		5,533
Property and equipment		187,890
Investments in affiliates		63,000
Deferred income taxes		23,185
Other noncurrent assets		17,868
Total tangible assets		439,002
Identifiable intangible assets		60,748
Liabilities
Identifiable intangible liabilities		6,700
Accounts payable		38,321
Contract liabilities		7,854
Accrued expenses and other current liabilities		47,694
Long-term debt		191,500
Other long-term liabilities		32,085
Total liabilities assumed		317,454
Total identifiable net assets acquired		175,596
Goodwill		174,244
Estimated purchase price	$	349,840

In addition, on April 3, 2018, we acquired LiquiForce, a privately owned company which provides sewer lining rehabilitation services to public and private sector water and wastewater customers in both Canada and the U.S. The Company acquired LiquiForce for $35.9 million in cash borrowed under the revolving credit facility as defined in Note 14. The tangible and net intangible assets acquired and liabilities assumed were $14.5 million, $10.9 million and $8.6 million, respectively, resulting in acquired goodwill of $19.1 million. LiquiForce results are reported in the Kenny operating group in the Construction segment.

14

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Intangible assets

The following table lists amortized intangible assets and liabilities from the Layne and LiquiForce acquisitions that are included in other noncurrent assets and other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2018 (in thousands):

	Weighted Average Useful Lives (Years)		Gross Value		Accumulated Amortization			Net Value
Assets
Customer relationships		7	$	34,674	$	(728	)	$	33,946
Backlog		3		11,163		(1,890	)		9,273
Developed technologies		4		9,228		(234	)		8,994
Trademarks/trade names		4		8,989		(163	)		8,826
Favorable contracts		3		4,800		(596	)		4,204
Right of ways		12		2,268		(12	)		2,256
Covenants not to compete and other		5		859		(42	)		817
Intangible assets			$	71,981	$	(3,665	)	$	68,316
Liabilities
Unfavorable contracts		2	$	6,892	$	(952	)	$	5,940
Unfavorable leases		1		300		(13	)		287
Intangible liabilities			$	7,192	$	(965	)	$	6,227

The net amortization expense related to the acquired amortized intangible assets for the three and six months ended June 30, 2018 was $2.7 million and was included in cost of revenue and selling, general and administrative expenses in the condensed consolidated statements of operations. All of the acquired intangible assets and liabilities will be amortized on a straight line basis except for backlog, favorable contracts and unfavorable contracts which will be amortized as the associated projects progress, and customer relationships which will be amortized on a double declining basis. Amortization expense related to the acquired amortized intangible asset balances at June 30, 2018 is expected to be recorded in the future as follows: $10.9 million for the remainder of 2018; $13.2 million in 2019; $10.8 million in 2020; $8.8 million in 2021; and $18.4 million thereafter.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The factors that contributed to the recognition of goodwill from the acquisitions of Layne and LiquiForce include acquiring a workforce with capabilities in the global water management, construction and drilling markets, cost savings opportunities and synergies. In connection with the Layne acquisition, the assignment of goodwill to reporting units was not complete as of June 30, 2018 and is expected to be complete as of September 30, 2018. For the LiquiForce acquisition, we recorded $18.8 million within our Construction segment that was allocated to our Kenny Construction reporting unit. The goodwill from both acquisitions is not expected to be deductible for income tax purposes.

Balance at December 31, 2017	$	53,799
Layne acquisition goodwill		174,244
LiquiForce acquisition goodwill		18,838
Balance at June 30, 2018	$	246,881

15

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Pro Forma Financial Information

The financial information in the table below summarizes the combined results of operations of Granite and Layne, on a pro forma basis, as though the companies had been combined as of the beginning of 2017 (in thousands, except per share amounts). The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2017.

	Three Months Ended June 30,					Six Months Ended June 30,
	2018		2017			2018		2017
Revenue	$	909,783	$	888,176		$	1,583,073	$	1,452,067
Net income (loss)		16,834		(10,974	)		14,454		(61,709	)
Net income (loss) attributable to Granite		14,530		(13,113	)		10,389		(63,787	)
Basic net income (loss) per share attributable to common shareholders		0.32		(0.29	)		0.23		(1.41	)
Diluted net income (loss) per share attributable to common shareholders		0.30		(0.29	)		0.22		(1.41	)

These amounts have been calculated after applying Granite’s accounting policies and adjusting the results of Layne to reflect the additional depreciation and amortization that would have been recorded assuming the fair value adjustments to property and equipment and intangible assets had been applied starting on January 1, 2017. Acquisition and integration expenses related to Layne that were incurred during the three and six months ended June 30, 2018 are reflected in the six months ended June 30, 2017 due to the assumed timing of the transaction. The statutory tax rate of 26% and 39% was used for 2018 and 2017, respectively, for the pro forma adjustments.

Acquisition and integration expenses associated with both the Layne and LiquiForce acquisitions for the three and six months ended June 30, 2018 were comprised of the following (in thousands):

	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
Professional services and other expenses	$	18,064	$	26,473
Severance and personnel costs		8,223		8,223
Total	$	26,287	$	34,696

4.  Revisions in Estimates

Our profit recognition related to construction contracts is based on estimates of costs to complete each project. These estimates can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, and uncertainties are resolved. When we experience significant changes in our estimates of costs to complete, we undergo a process that includes reviewing the nature of the changes to ensure that there are no material amounts that should have been recorded in a prior period rather than as revisions in estimates for the current period. For revisions in estimates, generally we use the cumulative catch-up method for changes to the transaction price that are part of a single performance obligation. Under this method, revisions in estimates are accounted for in their entirety in the period of change. There can be no assurance that we will not experience further changes in circumstances or otherwise be required to revise our cost estimates in the future.

In our review of these changes for the three and six months ended June 30, 2018 and for the three months ended June 30, 2017, we did not identify any material amounts that should have been recorded in a prior period. In our review of these changes for the six months ended June 30, 2017, we identified and corrected amounts that should have been recorded during the three months ended September 30, 2016. This correction resulted in a $4.9 million decrease to Large Project Construction revenue and gross profit and a $1.6 million increase in net loss attributable to Granite Construction Incorporated. We have assessed the impact of this correction to the financial statements of prior periods’ as well as to the financial statements for the six months ended June 30, 2017 and the year ended December 31, 2017 and have concluded that the amounts were not material.   

In the normal course of business, we have revisions in estimated costs some of which are associated with unresolved affirmative claims and back charges. The estimated or actual recovery related to these estimated costs may be recorded in future periods or may be at values below the associated cost, which can cause fluctuations in the gross profit impact from revisions in estimates.

16

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Affirmative Claims

Revisions in estimates for the three and six months ended June 30, 2018 included net increases in revenue of $2.3 million and $4.9 million, respectively, related to the estimated cost recovery of customer affirmative claims, which included increases of $6.4 million and $8.5 million, respectively, that were also affected by an increase in estimated contract costs in excess of the estimated recovery during the three and six months ended June 30, 2018. The offsetting decreases of $4.1 million and $3.6 million, respectively, had estimated contract costs in excess of the estimated cost recovery that were recorded in prior periods.

Revisions in estimates for the three and six months ended June 30, 2017 included net increases in revenue of $12.2 million and $14.0 million, respectively, related to the estimated cost recovery of customer affirmative claims, which included increases of $11.4 million and $14.1 million, respectively, that were also affected by an increase in estimated contract costs in excess of the estimated recovery during the three and six months ended June 30, 2017. The remaining $0.8 million and offsetting decrease of $0.1 million, respectively, had estimated contract costs in excess of estimated cost recovery that were recorded in prior periods.

Back Charges

Revisions in estimates for the three and six months ended June 30, 2018 included reductions in cost of revenue of $1.6 million and $2.0 million, respectively, related to the estimated recovery of back charges of which $0.9 million and $1.1 million, respectively, had estimated contract costs in excess of estimated cost recovery during the three and six months ended June 30, 2018. The remaining $0.7 million and $0.9 million, respectively, had estimated contract costs in excess of estimated cost recovery that were recorded in prior periods.

Revisions in estimates for the three and six months ended June 30, 2017 included reductions in cost of revenue of $2.7 million and $3.0 million, respectively, related to the estimated recovery of back charges of which $1.4 million had estimated contract costs in excess of estimated cost recovery during both the three and six months ended June 30, 2017. The remaining $1.3 million and $1.6 million, respectively, had estimated contract costs in excess of estimated cost recovery that were recorded in prior periods.

The tables below include the impact to gross profit from significant revisions in estimates related to estimated and actual recovery of customer affirmative claims and back charges as well as the impact to gross profit from changes in estimated contract revenue and costs.

Construction

The changes in project profitability from revisions in estimates, both increases and decreases, which individually had an impact of $1.0 million or more on gross profit, were net decreases of $4.5 million and $3.3 million for the three and six months ended June 30, 2018, respectively. The changes for the three and six months ended June 30, 2017 were decreases of $1.1 million and $1.8 million, respectively. The projects are summarized as follows:

Increases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with upward estimate changes			1			—			2			—
Range of increase in gross profit from each project, net	$		1.4	$		—	$	1.4 - 1.4		$		—
Increase on project profitability	$		1.4	$		—	$		2.8	$		—

The increases during the three and six months ended June 30, 2018 were due to lower costs and higher productivity than originally anticipated.

17

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Decreases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with downward estimate changes			3			1			3			1
Range of reduction in gross profit from each project, net	$	1.2 - 2.5		$		1.1	$	1.3 - 2.6		$		1.8
Decrease on project profitability	$		5.9	$		1.1	$		6.1	$		1.8

The decreases during the three and six months ended June 30, 2018 and 2017 were due to additional costs and lower productivity than originally anticipated.

Large Project Construction

The changes in project profitability from revisions in estimates, both increases and decreases, which individually had an impact of $1.0 million or more on gross profit, were net decreases of $30.3 million and $39.8 million for the three and six months ended June 30, 2018, respectively. The changes for the three and six months ended June 30, 2017 were decreases of $23.8 million and $37.8 million, respectively.

There were no amounts attributable to non-controlling interests for both the three and six months ended June 30, 2018. The amounts attributable to non-controlling interests were $0.4 million and $2.0 million of the decreases for the three and six months ended June 30, 2017, respectively. The projects are summarized as follows:

Increases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with upward estimate changes			1			—			1			—
Range of increase in gross profit from each project, net	$		1.0	$		—	$		1.2	$		—
Increase on project profitability	$		1.0	$		—	$		1.2	$		—

The increases during the three and six months ended June 30, 2018 were due to higher productivity than originally anticipated as well as owner-directed scope changes.

Decreases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with downward estimate changes			3			5			5			7
Range of reduction in gross profit from each project, net	$	1.0 - 15.7		$	1.1 - 8.1		$	1.1 - 18.3		$	1.0 - 10.8
Decrease on project profitability	$		31.3	$		23.8	$		41.0	$		37.8

The decreases during the three and six months ended June 30, 2018 were due to higher costs than originally anticipated as well as additional weather related costs and a decrease in estimated recovery from customer affirmative claims. The decreases during the three and six months ended June 30, 2017 were due to higher costs than originally anticipated as well as additional design, weather and owner-related costs, net of estimated and actual recovery from customer affirmative claims and back charges. As of June 30, 2018 there were three projects for which additional costs were reasonably possible in excess of the probable amounts included in the cost forecast. The reasonably possible aggregate range that has the potential to adversely impact gross profit during the year ending December 31, 2018, was zero to $15.0 million. As the related projects proceed, future estimates may change and could have a material effect on our financial position, results of operations and/or cash flows in the future.

18

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

5.  Disaggregation of Revenue

We disaggregate our revenue based on our reportable segments and operating groups as it is the format that is regularly reviewed by management. Our reportable segments are: Construction, Large Project Construction and Construction Materials. Our operating groups are: (i) California; (ii) Northwest; (iii) Heavy Civil; (iv) Kenny and (v) Water and Mineral Services. The following tables present our disaggregated revenue (in thousands):  

Three Months Ended June 30,

	Construction		Large Project Construction		Construction Materials		Total
2018
California	$	187,901	$	14,971	$	55,194	$	258,066
Northwest		160,983		12,360		43,621		216,964
Heavy Civil		7,055		201,960		—		209,015
Kenny		56,938		44,655		—		101,593
Water and Mineral Services		19,348		—		2,133		21,481
Total	$	432,225	$	273,946	$	100,948	$	807,119
2017
California	$	147,605	$	12,048	$	48,463	$	208,116
Northwest		182,574		11,295		30,718		224,587
Heavy Civil		24,098		188,481		—		212,579
Kenny		74,992		42,639		—		117,631
Total	$	429,269	$	254,463	$	79,181	$	762,913

Six Months Ended June 30,

	Construction		Large Project Construction		Construction Materials		Total
2018
California	$	351,997	$	27,786	$	88,182	$	467,965
Northwest		227,425		21,575		56,355		305,355
Heavy Civil		12,255		384,641		—		396,896
Kenny		90,443		88,358		—		178,801
Water and Mineral Services		19,348		—		2,133		21,481
Total	$	701,468	$	522,360	$	146,670	$	1,370,498
2017
California	$	230,369	$	22,169	$	72,879	$	325,417
Northwest		263,240		14,962		40,820		319,022
Heavy Civil		33,318		350,227		—		383,545
Kenny		129,191		74,138		—		203,329
Total	$	656,118	$	461,496	$	113,699	$	1,231,313

19

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

6.  Unearned Revenue

The following tables present our unearned revenue as of the respective periods (in thousands):

June 30, 2018

	Construction		Large Project Construction		Total
California	$	364,305	$	33,033	$	397,338
Northwest		383,855		—		383,855
Heavy Civil		43,959		2,032,151		2,076,110
Kenny		125,159		246,699		371,858
Water and Mineral Services		187,179		—		187,179
Total	$	1,104,457	$	2,311,883	$	3,416,340

March 31, 2018

	Construction		Large Project Construction		Total
California	$	333,866	$	48,162	$	382,028
Northwest		362,225		—		362,225
Heavy Civil		54,596		2,233,174		2,287,770
Kenny		130,289		286,269		416,558
Total	$	880,976	$	2,567,605	$	3,448,581

January 1, 2018

	Construction		Large Project Construction		Total
California	$	365,771	$	40,283	$	406,054
Northwest		262,117		53,465		315,582
Heavy Civil		43,016		2,356,769		2,399,785
Kenny		154,524		307,904		462,428
Total	$	825,428	$	2,758,421	$	3,583,849

7.  Contract Assets and Liabilities

During the three and six months ended June 30, 2018, we recognized revenue of $13.3 million and $102.7 million, respectively, that was included in the contract liability balance at January 1, 2018.

During the three and six months ended June 30, 2018, we recognized revenue of $33.2 million and $60.9 million, respectively, as a result of changes in contract transaction price related to performance obligations that were satisfied or partially satisfied prior to the end of the periods. The changes in contract transaction price were from items such as executed or estimated change orders and unresolved contract modifications and claims.

As of June 30, 2018 and January 1, 2018, the aggregate claim recovery estimates included in contract asset and liability balances were approximately $36.1 million and $26.7 million, respectively. As of June 30, 2017, costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings included $10.8 million in aggregate claim recovery estimates.

The components of the contract asset balances as of the respective dates were as follows (in thousands):

	June 30, 2018		January 1, 2018
Costs in excess of billings and estimated earnings	$	161,670	$	69,755
Contract retention		103,520		91,135
Total contract assets	$	265,190	$	160,890

20

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

The following table summarizes changes in the contract asset balance for the period presented (in thousands):

Balance at January 1, 2018	$	160,890
Change in the measure of progress on projects, net		643,605
Acquired contract assets		45,353
Revisions in estimates, net		(44,550	)
Billings		(516,854	)
Receipts related to contract retention		(23,254	)
Balance at June 30, 2018	$	265,190

The components of the contract liability balances as of the respective dates were as follows (in thousands):

	June 30, 2018		January 1, 2018
Billings in excess of costs and estimated earnings	$	91,147	$	82,750
Provisions for losses		717		924
Total contract liabilities	$	91,864	$	83,674

The following table summarizes changes in the contract liability balance for the period presented (in thousands):

Balance at January 1, 2018	$	83,674
Change in the measure of progress on projects, net		(620,602	)
Acquired contract liabilities		7,974
Revisions in estimates, net		(4,353	)
Billings		625,434
Change in provision for loss, net		(263	)
Balance at June 30, 2018	$	91,864

8. Receivables, net

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Construction contracts completed and in progress:
Billed	$	340,548	$	252,467	$	208,635
Unbilled		71,464		77,135		135,072
Retentions		—		91,135		75,891
Total construction contracts completed and in progress		412,012		420,737		419,598
Construction material sales		64,128		42,192		54,165
Other		16,644		17,014		10,892
Total gross receivables		492,784		479,943		484,655
Less: allowance for doubtful accounts		66		152		410
Total net receivables	$	492,718	$	479,791	$	484,245

Receivables include billed and unbilled amounts for services provided to clients for which we have an unconditional right to payment as of the end of the applicable period and do not bear interest. Included in other receivables at June 30, 2018, December 31, 2017 and June 30, 2017 were items such as estimated recovery from back charge claims, notes receivable, fuel tax refunds, receivables from vendors and income tax refunds. No such receivables individually exceeded 10% of total net receivables at any of these dates. As of June 30, 2018, December 31, 2017 and June 30, 2017, the estimated recovery from back charge claims included in Other receivables was $1.6 million, $1.1 million and $0.3 million, respectively.

Certain construction contracts include retainage provisions that were included in contract assets as of June 30, 2018 and in receivables, net as of December 31, 2017 and June 30, 2017 in our condensed consolidated balance sheets. As of June 30, 2018, December 31, 2017 and June 30, 2017, no retention receivable individually exceeded 10% of total net receivables at any of the presented dates. The majority of the retentions receivable are expected to be collected within one year and there were no retentions receivables determined to be uncollectible.

21

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

9.  Marketable Securities

All marketable securities were classified as held-to-maturity as of the dates presented and the carrying amounts of held-to-maturity securities were as follows:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
U.S. Government and agency obligations	$	15,000	$	17,910	$	12,909
Commercial paper		—		49,865		34,912
Corporate bonds		5,014		—		—
Total short-term marketable securities		20,014		67,775		47,821
U.S. Government and agency obligations		61,191		59,993		59,990
Corporate bonds		—		5,022		—
Total long-term marketable securities		61,191		65,015		59,990
Total marketable securities	$	81,205	$	132,790	$	107,811

Scheduled maturities of held-to-maturity investments were as follows:

(in thousands)	June 30, 2018
Due within one year	$	20,014
Due in one to five years		61,191
Total	$	81,205

10.  Fair Value Measurement

The following tables summarize significant assets and liabilities measured at fair value in the condensed consolidated balance sheets on a recurring basis for each of the fair value levels (in thousands):

	Fair Value Measurement at Reporting Date Using
June 30, 2018	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	56,534	$	—	$	—	$	56,534
Other noncurrent assets
Restricted cash		5,746		—		—		5,746
Total assets	$	62,280	$	—	$	—	$	62,280
December 31, 2017
Cash equivalents
Money market funds	$	37,284	$	—	$	—	$	37,284
Commercial paper		9,967		—		—		9,967
Total assets	$	47,251	$	—	$	—	$	47,251
June 30, 2017
Cash equivalents
Money market funds	$	38,006	$	—	$	—	$	38,006
Total assets	$	38,006	$	—	$	—	$	38,006

22

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Interest Rate Swaps

In May 2018, we entered into the Third Amended and Restated Credit Agreement (as defined in Note 14), terminated the interest rate swap we entered into in January 2016 and entered into two new interest rate swaps designated as cash flow hedges with an effective date of May 2018. The two new cash flow hedges have a combined initial notional amount of $150.0 million and mature in May 2023. The interest rate swaps are designed to convert the interest rate on the term loan described in Note 14, from a variable interest rate of LIBOR plus an applicable margin to a fixed rate of 2.76% plus the same applicable margin. The interest rate swaps are reported at fair value in the condensed consolidated balance sheets using Level 2 inputs. As of June 30, 2018, December 31, 2017 and June 30, 2017 the fair values of the cash flow hedges were $0.5 million, $1.4 million and $0.7 million, respectively, all of which were included in other current assets in the condensed consolidated balance sheets. The unrealized gains and losses, net of taxes, on the effective portion reported as a component of accumulated other comprehensive income and the interest expense reclassified from accumulated other comprehensive income (loss) were both immaterial during the three and six months ended June 30, 2018 and 2017.

Other Assets and Liabilities

The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in the condensed consolidated balance sheets were as follows:

		June 30, 2018				December 31, 2017				June 30, 2017
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Held-to-maturity marketable securities	Level 1	$	81,205	$	80,006	$	132,790	$	132,002	$	107,811	$	107,381
Liabilities (including current maturities):
2019 Notes1	Level 3	$	80,000	$	81,307	$	80,000	$	82,190	$	120,000	$	123,371
Credit Agreement - term loan1	Level 3		150,000		150,608		90,000		89,871		92,500		92,046
Credit Agreement - revolving credit facility1	Level 3		99,000		99,267		55,000		55,054		30,000		29,672
Convertible notes1	Level 1		160,765		186,410		—		—		—		—

¹See Note 14 for definitions of, and more information about, the 2019 Notes, Credit Agreement and Convertible notes.

During the three and six months ended June 30, 2018 and 2017, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

11.  Construction Joint Ventures

We participate in various construction joint ventures. We have determined that certain of these joint ventures are consolidated because they are variable interest entities (“VIEs”) and we are the primary beneficiary. We continually evaluate whether there are changes in the status of the VIEs or changes to the primary beneficiary designation of the VIE. Based on our assessments during the three months ended June 30, 2018, we determined no change to the primary beneficiary was required for existing construction joint ventures.

Due to the joint and several nature of the performance obligations under the related owner contracts, if any of the partners fail to perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a performance guarantee). At June 30, 2018, there was approximately $3.9 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $1.3 billion represented our share and the remaining $2.6 billion represented our partners’ share. We are not able to estimate amounts that may be required beyond the remaining cost of the work to be performed. These costs could be offset by billings to the customer or by proceeds from our partners’ and/or other guarantees.

23

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Consolidated Construction Joint Ventures (“CCJVs”)

At June 30, 2018, we were engaged in six active CCJV projects with total contract values ranging from $50.5 million to $409.7 million and a combined total of $1.2 billion. Our share of revenue remaining to be recognized on these CCJVs was $430.9 million and ranged from $1.1 million to $190.8 million. Our proportionate share of the equity in these joint ventures was between 50.0% and 65.0%. During the three and six months ended June 30, 2018, total revenue from CCJVs was $67.7 million and $111.5 million, respectively. During the three and six months ended June 30, 2017, total revenue from CCJVs was $49.5 million and $85.0 million, respectively. During the six months ended June 30, 2018 and 2017, CCJVs provided $15.1 million and $19.2 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As of June 30, 2018, we were engaged in ten active unconsolidated joint venture projects with total contract values ranging from $77.3 million to $3.7 billion and a combined total of $12.2 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20.0% to 50.0%. As of June 30, 2018, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $1.3 billion and ranged from $2.3 million to $312.8 million.

The following is summary financial information related to unconsolidated construction joint ventures:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Assets
Cash, cash equivalents and marketable securities	$	309,330	$	289,940	$	388,542
Other current assets1		701,945		812,577		632,166
Noncurrent assets		211,963		219,825		230,633
Less partners’ interest		792,567		869,782		828,237
Granite’s interest1,2		430,671		452,560		423,104
Liabilities
Current liabilities		535,700		682,832		668,630
Less partners’ interest and adjustments3		342,760		462,159		460,052
Granite’s interest		192,940		220,673		208,578
Equity in construction joint ventures4	$	237,731	$	231,887	$	214,526

¹Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets were amounts related to performance guarantees that were $88.6 million as of both June 30, 2018 and December 31, 2017 and $88.9 million as of June 30, 2017.

²Included in this balance as of June 30, 2018, December 31, 2017 and June 30, 2017 was $65.8 million, $74.3 million and $81.7 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $10.6 million, $11.8 million and $9.8 million related to Granite’s share of estimated recovery of back charge claims as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively.

³Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

⁴Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets were amounts related to deficits in construction joint ventures that were $14.7 million as of June 30, 2018 and $15.9 million as of both December 31, 2017 and June 30, 2017.

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2018			2017			2018			2017
Revenue
Total	$	449,996		$	515,983		$	689,437		$	967,304
Less partners’ interest and adjustments1		340,809			376,332			461,841			700,162
Granite’s interest		109,187			139,651			227,596			267,142
Cost of revenue
Total		423,385			498,932			804,274			941,922
Less partners’ interest and adjustments1		296,250			349,557			562,751			666,552
Granite’s interest		127,135			149,375			241,523			275,370
Granite’s interest in gross loss	$	(17,948	)	$	(9,724	)	$	(13,927	)	$	(8,228	)

¹Partners’ interest and adjustments represents amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates.

24

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

During the three and six months ended June 30, 2018, unconsolidated construction joint venture net income (loss) was $26.5 million and ($114.4) million, respectively, of which our post-adjustment share were net losses of ($17.7) million and ($13.4) million, respectively. During the three and six months ended June 30, 2017, unconsolidated construction joint venture net income was $17.6 million and $26.2 million, respectively, of which our post-adjustment share were net losses of ($9.7) million and ($8.2) million, respectively. The differences between our share of the joint venture net loss during 2018 when compared to the joint venture net income (loss) primarily resulted from differences between our estimated total revenue and cost of revenue when compared to that of our partners’ on two projects. These joint venture net income amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

Line Item Joint Ventures

As of June 30, 2018, we had one active line item joint venture construction project with a total contract value of $18.0 million of which our portion was $10.8 million. As of June 30, 2018, our share of revenue remaining to be recognized on this line item joint venture was $10.6 million. During the three and six months ended June 30, 2018, our portion of revenue from line item joint ventures was $0.4 million and $1.2 million, respectively. During the three and six months ended June 30, 2017, our portion of revenue from line item joint ventures was $6.8 million and $14.7 million, respectively.

12.  Investments in Affiliates

Our investments in affiliates balance is related to our investments in unconsolidated non-construction entities that we account for using the equity method of accounting, including investments in foreign affiliates, real estate entities and an asphalt terminal entity.

As part of the acquisition of Layne, we acquired investments in foreign affiliates that are engaged in mineral drilling services and the manufacture and supply of drilling equipment, parts and supplies in Latin America. The real estate entities were formed to accomplish specific real estate development projects in which our wholly-owned subsidiary, Granite Land Company, participates with third-party partners. The asphalt terminal entity is a 50% interest in a limited liability company which owns and operates an asphalt terminal and operates an emulsion plant in Nevada.

Our investments in affiliates balance consists of the following:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Equity method investment in foreign affiliates	$	63,000	$	—	$	—
Equity method investments in real estate affiliates		27,591		29,472		27,329
Equity method investment in asphalt terminal affiliate		8,904		8,997		9,841
Total investments in affiliates	$	99,495	$	38,469	$	37,170

The following table provides summarized balance sheet information for our affiliates accounted for under the equity method on a combined basis:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Current assets	$	136,953	$	31,320	$	25,246
Noncurrent assets		173,384		129,039		131,723
Total assets		310,337		160,359		156,969
Current liabilities		54,710		30,131		34,736
Long-term liabilities1		54,383		31,636		25,595
Total liabilities		109,093		61,767		60,331
Net assets		201,244		98,592		96,638
Granite’s share of net assets	$	99,495	$	38,469	$	37,170

¹The balance primarily relates to debt associated with our real estate investments. The increase in the balance since December 31, 2017 is related to debt of our investments in foreign affiliates associated with purchase of equipment and buildings.

The equity method investments in real estate affiliates included $24.0 million, $24.3 million and $22.2 million in residential real estate in Texas as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively. The remaining balances were in commercial real estate in Texas. Of the $310.3 million in total assets as of June 30, 2018, real estate entities had total assets ranging from $0.3 million to $68.2 million, the non-real estate entity had total assets of $20.4 million and the foreign entities had total assets ranging from $0.1 million to $64.6 million. We have direct and indirect investments in the foreign entities and our percent ownership ranged from 25.0% to 50.0% as of June 30, 2018.

25

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

13.  Property and Equipment, net

Balances of major classes of assets and allowances for depreciation and depletion are included in property and equipment, net in the condensed consolidated balance sheets and were as follows:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Equipment and vehicles	$	933,951	$	778,549	$	774,903
Quarry property		178,809		182,267		176,041
Land and land improvements		141,549		108,830		111,766
Buildings and leasehold improvements		105,038		82,601		84,113
Office furniture and equipment		63,806		56,894		58,377
Property and equipment		1,423,153		1,209,141		1,205,200
Less: accumulated depreciation and depletion		827,366		801,723		791,121
Property and equipment, net	$	595,787	$	407,418	$	414,079

14.  Long-Term Debt and Credit Arrangements

(in thousands)	June 30, 2018			December 31, 2017			June 30, 2017
Senior notes payable	$	80,000		$	80,000		$	120,000
Credit Agreement term loan		150,000			90,000			92,500
Credit Agreement revolving credit loan		99,000			55,000			30,000
Convertible notes		160,765			—			—
Debt issuance costs		(1,073	)		(499	)		(590	)
Total debt		488,692			224,501			241,910
Less current maturities		207,982			46,048			14,796
Total long-term debt	$	280,710		$	178,453		$	227,114

The aggregate minimum principal maturities of long-term debt, including current maturities and excluding debt issuance costs, related to balances at June 30, 2018 are as follows: $204.5 million during the remainder of 2018; $ 47.5 million in 2019; $7.5 million in 2020; $7.5 million in 2021; $7.5 million in 2022; and $215.3 million thereafter.

Senior Notes Payable

Senior notes payable in the amount of $80.0 million as of both June 30, 2018 and December 31, 2017 and in the amount of $120.0 million as of June 30, 2017 were due to a group of institutional holders and had an interest rate of 6.11% per annum (“2019 Notes”). As of both June 30, 2018 and December 31, 2017, $40.0 million of the outstanding balance was included in long-term debt and the remaining $40.0 million was included in current maturities of long-term debt on the condensed consolidated balance sheets. As of June 30, 2017, $10.0 million of the outstanding balance was included in current maturities of long-term debt in the condensed consolidated balance sheets. The remaining $110.0 million was included in long-term debt in the condensed consolidated balance sheets, including $30.0 million due for the 2017 installment as we had the ability and intent to pay the 2017 installment using borrowings under the Credit Agreement or by obtaining other sources of financing.

Credit Agreement

Granite entered into the Third Amended and Restated Credit Agreement dated May 31, 2018 (the “Credit Agreement”). The Credit Agreement provides for, among other things, (i) an increase in the total committed credit facility amount to $500.0 million from $300.0 million, of which $150.0 million is a term loan (all of which was drawn on May 31, 2018) and $350.0 million is a revolving credit facility; (ii) an additional increase to the revolving credit facility and/or term loan at the option of the Company, in an aggregate maximum amount up to $200.0 million subject to the lenders providing the additional commitments; (iii) a revised maturity date of May 31, 2023 (the “Maturity Date”) and (iv) the elimination of the stipulation to have a $150 million minimum cash balance before and after a dividend payment. There was no change in the aggregate sublimit for letters of credit of $100.0 million nor was there any significant change to the affirmative, restrictive or financial covenant terms except for the removal of the minimum Consolidated Tangible Net Worth financial covenant requirement and an increase of the Consolidated Leverage Ratio financial covenant requirement from 3.00 to 3.50 for the four quarters subsequent to a permitted acquisition with cash consideration in excess of $100.0 million.

