On August 9, 2024, we completed the acquisition of Dickerson & Bowen, Inc. ("D&B") for $125.5 million in cash, subject to customary closing adjustments. D&B is an aggregates, asphalt and highway construction company serving central and southern Mississippi which expands our footprint in that region. D&B’s customers are in both the public and private sectors. We have accounted for this transaction in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations (“ASC 805”).

D&B's results have been included in the Construction and Materials segments since the acquisition date. Revenue and gross profit attributable to D&B for the year ended December 31, 2024 were $37.8 million and $9.5 million, respectively.

The unaudited pro forma financial information in the table below summarizes the combined results of operations of Granite and D&B as though the companies had been combined as of January 1, 2023. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2023, nor does it intend to be a projection of future results.


Years Ended December 31,	2024		2023
(unaudited, in thousands, except per share amounts)
Revenue	$	4,062,791	$	3,614,443
Net income attributable to Granite Construction Incorporated	$	134,470	$	41,119
Basic net income per share attributable to common shareholders	$	3.07	$	0.94
Diluted net income per share attributable to common shareholders	$	2.56	$	0.78

These amounts have been calculated after applying Granite’s accounting policies and adjusting the results of D&B to reflect the additional depreciation and amortization that would have been recorded assuming the fair value adjustments to property and equipment and intangible assets had been applied starting on January 1, 2023. Acquisition and integration expenses related to D&B that were incurred during the year ended December 31, 2024 are reflected in the year ended December 31, 2023 due to the assumed timing of the transaction. The statutory tax rate of 26% was used for both 2024 and 2023 for the pro forma adjustments.

During the year ended December 31, 2024, we incurred $2.5 million of acquisition and integration expenses included in Other costs, net associated with the D&B acquisition which were primarily related to professional services.

In accordance with ASC 805, the preliminary purchase price was allocated to assets acquired and liabilities assumed based on their estimated fair values as of August 9, 2024. These estimates are subject to revision, which may result in adjustments to the values disclosed below. There are certain provisional estimates that are subject to finalization. As we continue to integrate the acquired business, we may obtain additional information which may result in revisions to preliminary valuation assumptions, estimates and the resulting fair values presented herein. We expect to finalize these amounts within 12 months from the acquisition date.

For the purpose of this allocation, the contractual purchase price has been adjusted to exclude cash acquired and include closing adjustments, resulting in a preliminary purchase price of $121.2 million. The tangible and identifiable intangible assets acquired, net of liabilities assumed, were $25.4 million and $27.9 million, respectively. This generated acquired goodwill of $67.9 million, none of which is tax deductible. The most significant assets acquired were $38.1 million of property and equipment and a $18.2 million customer relationship intangible asset.

Goodwill represents the excess of the purchase price over the fair value of the underlying net tangible and identifiable intangible assets. Of the acquired goodwill, $47.2 million is in the Materials segment and $20.7 million is in the

Construction segment. The factors that contributed to the recognition of goodwill from this acquisition include strengthening and expanding our vertically integrated southeast home market as well as expected synergies.

The following table lists identifiable intangible assets from the D&B acquisition that are included in intangible assets in the consolidated balance sheets as of December 31, 2024 (in thousands):


	Useful Lives (Years)	Gross Value		Accumulated Amortization		Net Value
Customer relationships	20	$	18,200	$	(379)	$	17,821
Backlog	1	600		(231)		369
Trademarks/trade name	10	7,500		(312)		7,188
Permits	10	1,600		(58)		1,542
Total intangible assets		$	27,900	$	(980)	$	26,920

The fair value of customer relationships was estimated as of the acquisition date utilizing the multi-period excess earnings method. This method discounts to present value the projected cash flows attributable to the customer relationships. The significant estimates and assumptions used in determining the fair value included discount rates, revenue growth rates, projected earnings before interest, taxes, depreciation and amortization ("EBITDA") margins and customer revenue attrition rates.

The amortization expense related to the acquired identifiable intangible assets for the year ended December 31, 2024 was included in cost of revenue and selling, general and administrative expenses in the consolidated statements of operations. All of the acquired identifiable intangible assets will be amortized on a straight-line basis. Amortization expense related to the acquired identifiable intangible asset balances at December 31, 2024 is expected to be recorded in the future as follows: $2.2 million in 2025; $1.8 million in each year from 2026 to 2029; and $17.5 million thereafter.

On November 30, 2023, we completed the acquisition of LRC/MSG for $278.0 million, subject to customary closing adjustments, plus an estimated amount related to tax make-whole agreements with the seller. We purchased all of the outstanding equity interests in LRC/MSG and the purchase price was funded by a new $150.0 million senior secured term loan, a draw of $100 million under our existing revolver and the remainder from cash on hand. Both the senior secured term loan and the draw under the revolver were fully repaid during the first half of 2024.

The acquired businesses are longstanding asphalt paving and asphalt and aggregates producers and suppliers. LRC/MSG operates strategically located asphalt plants and sand and gravel mines serving the greater Memphis area and northern Mississippi.

LRC/MSG's results have been included in the Construction and Materials segments since the acquisition date. LRC/MSG’s customers are in both the public and private sectors. Revenue attributable to LRC/MSG for the years ended December 31, 2024 and 2023 was $147.3 million and $7.7 million, respectively. Gross profit (loss) attributable to LRC/MSG for the years ended December 31, 2024 and 2023 was a profit of $8.7 million and loss of $1.5 million, respectively.

