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

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, ~~2020~~2021 (“Annual Report”). 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 ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 and the results of our operations and cash flows for the periods presented. The December 31, ~~2020~~2021 condensed consolidated balance sheet data included herein was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP.

We prepared the accompanying condensed consolidated financial statements on the same basis as our annual consolidated financial ~~statements. Our policy related to derivative instruments was expanded, as follows, to reflect treatment~~statements, except for the adoptions of Accounting Standards Update (“ASU”) 2020-06,Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) on January 1, 2022, ASUs 2020-04,Reference Rate Reform (Topic 848): Facilitation of the ~~interest rate swap de-designation that occurred during~~Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) and 2021-01,Reference Rate Reform (Topic848): Scope (“ASU 2021-01”), on June 30, 2022, the impacts of which are described in Note 2.

Out-of-period Adjustments: In the second quarter of 2022, we recorded immaterial out-of-period adjustments which resulted in a net $4.1 million increase to loss from continuing operations before income taxes for the three months ended June 30, ~~2021,~~2022 with no net impact on the six months ended June 30, 2022. Management has determined that these errors were not material to any of its previously issued financial statements.

Stock Purchase Programs: On May 2, 2022, we entered into an accelerated share repurchase agreement (“Accelerated Share Repurchase”) with Bank of Montreal. The Accelerated Share Repurchase was entered into pursuant to the existing share repurchase program. On May 2, 2022, we paid $50.0 million to the bank and received 80% of the notional amount, or $40.0 million, in shares using the closing price on the trade date. This equated to approximately 1.32 million shares, which were immediately retired. The final number of shares to be repurchased under the Accelerated Share Repurchase will be based on the average of the daily volume-weighted average price of Granite’s common stock, less a discount, during the term of the Accelerated Share Repurchase; final settlement is ~~further~~expected to occur in the third quarter of 2022. The Accelerated Share Repurchase is primarily included in Additional paid-in capital on the Condensed Consolidated Balance Sheet as well as in Repurchases of common stock on the Condensed Consolidated Statement of Shareholders’ Equity and within Financing activities on the Condensed Consolidated Statement of Cash Flows.

~~Derivative Instruments:~~ ~~We recognize derivative instruments as either assets or liabilities~~ we concluded that our former Water and Mineral Services operating group (“WMS”) met the criteria for held for sale during the fourth quarter of 2021 and met the criteria for discontinued operation classification. As a result, WMS is presented in the ~~consolidated balance sheets at fair value using Level~~ 2 inputs. To receive hedge accounting treatment, derivative instruments that are designated as cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. We formally document our hedge relationships at inception, including identification of the hedging instruments and the hedged items, our risk management objectives and strategies for undertaking the hedge transaction, and the initial quantitative assessment of the hedging instrument’s effectiveness in offsetting changes in the fair value of the hedged items. The effective portion of the gain or loss on cash flow hedges is reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified to thecondensed consolidated statements of operations ~~when~~as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses are presented in the ~~periodic hedged cash flows are settled. Adjustments to fair value on derivatives that are~~ ~~not~~ ~~part of a designated hedging relationship are reported through the~~condensed consolidated ~~statements of operations. We do~~ ~~not~~ ~~enter into derivative instruments~~balance sheets as assets and liabilities held for ~~speculative or trading purposes.~~sale.

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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 are not necessarily indicative of the results to be expected for the full year.

~~Cash, Cash Equivalents and Restricted Cash:~~ The table below presents changes in cash, cash equivalents and restricted cash on the condensed consolidated statements of cash flows and a reconciliation to the amounts reported in the condensed consolidated balance sheets (in thousands):

In ~~August~~March 2020, the Financial Accounting Standards Board (“FASB”) issued ~~Accounting Standards Update (“ASU”)~~ ~~2020~~-~~06,~~~~Debt~~—~~Debt with Conversion and Other Options (Subtopic~~ ~~470~~-20~~) and Derivatives and Hedging~~—~~Contracts in Entity~~’~~s Own Equity (Subtopic~~ ~~815~~-40~~): Accounting for Convertible Instruments and Contracts in an Entity~~’~~s Own Equity~~ ~~(“ASU~~ ~~2020~~-~~06”~~), which simplifies the accounting for convertible instruments resulting in accounting for convertible debt instruments as a single liability measured at its amortized cost. This change will also reduce reported interest expense and increase reported net income as we issued a convertible instrument that was bifurcated according to previously existing rules. In addition, the ASU requires the application of the if-converted method for calculating diluted earnings per share and eliminates the treasury stock method for convertible debt. The ASU is effective commencing with our quarter ending ~~March 31, 2022.~~ ~~We currently anticipate adopting this ASU using the modified retrospective transition approach.~~

~~Upon issuance of the 2.75% convertible senior notes due~~ ~~2024~~ (~~“2.75%~~ Convertible Notes”), cash received was separated into a $192.6 million debt component and a $27.9 million (net of $9.5 million in taxes) equity component. We have been increasing the debt component for the difference between the principal amount and the $192.6 million (“debt discount”) with an offset to interest expense over the life of the loan using an effective interest rate. Upon adoption of ASU ~~2020~~-~~06,~~ interest expense previously recorded and remaining to be recorded from the debt discount will be reversed through retained earnings with an offset to debt, net of tax. We estimate this impact to long-term debt and retained earnings to be between $20 million and $40 million. In addition, using the if-converted method as compared to the treasury stock method ~~may~~ ~~have a material impact to diluted earnings per share if the Company is in a net income position.~~

In ~~March 2020,~~ ~~the FASB issued~~ ASU 2020-04, ~~Reference Rate Reform (Topic~~ ~~848~~~~): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~, which provides optional guidance to ease the potential burden in accounting for the effects of the transition away from LIBOR and other reference rates. Also, in January 2021, the FASB issued ASU 2021-01, ~~Reference Rate Reform (Topic~~~~848~~~~): Scope~~, which provided clarification guidance to ASU 2020-04. ~~These~~We adopted these ASUs ~~are effective at our option beginning with our~~during the quarter ended ~~March 31, 2020~~ ~~through~~ ~~December 31,~~June 30, 2022, ~~and we expect to adopt~~ in ~~the~~ ~~second~~ ~~quarter of~~ ~~2022.~~ Asconjunction with entering into our ~~Third~~Fourth Amended and Restated Credit Agreement ~~dated~~(see Note ~~May 18, 2021,~~ 15~~as subsequently amended (the “Credit Agreement”~~), which replaced the London Interbank Offered Rate (“LIBOR”) ~~currently incorporates~~with the ~~use~~Secured Overnight Financing Rate ("SOFR") administered by the Federal Reserve Bank of ~~the secured overnight financing~~New York for purposes of interest rate ~~as an alternative to LIBOR, we do~~ ~~not~~ ~~expect the~~calculation. The adoption of these ASUs todid not have a material impact on our condensed consolidated financial statements.

As of June 30, 2022, the 2.75% Convertible Notes comprised our only convertible debt instrument. The 2.75% Convertible Notes were issued in November 2019 in an aggregate principal amount of $230.0 million, with an interest rate of 2.75% and a maturity date of November 1, 2024, unless earlier converted, redeemed or repurchased. The 2.75% Convertible Notes are convertible at the option of the holders prior to May 1, 2024 only during certain periods and upon the occurrence of certain events. After May 1, 2024, the 2.75% Convertible Notes will be convertible at the option of the holders at any time until October 30, 2024.

The conversion rate applicable to the 2.75% Convertible Notes is 31.7776 shares of Granite common stock per $1,000 principal amount of 2.75% Convertible Notes, which is equivalent to a conversion price of approximately $31.47 per share of Granite common stock. Upon conversion, we will pay or deliver shares of Granite common stock or a combination of cash and shares of Granite common stock, at our election. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2.75% Convertible Notes, (the “Indenture”) we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its 2.75% Convertible Notes in connection with such a make-whole fundamental change.

On or after November 7,2022, we have the option to redeem for cash all or any portion of the 2.75% Convertible Notes if the last reported sale price of our common stock is equal to or greater than 130% of the conversion price for a specified period of time. Upon the occurrence of a “fundamental change” as defined in the Indenture, holders may require us to repurchase for cash all or any portion of their 2.75% Convertible Notes at a price equal to 100% of the principal amount plus any accrued and unpaid interest. In addition, as described in the Indenture, certain events of default including, but not limited to, bankruptcy, insolvency or reorganization, may result in the 2.75% Convertible Notes becoming due and payable immediately.

In connection with the adoption of ASU 2020-06, we implemented the following accounting policy as of January 1, 2022:

Computation of Earnings per Share: Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares include common share equivalents issued under the terms of the 2012 and 2021 Equity Incentive Plans and common share equivalents issuable under our 2.75% Convertible Notes using the if-converted method. Dilutive potential common shares also include common share equivalents issuable under the terms of our warrants assuming the share price of our common stock was in excess of $53.44, the exercise price of warrants.

During the fourth quarter of 2021, our Board of Directors approved a plan to sell the businesses in WMS within the next twelve months. This includes: our trenchless and ~~Other Costs~~

pipe rehabilitation services business (“Inliner”); our water supply, treatment, delivery and maintenance business (“Water Resources”); and our mineral exploration drilling business (“Mineral Services”). After consideration of the relevant facts, we concluded the assets and liabilities of our WMS businesses met the criteria for classification as held for sale. We ~~perform~~concluded the proposed disposal activities represented a strategic shift that would have a major effect on our ~~goodwill impairment tests annually~~operations and financial results and qualified for presentation as discontinued operations in accordance with FASB Accounting Standards Codification (“ASC”) Topic 205-20,Presentation of financial statements - Discontinued operations. Accordingly, the financial results of these businesses are presented in the condensed consolidated statement of operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses not sold as of ~~November 1~~ the balance sheet date are presented in the condensed consolidated balance sheets as assets and ~~more frequently when events and circumstances occur that indicate a possible impairment of goodwill. There were~~ no ~~events or circumstances during the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021~~ ~~that would indicate a possible goodwill impairment.~~ liabilities held for sale for all periods presented.

~~We performed an interim goodwill impairment test on the~~On March 16, 2022, we completed the sale of Inliner to Inland Pipe Rehabilitation LLC (“IPR”) and ~~31,~~1000097155 ~~2020~~ ~~balances~~Ontario Inc. (“Ontario” and together with IPR, the “Purchasers”), investment affiliates of ~~our Water~~J.F. Lehman & Company, for a purchase price of $159.7 million, subject to certain adjustments. As a result of the sale, we received cash proceeds of $142.6 million based on preliminary post-closing adjustments and ~~Mineral Services Group Materials and Water and Mineral Services Group Specialty reporting units due to an adverse change~~we recognized a gain of $6.2 million. The gain on sale was included in the ~~business climate for these reporting units, including a modified relationship with a business partner, increased competition and market consolidation~~net income from discontinued operations in the condensed consolidated statements of operations during the three months ended March 31, ~~2020,~~2022. ~~exacerbated~~The Water Resources and Mineral Services businesses continued to meet the criteria for classification as held-for-sale and the financial results remain in discontinued operations as of June 30, 2022 and are expected to be sold by ~~economic disruption~~the end of 2022.

The following table presents summarized balance sheet information of assets and ~~market conditions associated with the COVID-~~liabilities held-for-sale:

The following table represents summarized statements of operations information of discontinued operations (in thousands):

(191) In June 2021, we completed a sale-leaseback transaction for two ~~pandemic. These factors led to reductions~~properties in ~~the revenue and margin growth rates used in our quantitative goodwill tests.~~California. The ~~goodwill impairment test~~sale of these properties resulted in a ~~$14.8~~reduction in net property and equipment of $11.1 million ~~impairment charge during the~~ ~~three~~ ~~months ended~~ ~~March~~ ~~31,~~~~2020~~ ~~associated with our Water~~ and ~~Mineral Services Group Materials reporting unit~~a $2.4 million addition to both right of use assets and ~~0 impairment charge associated with our Water and Minerals Services Group Specialty reporting unit as its estimated fair value exceeded its net book value (i.e., headroom) by over~~ ~~15%.~~ ~~Interim goodwill impairment tests were~~ ~~not~~ ~~performed on our remaining reporting units as there was~~ no ~~indication of a possible goodwill impairment.~~

~~We performed a~~ ~~second~~ ~~interim goodwill impairment test~~lease liabilities on the ~~September~~ ~~30,~~~~2020~~ ~~balances~~held-for-sale balance sheets, as well as a $29.7 million gain on sales of ~~our Midwest Group Specialty, Water~~property and ~~Mineral Services Group Water and Water and Mineral Services Group Materials reporting units due to~~equipment on the ~~continued impact from an adverse change~~discontinued operations statements of operations.

(2) In June 2022, we completed a sale-leaseback transaction on a property in ~~the business climate, including reduced market share due to loss~~Arizona. The sale of ~~strategic personnel during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020~~. ~~These factors led to reductions in the revenue and margin growth rates, and delays in the timing of future cash flows used in our quantitative goodwill tests. The goodwill impairment test~~this property resulted in a ~~non-cash impairment charge~~reduction in net property and equipment of ~~an additional $117.9~~$3.8 million and ~~$14.4~~a $1.1 million ~~associated with our Water~~addition to both right of use assets and ~~Mineral Services Group Water~~lease liabilities on the held-for-sale balance sheets, as well as an $8.2 million gain on sales of property and ~~Water and Mineral Services Group Materials reporting units, respectively, during~~equipment on the discontinued operations statements of operations.

As required per ASC Topic ~~three~~205-20, ~~months ended~~ ~~September 30, 2020~~.Presentation of financial statements - Discontinued operations, ~~The goodwill impairment test for the Midwest Group Specialty reporting unit indicated that its estimated fair value exceeded its net book value (i.e., headroom) by over~~ ~~15%;~~ ~~therefore,~~ no ~~impairment charge was recorded. Interim goodwill impairment tests were~~ ~~not~~ ~~performed on our remaining reporting units as there was~~ no ~~indication of a possible goodwill impairment.~~

Consistent with our annual impairment test, we calculated the estimated fair values of the Water and Mineral Services Group Materials and Water and Mineral Services Group Specialty reporting units using the discounted cash flows and market multiple methods. Judgments inherentcomponents included in these methods included the determination of appropriate discount rates, the amount and timing of expected future cash flows, revenue and margin growth rates, and appropriate benchmark companies. The cash flows used in our discounted cash flow model were based on ~~five~~-year financial forecasts developed internally by management adjusted for market participant-based assumptions. Our discount rate assumptions were based on an assessment of the equity cost of capital and appropriate capital structure for our reporting units.

~~Future developments that we are unable to anticipate~~ ~~may~~ require us to further revise the estimated future cash flows, which could adversely affect the fair value of our reporting units in future periods and result in additional impairment charges. The assumptions used in the goodwill impairment tests are classified as Level 3 ~~inputs.~~

Investments in affiliates are evaluated for impairment using the other-than-temporary impairment model, which requires an impairment charge to be recognized if our investments’ carrying amounts exceed their fair value, and the decline in fair value is deemed to be other than temporary. There were no ~~events or changes in circumstances which would cause us to assess our investments for impairment during the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021~~ ~~or during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020.~~

~~During the~~ ~~three~~ ~~months ended~~ ~~March~~ ~~31,~~~~2020,~~ operating costs increased in certain of our foreign entity investments in affiliates which resulted in price increases and therefore a decrease in demand. The effect of this change in business climate on certain investments’ expected future operating cash flows resulted in other than temporary declines in fair value below the carrying values. Therefore, we recorded a non-cash impairment charge of $9.6 million during the ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~using assumptions classified as Level~~ 3 ~~inputs.~~

~~Other costs included on~~ the condensed consolidated ~~statements~~statement of ~~operations primarily consisted of $66.0 million in net settlement charges~~cash flows for the discontinued operations are as follows (in thousands):

(~~nine~~1) In accordance with ASC Topic 360, ~~months ended~~Property, Plant, and Equipment, we ceased recording depreciation and amortization for WMS property, plant and equipment, finite-lived tangible assets and right-of-use lease assets as of ~~September~~ December 31, 2021.~~30,~~~~2021~~ ~~as further described in Note~~ ~~16.~~ ~~Other costs also included $3.5 million and $16.9 million for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~~~, respectively, and $9.7 million and $28.4 million for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~~~, respectively,~~

Our profit recognition related to construction contracts is based on estimates of transaction price and 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. Changes in estimates of transaction price and costs to complete may result in the reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate. In addition, the estimated or actual recovery related to estimated costs associated with unresolved affirmative claims and back charges 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.

When we experience significant ~~changes~~revisions in our estimates, 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 estimates in the future.

