Net income in Q309 was $30.6 million vs. $51.7 million a year ago
Revenue decreased 20% in Q309 to $720.3 million
Backlog in Granite East increased 17% year over year
Financial position remains strong with $399.2 million in cash and
short-term marketable securities
WATSONVILLE, Calif., Oct 28, 2009 (BUSINESS WIRE) -- Granite Construction Incorporated (NYSE: GVA) today reported net income
of $30.6 million for the third quarter of 2009 compared with $51.7
million for the third quarter of 2008. Diluted earnings per share for
the third quarter of 2009 were $0.79 compared with $1.35 for the third
quarter of 2008.
"In the midst of a challenging economic environment, we remain focused
on project execution and acquiring quality backlog," said William G.
Dorey, Granite president and chief executive officer. "In that regard, I
am pleased to report approximately $730.0 million in new awards in the
third quarter.
"In the West, the current bidding environment for small projects is one
of the toughest we have experienced, marked by an oversupply of
contractors as well as public funding challenges. While this is having
an impact on our short-term performance, we are pursuing a full pipeline
of larger projects that have the potential to deliver strong margins.
With a solid balance sheet and experienced teams, Granite is
well-positioned to successfully compete for these larger project
opportunities.
"Additionally, as we announced last month we are currently implementing
a new organizational structure at Granite that will strengthen our
business by leveraging resources and gaining efficiencies throughout the
company. Our goal is to create a more scalable structure that aligns
with current business trends while positioning Granite for long-term
profitable growth."
Third-quarter 2009 Financial Results
Total Company
Total revenue for the quarter ended September 30, 2009 was $720.3
million compared with $897.8 million in 2008.
Gross profit as a percentage of revenue for the quarter was 15 percent
compared with 16 percent in 2008 driven by the competitive bidding
environment in the West offset by improved operating results in the
East.
Gross profit on the sale of construction materials was $7.0 million in
2009 compared with $15.4 million in 2008 primarily as a result of
lower sales volume.
General and administrative expenses decreased $11.4 million to $60.5
million compared with $71.9 million in 2008. The decrease was
primarily related to a reduction in bad debt expense of approximately
$8.0 million and lower incentive compensation and salaries expense.
Operating income for the quarter was $46.3 million compared with $74.4
million in the prior year.
During the third quarter 2009, the company's real estate investment
segment recorded a $0.7 million pre-tax impairment charge related to
residential property located in Oregon.
Net income attributable to noncontrolling interests in joint ventures
increased from $0.6 million in 2008 to $5.9 million in 2009. The
increase is associated with a large project that had not reached the
profit recognition threshold in the third quarter 2008 and the effect
of changes in estimates related to certain joint venture projects.
At September 30, 2009, cash and short-term marketable securities
totaled $399.2 million, including $121.1 million of cash and cash
equivalents associated with the company's consolidated joint ventures.
Total contract backlog at September 30, 2009, was $1.6 billion
compared with $1.8 billion at September 30, 2008.
Granite West
Revenue for the third quarter totaled $564.1 million compared with
$749.5 million for the same period in 2008 reflecting intense
competition for public works projects, reduced public sector funding
and lower demand for construction materials.
Gross profit as a percentage of revenue for the quarter decreased to
15 percent compared with 18 percent in 2008. The margin compression
was primarily a product of lower gross margins on both public sector
construction projects and construction materials sales.
Operating income for the quarter decreased $37.3 million to $56.3
million compared with $93.6 million for the third quarter of last year.
Granite East
Revenue for the third quarter totaled $155.2 million compared with
$146.9 million for the same period in 2008.
Gross profit as a percentage of revenue for the quarter was 13 percent
compared with 7 percent in the same period last year driven primarily
by a high quality project portfolio and improved project execution.
Operating income for the quarter increased $8.3 million to $12.1
million compared with $3.8 million for the third quarter of 2008.
