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| 8-K - GRANITE CONSTRUCTION INCORPORATED 8-K - GRANITE CONSTRUCTION INC | a8-kpressrelease6302016.htm |
Exhibit 99.1
Granite Reports Second Quarter 2016 Results
• | Total Company revenue increased to $604.6 million, up 6.2 percent year-over-year |
• | Total Company gross profit was $73.2 million, up 14.0 percent year-over-year |
• | Total Company gross profit margin 12.1 percent, up more than 80 basis points year-over-year |
• | Construction segment drives profit growth; ninth consecutive quarter of year-over-year gross profit margin expansion to 14.8 percent, up more than 200 basis points |
• | Large Project Construction segment revenue increases; gross profit margin declines to 6.9 percent, down 100 basis points year-over-year |
• | Construction Materials segment revenue decreases; gross profit margin increases to 13.8 percent, up 40 basis points year-over-year |
• | Contract backlog at all-time high of $3.8 billion, up 25.0 percent year-over-year |
WATSONVILLE, Calif. (July 29, 2016) - Granite Construction Incorporated (NYSE: GVA) today reported net income of $14.1 million for the quarter ended June 30, 2016, compared to net income of $9.6 million in the second quarter of 2015. Earnings per diluted share in the quarter were $0.35, compared to $0.24 in the prior-year period.
“Steady improvement and balance across our portfolio once again drove our improved second quarter results,” said James H. Roberts, President and Chief Executive Officer of Granite Construction Incorporated. “Today's balance is positively weighted by the ninth consecutive quarter of year-over-year margin expansion in the Construction segment, which continues to offset our Large Project segment performance still well below expectations,” Roberts continued.
“Granite teams across the country created momentum as the second quarter progressed, highlighted by activity and results that accelerated late in the quarter. We congratulate our employees, as new and enhanced client relationships helped spur our backlog of work to a new record of nearly $3.8 billion. Our teams continue their focus on safety and excellence in execution to deliver results.” Roberts said.
Second Quarter and First Half 2016 Results
Total Company
▪ | Revenue for the second quarter increased 6.2 percent to $604.6 million compared with $569.2 million last year. On a year-to-date basis, consolidated revenue increased 5.5 percent to $1,044.0 million in the first half of 2016. |
▪ | Gross profit in the second quarter increased 14.0 percent to $73.2 million compared with $64.2 million last year. On a year-to-date basis, gross profit increased 9.0 percent to $112.4 million in the first half of 2016. |
▪ | Gross profit margin in the quarter was 12.1 percent compared with 11.3 percent in 2015. For the first half of 2016, gross profit margin of 10.8 percent reflects modest improvement from last year. |
▪ | Second quarter selling, general and administrative (SG&A) expenses increased 2.5 percent to $48.7 million. For the first half of 2016, SG&A totaled $104.8 million, up 6.4 percent year-over-year, with the increase primarily related to salary and compensation expenses. |
▪ | Cash and marketable securities totaled $238.8 million, as of June 30, 2016. Capital expenditures totaled $48.8 million in the first half of 2016, an increase of nearly $33 million year-over-year. The increased investment was driven by specific project needs and a shift in equipment purchase timing to earlier in the year for use in the current construction season. |
Construction
▪ | Construction revenue in the second quarter increased 8.4 percent to $331.3 million, compared with $305.6 million last year. |
▪ | Gross profit in the second quarter increased 26.2 percent to $49.1 million compared to $38.9 million last year. |
▪ | Gross profit margin of 14.8 percent, up from 12.7 percent a year ago, was driven by particular strength in the West, where activity accelerated late in the second quarter. |
Large Project Construction
▪ | Large Project Construction revenue in the second quarter increased 7.9 percent to $197.3 million, compared with $182.9 million last year. |
▪ | Gross profit in the second quarter decreased 5.7 percent to $13.7 million compared to $14.5 million last year. |
▪ | Gross profit margin was 6.9 percent compared with 7.9 percent in 2015, with performance impacted by design, weather, project execution, and owner-related issues. |
Construction Materials
▪ | Construction Materials revenue in the second quarter decreased 6.0 percent to $75.9 million, compared with $80.7 million last year. |
▪ | The business reported gross profit of $10.5 million compared to $10.8 million last year. |
▪ | Gross profit margin increased to 13.8 percent, up 40 basis points from last year. Operational performance remains strong, with solid levels of committed volumes driving accelerated activity late in the second quarter. |
Outlook and Guidance
“Opportunities for growth remain steady and broad across end markets and geographies. We continue to expect that as we move toward the end of 2016, the FAST Act will begin to provide public markets with some of the well-overdue stability needed to equalize the difficult balance of modern infrastructure funding demands.” said Roberts.
