Granite Reports Third Quarter 2015 Results

  • Total quarterly net income doubled to $30.8 million
  • Total quarterly gross profit increased to $100.9 million; all segments contribute to 51.3 percent year-over-year growth
  • Total quarterly revenue increased 4.4 percent to $751.4 million
  • Total year-to-date gross profit increased 21.3 percent to $206.8 million, with gross profit margin of 11.9 percent, up 176.0 basis points from 2014
  • Total contract backlog at all-time high of $3.1 billion

WATSONVILLE, Calif.--(BUSINESS WIRE)-- Granite Construction Incorporated (NYSE:GVA) today reported net income of $30.8 million for the quarter ended September 30, 2015, compared to net income of $15.3 million in the third quarter of 2014. Earnings per share in the quarter were $0.77, compared to $0.38 in the prior-year period.

“Across geographies and across end markets, Granite’s businesses delivered significantly improved results in the third quarter, reflecting solid execution and an environment of steady, modest economic growth,” said James H. Roberts, President and Chief Executive Officer of Granite Construction Incorporated.

“Our teams continue to build on the progress we have made to leverage improving safety trends, consistent project execution, solid plant performance, and our commitment to Continuous Improvement,” Roberts said.

Third Quarter and Year-to-date 2015 Results

Total Company

  • Revenue for the third quarter of 2015 increased 4.4 percent to $751.4 million compared with $719.8 million last year. On a year-to-date basis, revenue increased 3.3 percent to more than $1.7 billion.
  • Gross profit in the third quarter increased 51.3 percent to $100.9 million compared with $66.7 million last year. Gross profit margin in the quarter was 13.4 percent compared with 9.3 percent in 2014. On a year-to-date basis, gross profit increased 21.3 percent to $206.8 million, with a resulting gross profit margin of 11.9 percent, up 176 basis points from the first nine months of 2014.
  • Third quarter 2015 selling, general and administrative (SG&A) expenses increased 5.7 percent to $50.1 million. On a year-to-date basis, SG&A expenses increased 2.5 percent to $151.4 million.

Construction

  • Construction revenue in the third quarter of 2015 decreased 4.5 percent to $427.0 million, compared with $447.1 million last year.
  • Gross profit in the third quarter increased 31.8 percent to $64.3 million compared to $48.8 million last year. Gross profit margin of 15.1 percent, up from 10.9 percent a year ago, was driven by particular strength in certain parts of the West and across our Kenny businesses.

Large Project Construction

  • Large Project Construction revenue in the third quarter of 2015 increased 21.0 percent to $217.1 million, compared with $179.4 million last year.
  • Gross profit in the third quarter increased 297.5 percent to $22.6 million compared to $5.7 million last year. Gross profit margin totaled 10.4 percent compared with 3.2 percent in 2014, with quarterly performance driven by consistent execution on projects that were impacted by severe wet weather and slow startup in the first half of 2015.

Construction Materials

  • Construction Materials revenue in the third quarter of 2015 increased 15.1 percent to $107.3 million, compared with $93.2 million last year.
  • Gross profit in the third quarter increased 14.9 percent to $14.0 million compared to $12.2 million last year. Gross profit margin was 13.1 percent, in line with last year. Segment performance was driven by operational efficiencies and volume growth across geographies.

Outlook and Guidance

“In the Large Project Construction segment, the market remains robust and competitive. We were pleased to recover some ground in the third quarter from first-half weather and design challenges, as our project portfolio remains weighted toward early-stage projects,” Roberts said.

“Solid year-to-date performance from our Construction and Construction Materials businesses fuels our optimism, as we see state, local and private markets improving.

“Taxpayers and elected representatives in a growing number of states are making public transportation and infrastructure investment a priority, committing to increased, dedicated funding. Meanwhile, at the federal level, we remain in a seemingly interminable stall. Though the timing remains unclear, we are well positioned to benefit from the ultimate commitment for Federal infrastructure investment, as well as continued improvements in state-level participation,” said Roberts.

The Company’s current expectations for 2015 remain:

  • Mid-single digit consolidated revenue growth
  • Consolidated EBITDA margin1 of 6% to 8%

Conference Call

Granite will conduct a conference call today, November 2, 2015, at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended September 30, 2015. Access to a live audio webcast is available at http://investor.graniteconstruction.com/index.cfm. The live conference call may be accessed by calling 1-877-328-5503; international callers may dial 1-412-317-5472. The call will be available for replay approximately two hours after the live audio webcast through November 10, 2015 by calling 1-877-344-7529. The conference ID for the replay is also 10074408; international callers may dial 1-412-317-0088.

