Granite hits a record $7.5 billion backlog as federal and data center sitework grows

Backlog rose $1.1 billion from a year earlier, the Watsonville, California, contractor reported Oct. 29. Net income was $3.2 million, down from $102.9 million, after a $162 million charge tied to settling convertible notes, Construction Dive reported. Granite raised the low end of its 2026 revenue guidance to $5.4 billion and kept the top at $5.5 billion.

Federal work accounts for about $1.3 billion of the backlog, including $569 million of tactical infrastructure projects for U.S. Customs and Border Protection. CEO Kyle Larkin said on the earnings call that those projects, once scheduled for completion in 2027's second quarter, now run into the third quarter of 2028 because right-of-way is not yet available, with no change to expected profit. He said the 2026 National Defense Authorization Act brings progressive design-build and construction manager at risk to military construction, and listed pursuits including airfield work in Alaska, naval projects in Washington State and missile defense infrastructure in Guam.

Data center, battery and space-sector clients, which Granite groups as mission-critical work, make up $331 million of backlog and less than 5% of this year's revenue. Larkin said typical opportunities in that market used to run $20 million to $30 million and now run about $100 million, covering mass grading, utilities, paving and retaining walls. Granite wants the segment at 10% or more of construction revenue within several years. A 4,500-acre intermodal rail facility for a Class I railroad in Southern California is in preconstruction and still needs permits.

Fuel costs hit the materials side. Materials gross margin fell 4.2 points to 21.0% as energy surcharges inflated both revenue and cost, though CFO Staci Woolsey said unit economics held up.