EX-99.1 2 a5905036ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Granite Reports Full-Year and Fourth Quarter 2008 Results

  • Gross profit for the year increased 14% to a record $468.7 million
  • Operating income up 55% for the quarter and 24% for the year
  • Cash and short-term marketable securities increased $69.0 million for the year to $499.2 million
  • Strong balance sheet with zero net debt at year end
  • Effective tax rate decreased to 29% from 33% in 2007
  • Granite East operating margins 14% in 2008; up from breakeven in 2007

WATSONVILLE, Calif.--(BUSINESS WIRE)--February 25, 2009--Granite Construction Incorporated (NYSE:GVA) today reported net income of $122.4 million for the full-year 2008 compared with $112.1 million for 2007. Diluted earnings per share were $3.21 for the full-year 2008 compared with $2.71 per diluted share for the full-year 2007.

For the fourth quarter of 2008, Granite reported net income of $31.9 million, or $0.84 per diluted share. This compares with net income of $17.2 million, or $0.42 per diluted share for the fourth quarter of 2007.

“I am very pleased with our accomplishments this year,” said William G. Dorey, Granite president and chief executive officer. “We have delivered strong business results and increased value to our shareholders by significantly improving bottom line performance on our large projects. Additionally, we continue to maintain a strong balance sheet, which provides us the financial strength and flexibility to successfully navigate through today’s challenging economic environment.”


Full-Year 2008 Financial Results

Total Company

  • Revenues were $2.7 billion, essentially flat compared to 2007.
  • Gross profit as a percent of revenue for the year ended December 31, 2008, increased to 18% compared with 15% last year, reflecting a significant improvement in gross profit from Granite East and a slight decrease in gross profit from Granite West.
  • Construction materials gross profit as a percent of material sales was 12% in 2008 compared with 20% in 2007. The decrease was driven by weakness in the private sector market, a shift in demand for lower-valued products as well as inventory reserve adjustments.
  • General and administrative expenses increased to $257.5 million or 10% of revenue compared with $246.2 million or 9% of revenue in 2007.
  • Operating income increased to $216.7 million compared with $174.9 million in 2007, reflecting improved performance in Granite East.
  • Contract backlog at December 31, 2008 was $1.7 billion compared with $2.1 billion a year ago.
  • Other income for the year was $16.7 million compared with $23.5 million last year.
  • Minority interest in consolidated subsidiaries increased to $43.3 million for the year compared with $20.9 million in 2007. The increase was primarily due to improved execution on Granite East consolidated joint venture projects and a $17.7 million claim settlement.
  • At December 31, 2008, cash and short-term marketable securities totaled $499.2 million including approximately $121.0 million of cash and cash equivalents from the Company’s consolidated joint ventures.

Granite West

  • Granite West revenues totaled $2.0 billion compared with $1.9 billion for the prior year.
  • Gross profit as a percent of revenue for the year was 18% compared with 19% last year.
  • Operating income decreased to $205.4 million for the same period compared with $230.2 million in 2007.

Granite East

  • Granite East revenue totaled $695.0 million compared with $768.5 million for the prior year.
  • Gross margin as a percent of revenue for the year was 17% compared with 3% last year. The increase reflected improved project performance, the settlement of a significant claim, and projects reaching the profit recognition threshold.
  • Operating income totaled $93.6 million compared with $0.8 million in 2007.

Granite Land Company (“GLC”)

  • GLC revenue was $9.0 million compared with $40.7 million in 2007, reflecting the variability in the timing of real estate sales transactions.
  • Gross loss for the period was $1.5 million compared with a gross profit of $15.8 million last year.
  • Operating loss was $4.1 million for the year compared with operating income of $12.0 million in 2007. The 2008 loss includes a $4.5 million impairment charge related to residential development projects in California.

Fourth Quarter 2008 Financial Results

Total Company

  • Total revenues for the quarter were $627.3 million, essentially flat compared with 2007.
  • Gross profit as a percent of revenue increased in the quarter to 19% from 16% in 2007.
  • Operating income for the quarter was $58.4 million, compared with $37.7 million in the prior year, reflecting increases in Granite West and Granite East.
  • Other income for the quarter was $6.8 million compared with $4.4 million last year, reflecting a $14.4 million pre-tax gain related to the sale of our remaining shares in TIC Holdings, Inc. partially offset by a $10.9 million loss on available-for-sale securities.
  • General and administrative expenses decreased $3.9 million to $59.2 million or 9% of revenue compared with $63.1 million or 10% of revenue in 2007. The decrease reflects the Company’s ongoing initiative to reduce general and administrative expenses throughout the organization.
  • Minority interest for the quarter increased $5.2 million to $12.3 million.

