UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of report (Date of earliest event reported): November 3, 2014
GRANITE
CONSTRUCTION INCORPORATED
(Exact
Name of Registrant as Specified in Charter)
Delaware |
1-12911 |
77-0239383 |
(State or Other Jurisdiction |
(Commission |
(IRS Employer |
585 West Beach Street |
(Address of Principal Executive Offices) (Zip Code) |
Registrant’s
telephone number, including area code: (831) 724-1011
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instructions A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On November 3, 2014, Granite Construction Incorporated (the “Company”) issued a press release with respect to its earnings for the quarter ended September 30, 2014, a copy of which is attached as Exhibit 99.1 and incorporated herein by reference.
The press release referred to above contains certain non-GAAP financial measures. These measures include EBITDA and Consolidated EBITDA Margin. Management believes that these non-GAAP financial measures are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. 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. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. 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.
The information set forth is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition” and shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, nor shall the information, including the Exhibit, be deemed incorporated by reference in any filing of the Company, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. The following exhibits are attached hereto and furnished herewith:
Exhibit Number |
Description |
99.1 | Press Release of the Company, dated November 3, 2014 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
GRANITE CONSTRUCTION INCORPORATED |
|||
|
|||
|
|
By: |
/s/ Laurel J. Krzeminski |
Laurel J. Krzeminski |
|||
Senior Vice President and Chief Financial |
|||
Date: |
November 3, 2014 |
|
INDEX TO EXHIBITS
Exhibit |
|
||
99.1 |
Press Release of the Company, dated November 3, 2014 |
Exhibit 99.1
Granite Reports Third Quarter 2014 Results
WATSONVILLE, Calif.--(BUSINESS WIRE)--November 3, 2014--Granite Construction Incorporated (NYSE: GVA) today reported net income of $15.3 million for the quarter ended September 30, 2014, compared to revised1 net income of $13.0 million in the third quarter of 2013. Diluted earnings per share in the quarter were $0.38 compared to $0.33 in the prior-year period.
“We are encouraged with overall margin improvement in the business, driven by a continued rebound in our Construction Materials business,” said James H. Roberts, President and CEO of Granite Construction Incorporated.
“As we have discussed over the past few years, our materials business acts as a leading indicator of changes in the overall economic environment. This positive change is encouraging not only for our materials business, but it also reflects increased opportunities for our other business lines,” Roberts said.
Third Quarter 2014 Results
Total Company
Construction
Large Project Construction
Construction Materials
Outlook and Guidance
“A new long-term highway bill is essential to ensure longer term funding can meet the increasing demand for critical infrastructure projects across the country. We recently experienced delays in project awards and lettings. The delays were an unanticipated headwind in 2014, and will result in a benefit to our business in 2015, highlighting how swiftly current federal funding uncertainty impacts the timing of public sector work,” Roberts continued.
The Company’s 2014 guidance has been updated:
Granite continues to expect improved gross profit in 2014 and consolidated EBITDA2 margin of 5 percent to 7 percent. Consolidated revenues for 2014 are expected to finish at the bottom of the previously announced $2.4 to $2.8 billion range.
“Across the country, our business units are extremely busy executing on our record backlog,” Roberts said. “We are focused on leveraging this momentum as we look to finish strongly in 2014. This late-year activity, coupled with opportunities for resolution of outstanding issues, provides us with an opportunity for strong performance in the fourth quarter and in early 2015.”
(1) | Please refer to the description of fiscal year 2013 revisions in the Granite Construction Incorporated Quarterly Report on Form 10-Q. | |||
(2) | Please refer to the description and non-GAAP reconciliation in the attached tables. |
Conference Call
Granite will conduct a conference call today, Monday, November 3, 2014, at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended September 30, 2014. 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; international callers may dial (914) 495-8565. The conference ID for the live call is 23663263. The call will be recorded and available for replay approximately two hours after the live audio webcast through November 11, 2014 by calling (855) 859-2056. The conference ID for the replay is also 23663263; international callers may dial (404) 537-3406.
