Granite Announces First Quarter 2008 Results

WATSONVILLE, Calif., April 30, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Granite Construction Incorporated (NYSE: GVA) today announced net income for the first quarter ended March 31, 2008 of $13.1 million or $0.34 per diluted share, compared with a net loss of $2.2 million, or $0.05 per diluted share, for the same period last year. Operating income for the quarter increased significantly to $38.4 million, compared with an operating loss of $5.6 million a year ago. Total revenues for the quarter decreased 7% to $454.8 million, compared with $487.7 million a year ago.

"We were very pleased with our first quarter results, particularly the strong quarter posted by Granite East," said William G. Dorey, President and Chief Executive Officer. "We continue to improve the overall performance of our large projects business and are very pleased with our progress to date. Granite West faced some challenges in the quarter but our strategy of pursuing geographic as well as project diversity helped us deliver positive first quarter results in this difficult economic environment."

Other income for the quarter ended March 31, 2008 was positively affected by a gain of approximately $9.3 million from the sale of gold, which is a by- product of one of our aggregate mining operations.

Total company backlog at March 31, 2008 was $1.9 billion, a decrease of $0.6 billion from $2.5 billion at March 31, 2007. This decrease in backlog primarily reflects the progress on projects in Granite East as well as a reduction in new large project awards over the past twelve months.

General and administrative expenses for the quarter totaled $60.7 million or 13.3% of revenue compared with $54.3 million or 11.1% of revenue for the first quarter of 2007. The increase was primarily due to general and administrative costs related to the operation acquired from the Superior Group of Companies in April 2007 and higher accrued variable compensation due to higher income in the 2008 quarter.

Minority interest for the quarter ended March 31, 2008 was $22.5 million as compared to $2.4 million in the first quarter of 2007. This increase was largely due to our joint venture minority partners’ share of the improved Granite East project performance.

During the quarter ended March 31, 2008, the Company purchased and retired 1.4 million shares of its common stock at a total cost of approximately $43.2 million, representing an average cost of approximately $32 per share.

Results by Segment

Granite West revenue for the quarter totaled $240.0 million compared with $298.1 million for the same period in 2007. Gross profit as a percent of revenue for the quarter ended March 31, 2008 was 16.7% compared to 17.6% last year. Operating income decreased $16.1 million for the quarter to $4.8 million compared with $20.9 million for the first quarter last year. 2008 operating results were negatively affected, relative to last year, by a rainy winter, increased competition in some markets for construction services and reduced demand for construction-related materials.

Granite East revenue for the quarter increased 16% to $214.1 million compared with $184.7 million for the same period last year. Gross profit (loss) as a percent of revenue for the quarter ended March 31, 2008 was 27.6% compared with (4.3)% in the prior period. Operating income was $52.1 million as compared to an operating loss of $17.2 million for the same period in 2007. The increase is largely due to a claim settlement executed during the quarter on the State Route 22 project in Southern California, as well as improved performance on certain other large projects. In addition, a large joint venture design-build project reached the profit recognition threshold during the quarter.

Granite Land Company revenue for the quarter decreased $4.2 million to $0.7 million compared with $4.9 million for the same period last year. An operating loss of $0.5 million was reported as compared to operating income of $2.9 million in the first quarter of 2007. The first quarter 2007 results were positively affected by the sale of certain real estate development projects.

Outlook

"Our 2008 outlook includes revenue expectations for Granite West in the range of $1.8 to $2.0 billion with corresponding gross profit margin between 15% and 17%. Granite East is currently expected to reach an average gross profit margin for the year of 14% to 16% on revenue between $700 and $800 million. In addition, we anticipate minority interest for the total company to be approximately $45.0 to $50.0 million," said Dorey.

Conference Call

Granite will conduct a conference call tomorrow, May 1, 2008, at 11:00 a.m. ET/ 8:00 a.m. PT to discuss the results for the quarter. Access to a live audio webcast is available at http://www.graniteconstruction.com/investor-relations. The live conference call may be accessed by calling (877) 864-2735 in the U.S. and Canada and (706) 634-7039 for international listeners. The conference ID for the call is 41459028. The conference call will be recorded and available for replay from approximately two hours after the live call through June 1, 2008 by calling (800) 642-1687 or (706) 645-9291. The conference ID for the recording is 41459028.

