Granite Reports First-Quarter 2009 Financial Results
"Our business continues to perform well despite today's economic challenges," said
First-quarter 2009 Financial Results
-- Total revenue for the quarter ended March 31, 2009 was $347.4 million
compared with $454.8 million in 2008.
-- Gross profit as a percentage of revenue for the quarter decreased to 20
percent compared with 22 percent in 2008.
-- Gross loss on the sale of construction materials was $2.3 million in
2009 compared with a gross profit of $2.5 million in 2008. The company's
construction materials business continues to be affected by lower sales
volume.
-- General and administrative expenses decreased $7.0 million to $53.6
million or 15 percent of revenue compared with $60.7 million or 13
percent of revenue in 2008.
-- Operating income for the quarter was $16.9 million compared with $38.4
million in the prior year.
-- Other income for the quarter was $1.9 million compared with $9.3 million
last year. The decrease was due to lower investment interest income as
well as a reduction in the gain on the sale of gold, a by-product of one
of our aggregate facilities. In 2009, the gain from gold sales was $4.4
million compared with $9.3 million in the first quarter of 2008.
-- Net income attributable to noncontrolling interest in joint ventures was
$5.1 million compared with $22.5 million in 2008. The decrease was
related to the settlement of a significant claim associated with a
completed large joint-venture project in Southern California which was
recognized in the first quarter of 2008.
-- At March 31, 2009 , cash and short-term marketable securities totaled
$412.8 million , including $120.7 million of cash and cash equivalents
from the company's consolidated joint ventures.
-- Total contract backlog at March 31, 2009 , was $1.6 billion compared with
$1.9 billion at March 31, 2008 . Not included in contract backlog at
March 31, 2009 , is the company's 34 percent share of the $1.3 billion
contract for the Houston Metro Light Rail project awarded in the second
quarter of 2009. The award will be recorded in contract backlog
incrementally as Notices to Proceed are received.
Granite West
-- Revenue for the first quarter totaled $197.0 million compared with
$240.0 million for the same period in 2008. Granite West continues to
experience a competitive bidding environment as well as a reduction in
the demand for construction materials.
-- Gross profit as a percentage of revenue for the quarter was unchanged at
17 percent as a result of higher construction gross profit offset by a
loss from materials sales during the quarter.
-- Operating income for the quarter increased $2.0 million to $6.7 million
compared with $4.8 million for the first quarter of last year.
Granite East
-- Revenue for the first quarter totaled $149.9 million compared with
$214.1 million for the same period in 2008.
-- Gross profit as a percentage of revenue for the quarter was 23 percent
compared with 27 percent in the same period last year.
-- Operating income for the quarter decreased to $28.3 million compared
with $52.1 million for the first quarter of 2008. Operating results in
both the first quarter of 2008 and 2009 were positively affected by the
recognition of project settlements related to outstanding issues.
Results in 2009 include the $16.0 million settlement associated with a
large project in the Northeast. Results in 2008 include the $28.6
million settlement related to a large project in Southern California .
Outlook
"We are off to a good start in 2009," said Dorey. "In Granite West our public works bidding environment is becoming very active, in part due to stimulus-funded projects out to bid. We do, however, anticipate a challenging year in the West as the competitive climate continues to impact our hit ratio and our margin expectations. This is particularly true in the smaller, traditional branch work as well as our construction materials business. We are fortunate to have the experience and the financial wherewithal to bid on larger, more complex projects that often do not draw the same level of competitiveness due to their increased complexity and bonding requirements. We believe it is the larger projects that present the most encouraging opportunities for revenue and margin growth during this business cycle.
"We expect Granite East to continue to deliver gross margins in the mid-teens while building a strong backlog of work. Our bidding pipeline remains full, and we are excited about the opportunities for this business. We are tracking more than
"Our 2009 outlook includes revenue expectations for Granite West to be in the range of
Conference Call
Granite will conduct a conference call tomorrow,
About Granite
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 STATEMENTS OF INCOME (Unaudited - In Thousands, Except Per Share Data) Three Months Ended March 31, 2009 2008 Revenue Construction $ 317,109 $ 402,573 Material sales 29,846 51,554 Real estate 417 673 Total revenue 347,372 454,800 Cost of revenue Construction 246,969 306,846 Material sales 32,183 49,056 Real estate 207 204 Total cost of revenue 279,359 356,106 Gross profit 68,013 98,694 General and administrative expenses 53,632 60,651 Gain on sales of property and equipment 2,521 401 Operating income 16,902 38,444 Other income (expense) Interest income 2,061 6,055 Interest expense (3,488 ) (4,510 ) Equity in loss of affiliates (444 ) (707 ) Other income, net 3,785 8,463 Total other income 1,914 9,301 Income before provision for income taxes 18,816 47,745 Provision for income taxes 4,829 12,127 Net income 13,987 35,618 Amount attributable to noncontrolling interest (5,067 ) (22,495 ) Net income attributable to Granite Construction Inc. $ 8,920 $ 13,123 Net income per share attributable to common shareholders: Basic $ 0.23 $ 0.34 Diluted $ 0.23 $ 0.34 Weighted average shares of common stock: Basic 37,476 38,139 Diluted 37,600 38,172
GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited - In thousands, except share and per share data) March 31, December 31, March 31, 2009 2008 2008 Assets Current assets Cash and cash $ 390,483 $ 460,843 $ 266,427 equivalents Short-term marketable 22,276 38,320 79,997 securities Accounts receivable, 233,867 314,733 320,526 net Costs and estimated earnings in excess 54,400 13,295 74,279 of billings Inventories, 59,254 55,223 61,432 net Real estate held for development and 79,409 75,089 54,736 sale Deferred 43,484 43,637 44,728 income taxes Equity in construction 44,423 44,681 39,893 joint ventures Other current 52,488 56,742 62,559 assets Total current 980,084 1,102,563 1,004,577 assets Property and 526,734 517,678 518,900 equipment, net Long-term marketable 46,387 21,239 37,303 securities Investment in 21,768 19,996 25,713 affiliates Other noncurrent 79,534 81,979 72,149 assets Total assets $ 1,654,507 $ 1,743,455 $ 1,658,642 Liabilities and Equity Current liabilities Current maturities of long-term debt $ 34,218 $ 39,692 $ 34,071 Accounts 141,783 174,626 195,651 payable Billings in excess of costs and 190,540 227,364 218,935 estimated earnings Accrued expenses and other current 159,323 184,939 166,774 liabilities Total current 525,864 626,621 615,431 liabilities Long-term debt 251,351 250,687 257,442 Other long-term 45,836 43,604 45,479 liabilities Deferred 17,917 18,261 18,228 income taxes 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 38,679,123 shares as ofMarch 31, 2009 , 38,266,791 shares as of December 31, 2008 and 38,274,800 387 383 383 shares as ofMarch 31, 2008 Additional paid-in 88,158 85,035 79,534 capital Retained 686,129 682,237 587,881 earnings Accumulated other comprehensive loss - (146 ) (693 ) Total Granite Construction Inc. 774,674 767,509 667,105 shareholders' equity Noncontrolling 38,865 36,773 54,957 interest Total equity 813,539 804,282 722,062 Total liabilities and $ 1,654,507 $ 1,743,455 $ 1,658,642 equity March 31, December 31, March 31, Financial 2009 2008 2008 Position Working $ 454,220 $ 475,942 $ 389,146 capital Current ratio 1.86 1.76 1.63 Debt to Granite Construction Inc. 0.27 0.27 0.30 shareholders' equity capitalization Total liabilities to Granite Construction Inc. shareholders' equity 1.09 1.22 1.40 ratio
GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - In Thousands) Three Months Ended March 31, 2009 2008 Operating activities Net income $ 13,987 $ 35,618 Adjustments to reconcile net income to net cash used in operating activities: Depreciation, depletion and amortization 20,623 21,172 Gain on sales of property and equipment (2,521 ) (401 ) Change in deferred income taxes (283 ) 419 Stock-based compensation 2,777 1,609 Excess tax benefit on stock-based (413 ) (746 ) compensation Equity in loss of affiliates 444 707 Acquisition of noncontrolling interest - (16,616 ) Changes in assets and liabilities, net of the effects (49,009 ) (65,307 ) of acquisitions Net cash used in operating (14,395 ) (23,545 ) activities Investing activities Purchases of marketable securities (29,258 ) (9,179 ) Maturities of marketable securities 15,610 21,500 Release of funds for acquisition of - 28,332 noncontrolling interest Additions to property and equipment (29,601 ) (30,735 ) Proceeds from sales of property and 3,741 3,517 equipment Acquisition of businesses - (14,022 ) Contributions to affiliates (2,219 ) - Other investing activities 148 676 Net cash (used in) provided by (41,579 ) 89 investing activities Financing activities Proceeds from long-term debt 2,435 1,083 Long-term debt principal payments (7,282 ) (6,683 ) Cash dividends paid (4,975 ) (5,129 ) Purchase of common stock (2,017 ) (45,468 ) Contributions from noncontrolling 157 4,640 partners Distributions to noncontrolling partners (3,153 ) (24 ) Acquisition of noncontrolling interest - (11,716 ) Excess tax benefit on stock-based 413 746 compensation Other financing 36 - Net cash used in (14,386 ) (62,551 ) financing activities Decrease in cash and cash equivalents (70,360 ) (86,007 ) Cash and cash equivalents at beginning of 460,843 352,434 period Cash and cash equivalents at end of period $ 390,483 $ 266,427
GRANITE CONSTRUCTION INCORPORATED Business Segment Information (Unaudited - In Thousands) Three Months Ended Granite West Granite East Granite Land March 31, Company 2009 Revenue $ 197,049 $ 149,906 $ 417 Gross $ 32,939 $ 34,864 $ 210 profit Gross profit as a 16.7% 23.3% 50.4% percent of revenue Operating $ 6,720 $ 28,251 $ (698) income (loss) Operating income (loss) as a 3.4% 18.8% -167.4% percent of revenue 2008 Revenue $ 240,002 $ 214,125 $ 673 Gross $ 39,629 $ 58,596 $ 469 profit Gross profit as a 16.5% 27.4% 69.7% percent of revenue Operating $ 4,763 $ 52,136 $ (450) income (loss) Operating income (loss) as a 2.0% 24.3% -66.9% percent of revenueGRANITE CONSTRUCTION INCORPORATED Contract Backlog (Unaudited - In Thousands) Contract Backlog by March 31, 2009 March 31, 2008 Division Granite $ 743,219 47.3 % $ 868,530 44.7 % West Granite 826,855 52.7 % 1,074,659 55.3 % East Total $ 1,570,074 100.0 % $ 1,943,189 100.0 %
Source: Granite Construction Incorporated 