Delaware (State or Other Jurisdiction of Incorporation) | 1-12911 (Commission File Number) | 77-0239383 (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description |
99.1 |
GRANITE CONSTRUCTION INCORPORATED | ||||
By: | /s/ Laurel J. Krzeminski | |||
Laurel J. Krzeminski | ||||
Executive Vice President and Chief Financial Officer | ||||
• | Revenue increased to $957.1 million, up 19.1 percent year-over-year |
• | Net income of $46.0 million, up 23.6 percent year-over-year |
• | Construction segment gross profit margin at 15.8 percent |
• | Construction Materials segment gross profit margin at 17.1 percent |
• | Large Project Construction segment gross profit margin at 2.3 percent |
• | Record Company backlog of $4.23 billion, up 12.5 percent year-over-year |
▪ | Third quarter consolidated revenue increased 19.1 percent to $957.1 million compared with $803.9 million in the third quarter of 2016. On a year-to-date basis, consolidated revenue increased 18.4 percent to $2.19 billion. |
▪ | Third quarter consolidated gross profit increased 6.4 percent to $114.5 million compared with $107.7 million last year. On a year-to-date basis, gross profit decreased 2.7 percent to $214.2 million, as our operations continue to overcome the drag from poor first quarter weather. |
▪ | Third quarter consolidated gross profit margin was 12.0 percent compared with 13.4 percent in 2016. For the first nine months of 2017, gross profit margin was 9.8 percent compared with 11.9 percent last year. |
▪ | Total Company backlog was $4.23 billion, up 12.5 percent year-over-year. Construction segment backlog increased 3.0 percent year-over-year to $1.13 billion. Large Project Construction segment backlog increased 16.4 percent from last year to $3.10 billion. |
▪ | Third quarter SG&A expenses decreased to $49.5 million, a decrease of 8.7 percent from $54.2 million last year. For the first nine months of 2017, SG&A expenses were $162.7 million, an increase of 2.3 percent from $159.0 million last year, but down 120 basis points as a percentage of revenue. |
▪ | Our balance sheet remains strong with cash and marketable securities of $303.3 million, as of September 30, 2017, an increase of $45.3 million from September 30, 2016. |
▪ | Construction revenue increased 24.6 percent to $579.1 million, compared with $464.6 million last year. |
▪ | Gross profit increased 27.7 percent to $91.3 million, compared to $71.5 million last year. |
▪ | Gross profit margin of 15.8 percent increased from 15.4 percent a year ago. |
▪ | Solid execution on record backlog drove the strong revenue and profit increases in the third quarter. Steady bookings across geographies contributed to segment backlog increasing 3.0 percent year-over-year to $1.13 billion. |
▪ | Large Project Construction revenue increased 12.2 percent to $279.8 million, compared with $249.3 million last year. |
▪ | Gross profit decreased to $6.4 million compared to $23.5 million last year, with the decline attributable primarily to project write-downs. |
▪ | Gross profit margin was 2.3 percent compared with 9.4 percent in 2016. |
▪ | Accelerated activity on certain underperforming mature projects represented a significant amount of segment revenue. We continue to pursue resolutions for design, weather, and owner-related issues, while we close out several of these projects in late-2017 and through 2018. |
▪ | Segment backlog increased 16.4 percent from last year to a record of $3.10 billion, reflecting the addition of two Granite-sponsored projects in the quarter. We continue to emphasize increased project selectivity and significantly higher return expectations that properly balance project risk dynamics. |
