Granite Reports First-Quarter 2013 Financial Results

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Granite Reports First-Quarter 2013 Financial Results

  • First quarter revenues increased to $378.7 million, compared with $310.2 million in the first quarter of 2012, including $63.7 million associated with the acquisition of Kenny Construction Company
  • Operating segment gross margins in line with last year
  • Balance sheet remains strong with $363.6 million in cash and marketable securities
  • Backlog totaled $2.4 billion compared with $1.7 billion at year-end

WATSONVILLE, Calif.--(BUSINESS WIRE)-- Granite Construction Incorporated (NYS: GVA) today reported a net loss of $22.0 million, or $0.57 per diluted share, for the first quarter of 2013 compared with a net loss of $11.8 million, or $0.31 per diluted share, for the first quarter of 2012.

"As expected, we had strong backlog growth in the quarter driven by significant large project awards," said James H. Roberts, Granite president and chief executive officer. "We remain very encouraged by the quality of our backlog and the opportunities to grow the company in 2013 and beyond. We are slated to bid approximately $13 billion of Large Project work over the next 12 months, of which Granite's share would be approximately $6 billion.


"Our integration of Kenny is progressing well, meeting our expectations, and reinforcing the continued execution of our strategic plan. We are working successfully to expand our presence into targeted end-markets such as power delivery, water and wastewater infrastructure and tunneling, all of which have attractive long-term fundamentals."

First-quarter 2013 Financial Results

Total Company

  • Revenues for the quarter totaled $378.7 million, compared with $310.2 million in 2012. Revenues included $63.7 million from Kenny Construction Company ("Kenny"), which Granite acquired on December 31, 2012.
  • Gross profit margin was 7.9 percent compared with 8.0 percent in 2012.
  • Selling, general and administrative expenses ("SG&A") for the first quarter were $57.7 million, compared with $45.1 million in 2012. Kenny accounted for a significant portion of the increase.
  • Operating loss for the quarter was $26.0 million compared with $16.3 million in the prior year.
  • Total contract backlog at March 31, 2013, was $2.4 billion compared with $1.7 billion at December 31, 2012 and $2.1 billion at March 31, 2012. Backlog at March 31, 2013 included $733.0 million associated with our portion of the Tappan Zee Bridge project in New York.

Construction

  • Construction revenues in the first quarter were $177.1 million compared with $117.9 million a year ago. The increase reflects $53.3 million associated with Kenny.
  • Gross profit margin was 7.5 percent as compared with 7.3 percent a year ago. Included in the first quarter of 2013 was a $1.6 million amortization charge for intangible assets (acquired backlog) associated with the Kenny acquisition. There were no significant changes in project profitability from revisions in estimates during the first quarter of 2013.

Large Project Construction

  • Large Project Construction revenues for the quarter were $171.7 million compared with $163.9 million at March 31, 2012.
  • Gross profit margin for the quarter was 13.2 percent compared with 13.6 percent for the same period last year. Changes in project profitability from revisions in estimates during the first quarter of 2013 resulted in a net increase of $9.2 million.

Construction Materials

  • Construction Materials revenue for the quarter totaled $29.8 million compared with $25.6 million for the same period last year.
  • Gross loss on the sale of construction materials was $6.0 million, essentially unchanged from a year ago.

Outlook and Guidance

"In the short-term, certain markets of our vertically integrated business continue to face challenges as capacity exceeds demand for both our construction services and construction materials. While we will not see a turnaround overnight, the fundamentals of our business remain extremely solid and our future is very bright," Roberts said.

"As our 2013 guidance reflects, we anticipate growing the top line of our business by at least double digits. We also anticipate that Granite will continue to generate strong cash flow, allowing us to further implement our strategic long-term plan. Our solid Large Project portfolio has created significant opportunities to continue to grow this part of the business. In addition to leveraging Kenny's existing capabilities and presence in the power, underground and tunnel markets, we are confident that a recovery in the private construction market will help drive significant long-term operational and financial performance."

The Company's guidance for 2013 is as follows: Construction segment revenues are expected to total $1.25 billion to $1.4 billion, with a corresponding gross profit margin of 8 percent to 10 percent. Large Project Construction segment revenues are expected to be in the range of $850 million to $1.05 billion, with a corresponding gross profit margin of 12 percent to 14 percent. Construction Materials revenues are expected to be $200 million to $230 million, with a corresponding gross profit margin of 6 percent to 9 percent.

