Good morning. My name is Chad, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Investor Relations Third Quarter 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Please note, today's call is being recorded. After the speakers' remarks, there will be a question-and-answer period. Please also note, we will take one question and one follow-up question from each participant. It is now my pleasure to turn the floor over to your host to Granite Construction, Director of Investor Relations, Ron Botoff. Sir, the floor is yours.

Welcome to the Granite Construction, Incorporated third quarter 2015 earnings conference call. I'm here today with our President and Chief Executive Officer, Jim Roberts; and our Senior Vice President and Chief Financial Officer, 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. 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. Certain non-GAAP measures may be discussed during the call and from time-to-time by the company's executives. And please note that a reconciliation of certain non-GAAP measures is included as part of our third quarter earnings press release. For more information, 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 good morning, everyone. Following another quarter of steady growth and solid performance, I first want to congratulate Granite teams across the country. The focus on execution throughout our business is driving improved results across geographies and across end markets. Our constant focus on safety remains a steady contributor to our performance and I am quite proud of the fact that we again are riding this trend toward another year of record company safety performance. Another bright spot, speaking of records, our backlog at $3.1 billion once again moved the bar higher for us this quarter. I am particularly proud of our results in the third quarter. Lukewarm public…

Thank you very much. The first question comes today from Daniel Scott with Cowen & Company. Please go ahead. Daniel Scott - Cowen & Co. LLC: Hey. Good morning, guys. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Dan. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning. Daniel Scott - Cowen & Co. LLC: You mentioned there at the end of the comments that obviously the major projects are early stages and lower margin, other than Tappan Zee, they're all earlier in life and half way. What year are we looking at for the existing portfolio of Large Projects where they will kind of hit their max profitability level for lack of a better term? James Hildebrand Roberts - President, Chief Executive Officer & Director: Well, I would say out of those four now, again, it's going to depend on the new wins as well. So, on those four mega projects, I would suggest to you next year we'll be in full stride on all four of them. But remember, as we continue to build new projects, which we absolutely anticipate we will, we'll hit on a few of these coming up, it is going to really again weight the portfolio towards those four getting into the maturity stages and then some younger ones in the preliminary stages. So it will continue to evolve, Dan, over time, but those four, probably 2016 and 2017, they'll be hitting on all strides. Daniel Scott - Cowen & Co. LLC: Okay, great. And then last quarter you made comments about aggregates pricing was encouraging. And I think you said it was especially the higher quality products were showing the most strength. Is that trend continuing? James Hildebrand Roberts - President, Chief Executive Officer &…

The next question comes from Michael Dudas with Sterne Agee.

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

Don't want to – I'll knock on wood here. So if things maybe turn out more positively with new Speaker, House and Senate getting together. Everybody's loving each other now in Washington, so they say. Can you take me through how this would evolve for the industry in general and how for Granite particular, how much time, lag time, how pent-up are fittings, can we see meaningful activity in 2016 from this type of certainty? I know it's going to be very geographic and such related, but maybe just share your observation on how that might occur for the industry and for Granite? James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay, Mike. So, maybe let me go back and give you my opinion of what's happening first and it hasn't changed actually in the last two quarters. As we expected, whether it is a Boehner as Speaker or Ryan as Speaker or whether it is Inhofe or Boxer heading up public work side of the Senate, we're looking at end of the year bill coming into fruition and as we got these extensions over the last week from the House side moving and the Senate moving to November 20 date for a highway bill, that's a really good sign. If you read and talk to a lot of the people that are in the know in D.C., you'll hear a very strong level of optimism that they are working behind scenes to get something done. And if you follow what happens in D.C., well if we get a bill out of the House and they get a bill which supposed to be the working on this week heavily and we go back to the July bill, call it the back from the Senate. If we can get…