26

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Of the $150.0 million term loan, 1.25% of the principal balance is due each quarter beginning in September 2018 and the remaining balance is due on the Maturity Date. As of June 30, 2018, December 31, 2017 and June 30, 2017, $7.5 million, $6.2 million and $5.0 million, respectively, of the term loan balance was included in current maturities of long-term debt and the remaining $142.5 million, $83.8 million and $87.5 million, respectively, was included in long-term debt on the condensed consolidated balance sheets.

As of June 30, 2018, the total stated amount of all issued and outstanding letters of credit under the Credit Agreement was $33.0 million. As of June 30, 2018, December 31, 2017 and June 30, 2017, $99.0 million, $55.0 million and $30.0 million had been drawn on the revolving credit facility primarily to fund the Layne and LiquiForce acquisitions and to service the 2016 and 2017 installments of the 2019 Notes, respectively. As of June 30, 2018, the total unused availability under the Credit Agreement was $218.0 million. The letters of credit will expire between July 2018 and June 2019.

Borrowings under the Credit Agreement bear interest at LIBOR or a base rate (at our option), plus an applicable margin based on the Consolidated Leverage Ratio calculated quarterly. LIBOR varies based on the applicable loan term, market conditions and other external factors. The applicable margin was 1.63% for loans bearing interest based on LIBOR and 0.63% for loans bearing interest at the base rate at June 30, 2018. Accordingly, the effective interest rate using three-month LIBOR and base rate was 3.96% and 5.63%, respectively, at June 30, 2018 and we elected to use LIBOR for both the term loan and the revolving credit facility. In May 2018, we entered into an interest rate swap to convert the interest rate on borrowings under the Credit Agreement from a variable interest rate of LIBOR plus an applicable margin to a fixed rate of 2.76% plus the same applicable margin.

Borrowings at the base rate have no designated term and may be repaid without penalty any time prior to the Maturity Date. Borrowings bearing interest at a LIBOR rate have a term no less than one month and no greater than six months (a longer period, not to exceed 12 months, if approved by all lenders). At the end of each term, such borrowings can be paid or continued at our discretion as either a borrowing at the base rate or a borrowing at a LIBOR rate with similar terms and the same or different permitted interest period. Our obligations under the Credit Agreement are guaranteed by certain of our subsidiaries and are collateralized on an equivalent basis with the obligations under the 2019 Notes by first priority liens (subject only to other permitted liens) on substantially all of the assets of the Company and certain of our subsidiaries that are required to be guarantors or borrowers under the Credit Agreement; however, a waiver of the requirement for Layne to become a guarantor and provide liens on its assets has been obtained until the 8.0% Convertible Notes (defined below) are redeemed or converted.  

The Credit Agreement provides for the release of the liens securing the obligations at our option and expense, so long as certain conditions as defined by the terms in the Credit Agreement are satisfied (“Collateral Release Period”). However, if subsequent to exercising the option, our Consolidated Fixed Charge Coverage Ratio is less than 1.25 or our Consolidated Leverage Ratio is greater than 2.50, then we would be required to promptly re-pledge substantially all of the assets of the Company and our subsidiaries that are guarantors or borrowers under the Credit Agreement. As of June 30, 2018, the conditions for the exercise of our right under Credit Agreement to have liens released were not satisfied.

Convertible Notes

In connection with our acquisition of Layne, we assumed fair value of $69.9 million of convertible notes that have an interest rate of 4.25% per annum, payable semi-annually in arrears on May 15 and November 15 (“4.25% Convertible Notes”). The 4.25% Convertible Notes mature on November 15, 2018, unless earlier repurchased, redeemed or converted and are convertible at the option of the holders until the close of business on November 14, 2018. As of June 30, 2018, $69.9 million was included in current maturities of long-term debt on the condensed consolidated balance sheets.

Subsequent to the Merger Agreement, cash was elected as the settlement method for conversion of the 4.25% Convertible Notes. As of June 30, 2018, the conversion rate was 11.8012 shares of Granite’s common stock per $1,000 in principal of the 4.25% Convertible Notes providing a conversion price of approximately $84.74 per share of Granite’s common stock.

Also in connection with our acquisition of Layne, we assumed fair value of $121.6 million of convertible notes that have an interest rate of 8.0% per annum, payable semi-annually on May 1 and November 1 (“8.0% Convertible Notes”). The 8.0% Convertible Notes mature on May 1, 2019; however, if any of the then outstanding 4.25% Convertible Notes remain outstanding on August 15, 2018, the 8.0% Convertible Notes will mature on August 15, 2018 (“Maturity Date”). As of June 30, 2018, $90.9 million was included in current maturities of long-term debt and the premium of $30.7 million associated with the conversion feature was included in additional paid-in capital on the condensed consolidated balance sheet.

As of June 30, 2018, the conversion rate of the 8.0% Convertible Notes was 23.1305 shares of Granite’s common stock per $1,000 principal amount of 8.0% Convertible Notes providing a conversion price of approximately $43.23 per share of Granite’s common stock. Prior to the Maturity Date, the notes may be converted to Granite common stock at the election of the note holders.

27

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

Covenants and Events of Default

Our debt and credit agreements require us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below. Our failure to comply with any of these covenants, or to pay principal, interest or other amounts when due thereunder, would constitute an event of default under the applicable agreements. Under certain circumstances, the occurrence of an event of default under one of our debt or credit agreements (or the acceleration of the maturity of the indebtedness under one of our agreements) may constitute an event of default under one or more of our other debt or credit agreements. Default under our debt and credit agreements could result in (i) us no longer being entitled to borrow under the agreements; (ii) termination of the agreements; (iii) the requirement that any letters of credit under the agreements be cash collateralized; (iv) acceleration of the maturity of outstanding indebtedness under the agreements and/or (v) foreclosure on any collateral securing the obligations under the agreements.

The most significant financial covenants under the terms of our Credit Agreement and related to the note purchase agreement governing our 2019 Notes (“2019 NPA”) require the maintenance of a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio. In addition, the 2019 NPA requires a minimum Consolidated Tangible Net Worth.

As of June 30, 2018 and pursuant to the definitions in the 2019 NPA, which is more restrictive, our Consolidated Tangible Net Worth was $1.0 billion, which exceeded the minimum of$757.3 million, our Consolidated Leverage Ratio was 2.10 which did not exceed the maximum of 3.00. Our Consolidated Interest Coverage Ratio was 23.92 which exceeded the minimum of 4.00.

As of June 30, 2018, we were in compliance with all covenants contained in the Credit Agreement and related to the 2019 NPA. We are not aware of any non-compliance by any of our unconsolidated real estate entities with the covenants contained in their debt agreements.

15.  Weighted Average Shares Outstanding and Net (Loss) Income Per Share

The following table presents a reconciliation of the weighted average shares outstanding used in calculating basic and diluted net (loss) income per share as well as the calculation of basic and diluted net (loss) income per share:

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands, except per share amounts)	2018			2017		2018			2017
Numerator (basic and diluted)
Net (loss) income allocated to common shareholders for basic calculation	$	(8,385	)	$	14,133	$	(19,808	)	$	(9,657	)
Effect of dilutive convertible notes		—			—		—			—
Net (loss) income allocated to common shareholders for diluted calculation		(8,385	)		14,133		(19,808	)		(9,657	)
Denominator
Weighted average common shares outstanding, basic		41,044			39,827		40,074			39,738
Dilutive effect of convertible notes, restricted stock units and common stock options1		—			566		—			—
Weighted average common shares outstanding, diluted		41,044			40,393		40,074			39,738
Net (loss) income per share, basic	$	(0.20	)	$	0.35	$	(0.49	)	$	(0.24	)
Net (loss) income per share, diluted	$	(0.20	)	$	0.35	$	(0.49	)	$	(0.24	)

¹Due to the net losses, shares related to convertible notes and restricted stock units representing 960,000 and 732,000 for the three and six months ended June 30, 2018, respectively, and 618,000 related to restricted stock units for the six months ended June 30, 2017 have been excluded from the number of shares used in calculating diluted net loss per share, as their inclusion would be antidilutive.

28

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

16.  Income Taxes

The following table presents the provision for (benefit from) income taxes for the respective periods:

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2018			2017			2018			2017
Provision for (benefit from) income taxes	$	2,796		$	8,088		$	(1,335	)	$	(4,408	)
Effective tax rate		(85.1	%)		33.2	%		7.8	%		36.8	%

Our effective tax rate for the three and six months ended June 30, 2018 decreased to (85.1%) from 33.2% and to 7.8% from 36.8%, respectively, when compared to the same periods in 2017. This change was primarily due to a decrease in the effective tax rate due to Tax Reform enacted in December 2017, one-time nondeductible acquisition and integration expenses and an increase in the loss (income) before provision for (benefit from) income taxes.   

On December 22, 2017, Tax Reform was signed into law. As a result of Tax Reform, the U.S. statutory tax rate was lowered from 35% to 21% effective January 1, 2018, a territorial tax system was implemented, and a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries was imposed, among other changes. ASC Topic 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment. ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.118, allows a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain tax effects of Tax Reform. The Company has recognized the provisional tax impacts of Tax Reform in its consolidated financial statements for the year ended December 31, 2017. On June 14, 2018, the Company acquired Layne recognizing provisional tax impacts of Tax Reform in the opening balance sheet including assessing our intent to indefinitely reinvest certain earnings of our foreign subsidiaries and affiliates. The majority of the provisional tax impacts of Tax Reform recorded in the Company’s condensed consolidated financial statements as of June 30, 2018 are related to the revaluation of deferred tax assets and liabilities and the one-time repatriation tax. Based on a review of the guidance issued by the Internal Revenue Service in the second quarter of 2018, no adjustment to the provisional amounts recorded in the Company’s condensed consolidated financial statements, as of June 30, 2018, was deemed necessary. We continue to assess new guidance and refine our computation of the provisional tax impacts discussed above and will complete our analysis within the one-year measurement period ending December 22, 2018.

Approximately $15.0 million of uncertain tax position liability was assumed as part of the Layne acquisition and was recorded in other long-term liabilities in the Company’s condensed consolidated balance sheets as of June 30, 2018.

29

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

17.  Equity

The following tables summarize our equity activity for the periods presented (in thousands):

	Granite Construction Incorporated			Non-controlling Interests			Total Equity
Balance at December 31, 2017	$	945,108		$	47,697		$	992,805
Net (loss) income		(19,808	)		4,065			(15,743	)
Purchases of common stock1		(6,165	)		—			(6,165	)
Dividends on common stock		(11,146	)		—			(11,146	)
Effect of adopting Topic 606		(15,202	)		—			(15,202	)
Issuance of common stock for Layne acquisition2		321,075			48			321,123
Premium on 8.0% Convertible Notes3		30,702			—			30,702
Transactions with non-controlling interests		—			(6,400	)		(6,400	)
Other transactions with shareholders and employees4		11,012			—			11,012
Balance at June 30, 2018	$	1,255,576		$	45,410		$	1,300,986
Balance at December 31, 2016	$	885,988		$	36,603		$	922,591
Net (loss) income		(9,657	)		2,078			(7,579	)
Purchases of common stock5		(6,568	)		—			(6,568	)
Dividends on common stock		(10,354	)		—			(10,354	)
Other transactions with shareholders and employees4		11,987			—			11,987
Balance at June 30, 2017	$	871,396		$	38,681		$	910,077

¹Represents 104,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

²Represents 5,624,000 shares issued in connection with the Layne acquisition wherein each share of Layne common stock was exchanged for 0.27 shares of Granite common stock. See Note 3 for further information.

³Represents premium associated with the conversion feature on the 8.0% Convertible Notes assumed from the acquisition of Layne. See Note 14 for further discussion.

⁴Amounts are comprised primarily of amortized restricted stock units.

⁵Represents 133,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

30

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

18.  Legal Proceedings

In the ordinary course of business, we and our affiliates are involved in various legal proceedings alleging, among other things, liability issues or breach of contract or tortious conduct in connection with the performance of services and/or materials provided, the various outcomes of which cannot be predicted with certainty. We and our affiliates are also subject to government inquiries in the ordinary course of business seeking information concerning our compliance with government construction contracting requirements and various laws and regulations, the outcomes which cannot be predicted with certainty.

Some of the matters in which we or our joint ventures and affiliates are involved may involve compensatory, punitive, or other claims or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that are not probable to be incurred or cannot currently be reasonably estimated. In addition, in some circumstances our government contracts could be terminated, we could be suspended, debarred or incur other administrative penalties or sanctions, or payment of our costs could be disallowed. While any of our pending legal proceedings may be subject to early resolution as a result of our ongoing efforts to resolve the proceedings, whether or when any legal proceeding will be resolved is neither predictable nor guaranteed.

Accordingly, it is possible that future developments in such proceedings and inquiries could require us to (i) adjust existing accruals, or (ii) record new accruals that we did not originally believe to be probable or that could not be reasonably estimated. Such changes could be material to our financial condition, results of operations and/or cash flows in any particular reporting period. In addition to matters that are considered probable for which the loss can be reasonably estimated, disclosure is also provided when it is reasonably possible and estimable that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the amount recorded.

Liabilities relating to legal proceedings and government inquiries, to the extent that we have concluded such liabilities are probable and the amounts of such liabilities are reasonably estimable, are recorded in our condensed consolidated balance sheets. The aggregate liabilities recorded as of June 30, 2018, December 31, 2017 and June 30, 2017 related to these matters were approximately $1.0 million, $0.9 million and $1.0 million, respectively, and were primarily included in accounts payable and accrued expenses and other current liabilities on our condensed consolidated balance sheets. The aggregate range of possible loss related to (i) matters considered reasonably possible, and (ii) reasonably possible amounts in excess of accrued losses recorded for probable loss contingencies, including those related to liquidated damages, could have a material impact on our consolidated financial statements if they become probable and the reasonably estimable amount is determined.

31

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

19.  Business Segment Information

Summarized segment information is as follows (in thousands):

Three Months Ended June 30,

	Construction		Large Project Construction		Construction Materials			Total
2018
Total revenue from reportable segments	$	432,225	$	273,946	$	146,197		$	852,368
Elimination of intersegment revenue		—		—		(45,249	)		(45,249	)
Revenue from external customers		432,225		273,946		100,948			807,119
Gross profit		61,551		1,338		17,480			80,369
Depreciation, depletion and amortization		9,645		9,318		6,074			25,037
2017
Total revenue from reportable segments	$	429,269	$	254,463	$	123,242		$	806,974
Elimination of intersegment revenue		—		—		(44,061	)		(44,061	)
Revenue from external customers		429,269		254,463		79,181			762,913
Gross profit		60,900		489		13,181			74,570
Depreciation, depletion and amortization		5,441		3,081		5,417			13,939

Six Months Ended June 30,

	Construction		Large Project Construction		Construction Materials			Total
2018
Total revenue from reportable segments	$	701,468	$	522,360	$	199,519		$	1,423,347
Elimination of intersegment revenue		—		—		(52,849	)		(52,849	)
Revenue from external customers		701,468		522,360		146,670			1,370,498
Gross profit		99,947		21,704		15,001			136,652
Depreciation, depletion and amortization		14,699		11,917		11,484			38,100
Segment assets		608,116		335,036		304,121			1,247,273
2017
Total revenue from reportable segments	$	656,118	$	461,496	$	171,864		$	1,289,478
Elimination of intersegment revenue		—		—		(58,165	)		(58,165	)
Revenue from external customers		656,118		461,496		113,699			1,231,313
Gross profit		88,229		3,044		8,423			99,696
Depreciation, depletion and amortization		10,435		4,967		10,615			26,017
Segment assets		142,456		312,891		295,068			750,415

As of June 30, 2018, segment assets include $21.2 million of property and equipment located in foreign countries (primarily Brazil and Mexico). As of June 30, 2017 and December 31, 2017, all segment assets were located in the United States.

A reconciliation of segment gross profit to consolidated (loss) income before provision for (benefit from) income taxes is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2018			2017			2018			2017
Total gross profit from reportable segments	$	80,369		$	74,570		$	136,652		$	99,696
Selling, general and administrative expenses		61,316			51,388			122,568			113,225
Acquisition and integration expenses		26,287			—			34,696			—
Gain on sales of property and equipment		(1,505	)		(807	)		(2,048	)		(1,077	)
Total other income		(2,444	)		(371	)		(1,486	)		(465	)
(Loss) income before provision for (benefit from) income taxes	$	(3,285	)	$	24,360		$	(17,078	)	$	(11,987	)

32

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

Forward-Looking Disclosure

From time to time, Granite makes certain comments and disclosures in reports and statements, including in this Quarterly Report on Form 10-Q, or statements made by its officers or directors, that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results, that may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” and the negatives thereof or other comparable terminology or by the context in which they are made. In addition, other written or oral statements that constitute forward-looking statements have been made and may in the future be made by or on behalf of Granite. These forward-looking statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, circumstances, activities, performance, outcomes and results. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those more specifically described in our Annual Report on Form 10-K under “Item 1A. Risk Factors.”Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this Quarterly Report on Form 10-Q and, except as required by law, we undertake no obligation to revise or update any forward-looking statements for any reason.

Overview

We are one of the largest diversified heavy civil contractors and construction materials producers in the United States, engaged in the construction and improvement of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, trenchless and underground utilities, power-related facilities, water-related facilities, utilities, tunnels, dams and other infrastructure-related projects. We have three reportable business segments: Construction, Large Project Construction and Construction Materials (see Note 19 of “Notes to the Condensed Consolidated Financial Statements”).

On June 14, 2018, we completed the $349.8 million acquisition of Layne Construction Company (“Layne”), a U.S.-based global water management, infrastructure services and drilling company in a stock-for-stock merger which was comprised of $321.0 million in Company common stock and $28.8 million in cash to settle all outstanding stock options, restricted stock awards and unvested performance shares of Layne. In addition to issuances of Granite common stock and the settlement of various equity awards, we assumed $191.5 million in convertible notes at fair value. See Note 14 of “Notes to the Condensed Consolidated Financial Statements” for further discussion of the assumed convertible notes.

In addition, on April 3, 2018, we acquired LiquiForce, a privately owned company which provides sewer lining rehabilitation services to public and private sector water and wastewater customers in both Canada and the U.S. We acquired LiquiForce for $35.9 million in cash borrowed under the revolving credit facility as defined in Note 14 of “Notes to the Condensed Consolidated Financial Statements”.

Layne will operate as a wholly owned subsidiary of Granite Construction Incorporated and its results are reported in the newly formed Water and Mineral Services operating group in the Construction and Construction Materials segments. LiquiForce results are reported in the Kenny operating group in the Construction segment.

In addition to business segments, we review our business by operating groups. Our operating groups are defined as follows: (i) California; (ii) Northwest, which primarily includes offices in Alaska, Arizona, Nevada, Utah and Washington; (iii) Heavy Civil, which primarily includes offices in California, Florida, New York and Texas; (iv) Kenny, which primarily includes offices in Illinois and Canada and (v) Water and Mineral Services, which primarily includes offices in North America, Brazil and Latin America.

The four primary economic drivers of our business are (i) the overall health of the U.S. economy; (ii) federal, state and local public funding levels; (iii) population growth resulting in public and private development and (iv) the need to replace or repair aging infrastructure. Changes in these drivers can either reduce our revenues and/or gross profit margins or provide opportunities for revenue growth and gross profit margin improvement.

33

Current Economic Environment and Outlook

The above noted acquisitions extend our reach, as we execute our strategy to diversify and grow across geographies in the water, wastewater, and mining markets. We are confident that our focus on growth through end-market and geographic diversification, combined with stable-to-improving demand trends in these and other end markets, will fuel steady, long-term value creation for Granite’s stakeholders.

Public and private markets are creating opportunities for growth, even while these markets remain highly competitive. Company contract backlog of $3.65 billion continues to reflect a backdrop of consistent, modest economic growth. Private market activity remains a key growth and diversification opportunity across our business, and its portion of our portfolio continues to expand in focus and prominence. Today, public infrastructure investment is beginning to grow at state, regional, and local levels, and this investment provides our industry with visibility to funding that we have not experienced in more than a decade. This positive, multi-year public-spending demand will provide the most uplift for Granite through our Construction and Construction Materials segments.

Managing risks and being compensated appropriately for the complex skills and resources required to build tomorrow's great public infrastructure projects helps to guide our expectations going forward. This is even more accentuated in our Large Project Construction strategy, as we prioritize and pursue billions of dollars’ worth of future North American projects. The market for these projects remains robust, and we are acutely focused on projects with appropriate returns relative to risks.

Having improved state and local federal base funding visibility through 2020, the Fixing America’s Surface Transportation (“FAST”) Act remains a stabilizing force. Increased public investment has grown bottom-up for the past six years at state and local levels, with more than half of U.S. states acting individually to increase maintenance and to reinvest in transportation infrastructure. As a result, state- and local-led program expansions, coupled with Federal and private-sector strength are now key contributors to the most balanced market activity and visibility to funding that we have seen since the mid-2000s.

Following the close of the second quarter, we received notification of project wins that are not yet included in our backlog. These four project wins across four operating groups total more than $875 million, with these projects expected to enter our backlog in the second half of 2018 and early 2019.

Results of Operations

Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may alter our construction schedules and can create variability in our revenues and profitability. Therefore, the results of operations of a given quarter are not indicative of the results to be expected for the full year.

The following table presents a financial summary for the three and six months ended June 30, 2018 and 2017:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2018			2017			2018			2017
Total revenue	$	807,119		$	762,913		$	1,370,498		$	1,231,313
Gross profit		80,369			74,570			136,652			99,696
Operating (loss) income		(5,729	)		23,989			(18,564	)		(12,452	)
Total other income		(2,444	)		(371	)		(1,486	)		(465	)
Net (loss) income attributable to Granite Construction Incorporated		(8,385	)		14,133			(19,808	)		(9,657	)

Revenue

Total Revenue by Segment

	Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2018				2017				2018				2017
Construction	$	432,225	53.6	%	$	429,269	56.2	%	$	701,468	51.2	%	$	656,118	53.3	%
Large Project Construction		273,946	33.9			254,463	33.4			522,360	38.1			461,496	37.5
Construction Materials		100,948	12.5			79,181	10.4			146,670	10.7			113,699	9.2
Total	$	807,119	100.0	%	$	762,913	100.0	%	$	1,370,498	100.0	%	$	1,231,313	100.0	%

34

Construction Revenue

	Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2018				2017				2018				2017
California:
Public sector	$	149,188	34.6	%	$	97,106	22.6	%	$	276,370	39.5	%	$	155,808	23.7	%
Private sector		38,713	9.0			50,499	11.8			75,627	10.8			74,561	11.4
Northwest:
Public sector		120,702	27.9			160,421	37.4			160,920	22.9			229,034	34.9
Private sector		40,281	9.3			22,153	5.2			66,505	9.5			34,206	5.2
Heavy Civil:
Public sector		7,055	1.6			22,585	5.3			12,255	1.7			30,686	4.7
Private sector		—	—			1,513	0.4			—	—			2,632	0.4
Kenny:
Public sector		41,281	9.6			41,613	9.7			64,067	9.1			76,631	11.7
Private sector		15,657	3.6			33,379	7.8			26,376	3.8			52,560	8.0
Water and Mineral Services:
Public sector		10,133	2.3			—	—			10,133	1.4			—	—
Private sector		9,215	2.1			—	—			9,215	1.3			—	—
Total	$	432,225	100.0	%	$	429,269	100.0	%	$	701,468	100.0	%	$	656,118	100.0	%

Construction revenue for the three and six months ended June 30, 2018 increased by $3.0 million, or 0.7%, and $45.4 million, or 6.9%, respectively, when compared to 2017. In addition to increases in the Water and Mineral Services operating group from the Layne acquisition, the increases were due to a volume increase in the public sector of the California operating group from improved success rate on bidding activity on highway rehabilitation work and from entering the periods with greater contract backlog. In addition, increases in the private sector of the Northwest operating group were due to new awards and entering the periods with greater contract backlog. These increases were partially offset by decreases in the public sector of the Northwest operating group and Kenny operating groups as well as both sectors of the Heavy Civil operating group from beginning the periods with lower contract backlog and the private sector of the Kenny operating group from reduced volume.

Large Project Construction Revenue

	Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2018				2017				2018				2017
Heavy Civil1	$	201,960	73.7	%	$	188,481	74.1	%	$	384,641	73.8	%	$	350,227	75.9	%
Northwest1		12,360	4.5			11,295	4.4			21,575	4.1			14,962	3.2
California:
Public sector		11,432	4.2			12,048	4.7			22,391	4.3			22,169	4.8
Private sector		3,539	1.3			—	—			5,395	1.0			—	—
Kenny:
Public sector		39,863	14.6			33,800	13.3			66,900	12.8			59,014	12.8
Private sector		4,792	1.7			8,839	3.5			21,458	4.1			15,124	3.3
Total	$	273,946	100.0	%	$	254,463	100.0	%	$	522,360	100.0	%	$	461,496	100.0	%

¹For the periods presented, this Large Project Construction revenue was earned only from the public sector.

Large Project Construction revenue for the three and six months ended June 30, 2018 increased by $19.5 million, or 7.7%, and $60.9 million, or 13.2%, respectively, when compared to 2017 primarily due to increased beginning backlog and progress on new projects in our Heavy Civil operating group partially offset by a net negative impact from revisions in estimates (see Note 4 of “Notes to the Condensed Consolidated Financial Statements” for more information).

As of June 30, 2018, there were three projects for which additional costs were reasonably possible in excess of the probable amounts included in the cost forecast. The reasonably possible aggregate range that has the potential to adversely impact gross profit during the year ended December 31, 2018 was zero to $15.0 million. As the related projects proceed, future estimates may change and could have a material effect on our financial position, results of operations and/or cash flows in the future.

35

Construction Materials Revenue

	Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2018				2017				2018				2017
California	$	55,194	54.7	%	$	48,463	61.2	%	$	88,182	60.1	%	$	72,879	64.1	%
Northwest		43,621	43.2			30,718	38.8			56,355	38.4			40,820	35.9
Water and Mineral Services		2,133	2.1			—	—			2,133	1.5			—	—
Total	$	100,948	100.0	%	$	79,181	100.0	%	$	146,670	100.0	%	$	113,699	100.0	%

Construction Materials revenue for the three and six months ended June 30, 2018 increased by $21.8 million, or 27.5%, and $33.0 million, or 29.0%, respectively, when compared to 2017 primarily due to increases in aggregate and asphalt pricing and volume.

Contract Backlog

Our contract backlog consists of the revenue we expect to record in the future on awarded contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts. We generally include a project in our contract backlog at the time it is awarded and to the extent we believe contract execution and funding is probable. Awarded contracts that include unexercised contract options or unissued task orders are included in contract backlog to the extent option exercise or task order issuance is probable. Substantially all of the contracts in our contract backlog may be canceled or modified at the election of the customer; however, we have not been materially adversely affected by contract cancellations or modifications in the past.

Total Contract Backlog by Segment

(dollars in thousands)	June 30, 2018				March 31, 2018				June 30, 2017
Construction	$	1,272,646	34.8	%	$	978,288	27.3	%	$	1,266,504	31.2	%
Large Project Construction		2,379,276	65.2			2,607,379	72.7			2,797,894	68.8
Total	$	3,651,922	100.0	%	$	3,585,667	100.0	%	$	4,064,398	100.0	%

Construction Contract Backlog

(dollars in thousands)	June 30, 2018				March 31, 2018				January 1, 2018
Unearned revenue	$	1,104,457	86.8	%	$	880,976	90.1	%	$	825,428	92.0	%
Other awards1		168,189	13.2			97,312	9.9			71,527	8.0
Total	$	1,272,646	100.0	%	$	978,288	100.0	%	$	896,955	100.0	%

¹Other awards include unissued task orders and unexercised contract options to the extent their issuance or exercise is probable as well as contract awards to the extent we believe contract execution and funding is probable.

36

(dollars in thousands)	June 30, 2018				March 31, 2018				June 30, 2017
California
Public sector	$	302,691	23.8	%	$	293,910	30.0	%	$	355,872	28.2	%
Private sector		77,767	6.1			90,193	9.2			123,104	9.7
Northwest
Public sector		325,365	25.6			325,791	33.3			422,700	33.4
Private sector		60,009	4.7			44,195	4.5			47,117	3.7
Heavy Civil
Public sector		32,063	2.5			37,873	3.9			64,844	5.1
Private sector		—	0.0			—	—			1,611	0.1
Kenny
Public sector		154,258	12.1			130,867	13.4			175,017	13.8
Private sector		50,348	4.0			55,459	5.7			76,239	6.0
Water and Mineral Services
Public sector		238,200	18.7			—	—			—	—
Private sector		31,945	2.5			—	—			—	—
Total	$	1,272,646	100.0	%	$	978,288	100.0	%	$	1,266,504	100.0	%

Construction contract backlog of $1.3 billion at June 30, 2018 was $294.4 million, or 30.1%, higher than at March 30, 2018. In addition to increases in the Water and Mineral Services operating group from the Layne acquisition, the increase was due to new awards in the public sector of the California and Kenny operating groups and private sector of Northwest operating group. Significant new awards during the three months ended June 30, 2018 included an expressway construction project California and an interstate improvement contract in Chicago.

Large Project Construction Contract Backlog

(dollars in thousands)	June 30, 2018				March 31, 2018				January 1, 2018
Unearned revenue	$	2,311,883	97.2	%	$	2,567,605	98.5	%	$	2,758,421	97.8	%
Other awards1		67,393	2.8			39,774	1.5			62,781	2.2
Total	$	2,379,276	100.0	%	$	2,607,379	100.0	%	$	2,821,202	100.0	%

¹Other awards include contract awards to the extent we believe contract execution and funding is probable.

(dollars in thousands)	June 30, 2018				March 31, 2018				June 30, 2017
Heavy Civil1	$	2,003,988	84.3	%	$	2,195,568	84.2	%	$	2,200,119	78.7	%
Northwest1		32,935	1.4			44,732	1.7			77,193	2.8
California
Public sector		19,941	0.8			29,236	1.1			65,679	2.3
Private sector		8,322	0.3			11,800	0.5			—	—
Kenny
Public sector		246,697	10.4			286,269	11.0			369,780	13.2
Private sector		67,393	2.8			39,774	1.5			85,123	3.0
Total	$	2,379,276	100.0	%	$	2,607,379	100.0	%	$	2,797,894	100.0	%

¹For the periods presented, all Large Project Construction contract backlog was related to contracts with public agencies.

Large Project Construction contract backlog of $2.4 billion as of June 30, 2018 was $228.1 million, or 8.7%, lower than at March 30, 2018 due to progress on existing projects.

Non-controlling partners’ share of Large Project Construction contract backlog as of June 30, 2018, March 30, 2018, and June 30, 2017 was $341.5 million, $370.4 million and $135.0 million, respectively.

37

Gross Profit

The following table presents gross profit by business segment for the respective periods:

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2018			2017			2018			2017
Construction	$	61,551		$	60,900		$	99,947		$	88,229
Percent of segment revenue		14.2	%		14.2	%		14.2	%		13.4	%
Large Project Construction		1,338			489			21,704			3,044
Percent of segment revenue	0.5			0.2			4.2			0.7
Construction Materials		17,480			13,181			15,001			8,423
Percent of segment revenue		17.3			16.6			10.2			7.4
Total gross profit	$	80,369		$	74,570		$	136,652		$	99,696
Percent of total revenue		10.0	%		9.8	%		10.0	%		8.1	%

Construction gross profit for the three and six months ended June 30, 2018 increased by $0.7 million, or 1.1%, and $11.7 million, or 13.3%, respectively, when compared to 2017. The increases were primarily due to increased revenue volume and margin improvement in our California operating group due to favorable weather and an increase in highway rehabilitation work partially offset by a decline in our Kenny operating group from reduced revenue volume.

