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| 8-K - GRANITE CONSTRUCTION INCORPORATED 8-K - GRANITE CONSTRUCTION INC | a50916818.htm |
Exhibit 99.1
Granite Reports Second Quarter 2014 Results
- Second quarter 2014 revenues increase to $585.9 million, up 6.5 percent year-over-year
- Margin improvement across all segments drives second quarter 2014 gross profit increase to $82.4 million, up from $49.6 million in 2013
- Second quarter 2014 gross profit margin of 14.1 percent – up more than 500 basis points year-over-year
- Total contract backlog $2.6 billion
WATSONVILLE, Calif.--(BUSINESS WIRE)--August 1, 2014--Granite Construction Incorporated (NYSE:GVA) today reported net income of $13.6 million for the quarter ended June 30, 2014, compared to revised1 net income of $1.4 million in the second quarter of 2013. Diluted earnings per share in the quarter were $0.34 compared to $0.04 in the prior-year period.
“We are encouraged by the steady growth we have experienced thus far in 2014 as our teams are successfully leveraging opportunities and recent positive trends in all parts of our business,” said James H. Roberts, President and CEO of Granite Construction Incorporated. “Our opportunities to win new business and improve execution on our current work remain a top priority and focus going forward.”
Second Quarter 2014 Results
Total Company
- Revenue for the second quarter of 2014 increased 6.5 percent to $585.9 million compared with $550.3 million last year.
- Gross profit margin in the second quarter was 14.1 percent compared with 9.0 percent in 2013, driven primarily by improved performance in the Large Project Construction and Construction Materials segments.
- Profit performance was driven by projects reaching profit recognition, dispute resolution, and overall improved project execution in both the Construction and Large Project Construction segments, combined with improved volumes and efficiency gains in the Construction Materials segment.
- Second quarter 2014 profit performance continued to be offset by the ramp of projects which have not reached profit recognition.
- Selling, general and administrative expenses for the second quarter of 2014 increased $4.3 million, to $51.1 million, related primarily to the timing of pre-bid costs, coupled with increased Continuous Improvement investment.
- Net income attributable to non-controlling interests was $8.6 million for the second quarter of 2014, compared with $0.4 million in 2013.
- Total company backlog was $2.6 billion at the end of the second quarter of 2014, down from $2.8 billion last year. This total does not include Granite’s nearly $700-million portion of the successful bid on the I-4 Ultimate project in Florida, which is expected to be added to backlog in the third quarter.
- Balance sheet remains strong with $258.6 million in cash and marketable securities.
Construction
- Though Construction backlog increased more than 20 percent to $975.0 million year-over-year, revenue decreased 12.8 percent to $269.2 million, compared with $308.6 million last year. The decrease is attributable to project timing, a change in the mix of power projects from 2013, and weaker-than-anticipated public market activity in the Northwest.
- Gross profit margin for the quarter was 9.2 percent, compared with 7.8 percent in 2013, driven by improved performance across certain markets in the West.
Large Project Construction
- Large Project Construction revenue increased 34.6 percent to $244.3 million, compared with $181.6 million last year. The increase was a result of job progression in the quarter.
- Gross profit margin for the quarter was 20.8 percent, compared with 11.9 percent in 2013. The improvement was driven by project profit recognition, dispute resolution, and improved project execution.
Construction Materials
- Construction Materials revenue increased 20.2 percent to $72.3 million, compared with $60.2 million last year. The revenue increase was attributable to improved volumes related to private sector activity and mixed trends in public markets.
- Gross profit margin for the quarter was 9.4 percent, compared with 6.6 percent in 2013. Gross profit performance was driven by improved volumes and operational efficiencies.
Outlook and Guidance
“With a strong backlog of work and robust bidding activity, the outlook for continued growth remains positive,” Roberts continued. “We look to execute on the momentum we built in the first half of the year.”
“As expected, Construction Materials segment results are improving, and Large Project segment performance is on track to drive strong results in the second half of 2014,” Roberts said.
The Company’s current expectations for 2014 remain:
Consolidated revenues from $2.4 to $2.8 billion
Gross Profit significantly improved from 2013
Consolidated EBITDA2 margin of 5 percent to 7 percent
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(1) |
Please refer to the description of fiscal year 2013 revisions in the Granite Construction Incorporated Quarterly Report on Form 10-Q. |
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(2) |
Please refer to the description and non-GAAP reconciliation in the attached tables. |
Conference Call
Granite will conduct a conference call today, Friday, August 1, 2014, at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended June 30, 2014. Access to a live audio webcast is available at http://investor.graniteconstruction.com/index.cfm. The live conference call may be accessed by calling (877) 643-7158; international callers may dial (914) 495-8565. The conference ID for the live call is 77717739. The call will be recorded and available for replay approximately two hours after the live audio webcast through August 9, 2014 by calling (855) 859-2056. The conference ID for the replay is also 77717739; international callers may dial (404) 537-3406.
