Good morning. My name is Zilda, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Investor Relations Second Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speakers' remarks, there will be a question-and-answer period. It is now my pleasure to turn the floor over to your host, Granite Construction, Director of Investor Relations, Ron Botoff. Sir, the floor is yours.

Welcome to the Granite Construction Incorporated second quarter 2015 earnings conference call. I'm here today with our President and CEO, Jim Roberts; and our Senior Vice President and CFO, Laurel Krzeminski. We begin today with an overview of the company's Safe Harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from the statements made today. So, please refer to Granite's most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise. A reconciliation of non-GAAP results is included as part of our second quarter earnings press release. Certain non-GAAP measures may be discussed during the call and from time-to-time by the company's executives. For more information, please visit our Investor Relations website at investor.graniteconstruction.com. Thank you. Now, I would like to turn the call over to Granite Construction Incorporated, Chief Executive Officer, Jim Roberts. James Hildebrand Roberts - President, Chief Executive Officer & Director: Thank you, Ron and thank you all. Thank you, Ron and thank you all for joining us. After posting our best first quarter financial performance since 2009, I remain encouraged by the overall solid performance in our business in the second quarter, which contributed to Granite's best first half financial results since 2009, when the economic downturn was strongly in play; quite contrast of trends. At this point in 2009, our total company backlog was just about 50% of today's record $3 billion figure, another example of a sharp contrast of trends. I mentioned last quarter that the trends, opportunities and challenges ahead of us had not changed for quite some time. It is how these factors interrelate that…

Our first question comes from Jerry Revich with Goldman Sachs. Please go ahead. Jerry David Revich - Goldman Sachs & Co.: Good morning everyone. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Jerry. Jerry David Revich - Goldman Sachs & Co.: I'm wondering if you could just give us an update on bid pipeline as you do from time-to-time? Ron just give us a sense for projects within the next 12 months to 18 months that you're bidding on how that's evolved versus your last updated quarter ago? James Hildebrand Roberts - President, Chief Executive Officer & Director: Sure, Jerry. It's actually, really an interesting question because I want to talk not just about large projects, but I think it's important to also talk about our construction business as well. And when you look at the construction business, it doesn't necessarily make the highlights and that's been averaging somewhere on our bidding horizon here around somewhere from $250 million to $450 million worth of work every single month that we're bidding in the construction segment. And that's one of the things that we highlighted here in our discussion and our press release was that that market is changing, it's getting to be more robust and that's a good sign. So that's one thing and those – we bid hundreds of projects and I think everybody knows that, but to see the consistent amount of work out in front of us bidding in the construction segment is really a nice sign. We go back to the large project segment and we noted that we've got about $20 billion over the next couple of years we're teamed up on, currently we've got about $6 billion that we will bid between now and yearend. And they range from large…

Our next question comes from Michael Dudas with Sterne Agee. Please go ahead.

Good morning, Jim and Laurel. How are you today? James Hildebrand Roberts - President, Chief Executive Officer & Director: Good. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Mike, How are you?

Wonderful. Thank you, Jim. Two questions. First, short-term sense of how weather is so far currently through the first month of the third quarter. And off that on your comment about on the Construction Materials side, internal/external demand both growing pretty nicely. Is there a sense one growing better than the other? Do you get a predictive sense that with more external demand that could lead to less competition, better bidding opportunities on the constructions side? James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay. So let's talk about weather, first. And I am happy to say, Mike, that we have got some changes in the weather patterns where our large project exist. We did have a good July, and we're back on track. You can just imagine in Dallas what the effect was on our I-35 job there when basically the project was almost flooded. And then same thing back in North Carolina, we're seeing that weather subside, so we're able to do a lot of paving. We have a huge paving job back there in North Carolina. And then on our other jobs, they really weren't weather induced issues. They were really just startup issues and we're getting over the hurdle on those down in Florida and Pennsylvania. So, certainly, we expect to see a significant improvement in the second quarter on those large projects. Also let's talk about materials, pretty interesting. So right now we run about 60% of our material sales are external and only about 40% of them are internal. And we fluctuate with those percentages, and certainly as we migrate more towards the higher percentage of external sales, you'll see more, better results probably on the overall Materials business. But the nice part here is that both internal and external are growing.…

