Border infrastructure projects and data center site preparation have grown into a larger portion of Granite Construction's business. The company said on its first-quarter earnings call Thursday that federal contracts are trending toward accounting for 15% of its revenue, with data center projects potentially contributing another 10%.

These gains have partly prompted the Watsonville, California-based contractor to raise its 2026 revenue guidance. The company said it expects an additional $200 million in revenue from its border work in South Texas, while its recent acquisition of Utah-based Kenny Seng Construction is expected to contribute another $100 million. Granite said it will continue to look for more acquisition targets in the future.

Despite the cancellation of a roughly $300 million highway project in California, the company's backlog increased. Granite President and CEO Kyle Larkin said the project's withdrawal was rare, and the overall growth in the company's backlog "reflects a still-strong bidding environment at the federal, state, local, and private levels."

Data Center and Border Work

As of the end of the first quarter, of Granite's $7.2 billion backlog, about $640 million came from U.S. Customs and Border Protection tactical infrastructure projects. In 2025, Granite secured its first border wall contract under President Donald Trump's second term, and then in 2026 landed a $495 million tactical infrastructure project near Laredo, Texas.

That second contract amount is larger than the smaller work packages Granite has pursued in recent years to limit the excess risk posed by multi-billion-dollar, multi-year megaprojects. However, Larkin said the rapid pace of the Laredo project has given the company a clearer grasp of overall risk.

"The project is roughly a 14-month completion, so we expect to be about 40% complete by the end of 2026," Larkin said.

He categorized the risks of border work into three types: schedule risk, remote site risk, and uncertainty with subcontractors and suppliers.

Larkin said the faster pace has alleviated schedule concerns. Granite has also deployed resources in the region to address its remote location. Finally, the company has been cautious in selecting suppliers.

"Imagine a $40 billion project along the border with many subcontractors and suppliers involved, whose scale of participation may exceed their usual levels, so there is always some risk," Larkin said. "So we are very selective in choosing partners for this project."

In fact, Larkin said the company hopes to secure more border work in the region in upcoming tenders expected in June and July.

On the data center front, Granite has been taking a "selling shovels" approach to the construction boom, performing site infrastructure work and selling materials before structural construction begins.

"We are successfully delivering and supplying materials to projects in Washington, Oregon, Nevada, Arizona, Louisiana, and Mississippi," Larkin said. "We can indeed address it from civil engineering, water engineering... or just material supply."

When analysts asked about fuel price increases due to the Iran war, Larkin said Granite has not yet seen significant cost increases.

"The energy surcharges we implemented after the first quarter of 2021, particularly in our materials business, have indeed provided us good protection against rising costs," Larkin said.

Key Figures

Granite reported a widened net loss of $41.7 million for the first quarter of 2026, compared to $33.7 million in the same period of 2025; revenue was $912.5 million, up 30% year-over-year.

Backlog (which the company calls committed and awarded projects, or CAP) increased $200 million sequentially from the fourth quarter to $7.2 billion. On a year-over-year basis, it increased $1.4 billion, or 24%, from the first quarter of 2025. The company attributed $1.3 billion of its backlog to federal contracts.

The company also raised its full-year 2026 revenue guidance, increasing the expected range to $5.2 billion to $5.4 billion. Previously, it expected full-year revenue of $4.9 billion to $5.1 billion.