Outlook
The company now expects Granite West revenue in 2009 to be between $1.4
billion and $1.5 billion with an improved gross profit margin percentage
between 15.5 percent and 16.5 percent. Additionally, the company expects
Granite East revenue in 2009 to be in the range of $600.0 million and
$650.0 million with gross profit margin percentage between 16.5 and 17.5
percent. Net income attributable to noncontrolling interests in joint
ventures is now expected to be approximately $26.0 million for the year.
As part of its evolution to become a more efficient and effective
organization, Granite announced the reduction of approximately 160
salaried positions across the country. Pre-tax charges associated with
Granite's reorganization are estimated to be approximately $6.0 million
and will be recognized primarily in the fourth quarter of 2009. The
company estimates annualized pre-tax savings associated with
personnel-related costs to be approximately $11.0 million.
Conference Call
Granite will conduct a conference call tomorrow, October 29, 2009, at
8:00 a.m. PT/11:00 a.m. ET to discuss the results of the third quarter
ended September 30, 2009. Access to a live audio webcast is available at www.graniteconstruction.com/investor-relations.
The live conference call may be accessed by calling (877) 693-6483 and
(706) 758-5304 for international listeners. The conference ID for the
call is 35941051. The call will be recorded and available for replay
from approximately two hours after the live audio webcast through
November 13, 2009 by calling (800) 642-1687 or (706) 645-9291. The
conference ID for the recording is 35941051.
About Granite
Granite Construction Incorporated is a member of the S&P 400 Midcap
Index, the Domini 400 Social Index, and the Russell 2000. Granite
Construction Company, a wholly owned subsidiary, is one of the nation's
largest diversified heavy civil contractors and construction materials
producers. Granite Construction Company serves public- and
private-sector clients through its offices and subsidiaries nationwide.
For more information about Granite, please visit its Web site at www.graniteconstruction.com.
Forward-looking Statements
This press release contains statements that are not based on historical
facts and which may be forward-looking in nature. Under the Private
Securities Litigation Reform Act of 1995, a "safe harbor" may be
provided to Granite for certain of these forward-looking statements.
Words such as outlook, believes, expects, appears, may, will, should,
anticipates, and the negatives thereof or comparable terminology are
intended to identify these forward-looking statements. These
forward-looking statements are estimates reflecting the best judgment of
Granite's senior management and are based on its current expectations
and projections concerning future events, many of which are outside
Granite's control and involve a number of risks and uncertainties that
could cause actual results to differ materially from those suggested by
the forward-looking statements. Factors that might cause or contribute
to such differences include, but are not limited to, those risks
described in Granite's Annual Report under "Item 1A. Risk Factors."
Except as required by law, Granite undertakes no obligation to revise or
update any forward-looking statements for any reason. As a result, the
reader is cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release.