About Granite
Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYSE:GVA) is one of the nation’s leading infrastructure contractors and construction materials producers. Recognized as one of the top 25 largest construction companies in the U.S., Granite specializes in complex infrastructure projects, including transportation, industrial and federal contracting, and is a proven leader in alternative procurement project delivery. Granite is an award-winning firm in safety, quality and environmental stewardship, and has been honored as one of the World’s Most Ethical Companies by Ethisphere Institute for five years in a row. For more information, visit www.graniteconstruction.com. 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, please visit our investor relations website at investor.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 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (Unaudited - in thousands, except share and per share data) | ||||||||||||
| June 30, | December 31, | June 30, | ||||||||||
| 2014 | 2013 | 2013 | ||||||||||
| As Revised | ||||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 146,458 | $ | 229,121 | $ | 247,833 | ||||||
| Short-term marketable securities | 27,898 | 49,968 | 21,271 | |||||||||
| Receivables, net | 363,614 | 313,598 | 336,418 | |||||||||
| Costs and estimated earnings in excess of billings | 76,228 | 33,306 | 62,426 | |||||||||
| Inventories | 79,501 | 62,474 | 68,905 | |||||||||
| Real estate held for development and sale | 11,761 | 12,478 | 50,696 | |||||||||
| Deferred income taxes | 55,874 | 55,874 | 36,687 | |||||||||
| Equity in construction joint ventures | 185,859 | 162,673 | 148,727 | |||||||||
| Other current assets | 30,727 | 30,711 | 36,203 | |||||||||
| Total current assets | 977,920 | 950,203 | 1,009,166 | |||||||||
| Property and equipment, net | 426,700 | 436,859 | 470,893 | |||||||||
| Long-term marketable securities | 84,234 | 67,234 | 55,225 | |||||||||
| Investments in affiliates | 33,936 | 32,480 | 31,421 | |||||||||
| Goodwill | 53,799 | 53,799 | 53,598 | |||||||||
| Other noncurrent assets | 76,797 | 76,580 | 80,365 | |||||||||
| Total assets | $ | 1,653,386 | $ | 1,617,155 | $ | 1,700,668 | ||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Current maturities of long-term debt | $ | 21 | $ | 21 | $ | 20 | ||||||
| Current maturities of non-recourse debt | 1,226 | 1,226 | 2,147 | |||||||||
| Accounts payable | 210,777 | 160,706 | 188,124 | |||||||||
| Billings in excess of costs and estimated earnings | 125,957 | 138,375 | 144,462 | |||||||||
| Accrued expenses and other current liabilities | 187,348 | 197,242 | 200,758 | |||||||||
| Total current liabilities | 525,329 | 497,570 | 535,511 | |||||||||
| Long-term debt | 270,127 | 270,127 | 270,148 | |||||||||
| Long-term non-recourse debt | 6,129 | 6,741 | 7,354 | |||||||||
| Other long-term liabilities | 48,455 | 48,580 | 46,817 | |||||||||
| Deferred income taxes | 9,803 | 7,793 | 8,055 | |||||||||
| 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 39,131,647 shares as of June 30, 2014, 38,917,728 shares as of December 31, 2013 and 38,852,463 shares as of June 30, 2013 | 391 | 389 | 389 | |||||||||
| Additional paid-in capital | 130,181 | 126,449 | 121,368 | |||||||||
| Retained earnings | 637,905 | 655,102 | 681,311 | |||||||||
| Total Granite Construction Incorporated shareholders’ equity | 768,477 | 781,940 | 803,068 | |||||||||
| Non-controlling interests | 25,066 | 4,404 | 29,715 | |||||||||
| Total equity | 793,543 | 786,344 | 832,783 | |||||||||
| Total liabilities and equity | $ | 1,653,386 | $ | 1,617,155 | $ | 1,700,668 | ||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| (Unaudited - in thousands, except per share data) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||
| 2013 | 2013 | |||||||||||||||||||
| 2014 | As Revised | 2014 | As Revised | |||||||||||||||||
| Revenue | ||||||||||||||||||||
| Construction | $ | 269,220 | $ | 308,602 | $ | 426,261 | $ | 485,720 | ||||||||||||
| Large Project Construction | 244,328 | 181,557 | 431,663 | 353,271 | ||||||||||||||||