Large Project Construction gross profit for the three and six months ended June 30, 2018 increased by $0.8 million, or over 100%, and $18.7 million, or over 100%, respectively, when compared to 2017. Large Project Construction gross profit as a percentage of segment revenue for the three and six months ended June 30, 2018 increased to 0.5% from 0.2% and from 0.7% to 4.2%, respectively, when compared to 2017. The increases were primarily due to progression on projects with higher beginning backlog margin partially offset by an increase in net negative impact from revisions in estimates compared to 2017 (see Note 4 of “Notes to the Condensed Consolidated Financial Statements”).

Construction Materials gross profit for the three and six months ended June 30, 2018 increased by $4.3 million, or 32.6%, and $6.6 million, or 78.1%, respectively, when compared to 2017 primarily due to increased revenue volume as well as margin improvement driven by cost efficiency in the California operating group and price increases in the Northwest operating group.

38

Selling, General and Administrative Expenses

The following table presents the components of selling, general and administrative expenses for the respective periods:

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2018			2017			2018			2017
Selling
Salaries and related expenses	$	14,073		$	11,886		$	27,811		$	25,372
Restricted stock unit amortization		482			923			1,784			1,679
Other selling expenses		5,119			2,228			7,882			5,584
Total selling		19,674			15,037			37,477			32,635
General and administrative
Salaries and related expenses		20,835			20,506			40,692			41,104
Restricted stock unit amortization		1,253			724			8,353			9,145
Other general and administrative expenses		19,554			15,121			36,046			30,341
Total general and administrative		41,642			36,351			85,091			80,590
Total selling, general and administrative	$	61,316		$	51,388		$	122,568		$	113,225
Percent of revenue		7.6	%		6.7	%		8.9	%		9.2	%

Selling, general and administrative expenses for the three and six months ended June 30, 2018 increased $9.9 million, or 19.3%, and $9.3 million, or 8.3%, respectively, when compared to 2017. Selling, general and administrative expenses as a percent of revenue for the three and six months ended June 30, 2018 increased to 7.6% from 6.7% and decreased to 8.9% from 9.2%, respectively.

Selling Expenses

Selling expenses include the costs for estimating and bidding, business development and materials facility permits. Selling expenses can vary depending on the volume of projects in process and the number of employees assigned to estimating and bidding activities. As projects are completed or the volume of work slows down, we temporarily redeploy project employees to bid on new projects, moving their salaries and related costs from cost of revenue to selling expenses. Selling expenses during the three and six months ended June 30, 2018 increased $4.6 million, or 30.8%, and $4.8 million, or 14.8%, when compared to 2017 primarily due to the addition of Layne and LiquiForce expenses as well as costs from increased bidding activities.

General and Administrative Expenses

General and administrative expenses include costs related to our operational offices that are not allocated to direct contract costs and expenses related to our corporate functions. Other general and administrative expenses include travel and entertainment, outside services, information technology, depreciation, occupancy, training, office supplies, changes in the fair market value of our Non-Qualified Deferred Compensation plan liability and other miscellaneous expenses, none of which individually exceeded 10% of total general and administrative expenses. Total general and administrative expenses during the three and six months ended June 30, 2018 increased $5.3 million, or 14.6%, and $4.5 million, or 5.6%, respectively, when compared to 2017 due to increases in other general and administrative expenses primarily from the addition of Layne and LiquiForce expenses.

Acquisition and Integration expenses

	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2018		2017		2018		2017
Acquisition and integration expenses	$	26,287	$	—	$	34,696	$	—

Of the total acquisition and integration expenses for the three and six months ended June 30, 2018, $8.2 million was related to severance costs and $18.1 million and $26.5 million, respectively, was related to external transaction costs and professional fees. All of these costs were associated with the acquisition and integration of LiquiForce and Layne.

39

Income Taxes

The following table presents the provision for (benefit from) income taxes for the respective periods:

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2018			2017			2018			2017
Provision for (benefit from) income taxes	$	2,796		$	8,088		$	(1,335	)	$	(4,408	)
Effective tax rate		(85.1	%)		33.2	%		7.8	%		36.8	%

We calculate our income tax provision at the end of each interim period by estimating our annual effective tax rate and applying that rate to our income (loss) before provision for (benefit from) income taxes. The effect of changes in enacted tax laws, tax rates or tax status is recognized in the interim period in which the change occurs. See Note 16 of “Notes to the Condensed Consolidated Financial Statements” for more information.

Certain Legal Proceedings

As discussed in Note 18 of “Notes to the Condensed Consolidated Financial Statements”, under certain circumstances the resolution of certain legal proceedings to which we are subject could have direct or indirect consequences that could have a material adverse effect on our financial position, results of operations, cash flows and/or liquidity.

Liquidity and Capital Resources

The timing differences between our cash inflows and outflows require us to maintain adequate levels of working capital. We believe our cash and cash equivalents, short-term investments, available borrowing capacity and cash expected to be generated from operations will be sufficient to meet our expected working capital needs, capital expenditures, financial commitments, cash dividend payments, and other liquidity requirements associated with our existing operations for the next twelve months. We maintain a collateralized credit facility of $500.0 million, of which $218.0 million was available at June 30, 2018, to provide capital needs to fund growth opportunities, either internal or generated through acquisitions or to pay installments on our 2019 Notes. See the Senior Notes Payable and Credit Agreement sections of Note 14 of “Notes to the Condensed Consolidated Financial Statements” for definition and further discussion on our 2019 Notes and Credit Agreement. If we experience a prolonged change in our business operating results or make a significant acquisition, we may need additional sources of financing, which, even if available, may be limited by the terms of our existing debt covenants, or may require the amendment of our existing debt agreements. There can be no assurance that sufficient capital will continue to be available in the future or that it will be available on terms acceptable to us.

Absent a material change in our financial condition, we believe the credit facility includes sufficient capacity to address the maturities of the 4.25% and 8.00% Convertible Notes assumed from the acquisition of Layne. See Convertible Notes section of Note 14 of “Notes to the Condensed Consolidated Financial Statements” for further discussion on these assumed notes.

Our revenue, gross profit and the resulting cash flows can differ significantly from period to period due to a variety of factors, including our projects’ progressions toward completion, outstanding contract change orders and affirmative claims and the payment terms of our contracts. While we typically invoice our customers on a monthly basis, our contracts frequently call for retention that is a specified percentage withheld from each payment until the contract is completed and the work accepted by the customer.

The following table presents our cash, cash equivalents and marketable securities, including amounts from our consolidated construction joint ventures (“CCJVs”), as of the respective dates:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Cash and cash equivalents excluding CCJVs	$	113,468	$	139,352	$	97,873
CCJV cash and cash equivalents1		82,047		94,359		80,195
Total consolidated cash and cash equivalents		195,515		233,711		178,068
Short-term and long-term marketable securities2		81,205		132,790		107,811
Total cash, cash equivalents and marketable securities	$	276,720	$	366,501	$	285,879

¹The volume and stage of completion of contracts from our CCJVs may cause fluctuations in joint venture cash and cash equivalents between periods. These funds generally are not available for the working capital or other liquidity needs of Granite until distributed.

²See Note 9 of “Notes to the Condensed Consolidated Financial Statements” for the composition of our marketable securities.

Our primary sources of liquidity are cash and cash equivalents, marketable securities and cash generated from operations. We may also from time to time access our credit facility, issue and sell equity, debt or hybrid securities or engage in other capital markets transactions.

40

Our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions. Marketable securities consist of U.S. Government and agency obligations and corporate bonds.

Granite’s portion of CCJV cash and cash equivalents was $47.4 million, $56.5 million and $48.8 million as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively. Excluded from the table above is Granite’s portion of unconsolidated construction joint venture cash and cash equivalents of $97.6 million, $91.0 million and $106.6 million as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively. The assets of each consolidated and unconsolidated construction joint venture relate solely to that joint venture. The decision to distribute joint venture assets must generally be made jointly by a majority of the members and, accordingly, these assets, including those associated with estimated cost recovery of customer affirmative claims and back charge claims, are generally not available for the working capital needs of Granite until distributed.

Our principal uses of liquidity are paying the costs and expenses associated with our operations, servicing outstanding indebtedness, making capital expenditures and paying dividends on our capital stock. We may also from time to time prepay or repurchase outstanding indebtedness and acquire assets or businesses that are complementary to our operations.

Cash Flows

	Six Months Ended June 30,
(in thousands)	2018			2017
Net cash provided by (used in):
Operating activities	$	(75,445	)	$	22,686
Investing activities		(38,480	)		(14,726	)
Financing activities		81,475			(19,218	)

As a large construction and heavy civil contractor and construction materials producer, our operating cash flows are subject to seasonal cycles, as well as the cycles associated with winning, performing and closing projects. Additionally, operating cash flows are impacted by the timing related to funding construction joint ventures and the resolution of uncertainties inherent in the complex nature of the work that we perform, including claims settlements. Our working capital assets result from both public and private sector projects. Customers in the private sector can be slower paying than those in the public sector; however, private sector projects generally have higher gross profit as a percentage of revenue.

Excluding the effect of acquired receivables, day’s sales outstanding increased 3 days to 58 days as of June 30, 2018 from 55 days at June 30, 2017 primarily due to an increase in contract assets/cost in excess of billings and estimated earnings, net related to a contract for which we have a pending affirmative claim. Excluding the effect of acquired accounts payable, day’s payables outstanding decreased 2 days to 56 days as of June 30, 2018 from 58 days at June 30, 2017 due to timing of salary accruals.

Cash used in operating activities of $75.4 million for the six months ended June 30, 2018 represents a $98.1 million increase when compared to 2017. The change was primarily due to a $76.3 million increase in net contributions to unconsolidated joint ventures, a $29.3 million increase in cash used in working capital partially offset by $5.8 million increase in cash provided by net income after adjusting for non-cash items. The increase in cash used in working capital was due to a $2.5 million decrease in cash used in working capital assets and a $31.8 million decrease in cash provided by working capital liabilities. The decrease in cash provided by working capital liabilities was primarily due to a 2 day decrease in DPO and relative volume.

Cash used by investing activities of $38.5 million for the six months ended June 30, 2018 represents a $23.8 million increase when compared to 2017. The change was primarily due to the acquisitions of Layne and LiquiForce partially offset by an increase in maturities, net of purchases, of marketable securities and in purchases, net of sales proceeds, of property and equipment (see Capital Expenditures discussion below).

Cash provided by financing activities of $81.5 million for the six months ended June 30, 2018 represents a $100.7 million increase when compared to 2017. The change was primarily due to $105.0 million in revolving credit facility draws that were made to fund portions of the Layne and LiquiForce acquisitions (Note 14 of “Notes to the Condensed Consolidated Financial Statements”).

Capital Expenditures

During the six months ended June 30, 2018, we had capital expenditures of $36.5 million compared to $37.5 million during 2017. Major capital expenditures are typically for aggregate and asphalt production facilities, aggregate reserves, construction equipment, buildings and leasehold improvements and investments in our information technology systems. The timing and amount of such expenditures can vary based on the progress of planned capital projects, the type and size of construction projects, changes in business outlook and other factors. As part of the Layne acquisition, we acquired $187.9 million in property and equipment. We currently anticipate 2018 capital expenditures to be between $105.0 million and $115.0 million for the full year.  

41

Derivatives

We recognize derivative instruments as either assets or liabilities in the condensed consolidated balance sheets at fair value using Level 2 inputs.

In May 2018, we terminated the interest rate swap we entered into in January 2016 due to the amendment and restatement of the Credit Agreement (as defined in Credit Agreement section of Note 14 to “Notes to the Condensed Consolidated Financial Statements”). In May 2018, we entered into two interest rate swaps designated as cash flow hedges with an effective date of May 2018 and a combined initial notional amount of $150.0 million and mature in May 2023. The interest rate swaps are designed to convert the interest rate on our term loan from a variable interest rate of LIBOR plus an applicable margin to a fixed rate of 2.76% plus the same applicable margin.

Surety Bonds and Real Estate Mortgages

We are generally required to provide various types of surety bonds that provide an additional measure of security under certain public and private sector contracts. At June 30, 2018, approximately $3.1 billion of our contract backlog was bonded. Performance bonds do not have stated expiration dates; rather, we are generally released from the bonds after the owner accepts the work performed under contract. The ability to maintain bonding capacity to support our current and future level of contracting requires that we maintain cash and working capital balances satisfactory to our sureties.

Our real estate affiliates are subject to mortgage indebtedness. This indebtedness is non-recourse to Granite but is recourse to the real estate entities. The terms of this indebtedness are typically renegotiated to reflect the evolving nature of the real estate projects as they progress through acquisition, entitlement and development. Modification of these terms may include changes in loan-to-value ratios requiring the real estate entity to repay portions of the debt.

Covenants and Events of Default

Our debt and credit agreements require us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below. Our failure to comply with any of these covenants, or to pay principal, interest or other amounts when due thereunder, would constitute an event of default under the applicable agreements. Under certain circumstances, the occurrence of an event of default under one of our debt or credit agreements (or the acceleration of the maturity of the indebtedness under one of our agreements) may constitute an event of default under one or more of our other debt or credit agreements. Default under our debt and credit agreements could result in (i) us no longer being entitled to borrow under the agreements; (ii) termination of the agreements; (iii) the requirement that any letters of credit under the agreements be cash collateralized; (iv) acceleration of the maturity of outstanding indebtedness under the agreements and/or (v) foreclosure on any collateral securing the obligations under the agreements.

The most significant financial covenants under the terms of our Credit Agreement and related to the note purchase agreement governing our 2019 Notes (“2019 NPA”) require the maintenance of a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio. In addition, the 2019 NPA requires a minimum Consolidated Tangible Net Worth.

As of June 30, 2018 and pursuant to the definitions in the 2019 NPA, which is more restrictive, our Consolidated Tangible Net Worth was $1.0 billion, which exceeded the minimum of $757.3 million and our Consolidated Leverage Ratio was 2.10, which did not exceed the maximum of 3.00. Our Consolidated Interest Coverage Ratio was 23.92, which exceeded the minimum of 4.00.

As of June 30, 2018, we were in compliance with all covenants contained in the Credit Agreement and related to the 2019 Notes. We are not aware of any non-compliance by any of our unconsolidated real estate entities with the covenants contained in their debt agreements.

Share Purchase Program

On April 7, 2016, we announced that the Board of Directors authorized us to purchase up to $200.0 million of our common stock at management’s discretion, which replaced the former authorization including the amount available. We did not purchase shares under the share purchase program in any of the periods presented. The specific timing and amount of any future purchases will vary based on market conditions, securities law limitations and other factors.

Website Access

Our website address is www.graniteconstruction.com. On our website we make available, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). The information on our website is not incorporated into, and is not part of, this report. These reports, and any amendments to them, are also available at the website of the SEC, www.sec.gov.

42

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As part of our acquisition of Layne and LiquiForce, we now are exposed to incremental market risks.

Foreign Currency Risk

Operating in international markets involves exposure to possible volatile movements in currency exchange rates. Layne’s international operations are in Mexico, Canada and Brazil and LiquiForce has international operations in Canada. Layne’s affiliates also operate in Latin America (see Note 12 of “Notes to the Condensed Consolidated Financial Statements”). The majority of the customer contracts in Mexico are U.S. dollar-based, reducing the exposure to currency fluctuations. As of June 30, 2018, we do not have any outstanding foreign currency option contracts.

As foreign currency exchange rates change, the impact to our consolidated statements of operations could be significant and may affect year-to-year comparability of operating results. The impact from foreign currency transactions during the three and six months ended June 30, 2018 was immaterial.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Control and Procedures

Our management carried out, as of June 30, 2018, with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2018, our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2018, there were no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The description of the matters set forth in Part I, Item 1 of this Report under Note 18 of “Notes to the Condensed Consolidated Financial Statements” is incorporated herein by reference.

Item 1A. RISK FACTORS

Except as set forth below, there has been no material changes to the risk factors previously disclosed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017:

We may be exposed to liabilities under the Foreign Corrupt Practices Act (“FCPA”) and any determination that we or any of our subsidiaries has violated the FCPA could have a material adverse effect on our business. The FCPA generally prohibits companies and their affiliates from making improper payment to non-U.S. officials for the purpose of obtaining or retaining business. Our internal policies, procedures and code of conduct mandate compliance with these anti-corruption laws. However, with the acquisition of Layne we now operate in some countries known to experience corruption. Despite our training and compliance programs, we cannot assure that our internal policies and procedures will always protect us from violation of such anti-corruption laws committed by our affiliated entities or their respective officers, directors, employees and agents. We could also face fines, sanctions and other penalties from authorities in the relevant foreign jurisdictions, including prohibition of our participating in or curtailment of business operations in those jurisdictions and the seizure of certain of our assets. Our customers in those jurisdictions could also seek to impose penalties or take other actions adverse to our interest. In addition, we could face other third-party claims by our directors, officers, employees, affiliates, advisors, attorneys, agents, stockholders, debt holders or other interest holders or constituents. Violations of FCPA laws, allegations of such violations and/or disclosure related to any relevant investigation could have a material adverse impact on our financial position, results of operations, cash flows and liquidity for reasons including, but not limited to, an adverse effect our reputation, our ability to obtain new business or retain existing business, to attract and retain employees, to access the capital markets and/or could give rise to an event of default under the agreements governing our debt instruments

43

In connection with acquisitions or divestitures, we may become subject to liabilities. In connection with any acquisitions, we may acquire liabilities or defects such as legal claims, including but not limited to third party liability and other tort claims; claims for breach of contract; employment-related claims; environmental liabilities, conditions or damage; permitting, regulatory or other compliance with law issues; or tax liabilities. If we acquire any of these liabilities, and they are not adequately covered by insurance or an enforceable indemnity or similar agreement from a creditworthy counterparty, we may be responsible for significant out-of-pocket expenditures. In connection with any divestitures, we may incur liabilities for breaches of representations and warranties or failure to comply with operating covenants under any agreement for a divestiture. In addition, we may indemnify a counterparty in a divestiture for certain liabilities of the subsidiary or operations subject to the divestiture transaction. These liabilities, if they materialize, could have a material adverse effect on our business, financial condition and results of operations.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information regarding the repurchase of shares of our common stock during the three months ended June 30, 2018:

Period	Total number of shares purchased1		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value of shares that may yet be purchased under the plans or programs2
April 1, 2018 through April 30, 2018		506	$	54.77		—	$	200,000,000
May 1, 2018 through May 31, 2018		27	$	56.68		—	$	200,000,000
June 1, 2018 through June 30, 2018		301	$	57.50		—	$	200,000,000
		834	$	55.82		—

¹The number of shares purchased is in connection with employee tax withholding for units vested under our 2012 Equity Incentive Plan.

²On April 7, 2016, we announced that our the Board of Directors authorized us to purchase up to $200.0 million of our common stock at management’s discretion, which replaced the former authorization including the amount available. We did not purchase shares under the share purchase plan in any of the periods presented. The specific timing and amount of any future purchases will vary based on market conditions, securities law limitations and other factors.

Item 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17CFR 229.104) is included in Exhibit 95 to this Quarterly Report on Form 10-Q.

44

Item 6. EXHIBITS

4.1	†	Indenture, dated as of November 12, 2013, between Layne Christensen Company and U.S. Bank National Association (incorporated by reference from Exhibit 4.1 to Layne’s Current Report on Form 8-K dated November 12, 2013)
4.2	†	Indenture, dated as of March 2, 2015, among Layne Christensen Company, Guarantor parties thereto and U.S. Bank National Association (incorporated by reference from Exhibit 4.1 to Layne’s Current Report on Form 8-K dated March 2, 2015)
4.3	†	4.25% supplemental Indenture, dated as of June 14, 2018, between the Company and U.S. Bank National Association (incorporated by reference from Exhibit 4.1 to Layne’s Current Report on Form 8-K dated June 14, 2018.
4.4	†	8.00% Supplemental Indenture, dated as of June 14, 2018, by and among the Company, Layne, and U.S. Bank National Association (incorporated by reference from Exhibit 4.2 to our Current Report on From 8-K dated June 14, 2018)
10.1	†	Third Amendment to Note Purchase Agreement dated April 18, 2018
10.2	†	Third Amended and Restated Credit Agreement, dated May 31, 2018 by and among Granite Construction Incorporated, Granite Construction Company, GILC Incorporated, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender, and L/C Issuer (incorporated by reference from Exhibit 10.1 to our current Report on Form 8-K dated June 5, 2018)
10.3	†	Third Amended and Restated Guaranty Agreement, dated May 31, 2018, by and among Granite Construction Incorporated, the guarantors party thereto and Bank of America, N.A., as Administrative Agent (incorporated by reference from exhibit 10.2 to our Current Report on Form 8-K dated June 5, 2018)
31.1	†	Certification of Principal Executive Officer
31.2	†	Certification of Principal Financial Officer
32	††	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95	†	Mine Safety Disclosure
101.INS	†	XBRL Instance Document
101.SCH	†	XBRL Taxonomy Extension Schema
101.CAL	†	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	†	XBRL Taxonomy Extension Definition Linkbase
101.LAB	†	XBRL Taxonomy Extension Label Linkbase
101.PRE	†	XBRL Taxonomy Extension Presentation Linkbase
	†	Filed herewith
	††	Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			GRANITE CONSTRUCTION INCORPORATED
Date:	August 8, 2018	By:	/s/ Jigisha Desai
			Jigisha Desai
			Senior Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)

45

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, James H. Roberts, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Granite Construction Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ James H. Roberts
	James H. Roberts
	President and Chief Executive Officer

Dated: August 8, 2018

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Jigisha. Desai, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Granite Construction Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Jigisha Desai
	Jigisha Desai
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

Dated: August 8, 2018

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Granite Construction Incorporated (the “Company”) does hereby certify that, to such officers’ knowledge:

(i) The report on Form 10-Q for the quarter ended June 30, 2018 of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of the Company as of and for the periods expressed in the report on Form 10-Q.

Dated:	August 8, 2018	/s/ James H. Roberts
		James H. Roberts
		President and Chief Executive Officer
Dated:	August 8, 2018	/s/ Jigisha Desai
		Jigisha. Desai
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Granite Construction Incorporated and will be retained by Granite Construction Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

EX-95

Exhibit 95

MINE SAFETY DISCLOSURE

We operate surface mines in the western United States to produce construction aggregates. The operation of our mines is subject to regulation by the federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA conducted 26 and 14 inspections at 20 and 14 of our mines during the three months ended June 30, 2018 and 2017, respectively. There were no reportable citations or orders following 26 and 13 of those inspections during the three months ended June 30, 2018 and 2017, respectively.

The chart below contains information regarding certain mining safety and health citations or orders that MSHA issued during the three months ended June 30, 2018 and 2017 associated with our mining operations.

	For the three months ended June 30,
Name of Mine	2018		2017
Lockwood		—		4
Littlerock		1		—
Lucas Pit		—		1
N50 (Nevada)		—		1
Swan		—		3
Tangerine		1		—
Walker		1		—
Wells		1		—
Total		4		9

With respect to the information in the above table, it should be noted that: (i) the number of citations and orders will vary depending on the size of the mine, (ii) the number of citations issued will vary from inspector to inspector and mine to mine, and (iii) citations and orders can be contested and appealed, and in that process may be reduced in severity and amount or dismissed.

During the three months ended June 30, 2018 and 2017, with respect to our mines:

• MSHA did not issue any orders requiring persons to be withdrawn from the areas affected by the alleged violations of mandatory health or safety standards under Section 104(b) of the Mine Act.

• MSHA did not issue any citations or orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under section 104(d) of the Mine Act.

• MSHA did not identify any flagrant violations under Section 110(b)(2) of the Mine Act

• MSHA issued one imminent danger order requiring immediate withdrawal from the affected areas under Section 107(a) of the Mine Act.

• We did not experience any mining-related fatalities.

• We did not receive written notice of a pattern of violations of mandatory health or safety standards from MSHA under Section 104(e) of the Mine Act or of the potential to have a pattern of violations of mandatory health or safety standards from MSHA.

• There were two legal actions thatare contests of citations and orders referenced in Subpart B of 29 CFR Part 2700 pending before the federal Mine Safety & Health Review Commission. There were no such legal actions instituted or resolved during the three months ended June 30, 2018 and 2017.

• Proposed assessments from the MSHA during the three months ended June 30, 2018 and 2017 were less than six thousand dollars.

.

XML

Document and Entity Information Document - shares	6 Months Ended
	Jun. 30, 2018	Aug. 06, 2018
Document And Entity Information [Abstract]
Entity Registrant Name	GRANITE CONSTRUCTION INC
Entity Central Index Key	0000861459
Trading Symbol	GVA
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		45,695,158

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Current assets
Cash and cash equivalents ($82,047, $94,359 and $80,195 related to consolidated construction joint ventures (“CCJVs”))	$ 195,515	$ 233,711	$ 178,068
Short-term marketable securities	20,014	67,775	47,821
Receivables, net ($38,828, $52,031 and $42,099 related to CCJVs)	492,718	479,791	484,245
Contract assets ($24,479, $0 and $0 related to CCJVs)	265,190	0	0
Costs and estimated earnings in excess of billings ($0, $1,437 and $3,124 related to CCJVs)	0	103,965	99,883
Inventories	96,024	62,497	65,495
Equity in construction joint ventures	252,467	247,826	230,448
Other current assets ($12,421, $10,384 and $7,190 related to CCJVs)	49,100	36,513	43,597
Total current assets	1,371,028	1,232,078	1,149,557
Property and equipment, net ($38,854, $38,361 and $28,398 related to CCJVs)	595,787	407,418	414,079
Long-term marketable securities	61,191	65,015	59,990
Investments in affiliates	99,495	38,469	37,170
Goodwill	246,881	53,799	53,799
Deferred income taxes, net	25,135	0	0
Other noncurrent assets	156,808	75,199	88,550
Total assets	2,556,325	1,871,978	1,803,145
Current liabilities
Current maturities of long-term debt	207,982	46,048	14,796
Accounts payable ($35,375, $34,795 and $24,976 related to CCJVs)	303,885	237,673	252,527
Contract liabilities ($40,678, $0 and $0 related to CCJVs)	91,864	0	0
Billings in excess of costs and estimated earnings ($0, $37,701 and $32,657 related to CCJVs)	0	135,146	114,180
Accrued expenses and other current liabilities ($2,147, $2,126 and $1,156 related to CCJVs)	293,959	236,407	231,048
Total current liabilities	897,690	655,274	612,551
Long-term debt	280,710	178,453	227,114
Deferred income taxes, net	5,759	1,361	5,420
Other long-term liabilities	71,180	44,085	47,983
Commitments and contingencies	0	0	0
Equity
Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding	0	0	0
Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding: 45,688,582 shares as of June 30, 2018, 39,871,314 shares as of December 31, 2017 and 39,837,295 shares as of June 30, 2017	457	399	398
Additional paid-in capital	516,680	160,376	155,476
Accumulated other comprehensive income	1,022	634	71
Retained earnings	737,417	783,699	715,451
Total Granite Construction Incorporated shareholders’ equity	1,255,576	945,108	871,396
Non-controlling interests	45,410	47,697	38,681
Total equity	1,300,986	992,805	910,077
Total liabilities and equity	$ 2,556,325	$ 1,871,978	$ 1,803,145

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Cash and cash equivalents	$ 195,515	$ 233,711	$ 178,068
Receivables, Net	492,718	479,791	484,245
Contract assets	265,190	0	0
Costs and estimated earnings in excess of billings	0	103,965	99,883
Other current assets	49,100	36,513	43,597
Property and equipment, net	595,787	407,418	414,079
Accounts payable	303,885	237,673	252,527
Contract liabilities	91,864	0	0
Billings in excess of costs and estimated earnings	0	135,146	114,180
Accrued expenses and other current liabilities	$ 293,959	$ 236,407	$ 231,048
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	3,000,000	3,000,000	3,000,000
Preferred Stock, Shares Outstanding	0	0	0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01	$ 0.01
Common Stock, Shares Authorized	150,000,000	150,000,000	150,000,000
Common Stock, Shares, Issued	45,688,582	39,871,314	39,837,295
Common Stock, Shares, Outstanding	45,688,582	39,871,314	39,837,295
Consolidated Construction Joint Venture [Member] | Joint Venture Consolidated [Member]
Cash and cash equivalents	$ 82,047	$ 94,359	$ 80,195
Receivables, Net	38,828	52,031	42,099
Contract assets	24,479	0	0
Costs and estimated earnings in excess of billings	0	1,437	3,124
Other current assets	12,421	10,384	7,190
Property and equipment, net	38,854	38,361	28,398
Accounts payable	35,375	34,795	24,976
Contract liabilities	40,678	0	0
Billings in excess of costs and estimated earnings	0	37,701	32,657
Accrued expenses and other current liabilities	$ 2,147	$ 2,126	$ 1,156

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Revenue
Total revenue	$ 807,119	$ 762,913	$ 1,370,498	$ 1,231,313
Cost of revenue
Total cost of revenue	726,750	688,343	1,233,846	1,131,617
Gross profit	80,369	74,570	136,652	99,696
Selling, general and administrative expenses	61,316	51,388	122,568	113,225
Acquisition and integration expenses	26,287	0	34,696	0
Gain on sales of property and equipment	(1,505)	(807)	(2,048)	(1,077)
Operating (loss) income	(5,729)	23,989	(18,564)	(12,452)
Other (income) expense
Interest income	(1,173)	(1,164)	(2,694)	(2,215)
Interest expense	3,203	2,694	5,638	5,437
Equity in income of affiliates	(3,534)	(1,259)	(3,758)	(2,175)
Other income, net	(940)	(642)	(672)	(1,512)
Total other income	2,444	371	1,486	465
(Loss) income before provision for (benefit from) income taxes	(3,285)	24,360	(17,078)	(11,987)
Provision for (benefit from) income taxes	2,796	8,088	(1,335)	(4,408)
Net (loss) income	(6,081)	16,272	(15,743)	(7,579)
Amount attributable to non-controlling interests	(2,304)	(2,139)	(4,065)	(2,078)
Net (loss) income attributable to Granite Construction Incorporated	$ (8,385)	$ 14,133	$ (19,808)	$ (9,657)
Net (loss) income per share attributable to common shareholders (see Note 15)
Basic	$ (0.20)	$ 0.35	$ (0.49)	$ (0.24)
Diluted	$ (0.20)	$ 0.35	$ (0.49)	$ (0.24)
Weighted average shares of common stock
Basic	41,044	39,827	40,074	39,738
Diluted	41,044	40,393	40,074	39,738
Dividends per common share	$ 0.13	$ 0.13	$ 0.26	$ 0.26
Construction [Member]
Revenue
Total revenue	$ 432,225	$ 429,269	$ 701,468	$ 656,118
Cost of revenue
Total cost of revenue	370,674	368,369	601,521	567,889
Large Project Construction [Member]
Revenue
Total revenue	273,946	254,463	522,360	461,496
Cost of revenue
Total cost of revenue	272,608	253,974	500,656	458,452
Construction Materials [Member]
Revenue
Total revenue	100,948	79,181	146,670	113,699
Cost of revenue
Total cost of revenue	$ 83,468	$ 66,000	$ 131,669	$ 105,276

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement Of Income And Comprehensive Income [Abstract]
Net (loss) income	$ (6,081)	$ 16,272	$ (15,743)	$ (7,579)
Other comprehensive income (loss), net of tax:
Net unrealized loss on derivatives	(1,354)	(261)	(734)	(209)
Less: reclassification for net losses included in interest expense	1,602	47	1,562	116
Net change	248	(214)	828	(93)
Foreign currency translation adjustments, net	(421)	542	(438)	535
Other comprehensive (loss) income	(173)	328	390	442
Comprehensive (loss) income	(6,254)	16,600	(15,353)	(7,137)
Non-controlling interests in comprehensive loss	(2,304)	(2,139)	(4,065)	(2,078)
Comprehensive (loss) income attributable to Granite	$ (8,558)	$ 14,461	$ (19,418)	$ (9,215)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net loss	$ (15,743)	$ (7,579)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization	43,547	31,148
Gain on sales of property and equipment	(2,048)	(1,077)
Stock-based compensation	10,193	11,224
Equity in net loss from unconsolidated joint ventures	13,418	8,249
Net income from affiliates	(3,758)	(2,175)
Changes in assets and liabilities, net of the effects of acquisitions in 2018:
Receivables	(24,821)	(64,864)
Costs and estimated earnings in excess of billings, net	0	(28,284)
Contract assets, net	(76,166)	0
Inventories	(9,526)	(10,250)
Contributions to unconsolidated construction joint ventures	(55,733)	(750)
Distributions from unconsolidated construction joint ventures	11,201	32,494
Other assets, net	4,192	(7,037)
Accounts payable	24,559	52,417
Accrued expenses and other current liabilities, net	5,240	9,170
Net cash (used in) provided by operating activities	(75,445)	22,686
Investing activities
Purchases of marketable securities	(9,952)	(49,816)
Maturities of marketable securities	60,000	70,000
Purchases of property and equipment ($11,369 and $7,492 related to CCJVs)	(36,471)	(37,518)
Proceeds from sales of property and equipment	2,704	2,585
Cash paid to purchase businesses, net of cash and restricted cash acquired	(55,030)	0
Other investing activities, net	269	23
Net cash used in investing activities	(38,480)	(14,726)
Financing activities
Proceeds from long term debt	105,250	0
Long-term debt principal repayments	(1,250)	(2,500)
Cash dividends paid	(10,389)	(10,327)
Repurchases of common stock	(6,165)	(6,568)
Distributions to non-controlling partners	(6,400)	0
Other financing activities, net	429	177
Net cash provided by (used in) financing activities	81,475	(19,218)
Net decrease in cash, cash equivalents and restricted cash	(32,450)	(11,258)
Cash and cash equivalents at beginning of period	233,711	189,326
Cash, cash equivalents and restricted cash of $5,746 at end of period	201,261	178,068
Cash paid during the period for:
Interest	6,134	5,957
Income taxes	7,246	2,554
Other non-cash operating activities:
Performance guarantees	0	5,761
Non-cash investing and financing activities:
Common stock issued in acquisition	321,075	0
Premium on 8.0% Convertible Notes	30,702	0
Restricted stock units issued, net of forfeitures	13,022	11,254
Accrued cash dividends	$ 5,940	$ 5,179

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Purchases of property and equipment	$ (36,471)	$ (37,518)
Cash, cash equivalents and restricted cash	5,746	0
Consolidated Construction Joint Venture [Member] | Joint Venture Consolidated [Member]
Purchases of property and equipment	$ 11,369	$ 7,492

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Granite Construction Incorporated (“we,” “us,” “our,” “the Company” or “Granite”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), are unaudited and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2017. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to state fairly our financial position at June 30, 2018 and 2017 and the results of our operations and cash flows for the periods presented. The December 31, 2017 condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP.

Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may alter our construction schedules and can create variability in our revenues and profitability. Therefore, the results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year.

We prepared the accompanying condensed consolidated financial statements on the same basis as our annual consolidated financial statements, except for the adoption during the three months ended March 31, 2018 of Accounting Standards Update (“ASU”) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, ASU No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory, ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business and ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting, none of which had a material impact on our condensed consolidated financial statements. In addition, during the three months ended March 31, 2018, we adopted ASU No. 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.118, the impact of which is disclosed in Note 16 and on January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers and subsequently issued additional related ASUs (“Topic 606”), the impact of which is described in detail below.

On April 3, 2018, we acquired LiquiForce and on June 14, 2018, we completed the acquisition of Layne Christensen Company (“Layne”). See Note 3 for further information.

Foreign Currency Transactions and Translation:Through the acquisitions of Layne and LiquiForce, we now have operations in Latin America, Canada and Brazil which involve exposure to possible volatile movements in foreign currency exchange rates. We account for foreign currency exchange transactions and translation in accordance with ASC Topic 830, Foreign Currency Matters. Foreign currency transactions are remeasured into the functional currency with gains and losses included in other income, net in the condensed consolidated statements of operations. In Mexico, most of our customer contracts are denominated in U.S. dollars; therefore, the functional currency is U.S. dollars. In Canada and Brazil, the functional currency is the local currency. The impact from foreign currency transactions was immaterial for both the three and six months ended June 30, 2018. Assets and liabilities in functional currency are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated into U.S. dollars at average foreign currency exchange rates prevailing during the reporting periods. The translation adjustments from functional currency to U.S. dollars are reported in accumulated other comprehensive income on the condensed consolidated balance sheets.

Cash, Cash Equivalents and Restricted Cash: In connection with the acquisition of Layne, we acquired restricted cash which is included in other noncurrent assets in the condensed consolidated balance sheets and consists of escrow funds and judicial deposits associated with tax related legal proceedings in Brazil. The table below presents changes in restricted cash and cash equivalents on the condensed consolidated statements of cash flows and a reconciliation to the amounts reported in the condensed consolidated balance sheets (in thousands).

Six Months Ended June 30,	2018			2017
Cash and cash equivalents, beginning of period	$	233,711		$	189,326
End of the period
Cash and cash equivalents		195,515			178,068
Restricted cash		5,746			—
Total cash, cash equivalents and restricted cash, end of period		201,261			178,068
Net decrease in cash, cash equivalents and restricted cash	$	(32,450	)	$	(11,258	)

Inventories: Inventories consist primarily of quarry products, contract-specific materials, water well drilling materials, and sewer remediation materials that are located in the U.S. and mineral extraction and drilling supplies located in the U.S. and foreign countries, primarily Brazil and Mexico. Cost of U.S. and foreign inventories are valued at the lower of average cost or net realizable value. We reserve quarry products based on estimated quantities of materials on hand in excess of approximately one year of demand. As of June 30, 2018, inventory included $19.1 million of supplies related to the Water and Mineral Services operating group.

Reclassifications: Certain immaterial reclassifications of prior period amounts have been made to conform to the current period presentation.

Effect of adopting Topic 606

The core principle of Topic 606 is that revenue will be recognized when promised goods or services are transferred to customers in an amount that reflects consideration for which entitlement is expected in exchange for those goods or services. We adopted Topic 606 using a modified retrospective transition approach and elected to apply Topic 606 to contracts with customers that are not substantially complete, i.e. less than 90% complete, as of January 1, 2018.

While the adoption of Topic 606 did not have an impact on revenue of our Construction Materials segment, it did impact revenue of our Construction and Large Project Construction segments specifically in the following areas:

• Multiple performance obligations – In accordance with Topic 606, we reviewed construction contracts with customers, including those related to contract modifications, to determine if there are multiple performance obligations. Based on this review, we identified one unconsolidated joint venture contract in our Large Project Construction segment that has multiple performance obligations.

• Multiple contracts – We reviewed contracts containing task orders and identified one Construction segment master contract that consists of multiple individual contracts as defined by Topic 606. Previously, revenue for this contract was forecasted and recorded at the master contract level.

• Revenue recognition – We identified one contract in our Large Project Construction segment where performance obligations are satisfied and control of the promised goods and services are transferred to the customer upon delivery of goods rather than over time. Previously, revenue for this contract was recognized over time.

• Provisions for losses – We identified one unconsolidated joint venture contract in our Large Project Construction segment that has actual and provisions for losses at the performance obligation level related to completed and uncompleted performance obligations, respectively. Previously, provisions for losses were recorded at the contract level.

The impact to retained earnings as of January 1, 2018 from the adoption of Topic 606 related to the items noted above was a net cumulative decrease of $15.2 million.

In addition, as of January 1, 2018, we began to separately present contract assets and liabilities on the condensed consolidated balance sheets. Contract assets include amounts due under contractual retainage provisions that were previously included in accounts receivable as well as costs and estimated earnings in excess of billings that were previously separately presented. Contract liabilities include billings in excess of costs and estimated earnings that were previously separately presented as well as provisions for losses that were previously included in accrued expenses and other current liabilities. See Note 7 for further information.

Disclosures included in Notes 5, 6 and 7 are related to the adoption of Topic 606 and are revenue disaggregated by operating group, information about unearned revenue and contract assets and liabilities, respectively.

The accounting policies that were affected by Topic 606 and the changes thereto are as follows:

Revenue Recognition: Our revenue is primarily derived from construction contracts that can span several quarters or years and from sales of construction materials. We recognize revenue in accordance with Topic 606. Topic 606 provides for a five-step model for recognizing revenue from contracts with customers as follows:

1. Identify the contract

2. Identify performance obligations

3. Determine the transaction price

4. Allocate the transaction price

5. Recognize revenue

Generally, our contracts contain one performance obligation.

Contracts with customers in our Construction Materials segment are typically defined by our customary business practices and are valued at the contractual selling price per unit. Our customary business practices are for the delivery of a separately identifiable good at a point in time which is typically when delivery to the customer occurs.

Contracts in our Construction and Large Project Construction segments may contain multiple distinct promises or multiple contracts within a master agreement (e.g. contracts that cross multiple locations/geographies and task orders), which we review at contract inception to determine if they represent multiple performance obligations or multiple separate contracts. This review consists of determining if promises or groups of promises are distinct within the context of the contract, including whether contracts are physically contiguous, contain task orders, purchase orders or sales orders, contain termination clauses and/or contain elements not related to design and/or build.

The transaction price is the amount of consideration to which we expect to be entitled in exchange for transferring goods and services to the customer. The consideration promised in a contract with customers of our Construction and Large Project Construction segments may include both fixed amounts and variable amounts (e.g. bonuses/incentives or penalties/liquidated damages) to the extent that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved (i.e., probable and estimable). When a contract has a single performance obligation, the entire transaction price is attributed to that performance obligation. When a contract has more than one performance obligation, the transaction price is allocated to each performance obligation based on estimated relative standalone selling pricesof the goods or services at the inception of the contract, which typically is determined using cost plus an appropriate margin.

Subsequent to the inception of a contract in our Construction and Large Project Construction segments, the transaction price could change for various reasons, including the executed or estimated amount of change orders and unresolved contract modifications and claims to or from owners. Changes that are accounted for as an adjustment to existing performance obligations are allocated on the same basis at contract inception. Otherwise, changes are accounted for as separate performance obligation(s) and the separate transaction price is allocated as discussed above.

Changes are made to the transaction price from unapproved change orders to the extent the amount can be reasonably estimated and recovery is probable.

On certain projects we have submitted and have pending unresolved contract modifications and affirmative claims (“affirmative claims”) to recover additional costs and the associated profit, if applicable, to which the Company believes it is entitled under the terms of contracts with customers, subcontractors, vendors or others. The owners or their authorized representatives and/or other third parties may be in partial or full agreement with the modifications or affirmative claims, or may have rejected or disagree entirely or partially as to such entitlement.

Changes are made to the transaction price from affirmative claims with customers to the extent that additional revenue on a claim settlement with a customer is probable and estimable. A reduction to costs related to affirmative claims with non-customers with whom we have a contractual arrangement (“back charges”) is recognized when the estimated recovery is probable and the amount can be reasonably estimated. Except for contractual back charges, affirmative claims against non-customers that are unrelated to jobs are recognized as a reduction to cost or increase to other income when the claims are settled. Recognizing affirmative claims and back charge recoveries requires significant judgments of certain factors including, but not limited to, dispute resolution developments and outcomes, anticipated negotiation results, and the cost of resolving such matters and estimates.

Certain construction contracts include retention provisions to provide assurance to our customers that we will perform in accordance with the contract terms and are therefore not considered a financing benefit. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work or products by the customer. We have determined there are no significant financing components in our contracts during the six months ended June 30, 2018.

Typically, performance obligations related to contracts in our Construction and Large Project Construction segments are satisfied over time because our performance typically creates or enhances an asset that the customer controls as the asset is created or enhanced. We recognize revenue as performance obligations are satisfied and control of the promised good and service is transferred to the customer. Revenue in our Construction and Large Project Construction segments is ordinarily recognized over time as control is transferred to the customers by measuring the progress toward complete satisfaction of the performance obligation(s) using an input (i.e., “cost to cost”) method. Under the cost to cost method, costs incurred to-date are generally the best depiction of transfer of control.

All contract costs, including those associated with affirmative claims, change orders and back charges, are recorded as incurred and revisions to estimated total costs are reflected as soon as the obligation to perform is determined. Contract costs consist of direct costs on contracts, including labor and materials, amounts payable to subcontractors, direct overhead costs and equipment expense (primarily depreciation, fuel, maintenance and repairs).

The accuracy of our revenue and profit recognition in a given period depends on the accuracy of our estimates of the cost to complete each project. Cost estimates for all of our significant projects use a detailed “bottom up” approach, and we believe our experience allows us to create materially reliable estimates. There are a number of factors that can contribute to changes in estimates of contract cost and profitability. The most significant of these include:

• the completeness and accuracy of the original bid;

• costs associated with scope changes;

• changes in costs of labor and/or materials;

• extended overhead and other costs due to owner, weather and other delays;

• subcontractor performance issues;

• changes in productivity expectations;

• site conditions that differ from those assumed in the original bid;

• changes from original design on design-build projects;

• the availability and skill level of workers in the geographic location of the project;

• a change in the availability and proximity of equipment and materials;

• our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; and

• the customer’s ability to properly administer the contract.

The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins may cause fluctuations in gross profit and gross profit margin from period to period. Significant changes in cost estimates, particularly in our larger, more complex projects have had, and can in future periods have, a significant effect on our profitability.  

All state and federal government contracts and many of our other contracts provide for termination of the contract at the convenience of the party contracting with us, with provisions to pay us for work performed through the date of termination including demobilization cost.

Generally, costs to obtain our contracts (“pre-bid costs”) that are not expected to be recovered from the customer are expensed as incurred and included in selling, general and administrative expenses on our consolidated statements of operations. Although unusual, pre-bid costs that are explicitly chargeable to the customer even if the contract is not obtained are included in accounts receivable on our consolidated balance sheets when we are notified that we are not the low bidder with a corresponding reduction to selling, general and administrative expenses on our consolidated statements of operations.

Unearned Revenue: Unearned revenue represents the aggregate amount of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations at the end of a reporting period. We generally include a project in our unearned revenue at the time a contract is awarded, the contract has been executed and to the extent we believe funding is probable. Certain contracts contain contract options that are exercisable at the option of our customers without requiring us to go through an additional competitive bidding process or contain task orders related to master contracts under which we perform work only when the customer awards specific task orders to us. Contract options and task orders are included in unearned revenue when exercised or issued, respectively.

Substantially all of the contracts in our unearned revenue may be canceled or modified at the election of the customer; however, we have not been materially adversely affected by contract cancellations or modifications in the past. Many projects in our Construction segment are added to unearned revenue and completed within the same fiscal quarter or year and, therefore, may not be reflected in our beginning or ending unearned revenue. Approximately $2.2 billion of the June 30, 2018 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter. Unearned revenue is presented by segment and operating group in Note 6.

Contract Assets: Our contract assets include amounts due under contractual retainage provisions as well as costs and estimated earnings in excess of billings. The balances billed but not paid by customers pursuant to retainage provisions generally become due upon completion and acceptance of the project work or products by the owners. Costs and estimated earnings in excess of billings also represent amounts earned and reimbursable under contracts, including claim recovery estimates, but have a conditional right for billing and payment such as achievement of milestones or completion of the project. With the exception of customer affirmative claims, generally, such unbilled amounts will become billable according to the contract terms and generally will be billed and collected over the next twelve months. Settlement with the customer of outstanding affirmative claims is dependent on the claims resolution process and could extend beyond one year or the project operating cycle. Based on our historical experience, we generally consider the collection risk related to billable amounts to be low. When events or conditions indicate that it is probable that the amounts outstanding become unbillable, the transaction price and associated contract asset is reduced.

Costs to mobilize equipment and labor to a job site prior to substantive work beginning (“mobilization costs”) are capitalized as incurred and amortized over the expected duration of the contract. As of June 30, 2018 and January 1, 2018, we had no material capitalized mobilization costs.

Contract Liabilities: Our contract liabilities consist of provisions for losses and billings in excess of costs and estimated earnings. Provisions for losses are recognized in the consolidated statements of operations at the uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue. Billings in excess of costs and estimated earnings are billings to customers on contracts in advance of work performed, including advance payments negotiated as a contract condition. Generally, unearned project-related costs will be earned over the next twelve months.

The amounts by which each condensed consolidated balance sheet line item as of June 30, 2018 and condensed consolidated statement of operations line item for the three and six months ended June 30, 2018 was affected by the adoption of Topic 606 relative to the previous revenue guidance are presented in the tables below (in thousands). The changes are primarily related to reclassifications on the condensed consolidated balance sheet and the impact on the condensed consolidated statement of operations from the new requirements under Topic 606. The change in retained earnings is net of the cumulative effect of initially applying Topic 606.

June 30, 2018

Condensed Consolidated Balance Sheet	As Reported		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Assets
Receivables, net	$	492,718	$	615,782	$	(123,064	)
Contract assets		265,190		—		265,190
Costs and estimated earnings in excess of billings		—		175,265		(175,265	)
Other current assets		49,100		49,813		(713	)
Deferred income taxes, net		25,135		19,863		5,272
Liabilities and equity
Contract liabilities	$	91,864	$	—	$	91,864
Billings in excess of costs and estimated earnings		—		119,335		(119,335	)
Accrued expenses and other current liabilities		293,959		282,222		11,737
Deferred income taxes, net		5,759		5,759		—
Retained earnings		737,417		750,263		(12,846	)

Three Months Ended June 30, 2018

Condensed Consolidated Statement of Operations	As Reported			Balances Without Adoption of Topic 606			Effect of Change Higher/(Lower)
Revenue
Construction	$	432,225		$	433,509		$	(1,284	)
Large Project Construction		273,946			274,228			(282	)
Cost of revenue
Construction	$	370,674		$	370,674		$	—
Large Project Construction		272,608			274,450			(1,842	)
Gross profit		80,369			80,093			276
Operating (loss) income		(5,729	)		(6,005	)		276
Provision for income taxes		2,796			2,746			50
Net (loss) income		(6,081	)		(6,307	)		226
Net (loss) income attributable to Granite Construction Incorporated		(8,385	)		(8,611	)		226

Six Months Ended June 30, 2018

Condensed Consolidated Statement of Operations	As Reported			Balances Without Adoption of Topic 606			Effect of Change Higher/(Lower)
Revenue
Construction	$	701,468		$	702,989		$	(1,521	)
Large Project Construction		522,360			520,849			1,511
Cost of revenue
Construction	$	601,521		$	601,521		$	—
Large Project Construction		500,656			503,734			(3,078	)
Gross profit		136,652			133,584			3,068
Operating (loss) income		(18,564	)		(21,632	)		3,068
(Benefit from) provision for income taxes		(1,335	)		(2,048	)		713
Net (loss) income		(15,743	)		(18,098	)		2,355
Net (loss) income attributable to Granite Construction Incorporated		(19,808	)		(22,163	)		2,355

XML

Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Recently Issued Accounting Pronouncements

2.  Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) and subsequently issued a related ASU, which requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The ASU will be effective commencing with our quarter ending March 31, 2019. We expect the adoption of this ASU to have a material increase to assets and liabilities on our consolidated balance sheets.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows companies to reclassify stranded tax affects resulting from the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”), from accumulated other comprehensive income to retained earnings. In addition, the ASU requires certain new disclosures regardless of the election. This ASU will be effective commencing with our quarter ending March 31, 2019. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

XML

Acquisitions

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Acquisitions

3.  Acquisitions

On June 14, 2018, we completed the $349.8 million acquisition of Layne, a U.S.-based global water management, infrastructure services and drilling company in a stock-for-stock merger which was comprised of $321.0 million in Company common stock and $28.8 million in cash to settle all outstanding stock options, restricted stock awards and unvested performance shares of Layne. In addition to issuances of Granite common stock and the settlement of various equity awards, we assumed $191.5 million in convertible notes at fair value. See Note 14 for further discussion of the assumed convertible notes.

Layne will operate as a wholly owned subsidiary of Granite Construction Incorporated and its results will be reported in the newly formed Water and Mineral Services operating group in the Construction and Construction Materials segments. Layne’s customers are in both the public and private sector. Layne is a leader in water management and drilling and therefore this acquisition significantly enhances Granite’s presence in the water infrastructure market. Layne has a network of 52 offices located throughout North and Latin America. We have accounted for this transaction in accordance with ASC Topic 805, Business Combinations (“ASC 805”).

Included in the condensed consolidated statements of operations for three and six months ending June 30, 2018 is approximately two weeks of Layne revenue and net loss before taxes of $21.5 million and $15.1 million, respectively, following the June 14, 2018 acquisition date. The loss before taxes includes Layne’s portion of total acquisition and integration expenses of $14.7 million for three and six months ending June 30, 2018.

Preliminary Purchase Price Allocation

In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable intangible assets based on their estimated fair values as of June 14, 2018 as presented in the table below (in thousands). These estimates are subject to revision, which may result in adjustments to the values presented below. We expect to finalize these amounts within 12 months from the acquisition date.

Assets
Cash	$	2,995
Receivables		70,160
Contract assets		44,947
Inventories		23,424
Other current assets		5,533
Property and equipment		187,890
Investments in affiliates		63,000
Deferred income taxes		23,185
Other noncurrent assets		17,868
Total tangible assets		439,002
Identifiable intangible assets		60,748
Liabilities
Identifiable intangible liabilities		6,700
Accounts payable		38,321
Contract liabilities		7,854
Accrued expenses and other current liabilities		47,694
Long-term debt		191,500
Other long-term liabilities		32,085
Total liabilities assumed		317,454
Total identifiable net assets acquired		175,596
Goodwill		174,244
Estimated purchase price	$	349,840

In addition, on April 3, 2018, we acquired LiquiForce, a privately owned company which provides sewer lining rehabilitation services to public and private sector water and wastewater customers in both Canada and the U.S. The Company acquired LiquiForce for $35.9 million in cash borrowed under the revolving credit facility as defined in Note 14. The tangible and net intangible assets acquired and liabilities assumed were $14.5 million, $10.9 million and $8.6 million, respectively, resulting in acquired goodwill of $19.1 million. LiquiForce results are reported in the Kenny operating group in the Construction segment.

Intangible assets

The following table lists amortized intangible assets and liabilities from the Layne and LiquiForce acquisitions that are included in other noncurrent assets and other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2018 (in thousands):

	Weighted Average Useful Lives (Years)		Gross Value		Accumulated Amortization			Net Value
Assets
Customer relationships		7	$	34,674	$	(728	)	$	33,946
Backlog		3		11,163		(1,890	)		9,273
Developed technologies		4		9,228		(234	)		8,994
Trademarks/trade names		4		8,989		(163	)		8,826
Favorable contracts		3		4,800		(596	)		4,204
Right of ways		12		2,268		(12	)		2,256
Covenants not to compete and other		5		859		(42	)		817
Intangible assets			$	71,981	$	(3,665	)	$	68,316
Liabilities
Unfavorable contracts		2	$	6,892	$	(952	)	$	5,940
Unfavorable leases		1		300		(13	)		287
Intangible liabilities			$	7,192	$	(965	)	$	6,227

The net amortization expense related to the acquired amortized intangible assets for the three and six months ended June 30, 2018 was $2.7 million and was included in cost of revenue and selling, general and administrative expenses in the condensed consolidated statements of operations. All of the acquired intangible assets and liabilities will be amortized on a straight line basis except for backlog, favorable contracts and unfavorable contracts which will be amortized as the associated projects progress, and customer relationships which will be amortized on a double declining basis. Amortization expense related to the acquired amortized intangible asset balances at June 30, 2018 is expected to be recorded in the future as follows: $10.9 million for the remainder of 2018; $13.2 million in 2019; $10.8 million in 2020; $8.8 million in 2021; and $18.4 million thereafter.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The factors that contributed to the recognition of goodwill from the acquisitions of Layne and LiquiForce include acquiring a workforce with capabilities in the global water management, construction and drilling markets, cost savings opportunities and synergies. In connection with the Layne acquisition, the assignment of goodwill to reporting units was not complete as of June 30, 2018 and is expected to be complete as of September 30, 2018. For the LiquiForce acquisition, we recorded $18.8 million within our Construction segment that was allocated to our Kenny Construction reporting unit. The goodwill from both acquisitions is not expected to be deductible for income tax purposes.

Balance at December 31, 2017	$	53,799
Layne acquisition goodwill		174,244
LiquiForce acquisition goodwill		18,838
Balance at June 30, 2018	$	246,881

Pro Forma Financial Information

The financial information in the table below summarizes the combined results of operations of Granite and Layne, on a pro forma basis, as though the companies had been combined as of the beginning of 2017 (in thousands, except per share amounts). The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2017.

	Three Months Ended June 30,					Six Months Ended June 30,
	2018		2017			2018		2017
Revenue	$	909,783	$	888,176		$	1,583,073	$	1,452,067
Net income (loss)		16,834		(10,974	)		14,454		(61,709	)
Net income (loss) attributable to Granite		14,530		(13,113	)		10,389		(63,787	)
Basic net income (loss) per share attributable to common shareholders		0.32		(0.29	)		0.23		(1.41	)
Diluted net income (loss) per share attributable to common shareholders		0.30		(0.29	)		0.22		(1.41	)

These amounts have been calculated after applying Granite’s accounting policies and adjusting the results of Layne to reflect the additional depreciation and amortization that would have been recorded assuming the fair value adjustments to property and equipment and intangible assets had been applied starting on January 1, 2017. Acquisition and integration expenses related to Layne that were incurred during the three and six months ended June 30, 2018 are reflected in the six months ended June 30, 2017 due to the assumed timing of the transaction. The statutory tax rate of 26% and 39% was used for 2018 and 2017, respectively, for the pro forma adjustments.

Acquisition and integration expenses associated with both the Layne and LiquiForce acquisitions for the three and six months ended June 30, 2018 were comprised of the following (in thousands):

	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
Professional services and other expenses	$	18,064	$	26,473
Severance and personnel costs		8,223		8,223
Total	$	26,287	$	34,696

XML

Revisions in Estimates

6 Months Ended

Jun. 30, 2018

Change In Accounting Estimate [Abstract]

Revisions in Estimates

4.  Revisions in Estimates

Our profit recognition related to construction contracts is based on estimates of costs to complete each project. These estimates can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, and uncertainties are resolved. When we experience significant changes in our estimates of costs to complete, we undergo a process that includes reviewing the nature of the changes to ensure that there are no material amounts that should have been recorded in a prior period rather than as revisions in estimates for the current period. For revisions in estimates, generally we use the cumulative catch-up method for changes to the transaction price that are part of a single performance obligation. Under this method, revisions in estimates are accounted for in their entirety in the period of change. There can be no assurance that we will not experience further changes in circumstances or otherwise be required to revise our cost estimates in the future.

In our review of these changes for the three and six months ended June 30, 2018 and for the three months ended June 30, 2017, we did not identify any material amounts that should have been recorded in a prior period. In our review of these changes for the six months ended June 30, 2017, we identified and corrected amounts that should have been recorded during the three months ended September 30, 2016. This correction resulted in a $4.9 million decrease to Large Project Construction revenue and gross profit and a $1.6 million increase in net loss attributable to Granite Construction Incorporated. We have assessed the impact of this correction to the financial statements of prior periods’ as well as to the financial statements for the six months ended June 30, 2017 and the year ended December 31, 2017 and have concluded that the amounts were not material.   

In the normal course of business, we have revisions in estimated costs some of which are associated with unresolved affirmative claims and back charges. The estimated or actual recovery related to these estimated costs may be recorded in future periods or may be at values below the associated cost, which can cause fluctuations in the gross profit impact from revisions in estimates.

Affirmative Claims

Revisions in estimates for the three and six months ended June 30, 2018 included net increases in revenue of $2.3 million and $4.9 million, respectively, related to the estimated cost recovery of customer affirmative claims, which included increases of $6.4 million and $8.5 million, respectively, that were also affected by an increase in estimated contract costs in excess of the estimated recovery during the three and six months ended June 30, 2018. The offsetting decreases of $4.1 million and $3.6 million, respectively, had estimated contract costs in excess of the estimated cost recovery that were recorded in prior periods.

Revisions in estimates for the three and six months ended June 30, 2017 included net increases in revenue of $12.2 million and $14.0 million, respectively, related to the estimated cost recovery of customer affirmative claims, which included increases of $11.4 million and $14.1 million, respectively, that were also affected by an increase in estimated contract costs in excess of the estimated recovery during the three and six months ended June 30, 2017. The remaining $0.8 million and offsetting decrease of $0.1 million, respectively, had estimated contract costs in excess of estimated cost recovery that were recorded in prior periods.

Back Charges

Revisions in estimates for the three and six months ended June 30, 2018 included reductions in cost of revenue of $1.6 million and $2.0 million, respectively, related to the estimated recovery of back charges of which $0.9 million and $1.1 million, respectively, had estimated contract costs in excess of estimated cost recovery during the three and six months ended June 30, 2018. The remaining $0.7 million and $0.9 million, respectively, had estimated contract costs in excess of estimated cost recovery that were recorded in prior periods.

Revisions in estimates for the three and six months ended June 30, 2017 included reductions in cost of revenue of $2.7 million and $3.0 million, respectively, related to the estimated recovery of back charges of which $1.4 million had estimated contract costs in excess of estimated cost recovery during both the three and six months ended June 30, 2017. The remaining $1.3 million and $1.6 million, respectively, had estimated contract costs in excess of estimated cost recovery that were recorded in prior periods.

The tables below include the impact to gross profit from significant revisions in estimates related to estimated and actual recovery of customer affirmative claims and back charges as well as the impact to gross profit from changes in estimated contract revenue and costs.

Construction

The changes in project profitability from revisions in estimates, both increases and decreases, which individually had an impact of $1.0 million or more on gross profit, were net decreases of $4.5 million and $3.3 million for the three and six months ended June 30, 2018, respectively. The changes for the three and six months ended June 30, 2017 were decreases of $1.1 million and $1.8 million, respectively. The projects are summarized as follows:

Increases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with upward estimate changes			1			—			2			—
Range of increase in gross profit from each project, net	$		1.4	$		—	$	1.4 - 1.4		$		—
Increase on project profitability	$		1.4	$		—	$		2.8	$		—

The increases during the three and six months ended June 30, 2018 were due to lower costs and higher productivity than originally anticipated.

Decreases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with downward estimate changes			3			1			3			1
Range of reduction in gross profit from each project, net	$	1.2 - 2.5		$		1.1	$	1.3 - 2.6		$		1.8
Decrease on project profitability	$		5.9	$		1.1	$		6.1	$		1.8

The decreases during the three and six months ended June 30, 2018 and 2017 were due to additional costs and lower productivity than originally anticipated.