Very helpful, Jim. My follow-up would be, given tomorrow being election day, I don't know if there's any initiative that you guys have on your screen throughout the U.S. that might be helpful, but maybe even talk about – maybe for 2016, certainly with California you mentioned in your prepared remarks, do you anticipate in a 2016 election there will be a lot of those types of opportunities to kind of dovetail with some of this momentum you are seeing come out of Washington? James Hildebrand Roberts - President, Chief Executive Officer & Director: I do. In fact, let me go back and give you obviously the two big states that I mentioned real briefly in my remarks. California, it has been battling back and forth ever since the end of the regular session when they put together a special session starting in July and August and they've been running all the way through November now trying to put together a long-term $59 billion shortfall mechanism in the State of California. The special session I had the privilege of talking with them, in front of them two weeks ago and they're going to get something done in California, that's fairly clear, the question is going to be when. And then if you look at what's going in California, the Governor's proposal is a $36 billion 10-year program with a shortfall of $59 billion, so there are a host of legislators that believe that the $36 billion is not large enough, which of course you can imagine, Mike, I agree with them. So, that one is going to probably take a little time to work out because they've got a host of mechanisms and this is what's happening in most of these states. You're looking at potentially increased gas, diesel taxes;…

Jim, that's quite encouraging. Thanks for your thoughts. Appreciate it. James Hildebrand Roberts - President, Chief Executive Officer & Director: Thanks, Mike.

The next question comes from Jerry Revich with Goldman Sachs. Jerry David Revich - Goldman Sachs & Co.: Good morning, everyone. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Jerry. Jerry David Revich - Goldman Sachs & Co.: I'm wondering if you could just talk about what's the cadence of major Large Project awards on bids that you're involved with? Can you help us get a sense what the next couple of quarters should look like from an activity standpoint? James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay, maybe ask that again, Jerry. You want to know which projects we're bidding? Jerry David Revich - Goldman Sachs & Co.: So, out of the projects that you're bidding and in your slide deck, you typically have a list of 10 Large Projects that you're bidding, I'm wondering if you'd just talk about when those projects are expected to be awarded. James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay. Very good. So, a couple of them that I mentioned in my discussions earlier, we've got a Large Project bidding in Arizona, the Loop 202 South Mountain Freeway. That job just is turning in as we speak this week and that one will have an answer in January, as to who will be the winner of that project. And that's over $1 billion project. The Purple Line light rail job in Maryland, we've been talking about this one for quite some time, it goes in in December. We will most likely hear about that sometime in late in the first quarter where that goes. So that one's on the move fairly quickly. What other one did I mentioned to you…

The next question comes from Mike Shlisky with Seaport Global Securities.

Good morning, guys. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Mike.

Can you just share with us, I guess – so what's being talked about in a conference here in Congress? Is this a bill that could come out or could get passed? Is this in line with what you were hoping for from a highway bill? Is it bigger or smaller than what you were thinking about, maybe back when this whole thing first started many, many years back? James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay, Mike. Well, let me be very candid and open with you upfront. Is that what I had hoped for, absolutely not. But, probably what I had hoped for was never going to happen, Mike. So, let's be realistic. But the key ingredient I think from the feds really is not the size of the program, it is the longevity and the certainty that it provides long-term for the industry. So, from that perspective, I am very happy that it's a six year bill. Now, one of the things that both the Senate and the House have been focusing on is trying to figure out the funding mechanism for the back three years. They both agreed so far in their individual bills that they will fund it for three years, but they've got to find more funding in the back half. So, I am fine with the overall value increase. It's an incremental increase on an annual basis over the six year period which is fine. I'd like to see a little more TIFIA money in the finished product. They've got the TIFIA monies at about $200 million to $300 million with about a 30 multiple projection of what it puts into the overall transportation economy. So, down the middle, that's about another $7.5 billion annually. I'm fine with all the money part. Not what I hoped for, but I'm actually fine with it, because I think it creates value. I think what we need to do now between now and I'll say November 20, as we get into conference, is we need to do a little more work on how we're going to fund the back half of the overall bill.

Got it. Yeah. Got it. And my follow up is, I'm getting the sense that if a big bill like this is passed, are there some companies out there that perhaps were prequalified here, could start to ramp up and hire people to kind of get themselves prepared? And perhaps broadly can you give us your overall thoughts on the state of obtaining and keeping labor on your team for the next, let's say 12 months to 18 months? James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay. So, labor is certainly a discussion. But let me get into that in just a second. So, I don't think that, that what happens in this industry is you can't be in and out of the industry, one day out and then back in the next day. So, I don't see a highway bill changing the competitive landscape from adding a whole bunch of new players. What I do see is there will be more competition for labor and fixed resources. What will happen is that companies like Granite, we've got tremendous elasticity, we've actually shrunk that portion of our business that I think will be affected by highway bill, and that would specifically be our vertically integrated business. They will be the largest beneficiaries of a highway bill. And those – they have set labor forces in their markets and obviously we're a major player in most of the markets we work in. So, I think it's actually advantageous to people like us that have a strong presence already in the marketplace. I think the industry as a whole, Mike, the issue is going to be is do we enough labor force in the overall industry. I'm very comfortable with the wage rates that Granite pays and the relationships we have with our employees that will be able to increase our work force. But I do think that you have to be in the market today to take advantage of the highway bill that we're about to get.

