Granite Reports First-Quarter 2013 Financial Results

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 securities

44,841

56,088

70,444

Receivables, net

260,231

325,529

208,707

Costs and estimated earnings in excess of billings

48,428

34,116

49,962

Inventories

66,291

59,785

67,782

Real estate held for development and sale

50,303

50,223

58,363

Deferred income taxes

36,687

36,687

38,571

Equity in construction joint ventures

171,265

105,805

91,951

Other current assets

37,401

31,834

34,882

Total current assets

976,220

1,022,057

846,888

Property and equipment, net

477,666

481,478

442,132

Long-term marketable securities

57,958

55,342

70,114

Investments in affiliates

30,742

30,799

30,972

Goodwill

53,593

55,419

9,900

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 debt

4,132

10,707

19,765

Accounts payable

169,940

202,541

129,480

Billings in excess of costs and estimated earnings

124,609

139,692

87,370

Accrued expenses and other current liabilities

188,685

169,979

148,196

Total current liabilities

495,719

531,272

393,913

Long-term debt

270,148

270,148

208,501

Long-term non-recourse debt

7,628

922

1,371

Other long-term liabilities

49,231

47,124

50,011

Deferred income taxes

8,055

8,163

3,393

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, 2012

388

387

386

Additional paid-in capital

118,265

117,422

110,432

Retained earnings

685,023

712,144

670,462

Total Granite Construction Incorporated shareholders' equity

803,676

829,953

781,280

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 Construction

171,714

163,928

Construction Materials

29,750

25,623

Real Estate

121

2,663

Total revenue

378,704

310,160

Cost of revenue

Construction

163,918

109,366

Large Project Construction

148,993

141,679

Construction Materials

35,724

31,573

Real Estate

11

2,606

Total cost of revenue

348,646

285,224

Gross profit

30,058

24,936

Selling, general and administrative expenses

57,659

45,090

Gain on restructuring

498

1,902

Gain on sales of property and equipment

1,087

1,917

Operating loss

(26,016

)

(16,335

)

Other (expense) income

Interest income

129

1,044

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:

Basic

38,610

38,265

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 amortization

15,970

14,961

Gain on sales of property and equipment

(1,087

)

(1,917

)

Stock-based compensation

5,386

4,196

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