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share and per share data)
September 30,
December 31,
September 30,
2009
2008
2008
ASSETS
Current assets
Cash and cash equivalents
$
371,434
$
460,843
$
281,046
Short-term marketable securities
27,798
38,320
101,112
Accounts receivable, net
382,572
314,733
480,315
Costs and estimated earnings in excess of billings
38,011
13,295
34,759
Inventories, net
51,972
55,223
61,342
Real estate held for development and sale
135,306
75,089
52,165
Deferred income taxes
43,356
43,637
46,233
Equity in construction joint ventures
58,450
44,681
45,219
Other current assets
41,185
56,742
65,182
Total current assets
1,150,084
1,102,563
1,167,373
Property and equipment, net
530,661
517,678
522,733
Long-term marketable securities
62,612
21,239
30,209
Investment in affiliates
21,309
19,996
27,518
Other noncurrent assets
80,233
81,979
73,696
Total assets
$
1,844,899
$
1,743,455
$
1,821,529
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt
$
68,194
$
39,692
$
34,886
Accounts payable
211,670
174,626
234,126
Billings in excess of costs and estimated earnings
187,205
227,364
251,402
Accrued expenses and other current liabilities
209,806
184,939
227,611
Total current liabilities
676,875
626,621
748,025
Long-term debt
233,582
250,687
246,487
Other long-term liabilities
48,884
43,604
46,178
Deferred income taxes
17,917
18,261
18,733
Equity
Preferred stock, $0.01 par value, authorized 3,000,000 shares;
none outstanding
-
-
-
Common stock, $0.01 par value, authorized 150,000,000 shares in
2009 and in 2008; issued and outstanding 38,669,447 shares as of
September 30, 2009, 38,266,791 shares as of December 31, 2008 and
38,264,058 shares as of September 30, 2008
387
383
383
Additional paid-in capital
92,356
85,035
83,041
Retained earnings
724,621
682,237
655,287
Accumulated other comprehensive loss
-
(146
)
(3,334
)
Total Granite Construction Inc. shareholders' equity
817,364
767,509
735,377
Noncontrolling interests
50,277
36,773
26,729
Total equity
867,641
804,282
762,106
Total liabilities and equity
$
1,844,899
$
1,743,455
$
1,821,529
September 30,
December 31,
September 30,
FINANCIAL POSITION
2009
2008
2008
Working capital
$
473,209
$
475,942
$
419,348
Current ratio
1.70
1.76
1.56
Debt to Granite Construction Inc. shareholders' equity capitalization
0.27
0.27
0.28
Total liabilities to Granite Construction Inc. shareholders' equity
ratio
1.20
1.22
1.44
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2009
2008
2009
2008
Revenue
Construction
$
647,776
$
771,941
$
1,368,111
$
1,755,457
Construction materials
71,527
124,478
158,688
283,321
Real estate
981
1,369
1,932
8,142
Total revenue
720,284
897,788
1,528,731
2,046,920
Cost of revenue
Construction
549,053
643,531
1,123,038
1,437,093
Construction materials
64,528
109,068
145,991
247,959
Real estate
1,531
887
3,272
9,846
Total cost of revenue
615,112
753,486
1,272,301
1,694,898
Gross profit
105,172
144,302
256,430
352,022
General and administrative expenses
60,465
71,933
169,766
198,344
Gain on sales of property and equipment
1,549
2,008
6,878
4,564
Operating income
46,256
74,377
93,542
158,242
Other income (expense)
Interest income
744
5,439
3,914
15,087
Interest expense
(4,245
)
(5,303
)
(10,586
)
(12,871
)
Equity in income (loss) of affiliates
4,021
(1,257
)
4,360
(1,436
)
Other income, net
3,062
549
8,278
9,196
Total other income (expense)
3,582
(572
)
5,966
9,976
Income before provision for income taxes
49,838
73,805
99,508
168,218
Provision for income taxes
13,300
21,473
26,316
46,681
Net income
36,538
52,332
73,192
121,537
Amount attributable to noncontrolling interests
(5,940
)
(594
)
(15,725
)
(31,058
)
Net income attributable to Granite Construction Inc.
$
30,598
$
51,738
$
57,467
$
90,479
Net income per share attributable to common shareholders:
Basic (1)
$
0.79
$
1.35
$
1.49
$
2.35
Diluted (1)
$
0.79
$
1.35
$
1.49
$
2.35
Weighted average shares of common stock:
Basic
37,595
37,430
37,552
37,664
Diluted
37,709
37,557
37,670
37,760
Note:
(1) Computed using the two-class method as required by the
accounting standards adopted on January 1, 2009.