▪ | Construction Materials revenue increased 9.1 percent to $98.1 million, compared with $89.9 million last year. |
▪ | Third quarter gross profit increased 33.0 percent to $16.8 million, compared to $12.6 million last year. |
▪ | Gross profit margin of 17.1 percent increased from 14.0 percent a year ago. |
▪ | The gross profit and margin improvement was attributable primarily to improved external demand across geographies in the West. |
▪ | Mid- to high-teens consolidated revenue growth |
▪ | Consolidated EBITDA margin1 of 6.0% to 6.5% |
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||
(Unaudited - in thousands, except share and per share data) | ||||||||||||
September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 185,516 | $ | 189,326 | $ | 150,225 | ||||||
Short-term marketable securities | 47,814 | 64,884 | 54,863 | |||||||||
Receivables, net | 627,081 | 419,345 | 512,752 | |||||||||
Costs and estimated earnings in excess of billings | 94,527 | 73,102 | 80,032 | |||||||||
Inventories | 62,059 | 55,245 | 61,015 | |||||||||
Equity in construction joint ventures | 242,358 | 247,182 | 263,180 | |||||||||
Other current assets | 26,612 | 39,908 | 28,047 | |||||||||
Total current assets | 1,285,967 | 1,088,992 | 1,150,114 | |||||||||
Property and equipment, net | 412,174 | 406,650 | 407,327 | |||||||||
Long-term marketable securities | 69,991 | 62,895 | 52,908 | |||||||||
Investments in affiliates | 39,946 | 35,668 | 34,356 | |||||||||
Goodwill | 53,799 | 53,799 | 53,799 | |||||||||
Deferred income taxes, net | — | — | 5,223 | |||||||||
Other noncurrent assets | 85,411 | 85,449 | 81,540 | |||||||||
Total assets | $ | 1,947,288 | $ | 1,733,453 | $ | 1,785,267 | ||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities | ||||||||||||
Current maturities of long-term debt | $ | 14,796 | $ | 14,796 | $ | 14,795 | ||||||
Accounts payable | 286,913 | 199,029 | 223,612 | |||||||||
Billings in excess of costs and estimated earnings | 168,707 | 97,522 | 116,151 | |||||||||
Accrued expenses and other current liabilities | 246,775 | 218,587 | 237,534 | |||||||||
Total current liabilities | 717,191 | 529,934 | 592,092 | |||||||||
Long-term debt | 225,922 | 229,498 | 240,715 | |||||||||
Deferred income taxes, net | 5,932 | 5,441 | — | |||||||||
Other long-term liabilities | 46,435 | 45,989 | 46,270 | |||||||||
Commitments and contingencies | ||||||||||||
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: 39,850,587 shares as of September 30, 2017, 39,621,140 shares as of December 31, 2016 and 39,601,569 shares as of September 30, 2016 | 399 | 396 | 396 | |||||||||
Additional paid-in capital | 157,734 | 150,337 | 147,583 | |||||||||
Accumulated other comprehensive income (loss) | 240 | (371 | ) | (1,524 | ) | |||||||
Retained earnings | 756,183 | 735,626 | 724,691 | |||||||||
Total Granite Construction Incorporated shareholders’ equity | 914,556 | 885,988 | 871,146 | |||||||||
Non-controlling interests | 37,252 | 36,603 | 35,044 | |||||||||
Total equity | 951,808 | 922,591 | 906,190 | |||||||||
Total liabilities and equity | $ | 1,947,288 | $ | 1,733,453 | $ | 1,785,267 |
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited - in thousands, except per share data) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | |||||||||||||||
Construction | $ | 579,146 | $ | 464,624 | $ | 1,235,264 | $ | 1,005,457 | |||||||
Large Project Construction | 279,845 | 249,345 | 741,341 | 642,116 | |||||||||||
Construction Materials | 98,135 | 89,936 | 211,834 | 200,363 | |||||||||||
Total revenue | 957,126 | 803,905 | 2,188,439 | 1,847,936 | |||||||||||