Large Project Construction

The changes in project profitability from revisions in estimates, both increases and decreases, which individually had an impact of $1.0 million or more on gross profit, were net decreases of $30.3 million and $39.8 million for the three and six months ended June 30, 2018, respectively. The changes for the three and six months ended June 30, 2017 were decreases of $23.8 million and $37.8 million, respectively.

There were no amounts attributable to non-controlling interests for both the three and six months ended June 30, 2018. The amounts attributable to non-controlling interests were $0.4 million and $2.0 million of the decreases for the three and six months ended June 30, 2017, respectively. The projects are summarized as follows:

Increases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with upward estimate changes			1			—			1			—
Range of increase in gross profit from each project, net	$		1.0	$		—	$		1.2	$		—
Increase on project profitability	$		1.0	$		—	$		1.2	$		—

The increases during the three and six months ended June 30, 2018 were due to higher productivity than originally anticipated as well as owner-directed scope changes.

Decreases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with downward estimate changes			3			5			5			7
Range of reduction in gross profit from each project, net	$	1.0 - 15.7		$	1.1 - 8.1		$	1.1 - 18.3		$	1.0 - 10.8
Decrease on project profitability	$		31.3	$		23.8	$		41.0	$		37.8

The decreases during the three and six months ended June 30, 2018 were due to higher costs than originally anticipated as well as additional weather related costs and a decrease in estimated recovery from customer affirmative claims. The decreases during the three and six months ended June 30, 2017 were due to higher costs than originally anticipated as well as additional design, weather and owner-related costs, net of estimated and actual recovery from customer affirmative claims and back charges. As of June 30, 2018 there were three projects for which additional costs were reasonably possible in excess of the probable amounts included in the cost forecast. The reasonably possible aggregate range that has the potential to adversely impact gross profit during the year ending December 31, 2018, was zero to $15.0 million. As the related projects proceed, future estimates may change and could have a material effect on our financial position, results of operations and/or cash flows in the future.

XML

Disaggregation of Revenue

6 Months Ended

Jun. 30, 2018

Disaggregation Of Revenue [Abstract]

Disaggregation of Revenue

5.  Disaggregation of Revenue

We disaggregate our revenue based on our reportable segments and operating groups as it is the format that is regularly reviewed by management. Our reportable segments are: Construction, Large Project Construction and Construction Materials. Our operating groups are: (i) California; (ii) Northwest; (iii) Heavy Civil; (iv) Kenny and (v) Water and Mineral Services. The following tables present our disaggregated revenue (in thousands):  

Three Months Ended June 30,

	Construction		Large Project Construction		Construction Materials		Total
2018
California	$	187,901	$	14,971	$	55,194	$	258,066
Northwest		160,983		12,360		43,621		216,964
Heavy Civil		7,055		201,960		—		209,015
Kenny		56,938		44,655		—		101,593
Water and Mineral Services		19,348		—		2,133		21,481
Total	$	432,225	$	273,946	$	100,948	$	807,119
2017
California	$	147,605	$	12,048	$	48,463	$	208,116
Northwest		182,574		11,295		30,718		224,587
Heavy Civil		24,098		188,481		—		212,579
Kenny		74,992		42,639		—		117,631
Total	$	429,269	$	254,463	$	79,181	$	762,913

Six Months Ended June 30,

	Construction		Large Project Construction		Construction Materials		Total
2018
California	$	351,997	$	27,786	$	88,182	$	467,965
Northwest		227,425		21,575		56,355		305,355
Heavy Civil		12,255		384,641		—		396,896
Kenny		90,443		88,358		—		178,801
Water and Mineral Services		19,348		—		2,133		21,481
Total	$	701,468	$	522,360	$	146,670	$	1,370,498
2017
California	$	230,369	$	22,169	$	72,879	$	325,417
Northwest		263,240		14,962		40,820		319,022
Heavy Civil		33,318		350,227		—		383,545
Kenny		129,191		74,138		—		203,329
Total	$	656,118	$	461,496	$	113,699	$	1,231,313

XML

Unearned Revenue

6 Months Ended

Jun. 30, 2018

Deferred Revenue Disclosure [Abstract]

Unearned Revenue

6.  Unearned Revenue

The following tables present our unearned revenue as of the respective periods (in thousands):

June 30, 2018

	Construction		Large Project Construction		Total
California	$	364,305	$	33,033	$	397,338
Northwest		383,855		—		383,855
Heavy Civil		43,959		2,032,151		2,076,110
Kenny		125,159		246,699		371,858
Water and Mineral Services		187,179		—		187,179
Total	$	1,104,457	$	2,311,883	$	3,416,340

March 31, 2018

	Construction		Large Project Construction		Total
California	$	333,866	$	48,162	$	382,028
Northwest		362,225		—		362,225
Heavy Civil		54,596		2,233,174		2,287,770
Kenny		130,289		286,269		416,558
Total	$	880,976	$	2,567,605	$	3,448,581

January 1, 2018

	Construction		Large Project Construction		Total
California	$	365,771	$	40,283	$	406,054
Northwest		262,117		53,465		315,582
Heavy Civil		43,016		2,356,769		2,399,785
Kenny		154,524		307,904		462,428
Total	$	825,428	$	2,758,421	$	3,583,849

XML

Contract Assets and Liabilities

6 Months Ended

Jun. 30, 2018

Revenue From Contract With Customer [Abstract]

Contract Assets and Liabilities

7.  Contract Assets and Liabilities

During the three and six months ended June 30, 2018, we recognized revenue of $13.3 million and $102.7 million, respectively, that was included in the contract liability balance at January 1, 2018.

During the three and six months ended June 30, 2018, we recognized revenue of $33.2 million and $60.9 million, respectively, as a result of changes in contract transaction price related to performance obligations that were satisfied or partially satisfied prior to the end of the periods. The changes in contract transaction price were from items such as executed or estimated change orders and unresolved contract modifications and claims.

As of June 30, 2018 and January 1, 2018, the aggregate claim recovery estimates included in contract asset and liability balances were approximately $36.1 million and $26.7 million, respectively. As of June 30, 2017, costs and estimated earnings in excess of billings and billings in excess of costs and estimated earnings included $10.8 million in aggregate claim recovery estimates.

The components of the contract asset balances as of the respective dates were as follows (in thousands):

	June 30, 2018		January 1, 2018
Costs in excess of billings and estimated earnings	$	161,670	$	69,755
Contract retention		103,520		91,135
Total contract assets	$	265,190	$	160,890

The following table summarizes changes in the contract asset balance for the period presented (in thousands):

Balance at January 1, 2018	$	160,890
Change in the measure of progress on projects, net		643,605
Acquired contract assets		45,353
Revisions in estimates, net		(44,550	)
Billings		(516,854	)
Receipts related to contract retention		(23,254	)
Balance at June 30, 2018	$	265,190

The components of the contract liability balances as of the respective dates were as follows (in thousands):

	June 30, 2018		January 1, 2018
Billings in excess of costs and estimated earnings	$	91,147	$	82,750
Provisions for losses		717		924
Total contract liabilities	$	91,864	$	83,674

The following table summarizes changes in the contract liability balance for the period presented (in thousands):

Balance at January 1, 2018	$	83,674
Change in the measure of progress on projects, net		(620,602	)
Acquired contract liabilities		7,974
Revisions in estimates, net		(4,353	)
Billings		625,434
Change in provision for loss, net		(263	)
Balance at June 30, 2018	$	91,864

XML

Receivables, Net

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Receivables, Net

8. Receivables, net

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Construction contracts completed and in progress:
Billed	$	340,548	$	252,467	$	208,635
Unbilled		71,464		77,135		135,072
Retentions		—		91,135		75,891
Total construction contracts completed and in progress		412,012		420,737		419,598
Construction material sales		64,128		42,192		54,165
Other		16,644		17,014		10,892
Total gross receivables		492,784		479,943		484,655
Less: allowance for doubtful accounts		66		152		410
Total net receivables	$	492,718	$	479,791	$	484,245

Receivables include billed and unbilled amounts for services provided to clients for which we have an unconditional right to payment as of the end of the applicable period and do not bear interest. Included in other receivables at June 30, 2018, December 31, 2017 and June 30, 2017 were items such as estimated recovery from back charge claims, notes receivable, fuel tax refunds, receivables from vendors and income tax refunds. No such receivables individually exceeded 10% of total net receivables at any of these dates. As of June 30, 2018, December 31, 2017 and June 30, 2017, the estimated recovery from back charge claims included in Other receivables was $1.6 million, $1.1 million and $0.3 million, respectively.

Certain construction contracts include retainage provisions that were included in contract assets as of June 30, 2018 and in receivables, net as of December 31, 2017 and June 30, 2017 in our condensed consolidated balance sheets. As of June 30, 2018, December 31, 2017 and June 30, 2017, no retention receivable individually exceeded 10% of total net receivables at any of the presented dates. The majority of the retentions receivable are expected to be collected within one year and there were no retentions receivables determined to be uncollectible.

XML

Marketable Securities

6 Months Ended

Jun. 30, 2018

Marketable Securities [Abstract]

Marketable Securities

9.  Marketable Securities

All marketable securities were classified as held-to-maturity as of the dates presented and the carrying amounts of held-to-maturity securities were as follows:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
U.S. Government and agency obligations	$	15,000	$	17,910	$	12,909
Commercial paper		—		49,865		34,912
Corporate bonds		5,014		—		—
Total short-term marketable securities		20,014		67,775		47,821
U.S. Government and agency obligations		61,191		59,993		59,990
Corporate bonds		—		5,022		—
Total long-term marketable securities		61,191		65,015		59,990
Total marketable securities	$	81,205	$	132,790	$	107,811

Scheduled maturities of held-to-maturity investments were as follows:

(in thousands)	June 30, 2018
Due within one year	$	20,014
Due in one to five years		61,191
Total	$	81,205

XML

Fair Value Measurement

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

10.  Fair Value Measurement

The following tables summarize significant assets and liabilities measured at fair value in the condensed consolidated balance sheets on a recurring basis for each of the fair value levels (in thousands):

	Fair Value Measurement at Reporting Date Using
June 30, 2018	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	56,534	$	—	$	—	$	56,534
Other noncurrent assets
Restricted cash		5,746		—		—		5,746
Total assets	$	62,280	$	—	$	—	$	62,280
December 31, 2017
Cash equivalents
Money market funds	$	37,284	$	—	$	—	$	37,284
Commercial paper		9,967		—		—		9,967
Total assets	$	47,251	$	—	$	—	$	47,251
June 30, 2017
Cash equivalents
Money market funds	$	38,006	$	—	$	—	$	38,006
Total assets	$	38,006	$	—	$	—	$	38,006

Interest Rate Swaps

In May 2018, we entered into the Third Amended and Restated Credit Agreement (as defined in Note 14), terminated the interest rate swap we entered into in January 2016 and entered into two new interest rate swaps designated as cash flow hedges with an effective date of May 2018. The two new cash flow hedges have a combined initial notional amount of $150.0 million and mature in May 2023. The interest rate swaps are designed to convert the interest rate on the term loan described in Note 14, from a variable interest rate of LIBOR plus an applicable margin to a fixed rate of 2.76% plus the same applicable margin. The interest rate swaps are reported at fair value in the condensed consolidated balance sheets using Level 2 inputs. As of June 30, 2018, December 31, 2017 and June 30, 2017 the fair values of the cash flow hedges were $0.5 million, $1.4 million and $0.7 million, respectively, all of which were included in other current assets in the condensed consolidated balance sheets. The unrealized gains and losses, net of taxes, on the effective portion reported as a component of accumulated other comprehensive income and the interest expense reclassified from accumulated other comprehensive income (loss) were both immaterial during the three and six months ended June 30, 2018 and 2017.

Other Assets and Liabilities

The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in the condensed consolidated balance sheets were as follows:

		June 30, 2018				December 31, 2017				June 30, 2017
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Held-to-maturity marketable securities	Level 1	$	81,205	$	80,006	$	132,790	$	132,002	$	107,811	$	107,381
Liabilities (including current maturities):
2019 Notes1	Level 3	$	80,000	$	81,307	$	80,000	$	82,190	$	120,000	$	123,371
Credit Agreement - term loan1	Level 3		150,000		150,608		90,000		89,871		92,500		92,046
Credit Agreement - revolving credit facility1	Level 3		99,000		99,267		55,000		55,054		30,000		29,672
Convertible notes1	Level 1		160,765		186,410		—		—		—		—

¹See Note 14 for definitions of, and more information about, the 2019 Notes, Credit Agreement and Convertible notes.

During the three and six months ended June 30, 2018 and 2017, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

XML

Construction Joint Ventures

6 Months Ended

Jun. 30, 2018

Construction And Line Item Joint Ventures [Abstract]

Construction and Line Item Joint Ventures

11.  Construction Joint Ventures

We participate in various construction joint ventures. We have determined that certain of these joint ventures are consolidated because they are variable interest entities (“VIEs”) and we are the primary beneficiary. We continually evaluate whether there are changes in the status of the VIEs or changes to the primary beneficiary designation of the VIE. Based on our assessments during the three months ended June 30, 2018, we determined no change to the primary beneficiary was required for existing construction joint ventures.

Due to the joint and several nature of the performance obligations under the related owner contracts, if any of the partners fail to perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a performance guarantee). At June 30, 2018, there was approximately $3.9 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $1.3 billion represented our share and the remaining $2.6 billion represented our partners’ share. We are not able to estimate amounts that may be required beyond the remaining cost of the work to be performed. These costs could be offset by billings to the customer or by proceeds from our partners’ and/or other guarantees.

Consolidated Construction Joint Ventures (“CCJVs”)

At June 30, 2018, we were engaged in six active CCJV projects with total contract values ranging from $50.5 million to $409.7 million and a combined total of $1.2 billion. Our share of revenue remaining to be recognized on these CCJVs was $430.9 million and ranged from $1.1 million to $190.8 million. Our proportionate share of the equity in these joint ventures was between 50.0% and 65.0%. During the three and six months ended June 30, 2018, total revenue from CCJVs was $67.7 million and $111.5 million, respectively. During the three and six months ended June 30, 2017, total revenue from CCJVs was $49.5 million and $85.0 million, respectively. During the six months ended June 30, 2018 and 2017, CCJVs provided $15.1 million and $19.2 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As of June 30, 2018, we were engaged in ten active unconsolidated joint venture projects with total contract values ranging from $77.3 million to $3.7 billion and a combined total of $12.2 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20.0% to 50.0%. As of June 30, 2018, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $1.3 billion and ranged from $2.3 million to $312.8 million.

The following is summary financial information related to unconsolidated construction joint ventures:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Assets
Cash, cash equivalents and marketable securities	$	309,330	$	289,940	$	388,542
Other current assets1		701,945		812,577		632,166
Noncurrent assets		211,963		219,825		230,633
Less partners’ interest		792,567		869,782		828,237
Granite’s interest1,2		430,671		452,560		423,104
Liabilities
Current liabilities		535,700		682,832		668,630
Less partners’ interest and adjustments3		342,760		462,159		460,052
Granite’s interest		192,940		220,673		208,578
Equity in construction joint ventures4	$	237,731	$	231,887	$	214,526

¹Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets were amounts related to performance guarantees that were $88.6 million as of both June 30, 2018 and December 31, 2017 and $88.9 million as of June 30, 2017.

²Included in this balance as of June 30, 2018, December 31, 2017 and June 30, 2017 was $65.8 million, $74.3 million and $81.7 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $10.6 million, $11.8 million and $9.8 million related to Granite’s share of estimated recovery of back charge claims as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively.

³Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

⁴Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets were amounts related to deficits in construction joint ventures that were $14.7 million as of June 30, 2018 and $15.9 million as of both December 31, 2017 and June 30, 2017.

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2018			2017			2018			2017
Revenue
Total	$	449,996		$	515,983		$	689,437		$	967,304
Less partners’ interest and adjustments1		340,809			376,332			461,841			700,162
Granite’s interest		109,187			139,651			227,596			267,142
Cost of revenue
Total		423,385			498,932			804,274			941,922
Less partners’ interest and adjustments1		296,250			349,557			562,751			666,552
Granite’s interest		127,135			149,375			241,523			275,370
Granite’s interest in gross loss	$	(17,948	)	$	(9,724	)	$	(13,927	)	$	(8,228	)

¹Partners’ interest and adjustments represents amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates.

During the three and six months ended June 30, 2018, unconsolidated construction joint venture net income (loss) was $26.5 million and ($114.4) million, respectively, of which our post-adjustment share were net losses of ($17.7) million and ($13.4) million, respectively. During the three and six months ended June 30, 2017, unconsolidated construction joint venture net income was $17.6 million and $26.2 million, respectively, of which our post-adjustment share were net losses of ($9.7) million and ($8.2) million, respectively. The differences between our share of the joint venture net loss during 2018 when compared to the joint venture net income (loss) primarily resulted from differences between our estimated total revenue and cost of revenue when compared to that of our partners’ on two projects. These joint venture net income amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

Line Item Joint Ventures

As of June 30, 2018, we had one active line item joint venture construction project with a total contract value of $18.0 million of which our portion was $10.8 million. As of June 30, 2018, our share of revenue remaining to be recognized on this line item joint venture was $10.6 million. During the three and six months ended June 30, 2018, our portion of revenue from line item joint ventures was $0.4 million and $1.2 million, respectively. During the three and six months ended June 30, 2017, our portion of revenue from line item joint ventures was $6.8 million and $14.7 million, respectively.

XML

Investments in Affiliates

6 Months Ended

Jun. 30, 2018

Investments In And Advances To Affiliates Schedule Of Investments [Abstract]

Investments in Affiliates

12.  Investments in Affiliates

Our investments in affiliates balance is related to our investments in unconsolidated non-construction entities that we account for using the equity method of accounting, including investments in foreign affiliates, real estate entities and an asphalt terminal entity.

As part of the acquisition of Layne, we acquired investments in foreign affiliates that are engaged in mineral drilling services and the manufacture and supply of drilling equipment, parts and supplies in Latin America. The real estate entities were formed to accomplish specific real estate development projects in which our wholly-owned subsidiary, Granite Land Company, participates with third-party partners. The asphalt terminal entity is a 50% interest in a limited liability company which owns and operates an asphalt terminal and operates an emulsion plant in Nevada.

Our investments in affiliates balance consists of the following:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Equity method investment in foreign affiliates	$	63,000	$	—	$	—
Equity method investments in real estate affiliates		27,591		29,472		27,329
Equity method investment in asphalt terminal affiliate		8,904		8,997		9,841
Total investments in affiliates	$	99,495	$	38,469	$	37,170

The following table provides summarized balance sheet information for our affiliates accounted for under the equity method on a combined basis:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Current assets	$	136,953	$	31,320	$	25,246
Noncurrent assets		173,384		129,039		131,723
Total assets		310,337		160,359		156,969
Current liabilities		54,710		30,131		34,736
Long-term liabilities1		54,383		31,636		25,595
Total liabilities		109,093		61,767		60,331
Net assets		201,244		98,592		96,638
Granite’s share of net assets	$	99,495	$	38,469	$	37,170

¹The balance primarily relates to debt associated with our real estate investments. The increase in the balance since December 31, 2017 is related to debt of our investments in foreign affiliates associated with purchase of equipment and buildings.

The equity method investments in real estate affiliates included $24.0 million, $24.3 million and $22.2 million in residential real estate in Texas as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively. The remaining balances were in commercial real estate in Texas. Of the $310.3 million in total assets as of June 30, 2018, real estate entities had total assets ranging from $0.3 million to $68.2 million, the non-real estate entity had total assets of $20.4 million and the foreign entities had total assets ranging from $0.1 million to $64.6 million. We have direct and indirect investments in the foreign entities and our percent ownership ranged from 25.0% to 50.0% as of June 30, 2018.

XML

Property and Equipment, Net

6 Months Ended

Jun. 30, 2018

Property Plant And Equipment [Abstract]

Property and Equipment, Net

13.  Property and Equipment, net

Balances of major classes of assets and allowances for depreciation and depletion are included in property and equipment, net in the condensed consolidated balance sheets and were as follows:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Equipment and vehicles	$	933,951	$	778,549	$	774,903
Quarry property		178,809		182,267		176,041
Land and land improvements		141,549		108,830		111,766
Buildings and leasehold improvements		105,038		82,601		84,113
Office furniture and equipment		63,806		56,894		58,377
Property and equipment		1,423,153		1,209,141		1,205,200
Less: accumulated depreciation and depletion		827,366		801,723		791,121
Property and equipment, net	$	595,787	$	407,418	$	414,079

XML

Long-Term Debt and Credit Arrangements

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Long-Term Debt and Credit Arrangements

14.  Long-Term Debt and Credit Arrangements

(in thousands)	June 30, 2018			December 31, 2017			June 30, 2017
Senior notes payable	$	80,000		$	80,000		$	120,000
Credit Agreement term loan		150,000			90,000			92,500
Credit Agreement revolving credit loan		99,000			55,000			30,000
Convertible notes		160,765			—			—
Debt issuance costs		(1,073	)		(499	)		(590	)
Total debt		488,692			224,501			241,910
Less current maturities		207,982			46,048			14,796
Total long-term debt	$	280,710		$	178,453		$	227,114

The aggregate minimum principal maturities of long-term debt, including current maturities and excluding debt issuance costs, related to balances at June 30, 2018 are as follows: $204.5 million during the remainder of 2018; $ 47.5 million in 2019; $7.5 million in 2020; $7.5 million in 2021; $7.5 million in 2022; and $215.3 million thereafter.

Senior Notes Payable

Senior notes payable in the amount of $80.0 million as of both June 30, 2018 and December 31, 2017 and in the amount of $120.0 million as of June 30, 2017 were due to a group of institutional holders and had an interest rate of 6.11% per annum (“2019 Notes”). As of both June 30, 2018 and December 31, 2017, $40.0 million of the outstanding balance was included in long-term debt and the remaining $40.0 million was included in current maturities of long-term debt on the condensed consolidated balance sheets. As of June 30, 2017, $10.0 million of the outstanding balance was included in current maturities of long-term debt in the condensed consolidated balance sheets. The remaining $110.0 million was included in long-term debt in the condensed consolidated balance sheets, including $30.0 million due for the 2017 installment as we had the ability and intent to pay the 2017 installment using borrowings under the Credit Agreement or by obtaining other sources of financing.

Credit Agreement

Granite entered into the Third Amended and Restated Credit Agreement dated May 31, 2018 (the “Credit Agreement”). The Credit Agreement provides for, among other things, (i) an increase in the total committed credit facility amount to $500.0 million from $300.0 million, of which $150.0 million is a term loan (all of which was drawn on May 31, 2018) and $350.0 million is a revolving credit facility; (ii) an additional increase to the revolving credit facility and/or term loan at the option of the Company, in an aggregate maximum amount up to $200.0 million subject to the lenders providing the additional commitments; (iii) a revised maturity date of May 31, 2023 (the “Maturity Date”) and (iv) the elimination of the stipulation to have a $150 million minimum cash balance before and after a dividend payment. There was no change in the aggregate sublimit for letters of credit of $100.0 million nor was there any significant change to the affirmative, restrictive or financial covenant terms except for the removal of the minimum Consolidated Tangible Net Worth financial covenant requirement and an increase of the Consolidated Leverage Ratio financial covenant requirement from 3.00 to 3.50 for the four quarters subsequent to a permitted acquisition with cash consideration in excess of $100.0 million.

Of the $150.0 million term loan, 1.25% of the principal balance is due each quarter beginning in September 2018 and the remaining balance is due on the Maturity Date. As of June 30, 2018, December 31, 2017 and June 30, 2017, $7.5 million, $6.2 million and $5.0 million, respectively, of the term loan balance was included in current maturities of long-term debt and the remaining $142.5 million, $83.8 million and $87.5 million, respectively, was included in long-term debt on the condensed consolidated balance sheets.

As of June 30, 2018, the total stated amount of all issued and outstanding letters of credit under the Credit Agreement was $33.0 million. As of June 30, 2018, December 31, 2017 and June 30, 2017, $99.0 million, $55.0 million and $30.0 million had been drawn on the revolving credit facility primarily to fund the Layne and LiquiForce acquisitions and to service the 2016 and 2017 installments of the 2019 Notes, respectively. As of June 30, 2018, the total unused availability under the Credit Agreement was $218.0 million. The letters of credit will expire between July 2018 and June 2019.

Borrowings under the Credit Agreement bear interest at LIBOR or a base rate (at our option), plus an applicable margin based on the Consolidated Leverage Ratio calculated quarterly. LIBOR varies based on the applicable loan term, market conditions and other external factors. The applicable margin was 1.63% for loans bearing interest based on LIBOR and 0.63% for loans bearing interest at the base rate at June 30, 2018. Accordingly, the effective interest rate using three-month LIBOR and base rate was 3.96% and 5.63%, respectively, at June 30, 2018 and we elected to use LIBOR for both the term loan and the revolving credit facility. In May 2018, we entered into an interest rate swap to convert the interest rate on borrowings under the Credit Agreement from a variable interest rate of LIBOR plus an applicable margin to a fixed rate of 2.76% plus the same applicable margin.

Borrowings at the base rate have no designated term and may be repaid without penalty any time prior to the Maturity Date. Borrowings bearing interest at a LIBOR rate have a term no less than one month and no greater than six months (a longer period, not to exceed 12 months, if approved by all lenders). At the end of each term, such borrowings can be paid or continued at our discretion as either a borrowing at the base rate or a borrowing at a LIBOR rate with similar terms and the same or different permitted interest period. Our obligations under the Credit Agreement are guaranteed by certain of our subsidiaries and are collateralized on an equivalent basis with the obligations under the 2019 Notes by first priority liens (subject only to other permitted liens) on substantially all of the assets of the Company and certain of our subsidiaries that are required to be guarantors or borrowers under the Credit Agreement; however, a waiver of the requirement for Layne to become a guarantor and provide liens on its assets has been obtained until the 8.0% Convertible Notes (defined below) are redeemed or converted.  

The Credit Agreement provides for the release of the liens securing the obligations at our option and expense, so long as certain conditions as defined by the terms in the Credit Agreement are satisfied (“Collateral Release Period”). However, if subsequent to exercising the option, our Consolidated Fixed Charge Coverage Ratio is less than 1.25 or our Consolidated Leverage Ratio is greater than 2.50, then we would be required to promptly re-pledge substantially all of the assets of the Company and our subsidiaries that are guarantors or borrowers under the Credit Agreement. As of June 30, 2018, the conditions for the exercise of our right under Credit Agreement to have liens released were not satisfied.

Convertible Notes

In connection with our acquisition of Layne, we assumed fair value of $69.9 million of convertible notes that have an interest rate of 4.25% per annum, payable semi-annually in arrears on May 15 and November 15 (“4.25% Convertible Notes”). The 4.25% Convertible Notes mature on November 15, 2018, unless earlier repurchased, redeemed or converted and are convertible at the option of the holders until the close of business on November 14, 2018. As of June 30, 2018, $69.9 million was included in current maturities of long-term debt on the condensed consolidated balance sheets.

Subsequent to the Merger Agreement, cash was elected as the settlement method for conversion of the 4.25% Convertible Notes. As of June 30, 2018, the conversion rate was 11.8012 shares of Granite’s common stock per $1,000 in principal of the 4.25% Convertible Notes providing a conversion price of approximately $84.74 per share of Granite’s common stock.

Also in connection with our acquisition of Layne, we assumed fair value of $121.6 million of convertible notes that have an interest rate of 8.0% per annum, payable semi-annually on May 1 and November 1 (“8.0% Convertible Notes”). The 8.0% Convertible Notes mature on May 1, 2019; however, if any of the then outstanding 4.25% Convertible Notes remain outstanding on August 15, 2018, the 8.0% Convertible Notes will mature on August 15, 2018 (“Maturity Date”). As of June 30, 2018, $90.9 million was included in current maturities of long-term debt and the premium of $30.7 million associated with the conversion feature was included in additional paid-in capital on the condensed consolidated balance sheet.

As of June 30, 2018, the conversion rate of the 8.0% Convertible Notes was 23.1305 shares of Granite’s common stock per $1,000 principal amount of 8.0% Convertible Notes providing a conversion price of approximately $43.23 per share of Granite’s common stock. Prior to the Maturity Date, the notes may be converted to Granite common stock at the election of the note holders.

Covenants and Events of Default

Our debt and credit agreements require us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below. Our failure to comply with any of these covenants, or to pay principal, interest or other amounts when due thereunder, would constitute an event of default under the applicable agreements. Under certain circumstances, the occurrence of an event of default under one of our debt or credit agreements (or the acceleration of the maturity of the indebtedness under one of our agreements) may constitute an event of default under one or more of our other debt or credit agreements. Default under our debt and credit agreements could result in (i) us no longer being entitled to borrow under the agreements; (ii) termination of the agreements; (iii) the requirement that any letters of credit under the agreements be cash collateralized; (iv) acceleration of the maturity of outstanding indebtedness under the agreements and/or (v) foreclosure on any collateral securing the obligations under the agreements.

The most significant financial covenants under the terms of our Credit Agreement and related to the note purchase agreement governing our 2019 Notes (“2019 NPA”) require the maintenance of a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio. In addition, the 2019 NPA requires a minimum Consolidated Tangible Net Worth.

As of June 30, 2018 and pursuant to the definitions in the 2019 NPA, which is more restrictive, our Consolidated Tangible Net Worth was $1.0 billion, which exceeded the minimum of$757.3 million, our Consolidated Leverage Ratio was 2.10 which did not exceed the maximum of 3.00. Our Consolidated Interest Coverage Ratio was 23.92 which exceeded the minimum of 4.00.

As of June 30, 2018, we were in compliance with all covenants contained in the Credit Agreement and related to the 2019 NPA. We are not aware of any non-compliance by any of our unconsolidated real estate entities with the covenants contained in their debt agreements.

XML

Weighted Average Shares Outstanding and Net (Loss) Income Per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Weighted Average Shares Outstanding and Net (Loss) Income Per Share

15.  Weighted Average Shares Outstanding and Net (Loss) Income Per Share

The following table presents a reconciliation of the weighted average shares outstanding used in calculating basic and diluted net (loss) income per share as well as the calculation of basic and diluted net (loss) income per share:

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands, except per share amounts)	2018			2017		2018			2017
Numerator (basic and diluted)
Net (loss) income allocated to common shareholders for basic calculation	$	(8,385	)	$	14,133	$	(19,808	)	$	(9,657	)
Effect of dilutive convertible notes		—			—		—			—
Net (loss) income allocated to common shareholders for diluted calculation		(8,385	)		14,133		(19,808	)		(9,657	)
Denominator
Weighted average common shares outstanding, basic		41,044			39,827		40,074			39,738
Dilutive effect of convertible notes, restricted stock units and common stock options1		—			566		—			—
Weighted average common shares outstanding, diluted		41,044			40,393		40,074			39,738
Net (loss) income per share, basic	$	(0.20	)	$	0.35	$	(0.49	)	$	(0.24	)
Net (loss) income per share, diluted	$	(0.20	)	$	0.35	$	(0.49	)	$	(0.24	)

¹Due to the net losses, shares related to convertible notes and restricted stock units representing 960,000 and 732,000 for the three and six months ended June 30, 2018, respectively, and 618,000 related to restricted stock units for the six months ended June 30, 2017 have been excluded from the number of shares used in calculating diluted net loss per share, as their inclusion would be antidilutive.

