Granite Reports Second-Quarter 2009 Financial Results
"As expected, our second quarter results reflect a very competitive bidding environment in the West," said
Second-quarter 2009 Financial Results
-- Total revenue for the quarter ended June 30, 2009 was $461.1 million
compared with $694.3 million in 2008. The decrease reflects a $169.2
million reduction in Granite West revenue and $58.5 million reduction in
Granite East revenue.
-- Gross profit as a percentage of revenue for the quarter was 18 percent
compared with 16 percent in 2008 reflecting improved margins from
Granite East.
-- Gross profit on the sale of construction materials was $8.0 million in
2009 compared with $17.5 million in 2008. The company's third-party
construction materials business continues to be affected by lower sales
volume.
-- General and administrative expenses decreased $10.1 million to $55.7
million or 12 percent of revenue compared with $65.8 million or 10
percent of revenue in 2008 reflecting decreases in salaries and
incentive compensation.
-- Operating income for the quarter was $30.4 million compared with $45.4
million in the prior year due to the competitive bidding environment in
the West offset by improved operating results in the East.
-- During the second quarter 2009, the company's real estate investment
segment recorded a $1.0 million pretax impairment charge related to a
residential property located in Oregon .
-- Other income for the quarter was $0.5 million compared with $1.2 million
in 2008 due to lower investment interest income.
-- Net income attributable to noncontrolling interest in joint ventures
decreased from $8.0 million in 2008 to $4.7 million in 2009 due to the
completion of certain large projects.
-- At June 30, 2009 , cash and short-term marketable securities totaled
$381.0 million , including $120.9 million of cash and cash equivalents
from the company's consolidated joint ventures.
-- Total contract backlog at June 30, 2009 , was $1.5 billion compared with
$2.1 billion at June 30, 2008 . Not included in second quarter 2009
backlog is approximately $500.0 million associated with three projects
the company expects to book in the third quarter of 2009.
Granite West
-- Revenue for the second quarter totaled $348.3 million compared with
$517.5 million for the same period in 2008. The decrease reflects a
highly competitive bidding environment and lower demand for construction
materials.
-- Gross profit as a percentage of revenue for the quarter remained flat at
18 percent.
-- Operating income for the quarter decreased $21.9 million to $34.9
million compared with $56.8 million for the second quarter of last year.
Granite East
-- Revenue for the second quarter totaled $112.2 million compared with
$170.8 million for the same period in 2008 reflecting several large
projects nearing completion.
-- Gross profit as a percentage of revenue for the quarter was 19 percent
compared with 11 percent in the same period last year.
-- Operating income for the quarter increased to $14.7 million compared
with $11.7 million for the second quarter of 2008.
Outlook
"In the West, we expect the bidding environment to remain competitive for at least the next several quarters," said Dorey. "We also anticipate our third-party construction materials business will continue to be affected by lower demand. As a result, we are forecasting Granite West revenue in 2009 to be between
