EX-99.1 2 gc3898ex991.htm EXHIBIT 99.1

Exhibit 99.1

Granite Construction Incorporated Reports Third Quarter 2005 Results

WATSONVILLE, Calif., Oct. 26 /PRNewswire-FirstCall/ -- Granite Construction Incorporated (NYSE: GVA) today announced its results for the third quarter ended September 30, 2005. The Company reported net income for the quarter of $40.7 million, or $0.98 per diluted share. This compares with net income of $32.8 million, or $0.80 per diluted share for the same period last year. For the nine-month period ended September 30, 2005, net income was $47.3 million or $1.15 per diluted share compared with $37.5 million or $0.91 per diluted share for the same period in 2004.

Commenting on the results, President and Chief Executive Officer, William G. Dorey said, “Our record third quarter results were driven by strong markets in the West and an outstanding performance from our Branch Division. We are very pleased with our branch operations, which are capitalizing on healthy public transportation budgets, demand for our construction materials, and a healthy private sector market.”

“We continue, however, to be very disappointed with the results from our Heavy Construction Division (HCD). Although these results have yet to reflect the improvements that we have made throughout the division, I believe we are on the right path to turn this segment of our business around. We are applying more patience and discipline on bid day in an effort to book backlog that will consistently deliver acceptable levels of profitability. We are making progress, and I remain confident in our plan of focusing on quality bids, project execution and bottom line results that will deliver the performance improvement we expect from this business in the future,” said Dorey.

Operating Results - Quarter and Year-To-Date

For the third quarter of 2005, total revenue increased 23.5% to $864.2 million compared with $699.8 million a year ago. Total gross profit as a percent of revenue for the third quarter 2005 decreased to 12.7% compared with 13.6% for the same period last year. Operating income increased to $62.0 million for the third quarter of 2005 compared with $54.0 million for the third quarter 2004.

For the nine-month period ended September 30, 2005, revenue for the Company totaled $2.0 billion compared with $1.6 billion for the same period last year. Total gross profit as a percent of revenue for the nine months ended September 30, 2005 increased to 10.9% compared with 10.4% last year. Operating income for the nine month period increased to $79.1 million compared with $66.4 million for the same period in 2004. Total company backlog at September 30, 2005 was $2.4 billion compared with $2.3 billion a year ago.

Results by Segment

HCD revenue for the quarter totaled $291.2 million versus $237.1 million for the same period last year. HCD backlog increased slightly to $1.72 billion compared with $1.71 billion for the same period last year. HCD gross profit as a percent of revenue decreased in the quarter to 3.6% compared with 7.9% in the prior period. This decrease reflects a net reduction of gross profit of approximately $10.0 million primarily resulting from changes in the estimated profitability of six projects compared with $4.0 million in changes on two projects in the third quarter 2004. As a product of lower gross profit in the quarter, operating income for HCD decreased for the third quarter 2005 to $1.4 million compared with $9.9 million in the prior year.


For the nine-month period ended September 30, 2005, HCD revenue totaled $769.4 million compared with $627.3 million for the same period last year. HCD gross profit as a percent of revenue for the nine months ended September 30, 2005 decreased to 4.2% compared with 5.3% last year. HCD operating income for the nine-month period decreased to $8.1 million compared with a $8.9 million for the same period in 2004.

Branch Division revenue for the quarter totaled $570.8 million, an increase of $108.1 million or 23.4% over the same period in 2004. Backlog for the division increased in the third quarter 2005 to $674.3 million compared with $606.8 million for the third quarter 2004. Gross profit as a percent of revenue for the division increased slightly for the third quarter 2005 to 16.8% compared with 16.7% for the third quarter 2004. Operating income increased $15.8 million for the quarter to $72.4 million compared with $56.6 million for the third quarter last year.

For the nine-month period ended September 30, 2005, Branch Division revenue totaled $1.2 billion compared with $968.3 million for the same period last year. Branch Division gross profit as a percent of revenue for the nine months ended September 30, 2005 increased to 14.9% compared with 13.7% last year due primarily to improved performance on construction projects. Branch operating income increased $27.1 million to $101.8 million for the same period compared with $74.7 million in 2004.