XML

Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

16.  Income Taxes

The following table presents the provision for (benefit from) income taxes for the respective periods:

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2018			2017			2018			2017
Provision for (benefit from) income taxes	$	2,796		$	8,088		$	(1,335	)	$	(4,408	)
Effective tax rate		(85.1	%)		33.2	%		7.8	%		36.8	%

Our effective tax rate for the three and six months ended June 30, 2018 decreased to (85.1%) from 33.2% and to 7.8% from 36.8%, respectively, when compared to the same periods in 2017. This change was primarily due to a decrease in the effective tax rate due to Tax Reform enacted in December 2017, one-time nondeductible acquisition and integration expenses and an increase in the loss (income) before provision for (benefit from) income taxes.   

On December 22, 2017, Tax Reform was signed into law. As a result of Tax Reform, the U.S. statutory tax rate was lowered from 35% to 21% effective January 1, 2018, a territorial tax system was implemented, and a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries was imposed, among other changes. ASC Topic 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment. ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No.118, allows a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain tax effects of Tax Reform. The Company has recognized the provisional tax impacts of Tax Reform in its consolidated financial statements for the year ended December 31, 2017. On June 14, 2018, the Company acquired Layne recognizing provisional tax impacts of Tax Reform in the opening balance sheet including assessing our intent to indefinitely reinvest certain earnings of our foreign subsidiaries and affiliates. The majority of the provisional tax impacts of Tax Reform recorded in the Company’s condensed consolidated financial statements as of June 30, 2018 are related to the revaluation of deferred tax assets and liabilities and the one-time repatriation tax. Based on a review of the guidance issued by the Internal Revenue Service in the second quarter of 2018, no adjustment to the provisional amounts recorded in the Company’s condensed consolidated financial statements, as of June 30, 2018, was deemed necessary. We continue to assess new guidance and refine our computation of the provisional tax impacts discussed above and will complete our analysis within the one-year measurement period ending December 22, 2018.

Approximately $15.0 million of uncertain tax position liability was assumed as part of the Layne acquisition and was recorded in other long-term liabilities in the Company’s condensed consolidated balance sheets as of June 30, 2018.

XML

Equity

6 Months Ended

Jun. 30, 2018

Stockholders Equity Note [Abstract]

Equity

17.  Equity

The following tables summarize our equity activity for the periods presented (in thousands):

	Granite Construction Incorporated			Non-controlling Interests			Total Equity
Balance at December 31, 2017	$	945,108		$	47,697		$	992,805
Net (loss) income		(19,808	)		4,065			(15,743	)
Purchases of common stock1		(6,165	)		—			(6,165	)
Dividends on common stock		(11,146	)		—			(11,146	)
Effect of adopting Topic 606		(15,202	)		—			(15,202	)
Issuance of common stock for Layne acquisition2		321,075			48			321,123
Premium on 8.0% Convertible Notes3		30,702			—			30,702
Transactions with non-controlling interests		—			(6,400	)		(6,400	)
Other transactions with shareholders and employees4		11,012			—			11,012
Balance at June 30, 2018	$	1,255,576		$	45,410		$	1,300,986
Balance at December 31, 2016	$	885,988		$	36,603		$	922,591
Net (loss) income		(9,657	)		2,078			(7,579	)
Purchases of common stock5		(6,568	)		—			(6,568	)
Dividends on common stock		(10,354	)		—			(10,354	)
Other transactions with shareholders and employees4		11,987			—			11,987
Balance at June 30, 2017	$	871,396		$	38,681		$	910,077

¹Represents 104,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

²Represents 5,624,000 shares issued in connection with the Layne acquisition wherein each share of Layne common stock was exchanged for 0.27 shares of Granite common stock. See Note 3 for further information.

³Represents premium associated with the conversion feature on the 8.0% Convertible Notes assumed from the acquisition of Layne. See Note 14 for further discussion.

⁴Amounts are comprised primarily of amortized restricted stock units.

⁵Represents 133,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

XML

Legal Proceedings

6 Months Ended

Jun. 30, 2018

Commitments And Contingencies Disclosure [Abstract]

Legal Proceedings

18.  Legal Proceedings

In the ordinary course of business, we and our affiliates are involved in various legal proceedings alleging, among other things, liability issues or breach of contract or tortious conduct in connection with the performance of services and/or materials provided, the various outcomes of which cannot be predicted with certainty. We and our affiliates are also subject to government inquiries in the ordinary course of business seeking information concerning our compliance with government construction contracting requirements and various laws and regulations, the outcomes which cannot be predicted with certainty.

Some of the matters in which we or our joint ventures and affiliates are involved may involve compensatory, punitive, or other claims or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that are not probable to be incurred or cannot currently be reasonably estimated. In addition, in some circumstances our government contracts could be terminated, we could be suspended, debarred or incur other administrative penalties or sanctions, or payment of our costs could be disallowed. While any of our pending legal proceedings may be subject to early resolution as a result of our ongoing efforts to resolve the proceedings, whether or when any legal proceeding will be resolved is neither predictable nor guaranteed.

Accordingly, it is possible that future developments in such proceedings and inquiries could require us to (i) adjust existing accruals, or (ii) record new accruals that we did not originally believe to be probable or that could not be reasonably estimated. Such changes could be material to our financial condition, results of operations and/or cash flows in any particular reporting period. In addition to matters that are considered probable for which the loss can be reasonably estimated, disclosure is also provided when it is reasonably possible and estimable that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the amount recorded.

Liabilities relating to legal proceedings and government inquiries, to the extent that we have concluded such liabilities are probable and the amounts of such liabilities are reasonably estimable, are recorded in our condensed consolidated balance sheets. The aggregate liabilities recorded as of June 30, 2018, December 31, 2017 and June 30, 2017 related to these matters were approximately $1.0 million, $0.9 million and $1.0 million, respectively, and were primarily included in accounts payable and accrued expenses and other current liabilities on our condensed consolidated balance sheets. The aggregate range of possible loss related to (i) matters considered reasonably possible, and (ii) reasonably possible amounts in excess of accrued losses recorded for probable loss contingencies, including those related to liquidated damages, could have a material impact on our consolidated financial statements if they become probable and the reasonably estimable amount is determined.

XML

Business Segment Information

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Business Segment Information

GRANITE CONSTRUCTION INCORPORATED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(Unaudited)

19.  Business Segment Information

Summarized segment information is as follows (in thousands):

Three Months Ended June 30,

	Construction		Large Project Construction		Construction Materials			Total
2018
Total revenue from reportable segments	$	432,225	$	273,946	$	146,197		$	852,368
Elimination of intersegment revenue		—		—		(45,249	)		(45,249	)
Revenue from external customers		432,225		273,946		100,948			807,119
Gross profit		61,551		1,338		17,480			80,369
Depreciation, depletion and amortization		9,645		9,318		6,074			25,037
2017
Total revenue from reportable segments	$	429,269	$	254,463	$	123,242		$	806,974
Elimination of intersegment revenue		—		—		(44,061	)		(44,061	)
Revenue from external customers		429,269		254,463		79,181			762,913
Gross profit		60,900		489		13,181			74,570
Depreciation, depletion and amortization		5,441		3,081		5,417			13,939

Six Months Ended June 30,

	Construction		Large Project Construction		Construction Materials			Total
2018
Total revenue from reportable segments	$	701,468	$	522,360	$	199,519		$	1,423,347
Elimination of intersegment revenue		—		—		(52,849	)		(52,849	)
Revenue from external customers		701,468		522,360		146,670			1,370,498
Gross profit		99,947		21,704		15,001			136,652
Depreciation, depletion and amortization		14,699		11,917		11,484			38,100
Segment assets		608,116		335,036		304,121			1,247,273
2017
Total revenue from reportable segments	$	656,118	$	461,496	$	171,864		$	1,289,478
Elimination of intersegment revenue		—		—		(58,165	)		(58,165	)
Revenue from external customers		656,118		461,496		113,699			1,231,313
Gross profit		88,229		3,044		8,423			99,696
Depreciation, depletion and amortization		10,435		4,967		10,615			26,017
Segment assets		142,456		312,891		295,068			750,415

As of June 30, 2018, segment assets include $21.2 million of property and equipment located in foreign countries (primarily Brazil and Mexico). As of June 30, 2017 and December 31, 2017, all segment assets were located in the United States.

A reconciliation of segment gross profit to consolidated (loss) income before provision for (benefit from) income taxes is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2018			2017			2018			2017
Total gross profit from reportable segments	$	80,369		$	74,570		$	136,652		$	99,696
Selling, general and administrative expenses		61,316			51,388			122,568			113,225
Acquisition and integration expenses		26,287			—			34,696			—
Gain on sales of property and equipment		(1,505	)		(807	)		(2,048	)		(1,077	)
Total other income		(2,444	)		(371	)		(1,486	)		(465	)
(Loss) income before provision for (benefit from) income taxes	$	(3,285	)	$	24,360		$	(17,078	)	$	(11,987	)

XML

Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Foreign Currency Transactions and Translations

Foreign Currency Transactions and Translation:Through the acquisitions of Layne and LiquiForce, we now have operations in Latin America, Canada and Brazil which involve exposure to possible volatile movements in foreign currency exchange rates. We account for foreign currency exchange transactions and translation in accordance with ASC Topic 830, Foreign Currency Matters. Foreign currency transactions are remeasured into the functional currency with gains and losses included in other income, net in the condensed consolidated statements of operations. In Mexico, most of our customer contracts are denominated in U.S. dollars; therefore, the functional currency is U.S. dollars. In Canada and Brazil, the functional currency is the local currency. The impact from foreign currency transactions was immaterial for both the three and six months ended June 30, 2018. Assets and liabilities in functional currency are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated into U.S. dollars at average foreign currency exchange rates prevailing during the reporting periods. The translation adjustments from functional currency to U.S. dollars are reported in accumulated other comprehensive income on the condensed consolidated balance sheets.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash: In connection with the acquisition of Layne, we acquired restricted cash which is included in other noncurrent assets in the condensed consolidated balance sheets and consists of escrow funds and judicial deposits associated with tax related legal proceedings in Brazil. The table below presents changes in restricted cash and cash equivalents on the condensed consolidated statements of cash flows and a reconciliation to the amounts reported in the condensed consolidated balance sheets (in thousands).

Six Months Ended June 30,	2018			2017
Cash and cash equivalents, beginning of period	$	233,711		$	189,326
End of the period
Cash and cash equivalents		195,515			178,068
Restricted cash		5,746			—
Total cash, cash equivalents and restricted cash, end of period		201,261			178,068
Net decrease in cash, cash equivalents and restricted cash	$	(32,450	)	$	(11,258	)

Inventories

Inventories: Inventories consist primarily of quarry products, contract-specific materials, water well drilling materials, and sewer remediation materials that are located in the U.S. and mineral extraction and drilling supplies located in the U.S. and foreign countries, primarily Brazil and Mexico. Cost of U.S. and foreign inventories are valued at the lower of average cost or net realizable value. We reserve quarry products based on estimated quantities of materials on hand in excess of approximately one year of demand. As of June 30, 2018, inventory included $19.1 million of supplies related to the Water and Mineral Services operating group.

XML

Basis of Presentation (Tables)

6 Months Ended

Jun. 30, 2018

New Accounting Pronouncement Early Adoption [Line Items]

Summary of Reconciliation of Cash, Cash Equivalents, and Restricted Cash Reported in the Condensed Consolidated Balance Sheets

The table below presents changes in restricted cash and cash equivalents on the condensed consolidated statements of cash flows and a reconciliation to the amounts reported in the condensed consolidated balance sheets (in thousands).

Six Months Ended June 30,	2018			2017
Cash and cash equivalents, beginning of period	$	233,711		$	189,326
End of the period
Cash and cash equivalents		195,515			178,068
Restricted cash		5,746			—
Total cash, cash equivalents and restricted cash, end of period		201,261			178,068
Net decrease in cash, cash equivalents and restricted cash	$	(32,450	)	$	(11,258	)

Accounting Standards Update 2014-09 [Member]

New Accounting Pronouncement Early Adoption [Line Items]

Summary of Impact of Adoption of Accounting Standards

The amounts by which each condensed consolidated balance sheet line item as of June 30, 2018 and condensed consolidated statement of operations line item for the three and six months ended June 30, 2018 was affected by the adoption of Topic 606 relative to the previous revenue guidance are presented in the tables below (in thousands). The changes are primarily related to reclassifications on the condensed consolidated balance sheet and the impact on the condensed consolidated statement of operations from the new requirements under Topic 606. The change in retained earnings is net of the cumulative effect of initially applying Topic 606.

June 30, 2018

Condensed Consolidated Balance Sheet	As Reported		Balances Without Adoption of Topic 606		Effect of Change Higher/(Lower)
Assets
Receivables, net	$	492,718	$	615,782	$	(123,064	)
Contract assets		265,190		—		265,190
Costs and estimated earnings in excess of billings		—		175,265		(175,265	)
Other current assets		49,100		49,813		(713	)
Deferred income taxes, net		25,135		19,863		5,272
Liabilities and equity
Contract liabilities	$	91,864	$	—	$	91,864
Billings in excess of costs and estimated earnings		—		119,335		(119,335	)
Accrued expenses and other current liabilities		293,959		282,222		11,737
Deferred income taxes, net		5,759		5,759		—
Retained earnings		737,417		750,263		(12,846	)

Three Months Ended June 30, 2018

Condensed Consolidated Statement of Operations	As Reported			Balances Without Adoption of Topic 606			Effect of Change Higher/(Lower)
Revenue
Construction	$	432,225		$	433,509		$	(1,284	)
Large Project Construction		273,946			274,228			(282	)
Cost of revenue
Construction	$	370,674		$	370,674		$	—
Large Project Construction		272,608			274,450			(1,842	)
Gross profit		80,369			80,093			276
Operating (loss) income		(5,729	)		(6,005	)		276
Provision for income taxes		2,796			2,746			50
Net (loss) income		(6,081	)		(6,307	)		226
Net (loss) income attributable to Granite Construction Incorporated		(8,385	)		(8,611	)		226

Six Months Ended June 30, 2018

Condensed Consolidated Statement of Operations	As Reported			Balances Without Adoption of Topic 606			Effect of Change Higher/(Lower)
Revenue
Construction	$	701,468		$	702,989		$	(1,521	)
Large Project Construction		522,360			520,849			1,511
Cost of revenue
Construction	$	601,521		$	601,521		$	—
Large Project Construction		500,656			503,734			(3,078	)
Gross profit		136,652			133,584			3,068
Operating (loss) income		(18,564	)		(21,632	)		3,068
(Benefit from) provision for income taxes		(1,335	)		(2,048	)		713
Net (loss) income		(15,743	)		(18,098	)		2,355
Net (loss) income attributable to Granite Construction Incorporated		(19,808	)		(22,163	)		2,355

XML

Acquisitions (Tables)

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Schedule of Preliminary Purchase Price Allocation

In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable intangible assets based on their estimated fair values as of June 14, 2018 as presented in the table below (in thousands). These estimates are subject to revision, which may result in adjustments to the values presented below. We expect to finalize these amounts within 12 months from the acquisition date.

Assets
Cash	$	2,995
Receivables		70,160
Contract assets		44,947
Inventories		23,424
Other current assets		5,533
Property and equipment		187,890
Investments in affiliates		63,000
Deferred income taxes		23,185
Other noncurrent assets		17,868
Total tangible assets		439,002
Identifiable intangible assets		60,748
Liabilities
Identifiable intangible liabilities		6,700
Accounts payable		38,321
Contract liabilities		7,854
Accrued expenses and other current liabilities		47,694
Long-term debt		191,500
Other long-term liabilities		32,085
Total liabilities assumed		317,454
Total identifiable net assets acquired		175,596
Goodwill		174,244
Estimated purchase price	$	349,840

Summary of amortized intangible assets and liabilities

The following table lists amortized intangible assets and liabilities from the Layne and LiquiForce acquisitions that are included in other noncurrent assets and other long-term liabilities in the condensed consolidated balance sheets as of June 30, 2018 (in thousands):

	Weighted Average Useful Lives (Years)		Gross Value		Accumulated Amortization			Net Value
Assets
Customer relationships		7	$	34,674	$	(728	)	$	33,946
Backlog		3		11,163		(1,890	)		9,273
Developed technologies		4		9,228		(234	)		8,994
Trademarks/trade names		4		8,989		(163	)		8,826
Favorable contracts		3		4,800		(596	)		4,204
Right of ways		12		2,268		(12	)		2,256
Covenants not to compete and other		5		859		(42	)		817
Intangible assets			$	71,981	$	(3,665	)	$	68,316
Liabilities
Unfavorable contracts		2	$	6,892	$	(952	)	$	5,940
Unfavorable leases		1		300		(13	)		287
Intangible liabilities			$	7,192	$	(965	)	$	6,227

Schedule of Goodwill

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and intangible assets. The factors that contributed to the recognition of goodwill from the acquisitions of Layne and LiquiForce include acquiring a workforce with capabilities in the global water management, construction and drilling markets, cost savings opportunities and synergies. In connection with the Layne acquisition, the assignment of goodwill to reporting units was not complete as of June 30, 2018 and is expected to be complete as of September 30, 2018. For the LiquiForce acquisition, we recorded $18.8 million within our Construction segment that was allocated to our Kenny Construction reporting unit. The goodwill from both acquisitions is not expected to be deductible for income tax purposes.

Balance at December 31, 2017	$	53,799
Layne acquisition goodwill		174,244
LiquiForce acquisition goodwill		18,838
Balance at June 30, 2018	$	246,881

Schedule of Pro Forma Financial Information

The financial information in the table below summarizes the combined results of operations of Granite and Layne, on a pro forma basis, as though the companies had been combined as of the beginning of 2017 (in thousands, except per share amounts). The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2017.

	Three Months Ended June 30,					Six Months Ended June 30,
	2018		2017			2018		2017
Revenue	$	909,783	$	888,176		$	1,583,073	$	1,452,067
Net income (loss)		16,834		(10,974	)		14,454		(61,709	)
Net income (loss) attributable to Granite		14,530		(13,113	)		10,389		(63,787	)
Basic net income (loss) per share attributable to common shareholders		0.32		(0.29	)		0.23		(1.41	)
Diluted net income (loss) per share attributable to common shareholders		0.30		(0.29	)		0.22		(1.41	)

Summary of Acquisition and Integration Expenses

Acquisition and integration expenses associated with both the Layne and LiquiForce acquisitions for the three and six months ended June 30, 2018 were comprised of the following (in thousands):

	Three Months Ended		Six Months Ended
	June 30, 2018		June 30, 2018
Professional services and other expenses	$	18,064	$	26,473
Severance and personnel costs		8,223		8,223
Total	$	26,287	$	34,696

XML

Revisions in Estimates (Tables)

6 Months Ended

Jun. 30, 2018

Construction Segment [Member]

Change In Accounting Estimate [Line Items]

Schedule of Projects Summarized

The projects are summarized as follows:

Increases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with upward estimate changes			1			—			2			—
Range of increase in gross profit from each project, net	$		1.4	$		—	$	1.4 - 1.4		$		—
Increase on project profitability	$		1.4	$		—	$		2.8	$		—

Decreases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with downward estimate changes			3			1			3			1
Range of reduction in gross profit from each project, net	$	1.2 - 2.5		$		1.1	$	1.3 - 2.6		$		1.8
Decrease on project profitability	$		5.9	$		1.1	$		6.1	$		1.8

Large Project Construction [Member]

Change In Accounting Estimate [Line Items]

Schedule of Projects Summarized

The projects are summarized as follows:

Increases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with upward estimate changes			1			—			1			—
Range of increase in gross profit from each project, net	$		1.0	$		—	$		1.2	$		—
Increase on project profitability	$		1.0	$		—	$		1.2	$		—

Decreases

		Three Months Ended June 30,						Six Months Ended June 30,
(dollars in millions)		2018			2017			2018			2017
Number of projects with downward estimate changes			3			5			5			7
Range of reduction in gross profit from each project, net	$	1.0 - 15.7		$	1.1 - 8.1		$	1.1 - 18.3		$	1.0 - 10.8
Decrease on project profitability	$		31.3	$		23.8	$		41.0	$		37.8

XML

Disaggregation of Revenue (Tables)

6 Months Ended

Jun. 30, 2018

Disaggregation Of Revenue [Abstract]

Schedule of Disaggregation of Revenue

The following tables present our disaggregated revenue (in thousands):

Three Months Ended June 30,

	Construction		Large Project Construction		Construction Materials		Total
2018
California	$	187,901	$	14,971	$	55,194	$	258,066
Northwest		160,983		12,360		43,621		216,964
Heavy Civil		7,055		201,960		—		209,015
Kenny		56,938		44,655		—		101,593
Water and Mineral Services		19,348		—		2,133		21,481
Total	$	432,225	$	273,946	$	100,948	$	807,119
2017
California	$	147,605	$	12,048	$	48,463	$	208,116
Northwest		182,574		11,295		30,718		224,587
Heavy Civil		24,098		188,481		—		212,579
Kenny		74,992		42,639		—		117,631
Total	$	429,269	$	254,463	$	79,181	$	762,913

Six Months Ended June 30,

	Construction		Large Project Construction		Construction Materials		Total
2018
California	$	351,997	$	27,786	$	88,182	$	467,965
Northwest		227,425		21,575		56,355		305,355
Heavy Civil		12,255		384,641		—		396,896
Kenny		90,443		88,358		—		178,801
Water and Mineral Services		19,348		—		2,133		21,481
Total	$	701,468	$	522,360	$	146,670	$	1,370,498
2017
California	$	230,369	$	22,169	$	72,879	$	325,417
Northwest		263,240		14,962		40,820		319,022
Heavy Civil		33,318		350,227		—		383,545
Kenny		129,191		74,138		—		203,329
Total	$	656,118	$	461,496	$	113,699	$	1,231,313

XML

Unearned Revenue (Tables)

6 Months Ended

Jun. 30, 2018

Deferred Revenue Disclosure [Abstract]

Schedule of Unearned Revenue

The following tables present our unearned revenue as of the respective periods (in thousands):

June 30, 2018

	Construction		Large Project Construction		Total
California	$	364,305	$	33,033	$	397,338
Northwest		383,855		—		383,855
Heavy Civil		43,959		2,032,151		2,076,110
Kenny		125,159		246,699		371,858
Water and Mineral Services		187,179		—		187,179
Total	$	1,104,457	$	2,311,883	$	3,416,340

March 31, 2018

	Construction		Large Project Construction		Total
California	$	333,866	$	48,162	$	382,028
Northwest		362,225		—		362,225
Heavy Civil		54,596		2,233,174		2,287,770
Kenny		130,289		286,269		416,558
Total	$	880,976	$	2,567,605	$	3,448,581

January 1, 2018

	Construction		Large Project Construction		Total
California	$	365,771	$	40,283	$	406,054
Northwest		262,117		53,465		315,582
Heavy Civil		43,016		2,356,769		2,399,785
Kenny		154,524		307,904		462,428
Total	$	825,428	$	2,758,421	$	3,583,849

XML

Contract Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Contract With Customer Asset And Liability [Abstract]

Component of and Changes in Contract Asset and Liability Balances

The components of the contract asset balances as of the respective dates were as follows (in thousands):

	June 30, 2018		January 1, 2018
Costs in excess of billings and estimated earnings	$	161,670	$	69,755
Contract retention		103,520		91,135
Total contract assets	$	265,190	$	160,890

The following table summarizes changes in the contract asset balance for the period presented (in thousands):

Balance at January 1, 2018	$	160,890
Change in the measure of progress on projects, net		643,605
Acquired contract assets		45,353
Revisions in estimates, net		(44,550	)
Billings		(516,854	)
Receipts related to contract retention		(23,254	)
Balance at June 30, 2018	$	265,190

The components of the contract liability balances as of the respective dates were as follows (in thousands):

	June 30, 2018		January 1, 2018
Billings in excess of costs and estimated earnings	$	91,147	$	82,750
Provisions for losses		717		924
Total contract liabilities	$	91,864	$	83,674

The following table summarizes changes in the contract liability balance for the period presented (in thousands):

Balance at January 1, 2018	$	83,674
Change in the measure of progress on projects, net		(620,602	)
Acquired contract liabilities		7,974
Revisions in estimates, net		(4,353	)
Billings		625,434
Change in provision for loss, net		(263	)
Balance at June 30, 2018	$	91,864

XML

Receivables, Net (Tables)

6 Months Ended

Jun. 30, 2018

Receivables [Abstract]

Summary of Receivables

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Construction contracts completed and in progress:
Billed	$	340,548	$	252,467	$	208,635
Unbilled		71,464		77,135		135,072
Retentions		—		91,135		75,891
Total construction contracts completed and in progress		412,012		420,737		419,598
Construction material sales		64,128		42,192		54,165
Other		16,644		17,014		10,892
Total gross receivables		492,784		479,943		484,655
Less: allowance for doubtful accounts		66		152		410
Total net receivables	$	492,718	$	479,791	$	484,245

XML

Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2018

Marketable Securities [Abstract]

Held-to-maturity Securities

All marketable securities were classified as held-to-maturity as of the dates presented and the carrying amounts of held-to-maturity securities were as follows:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
U.S. Government and agency obligations	$	15,000	$	17,910	$	12,909
Commercial paper		—		49,865		34,912
Corporate bonds		5,014		—		—
Total short-term marketable securities		20,014		67,775		47,821
U.S. Government and agency obligations		61,191		59,993		59,990
Corporate bonds		—		5,022		—
Total long-term marketable securities		61,191		65,015		59,990
Total marketable securities	$	81,205	$	132,790	$	107,811

Scheduled maturities of held-to-maturity investments were as follows:

(in thousands)	June 30, 2018
Due within one year	$	20,014
Due in one to five years		61,191
Total	$	81,205

XML

Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2018

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables summarize significant assets and liabilities measured at fair value in the condensed consolidated balance sheets on a recurring basis for each of the fair value levels (in thousands):

	Fair Value Measurement at Reporting Date Using
June 30, 2018	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	56,534	$	—	$	—	$	56,534
Other noncurrent assets
Restricted cash		5,746		—		—		5,746
Total assets	$	62,280	$	—	$	—	$	62,280
December 31, 2017
Cash equivalents
Money market funds	$	37,284	$	—	$	—	$	37,284
Commercial paper		9,967		—		—		9,967
Total assets	$	47,251	$	—	$	—	$	47,251
June 30, 2017
Cash equivalents
Money market funds	$	38,006	$	—	$	—	$	38,006
Total assets	$	38,006	$	—	$	—	$	38,006

Schedule of Carrying and Fair Value Amounts

The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in the condensed consolidated balance sheets were as follows:

		June 30, 2018				December 31, 2017				June 30, 2017
(in thousands)	Fair Value Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Held-to-maturity marketable securities	Level 1	$	81,205	$	80,006	$	132,790	$	132,002	$	107,811	$	107,381
Liabilities (including current maturities):
2019 Notes1	Level 3	$	80,000	$	81,307	$	80,000	$	82,190	$	120,000	$	123,371
Credit Agreement - term loan1	Level 3		150,000		150,608		90,000		89,871		92,500		92,046
Credit Agreement - revolving credit facility1	Level 3		99,000		99,267		55,000		55,054		30,000		29,672
Convertible notes1	Level 1		160,765		186,410		—		—		—		—

¹See Note 14 for definitions of, and more information about, the 2019 Notes, Credit Agreement and Convertible notes.

XML

Construction Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2018

Construction And Line Item Joint Ventures [Abstract]

Schedule of Unconsolidated Joint Ventures Assets and Liabilities [Table Text Block]

The following is summary financial information related to unconsolidated construction joint ventures:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Assets
Cash, cash equivalents and marketable securities	$	309,330	$	289,940	$	388,542
Other current assets1		701,945		812,577		632,166
Noncurrent assets		211,963		219,825		230,633
Less partners’ interest		792,567		869,782		828,237
Granite’s interest1,2		430,671		452,560		423,104
Liabilities
Current liabilities		535,700		682,832		668,630
Less partners’ interest and adjustments3		342,760		462,159		460,052
Granite’s interest		192,940		220,673		208,578
Equity in construction joint ventures4	$	237,731	$	231,887	$	214,526

¹Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets were amounts related to performance guarantees that were $88.6 million as of both June 30, 2018 and December 31, 2017 and $88.9 million as of June 30, 2017.

²Included in this balance as of June 30, 2018, December 31, 2017 and June 30, 2017 was $65.8 million, $74.3 million and $81.7 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $10.6 million, $11.8 million and $9.8 million related to Granite’s share of estimated recovery of back charge claims as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively.

³Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

⁴Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets were amounts related to deficits in construction joint ventures that were $14.7 million as of June 30, 2018 and $15.9 million as of both December 31, 2017 and June 30, 2017.

Schedule of Unconsolidated Joint Ventures Revenue and Costs [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2018			2017			2018			2017
Revenue
Total	$	449,996		$	515,983		$	689,437		$	967,304
Less partners’ interest and adjustments1		340,809			376,332			461,841			700,162
Granite’s interest		109,187			139,651			227,596			267,142
Cost of revenue
Total		423,385			498,932			804,274			941,922
Less partners’ interest and adjustments1		296,250			349,557			562,751			666,552
Granite’s interest		127,135			149,375			241,523			275,370
Granite’s interest in gross loss	$	(17,948	)	$	(9,724	)	$	(13,927	)	$	(8,228	)

¹Partners’ interest and adjustments represents amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates.

XML

Investments in Affiliates (Tables)

6 Months Ended

Jun. 30, 2018

Investments In And Advances To Affiliates Schedule Of Investments [Abstract]

Investments in and Advances to Affiliates [Table Text Block]

Our investments in affiliates balance consists of the following:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Equity method investment in foreign affiliates	$	63,000	$	—	$	—
Equity method investments in real estate affiliates		27,591		29,472		27,329
Equity method investment in asphalt terminal affiliate		8,904		8,997		9,841
Total investments in affiliates	$	99,495	$	38,469	$	37,170

Equity Method Investment Summarized Balance Sheet Information Table Text Block

The following table provides summarized balance sheet information for our affiliates accounted for under the equity method on a combined basis:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Current assets	$	136,953	$	31,320	$	25,246
Noncurrent assets		173,384		129,039		131,723
Total assets		310,337		160,359		156,969
Current liabilities		54,710		30,131		34,736
Long-term liabilities1		54,383		31,636		25,595
Total liabilities		109,093		61,767		60,331
Net assets		201,244		98,592		96,638
Granite’s share of net assets	$	99,495	$	38,469	$	37,170

¹The balance primarily relates to debt associated with our real estate investments. The increase in the balance since December 31, 2017 is related to debt of our investments in foreign affiliates associated with purchase of equipment and buildings.