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Nine Months Ended September 30,
2009
2008
Operating activities
Net income
$
73,192
$
121,537
Adjustments to reconcile net income to net cash provided by
operating activities:
Impairment of real estate held for development and sale
1,686
4,500
Depreciation, depletion and amortization
59,048
64,036
(Recovery of) provision for doubtful accounts, net
(3,844
)
8,914
Gain on sales of property and equipment
(6,878
)
(4,564
)
Change in deferred income taxes
(518
)
1,116
Stock-based compensation
7,869
5,135
Excess tax benefit on stock-based compensation
(670
)
(743
)
Gain from trading securities
(431
)
-
Equity in (income) loss of affiliates
(4,360
)
1,436
Acquisition of noncontrolling interest
-
(16,616
)
Changes in assets and liabilities, net of the effects of acquisition
and consolidations
(67,511
)
(79,854
)
Net cash provided by operating activities
57,583
104,897
Investing activities
Purchases of marketable securities
(61,974
)
(68,732
)
Maturities of marketable securities
32,610
64,090
Release of funds for acquisition of noncontrolling interest
-
28,332
Additions to property and equipment
(75,773
)
(76,098
)
Proceeds from sales of property and equipment
10,089
12,253
Acquisition of businesses
-
(14,022
)
Contributions to affiliates
(4,969
)
(5,345
)
Issuance of notes receivable
(4,270
)
-
Other investing activities
450
626
Net cash used in investing activities
(103,837
)
(58,896
)
Financing activities
Proceeds from long-term debt
8,384
2,660
Long-term debt principal payments
(18,139
)
(15,748
)
Cash dividends paid
(15,031
)
(15,081
)
Purchase of common stock
(2,840
)
(45,489
)
Contributions from noncontrolling partners
239
4,955
Distributions to noncontrolling partners
(16,490
)
(37,713
)
Acquisition of noncontrolling interest
-
(11,716
)
Excess tax benefit on stock-based compensation
670
743
Other financing
52
-
Net cash used in financing activities
(43,155
)
(117,389
)
Decrease in cash and cash equivalents
(89,409
)
(71,388
)
Cash and cash equivalents at beginning of period
460,843
352,434
Cash and cash equivalents at end of period
$
371,434
$
281,046
GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - in thousands)
Three Months Ended September 30,
Nine Months Ended September 30,
Granite West
Granite East
Granite Land Company
Granite West
Granite East
Granite Land Company
2009
Revenue
$
564,089
$
155,214
$
981
$
1,109,442
$
417,357
$
1,932
Gross profit (loss)
$
85,499
$
20,223
$
(550
)
$
181,320
$
76,450
$
(1,340
)
Gross profit (loss) as a percent of revenue
15.2
%
13.0
%
-56.1
%
16.3
%
18.3
%
-69.4
%
Operating income (loss)
$
56,299
$
12,052
$
(1,221
)
$
98,073
$
55,136
$
(4,159
)
Operating income (loss) as a percent of revenue
10.0
%
7.8
%
-124.5
%
8.8
%
13.2
%
-215.3
%
2008
Revenue
$
749,487
$
146,932
$
1,369
$
1,506,952
$
531,826
$
8,142
Gross profit (loss)
$
133,904
$
9,916
$
482
$
266,457
$
87,269
$
(1,704
)
Gross profit (loss) as a percent of revenue
17.9
%
6.7
%
35.2
%
17.7
%
16.4
%
-20.9
%
Operating income (loss)
$
93,570
$
3,819
$
(191
)
$
154,684
$
67,196
$
(3,795
)
Operating income (loss) as a percent of revenue
12.5
%
2.6
%
-14.0
%
10.3
%
12.6
%
-46.6
%
GRANITE CONSTRUCTION INCORPORATED
Contract Backlog
(Unaudited - in thousands)
Contract Backlog by Segment
September 30, 2009
June 30, 2009
September 30, 2008
Granite West
$
553,728
34.3
%
$
824,676
53.8
%
$
915,472
50.3
%
Granite East
1,058,540
65.7
%
707,567
46.2
%
906,116
49.7
%
Total
$
1,612,268
100.0
%
$
1,532,243
100.0
%
$
1,821,588
100.0
%
SOURCE: Granite Construction Incorporated
Granite Construction Incorporated Jacque Fourchy, 831-761-4714 (Investor)
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