Great. Thanks, guys. I appreciate it.

The next question comes from Adam Thalhimer with BB&T. Adam Robert Thalhimer - BB&T Capital Markets: Hey, good morning, guys. 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: Nice quarter. In the Construction segment, you had a very strong margin in the quarter and you said that you had some contribution there from Kenny. I'm just curious whether is that a good run rate going forward or were there some unusual items in the quarter? James Hildebrand Roberts - President, Chief Executive Officer & Director: Well, let's do it this way. Again, we don't talk about individual segments relative to run rates and guidance and all that, but I will say this, and I'm glad you brought it up. The Kenny business is progressing very, very nicely. Obviously that was a very nice acquisition for Granite. They are a great team. The two portions of the business that showed really strong encouragement in the third quarter was the underground business, which is our rehabilitation and pipelining business, and our power business, which is very strong with the utilities and our relationship in the construction management role with a lot of these large utilities across the country. I see that sustaining itself nicely over time, and those both have very nice markets. Interestingly enough, the two lines that I didn't discuss are progressing nicely in Kenny as well. We're expanding our civil business in the Midwest and we have some new, young, very talented management that's helping us to expand that business very nicely. And then the other thing I didn't talk about was the power business. It's been a really good business for us. We…

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. John Bergstrom Rogers - D.A. Davidson & Co.: Couple of just follow up. In terms of the – just going back to the Large Project business and your comments Jim about three of those four Large Projects that were driving business in the quarter not really hitting stride yet. With the way you estimate margins for these projects, can you just give us a sense of the range between the margins in the early stages and at the back half, and still expectations that – I assume that this is a mid to high-teens project business. Is that correct? James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay. Yeah, John, I think that that's a good question. I think let me state it to begin with that. You know our business quite well and we've always said that our Large Project business is a mid-teen margin business and we continue to believe that that is the case and that is our expectation. But what we end up doing when we bid and build our work, we definitely hold back, and I'm going to call it contingencies, upfront. There are a lot of unknowns once we start with this work. And we create contingencies with milestones attached to them so that as we get more comfortable and confident as the progression of the job assuming we didn't run into an issue, we release contingency as the job progresses. Now, what's happening is about the way we have created most of our milestones is that they don't tend to get to the release…

The next question will come today from Min Cho with FBR Capital Markets. Min Chung Cho - FBR Capital Markets & Co.: Great. Thank you. Jim, quick question, just about international competition. Obviously, it's happening, it's inevitable in the larger projects. But can you tell us if you're starting to see any impact on pricing on the projects that you're bidding on and if it's impacting any win rates? James Hildebrand Roberts - President, Chief Executive Officer & Director: That actually is a very interesting environment. And we have seen increased competition from international companies, and I think it has affected the prices. They're winning their share. I will say this, it's not affecting what we think we need to get out of our work in Large Projects. We continue to be very disciplined in the margin expectations that we have on Large Projects. We have noticed that when we don't win a project and it is potentially an international competitor that does beat us, some of the pricing can make you shake your head and question whether or not it is overly aggressive. But that's somebody else's business. And if they want to stay that aggressive in what I consider to be a high risk, high reward business, that's certainly their choice. But for us, we're going to stay disciplined and keep our pricing where it is. And the other thing I would suggest to you on these large Large Projects, the majority of the win or lose will come out of the innovativeness of how you design, how you build, how you finance the work. It typically is not based on the margin. And we consistently look at whether we get a project or don't, it's based on how the project has come together with us, working with our designers and our financers. So I don't think margin is an issue, but I have seen some international competition is bidding the work very cheap. Min Chung Cho - FBR Capital Markets & Co.: Okay. And then, Laurel, I'm assuming the Folsom Dam project was completed in the quarter. Were there any significant contingencies there that had an impact on Large Project margins? Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Our 10-Q is going to be released today. But the revisions and estimates aren't significant, net and year-over-year, so. James Hildebrand Roberts - President, Chief Executive Officer & Director: Yeah. I think that it was completed, but it's got some work we're doing with the owner, the Corps of Engineers, to get it totally cleaned up. The majority of the work is basically completed, but it is not a significant player on the financials in the third quarter. Min Chung Cho - FBR Capital Markets & Co.: Okay. Great. Thank you.