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 the 5th straight year, Granite was named to FORTUNE’S List of 100 Best Companies to Work For. For more information about Granite, please visit their website at http://www.graniteconstruction.com.

Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represents our management’s beliefs and assumptions concerning future events such as statements related to the existence of bidding opportunities and economic conditions on the Company’s future results. Additionally, forward-looking statements include statements that can be identified by the use of forward-looking terminology such as "believes," "expects," "appears," "may," "will," "should," "look for," or "anticipates," or the negative thereof or comparable terminology, or by discussions of strategy. All such forward-looking statements are subject to risks and uncertainties that could cause actual results of operations and financial condition and other events, as well as the timing thereof, to differ materially from those expressed or implied in such forward-looking statements. Specific risk factors include, without limitation, changes in the composition of applicable federal and state legislation appropriation committees; federal and state appropriation changes for infrastructure spending; the general state of the economy; job productivity; accuracy of project estimates; weather conditions; competition and pricing pressures; and state referendums and initiatives. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. You should also understand that many important factors in addition to those discussed, referred to or incorporated by reference in this press release, could cause our results to differ materially from those expressed in the forward-looking statements. In light of these risks and uncertainties, it is important to be aware that the forward- looking events discussed in this release may not occur. We undertake no obligation to revise or update publicly any forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.

For further information regarding risks and uncertainties associated with Granite’s business, please refer to the "Management’s Discussion and Analysis of Financial Condition and Results of Operation" and "Risk Factors" sections of Granite’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Granite’s investor relations department at (831) 724-1011 or at Granite’s website at http://www.graniteconstruction.com.

