EX-99.1 2 gc3206ex991.htm

Exhibit 99.1

Granite Construction Incorporated Reports Second Quarter 2005 Results

          WATSONVILLE, Calif., July 27 /PRNewswire-FirstCall/ -- Granite Construction Incorporated (NYSE: GVA) today announced its results for the second quarter ended June 30, 2005.  The Company reported net income for the quarter of $15.0 million, or $0.36 per diluted share.  This compares with net income of $13.8 million, or $0.34 per diluted share for the same period last year.  For the six-month period ended June 30, 2005, net income was $6.7 million or $0.16 per share on a diluted basis compared with $4.7 million or $0.11 per share for the same period in 2004.  As previously disclosed, a $9.3 million accrual related to a judgment in a civil lawsuit in Nevada is included in the second quarter 2005 results.

          William G. Dorey, president and chief executive officer, said, “We are pleased with our second quarter results, which reflect the strength of our business in the West.  The Branch Division results, in particular, demonstrate our ability to capitalize on the demand for our construction services and materials in what can be characterized as the healthiest business conditions we have experienced in many years.”

          Commenting on the Company’s outlook, “We believe the current prospects for our Branch Division are very exciting and the long-term prospects for our Heavy Construction Division (HCD) are encouraging.  Based on the strength of the private sector market, along with improved public sector funding, we expect operating income for the Branch Division to exceed that of 2004.  Our second quarter results for HCD, however, highlight our challenge to improve the profitability on our large projects.  We are working diligently to improve large project performance and continue to anticipate these efforts will be reflected in the performance of the division by year end.”

          Operating Results -- Quarter and Year-To-Date
          For the second quarter of 2005, total revenue increased 21.1% to $676.7 million compared with $558.8 million a year ago.  Total gross profit as a percent of revenue for the second quarter 2005 increased to 11.3% compared with 10.7% for the same period last year.  Operating income increased to $29.0 million for the second quarter of 2005 compared with $24.9 million for the second quarter 2004.

          For the six-month period ended June 30, 2005, revenue for the Company totaled $1.1 billion compared with $895.8 million for the same period last year.  Total gross profit as a percent of revenue for the six months ended June 30, 2005 increased to 9.4% compared with 7.9% last year.  Operating income for the six month period increased to $17.1 million compared with $12.4 million for the same period in 2004.

          Total company backlog at June 30, 2005 was $2.5 billion compared with $2.0 billion a year ago. New awards for the second quarter 2005 include a $44.9 million site preparation project in New York, a $23.7 million highway project in Alaska, a $17.3 million paving project in Texas and a $14.2 million highway project in Utah.

          Results by Segment
          HCD revenue for the quarter totaled $276.3 million versus $220.1 million for the same period last year.  HCD backlog increased $474.3 million to $1.9 billion compared with $1.4 billion for the same period last year.  HCD gross profit as a percent of revenue decreased in the quarter to 5.5% compared with 8.3% in the prior period.  This decrease reflects a net reduction of gross profit of approximately $11.0 million resulting from changes in the costs to complete compared with $5.4 million in the second quarter 2004.  As a product of lower gross profit in the quarter, operating income for HCD decreased 22.3% for the second quarter 2005 to $8.0 million compared with $10.3 million in the prior year.


          For the six-month period ended June 30, 2005, HCD revenue totaled $478.2 million compared with $390.2 million for the same period last year.  HCD gross profit as a percent of revenue for the six months ended June 30, 2005 increased to 4.7% compared with 3.8% last year.  HCD operating income for the six month period increased to $6.7 million compared with a loss of $1.0 million for the same period in 2004.

          Branch Division revenue for the quarter totaled $400.4 million, an increase of $61.8 million or 18.2% over the same period in 2004.  Backlog for the Branch Division decreased slightly in the second quarter 2005 to $647.9 million compared with $660.1 million for the second quarter 2004.  Branch Division gross profit as a percent of revenue increased for the second quarter 2005 to 15.4% compared with 12.3% for the second quarter 2004 due to an increase in profitability on our construction work and the sales of our construction materials.  Branch Division operating income increased $6.8 million for the quarter to $30.5 million compared with $23.7 million for the second quarter last year.  Second quarter 2005 operating results for the Branch Division includes the $9.3 million provision for a legal judgment.

          For the six-month period ended June 30, 2005, Branch Division revenue totaled $619.4 million compared with $505.6 million for the same period last year.  Branch Division gross profit as a percent of revenue for the six months ended June 30, 2005 increased to 13.1% compared with 11.1% last year. Operating income for the division increased to $29.5 million for the same period compared with $18.0 million in 2004.