About Granite
Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYSE: GVA) is one of the nation’s leading infrastructure contractors and construction materials producers. Recognized as one of the top 25 largest construction companies in the U.S., Granite specializes in complex infrastructure projects, including transportation, industrial and federal contracting, and is a proven leader in alternative procurement project delivery. Granite is an award-winning firm in safety, quality and environmental stewardship, and has been honored as one of the World’s Most Ethical Companies by Ethisphere Institute for five years in a row. For more information, visit www.graniteconstruction.com. Granite is listed on the New York Stock Exchange and is part of the S&P MidCap 400 Index, the MSCI KLD 400 Social Index and the Russell 2000 Index. For more information, please visit our investor relations website at investor.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) | |||||||||
September 30, | December 31, | September 30, | |||||||
2014 | 2013 | 2013 | |||||||
As Revised | |||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 167,174 | $ | 229,121 | $ | 212,463 | |||
Short-term marketable securities | 27,950 | 49,968 | 22,892 | ||||||
Receivables, net | 417,628 | 313,598 | 422,609 | ||||||
Costs and estimated earnings in excess of billings | 62,823 | 33,306 | 40,837 | ||||||
Inventories | 74,605 | 62,474 | 61,667 | ||||||
Real estate held for development and sale | 11,773 | 12,478 | 50,250 | ||||||
Deferred income taxes | 55,874 | 55,874 | 36,687 | ||||||
Equity in construction joint ventures | 181,259 | 162,673 | 161,063 | ||||||
Other current assets | 21,743 | 30,711 | 32,836 | ||||||
Total current assets | 1,020,829 | 950,203 | 1,041,304 | ||||||
Property and equipment, net | 424,272 | 436,859 | 458,024 | ||||||
Long-term marketable securities | 74,140 | 67,234 | 64,014 | ||||||
Investments in affiliates | 34,177 | 32,480 | 31,338 | ||||||
Goodwill | 53,799 | 53,799 | 53,799 | ||||||
Other noncurrent assets | 75,826 | 76,580 | 78,655 | ||||||
Total assets | $ | 1,683,043 | $ | 1,617,155 | $ | 1,727,134 | |||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Current maturities of long-term debt | $ | 21 | $ | 21 | $ | 20 | |||
Current maturities of non-recourse debt | 1,226 | 1,226 | 2,147 | ||||||
Accounts payable | 205,493 | 160,706 | 198,282 | ||||||
Billings in excess of costs and estimated earnings | 115,809 | 138,375 | 146,343 | ||||||
Accrued expenses and other current liabilities | 221,618 | 197,242 | 219,169 | ||||||
Total current liabilities | 544,167 | 497,570 | 565,961 | ||||||
Long-term debt | 270,127 | 270,127 | 270,148 | ||||||
Long-term non-recourse debt | 5,822 | 6,741 | 7,048 | ||||||
Other long-term liabilities | 45,887 | 48,580 | 46,474 | ||||||
Deferred income taxes | 9,977 | 7,793 | 7,988 | ||||||
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 39,152,255 shares as of September 30, 2014, 38,917,728 shares as of December 31, 2013 and 38,878,194 shares as of September 30, 2013 | 391 | 389 | 388 | ||||||
Additional paid-in capital | 132,396 | 126,449 | 123,681 | ||||||
Retained earnings | 648,017 | 655,102 | 689,181 | ||||||
Total Granite Construction Incorporated shareholders’ equity | 780,804 | 781,940 | 813,250 | ||||||
Non-controlling interests | 26,259 | 4,404 | 16,265 | ||||||
Total equity | 807,063 | 786,344 | 829,515 | ||||||
Total liabilities and equity | $ | 1,683,043 | $ | 1,617,155 | $ | 1,727,134 |
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(Unaudited - in thousands, except per share data) | ||||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||||