About Granite

Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYSE: GVA) is recognized as one of the largest diversified construction companies and construction materials producers in the U.S. Granite is an award-winning firm in safety, quality and environmental stewardship, and has been named one of the World's Most Ethical Companies for six consecutive years. Granite is listed on the New York Stock Exchange and is part of the S&P MidCap 400 Index, the MSCI KLD 400 Social Index and the Russell 2000 Index. For more information, visit graniteconstruction.com.

1 Please refer to the description and non-GAAP reconciliation in the attached tables.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, circumstances, activities, performance, outcomes and results. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those specifically described in our Annual Report on Form 10-K and quarterly reports on Form 10-Q.

Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.

 
 
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share and per share data)
             
    September 30,   December 31,   September 30,
    2015   2014   2014
ASSETS            
Current assets            
Cash and cash equivalents   $ 221,785   $ 255,961   $ 167,174
Short-term marketable securities     17,607     25,504     27,950
Receivables, net     456,688     310,934     417,628
Costs and estimated earnings in excess of billings     56,971     36,411     62,823
Inventories     60,289     68,920     74,605
Real estate held for development and sale     11,609     11,609     11,773
Deferred income taxes     39,272     53,231     55,874
Equity in construction joint ventures     219,652     184,575     181,259
Other current assets     18,863     23,033     21,743
Total current assets     1,102,736     970,178     1,020,829
Property and equipment, net     385,036     409,653     424,272
Long-term marketable securities     70,646     76,563     74,140
Investments in affiliates     33,077     32,361     34,177
Goodwill     53,799     53,799     53,799
Other noncurrent assets     73,412     77,940     75,826
Total assets   $ 1,718,706   $ 1,620,494   $ 1,683,043
LIABILITIES AND EQUITY            
Current liabilities            
Current maturities of long-term debt   $ 22   $ 21   $ 21
Current maturities of non-recourse debt     5,822     1,226     1,226
Accounts payable     196,885     151,935     205,493
Billings in excess of costs and estimated earnings     122,409     108,992     115,809
Accrued expenses and other current liabilities     224,101     200,652     221,618
Total current liabilities     549,239     462,826     544,167
Long-term debt     270,105     270,105     270,127
Long-term non-recourse debt     —     5,516     5,822
Other long-term liabilities     41,211     44,495     45,887
Deferred income taxes     21,646     20,446     9,977
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 39,380,053 shares as of September 30, 2015, 39,186,386 shares as of December 31, 2014 and 39,152,255 shares as of September 30, 2014     394     392     391
Additional paid-in capital     137,974     134,177     132,396
Retained earnings     675,927     659,816     648,017
Total Granite Construction Incorporated shareholders’ equity     814,295     794,385     780,804
Non-controlling interests     22,210     22,721     26,259
Total equity     836,505     817,106     807,063
Total liabilities and equity   $ 1,718,706   $ 1,620,494   $ 1,683,043
                   

 

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
                     
    Three Months Ended September 30,       Nine Months Ended September 30,
    2015   2014       2015   2014
Revenue                    
Construction   $ 427,018     $ 447,097         $ 921,143     $ 873,357  
Large Project Construction     217,084       179,446           590,282       611,110  
Construction Materials     107,274       93,221           229,442       201,014  
Total revenue     751,376       719,764           1,740,867       1,685,481  
Cost of revenue                    
Construction     362,720       398,295           795,108       790,584  
Large Project Construction     194,512       173,767           535,166       538,846  
Construction Materials     93,246       81,010           203,818       185,536  
Total cost of revenue     650,478       653,072           1,534,092       1,514,966  
Gross profit     100,898       66,692           206,775       170,515  
Selling, general and administrative expenses     50,077       47,386           151,374       147,731  
Gain on sales of property and equipment     (804 )     (3,004 )         (2,090 )     (6,891 )
Operating income     51,625       22,310           57,491       29,675  
Other (income) expense                    
Interest income     (591 )     (451 )         (1,561 )     (1,343 )
Interest expense     3,485       2,488           10,966       10,426  
Equity in income of affiliates     (1,155 )     (1,109 )         (1,762 )     (2,310 )
Other expense (income), net     27       1,196           (1,409 )     (450 )
Total other expense     1,766       2,124           6,234       6,323  
Income before provision for income taxes     49,859       20,186           51,257       23,352  
Provision for income taxes     17,679       6,081           18,148       8,301  
Net income     32,180       14,105           33,109       15,051  
Amount attributable to non-controlling interests     (1,421 )     1,177           (1,297 )     (6,681 )
Net income attributable to Granite Construction Incorporated   $ 30,759     $ 15,282         $ 31,812     $ 8,370  
                     
Net income per share attributable to common shareholders:                    
Basic   $ 0.78     $ 0.39         $ 0.81     $ 0.21  
Diluted   $ 0.77     $ 0.38         $ 0.80     $ 0.21  
Weighted average shares of common stock:                    
Basic     39,378       39,150           39,317       39,073  
Diluted     39,897       39,813           39,863       39,790  
                     