(29:24). That sounds very helpful, Jim, and my follow-up question would be, so as you look at what's going on in Washington, is it – and there's been some creative ways that the Senate and House have come up to try to help bridge the funding gaps here, but is it really going to be tied towards this repatriation issue or is it going to be just the issue on gasoline taxes? Is there something you can point toward that could smooth the way for something to happen in 2016, and are those the two key determinants before we get more clarity on that? James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay. So, Mike, today those are two key issues. First of all, the repatriation monies, there's been long talks, but when you listen to certain members, they'll tell you that they won't discuss the repatriation monies until we do overall tax reform. So that's potentially a problem. And at the same time, you have certain really focused members who say they will not allow a gas tax to pass. So I think what's going to probably end up happening between – and I'm going to somewhere in October through December, which hasn't changed, you're going to see some innovative funding mechanisms come into play. And I wouldn't be surprised at all, Mike, if they come up with a totally different alternative to fund a long-term highway bill. The Senate has really already I think today they will probably approve their six-year bill, knowing that the House already tossed over a three-month extension to them. But I think you're going to see some real innovation over the next six months on alternative funding mechanisms, because there are people that will not touch repatriation because of overall tax reform, and there are people that won't touch gas tax just because it's political suicide in their opinion. But I do think you're going to come up with some numbers and the Senate has already come up with a reasonable six-year bill, the financial aspects of it, and I think what they're going to focus on are some really alternative ways of funding the whole deal. Today, I can't tell you what that's going to be, but I think the innovative part of it's going to start hitting the street here probably when they get back from recess.

Jim, excellent color. Thank you very much. Good luck. James Hildebrand Roberts - President, Chief Executive Officer & Director: Thanks, Mike.

The next question comes from Daniel Scott with Cowen & Co. Please go ahead. Daniel W. Scott - Cowen & Co. LLC: Hey, thanks for taking my question, guys. You did give a lot of cover on large projects and weather impacts, and how that was probably a drag on the quarter. As we look at guidance being maintained for the full year, does that imply that there is going to be a catch up contribution on the large project side or is it going to be that the vertically integrated continues to carry the day through the end of the year? James Hildebrand Roberts - President, Chief Executive Officer & Director: I think it's both. I think, Dan, that as you look at it, we know we lost some time on large projects. We have accelerated those projects. So we will make up as much as we possibly can. And I also think, Dan, that you're going to see that the Construction and the Construction Materials business are in a stronger environment they've been in a while. So that performance will help bridge the gap as well. So I think both. Daniel W. Scott - Cowen & Co. LLC: Okay, great. And piggybacking off of Mike's question there on the Construction Materials. Clearly it sounds like volumes are working. Are you getting pricing as well? James Hildebrand Roberts - President, Chief Executive Officer & Director: Yes, that's a key, Dan, right there, that's the key question. The volumes are up and pricing is up. We started off with some modest price increases at the first of year, and we just met with some of our teams yesterday, this last couple weeks as well, and they're actually implementing more price increases midway through the year. So both volume and pricing…

Our next question comes from Alex Rygiel with FBR Capital Markets. Please go ahead. Alex J. Rygiel - FBR Capital Markets & Co.: Thanks. Good morning, Jim and Laurel. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Alex. Alex J. Rygiel - FBR Capital Markets & Co.: Jim, in the past you've kind of addressed how many competitors show up at certain bids, whether or not it's in the Construction segment in California or it's on some large projects. Can you talk about how many competitors you're seeing today in those two different environments and how it compared maybe six months, 12 months ago? James Hildebrand Roberts - President, Chief Executive Officer & Director: You bet, Alex. First of all, some are large projects. That's an interesting environment, most of the projects that we're bidding today do have a shortlist approach to them. In other words, where we'll put our qualifications in and an owner will shortlist three bidders or four bidders. I will tell you that it's interesting that even if they shortlist four bidders for large project, we would think twice about whether or not that's the kind of a project we would want to literally compete on, because of the costs of putting together a large project bid. So three competitors on large projects, maybe four is the sweet spot today and that's about where we see that part of the business. The kind of the wildcard is over on the construction side where the markets are all different. You can have a market in one part of California substantially different than another. But in general we're seeing somewhere between three bidders to five bidders on our projects. There are…

