EX-99.1 2 d83982exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(GRANITE LOGO)
NEWS RELEASE
Contact:   Jacque Fourchy
(831) 761-4741
GRANITE REPORTS IMPROVED SECOND-QUARTER 2011 RESULTS
  §   Revenue up 7 percent from a year ago
 
  §   Net income of $4.9 million compared with net loss of $6.7 million
 
  §   SG&A decreased 24 percent to $38.8 million
 
  §   Total contract backlog of $2.1 billion compared with $1.6 billion a year ago
 
  §   Balance sheet strong with $317.9 million in cash, cash equivalents and marketable securities
WATSONVILLE, Calif. (August 3, 2011) — Granite Construction Incorporated (NYSE: GVA) today reported net income of $4.9 million, or $0.13 per diluted share, for the second quarter of 2011 compared with a net loss of $6.7 million, or $0.18 per diluted share, for the second quarter of 2010.
“I am pleased to report that our teams delivered improved operating results and added $526.7 million of new awards during the second quarter,” said James H. Roberts, Granite’s president and chief executive officer. “The quarter was, however, impacted by wet weather in certain geographic locations that pushed out some revenue and gross profit to the second half of the year. There is also no question that competition remains fierce and funding uncertainties are weighing heavily on many of our customers. To successfully manage through this cycle, we continue to focus our efforts on building quality backlog, managing our cost structure, and operating effectively and efficiently in all aspects of our business.”
Second-quarter 2011 Financial Results
Total Company
  §   Revenue totaled $484.7 million compared with $454.2 million in 2010, driven largely by an increase in Construction segment revenue.
 
  §   Gross profit margin was 9 percent compared with 11 percent in 2010.
 
  §   Selling, general and administrative expenses for the second quarter were $38.8 million compared with $51.4 million for the same period last year as a result of the Company’s continued focus on improving efficiencies as well as the actions the Company took in late 2010 to reduce its cost structure.

 


 

  §   Operating income for the quarter was $9.4 million compared with $2.1 million in the prior year driven largely by a decrease in selling, general and administrative expenses.
 
  §   Net income attributable to noncontrolling interests in joint ventures was $1.2 million compared with $4.1 million in 2010.
 
  §   Total contract backlog at June 30, 2011, was $2.1 billion compared with $1.6 billion a year ago due to continued bidding successes.
Construction
  §   Construction revenue for the quarter increased 10 percent to $260.6 million due to a higher volume of work completed in the quarter compared to a year ago.
 
  §   Gross profit margin for the second quarter was 9 percent compared with 10 percent a year ago reflecting the continued pressure on margins due to intense competition.
Large Project Construction
  §   Large Project Construction revenue for the quarter increased 6 percent to $162.3 million reflecting continued progress on the Queens Bored Tunnels and Structures project in the East and the SR 520 and Mountain View Corridor projects in the Northwest.
 
  §   Gross profit margin for the quarter was 8 percent compared with 14 percent for the same period last year. The decrease is associated with 74.4 million in revenue recognized on projects that have not reached the profit recognition threshold compared with 34.4 million last year. In addition, the Company settled a project design issue in the second quarter of 2010 with no corresponding settlement in 2011.
Construction Materials
  §   Construction Materials revenue for the quarter totaled $58.1 million compared with $61.1 million for the same period last year.
 
  §   Gross profit on the sale of construction materials was 15 percent compared with 7 percent in 2010 reflecting increased production efficiencies to meet growing Construction backlog.
Outlook
“Our year over year improvement is encouraging, however, we continue to face a very difficult and competitive bidding environment across the country,” said Roberts. “While we are not out of the woods with this downturn, I am pleased with the amount and quality of our current backlog and I remain confident in the long-term outlook for our business,” he said.
The Company’s fiscal 2011 guidance for its operating segments remains unchanged. Construction segment revenue is expected to be $1.0 billion to $1.2 billion with a corresponding gross profit margin between 9 percent and 11 percent. Large Project Construction segment revenue is expected to be $650 million to $850 million with a corresponding gross profit margin of between 13 percent and 15 percent. Construction Materials segment revenue is expected to be $170 million to $200 million with corresponding gross profit margin between 7 percent and 9 percent. The Company is updating its guidance for net income attributable to noncontrolling interests in joint ventures to a range of $12 million to $16 million.

