Exhibit 99.1
Granite Reports Second-Quarter 2010 Financial Results
- Total revenue essentially flat compared with a year ago
- Net loss for the second quarter of $6.7 million
- SG&A expenses decreased $5.0 million in the quarter compared with a year ago
- Total contract backlog $1.6 billion; Approximately $210 million in new projects awarded since June 30, 2010
- $150 million credit facility renewed until June 2013
WATSONVILLE, Calif.--(BUSINESS WIRE)--August 2, 2010--Granite Construction Incorporated (NYSE:GVA) today reported a net loss of $6.7 million, or $0.18 per diluted share, for the second quarter of 2010 compared with net income of $17.9 million, or $0.46 per diluted share, for the second quarter of 2009.
“Our 2010 construction season is in full swing despite a slow start in the second quarter,” said, William G. Dorey, Granite President and Chief Executive Officer. “Although we were unable to build as much work as we would have liked in April and May, our June results were encouraging. However, as expected, gross margins are considerably lower as we build projects bid in this highly competitive environment.”
Mr. Dorey continued, “Large Project Construction segment results for the second quarter include the initial work on the Queens Bored Tunnel and Houston Metro projects. Both of these projects are not expected to reach the profit recognition threshold until 2011. The profit associated with these two projects should lead to Large Project earnings growth next year.”
Second-quarter 2010 Financial Results
Total Company
- Revenue totaled $454.2 million compared with $461.1 million in 2009.
- Gross profit margin was 11 percent, down from 18 percent in 2009, driven primarily by the lack of private-sector work and too much capacity for the available work in the marketplace.
- Operating income for the quarter was $2.1 million compared with $30.4 million in the prior year.
- Selling, general and administrative expenses for the second quarter were $51.4 million compared with $56.3 million for the same period last year, driven by a continuing effort to reduce the Company’s overall cost structure.
- Net income attributable to noncontrolling interests was $4.1 million compared with $4.7 million in 2009.
- Total contract backlog at June 30, 2010 was $1.6 billion, essentially flat compared with backlog at June 30, 2009. Second quarter 2010 backlog does not include approximately $210 million associated with three projects awarded to date in the third quarter of 2010.
- The tax rate for the second quarter was 248.5 percent compared with 26.5 percent in 2009. This unusually high rate for the quarter is due to adjusting the year-to-date tax rate to the current estimate of 6 percent for fiscal 2010.
Construction
- Construction revenue for the quarter totaled $237.9 million compared with $277.5 million for the same period in 2009.
- Gross profit margin for the second quarter was 10 percent compared with 19 percent a year ago. The decrease is due to the lack of profitability associated with border fence work in 2010 as compared with 2009, as well as lower margin backlog due to the competitive markets and a slow start to the construction season in the West.
Large Project Construction
- Large Project Construction revenue for the quarter totaled $153.3 million compared with $125.8 million for the same period last year.
- Gross profit margin for the quarter decreased to 14 percent compared with 18 percent for the same period last year, reflecting an increase in revenue on projects that have yet to reach the profit recognition threshold.
Construction Materials
- Construction Materials revenue for the quarter totaled $61.1 million compared with $57.3 million for the same period last year.
- Gross profit on the sale of construction materials was $4.5 million in 2010 compared with $9.6 million in 2009. The decline reflects an increase in fixed costs related to new plants that came on line in late 2009 without a corresponding increase in sales.
Outlook
“This year is proving to be very challenging, particularly in the West,” said Dorey. “Although the public works bidding activity in the Construction segment has been strong, the competitive climate is driving margins associated with that work substantially lower than in previous years. Based on our current outlook, we are updating our guidance for each of our segments. Revenue for the Construction segment is now expected to be between $950.0 million and $1.15 billion with a corresponding gross profit margin between 11 percent and 12 percent. Revenue for the Large Project Construction segment is expected to be between $650.0 million and $750.0 million with a corresponding gross profit margin between 10 and 11 percent. Construction Materials segment revenue is expected to be between $175.0 million and $225.0 million with a corresponding gross profit margin between 9 and 10 percent. Net income attributable to noncontrolling interests is expected to be approximately $19.0 million for the year. The tax rate for 2010 is currently forecasted to be 6 percent.