XML

Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2018

Property Plant And Equipment [Abstract]

Property and Equipment

Balances of major classes of assets and allowances for depreciation and depletion are included in property and equipment, net in the condensed consolidated balance sheets and were as follows:

(in thousands)	June 30, 2018		December 31, 2017		June 30, 2017
Equipment and vehicles	$	933,951	$	778,549	$	774,903
Quarry property		178,809		182,267		176,041
Land and land improvements		141,549		108,830		111,766
Buildings and leasehold improvements		105,038		82,601		84,113
Office furniture and equipment		63,806		56,894		58,377
Property and equipment		1,423,153		1,209,141		1,205,200
Less: accumulated depreciation and depletion		827,366		801,723		791,121
Property and equipment, net	$	595,787	$	407,418	$	414,079

XML

Long-Term Debt and Credit Arrangements (Tables)

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

(in thousands)	June 30, 2018			December 31, 2017			June 30, 2017
Senior notes payable	$	80,000		$	80,000		$	120,000
Credit Agreement term loan		150,000			90,000			92,500
Credit Agreement revolving credit loan		99,000			55,000			30,000
Convertible notes		160,765			—			—
Debt issuance costs		(1,073	)		(499	)		(590	)
Total debt		488,692			224,501			241,910
Less current maturities		207,982			46,048			14,796
Total long-term debt	$	280,710		$	178,453		$	227,114

XML

Weighted Average Shares Outstanding and Net (Loss) Income Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Summary of Reconciliation of Weighted Average Shares Outstanding in Basic and Diluted Net (Loss) Income Per Share

The following table presents a reconciliation of the weighted average shares outstanding used in calculating basic and diluted net (loss) income per share as well as the calculation of basic and diluted net (loss) income per share:

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands, except per share amounts)	2018			2017		2018			2017
Numerator (basic and diluted)
Net (loss) income allocated to common shareholders for basic calculation	$	(8,385	)	$	14,133	$	(19,808	)	$	(9,657	)
Effect of dilutive convertible notes		—			—		—			—
Net (loss) income allocated to common shareholders for diluted calculation		(8,385	)		14,133		(19,808	)		(9,657	)
Denominator
Weighted average common shares outstanding, basic		41,044			39,827		40,074			39,738
Dilutive effect of convertible notes, restricted stock units and common stock options1		—			566		—			—
Weighted average common shares outstanding, diluted		41,044			40,393		40,074			39,738
Net (loss) income per share, basic	$	(0.20	)	$	0.35	$	(0.49	)	$	(0.24	)
Net (loss) income per share, diluted	$	(0.20	)	$	0.35	$	(0.49	)	$	(0.24	)

¹Due to the net losses, shares related to convertible notes and restricted stock units representing 960,000 and 732,000 for the three and six months ended June 30, 2018, respectively, and 618,000 related to restricted stock units for the six months ended June 30, 2017 have been excluded from the number of shares used in calculating diluted net loss per share, as their inclusion would be antidilutive.

XML

Income Taxes (Tables)

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Schedule of Provision for (Benefit From) Income Taxes

The following table presents the provision for (benefit from) income taxes for the respective periods:

	Three months ended June 30,						Six months ended June 30,
(dollars in thousands)	2018			2017			2018			2017
Provision for (benefit from) income taxes	$	2,796		$	8,088		$	(1,335	)	$	(4,408	)
Effective tax rate		(85.1	%)		33.2	%		7.8	%		36.8	%

XML

Equity (Tables)

6 Months Ended

Jun. 30, 2018

Stockholders Equity Note [Abstract]

Schedule of Stockholders Equity

The following tables summarize our equity activity for the periods presented (in thousands):

	Granite Construction Incorporated			Non-controlling Interests			Total Equity
Balance at December 31, 2017	$	945,108		$	47,697		$	992,805
Net (loss) income		(19,808	)		4,065			(15,743	)
Purchases of common stock1		(6,165	)		—			(6,165	)
Dividends on common stock		(11,146	)		—			(11,146	)
Effect of adopting Topic 606		(15,202	)		—			(15,202	)
Issuance of common stock for Layne acquisition2		321,075			48			321,123
Premium on 8.0% Convertible Notes3		30,702			—			30,702
Transactions with non-controlling interests		—			(6,400	)		(6,400	)
Other transactions with shareholders and employees4		11,012			—			11,012
Balance at June 30, 2018	$	1,255,576		$	45,410		$	1,300,986
Balance at December 31, 2016	$	885,988		$	36,603		$	922,591
Net (loss) income		(9,657	)		2,078			(7,579	)
Purchases of common stock5		(6,568	)		—			(6,568	)
Dividends on common stock		(10,354	)		—			(10,354	)
Other transactions with shareholders and employees4		11,987			—			11,987
Balance at June 30, 2017	$	871,396		$	38,681		$	910,077

¹Represents 104,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

²Represents 5,624,000 shares issued in connection with the Layne acquisition wherein each share of Layne common stock was exchanged for 0.27 shares of Granite common stock. See Note 3 for further information.

³Represents premium associated with the conversion feature on the 8.0% Convertible Notes assumed from the acquisition of Layne. See Note 14 for further discussion.

⁴Amounts are comprised primarily of amortized restricted stock units.

⁵Represents 133,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

XML

Business Segment Information (Tables)

6 Months Ended

Jun. 30, 2018

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

Summarized segment information is as follows (in thousands):

Three Months Ended June 30,

	Construction		Large Project Construction		Construction Materials			Total
2018
Total revenue from reportable segments	$	432,225	$	273,946	$	146,197		$	852,368
Elimination of intersegment revenue		—		—		(45,249	)		(45,249	)
Revenue from external customers		432,225		273,946		100,948			807,119
Gross profit		61,551		1,338		17,480			80,369
Depreciation, depletion and amortization		9,645		9,318		6,074			25,037
2017
Total revenue from reportable segments	$	429,269	$	254,463	$	123,242		$	806,974
Elimination of intersegment revenue		—		—		(44,061	)		(44,061	)
Revenue from external customers		429,269		254,463		79,181			762,913
Gross profit		60,900		489		13,181			74,570
Depreciation, depletion and amortization		5,441		3,081		5,417			13,939

Six Months Ended June 30,

	Construction		Large Project Construction		Construction Materials			Total
2018
Total revenue from reportable segments	$	701,468	$	522,360	$	199,519		$	1,423,347
Elimination of intersegment revenue		—		—		(52,849	)		(52,849	)
Revenue from external customers		701,468		522,360		146,670			1,370,498
Gross profit		99,947		21,704		15,001			136,652
Depreciation, depletion and amortization		14,699		11,917		11,484			38,100
Segment assets		608,116		335,036		304,121			1,247,273
2017
Total revenue from reportable segments	$	656,118	$	461,496	$	171,864		$	1,289,478
Elimination of intersegment revenue		—		—		(58,165	)		(58,165	)
Revenue from external customers		656,118		461,496		113,699			1,231,313
Gross profit		88,229		3,044		8,423			99,696
Depreciation, depletion and amortization		10,435		4,967		10,615			26,017
Segment assets		142,456		312,891		295,068			750,415

Reconciliation of Operating Profit (Loss) from Segments to Consolidated

A reconciliation of segment gross profit to consolidated (loss) income before provision for (benefit from) income taxes is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2018			2017			2018			2017
Total gross profit from reportable segments	$	80,369		$	74,570		$	136,652		$	99,696
Selling, general and administrative expenses		61,316			51,388			122,568			113,225
Acquisition and integration expenses		26,287			—			34,696			—
Gain on sales of property and equipment		(1,505	)		(807	)		(2,048	)		(1,077	)
Total other income		(2,444	)		(371	)		(1,486	)		(465	)
(Loss) income before provision for (benefit from) income taxes	$	(3,285	)	$	24,360		$	(17,078	)	$	(11,987	)

XML

Basis of Presentation - Summary of Reconciliation of Cash, Cash Equivalents, and Restricted Cash Reported in the Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash And Cash Equivalents [Abstract]
Cash and cash equivalents, beginning of period	$ 233,711	$ 189,326
Cash and cash equivalents	195,515	178,068
Restricted cash, end of period	5,746	0
Cash, cash equivalents and restricted cash of $5,746 at end of period	201,261	178,068
Net decrease in cash, cash equivalents and restricted cash	$ (32,450)	$ (11,258)

XML

Basis of Presentation - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Jan. 01, 2018
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]
New Accounting Pronouncement Early Adoption [Line Items]
Estimated net cumulative decrease to retained earnings		$ 15.2
Maximum [Member]
New Accounting Pronouncement Early Adoption [Line Items]
Percentage of completed contracts with customers		90.00%
Water and Mineral Services [Member] | Inventories [Member]
New Accounting Pronouncement Early Adoption [Line Items]
Advances to suppliers	$ 19.1

XML

Basis of Presentation - Additional Information 1 (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2018-03-31 $ in Billions	6 Months Ended
	Jun. 30, 2018 USD ($)
New Accounting Pronouncement Early Adoption [Line Items]
Unearned revenue	$ 2.2
Unearned revenue expect to recognize period	1 year
Unearned revenue expect to recognize description	Approximately $2.2 billion of the June 30, 2018 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.

XML

Basis of Presentation - Summary of Impact of Adoption of Accounting Standards (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Assets
Receivables, net	$ 492,718	$ 484,245	$ 492,718	$ 484,245		$ 479,791
Contract assets	265,190	0	265,190	0	$ 160,890	0
Costs and estimated earnings in excess of billings	0	99,883	0	99,883		103,965
Other current assets	49,100	43,597	49,100	43,597		36,513
Deferred income taxes, net	25,135	0	25,135	0		0
Liabilities and equity
Contract liabilities	91,864	0	91,864	0	$ 83,674	0
Billings in excess of costs and estimated earnings	0	114,180	0	114,180		135,146
Accrued expenses and other current liabilities	293,959	231,048	293,959	231,048		236,407
Deferred income taxes, net	5,759		5,759
Retained earnings	737,417	715,451	737,417	715,451		$ 783,699
Revenue
Revenue	807,119	762,913	1,370,498	1,231,313
Cost of revenue
Cost of revenue	726,750	688,343	1,233,846	1,131,617
Gross profit	80,369	74,570	136,652	99,696
Operating (loss) income	(5,729)	23,989	(18,564)	(12,452)
Provision for (benefit from) income taxes	2,796	8,088	(1,335)	(4,408)
Net (loss) income	(6,081)	16,272	(15,743)	(7,579)
Net (loss) income attributable to Granite Construction Incorporated	(8,385)	14,133	(19,808)	(9,657)
Construction Segment [Member]
Revenue
Revenue	432,225	429,269	701,468	656,118
Cost of revenue
Cost of revenue	370,674	368,369	601,521	567,889
Large Project Construction [Member]
Revenue
Revenue	273,946	254,463	522,360	461,496
Cost of revenue
Cost of revenue	272,608	$ 253,974	500,656	$ 458,452
Accounting Standards Update 2014-09 [Member] | Balances Without Adoption of Topic 606 [Member]
Assets
Receivables, net	615,782		615,782
Contract assets	0		0
Costs and estimated earnings in excess of billings	175,265		175,265
Other current assets	49,813		49,813
Deferred income taxes, net	19,863		19,863
Liabilities and equity
Contract liabilities	0		0
Billings in excess of costs and estimated earnings	119,335		119,335
Accrued expenses and other current liabilities	282,222		282,222
Deferred income taxes, net	5,759		5,759
Retained earnings	750,263		750,263
Cost of revenue
Gross profit	80,093		133,584
Operating (loss) income	(6,005)		(21,632)
Provision for (benefit from) income taxes	2,746		(2,048)
Net (loss) income	(6,307)		(18,098)
Net (loss) income attributable to Granite Construction Incorporated	(8,611)		(22,163)
Accounting Standards Update 2014-09 [Member] | Balances Without Adoption of Topic 606 [Member] | Construction Segment [Member]
Revenue
Revenue	433,509		702,989
Cost of revenue
Cost of revenue	370,674		601,521
Accounting Standards Update 2014-09 [Member] | Balances Without Adoption of Topic 606 [Member] | Large Project Construction [Member]
Revenue
Revenue	274,228		520,849
Cost of revenue
Cost of revenue	274,450		503,734
Accounting Standards Update 2014-09 [Member] | Effect of Change Higher/(Lower) [Member]
Assets
Receivables, net	(123,064)		(123,064)
Contract assets	265,190		265,190
Costs and estimated earnings in excess of billings	(175,265)		(175,265)
Other current assets	(713)		(713)
Deferred income taxes, net	5,272		5,272
Liabilities and equity
Contract liabilities	91,864		91,864
Billings in excess of costs and estimated earnings	(119,335)		(119,335)
Accrued expenses and other current liabilities	11,737		11,737
Deferred income taxes, net	0		0
Retained earnings	(12,846)		(12,846)
Cost of revenue
Gross profit	276		3,068
Operating (loss) income	276		3,068
Provision for (benefit from) income taxes	50		713
Net (loss) income	226		2,355
Net (loss) income attributable to Granite Construction Incorporated	226		2,355
Accounting Standards Update 2014-09 [Member] | Effect of Change Higher/(Lower) [Member] | Construction Segment [Member]
Revenue
Revenue	(1,284)		(1,521)
Cost of revenue
Cost of revenue	0		0
Accounting Standards Update 2014-09 [Member] | Effect of Change Higher/(Lower) [Member] | Large Project Construction [Member]
Revenue
Revenue	(282)		1,511
Cost of revenue
Cost of revenue	$ (1,842)		$ (3,078)

XML

Acquisitions - Additional Information (Details) $ in Thousands			3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 14, 2018 USD ($)	Apr. 03, 2018 USD ($)	Jun. 30, 2018 USD ($) Office	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) Office	Jun. 30, 2017 USD ($)	Dec. 31, 2018	Dec. 31, 2017 USD ($)
Business Acquisition [Line Items]
Common stock issued in acquisition					$ 321,075	$ 0
Revenue			$ 909,783	$ 888,176	1,583,073	1,452,067
Acquisition and integration expenses			26,287	0	34,696	0
Goodwill			246,881	$ 53,799	246,881	$ 53,799		$ 53,799
Amortization expenses			2,700		2,700
Amortization expenses remainder of 2018			10,900		10,900
Amortization expenses in 2019			13,200		13,200
Amortization expenses in 2020			10,800		10,800
Amortization expenses in 2021			8,800		8,800
Amortization expenses thereafter			$ 18,400		$ 18,400
Federal statutory tax, Percent					21.00%			35.00%
Proforma Adjustments
Business Acquisition [Line Items]
Federal statutory tax, Percent								39.00%
Scenario, Forecast [Member] | Proforma Adjustments
Business Acquisition [Line Items]
Federal statutory tax, Percent							26.00%
Layne Christensen Company [Member]
Business Acquisition [Line Items]
Acquisition purchase price	$ 349,840
Common stock issued in acquisition	321,000
Acquisition cash settled	28,800
Acquisition assumed liabilities	191,500
Number of offices | Office			52		52
Revenue			$ 21,500		$ 21,500
Net loss before tax attributable to Granite			15,100		15,100
Acquisition and integration expenses			14,700		14,700
Business consideration tangible assets acquired	439,002
Identifiable intangible assets	60,748
Business consideration intangible liabilities assumed	6,700
Goodwill	$ 174,244
LiquiForce Services Company [Member]
Business Acquisition [Line Items]
Acquisition assumed liabilities		$ 35,900
Business consideration tangible assets acquired		14,500
Identifiable intangible assets		10,900
Business consideration intangible liabilities assumed		8,600
Goodwill		$ 19,100
LiquiForce Services Company [Member] | Construction Segment [Member]
Business Acquisition [Line Items]
Goodwill			$ 18,800		$ 18,800

XML

Acquisitions - Schedule of Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands	Jun. 14, 2018	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Liabilities
Goodwill		$ 246,881	$ 53,799	$ 53,799
Layne Christensen Company [Member]
Assets
Cash	$ 2,995
Receivables	70,160
Contract assets	44,947
Inventories	23,424
Other current assets	5,533
Property and equipment	187,890
Investments in affiliates	63,000
Deferred income taxes	23,185
Other noncurrent assets	17,868
Total tangible assets	439,002
Identifiable intangible assets	60,748
Liabilities
Identifiable intangible liabilities	6,700
Accounts payable	38,321
Contract liabilities	7,854
Accrued expenses and other current liabilities	47,694
Long-term debt	191,500
Other long-term liabilities	32,085
Total liabilities assumed	317,454
Total identifiable net assets acquired	175,596
Goodwill	174,244
Acquisition purchase price	$ 349,840

XML

Acquisitions - Schedule of Amortized Intangible Assets And Liabilities (Details) - Layne and Liquiforce Acquisitions [Member] $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Finite Lived Intangible Assets And Liabilities [Line Items]
Gross Value, Assets	$ 71,981
Accumulated Amortization, Assets	(3,665)
Net Value, Assets	68,316
Gross Value, Liabilities	7,192
Accumulated Amortization, Liabilities	(965)
Net Value, Liabilities	$ 6,227
Customer Relationships [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years), Assets	7 years
Gross Value, Assets	$ 34,674
Accumulated Amortization, Assets	(728)
Net Value, Assets	$ 33,946
Backlog [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years), Assets	3 years
Gross Value, Assets	$ 11,163
Accumulated Amortization, Assets	(1,890)
Net Value, Assets	$ 9,273
Developed Technology [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years), Assets	4 years
Gross Value, Assets	$ 9,228
Accumulated Amortization, Assets	(234)
Net Value, Assets	$ 8,994
Trademarks/Trade Names [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years), Assets	4 years
Gross Value, Assets	$ 8,989
Accumulated Amortization, Assets	(163)
Net Value, Assets	$ 8,826
Favorable Contracts [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years), Assets	3 years
Gross Value, Assets	$ 4,800
Accumulated Amortization, Assets	(596)
Net Value, Assets	$ 4,204
Right of Ways [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years), Assets	12 years
Gross Value, Assets	$ 2,268
Accumulated Amortization, Assets	(12)
Net Value, Assets	$ 2,256
Covenants not to compete and other [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years), Assets	5 years
Gross Value, Assets	$ 859
Accumulated Amortization, Assets	(42)
Net Value, Assets	$ 817
Unfavorable Contracts [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years),Laibilities	2 years
Gross Value, Liabilities	$ 6,892
Accumulated Amortization, Liabilities	(952)
Net Value, Liabilities	$ 5,940
Unfavorable Leases [Member]
Finite Lived Intangible Assets And Liabilities [Line Items]
Weighted Average Useful Lives (Years),Laibilities	1 year
Gross Value, Liabilities	$ 300
Accumulated Amortization, Liabilities	(13)
Net Value, Liabilities	$ 287

XML

Acquisitions - Schedule of Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Goodwill [Line Items]
Beginning Balance	$ 53,799
Ending Balance	246,881
Layne Christensen Company [Member]
Goodwill [Line Items]
Goodwill acquired	174,244
LiquiForce Services Company [Member]
Goodwill [Line Items]
Goodwill acquired	$ 18,838

XML

Acquisitions - Schedule of Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Business Combinations [Abstract]
Revenue	$ 909,783	$ 888,176	$ 1,583,073	$ 1,452,067
Net income (loss)	16,834	(10,974)	14,454	(61,709)
Net income (loss) attributable to Granite	$ 14,530	$ (13,113)	$ 10,389	$ (63,787)
Basic net income (loss) per share attributable to common shareholders	$ 0.32	$ (0.29)	$ 0.23	$ (1.41)
Diluted net income (loss) per share attributable to common shareholders	$ 0.30	$ (0.29)	$ 0.22	$ (1.41)

XML

Acquisitions - Summary of Acquisition and Integration Expenses (Details) - Layne and Liquiforce Acquisitions [Member] - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018
Business Acquisition [Line Items]
Professional services and other expenses	$ 18,064	$ 26,473
Severance and personnel costs	8,223	8,223
Total	$ 26,287	$ 34,696

XML

Revisions in Estimates - Additional Information(Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2018
Change In Accounting Estimate [Line Items]
Impact from affirmative claim recovery estimate	$ 2.3	$ 12.2	$ 4.9	$ 14.0
Impact from estimated recovery of back charge claims	(1.6)	2.7	(2.0)	3.0
Minimum [Member] | Subsequent Event [Member]
Change In Accounting Estimate [Line Items]
Decrease on project revenue and profitability					$ 0.0
Maximum [Member] | Subsequent Event [Member]
Change In Accounting Estimate [Line Items]
Decrease on project revenue and profitability					$ 15.0
Revisions to Estimated Total Contract Costs [Member]
Change In Accounting Estimate [Line Items]
Impact from affirmative claim recovery estimate	6.4		8.5
Impact from estimated recovery of back charge claims	0.9	1.4	1.1	1.4
Estimated Costs Recorded in Prior Period [Member]
Change In Accounting Estimate [Line Items]
Impact from affirmative claim recovery estimate	(4.1)	0.8	(3.6)	(0.1)
Impact from estimated recovery of back charge claims	0.7	1.3	0.9	1.6
Revisions to Estimated Total Contract Costs [Member]
Change In Accounting Estimate [Line Items]
Impact from affirmative claim recovery estimate		11.4		14.1
Large Project Construction [Member]
Change In Accounting Estimate [Line Items]
Decrease on project revenue and profitability			4.9
Increase in net loss			1.6
Change in accounting estimate amount considered significant to individual project gross profit			1.0
Large Project Construction [Member] | Net Estimate Change [Member]
Change In Accounting Estimate [Line Items]
Increase (decrease) on project profitability	(30.3)	(23.8)	(39.8)	(37.8)
Large Project Construction [Member] | Contracts Accounted for under Percentage of Completion [Member] | Noncontrolling Interest [Member]
Change In Accounting Estimate [Line Items]
Increase (decrease) on project profitability	0.0	(0.4)	0.0	(2.0)
Construction Segment [Member]
Change In Accounting Estimate [Line Items]
Change in accounting estimate amount considered significant to individual project gross profit			1.0
Construction Segment [Member] | Net Estimate Change [Member]
Change In Accounting Estimate [Line Items]
Increase (decrease) on project profitability	$ (4.5)	$ (1.1)	$ (3.3)	$ (1.8)

XML

Revisions in Estimates - Schedule of Projects Summarized (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) project	Jun. 30, 2017 USD ($) project	Jun. 30, 2018 USD ($) project	Jun. 30, 2017 USD ($) project
Upward Estimate Change [Member] | Construction Segment [Member]
Change In Accounting Estimate [Line Items]
Number of projects with estimate changes | project	1	0	2	0
Range of increase (reduction) in gross profit from each project, net	$ 1.4	$ 0.0		$ 0.0
Increase (decrease) on project profitability	$ 1.4	$ 0.0	$ 2.8	$ 0.0
Upward Estimate Change [Member] | Large Project Construction [Member]
Change In Accounting Estimate [Line Items]
Number of projects with estimate changes | project	1	0	1	0
Range of increase (reduction) in gross profit from each project, net	$ 1.0	$ 0.0	$ 1.2	$ 0.0
Increase (decrease) on project profitability	$ 1.0	$ 0.0	1.2	$ 0.0
Upward Estimate Change [Member] | Maximum [Member] | Construction Segment [Member]
Change In Accounting Estimate [Line Items]
Range of increase (reduction) in gross profit from each project, net			1.4
Upward Estimate Change [Member] | Minimum [Member] | Construction Segment [Member]
Change In Accounting Estimate [Line Items]
Range of increase (reduction) in gross profit from each project, net			$ 1.4
Downward Estimate Change [Member] | Construction Segment [Member]
Change In Accounting Estimate [Line Items]
Number of projects with estimate changes | project	3	1	3	1
Range of increase (reduction) in gross profit from each project, net		$ (1.1)		$ (1.8)
Increase (decrease) on project profitability	$ (5.9)	$ (1.1)	$ (6.1)	$ (1.8)
Downward Estimate Change [Member] | Large Project Construction [Member]
Change In Accounting Estimate [Line Items]
Number of projects with estimate changes | project	3	5	5	7
Increase (decrease) on project profitability	$ (31.3)	$ (23.8)	$ (41.0)	$ (37.8)
Downward Estimate Change [Member] | Maximum [Member] | Construction Segment [Member]
Change In Accounting Estimate [Line Items]
Range of increase (reduction) in gross profit from each project, net	(2.5)		(2.6)
Downward Estimate Change [Member] | Maximum [Member] | Large Project Construction [Member]
Change In Accounting Estimate [Line Items]
Range of increase (reduction) in gross profit from each project, net	(15.7)	(8.1)	(18.3)	(10.8)
Downward Estimate Change [Member] | Minimum [Member] | Construction Segment [Member]
Change In Accounting Estimate [Line Items]
Range of increase (reduction) in gross profit from each project, net	(1.2)		(1.3)
Downward Estimate Change [Member] | Minimum [Member] | Large Project Construction [Member]
Change In Accounting Estimate [Line Items]
Range of increase (reduction) in gross profit from each project, net	$ (1.0)	$ (1.1)	$ (1.1)	$ (1.0)

XML

Disaggregation of Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Disaggregation Of Revenue [Line Items]
Total revenue	$ 807,119	$ 762,913	$ 1,370,498	$ 1,231,313
Construction Segment [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	432,225	429,269	701,468	656,118
Large Project Construction [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	273,946	254,463	522,360	461,496
Construction Materials [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	100,948	79,181	146,670	113,699
California [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	258,066	208,116	467,965	325,417
California [Member] | Construction Segment [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	187,901	147,605	351,997	230,369
California [Member] | Large Project Construction [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	14,971	12,048	27,786	22,169
California [Member] | Construction Materials [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	55,194	48,463	88,182	72,879
Northwest [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	216,964	224,587	305,355	319,022
Northwest [Member] | Construction Segment [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	160,983	182,574	227,425	263,240
Northwest [Member] | Large Project Construction [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	12,360	11,295	21,575	14,962
Northwest [Member] | Construction Materials [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	43,621	30,718	56,355	40,820
Heavy Civil [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	209,015	212,579	396,896	383,545
Heavy Civil [Member] | Construction Segment [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	7,055	24,098	12,255	33,318
Heavy Civil [Member] | Large Project Construction [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	201,960	188,481	384,641	350,227
Heavy Civil [Member] | Construction Materials [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	0	0	0	0
Kenny [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	101,593	117,631	178,801	203,329
Kenny [Member] | Construction Segment [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	56,938	74,992	90,443	129,191
Kenny [Member] | Large Project Construction [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	44,655	42,639	88,358	74,138
Kenny [Member] | Construction Materials [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	0	$ 0	0	$ 0
Water and Mineral Services [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	21,481		21,481
Water and Mineral Services [Member] | Construction Segment [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	19,348		19,348
Water and Mineral Services [Member] | Large Project Construction [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	0		0
Water and Mineral Services [Member] | Construction Materials [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	$ 2,133		$ 2,133

XML

Unearned Revenue - Schedule of Unearned Revenue (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Mar. 31, 2018	Jan. 01, 2018
Deferred Revenue Arrangement [Line Items]
Unearned revenue	$ 3,416,340	$ 3,448,581	$ 3,583,849
California [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	397,338	382,028	406,054
Northwest [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	383,855	362,225	315,582
Heavy Civil [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	2,076,110	2,287,770	2,399,785
Kenny [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	371,858	416,558	462,428
Water and Mineral Services [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	187,179
Construction Segment [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	1,104,457	880,976	825,428
Construction Segment [Member] | California [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	364,305	333,866	365,771
Construction Segment [Member] | Northwest [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	383,855	362,225	262,117
Construction Segment [Member] | Heavy Civil [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	43,959	54,596	43,016
Construction Segment [Member] | Kenny [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	125,159	130,289	154,524
Construction Segment [Member] | Water and Mineral Services [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	187,179
Large Project Construction [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	2,311,883	2,567,605	2,758,421
Large Project Construction [Member] | California [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	33,033	48,162	40,283
Large Project Construction [Member] | Northwest [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	0	0	53,465
Large Project Construction [Member] | Heavy Civil [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	2,032,151	2,233,174	2,356,769
Large Project Construction [Member] | Kenny [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	246,699	$ 286,269	$ 307,904
Large Project Construction [Member] | Water and Mineral Services [Member]
Deferred Revenue Arrangement [Line Items]
Unearned revenue	$ 0

XML

Contract Assets and Liabilities - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Loss Contingencies [Line Items]
Revenue recognized	$ 13,300		$ 102,700
Total revenue	807,119	$ 762,913	1,370,498	$ 1,231,313
Aggregate claim recovery estimate included in contract assets and liability	36,100		36,100		$ 26,700
Costs in excess of billings and estimated earnings and billings in excess of estimated earnings		$ 10,800		$ 10,800
Performance Obligations [Member]
Loss Contingencies [Line Items]
Total revenue	$ 33,200		$ 60,900

XML

Contract Assets and Liabilities - Component of Contract Asset Balances (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jan. 01, 2018	Dec. 31, 2017	Jun. 30, 2017
Revenue From Contract With Customer [Abstract]
Costs in excess of billings and estimated earnings	$ 161,670	$ 69,755
Contract retention	103,520	91,135
Total contract assets	$ 265,190	$ 160,890	$ 0	$ 0

XML

Contract Assets and Liabilities - Schedule of Change in Contract Asset Balance (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Revenue From Contract With Customer [Abstract]
Balance at January 1, 2018	$ 160,890
Change in the measure of progress on projects, net	643,605
Acquired contract assets	45,353
Revisions in estimates, net	(44,550)
Billings	(516,854)
Receipts related to contract retention	(23,254)
Balance at June 30, 2018	$ 265,190

XML

Contract Assets and Liabilities - Components of Contract Liabilities Balance (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Jan. 01, 2018	Dec. 31, 2017	Jun. 30, 2017
Revenue From Contract With Customer [Abstract]
Billings in excess of costs and estimated earnings	$ 91,147	$ 82,750
Provisions for losses	717	924
Total contract liabilities	$ 91,864	$ 83,674	$ 0	$ 0

XML

Contract Assets and Liabilities - Schedule of Change in Contract Liability Balance (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Revenue From Contract With Customer [Abstract]
Balance at January 1, 2018	$ 83,674
Change in the measure of progress on projects, net	(620,602)
Acquired contract liabilities	7,974
Revisions in estimates, net	(4,353)
Billings	625,434
Change in provision for loss, net	(263)
Balance at June 30, 2018	$ 91,864

XML

Receivables, Net - Summary of Receivables (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable-gross	$ 492,784	$ 479,943	$ 484,655
Less: allowance for doubtful accounts	66	152	410
Accounts receivable-net	492,718	479,791	484,245
Completed and in Progress [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Billed	340,548	252,467	208,635
Unbilled	71,464	77,135	135,072
Accounts receivable-gross	412,012	420,737	419,598
Construction Material Sales [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable-gross	64,128	42,192	54,165
Other Business Products and Services [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable-gross	16,644	17,014	10,892
Retentions [Member] | Completed and in Progress [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable-gross	$ 0	$ 91,135	$ 75,891

XML

Receivables, Net - Additional Information (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Back charges claims	$ 1,600,000	$ 1,100,000	$ 300,000
Uncollectible Receivables [Member] | Retentions [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts Notes Loans and Financing Receivable Gross Current	$ 0	$ 0	$ 0

XML

Marketable Securities - Carrying Amounts of Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Schedule of Marketable Securities [Line Items]
Short-term marketable securities	$ 20,014	$ 67,775	$ 47,821
Long-term marketable securities	61,191	65,015	59,990
Total marketable securities	81,205	132,790	107,811
U.S. Government and agency obligations [Member]
Schedule of Marketable Securities [Line Items]
Short-term marketable securities	15,000	17,910	12,909
Long-term marketable securities	61,191	59,993	59,990
Commercial paper [Member]
Schedule of Marketable Securities [Line Items]
Short-term marketable securities	0	49,865	34,912
Corporate bonds [Member]
Schedule of Marketable Securities [Line Items]
Short-term marketable securities	5,014	0	0
Long-term marketable securities	$ 0	$ 5,022	$ 0

XML

Marketable Securities - Maturities of Held to Maturity Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Marketable Securities [Abstract]
Due within one year	$ 20,014
Due in one to five years	61,191
Total marketable securities	$ 81,205	$ 132,790	$ 107,811