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Conference Call
Granite will conduct a conference call tomorrow, August 4, 2011 at 8 a.m. Pacific time/11 a.m. Eastern time to discuss the results of the quarter ended June 30, 2011. Access to a live audio webcast is available at www.graniteconstruction.com/investor-relations. The live conference call may be accessed by calling (877) 693-6483. The conference ID for the live call is 82727819. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through August 25, 2011 by calling (855) 859-2056. The conference ID for the replay is also 82727819.
About Granite
Granite is one of the nation’s leading infrastructure contractors and is member of the S&P 400 Midcap Index, the FTSE KLD 400 Social Index and the Russell 2000 Index. Through its wholly owned subsidiary, Granite is one of the nation’s largest diversified heavy civil contractors and construction materials producers serving public- and private-sector clients nationwide. In addition, Granite has one of the oldest and most robust ethics and compliance programs in the industry. The Company was recently recognized by the Ethisphere Institute as one of the World’s Most Ethical Companies for the second year in a row. For more information, please visit 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 under “Item 1A. Risk Factors.”
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.

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GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited — in thousands, except share and per share data)
                         
    June 30,   December 31,   June 30,
    2011   2010   2010
 
ASSETS
                       
Current assets
                       
Cash and cash equivalents
  $ 190,069     $ 252,022     $ 208,450  
Short-term marketable securities
    78,255       109,447       73,566  
Receivables, net
    283,944       243,986       295,779  
Costs and estimated earnings in excess of billings
    51,739       10,519       56,665  
Inventories
    64,727       51,018       48,529  
Real estate held for development and sale
    78,725       75,716       148,897  
Deferred income taxes
    52,714       53,877       31,870  
Equity in construction joint ventures
    87,653       74,716       72,571  
Other current assets
    34,779       42,555       39,031  
 
Total current assets
    922,605       913,856       975,358  
Property and equipment, net
    464,616       473,607       501,258  
Long-term marketable securities
    49,580       34,259       68,291  
Investments in affiliates
    32,932       31,410       31,210  
Other noncurrent assets
    82,214       82,401       79,060  
 
Total assets
  $ 1,551,947     $ 1,535,533     $ 1,655,177  
 
 
                       
LIABILITIES AND EQUITY
                       
Current liabilities
                       
Current maturities of long-term debt
  $ 8,351     $ 8,359     $ 8,538  
Current maturities of non-recourse debt
    16,454       29,760       39,657  
Accounts payable
    179,664       129,700       173,637  
Billings in excess of costs and estimated earnings
    122,014       120,185       144,935  
Accrued expenses and other current liabilities
    156,727       150,773       161,632  
 
Total current liabilities
    483,210       438,777       528,399  
Long-term debt
    208,519       217,014       216,870  
Long-term non-recourse debt
    28,907       25,337       16,615  
Other long-term liabilities
    46,460       47,996       49,197  
Deferred income taxes
    10,983       10,774       27,905  
 
                       
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 38,667,457 shares as of June 30, 2011, 38,745,542 shares as of December 31, 2010 and 38,788,581 shares as of June 30, 2010
    387       387       388  
Additional paid-in capital
    105,287       104,232       98,142  
Retained earnings
    642,228       656,412       677,873  
 
Total Granite Construction Incorporated shareholders’ equity
    747,902       761,031       776,403  
Noncontrolling interests
    25,966       34,604       39,788  
 
Total equity
    773,868       795,635       816,191  
 
Total liabilities and equity
  $ 1,551,947     $ 1,535,533     $ 1,655,177  
 

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GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited — in thousands, except per share data)
                                 
    Three Months Ended June 30,   Six Months Ended June 30,
    2011   2010   2011   2010
 
Revenue
                               
Construction
  $ 260,600     $ 237,943     $ 353,292     $ 319,129  
Large project construction
    162,338       153,328       300,158       259,653  
Construction materials
    58,114       61,089       81,912       87,253  
Real estate
    3,622       1,844       6,043       8,852  
 
Total revenue
    484,674       454,204       741,405       674,887  
 
Cost of revenue
                               
Construction
    237,211       215,042       324,350       294,382  
Large project construction
    149,680       131,493       256,202       228,335  
Construction materials
    49,644       56,609       80,712       89,898  
Real estate
    3,183       1,362       5,197       6,860  
 
Total cost of revenue
    439,718       404,506       666,461       619,475  
 
Gross profit
    44,956       49,698       74,944       55,412  
Selling, general and administrative expenses
    38,793       51,357       82,165       106,649  
Gain on sales of property and equipment
    3,270       3,800       5,974       8,252  
 
Operating income (loss)
    9,433       2,141       (1,247 )     (42,985 )
Other expense
                               
Interest income
    575       1,098       1,819       2,037  
Interest expense
    (879 )     (3,013 )     (4,235 )     (6,747 )
Equity in loss of affiliates
    (181 )     (387 )     (438 )     (706 )
Other (expense) income, net
    (688 )     1,934       (118 )     4,831  
 