Revenue | ||||||||||||||||||
Construction | $ | 447,097 | $ | 470,567 | $ | 873,357 | $ | 956,287 | ||||||||||
Large Project Construction | 179,446 | 185,997 | 611,110 | 539,268 | ||||||||||||||
Construction Materials | 93,214 | 83,172 | 200,985 | 173,107 | ||||||||||||||
Real Estate | 7 | 16 | 29 | 141 | ||||||||||||||
Total revenue | 719,764 | 739,752 | 1,685,481 | 1,668,803 | ||||||||||||||
Cost of revenue | ||||||||||||||||||
Construction | 398,295 | 419,848 | 790,584 | 868,298 | ||||||||||||||
Large Project Construction | 173,767 | 188,160 | 538,846 | 497,139 | ||||||||||||||
Construction Materials | 81,010 | 75,884 | 185,536 | 167,839 | ||||||||||||||
Real Estate | — | — | — | 14 | ||||||||||||||
Total cost of revenue | 653,072 | 683,892 | 1,514,966 | 1,533,290 | ||||||||||||||
Gross profit | 66,692 | 55,860 | 170,515 | 135,513 | ||||||||||||||
Selling, general and administrative expenses | 47,386 | 45,527 | 147,731 | 149,477 | ||||||||||||||
Gain on sales of property and equipment | 3,004 | 3,259 | 6,891 | 7,653 | ||||||||||||||
Operating income (loss) | 22,310 | 13,592 | 29,675 | (6,311 | ) | |||||||||||||
Other income (expense) | ||||||||||||||||||
Interest income | 451 | 602 | 1,343 | 1,111 | ||||||||||||||
Interest expense | (2,488 | ) | (3,736 | ) | (10,426 | ) | (11,082 | ) | ||||||||||
Equity in income of affiliates | 1,109 | (2 | ) | 2,310 | 273 | |||||||||||||
Other (expense) income, net | (1,196 | ) | 1,022 | 450 | 1,630 | |||||||||||||
Total other expense | (2,124 | ) | (2,114 | ) | (6,323 | ) | (8,068 | ) | ||||||||||
Income (loss) before provision for (benefit from) income taxes | 20,186 | 11,478 | 23,352 | (14,379 | ) | |||||||||||||
Provision for (benefit from) income taxes | 6,081 | 4,946 | 8,301 | (2,867 | ) | |||||||||||||
Net income (loss) | 14,105 | 6,532 | 15,051 | (11,512 | ) | |||||||||||||
Amount attributable to non-controlling interests | 1,177 | 6,505 | (6,681 | ) | 3,986 | |||||||||||||
Net income (loss) attributable to Granite Construction Incorporated | $ | 15,282 | $ | 13,037 | $ | 8,370 | $ | (7,526 | ) | |||||||||
Net income (loss) per share attributable to common shareholders: | ||||||||||||||||||
Basic | $ | 0.39 | $ | 0.34 | $ | 0.21 | $ | (0.19 | ) | |||||||||
Diluted | $ | 0.38 | $ | 0.33 | $ | 0.21 | $ | (0.19 | ) | |||||||||
Weighted average shares of common stock: | ||||||||||||||||||
Basic | 39,150 | 38,876 | 39,073 | 38,773 | ||||||||||||||
Diluted | 39,813 | 39,759 | 39,790 | 38,773 |
GRANITE CONSTRUCTION INCORPORATED | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited - in thousands) | ||||||||
Nine Months Ended September 30, | 2014 |
2013 |
||||||
Operating activities | ||||||||
Net income (loss) | $ | 15,051 | $ | (11,512 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Depreciation, depletion and amortization | 49,968 | 54,788 | ||||||
Gain on sales of property and equipment | (6,891 | ) | (7,653 | ) | ||||
Stock-based compensation | 8,933 | 10,645 | ||||||
Equity in net income from unconsolidated joint ventures | (27,001 | ) | (51,826 | ) | ||||
Contributions to unconsolidated construction joint ventures | (24,797 | ) | (28,514 | ) | ||||
Distributions from unconsolidated construction joint ventures | 46,991 | 68,033 | ||||||
Changes in assets and liabilities | (109,087 | ) | (98,476 | ) | ||||
Net cash used in operating activities | (46,833 | ) | (64,515 | ) | ||||
Investing activities | ||||||||
Purchases of marketable securities | (49,975 | ) | (34,957 | ) | ||||
Maturities of marketable securities | 40,000 | 57,000 | ||||||
Proceeds from sale of marketable securities | 25,000 | 5,000 | ||||||
