Exhibit 99.1
Granite Reports Second-Quarter 2009 Financial Results
- Granite East operating results increased 26% to $14.7 million
- Strong balance sheet; Cash and short-term marketable securities totaled $381 million at quarter-end
WATSONVILLE, Calif.--(BUSINESS WIRE)--July 29, 2009--Granite Construction Incorporated (NYSE: GVA) today reported net income of $17.9 million for the second quarter of 2009 compared with $25.6 million for the second quarter of 2008. Diluted earnings per share for the second quarter of 2009 were $0.46 compared with $0.67 for the second quarter of 2008.
“As expected, our second quarter results reflect a very competitive bidding environment in the West,” said William G. Dorey, Granite president and chief executive officer. “That said, we are pleased with the way our business model is performing in these challenging times. Granite East continues to deliver strong operating results and is well-positioned to grow its backlog this year. Across the company we continue to focus on productivity, managing costs and executing on our backlog.”
Second-quarter 2009 Financial Results
Total Company
- Total revenue for the quarter ended June 30, 2009 was $461.1 million compared with $694.3 million in 2008. The decrease reflects a $169.2 million reduction in Granite West revenue and $58.5 million reduction in Granite East revenue.
- Gross profit as a percentage of revenue for the quarter was 18 percent compared with 16 percent in 2008 reflecting improved margins from Granite East.
- Gross profit on the sale of construction materials was $8.0 million in 2009 compared with $17.5 million in 2008. The company’s third-party construction materials business continues to be affected by lower sales volume.
- General and administrative expenses decreased $10.1 million to $55.7 million or 12 percent of revenue compared with $65.8 million or 10 percent of revenue in 2008 reflecting decreases in salaries and incentive compensation.
- Operating income for the quarter was $30.4 million compared with $45.4 million in the prior year due to the competitive bidding environment in the West offset by improved operating results in the East.
- During the second quarter 2009, the company’s real estate investment segment recorded a $1.0 million pretax impairment charge related to a residential property located in Oregon.
- Other income for the quarter was $0.5 million compared with $1.2 million in 2008 due to lower investment interest income.
- Net income attributable to noncontrolling interest in joint ventures decreased from $8.0 million in 2008 to $4.7 million in 2009 due to the completion of certain large projects.
- At June 30, 2009, cash and short-term marketable securities totaled $381.0 million, including $120.9 million of cash and cash equivalents from the company’s consolidated joint ventures.
- Total contract backlog at June 30, 2009, was $1.5 billion compared with $2.1 billion at June 30, 2008. Not included in second quarter 2009 backlog is approximately $500.0 million associated with three projects the company expects to book in the third quarter of 2009.
Granite West
- Revenue for the second quarter totaled $348.3 million compared with $517.5 million for the same period in 2008. The decrease reflects a highly competitive bidding environment and lower demand for construction materials.
- Gross profit as a percentage of revenue for the quarter remained flat at 18 percent.
- Operating income for the quarter decreased $21.9 million to $34.9 million compared with $56.8 million for the second quarter of last year.
Granite East
- Revenue for the second quarter totaled $112.2 million compared with $170.8 million for the same period in 2008 reflecting several large projects nearing completion.
- Gross profit as a percentage of revenue for the quarter was 19 percent compared with 11 percent in the same period last year.
- Operating income for the quarter increased to $14.7 million compared with $11.7 million for the second quarter of 2008.
Outlook
“In the West, we expect the bidding environment to remain competitive for at least the next several quarters,” said Dorey. “We also anticipate our third-party construction materials business will continue to be affected by lower demand. As a result, we are forecasting Granite West revenue in 2009 to be between $1.5 billion and $1.7 billion with a corresponding gross profit margin percentage between 14 percent and 16 percent.
The outlook for Granite East is very positive as we continue to execute well and add quality projects to our backlog. Although we continue to expect strong bottom line performance this year, delayed project awards caused us to lower our revenue forecast for the segment. We now expect Granite East revenue in 2009 to be in the range of $600.0 million and $675.0 million with an improved gross profit margin percentage between 15 percent and 17 percent. We expect net income attributable to noncontrolling interest in joint ventures for the total company to be approximately $30.0 million for the year.”
Conference Call
Granite will conduct a conference call tomorrow, July 30, 2009, at 8:00 a.m. PT/11:00 a.m. ET to discuss the results of the second quarter ended June 30, 2009. Access to a live audio webcast is available at www.graniteconstruction.com/investor-relations. The live conference call may be accessed by calling (877) 865-1220 in the United States and (706) 634-4451 for international listeners. The conference ID for the call is 14073730. The call will be recorded and available for replay from approximately two hours after the live audio webcast through August 30, 2009 by calling (706) 645-9291. The conference ID for the recording is 14073730.
