EX-99.1 2 a50579503ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Granite Reports Fourth Quarter and Fiscal 2012 Results

Revenues for the year increased 4 percent to $2.1 billion
Net income of $45.3 million in 2012 compared with $51.2 million in 2011
Large Project Construction gross margins improved to 17.2 percent
Balance Sheet remains strong with $433.4 million in cash and marketable securities
Total contract backlog at December 31, 2012 of $1.7 billion, which does not include approximately $1.0 billion related to Granite’s portions of the Tappan Zee Bridge project in New York and IH-35E project in Texas
Acquisition of Kenny Construction Company completed on December 31, 2012

WATSONVILLE, Calif.--(BUSINESS WIRE)--February 28, 2013--Granite Construction Incorporated (NYSE: GVA) today reported a net income of $45.3 million for 2012, compared to $51.2 million the prior year. Diluted earnings per share (EPS) for the year was $1.15 compared to $1.31 in 2011.

For the fourth quarter of 2012, Granite reported a net income of $18.0 million, compared to $18.8 million for the fourth quarter of 2011. Diluted EPS for the quarter ended December 31, 2012 was $0.46 compared to $0.48 in the prior year period.

“Our fourth quarter results highlight the strength of our Large Project portfolio as well as the challenging market conditions our Construction and Construction Materials businesses continued to face in the West,” said James H. Roberts, President and CEO of Granite Construction Incorporated. “We remain focused on our strategic growth plan and are pleased with the progress we have made to diversify our business portfolio, grow the Large Projects segment and optimize our overall asset base.”

Fiscal Year 2012 Highlights:

Total Company

Revenues for the year were $2.1 billion, compared with $2.0 billion recorded in 2011.
Gross profit margin was 11.3 percent compared with 12.3 percent in 2011 due to lower gross profit in both the Construction and Construction Materials segments partially offset by an increase in margins in the Large Project segment.
SG&A expenses for the year were $185.1 million, compared with $162.3 million last year. The increase reflects $5.4 million associated with large project bid costs, $4.4 million associated with the acquisition of Kenny Construction and $2.0 million related to earnings in the Company’s deferred compensation plan.
Gain on sales of property and equipment was $27.4 million in 2012, compared with $15.8 million in 2011. The increase is associated with an $18.0 million gain on the sale of a quarry investment.
Operating income was $80.8 million in 2012, compared with $99.3 million in 2011.
Total other income (expense) for the year was $0.2 million, compared with $(9.8) million in 2011. Other income for 2012 included a $7.4 million gain related to the sale of gold, a by-product of aggregate production, partially offset by a $2.8 million non-cash impairment loss on an investment in a solar-related business.
Net income attributable to non-controlling interests was $14.6 million, compared with $14.9 million the prior period.
Total contract backlog at December 31, 2012, was $1.7 billion compared with $2.0 billion a year ago. 2012 backlog includes $357 million attributable to the Kenny acquisition and does not include Granite’s approximate $733 million portion of the Tappan Zee Bridge project in New York or the IH-35E highway reconstruction project in Texas of which Granite’s portion is approximately $297 million.

Construction

Construction revenues for the year were $1.0 billion, in line with 2011.
Gross profit margin was 7.9 percent compared with 11.9 percent a year ago reflecting challenging market conditions, as well as increased costs to complete certain projects due to lower productivity than anticipated.

Large Project Construction

Large Project Construction revenue for the year increased 19 percent to $863.2 million due largely to the progress on projects awarded in late 2010 and early 2011.
Gross profit margin was 17.2 percent compared with 14.4 percent in 2011 reflecting successful execution on several large projects across the country offset by a downward forecast adjustment on a project in Washington.

Construction Materials

Construction Materials revenue was $230.6 million compared with $220.6 million last year.
Gross profit in 2012 was $7.6 million, compared with $16.6 million in 2011. The decline in gross profit is primarily attributable to slow economic conditions at certain California locations.

Fourth Quarter 2012 Highlights

Total Company

Revenue for the quarter totaled $504.8 million compared with $539.5 million for the fourth quarter of 2011.
Gross profit margin for the fourth quarter of 2012 was 11.3 percent compared with 14.7 percent in 2011. The decrease is primarily due to lower gross profit in both the Construction and Construction Materials segments partially offset by an increase in margins in the Large Project segment.
Selling, general and administrative expenses for the fourth quarter increased $14.8 million to $57.3 million reflecting $4.7 million in costs associated with the pursuit of large projects and $4.4 million in acquisition-related costs.
Operating income was $21.7 million, compared with $40.1 million in the prior year.
Net income attributable to noncontrolling interests was $0.4 million compared with $6.0 million in 2011.