Purchases of property and equipment | (37,471 | ) | (30,467 | ) | ||||
Proceeds from sales of property and equipment | 12,257 | 18,431 | ||||||
Payment of Kenny post-closing adjustments | — | (8,382 | ) | |||||
Other investing activities, net | (1,109 | ) | 1,088 | |||||
Net cash (used in) provided by investing activities | (11,298 | ) | 7,713 | |||||
Financing activities | ||||||||
Long-term debt principal payments | (919 | ) | (10,900 | ) | ||||
Cash dividends paid | (15,229 | ) | (15,150 | ) | ||||
Purchase of common stock | (4,751 | ) | (5,457 | ) | ||||
Contributions from non-controlling partners | 15,842 | 6,007 | ||||||
Distributions to non-controlling partners | (686 | ) | (28,015 | ) | ||||
Other financing activities, net | 1,927 | 790 | ||||||
Net cash used in financing activities | (3,816 | ) | (52,725 | ) | ||||
Decrease in cash and cash equivalents | (61,947 | ) | (109,527 | ) | ||||
Cash and cash equivalents at beginning of period | 229,121 | 321,990 | ||||||
Cash and cash equivalents at end of period | $ | 167,174 | $ | 212,463 |
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||||||||||||||||||||
Business Segment Information | |||||||||||||||||||||||||||||||||
(Unaudited - dollars in thousands) | |||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||
Construction |
Large Project |
Construction |
Real Estate | Construction |
Large Project |
Construction |
Real Estate | ||||||||||||||||||||||||||
2014 | |||||||||||||||||||||||||||||||||
Revenue | $ | 447,097 | $ | 179,446 | $ | 93,214 | $ | 7 | $ | 873,357 | $ | 611,110 | $ | 200,985 | $ | 29 | |||||||||||||||||
Gross profit | 48,802 | 5,679 | 12,204 | 7 | 82,773 | 72,264 | 15,449 | 29 | |||||||||||||||||||||||||
Gross profit as a percent of revenue | 10.9 | % | 3.2 | % | 13.1 | % | 100.0 | % | 9.5 | % | 11.8 | % | 7.7 | % | 100.0 | % | |||||||||||||||||
2013 As Revised | |||||||||||||||||||||||||||||||||
Revenue | $ | 470,567 | $ | 185,997 | $ | 83,172 | $ | 16 | $ | 956,287 | $ | 539,268 | $ | 173,107 | $ | 141 | |||||||||||||||||
Gross profit (loss) | 50,719 | (2,163 | ) | 7,288 | 16 | 87,989 | 42,129 | 5,268 | 127 | ||||||||||||||||||||||||
Gross profit (loss) as a percent of revenue | 10.8 | % | (1.2 | )% | 8.8 | % | 100.0 | % | 9.2 | % | 7.8 | % | 3.0 | % | 90.1 | % |
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||
Contract Backlog by Segment | ||||||||||||||||||
(Unaudited - dollars in thousands) | ||||||||||||||||||
Contract Backlog by Segment | September 30, 2014 | June 30, 2014 | September 30, 2013 | |||||||||||||||
Construction | $ | 817,365 | 27.5 | % | $ | 974,986 | 38.1 | % | $ | 705,839 | 25.6 | % | ||||||
Large Project Construction | 2,154,289 | 72.5 | % | 1,586,879 | 61.9 | % | 2,049,003 | 74.4 | % | |||||||||
Total | $ | 2,971,654 | 100.0 | % | $ | 2,561,865 | 100.0 | % | $ | 2,754,842 | 100.0 | % |
GRANITE CONSTRUCTION INCORPORATED | ||||||||
EBITDA(1) | ||||||||
(Unaudited - dollars in thousands) | ||||||||
Three Months Ended |
Nine Months Ended |
|||||||
2014 | ||||||||
Net income attributable to Granite Construction Incorporated | $ | 15,282 | $ | 8,370 | ||||
Depreciation, depletion and amortization expense(2) |
18,090 |
49,968 | ||||||
Provision for income taxes | 6,081 | 8,301 | ||||||
Interest expense, net of interest income | 2,037 | 9,083 | ||||||
EBITDA(1) | $ |
41,490 |
$ | 75,722 | ||||
Consolidated EBITDA Margin | 5.8 | % | 4.5 | % |
Note: |
(1)We define EBITDA as GAAP net income (loss) 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 security 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. |
CONTACT:
Granite Construction Incorporated
Ron Botoff, 831-728-7532