Business Outlook

The outlook for the Branch Division continues to be very positive provided the housing market in the West remains strong and the state of California continues to adequately fund infrastructure improvements. The demand for our construction materials is primarily driven by residential, commercial and industrial markets in the West, where all of our materials operations are located.

Looking ahead for HCD, the primary focus for the division will continue to be on improving operating performance and execution of the existing backlog. While healthy bidding opportunities are expected to continue for large heavy- civil transportation projects, increasing operating margins and controlling costs will continue to be a priority over revenue growth.

The Company’s earnings guidance for 2005 is in the range of $1.55 to $1.60 per diluted share. The ability to achieve these forecasted results is contingent on a number of factors, including the amount of work the Company is able to complete in the fourth quarter, which can vary significantly due to the onset of winter weather conditions.


Third Quarter Conference Call Information

The Company will host a conference call on Thursday, October 27, 2005, at 11:00 a.m. Eastern time. Investors and other interested parties may access the call live by dialing (888) 515-2781, 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 November 3, 2005. In the U.S. and Canada, dial (888) 203-1112. For international listeners, dial (719) 457-0820. The pass code required for the recording is 4867408. 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
September 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

864,162

 

$

699,825

 

$

164,337

 

 

23.5

 

Gross profit

 

$

109,701

 

$

95,348

 

$

14,353

 

 

15.1

 

Gross profit as a percent of revenue

 

 

12.7

%

 

13.6

%

 

(0.9

)%

 

—  

 

General and administrative expenses

 

$

50,149

 

$

44,007

 

$

(6,142

)

 

(14.0

)

G&A expenses as a percent of revenue

 

 

5.8

%

 

6.3

%

 

0.5

%

 

—  

 

Provision for legal judgment

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

Gain on sales of property and equipment

 

$

2,441

 

$

2,638

 

$

(197

)

 

(7.5

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

2,693

 

$

1,353

 

$

1,340

 

 

99.0

 

Interest expense

 

$

(1,734

)

$

(1,813

)

$

79

 

 

4.4

 

Equity in income of affiliates

 

$

85

 

$

3

 

$

82

 

 

****

 

Other, net

 

$

176

 

$

59

 

$

117

 

 

****

 

Total other income (expense)

 

$

1,220

 

$

(398

)

$

1,618

 

 

****

 

Income before provision for income taxes and minority interest

 

$

63,213

 

$

53,581

 

$

9,632

 

 

18.0

 

Minority interest

 

$

(3,771

)

$

(3,892

)

$

121

 

 

3.1

 

Net income

 

$

40,651

 

$

32,785

 

$

7,866

 

 

24.0

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.00

 

$

0.81

 

$

0.19

 

 

23.5

 

Diluted

 

$

0.98

 

$

0.80

 

$

0.18

 

 

22.5

 

Weighted average shares of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,656

 

 

40,433

 

 

223

 

 

0.6

 

Diluted

 

 

41,340

 

 

41,083

 

 

257

 

 

0.6

 

 

 

Nine Months Ended
September 30,

 

Variance

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,961,800

 

$

1,595,597

 

$

366,203

 

 

23.0

 

Gross profit

 

$

213,348

 

$

165,776

 

$

47,572

 

 

28.7

 

Gross profit as a percent of revenue

 

 

10.9

%

 

10.4

%

 

0.5

%

 

—  

 

General and administrative expenses

 

$

129,625

 

$

116,465

 

$

(13,160

)

 

(11.3

)

G&A expenses as a percent of revenue

 

 

6.6

%

 

7.3

%

 

0.7

%

 

—  

 

Provision for legal judgment

 

$

9,300

 

 

—  

 

$

(9,300

)

 

—  

 

Gain on sales of property and equipment

 

$

4,656

 

$

17,077

 

$

(12,421

)

 

(72.7

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

6,820

 

$

4,068

 

$

2,752

 

 

67.6

 

Interest expense

 

$

(5,401

)

$

(5,412

)

$

11

 

 

0.2

 

Equity in income of affiliates

 

$

8

 

$

2,876

 

$

(2,868

)

 

(99.7

)

Other, net

 

$

(548

)

$

154

 

$

(702

)

 

****

 

Total other income (expense)

 