“Additionally, we continue to focus considerable effort on optimizing our cost structure and lowering expenses across the Company. In 2010, our goal is to reduce SG&A by 10 percent compared with 2009 through reductions in headcount, discretionary spending and lower compensation expense,” said Dorey.
Conference Call
Granite will conduct a conference call today, August 2, 2010, at 8 a.m. Pacific time/11 a.m. Eastern time to discuss the results of the quarter ended June 30, 2010. 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, or (706) 758-5304 for international listeners. The conference ID for the call is 86369247. The call will be recorded and will be available for replay from approximately two hours after the live audio webcast through August 13, 2010, by calling (800) 642-1687 or (706) 645-9291. The conference ID for the recording is 86369247.
About Granite
Granite Construction Incorporated is a member of the S&P 400 Midcap Index, the FTSE KLD 400 Social Index and the Russell 2000 Index. 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 news 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 of 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, | |||||||
2010 | 2009 | 2009 | |||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 208,450 | $ | 338,956 | $ | 356,168 | |||
Short-term marketable securities | 73,566 | 42,448 | 24,878 | ||||||
Receivables, net | 295,779 | 280,252 | 281,432 | ||||||
Costs and estimated earnings in excess of billings | 56,665 | 10,619 | 50,891 | ||||||
Inventories | 48,529 | 45,800 | 68,755 | ||||||
Real estate held for development and sale | 148,897 | 139,449 | 131,169 | ||||||
Deferred income taxes | 31,870 | 31,034 | 43,314 | ||||||
Equity in construction joint ventures | 72,571 | 67,693 | 50,215 | ||||||
Other current assets | 39,031 | 50,467 | 46,719 | ||||||
Total current assets | 975,358 | 1,006,718 | 1,053,541 | ||||||
Property and equipment, net | 501,258 | 520,778 | 529,805 | ||||||
Long-term marketable securities | 68,291 | 76,937 | 53,328 | ||||||
Investments in affiliates | 31,210 | 24,644 | 17,310 | ||||||
Other noncurrent assets | 79,060 | 80,498 | 80,300 | ||||||
Total assets | $ | 1,655,177 | $ | 1,709,575 | $ | 1,734,284 | |||
LIABILITIES AND EQUITY | |||||||||
Current liabilities | |||||||||
Current maturities of long-term debt | $ | 8,538 | $ | 15,017 | $ | 15,348 | |||
Current maturities of non-recourse debt | 39,657 | 43,961 | 49,500 | ||||||
Accounts payable | 173,637 | 131,251 | 177,025 | ||||||
Billings in excess of costs and estimated earnings | 144,935 | 156,041 | 184,665 | ||||||
Accrued expenses and other current liabilities | 161,632 | 159,843 | 168,217 | ||||||
Total current liabilities | 528,399 | 506,113 | 594,755 | ||||||
Long-term debt | 216,870 | 225,203 | 225,220 | ||||||
Long-term non-recourse debt | 16,615 | 19,485 | 8,455 | ||||||
Other long-term liabilities | 49,197 | 48,998 | 46,686 | ||||||
Deferred income taxes | 27,905 | 27,220 | 17,917 | ||||||
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 38,788,581 shares as of June 30, 2010, 38,635,021 shares as of December 31, 2009 and 38,673,034 shares as of June 30, 2009 | 388 | 386 | 387 | ||||||
Additional paid-in capital | 98,142 | 94,633 | 89,142 | ||||||
Retained earnings | 677,873 | 735,632 | 699,050 | ||||||
Total Granite Construction Incorporated shareholders' equity | 776,403 | 830,651 | 788,579 | ||||||
Noncontrolling interests | 39,788 | 51,905 | 52,672 | ||||||
Total equity | 816,191 | 882,556 | 841,251 | ||||||
