Granite Announces Third-Quarter 2012 Results

Granite Construction Incorporated (NYSE: GVA) today reported net income attributable to common shareholders of $37.1 million, or $0.94 per diluted share, for the third quarter of 2012 compared with $36.5 million, or $0.93 per diluted share, the prior year.

“Granite’s third quarter results reflect a continuation of the strong performance and momentum we have been seeing from our Large Project segment offset by ongoing competitive headwinds in the Construction and Construction Materials segments,” said James H. Roberts, Granite’s president and chief executive officer. “We continue to follow a well-developed plan to strengthen and grow our business, which includes diversifying and leveraging our core capabilities in the federal, water and power markets. We remain focused on maintaining a solid balance sheet and healthy liquidity while continuing to take the actions necessary to position the company to deliver long-term profitable growth.”

Third-quarter 2012 Financial Results

Total Company
  • Revenue totaled $728.5 million compared with $728.6 million in 2011 reflecting a decrease in Construction segment revenue offset by increases in Large Project segment revenue.
  • Gross profit margin for the third quarter was 13.9 percent compared with 12.9 percent a year ago.
  • Selling, general and administrative expenses for the third quarter increased $2.2 million to $41.3 million primarily due to changes in the fair market value of a liability related to the Company’s non-qualified deferred compensation plan.
  • Operating income for the quarter was $61.4 million compared with $60.4 million in the prior year.
  • Other income (expense) for the quarter was $1.4 million, an increase of $4.3 million which includes a gain in the value of the investment portfolio associated with the Company’s non-qualified deferred compensation plan of which there is an offsetting charge in SG&A expenses.
  • Net income attributable to non-controlling interests in joint ventures was $8.6 million compared with $5.9 million in 2011.
  • Total contract backlog at September 30, 2012, was $1.6 billion compared with $1.8 billion a year ago. New awards for the quarter include a $27.6 million highway project and a $24.2 million private-sector solar project, both in California. Backlog at September 30, 2012 does not include any Large Project awards during the quarter.
  • Cash and marketable securities at September 30, 2012 was $372.3 million compared with $330.0 million at September 30, 2011.

Construction
  • Construction revenue for the quarter decreased to $385.7 million compared with $431.1 million in 2011 as a result of the competitive public-sector bidding environment.
  • Gross profit margin for the third quarter was 8.6 percent compared with 13.6 percent a year ago. The results reflect challenging market conditions, as well as increased cost to complete certain projects.

Large Project
  • Large Project Construction revenue for the quarter increased to $255.9 million compared with $213.3 million, reflecting progress on several Large Projects across the country.
  • Gross profit margin for the quarter was 22.6 percent compared with 12 percent for the same period last year. The increase is primarily due to lower than anticipated costs on several Large Projects, as well as the resolution of various outstanding issues with contract owners.

Construction Materials
  • Construction Materials revenue for the quarter totaled $86.8 million, compared with $83.2 million for the same period last year.
  • Gross profit on the sale of construction materials was 11.5 percent which is in line with the same period in 2011.

Outlook

Based on its year-to-date performance, the company is updating its guidance for the Large Project segment and now expects revenue to be between $900.0 and $950.0 million with gross margin of 16 to 17 percent. The Company is also updating its revenue guidance for the Construction segment and now expects revenue to be $1.0 to $1.05 billion. Gross margin guidance is still expected to be between 8 and 9 percent. The Company is also updating its revenue guidance for the Construction Materials segment and now expects revenue to be $210 to $220 million with gross margins of 6 to 7 percent.

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