 

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
         
Nine Months Ended September 30,   2015   2014
Operating activities        
Net income   $ 33,109     $ 15,051  
Adjustments to reconcile net income to net cash used in operating activities:        
Depreciation, depletion and amortization     48,517       49,968  
Gain on sales of property and equipment     (2,090 )     (6,891 )
Change in deferred income taxes     14,967       1,795  
Stock-based compensation     6,962       8,933  
Equity in net income from unconsolidated joint ventures     (29,465 )     (27,001 )
Changes in assets and liabilities     (80,129 )     (88,688 )
Net cash used in operating activities     (8,129 )     (46,833 )
Investing activities        
Purchases of marketable securities     (54,961 )     (49,975 )
Maturities of marketable securities     26,700       40,000  
Proceeds from called marketable securities     45,000       25,000  
Purchases of property and equipment     (26,144 )     (37,471 )
Proceeds from sales of property and equipment     3,439       12,257  
Other investing activities, net     598       (1,109 )
Net cash used in investing activities     (5,368 )     (11,298 )
Financing activities        
Cash dividends paid     (15,326 )     (15,229 )
Purchase of common stock     (3,325 )     (4,751 )
(Distributions to) contributions from non-controlling partners, net     (1,740 )     15,156  
Other financing activities, net     (288 )     1,008  
Net cash used in financing activities     (20,679 )     (3,816 )
Decrease in cash and cash equivalents     (34,176 )     (61,947 )
Cash and cash equivalents at beginning of period     255,961       229,121  
Cash and cash equivalents at end of period   $ 221,785     $ 167,174  
                 

 

GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
                           
    Three Months Ended September 30,     Nine Months Ended September 30,
    Construction  

Large Project

Construction

  

Construction

Materials

     Construction  

Large Project

Construction

  

Construction

Materials
                           
2015                          
Revenue   $ 427,018     $ 217,084     $ 107,274       $ 921,143     $ 590,282     $ 229,442  
Gross profit     64,298       22,572       14,028         126,035       55,116       25,624  
Gross profit as a percent of revenue     15.1 %     10.4 %     13.1 %       13.7 %     9.3 %     11.2 %
                           
2014                          
Revenue   $ 447,097     $ 179,446     $ 93,221       $ 873,357     $ 611,110     $ 201,014  
Gross profit     48,802       5,679       12,211         82,773       72,264       15,478  
Gross profit as a percent of revenue     10.9 %     3.2 %     13.1 %       9.5 %     11.8 %     7.7 %
                                                   

 

GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
                         
Contract Backlog by Segment   September 30, 2015   June 30, 2015   September 30, 2014
                         
Construction   $ 866,567   28.1 %   $ 831,067   27.7 %   $ 817,365   27.5 %
Large Project Construction     2,222,085   71.9 %     2,169,736   72.3 %     2,154,289   72.5 %
                         
Total   $ 3,088,652   100.0 %   $ 3,000,803   100.0 %   $ 2,971,654   100.0 %
                                     

 

GRANITE CONSTRUCTION INCORPORATED
EBITDA(1)
(Unaudited - dollars in thousands)
                   
    Three Months Ended September 30,     Nine Months Ended September 30,
    2015     2014       2015     2014  
Net income attributable to Granite Construction Incorporated   $ 30,759     $ 15,282       $ 31,812     $ 8,370  
Depreciation, depletion and amortization expense(2)     17,186       18,090         48,517       49,968  
Provision for income taxes     17,679       6,081         18,148       8,301  
Interest expense, net of interest income     2,894       2,037         9,405       9,083  
EBITDA(1)   $ 68,518     $ 41,490       $ 107,882     $ 75,722  
Consolidated EBITDA Margin(3)     9.1 %     5.8 %       6.2 %     4.5 %
Note:  

(1)We define EBITDA as GAAP net income (loss) attributable to Granite Construction Incorporated, adjusted for interest, taxes, depreciation, depletion and amortization. We believe this non-GAAP financial measure and the associated margin are useful in evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in reviewing the Company. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to similar measures provided by other companies.
 
(2)Amount includes the sum of depreciation, depletion and amortization which are classified as Cost of Revenue and Selling, General and Administrative expenses in the condensed consolidated statements of operations of Granite Construction Incorporated.
 
(3)Represents EBITDA divided by consolidated revenue. Consolidated revenue was $751,376 and $1,740,867 for three and nine months ended September 30, 2015, respectively and $719,764 and $1,685,481 for the three and nine months ended September 30, 2014, respectively.

 

Granite Construction Incorporated
Ron Botoff, 831-728-7532

 

Source: Granite Construction Incorporated