Granite Construction Incorporated Reports First Quarter 2007 Results
WATSONVILLE, Calif.,
William G. Dorey, president and chief executive officer, said, "The branches are off to a good start this year. A profitable backlog, mild weather in the quarter and exceptional execution by our team fueled the branch results in the quarter. Conversely, our Heavy Construction Division ("HCD") results reflect the fact that we have underperforming projects to complete before we are able to fully realize the benefits of both our recent organizational realignment as well as the newer, more profitable work in our backlog."
Total Company Operating Results
The operating loss for the quarter was
General and Administrative expenses for the quarter totaled
Operating Results by Division
Branch Division operating income for the quarter increased slightly to
HCD operating loss for the quarter was
Outlook
"Our branches started the year with excellent results and our outlook for the year remains positive. While it is still too early in our construction season to predict how the Branch Division will fare compared to last year's financial results, we are optimistic that 2007 will be another excellent year for our business in the West. The public funding pipeline in most of our markets is very healthy. As was expected, some of our markets are beginning to see an increase in competition for public sector work as a result of the slowdown in the residential market. In this type of market, our strategy is to be patient and cautious in our bidding strategy so that we do not commit our capacity to lower margin work if we believe better opportunities are going to be available later in the year. In addition, we are excited about the opportunities ahead, particularly in
"Our 2007 outlook for our HCD business remains guarded, particularly in light of the losses we incurred in the first quarter, as well as our ongoing negotiations with the
Subsequent Events
In a press release dated
The results for the quarter ended
Financial Results
The financial information in this announcement reflects the Company's preliminary results subject to completion of the quarterly review. The final quarterly financial results will appear in Granite's Form 10-Q, which will be filed on or before
Conference Call
Granite will conduct a conference call tomorrow,
About Granite
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 www.graniteconstruction.com.
GRANITE CONSTRUCTION INCORPORATED
COMPARATIVE FINANCIAL SUMMARY
(Unaudited - In Thousands, Except Per Share Data)
Three Months Ended
March 31, Variance
Operations 2007 2006 Amount Percent
Revenue
Construction $421,549 $434,338 $(12,789) (2.9)
Material sales $66,111 $61,630 $4,481 7.3
Total revenue $487,660 $495,968 $(8,308) (1.7)
Cost of revenue
Construction $385,516 $403,960 $18,444 4.6
Material sales $54,108 $51,773 $(2,335) (4.5)
Total cost of
revenue $439,624 $455,733 $16,109 3.5
Gross profit $48,036 $40,235 $7,801 19.4
Gross profit as a
percent of revenue 9.9% 8.1% 1.8% --
General and
administrative
expenses $54,337 $48,256 $(6,081) (12.6)
G&A expenses as a
percent of revenue 11.1% 9.7% (1.4%) --
Gain on sales of
property and equipment $713 $4,238 $(3,525) (83.2)
Other income (expense)
Interest income $6,843 $4,733 $2,110 44.6
Interest expense $(1,086) $(1,395) $309 22.2
Equity in income
(loss) of
affiliates $351 $(77) $428 ****
Other, net $(233) $(606) $373 61.6
Total other income $5,875 $2,655 $3,220 ****
Income (loss) before
provision for
(benefit from)
income taxes and
minority interest $287 $(1,128) $1,415 ****
Minority interest $(2,447) $(1,067) $(1,380) ****
Net loss $(2,249) $(1,422) $(827) (58.2)
Net loss per share:
Basic $(0.05) $(0.03) $(0.02) (66.7)
Diluted $(0.05) $(0.03) $(0.02) (66.7)
Weighted average shares
of common stock:
Basic 40,992 40,739 253 0.6
Diluted 40,992 40,739 253 0.6
**** 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,
2007 2006
Assets
Current assets
Cash and cash equivalents $207,647 $204,893
Short-term marketable securities 93,313 141,037
Accounts receivable, net 413,267 492,229
Costs and estimated earnings in
excess of billings 25,666 15,797
Inventories 47,337 41,529
Real estate held for sale 58,192 55,888
Deferred income taxes 36,552 36,776
Equity in construction joint ventures 37,422 31,912
Other current assets 65,930 63,144
Total current assets 985,326 1,083,205
Property and equipment, net 444,570 429,966
Long-term marketable securities 49,882 48,948
Investment in affiliates 23,585 21,471
Other assets 43,341 49,248
Total assets $1,546,704 $1,632,838
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $29,962 $28,660
Accounts payable 214,395 257,612
Billings in excess of costs and
estimated earnings 270,641 287,843
Accrued expenses and other
current liabilities 170,042 189,328
Total current liabilities 685,040 763,443
Long-term debt 70,530 78,576
Other long-term liabilities 64,315 58,419
Deferred income taxes 19,798 22,324
Minority interest in consolidated subsidiaries 18,227 15,532
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; issued
and outstanding 41,942,130 shares in
2007 and 41,833,559 shares in 2006 420 418
Additional paid-in capital 79,596 78,620
Retained earnings 605,797 612,875
Accumulated other comprehensive income 2,981 2,631
Total shareholders' equity 688,794 694,544
Total liabilities and
shareholders' equity $1,546,704 $1,632,838
March 31, December 31,
Financial Position 2007 2006
Working capital $300,286 $319,762
Current ratio 1.44 1.42
Debt to total capitalization 0.13 0.13
Total liabilities to equity ratio 1.25 1.35
GRANITE CONSTRUCTION INCORPORATED
REVENUE AND BACKLOG ANALYSIS
(Unaudited - Dollars In Thousands)
BY MARKET SECTOR
Revenue
Three Months Ended March 31, Variance
2007 2006 Amount Percent
Public Sector $338,829 $352,961 $(14,132) (4.0)
Private Sector 77,803 81,347 (3,544) (4.4)
Aggregate sales 66,111 61,630 4,481 7.3
Other 4,917 30 4,887 ****
$487,660 $495,968 $(8,308) (1.7)
Backlog
March 31, Variance
2007 2006 Amount Percent
Public Sector $2,311,722 $2,219,442 $92,280 4.2
Private Sector 186,748 327,293 (140,545) (42.9)
$2,498,470 $2,546,735 $(48,265) (1.9)
BY GEOGRAPHIC AREA
Revenue
Three Months Ended March 31, Variance
2007 2006 Amount Percent
California $191,107 $212,871 $(21,764) (10.2)
West (Excl. CA) 124,274 103,928 20,346 19.6
Midwest 18,289 12,910 5,379 41.7
Northeast 46,556 69,442 (22,886) (33.0)
Southeast 70,965 47,730 23,235 48.7
South 36,469 49,087 (12,618) (25.7)
$487,660 $495,968 $(8,308) (1.7)
Backlog
March 31, Variance
2007 2006 Amount Percent
California $506,628 $671,689 $(165,061) (24.6)
West (Excl. CA) 497,223 629,501 (132,278) (21.0)
Midwest 425,836 65,111 360,725 ****
Northeast 683,323 428,112 255,211 59.6
Southeast 204,324 452,019 (247,695) (54.8)
South 181,136 300,303 (119,167) (39.7)
$2,498,470 $2,546,735 $(48,265) (1.9)
**** Represents percentages greater than 100%
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