Ladies and gentlemen, our final question today will come from Nick Coppola with Thompson Research Group.

Hi. Good morning. James Hildebrand Roberts - President, Chief Executive Officer & Director: Good morning, Nick. Laurel J. Krzeminski - Chief Financial Officer & Senior Vice President: Good morning, Nick.

So, looking at the Construction segment again, apart from the industrial type work and private type work, can you just talk more about public trends, the competitive environment there, whether it's getting any better and what's happening with bid lists? James Hildebrand Roberts - President, Chief Executive Officer & Director: Yeah. So when you say public, let's talk about the different kinds of public work. Certainly you have your DOTs, which would be the majority of the largest public sector. The other areas would be municipalities, the cities, the counties. And I would say that the bid lists are stagnant, I'd say in the five range to six range, we've been talking about that for quite some time. And I would say the pricing is just stable, it's the same as it has been. I haven't seen it get better and I haven't seen it get a whole lot worse. Overall, I think that as we get to a larger program, I think that's when you're going to start seeing the pricing move. But with the programs being diminished today, some of the state programs just starting to kick in, you get a federal highway bill that kicks in, that's when I'm going to see probably the smaller bid list, Nick, and the higher pricing opportunities, but it hasn't happened yet. So everything we're doing is pretty much in a stable environment for the last 12 months.

Have you been seeing any regional highlights that are by state when you look across your offices? James Hildebrand Roberts - President, Chief Executive Officer & Director: Well, we have and I really try not to dive into individual states. But certainly I'll give you one state that I think is healthier than it was four years or five years ago, and that's California. It's done quite a bit better overall. And I think it's really the private sector that's driving it in California. You look at the overall work we're doing, we're building some major complexes for new office space. We're really heavily involved in the solar work. We're really doing a lot more private work in California. So one of the bright spots out of all the states would be California. And also we're seeing some picked up activity in the other states around there as well, but obviously California is one of our biggest state in the country.

Okay. Then my last question. Can you just talk a little bit more about what Prop 7 would do for your business, particularly how much incremental demand for Larger Projects could that drive? James Hildebrand Roberts - President, Chief Executive Officer & Director: Yeah, okay. So, Prop 7, the way I read Prop 7 is that I don't think it's going to have a huge effect on our business overnight for two reasons. First of all, in Texas, the work that we do there is mostly Large Projects.

Right. James Hildebrand Roberts - President, Chief Executive Officer & Director: And those are focused on – I'll call it quasi-municipal, quasi-public agencies that have revenue streams that allow them to build these $1 billion jobs. I don't see Prop 7 affecting those Large Projects. What I see Prop 7 doing is increasing the day-to-day smaller work in Texas, of which I would love to see Granite have a larger role in the State of Texas. So between Prop 1 and Prop 7, I think what you're going to see is an enhanced local programs, which will help us in the overall Larger Projects because we do compete with some local players in Texas on the larger work. So I think they're going to probably be pretty darn happy with the local work and they may not migrate into the Large Projects. But Prop 7, I don't see the way it's written today that it's going to have a large play in Large Projects funding.

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

Ladies and gentlemen, that concludes our Q&A portion of today's call. So I would like to turn the call back over to our hosts. James Hildebrand Roberts - President, Chief Executive Officer & Director: Okay. Everyone, thank you for your questions. And thank you again to the Granite employees for working hard, working safely, and living the Granite core values every single day. We look forward to seeing a few of you in Dallas to tour our I-35E project next Monday. Please let us know if you have interest in joining us down in Texas. As always, Laurel, Ron and I are available for follow-up, if you have any questions at all. Thank you, everybody.

Thank you. The conference is now concluded. Thank you for attending. You may now disconnect.