In our review of these changes for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021, we did not identify any material amounts that should have been recorded in a prior period.

There were no increases from revisions in estimates, which individually had an impact of $5.0 million or more on gross profit, for the periods presented.

~~Decreases for all periods presented were in our Transportation segment except for~~ ~~one~~ ~~project in the Water segment during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~and~~ ~~one~~ ~~project in the Specialty segment during each period in~~ ~~2020~~ ~~and the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~ The projects with decreases from revisions in estimates, which individually had an impact of $5.0 million or more on gross profit, are summarized as follows (dollars in millions except per share data):

⁽¹⁾ ~~The prior period amounts have been adjusted to correct an immaterial disclosure error in the previously issued~~ ~~September 30, 2020~~ ~~condensed consolidated financial statements.~~

The decreases during the three and ~~nine~~six months ended ~~September~~June 30,2022 were due to additional costs related to extended project duration, increased labor and materials costs, and disputed work being performed where there are ongoing legal claims. The decreases during the six months ended June 30, 2021 were due to additional costs from acceleration of work coupled with lower productivity ~~and higher costs than originally anticipated. The decreases during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~ ~~were also due to unfavorable weather and extended project duration. The decreases during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~were due to additional costs from differing site conditions, lower productivity~~ than originally anticipated and ~~unfavorable weather.~~weather impacts.

We disaggregate our revenue based on our reportable segments (see Note 19) and operating groups as these are the formats that are regularly reviewed by management. Our reportable segments are: Construction and Materials. In alphabetical order, our operating groups from continuing operations are: California, Central and Mountain. The following tables present our disaggregated revenue from continuing operations by operating group (in thousands):

The following ~~tables present~~table presents our unearned revenue from continuing operations as of the respective ~~periods (in thousands):~~periods:

All unearned revenue is in the Construction segment. Approximately ~~$2.3~~$2.4 billion of the ~~September~~June 30, ~~2021~~2022 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.

Other costs included in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 primarily consisted of $12 million in accrued charges related to the expected resolution of the SEC investigation as further described in Note 18. Other costs also included $4.8 million and $10.6 million for the three and six months ended June 30, 2022, respectively, of non-recurring legal fees related to the lawsuits discussed in Note 18, and $2.9 million and $5.5 million, respectively, of costs related to strategic acquisition and divestiture costs. Other costs for the six months ended June 30, 2021 primarily consisted of $66 million in net settlement charges as further described in Note 18. Other costs also included $6.2 million and $13.4 million for the three and six months ended June 30, 2021, respectively, of non-recurring legal and accounting fees related to the Audit/Compliance Committee’s independent investigation of prior-period reporting for the former Heavy Civil operating group, which was completed in early 2021.

As ~~work is performed, revenue is recognized and the corresponding contract liabilities are reduced. We recognized revenue of $5.8 million and $181.4 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~~~, respectively, and $3.5 million and $117.5 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~~~, respectively, that was included in the contract liability balances at~~ ~~December 31, 2020~~ ~~and~~ ~~2019,~~ ~~respectively.~~

As a result of changes in contract transaction price ~~from items such as executed or estimated change orders and resolution of contract modifications and claims, we recognized revenue of $37.2 million and $153.6 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~~~, respectively, and $55.5 million and $149.3 million during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~~~, respectively,~~ related to performance obligations that were satisfied or partially satisfied prior to the end of the ~~periods.~~periods, we recognized revenue of $71.0 million and $112.1 million during the three and six months ended June 30, 2022, respectively, and $39.4 million and $100.9 million during the three and six months ended 2021, respectively. The ~~prior period amounts have been adjusted to correct an immaterial disclosure error~~changes in ~~the previously issued~~ ~~September 30, 2020~~ ~~condensed consolidated financial statements.~~contract transaction price were from items such as executed or estimated change orders and unresolved contract modifications and claims.

The components of the contract asset balances as of the respective dates were as follows:

The components of the contract liability balances as of the respective dates were as follows:

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 generally do not bear interest. The following table presents major categories of receivables:

Included in other receivables at ~~September~~June 30, ~~2021~~2022, December 31, ~~2020~~2021 and ~~September~~June 30, ~~2020~~2021, were items such as estimated recovery from back charge claims, notes receivable, insurance receivable, ~~notes receivable~~fuel tax refunds and income tax refunds. Other receivables at June 30, 2022 and December 31, 2021 also included $24.9 million and $20.4 million, respectively, of working capital contributions in the form of a loan to a partner in one of our unconsolidated joint ventures that bears interest at prime plus 3.0% per annum. Other than the $63.0 million insurance receivable recorded as of June 30, 2021 related to the settlement discussed in Note 1618, which was collected in October 2021 and is in a settlement escrow account included in Other current assets in the Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2021~~2022, ~~balance,~~ no other ~~receivables~~receivable individually exceeded 5%10% of total net receivables at any of these dates.

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):

In connection with entering into the Third Amended and Restated Credit Agreement, we entered into two amortizing interest rate swaps with a combined initial notional amount of $150.0 million, with effective dates of May 2018 and maturity dates in May 2023. The interest rate swaps were designated as cash flow hedges through the three months ended March 31, 2021 and de-designated as cash flow hedges during the three months ended June 30, 2021.

During the six months ended June 30, 2022, we terminated the entirety of our floating-to-fixed interest rate swaps in connection with the prepayments of our term loan (see Note 15). The impact to interest expense on the condensed consolidated statements of operations was $1.5 million and $2.2 million for the three and six months ended June 30, 2022.

As of June 30, 2022, we held commodity swaps for crude oil designated as cash flow hedges with a total outstanding notional amount of $15.0 million with a maturity date of October 31, 2022. The financial statement impact for the three and six months ended June 30, 2022 was a realized gain of $2.4 million and $2.8 million, respectively. In addition, for the three months ended June 30, 2022, the commodity swaps had an unrealized loss of $0.5 million, and for the six months ended June 30, 2022, the commodity swaps had an unrealized gain of $2.8 million. As of June 30, 2021, we held commodity swaps for crude oil that were designated as cash flow hedges with a total outstanding notional amount of $4.9 million that matured in October 2021. The total commodity swap gain for these swaps was $1.0 million.

~~In connection with entering into the Credit Agreement, we entered into~~ ~~two~~ ~~interest rate swaps with an effective date of~~ ~~May 2018~~ ~~that were designated as cash flow hedges through the~~ ~~three~~ ~~months ended~~ ~~March 31, 2021.~~ ~~These interest rate swaps had 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 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 measured at fair value on the condensed consolidated balance sheets using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations primarily utilize indirectly observable inputs, including contractual terms, interest rates and yield curves observable at commonly quoted intervals. During the ~~three~~ ~~months ended~~ ~~June 30,~~ ~~2021,~~ ~~we determined that the interest rate swaps were~~ no longer highly effective in offsetting changes to expected future cash flows on hedged transactions and were therefore de-designated as cash flow hedges. As a result of this de-designation, the $5.4 million unrealized loss recorded to accumulated other comprehensive loss prior to de-designation will continue to be amortized to interest expense through the maturity date of ~~May 2023.~~ ~~The impact from the interest rate swap de-designation that was included in interest expense on the condensed consolidated statements of operations was immaterial for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021.~~

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

(1) All marketable securities as of June 30, 2022, December 31, 2021 and June 30, 2021 were classified as held-to-maturity and consisted of U.S. Government and agency obligations and corporate commercial paper maturing in ~~one~~two months to ~~five~~three years.

(2) The fair value of the 2.75% Convertible Notes is based on the median price of the notes in an active market. The fair value of the Third Amended and Restated Credit Agreement and Fourth Amended and Restated Credit Agreement is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 1315 for more information about the 2.75% Convertible Notes, the Third Amended and ~~the~~Restated Credit Agreement and Fourth Amended and Restated Credit Agreement.

(3) Excluded from the carrying value is debt discount of ~~$24.5 million, $29.7~~$22.6 million and ~~$31.4~~$26.2 million as of ~~September~~December 31, 2021 and June 30, 2021, ~~December 31, 2020~~ ~~and~~ ~~September 30, 2020,~~ respectively, related to the 2.75% Convertible Notes (see ~~Note~~Notes 132 and 15).

During the three and ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis. ~~As disclosed in Note~~ 3, ~~we recorded fair value adjustments related to nonfinancial assets measured at fair value on a nonrecurring basis during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020.~~ ~~During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~we did~~ ~~not~~ ~~record any fair value adjustments related to nonfinancial liabilities measured at fair value on a nonrecurring basis.~~

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 and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022, we determined no change was required for existing joint ventures.

Due to the joint and several nature of the performance obligations under the related owner contracts, if any of ~~the~~our 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 ~~September~~June 30, ~~2021~~2022, there was approximately ~~$0.8 billion~~$309.7 million of construction revenue to be recognized on unconsolidated ~~and line item~~ construction joint venture contracts of which ~~$0.3 billion~~$110.3 million represented our share and the remaining ~~$0.5 billion~~$199.4 million 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’ corporate and/or other guarantees.

At ~~September~~June 30, ~~2021~~2022, we were engaged in 8nine active CCJV projects with total contract values ranging from ~~$2.3~~$12.1 million to ~~$437.5~~$439.4 million ~~and~~for a combined total of ~~$1.6~~$1.8 billion of which our share was ~~$914.8 million.~~$1.0 billion. As of ~~September~~June 30, ~~2021,~~ 2022, our share of revenue remaining to be recognized on these CCJVs was ~~$292.6~~$225.9 million and ranged from ~~$0.8~~$4.7 million to ~~$97.3~~$56.2 million by project. Our proportionate share of the equity in these joint ventures was between 50.0% and 70.0%. During the three and ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, total revenue from CCJVs was ~~$117.4~~$119.4 million, $227.0 million, $114.9 million and ~~$314.9 million, respectively, and during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~~~, total revenue from CCJVs was $79.2 million and $219.9~~$197.5 million, respectively. During the ~~nine~~six months ended ~~September~~June 30, ~~2021~~ ~~and~~ ~~2020~~2022, CCJVs used $13.4 million of operating cash flows and during the six months ended June 30, 2021, CCJVs provided ~~$17.5 million and $17.0~~$19.4 million of operating cash flows, respectively.

As of ~~September~~June 30, ~~2021~~2022, we were engaged in ~~ten~~8 active unconsolidated joint venture projects with total contract values ranging from ~~$13.7~~$12.3 million to $3.8 billion for a combined total of ~~$11.6~~$9.7 billion of which our share was ~~$3.4~~$2.7 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20.0% to 50.0%. As of ~~September~~June 30, ~~2021~~2022, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was ~~$225.8~~$110.3 million and ranged from ~~$1.2~~$1.1 million to ~~$52.8~~$34.8 million by project.

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

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets ~~was $82.3 million~~ as of ~~September~~June 30, ~~2021~~2022, December 31, ~~2020~~2021 and ~~September~~June 30, ~~2020~~2021 was $77.4 million, $82.1 million and $82.3 million, respectively, related to performance guarantees.

(2) Included in this balance as of ~~September~~June 30, ~~2021~~2022, December 31, ~~2020~~2021 and ~~September~~June 30, ~~2020~~2021, was ~~$101.9~~$109.5 million, ~~$88.7~~$103.8 million and ~~$86.2~~$96.7 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included ~~$14.1~~$2.9 million, ~~$13.1~~$10.7 million and ~~$13.8~~$14.1 million ~~as of~~ ~~September 30, 2021~~, ~~December 31, 2020~~ ~~and~~ ~~September 30, 2020~~~~, respectively,~~ related to Granite’s share of estimated recovery of back charge ~~claims.~~claims as of June 30, 2022, December 31, 2021 and June 30, 2021, respectively.

(3) Partners’ 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.

(4) Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets was ~~$19.9~~$12.7 million, ~~$82.5~~$28.6 million and ~~$75.1~~$33.6 million as of ~~September~~June 30, ~~2021~~2022, December 31, ~~2020~~2021 and ~~September~~June 30, ~~2020~~2021, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.

(1) Partners’ interest and adjustments includes 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 primarily related to contract forecast and/or actual differences.

~~During the~~ (~~three~~2 ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~, unconsolidated construction joint venture net loss was $(9.3) million and $(11.5) million, respectively, of which our share was net income of $1.0 million and $8.0 million, respectively. During the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~~~, unconsolidated construction joint venture net loss was $(6.0) million and $(144.5) million, respectively, of which our share was $(8.0) million and $(38.5) million, respectively.~~

~~During both~~ ~~2021~~ ~~and~~ ~~2020,~~ ~~there were variances on~~ ~~five~~ projects between our estimated total revenue and cost of revenue when compared to that of our partners’ due to timing of recognition from differing accounting policies and public company quarterly reporting requirements.) These joint venture net income/(loss) 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.

~~As of~~ ~~September 30, 2021~~~~, we were engaged in~~ ~~three~~ ~~active line item joint venture construction projects with a total contract value of $337.0 million of which our portion was $221.9 million. As of~~ ~~September 30, 2021~~~~, our share of revenue remaining to be recognized on these line item joint ventures was $84.6 million. During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~,~~our portion of revenue from line item joint ventures was $26.3 million and $55.0 million, respectively. During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~~~, our portion of revenue from line item joint ventures was $27.5 million and $58.7 million, respectively.~~

Our investments in affiliates balance consists of equity method investments in the following types of entities:

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

(1) ~~The~~This balance is primarily related to local bank debt for equipment purchases and ~~working capital in our foreign affiliates, as well as~~ debt associated with our real estate investments.

Of the ~~$324.2~~$110.5 million of total affiliate assets as of ~~September~~June 30, ~~2021~~2022, we had investments in ~~thirteen~~ ~~foreign entities with total assets ranging from $0.1 million to $84.4 million,~~ ~~two~~2 real estate entities with total assets of ~~$75.5~~$77.4 million and the asphalt terminal entity ~~that~~ had total assets of ~~$33.4~~$33.1 million. ~~We have direct and indirect investments in the foreign entities and our percent ownership ranged from 25% to 50% as of~~ ~~September 30, 2021~~~~. During the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2020,~~ ~~we recorded a $9.6 million impairment charge related to our investment in foreign affiliates. See Note~~ 3 ~~for further discussion of the impairment charge.~~ As of ~~September~~June 30, 2022, December 31, 2021 and ~~December 31, 2020~~June 30, 2021, all of the investments in real estate affiliates were in residential real estate in Texas. As of ~~September~~June 30, ~~2020~~2022, ~~$13.2 million of the investments in real estate affiliates was in residential real estate in Texas and the remaining balance was in commercial real estate in Texas. Our~~our percent ownership in the real estate entities ~~was between~~ranged from 10% ~~and~~to 25% ~~as of~~ ~~September 30, 2021~~.

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

On ~~June 30, 2021,~~ ~~we completed a sale-leaseback transaction associated with~~ ~~two~~14. ~~properties in California. Sale of these properties resulted in a reduction in net property~~ Accrued Expenses and ~~equipment of $11.1 million and a $2.4 million addition to right of use assets and~~Other Current Liabilities

Other includes short-term lease liabilities, ~~on the condensed consolidated balance sheets, as well as a $29.7 million gain on sales~~dividends payable, warranty reserves, asset retirement obligations, remediation reserves and other miscellaneous accruals, none of ~~property and equipment on the condensed consolidated statements~~which are greater than 5% of ~~operations.~~total current liabilities.

AsDuring the six months ended June 30,2022, we prepaid 100% of ~~each~~ ~~September 30, 2021~~, ~~December 31, 2020~~ ~~and~~ ~~September 30, 2020~~~~, $7.5 million of the~~our outstanding term loan ~~portion of~~and replaced the Third Amended and Restated Credit Agreement ~~was included in current maturities~~dated May 31, 2018 with the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) maturing June 2, 2027. The Credit Agreement is a $350.0 million senior secured, five year revolving facility (the “Revolver”), including an accordion feature allowing us to increase borrowings up to the greater of ~~long-term debt~~(a) $200.0 million and (b) 100% of twelve-month trailing EBITDA, subject to lender approval. The Credit Agreement includes a $150.0 million sublimit for letters of credit ($75.0 million for financial letters of credit) and a $20.0 million sublimit for swingline loans.