Cost of revenue | |||||||||||||||
Construction | 487,798 | 393,094 | 1,053,463 | 857,938 | |||||||||||
Large Project Construction | 273,460 | 225,826 | 731,906 | 591,438 | |||||||||||
Construction Materials | 81,338 | 77,311 | 188,844 | 178,440 | |||||||||||
Total cost of revenue | 842,596 | 696,231 | 1,974,213 | 1,627,816 | |||||||||||
Gross profit | 114,530 | 107,674 | 214,226 | 220,120 | |||||||||||
Selling, general and administrative expenses | 49,501 | 54,194 | 162,726 | 159,032 | |||||||||||
Gain on sales of property and equipment | (1,753 | ) | (398 | ) | (2,830 | ) | (2,364 | ) | |||||||
Operating income | 66,782 | 53,878 | 54,330 | 63,452 | |||||||||||
Other (income) expense | |||||||||||||||
Interest income | (1,141 | ) | (790 | ) | (3,356 | ) | (2,424 | ) | |||||||
Interest expense | 2,660 | 3,034 | 8,097 | 9,270 | |||||||||||
Equity in income of affiliates | (2,732 | ) | (2,424 | ) | (4,907 | ) | (4,583 | ) | |||||||
Other income, net | (1,309 | ) | (732 | ) | (2,821 | ) | (5,287 | ) | |||||||
Total other income | (2,522 | ) | (912 | ) | (2,987 | ) | (3,024 | ) | |||||||
Income before provision for income taxes | 69,304 | 54,790 | 57,317 | 66,476 | |||||||||||
Provision for income taxes | 21,249 | 16,617 | 16,841 | 19,540 | |||||||||||
Net income | 48,055 | 38,173 | 40,476 | 46,936 | |||||||||||
Amount attributable to non-controlling interests | (2,073 | ) | (982 | ) | (4,151 | ) | (5,987 | ) | |||||||
Net income attributable to Granite Construction Incorporated | $ | 45,982 | $ | 37,191 | $ | 36,325 | $ | 40,949 | |||||||
Net income per share attributable to common shareholders: | |||||||||||||||
Basic | $ | 1.15 | $ | 0.94 | $ | 0.91 | $ | 1.04 | |||||||
Diluted | $ | 1.14 | $ | 0.92 | $ | 0.90 | $ | 1.02 | |||||||
Weighted average shares of common stock | |||||||||||||||
Basic | 39,844 | 39,599 | 39,774 | 39,539 | |||||||||||
Diluted | 40,387 | 40,313 | 40,367 | 40,205 |
GRANITE CONSTRUCTION INCORPORATED | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited - in thousands) | ||||||||
Nine Months Ended September 30, | 2017 | 2016 | ||||||
Operating activities | ||||||||
Net income | $ | 40,476 | $ | 46,936 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation, depletion and amortization | 48,522 | 46,637 | ||||||
Gain on sales of property and equipment, net | (2,830 | ) | (2,364 | ) | ||||
Stock-based compensation | 13,580 | 11,013 | ||||||
Equity in net loss (income) from unconsolidated joint ventures | 15,415 | (15,903 | ) | |||||
Gain on real estate entity | — | (2,452 | ) | |||||
Net income from affiliates | (4,907 | ) | (4,583 | ) | ||||
Changes in assets and liabilities: | (45,642 | ) | (98,682 | ) | ||||
Net cash provided by (used in) operating activities | 64,614 | (19,398 | ) | |||||
Investing activities | ||||||||
Purchases of marketable securities | (79,708 | ) | (84,758 | ) | ||||
Maturities of marketable securities | 90,000 | 30,000 | ||||||
Proceeds from called marketable securities | — | 50,000 | ||||||
Purchases of property and equipment | (56,808 | ) | (67,889 | ) | ||||
Proceeds from sales of property and equipment | 5,107 | 5,790 | ||||||
Distributions from affiliates | — | 2,233 | ||||||
Other investing activities, net | 2,321 | 3,847 | ||||||
Net cash used in investing activities | (39,088 | ) | (60,777 | ) | ||||
Financing activities | ||||||||
Long-term debt principal repayments | (3,750 | ) | (3,750 | ) | ||||
Cash dividends paid | (15,506 | ) | (15,415 | ) | ||||
Repurchases of common stock | (6,713 | ) | (4,946 | ) | ||||
(Distributions to) contributions from non-controlling partners, net | (3,500 | ) | 1,522 | |||||
Other financing activities, net | 133 | 153 | ||||||