Granite West

  • Revenue for the quarter totaled $463.2 million compared with $445.8 million for the same period in 2007.
  • Gross profit as a percent of revenue for the fourth quarter was 18% compared with 19% in 2007.
  • Operating income increased $6.4 million for the quarter to $50.1 million compared with $43.7 million for the fourth quarter last year.

Granite East

  • Revenue for the quarter was $163.2 million compared with $183.1 million for the same period last year.
  • Gross profit as a percent of revenue for the quarter increased to 20% compared with 10% in the same period last year.
  • Operating income for the quarter increased to $25.8 million compared with $14.1 million for the fourth quarter 2007.

Granite Land Company

  • GLC revenue for the quarter was $0.9 million compared with $4.2 million for the same period last year.
  • Gross profit as a percent of revenue for the period was 21% compared with a negative gross profit margin of 30% last year.
  • Operating loss for the quarter was $0.3 million compared with a loss of $2.1 million in the fourth quarter of 2007.

Outlook

“Over the longer term, we are optimistic about the growing need for the services and materials we provide. While the current level of bidding activity in the West remains relatively healthy, we are experiencing a lot of competition for smaller-sized projects which we expect will continue through 2009,” said Dorey.

“In the East, we are maintaining solid margins and benefiting from overall improved execution. We are selectively pursuing projects across our three Granite East regions and expect to build our backlog over the year.

“Additionally, while we are encouraged by the potential increase in infrastructure funding as a result of the federal stimulus bill, it is too early for us to know to what degree it will impact our business.

“As we look to 2009, our priority is to maximize profitability by operating as efficiently and effectively as possible. We remain focused on driving sustainable long term growth for our shareholders. With our strong balance sheet and diversified business strategy, we are positioned to take advantage of the opportunities our markets have to offer.”

Conference Call

Granite will conduct a conference call tomorrow, February 26, 2009, at 11:00 a.m. ET/ 8:00 a.m. PT to discuss the results for the fourth quarter ended December 31, 2008. Access to a live audio webcast is available at www.graniteconstruction.com/investor-relations. The live conference call may be accessed by calling (877) 864-2735 in the U.S. and Canada and (706) 634-7039 for international listeners. The conference ID for the call is 77458748. The conference call will be recorded and available for replay from approximately two hours after the live call through March 5, 2009 by calling (800) 642-1687 or (706) 645-9291. The conference ID for the recording is 77458748.

About Granite

Granite Construction Incorporated is a member of the S&P 400 Midcap Index, the Domini 400 Social Index and the Russell 2000. Granite Construction Company, a wholly owned subsidiary, is one of the nation's largest diversified heavy civil contractors and construction materials producers. Granite Construction Company serves public and private sector clients through its offices and subsidiaries nationwide. For more information about Granite, please visit their website at www.graniteconstruction.com.

Forward-Looking Statements

This press release contains statements that are not based on historical facts and which may be forward-looking in nature. Under the Private Securities Litigation Reform Act of 1995, a “safe harbor” may be provided to us for certain of these forward-looking statements. Words such as “outlook,” “believes,” “expects,” “appears,” “may,” “will,” “should,” “anticipates” or the negative thereof or comparable terminology, are intended to identify these forward-looking statements. These forward-looking statements are estimates reflecting the best judgment of our senior management and are based on our current expectations and projections concerning future events, many of which are outside of our control, and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those risks described in this Report under “Item 1A. Risk Factors.” Except as required by law, we undertake no obligation to revise or update any forward-looking statements for any reason. As a result, the reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release.