We may borrow on the ~~condensed consolidated balance sheets and~~Revolver, at our option, at either (a) the ~~remaining $118.1 million, $123.8 million and $125.6 million, respectively, was included~~SOFR term rate plus a credit adjustment spread plus applicable margin ranging from 1.0% to 2.0%, or (b) a base rate plus an applicable margin ranging from 0.0% to 1.0%. The applicable margin is based on our Consolidated Leverage Ratio (as defined in ~~long-term debt.~~

our Credit Agreement), calculated quarterly. As of ~~September~~June 30, ~~2021~~2022, the total unused availability under the Credit Agreement was ~~$227.9~~$267.1 million, resulting from ~~$47.1~~$32.9 million in issued and outstanding letters of credit and ~~0 amount~~$50.0 million drawn under the ~~revolving credit facility.~~Revolver. The letters of credit had expiration dates between ~~October 2021~~August 2022 and December ~~2024~~2025.

As of ~~September~~June 30, ~~2021,~~ 2022, the ~~Applicable Rate~~applicable rate was ~~1.63%~~1.8% for loans under the Credit Agreement bearing interest based on ~~LIBOR~~SOFR and ~~0.63%~~0.8% for loans bearing interest at the ~~Base Rate.~~base rate. Accordingly, the effective interest rates at ~~September~~June 30, ~~2021~~2022, for ~~LIBOR~~SOFR and ~~Base Rate~~base rate loans were ~~2.38%~~3.4% and ~~3.88%~~5.5%, respectively. ~~We elected~~

The amended Credit Agreement contains certain affirmative and restrictive covenants, and customary events of default. The financial covenants include a maximum Consolidated Leverage Ratio of 3.25 to ~~use LIBOR for~~1.00 and a minimum Consolidated Interest Coverage Ratio (as defined in the ~~term loan.~~

amended Credit Agreement) of 3.00 to 1.00.As of ~~September~~June 30, ~~2021~~2022, the Consolidated Leverage Ratio ~~(as defined in the Credit Agreement)~~ was ~~1.73,~~2.57, which did not exceed the maximum of ~~3.00 and the~~3.25. Our Consolidated Interest Coverage Ratio ~~(as defined in the Credit Agreement)~~ was ~~8.52,~~6.53, which ~~exceeded~~was above the minimum of ~~4.00.~~3.00.

~~As of~~Effective ~~September 30, 2021~~January 1, 2022, we adopted ASU 2020-06 (see Note 2), ~~December 31, 2020~~ ~~and~~ ~~September 30, 2020~~~~, the carrying amount of the liability component of~~which updated our accounting for the 2.75% Convertible ~~Notes was $205.5 million, $200.3 million and $198.6 million, respectively. As of~~ ~~September 30, 2021~~, ~~December 31, 2020~~ ~~and~~ ~~September 30, 2020~~~~, the unamortized debt discount was $24.5 million, $29.7 million and $31.4 million, respectively.~~Notes.

During the three and sixmonths ended ~~September~~ June 30, ~~2021~~2022, we did not record amortization of the debt discount due to the implementation of ASU 2020-06, and during the three and ~~2020,~~six months ended June 30, 2021, we recorded ~~$1.7~~$1.8 million and $3.5 million, respectively, of amortization ~~related to~~of the debt ~~discount on~~discount. During the ~~2.75% Convertible Notes to interest expense in our condensed consolidated statements of operations~~three and ~~$0.6~~six months ended June 30, 2022 and 2021, we recorded $0.4 million, $0.7 million, $0.3 million and ~~$0.5~~$0.6 million, respectively, of amortization related to debt issuance ~~costs and fees to other (income) expense, net in our condensed consolidated statements of operations. During the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~31,~~~~2021~~ ~~and~~ ~~2020,~~ we recorded $5.2 million and $4.9 million, respectively, of amortization related to the debt discount on the 2.75% Convertible Notes to interest expense in our condensed consolidated statements of operations and $1.8 million and $1.6 million, respectively, of amortization related to debt issuance costs and fees to other (income) expense, net in our condensed consolidated statements of operations. These ~~nine~~~~-month amounts were presented as amortization related to the 2.75% Convertible Notes on our condensed consolidated statements of cash flows.~~costs.

~~14.~~16. Weighted Average Shares Outstanding and Net Income (Loss) Per Share

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

(1) Due to the net ~~losses~~loss from continuing operations for the three months ended June 30, 2022and the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2022 and 2021, RSUs representing ~~approximately 636,000~~452,000, 493,000 and ~~580,000~~503,000 shares, respectively, and the potential dilution from the 2.75% Convertible Notes converting into 7,309,000, 7,309,000 and 1,066,000 shares of common stock, respectively, (see Note 1) have been excluded from the number of shares used in calculating diluted net loss per share, as their inclusion would behave been antidilutive.

(2~~) The number of shares used in calculating diluted net loss per share for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~excluded the potential dilution from the 2.75% Convertible Notes converting into shares of common stock as the average price of our common stock was below $31.47 per share for those periods.~~

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

Our effective tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 ~~increased to 21.5% and 8.3% from (12.9)% and 2.9%, respectively, when compared to~~was lower than the ~~same periods in~~ ~~2020~~~~. These changes were~~prior year primarily due to a $12 million accrual related to the ~~goodwill impairments and the investment in affiliates impairments during the~~ ~~three~~ ~~months ended~~ ~~March 31, 2020~~ ~~and~~ ~~September 30, 2020~~ ~~which were discrete to those periods and resulted in~~ no ~~discrete tax benefit. See Note~~ 3 ~~for discussion~~expected resolution of the ~~impairment charges. The $66.0 million in settlement charges~~SEC investigation discussed further in Note 1618. ~~are~~The expected payment of $12 million is non-deductible for tax purposes and is recognized as a discrete adjustment in the current quarter. The tax impact of this discrete adjustment relative to the ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021~~ ~~which resulted~~small loss from continuing operations before income taxes results in ~~a discrete~~the disproportionately large negative tax ~~benefit of $17.0 million.~~rate for the current quarter.

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 the consolidated balance sheets. It is possible that future developments in our legal proceedings and inquiries could require us to (i) adjust or reverse existing accruals, or (ii) record new accruals that we did not originally believe to be probable or that could not bepreviously have been 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, disclosure~~Disclosure of loss contingencies is ~~required~~provided when a material loss is ~~either~~ probable but not reasonably estimable, a material loss is reasonably possible but not probable, or when it is reasonably possible that the amount of a loss will exceed the amount recorded.

~~The total liabilities recorded, net of insurance receivable, as of~~ ~~September 30, 2021~~ ~~were $66.0 million and as of~~ ~~December 31,~~ ~~2020~~ ~~and~~ ~~June 30, 2020~~ ~~were immaterial.~~ The total 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 reasonably estimable.

The total liabilities for legal proceedings recorded as of June 30, 2022 and December 31, 2021 were $129 million, $63 million of which was paid through insurance proceeds, which have been fully funded into a settlement escrow account. The balance of the ~~reasonably estimable amount~~settlement escrow account is ~~determined.~~included in other current assets in the consolidated balance sheets. As of June 30, 2021, the total liabilities recorded for legal proceedings, net of insurance receivable, were $66 million. Additionally, as further discussed below, during the quarter ended June 30, 2022, we accrued $12 million relating to the expected resolution of the SEC investigation.

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 often cannot be predicted with certainty. For information on our accounting policies regarding affirmative claims and back charges that we are party to in the ordinary course of business, see Note 1 of ~~“Notes to the Consolidated Financial Statements” in~~ our Annual ~~Report on Form~~ 10~~-K for the year ended~~ ~~December 31, 2020.~~ Report. 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 often cannot be predicted with certainty.

Some of the matters in which we or our joint ventures and affiliates are involved may ~~involve~~include 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 considered 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.

On August 13, 2019, a securities class action was filed in the United States District Court for the Northern District of California against the Company, James H. Roberts, our former President and Chief Executive Officer, and Jigisha Desai, our former Senior Vice President and Chief Financial Officer and ~~current~~ Executive Vice President and Chief Strategy Officer. An amended complaint was filed on February 20, 2020 that, among other things, added Laurel Krzeminski, our former Chief Financial Officer, as a defendant. The amended complaint iswas brought on behalf of an alleged class of persons or entities that acquired our common stock between April 30, 2018 and October 24, 2019, and ~~alleges~~alleged claims arising under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. After the filing of the amended complaint, this case was re-titled Police Retirement System of St. Louis v. Granite Construction Incorporated, et. ~~al.~~al. The amended complaint ~~seeks~~sought damages based on allegations that the defendants made false and/or misleading statements and failed to disclose material adverse facts in the Company’s SEC filings about its business, operations and prospects. On May 20, 2020, the court denied, in part, our motion to dismiss the amended complaint. On January 21, 2021, the court granted the plaintiff’s motion for class certification.

On October 23, 2019, a putative class action lawsuit, titled Nasseri v. Granite Construction Incorporated, et. al., was filed in the Superior Court of California, County of Santa Cruz against the Company, James H. Roberts, our former President and Chief Executive Officer, Laurel Krzeminski, our former Chief Financial Officer, and the then-serving Board of Directors on behalf of persons who acquired shares of Company common stock in the Company’s June 2018 merger with ~~Layne.~~Layne Christensen Company (“Layne”). The complaint ~~asserts~~asserted causes of action under the Securities Act of 1933 and ~~alleges~~alleged that the registration statement and prospectus were negligently prepared and included materially false and misleading statements and failed to disclose facts required to be ~~disclosed.~~disclosed and seeks monetary damages based on the allegations. On August 10, 2020, the court sustained our demurrer dismissing the complaint with leave to amend. On September 16, 2020, the plaintiff filed an amended complaint. We filed a demurrer seeking to dismiss the amended complaint. On April 9, 2021, the court entered an order overruling our demurrer seeking to dismiss the amended complaint. On May 14, 2021, the plaintiff filed a motion for class certification. ~~The hearing on the motion has been continued to~~ ~~March 25, 2022~~ ~~in light of the settlement proceedings in~~ ~~Police Retirement System of St. Louis v. Granite Construction Incorporated, et al.~~

On April 29, 2021, we entered into a stipulation of settlement (the “Settlement Agreement”) to settle Police Retirement System of St. Louis v. Granite Construction Incorporated, et ~~al.~~al. The Settlement Agreement also ~~settles~~settled claims alleged in Nasseri v. Granite Construction Incorporated, et ~~al.~~al ~~The settlement is subject to court approval.~~. As a result of entering into the Settlement Agreement, we recorded a pre-tax charge of approximately $66 million in the quarter ended March 31, 2021.

Under the Settlement Agreement, the Company ~~will~~agreed to pay or cause to be paid a total of ~~$129.0~~$129 million in cash ~~$63.0 million of which it expects to be paid through insurance proceeds. The payment will be paid~~ to a settlement fund that will be used to pay all settlement fees and expenses, attorneys’ fees and expenses, and cash payments to members of the settlement class. The settlement class ~~has~~ agreed to release us, the other defendants named in the lawsuits and certain of their respective related parties from any and all claims, rights, causes of action, liabilities, actions, suits, damages or demands of any kind whatsoever, that relate in any way to the purchase, acquisition, holding, sale or disposition of our common stock during the period between February 17, 2017 and October 24, 2019 that arose out of or are based upon or related to the facts alleged or the claims or allegations set forth in Police Retirement System of St. Louis v. Granite Construction Incorporated, et al. or relate in any way to any alleged violation of the Securities Act of 1933, the Securities Exchange Act of 1934, or any other state, federal or foreign jurisdiction’s securities or other laws, any alleged misstatement, omission or disclosure (including in financial statements) or other alleged securities-related wrongdoing or misconduct, including all claims alleged in Nasseri v. Granite Construction Incorporated, et ~~al.~~al. The Settlement Agreement ~~contains~~contained no admission of liability, wrongdoing or responsibility by any of the parties.

On April 30, 2021, the class representative in Police Retirement System of St. Louis v. Granite Construction Incorporated, et al. filed a motion for preliminary approval of the settlement. The plaintiff in Nasseri v. Granite Construction Incorporated, et al. ~~has been~~was permitted to intervene, although the court ~~has~~ denied ~~his~~the plaintiff's application to be appointed as additional lead plaintiff. On October 6, 2021, the court issued an order granting preliminary approval of the ~~settlement. Pursuant~~settlement and, pursuant to the terms of the Settlement Agreement, ~~payment~~$129 million was ~~made~~paid to the settlement ~~fund after preliminary approval~~escrow account. $66 million was paid by the Company and $63 million was paid through insurance proceeds. The total $129 million is included in ~~October 2021.~~ the condensed consolidated balance sheet as deposits and an accrued liability. Members of the settlement class ~~will now be provided notice of, and an~~had the opportunity to object to the settlement at a fairness hearing ~~to be~~ held by the court to determine whether the settlement should be finally approved and whether the proposed order and final judgment should be entered. The fairness hearing ~~is scheduled for~~occurred on February 24, 2022. If On March 17, 2022, the court ~~approves the settlement, including the payment and release described above, and enters such order and~~granted final ~~judgment, and such judgment is~~ no ~~longer subject to further appeal or other review, the settlement fund will be disbursed in accordance with a plan of allocation approved by the court and the release will be effective to all members~~approval of the settlement, ~~class.~~

Asgranted the request for attorneys’ fees by class representative's counsel, granted in part and denied in part the request for attorneys’ fees by the plaintiff in Nasseri v. Granite Construction Incorporated, et al., and entered final judgment. On April 12, 2022, the plaintiff in Nasseri v. Granite Construction Incorporated, et al. requested that the Nasseri case be dismissed with prejudice in light of the final approval of the settlement. On April 15, 2022, the plaintiff in Nasseri v. Granite Construction Incorporated, et al. filed a ~~result~~notice of ~~entering into the Settlement Agreement, we recorded a pre-tax charge~~appeal in Police Retirement System of ~~approximately $66.0 million in the quarter ended~~ ~~March 31, 2021.~~St. Louis v. Granite Construction Incorporated, et al., naming Class Representative Police Retirement System of St. Louis as appellee.

On May 6, 2020, a stockholder derivative lawsuit, titled English v. Roberts, et al., was filed in the United States District Court for the Northern District of California against James H. Roberts, our former President and Chief Executive Officer, Jigisha Desai, our former Senior Vice President and Chief Financial Officer and ~~current~~ Executive Vice President and Chief Strategy Officer, Laurel Krzeminski, our former Chief Financial Officer, and our then-current Board of Directors, and the Company, as a nominal defendant, asserting claims for breach of fiduciary duty, unjust enrichment, and violations of the Securities Exchange Act of 1934 that allegedly occurred between April 30, 2018 and October 24, 2019. The lawsuit alleges that the individual defendants each knowingly inflated the Company’s revenue, income, and margins in violation of U.S. GAAP, which caused the results during the relevant periods to be materially false and misleading. The complaint seeks monetary damages and corporate governance reforms. ~~The~~Pursuant to court ~~has ordered that the lawsuit in the derivative~~order, this action bewas stayed until ~~further order of~~ the ~~court or until~~court's entry of a final judgment on March 17, 2022 in the putative securities class action lawsuit filed in ~~the United States District Court for~~ the Northern District of California.

On May 12, 2021, a stockholder derivative lawsuit, titled Davydov v. Roberts, et al., was filed in the Delaware Court of Chancery against James H. Roberts, Jigisha Desai, Laurel Krzeminski, Craig Hall, our Senior Vice President, General Counsel, Corporate Compliance Officer, and Secretary, and our then-current Board of Directors, and the Company, as a nominal defendant, asserting claims for breach of fiduciary duty, unjust enrichment, and aiding and abetting breach of fiduciary duty that allegedly occurred between April 30, 2018 and October 24, 2019. The lawsuit alleges that the individual defendants each knowingly inflated the Company’s revenue, income, and margins in violation of U.S. GAAP, which caused the results during the relevant periods to be materially false and misleading. The complaint seeks monetary damages and corporate governance reforms.

On ~~July 16, 2021,~~April 14, 2022, wethe parties in Davydov v. Roberts et al., the plaintiff in English v. Roberts et al.,and the Company entered into a Stipulation of Compromise and Settlement that, if approved by the court in Davydov and not subject to termination under its terms, provides that (i) defendants will cause insurers to pay $7.5 million, which amount, less court-awarded attorneys’ fees and expenses, will be paid to the Company, (ii) the Company shall implement agreed upon corporate governance provisions within 30 days of final approval of the settlement, and (iii) all claims that were asserted or could have been asserted against the defendants or their related persons in Davydov v. Roberts, et al., English v. Roberts, et al., or any other proceeding on behalf of the Davydov plaintiff, the English plaintiff, the Company or any Granite stockholder, will be released. On April 14, 2022, the plaintiff in Davydov v. Roberts, et al. filed the Stipulation of Compromise and Settlement and a ~~motion to dismiss the complaint. The plaintiff’s response is due on~~ ~~November 22, 2021.~~

~~We are~~proposed scheduling order for a hearing in the ~~preliminary stages~~Delaware Court of Chancery for review of the ~~litigation and, as~~settlement. The Court in English v. Roberts, et al. has entered the parties’ stipulation to stay that case in light of the settlement filed in Davydov v. Roberts, et al. The Delaware Court of Chancery held a ~~result, we cannot predict~~fairness hearing concerning its review of the ~~outcome or consequences of these cases.~~settlement on July 12, 2022.