XML

Fair Value Measurement Cash and Cash Equivalents (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Assets, Fair Value Disclosure
Total Assets, Fair Value	$ 62,280	$ 47,251	$ 38,006
Level 1 [Member]
Assets, Fair Value Disclosure
Total Assets, Fair Value	62,280	47,251	38,006
Level 2 [Member]
Assets, Fair Value Disclosure
Total Assets, Fair Value	0	0	0
Level 3 [Member]
Assets, Fair Value Disclosure
Total Assets, Fair Value	0	0	0
Money Market Funds [Member]
Assets, Fair Value Disclosure
Cash equivalents	56,534	37,284	38,006
Money Market Funds [Member] | Level 1 [Member]
Assets, Fair Value Disclosure
Cash equivalents	56,534	37,284	38,006
Money Market Funds [Member] | Level 2 [Member]
Assets, Fair Value Disclosure
Cash equivalents	0	0	0
Money Market Funds [Member] | Level 3 [Member]
Assets, Fair Value Disclosure
Cash equivalents	0	0	$ 0
Commercial paper [Member]
Assets, Fair Value Disclosure
Cash equivalents		9,967
Commercial paper [Member] | Level 1 [Member]
Assets, Fair Value Disclosure
Cash equivalents		9,967
Commercial paper [Member] | Level 2 [Member]
Assets, Fair Value Disclosure
Cash equivalents		0
Commercial paper [Member] | Level 3 [Member]
Assets, Fair Value Disclosure
Cash equivalents		$ 0
Restricted Cash [Member]
Assets, Fair Value Disclosure
Other noncurrent assets	5,746
Restricted Cash [Member] | Level 1 [Member]
Assets, Fair Value Disclosure
Other noncurrent assets	5,746
Restricted Cash [Member] | Level 2 [Member]
Assets, Fair Value Disclosure
Other noncurrent assets	0
Restricted Cash [Member] | Level 3 [Member]
Assets, Fair Value Disclosure
Other noncurrent assets	$ 0

XML

Fair Value Measurement - Additional Information (Details) - Designated as Hedging Instrument [Member] - USD ($)	May 31, 2018	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Level 2 [Member]
Derivatives Details
Derivative Asset		$ 500,000	$ 1,400,000	$ 700,000
Interest Rate Swap May 2018 [Member]
Derivatives Details
Interest rate swap initial notional amount	$ 150,000,000
Maturity date	May 31, 2023
Cash flow hedge fixed rate	2.76%
Number of interest rate swap	2

XML

Fair Value Measurement - Schedule of Carrying and Fair Value Amounts (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Level 1 [Member] | Other Assets Liabilities, Carrying Value [Member]
Balance Sheet Grouping
Held-to-maturity marketable securities	$ 81,205	$ 132,790	$ 107,811
Convertible notes	160,765	0	0
Level 1 [Member] | Other Assets, Liabilities, Fair Value [Member]
Balance Sheet Grouping
Held-to-maturity marketable securities	80,006	132,002	107,381
Convertible notes	186,410	0	0
Level 3 [Member] | Other Assets Liabilities, Carrying Value [Member]
Balance Sheet Grouping
2019 Notes	80,000	80,000	120,000
Credit Agreement - term loan	150,000	90,000	92,500
Level 3 [Member] | Other Assets Liabilities, Carrying Value [Member] | Revolving Credit Facility [Member]
Balance Sheet Grouping
Revolving credit agreement	99,000	55,000	30,000
Level 3 [Member] | Other Assets, Liabilities, Fair Value [Member]
Balance Sheet Grouping
2019 Notes	81,307	82,190	123,371
Credit Agreement - term loan	150,608	89,871	92,046
Level 3 [Member] | Other Assets, Liabilities, Fair Value [Member] | Revolving Credit Facility [Member]
Balance Sheet Grouping
Revolving credit agreement	$ 99,267	$ 55,054	$ 29,672

XML

Construction Joint Ventures - Additional Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018 USD ($) project	Jun. 30, 2017 USD ($)	Jun. 30, 2018 USD ($) project	Jun. 30, 2017 USD ($)
Construction Joint Venture
Number of active construction joint venture projects | project	10		10
Construction Contract Value	$ 12,200,000		$ 12,200,000
Revenue	807,119	$ 762,913	1,370,498	$ 1,231,313
Net cash provided by operating activities			(75,445)	22,686
Unconsolidated Construction Joint Venture Net (Loss) Income	$ (26,500)	17,600	$ (114,400)	26,200
Line Item Joint Venture [Member]
Construction Joint Venture
Number of active construction joint venture projects | project	1		1
Revenue	$ 400	6,800	$ 1,200	14,700
Line Item Joint Venture One [Member]
Construction Joint Venture
Construction Contract Value	18,000		18,000
Minimum [Member]
Construction Joint Venture
Construction Contract Value	$ 77,300		$ 77,300
Proportionate Share of the Joint Ventures Equity Owned by or Beneficial Interest in the Reporting Entity Directly or Indirectly	20.00%		20.00%
Maximum [Member]
Construction Joint Venture
Construction Contract Value	$ 3,700,000		$ 3,700,000
Proportionate Share of the Joint Ventures Equity Owned by or Beneficial Interest in the Reporting Entity Directly or Indirectly	50.00%		50.00%
Reporting Entitys Interest in Joint Venture [Member]
Construction Joint Venture
Revenue Remaining to be Recognized on Unconsolidated Construction Joint Ventures	$ 1,300,000		$ 1,300,000
Other Partners Interest in Partnerships [Member]
Construction Joint Venture
Revenue Remaining to be Recognized on Unconsolidated Construction Joint Ventures	$ 2,600,000		$ 2,600,000
Joint Venture Consolidated [Member]
Construction Joint Venture
Number of active construction joint venture projects | project	6		6
Construction Contract Value	$ 1,200,000		$ 1,200,000
Joint Venture Consolidated [Member] | Consolidated Construction Joint Venture [Member]
Construction Joint Venture
Revenue	67,700	49,500	111,500	85,000
Net cash provided by operating activities			15,100	19,200
Joint Venture Consolidated [Member] | Minimum [Member]
Construction Joint Venture
Construction Contract Value	$ 50,500		$ 50,500
Joint Venture Consolidated [Member] | Minimum [Member] | Consolidated Construction Joint Venture [Member]
Construction Joint Venture
Proportionate Share of the Joint Ventures Equity Owned by or Beneficial Interest in the Reporting Entity Directly or Indirectly	50.00%		50.00%
Joint Venture Consolidated [Member] | Maximum [Member]
Construction Joint Venture
Construction Contract Value	$ 409,700		$ 409,700
Joint Venture Consolidated [Member] | Maximum [Member] | Consolidated Construction Joint Venture [Member]
Construction Joint Venture
Proportionate Share of the Joint Ventures Equity Owned by or Beneficial Interest in the Reporting Entity Directly or Indirectly	65.00%		65.00%
Partnership Interest [Member]
Construction Joint Venture
Revenue Remaining to be Recognized on Unconsolidated Construction Joint Ventures	$ 3,900,000		$ 3,900,000
Granite Construction [Member]
Construction Joint Venture
Revenue			1,300,000
Unconsolidated Construction Joint Venture Net (Loss) Income	(17,700)	$ (9,700)	(13,400)	$ (8,200)
Granite Construction [Member] | Line Item Joint Venture One [Member]
Construction Joint Venture
Construction Contract Value	10,800		10,800
Revenue Remaining to be Recognized on Consolidated Construction Joint Ventures	$ 10,600		10,600
Granite Construction [Member] | Minimum [Member]
Construction Joint Venture
Revenue			2,300
Granite Construction [Member] | Maximum [Member]
Construction Joint Venture
Revenue			312,800
Granite Construction [Member] | Joint Venture Consolidated [Member]
Construction Joint Venture
Revenue			430,900
Granite Construction [Member] | Joint Venture Consolidated [Member] | Minimum [Member]
Construction Joint Venture
Revenue			1,100
Granite Construction [Member] | Joint Venture Consolidated [Member] | Maximum [Member]
Construction Joint Venture
Revenue			$ 190,800

XML

Construction Joint Ventures - Schedule of Unconsolidated Construction Joint Ventures Assets and Liabilities (Details) - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Construction Joint Venture
Unconsolidated Construction Joint Venture Assets, Noncurrent Assets		$ 211,963	$ 219,825	$ 230,633
Equity in Construction Joint Ventures	[1]	237,731	231,887	214,526
Other Partners Interest in Partnerships [Member]
Construction Joint Venture
Unconsolidated Construction Joint Venture Assets		792,567	869,782	828,237
Unconsolidated Construction Joint Venture Liabilities	[2]	342,760	462,159	460,052
Reporting Entitys Interest in Joint Venture [Member]
Construction Joint Venture
Unconsolidated Construction Joint Venture Assets	[3],[4]	430,671	452,560	423,104
Unconsolidated Construction Joint Venture Liabilities		192,940	220,673	208,578
Cash and Cash Equivalents [Member]
Construction Joint Venture
Unconsolidated Construction Joint Venture Assets		309,330	289,940	388,542
Other Assets, Current and Longterm [Member]
Construction Joint Venture
Unconsolidated Construction Joint Venture Assets	[3]	701,945	812,577	632,166
Accounts Payable [Member]
Construction Joint Venture
Unconsolidated Construction Joint Venture Liabilities		$ 535,700	$ 682,832	$ 668,630

[1] 4Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets were amounts related to deficits in construction joint ventures that were $14.7 million as of June 30, 2018 and $15.9 million as of both December 31, 2017 and June 30, 2017

[2] 3Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

[3] 1Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets were amounts related to performance guarantees that were $88.6 million as of both June 30, 2018 and December 31, 2017 and $88.9 million as of June 30, 2017.

[4] 2Included in this balance as of June 30, 2018, December 31, 2017 and June 30, 2017 was $65.8 million, $74.3 million and $81.7 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $10.6 million, $11.8 million and $9.8 million related to Granite’s share of estimated recovery of back charge claims as of June 30, 2018, December 31, 2017 and June 30, 2017, respectively.

XML

Construction Joint Ventures - Schedule of Unconsolidated Construction Joint Ventures Assets and Liabilities (Parenthetical) (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Construction Joint Venture
Performance Guarantees	$ 88.6	$ 88.6	$ 88.9
Unconsolidated Joint Venture Back charges claims	10.6	11.8	9.8
Deficit in unconsolidated construction joint venture	14.7	15.9	15.9
Reporting Entitys Interest in Joint Venture [Member]
Construction Joint Venture
Affirmative Claim Recovery Estimate	$ 65.8	$ 74.3	$ 81.7

XML

Construction Joint Ventures - Schedule of Unconsolidated Construction Joint Ventures Revenue and Costs (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Variable Interest Entity [Line Items]
Unconsolidated Construction Joint Venture Revenue		$ 449,996	$ 515,983	$ 689,437	$ 967,304
Unconsolidated Construction Joint Venture Cost of Revenue		423,385	498,932	804,274	941,922
Unconsolidated Construction Joint Venture Gross Loss		(17,948)	(9,724)	(13,927)	(8,228)
Other Partners Interest in Partnerships [Member]
Variable Interest Entity [Line Items]
Unconsolidated Construction Joint Venture Revenue	[1]	340,809	376,332	461,841	700,162
Unconsolidated Construction Joint Venture Cost of Revenue	[1]	296,250	349,557	562,751	666,552
Reporting Entitys Interest in Joint Venture [Member]
Variable Interest Entity [Line Items]
Unconsolidated Construction Joint Venture Revenue		109,187	139,651	227,596	267,142
Unconsolidated Construction Joint Venture Cost of Revenue		$ 127,135	$ 149,375	$ 241,523	$ 275,370

[1] 1Partners’ interest and adjustments represents amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates.

XML

Investments in Affiliates - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Asphalt Terminal Entity [Member] | Limited Liability Company [Member] | Nevada [Member]
Investments In And Advances To Affiliates [Line Items]
Equity interest acquired	50.00%
Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Total assets	$ 310,337	$ 160,359	$ 156,969
Joint Venture Unconsolidated [Member] | Texas [Member]
Investments In And Advances To Affiliates [Line Items]
Equity Method Investments	24,000	24,300	22,200
Other Affiliates [Member] | Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Equity Method Investments	99,495	$ 38,469	$ 37,170
Total assets	310,300
Variable Interest Entity, Not Primary Beneficiary [Member] | Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Total assets	$ 20,400
Minimum [Member] | Foreign Affiliates [Member] | Joint Venture Unconsolidated [Member] | Equity Method Investment Directly Owned [Member]
Investments In And Advances To Affiliates [Line Items]
Ownership percentage	25.00%
Minimum [Member] | Variable Interest Entity, Not Primary Beneficiary [Member] | Real Estate Entities [Member] | Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Total assets	$ 300
Minimum [Member] | Variable Interest Entity, Not Primary Beneficiary [Member] | Foreign Affiliates [Member] | Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Total assets	$ 100
Maximum [Member] | Foreign Affiliates [Member] | Joint Venture Unconsolidated [Member] | Equity Method Investment Indirectly Owned [Member]
Investments In And Advances To Affiliates [Line Items]
Ownership percentage	50.00%
Maximum [Member] | Variable Interest Entity, Not Primary Beneficiary [Member] | Real Estate Entities [Member] | Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Total assets	$ 68,200
Maximum [Member] | Variable Interest Entity, Not Primary Beneficiary [Member] | Foreign Affiliates [Member] | Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Total assets	$ 64,600

XML

Investments in Affiliates - Investments in Affiliates (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Investments In And Advances To Affiliates [Line Items]
Investments in affiliates	$ 99,495	$ 38,469	$ 37,170
Joint Venture Unconsolidated [Member]
Investments In And Advances To Affiliates [Line Items]
Investments in affiliates	99,495	38,469	37,170
Joint Venture Unconsolidated [Member] | Foreign Affiliates [Member]
Investments In And Advances To Affiliates [Line Items]
Investments in affiliates	63,000	0	0
Joint Venture Unconsolidated [Member] | Equity Method investments in Real Estate Affiliates [Member]
Investments In And Advances To Affiliates [Line Items]
Investments in affiliates	27,591	29,472	27,329
Joint Venture Unconsolidated [Member] | Equity Method Investment in Asphalt Terminal Affiliate [Member]
Investments In And Advances To Affiliates [Line Items]
Investments in affiliates	$ 8,904	$ 8,997	$ 9,841

XML

Investments in Affiliates - Equity Method Investment Summarized Balance Sheet Information (Details) - Joint Venture Unconsolidated [Member] - USD ($) $ in Thousands		Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Investments In And Advances To Affiliates [Line Items]
Equity Method Investment, Summarized Financial Information, Current Assets		$ 136,953	$ 31,320	$ 25,246
Equity Method Investment, Summarized Financial Information, Noncurrent Assets		173,384	129,039	131,723
Equity Method Investment, Summarized Financial Information, Assets		310,337	160,359	156,969
Equity Method Investment, Summarized Financial Information, Current Liabilities		54,710	30,131	34,736
Equity Method Investment, Summarized Financial Information, Long-term Liabilities	[1]	54,383	31,636	25,595
Equity Method Investment, Summarized Financial Information, Total Liabilities		109,093	61,767	60,331
Equity Method Investments Summarized Financial Information Net Assets		201,244	98,592	96,638
Other Affiliates [Member]
Investments In And Advances To Affiliates [Line Items]
Equity Method Investment, Summarized Financial Information, Assets		310,300
Equity Method Investments		$ 99,495	$ 38,469	$ 37,170

[1] The balance primarily relates to debt associated with our real estate investments. The increase in the balance since December 31, 2017 is related to debt of our investments in foreign affiliates associated with purchase of equipment and buildings.

XML

Property and Equipment, Net - Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Property Plant And Equipment [Line Items]
Property and equipment	$ 1,423,153	$ 1,209,141	$ 1,205,200
Accumulated depreciation and depletion	827,366	801,723	791,121
Property and equipment, net	595,787	407,418	414,079
Equipment and vehicles [Member]
Property Plant And Equipment [Line Items]
Property and equipment	933,951	778,549	774,903
Quarry property [Member]
Property Plant And Equipment [Line Items]
Property and equipment	178,809	182,267	176,041
Land and land improvements [Member]
Property Plant And Equipment [Line Items]
Property and equipment	141,549	108,830	111,766
Building and leasehold improvements [Member]
Property Plant And Equipment [Line Items]
Property and equipment	105,038	82,601	84,113
Office furniture and equipment [Member]
Property Plant And Equipment [Line Items]
Property and equipment	$ 63,806	$ 56,894	$ 58,377

XML

Long-Term Debt and Credit Arrangements - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Debt Instrument [Line Items]
Debt, Long-term and Short-term, Combined Amount	$ 488,692	$ 224,501	$ 241,910
Less current maturities	207,982	46,048	14,796
Total long-term debt	280,710	178,453	227,114
Senior Notes [Member]
Debt Instrument [Line Items]
Debt, Long-term and Short-term, Combined Amount	80,000	80,000	120,000
Term Loan [Member]
Debt Instrument [Line Items]
Debt, Long-term and Short-term, Combined Amount	150,000	90,000	92,500
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Revolving credit agreement	99,000	55,000	30,000
Convertible Notes [Member]
Debt Instrument [Line Items]
Debt, Long-term and Short-term, Combined Amount	160,765	0	0
Other notes payables [Member]
Debt Instrument [Line Items]
Debt issuance costs	$ (1,073)	$ (499)	$ (590)

XML

Long-Term Debt and Credit Arrangements - Additional Information (Details) - USD ($)		6 Months Ended		12 Months Ended
	Jun. 14, 2018	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	May 31, 2018
Debt Instrument [Line Items]
Long-term Debt, Maturities, Repayments of Principal in the Remainder of 2018		$ 204,500,000
Long-term Debt, Maturities, Repayments of Principal in 2019		47,500,000
Long-term Debt, Maturities, Repayments of Principal in 2020		7,500,000
Long-term Debt, Maturities, Repayments of Principal in 2021		7,500,000
Long-term Debt, Maturities, Repayments of Principal in 2022		7,500,000
Long-term Debt, Maturities, Repayments of Principal , thereafter		215,300,000
Long-term debt		280,710,000	$ 227,114,000	$ 178,453,000
Current maturities of long-term debt		207,982,000	14,796,000	46,048,000
Line of credit facility, maximum borrowing capacity		500,000,000
Line of Credit Facility, Current Borrowing Capacity		300,000,000
Line of Credit, Current		150,000,000
Line of Credit, minimum cash balance		150,000,000
Line of Credit Facility, Increase (Decrease), Net		100,000,000
Letters of Credit Outstanding, Amount		33,000,000		0
Proceeds from long-term debt		$ 105,250,000	0
Consolidated Leverage Ratio, Maximum		0.0300
Consolidated Interest Coverage Ratio, Actual		0.2392
Consolidated Interest Coverage Ratio, Covenant		0.0400
Layne Christensen Company [Member]
Debt Instrument [Line Items]
Acquisition purchase price	$ 349,840,000
Minimum [Member]
Debt Instrument [Line Items]
Consolidated leverage ratio financial covenant		0.0300
Acquisition purchase price		$ 100,000,000
Maximum [Member]
Debt Instrument [Line Items]
Consolidated leverage ratio financial covenant		0.0350
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity		$ 200,000,000
Line of Credit Facility, Remaining Borrowing Capacity		350,000,000
Proceeds from long-term debt		99,000,000	30,000,000	55,000,000
Term Loan [Member]
Debt Instrument [Line Items]
Current maturities of long-term debt		7,500,000	5,000,000	6,200,000
Long-term debt		$ 142,500,000	87,500,000	83,800,000
Debt instrument redemption price percentage		1.25%
8.0 % Convertible Notes [Member]
Debt Instrument [Line Items]
Common stock conversion rate		23.1305
Common stock conversion principal amount		$ 1,000
Conversion price per share		$ 43.23
8.0 % Convertible Notes [Member] | Layne Christensen Company [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage	8.00%	8.00%
Debt instrument, fair value	$ 121,600,000
Debt instrument frequency of periodic payment		convertible notes that have an interest rate of 8.0% per annum, payable semi-annually on May 1 and November 1 (“8.0% Convertible Notes”).
Debt instrument maturity, Ending date	Aug. 15, 2018
Debt Instrument, maturity date, description		The 8.0% Convertible Notes mature on May 1, 2019; however, if any of the then outstanding 4.25% Convertible Notes remain outstanding on August 15, 2018, the 8.0% Convertible Notes will mature on August 15, 2018 (“Maturity Date”).
Debt instrument maturity date	May 01, 2019
Debt instrument, extended maturity date	Aug. 15, 2018
Senior Notes [Member] | 2019 Notes [Member]
Debt Instrument [Line Items]
Debt instrument, face amount		$ 80,000,000	120,000,000	80,000,000
Debt instrument, interest rate, stated percentage		6.11%
Long-term debt		$ 40,000,000	110,000,000	$ 40,000,000
Current maturities of long-term debt		40,000,000	10,000,000
Senior Notes [Member] | 2019 Notes [Member] | Long-term Debt [Member]
Debt Instrument [Line Items]
Long-term Debt, Maturities, Repayments of Principal in the Remainder of 2018		0	$ 30,000,000
Line of Credit [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity		$ 218,000,000
Consolidated leverage ratio financial covenant		0.0210
Debt Instrument, Basis Spread on Variable Rate, LIBOR Loans		1.63%
Debt Instrument, Basis Spread on Variable Rate		0.63%
Derivative, Variable Interest Rate					2.76%
Consolidated Fixed Charge Coverage Ratio, Minimum, Collateral Release Period		1.25
Consolidated Leverage Ratio, Maximum, Collateral Release Period		2.50
Consolidated Tangible Net Worth, Actual		$ 1,000,000,000
Consolidated Tangible Net Worth, Covenant		$ 757,300,000
Line of Credit [Member] | Minimum [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Interest Rate at Period End		3.96%
Line of Credit [Member] | Maximum [Member]
Debt Instrument [Line Items]
Line of Credit Facility, Interest Rate at Period End		5.63%
Convertible Notes [Member] | 8.0 % Convertible Notes [Member] | Layne Christensen Company [Member]
Debt Instrument [Line Items]
Current maturities of long-term debt		$ 90,900,000
Additional paid-in capital		$ 30,700,000
Convertible Notes [Member] | 4.25% Notes due 2018 [Member]
Debt Instrument [Line Items]
Common stock conversion rate		11.8012
Common stock conversion principal amount		$ 1,000
Conversion price per share		$ 84.74
Convertible Notes [Member] | 4.25% Notes due 2018 [Member] | Layne Christensen Company [Member]
Debt Instrument [Line Items]
Debt instrument, interest rate, stated percentage	4.25%
Current maturities of long-term debt		$ 69,900,000
Debt instrument, fair value	$ 69,900,000
Debt instrument frequency of periodic payment		convertible notes that have an interest rate of 4.25% per annum, payable semi-annually in arrears on May 15 and November 15 (“4.25% Convertible Notes”).
Debt instrument maturity, Beginning date		May 31, 2015
Debt instrument maturity, Ending date		Nov. 30, 2015
Debt instrument, extended maturity date		Nov. 30, 2015

XML

Weighted Average Shares Outstanding and Net (Loss) Income Per Share - Summary of Reconciliation of Weighted Average Shares Outstanding in Basic and Diluted Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Earnings Per Share [Abstract]
Net (loss) income allocated to common shareholders for basic calculation	$ (8,385)	$ 14,133	$ (19,808)	$ (9,657)
Effect of dilutive convertible notes	$ 0	$ 0	$ 0	$ 0
Weighted average common shares outstanding, basic	41,044	39,827	40,074	39,738
Dilutive effect of convertible notes, restricted stock units and common stock options	0	566	0	0
Weighted average common shares outstanding, diluted	41,044	40,393	40,074	39,738
Net (loss) income per share, basic	$ (0.20)	$ 0.35	$ (0.49)	$ (0.24)
Net (loss) income per share, diluted	$ (0.20)	$ 0.35	$ (0.49)	$ (0.24)

XML

Weighted Average Shares Outstanding and Net (Loss) Income Per Share - Summary of Reconciliation of Weighted Average Shares Outstanding in Basic and Diluted Net (Loss) Income Per Share (Parenthetical) (Details) - shares	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017
Earnings Per Share [Abstract]
Antidilutive shares excluded from calculating diluted net loss per share	960,000	732,000	618,000

XML

Income Taxes - Schedule of Provision for (Benefit From) Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Provision for (benefit from) income taxes	$ 2,796	$ 8,088	$ (1,335)	$ (4,408)
Effective tax rate	(85.10%)	33.20%	7.80%	36.80%

XML

Income Taxes - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Effective tax rate	(85.10%)	33.20%	7.80%	36.80%
Federal statutory tax, Percent			21.00%		35.00%
Uncertain tax position noncurrent liability	$ 15.0		$ 15.0

XML

Equity - Schedule of Stockholders Equity (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018		Jun. 30, 2017
Stockholders Equity Rollforward [Line Items]
Stockholders' equity, beginning balance				$ 992,805		$ 922,591
Net (loss) income		$ (6,081)	$ 16,272	(15,743)		(7,579)
Purchase of common stock				(6,165)	[1]	(6,568)	[2]
Dividends on common stock				(11,146)		(10,354)
Effect of adopting Topic 606				(15,202)
Issuance of common stock for Layne acquisition	[3]			321,123
Transactions with non-controlling interests				(6,400)
Other transactions with shareholders and employees	[4]			11,012		11,987
Stockholders' equity, ending balance		1,300,986	910,077	1,300,986		910,077
8.0 % Convertible Notes [Member]
Stockholders Equity Rollforward [Line Items]
Premium on convertible 8% notes	[5]	30,702		30,702
Granite Construction [Member]
Stockholders Equity Rollforward [Line Items]
Stockholders' equity, beginning balance				945,108		885,988
Net (loss) income				(19,808)		(9,657)
Purchase of common stock				(6,165)	[1]	(6,568)	[2]
Dividends on common stock				(11,146)		(10,354)
Effect of adopting Topic 606				(15,202)
Issuance of common stock for Layne acquisition	[3]			321,075
Transactions with non-controlling interests				0
Other transactions with shareholders and employees	[4]			11,012		11,987
Stockholders' equity, ending balance		1,255,576	871,396	1,255,576		871,396
Granite Construction [Member] | 8.0 % Convertible Notes [Member]
Stockholders Equity Rollforward [Line Items]
Premium on convertible 8% notes	[5]	30,702		30,702
Noncontrolling Interest [Member]
Stockholders Equity Rollforward [Line Items]
Stockholders' equity, beginning balance				47,697		36,603
Net (loss) income				4,065		2,078
Purchase of common stock				0	[1]	0	[2]
Dividends on common stock				0		0
Effect of adopting Topic 606				0
Issuance of common stock for Layne acquisition	[3]			48
Transactions with non-controlling interests				(6,400)
Other transactions with shareholders and employees	[4]			0		0
Stockholders' equity, ending balance		45,410	$ 38,681	45,410		$ 38,681
Noncontrolling Interest [Member] | 8.0 % Convertible Notes [Member]
Stockholders Equity Rollforward [Line Items]
Premium on convertible 8% notes	[5]	$ 0		$ 0

[1] Represents 104,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

[2] Represents 133,000 shares purchased in connection with employee tax withholding for restricted stock units vested under our 2012 Equity Incentive Plan.

[3] Represents 5,624,000 shares issued in connection with the Layne acquisition wherein each share of Layne common stock was exchanged for 0.27 shares of Granite common stock. See Note 3 for further information.

[4] Amounts are comprised primarily of amortized restricted stock units.

[5] Represents premium associated with the conversion feature on the 8.0% Convertible Notes assumed from the acquisition of Layne. See Note 14 for further discussion.

XML

Equity - Schedule of Stockholders Equity (Parenthetical) (Details) - shares	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 14, 2018
Stockholders Equity Rollforward [Line Items]
Shares Purchased for Tax Withholding for Share Based Compensation	104,000,000	133,000,000
Layne Christensen Company [Member]
Stockholders Equity Rollforward [Line Items]
Stock issued during period, shares, acquisitions	5,624,000
Stock-for-stock merger exchange ratio	0.27%
Layne Christensen Company [Member] | 8.0 % Convertible Notes [Member]
Stockholders Equity Rollforward [Line Items]
Debt instrument, interest rate, stated percentage	8.00%		8.00%

XML

Legal Proceedings - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Commitments And Contingencies Disclosure [Abstract]
Liabilities relating to legal proceedings and government inquires	$ 1.0	$ 0.9	$ 1.0

XML

Business Segment Information - Schedule of Segment Reporting Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Segment Reporting Information [Line Items]
Total revenue	$ 807,119	$ 762,913	$ 1,370,498	$ 1,231,313
Gross profit	80,369	74,570	136,652	99,696
Segment assets	2,556,325	1,803,145	2,556,325	1,803,145	$ 1,871,978
Operating Segments [Member]
Segment Reporting Information [Line Items]
Total revenue	852,368	806,974	1,423,347	1,289,478
Gross profit	80,369	74,570	136,652	99,696
Depreciation, depletion and amortization	25,037	13,939	38,100	26,017
Segment assets	1,247,273	750,415	1,247,273	750,415
Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Total revenue	(45,249)	(44,061)	(52,849)	(58,165)
Construction Segment [Member]
Segment Reporting Information [Line Items]
Total revenue	432,225	429,269	701,468	656,118
Construction Segment [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Total revenue	432,225	429,269	701,468	656,118
Gross profit	61,551	60,900	99,947	88,229
Depreciation, depletion and amortization	9,645	5,441	14,699	10,435
Segment assets	608,116	142,456	608,116	142,456
Construction Segment [Member] | Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Large Project Construction [Member]
Segment Reporting Information [Line Items]
Total revenue	273,946	254,463	522,360	461,496
Large Project Construction [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Total revenue	273,946	254,463	522,360	461,496
Gross profit	1,338	489	21,704	3,044
Depreciation, depletion and amortization	9,318	3,081	11,917	4,967
Segment assets	335,036	312,891	335,036	312,891
Large Project Construction [Member] | Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Total revenue	0	0	0	0
Construction Materials [Member]
Segment Reporting Information [Line Items]
Total revenue	100,948	79,181	146,670	113,699
Construction Materials [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Total revenue	146,197	123,242	199,519	171,864
Gross profit	17,480	13,181	15,001	8,423
Depreciation, depletion and amortization	6,074	5,417	11,484	10,615
Segment assets	304,121	295,068	304,121	295,068
Construction Materials [Member] | Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Total revenue	$ (45,249)	$ (44,061)	$ (52,849)	$ (58,165)

XML

Business Segment Information - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017
Segment Reporting Information [Line Items]
Property and equipment, net	$ 595,787	$ 407,418	$ 414,079
Foreign Countries [Member]
Segment Reporting Information [Line Items]
Property and equipment, net	$ 21,200

XML

Business Segment Information - Reconciliation of Operating Profit (Loss) from Segments to Consolidated (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Segment Reporting Information [Line Items]
Gross profit	$ 80,369	$ 74,570	$ 136,652	$ 99,696
Selling, general and administrative expenses	61,316	51,388	122,568	113,225
Acquisition and integration expenses	26,287	0	34,696	0
Gain on sales of property and equipment	(1,505)	(807)	(2,048)	(1,077)
Total other income	(2,444)	(371)	(1,486)	(465)
(Loss) income before provision for (benefit from) income taxes	(3,285)	24,360	(17,078)	(11,987)
Operating Segments [Member]
Segment Reporting Information [Line Items]
Gross profit	$ 80,369	$ 74,570	$ 136,652	$ 99,696