Granite Reports Fourth Quarter and Fiscal 2011 Results

• Revenue increased 14 percent in 2011
• Gross profit margin improved to 12 percent
• SG&A expenses decreased 15 percent or $29 million in 2011
• Cash position remains strong with $407 million in cash, cash equivalents and marketable securities
• Backlog increased to $2.0 billion at year-end

WATSONVILLE, Calif.--(BUSINESS WIRE)-- Granite Construction Incorporated (NYSE: GVA) today reported a net income of $51 million for the full year 2011, compared to a net loss of $59 million the prior year. Diluted earnings per share (EPS) for the year was $1.31 compared to a loss per share of $(1.56) in 2010.

For the fourth quarter of 2011, Granite reported a net income of $19 million, compared to a net loss of $50 million for the fourth quarter of 2010. Diluted EPS for the quarter ended December 31, 2011 was $0.48 compared to a loss per share of $(1.32) in the prior year period. Included in the fourth quarter of 2010 were restructuring charges of $107 million associated with the Company’s Enterprise Improvement Plan.

“Our solid performance in 2011 is the result of our continued successful project execution, the tremendous efforts of our people to improve efficiencies throughout the company and the significant reductions we have made to our cost structure,” said
James H. Roberts, president and chief executive officer.

Fiscal 2011 Highlights:

Total Company

• Revenue totaled $2.0 billion compared with $1.8 billion in 2010, driven by increases in both Construction and Large Project Construction revenue.
• Gross profit margin was 12 percent compared with 10 percent in 2010.
• SG&A expenses decreased $29 million to $162 million primarily due to a workforce reduction in 2010 and restructuring of administrative services.
• Operating income was $99 million in 2011 compared with an operating loss of $109 million in 2010. Fiscal 2010 includes restructuring charges of approximately $109 million.
• Total other (expense) income decreased $13 million from 2010 due primarily to previously deferred income and impairment charges on other investments.
• Net income attributable to noncontrolling interests was $15 million compared with a net loss attributable to noncontrolling interests of $4 million in 2010.
• Total contract backlog at December 31, 2011, was $2.0 billion compared with $1.9 billion a year ago.

Construction

• Construction revenue increased 11 percent to $1.0 billion driven by a higher volume of work and mild weather in the fourth quarter.
• Gross profit margin was 12 percent compared with 10 percent a year ago reflecting successful execution on projects and improved cost management.

Large Project Construction

• Large Project Construction revenue increased 24 percent to $725 million aided by the progress on several large projects.
• Gross profit margin was 14 percent compared with 12 percent in 2010 reflecting an increase in the volume of projects that reached the profit recognition threshold during the year.

Construction Materials

• Construction Materials revenue was $221 million compared with $222 million last year.
• Gross profit on the sale of construction materials was 8 percent compared with 5 percent in 2010 driven by production efficiencies.

Fourth Quarter 2011 Highlights

Total Company

• Revenue totaled $540 million compared with $417 million in 2010, driven by increases in both Construction and Large Project Construction revenue.
• Gross profit margin was 15 percent compared with 11 percent in 2010.
• Selling, general and administrative expenses for the fourth quarter increased $3 million to $43 million due to higher incentive compensation related to higher earnings.
• Operating income for the quarter was $40 million compared with an operating loss of $99 million in the prior year. The fourth quarter 2010 includes restructuring charges of $107 million related to workforce reductions as well as real estate and fixed asset impairment charges.
• Net income attributable to noncontrolling interests was $6 million compared with net loss attributable to noncontrolling interest of $15 million in 2010. The results for 2010 include $20 million associated with impairment charges related to the implementation of the company’s Enterprise Improvement Plan.

Construction

• Construction revenue for the quarter increased 21 percent to $259 million due to relatively mild weather throughout the quarter.
• Gross profit margin for the fourth quarter was 14 percent compared with 12 percent a year ago reflecting successful execution on projects and improved cost management.

Large Project Construction

• Large Project Construction revenue for the quarter increased 37 percent to $212 million reflecting progress on several large projects across the country.
• Gross profit margin for the quarter was 16 percent compared with 11 percent for the same period last year. During the fourth quarter, projects which reached profit recognition include the Houston Metro Light Rail project and the State Route 520 project in the Northwest.

Construction Materials

• Construction Materials revenue for the quarter increased 19 percent to $56 million reflecting drier weather in the fourth quarter of 2011 compared to the fourth quarter of 2010.
• Gross profit margin on the sale of construction materials was 11 percent compared with 5 percent in 2010.