As of ~~September~~June 30, 2022, ~~30,~~December 31, 2021 and June 30, 2021, other than the ~~$66.0~~ ~~million~~Settlement Agreement charge described above, we did not record any liability related to the above matters because we concluded such liabilities were not probable and the amounts of such liabilities ~~are~~were not reasonably estimable.

~~We were informed on~~ ~~July 20, 2021~~ ~~of an arbitration award denying insurance coverage for claims related to remedial measures undertaken by the general contractor~~Other Matters

In connection with our prior disclosure of the ~~Salesforce Tower office building in~~Audit/Compliance Committee’s independent investigation of prior-period reporting for the former Heavy Civil operating group and the extent to which those matters affected the effectiveness of the Company’s internal control over financial reporting (the “Investigation”), we voluntarily contacted the San Francisco office of the SEC Division of Enforcement regarding the Investigation. The SEC has issued subpoenas for documents in connection with the accounting issues identified in the Investigation. We have produced documents to the SEC and ~~related damages.~~ cooperated with the SEC in its investigation.

Based upon our current estimate for the expected resolution of the SEC’s investigation, we recorded a $12 million accrual in the second quarter of 2022, which is reflected in other costs in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and in accrued expenses and other current liabilities on the condensed consolidated balance sheet as of June 30, 2022. We have not reached a final resolution of these matters with the SEC and we cannot predict when a settlement, if finally agreed, would become final, nor whether any of the proposed terms, including the penalty amount, may change in connection with a final resolution.

Our wholly-owned subsidiary, Layne, was a subcontractor on the foundation for the Salesforce Tower office building in San Francisco in 2013 and 2014. Certain anomalies were discovered in March 2014 in the foundation’s structural concrete, which were remediated by the general contractor during 2015. Layne assigned any insurance claims it may have had under the project’s builder’s risk insurance policy to the general contractor. During 2014, the project owner and the general contractor submitted a claim to the project’s builder’s risk insurers to cover the cost of remedial work and related damages. The claim was denied by the builder’s risk insurers. The project owner and the general contractor subsequently filed a legal proceeding against the insurers seeking coverage under the builder’s risk insurance policy, which proceeding was then transferred by agreement to arbitration. ~~Although~~ On July 20, 2021, we were ~~not~~ a party to this legal proceeding, we believe, based on court filings and developments in the arbitration, that the project owner and the general contractor asserted a claim for damages against the project’s builder’s risk insurers for approximately $100 million. In connection with our acquisitioninformed of ~~Layne in~~ ~~June 2018,~~ ~~we assumed any potential liability relating to this project. Based on the~~an arbitration award denying insurance coverage for claims related to the remedial measures undertaken by the general contractor of the Salesforce Tower ~~office building~~ and related ~~damages, management believes it is probable that claims could be brought against the~~damages.

On February 3, 2022, a lawsuit titled Steadfast Insurance Company ~~by the general contractor related to Layne’s involvement~~(“Steadfast”), a subrogee of Clark/Hathaway Dinwiddie, a Joint Venture (“CHDJV”) v. Layne Christensen Company (“Layne”) was filed in the ~~original project.~~Superior Court of the State of California, County of San Francisco, seeking damages of approximately $70 million for costs incurred by Steadfast on behalf of CHDJV to cure Layne’s allegedly defective work on the foundation of the Salesforce Tower. On February 4, 2022, CHDJV submitted an arbitration demand with the American Arbitration Association against Granite Construction Incorporated seeking to recover approximately $30 million for costs incurred by CHDJV to cure Layne’s allegedly defective work on the foundation of the Salesforce Tower. CHDJV subsequently dismissed Granite and added Layne as a respondent to the arbitration. On March 8, 2022, we filed a motion to dismiss the CHDJV arbitration. On April 8, 2022, we filed a demurrer seeking to dismiss the Steadfast lawsuit. On May 6, 2022, CHDJV consolidated its claims with those of Steadfast and joined as a plaintiff in the Steadfast lawsuit, and on May 16, 2022, the arbitration was stayed. We believe ~~we have~~Layne has multiple defenses and counterclaims to ~~any~~the claims ~~that are brought against us and intend~~at issue. Layne intends to vigorously defend against the claims and prosecute ~~any~~its counterclaims, ~~vigorously. As of the date of this report,~~ no ~~action has been filed against us. While~~but we ~~believe a claim is probable, we~~cannot provide assurance that Layne will be successful in these efforts. We do not believe it is probable this matter will result in a material loss, however, if we are unsuccessful we believe the ~~amount~~range of ~~any liabilities related~~reasonably possible loss upon final resolution of this matter could be up to ~~the claim are reasonably estimable at this time. Accordingly,~~ no ~~provision has been made in our consolidated financial statements.~~

In connection with our prior disclosure of the Audit/Compliance Committee’s independent investigation of prior-period reporting for the Heavy Civil operating group and the extent to which those matters affected the effectiveness of the Company’s internal control over financial reporting (the “Investigation”), we voluntarily contacted the San Francisco office of the SEC Division of Enforcement regarding the Investigation. The SEC has issued us subpoenas for documents in connection with the accounting issues identified in the Investigation. We have produced documents to the SEC and will continue to cooperate with the SEC in its investigation.approximately $100 million.

During the fourth quarter of 2021, we updated our strategy to focus on our core business capabilities, to leverage our current geographic based home markets in the civil construction and materials business and to target expansion based upon that combined strategy. In addition, we revised the financial information our chief operating decision maker, or decision-making group (our “CODM”), regularly reviews to allocate resources and assess our performance. This change is consistent with our new strategic plan and better aligns with our continuing civil construction and materials business. Our CODM now regularly reviews financial information regarding our two primary product lines, construction and materials as well as our operating groups. We identified our CODM as our Chief Executive Officer and our Chief Operating Officer.

As a result of these changes, in accordance with FASB ASC Topic 280,Segment Reporting, our reportable segments, which are the same as our operating segments, were changed to: Construction and Materials. The Construction segment replaces the previous Transportation, Water and Specialty reportable segments, with the composition of our Materials segment for our continuing operations remaining unchanged. These changes have been applied retrospectively for all periods presented.

2020

Total revenue from reportable segments
$ 1,510,001 $ 317,980 $ 513,087 $ 400,808 $ 2,741,876
Elimination of intersegment revenue
0 0 0 (124,989 ) (124,989 )
Revenue from external customers
1,510,001 317,980 513,087 275,819 2,616,887
Gross profit
110,888 34,483 47,853 44,915 238,139
Depreciation, depletion and amortization
14,685 27,399 18,166 16,563 76,813
Segment assets
305,962 142,604 118,797 361,862 929,225

Six months ended June 30,	*Construction*		*Materials*			*Total*
2022
Total revenue from reportable segments	$	1,107,195	$	269,998		$	1,377,193
Elimination of intersegment revenue		0	$	(61,321	)		(61,321	)
Revenue from external customers	$	1,107,195	$	208,677		$	1,315,872
Gross profit	$	109,358	$	18,897		$	128,255
Depreciation, depletion and amortization	$	13,389	$	13,137		$	26,526
Segment assets	$	369,160	$	357,922		$	727,082

2021
Total revenue from reportable segments	$	1,220,396	$	239,321		$	1,459,717
Elimination of intersegment revenue	$	0	$	(58,714	)		(58,714	)
Revenue from external customers	$	1,220,396	$	180,607		$	1,401,003
Gross profit	$	129,036	$	22,908		$	151,944
Depreciation, depletion and amortization	$	15,482	$	11,683		$	27,165
Segment assets	$	372,952	$	331,748		$	704,700

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

	*Three months ended June 30,*						*Six months ended June 30,*
	*2022*			*2021*			*2022*			*2021*
Total gross profit from continuing operations	$	78,480		$	98,232		$	128,255		$	151,944
Selling, general and administrative expenses		53,162			58,628			111,663			119,789
Other costs (see Note 7)		20,177			5,868			28,391			80,177
Gain on sales of property and equipment		(385	)		(1,052	)		(717	)		(3,297	)
Total other expense, net		5,930			933			10,570			5,578
Income (loss) from continuing operations before income taxes	$	(404	)	$	33,855		$	(21,652	)	$	(50,303	)

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2021

2020

2021

2020

Total gross profit from reportable segments
$ 119,935 $ 125,997 $ 300,199 $ 238,139
Selling, general and administrative expenses
77,603 72,889 227,400 224,128
Non-cash impairment charges (see Note 3)
0 132,277 0 156,690
Other costs (see Note 3)
3,759 9,689 85,547 28,513
Gain on sales of property and equipment (see Note 12)
(5,159 ) (3,057 ) (39,349 ) (4,870 )
Total other expense, net
2,405 1,284 1,686 10,766
Income (loss) before provision for (benefit from) income taxes
$ 41,327 $ (87,085 ) $ 24,915 $ (177,088 )

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

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 (our "Annual Report") and the unaudited condensed consolidated financial statements and the accompanying notes thereto included herein.

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, strategy, activities, performance, outlook, outcomes, guidance, capital expenditures, committed and awarded projects, results, strategic actions, the final settlement of the Accelerated Share Repurchase, the expected resolution of the SEC investigation and ~~results,~~the sales of the Water Resources and Mineral Services businesses, 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, strategy, activities, performance, outlook, outcomes, guidance, capital expenditures, committed and awarded projects, 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 deliver infrastructure solutions for public and private clients primarily in the United States. We are one of the largest diversified infrastructure companies in the United States. ~~We are engaged in a wide array of~~Within the public sector, we primarily concentrate on infrastructure projects, including the construction of streets, roads, highways, mass transit facilities, airport infrastructure, bridges, ~~trenchless and underground utilities,~~dams, power-related facilities, ~~water-related facilities, well drilling,~~ utilities, tunnels ~~dams,~~and other infrastructure-related projects. Within the private sector, we perform site preparation, mining services and ~~construction management professional services. We are also engaged in a variety of~~ infrastructure services ~~including those~~ for ~~airports,~~ residential development, energy development, commercial and industrial ~~sites.~~sites, and other facilities, as well as provide construction management professional services.

During the fourth quarter of 2021, we updated our strategy to focus on our core business capabilities, to leverage our current geographic based home markets in the civil construction and materials business and to target expansion based upon that combined strategy. Also related to our new strategic plan, during the fourth quarter of 2021, we reorganized our operating groups to improve operating efficiencies and better position the Company for long-term growth. In alphabetical order, our continuing business operating groups are California, Central and Mountain.

In addition, we revised the financial information our chief operating decision maker, or decision-making group (our “CODM”), regularly reviews to allocate resources and assess our performance. This change is consistent with our strategic plan update and better aligns with our continuing civil construction and materials business. Our CODM now regularly reviews financial information regarding our two primary product lines, construction and materials, as well as our operating groups. We ~~have four~~identified our CODM as our Chief Executive Officer and our Chief Operating Officer.

As a result of these changes, in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, our reportable ~~business~~segments, which are the same as our operating segments, were changed to two reportable segments: ~~Transportation, Water, Specialty~~Construction and Materials (see Note 1719 of “Notes to the Condensed Consolidated Financial Statements”). ~~In addition to business segments, we review our business by operating groups. Our operating groups are California, Federal, Heavy Civil, Northwest, Midwest and Water and Mineral Services.~~

The five primary economic drivers of our business are (i) the overall health of the U.S. ~~economy;~~economy including access to resources (labor, supplies and subcontractors); (ii) federal, state and local public funding levels; (iii) population growth resulting in public and private development; (iv) the need to build, replace or repair aging infrastructure; and (v) the pricing of certain commodity related products. 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.

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Current Economic Environment and Outlook

While the COVID-19 pandemic continues to have a significant impact around the country and the world, Granite’s approach has been consistent led by prioritizing the safety, health and hygiene of our employees, customers, suppliers and others with whom we partner in our business activities. Although certain projects are periodically affected by the pandemic, our business has largely returned to pre-pandemic levels of activity. The future developments of the pandemic are highly uncertain and could adversely impact our operations and financial results in future periods. We are closely monitoring federal, state, regional and local guidelines, orders and regulations and will take necessary steps to comply with new regulations as required.

We are continually monitoring the supply and demand related to labor and supplies, including materials such as concrete and steel. During 2021, certain segments of the construction industry were adversely affected by inflation as well as supply chain and labor constraints. The actual and expected impact to Granite was limited to oil price inflation through our use of diesel fuel and liquid asphalt, which we are monitoring and pricing into our contracts accordingly.

Our consolidated balance sheet and liquidity continue to be strong through the third quarter of 2021 and we expect it to continue to remain strong providing us the flexibility to reinvest in our businesses and execute upon our capital allocation strategy.

Funding for our public work projects, which ~~is around~~accounts for approximately 75% of our portfolio, is dependent on federal, state, regional and local revenues. At the federal level, ~~public work projects benefit from a $10 billion relief spending bill for state departments of transportations approved by Congress in December 2020 as part of~~ the Coronavirus Response and Relief Act and a $360 billion Coronavirus State and Local Fiscal Recovery Funds approved by Congress in March 2021. The Fixing America’s Surface Transportation (“FAST”) was extended for one year through September 30, 2021 with flat funding levels and for another month through October 31, 2021 as the Biden Administration and Congress work to pass a long-term solution. In late June 2021, the Biden Administration and members of a bipartisan Senate group agreed to a roughly $1.2 trillion ~~Bipartisan~~ Infrastructure ~~Framework (Infrastructure~~ Investment and Jobs ~~Act), proposing for $579~~Act (“IIJA”) was enacted in November 2021 with the appropriation of funds included in the 2022 federal spending bill passed by the Administration in March 2022. The five-year IIJA provides the largest increase in federal highway, bridge and transit funding in more than six decades and includes $550 billion in ~~new~~related incremental funding. We continue to believe that the increased multi-year spending ~~which includes significant new funding proposals for roads, bridges, airports, ports and inland waterway infrastructures. We remain optimistic that Congress and the Administration~~commitment will ~~jointly move forward in 2021 to pass a long-term solution that addresses infrastructure investment, which we believe will meaningfully~~ improve the programming visibility for state and local governments and bring meaningful impact to project lettings starting in ~~mid to~~ late 2022 and then ~~building~~growing in ~~following years.~~2023 and beyond. We anticipate the impact to our financial statements to gradually grow in 2023 and beyond as funds are allocated first to quicker turn projects and then later to more complex larger projects.

At state, regional and local levels, voter-approved state and local transportation measures continue to support infrastructure spending. InWhile each market is unique, we see a strong funding environment at the ~~November 2020 elections, voters in 18 states approved 94% of~~ state and local ~~ballot initiatives~~levels currently and we expect that ~~will provide an additional $14 billion in one-time and recurring revenue for transportation improvements.~~environment to improve with the impact of the IIJA. In California, our top revenue-generating state, a significant part of the state infrastructure spend is funded through Senate Bill 1 ~~(SB-1)~~(“SB-1”), the Road Repair and Accountability Act of 2017, which is a 10-year, $54.2 billion ~~program.~~program without any sunset provisions. Revenue collected through SB-1 is on track to increase over the next ~~5 years.~~five years and supports our expected growth in the state.

Over the last year, inflation, supply chain and labor constraints have had a significant impact on the global economy including the construction industry in the United States. While it is impossible to fully eliminate the impact of these factors, we have applied proactive measures such as fixed forward purchase contracts of oil related inputs and adjustment of project schedules for constraints related to construction materials such as concrete. In June 2022, we completed the purchase of a liquid asphalt terminal in California. The facility provides 170,000 barrels of liquid asphalt storage to address oil price volatility and allows Granite to expand into new, more sustainable product offerings such as asphalt modified with recycled materials. While we ~~are encouraged by these funding supports,~~actively work to mitigate the impacts of oil price inflation, further price increases may adversely impact us in the future.

Granite’s Committed and Awarded Projects (“CAP”) continues to be strong with an increase from the first quarter of $278.9 million to $4.2 billion at the end of the second quarter. We believe the environments in our key markets are ~~diverse~~strong and will continue to grow as funding from IIJA is allocated for projects beginning in the second half of 2022.

