Granite Reports Improved Second-Quarter 2011 Results

  • Revenue up 7 percent from a year ago
  • Net income of $4.9 million compared with net loss of $6.7 million
  • SG&A decreased 24 percent to $38.8 million
  • Total contract backlog of $2.1 billion compared with $1.6 billion a year ago
  • Balance sheet strong with $317.9 million in cash, cash equivalents and marketable securities

WATSONVILLE, Calif.--(BUSINESS WIRE)-- Granite Construction Incorporated (NYSE: GVA) today reported net income of $4.9 million, or $0.13 per diluted share, for the second quarter of 2011 compared with a net loss of $6.7 million, or $0.18 per diluted share, for the second quarter of 2010.

"I am pleased to report that our teams delivered improved operating results and added $526.7 million of new awards during the second quarter," said
James H. Roberts, Granite's president and chief executive officer. "The quarter was, however, impacted by wet weather in certain geographic locations that pushed out some revenue and gross profit to the second half of the year. There is also no question that competition remains fierce and funding uncertainties are weighing heavily on many of our customers. To successfully manage through this cycle, we continue to focus our efforts on building quality backlog, managing our cost structure, and operating effectively and efficiently in all aspects of our business."

Second-quarter 2011 Financial Results

Total Company

  • Revenue totaled $484.7 million compared with $454.2 million in 2010, driven largely by an increase in Construction segment revenue.
  • Gross profit margin was 9 percent compared with 11 percent in 2010.
  • Selling, general and administrative expenses for the second quarter were $38.8 million compared with $51.4 million for the same period last year as a result of the Company's continued focus on improving efficiencies as well as the actions the Company took in late 2010 to reduce its cost structure.
  • Operating income for the quarter was $9.4 million compared with $2.1 million in the prior year driven largely by a decrease in selling, general and administrative expenses.
  • Net income attributable to noncontrolling interests in joint ventures was $1.2 million compared with $4.1 million in 2010.
  • Total contract backlog at June 30, 2011, was $2.1 billion compared with $1.6 billion a year ago due to continued bidding successes.

Construction

  • Construction revenue for the quarter increased 10 percent to $260.6 million due to a higher volume of work completed in the quarter compared to a year ago.
  • Gross profit margin for the second quarter was 9 percent compared with 10 percent a year ago reflecting the continued pressure on margins due to intense competition.

Large Project Construction

  • Large Project Construction revenue for the quarter increased 6 percent to $162.3 million reflecting continued progress on the Queens Bored Tunnels and Structures project in the East and the SR 520 and Mountain View Corridor projects in the Northwest.
  • Gross profit margin for the quarter was 8 percent compared with 14 percent for the same period last year. The decrease is associated with $74.4 million in revenue recognized on projects that have not reached the profit recognition threshold compared with $34.4 million last year. In addition, the Company settled a project design issue in the second quarter of 2010 with no corresponding settlement in 2011.

Construction Materials

  • Construction Materials revenue for the quarter totaled $58.1 million compared with $61.1 million for the same period last year.
  • Gross profit on the sale of construction materials was 15 percent compared with 7 percent in 2010 reflecting increased production efficiencies to meet growing Construction backlog.

Outlook

"Our year over year improvement is encouraging, however, we continue to face a very difficult and competitive bidding environment across the country," said Roberts. "While we are not out of the woods with this downturn, I am pleased with the amount and quality of our current backlog and I remain confident in the long-term outlook for our business," he said.

The Company's fiscal 2011 guidance for its operating segments remains unchanged. Construction segment revenue is expected to be $1.0 billion to $1.2 billion with a corresponding gross profit margin between 9 percent and 11 percent. Large Project Construction segment revenue is expected to be $650 million to $850 million with a corresponding gross profit margin of between 13 percent and 15 percent. Construction Materials segment revenue is expected to be $170 million to $200 million with corresponding gross profit margin between 7 percent and 10 percent. The Company is updating its guidance for net income attributable to noncontrolling interests in joint ventures to a range of $12 million to $16 million.