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 its Web site 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 Granite for certain of these forward-looking statements. Words such as outlook, believes, expects, appears, may, will, should, anticipates, and the negatives thereof or comparable terminology are intended to identify these forward-looking statements. These forward-looking statements are estimates reflecting the best judgment of Granite’s senior management and are based on its current expectations and projections concerning future events, many of which are outside Granite’s 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 Granite’s Annual Report under “Item 1A. Risk Factors.” Except as required by law, Granite undertakes 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 BALANCE SHEETS | |||||||||||||
(Unaudited - in thousands, except share and per share data) | |||||||||||||
June 30, | December 31, | June 30, | |||||||||||
2009 | 2008 | 2008 | |||||||||||
ASSETS | |||||||||||||
Current assets | |||||||||||||
Cash and cash equivalents | $ | 356,168 | $ | 460,843 | $ | 286,648 | |||||||
Short-term marketable securities | 24,878 | 38,320 | 88,230 | ||||||||||
Accounts receivable, net | 281,432 | 314,733 | 418,657 | ||||||||||
Costs and estimated earnings in excess of billings | 50,891 | 13,295 | 51,047 | ||||||||||
Inventories, net | 68,755 | 55,223 | 63,930 | ||||||||||
Real estate held for development and sale | 131,169 | 75,089 | 50,308 | ||||||||||
Deferred income taxes | 43,314 | 43,637 | 44,887 | ||||||||||
Equity in construction joint ventures | 50,215 | 44,681 | 42,844 | ||||||||||
Other current assets | 46,719 | 56,742 | 66,297 | ||||||||||
Total current assets | 1,053,541 | 1,102,563 | 1,112,848 | ||||||||||
Property and equipment, net | 529,805 | 517,678 | 526,383 | ||||||||||
Long-term marketable securities | 53,328 | 21,239 | 29,706 | ||||||||||
Investment in affiliates | 17,310 | 19,996 | 30,502 | ||||||||||
Other noncurrent assets | 80,300 | 81,979 | 73,455 | ||||||||||
Total assets | $ | 1,734,284 | $ | 1,743,455 | $ | 1,772,894 | |||||||
LIABILITIES AND EQUITY | |||||||||||||
Current liabilities | |||||||||||||
Current maturities of long-term debt | $ | 64,848 | $ | 39,692 | $ | 35,039 | |||||||
Accounts payable | 177,025 | 174,626 | 237,561 | ||||||||||
Billings in excess of costs and estimated earnings | 184,665 | 227,364 | 226,213 | ||||||||||
Accrued expenses and other current liabilities | 168,217 | 184,939 | 211,907 | ||||||||||
Total current liabilities | 594,755 | 626,621 | 710,720 | ||||||||||
Long-term debt | 233,675 | 250,687 | 246,493 | ||||||||||
Other long-term liabilities | 46,686 | 43,604 | 46,956 | ||||||||||
Deferred income taxes | 17,917 | 18,261 | 18,228 | ||||||||||
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 2009 and in 2008; issued and outstanding 38,673,034 shares as of June 30, 2009, 38,266,791 shares as of December 31, 2008 and 38,274,588 shares as of June 30, 2008 | |||||||||||||
387 | 383 | 383 | |||||||||||
Additional paid-in capital | 89,142 | 85,035 | 81,358 | ||||||||||
Retained earnings | 699,050 | 682,237 | 608,525 | ||||||||||
Accumulated other comprehensive loss | - | (146 | ) | (941 | ) | ||||||||
Total Granite Construction Inc. shareholders' equity | 788,579 | 767,509 | 689,325 | ||||||||||
Noncontrolling interest | 52,672 | 36,773 | 61,172 | ||||||||||
Total equity | 841,251 | 804,282 | 750,497 | ||||||||||
Total liabilities and equity | $ | 1,734,284 | $ | 1,743,455 | $ | 1,772,894 | |||||||
June 30, | December 31, | June 30, | |||||||||||
FINANCIAL POSITION | 2009 | 2008 | 2008 | ||||||||||
Working capital | $ | 458,786 | $ | 475,942 | $ | 402,128 | |||||||
Current ratio | 1.77 | 1.76 | 1.57 | ||||||||||
Debt to Granite Construction Inc. shareholders' equity capitalization | 0.27 | 0.27 | 0.29 | ||||||||||
Total liabilities to Granite Construction Inc. shareholders' equity ratio | 1.13 | 1.22 | 1.48 |