The outlook for Granite East is very positive as we continue to execute well and add quality projects to our backlog. Although we continue to expect strong bottom line performance this year, delayed project awards caused us to lower our revenue forecast for the segment. We now expect Granite East revenue in 2009 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 BALANCE SHEETS (Unaudited - in thousands, except share and per share data) June 30, December 31, June 30, 2009 2008 2008 ASSETS Current assets Cash and cash $ 356,168 $ 460,843 $ 286,648 equivalents Short-term marketable securities 24,878 38,320 88,230 Accounts receivable, net 281,432 314,733 418,657 Costs and estimated earnings in 50,891 13,295 51,047 excess of billings Inventories, net 68,755 55,223 63,930 Real estate held for development and 131,169 75,089 50,308 sale Deferred income taxes 43,314 43,637 44,887 Equity in construction joint ventures 50,215 44,681 42,844 Other current assets 46,719 56,742 66,297 Total current assets 1,053,541 1,102,563 1,112,848 Property and equipment, net 529,805 517,678 526,383 Long-term marketable securities 53,328 21,239 29,706 Investment in affiliates 17,310 19,996 30,502 Other noncurrent assets 80,300 81,979 73,455 Total assets $ 1,734,284 $ 1,743,455 $ 1,772,894 LIABILITIES AND EQUITY Current liabilities Current maturities of long-term debt $ 64,848 $ 39,692 $ 35,039 Accounts payable 177,025 174,626 237,561 Billings in excess of costs and 184,665 227,364 226,213 estimated earnings Accrued expenses and other current 168,217 184,939 211,907 liabilities Total current liabilities 594,755 626,621 710,720 Long-term debt 233,675 250,687 246,493 Other long-term liabilities 46,686 43,604 46,956 Deferred income taxes 17,917 18,261 18,228 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 38,673,034 shares as of June 30, 387 383 383 2009, 38,266,791 shares as ofDecember 31, 2008 and 38,274,588 shares as ofJune 30, 2008 Additional paid-in capital 89,142 85,035 81,358 Retained earnings 699,050 682,237 608,525 Accumulated other comprehensive loss - (146 ) (941 ) Total Granite Construction Inc. 788,579 767,509 689,325 shareholders' equity Noncontrolling 52,672 36,773 61,172 interest Total equity 841,251 804,282 750,497 Total liabilities and equity $ 1,734,284 $ 1,743,455 $ 1,772,894 June 30, December 31, June 30, FINANCIAL POSITION 2009 2008 2008 Working capital $ 458,786 $ 475,942 $ 402,128 Current ratio 1.77 1.76 1.57 Debt to Granite Construction Inc. 0.27 0.27 0.29 shareholders' equity capitalization Total liabilities to Granite Construction Inc. shareholders' 1.13 1.22 1.48 equity ratio
GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited - in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 Revenue Construction $ 403,226 $ 580,943 $ 720,335 $ 983,516 Material 57,315 107,289 87,161 158,843 sales Real estate 534 6,100 951 6,773 Total revenue 461,075 694,332 808,447 1,149,132 Cost of revenue Construction 327,016 486,716 573,985 793,562 Material 49,280 89,835 81,463 138,891 sales Real estate 1,534 8,755 1,741 8,959 Total cost of revenue 377,830 585,306 657,189 941,412 Gross 83,245 109,026 151,258 207,720 profit General and 55,669 65,760 109,301 126,411 administrative expenses Gain on sales of 2,808 2,155 5,329 2,556 property and equipment Operating 30,384 45,421 47,286 83,865 income Other income (expense) Interest 1,109 3,593 3,170 9,648 income Interest (2,853 ) (3,058 ) (6,341 ) (7,568 ) expense Equity in income (loss) 783 528 339 (179 ) of affiliates Other income, net 1,431 184 5,216 8,647 Total other income 470 1,247 2,384 10,548 Income before provision 30,854 46,668 49,670 94,413 for income taxes Provision for income 8,187 13,081 13,016 25,208 taxes Net income 22,667 33,587 36,654 69,205 Amount attributable to (4,718 ) (7,969 ) (9,785 ) (30,464 ) noncontrolling interest Net income attributable to Granite Construction $ 17,949 $ 25,618 $ 26,869 $ 38,741 Inc. Net income per share attributable to common shareholders: Basic $ 0.46 $ 0.67 $ 0.70 $ 1.00 (1) Diluted $ 0.46 $ 0.67 $ 0.70 $ 1.00 (1) Weighted average shares of common stock: Basic 37,584 37,426 37,530 37,782 Diluted 37,699 37,552 37,650 37,862 Note: (1) Computed using the two-class method as required by FSP EITF 03-6-1 adopted onJanuary 1, 2009 .
GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands) Six Months Ended June 30, 2009 2008 Operating activities Net income $ 36,654 $ 69,205 Adjustments to reconcile net income to net cash used in operating activities: Impairment of real estate held for 1,036 4,500 development and sale Depreciation, depletion and 39,670 42,428 amortization (Recovery of) provision for doubtful (3,386 ) 1,383 accounts, net Gain on sales of property and equipment (5,329 ) (2,556 ) Change in deferred income taxes (113 ) 419 Stock-based compensation 4,561 3,427 Excess tax benefit on stock-based (400 ) (746 ) compensation Gain from trading securities (187 ) - Equity in (income) loss of affiliates (339 ) 179 Acquisition of noncontrolling interest - (16,616 ) Changes in assets and liabilities, net of the effects (78,602 ) (57,827 ) of acquisition and consolidations Net cash (used in) provided by (6,435 ) 43,796 operating activities Investing activities Purchases of marketable securities (39,043 ) (28,620 ) Maturities of marketable securities 27,610 40,250 Release of funds for acquisition of - 28,332 noncontrolling interest Additions to property and equipment (55,659 ) (62,528 ) Proceeds from sales of property and 7,416 8,115 equipment Acquisition of businesses - (14,022 ) Contributions to affiliates (4,971 ) (4,420 ) Other investing activities 439 676 Net cash used in investing (64,208 ) (32,217 ) activities Financing activities Proceeds from long-term debt 4,911 2,103 Long-term debt principal payments (17,475 ) (15,032 ) Cash dividends paid (10,003 ) (10,103 ) Purchase of common stock (2,821 ) (45,468 ) Contributions from noncontrolling 203 4,744 partners Distributions to noncontrolling partners (9,283 ) (2,639 ) Acquisition of noncontrolling interest - (11,716 ) Excess tax benefit on stock-based 400 746 compensation Other financing 36 - Net cash used in financing (34,032 ) (77,365 ) activities Decrease in cash and cash equivalents (104,675 ) (65,786 ) Cash and cash equivalents at beginning of 460,843 352,434 period Cash and cash equivalents at end of $ 356,168 $ 286,648 period
GRANITE CONSTRUCTION INCORPORATED Business Segment Information (Unaudited - in thousands) Three Months Ended June 30, Six Months Ended June 30, Granite Granite Land Granite Granite Granite West East Company West Granite East Land Company 2009 Revenue $ 348,304 $ 112,237 $ 534 $ 545,353 $ 262,143 $ 951 Gross profit $ 62,882 $ 21,363 $ (1,000 ) $ 95,821 $ 56,227 $ (790 ) (loss) Gross profit (loss) as a 18.1% 19.0% -187.3% 17.6% 21.4% -83.1% percent of revenue Operating income $ 34,909 $ 14,688 $ (2,240 ) $ 41,774 $ 43,084 $ (2,938 ) (loss) Operating income (loss) 10.0% 13.1% -419.5% 7.7% 16.4% -308.9% as a percent of revenue 2008 Revenue $ 517,463 $ 170,769 $ 6,100 $ 757,465 $ 384,894 $ 6,773 Gross profit $ 92,924 $ 18,757 $ (2,655 ) $ 132,553 $ 77,353 $ (2,186 ) (loss) Gross profit (loss) as a 18.0% 11.0% -43.5% 17.5% 20.1% -32.3% percent of revenue Operating income $ 56,801 $ 11,691 $ (3,154 ) $ 61,114 $ 63,377 $ (3,604 ) (loss) Operating income (loss) 11.0% 6.8% -51.7% 8.1% 16.5% -53.2% as a percent of revenueGRANITE CONSTRUCTION INCORPORATED Contract Backlog (Unaudited - in thousands) Contract Backlog by June 30, 2009 March 31, 2009 June 30, 2008 Segment Granite $ 824,676 53.8 % $ 743,219 47.3 % $ 1,188,948 55.5 % West Granite 707,567 46.2 % 826,855 52.7 % 952,700 44.5 % East Total $ 1,532,243 100.0 % $ 1,570,074 100.0 % $ 2,141,648 100.0 %
Source: Granite Construction Incorporated 