Conference Call

Granite will conduct a conference call tomorrow, August 4, 2011 at 8 a.m. Pacific time/11 a.m. Eastern time to discuss the results of the quarter ended June 30, 2011. Access to a live audio webcast is available at www.graniteconstruction.com/investor-relations. The live conference call may be accessed by calling (877) 693-6483. The conference ID for the live call is 82727819. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through August 25, 2011 by calling (855) 859-2056. The conference ID for the replay is also 82727819.

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 was recently recognized by the Ethisphere Institute as one of the World's Most Ethical Companies for the second year in a row. 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 under "Item 1A. Risk Factors."

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)
             
    June 30,   December 31,   June 30,
    2011   2010   2010
             
ASSETS            
Current assets            
Cash and cash equivalents   $ 190,069   $ 252,022   $ 208,450
Short-term marketable securities     78,255     109,447     73,566
Receivables, net     283,944     243,986     295,779
Costs and estimated earnings in excess of billings     51,739     10,519     56,665
Inventories     64,727     51,018     48,529
Real estate held for development and sale     78,725     75,716     148,897
Deferred income taxes     52,714     53,877     31,870
Equity in construction joint ventures     87,653     74,716     72,571
Other current assets     34,779     42,555     39,031
Total current assets     922,605     913,856     975,358
Property and equipment, net     464,616     473,607     501,258
Long-term marketable securities     49,580     34,259     68,291
Investments in affiliates     32,932     31,410     31,210
Other noncurrent assets     82,214     82,401     79,060
Total assets   $ 1,551,947   $ 1,535,533   $ 1,655,177
             
LIABILITIES AND EQUITY            
Current liabilities            
Current maturities of long-term debt   $ 8,351   $ 8,359   $ 8,538
Current maturities of non-recourse debt     16,454     29,760     39,657
Accounts payable     179,664     129,700     173,637
Billings in excess of costs and estimated earnings     122,014     120,185     144,935
Accrued expenses and other current liabilities     156,727     150,773     161,632
Total current liabilities     483,210     438,777     528,399
Long-term debt     208,519     217,014     216,870
Long-term non-recourse debt     28,907     25,337     16,615
Other long-term liabilities     46,460     47,996     49,197
Deferred income taxes     10,983     10,774     27,905
             
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 38,667,457 shares as of June 30, 2011, 38,745,542 shares as of December 31, 2010 and 38,788,581 shares as of June 30, 2010     387     387     388
Additional paid-in capital     105,287     104,232     98,142
Retained earnings     642,228     656,412     677,873
Total Granite Construction Incorporated shareholders' equity     747,902     761,031     776,403
Noncontrolling interests     25,966     34,604     39,788
Total equity     773,868     795,635     816,191
Total liabilities and equity   $ 1,551,947   $ 1,535,533   $ 1,655,177
             
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
                   
    Three Months Ended June 30,     Six Months Ended June 30,
    2011   2010     2011   2010
Revenue                  
Construction   $ 260,600     $ 237,943       $ 353,292     $ 319,129  
Large project construction     162,338       153,328         300,158       259,653  
Construction materials     58,114       61,089         81,912       87,253  
Real estate     3,622       1,844         6,043       8,852  
Total revenue     484,674       454,204         741,405       674,887  
Cost of revenue                  
Construction     237,211       215,042         324,350       294,382  
Large project construction     149,680       131,493         256,202       228,335  
Construction materials     49,644       56,609         80,712       89,898  
Real estate     3,183       1,362         5,197       6,860  
Total cost of revenue     439,718       404,506         666,461       619,475  
Gross profit     44,956       49,698         74,944       55,412  
Selling, general and administrative expenses     38,793       51,357         82,165       106,649  
Gain on sales of property and equipment     3,270       3,800         5,974       8,252  
Operating income (loss)     9,433       2,141         (1,247 )     (42,985 )
Other expense                  
Interest income     575       1,098         1,819       2,037  
Interest expense     (879 )     (3,013 )       (4,235 )     (6,747 )
Equity in loss of affiliates     (181 )     (387 )       (438 )     (706 )
Other (expense) income, net     (688 )     1,934         (118 )     4,831  
Total other expense     (1,173 )     (368 )       (2,972 )     (585 )
Income (loss) before provision for (benefit from) income taxes     8,260       1,773         (4,219 )     (43,570 )
Provision for (benefit from) income taxes     2,087       4,406         (3,136 )     (3,207 )
Net income (loss)     6,173       (2,633 )       (1,083 )     (40,363 )
Amount attributable to noncontrolling interests     (1,227 )     (4,058 )       (2,978 )     (7,282 )
Net income (loss) attributable to Granite Construction Incorporated   $ 4,946     $ (6,691 )     $ (4,061 )   $ (47,645 )
                   
