Granite Reports First-Quarter 2012 Financial Results

Granite Construction Incorporated (NYSE: GVA) today reported a net loss of $12 million, or $0.31 per diluted share, for the first quarter of 2012 compared with a net loss of $9 million, or $0.24 per diluted share, for the first quarter of 2011.

“Overall, I am pleased with our start to the year as mild weather allowed many of our business units to work throughout the quarter, which is typically a slow quarter for our business,” said James H. Roberts, Granite president and CEO. “Our results are in alignment with our expectations for the year,” Roberts added.

“As we manage our way through today’s challenging market, we are also following a well-developed plan that will further strengthen our company and position us for long-term profitable growth,” Roberts continued. “We are encouraged by the opportunities to grow, diversify our business model and optimize our asset portfolio. We also remain intensely focused on increasing efficiencies and controlling costs throughout the company.”

First-quarter 2012 Financial Results

Total Company
  • Revenue totaled $310 million compared with $257 million in 2011, driven by increases in Large Project Construction and Construction segment revenues.
  • Gross profit margin was 8 percent compared with 12 percent in 2011. First quarter 2011 gross profit was impacted by the recognition of deferred profit on a project in New York.
  • Selling, general and administrative expenses for the first quarter were $43 million, essentially flat compared to a year ago. Included in 2012 was a net gain on restructuring of $2 million related to divestiture activities of our real estate investment business.
  • Operating loss for the quarter was $16 million compared with $11 million in the prior year driven largely by a decrease in gross profit.
  • Other income, net for the quarter was $7 million compared with $1 million last year due primarily to a gain on the sale of gold, a by-product of aggregate production.
  • Net income attributable to noncontrolling interests in joint ventures was $3 million compared with $2 million in 2011.
  • Total contract backlog at March 31, 2012, was $2.1 billion compared with $2.0 billion a year ago.

Construction
  • Construction revenue for the quarter increased 27 percent to $118 million due to a higher volume of work completed in the quarter related to mild weather throughout the West as well entering the year with a higher volume of backlog.
  • Gross profit margin for the first quarter was 7 percent compared with 6 percent a year ago.

Large Project Construction
  • Large Project Construction revenue for the quarter increased 19 percent to $164 million reflecting continued progress on projects throughout the country.
  • Gross profit margin for the quarter was 14 percent compared with 23 percent for the same period last year. The decrease is largely associated with deferred profit that was recognized on a large project in New York during the first quarter 2011.

Construction Materials
  • Construction Materials revenue for the quarter totaled $26 million compared with $24 million for the same period last year.
  • Gross loss on the sale of construction materials was $6 million compared with $7 million in 2011.

Outlook

“We are encouraged by the number of Large Project opportunities as well as the healthy bidding activity we are seeing throughout many of our markets in the West. Our outlook is tempered, however, by the intensely competitive environment that we anticipate will continue through the balance of the year,” Roberts said.

For 2012, Granite expects Construction segment revenue to be $1 billion to $1.1 billion with a corresponding gross profit margin between 9 percent and 11 percent. Large Project Construction segment revenue is expected to be $1 billion to $1.1 billion with a corresponding gross profit margin between 12 percent and 14 percent. Construction Materials segment revenue is expected to be $200 million to $220 million with corresponding gross profit margin between 7 percent and 9 percent. In addition, sales, general and administrative expenses are expected to be between $170 million and $180 million for the year and net income attributable to non-controlling interest in joint ventures for the total company is expected to be in the range of $15 million to $18 million.

Conference Call

Granite will conduct a conference call tomorrow, May 8, 2012 at 8 a.m. Pacific time/11 a.m. Eastern time to discuss the results of the quarter ended March 31, 2012. 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. The conference ID for the live call is 73795661. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through May 15, 2012 by calling (855) 859-2056. The conference ID for the replay is also 73795661.

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 has been recognized by Ethisphere Institute as one of the World’s Most Ethical Companies for three straight years. 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 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)
 
  March 31,   December 31,   March 31,
   

2012
 

2011
  2011
 
ASSETS
Current assets
Cash and cash equivalents $ 226,226 $ 256,990 $ 240,768
Short-term marketable securities 70,444 70,408 83,084
Receivables, net 208,707 251,838 170,441
Costs and estimated earnings in excess of billings 49,962 37,703 33,302
Inventories 67,782 50,975 56,899
Real estate held for development and sale 58,363 67,037 77,128
Deferred income taxes 38,571 38,571 52,583
Equity in construction joint ventures 91,951 101,029 78,773
Other current assets     34,882     35,171     44,059
Total current assets 846,888 909,722 837,037
Property and equipment, net 442,132 447,140 468,929
Long-term marketable securities 70,114 79,250 46,251
Investments in affiliates 30,972 31,071 28,893
Other noncurrent assets     79,849     80,616     83,478
Total assets   $ 1,469,955   $ 1,547,799   $ 1,464,588
 