| Construction Materials | 72,322 | 60,185 | 107,771 | 89,936 | ||||||||||||||||
| Real Estate | — | 4 | 22 | 125 | ||||||||||||||||
| Total revenue | 585,870 | 550,348 | 965,717 | 929,052 | ||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Construction | 244,393 | 284,532 | 392,289 | 448,451 | ||||||||||||||||
| Large Project Construction | 193,536 | 159,986 | 365,080 | 308,979 | ||||||||||||||||
| Construction Materials | 65,524 | 56,231 | 104,526 | 91,957 | ||||||||||||||||
| Real Estate | 2 | 3 | — | 13 | ||||||||||||||||
| Total cost of revenue | 503,455 | 500,752 | 861,895 | 849,400 | ||||||||||||||||
| Gross profit | 82,415 | 49,596 | 103,822 | 79,652 | ||||||||||||||||
| Selling, general and administrative expenses | 51,098 | 46,789 | 100,346 | 103,950 | ||||||||||||||||
| Gain on sales of property and equipment | 2,993 | 3,306 | 3,886 | 4,394 | ||||||||||||||||
| Operating income (loss) | 34,310 | 6,113 | 7,362 | (19,904 | ) | |||||||||||||||
| Other income (expense) | ||||||||||||||||||||
| Interest income | 413 | 380 | 893 | 508 | ||||||||||||||||
| Interest expense | (4,339 | ) | (3,700 | ) | (7,937 | ) | (7,345 | ) | ||||||||||||
| Equity in income of affiliates | 410 | 698 | 1,202 | 275 | ||||||||||||||||
| Other income (expense), net | 1,697 | (495 | ) | 1,645 | 608 | |||||||||||||||
| Total other expense | (1,819 | ) | (3,117 | ) | (4,197 | ) | (5,954 | ) | ||||||||||||
| Income (loss) before provision for (benefit from) income taxes | 32,491 | 2,996 | 3,165 | (25,858 | ) | |||||||||||||||
| Provision for (benefit from) income taxes | 10,284 | 1,214 | 2,220 | (7,813 | ) | |||||||||||||||
| Net income (loss) | 22,207 | 1,782 | 945 | (18,045 | ) | |||||||||||||||
| Amount attributable to non-controlling interests | (8,566 | ) | (363 | ) | (7,858 | ) | (2,518 | ) | ||||||||||||
| Net income (loss) attributable to Granite Construction Incorporated | $ | 13,641 | $ | 1,419 | $ | (6,913 | ) | $ | (20,563 | ) | ||||||||||
| Net income (loss) per share attributable to common shareholders: | ||||||||||||||||||||
| Basic | $ | 0.35 | $ | 0.04 | $ | (0.18 | ) | $ | (0.53 | ) | ||||||||||
| Diluted | $ | 0.34 | $ | 0.04 | $ | (0.18 | ) | $ | (0.53 | ) | ||||||||||
| Weighted average shares of common stock: | ||||||||||||||||||||
| Basic | 39,115 | 38,829 | 39,033 | 38,720 | ||||||||||||||||
| Diluted | 39,807 | 39,769 | 39,033 | 38,720 | ||||||||||||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (Unaudited - in thousands) | ||||||||||
| 2013 | ||||||||||
| Six Months Ended June 30, | 2014 | As Revised | ||||||||
| Operating activities | ||||||||||
| Net income (loss) | $ | 945 | $ | (18,045 | ) | |||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||
| Gain on restructuring, net | - | (497 | ) | |||||||
| Depreciation, depletion and amortization | 31,878 | 34,362 | ||||||||
| Gain on sales of property and equipment | (3,886 | ) | (4,394 | ) | ||||||
| Change in deferred income taxes | 1,613 | - | ||||||||
| Stock-based compensation | 6,585 | 8,101 | ||||||||
| Equity in net income from unconsolidated joint ventures | (25,724 | ) | (31,201 | ) | ||||||
| Contributions to unconsolidated construction joint ventures | (13,797 | ) | (16,209 | ) | ||||||
| Distributions from unconsolidated construction joint ventures | 16,528 | 42,486 | ||||||||
| Changes in assets and liabilities | (86,530 | ) | (66,251 | ) | ||||||
| Net cash used in operating activities | (72,388 | ) | (51,648 | ) | ||||||
| Investing activities | ||||||||||
| Purchases of marketable securities | (34,991 | ) | (14,975 | ) | ||||||
| Maturities of marketable securities | 25,000 | 43,000 | ||||||||
| Proceeds from sale of marketable securities | 15,000 | 5,000 | ||||||||
| Purchases of property and equipment | (20,091 | ) | (19,422 | ) | ||||||
| Proceeds from sales of property and equipment | 5,838 | 8,481 | ||||||||
| Other investing activities, net | - | (4,621 | ) | |||||||
| Other investing activities, net | 47 | 163 | ||||||||
| Net cash (used in) provided by investing activities | (9,197 | ) | 17,626 | |||||||
