Granite Construction has snared three more modest highway contracts in its back-to-basics approach of pursuing smaller, less risky jobs.
The Watsonville, California-based contractor won a $40 million project on State Highway 288 in Houston, as well as two contracts on I-5 in California valued at a combined $38 million, according to the company.
The SH 288 contract is the first of four projects on the roadway and will position Granite to pursue the additional bid lettings later this summer, which are funded by Texas DOT, the firm said. On I-5, the pair of contracts include pavement rehabilitation and bridge structure replacement.
The contracts, worth less than $100 million combined, further illustrate Granite’s pivot away from $500-million-plus megaprojects as it pursues jobs that have less design and execution risk. The company changed its approach after a Securities and Exchange Commission investigation in its heavy civil unit led it to restate some of its financials from 2017, 2018 and 2019.
Both jobs also align with the firm’s “home market strategy,” which emphasizes taking on projects in areas where Granite already has a strong presence and can take advantage of economies of scale.
In California, for example, the I-5 jobs will source asphalt and other materials from the firm’s Coalinga Quarry and Hot Plant, including 103,000 tons of hot mix asphalt, 56,000 of rubberized hot mix asphalt and 10,000 cubic yards of import borrow. In Texas, the SH 288 contract will emphasize its subcontractor and supplier relationships in the region.
On its second quarter conference call last week, when it reported lower profits and revenue from a year ago, the company emphasized strategic moves in its materials business, which has benefited from higher material prices.
Kyle Larkin, Granite’s president and CEO, said the emphasis on its materials division would allow it to store asphalt and manage the volatility of oil prices and supply chain snarls as it anticipates increased activity from the infrastructure act later this year.
