Granite’s Newest Home Market, Lehman-Roberts and the Mid-South
Granite (NYSE:GVA) has expanded its home market strategy by acquiring Lehman-Roberts Company and Memphis Stone & Gravel Company (MSG) in Q4 2023. This acquisition targets the Memphis Metropolitan and Northern Mississippi areas. In 2024, the newly acquired entities have secured significant contracts, including:
- Tennessee Department of Transportation (TDOT) Shelby County SR 14 project, involving over four miles of construction.
- Mississippi Department of Transportation (MDOT) Hwy 61 project, enhancing a major transportation corridor.
- Calhoun County Roads 306 & 137 project, improving local infrastructure.
MSG will supply substantial quantities of sand and gravel for these projects, enhancing Granite's operational capabilities in asphalt and aggregates. Patrick Nelson, President of Lehman-Roberts and MSG, highlighted the importance of these contracts for driving volume and delivering high-quality services.
- Granite's acquisition of Lehman-Roberts and MSG expands their market reach into the Memphis and Northern Mississippi areas.
- Newly secured contracts in 2024 enhance the company's backlog and drive volume in asphalt and aggregate materials.
- Significant projects with the Tennessee Department of Transportation and Mississippi Department of Transportation could boost revenue.
- Vertically integrated operations allow for efficient supply management with MSG providing essential materials.
- Improved infrastructure projects can lead to long-term growth and community goodwill.
- Integration of newly acquired companies might present operational and financial challenges.
- Dependence on state and local government contracts may expose the company to budgetary constraints and funding uncertainties.
- Large volumes of material supply necessary for new contracts could strain existing resources and logistics.
The acquisition of Lehman-Roberts Company and Memphis Stone & Gravel Company by Granite (NYSE:GVA) strategically positions Granite in the Memphis Metropolitan and Northern Mississippi area, a move that can significantly bolster its revenue streams. Lehman-Roberts' new contracts in 2024 demonstrate immediate revenue generation opportunities. For instance, the Shelby County SR 14 project involves substantial quantities of materials, which points to strong demand for Granite's aggregate supply chain.
From a financial perspective, these contracts may positively impact Granite's top-line growth in the short term due to the immediate nature of the projects. Additionally, the focus on infrastructure projects can contribute to more predictable cash flows and earnings stability, a favorable sign for investors. However, the integration of acquired companies always carries risks, including culture clashes, unexpected costs, or operational disruptions.
Investors should track the profitability margins of these projects and the execution efficiency of Lehman-Roberts under Granite's ownership, as these factors will ultimately determine the long-term value creation from these acquisitions.
The expansion into new markets through the acquisition of Lehman-Roberts and Memphis Stone & Gravel is a strategic move for Granite. This acquisition not only expands Granite's market share but also diversifies its geographical footprint. The contracts in Tennessee and Mississippi highlight the robust demand for infrastructure improvements in these regions. The successful completion of these projects can enhance Granite's reputation, leading to further opportunities in the public and private sectors.
From a market perspective, the acquisition allows Granite to leverage established local relationships and expertise, reducing entry barriers typically encountered in new markets. Moreover, the vertical integration with Memphis Stone & Gravel ensures a steady supply of materials, potentially leading to cost efficiencies and higher project margins.
However, it remains essential to monitor regional economic conditions and government infrastructure spending policies, which could significantly impact the sustainability of such projects. A prolonged economic downturn or policy shifts could adversely affect future contracts and profitability.
The following highlighted new work demonstrates Lehman-Roberts' versatility in the construction and materials industry. Most of the aggregates for this work will be supplied by MSG:
- Tennessee Department of Transportation (TDOT) Shelby County SR 14: The project consists of over four miles of grade, drain, bridge, and paving construction of SR 14 (4-lane) in Shelby County. The largest of the new contracts aims to enhance a major roadway in Shelby County. As vertically integrated companies, MSG will supply Lehman-Roberts 4,820 tons of sand and 8,700 tons of gravel for the project.
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Mississippi Department of Transportation (MDOT) Hwy 61 Coahoma/Tunica: This project will improve the transportation corridor and includes Scrub Sealing & Overlaying approximately nine miles of US 61 from the Coahoma County Line to
Clayton and approximately two miles of US 61 from SR 315 to the Tunica County Line. MSG will supply 3,000 tons of sand and more than 23,000 tons of mixed gravel. -
Calhoun County Roads 306 & 137: Milling and overlaying approximately five miles of roads in
Calhoun County, MS. This project will enhance the county's transportation infrastructure, improving accessibility and safety for all residents. MSG will supply 560 tons of sand and 2,100 tons of gravel.
"We are thrilled to highlight these new contract awards," said Patrick Nelson, Lehman-Roberts and Memphis Stone and Gravel President. "While these projects are welcome additions to our construction backlog, they also drive volume in our asphalt and aggregate materials businesses. These new awards represent our ongoing commitment to delivering high-quality construction services to our clients and help us execute on our goal of serving our communities and contributing to the improvement of their infrastructure."
About Granite
Granite is America’s Infrastructure Company™. Incorporated since 1922, Granite (NYSE:GVA) is one of the largest diversified construction and construction materials companies in
About Lehman-Roberts and sister company Memphis Stone & Gravel
Lehman-Roberts, a Granite Company, and Memphis Stone & Gravel, a Granite Company, have been a part of the fabric of the Mid-South for more than a combined 190 years. Today, the companies continue to build upon a long tradition of quality, trust and a strong culture that distinguishes them among competitors in the road construction, asphalt and aggregates industries. With an impressive record and vibrant leadership, it is well poised for its next 190 years of success. For more information, please call (901) 774-4000 or visit www.lehmanroberts.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240523053932/en/
Granite Contacts
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Erin Kuhlman 831-768-4111
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Wenjun Xu - 831-761-7861
Source: Granite
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