Granite Reports Fourth Quarter And Fiscal 2013 Results

Granite Construction Incorporated (NYSE: GVA) today reported a net loss of $36.4 million for the year ended December 31, 2013, compared with net income of $45.3 million in the prior year. Diluted earnings per share (EPS) for the year was a loss of $0.94 compared to $1.15 in 2012.

Granite reported a net loss of $28.9 million for the quarter ended December 31, 2013, compared to net income of $18.0 million in the fourth quarter of 2012. Diluted EPS in the quarter was a loss of $0.74 compared to $0.46 in the prior-year period.

Fourth quarter and full-year 2013 results include the impact of the 2010 EIP charges. Excluding the impact of these charges, Granite’s diluted EPS was $0.02 and a loss of $0.17 respectively, for the fourth quarter and year ended December 31, 2013.

“Our teams finished the year with a continued focus on improving execution across all of our businesses. Our backlog entering 2014 is excellent, and the bidding pipeline is as large and robust as we have ever seen,” said James H. Roberts, President and CEO of Granite Construction Incorporated. “Our business leaders are tasked with managing operations in varied cyclical environments, and we are focused on driving the improvements necessary to generate the returns we expect for our shareholders.”

Fiscal Year 2013 Highlights:

Total Company
  • Revenues for the year increased 8.8 percent to $2.3 billion, compared with $2.1 billion in 2012.
  • Gross profit margin was 8.2 percent compared with 11.3 percent in 2012 due primarily to decreased gross profit in the Large Project segment, which offset an increase in Construction segment margins.
  • Selling, general and administrative (SG&A) expenses for the year were $199.9 million, compared with $185.1 million last year. The increase reflects the addition of Kenny. SG&A expenses as a percentage of revenue were 8.8% in 2013, down slightly from 8.9% in 2012.
  • Total contract backlog at December 31, 2013, was $2.5 billion compared with $1.7 billion a year ago. The increase in contract backlog in 2013 reflects the addition of the Tappan Zee Bridge project in New York, the IH-35E highway reconstruction project in Texas, the I-40/440 project in North Carolina, as well as an overall increase in Construction segment backlog.

Construction
  • Construction revenues in 2013 increased 27.1% to nearly $1.3 billion, up from nearly $1.0 billion in 2012, driven primarily by the addition of Kenny, improved performance in some Western markets, and partially offset by a revenue decline in California.
  • Gross profit margin was 8.5 percent compared with 7.9 percent a year ago. Kenny accounted for the majority of the increase.

Large Project Construction
  • Large Project Construction revenue for the year decreased 9.9 percent to $777.8 million from $863.2 million in 2012, driven primarily by the timing of new projects.
  • Gross profit margin was 9.2 percent compared with 17.2 percent in 2012 primarily reflecting negative revisions in estimates on a project in Washington State, and by timing of overall project portfolio progression.

Construction Materials
  • Construction Materials revenue in 2013 was $237.8 million compared with $230.6 million last year. The 3.1 percent increase is due primarily to improved volume from 2012.
  • Gross profit margin in 2013 was 2.9 percent, compared with 3.3 percent in 2012, reflecting product mix and varied market conditions across the West.

Fourth Quarter 2013 Highlights

Total Company
  • Revenue for the fourth quarter of 2013 increased 18.5 percent to $598.1 million compared with $504.8 million last year.
  • Gross profit margin in the fourth quarter was 8.3 percent compared with 11.3 percent in 2012, as decreased gross profit in the Large Project Construction and Construction segments more than offset an increase in Construction Materials segment gross profit.
  • SG&A expenses for the fourth quarter of 2013 decreased about $6.9 million to $50.5 million reflecting a decrease in pre-bid costs, incentive compensation, and as a result of non-recurring fourth quarter 2012 Kenny-related acquisition costs.
  • Operating loss was $48.4 million in the quarter, compared to operating income of $21.7 million in the fourth quarter of 2012. Fourth quarter 2013 operating income includes the impact of $52.2 million in restructuring and impairment charges related to the EIP.

Construction
  • Construction revenue for the fourth quarter 2013 increased 25.3 percent to $294.9 million, compared with $235.3 million last year.
  • Gross profit margin was 6.2 percent, compared with 7.7 percent a year ago as weaker performance in certain Western markets outweighed a positive impact from Kenny.

Large Project Construction
  • Large Project Construction revenue in the fourth quarter of 2013 increased 11.2 percent to $238.5 million, compared with $214.6 million last year.
  • Gross profit margin for the quarter was 12.4 percent, compared with 18.7 percent in 2012. The decrease reflects timing of overall project portfolio progression.

Construction Materials
  • Construction Materials revenue in the fourth quarter of 2013 increased 17.8 percent to $64.6 million, compared with $54.9 million last year.
  • Gross profit margin was 2.6 percent, compared with a loss of 2.7 percent in 2012, as a result of overall improved performance.

Outlook

“Trends in company backlog, project funding and financing, and private construction all have improved since last year, and diversification opportunities in power, tunnel, and underground also are providing Granite with solid footing for growth. Our more than $2.5 billion of backlog at the end of 2013 reflects a diverse, healthy portfolio of projects, which we will look to grow further in 2014,” Roberts said. “This year, we expect to bid on more than $13 billion of large projects, and, beyond 2014, we are tracking an additional $20 billion in large projects. Funding and financing stability is critical to improve progress on important infrastructure investment, at federal, state and local levels.

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