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Lehman-Roberts, a Granite Company, Spearheads Infrastructure Upgrade

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Granite (NYSE:GVA) announced that Lehman-Roberts, a Granite company, has been selected as a subcontractor by Dement Construction Company for a Tennessee Department of Transportation (TDOT) project. Funded by federal and TDOT funds, Lehman-Roberts' $21 million contract will be part of Granite's second-quarter CAP. This Phase 2 project aims to add lanes and overpasses over two miles to ease congestion and enhance transportation efficiency. Lehman-Roberts will produce 178,000 tons of hot mix asphalt, while Granite-owned Memphis Stone & Gravel will supply 2,600 tons of washed sand, 182,000 tons of clay gravel, and 32,000 tons of screened gravel. The project is set to start in July 2024 and finish in July 2028.

Positive
  • Lehman-Roberts secured a $21 million subcontract for a TDOT project, enhancing Granite's second-quarter CAP.
  • Project aims to improve transportation efficiency and ease congestion, benefiting regional infrastructure.
  • Granite-owned Memphis Stone & Gravel will supply significant materials, ensuring quality control and cost-effectiveness.
Negative
  • Long project timeline with completion not expected until July 2028, which might delay ROI for investors.

The inclusion of Lehman-Roberts in the ongoing infrastructure upgrade project by the Tennessee Department of Transportation (TDOT) and its $21 million subcontract, represents a significant stride in enhancing transportation efficiency in the Southeast. Infrastructure projects are vital drivers of economic activity, impacting local businesses and employment positively. The project's strategic location, serving a major intermodal facility, underscores its importance not only for regional traffic alleviation but also for broader logistical efficiency.

Collaboration with Dement Construction Company, LLC as the prime contractor highlights Lehman-Roberts' strong industry relationships and expertise, ensuring the project's successful execution. The production and supply of materials like hot mix asphalt and gravel further demonstrate Granite's integrated approach, optimizing project costs and timelines.

Retail investors should recognize the long-term benefits of infrastructure spending, which often lead to sustained, incremental revenue growth for companies like Granite. Although the immediate financial impact may be moderate, the project's scope and duration (2024-2028) indicate consistent revenue streams, thereby potentially stabilizing Granite's earnings over this period.

From a financial perspective, the inclusion of this $21 million contract in Granite's second-quarter capital expenditures (CAP) suggests a strategic allocation of resources towards high-value, long-term projects. This will likely enhance Granite's asset base and revenue-generating capacity through 2028.

The project’s funding, supported by both Federal and TDOT funds, reduces the financial risk associated with delayed payments or budget overruns, a common concern in large-scale infrastructure projects. Investors should note the impact of such government-backed projects on Granite's balance sheet, potentially leading to improved financial stability and creditworthiness.

Granite’s diversified portfolio, evident from its ability to produce and supply critical materials through its Memphis Stone & Gravel subsidiary, adds a layer of vertical integration that can lead to cost efficiencies and higher profit margins. This vertical integration strategy might serve as a buffer against market volatility, offering a more predictable financial outlook.

Granite's involvement in this infrastructure upgrade project aligns well with the broader national trend of increasing infrastructure investments. The emphasis on enhancing transportation networks, especially in regions with significant logistical importance, reflects a strategic alignment with federal infrastructure priorities.

Retail investors should consider the implications of this trend. Companies engaged in infrastructure development are likely to see favorable market conditions, partly driven by government spending and partly by the growing need for improved transportation efficiency.

This project also strengthens Granite's market position in the Southeast, potentially leading to additional contract opportunities as regional infrastructure needs expand. The company's demonstrated capability in large-scale projects builds its reputation, an intangible yet valuable asset in securing future contracts.

WATSONVILLE, Calif.--(BUSINESS WIRE)-- Granite (NYSE:GVA) announced Lehman-Roberts, a Granite company, has been selected as a subcontractor by Dement Construction Company, LLC on a project for the Tennessee Department of Transportation (TDOT) in the ongoing infrastructure upgrade project where Interstate 22 terminates into State Route 4 (SR 4) and U.S. Route 78 (US 78) southeast of downtown Memphis. Funded by Federal and TDOT funds, Lehman-Roberts’ portion of the contract is approximately $21 million and will be included in Granite’s second-quarter CAP.

Phase 2, the project’s current phase, involves the addition of extra lanes and overpasses spanning approximately two miles to relieve daily traffic congestion and improve overall transportation efficiency. This follows the successful completion of Phase 1, which was also paved by Lehman-Roberts from 2018 to 2023.

The project is strategically located in the heart of one of the Southeast’s largest intermodal facilities that services the BNSF railway.

“Lehman-Roberts is excited to contribute to this significant infrastructure upgrade and looks forward to continuing its work in enhancing transportation networks across the region,” said Patrick Nelson, Lehman-Roberts and Memphis Stone and Gravel President. “Lehman-Roberts maintains a strong working relationship with the project owner and prime contractor, underscoring the company’s commitment to delivering high-quality work at competitive prices,” he continued.

Lehman-Roberts will produce approximately 178,000 tons of hot mix asphalt for this project. In addition, Granite-owned Memphis Stone & Gravel will supply key materials for the project, including approximately 2,600 tons of washed sand, 182,000 tons of clay gravel, and 32,000 tons of screened gravel from their DeSoto plant.

The project is expected to begin in July 2024 and be completed in July of 2028.

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 the United States as well as a full-suite civil construction provider. Granite’s Code of Conduct and strong Core Values guide the Company and its employees to uphold the highest ethical standards. Granite is an industry leader in safety and an award-winning firm in quality and sustainability. For more information, visit the Granite website, graniteconstruction.com, and connect with Granite on LinkedIn, X, Facebook, and Instagram.

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.

Media

Erin Kuhlman 831-768-4111

Investors

Wenjun Xu - 831-761-7861

Source: Granite

FAQ

What is the value of the Lehman-Roberts subcontract for the TDOT project?

The value of the Lehman-Roberts subcontract for the TDOT project is approximately $21 million.

When will the TDOT infrastructure upgrade project start and end?

The project is expected to start in July 2024 and be completed by July 2028.

What materials will Granite-owned Memphis Stone & Gravel supply for the TDOT project?

Memphis Stone & Gravel will supply 2,600 tons of washed sand, 182,000 tons of clay gravel, and 32,000 tons of screened gravel.

How will the TDOT project improve transportation?

The TDOT project will add lanes and overpasses over a two-mile stretch, improving overall transportation efficiency and reducing daily traffic congestion.

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