          Second Quarter Conference Call Information
          The Company will host a conference call on Thursday, July 28, 2005, at 11:00 a.m. Eastern time. Investors and other interested parties may access the call live by dialing 800-362-0571, conference identification is “Granite Construction.”  A live Webcast will also be available via the Internet at www.graniteconstruction.com. The conference call will be recorded and available for replay approximately two hours after the call through August 3, 2005. In the U.S. and Canada, dial 888-203-1112. For international listeners, dial 719-457-0820. The pass code for the recording is 3947976. An audio archive of the call will also be available on the Company’s website.

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

          This press release contains forward-looking statements, such as statements related to the existence of bidding opportunities and economic conditions on the Company’s future results. Additionally, forward-looking statements include statements that can be identified by the use of forward-looking terminology such as “believes,” “expects,” “appears,” “may,” “will,” “should,” “look for,” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy. All such forward-looking statements are subject to risks and uncertainties that could cause actual results of operations and financial condition and other events to differ materially from those expressed or implied in such forward-looking statements. Specific risk factors include, without limitation, changes in the composition of applicable federal and state legislation appropriation committees; federal and state appropriation changes for infrastructure spending; the general state of the economy; job productivity; accuracy of project estimates; weather conditions; competition and pricing pressures; and state referendums and initiatives.  You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release.  Granite undertakes no obligation to revise or update publicly any forward-looking statements to conform the statement to actual results or changes in the Company’s expectations.


          For further information regarding risks and uncertainties associated with Granite’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and “Quantitative and Qualitative Disclosures About Market Risk” sections of Granite’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Granite’s investor relations department at 831-724-1011 or at Granite’s website at www.graniteconstruction.com.

GRANITE CONSTRUCTION INCORPORATED
COMPARATIVE FINANCIAL SUMMARY
(Unaudited - In Thousands, Except Per Share Data)

 

 

Three Months Ended
June 30,

 

Variance

 

 

 

 

 

Operations

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

Revenue

 

$

676,704

 

$

558,754

 

$

117,950

 

 

21.1

 

Gross profit

 

$

76,707

 

$

59,744

 

$

16,963

 

 

28.4

 

Gross profit as a percent of revenue

 

 

11.3

%

 

10.7

%

 

0.6

%

 

—  

 

General and administrative expenses

 

$

40,606

 

$

35,914

 

$

(4,692

)

 

(13.1

)

G&A expenses as a percent of revenue

 

 

6.0

%

 

6.4

%

 

0.4

%

 

—  

 

Provision for legal judgment

 

$

9,300

 

 

—  

 

$

(9,300

)

 

—  

 

Gain on sales of property and equipment

 

$

2,189

 

$

1,109

 

$

1,080

 

 

97.4

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

1,968

 

$

1,317

 

$

651

 

 

49.4

 

Interest expense

 

$

(1,636

)

$

(1,859

)

$

223

 

 

12.0

 

Equity in (loss) income of affiliates

 

$

(17

)

$

2,766

 

$

(2,783

)

 

****

 

Other, net

 

$

(651

)

$

(7

)

$

(644

)

 

****

 

Total other income (expense)

 

$

(336

)

$

2,217

 

$

(2,553

)

 

****

 

Income before provision for income taxes and minority interest

 

$

28,654

 

$

27,156

 

$

1,498

 

 

5.5

 

Minority interest

 

$

(5,480

)

$

(4,111

)

$

(1,369

)

 

(33.3

)

Net income

 

$

14,954

 

$

13,806

 

$

1,148

 

 

8.3

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.37

 

$

0.34

 

$

0.03

 

 

8.8

 

Diluted

 

$

0.36

 

$

0.34

 

$

0.02

 

 

5.9

 

Weighted average shares of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,638

 

 

40,417

 

 

221

 

 

0.5

 

Diluted

 

 

41,212

 

 

41,018

 

 

194

 

 

0.5

 

 

 

June 30,
2005

 

Dec. 31,
2004

 

Variance

 

 

 

 

 

 

Financial Position

 

 

 

Amount

 

Percent

 

 

 

 

 

 

Working capital

 

$

312,917

 

$

355,927

 

$

(43,010

)

 

(12.1

)

Current ratio

 

 

1.57

 

 

1.76

 

 

(0.19

)

 

(10.8

)

Long-term debt

 

$

130,427

 

$

148,503

 

$

(18,076

)

 

(12.2

)

Total liabilities to equity ratio

 

 

1.45

 

 

1.32

 

 

0.13

 

 

9.8

 

