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Granite Reports Second-Quarter 2012 Financial Results

Granite Construction Incorporated (NYSE: GVA) today reported second quarter 2012 net income of $1.9 million, or $0.05 per diluted share compared with $4.9 million, or $0.13 per diluted share, for the second quarter of 2011.

The second quarter 2012 reflects a $4.6 million increase in operating income driven by excellent execution on large projects. In addition, other expenses increased by $6.5 million which includes an impairment loss on an investment in a manufacturer of solar power systems.

“Operating results in the quarter continue to demonstrate Granite’s ability to successfully navigate through one of the toughest construction markets our company, and our industry, has faced in recent times,” said Granite President and Chief Executive Officer James H. Roberts. “We are facing these challenging conditions head on with a keen focus on maintaining a high level of discipline when it comes to costs, bidding and execution.”

“Looking ahead, while we anticipate the Construction and Construction Materials markets in the West will remain challenging, I am encouraged by the strategic initiatives we are employing to both diversify and grow our business,” Roberts added. “In addition to a full pipeline of bidding opportunities, we expect our Large Projects to reach a number of key milestones and continue to perform very well for the balance of the year. In addition, we expect to see local and state governments put more work out to bid over the coming months given the recent passage of a two-year federal highway bill.”

Second-quarter 2012 Financial Results

Total Company

  • Revenue totaled $539.6 million compared with $484.7 million in 2011, driven largely by an increase in Large Project Construction segment revenue.
  • Gross profit margin was 9.6 percent compared with 9.3 percent in 2011.
  • Selling, general and administrative expenses for the second quarter were $40.8 million compared with $38.8 million.
  • Operating income for the quarter was $14.1 million compared with $9.4 million in the prior year.
  • Other (expense) income includes $2.8 million attributable to a non-cash impairment loss on an investment.
  • Net income attributable to noncontrolling interests in joint ventures was $2.5 million compared with $1.2 million in 2011.
  • Total contract backlog at June 30, 2012, was $2.0 billion compared with $2.1 billion a year ago.

Construction

  • Construction revenue for the quarter decreased 5.9 percent to $245.1 million.
  • Gross profit margin for the second quarter was 7.3 percent compared with 9.0 percent a year ago primarily reflecting two project write-downs and the continued pressure on margins due to intense competition.

Large Project Construction

  • Large Project Construction revenue for the quarter increased 40.9 percent to $228.8 million reflecting progress on projects that are well underway across the country.
  • Gross profit margin for the quarter was 12.3 percent compared with 7.8 percent for the same period last year as a result of successful project execution and proportionately less revenue from projects that had yet to recognize gross profit.

Construction Materials

  • Construction Materials revenue for the quarter totaled $63.3 million compared with $58.1 million for the same period last year.
  • Gross profit margin on the sale of Construction Materials was 7.9 percent compared with 14.6 percent in 2011 reflecting ongoing weakness in the commercial and residential markets.

Outlook

Based on its year-to-date results and outlook for the remainder of the year, the company is making the following adjustments to its fiscal year 2012 guidance:

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