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| 8-K - GRANITE CONSTRUCTION INCORPORATED 8-K - GRANITE CONSTRUCTION INC | a50055369.htm |
Exhibit 99.1
Granite Announces Third-Quarter 2011 Results
- Revenue increased 9 percent compared to a year ago
- Operating income increased $28.2 million to $60.4 million
- Gross profit margin improved to 13 percent from 11 percent in 2010
- SG&A decreased $8.0 million to $39.1 million
WATSONVILLE, Calif.--(BUSINESS WIRE)--November 2, 2011--Granite Construction Incorporated (NYSE:GVA) today reported net income attributable to common shareholders of $36.5 million, or $0.93 per diluted share, for the third quarter of 2011 compared with $38.7 million, or $0.99 per diluted share, the prior year. Third quarter of 2010 included a tax benefit of $8.0 million versus a tax provision of $15.1 million for the third quarter of 2011.
“Overall, our business continues to operate well in the face of a very challenging environment,” said James H. Roberts, Granite’s president and chief executive officer. “We are successfully lowering our cost structure, holding margins in a very competitive market and executing well on our backlog of work.”
“I am extremely proud of our employees,” Roberts continued. “It is with their tireless work ethic that we have been able to offset some of the economic challenges facing our industry. Not only have we reduced overhead, we have lowered our costs to produce, streamlined our operations and continue to seek opportunities to do more. I am confident that with the healthy pipeline of project bidding opportunities in front of us, we are well-positioned to leverage our capabilities and emerge from this downturn with a more diversified portfolio of work that will strengthen and grow the business over the long-term.”
Third-quarter 2011 Financial Results
Total Company
- Revenue totaled $728.6 million compared with $670.9 million in 2010, driven by increases in both Construction and Large Project Construction revenue.
- Gross profit margin was 13 percent compared with 11 percent in 2010.
- Selling, general and administrative expenses for the third quarter decreased $8.0 million to $39.1 million primarily due to the 2010 workforce reduction as well as other ongoing efforts to reduce the company’s cost structure.
- Operating income for the quarter was $60.4 million compared with $32.2 million in the prior year driven largely by an increase in gross profit and a decrease in selling, general and administrative expenses.
- Other income (expense) decreased $6.0 million from 2010 due primarily to tax related benefits in the prior year.
- Net income attributable to non-controlling interests in joint ventures was $5.9 million compared with $4.6 million in 2010.
- Total contract backlog at September 30, 2011, was $1.8 billion compared with $1.6 billion a year ago. New awards for the quarter include a $64 million bridge project in Florida, Granite’s 49 percent share of a $90 million project in Guam and Granite’s 25 percent share of a $97 million airport runway project in California.
- Due to a change in mix of the company’s consolidated versus unconsolidated joint venture projects, cash and marketable securities at September 30, 2011 was $330.0 million compared with $388.3 million at September 30, 2010.
Construction
- Construction revenue for the quarter increased 5 percent to $431.1 million due to a higher volume of work completed in the quarter compared to a year ago.
- Gross profit margin for the third quarter was 14 percent compared with 11 percent a year ago reflecting successful execution on projects and improved cost management.
Large Project Construction
- Large Project Construction revenue for the quarter increased 26 percent to $213.3 million reflecting progress on several large projects across the country.
- Gross profit margin for the quarter was 12 percent compared with 11 percent for the same period last year. During the quarter, the World Trade Center project in New York and the Mountain View Corridor project in Utah reached the profit recognition threshold.
Construction Materials
- Construction Materials revenue for the quarter totaled $83.2 million compared with $88.1 million for the same period last year as the demand for construction materials remains weak throughout most of our markets in the West.
- Gross profit on the sale of construction materials was 12 percent compared with 14 percent in 2010.