Shareholders’ equity

 

$

549,135

 

$

550,474

 

$

(1,339

)

 

(0.2

)

Total assets

 

$

1,347,875

 

$

1,277,954

 

$

69,921

 

 

5.5

 

Book value per common share

 

$

13.16

 

$

13.23

 

$

(0.07

)

 

(0.5

)

Backlog

 

$

2,500,307

 

$

2,437,994

 

$

62,313

 

 

2.6

 


 

 

Six Months Ended
June 30,

 

Variance

 

 

 

 

 

Operations

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

Revenue

 

$

1,097,638

 

$

895,772

 

$

201,866

 

 

22.5

 

Gross profit

 

$

103,647

 

$

70,428

 

$

33,219

 

 

47.2

 

Gross profit as a percent of revenue

 

 

9.4

%

 

7.9

%

 

1.5

%

 

—  

 

General and administrative expenses

 

$

79,476

 

$

72,458

 

$

(7,018

)

 

(9.7

)

G&A expenses as a percent of revenue

 

 

7.2

%

 

8.1

%

 

0.9

%

 

—  

 

Provision for legal judgment

 

$

9,300

 

 

—  

 

$

(9,300

)

 

—  

 

Gain on sales of property and equipment

 

$

2,215

 

$

14,439

 

$

(12,224

)

 

(84.7

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

4,127

 

$

2,715

 

$

1,412

 

 

52.0

 

Interest expense

 

$

(3,667

)

$

(3,599

)

$

(68

)

 

(1.9

)

Equity in (loss) income of affiliates

 

$

(77

)

$

2,873

 

$

(2,950

)

 

****

 

Other, net

 

$

(724

)

$

95

 

$

(819

)

 

****

 

Total other income (expense)

 

$

(341

)

$

2,084

 

$

(2,425

)

 

****

 

Income before provision for income taxes and minority interest

 

$

16,745

 

$

14,493

 

$

2,252

 

 

15.5

 

Minority interest

 

$

(5,530

)

$

(4,941

)

$

(589

)

 

(11.9

)

Net income

 

$

6,687

 

$

4,697

 

$

1,990

 

 

42.4

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

$

0.12

 

$

0.04

 

 

33.3

 

Diluted

 

$

0.16

 

$

0.11

 

$

0.05

 

 

45.5

 

Weighted average shares of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,562

 

 

40,341

 

 

221

 

 

0.5

 

Diluted

 

 

41,118

 

 

40,919

 

 

199

 

 

0.5

 

 

 

June 30,

 

Variance

 

 

 

 

 

Financial Position

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

Working capital

 

$

312,917

 

$

288,732

 

$

24,185

 

 

8.4

 

Current ratio

 

 

1.57

 

 

1.64

 

 

(0.07

)

 

(4.3

)

Long-term debt

 

$

130,427

 

$

131,592

 

$

(1,165

)

 

(0.9

)

Total liabilities to equity ratio

 

 

1.45

 

 

1.37

 

 

0.08

 

 

5.8

 

Shareholders’ equity

 

$

549,135

 

$

501,733

 

$

47,402

 

 

9.4

 

Total assets

 

$

1,347,875

 

$

1,190,510

 

$

157,365

 

 

13.2

 

Book value per common share

 

$

13.16

 

$

12.06

 

$

1.10

 

 

9.1

 

Backlog

 

$

2,500,307

 

$

2,038,169

 

$

462,138

 

 

22.7

 


GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands, except share and per share data)

 

 

June 30,
2005

 

December 31,
2004

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

116,988

 

$

161,627

 

Short-term marketable securities

 

 

60,751

 

 

102,237

 

Accounts receivable, net

 

 

498,892

 

 

357,842

 

Costs and estimated earnings in excess of billings

 

 

51,233

 

 

54,384

 

Inventories

 

 

34,377

 

 

31,711

 

Deferred income taxes

 

 

20,947

 

 

21,012

 

Equity in construction joint ventures

 

 

21,167

 

 

20,895

 

Other current assets

 

 

62,176

 

 

75,630

 

Total current assets

 

 

866,531

 

 

825,338

 

Property and equipment, net

 

 

397,476

 

 

376,197

 

Long-term marketable securities

 

 

23,718

 

 

13,828

 

Investment in affiliates

 

 

10,844

 

 

10,725

 

Other assets

 

 

49,306

 

 

51,866

 

Total assets

 

$

1,347,875

 

$

1,277,954

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

22,639

 

$

15,861

 

Accounts payable

 

 

256,888

 

 

191,782

 

Billings in excess of costs and estimated earnings

 