Construction

Construction revenue for the fourth quarter 2012 was $235.3 million, compared with $259.2 million for the fourth quarter of 2011.
Gross profit margin was 7.7 percent, compared with 14.3 percent a year ago reflecting competitive market conditions, wet weather in the West in November and December, and increased costs to complete certain projects due to lower productivity than anticipated.

Large Project Construction

Large Project Construction revenue was $214.6 million, compared with $211.6 million.
Gross profit margin for the quarter was 18.7 percent, compared with 16.4 percent for the same period last year. The increase reflects successful execution on several large projects across the country, partially offset by a downward forecast adjustment on a project Washington.

Construction Materials

Construction Materials revenue for the quarter was $54.9 million, compared with $55.5 million in the fourth quarter of 2011.
Gross loss on the sale of construction materials was $1.5 million, compared with gross profit of $5.9 million in the prior period. The fourth quarter of 2012 was impacted by slow economic conditions at certain California locations.

Outlook

“Overall, I am pleased with the direction of our company, led by the implementation of our well-developed strategic plan. We are well prepared to capture the benefits of our acquisition of Kenny and intend to continue to pursue our growth plan through geographic and end market diversification in 2013,” said Roberts.

“While we are optimistic that we will see some benefit from the residential building market towards the end of the year, we expect that our Construction and Construction Materials businesses will continue to face challenging market conditions throughout most of 2013. Our outlook for Large Projects, however, remains very positive. We anticipate strong backlog growth in our Large Projects segment in light of the strong pipeline of opportunities across the country. We have several large projects in various stages of completion in 2013 and will be starting work on the Tappan Zee and IH-35E projects, both of which should recognize profit in 2014.”

Conference Call

Granite will conduct a conference call today, February 28, 2013 at 8 a.m. Pacific time/11 a.m. Eastern time to discuss the results of the quarter and year ended December 31, 2012. Access to a live audio webcast is available at www.graniteconstruction.com. The live conference call may be accessed by calling (877) 643-7158. The conference ID for the live call is 99198804. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through March 7, 2013 by calling (855) 859-2056. The conference ID for the replay is 99198804.

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 subsidiaries, 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 has been recognized by Ethisphere Institute as one of the World’s Most Ethical Companies for three straight years. 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 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 CONSOLIDATED BALANCE SHEETS (Unaudited - in thousands, except share and per share data)

December 31,	2012		2011
ASSETS
Current assets
Cash and cash equivalents	$	321,990	$	256,990
Short-term marketable securities		56,088		70,408
Receivables, net		325,529		251,838
Costs and estimated earnings in excess of billings		34,116		37,703
Inventories		59,785		50,975
Real estate held for development and sale		50,223		67,037
Deferred income taxes		36,687		38,571
Equity in construction joint ventures		105,805		101,029
Other current assets		31,834		35,171
Total current assets		1,022,057		909,722
Property and equipment, net		481,478		447,140
Long-term marketable securities		55,342		79,250
Investments in affiliates		30,799		31,071
Goodwill		55,419		9,900
Other noncurrent assets		84,392		70,716
Total assets	$	1,729,487	$	1,547,799
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	8,353	$	9,102
Current maturities of non-recourse debt		10,707		23,071
Accounts payable		202,541		158,660
Billings in excess of costs and estimated earnings		139,692		90,845
Accrued expenses and other current liabilities		169,979		166,790
Total current liabilities		531,272		448,468
Long-term debt		270,148		208,501
Long-term non-recourse debt		922		9,912
Other long-term liabilities		47,124		49,221
Deferred income taxes		8,163		4,034
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 38,730,665 shares as of December 31, 2012 and 38,682,771 shares as of December 31, 2011		387		387
Additional paid-in capital		117,422		111,514
Retained earnings		712,144		687,296
Total Granite Construction Incorporated shareholders’ equity		829,953		799,197
Noncontrolling interests		41,905		28,466
Total equity		871,858		827,663
Total liabilities and equity	$	1,729,487	$	1,547,799


GRANITE CONSTRUCTION INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited - in thousands, except per share data)