| Financing activities | ||||||||||
| Long-term debt principal payments | (613 | ) | (10,594 | ) | ||||||
| Cash dividends paid | (10,142 | ) | (10,078 | ) | ||||||
| Purchase of common stock | (4,369 | ) | (5,022 | ) | ||||||
| Contributions from non-controlling partners | 13,442 | 6,001 | ||||||||
| Distributions to noncontrolling partners | (686 | ) | (21,142 | ) | ||||||
| Other financing activities, net | 1,290 | 700 | ||||||||
| Net cash used in financing activities | (1,078 | ) | (40,135 | ) | ||||||
| Decrease in cash and cash equivalents | (82,663 | ) | (74,157 | ) | ||||||
| Cash and cash equivalents at beginning of period | 229,121 | 321,990 | ||||||||
| Cash and cash equivalents at end of period | $ | 146,458 | $ | 247,833 | ||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||||||||||||||||||||
| BUSINESS SEGMENT INFORMATION | ||||||||||||||||||||||||||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||
| Large Project | Construction | Large Project | Construction | |||||||||||||||||||||||||||||||||||||
| Construction | Construction | Materials | Real Estate | Construction | Construction | Materials | Real Estate | |||||||||||||||||||||||||||||||||
| 2014 | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 269,220 | $ | 244,328 | $ | 72,322 | $ | - | $ | 426,261 | $ | 431,663 | $ | 107,771 | $ | 22 | ||||||||||||||||||||||||
| Gross profit (loss) | 24,827 | 50,792 | 6,798 | (2 | ) | 33,972 | 66,583 | 3,245 | 22 | |||||||||||||||||||||||||||||||
| Gross profit (loss) as a percent of revenue | 9.2 | % | 20.8 | % | 9.4 | % | n/a | 8.0 | % | 15.4 | % | 3.0 | % | 100.0 | % | |||||||||||||||||||||||||
| 2013 As Revised | ||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 308,602 | $ | 181,557 | $ | 60,185 | $ | 4 | $ | 485,720 | $ | 353,271 | $ | 89,936 | $ | 125 | ||||||||||||||||||||||||
| Gross profit (loss) | 24,070 | 21,571 | 3,954 | 1 | 37,269 | 44,292 | (2,021 | ) | 112 | |||||||||||||||||||||||||||||||
| Gross profit (loss) as a percent of revenue | 7.8 | % | 11.9 | % | 6.6 | % | 25.0 | % | 7.7 | % | 12.5 | % | (2.2 | )% | 89.6 | % | ||||||||||||||||||||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||||
| CONTRACT BACKLOG BY SEGMENT | ||||||||||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||||||||||
| Contract Backlog by Segment | June 30, 2014 | March 31, 2014 | June 30, 2013 | |||||||||||||||||||||
| Construction | $ | 974,986 | 38.1 | % | $ | 786,458 | 30.6 | % | $ | 807,686 | 28.9 | % | ||||||||||||
| Large Project Construction | 1,586,879 | 61.9 | % | 1,783,254 | 69.4 | % | 1,990,201 | 71.1 | % | |||||||||||||||
| Total | $ | 2,561,865 | 100.0 | % | $ | 2,569,712 | 100.0 | % | $ | 2,797,887 | 100.0 | % | ||||||||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||
| EBITDA(1) | ||||||||||
| (Unaudited - dollars in thousands) | ||||||||||
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Three Months |
Six Months |
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Ended June 30, |
Ended June 30, |
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| 2014 | ||||||||||
| Net income (loss) attributable to Granite Construction Incorporated | $ | 13,641 | $ | (6,913 | ) | |||||
| Depreciation, depletion and amortization expense(2) | 16,046 | 31,878 | ||||||||
| Provision for income taxes | 10,284 | 2,220 | ||||||||
| Interest expense, net of interest income | 3,926 | 7,044 | ||||||||
| EBITDA(1) | $ | 43,897 | $ | 34,229 | ||||||
| Consolidated EBITDA Margin | 7.5 | % | 3.5 | % | ||||||
| Note: | |
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(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. |
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(2)Amount includes the sum of depreciation, depletion and amortization which are classified as Cost of Revenue and general and administrative expenses in the condensed consolidated statements of operations of Granite Construction Incorporated. |
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CONTACT:
Granite Construction Incorporated
Ron Botoff, 831-728-7532