The next question comes from John Rogers with D.A. Davidson. Please go ahead. John Bergstrom Rogers - D.A. Davidson & Co.: Hi, good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, John. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning. John Bergstrom Rogers - D.A. Davidson & Co.: If we could just go back to the Construction segment for a second, I just want to understand a little bit more about the margins that you see in that business now and the improvement, especially year-over-year, that you've been trending at, how much of that, Jim, is related to the private work versus public work? James Hildebrand Roberts - President, Chief Executive Officer & Director: I think, John, that's probably the biggest driver of the positive trends. Historically, we have always had a higher margin expectation on the private side than in the public side. The public side seems to be just the low-cost mentality and really a very competitive environment on bid day. But our increase definitely comes from the private side and I think that it will continue to move up as the overall public side gets stronger and the bid list get shorter and some of those individuals go back to the private side. But today, our highest margins are still on the private side. John Bergstrom Rogers - D.A. Davidson & Co.: And I guess – that's why I'm wondering. So as the public side of it comes back, I realize it would add a lot to revenue, but does it keep the margins from further improvement? James Hildebrand Roberts - President, Chief Executive Officer & Director: It doesn't keep – no, because what happens is that historically, when you come back up out of a downturn,…

Thank you. Our next question comes from Nick Coppola with Thompson Research Group. Please go ahead.

Hi, good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Nick.

In terms of operational improvement and lean initiatives, can you talk a little bit more about what work's being been done there and what kind of benefit do you expect? James Hildebrand Roberts - President, Chief Executive Officer & Director: You bet, you bet. So, I don't how much, Nick, that you've followed some of the discussions I've had previously is that, so when we started CI, we started with 10 black belts back in 2014 training. We're now up to 17 black belts that have been trained and are in play, working on individual projects across the country inside the company. Every black belt is expected to be working approximately three projects at a time. And most of those projects need to be somewhere between – have a financial benefit of somewhere $250,000 to $1 million for the individual project. We're closing out project – we're starting to close out projects now on a given example of a couple types of projects. We had a huge project in play to minimize the non-value-added steps of our P2P process or procure-to-pay process. That will be rolled out at the end of the year here. And that's a big deal, it's not hard dollar, it's soft dollar savings, but it will be able to redirect a lot of the efforts of our people that have been focusing on many non-value-added steps. We've been out in our asphalt plants and really found some real cost savings in our asphalt plants, we started down in Southern California, now we're working through the rest of the company to put some of those things into play in other asphalt plants around the company as well. So, there's a combination of hard dollar events that are occurring out in the field, and there are a combination of soft dollar, the kind of Type 1 and Type 2 benefits that are behind the scenes. And right now, we're tracking towards about somewhere between, I'd say, $10 million to $20 million of overall annualized benefits by the end of the year here that will allow us to increase our efficiencies and our bottom line over the next several years. So it's progressing really nicely. It's something that I wish we had done a long time ago. Although a very expensive investment, it's teaching our company how to improve our processes and make those processes stick for a long time.

Okay. That's certainly helpful. And then can you add anymore color on your acquisition strategy and whether or not the number of opportunities you're looking at did change at all? James Hildebrand Roberts - President, Chief Executive Officer & Director: No, it hasn't changed. Actually, we're looking at a combination of acquisition opportunities. First of all, and we've been discussing this with the diversification opportunities to move into the markets of oil and gas, water, rail, those were the focused areas that we've had. The other thing that we've been focusing on also was geographic diversity. We're looking at moving – I'd really like to move our vertically integrated business further to the east, it's a strong business. We're starting to see it come back again where we know it can operate at, and we'd like to geographically diversify that as well. So, we're looking at all those options right now.

Okay. Thanks for taking my questions. James Hildebrand Roberts - President, Chief Executive Officer & Director: Thanks, Nick.

The next question comes from Brian Rafn with Morgan Dempsey Capital Management. Please go ahead.

Good morning, Jim. James Hildebrand Roberts - President, Chief Executive Officer & Director: Morning, Brian.

