Granite Construction Incorporated Announces New Strategic and Organizational Realignment
WATSONVILLE, Calif.,
"The actions announced today lay the foundation for growth that is anatural evolution of a healthy, growing and financially strong company," saidWilliam G. Dorey, President and Chief Executive Officer. "The cornerstone ofour corporate strategy over the coming years is to expand our verticallyintegrated branch business model into new geographies in the west and right-size our large projects business. This new structure will allow us to takefull advantage of the long-term opportunities and strong market conditions weforesee for our business."
Dorey continued, "Granite has tremendous capabilities and outstandingpeople. The expertise, know-how and commitment of our people throughout thecountry is truly remarkable and is what makes us among the most capable andexperienced in the industry. I am confident that this strategic andorganizational realignment of our business is in the best interest of ourpeople and our shareholders. I am excited about the opportunities inGranite’s future and believe we will be a much stronger and more profitablecompany as a result of these actions."
Highlights of today’s announcement include: -- Geographic realignment into Granite West and Granite East -- Right-sizing large projects business -- Realigning large projects resources -- Realigning individual branches under three separate operating groups -- Retaining successful decentralized branch operating structure -- Adding branch management structure to support growth of vertical integration strategy
Led by Senior Vice President James H. Roberts, Granite West will bestructured to strategically support the growth of the Company’s constructionand construction materials businesses. The western portion of the Company’scurrent large project business will be integrated into Granite West bycarefully capitalizing on Granite West’s capacity, people and assets, as wellas its extensive and proven management and support structure.
The Company will retain its successful decentralized operating structurewithin Granite West, with each of its branch locations aligning under one ofthree Operating Groups: Northwest,
"Our expectation is that we can maximize the use of our existing assetsand minimize our risk profile by properly preparing for the medium to large-size projects that ideally utilize our own construction materials," saidDorey. "More importantly, we intend to build this capacity slowly in the westso we do not impact our local business units’ normal project portfolio."
Led by Senior Vice President Michael F. Donnino, Granite East will bealigned to focus on enhancing project management oversight and discipline fromestimating through execution. Granite East will leverage its resources andcore capabilities in areas where it has local knowledge, local relationships,and local resources. It will be operated out of three regional offices: theCentral Region, based in
"The underperformance on our large projects has been unacceptable and itis critical that we take the necessary steps to right-size this business. Webelieve our technical capabilities to build large, complex projects of highquality are among the best in the industry and we are committed to get itright," said Dorey. "We see this realignment as a positive approach to ensurethat our expertise is deployed properly to allow us to capture all of theprofit potential on this large work," Dorey added.
On going operational improvements in its large projects business include: -- Improving the project selection process to ensure Granite only pursues projects that match its capabilities. -- Improving administrative oversight, systems and project controls to provide for greater accuracy of forecasts and better management oversight. -- Improving training and project execution to achieve project bid margins. -- Improving project issue resolution to bring project issues to a more timely and satisfactory close. -- Continuing to monitor and evaluate the large projects business.
The Company expects 2007 consolidated revenue in the Heavy ConstructionDivision to be approximately
"Our revenue forecast for HCD is an indication that our strategy to right-size this business is having a positive impact. I am confident that theactions we are taking to strategically realign this business will provide uswith an opportunity to further develop our proven network in Granite West andallow us to focus our management and talent on a more suitable business inGranite East," said Dorey.
Chart of New Organizational Structure
A downloadable presentation, including a detailed organization chartoutlining the new structure, is available athttp://www.graniteconstruction.com/investor-relations under the Presentationssection.
Conference Call
Granite will conduct a conference call today at
Company Description
Granite, a member of the S&P 400 Midcap Index, the Domini 400 Social Indexand the Russell 2000, is one of the nation’s largest diversified heavy civilcontractors and construction materials producers. Granite Construction servespublic and private sector clients through its offices nationwide. For the 4thstraight year, Granite was named to FORTUNE’S List of 100 Best Companies toWork For. For more information about the company, please visit their websiteat http://www.graniteconstruction.com.
This press release contains forward-looking statements, within the meaningof Section 27A of the Securities Act of 1933, as amended, and Section 21E ofthe Securities Exchange Act of 1934, as amended, which represents ourmanagement’s beliefs and assumptions concerning future events such asstatements related to the existence of bidding opportunities and economicconditions on the Company’s future results. Additionally, forward-lookingstatements 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 comparableterminology, or by discussions of strategy. All such forward-lookingstatements are subject to risks and uncertainties that could cause actualresults of operations and financial condition and other events, as well as thetiming thereof, to differ materially from those expressed or implied in suchforward-looking statements. Specific risk factors include, without limitation,changes in the composition of applicable federal and state legislationappropriation committees; federal and state appropriation changes forinfrastructure spending; the general state of the economy; job productivity;accuracy of project estimates; weather conditions; competition and pricingpressures; and state referendums and initiatives. You should not place unduereliance on these forward-looking statements, which speak only as of the dateof this news release. You should also understand that many important factorsin addition to those discussed, referred to or incorporated by reference inthis press release, could cause our results to differ materially from thoseexpressed in the forward-looking statements. In light of these risks anduncertainties, it is important to be aware that the forward-looking eventsdiscussed in this release may not occur. We undertake no obligation to reviseor update publicly any forward-looking statements to conform the statement toactual results or changes in the Company’s expectations.
For further information regarding risks and uncertainties associated withGranite’s business, please refer to the "Management’s Discussion and Analysisof Financial Condition and Results of Operation" and "Risk Factors" sectionsof Granite’s SEC filings, including, but not limited to, its annual report onForm 10-K and quarterly reports on Form 10-Q, copies of which may be obtainedby contacting Granite’s investor relations department at (831) 724-1011 or atGranite’s website at http://www.graniteconstruction.com.
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