                         
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
                         
    Three Months Ended     Years Ended
December 31, December 31,
2008   2007 2008   2007
          (Unaudited)     (Unaudited)   (1)
 
Revenue
Construction $ 556,659 $ 542,864 $ 2,312,116 $ 2,321,502
Material sales 69,794 86,045 353,115 375,700
Real estate     871       4,156         9,013       40,712  
Total revenue     627,324       633,065         2,674,244       2,737,914  
Cost of revenue
Construction 446,649 458,104 1,883,742 2,002,064
Material sales 63,287 71,118 311,246 300,234
Real estate     690       5,406         10,536       24,872  
Total cost of revenue     510,626       534,628         2,205,524       2,327,170  
 
Gross profit 116,698 98,437 468,720 410,744
 
General and administrative expenses 59,188 63,069 257,532 246,202
Gain on sales of property and equipment     939       2,290         5,503       10,343  
 
Operating income 58,449 37,658 216,691 174,885
 
Other income (expense)
Interest income 3,358 6,129 18,445 26,925
Interest expense (3,130 ) (1,369 ) (16,001 ) (6,367 )
Acquisition expense - (7,752 ) - (7,752 )
Equity in income (loss) of affiliates 378 846 (1,058 ) 5,205
Other, net     6,157       6,555         15,353       5,498  
Total other income     6,763       4,409         16,739       23,509  
 

Income before provision for income taxes and minority interest

65,212 42,067 233,430 198,394
 
Provision for income tax       21,011       17,790         67,692       65,470  
 
Income before minority interest 44,201 24,277 165,738 132,924
 
Minority interest in consolidated subsidiaries     (12,276 )     (7,109 )       (43,334 )     (20,859 )
 
Net income   $ 31,925     $ 17,168       $ 122,404     $ 112,065  
 
Net income per share:
Basic $ 0.85 $ 0.43 $ 3.25 $ 2.74
Diluted $ 0.84 $ 0.42 $ 3.21 $ 2.71
Weighted average shares of common stock:
Basic 37,434 40,275 37,606 40,866
Diluted     38,013       40,802         38,106       41,389  
 
(1) Derived from Granite's annual audited consolidated financial statements.
 

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
       
December 31,   December 31,
2008 2007
  (Unaudited)   (1)
 
Assets
 
Current assets
Cash and cash equivalents $ 460,843 $ 352,434
Short-term marketable securities 38,320 77,758
Accounts receivable, net 314,733 397,097
Costs and estimated earnings in excess of billings 13,295 17,957
Inventories, net 55,223 55,557
Real estate held for development and sale 75,089 51,688
Deferred income taxes 43,637 43,713
Equity in construction joint ventures 44,681 34,340
Other current assets   56,742       96,969  
 
Total current assets   1,102,563       1,127,513  
 
Property and equipment, net   517,678       502,901  
 
Long-term marketable securities   21,239       55,156  
 
Investment in affiliates   19,996       26,475  
 
Other noncurrent assets   81,979       74,373  
 
Total assets $ 1,743,455     $ 1,786,418  
 
Liabilities and Shareholders' Equity
 
Current liabilities
Current maturities of long-term debt $ 39,692 $ 28,696
Accounts payable 174,626 213,135
Billings in excess of costs and estimated earnings 227,364 275,849
Accrued expenses and other current liabilities   184,939       212,265  
 
Total current liabilities   626,621       729,945  
 
Long-term debt   250,687       268,417  
 
Other long-term liabilities   43,604       46,441  
 
Deferred income taxes   18,261       17,945  
 
Minority interest in consolidated subsidiaries   36,773       23,471  
 
Shareholders' 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 in 2008 and in 2007;
issued and outstanding 38,266,791 shares as of December 31, 2008 and 39,450,923 shares as of December 31, 2007

383 395
Additional paid-in capital 85,035 79,007
Retained earnings 682,237 619,699
Accumulated other comprehensive (loss) income   (146 )     1,098  
 
Total shareholders' equity   767,509       700,199  
 
Total liabilities and shareholders' equity $ 1,743,455     $ 1,786,418  
 
       
December 31, December 31,
Financial Position 2008   2007
 
Working capital $ 475,942 $ 397,568
Current ratio 1.76 1.54
Debt to total capitalization 0.27 0.30
Total liabilities to equity ratio   1.27       1.55  
 
(1) Derived from Granite's annual audited consolidated financial statements.
 