	Three Months Ended December 31,						Years Ended December 31,
	2012			2011			2012			2011
Revenue
Construction	$	235,303		$	259,221		$	984,106		$	1,043,614
Large project construction		214,572			211,565			863,217			725,043
Construction materials		54,888			55,500			230,642			220,583
Real estate		18			13,262			5,072			20,291
Total revenue		504,781			539,548			2,083,037			2,009,531
Cost of revenue
Construction		217,155			222,197			906,143			919,108
Large project construction		174,456			176,970			714,799			620,935
Construction materials		56,349			49,613			223,070			203,942
Real estate		13			11,642			4,266			17,583
Total cost of revenue		447,973			460,422			1,848,278			1,761,568
Gross profit		56,808			79,126			234,759			247,963
Selling, general and administrative expenses		57,298			42,536			185,099			162,302
Restructuring (gains) charges, net		(1,200	)		670			(3,728	)		2,181
Gain on sales of property and equipment		20,954			4,217			27,447			15,789
Operating income		21,664			40,137			80,835			99,269
Other income (expense)
Interest income		486			583			2,626			2,878
Interest expense		(2,033	)		(2,709	)		(10,603	)		(10,362	)
Equity in income of affiliates		1,608			750			1,988			2,193
Other income (expense), net		2,316			(2,594	)		6,183			(4,545	)
Total other income (expense)		2,377			(3,970	)		194			(9,836	)
Income before provision for income taxes		24,041			36,167			81,029			89,433
Provision for income taxes		5,667			11,375			21,109			23,348
Net income		18,374			24,792			59,920			66,085
Amount attributable to noncontrolling interests		(387	)		(6,038	)		(14,637	)		(14,924	)
Net income attributable to Granite Construction Incorporated	$	17,987		$	18,754		$	45,283		$	51,161

Net income per share attributable to common shareholders:
Basic	$	0.46		$	0.48		$	1.17		$	1.32
Diluted	$	0.46		$	0.48		$	1.15		$	1.31
Weighted average shares of common stock:
Basic		38,534			38,191			38,447			38,117
Diluted		39,207			38,607			39,076			38,473


GRANITE CONSTRUCTION INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands)

Years Ended December 31,	2012			2011
Operating activities
Net income	$	59,920		$	66,085
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash restructuring, net		(3,093	)		1,678
Other non-cash impairment charges		3,238			5,067
Depreciation, depletion and amortization		56,101			60,546
Gain on sales of property and equipment		(27,447	)		(15,789	)
Change in deferred income tax		6,013			8,566
Stock-based compensation		11,475			12,155
Changes in assets and liabilities, net of the effects of acquisition		(14,417	)		(45,963	)
Net cash provided by operating activities		91,790			92,345
Investing activities
Purchases of marketable securities		(124,596	)		(155,122	)
Maturities of marketable securities		90,100			110,875
Proceeds from sale of marketable securities		75,000			33,268
Additions to property and equipment		(37,622	)		(45,035	)
Proceeds from sales of property and equipment		34,392			27,959
Acquisition of business, net of cash acquired		(79,640	)		—
Other investing activities, net		(188	)		327
Net cash used in investing activities		(42,554	)		(27,728	)
Financing activities
Proceeds from long-term debt		70,495			2,122
Long-term debt principal payments		(11,751	)		(16,907	)
Cash dividends paid		(20,117	)		(20,117	)
Purchase of common stock		(4,853	)		(4,029	)
Distributions to noncontrolling partners, net		(15,988	)		(21,062	)
Other financing activities, net		(2,022	)		344
Net cash provided by (used in) financing activities		15,764			(59,649	)
Increase in cash and cash equivalents		65,000			4,968
Cash and cash equivalents at beginning of period		256,990			252,022
Cash and cash equivalents at end of period	$	321,990		$	256,990


GRANITE CONSTRUCTION INCORPORATED Business Segment Information (Unaudited - dollars in thousands)

	Three Months Ended December 31,												Years Ended December 31,
	Construction			Large Project Construction			Construction Materials			Real Estate			Construction			Large Project Construction			Construction Materials			Real Estate

2012
Revenue	$	235,303		$	214,572		$	54,888		$	18		$	984,106		$	863,217		$	230,642		$	5,072
Gross profit (loss)		18,148			40,116			(1,461	)		5			77,963			148,418			7,572			806
Gross profit (loss) as a percent of revenue		7.7	%		18.7	%		(2.7	)%		27.8	%		7.9	%		17.2	%		3.3	%		15.9	%

2011
Revenue	$	259,221		$	211,565		$	55,500		$	13,262		$	1,043,614		$	725,043		$	220,583		$	20,291
Gross profit		37,024			34,595			5,887			1,620			124,506			104,108			16,641			2,708
Gross profit as a percent of revenue		14.3	%		16.4	%		10.6	%		12.2	%		11.9	%		14.4	%		7.5	%		13.3	%


GRANITE CONSTRUCTION INCORPORATED Contract Backlog by Segment (Unaudited - dollars in thousands)

Contract Backlog by Segment	December 31, 2012				December 31, 2011
Construction	$	629,898	36.9	%	$	513,624	25.4	%
Large project construction		1,077,417	63.1	%		1,508,830	74.6	%
Total	$	1,707,315	100.0	%	$	2,022,454	100.0	%

CONTACT:
Granite Construction Incorporated
Jacque Fourchy, 831-761-4741