Give me a sense -- you talked about the low cost mentality on kind of the big public heavy civil side. If by chance, by miracle, we get a six-year highway bill -- it's kind of like building the border fence -- is that going to impact in just a complete release of more federal DOT work? Will that bring margins and pricing up on some of that, what you call, low cost mentality heavy civil work? James Hildebrand Roberts - President, Chief Executive Officer & Director: So, Brian, I think there's an even a bigger question that I'm going to add on to that one: that if we can get a federal highway bill, which I agree with you, I'm not going to make it a miracle work, but I'm going to say that there's a 50-50 chance, maybe even better, that we'll get some by the end of year. Some of the work that's been done over the last couple of weeks is fairly encouraging, especially on the Senate side and then the House side is now saying you give us a three-month extension and we'll work with you on something for the back half of the year. So, that's good news, but that's one thing, the federal highway bill. I think what you're going to see, and I think that all by itself would have a slight upward tick in the pricing. But I think the bigger deals, if you couple that, Brian, with what these states are doing themselves, I think you're going to start seeing the combination of those two is going to increase the overall volume of work bidding at the DOT level and change pricing even more. And so I think you're going to see a combination of events here. And I think maybe even late this year and in 2016, it's going to have a nice effect on the rip – we call it the rip and read market, which is the lowest priced market in the industry today, is the standard DOT rip and read is the most competitive part of the business. The other thing that happens is as we continue to see the private sector, commercial/industrial, and again, we haven't seen the residential side yet – as we see those other sides grow, what we're going to end up seeing is people migrating back towards the private sector, and that's going to once again create less competition on the public sector and that pricing will change as well.

Okay. From the standpoint of kind of (47:40) you talked about the heyday of some of those upper teens in the construction side, on the EBIT side. If you look on the materials and quarry side, as you recover, do you see that external to internal mix shifting as you continue to fund more of your own internal backlog jobs, or is that 60-40 kind of where we're going to see? James Hildebrand Roberts - President, Chief Executive Officer & Director: Well, I think that it probably isn't going to change dramatically, because what we're really looking at is the combination of both internal and external growing like we've seen so far this year. And I think what you're going to see is you're going to see the internal part grow, along with the external part. So I don't think the actual ratios are going to change dramatically, and I'm kind of hoping they don't. I'd always like to see the external part grow, but it's also very healthy to have that internal work in there at the same time. And I think you're going to continue to see that part grow. So, I don't think it's going to change dramatically, Brian.

Yeah, Jim, if you see on the construction side, going back to that, again, that heyday of the mid-2000s, in the turn business today, is there any difference in the type of work, the number of jobs -- you talked a little bit about the residential, I think that would be a difference -- the dollar volume, the duration of the work, local streets versus industrial parts, any different in the mix of the construction business today versus where it was ex the margins that we talked about? James Hildebrand Roberts - President, Chief Executive Officer & Director: Not really, except that I still think the private sector has a lot more growth opportunity because of the residential. I also think and I mentioned this before that things that are hot like the renewable energy market right now is a nice amount of work. We're also seeing more of a regional transportation or really quasi-municipal setup programs that are bigger than they used to be because the DOTs are actually smaller overall. But this public work, we may have specialized groups to go focus on individual projects, those are starting to increase. So, I think you're seeing a less DOT, more quasi-municipal, and then a shift in the private sector towards industrial and commercial.

Thanks, Jim. James Hildebrand Roberts - President, Chief Executive Officer & Director: You bet.

The next question comes from Adam Thalhimer – I'm sorry, I can't pronounce your name – with BB&T Capital Markets. Please go ahead. Adam Robert Thalhimer - BB&T Capital Markets: No worries. Thanks. Good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Adam. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning. Adam Robert Thalhimer - BB&T Capital Markets: Jim, can you give – you threw some numbers on the potential additional funding from California. Can you go over those numbers again? James Hildebrand Roberts - President, Chief Executive Officer & Director: You bet, you bet. So, the governor called for, first of all, it's interesting when you look at California as a economy in itself. I mean it's got somewhere close to about $115 billion budget they just passed. And two things occurred when they passed their annual budget in the state of California. The governor came out and said that there are two things that need to be addressed outside of the normal budget. And I want you, the legislature, to get into a special session and focus on these two issues, they need to be resolved. One of them was healthcare and the other was infrastructure and transportation improvements. So, this special session that's put into play today had previously had some of the overall – the legislature looking at prior to the special session. Several of the Senators and assembly men had or assembly people had actually had put forth some bills in the general session that got kicked out to the special session. So on the Democratic side, they put together a couple of bills in the $2 billion to $3 billion annual range addition to the current $2.5 billion program, and they put those out…

This is the end of Q&A. And now, I'd like to turn the call back over to our host. James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay, everybody. Well, thank you for your questions. To our employees, thank you for what you do every day. I can't tell you how proud I am of you for the hard work that you perform every day, and more importantly, in the way you conduct yourself each and every day at Granite. So thank you for who you are. To all of our investors, please do not hesitate to reach out, to see if we will be able to make it your way soon, and finally, Ron, Laurel and I are available for follow up, if you have any further questions. Thank you everybody for your time.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. .