Selling, general and administrative expenses are expected to be $210 million to $220 million for the year. Gains on sales of property and equipment are expected to be in the range of $10 million to $20 million, and net income attributable to non-controlling interest in joint ventures for the total company is expected to be $15 million to $20 million. Granite expects the tax rate for 2013 to be in the range of 27 percent to 31 percent, with planned capital expenditures of $40 million to $60 million. Cash flow from operations is expected to total between $80 million and $120 million for the year.

Conference Call

Granite will conduct a conference call today, May 9, 2013 at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended March 31, 2013. 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 46628022. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through May 16, 2013 by calling (855) 859-2056. The conference ID for the replay is also 46628022.

About Granite

Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYS: GVA) is one of the nation's largest infrastructure contractors and construction materials producers. Incorporated in 1922, Granite serves public- and private-sector clients on projects both small and large. Granite's project teams represent some of the best in the industry serving owners in the transportation, power, federal, tunneling, underground, and industrial/mining and water resources markets. In 2013, the Company was recognized by the Ethisphere Institute as one of the World's Most Ethical Companies for the fourth year in a row. For more information please visit www.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,
   2013  2012  2012
ASSETS
Current assets
Cash and cash equivalents$260,773$321,990$226,226
Short-term marketable securities44,84156,08870,444
Receivables, net260,231325,529208,707
Costs and estimated earnings in excess of billings48,42834,11649,962
Inventories66,29159,78567,782
Real estate held for development and sale50,30350,22358,363
Deferred income taxes36,68736,68738,571
Equity in construction joint ventures171,265105,80591,951
Other current assets   37,401   31,834   34,882
Total current assets976,2201,022,057846,888
Property and equipment, net477,666481,478442,132
Long-term marketable securities57,95855,34270,114
Investments in affiliates30,74230,79930,972
Goodwill53,59355,4199,900
Other noncurrent assets   82,531   84,392   69,949
Total assets  $1,678,710  $1,729,487  $1,469,955
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt$8,353$8,353$9,102
Current maturities of non-recourse debt4,13210,70719,765
Accounts payable169,940202,541129,480
Billings in excess of costs and estimated earnings124,609139,69287,370
Accrued expenses and other current liabilities   188,685   169,979   148,196
Total current liabilities495,719531,272393,913
Long-term debt270,148270,148208,501
Long-term non-recourse debt7,6289221,371
Other long-term liabilities49,23147,12450,011
Deferred income taxes8,0558,1633,393
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 38,810,255 shares as of March 31, 2013, 38,730,665 shares as of December 31, 2012 and 38,621,370 shares as of March 31, 2012388387386
Additional paid-in capital118,265117,422110,432
Retained earnings   685,023   712,144   670,462
Total Granite Construction Incorporated shareholders' equity803,676829,953781,280
Noncontrolling interests   44,253   41,905   31,486
Total equity   847,929   871,858   812,766
Total liabilities and equity  $1,678,710  $1,729,487  $1,469,955

 
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
       
Three Months Ended March 31,  2013  2012
Revenue    
Construction$177,119$117,946
Large Project Construction171,714163,928
Construction Materials29,75025,623
Real Estate   121    2,663 
Total revenue   378,704    310,160 
Cost of revenue
Construction163,918109,366
Large Project Construction148,993141,679
Construction Materials35,72431,573
Real Estate   11    2,606 
Total cost of revenue   348,646    285,224 
Gross profit30,05824,936
Selling, general and administrative expenses57,65945,090
Gain on restructuring4981,902
Gain on sales of property and equipment   1,087    1,917 
Operating loss(26,016)(16,335)
Other (expense) income
Interest income1291,044
Interest expense(3,646)(3,182)
Equity in loss of affiliates(423)(617)
Other income, net   1,103    6,871 
Total other (expense) income   (2,837)   4,116 
Loss before benefit from income taxes(28,853)(12,219)
Benefit from income taxes   (9,027)   (3,532)
Net loss(19,826)(8,687)
Amount attributable to noncontrolling interests   (2,156)   (3,086)
Net loss attributable to Granite Construction Incorporated  $(21,982)  $(11,773)
 
Net loss per share attributable to common shareholders:
Basic$(0.57)$(0.31)
Diluted$(0.57)$(0.31)
Weighted average shares of common stock:
Basic38,61038,265
Diluted   38,610    38,265 

 
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
       
Three Months Ended March 31,   2013    2012 
Operating activities    
Net loss$(19,826)$(8,687)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization15,97014,961
Gain on sales of property and equipment(1,087)(1,917)
Stock-based compensation5,3864,196
Changes in assets and liabilities   (55,096)   (31,426)
Net cash used in operating activities   (54,653)   (22,873)
Investing activities
Purchases of marketable securities(14,975 Read Full Story

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