Net cash used in financing activities | (29,336 | ) | (22,436 | ) | ||||
Decrease in cash and cash equivalents | (3,810 | ) | (102,611 | ) | ||||
Cash and cash equivalents at beginning of period | 189,326 | 252,836 | ||||||
Cash and cash equivalents at end of period | $ | 185,516 | $ | 150,225 |
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||||
Business Segment Information | ||||||||||||||||||||||||
(Unaudited - dollars in thousands) | ||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
Construction | Large Project Construction | Construction Materials | Construction | Large Project Construction | Construction Materials | |||||||||||||||||||
2017 | ||||||||||||||||||||||||
Revenue | $ | 579,146 | $ | 279,845 | $ | 98,135 | $ | 1,235,264 | $ | 741,341 | $ | 211,834 | ||||||||||||
Gross profit | 91,348 | 6,385 | 16,797 | 181,801 | 9,435 | 22,990 | ||||||||||||||||||
Gross profit as a percent of revenue | 15.8 | % | 2.3 | % | 17.1 | % | 14.7 | % | 1.3 | % | 10.9 | % | ||||||||||||
2016 | ||||||||||||||||||||||||
Revenue | $ | 464,624 | $ | 249,345 | $ | 89,936 | $ | 1,005,457 | $ | 642,116 | $ | 200,363 | ||||||||||||
Gross profit | 71,530 | 23,519 | 12,625 | 147,519 | 50,678 | 21,923 | ||||||||||||||||||
Gross profit as a percent of revenue | 15.4 | % | 9.4 | % | 14.0 | % | 14.7 | % | 7.9 | % | 10.9 | % |
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||||||||
Contract Backlog by Segment | |||||||||||||||||||||
(Unaudited - dollars in thousands) | |||||||||||||||||||||
Contract Backlog by Segment | September 30, 2017 | June 30, 2017 | September 30, 2016 | ||||||||||||||||||
Construction | $ | 1,134,887 | 26.8 | % | $ | 1,266,504 | 31.2 | % | $ | 1,102,147 | 29.3 | % | |||||||||
Large Project Construction | 3,099,857 | 73.2 | % | 2,797,894 | 68.8 | % | 2,662,399 | 70.7 | % | ||||||||||||
Total | $ | 4,234,744 | 100.0 | % | $ | 4,064,398 | 100.0 | % | $ | 3,764,546 | 100.0 | % | |||||||||
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||
EBITDA(1) | ||||||||||||||||
(Unaudited - dollars in thousands) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income attributable to Granite Construction Incorporated | $ | 45,982 | $ | 37,191 | $ | 36,325 | $ | 40,949 | ||||||||
Depreciation, depletion and amortization expense(2) | 17,374 | 17,135 | 48,522 | 46,637 | ||||||||||||
Provision for income taxes | 21,249 | 16,617 | 16,841 | 19,540 | ||||||||||||
Interest expense, net of interest income | 1,519 | 2,244 | 4,741 | 6,846 | ||||||||||||
EBITDA | $ | 86,124 | $ | 73,187 | $ | 106,429 | $ | 113,972 | ||||||||
Consolidated EBITDA Margin(3) | 9.0 | % | 9.1 | % | 4.9 | % | 6.2 | % | ||||||||
Note: | ||||||||||||||||
(1)We define EBITDA as GAAP net income attributable to Granite Construction Incorporated, adjusted for interest, taxes, depreciation, depletion and amortization. We believe this non-GAAP financial measure and the associated margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties in reviewing the Company. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to similar measures provided by other companies. | ||||||||||||||||
(2)Amount includes the sum of depreciation, depletion and amortization which are classified as Cost of Revenue and Selling, General and Administrative expenses in the condensed consolidated statements of operations of Granite Construction Incorporated. | ||||||||||||||||
(3)Represents EBITDA divided by consolidated revenue. Consolidated revenue was $957,126 and $2,188,439 for three and nine months ended September 30, 2017, respectively, and $803,905 and $1,847,936 for the three and nine months ended September 30, 2016, respectively. |