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||||
(Unaudited - in thousands, except per share data) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
Revenue | ||||||||||||||||||||||
Construction | $ | 403,226 | $ | 580,943 | $ | 720,335 | $ | 983,516 | ||||||||||||||
Material sales | 57,315 | 107,289 | 87,161 | 158,843 | ||||||||||||||||||
Real estate | 534 | 6,100 | 951 | 6,773 | ||||||||||||||||||
Total revenue | 461,075 | 694,332 | 808,447 | 1,149,132 | ||||||||||||||||||
Cost of revenue | ||||||||||||||||||||||
Construction | 327,016 | 486,716 | 573,985 | 793,562 | ||||||||||||||||||
Material sales | 49,280 | 89,835 | 81,463 | 138,891 | ||||||||||||||||||
Real estate | 1,534 | 8,755 | 1,741 | 8,959 | ||||||||||||||||||
Total cost of revenue | 377,830 | 585,306 | 657,189 | 941,412 | ||||||||||||||||||
Gross profit | 83,245 | 109,026 | 151,258 | 207,720 | ||||||||||||||||||
General and administrative expenses | 55,669 | 65,760 | 109,301 | 126,411 | ||||||||||||||||||
Gain on sales of property and equipment | 2,808 | 2,155 | 5,329 | 2,556 | ||||||||||||||||||
Operating income | 30,384 | 45,421 | 47,286 | 83,865 | ||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||
Interest income | 1,109 | 3,593 | 3,170 | 9,648 | ||||||||||||||||||
Interest expense | (2,853 | ) | (3,058 | ) | (6,341 | ) | (7,568 | ) | ||||||||||||||
Equity in income (loss) of affiliates | 783 | 528 | 339 | (179 | ) | |||||||||||||||||
Other income, net | 1,431 | 184 | 5,216 | 8,647 | ||||||||||||||||||
Total other income | 470 | 1,247 | 2,384 | 10,548 | ||||||||||||||||||
Income before provision for income taxes | 30,854 | 46,668 | 49,670 | 94,413 | ||||||||||||||||||
Provision for income taxes | 8,187 | 13,081 | 13,016 | 25,208 | ||||||||||||||||||
Net income | 22,667 | 33,587 | 36,654 | 69,205 | ||||||||||||||||||
Amount attributable to noncontrolling interest | (4,718 | ) | (7,969 | ) | (9,785 | ) | (30,464 | ) | ||||||||||||||
Net income attributable to Granite Construction Inc. | $ | 17,949 | $ | 25,618 | $ | 26,869 | $ | 38,741 | ||||||||||||||
Net income per share attributable to common shareholders: | ||||||||||||||||||||||
Basic (1) |
| $ | 0.46 | $ | 0.67 | $ | 0.70 | $ | 1.00 | |||||||||||||
Diluted (1) |
| $ | 0.46 | $ | 0.67 | $ | 0.70 | $ | 1.00 | |||||||||||||
Weighted average shares of common stock: | ||||||||||||||||||||||
Basic | 37,584 | 37,426 | 37,530 | 37,782 | ||||||||||||||||||
Diluted | 37,699 | 37,552 | 37,650 | 37,862 | ||||||||||||||||||
Note: | ||||||||||||||||||||||
(1) Computed using the two-class method as required by FSP EITF 03-6-1 adopted on January 1, 2009. |
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
(Unaudited - in thousands) | |||||||||||||
Six Months Ended June 30, | 2009 | 2008 | |||||||||||
Operating activities | |||||||||||||
Net income | $ | 36,654 | $ | 69,205 | |||||||||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||||
Impairment of real estate held for development and sale | 1,036 | 4,500 | |||||||||||
Depreciation, depletion and amortization | 39,670 | 42,428 | |||||||||||
(Recovery of) provision for doubtful accounts, net | (3,386 | ) | 1,383 | ||||||||||
Gain on sales of property and equipment | (5,329 | ) | (2,556 | ) | |||||||||
Change in deferred income taxes | (113 | ) | 419 | ||||||||||
Stock-based compensation | 4,561 | 3,427 | |||||||||||
Excess tax benefit on stock-based compensation | (400 | ) | (746 | ) | |||||||||
Gain from trading securities | (187 | ) | - | ||||||||||
Equity in (income) loss of affiliates | (339 | ) | 179 | ||||||||||
Acquisition of noncontrolling interest | - | (16,616 | ) | ||||||||||
Changes in assets and liabilities, net of the effects of acquisition and consolidations | (78,602 | ) | (57,827 | ) | |||||||||
Net cash (used in) provided by operating activities | (6,435 | ) | 43,796 | ||||||||||
Investing activities | |||||||||||||
