Granite Construction Boosts Footprint In Memphis Metropolitan Area, Raises FY24 Sales Outlook

Granite Construction Inc GVA disclosed the acquisition of Lehman-Roberts Company (LRC) and Memphis Stone & Gravel Company (MSG) for undisclosed terms.

The acquisition boosts Granite's footprint and creates a new platform for growth in the attractive greater Memphis metropolitan market.

Notably, LRC has seven strategically located asphalt plants, and MSG has three sand and gravel mines in the region. 

Also, MSG owns exclusive rights to an estimated 57 million tons of proven and probable reserves and 24 million tons of measured and indicated resources. 

"We are very excited to complete this acquisition of an outstanding materials-led business that expands our footprint in the Southeast. We believe their business model aligns with our previously disclosed strategy to grow our business by focusing on developing home markets that are served by highly successful companies of scale with great leadership," said Kyle Larkin, President and Chief Executive Officer.

FY24 Outlook: Following the acquisition, GVA raised its revenue target to $3.8 billion-$4.0 billion (from $3.6 billion-$3.9 billion earlier). The company maintained a 2024 adjusted EBITDA margin outlook at 9% to 11%.

The company financed the buyout through a new term loan of $150 million and the remaining amount through an existing revolver and cash in hand. As of September 30, 2023, cash and cash equivalent stood at $323.4 million. 

Price Action: GVA shares traded lower by 0.72% at $47.10 on the last check Tuesday.