Granite Construction (GVA) 8-K Granite Reports Third-Quarter 2009 Financial Results

Exhibit 99.1

Granite Reports Third-Quarter 2009 Financial Results

• Net income in Q309 was $30.6 million vs. $51.7 million a year ago
• Revenue decreased 20% in Q309 to $720.3 million
• Backlog in Granite East increased 17% year over year
• Financial position remains strong with $399.2 million in cash and short-term marketable securities

WATSONVILLE, Calif.--(BUSINESS WIRE)--October 28, 2009--Granite Construction Incorporated (NYSE: GVA) today reported net income of $30.6 million for the third quarter of 2009 compared with $51.7 million for the third quarter of 2008. Diluted earnings per share for the third quarter of 2009 were $0.79 compared with $1.35 for the third quarter of 2008.

“In the midst of a challenging economic environment, we remain focused on project execution and acquiring quality backlog,” said William G. Dorey, Granite president and chief executive officer. “In that regard, I am pleased to report approximately $730.0 million in new awards in the third quarter.

“In the West, the current bidding environment for small projects is one of the toughest we have experienced, marked by an oversupply of contractors as well as public funding challenges. While this is having an impact on our short-term performance, we are pursuing a full pipeline of larger projects that have the potential to deliver strong margins. With a solid balance sheet and experienced teams, Granite is well-positioned to successfully compete for these larger project opportunities.

“Additionally, as we announced last month we are currently implementing a new organizational structure at Granite that will strengthen our business by leveraging resources and gaining efficiencies throughout the company. Our goal is to create a more scalable structure that aligns with current business trends while positioning Granite for long-term profitable growth.”

Third-quarter 2009 Financial Results

Total Company

• Total revenue for the quarter ended September 30, 2009 was $720.3 million compared with $897.8 million in 2008.
• Gross profit as a percentage of revenue for the quarter was 15 percent compared with 16 percent in 2008 driven by the competitive bidding environment in the West offset by improved operating results in the East.
• Gross profit on the sale of construction materials was $7.0 million in 2009 compared with $15.4 million in 2008 primarily as a result of lower sales volume.
• General and administrative expenses decreased $11.4 million to $60.5 million compared with $71.9 million in 2008. The decrease was primarily related to a reduction in bad debt expense of approximately $8.0 million and lower incentive compensation and salaries expense.
• Operating income for the quarter was $46.3 million compared with $74.4 million in the prior year.
• During the third quarter 2009, the company’s real estate investment segment recorded a $0.7 million pre-tax impairment charge related to residential property located in Oregon.
• Net income attributable to noncontrolling interests in joint ventures increased from $0.6 million in 2008 to $5.9 million in 2009. The increase is associated with a large project that had not reached the profit recognition threshold in the third quarter 2008 and the effect of changes in estimates related to certain joint venture projects.
• At September 30, 2009, cash and short-term marketable securities totaled $399.2 million, including $121.1 million of cash and cash equivalents associated with the company’s consolidated joint ventures.
• Total contract backlog at September 30, 2009, was $1.6 billion compared with $1.8 billion at September 30, 2008.

Granite West

• Revenue for the third quarter totaled $564.1 million compared with $749.5 million for the same period in 2008 reflecting intense competition for public works projects, reduced public sector funding and lower demand for construction materials.
• Gross profit as a percentage of revenue for the quarter decreased to 15 percent compared with 18 percent in 2008. The margin compression was primarily a product of lower gross margins on both public sector construction projects and construction materials sales.
• Operating income for the quarter decreased $37.3 million to $56.3 million compared with $93.6 million for the third quarter of last year.

Granite East

• Revenue for the third quarter totaled $155.2 million compared with $146.9 million for the same period in 2008.
• Gross profit as a percentage of revenue for the quarter was 13 percent compared with 7 percent in the same period last year driven primarily by a high quality project portfolio and improved project execution.
• Operating income for the quarter increased $8.3 million to $12.1 million compared with $3.8 million for the third quarter of 2008.

Outlook

The company now expects Granite West revenue in 2009 to be between $1.4 billion and $1.5 billion with an improved gross profit margin percentage between 15.5 percent and 16.5 percent. Additionally, the company expects Granite East revenue in 2009 to be in the range of $600.0 million and $650.0 million with gross profit margin percentage between 16.5 and 17.5 percent. Net income attributable to noncontrolling interests in joint ventures is now expected to be approximately $26.0 million for the year.

As part of its evolution to become a more efficient and effective organization, Granite announced the reduction of approximately 160 salaried positions across the country. Pre-tax charges associated with Granite’s reorganization are estimated to be approximately $6.0 million and will be recognized primarily in the fourth quarter of 2009. The company estimates annualized pre-tax savings associated with personnel-related costs to be approximately $11.0 million.