Outlook
Based on the year-to-date performance, the company is updating its guidance for the year. Construction segment revenues are now expected to be $1 billion to $1.1 billion and gross margin of 10.5 percent to 11.5 percent. Revenue for the Large Project Construction segment is expected to be $650 million to $700 million with a gross margin range of 15.5 percent and 16.5 percent. Revenue for the Construction Materials segment is expected to be $190 million to $210 million and gross margin between 7.5 percent and 8.5 percent. Net income attributable to non-controlling interests is expected to be $13 million to $15 million for the year.
Conference Call
Granite will conduct a conference call tomorrow, November 3, 2011 at 8 a.m. Pacific time/11 a.m. Eastern time to discuss the results of the quarter ended September 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) 643-7158. The conference ID for the live call is 18220474. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through November 24, 2011 by calling (855) 859-2056. The conference ID for the replay is also 18220474.
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” and Quarterly Reports on Form 10-Q under “Part II, 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) | |||||||||
| September 30, | December 31, | September 30, | |||||||
| 2011 | 2010 | 2010 | |||||||
| ASSETS | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 193,099 | $ | 252,022 | $ | 257,854 | |||
| Short-term marketable securities | 77,389 | 109,447 | 80,962 | ||||||
| Receivables, net | 357,807 | 243,986 | 375,914 | ||||||
| Costs and estimated earnings in excess of billings | 45,884 | 10,519 | 34,448 | ||||||
| Inventories | 57,987 | 51,018 | 45,224 | ||||||
| Real estate held for development and sale | 79,173 | 75,716 | 151,638 | ||||||
| Deferred income taxes | 52,714 | 53,877 | 31,035 | ||||||
| Equity in construction joint ventures | 97,415 | 74,716 | 80,496 | ||||||
| Other current assets | 29,526 | 42,555 | 42,409 | ||||||
| Total current assets | 990,994 | 913,856 | 1,099,980 | ||||||
| Property and equipment, net | 453,822 | 473,607 | 491,363 | ||||||
| Long-term marketable securities | 59,509 | 34,259 | 49,502 | ||||||
| Investments in affiliates | 33,435 | 31,410 | 32,515 | ||||||
| Other noncurrent assets | 80,709 | 82,401 | 78,611 | ||||||
| Total assets | $ | 1,618,469 | $ | 1,535,533 | $ | 1,751,971 | |||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities | |||||||||
| Current maturities of long-term debt | $ | 8,351 | $ | 8,359 | $ | 8,444 | |||
| Current maturities of non-recourse debt | 16,690 | 29,760 | 39,157 | ||||||
| Accounts payable | 216,600 | 129,700 | 206,993 | ||||||
| Billings in excess of costs and estimated earnings | 89,505 | 120,185 | 157,233 | ||||||
| Accrued expenses and other current liabilities | 185,624 | 150,773 | 173,547 | ||||||
| Total current liabilities | 516,770 | 438,777 | 585,374 | ||||||
| Long-term debt | 208,519 | 217,014 | 216,870 | ||||||
| Long-term non-recourse debt | 27,755 | 25,337 | 16,420 | ||||||
| Other long-term liabilities | 46,985 | 47,996 | 48,764 | ||||||
| Deferred income taxes | 10,330 | 10,774 | 27,883 | ||||||
| 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 38,664,403 shares as of September 30, 2011, 38,745,542 shares as of December 31, 2010 and 38,769,787 shares as of September 30, 2010 | 387 | 387 | 388 | ||||||
| Additional paid-in capital | 108,096 | 104,232 | 101,567 | ||||||