Outlook

“I am very pleased with the quality of our backlog and the opportunities to grow it even further in all segments of our business throughout 2012,” commented Roberts. “Despite operating in an extremely competitive bidding environment, our teams continue to meet the challenge by being strategic about the work we bid, intensely focused on execution, and responsive to market conditions. ”

“Going forward, we will continue to aggressively manage expenses and drive efficiencies. We will also leverage our capabilities and experience to drive opportunities to grow our business. Our efforts this past eighteen months have set the stage for long-term profitability,” said Roberts. “In addition, we have renewed our focus on growing the business and are excited about the future for Granite. Our strategy is centered on several key initiatives including growing both our large projects and vertically integrated businesses, as well as diversifying our business model, and continually optimizing our asset portfolio. We are building momentum around these initiatives and looking forward to executing on our plan not only this year, but over the years to come.”

Conference Call

Granite will conduct a conference call tomorrow, February 23, 2012 at 8 a.m. Pacific time/11 a.m. Eastern time to discuss the results of the quarter and year ended December 31, 2011. Access to a live audio webcast is available at http://investor.graniteconstruction.com. The live conference call may be accessed by calling (877) 643-7158. The conference ID for the live call is 47718778. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through May 15, 2012 by calling (855) 859-2056. The conference ID for the replay is 47718778.

About Granite

Granite is one of the nation’s leading infrastructure contractors and is member of the S&P 400 Midcap Index, the FTSE KLD 400 Social Index and the Russell 2000 Index. Through its wholly owned subsidiary, Granite is one of the nation’s largest diversified heavy civil contractors and construction materials producers serving public- and private-sector clients nationwide. In addition, Granite has one of the oldest and most robust ethics and compliance programs in the industry. The Company has been recognized by Ethisphere Institute as one of the World’s Most Ethical Companies for two straight years. For more information, please visit graniteconstruction.com.

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
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share and per share data)
December 31,		2011			2010
ASSETS
Current assets
Cash and cash equivalents		$	256,990		$	252,022
Short-term marketable securities			70,408			109,447
Receivables, net			251,838			243,986
Costs and estimated earnings in excess of billings			37,703			10,519
Inventories			50,975			51,018
Real estate held for development and sale			67,037			75,716
Deferred income taxes			38,571			53,877
Equity in construction joint ventures			101,029			74,716
Other current assets			35,171			42,555
Total current assets			909,722			913,856
Property and equipment, net			447,140			473,607
Long-term marketable securities			79,250			34,259
Investments in affiliates			31,071			31,410
Other noncurrent assets			80,616			82,401
Total assets		$	1,547,799		$	1,535,533
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt		$	9,102		$	8,359
Current maturities of non-recourse debt			23,071			29,760
Accounts payable			158,660			129,700
Billings in excess of costs and estimated earnings			90,845			120,185
Accrued expenses and other current liabilities			166,790			150,773
Total current liabilities			448,468			438,777
Long-term debt			208,501			217,014
Long-term non-recourse debt			9,912			25,337
Other long-term liabilities			49,221			47,996
Deferred income taxes			4,034			10,774
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 38,682,771 shares as of December 31, 2011 and 38,745,542 shares as of December 31, 2010			387			387
Additional paid-in capital			111,514			104,232
Retained earnings			687,296			656,412
Total Granite Construction Incorporated shareholders’ equity			799,197			761,031
Noncontrolling interests			28,466			34,604
Total equity			827,663			795,635
Total liabilities and equity		$	1,547,799		$	1,535,533

GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
		Three Months Ended						Years Ended
		December 31,						December 31,
		2011		2010				2011		2010
Revenue
Construction		$ 259,221		$ 214,127				$ 1,043,614		$ 943,245
Large project construction		211,565		154,781				725,043		584,406
Construction materials		55,500		46,677				220,583		222,058
Real estate		13,262		1,643				20,291		13,256
Total revenue		539,548		417,228				2,009,531		1,762,965
Cost of revenue
Construction		222,197		187,831				919,108		847,536
Large project construction		176,970		137,108				620,935		517,099
Construction materials		49,613		44,151				203,942		210,040
Real estate		11,642		1,921				17,583		10,506
Total cost of revenue		460,422		371,011				1,761,568		1,585,181
Gross profit		79,126		46,217				247,963		177,784
Selling, general and administrative expenses		42,536		39,766				162,302		191,593
Restructuring charges		670		107,297				2,181		109,279
Gain on sales of property and equipment		4,217		2,331				15,789		13,748
Operating income (loss)		40,137		(98,515)				99,269		(109,340)
Other (expense) income
Interest income		583		833				2,878		4,980
Interest expense		(2,709)		(2,446)				(10,362)		(9,740)
Equity in income of affiliates		750		933				2,193		756
Other (expense) income, net		(2,594)		1,114				(4,545)		6,968
Total other (expense) income		(3,970)		434				(9,836)		2,964
Income (loss) before provision for (benefit from) income taxes		36,167		(98,081)				89,433		(106,376)
Provision for (benefit from) income taxes		11,375		(32,695)				23,348		(43,928)
Net income (loss)		24,792		(65,386)				66,085		(62,448)
Amount attributable to noncontrolling interests		(6,038)		15,367				(14,924)		3,465
Net income (loss) attributable to Granite Construction Incorporated		$ 18,754		$ (50,019)				$ 51,161		$ (58,983)
Net income (loss) per share attributable to common shareholders:
Basic (1)		$ 0.48		$ (1.32)				$ 1.32		$ (1.56)
Diluted (1)		$ 0.48		$ (1.32)				$ 1.31		$ (1.56)
Weighted average shares of common stock:
Basic		38,191		37,875				38,117		37,820
Diluted		38,607		37,875				38,473		37,820

