Granite Announces Second Quarter 2008 Results
WATSONVILLE, Calif., July 30, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Granite Construction Incorporated (NYSE: GVA) today announced net income for the second quarter ended June 30, 2008 of $25.6 million or $0.68 per diluted share, compared with net income of $43.8 million, or $1.05 per diluted share, for the same period last year. Operating income for the quarter was $45.4 million, compared with $66.9 million a year ago. Total revenues for the quarter were $694.3 million compared with $770.9 million a year ago.
William G. Dorey, Granite President and Chief Executive Officer, stated, "While we did not match last year's record setting second quarter results, I am pleased with how our business performed this quarter. We are executing well in today's highly competitive environment which is a testament to our people and the strength of our business model."
General and administrative expenses for the second quarter ended June 30, 2008 totaled $65.8 million or 9.5% of revenue compared with $65.1 million or 8.4% of revenue for the second quarter of 2007.
"We are focusing on reducing our general and administrative costs by instituting a series of cost control initiatives, improving our processes and more efficiently utilizing our staff throughout the organization. Although we are making progress on these efforts, we do not expect to see a reduction in general and administrative expenses on an absolute dollar basis until 2009," Dorey said.
Total company backlog at June 30, 2008 was $2.1 billion compared with $2.5 billion at June 30, 2007, primarily reflecting the lack of any significant new awards in Granite East.
Minority interest for the quarter ended June 30, 2008 was $8.0 million compared with $4.8 million in the second quarter of 2007. The $3.2 million increase primarily reflects improved performance on our Granite East consolidated joint venture projects.
For the six-month period ended June 30, 2008, total company revenues were $1.1 billion compared with $1.3 billion for the same period last year. Gross profit as a percent of revenue for the six months ended June 30, 2008 increased to 18.1% compared with 14.0% last year. Operating income for the total company increased $22.6 million to $83.9 million compared with $61.3 million in 2007.
Operating Results by Segment
Granite West
Revenue for the quarter totaled $517.5 million compared with $542.4 million for the same period in 2007. Gross profit as a percent of revenue for the quarter ended June 30, 2008 was 18.0% compared with 20.2% last year. Operating income decreased $18.6 million for the quarter to $57.1 million compared with $75.7 million for the second quarter last year.
For the six-month period ended June 30, 2008, Granite West revenue totaled $757.5 million compared with $840.5 million for the same period last year. Gross profit as a percent of revenue for the six months ended June 30, 2008 was 17.6% compared with 19.2% last year. Operating income for Granite West decreased to $61.9 million for the same period compared with $96.7 million in 2007. Operating results for the segment continued to be affected by increased competition for construction services and lower demand for construction- related materials in some markets.
Granite East
Revenue for the quarter was $170.8 million compared with $218.0 million for the same period last year. Gross profit as a percent of revenue for the quarter ended June 30, 2008 increased to 11.2% compared with 6.6% in the same period last year. Operating income for the quarter increased to $12.0 million compared with $7.1 million for the same period in 2007.
For the six-month period ended June 30, 2008, Granite East revenue totaled $384.9 million compared with $402.7 million for the same period last year. Gross profit as a percent of revenue for the six months ended June 30, 2008 was 20.3% compared with 1.6% last year. Operating income for Granite East totaled $64.1 million for the six-month period compared with an operating loss of $10.2 million for the same period in 2007. The significant year over year gross margin improvement and increase in operating income is largely due to improved performance on certain large projects.
Granite Land Company ("GLC")
GLC revenue for the quarter was $6.1 million compared with $10.4 million for the same period last year. Negative gross margin as a percent of revenue for the period was 43.5% compared with a gross profit of 38.1% last year. Operating loss for the quarter was $3.2 million compared with operating income of $3.0 million in the second quarter of 2007.
For the six-month period ended June 30, 2008, GLC revenue was $6.8 million compared with $15.3 million in 2007. Negative gross margin as a percent of revenue for the period was 32.3% compared with a gross profit of 49.1% last year. Operating loss was $3.6 million for the six-month period compared with operating income of $5.9 million for the same period in 2007. The operating loss was due to a $4.5 million pre-tax impairment charge related to two investment properties in Northern California in the second quarter 2008.