Purchases of marketable securities | (39,043 | ) | (28,620 | ) | |||||||||
Maturities of marketable securities | 27,610 | 40,250 | |||||||||||
Release of funds for acquisition of noncontrolling interest | - | 28,332 | |||||||||||
Additions to property and equipment | (55,659 | ) | (62,528 | ) | |||||||||
Proceeds from sales of property and equipment | 7,416 | 8,115 | |||||||||||
Acquisition of businesses | - | (14,022 | ) | ||||||||||
Contributions to affiliates | (4,971 | ) | (4,420 | ) | |||||||||
Other investing activities | 439 | 676 | |||||||||||
Net cash used in investing activities | (64,208 | ) | (32,217 | ) | |||||||||
Financing activities | |||||||||||||
Proceeds from long-term debt | 4,911 | 2,103 | |||||||||||
Long-term debt principal payments | (17,475 | ) | (15,032 | ) | |||||||||
Cash dividends paid | (10,003 | ) | (10,103 | ) | |||||||||
Purchase of common stock | (2,821 | ) | (45,468 | ) | |||||||||
Contributions from noncontrolling partners | 203 | 4,744 | |||||||||||
Distributions to noncontrolling partners | (9,283 | ) | (2,639 | ) | |||||||||
Acquisition of noncontrolling interest | - | (11,716 | ) | ||||||||||
Excess tax benefit on stock-based compensation | 400 | 746 | |||||||||||
Other financing | 36 | - | |||||||||||
Net cash used in financing activities | (34,032 | ) | (77,365 | ) | |||||||||
Decrease in cash and cash equivalents | (104,675 | ) | (65,786 | ) | |||||||||
Cash and cash equivalents at beginning of period | 460,843 | 352,434 | |||||||||||
Cash and cash equivalents at end of period | $ | 356,168 | $ | 286,648 |
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||||||||||||||||||
Business Segment Information | |||||||||||||||||||||||||||||||
(Unaudited - in thousands) | |||||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||
Granite West | Granite East | Granite Land | Granite West | Granite East | Granite Land | ||||||||||||||||||||||||||
2009 | |||||||||||||||||||||||||||||||
Revenue | $ | 348,304 | $ | 112,237 | $ | 534 | $ | 545,353 | $ | 262,143 | $ | 951 | |||||||||||||||||||
Gross profit (loss) | $ | 62,882 | $ | 21,363 | $ | (1,000 | ) | $ | 95,821 | $ | 56,227 | $ | (790 | ) | |||||||||||||||||
Gross profit (loss) as a percent of revenue | 18.1% |
| 19.0% |
| -187.3% |
| 17.6% |
| 21.4% |
| -83.1% |
| |||||||||||||||||||
Operating income (loss) | $ | 34,909 | $ | 14,688 | $ | (2,240 | ) | $ | 41,774 | $ | 43,084 | $ | (2,938 | ) | |||||||||||||||||
Operating income (loss) as a percent of revenue | 10.0% |
| 13.1% |
| -419.5% |
| 7.7% |
| 16.4% |
| -308.9% |
| |||||||||||||||||||
2008 | |||||||||||||||||||||||||||||||
Revenue | $ | 517,463 | $ | 170,769 | $ | 6,100 | $ | 757,465 | $ | 384,894 | $ | 6,773 | |||||||||||||||||||
Gross profit (loss) | $ | 92,924 | $ | 18,757 | $ | (2,655 | ) | $ | 132,553 | $ | 77,353 | $ | (2,186 | ) | |||||||||||||||||
Gross profit (loss) as a percent of revenue | 18.0% |
| 11.0% |
| -43.5% |
| 17.5% |
| 20.1% |
| -32.3% |
| |||||||||||||||||||
Operating income (loss) | $ | 56,801 | $ | 11,691 | $ | (3,154 | ) | $ | 61,114 | $ | 63,377 | $ | (3,604 | ) | |||||||||||||||||
Operating income (loss) as a percent of revenue | 11.0% |
| 6.8% |
| -51.7% |
| 8.1% |
| 16.5% |
| -53.2% |
| |||||||||||||||||||
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||||||||||||||||||
Contract Backlog | |||||||||||||||||||||||||||||||
(Unaudited - in thousands) | |||||||||||||||||||||||||||||||
Contract Backlog by Segment | June 30, 2009 | March 31, 2009 | June 30, 2008 | ||||||||||||||||||||||||||||
Granite West | $ | 824,676 | 53.8 | % | $ | 743,219 | 47.3 | % | $ | 1,188,948 | 55.5 | % | |||||||||||||||||||
Granite East | 707,567 | 46.2 | % | 826,855 | 52.7 | % | 952,700 | 44.5 | % | ||||||||||||||||||||||
Total | $ | 1,532,243 | 100.0 | % | $ | 1,570,074 | 100.0 | % | $ | 2,141,648 | 100.0 | % |
CONTACT:
Granite Construction Incorporated
Jacque Fourchy, 831-761-4714 (Investor)