“Record backlog provides us with opportunities for focused and improved execution, organic and diversified growth, as well as improved financial results. Across geographies and end markets, the balance of our business remains on track to create solid growth in 2016 and beyond,” Roberts said.
The Company’s current expectations for 2016 remain:
▪ | Mid-single digit consolidated revenue growth |
▪ | Consolidated EBITDA margin1 of 6% to 8% |
Conference Call
Granite will conduct a conference call today, July 29, 2016, at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended June 30, 2016. The Company invites investors to listen to a live audio webcast on its Investor Relations website, http://investor.graniteconstruction.com. An archive of the webcast will be available on the website approximately one hour after the call. The live call also is available by calling 1-877-328-5503; international callers may dial 1-412-317-5472. A replay will be available after the live call through August 5, 2016 by calling 1-877-344-7529, replay access code 10089594; international callers may dial 1-412-317-0088.
About Granite
Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYSE: GVA) is one of the nation’s largest infrastructure contractors and construction materials producers. 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 seven 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) | ||||||||||||
June 30, 2016 | December 31, 2015 | June 30, 2015 | ||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 161,218 | $ | 252,836 | $ | 188,147 | ||||||
Short-term marketable securities | 34,959 | 25,043 | 17,560 | |||||||||
Receivables, net | 431,127 | 340,822 | 362,336 | |||||||||
Costs and estimated earnings in excess of billings | 86,025 | 59,070 | 60,093 | |||||||||
Inventories | 64,711 | 55,553 | 71,022 | |||||||||
Equity in construction joint ventures | 245,509 | 224,689 | 209,016 | |||||||||
Other current assets | 31,949 | 26,985 | 33,885 | |||||||||
Total current assets | 1,055,498 | 984,998 | 942,059 | |||||||||
Property and equipment, net | 409,860 | 385,129 | 391,989 | |||||||||
Long-term marketable securities | 42,653 | 80,652 | 70,508 | |||||||||
Investments in affiliates | 34,517 | 33,182 | 32,655 | |||||||||
Goodwill | 53,799 | 53,799 | 53,799 | |||||||||
Deferred income taxes, net | 5,407 | 4,329 | 32,616 | |||||||||
Other noncurrent assets | 84,095 | 84,789 | 74,912 | |||||||||
Total assets | $ | 1,685,829 | $ | 1,626,878 | $ | 1,598,538 | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Current maturities of long-term debt | $ | 14,795 | $ | 14,800 | $ | 22 | ||||||
Accounts payable | 210,923 | 157,571 | 170,474 | |||||||||
Billings in excess of costs and estimated earnings | 90,484 | 92,515 | 106,086 | |||||||||
Accrued expenses and other current liabilities | 212,986 | 200,935 | 201,259 | |||||||||
Total current liabilities | 529,188 | 465,821 | 477,841 | |||||||||
Long-term debt | 241,907 | 244,323 | 269,566 | |||||||||
Other long-term liabilities | 45,719 | 46,613 | 42,851 | |||||||||
Commitments and contingencies | ||||||||||||
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: 39,597,469 shares as of June 30, 2016, 39,412,877 shares as of December 31, 2015 and 39,372,298 shares as of June 30, 2015 | 396 | 394 | 394 | |||||||||
Additional paid-in capital | 145,972 | 140,912 | 137,012 | |||||||||
Accumulated other comprehensive loss | (1,811 | ) | (1,500 | ) | (798 | ) | ||||||