Outlook
"Our outlook for Granite remains very positive. We continue to expect Granite West 2008 revenue to be in the range of $1.8 to $2.0 billion with a corresponding gross profit margin in the range of 15% to 17%. Based on our results to date and our view of the remainder of the year, we are updating our gross profit margin expectations for Granite East from a range of 14% to 16% to a range of 15% to 17% in 2008. We continue to expect revenues for Granite East to be in the range of $700 to $800 million this year. As stated last quarter, minority interest for the total company is expected to be in the range of $45 to $50 million for the year. Longer term, our expectation for Granite East gross profit margin continues to be in the mid-teens," said Dorey.
Conference Call
Granite will conduct a conference call tomorrow, July 31, 2008, at 11:00 a.m. ET/ 8:00 a.m. PT to discuss the results for the second quarter ended June 30, 2008. 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 54648865. The conference call will be recorded and available for replay from approximately two hours after the live call through August 15, 2008 by calling (800) 642-1687 or (706) 645-9291. The conference ID for the recording is 54648865.
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. In addition, statements in this press release that are not historical are "forward-looking statements" as in the Private Securities Litigation Reform Act of 1995. 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, 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
June 30, Variance
2008 2007 Amount Percent
Revenue
Construction $580,943 $660,384 $(79,441) (12.0)
Material sales $107,289 $100,091 $7,198 7.2
Real estate $6,100 $10,401 $(4,301) (41.4)
Total revenue $694,332 $770,876 $(76,544) (9.9)
Cost of revenue
Construction $486,716 $557,926 $71,210 12.8
Material sales $89,835 $78,878 $(10,957) (13.9)
Real estate $8,755 $6,438 $(2,317) (36.0)
Total cost of
revenue $585,306 $643,242 $57,936 9.0
Gross profit $109,026 $127,634 $(18,608) (14.6)
Gross profit as
a percent of
revenue 15.7% 16.6% (0.9%) -
General and
administrative
expenses $65,760 $65,130 $(630) (1.0)
G&A expenses as a
percent of revenue 9.5% 8.4% (1.1%) -
Gain on sales of
property and
equipment $2,155 $4,346 $(2,191) (50.4)
Operating income $45,421 $66,850 $(21,429) (32.1)
Other income (expense)
Interest income $3,593 $6,439 $(2,846) (44.2)
Interest expense $(3,058) $(2,028) $(1,030) (50.8)
Equity in income
(loss) of
affiliates $528 $(29) $557 ****
Other, net $184 $(433) $617 ****
Total other
income $1,247 $3,949 $(2,702) (68.4)
Income before
provision for income
taxes and minority
interest $46,668 $70,799 $(24,131) (34.1)
Minority interest $(7,969) $(4,799) $(3,170) (66.1)
Net income $25,618 $43,846 $(18,228) (41.6)
Net income per share:
Basic $0.68 $1.07 $(0.39) (36.4)
Diluted $0.68 $1.05 $(0.37) (35.2)
Weighted average
shares of
common stock:
Basic 37,426 41,096 (3,670) (8.9)
Diluted 37,929 41,631 (3,702) (8.9)
Six Months Ended
June 30, Variance
2008 2007 Amount Percent
Revenue
Construction $983,516 $1,077,016 $(93,500) (8.7)
Material sales $158,843 $166,202 $(7,359) (4.4)
Real estate $6,773 $15,318 $(8,545) (55.8)
Total revenue $1,149,132 $1,258,536 $(109,404) (8.7)
Cost of revenue
Construction $793,562 $942,080 $148,518 15.8
Material sales $138,891 $132,986 $(5,905) (4.4)
Real estate $8,959 $7,800 $(1,159) (14.9)
Total cost of
revenue $941,412 $1,082,866 $141,454 13.1
Gross profit $207,720 $175,670 $32,050 18.2
Gross profit as
a percent of
revenue 18.1% 14.0% 4.1% -
General and
administrative
expenses $126,411 $119,467 $(6,944) (5.8)
G&A expenses as
a percent of
revenue 11.0% 9.5% (1.5%) -
Gain on sales
of property
and equipment $2,556 $5,059 $(2,503) (49.5)
Operating income $83,865 $61,262 $22,603 36.9