 

148,161

 

 

144,401

 

Accrued expenses and other current liabilities

 

 

125,926

 

 

117,367

 

Total current liabilities

 

 

553,614

 

 

469,411

 

Long-term debt

 

 

130,427

 

 

148,503

 

Other long-term liabilities

 

 

43,044

 

 

40,641

 

Deferred income taxes

 

 

44,135

 

 

44,135

 

Minority interest in consolidated subsidiaries

 

 

27,520

 

 

24,790

 

Shareholders’ equity

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, authorized 3,000,000 shares; none outstanding

 

 

—  

 

 

—  

 

Common stock, $0.01 par value, authorized 100,000,000 shares; issued and outstanding 41,714,138 shares in 2005 and 41,612,319 shares in 2004

 

 

417

 

 

416

 

Additional paid-in capital

 

 

79,603

 

 

76,766

 

Unearned compensation

 

 

(13,380

)

 

(10,818

)

Retained earnings

 

 

480,979

 

 

482,635

 

Accumulated other comprehensive income

 

 

1,516

 

 

1,475

 

Total shareholders’ equity

 

 

549,135

 

 

550,474

 

Total liabilities and shareholders’ equity

 

$

1,347,875

 

$

1,277,954

 


GRANITE CONSTRUCTION INCORPORATED
REVENUE AND BACKLOG ANALYSIS
(Unaudited - Dollars In Thousands)

BY MARKET SECTOR

 

 

Revenue

 

 

 

 

 

 

Three Months Ended
June 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

24,528

 

$

37,801

 

$

(13,273

)

 

(35.1

)

State

 

 

202,006

 

 

201,802

 

 

204

 

 

0.1

 

Local

 

 

239,975

 

 

171,594

 

 

68,381

 

 

39.9

 

Total public sector

 

 

466,509

 

 

411,197

 

 

55,312

 

 

13.5

 

Private sector

 

 

125,620

 

 

76,521

 

 

49,099

 

 

64.2

 

Aggregate sales

 

 

84,575

 

 

71,036

 

 

13,539

 

 

19.1

 

 

 

$

676,704

 

$

558,754

 

$

117,950

 

 

21.1

 

 

 

Backlog

 

 

 

 

 

 

June 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

99,365

 

$

113,384

 

$

(14,019

)

 

(12.4

)

State

 

 

995,024

 

 

711,242

 

 

283,782

 

 

39.9

 

Local

 

 

1,156,403

 

 

1,002,397

 

 

154,006

 

 

15.4

 

Total public sector

 

 

2,250,792

 

 

1,827,023

 

 

423,769

 

 

23.2

 

Private sector

 

 

249,515

 

 

211,146

 

 

38,369

 

 

18.2

 

Aggregate sales

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

 

$

2,500,307

 

$

2,038,169

 

$

462,138

 

 

22.7

 


BY GEOGRAPHIC AREA

 

 

Revenue

 

 

 

 

 

 

Three Months Ended
 June 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

California

 

$

259,449

 

$

188,737

 

$

70,712

 

 

37.5

 

West (Excl. CA)

 

 

208,847

 

 

173,713

 

 

35,134

 

 

20.2

 

Midwest

 

 

28,457

 

 

17,457

 

 

11,000

 

 

63.0

 

Northeast

 

 

77,700

 

 

80,243

 

 

(2,543

)

 

(3.2

)

South

 

 

102,251

 

 

98,604

 

 

3,647

 

 

3.7

 

 

 

$

676,704

 

$

558,754

 

$

117,950

 

 

21.1

 

BY GEOGRAPHIC AREA

 

 

Backlog

 

 

 

 

 

 

June 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

California

 

$

576,783

 

$

322,591

 

$

254,192

 

 

78.8

 

West (Excl. CA)

 

 

380,632

 

 

442,695

 

 

(62,063

)

 

(14.0

)

Midwest

 

 

85,915

 

 

32,507

 

 

53,408

 

 

****

 

Northeast

 

 

636,723

 

 

683,054

 

 

(46,331

)

 

(6.8

)

South

 

 

820,254

 

 

557,322

 

 

262,932

 

 

47.2

 

 

 

$

2,500,307

 

$

2,038,169

 

$

462,138

 

 

22.7

 

**** Represents percentages greater than 100%

SOURCE  Granite Construction Incorporated
          -0-                                                                      07/27/2005
          /CONTACT:  Jacque Underdown of Granite Construction Incorporated,
+1-831-761-4741, or Jacque.Underdown@gcinc.com/
          /Web site:  http://www.graniteconstruction.com   /