Strategic Actions

The planned divestitures of the businesses in our former Water and Mineral Services operating group (“WMS”) reflect our new strategy to focus on our core civil construction and materials businesses by using sale proceeds to invest in these two businesses. The divestitures also create opportunities to streamline operational support functions, improve overhead efficiency and better leverage efficiencies of scale. The current and projected strong demand for civil construction supports the decision to grow our vertically integrated business. Through our newly reorganized operational structure, our focus is to pursue opportunities in markets where our operating groups’ presence, capabilities and resources provide strategic advantages, with ~~some being more impacted~~improved and consistent margin expectations. The sale of our trenchless and pipe rehabilitation services business (“Inliner”) was completed on March 16, 2022 for a purchase price of $159.7 million, subject to certain adjustments. As a result of the sale, we received cash proceeds of $142.6 million based on preliminary post-closing adjustments and we recognized a gain of $6.2 million. The process to sell the remaining two businesses in the former WMS operating group is proceeding as planned with completion anticipated by the ~~pandemic. We closely monitor these funding trends in all our markets~~end of the year.

Litigation and ~~manage our pursuit pipeline accordingly.~~SEC Matters

As further discussed in Note 1618 of “Notes to the Condensed Consolidated Financial Statements,” ~~we were informed~~our wholly owned subsidiary, Layne Christensen Company (“Layne”), has been sued for $100 million relating to Layne’s work on ~~July 20, 2021 of an arbitration award denying insurance coverage for claims related to remedial measures undertaken by the general contractor of~~ the Salesforce Tower ~~office building in San Francisco and related damages.~~foundation. Layne was a subcontractor on this project and potential liability for this project remained with Layne in connection with our acquisition of Layne in June ~~2018, we assumed any liability related to it.~~2018. See ~~“Item 1A. Risk Factors - In~~Note 18 and "In connection with acquisitions or divestitures, we may become subject to liabilities” and ~~“Item 1A. Risk Factors - We~~"We are involved in lawsuits and legal proceedings in the ordinary course of our business and may in the future be subject to other litigation and legal proceedings, and, if any of these are resolved adversely against us, it could harm our business, financial condition and results of operations” in Item 1A. Risk Factors in our Annual Report ~~on Form 10-K for the year ended December 31, 2020 (our “2020 Annual Report on Form 10-K”)~~ for additional information.

Additionally, as further discussed in Note 18 of “Notes to the Condensed Consolidated Financial Statements,” we accrued $12 million relating to the expected resolution of the SEC investigation.

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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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Total revenue	$	1,062,129		$	1,065,189		$	2,696,214		$	2,616,887		$	768,286		$	834,671		$	1,315,872		$	1,401,003
Gross profit		119,935			125,997			300,199			238,139		$	78,480		$	98,232		$	128,255		$	151,944
Selling, general and administrative expenses		77,603			72,889			227,400			224,128		$	53,162		$	58,628		$	111,663		$	119,789
Non-cash impairment charges (see Note 3 of “Notes to the Condensed Consolidated Financial Statements”)		—			132,277			—			156,690
Other costs (see Note 3 of “Notes to the Condensed Consolidated Financial Statements”)		3,759			9,689			85,547			28,513
Gain on sales of property and equipment, net (see Note 12 of “Notes to the Condensed Consolidated Financial Statements”)		(5,159	)		(3,057	)		(39,349	)		(4,870	)
Other costs (see Note 7 of “Notes to the Condensed Consolidated Financial Statements”)													$	20,177		$	5,868		$	28,391		$	80,177
Operating income (loss)		43,732			(85,801	)		26,601			(166,322	)	$	5,526		$	34,788		$	(11,082	)	$	(44,725	)
Total other expense, net		2,405			1,284			1,686			10,766		$	5,930		$	933		$	10,570		$	5,578
Amount attributable to non-controlling interests		2,620			7,195			462			18,741
Net income (loss) from continuing operations													$	(2,953	)	$	26,145		$	(18,870	)	$	(36,256	)
Net income from discontinued operations (see Note 3 of "Notes to the Condensed Consolidated Financial Statements")													$	19,521		$	29,602		$	25,617		$	26,680
Amount attributable to non-controlling interests from continuing operations													$	583		$	(1,286	)	$	(2,535	)	$	(2,158	)
Net income (loss) attributable to Granite Construction Incorporated		35,043			(91,162	)		23,309			(153,127	)	$	17,151		$	54,461		$	4,212		$	(11,734	)

Revenue

Total Revenue by Segment

	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2021				2020				2021				2020				2022				2021				2022				2021
Transportation	$	568,186	53.5	%	$	623,999	58.6	%	$	1,444,450	53.6	%	$	1,510,001	57.7	%
Water		121,968	11.5			106,599	10.0			335,153	12.4			317,980	12.2
Specialty		234,300	22.1			205,134	19.3			590,245	21.9			513,087	19.6
Construction																	$	632,260	82.3	%	$	713,425	85.5	%	$	1,107,195	84.2	%	$	1,220,396	87.1	%
Materials		137,675	12.9			129,457	12.1			326,366	12.1			275,819	10.5			136,026	17.7			121,246	14.5			208,677	15.8			180,607	12.9
Total	$	1,062,129	100.0	%	$	1,065,189	100.0	%	$	2,696,214	100.0	%	$	2,616,887	100.0	%	$	768,286	100.0	%	$	834,671	100.0	%	$	1,315,872	100.0	%	$	1,401,003	100.0	%

~~Transportation~~Construction Revenue

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

2021

2020

2021

2020

California
$ 191,146 33.7 % $ 224,636 36.0 % $ 478,823
33.1%
$ 478,590 31.7 %
Federal
4,442 0.8 3,140 0.5 9,593
0.7
5,306 0.4
Heavy Civil
138,201 24.3 165,434 26.5 445,812
30.9
519,963 34.4
Midwest
34,767 6.1 43,896 7.0 83,945
5.8
103,081 6.8
Northwest
199,630 35.1 186,893 30.0 426,277
29.5
403,061 26.7
Total
$ 568,186 100.0 % $ 623,999 100.0 % $ 1,444,450
100.0%
$ 1,510,001 100.0 %

	Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2022				2021				2022				2021
California	$	199,357	31.5	%	$	228,631	32.0	%	$	343,744	31.0	%	$	387,897	31.7	%
Central		207,406	32.8			287,994	40.4			431,499	39.0			541,287	44.4
Mountain		225,497	35.7			196,800	27.6			331,952	30.0			291,212	23.9
Total	$	632,260	100.0	%	$	713,425	100.0	%	$	1,107,195	100.0	%	$	1,220,396	100.0	%

~~Transportation~~Construction revenue for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 decreased by ~~$55.8~~$81.2 million and $113.2 million, or ~~8.9%,~~11.4% and ~~$65.6 million, or 4.3%~~9.3%, respectively, when compared to ~~2020.~~2021. These decreases were primarily driven by ~~lower Committed and Awarded Projects (“CAP”) levels~~the wind down of several large projects in the ~~Heavy Civil~~Central operating group, as well as ~~certain Heavy Civil operating group~~delayed project awards, slower progress on existing projects ~~including those~~due to supply chain disruptions in the ~~Old Risk Portfolio~~⁽¹⁾~~, nearing completion~~current year and ~~decreases~~less favorable weather conditions in the first quarter of 2022 in the California operating ~~group due to owner worksite accommodations in the third quarter of 2020 that are not present in 2021.~~group. These decreases were partially offset by ~~a decrease~~increased revenue in the ~~net negative impact of revisions in estimates when compared to 2020 (see Note 4 of “Notes to the Condensed Consolidated Financial Statements” for more information).~~Mountain operating group. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the majority of revenue earned in the ~~Transportation~~Construction segment was from the public sector.

⁽¹⁾ ~~Old Risk Portfolio includes projects with risk criteria that do not align with Granite's new project selection criteria for the Heavy Civil operating group.~~

~~Table of Content~~

~~Water Revenue~~

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

2021

2020

2021

2020

California
$ 8,531 7.0 % $ 10,498 9.8 % $ 27,512
8.2%
$ 24,225 7.6 %
Federal
9 — 341 0.3 166
—
1,309 0.4
Heavy Civil
7,799 6.4 9,985 9.4 21,197
6.3
28,260 8.9
Midwest
— — — — —
—
152 —
Northwest
2,124 1.8 444 0.5 4,202
1.3
4,344 1.4
Water and Mineral Services
103,505 84.8 85,331 80.0 282,076
84.2
259,690 81.7
Total
$ 121,968 100.0 % $ 106,599 100.0 % $ 335,153
100.0%
$ 317,980 100.0 %

Water revenue for the three and nine months ended September 30, 2021 increased by $15.4 million, or 14.4%, and $17.2 million, or 5.4%, respectively, when compared to 2020. The increases were primarily driven by increased demand for water supply and maintenance services, as well as lower activity levels in 2020 as a result of the COVID-19 pandemic which caused delays in awarded projects and deferrals in bidding processes. During the three and nine months ended September 30, 2021 and 2020, the majority of revenue earned in the Water segment was from the public sector.

~~Specialty Revenue~~

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

2021

2020

2021

2020

California
$ 56,364 24.1 % $ 62,623 30.5 % $ 153,497
26.0
% $ 158,076 30.8 %
Federal
29,347 12.5 28,765 14.0 70,280
11.9
78,760 15.4
Heavy Civil
34,424 14.7 12,892 6.3 82,651 14.0 27,963 5.4
Midwest
25,608 10.9 24,392 11.9 71,376
12.1
74,543 14.5
Northwest
61,030 26.1 57,247 27.9 138,487
23.5
125,647 24.5
Water and Mineral Services
27,527 11.7 19,215 9.4 73,954
12.5
48,098 9.4
Total
$ 234,300 100.0 % $ 205,134 100.0 % $ 590,245
100.0
% $ 513,087 100.0 %

Specialty revenue for the three and nine months ended September 30, 2021 increased by $29.2 million, or 14.2%, and $77.2 million, or 15.0%, respectively, when compared to 2020. These increases were primarily driven by project progression of a federal site development project in the Heavy Civil operating group and increased activity in the Water and Mineral Services operating group’s mineral exploration business. During the three and nine months ended September 30, 2021 and 2020, revenue earned in the Specialty segment was from both the public and private sectors.

Materials Revenue

	Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended June 30,								Six Months Ended June 30,
(dollars in thousands)	2021				2020				2021				2020				2022				2021				2022				2021
California	$	76,029	55.2	%	$	75,901	58.6	%	$	188,475	57.7	%	$	161,397	58.6	%	$	71,572	52.6	%	$	70,490	58.2	%	$	117,259	56.2	%	$	112,446	62.2	%
Northwest		56,403	41.0			48,674	37.6			124,564	38.2			103,812	37.6
Water and Mineral Services		5,243	3.8			4,882	3.8			13,327	4.1			10,610	3.8
Central																		13,901	10.2			10,720	8.8			24,263	11.6			19,100	10.6
Mountain																		50,553	37.2			40,036	33.0			67,155	32.2			49,061	27.2
Total	$	137,675	100.0	%	$	129,457	100.0	%	$	326,366	100.0	%	$	275,819	100.0	%	$	136,026	100.0	%	$	121,246	100.0	%	$	208,677	100.0	%	$	180,607	100.0	%

Materials revenue for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 increased by ~~$8.2~~$14.8 million and $28.1 million, or ~~6.3%~~12.2% and 15.5%, ~~and $50.5 million, or 18.3%,~~respectively, when compared to ~~2020 primarily due to an increase in volume~~2021 driven by overall market demands driving higher sales volumes with both aggregates and ~~an increase in prices in both~~ asphalt, and ~~aggregates.~~in the second quarter of 2022 we implemented energy surcharges to cover cost increases.

Table of Contents

Committed and Awarded Projects

~~Effective during the three months ended June 30, 2021, on a retroactive basis, we renamed contract backlog (consisting~~CAP consists of two components: (1) unearned revenue and (2) other awards. Unearned revenue includes the revenue we expect to record in the future on ~~awarded~~executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts) to CAP and added the general construction portion of construction management/general contractor contracts to the extent contract execution and funding is probable. This is the same presentation used in our quarterly earnings calls and press releases. Prior period amounts have been revised to reflect this change.

contracts. 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 ~~contract execution and~~ funding is probable. Contract options and task orders are included in unearned revenue when exercised or issued, respectively. Certain government contracts where funding is appropriated on a periodic basis are included in unearned revenue at the time of the award when it is probable the contract value will be funded and executed. ~~Contract options and task orders are included in unearned revenue when exercised or issued, respectively.~~

Other awards ininclude the ~~tables below include~~general construction portion of construction management/general contractor (“CM/GC”) contracts and awarded contracts with unexercised contract options or unissued task orders. The general construction portion of CM/GC contracts are included in other awards to the extent contract execution and funding is probable. Contracts with unexercised contract options or unissued task orders are included in other awards to the extent option exercise or task order issuance is ~~probable, respectively. Other awards also include~~probable. In line with the ~~general construction portion of construction management/general contractor projects to~~revised reportable segments, all CAP is now in the ~~extent award, contract execution and funding are probable.~~Construction segment.

~~Total CAP by Segment~~

(dollars in thousands)
September 30, 2021 June 30, 2021 September 30, 2020
Transportation
$ 2,914,206 67.3 % $ 2,894,115 65.1 % $ 3,222,829 76.8 %
Water
524,106 12.1 531,858 12.0 346,253 8.3
Specialty
889,580 20.6 1,019,318 22.9 623,452 14.9
Total
$ 4,327,892 100.0 % $ 4,445,291 100.0 % $ 4,192,534 100.0 %

~~Transportation CAP~~

(dollars in thousands)		September 30, 2021				June 30, 2021			September 30, 2020				June 30, 2022				March 31, 2022				June 30, 2021
Unearned revenue	$	1,803,664	61.9	%	$	2,075,498	71.7	%	$	2,311,906	71.7	%	$	2,884,876	68.5	%	$	2,491,537	63.3	%	$	3,298,971	78.9	%
Other awards		1,110,542	38.1			818,617	28.3			910,923	28.3			1,328,784	31.5			1,443,190	36.7			882,125	21.1
Total	$	2,914,206	100.0	%	$	2,894,115	100.0	%	$	3,222,829	100.0	%	$	4,213,660	100.0	%	$	3,934,727	100.0	%	$	4,181,096	100.0	%

(dollars in thousands)
September 30, 2021 June 30, 2021 September 30, 2020
California
$ 1,318,822 45.3 % $ 1,152,327 39.7 % $ 1,116,680 34.6 %
Federal
40,477 1.4 7,303 0.3 13,787 0.4
Heavy Civil
513,589 17.6 622,490 21.5 1,059,939 32.9
Midwest
230,696 7.9 230,184 8.0 169,538 5.3
Northwest
810,622 27.8 881,811 30.5 862,885 26.8
Total
$ 2,914,206 100.0 % $ 2,894,115 100.0 % $ 3,222,829 100.0 %

(dollars in thousands)	June 30, 2022				March 31, 2022				June 30, 2021
California	$	1,629,765	38.7	%	$	1,480,950	37.7	%	$	1,358,018	32.5	%
Central		1,518,970	36.0			1,426,255	36.2			1,919,386	45.9
Mountain		1,064,925	25.3			1,027,522	26.1			903,692	21.6
Total	$	4,213,660	100.0	%	$	3,934,727	100.0	%	$	4,181,096	100.0	%

~~Transportation~~ CAP of ~~$2.9~~$4.2 billion ~~at September 30, 2021 was $20.1 million, or 0.7%, higher than~~ at June 30, ~~2021 primarily due~~2022 increased $0.3 billion when compared to March 31, 2022. Significant new awards during the three months ended June 30, 2022 included a $200 million award for street work in ~~the California operating group and new awards in the Northwest operating group, including~~Illinois, a ~~$25~~$55 million ~~airport transformation~~road improvement project in ~~Arizona, partially offset by progress on existing~~Alaska, $38 million for rehabilitation, construction improvements and bridge replacement projects in California, a $36 million infrastructure project in Guam, a $15 million restoration project in California, a $13 million resurfacing project in Alaska and ~~fewer awarded contracts~~a $10 million highway median fill project in ~~the Heavy Civil operating group, consistent with our strategy to narrow the footprint of this group.~~ California.

Non-controlling partners’ share of ~~Transportation~~ CAP as of ~~September~~June 30, 2022, December 31, 2021 and June 30, 2021 ~~and September 30, 2020~~ was ~~$184.1~~$165.2 million, ~~$212.1~~$214.3 million and ~~$282.4~~$273.6 million, respectively. ~~Four~~At June 30, 2022, six contracts ~~in our Transportation segment~~ had total forecasted losses with remaining revenue of ~~$252.1~~$178.5 million, or ~~8.7%~~4.2%, of ~~Transportation CAP at~~ ~~September 30, 2021~~.total CAP.