Total liabilities and equity | $ | 1,655,177 | $ | 1,709,575 | $ | 1,734,284 | |||
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(Unaudited - in thousands, except per share data) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenue | ||||||||||||||||
Construction | $ | 237,943 | $ | 277,456 | $ | 319,129 | $ | 445,505 | ||||||||
Large project construction | 153,328 | 125,770 | 259,653 | 274,830 | ||||||||||||
Construction materials | 61,089 | 57,315 | 87,253 | 87,161 | ||||||||||||
Real estate | 1,844 | 534 | 8,852 | 951 | ||||||||||||
Total revenue | 454,204 | 461,075 | 674,887 | 808,447 | ||||||||||||
Cost of revenue | ||||||||||||||||
Construction | 215,042 | 224,655 | 294,382 | 357,528 | ||||||||||||
Large project construction | 131,493 | 103,259 | 228,335 | 218,655 | ||||||||||||
Construction materials | 56,609 | 47,732 | 89,898 | 77,892 | ||||||||||||
Real estate | 1,362 | 1,534 | 6,860 | 1,741 | ||||||||||||
Total cost of revenue | 404,506 | 377,180 | 619,475 | 655,816 | ||||||||||||
Gross profit | 49,698 | 83,895 | 55,412 | 152,631 | ||||||||||||
Selling, general and administrative expenses | 51,357 | 56,319 | 106,649 | 110,674 | ||||||||||||
Gain on sales of property and equipment | 3,800 | 2,808 | 8,252 | 5,329 | ||||||||||||
Operating income (loss) | 2,141 | 30,384 | (42,985 | ) | 47,286 | |||||||||||
Other income (expense) | ||||||||||||||||
Interest income | 1,098 | 1,109 | 2,037 | 3,170 | ||||||||||||
Interest expense | (3,013 | ) | (2,853 | ) | (6,747 | ) | (6,341 | ) | ||||||||
Equity in (loss) income of affiliates | (387 | ) | 783 | (706 | ) | 339 | ||||||||||
Other income, net | 1,934 | 1,431 | 4,831 | 5,216 | ||||||||||||
Total other (expense) income | (368 | ) | 470 | (585 | ) | 2,384 | ||||||||||
Income (loss) before provision for (benefit from) income taxes | 1,773 | 30,854 | (43,570 | ) | 49,670 | |||||||||||
Provision for (benefit from) income taxes | 4,406 | 8,187 | (3,207 | ) | 13,016 | |||||||||||
Net (loss) income | (2,633 | ) | 22,667 | (40,363 | ) | 36,654 | ||||||||||
Amount attributable to noncontrolling interests | (4,058 | ) | (4,718 | ) | (7,282 | ) | (9,785 | ) | ||||||||
Net (loss) income attributable to Granite Construction Incorporated | $ | (6,691 | ) | $ | 17,949 | $ | (47,645 | ) | $ | 26,869 | ||||||
Net (loss) income per share attributable to common shareholders: | ||||||||||||||||
Basic (1) | $ | (0.18 | ) | $ | 0.46 | $ | (1.26 | ) | $ | 0.70 | ||||||
Diluted (1) | $ | (0.18 | ) | $ | 0.46 | $ | (1.26 | ) | $ | 0.70 | ||||||
Weighted average shares of common stock: | ||||||||||||||||
Basic | 37,850 | 37,584 | 37,770 | 37,530 | ||||||||||||
Diluted | 37,850 | 37,699 | 37,770 | 37,650 | ||||||||||||
Note: | |
(1) Computed using the two-class method, except when in a net loss position | |
GRANITE CONSTRUCTION INCORPORATED | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited - in thousands) | ||||||||
Six Months Ended June 30, | 2010 | 2009 | ||||||
Operating activities | ||||||||
Net (loss) income | $ | (40,363 | ) | $ | 36,654 | |||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
Impairment of real estate held for development and sale | 107 | 1,036 | ||||||
Depreciation, depletion and amortization | 35,839 | 39,670 | ||||||
Provision for (recovery of) doubtful accounts | 406 | (3,386 | ) | |||||
Gain on sales of property and equipment | (8,252 | ) | (5,329 | ) | ||||
Stock-based compensation | 6,885 | 4,561 | ||||||
Gain on company owned life insurance | (1,748 | ) | - | |||||
Changes in assets and liabilities, net of the effects of consolidations | (31,792 | ) | (79,241 | ) | ||||