Total other expense
    (1,173 )     (368 )     (2,972 )     (585 )
 
Income (loss) before provision for (benefit from) income taxes
    8,260       1,773       (4,219 )     (43,570 )
Provision for (benefit from) income taxes
    2,087       4,406       (3,136 )     (3,207 )
 
Net income (loss)
    6,173       (2,633 )     (1,083 )     (40,363 )
Amount attributable to noncontrolling interests
    (1,227 )     (4,058 )     (2,978 )     (7,282 )
 
Net income (loss) attributable to Granite Construction Incorporated
  $ 4,946     $ (6,691 )   $ (4,061 )   $ (47,645 )
 
 
                               
Net income (loss) per share attributable to common shareholders:
                               
Basic (1)
  $ 0.13     $ (0.18 )   $ (0.11 )   $ (1.26 )
Diluted (1)
  $ 0.13     $ (0.18 )   $ (0.11 )   $ (1.26 )
Weighted average shares of common stock:
                               
Basic
    38,140       37,850       38,052       37,770  
Diluted
    38,479       37,850       38,052       37,770  
 
    Note:
 
(1)   Computed using the two-class method, except when in a net loss position

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GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited — in thousands)
                 
Six Months Ended June 30,   2011   2010
 
Operating activities
               
Net loss
  $ (1,083 )   $ (40,363 )
Adjustments to reconcile net loss to net cash used in operating activities:
               
Depreciation, depletion and amortization
    30,464       35,839  
Gain on sales of property and equipment
    (5,974 )     (8,252 )
Stock-based compensation
    5,913       6,885  
Gain on company owned life insurance
    (536 )     (1,748 )
Changes in assets and liabilities, net of the effects of consolidations
    (45,520 )     (31,279 )
 
Net cash used in operating activities
    (16,736 )     (38,918 )
 
Investing activities
               
Purchases of marketable securities
    (65,287 )     (60,073 )
Maturities of marketable securities
    58,375       24,900  
Proceeds from sale of marketable securities
    19,268       10,000  
Proceeds from company owned life insurance
          2,078  
Additions to property and equipment
    (27,542 )     (21,809 )
Proceeds from sales of property and equipment
    10,266       11,936  
Purchase of private preferred stock
    (50 )     (6,400 )
Other investing activities, net
    170       (869 )
 
Net cash used in investing activities
    (4,800 )     (40,237 )
 
Financing activities
               
Long-term debt principal payments
    (16,151 )     (18,155 )
Cash dividends paid
    (10,061 )     (10,067 )
Purchase of common stock
    (3,662 )     (3,434 )
Distributions to noncontrolling partners, net
    (11,616 )     (19,797 )
Other financing activities
    1,073       102  
 
Net cash used in financing activities
    (40,417 )     (51,351 )
 
Decrease in cash and cash equivalents
    (61,953 )     (130,506 )
Cash and cash equivalents at beginning of period
    252,022       338,956  
 
Cash and cash equivalents at end of period
  $ 190,069     $ 208,450  
 

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GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited — dollars in thousands)
                                                                     
      Three Months Ended June 30,     Six Months Ended June 30,
              Large Project   Construction                     Large Project   Construction    
      Construction   Construction   Materials   Real Estate     Construction   Construction   Materials   Real Estate
             
2011
                                                                   
Revenue
    $ 260,600     $ 162,338     $ 58,114     $ 3,622       $ 353,292     $ 300,158     $ 81,912     $ 6,043  
Gross profit
      23,389       12,658       8,470       439         28,942       43,956       1,200       846  
Gross profit as a percent of revenue
      9.0 %     7.8 %     14.6 %     12.1 %       8.2 %     14.6 %     1.5 %     14.0 %
 
                                                                   
2010
                                                                   
Revenue
    $ 237,943     $ 153,328     $ 61,089     $ 1,844       $ 319,129     $ 259,653     $ 87,253     $ 8,852  
Gross profit (loss)
      22,901       21,835       4,480       482         24,747       31,318       (2,645 )     1,992  
Gross profit (loss) as a percent of revenue
      9.6 %     14.2 %     7.3 %     26.1 %       7.8 %     12.1 %     (3.0 )%     22.5 %
             
GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited — dollars in thousands)
                                                 
Contract Backlog by Segment   June 30, 2011   March 31, 2011   June 30, 2010
 
Construction
  $ 800,434       38.0 %   $ 696,055       34.7 %   $ 594,214       38.3 %
Large project construction
    1,306,961       62.0 %     1,307,622       65.3 %     957,080       61.7 %
 
 
                                               
Total
  $ 2,107,395       100.0 %   $ 2,003,677       100.0 %   $ 1,551,294       100.0 %
 
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