Net income (loss) per share attributable to common shareholders:                  
Basic (1)   $ 0.13     $ (0.18 )     $ (0.11 )   $ (1.26 )
Diluted (1)   $ 0.13     $ (0.18 )     $ (0.11 )   $ (1.26 )
Weighted average shares of common stock:                  
Basic     38,140       37,850         38,052       37,770  
Diluted     38,479       37,850         38,052       37,770  
                                   
Note:
(1) Computed using the two-class method, except when in a net loss position
 
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
         
         
Six Months Ended June 30,   2011   2010
Operating activities        
Net loss   $ (1,083 )   $ (40,363 )
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation, depletion and amortization     30,464       35,839  
Gain on sales of property and equipment     (5,974 )     (8,252 )
Stock-based compensation     5,913       6,885  
Gain on company owned life insurance     (536 )     (1,748 )
Changes in assets and liabilities, net of the effects of consolidations     (45,520 )     (31,279 )
Net cash used in operating activities     (16,736 )     (38,918 )
Investing activities        
Purchases of marketable securities     (65,287 )     (60,073 )
Maturities of marketable securities     58,375       24,900  
Proceeds from sale of marketable securities     19,268       10,000  
Proceeds from company owned life insurance     -       2,078  
Additions to property and equipment     (27,542 )     (21,809 )
Proceeds from sales of property and equipment     10,266       11,936  
Purchase of private preferred stock     (50 )     (6,400 )
Other investing activities, net     170       (869 )
Net cash used in investing activities     (4,800 )     (40,237 )
Financing activities        
Long-term debt principal payments     (16,151 )     (18,155 )
Cash dividends paid     (10,061 )     (10,067 )
Purchase of common stock     (3,662 )     (3,434 )
Distributions to noncontrolling partners, net     (11,616 )     (19,797 )
Other financing activities     1,073       102  
Net cash used in financing activities     (40,417 )     (51,351 )
Decrease in cash and cash equivalents     (61,953 )     (130,506 )
Cash and cash equivalents at beginning of period     252,022       338,956  
Cash and cash equivalents at end of period   $ 190,069     $ 208,450  
                 
GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
                                   
    Three Months Ended June 30,     Six Months Ended June 30,
    Construction   Large Project Construction   Construction Materials   Real Estate     Construction   Large Project Construction   Construction Materials   Real Estate
                                   
2011                                  
Revenue   $ 260,600     $ 162,338     $ 58,114     $ 3,622       $ 353,292     $ 300,158     $ 81,912     $ 6,043  
Gross profit     23,389       12,658       8,470       439         28,942       43,956       1,200       846  
Gross profit as a percent of revenue     9.0 %     7.8 %     14.6 %     12.1 %       8.2 %     14.6 %     1.5 %     14.0 %
                                   
2010                                  
Revenue   $ 237,943     $ 153,328     $ 61,089     $ 1,844       $ 319,129     $ 259,653     $ 87,253     $ 8,852  
Gross profit (loss)     22,901       21,835       4,480       482         24,747       31,318       (2,645 )     1,992  
Gross profit (loss) as a percent of revenue     9.6 %     14.2 %     7.3 %     26.1 %       7.8 %     12.1 %     (3.0 )%     22.5 %
                                   
GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
                         
Contract Backlog by Segment   June 30, 2011   March 31, 2011   June 30, 2010
                         
Construction   $ 800,434   38.0 %   $ 696,055   34.7 %   $ 594,214   38.3 %
Large project construction     1,306,961   62.0 %     1,307,622   65.3 %     957,080   61.7 %
                         
Total   $ 2,107,395   100.0 %   $ 2,003,677   100.0 %   $ 1,551,294   100.0 %
                                     

 

Granite Construction Incorporated

Jacque Fourchy, 831-761-4741

 

Source: Granite Construction Incorporated

 

 

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