Net cash used in operating activities | (38,918 | ) | (6,035 | ) | ||||
Investing activities | ||||||||
Purchases of marketable securities | (60,073 | ) | (39,043 | ) | ||||
Maturities of marketable securities | 34,900 | 27,610 | ||||||
Proceeds from company owned life insurance | 2,078 | - | ||||||
Additions to property and equipment | (21,809 | ) | (55,659 | ) | ||||
Proceeds from sales of property and equipment | 11,936 | 7,416 | ||||||
Purchase of private preferred stock | (6,400 | ) | - | |||||
Contributions to affiliates | (1,014 | ) | (4,971 | ) | ||||
Issuance of notes receivable | (1,242 | ) | - | |||||
Collection of notes receivable | 1,720 | 374 | ||||||
Other investing activities | (333 | ) | 65 | |||||
Net cash used in investing activities | (40,237 | ) | (64,208 | ) | ||||
Financing activities | ||||||||
Proceeds from long-term debt | 95 | 4,911 | ||||||
Long-term debt principal payments | (18,155 | ) | (17,475 | ) | ||||
Cash dividends paid | (10,067 | ) | (10,003 | ) | ||||
Purchase of common stock | (3,434 | ) | (2,821 | ) | ||||
Distributions to noncontrolling partners, net | (19,797 | ) | (9,080 | ) | ||||
Other financing activities | 7 | 36 | ||||||
Net cash used in financing activities | (51,351 | ) | (34,432 | ) | ||||
Decrease in cash and cash equivalents | (130,506 | ) | (104,675 | ) | ||||
Cash and cash equivalents at beginning of period | 338,956 | 460,843 | ||||||
Cash and cash equivalents at end of period | $ | 208,450 | $ | 356,168 | ||||
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||||||||||||||
Business Segment Information | ||||||||||||||||||||||||||||||||||
(Unaudited - in thousands) | ||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, |
| Six Months Ended June 30, | |||||||||||||||||||||||||||||||
Large Project | Construction |
Real Estate | Large Project | Construction |
Real Estate | |||||||||||||||||||||||||||||
Construction | Construction | Materials | Construction | Construction | Materials | |||||||||||||||||||||||||||||
2010 | ||||||||||||||||||||||||||||||||||
Revenue | $ | 237,943 | $ | 153,328 | $ | 61,089 | $ | 1,844 | $ | 319,129 | $ | 259,653 | $ | 87,253 | $ | 8,852 | ||||||||||||||||||
Gross profit (loss) | $ | 22,901 | $ | 21,835 | $ | 4,480 | $ | 482 | $ | 24,747 | $ | 31,318 | $ | (2,645 | ) | $ | 1,992 | |||||||||||||||||
Gross profit (loss) as a percent of revenue | 9.6 | % | 14.2 | % | 7.3 | % | 26.1 | % | 7.8 | % | 12.1 | % | -3.0 | % | 22.5 | % | ||||||||||||||||||
2009 | ||||||||||||||||||||||||||||||||||
Revenue | $ | 277,456 | $ | 125,770 | $ | 57,315 | $ | 534 | $ | 445,505 | $ | 274,830 | $ | 87,161 | $ | 951 | ||||||||||||||||||
Gross profit (loss) | $ | 52,801 | $ | 22,511 | $ | 9,583 | $ | (1,000 | ) | $ | 87,977 | $ | 56,175 | $ | 9,269 | $ | (790 | ) | ||||||||||||||||
Gross profit (loss) as a percent of revenue | 19.0 | % | 17.9 | % | 16.7 | % | -187.3 | % | 19.7 | % | 20.4 | % | 10.6 | % | -83.1 | % | ||||||||||||||||||
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||
Contract Backlog by Segment | ||||||||||||||||||||||
(Unaudited - in thousands) | ||||||||||||||||||||||
| June 30, 2010 | March 31, 2010 | June 30, 2009 | |||||||||||||||||||
Construction | $ | 594,214 | 38.3 | % | $ | 487,751 | 30.9 | % | $ | 687,696 | 44.9 | % | ||||||||||
Large project construction | 957,080 | 61.7 | % | 1,091,251 | 69.1 | % | 844,547 | 55.1 | % | |||||||||||||
Total | $ | 1,551,294 | 100.0 | % | $ | 1,579,002 | 100.0 | % | $ | 1,532,243 | 100.0 | % |
CONTACT:
Granite Construction Incorporated
Jacque Fourchy, 831-761-4741