Note:
(1) Computed using the two-class method, except when in a net loss position

GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Years Ended December 31,			2011				2010
Operating activities
Net income (loss)		$	66,085			$	(62,448	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Restructuring impairment charges			1,678				93,862
Other impairment charges			5,067				821
Depreciation, depletion and amortization			60,546				74,435
Gain on sales of property and equipment			(15,789	)			(13,748	)
Change in deferred income tax			8,566				(39,289	)
Stock-based compensation			12,155				13,040
Loss (gain) on company owned life insurance			18				(3,321	)
Equity in income of affiliates			(2,193	)			(756	)
Changes in assets and liabilities, net of the effects of consolidations			(43,788	)			(33,278	)
Net cash provided by operating activities			92,345				29,318
Investing activities
Purchases of marketable securities			(155,122	)			(121,626	)
Maturities of marketable securities			110,875				74,000
Proceeds from sale of marketable securities			33,268				15,000
Purchase of company owned life insurance			(359	)			(8,195	)
Additions to property and equipment			(45,035	)			(37,004	)
Proceeds from sales of property and equipment			27,959				21,148
Purchase of private preferred stock			(50	)			(6,400	)
Contributions to (distributions from) affiliates, net			1,458				(1,658	)
Issuance of notes receivable			(3,979	)			(1,313	)
Collection of notes receivable			1,599				3,126
Other investing activities, net			1,658				2,487
Net cash used in investing activities			(27,728	)			(60,435	)
Financing activities
Proceeds from long-term debt			2,122				1,918
Long-term debt principal payments			(16,907	)			(19,829	)
Cash dividends paid			(20,117	)			(20,150	)
Purchase of common stock			(4,029	)			(3,641	)
Contributions from noncontrolling partners			519				7,321
Distributions to noncontrolling partners			(21,581	)			(21,498	)
Other financing activities, net			344				62
Net cash used in financing activities			(59,649	)			(55,817	)
Increase (decrease) in cash and cash equivalents			4,968				(86,934	)
Cash and cash equivalents at beginning of period			252,022				338,956
Cash and cash equivalents at end of period		$	256,990			$	252,022

GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
		Three Months Ended December 31,																	Years Ended December 31,
		Construction				Large Project Construction				Construction Materials				Real Estate					Construction				Large Project Construction				Construction Materials				Real Estate
2011
Revenue		$	259,221			$	211,565			$	55,500			$	13,262				$	1,043,614			$	725,043			$	220,583			$	20,291
Gross profit			37,024				34,595				5,887				1,620					124,506				104,108				16,641				2,708
Gross profit as a percent of revenue			14.3	%			16.4	%			10.6	%			12.2	%				11.9	%			14.4	%			7.5	%			13.3	%
2010
Revenue		$	214,127			$	154,781			$	46,677			$	1,643				$	943,245			$	584,406			$	222,058			$	13,256
Gross profit (loss)			26,296				17,673				2,526				(278	)				95,709				67,307				12,018				2,750
Gross profit (loss) as a percent of revenue			12.3	%			11.4	%			5.4	%			-16.9	%				10.1	%			11.5	%			5.4	%			20.7	%

GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
Contract Backlog by Segment		December 31, 2011						December 31, 2010
Construction		$	513,624		25.4	%		$	465,271		24.5	%
Large project construction			1,508,830		74.6	%			1,433,899		75.5	%
Total		$	2,022,454		100.0	%		$	1,899,170		100.0	%

 

Granite Construction Incorporated

Jacque Fourchy, 831-761-4741

Source: Granite Construction Incorporated