| Retained earnings | 673,626 | 656,412 | 711,497 | ||||||
| Total Granite Construction Incorporated shareholders’ equity | 782,109 | 761,031 | 813,452 | ||||||
| Noncontrolling interests | 26,001 | 34,604 | 43,208 | ||||||
| Total equity | 808,110 | 795,635 | 856,660 | ||||||
| Total liabilities and equity | $ | 1,618,469 | $ | 1,535,533 | $ | 1,751,971 | |||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited - in thousands, except per share data) | ||||||||||||||||
|
Three Months Ended September |
Nine Months Ended September |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenue | ||||||||||||||||
| Construction | $ | 431,101 | $ | 409,989 | $ | 784,393 | $ | 729,118 | ||||||||
| Large project construction | 213,320 | 169,972 | 513,478 | 429,625 | ||||||||||||
| Construction materials | 83,171 | 88,128 | 165,083 | 175,381 | ||||||||||||
| Real estate | 986 | 2,761 | 7,029 | 11,613 | ||||||||||||
| Total revenue | 728,578 | 670,850 | 1,469,983 | 1,345,737 | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Construction | 372,561 | 365,323 | 696,911 | 659,705 | ||||||||||||
| Large project construction | 187,763 | 151,656 | 443,965 | 379,991 | ||||||||||||
| Construction materials | 73,617 | 75,991 | 154,329 | 165,889 | ||||||||||||
| Real estate | 744 | 1,725 | 5,941 | 8,585 | ||||||||||||
| Total cost of revenue | 634,685 | 594,695 | 1,301,146 | 1,214,170 | ||||||||||||
| Gross profit | 93,893 | 76,155 | 168,837 | 131,567 | ||||||||||||
| Selling, general and administrative expenses | 39,112 | 47,160 | 121,277 | 153,809 | ||||||||||||
| Gain on sales of property and equipment | 5,598 | 3,165 | 11,572 | 11,417 | ||||||||||||
| Operating income (loss) | 60,379 | 32,160 | 59,132 | (10,825 | ) | |||||||||||
| Other (expense) income | ||||||||||||||||
| Interest income | 476 | 2,110 | 2,295 | 4,147 | ||||||||||||
| Interest expense | (3,418 | ) | (547 | ) | (7,653 | ) | (7,294 | ) | ||||||||
| Equity in income (loss) of affiliates | 1,881 | 529 | 1,443 | (177 | ) | |||||||||||
| Other (expense) income, net | (1,833 | ) | 1,023 | (1,951 | ) | 5,854 | ||||||||||
| Total other (expense) income | (2,894 | ) | 3,115 | (5,866 | ) | 2,530 | ||||||||||
| Income (loss) before provision for (benefit from) income taxes | 57,485 | 35,275 | 53,266 | (8,295 | ) | |||||||||||
| Provision for (benefit from) income taxes | 15,109 | (8,026 | ) | 11,973 | (11,233 | ) | ||||||||||
| Net income | 42,376 | 43,301 | 41,293 | 2,938 | ||||||||||||
| Amount attributable to noncontrolling interests | (5,908 | ) | (4,620 | ) | (8,886 | ) | (11,902 | ) | ||||||||
| Net income (loss) attributable to Granite Construction Incorporated | $ | 36,468 | $ | 38,681 | $ | 32,407 | $ | (8,964 | ) | |||||||
| Net income (loss) per share attributable to common shareholders: | ||||||||||||||||
| Basic (1) | $ | 0.94 | $ | 1.00 | $ | 0.84 | $ | (0.24 | ) | |||||||
| Diluted (1) | $ | 0.93 | $ | 0.99 | $ | 0.83 | $ | (0.24 | ) | |||||||
| Weighted average shares of common stock: | ||||||||||||||||
| Basic | 38,172 | 37,865 | 38,092 | 37,802 | ||||||||||||
| Diluted | 38,598 | 38,071 | 38,428 | 37,802 | ||||||||||||
| 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) | ||||||||
| Nine Months Ended September 30, | 2011 | 2010 | ||||||
| Operating activities | ||||||||
| Net income | $ | 41,293 | $ | 2,938 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation, depletion and amortization | 45,691 | 54,169 | ||||||