$

879

 

$

1,686

 

$

(807

)

 

(47.9

)

Income before provision for income taxes and minority interest

 

$

79,958

 

$

68,074

 

$

11,884

 

 

17.5

 

Minority interest

 

$

(9,301

)

$

(8,833

)

$

(468

)

 

(5.3

)

Net income

 

$

47,338

 

$

37,482

 

$

9,856

 

 

26.3

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.17

 

$

0.93

 

$

0.24

 

 

25.8

 

Diluted

 

$

1.15

 

$

0.91

 

$

0.24

 

 

26.4

 

Weighted average shares of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

40,594

 

 

40,372

 

 

222

 

 

0.5

 

Diluted

 

 

41,192

 

 

40,974

 

 

218

 

 

0.5

 


 

 

 

 

 

 

 

 

Variance

 

 

 

 

 

 

 

 

 

 

 

 

Sept.  30,
2005

 

Dec.  31,
2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Working capital

 

$

333,155

 

$

355,927

 

$

(22,772

)

 

(6.4

)

Current ratio

 

 

1.48

 

 

1.76

 

 

(0.28

)

 

(15.9

)

Long-term debt

 

$

128,539

 

$

148,503

 

$

 (19,964

)

 

(13.4

)

Total liabilities to equity ratio

 

 

1.61

 

 

1.32

 

 

0.29

 

 

22.0

 

Shareholders’ equity

 

$

587,330

 

$

550,474

 

$

36,856

 

 

6.7

 

Total assets

 

$

1,532,027

 

$

1,277,954

 

$

254,073

 

 

19.9

 

Book value per common share

 

$

14.08

 

$

13.23

 

$

0.85

 

 

6.4

 

Backlog

 

$

2,393,744

 

$

2,437,994

 

$

(44,250

)

 

(1.8

)

 

 

September 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Working capital

 

$

333,155

 

$

329,921

 

$

3,234

 

 

1.0

 

Current ratio

 

 

1.48

 

 

1.64

 

 

(0.16

)

 

(9.8

)

Long-term debt

 

$

128,539

 

$

125,850

 

$

2,689

 

 

2.1

 

Total liabilities to equity ratio

 

 

1.61

 

 

1.41

 

 

0.20

 

 

14.2

 

Shareholders’ equity

 

$

587,330

 

$

532,190

 

$

55,140

 

 

10.4

 

Total assets

 

$

1,532,027

 

$

1,284,543

 

$

247,484

 

 

19.3

 

Book value per common share

 

$

14.08

 

$

12.79

 

$

1.29

 

 

10.1

 

Backlog

 

$

2,393,744

 

$

2,317,974

 

$

75,770

 

 

3.3

 

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

 

 

September 30,
2005

 

December 31,
2004

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

159,297

 

$

161,627

 

Short-term marketable securities

 

 

81,043

 

 

102,237

 

Accounts receivable, net

 

 

586,476

 

 

357,842

 

Costs and estimated earnings in excess of billings

 

 

50,306

 

 

54,384

 

Inventories

 

 

31,699

 

 

31,711

 

Deferred income taxes

 

 

20,581

 

 

21,012

 

Equity in construction joint ventures

 

 

24,514

 

 

20,895

 

Other current assets

 

 

76,260

 

 

75,630

 

Total current assets

 

 

1,030,176

 

 

825,338

 

Property and equipment, net

 

 

408,912

 

 

376,197

 

Long-term marketable securities

 

 

32,163

 

 

13,828

 

Investment in affiliates

 

 

10,887

 

 

10,725

 

Other assets

 

 

49,889

 

 

51,866

 

Total assets

 

$

1,532,027

 

$

1,277,954

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

21,772

 

$

15,861

 

Accounts payable

 

 

309,281

 

 

191,782

 

Billings in excess of costs and estimated earnings

 

 

189,067

 

 

144,401

 

Accrued expenses and other current liabilities

 

 

176,901

 

 

117,367

 

Total current liabilities

 

 

697,021

 

 

469,411

 

Long-term debt

 

 

128,539

 

 

148,503

 

Other long-term liabilities

 

 

46,007

 

 

40,641

 

Deferred income taxes

 

 

44,135

 

 