Retained earnings | 691,924 | 699,431 | 650,357 | |||||||||
Total Granite Construction Incorporated shareholders’ equity | 836,481 | 839,237 | 786,965 | |||||||||
Non-controlling interests | 32,534 | 30,884 | 21,315 | |||||||||
Total equity | 869,015 | 870,121 | 808,280 | |||||||||
Total liabilities and equity | $ | 1,685,829 | $ | 1,626,878 | $ | 1,598,538 | ||||||
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, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | |||||||||||||||
Construction | $ | 331,346 | $ | 305,605 | $ | 540,833 | $ | 494,125 | |||||||
Large Project Construction | 197,322 | 182,893 | 392,771 | 373,198 | |||||||||||
Construction Materials | 75,911 | 80,744 | 110,427 | 122,168 | |||||||||||
Total revenue | 604,579 | 569,242 | 1,044,031 | 989,491 | |||||||||||
Cost of revenue | |||||||||||||||
Construction | 282,290 | 266,721 | 464,844 | 434,646 | |||||||||||
Large Project Construction | 183,668 | 168,414 | 365,612 | 341,183 | |||||||||||
Construction Materials | 65,420 | 69,907 | 101,129 | 110,533 | |||||||||||
Total cost of revenue | 531,378 | 505,042 | 931,585 | 886,362 | |||||||||||
Gross profit | 73,201 | 64,200 | 112,446 | 103,129 | |||||||||||
Selling, general and administrative expenses | 48,705 | 47,526 | 104,838 | 98,549 | |||||||||||
Gain on sales of property and equipment | (1,366 | ) | (475 | ) | (1,966 | ) | (1,286 | ) | |||||||
Operating income | 25,862 | 17,149 | 9,574 | 5,866 | |||||||||||
Other (income) expense | |||||||||||||||
Interest income | (798 | ) | (528 | ) | (1,634 | ) | (970 | ) | |||||||
Interest expense | 3,187 | 3,985 | 6,236 | 7,481 | |||||||||||
Equity in income of affiliates | (717 | ) | (670 | ) | (2,159 | ) | (607 | ) | |||||||
Other income, net | (3,183 | ) | (152 | ) | (4,555 | ) | (1,436 | ) | |||||||
Total other (income) expense | (1,511 | ) | 2,635 | (2,112 | ) | 4,468 | |||||||||
Income before provision for income taxes | 27,373 | 14,514 | 11,686 | 1,398 | |||||||||||
Provision for income taxes | 8,916 | 4,975 | 3,739 | 469 | |||||||||||
Net income | 18,457 | 9,539 | 7,947 | 929 | |||||||||||
Amount attributable to non-controlling interests | (4,327 | ) | 74 | (5,005 | ) | 124 | |||||||||
Net income attributable to Granite Construction Incorporated | $ | 14,130 | $ | 9,613 | $ | 2,942 | $ | 1,053 | |||||||
Net income per share attributable to common shareholders: | |||||||||||||||
Basic | $ | 0.36 | $ | 0.24 | $ | 0.07 | $ | 0.03 | |||||||
Diluted | $ | 0.35 | $ | 0.24 | $ | 0.07 | $ | 0.03 | |||||||
Weighted average shares of common stock | |||||||||||||||
Basic | 39,584 | 39,358 | 39,509 | 39,287 | |||||||||||
Diluted | 40,302 | 39,881 | 40,140 | 39,848 | |||||||||||
GRANITE CONSTRUCTION INCORPORATED | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited - in thousands) | ||||||||
Six Months Ended June 30, | 2016 | 2015 | ||||||
Operating activities | ||||||||
Net income | $ | 7,947 | $ | 929 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation, depletion and amortization | 29,502 | 31,331 | ||||||
Gain on sales of property and equipment | (1,966 | ) | (1,286 | ) | ||||
Stock-based compensation | 8,563 | 4,992 | ||||||
Equity in net income from unconsolidated joint ventures | (5,688 | ) | (18,547 | ) | ||||
Gain on real estate entity | (2,452 | ) | — | |||||
Changes in assets and liabilities | (89,835 | ) | (74,082 | ) | ||||
Net cash used in operating activities | (53,929 | ) | (56,663 | ) | ||||
Investing activities | ||||||||