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt $ 9,102 $ 9,102 $ 8,351
Current maturities of non-recourse debt 19,765 23,071 17,740
Accounts payable 129,480 158,660 94,688
Billings in excess of costs and estimated earnings 87,370 90,845 113,347
Accrued expenses and other current liabilities     148,196     166,790     144,584
Total current liabilities 393,913 448,468 378,710
Long-term debt 208,501 208,501 216,852
Long-term non-recourse debt 1,371 9,912 30,454
Other long-term liabilities 50,011 49,221 47,943
Deferred income taxes 3,393 4,034 11,048
 
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 38,621,370 shares as of March 31, 2012, 38,682,771 shares as of December 31, 2011 and 38,634,470 shares as of March 31, 2011 386 387 386
Additional paid-in capital 110,432 111,514 102,548
Retained earnings     670,462     687,296     642,354
Total Granite Construction Incorporated shareholders’ equity 781,280 799,197 745,288
Noncontrolling interests     31,486     28,466     34,293
Total equity     812,766     827,663     779,581
Total liabilities and equity   $ 1,469,955   $ 1,547,799   $ 1,464,588

 
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
 
Three Months Ended March 31,     2012       2011  
Revenue    
Construction $ 117,946 $

92,692
Large project construction

163,928
137,820
Construction materials 25,623 23,798
Real estate     2,663       2,421  
Total revenue     310,160       256,731  
Cost of revenue
Construction 109,366 87,139
Large project construction 141,679 106,522
Construction materials 31,573 31,068
Real estate     2,606       2,014  
Total cost of revenue     285,224       226,743  
Gross profit 24,936 29,988
Selling, general and administrative expenses 43,188 43,372
Gain on sales of property and equipment     1,917       2,704  
Operating loss (16,335 ) (10,680 )
Other income (expense)
Interest income 1,044 1,244
Interest expense (3,182 ) (3,356 )
Equity in loss of affiliates (617 ) (257 )
Other income, net     6,871       570  
Total other income (expense)     4,116       (1,799 )
Loss before benefit from income taxes (12,219 ) (12,479 )
Benefit from income taxes     (3,532 )     (5,223 )
Net loss (8,687 ) (7,256 )
Amount attributable to noncontrolling interests     (3,086 )     (1,751 )
Net loss attributable to Granite Construction Incorporated   $ (11,773 )   $ (9,007 )
 
Net loss per share attributable to common shareholders:
Basic $ (0.31 ) $ (0.24 )
Diluted $ (0.31 ) $ (0.24 )
Weighted average shares of common stock:
Basic 38,265 37,963
Diluted     38,265       37,963  

 
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
 
Three Months Ended March 31,     2012       2011  
Operating activities    
Net loss $ (8,687 ) $ (7,256 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization 14,961 15,291
Gain from restructuring, net (1,888 ) -
Gain on sales of property and equipment (1,917 ) (2,704 )
Stock-based compensation 4,196 3,149
Gain on company owned life insurance (1,203 ) (550 )
Changes in assets and liabilities, net of the effects of consolidations     (28,335 )     (7,254 )
Net cash (used in) provided by operating activities     (22,873 )     676  
Investing activities
Purchases of marketable securities (24,987 ) (27,341 )
Maturities of marketable securities 15,000 24,000
Proceeds from sale of marketable securities 20,000 14,268
Additions to property and equipment (9,225 ) (11,760 )
Proceeds from sales of property and equipment 2,883 4,623
Other investing activities, net     (294 )     1,221  

Net cash provided by investing activities
    3,377       5,011  
Financing activities
Long-term debt principal payments (2,500 ) (7,235 )
Cash dividends paid (5,021 ) (5,038 )
Purchase of common stock (3,837 ) (3,515 )
Distributions to noncontrolling partners, net (66 ) (2,062 )
Other financing activities, net     156       909  

Net cash used in financing activities
    (11,268 )     (16,941 )
Decrease in cash and cash equivalents (30,764 ) (11,254 )
Cash and cash equivalents at beginning of period     256,990       252,022  
Cash and cash equivalents at end of period   $ 226,226     $ 240,768  

 
GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
 
  Three Months Ended March 31,
    Construction  

Large ProjectConstruction
 

ConstructionMaterials
  Real Estate
     
2012
Revenue $ 117,946 $ 163,928 $ 25,623 $ 2,663
Gross profit (loss) 8,580 22,249 (5,950 ) 57
Gross profit (loss) as a percent of revenue

7.3

%

13.6

%
(23.2 )%

2.1

%
 
2011
Revenue $ 92,692 $ 137,820 $ 23,798 $ 2,421
Gross profit (loss) 5,553 31,298 (7,270 ) 407
Gross profit (loss) as a percent of revenue

6.0

%

22.7

%
(30.5 )%

16.8

%
 
GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
 
    March 31, 2012   December 31, 2011  

March 31, 2011
           
Construction $ 622,240

29.9

%
$ 513,624

25.4

%
$ 696,055

34.7

%
Large project construction     1,460,674  

70.1

%
    1,508,830  

74.6

%
   

1,307,622
 

65.3

%
 
Total   $ 2,082,914  

100.0

%
  $ 2,022,454  

100.0

%
  $ 2,003,677  

100.0

%

Copyright Business Wire 2010

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