~~Table of Contents~~

~~Water CAP~~

(dollars in thousands)
September 30, 2021 June 30, 2021 September 30, 2020
Unearned revenue
$ 353,731 67.5 % $ 362,713 68.2 % $ 197,554 57.1 %
Other awards
170,375 32.5 169,145 31.8 148,699 42.9
Total
$ 524,106 100.0 % $ 531,858 100.0 % $ 346,253 100.0 %

(dollars in thousands)
September 30, 2021 June 30, 2021 September 30, 2020
California
$ 35,972 6.9 % $ 44,066 8.3 % $ 52,598 15.2 %
Federal
65 — 73 — 494 0.1
Heavy Civil
163,714 31.2 161,632 30.4 24,803 7.2
Northwest
61,731 11.8 61,891 11.6 721 0.2
Water and Mineral Services
262,624 50.1 264,196 49.7 267,637 77.3
Total
$ 524,106 100.0 % $ 531,858 100.0 % $ 346,253 100.0 %

~~Water CAP of $0.5 billion as of September 30, 2021 was $7.8 million, or 1.5%, lower than at June 30, 2021 primarily due to progress on existing projects in the California operating group.~~

~~Specialty CAP~~

(dollars in thousands)
September 30, 2021 June 30, 2021 September 30, 2020
Unearned revenue
$ 874,797 98.3 % $ 1,013,810 99.5 % $ 604,894 97.0 %
Other awards
14,783 1.7 5,508 0.5 18,558 3.0
Total
$ 889,580 100.0 % $ 1,019,318 100.0 % $ 623,452 100.0 %

(dollars in thousands)
September 30, 2021 June 30, 2021 September 30, 2020
California
$ 128,961 14.5 % $ 155,686 15.3 % $ 134,306 21.6 %
Federal
75,827 8.5 102,972 10.1 107,273 17.2
Heavy Civil
124,026 13.9 172,819 17.0 224,427 36.0
Midwest
287,144 32.3 295,446 28.9 106,694 17.1
Northwest
273,622 30.8 292,395 28.7 50,752 8.1
Total
$ 889,580 100.0 % $ 1,019,318 100.0 % $ 623,452 100.0 %

Specialty CAP of $0.9 billion as of September 30, 2021 was $129.7 million, or 12.7%, lower than at June 30, 2021 due to progress on existing projects in all operating groups. Non-controlling partners’ share of Specialty CAP as of September 30, 2021, June 30, 2021 and September 30, 2020 was $46.0 million, $61.5 million and $64.8 million, respectively.

~~Table of Contents~~

Gross Profit

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Transportation	$	58,503		$	54,322		$	153,886		$	110,888
Percent of segment revenue		10.3	%		8.7	%		10.7	%		7.3	%
Water		9,876			12,557			29,005			34,483
Percent of segment revenue		8.1			11.8			8.7			10.8
Specialty		30,858			33,292			72,552			47,853
Construction													$	61,166		$	76,267		$	109,358		$	129,036
Percent of segment revenue		13.2			16.2			12.3			9.3			9.7	%		10.7	%		9.9	%		10.6	%
Materials		20,698			25,826			44,756			44,915			17,314			21,965			18,897			22,908
Percent of segment revenue		15.0			19.9			13.7			16.3			12.7			18.1			9.1			12.7
Total gross profit	$	119,935		$	125,997		$	300,199		$	238,139		$	78,480		$	98,232		$	128,255		$	151,944
Percent of total revenue		11.3	%		11.8	%		11.1	%		9.1	%		10.2	%		11.8	%		9.7	%		10.8	%

~~Transportation~~Construction gross profit for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021 increased~~2022 decreased by ~~$4.2~~$15.1 million and $19.7, or ~~7.7%,~~19.8% and ~~$43.0 million, or 38.8%~~15.3%, respectively, when compared to ~~2020~~2021 primarily due to ~~a decrease~~an increase in the negative net impact from revisions in estimates in our ~~Heavy Civil~~Central operating group ~~Old Risk Portfolio~~ (see Note 4 of ~~“Notes~~"Notes to the ~~Condensed~~ Consolidated Financial ~~Statements”).~~

Water gross profit for the three and nine months ended September 30, 2021 decreased by $2.7 million, or 21.4%, and $5.5 million, or 15.9%, respectively, when compared to 2020. This decrease is primarily due to the increase in the negative net impact from revisions in estimates (see Note 4 of “Notes to the Condensed Consolidated Financial Statements”).

Specialty gross profit for the three and nine months ended September 30, 2021 decreased by $2.4 million, or 7.3%, and increased by $24.7 million, or 51.6%, respectively, when compared to 2020. The year-to-date increase was primarily due to increased revenue from project progression in the Heavy Civil operating group, increased activity in the Water and Mineral Services operating group’s mineral exploration business and a decrease in the negative net impact from revisions in estimates (see Note 4 of “Notes to the Condensed Consolidated Financial Statements”Statements").

Materials gross profit for the three and six months ended ~~September~~June 30, ~~2021~~2022 decreased by ~~$5.0~~$4.7 million and $4.0 million, or ~~19.5%~~21.2% and 17.5%, respectively, when compared to ~~2020 as rising~~2021 primarily due to lower asphalt volumes in California and overall higher fuel ~~and liquid asphalt~~costs. Although we implemented energy surcharges in the second quarter of 2022 to cover increased fuel costs, ~~were not able~~contracts we had in place without energy surcharge clauses or prior to ~~be fully mitigated during~~our surcharge taking effect are still being burned through at the ~~quarter.~~lower sales price.

Table of Contents

Selling, General and Administrative Expenses

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Selling
Salaries and related expenses	$	14,799		$	17,225		$	49,440		$	51,142		$	12,802		$	15,044		$	27,950		$	30,668
Restricted stock unit amortization		225			264			1,251			1,002			213			338			846			991
Other selling expenses		3,154			2,907			5,403			9,478			2,923			(92	)		4,398			974
Total selling		18,178			20,396			56,094			61,622			15,938			15,290			33,194			32,633
General and administrative
Salaries and related expenses		26,002			26,257			83,515			81,171			21,469			21,949			45,614			45,227
Restricted stock unit amortization		795			690			3,126			2,812			1,106			798			2,761			1,863
Other general and administrative expenses		32,628			25,546			84,665			78,523			14,649			20,591			30,094			40,066
Total general and administrative		59,425			52,493			171,306			162,506			37,224			43,338			78,469			87,156
Total selling, general and administrative	$	77,603		$	72,889		$	227,400		$	224,128		$	53,162		$	58,628		$	111,663		$	119,789
Percent of revenue		7.3	%		6.8	%		8.4	%		8.6	%		6.9	%		7.0	%		8.5	%		8.6	%

Selling Expenses

Selling expenses include the costs for estimating and bidding including offsetting customer reimbursements for portions of our selling/bid submission expenses (i.e., stipends), 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 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021 decreased by $2.2 million, or 10.9%, and $5.5 million, or 9.0%, respectively,~~2022 remained relatively unchanged when compared to ~~2020 from reduced estimating and bidding costs, which impacted other selling expenses for the nine months, and salaries and related expenses for both periods.~~2021.

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, incentive compensation, changes in the fair market value of our Non-Qualified Deferred Compensation plan liability and other miscellaneous expenses. Total general and administrative expenses for the three ~~and nine~~ months ended ~~September~~June 30, ~~2021 increased~~2022 decreased by ~~$7.2~~$6.1 million, or ~~13.8%~~14.1%, and ~~$9.1~~for the six months ended June 30, 2022 decreased by $8.7 million, or ~~5.6%~~10.0%, ~~respectively,~~ when compared to ~~2020,~~2021, primarily due to ~~increases~~decreases in the fair market value of our Non-Qualified Deferred Compensation plan liability, which is offset in other ~~general and administrative expenses from increases in incentive compensation as a result of improved financial performance.~~(income) expense, net, through our own company-owned life insurance policy.

~~Table of Contents~~

~~Gain on Sales of Property and Equipment, net~~Other Costs

The following table presents ~~the gain on sales of property and equipment, net~~other costs for the respective periods:

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)
2021 2020 2021 2020
Gain on sales of property and equipment, net
$ (5,159 ) $ (3,057 ) $ (39,349 ) $ (4,870 )

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Other costs	$	20,177	$	5,868	$	28,391	$	80,177

Gain on sales of property and equipment, net for the three and nine months ended September 30, 2021 increased by $2.1 million and $34.5 million, respectively, when compared to 2020. The increase during the nine months was primarily due to the sale of two properties in California as part of our ongoing asset optimization plan. SeeOther costs (see Note 127 of “Notes to the Condensed Consolidated Financial Statements”) for ~~more information.~~the three and six months ended June 30, 2022 increased $14.3 million and decreased $51.8 million when compared to 2021, respectively. The three months ended June 30, 2022 includes an accrual of $12 million for the expected resolution of the SEC investigation. The six months ended June 30, 2021 includes a $66 million legal settlement charge.

Income Taxes

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
(dollars in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Provision for (benefit from) income taxes	$	8,904		$	11,272		$	2,068		$	(5,220	)
Provision for (benefit from) income taxes on continuing operations													$	2,549		$	7,710		$	(2,782	)	$	(14,047	)
Effective tax rate		21.5	%		(12.9	)%		8.3	%		2.9	%		(630.9	%)		22.8	%		12.8	%		27.9	%

We calculate our income tax provision for continuing operations at the end of each interim period by estimating our annual effective tax rate and applying that rate to our ~~income (loss)~~loss before ~~provision for (benefit from)~~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 1517 of “Notes to the Condensed Consolidated Financial Statements” for more information.

~~Certain Legal Proceedings~~Amount Attributable to Non-controlling Interests

~~As discussed~~The following table presents the amount attributable to non-controlling interests in consolidated subsidiaries for the respective periods:

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2022		2021			2022			2021
Amount attributable to non-controlling interests	$	583	$	(1,286	)	$	(2,535	)	$	(2,158	)

The amount attributable to non-controlling interests represents the non-controlling owners’ share of the income or loss of our consolidated construction joint ventures. The amounts for the three and six months ended June 30, 2022 decreased $1.9 million and increased $0.4 million, respectively, primarily due to impacts from revisions in estimates.

Net Income (Loss) from Discontinued Operations

Net income (loss) from discontinued operations for the three and six months ended June 30, 2022 decreased $10.1 million and $1.1 million, respectively, when compared to the same periods in 2021 primarily due to lower gains on sales of property in the current year and removal of Inliner's results due to the sale of Inliner in March 2022. These decreases were partially offset by the gain on sale of Inliner during the six months ended June 30, 2022 as well as ceasing depreciation and amortization on property, plant and equipment, finite-lived intangible assets and right-of-use lease assets in 2022 due to the classification of these assets as held-for-sale beginning December 31, 2021 (see Note 163 of “Notes to the Condensed Consolidated Financial ~~Statements,” under certain circumstances the resolution~~Statements”).

Table 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.

Contents

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, ~~short-term~~ investments, available borrowing capacity and cash generated from operations. We may also from ~~time to time~~time-to-time issue and sell equity, debt or hybrid securities or engage in other capital markets transactions or sell one or more business units, divisions or assets. As of September 30, 2021, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and our marketable securities consisted of U.S. Government and agency obligations. Our credit facility consists of a term loan and a revolving credit facility. Ofassets including the $275.0 million revolving credit facility capacity, $227.9 million was available for borrowing at September 30, 2021. This difference between capacity and amount available for borrowing is due to letters of credit taken out primarily for insurance; see Note 13 of “Notes to the Condensed Consolidated Financial Statements” for further discussion regarding our credit facility.WMS businesses.

Our ~~principal uses of liquidity are~~material cash requirements include 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~~repurchase shares of our common stock or acquire assets or businesses that are complementary to our operations.

We believe our primary sources of liquidity will be sufficient to meet our expected working capital needs, capital expenditures, financial commitments, cash dividend payments and ~~cash equivalents, short-term investments, available borrowing capacity~~other liquidity requirements associated with our existing operations for the next twelve months. We also believe our primary sources of liquidity, access to debt and equity capital markets, proceeds from the sales of the WMS businesses and cash expected to be generated from operations will be sufficient to meet our ~~expected operating~~long-term requirements for the next twelve months from the date of this filing. This includes the payment that was made pursuant to the terms of the settlement agreement to the settlement fund after preliminary approval in October 2021, as discussed in Note 16 of “Notes to the Condensed Consolidated Financial Statements.” Thereand plans. However, 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.

As of June 30, 2022, our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions and marketable securities consisting primarily of U.S. Government and agency obligations and corporate commercial paper.

As of June 30, 2022, we had $19.9 million of receivables and $27.1 million of contract retention receivable from Brightline Trains Florida LLC (“Brightline”) (see Note 8 of “Notes to the Condensed Consolidated Financial Statements”). Brightline is currently experiencing delays in securing additional funding, and as a result, $16.5 million of the receivable balance was past due as of June 30, 2022. We did not deem these balances uncollectible as of June 30, 2022, however we have taken steps to mitigate the risk of non-payment and preserve our rights under our contract with Brightline. We received $6.0 million from Brightline on July 1, 2022, however the timing and probability of future payments is uncertain and if Brightline does not pay the outstanding balances, our liquidity could decrease.

During the six months ended June 30, 2022, we prepaid 100% of our outstanding term loan and replaced the Third Amended and Restated Credit Agreement dated May 31, 2018 with the Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) maturing June 2, 2027. The Credit Agreement is a $350.0 million senior secured, five-year revolving facility (the “Revolver”). As of June 30, 2022, the total unused availability under the Credit Agreement was $267.1 million, resulting from $32.9 million in issued and outstanding letters of credit and $50.0 million drawn under the Revolver. See Note 15 of “Notes to the Condensed Consolidated Financial Statements” for further discussion regarding the Revolver.

In evaluating our liquidity position and needs, we also consider cash and cash equivalents held by our consolidated construction joint ventures (“CCJVs”). The following table presents our cash, cash equivalents and marketable securities, including amounts from our CCJVs, for continuing operations as of the respective dates:

(in thousands)	September 30, 2021		December 31, 2020		September 30, 2020		June 30, 2022		December 31, 2021		June 30, 2021
Cash and cash equivalents excluding CCJVs	$	344,438	$	361,317	$	295,437	$	97,079	$	302,864	$	269,766
CCJV cash and cash equivalents (1)		119,611		74,819		92,587		77,943		92,783		107,854
Total consolidated cash and cash equivalents		464,049		436,136		388,024		175,022		395,647		377,620
Short-term and long-term marketable securities (2)		10,600		5,200		5,700		66,675		15,600		10,850
Total cash, cash equivalents and marketable securities	$	474,649	$	441,336	$	393,724	$	241,697	$	411,247	$	388,470

(1) The volume and stage of completion of contracts from our CCJVs may cause fluctuations in joint venture cash and cash equivalents between periods. 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.
(2) All marketable securities were classified as held-to-maturity and consisted of U.S. and agency obligations and corporate commercial paper as of all periods presented.

Granite’s portion of CCJV cash and cash equivalents was ~~$69.2~~$45.8 million, ~~$42.6~~$54.4 million and ~~$53.4~~$62.3 million as of ~~September~~June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and ~~September~~June 30, ~~2020,~~2021, respectively. Excluded from the table above is:

	•	$45.1 million, $56.5 million and $47.5 million as of June 30, 2022, December 31, 2021 and June 30, 2021, respectively, in Granite’s portion of unconsolidated construction joint venture cash and cash equivalents
	•	$8.6 million, $16.5 million and $15.6 million as of June 30, 2022, December 31, 2021 and June 30, 2021, respectively, that is included in current assets held-for-sale

Capital Expenditures

During the six months ended June 30, 2022, we had capital expenditures of $ 73.2 million, including $ 5.6 million related to discontinued operations, compared t o $46.4 million, including $ 7.8 million related to discontinued operations during the six months ended June 30, 2021. The increase year over year is ~~Granite’s portion~~primarily due to earlier procurement of ~~unconsolidated~~equipment due to supply chain disruptions and acquisition of material reserves in 2022. Major capital expenditures are typically for aggregate and asphalt production facilities, aggregate reserves, construction ~~joint venture cash~~equipment, buildings and ~~cash equivalents~~leasehold improvements and investments in our information technology systems. The timing and amount of ~~$48.0 million, $58.9~~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. We currently anticipate 2022 capital expenditures for continuing operations to be between approximately $100 million and ~~$66.2 million as of September 30, 2021, December 31, 2020 and September 30, 2020, respectively.~~

$115 million.