44,135

 

Minority interest in consolidated subsidiaries

 

 

28,995

 

 

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 41,699,060 shares in 2005 and 41,612,319 shares in 2004

 

 

417

 

 

416

 

Additional paid-in capital

 

 

79,148

 

 

76,766

 

Unearned compensation

 

 

(11,807

)

 

(10,818

)

Retained earnings

 

 

517,460

 

 

482,635

 

Accumulated other comprehensive income

 

 

2,112

 

 

1,475

 

Total shareholders’ equity

 

 

587,330

 

 

550,474

 

Total liabilities and shareholders’ equity

 

$

1,532,027

 

$

1,277,954

 


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

BY MARKET SECTOR

 

 

Revenue

 

 

 

 

 

 

Three Months Ended
September 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

33,455

 

$

48,333

 

$

(14,878

)

 

(30.8

)

State

 

 

278,204

 

 

214,576

 

 

63,628

 

 

29.7

 

Local

 

 

294,065

 

 

246,309

 

 

47,756

 

 

19.4

 

Total public sector

 

 

605,724

 

 

509,218

 

 

96,506

 

 

19.0

 

Private sector

 

 

150,666

 

 

99,582

 

 

51,084

 

 

51.3

 

Aggregate sales

 

 

107,772

 

 

91,025

 

 

16,747

 

 

18.4

 

 

 

$

864,162

 

$

699,825

 

$

164,337

 

 

23.5

 

 

 

Backlog

 

 

 

 

 

 

September 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

83,133

 

$

76,581

 

$

6,552

 

 

8.6

 

State

 

 

1,005,450

 

 

773,633

 

 

231,817

 

 

30.0

 

Local

 

 

1,026,657

 

 

1,236,939

 

 

(210,282

)

 

(17.0

)

Total public sector

 

 

2,115,240

 

 

2,087,153

 

 

28,087

 

 

1.3

 

Private sector

 

 

278,504

 

 

230,821

 

 

47,683

 

 

20.7

 

Aggregate sales

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

 

$

2,393,744

 

$

2,317,974

 

$

75,770

 

 

3.3

 

BY GEOGRAPHIC AREA

 

 

Revenue

 

 

 

 

 

 

Three Months Ended
September 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount 

 

Percent

 

 

 

 

 

 

 

California

 

$

341,334

 

$

255,906

 

$

85,428

 

 

33.4

 

West (Excl. CA)

 

 

300,176

 

 

239,041

 

 

61,135

 

 

25.6

 

Midwest

 

 

23,637

 

 

23,546

 

 

91

 

 

0.4

 

New York

 

 

60,359

 

 

84,816

 

 

(24,457

)

 

(28.8

)

Northeast (Excl. NY)

 

 

24,841

 

 

3,546

 

 

21,295

 

 

****

 

South

 

 

113,815

 

 

92,970

 

 

20,845

 

 

22.4

 

 

 

$

864,162

 

$

699,825

 

$

164,337

 

 

23.5

 

 

 

Backlog

 

 

 

 

 

 

September 30,

 

Variance

 

 

 

 

 

 

 

2005

 

2004

 

Amount

 

Percent

 

 

 

 

 

 

 

California

 

$

567,155

 

$

674,622

 

$

(107,467

)

 

(15.9

)

West (Excl. CA)

 

 

468,261

 

 

377,770

 

 

90,491

 

 

24.0

 

Midwest

 

 

62,204

 

 

144,973

 

 

(82,769

)

 

(57.1

)

New York

 

 

455,845

 

 

466,850

 

 

(11,005

)

 

(2.4

)

Northeast (Excl. NY)

 

 

99,980

 

 

132,743

 

 

(32,763

)

 

(24.7

)

South

 

 

740,299

 

 

521,016

 

 

219,283

 

 

42.1

 

 

 

$

2,393,744

 

$

2,317,974

 

$

75,770

 

 

3.3

 

****

Represents percentages greater than 100%

SOURCE  Granite Construction Incorporated
           -0-                                                10/26/2005
           /CONTACT:  Jacqueline Underdown, Investor Relations of Granite Construction Incorporated, +1-831-761-4741/
           /Web site:  http://www.graniteconstruction.com /