Other income
(expense)
Interest income $9,648 $13,282 $(3,634) (27.4)
Interest expense $(7,568) $(3,114) $(4,454) ****
Equity in income
(loss) of
affiliates $(179) $322 $(501) ****
Other, net $8,647 $(666) $9,313 ****
Total other
income $10,548 $9,824 $724 7.4
Income before
provision for
income taxes and
minority interest $94,413 $71,086 $23,327 32.8
Minority interest $(30,464) $(7,246) $(23,218) ****
Net income $38,741 $41,597 $(2,856) (6.9)
Net income per share:
Basic $1.03 $1.01 $0.02 2.0
Diluted $1.01 $1.00 $0.01 1.0
Weighted average
shares of
common stock:
Basic 37,782 41,044 (3,262) (7.9)
Diluted 38,221 41,560 (3,339) (8.0)
**** Represents percentages greater than 100%
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands, except share and per share data)
June 30, December 31,
2008 2007
Assets
Current assets
Cash and cash equivalents $286,648 $352,434
Short-term marketable securities 88,230 77,758
Accounts receivable, net 418,657 397,097
Costs and estimated earnings in
excess of billings 51,047 17,957
Inventories 63,930 55,557
Real estate held for sale 50,308 51,688
Deferred income taxes 44,887 43,713
Equity in construction joint
ventures 42,844 34,340
Other current assets 66,297 96,969
Total current assets 1,112,848 1,127,513
Property and equipment, net 526,383 502,901
Long-term marketable securities 29,706 55,156
Investment in affiliates 30,502 26,475
Other assets 73,455 74,373
Total assets $1,772,894 $1,786,418
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $35,039 $28,696
Accounts payable 237,561 213,135
Billings in excess of costs and
estimated earnings 226,213 275,849
Accrued expenses and other current
liabilities 211,907 212,265
Total current liabilities 710,720 729,945
Long-term debt 246,493 268,417
Other long-term liabilities 46,956 46,441
Deferred income taxes 18,228 17,945
Minority interest in consolidated
subsidiaries 61,172 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
38,274,588 shares in
2008 and 39,450,923 shares in
2007 383 395
Additional paid-in capital 81,358 79,007
Retained earnings 608,525 619,699
Accumulated other comprehensive
(loss) income (941) 1,098
Total shareholders' equity 689,325 700,199
Total liabilities and
shareholders' equity $1,772,894 $1,786,418
June 30, December 31,
Financial Position 2008 2007
Working capital $402,128 $397,568
Current ratio 1.57 1.54
Debt to total capitalization 0.29 0.30
Total liabilities to equity ratio 1.57 1.55
GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - In Thousands)
Three Months Ended June 30, Six Months Ended June 30,
Granite Granite
Granite Granite Land Granite Granite Land
West East Company West East Company
2008
Revenue $517,463 $170,769 $6,100 $757,465 $384,894 $6,773
Gross profit
(loss) $93,240 $19,072 $(2,655) $133,319 $78,118 $(2,186)
Gross profit
(loss) as
a percent
of revenue 18.0% 11.2% -43.5% 17.6% 20.3% -32.3%
Operating income
(loss) $57,117 $12,006 $(3,154) $61,880 $64,142 $(3,604)
Operating income
(loss) as
a percent
of revenue 11.0% 7.0% -51.7% 8.2% 16.7% -53.2%
2007
Revenue $542,447 $218,028 $10,401 $840,541 $402,677 $15,318
Gross profit $109,409 $14,411 $3,964 $161,738 $6,403 $7,519
Gross profit
as a percent
of revenue 20.2% 6.6% 38.1% 19.2% 1.6% 49.1%
Operating income
(loss) $75,747 $7,072 $2,978 $96,721 $(10,185) $5,879
Operating income
(loss) as a
percent
of revenue 14.0% 3.2% 28.6% 11.5% -2.5% 38.4%
GRANITE CONSTRUCTION INCORPORATED
Backlog
(Unaudited - In Thousands)
Backlog by
Division June 30, 2008 March 31, 2008 June 30, 2007
Granite West $1,188,948 55.5% $868,530 44.7% $986,316 39.4%
Granite East $952,700 44.5% $1,074,659 55.3% $1,516,785 60.6%
Total $2,141,648 100.0% $1,943,189 100.0% $2,503,101 100.0%
SOURCE Granite Construction Incorporated
http://www.graniteconstruction.com
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