Purchases of marketable securities | (29,894 | ) | (29,974 | ) | ||||
Maturities of marketable securities | 20,000 | 16,700 | ||||||
Proceeds from called marketable securities | 35,000 | 30,000 | ||||||
Purchases of property and equipment | (48,837 | ) | (16,152 | ) | ||||
Proceeds from sales of property and equipment | 2,510 | 2,062 | ||||||
Other investing activities, net | (128 | ) | 912 | |||||
Net cash (used in) provided by investing activities | (21,349 | ) | 3,548 | |||||
Financing activities | ||||||||
Long-term debt principal repayments | (2,500 | ) | (306 | ) | ||||
Cash dividends paid | (10,267 | ) | (10,208 | ) | ||||
Repurchases of common stock | (4,845 | ) | (3,291 | ) | ||||
Other financing activities, net | 1,272 | (894 | ) | |||||
Net cash used in financing activities | (16,340 | ) | (14,699 | ) | ||||
Decrease in cash and cash equivalents | (91,618 | ) | (67,814 | ) | ||||
Cash and cash equivalents at beginning of period | 252,836 | 255,961 | ||||||
Cash and cash equivalents at end of period | $ | 161,218 | $ | 188,147 | ||||
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 | Construction | Large Project Construction | Construction Materials | |||||||||||||||||||
2016 | ||||||||||||||||||||||||
Revenue | $ | 331,346 | $ | 197,322 | $ | 75,911 | $ | 540,833 | $ | 392,771 | $ | 110,427 | ||||||||||||
Gross profit | 49,056 | 13,654 | 10,491 | 75,989 | 27,159 | 9,298 | ||||||||||||||||||
Gross profit as a percent of revenue | 14.8 | % | 6.9 | % | 13.8 | % | 14.1 | % | 6.9 | % | 8.4 | % | ||||||||||||
2015 | ||||||||||||||||||||||||
Revenue | $ | 305,605 | $ | 182,893 | $ | 80,744 | $ | 494,125 | $ | 373,198 | $ | 122,168 | ||||||||||||
Gross profit | 38,884 | 14,479 | 10,837 | 59,479 | 32,015 | 11,635 | ||||||||||||||||||
Gross profit as a percent of revenue | 12.7 | % | 7.9 | % | 13.4 | % | 12.0 | % | 8.6 | % | 9.5 | % | ||||||||||||
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||||||||
Contract Backlog by Segment | |||||||||||||||||||||
(Unaudited - dollars in thousands) | |||||||||||||||||||||
Contract Backlog by Segment | June 30, 2016 | March 2016 | June 30, 2015 | ||||||||||||||||||
Construction | $ | 1,144,965 | 30.5 | % | $ | 999,980 | 29.5 | % | $ | 831,067 | 27.7 | % | |||||||||
Large Project Construction | 2,606,019 | 69.5 | % | 2,386,019 | 70.5 | % | 2,169,736 | 72.3 | % | ||||||||||||
Total | $ | 3,750,984 | 100.0 | % | $ | 3,385,999 | 100.0 | % | $ | 3,000,803 | 100.0 | % | |||||||||
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||
EBITDA(1) | |||||||||||||||
(Unaudited - dollars in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to Granite Construction Incorporated | $ | 14,130 | $ | 9,613 | $ | 2,942 | $ | 1,053 | |||||||
Depreciation, depletion and amortization expense(2) | 15,766 | 15,704 | 29,502 | 31,331 | |||||||||||
Provision for income taxes | 8,916 | 4,975 | 3,739 | 469 | |||||||||||
Interest expense, net of interest income | 2,389 | 3,457 | 4,602 | 6,511 | |||||||||||
EBITDA | $ | 41,201 | $ | 33,749 | $ | 40,785 | $ | 39,364 | |||||||
Consolidated EBITDA Margin(3) | 6.8 | % | 5.9 | % | 3.9 | % | 4.0 | % | |||||||
Note: | |||||||||||||||
(1)We define EBITDA as GAAP net income 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 $604,579 and $1,044,031 for three and six months ended June 30, 2016, respectively and $569,242 and $989,491 for the three and six months ended June 30, 2015, respectively. | |||||||||||||||
CONTACT:
Granite Construction Incorporated
Ron Botoff, 831-728-7532