                      GRANITE CONSTRUCTION INCORPORATED                        COMPARATIVE FINANCIAL SUMMARY              (Unaudited - In Thousands, Except Per Share Data)                            Three Months Ended                                 March 31,                Variance                             2008        2007        Amount      Percent    Revenue      Construction        $402,573     $416,632     $(14,059)        (3.4)      Material sales       $51,554      $66,111     $(14,557)       (22.0)      Real estate             $673       $4,917      $(4,244)       (86.3)        Total revenue     $454,800     $487,660     $(32,860)        (6.7)    Cost of revenue      Construction        $306,846     $384,154      $77,308         20.1      Material sales       $49,056      $54,108       $5,052          9.3      Real estate             $204       $1,362       $1,158         85.0        Total cost of         revenue          $356,106     $439,624      $83,518         19.0    Gross profit           $98,694      $48,036      $50,658         ****      Gross profit as a       percent of revenue    21.7%         9.9%        11.8%            -    General and     administrative     expenses              $60,651      $54,337     $(6,314)        (11.6)      G&A expenses as a       percent of revenue    13.3%        11.1%       (2.2%)            -    Gain on sales of     property and     equipment                $401         $713       $(312)        (43.8)    Other income (expense)      Interest income       $6,055       $6,843       $(788)        (11.5)      Interest expense     $(4,510)     $(1,086)     $(3,424)        ****      Equity in (loss)       income of       affiliates            $(707)        $351      $(1,058)        ****      Other, net            $8,463        $(233)      $8,696         ****        Total other income  $9,301       $5,875       $3,426         58.3    Income before     provision for     income taxes and     minority interest     $47,745         $287      $47,458         ****    Minority interest     $(22,495)     $(2,447)    $(20,048)        ****    Net income (loss)      $13,123      $(2,249)     $15,372         ****    Net income (loss) per     share:      Basic                  $0.34       $(0.05)       $0.39         ****      Diluted                $0.34       $(0.05)       $0.39         ****    Weighted average shares     of common stock:      Basic                 38,139       40,992       (2,853)        (7.0)      Diluted               38,513       40,992       (2,479)        (6.0)    **** Represents percentages greater than 100%                      GRANITE CONSTRUCTION INCORPORATED                    CONDENSED CONSOLIDATED BALANCE SHEETS         (Unaudited - In thousands, except share and per share data)                                                  March 31,       December 31,                                                    2008              2007                                    Assets    Current assets      Cash and cash equivalents                   $266,427           $352,434      Short-term marketable securities              79,997             77,758      Accounts receivable, net                     320,526            397,097      Costs and estimated earnings in excess of       billings                                     74,279             17,957      Inventories                                   61,432             55,557      Real estate held for sale                     54,736             51,688      Deferred income taxes                         44,728             43,713      Equity in construction joint ventures         39,893             34,340      Other current assets                          62,559             96,969        Total current assets                     1,004,577          1,127,513    Property and equipment, net                    518,900            502,901    Long-term marketable securities                 37,303             55,156    Investment in affiliates                        25,713             26,475    Other assets                                    72,149             74,373          Total assets                          $1,658,642         $1,786,418                     Liabilities and Shareholders’ Equity    Current liabilities      Current maturities of long-term debt         $34,071           $28,696      Accounts payable                             195,651           213,135      Billings in excess of costs and estimated       earnings                                    218,935           275,849      Accrued expenses and other current       liabilities                                 166,774           212,265        Total current liabilities                  615,431           729,945    Long-term debt                                 257,442           268,417    Other long-term liabilities                     45,479            46,441    Deferred income taxes                           18,228            17,945    Minority interest in consolidated     subsidiaries                                   54,957            23,471    Shareholders’ 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 2008       and in 2007; issued and outstanding       38,274,800 shares in 2008 and       39,450,923 shares in 2007                       383               395      Additional paid-in capital                    79,534            79,007      Retained earnings                            587,881           619,699      Accumulated other comprehensive (loss)       income                                         (693)            1,098        Total shareholders’ equity                 667,105           700,199          Total liabilities and shareholders’           equity                               $1,658,642        $1,786,418                                                  March 31,       December 31,    Financial Position                              2008              2007      Working capital                             $389,146          $397,568      Current ratio                                   1.63              1.54      Debt to total capitalization                    0.30              0.30      Total liabilities to equity ratio               1.49              1.55                      GRANITE CONSTRUCTION INCORPORATED                         REVENUE AND BACKLOG ANALYSIS                      (Unaudited - Dollars In Thousands)                               BY MARKET SECTOR                                   Revenue                                      March 31,                Variance                                 2008         2007         Amount     Percent      Public Sector            $353,102     $338,829       $14,273      4.2      Private Sector             49,471       77,803       (28,332)   (36.4)      Material sales             51,554       66,111       (14,557)   (22.0)      Real Estate                   673        4,917        (4,244)   (86.3)                               $454,800     $487,660      $(32,860)    (6.7)                                   Backlog                                      March 31,                Variance                                 2008         2007         Amount     Percent      Public Sector          $1,841,373   $2,311,722     $(470,349)   (20.3)      Private Sector            101,816      186,748       (84,932)   (45.5)      Material sales                  -            -             -      -      Real Estate                     -            -             -      -                             $1,943,189   $2,498,470     $(555,281)   (22.2)                                BY GEOGRAPHIC AREA                                   Revenue                                      March 31,                Variance                                 2008         2007         Amount     Percent      California               $174,611     $191,678      $(17,067)    (8.9)      West (Excl. CA)           102,268      124,347       (22,079)   (17.8)      Midwest                    40,357       16,159        24,198     ****      Northeast                  36,419       40,982        (4,563)   (11.1)      Southeast                  71,109       78,696        (7,587)    (9.6)      South                      30,036       35,798        (5,762)   (16.1)                               $454,800     $487,660      $(32,860)    (6.7)      **** Represents percentages greater than 100%                                   Backlog                                      March 31,                Variance                                 2008         2007         Amount     Percent      California               $445,402     $506,628      $(61,226)   (12.1)      West (Excl. CA)           434,215      497,933       (63,718)   (12.8)      Midwest                   287,488      406,782      (119,294)   (29.3)      Northeast                 104,896      195,879       (90,983)   (46.4)      Southeast                 544,595      710,822      (166,227)   (23.4)      South                     126,593      180,426       (53,833)   (29.8)                             $1,943,189   $2,498,470     $(555,281)   (22.2)

SOURCE Granite Construction Incorporated

http://www.graniteconstruction.com

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