GRANITE CONSTRUCTION INCGVA
GRANITE CONSTRUCTION INC Fair Value Disclosure
8. Fair Value Measurement
The following tables summarize significant assets and liabilities measured at fair value in the consolidated balance sheets on a recurring basis for each of the fair value measurement levels (in thousands):
| Fair Value Measurement at Reporting Date Using | |||||||||||||||||||||||
| December 31, 2025 | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 231,865 | $ | — | $ | — | $ | 231,865 | |||||||||||||||
| Other current assets: | |||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | 830 | $ | — | $ | 830 | |||||||||||||||
| Total assets | $ | 231,865 | $ | 830 | $ | — | $ | 232,695 | |||||||||||||||
| Accrued and other current liabilities: | |||||||||||||||||||||||
| Heating oil swaps | $ | — | $ | 122 | $ | — | $ | 122 | |||||||||||||||
| Total liabilities | $ | — | $ | 122 | $ | — | $ | 122 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds | $ | 73,031 | $ | — | $ | — | $ | 73,031 | |||||||||||||||
| Total assets | $ | 73,031 | $ | — | $ | — | $ | 73,031 | |||||||||||||||
| Accrued and other current liabilities: | |||||||||||||||||||||||
| Heating oil swaps | — | 531 | — | 531 | |||||||||||||||||||
| Diesel collars | — | 177 | — | 177 | |||||||||||||||||||
| Total liabilities | $ | — | $ | 708 | $ | — | $ | 708 | |||||||||||||||
Interest Rate Swaps
In September 2025, we entered into two interest rate swaps designated as cash flow hedges with an effective date of January 2026. The two cash flow hedges had a combined initial notional amount of $350 million and mature in January of 2029. The interest rate swaps are designed to convert the interest rate on our Term Loan (as defined below) under our Fifth Amended and Restated Credit Agreement (the “Credit Agreement”) (See Note 14) from a variable interest rate of Secured Overnight Financing Rate (“SOFR”) plus an applicable margin to a fixed rate of 3.218% plus the same applicable margin. The interest rate swap is measured at fair value on the consolidated balance sheet using the income approach, which discounts the future net cash settlements expected under the derivative contracts to a present value. These valuations primarily utilize indirectly observable inputs, including contractual terms, interest rates, and yield curves observable at commonly quoted intervals.
Commodity Derivatives
We have entered into collar contracts and commodity swaps to reduce our price exposure on diesel consumption and heating oil consumption, respectively. The collars and swaps were not designated as hedges and will be treated as a mark-to-market derivative instruments through their maturity dates. The financial statement impact of the collar contracts and commodity swaps for the years ended December 31, 2025 and 2024 was immaterial.
Other Assets and Liabilities
The carrying values and estimated fair values of financial instruments that are not required to be recorded at fair value in the consolidated balance sheets were as follows:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||
| Fair Value Hierarchy | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||
| Held-to-maturity marketable securities (1) | |||||||||||||||||||||||||||||
| Corporate notes and bonds | Level 1 | $ | 59,477 | $ | 59,757 | $ | — | $ | — | ||||||||||||||||||||
| U.S. Government and agency obligations | Level 1 | $ | 10,001 | $ | 10,006 | $ | 7,311 | $ | 7,312 | ||||||||||||||||||||
| Commercial paper | Level 1 | $ | 39,202 | $ | 39,198 | $ | — | $ | — | ||||||||||||||||||||
| Municipal notes and bonds | Level 1 | $ | 11,875 | $ | 11,890 | $ | — | $ | — | ||||||||||||||||||||
| Liabilities (including current maturities): | |||||||||||||||||||||||||||||
3.75% Convertible Notes (2) | Level 2 | $ | 373,750 | $ | 950,013 | $ | 373,750 | $ | 738,724 | ||||||||||||||||||||
3.25% Convertible Notes (2) | Level 2 | $ | 373,750 | $ | 597,206 | $ | 373,750 | $ | 491,582 | ||||||||||||||||||||
| Credit Agreement - Term Loan (2) | Level 3 | $ | 600,000 | $ | 602,265 | $ | — | $ | — | ||||||||||||||||||||
| Credit Agreement - Revolver (2) | Level 3 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
(1)All marketable securities were classified as held-to-maturity as of the periods presented. Of the above balances, $71.0 million and $7.3 million were short-term marketable securities on our consolidated balance sheets as of December 31, 2025 and 2024, respectively and $49.5 million were long-term marketable securities on our consolidated balance sheets as of December 31, 2025. Our long-term marketable securities have varying maturities between and three years.
(2)The fair values of our 3.25% Convertible Notes and our 3.75% Convertible Notes are based on the median price of the notes in an active market. The fair value of the Credit Agreement is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 14 for more information about our convertible notes and the Credit Agreement.
The carrying value of marketable securities approximates their fair value as determined by market quotes. Rates currently available to us for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. The carrying value of receivables and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one year, is estimated to approximate fair value.
At least annually, we measure certain nonfinancial assets and liabilities at fair value on a nonrecurring basis. As of December 31, 2025 and 2024, the nonfinancial assets and liabilities included our asset retirement and reclamation obligations, as well as assets and corresponding liabilities associated with performance guarantees. Asset retirement and reclamation obligations were measured using Level 3 inputs and performance guarantees were measured using Level 2 inputs.
Asset retirement and reclamation obligations were initially measured using internal discounted cash flow calculations based upon our estimates of future retirement costs. To determine the fair value of the obligation, we estimate the cost for a third-party to perform the legally required reclamation including a reasonable profit margin. This cost is then increased for future estimated inflation based on the estimated years to complete and discounted to fair value using present value techniques with a credit-adjusted, risk-free rate. In estimating the settlement date, we evaluate the current facts and conditions to determine the most likely settlement date. We review reclamation obligations at least annually for a revision to the cost or a change in the estimated settlement date. Additionally, reclamation obligations are reviewed in the period that a triggering event occurs that would result in either a revision to the cost or a change in the estimated settlement date. See Note 11 for details of the asset retirement obligation balances.
We estimate our liability for performance guarantees for our unconsolidated construction joint ventures and line item joint ventures using estimated partner bond rates, which are Level 2 inputs, and include them in accrued expenses and other current liabilities (see Note 13) with a corresponding increase in equity in construction joint ventures in the consolidated balance sheets. See Note 1 for further discussion of performance guarantees.
During the years ended December 31, 2025 and 2024, we had no material nonfinancial asset and liability fair value adjustments.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 14, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 30, 2021 | |
| 2019 | Feb 22, 2021 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 25, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.