Conference Call

Granite will conduct a conference call tomorrow, October 29, 2009, at 8:00 a.m. PT/11:00 a.m. ET to discuss the results of the third quarter ended September 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) 693-6483 and (706) 758-5304 for international listeners. The conference ID for the call is 35941051. The call will be recorded and available for replay from approximately two hours after the live audio webcast through November 13, 2009 by calling (800) 642-1687 or (706) 645-9291. The conference ID for the recording is 35941051.

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)
		September 30,		December 31,			September 30,
		2009		2008			2008
ASSETS
Current assets
	Cash and cash equivalents	$	371,434	$	460,843		$	281,046
	Short-term marketable securities		27,798		38,320			101,112
	Accounts receivable, net		382,572		314,733			480,315
	Costs and estimated earnings in excess of billings		38,011		13,295			34,759
	Inventories, net		51,972		55,223			61,342
	Real estate held for development and sale		135,306		75,089			52,165
	Deferred income taxes		43,356		43,637			46,233
	Equity in construction joint ventures		58,450		44,681			45,219
	Other current assets		41,185		56,742			65,182
	Total current assets		1,150,084		1,102,563			1,167,373
Property and equipment, net			530,661		517,678			522,733
Long-term marketable securities			62,612		21,239			30,209
Investment in affiliates			21,309		19,996			27,518
Other noncurrent assets			80,233		81,979			73,696
	Total assets	$	1,844,899	$	1,743,455		$	1,821,529
LIABILITIES AND EQUITY
Current liabilities
	Current maturities of long-term debt	$	68,194	$	39,692		$	34,886
	Accounts payable		211,670		174,626			234,126
	Billings in excess of costs and estimated earnings		187,205		227,364			251,402
	Accrued expenses and other current liabilities		209,806		184,939			227,611
	Total current liabilities		676,875		626,621			748,025
Long-term debt			233,582		250,687			246,487
Other long-term liabilities			48,884		43,604			46,178
Deferred income taxes			17,917		18,261			18,733
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 38,669,447 shares as of September 30, 2009, 38,266,791 shares as of December 31, 2008 and 38,264,058 shares as of September 30, 2008		387		383			383
	Additional paid-in capital		92,356		85,035			83,041
	Retained earnings		724,621		682,237			655,287
	Accumulated other comprehensive loss		-		(146	)		(3,334	)
	Total Granite Construction Inc. shareholders' equity		817,364		767,509			735,377
	Noncontrolling interests		50,277		36,773			26,729
	Total equity		867,641		804,282			762,106
	Total liabilities and equity	$	1,844,899	$	1,743,455		$	1,821,529
		September 30,		December 31,			September 30,
FINANCIAL POSITION		2009		2008			2008
	Working capital	$	473,209	$	475,942		$	419,348
	Current ratio		1.70		1.76			1.56
	Debt to Granite Construction Inc. shareholders' equity capitalization		0.27		0.27			0.28
	Total liabilities to Granite Construction Inc. shareholders' equity ratio		1.20		1.22			1.44

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except per share data)
		Three Months Ended						Nine Months Ended
		September 30,						September 30,
		2009			2008			2009			2008
Revenue
	Construction	$	647,776		$	771,941		$	1,368,111		$	1,755,457
	Construction materials		71,527			124,478			158,688			283,321
	Real estate		981			1,369			1,932			8,142
	Total revenue		720,284			897,788			1,528,731			2,046,920
Cost of revenue
	Construction		549,053			643,531			1,123,038			1,437,093
	Construction materials		64,528			109,068			145,991			247,959
	Real estate		1,531			887			3,272			9,846
	Total cost of revenue		615,112			753,486			1,272,301			1,694,898
Gross profit			105,172			144,302			256,430			352,022
General and administrative expenses			60,465			71,933			169,766			198,344
Gain on sales of property and equipment			1,549			2,008			6,878			4,564
Operating income			46,256			74,377			93,542			158,242
Other income (expense)
	Interest income		744			5,439			3,914			15,087
	Interest expense		(4,245	)		(5,303	)		(10,586	)		(12,871	)
	Equity in income (loss) of affiliates		4,021			(1,257	)		4,360			(1,436	)
	Other income, net		3,062			549			8,278			9,196
	Total other income (expense)		3,582			(572	)		5,966			9,976
Income before provision for income taxes			49,838			73,805			99,508			168,218
Provision for income taxes			13,300			21,473			26,316			46,681
Net income			36,538			52,332			73,192			121,537
Amount attributable to noncontrolling interests			(5,940	)		(594	)		(15,725	)		(31,058	)
Net income attributable to Granite Construction Inc.		$	30,598		$	51,738		$	57,467		$	90,479
Net income per share attributable to common shareholders:
	Basic (1)	$	0.79		$	1.35		$	1.49		$	2.35
	Diluted (1)	$	0.79		$	1.35		$	1.49		$	2.35
Weighted average shares of common stock:
	Basic		37,595			37,430			37,552			37,664
	Diluted		37,709			37,557			37,670			37,760
Note:
	(1) Computed using the two-class method as required by the accounting standards adopted on January 1, 2009.