The unaudited pro forma financial information in the table below summarizes the combined results of operations of Granite and LRC/MSG as though the companies had been combined as of January 1, 2022. The Granite Canada acquisition discussed below is not included in the pro forma financial information as the effects of the business would not have a material impact. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2022, nor does it intend to be a projection of future results.


Years Ended December 31,	2023		2022
(unaudited, in thousands, except per share amounts)
Revenue	$	3,720,449	$	3,485,186
Net income	$	55,025	$	72,219
Basic net income per share attributable to common shareholders	$	1.25	$	1.62
Diluted net income per share attributable to common shareholders	$	1.19	$	1.49

These amounts have been calculated after applying Granite’s accounting policies and adjusting the results of LRC/MSG to reflect the additional depreciation and amortization that would have been recorded assuming the fair value adjustments to property and equipment and intangible assets had been applied starting on January 1, 2022. Additionally, these amounts reflect adjustment for additional interest that would have been incurred as a result of incurring debt for the acquisition over the periods in the pro forma financial information. Acquisition and integration expenses related to LRC/MSG that were incurred during the year ended December 31, 2023 are reflected in the year ended December 31, 2022 due to the assumed timing of the transaction. The statutory tax rate of 26% was used for both 2023 and 2022 for the pro forma adjustments.

During the year ended December 31, 2023, we incurred $5.0 million of acquisition and integration expenses included in Other costs, net associated with the LRC/MSG and Granite Canada acquisitions which were primarily related to professional services.

In accordance with ASC 805, the total purchase price and assumed liabilities were allocated to the net tangible and identifiable intangible assets based on their estimated fair values as of the acquisition date, as presented in the table below.

We recorded a $22.0 million provisional estimate related to tax make-whole agreements with the seller at the time of the acquisition. In the second quarter of 2024, the former owners of LRC/MSG determined their personal tax burden related to the sale of the businesses which allowed us to finalize our tax make-whole obligation. Our obligation was $7.1 million, which was paid in June 2024.

During 2024, we made measurement period adjustments to reflect facts and circumstances in existence as of the acquisition date. These adjustments included a $4.6 million net increase from net working capital adjustments and a $2.2 million net decrease in the value of the net tangible and identifiable intangible assets acquired, offset by a $14.9 million decrease in the estimated obligation associated with the tax make-whole agreements noted above. The impact of these adjustments was a decrease in goodwill of $8.1 million. We paid $13.2 million during the 2024 associated with the acquisition of LRC/MSG, which includes $6.1 million for working capital adjustments and $7.1 million for the tax make-whole obligation.


(in thousands)
Assets
Cash and cash equivalents	$	12,798
Receivables	18,373
Contract assets	3,388
Inventories	13,738
Other current assets	1,032
Property and equipment	86,329
Right of use assets	15,539

Other noncurrent assets	3,718
Total tangible assets	$	154,915
Identifiable intangible assets	$	107,460
Liabilities
Accounts payable	$	6,806
Contract liabilities	3,213
Accrued expenses and other current liabilities	10,166
Long-term lease liabilities	15,558

Other long-term liabilities	5,960
Total liabilities assumed	$	41,703
Total tangible and identifiable net assets acquired	$	220,672
Goodwill	72,744
Purchase price	$	293,416

The primary factor that contributed to the recognition of goodwill from the acquisition of LRC/MSG was expansion of our vertically integrated home market strategy into the southeastern United States. For the LRC/MSG acquisition, we recorded $72.7 million of goodwill which will be deductible for tax purposes. $46.7 million and $26.0 million were allocated to our Construction and Materials segments, respectively.

The following table lists identifiable intangible assets from the LRC/MSG acquisition that are included in intangible assets in the consolidated balance sheets as of December 31, 2024 (in thousands):


	Useful Lives (Years)	Gross Value		Accumulated Amortization		Net Value
Customer relationships	20	$	78,860	$	(4,272)	$	74,588
Backlog	1	6,500		(6,500)		—
Trademarks/trade name	10	15,100		(1,636)		13,464
Permits	10	7,000		(758)		6,242
Total intangible assets		$	107,460	$	(13,166)	$	94,294

The fair value of customer relationships was estimated as of the acquisition date utilizing the multi-period excess earnings method. This method discounts to present value the projected cash flows attributable to the customer relationships. The significant estimates and assumptions used in determining the fair value included discount rates, revenue growth rates, projected EBITDA margins and customer revenue attrition rates.

the acquired identifiable intangible asset balances is expected to be recorded in the future as follows: $6.2 million in each year from 2025 to 2029; and $63.5 million thereafter.

On April 24, 2023, we acquired Coast Mountain Resources (2020) Ltd. which changed its name to Granite Infrastructure Canada, Ltd. ("Granite Canada") on May 13, 2024. Granite Canada is a construction aggregate producer based in British Columbia, Canada operating on Malahat First Nation land. Granite Canada results are reported in the Materials segment. This acquisition did not have a material impact on our financial statements. The primary factor that contributed to the recognition of goodwill from the acquisition of Granite Canada was strengthening our existing vertically integrated home markets in the western United States. For the Granite Canada acquisition, we recorded $5.1 million in goodwill that was allocated to our Materials segment and will not be tax deductible for income tax purposes.