| Gain on sales of property and equipment | (11,572 | ) | (11,417 | ) | ||||
| Stock-based compensation | 8,994 | 10,241 | ||||||
| Loss (gain) on company owned life insurance | 639 | (2,655 | ) | |||||
| Changes in assets and liabilities, net of the effects of consolidations | (83,027 | ) | (42,710 | ) | ||||
| Net cash provided by operating activities | 2,018 | 10,566 | ||||||
| Investing activities | ||||||||
| Purchases of marketable securities | (115,146 | ) | (78,355 | ) | ||||
| Maturities of marketable securities | 85,875 | 50,900 | ||||||
| Proceeds from sale of marketable securities | 33,268 | 10,000 | ||||||
| Additions to property and equipment | (34,748 | ) | (30,182 | ) | ||||
| Proceeds from sales of property and equipment | 20,071 | 17,225 | ||||||
| Purchase of private preferred stock | (50 | ) | (6,400 | ) | ||||
| Other investing activities, net | 2,363 | 2,407 | ||||||
| Net cash used in investing activities | (8,367 | ) | (34,405 | ) | ||||
| Financing activities | ||||||||
| Long-term debt principal payments | (17,293 | ) | (18,472 | ) | ||||
| Cash dividends paid | (15,090 | ) | (15,110 | ) | ||||
| Purchase of common stock | (3,840 | ) | (3,374 | ) | ||||
| Distributions to noncontrolling partners, net | (17,489 | ) | (20,940 | ) | ||||
| Other financing activities | 1,138 | 633 | ||||||
| Net cash used in financing activities | (52,574 | ) | (57,263 | ) | ||||
| Decrease in cash and cash equivalents | (58,923 | ) | (81,102 | ) | ||||
| Cash and cash equivalents at beginning of period | 252,022 | 338,956 | ||||||
| Cash and cash equivalents at end of period | $ | 193,099 | $ | 257,854 | ||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||||||||||||
| Business Segment Information | ||||||||||||||||||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
| Construction |
Large Project |
Construction |
Real Estate | Construction |
Large Project |
Construction |
Real Estate | |||||||||||||||||||||||||
| 2011 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 431,101 | $ | 213,320 | $ | 83,171 | $ | 986 | $ | 784,393 | $ | 513,478 | $ | 165,083 | $ | 7,029 | ||||||||||||||||
| Gross profit | 58,540 | 25,557 | 9,554 | 242 | 87,482 | 69,513 | 10,754 | 1,088 | ||||||||||||||||||||||||
| Gross profit as a percent of revenue | 13.6 | % | 12.0 | % | 11.5 | % | 24.5 | % | 11.2 | % | 13.5 | % | 6.5 | % | 15.5 | % | ||||||||||||||||
| 2010 | ||||||||||||||||||||||||||||||||
| Revenue | $ | 409,989 | $ | 169,972 | $ | 88,128 | $ | 2,761 | $ | 729,118 | $ | 429,625 | $ | 175,381 | $ | 11,613 | ||||||||||||||||
| Gross profit | 44,666 | 18,316 | 12,137 | 1,036 | 69,413 | 49,634 | 9,492 | 3,028 | ||||||||||||||||||||||||
| Gross profit as a percent of revenue | 10.9 | % | 10.8 | % | 13.8 | % | 37.5 | % | 9.5 | % | 11.6 | % | 5.4 | % | 26.1 | % | ||||||||||||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||
| Contract Backlog by Segment | ||||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||||
| Contract Backlog by Segment | September 30, 2011 | June 30, 2011 | September 30, 2010 | |||||||||||||||
| Construction | $ | 562,705 | 30.5 | % | $ | 800,434 | 38.0 | % | $ | 497,089 | 30.3 | % | ||||||
| Large project construction | 1,280,945 | 69.5 | % | 1,306,961 | 62.0 | % | 1,141,453 | 69.7 | % | |||||||||
| Total | $ | 1,843,650 | 100.0 | % | $ | 2,107,395 | 100.0 | % | $ | 1,638,542 | 100.0 | % | ||||||
CONTACT:
Granite Construction Incorporated
Jacque Fourchy,
831-761-4741