       
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
       
 
Years Ended December 31, 2008 2007
  (Unaudited)   (1)
Operating activities
Net income $ 122,404 $ 112,065
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment of real estate held for development and sale 4,500 3,000
Inventory reserve adjustment 12,848 478
Depreciation, depletion and amortization 87,311 82,157
Provision for doubtful accounts 10,958 3,894
Gain on sales of property and equipment (5,503 ) (10,343 )
Change in deferred income taxes 1,190 (7,822 )
Stock-based compensation 7,463 7,342
Excess tax benefit on stock-based compensation (851 ) (3,659 )
Minority interest in consolidated subsidiaries 43,334 20,859
Acquisition expense - 7,752
Equity in loss (income) of affiliates 1,058 (5,205 )
Acquisition of minority interest (16,617 ) -
Gain on sale of investment in affiliate (14,416 ) -
Loss on sale of marketable securities 10,939 -
Gain on early extinguishment of debt (1,150 ) -
Changes in assets and liabilities, net of the effects of acquisitions   (6,132 )     24,270  
Net cash provided by operating activities   257,336       234,788  
Investing activities
Purchases of marketable securities (71,630 ) (152,954 )
Maturities of marketable securities 108,090 195,313
Purchase of company owned life insurance (8,000 ) -
Proceeds from sale of marketable securities 22,499 -
Release of funds for acquisition of minority interest 28,332 -
Additions to property and equipment (94,135 ) (118,612 )
Proceeds from sales of property and equipment 14,539 17,777
Acquisition of business (14,022 ) (76,427 )
Contributions to affiliates (8,053 ) (6,805 )
Distributions from affiliates 3,895 -
Acquisition of minority interest - (28,495 )
Other investing activities, net   228       3,459  
Net cash used in investing activities   (18,257 )     (166,744 )
Financing activities
Proceeds from long-term debt 3,725 330,260
Long-term debt principal payments (17,092 ) (139,598 )
Repurchase of common stock (45,540 ) (98,014 )
Cash dividends paid (20,055 ) (16,764 )
Contributions from minority partners 5,026 33,287
Distributions to minority partners (45,909 ) (33,813 )
Acquisition of minority interest (11,716 ) -
Excess tax benefit on stock-based compensation 851 3,659
Other financing activities   40       480  
Net cash (used in) provided by financing activities   (130,670 )     79,497  
 
Increase in cash and cash equivalents 108,409 147,541
 
Cash and cash equivalents at beginning of period   352,434       204,893  
 
Cash and cash equivalents at end of period $ 460,843     $ 352,434  
 
(1) Derived from Granite's annual audited consolidated financial statements.
 

                         
GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - In Thousands)
                         

Three Months Ended December 31,

   

Year Ended December 31,

  Granite West   Granite East  

Granite Land
Company

    Granite West   Granite East  

Granite Land
Company

       
2008
Revenue $ 463,244 $ 163,209 $ 871 $ 1,970,196 $ 695,035 $ 9,013
Gross profit (loss) $ 81,202 $ 32,998 $ 181 $ 348,259 $ 120,866 $ (1,523 )
Gross profit (loss) as a percent of revenue 17.5 % 20.2 % 20.8 % 17.7 % 17.4 % -16.9 %
Operating income (loss) $ 50,115 $ 25,827 $ (348 ) $ 205,399 $ 93,622 $ (4,143 )
Operating income (loss) as a percent of revenue 10.8 % 15.8 % -40.0 % 10.4 % 13.5 % -46.0 %
 
2007
Revenue $ 445,782 $ 183,127 $ 4,156 $ 1,928,751 $ 768,451 $ 40,712
Gross profit (loss) $ 84,035 $ 17,346 $ (1,250 ) $ 370,429 $ 25,824 $ 15,840
Gross profit (loss) as a percent of revenue 18.9 % 9.5 % -30.1 % 19.2 % 3.4 % 38.9 %
Operating income (loss) $ 43,715 $ 14,125 $ (2,089 ) $ 230,191 $ 766 $ 12,031
Operating income (loss) as a percent of revenue   9.8 %     7.7 %     -50.3 %       11.9 %     0.1 %     29.6 %
 
                         
GRANITE CONSTRUCTION INCORPORATED
Contract Backlog
(Unaudited - In Thousands)
                         
Contract Backlog by Division December 31, 2008   September 30, 2008   December 31, 2007
 
Granite West $ 788,872 46.4 % $ 915,472 50.3 % $ 854,142 41.0 %
Granite East   910,524       53.6 %     906,116         49.7 %     1,230,403       59.0 %
 
Total $ 1,699,396       100.0 %   $ 1,821,588         100.0 %   $ 2,084,545       100.0 %

CONTACT:
Granite Construction
Jacque Fourchy, 831-761-4714 (Investors)