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Cash Flows

	Nine Months Ended September 30,						Six months ended June 30,
(in thousands)	2021			2020			2022			2021
Net cash provided by (used in):
Operating activities	$	59,922		$	138,666		$	(103,278	)	$	(31,004	)
Investing activities		(17,381	)		(41,901	)	$	30,317		$	1,661
Financing activities		(14,628	)		24,663		$	(157,055	)	$	(13,612	)

Operating ~~activities~~activities.

As a large infrastructure contractor and construction materials producer, our revenue, gross profit and the resulting operating cash flows can differ significantly from period to period due to a variety of factors, including ~~seasonal cycles, our projects’ progressions~~project progression toward completion, outstanding contract change orders and affirmative claims, and the payment terms of our contracts. 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 claim and back charge 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. While we typically invoice our customers on a monthly basis, our contracts frequently provide for retention that is a specified percentage withheld from each payment by our customers until the contract is completed and the work accepted by the ~~customer which can cause fluctuations in operating cash flows.~~customer.

Cash ~~provided by~~used in operating activities of $ ~~59.9~~103.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 represents a $ ~~78.7~~72.3 million ~~decrease~~increase in cash used when compared to ~~cash provided by operating activities in~~ the same period of ~~2020.~~2021. The ~~decrease~~change was primarily ~~due~~attributable to ~~a $ 54.7 million decrease (including~~ the $66.0 million in net securities litigation settlement charges) in cash provided by net income after adjusting for non-cash items, a $ 71.4 million increase (excluding the $66.0 million net increase intiming of receipts and payments of working capital, ~~related to the securities litigation settlement) in cash~~which includes receivables, net contract assets, inventories, other assets, accounts payable and accrued expenses and other liabilities. Cash used in working capital increased by $70.6 million. Cash used in operating activities also increased $15.2 million due to a decrease in net income (loss), net of adjustments for non-cash items and ~~an $ 18.6~~the changes related to the accrual for the expected resolution of the SEC investigation and the litigation settlement described in Note 18. These increases in net cash used were partially offset by a $13.5 million ~~increase~~decrease in contributions, net of distributions, to unconsolidated joint ventures and affiliates. ~~The decrease in cash used in working capital was primarily due to increases to contract assets, net, partially offset by a decrease in cash used by accounts payable from payment timing differences.~~

Related to the ~~securities~~ litigation ~~settlement~~,settlements discussed in Note 1618 of “Notes to the Condensed Consolidated Financial Statements,” we have separately presented the ~~$129.0~~$129 million liability and the associated ~~$63.0~~$63 million insurance receivable in the condensed consolidated statement of cash ~~flows.~~flows for the six months ended June 30, 2021. The insurance receivable was collected and the liability was paid ~~and~~to the ~~receivable was collected~~Court in October 2021; therefore, the impact on operating cash flow ~~will occur~~occurred in the fourth quarter of 2021 and there was no impact during the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021.

Investing activities

Cash ~~used in~~provided by investing activities of ~~$17.4~~$30.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 represents a ~~$24.5~~$28.7 million ~~decrease from cash used in investing activities~~increase when compared to 2021. The change was primarily due to proceeds from the ~~same period~~sale of ~~2020 primarily from~~the Inliner business, partially offset by purchases of marketable securities and property and equipment and a decrease in proceeds from ~~maturities~~sales of property and ~~proceeds from called, marketable securities, partially offset by proceeds from the sale of two properties in California.~~equipment.

Financing activities

Cash used in financing activities of ~~$14.6~~$157.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 represents a ~~$39.3~~$143.4 million ~~decrease~~increase when compared to ~~cash provided by financing activities in the same period of 2020~~2021. The change was primarily due to ~~a draw on~~the prepayment of our ~~revolver~~term loan of ~~$50~~$124.7 million ~~in the prior year,~~and repurchases of common stock (inclusive of our accelerated share repurchase) of $70.4 million, partially offset by ~~an increase~~$50.0 million drawn on our Revolver. The net debt paydown was undertaken at the time the Credit Agreement was entered (see Note 15 to “Notes to the Condensed Consolidated Financial Statements” for further information), to bring our cash balance in ~~contributions from non-controlling partners, net of distributions.~~

~~Capital Expenditures~~

~~During the nine months ended September 30, 2021, we had capital expenditures of $73.0 million compared to $74.9 mi~~llion during 2020. 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. We currently anticipate 2021 capital expenditures to be approximately $100 millionline with projected cash needs for the ~~full year.~~second half of 2022.

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Derivatives

We recognize ~~interest rate and commodity swap~~ derivative instruments as either assets or liabilities in the condensed consolidated balance sheets at fair value using Level 2 ~~inputs in the condensed consolidated balance sheets.~~inputs. See Note 910 to “Notes to the Condensed Consolidated Financial Statements” for further information. The hedge option and warrant derivative transactions related to the 2.75% Convertible Notes were recorded to equity on our condensed consolidated balance sheets based on the cash proceeds.

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 ~~September~~June 30, ~~2021,~~2022, approximately ~~$2.6~~$2.5 billion of our $4.2 billion CAP 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 investments in 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. Our unconsolidated investments in our foreign affiliates are subject to local bank debt primarily for equipment purchases and working capital. This debt is non-recourse to Granite, but it is recourse to the affiliates. The debt associated with our unconsolidated non-construction entities is included in Note 1112 of “Notes to the Condensed Consolidated Financial Statements.”

Covenants and Events of Default

Our Credit Agreement requires us to comply with various affirmative, restrictive and financial covenants, including the financial covenants described below. Our failure to comply with these covenants would constitute an event of default under the Credit Agreement. Additionally, ~~our~~the 2.75% Convertible Notes are governed by the terms and conditions of the indenture. Our failure to pay principal, interest or other amounts when due or within the relevant grace period on our 2.75% Convertible Notes or our Credit Agreement would constitute an event of default under the ~~indenture governing our~~ 2.75% Convertible Notes indenture or the Credit Agreement. A default under our Credit Agreement could result in (i) us no longer being entitled to borrow under such facility; (ii) termination of such facility; (iii) the requirement that any letters of credit under such facility be cash collateralized; (iv) acceleration of amounts owed under the Credit Agreement; and/or (v) foreclosure on any lien securing the obligations under such facility. A default under the ~~indenture governing our~~ 2.75% Convertible Notes indenture could result in acceleration of the maturity of the notes.

The most significant financial covenants under the terms of our Credit Agreement require the maintenance of a minimum Consolidated Interest Coverage Ratio and a maximum Consolidated Leverage Ratio. As of ~~September~~June 30, ~~2021,~~2022, the Consolidated Leverage Ratio was ~~1.73,~~2.57, which did not exceed the maximum of ~~3.00.~~3.25. Our Consolidated Interest Coverage Ratio was ~~8.52,~~6.53, which ~~exceeded~~was above the minimum of ~~4.00.~~3.00.

Share Repurchase Program

As announced on ~~April 29, 2016,~~February 3, 2022, on ~~April 7, 2016,~~February 1, 2022, the Board of Directors authorized us to ~~repurchase~~purchase up to ~~$200.0~~$300.0 million of our common stock at management’s ~~discretion. As part~~discretion (the “2022 authorization”).

On May 2, 2022, we entered into an accelerated share repurchase transaction with Bank of ~~this authorization, we have established a plan~~Montreal. We paid $50.0 million to ~~facilitate~~the bank and received 80% of the notional amount, or $40.0 million, in shares using the closing price on the trade date. This equated to approximately 1.32 million shares, which were immediately retired. The final number of shares to be repurchased under the accelerated share repurchase will be based on the average of the daily volume-weighted average price of Granite’s common stock, ~~repurchases. As of September 30, 2021, $157.2 million~~less a discount, during the term of the ~~authorization remained available. The specific timing and amount~~accelerated share repurchase; final settlement is expected to occur in the third quarter of ~~any future repurchases will vary based on market conditions, securities law limitations and other factors.~~2022.

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~~any 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.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in our exposure to market risk from what was previously disclosed in our ~~2020~~ Annual ~~Report on Form 10-K.~~Report.

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Item 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~Based on their evaluation~~Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) orand 15d-15(e) ofunder the ~~Exchange Act) as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 of the~~Securities Exchange Act of 1934 (the “Exchange Act”)) as of June 30, 2022. Based on that evaluation, our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer have~~Chief Financial Officer concluded that, as of June 30, 2022, our disclosure controls and procedures were ~~not~~ effective ~~as of~~to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the ~~end of~~Exchange Act is recorded, processed, summarized and reported within the period covered by this report due to material weaknesses previously disclosed in our 2020 Annual Report on Form 10-K (the “material weaknesses”). In light of the material weaknesses in our internal control over financial reporting, we performed additional analysis and other procedures to validate that our financial information contained in this Form 10-Q was prepared in accordance with accounting principles generally acceptedtime periods specified in the ~~United States of America (“U.S. GAAP”). Following such additional analysis~~SEC rules and ~~procedures,~~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 ~~principal executive officer~~Chief Executive Officer and principal financial officer, has concluded that our financial statements state fairly, in all material respects, our financial position, results of our operations and our cash flows for the periods presented in this Form 10-Q, in conformity with U.S. GAAP.

~~Remediation Plan and Status~~

As disclosed in our 2020 Annual Report on Form 10-K, Company management, with the assistance of outside consultants, began reviewing and revising our internal control over financial reporting in 2020 in responseChief Financial Officer, as appropriate to the material weaknesses identified in connection with the Audit/Compliance Committee’s independent Investigation. Management has evaluated the impact of the material weaknesses and has developed and implemented a plan to remediate the control deficiencies that contributed to the material weaknesses. To date, we have taken the following actions to remediate the material weaknesses:

	●	we implemented oversight, training and communication programs to reinforce: (1) our ethical standards and Code of Conduct across the Company, which emphasized, among other things, the purpose and availability of the anonymous whistleblower hotline, (2) the responsibilities and obligations of public company officers, (3) our cost forecasting processes and policies, including proper and contemporaneous documentation to support cost forecast adjustments, (4) the principles and requirements of each cost forecasting control and (5) reporting communication protocols for internal audit reports;
	●	~~we implemented additional internal controls related to cost forecasts including reviews from individuals who are independent of the operating group; and~~
	●	we took appropriate personnel actions, including separations, dismissals and changes in leadership and/or responsibilities and implemented other organizational changes, including changes in reporting structures.

We will continue to execute and monitor these programs, processes and controls that were implemented as part of our remediation plan. However, the material weaknesses described in our 2020 Annual Report on Form 10-K will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Additionally, we may take additional measures to address the control deficiencies or modify the remediation plan described above.allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

~~Except for the changes implemented as part of our remediation plan discussed above, there~~There were no changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting during the quarter ended September 30, 2021.~~ reporting.

PART II. OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS

The description of the matters set forth in Part I, Item I of this Report under Note 1618 of “Notes to the Condensed Consolidated Financial Statements” is incorporated herein by reference.

Item 1A.

RISK FACTORS

There have been no material changes in the risk factors previously disclosed in “Item 1A. Risk Factors” in our ~~2020~~ Annual ~~Report on Form 10-K.~~Report.

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 ~~September~~June 30, ~~2021:~~2022:

Period

Total number of shares purchased (1)

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 programs (2)

July 1, 2021 through July 31, 2021
931 $ 37.45 34,867 $ 157,165,044
August 1, 2021 through August 31, 2021
223 $ 40.55 9,042 $ 157,165,044
September 1, 2021 through September 30, 2021
1,529 $ 40.38 61,740 $ 157,165,044
2,683 $ 39.38 105,649

Period	Total number of shares purchased (1)	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 programs (2)
April 1, 2022 through April 30, 2022	203	$31.51	—	$281,535,405
May 1, 2022 through May 31, 2022	1,320,568	$30.29	1,320,568	$241,535,405
June 1, 2022 through June 30, 2022	4,935	$32.11	—	$241,535,405
	1,325,706	$30.30	1,320,568

(1) ~~On June 2, 2021, the Company’s stockholders approved the 2021 Equity Incentive Plan, which replaced the Amended~~Includes 203 and ~~Restated 2012 Equity Incentive Plan. The number of~~4,935 shares purchased isduring April and June, respectively, in connection with employee tax withholding for restricted stock units vested under our ~~2012 and 2021 Equity Incentive Plans.~~equity incentive plans.
(2) As announced on ~~April 29, 2016,~~February 3, 2022, on ~~April 7, 2016,~~February 1, 2022, the Board of Directors authorized us to ~~repurchase~~purchase up to ~~$200.0~~$300.0 million of our common stock at management’s ~~discretion. As part of this authorization~~discretion (the “2022 authorization”). In May 2022, we ~~have established a share repurchase program to facilitate common stock repurchases. We did not purchase~~purchased approximately 1.32 million shares under the 2022 authorization in the accelerated share ~~repurchase plan in any~~repurchase. As of June 30, 2022, $241.5 million of the ~~periods presented.~~2022 authorization remained available; however, approximately $10 million of this amount is restricted for the accelerated share repurchase. The specific timing and amount of any future ~~repurchases~~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.

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Item 6.

EXHIBITS

10.1	*	Fourth Amended and Restated Credit Agreement, dated June 2, 2022, by and among Granite Construction Incorporated, Granite Construction Company, GILC Incorporated, Bank of America, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and L/C Issuer, and the lenders and other parties thereto [Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 6, 2022].
10.2	*	Fourth Amended and Restated Guaranty Agreement, dated June 2, 2022, by and among Granite Construction Incorporated, the guarantors party thereto and Bank of America, N.A., as Administrative Agent [Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 6, 2022].
31.1	†	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	†	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	††	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
95	†	Mine Safety Disclosure
101.INS	†	Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document)
101.SCH	†	Inline XBRL Taxonomy Extension Schema
101.CAL	†	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	†	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	†	Inline XBRL Taxonomy Extension Label Linkbase
101.PRE	†	Inline XBRL Taxonomy Extension Presentation Linkbase
104	†	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		*		Incorporated by reference
		†		Filed herewith
		††		Furnished herewith

~~SIGNATURE~~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:	~~October~~July 28, ~~2021~~2022	By:	/s/ Elizabeth L. Curtis
			Elizabeth L. Curtis
			Executive Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

3129

☐	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

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	GVA	New York Stock Exchange

PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2021,~~2022, December 31, ~~2020~~2021 and ~~September~~June 30, ~~2020~~2021
		Condensed Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021
		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021
		Condensed Consolidated Statements of Shareholders’ Equity for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021
		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021
		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

	*September 30, 2021*			*December 31, 2020*			*September 30, 2020*			*June 30, 2022*		*December 31, 2021*			*June 30, 2021*
ASSETS
Current assets
Cash and cash equivalents ($119,611, $74,819 and $92,587 related to consolidated construction joint ventures (“CCJVs”))	$	464,049		$	436,136		$	388,024
Receivables, net ($42,530, $56,147 and $32,028 related to CCJVs)		684,822			540,812			661,948
Contract assets ($42,792, $33,838 and $27,528 related to CCJVs)		204,046			164,939			159,939
Cash and cash equivalents ($77,943, $92,783 and $107,854 related to consolidated construction joint ventures (“CCJVs”))										$	175,022	$	395,647		$	377,620
Short-term marketable securities											45,000		0			0
Receivables, net ($69,347, $49,534 and $49,408 related to CCJVs)											527,277		464,588			543,914
Contract assets ($70,453, $50,054 and $41,815 related to CCJVs)											190,187		145,437			154,542
Inventories		77,412			82,362			102,111			78,634		61,965			66,584
Equity in construction joint ventures		195,354			188,798			184,980			187,028		189,911			195,430
Other current assets ($9,954, $13,252 and $13,634 related to CCJVs)		39,749			42,199			48,300
Other current assets ($6,056, $8,091 and $12,142 related to CCJVs)											167,349		177,210			44,076
Current assets held-for-sale											222,779		392,641			184,267
Total current assets		1,665,432			1,455,246			1,545,302			1,593,276		1,827,399			1,566,433
Property and equipment, net ($17,534, $23,704 and $25,765 related to CCJVs)		510,658			527,016			536,256
Property and equipment, net ($13,596, $14,920 and $20,206 related to CCJVs)											464,593		433,504			432,896
Long-term marketable securities		10,600			5,200			5,700			21,675		15,600			10,850
Investments in affiliates		72,415			75,287			76,464			23,203		23,368			25,317
Goodwill		116,788			116,777			116,691			53,715		53,715			53,715
Right of use assets		58,226			62,256			68,276			45,404		49,312			47,181
Deferred income taxes, net		41,228			41,839			39,439			25,458		24,141			42,230
Other noncurrent assets		86,409			96,375			100,145			64,008		67,888			70,148
Noncurrent assets held-for-sale											—		0			230,128
Total assets	$	2,561,756		$	2,379,996		$	2,488,273		$	2,291,332	$	2,494,927		$	2,478,898

LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	8,718		$	8,278		$	8,253		$	1,429	$	8,727		$	8,709
Accounts payable ($62,547, $53,033 and $50,503 related to CCJVs)		397,152			359,160			385,259
Contract liabilities ($56,914, $79,777 and $73,426 related to CCJVs)		195,267			171,321			189,430
Accrued expenses and other current liabilities ($5,238, $4,410 and $4,553 related to CCJVs)		499,214			404,497			391,651
Accounts payable ($63,541, $55,012 and $62,117 related to CCJVs)											331,728		324,313			334,158
Contract liabilities ($61,868, $69,328 and $66,193 related to CCJVs)											179,322		200,041			166,415
Accrued expenses and other current liabilities ($8,025, $5,514 and $5,186 related to CCJVs)											435,061		452,829			459,517
Current liabilities held-for-sale											46,706		83,408			79,487
Total current liabilities		1,100,351			943,256			974,593			994,246		1,069,318			1,048,286
Long-term debt		331,192			330,522			405,644			286,801		331,191			331,222
Long-term lease liabilities		39,908			46,769			51,879			31,182		32,928			33,577
Deferred income taxes, net		3,168			3,155			3,417
Other long-term liabilities		64,783			64,684			63,741			61,868		65,927			66,995
Commitments and contingencies (see Note 16)
Long-term liabilities held-for-sale											—		0			10,576
Commitments and contingencies (see Note 18)
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: 45,826,409 shares as of September 30, 2021, 45,668,541 shares as of December 31, 2020 and 45,655,682 shares as of September 30, 2020		458			457			457
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: 44,078,469 shares as of June 30, 2022, 45,840,260 shares as of December 31, 2021 and 45,818,719 shares as of June 30, 2021											441		458			458
Additional paid-in capital		558,121			555,407			554,303			467,159		559,752			556,615
Accumulated other comprehensive loss		(3,468	)		(5,035	)		(6,000	)
Accumulated other comprehensive income (loss)											2,388		(3,359	)		(2,750	)
Retained earnings		430,074			424,835			422,846			413,931		410,831			401,061
Total Granite Construction Incorporated shareholders’ equity		985,185			975,664			971,606			883,919		967,682			955,384
Non-controlling interests		37,169			15,946			17,393			33,316		27,881			32,858
Total equity		1,022,354			991,610			988,999			917,235		995,563			988,242
Total liabilities and equity	$	2,561,756		$	2,379,996		$	2,488,273		$	2,291,332	$	2,494,927		$	2,478,898

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

	For the quarterly period ended ~~September~~June 30, ~~2021~~2022

Class		Outstanding
Common stock, $0.01 par value		~~45,826,735~~44,084,843

	*Three Months Ended September 30,*						*Nine Months Ended September 30,*							*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2021*			*2020*			*2021*			*2020*			*2022*			*2021*			*2022*			*2021*
Revenue
Transportation	$	568,186		$	623,999		$	1,444,450		$	1,510,001
Water		121,968			106,599			335,153			317,980
Specialty		234,300			205,134			590,245			513,087
Construction													$	632,260		$	713,425		$	1,107,195		$	1,220,396
Materials		137,675			129,457			326,366			275,819			136,026			121,246			208,677			180,607
Total revenue		1,062,129			1,065,189			2,696,214			2,616,887			768,286			834,671			1,315,872			1,401,003
Cost of revenue
Transportation		509,683			569,677			1,290,564			1,399,113
Water		112,092			94,042			306,148			283,497
Specialty		203,442			171,842			517,693			465,234
Construction														571,094			637,158			997,837			1,091,360
Materials		116,977			103,631			281,610			230,904			118,712			99,281			189,780			157,699
Total cost of revenue		942,194			939,192			2,396,015			2,378,748			689,806			736,439			1,187,617			1,249,059
Gross profit		119,935			125,997			300,199			238,139			78,480			98,232			128,255			151,944
Selling, general and administrative expenses		77,603			72,889			227,400			224,128			53,162			58,628			111,663			119,789
Non-cash impairment charges (see Note 3)		0			132,277			0			156,690
Other costs (see Note 3)		3,759			9,689			85,547			28,513
Gain on sales of property and equipment, net (see Note 12)		(5,159	)		(3,057	)		(39,349	)		(4,870	)
Other costs (see Note 7)														20,177			5,868			28,391			80,177
Gain on sales of property and equipment, net														(385	)		(1,052	)		(717	)		(3,297	)
Operating income (loss)		43,732			(85,801	)		26,601			(166,322	)		5,526			34,788			(11,082	)		(44,725	)
Other (income) expense
Interest income		(293	)		(755	)		(737	)		(2,813	)		(782	)		(162	)		(1,405	)		(395	)
Interest expense		5,131			6,359			16,019			17,902			3,896			5,502			7,471			10,874
Equity in income of affiliates, net		(2,539	)		(2,353	)		(10,578	)		(4,415	)		(541	)		(2,607	)		(235	)		(2,875	)
Other expense (income), net		106			(1,967	)		(3,018	)		92
Other (income) expense, net														3,357			(1,800	)		4,739			(2,026	)
Total other expense, net		2,405			1,284			1,686			10,766			5,930			933			10,570			5,578
Income (loss) before provision for (benefit from) income taxes		41,327			(87,085	)		24,915			(177,088	)
Provision for (benefit from) income taxes		8,904			11,272			2,068			(5,220	)
Income (loss) from continuing operations before income taxes														(404	)		33,855			(21,652	)		(50,303	)
Provision for (benefit from) income taxes on continuing operations														2,549			7,710			(2,782	)		(14,047	)
Net income (loss) from continuing operations														(2,953	)		26,145			(18,870	)		(36,256	)
Net income from discontinued operations														19,521			29,602			25,617			26,680
Net income (loss)		32,423			(98,357	)		22,847			(171,868	)		16,568			55,747			6,747			(9,576	)
Amount attributable to non-controlling interests		2,620			7,195			462			18,741
Amount attributable to non-controlling interests from continuing operations														583	��		(1,286	)		(2,535	)		(2,158	)
Net income (loss) attributable to Granite Construction Incorporated from continuing operations														(2,370	)		24,859			(21,405	)		(38,414	)
Net income attributable to Granite Construction Incorporated from discontinued operations														19,521			29,602			25,617			26,680
Net income (loss) attributable to Granite Construction Incorporated	$	35,043		$	(91,162	)	$	23,309		$	(153,127	)	$	17,151		$	54,461		$	4,212		$	(11,734	)

Net income (loss) per share attributable to common shareholders (see Note 14)
Net income (loss) per share attributable to common shareholders (see Note 16):
Basic continuing operations per share													$	(0.05	)	$	0.54		$	(0.47	)	$	(0.84	)
Basic discontinued operations per share														0.44			0.65			0.57			0.58
Basic earnings (loss) per share													$	0.39		$	1.19		$	0.10		$	(0.26	)

Diluted continuing operations per share													$	(0.05	)	$	0.52		$	(0.47	)	$	(0.84	)
Diluted discontinued operations per share														0.44			0.62			0.57			0.58
Diluted earnings (loss) per share													$	0.39		$	1.14		$	0.10		$	(0.26	)

Weighted average shares outstanding:
Basic	$	0.76		$	(2.00	)	$	0.51		$	(3.36	)		44,534			45,798			45,128			45,748
Diluted	$	0.73		$	(2.00	)	$	0.49		$	(3.36	)		44,534			47,798			45,128			45,748
Weighted average shares of common stock
Basic		45,821			45,654			45,773			45,598
Diluted		47,906			45,654			47,522			45,598

	*Outstanding Shares*			*Common Stock*			*Additional Paid-In Capital*			*Accumulated Other Comprehensive (Loss) Income*			*Retained Earnings*			*Total Granite Shareholders’ Equity*			*Non-controlling Interests*			*Total Equity*
Balances at June 30, 2021	45,818,719		$	458		$	556,615		$	(2,750	)	$	401,061		$	955,384		$	32,858		$	988,242
Net income (loss)	—			0			0			0			35,043			35,043			(2,620	)		32,423
Other comprehensive loss	—			0			0			(717	)		0			(717	)		0			(717	)
Purchases of common stock (1)	(2,683	)		0			(105	)		0			0			(105	)		0			(105	)
Restricted stock units (“RSUs”) vested	10,399			0			0			0			0			0			0			0
Dividends on common stock ($0.13 per share)	—			0			0			0			(5,958	)		(5,958	)		0			(5,958	)
Transactions with non-controlling interests	—			0			0			0			0			0			6,931			6,931
Amortized RSUs and other	(26	)		0			1,611			(1	)		(72	)		1,538			0			1,538
Balances at September 30, 2021	45,826,409		$	458		$	558,121		$	(3,468	)	$	430,074		$	985,185		$	37,169		$	1,022,354

Balances at June 30, 2020	45,651,914		$	458		$	553,038		$	(5,800	)	$	520,025		$	1,067,721		$	23,039		$	1,090,760
Net loss	—			0			0			0			(91,162	)		(91,162	)		(7,195	)		(98,357	)
Other comprehensive loss	—			0			0			(202	)		0			(202	)		0			(202	)
Purchases of common stock (1)	(1,352	)		0			(25	)		0			0			(25	)		0			(25	)
RSUs vested	5,133			0			0			0			0			0			0			0
Dividends on common stock ($0.13 per share)	—			0			0			0			(5,935	)		(5,935	)		0			(5,935	)
Transactions with non-controlling interests	—			0			0			0			0			0			1,549			1,549
Amortized RSUs and other	(13	)		(1	)		1,290			2			(82	)		1,209			0			1,209
Balances at September 30, 2020	45,655,682		$	457		$	554,303		$	(6,000	)	$	422,846		$	971,606		$	17,393		$	988,999

Balances at December 31, 2020	45,668,541		$	457		$	555,407		$	(5,035	)	$	424,835		$	975,664		$	15,946		$	991,610
Net income (loss)	—			0			0			0			23,309			23,309			(462	)		22,847
Other comprehensive income	—			0			0			1,566			0			1,566			0			1,566
Purchases of common stock (1)	(65,283	)		(1	)		(2,602	)		0			0			(2,603	)		0			(2,603	)
RSUs vested	223,966			2			(2	)		0			0			0			0			0
Dividends on common stock ($0.13 per share)	—			0			0			0			(17,867	)		(17,867	)		0			(17,867	)
Transactions with non-controlling interests	—			0			0			0			0			0			21,685			21,685
Amortized RSUs and other	(815	)		0			5,318			1			(203	)		5,116			0			5,116
Balances at September 30, 2021	45,826,409		$	458		$	558,121		$	(3,468	)	$	430,074		$	985,185		$	37,169		$	1,022,354

Balances at December 31, 2019	45,503,805		$	456		$	549,307		$	(2,645	)	$	594,353		$	1,141,471		$	36,945		$	1,178,416
Net loss	—			0			0			0			(153,127	)		(153,127	)		(18,741	)		(171,868	)
Other comprehensive loss	—			0			0			(3,357	)		0			(3,357	)		0			(3,357	)
Purchases of common stock (1)	(55,273	)		(1	)		(750	)		0			0			(751	)		0			(751	)
RSUs vested	173,493			2			0			0			0			2			0			2
Dividends on common stock ($0.13 per share)	—			0			0			0			(17,797	)		(17,797	)		0			(17,797	)
Effect of adopting Topic 326	—			0			0			0			(366	)		(366	)		0			(366	)
Transactions with non-controlling interests	—			0			0			0			0			0			(810	)		(810	)
Amortized RSUs and other	33,657			0			5,746			2			(217	)		5,531			(1	)		5,530
Balances at September 30, 2020	45,655,682		$	457		$	554,303		$	(6,000	)	$	422,846		$	971,606		$	17,393		$	988,999

	*For the three months ended June 30,*						*For the six months ended June 30,*
	*2022*			*2021*			*2022*			*2021*
Revenue	$	85,554		$	129,501		$	188,516		$	233,082
Cost of revenue		70,386			110,787			159,113			204,762
Gross profit		15,168			18,714			29,403			28,320
Selling, general and administrative expenses		6,960			15,440			18,580			30,008
Other costs		(3,565	)		85			(2,223	)		1,611
Gain on sale of discontinued operations		0			0			(6,234	)		0
Gain on sales of property and equipment, net (1), (2)		(8,530	)		(30,583	)		(8,796	)		(30,893	)
Operating income		20,303			33,772			28,076			27,594
Other income, net		(4,426	)		(3,739	)		(6,034	)		(6,297	)
Income from discontinued operations before income taxes		24,729			37,511			34,110			33,891
Provision for income taxes		5,208			7,909			8,493			7,211
Net income from discontinued operations	$	19,521		$	29,602		$	25,617		$	26,680

2021	*Transportation*		*Water*		*Specialty*		*Materials*		*Total*
California	$	191,146	$	8,531	$	56,364	$	76,029	$	332,070
Federal		4,442		9		29,347		0		33,798
Heavy Civil		138,201		7,799		34,424		0		180,424
Midwest		34,767		0		25,608		0		60,375
Northwest		199,630		2,124		61,030		56,403		319,187
Water and Mineral Services		0		103,505		27,527		5,243		136,275
Total	$	568,186	$	121,968	$	234,300	$	137,675	$	1,062,129

(in thousands)		*June 30, 2022*		*December 31, 2021*		*June 30, 2021*
Billings in excess of costs and estimated earnings, net of retention	$	159,541	$	169,542	$	139,327
Provisions for losses		19,781		30,499		27,088
Total contract liabilities	$	179,322	$	200,041	$	166,415

	*Fair Value Measurement at Reporting Date Using*
September 30, 2021	*Level 1*		*Level 2*		*Level 3*		*Total*
Cash equivalents
Money market funds	$	61,231	$	0	$	0	$	61,231
Other noncurrent assets
Restricted cash		1,512		0		0		1,512
Total assets	$	62,743	$	0	$	0	$	62,743
Accrued and other current liabilities
Interest rate swap	$	0	$	5,001	$	0	$	5,001
Total liabilities	$	0	$	5,001	$	0	$	5,001

	*Three Months Ended September 30,*					*Nine Months Ended September 30,*
(in thousands, except per share amounts)	*2021*		*2020*			*2021*		*2020*
*Numerator (basic and diluted)*
Net income (loss) allocated to common shareholders for basic calculation	$	35,043	$	(91,162	)	$	23,309	$	(153,127	)
*Denominator*
Weighted average common shares outstanding, basic		45,821		45,654			45,773		45,598
Dilutive effect of RSUs (1)		563		0			523		0
Dilutive effect of 2.75% Convertible Notes (2)		1,522		0			1,226		0
Weighted average common shares outstanding, diluted		47,906		45,654			47,522		45,598
Net income (loss) per share, basic	$	0.76	$	(2.00	)	$	0.51	$	(3.36	)
Net income (loss) per share, diluted	$	0.73	$	(2.00	)	$	0.49	$	(3.36	)

Basic:
Net income (loss) from continuing operations per share	$	(0.05	)	$	0.54	$	(0.47	)	$	(0.84	)
Net income from discontinued operations per share		0.44			0.65		0.57			0.58
Net income (loss) per share	$	0.39		$	1.19	$	0.10		$	(0.26	)

Diluted:
Net income (loss) from continuing operations per share	$	(0.05	)	$	0.52	$	(0.47	)	$	(0.84	)
Net income from discontinued operations per share		0.44			0.62		0.57			0.58
Net income (loss) per share	$	0.39		$	1.14	$	0.10		$	(0.26	)

(in thousands)		*September 30, 2021*		*December 31, 2020*		*September 30, 2020*	*June 30, 2022*		*December 31, 2021*		*June 30, 2021*
Contracts completed and in progress:
Billed	$	278,313	$	293,376	$	355,293	$	221,084	$	236,053	$	187,188
Unbilled		217,534		148,159		167,311		160,336		126,371		189,332
Total contracts completed and in progress		495,847		441,535		522,604		381,420		362,424		376,520
Material sales		80,357		49,991		70,918
Materials sales								75,634		43,746		64,017
Other		110,302		52,736		71,691		71,352		59,496		104,756
Total gross receivables		686,506		544,262		665,213		528,406		465,666		545,293
Less: allowance for credit losses		1,684		3,450		3,265		1,129		1,078		1,379
Total net receivables	$	684,822	$	540,812	$	661,948	$	527,277	$	464,588	$	543,914