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Nine Months Ended September 30,				2009			2008
Operating activities
	Net income			$	73,192		$	121,537
	Adjustments to reconcile net income to net cash provided by operating activities:
		Impairment of real estate held for development and sale			1,686			4,500
		Depreciation, depletion and amortization			59,048			64,036
		(Recovery of) provision for doubtful accounts, net			(3,844	)		8,914
		Gain on sales of property and equipment			(6,878	)		(4,564	)
		Change in deferred income taxes			(518	)		1,116
		Stock-based compensation			7,869			5,135
		Excess tax benefit on stock-based compensation			(670	)		(743	)
		Gain from trading securities			(431	)		-
		Equity in (income) loss of affiliates			(4,360	)		1,436
		Acquisition of noncontrolling interest			-			(16,616	)
	Changes in assets and liabilities, net of the effects of acquisition and consolidations				(67,511	)		(79,854	)
			Net cash provided by operating activities		57,583			104,897
Investing activities
	Purchases of marketable securities				(61,974	)		(68,732	)
	Maturities of marketable securities				32,610			64,090
	Release of funds for acquisition of noncontrolling interest				-			28,332
	Additions to property and equipment				(75,773	)		(76,098	)
	Proceeds from sales of property and equipment				10,089			12,253
	Acquisition of businesses				-			(14,022	)
	Contributions to affiliates				(4,969	)		(5,345	)
	Issuance of notes receivable				(4,270	)		-
	Other investing activities				450			626
			Net cash used in investing activities		(103,837	)		(58,896	)
Financing activities
	Proceeds from long-term debt				8,384			2,660
	Long-term debt principal payments				(18,139	)		(15,748	)
	Cash dividends paid				(15,031	)		(15,081	)
	Purchase of common stock				(2,840	)		(45,489	)
	Contributions from noncontrolling partners				239			4,955
	Distributions to noncontrolling partners				(16,490	)		(37,713	)
	Acquisition of noncontrolling interest				-			(11,716	)
	Excess tax benefit on stock-based compensation				670			743
	Other financing				52			-
			Net cash used in financing activities		(43,155	)		(117,389	)
Decrease in cash and cash equivalents					(89,409	)		(71,388	)
Cash and cash equivalents at beginning of period					460,843			352,434
Cash and cash equivalents at end of period				$	371,434		$	281,046

GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - in thousands)
		Three Months Ended September 30,									Nine Months Ended September 30,
		Granite West			Granite East			Granite Land Company			Granite West			Granite East			Granite Land Company
	2009
	Revenue	$	564,089		$	155,214		$	981		$	1,109,442		$	417,357		$	1,932
	Gross profit (loss)	$	85,499		$	20,223		$	(550	)	$	181,320		$	76,450		$	(1,340	)
	Gross profit (loss) as a percent of revenue		15.2	%		13.0	%		-56.1	%		16.3	%		18.3	%		-69.4	%
	Operating income (loss)	$	56,299		$	12,052		$	(1,221	)	$	98,073		$	55,136		$	(4,159	)
	Operating income (loss) as a percent of revenue		10.0	%		7.8	%		-124.5	%		8.8	%		13.2	%		-215.3	%
	2008
	Revenue	$	749,487		$	146,932		$	1,369		$	1,506,952		$	531,826		$	8,142
	Gross profit (loss)	$	133,904		$	9,916		$	482		$	266,457		$	87,269		$	(1,704	)
	Gross profit (loss) as a percent of revenue		17.9	%		6.7	%		35.2	%		17.7	%		16.4	%		-20.9	%
	Operating income (loss)	$	93,570		$	3,819		$	(191	)	$	154,684		$	67,196		$	(3,795	)
	Operating income (loss) as a percent of revenue		12.5	%		2.6	%		-14.0	%		10.3	%		12.6	%		-46.6	%
GRANITE CONSTRUCTION INCORPORATED
Contract Backlog
(Unaudited - in thousands)
Contract Backlog by Segment		September 30, 2009						June 30, 2009						September 30, 2008
	Granite West	$	553,728			34.3	%	$	824,676			53.8	%	$	915,472			50.3	%
	Granite East		1,058,540			65.7	%		707,567			46.2	%		906,116			49.7	%
	Total	$	1,612,268			100.0	%	$	1,532,243			100.0	%	$	1,821,588			100.0	%

CONTACT:
Granite Construction Incorporated
Jacque Fourchy, 831-761-4714 (Investor)