Granite Construction (GVA) 8-K Granite Announces Third-Quarter 2012 Results

Exhibit 99.1

Granite Announces Third-Quarter 2012 Results

• Total revenues of $728.5 million in line with Q3 2011
• Operating segment results reflect successful execution of Large Projects and ongoing competitive environment in the West
• Cash and marketable securities increased $42.3 million to $372.3 million
• Credit facility increased to $215 million; renewed until October 2016

WATSONVILLE, Calif.--(BUSINESS WIRE)--November 7, 2012--Granite Construction Incorporated (NYSE: GVA) today reported net income attributable to common shareholders of $37.1 million, or $0.94 per diluted share, for the third quarter of 2012 compared with $36.5 million, or $0.93 per diluted share, the prior year.

“Granite’s third quarter results reflect a continuation of the strong performance and momentum we have been seeing from our Large Project segment offset by ongoing competitive headwinds in the Construction and Construction Materials segments,” said James H. Roberts, Granite’s president and chief executive officer. “We continue to follow a well-developed plan to strengthen and grow our business, which includes diversifying and leveraging our core capabilities in the federal, water and power markets. We remain focused on maintaining a solid balance sheet and healthy liquidity while continuing to take the actions necessary to position the company to deliver long-term profitable growth.”

Third-quarter 2012 Financial Results

Total Company

• Revenue totaled $728.5 million compared with $728.6 million in 2011 reflecting a decrease in Construction segment revenue offset by increases in Large Project segment revenue.
• Gross profit margin for the third quarter was 13.9 percent compared with 12.9 percent a year ago.
• Selling, general and administrative expenses for the third quarter increased $2.2 million to $41.3 million primarily due to changes in the fair market value of a liability related to the Company’s non-qualified deferred compensation plan.
• Operating income for the quarter was $61.4 million compared with $60.4 million in the prior year.
• Other income (expense) for the quarter was $1.4 million, an increase of $4.3 million which includes a gain in the value of the investment portfolio associated with the Company’s non-qualified deferred compensation plan of which there is an offsetting charge in SG&A expenses.
• Net income attributable to non-controlling interests in joint ventures was $8.6 million compared with $5.9 million in 2011.
• Total contract backlog at September 30, 2012, was $1.6 billion compared with $1.8 billion a year ago. New awards for the quarter include a $27.6 million highway project and a $24.2 million private-sector solar project, both in California. Backlog at September 30, 2012 does not include any Large Project awards during the quarter.
• Cash and marketable securities at September 30, 2012 was $372.3 million compared with $330.0 million at September 30, 2011.

Construction

• Construction revenue for the quarter decreased to $385.7 million compared with $431.1 million in 2011 as a result of the competitive public-sector bidding environment.
• Gross profit margin for the third quarter was 8.6 percent compared with 13.6 percent a year ago. The results reflect challenging market conditions, as well as increased cost to complete certain projects.

Large Project

• Large Project Construction revenue for the quarter increased to $255.9 million compared with $213.3 million, reflecting progress on several Large Projects across the country.
• Gross profit margin for the quarter was 22.6 percent compared with 12 percent for the same period last year. The increase is primarily due to lower than anticipated costs on several Large Projects, as well as the resolution of various outstanding issues with contract owners.

Construction Materials

• Construction Materials revenue for the quarter totaled $86.8 million, compared with $83.2 million for the same period last year.
• Gross profit on the sale of construction materials was 11.5 percent which is in line with the same period in 2011.

Outlook

Based on its year-to-date performance, the company is updating its guidance for the Large Project segment and now expects revenue to be between $900.0 and $950.0 million with gross margin of 16 to 17 percent. The Company is also updating its revenue guidance for the Construction segment and now expects revenue to be $1.0 to $1.05 billion. Gross margin guidance is still expected to be between 8 and 9 percent. The Company is also updating its revenue guidance for the Construction Materials segment and now expects revenue to be $210 to $220 million with gross margins of 6 to 7 percent.

Net income attributable to non-controlling interests is now expected to be approximately $18 million for the year.

Conference Call

Granite will conduct a conference call today, November 7, 2012 at 8 a.m. Pacific time/11 a.m. Eastern Time to discuss the results of the quarter ended September 30, 2012. Access to a live audio webcast is available at http://investor.graniteconstruction.com/index.cfm . The live conference call may be accessed by calling (877) 643-7158. The conference ID for the live call is 55054260. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through November 14, 2012 by calling (855) 859-2056. The conference ID for the replay is also 55054260.

About Granite

Granite is one of the nation’s leading infrastructure contractors and is member of the S&P 400 Midcap Index, the FTSE KLD 400 Social Index and the Russell 2000 Index. Through its wholly owned subsidiary, Granite is one of the nation’s largest diversified heavy civil contractors and construction materials producers serving public- and private-sector clients nationwide. In addition, Granite has one of the oldest and most robust ethics and compliance programs in the industry. The Company has been recognized by the Ethisphere Institute as one of the World’s Most Ethical Companies for the third year in a row. For more information, please visit graniteconstruction.com.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, circumstances, activities, performance, outcomes and results. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those specifically described in our Annual Report on Form 10-K under “Item 1A. Risk Factors” and Quarterly Reports on Form 10-Q under “Part II, Item 1A. Risk Factors.”

Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law, we undertake no obligation to revise or update any forward-looking statements for any reason.

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share and per share data)
	September 30,		December 31,		September 30,
	2012		2011		2011
ASSETS
Current assets
Cash and cash equivalents	$	287,322	$	256,990	$	193,099
Short-term marketable securities		47,185		70,408		77,389
Receivables, net		363,455		251,838		357,807
Costs and estimated earnings in excess of billings		49,548		37,703		45,884
Inventories		63,999		50,975		57,987
Real estate held for development and sale		57,964		67,037		79,173
Deferred income taxes		38,571		38,571		52,714
Equity in construction joint ventures		97,890		101,029		97,415
Other current assets		13,974		35,171		29,526
Total current assets		1,019,908		909,722		990,994
Property and equipment, net		432,293		447,140		453,822
Long-term marketable securities		37,802		79,250		59,509
Investments in affiliates		30,257		31,071		33,435
Other noncurrent assets		78,375		80,616		80,709
Total assets	$	1,598,635	$	1,547,799	$	1,618,469
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt	$	8,352	$	9,102	$	8,351
Current maturities of non-recourse debt		16,712		23,071		16,690
Accounts payable		209,683		158,660		216,600
Billings in excess of costs and estimated earnings		91,348		90,845		89,505
Accrued expenses and other current liabilities		167,166		166,790		185,624
Total current liabilities		493,261		448,468		516,770
Long-term debt		200,168		208,501		208,519
Long-term non-recourse debt		4,375		9,912		27,755
Other long-term liabilities		47,913		49,221		46,985
Deferred income taxes		3,644		4,034		10,330
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 38,706,966 shares as of September 30, 2012, 38,682,771 shares as of December 31, 2011 and 38,664,403 shares as of September 30, 2011		387		387		387
Additional paid-in capital		114,917		111,514		108,096
Retained earnings		699,277		687,296		673,626
Total Granite Construction Incorporated shareholders’ equity		814,581		799,197		782,109
Noncontrolling interests		34,693		28,466		26,001
Total equity		849,274		827,663		808,110
Total liabilities and equity	$	1,598,635	$	1,547,799	$	1,618,469

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except per share data)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenue
Construction	$	385,744		$	431,101		$	748,803		$	784,393
Large project construction		255,918			213,320			648,645			513,478
Construction materials		86,782			83,171			175,754			165,083
Real estate		38			986			5,055			7,029
Total revenue		728,482			728,578			1,578,257			1,469,983
Cost of revenue
Construction		352,471			372,561			688,989			696,911
Large project construction		198,104			187,763			540,343			443,965
Construction materials		76,798			73,617			166,720			154,329
Real estate		10			744			4,254			5,941
Total cost of revenue		627,383			634,685			1,400,306			1,301,146
Gross profit		101,099			93,893			177,951			168,837
Selling, general and administrative expenses		41,280			39,112			125,274			121,277
Gain on sales of property and equipment		1,622			5,598			6,493			11,572
Operating income		61,441			60,379			59,170			59,132
Other income (expense)
Interest income		485			476			2,140			2,295
Interest expense		(2,561	)		(3,418	)		(8,570	)		(7,653	)
Equity in income of affiliates		1,481			1,881			380			1,443
Other income (expense), net		2,013			(1,833	)		3,866			(1,951	)
Total other income (expense)		1,418			(2,894	)		(2,184	)		(5,866	)
Income before provision for income taxes		62,859			57,485			56,986			53,266
Provision for income taxes		17,113			15,109			15,440			11,973
Net income		45,746			42,376			41,546			41,293
Amount attributable to noncontrolling interests		(8,625	)		(5,908	)		(14,249	)		(8,886	)
Net income attributable to Granite Construction Incorporated	$	37,121		$	36,468		$	27,297		$	32,407
Net income per share attributable to common shareholders:
Basic	$	0.96		$	0.94		$	0.71		$	0.84
Diluted	$	0.94		$	0.93		$	0.70		$	0.83
Weighted average shares of common stock:
Basic		38,518			38,172			38,418			38,092
Diluted		39,141			38,598			39,013			38,428

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Nine Months Ended September 30,	2012			2011
Operating activities
Net income	$	41,546		$	41,293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization		43,651			45,691
Non-cash restructuring, net		(1,782	)		1,031
Other non-cash impairment charges		3,101			-
Gain on sales of property and equipment		(6,493	)		(11,572	)
Stock-based compensation		8,910			8,994
(Gain) loss on company owned life insurance		(1,829	)		639
Changes in assets and liabilities		(66,941	)		(84,058	)
Net cash provided by operating activities		20,163			2,018
Investing activities
Purchases of marketable securities		(59,936	)		(115,146	)
Maturities of marketable securities		70,100			85,875
Proceeds from sale of marketable securities		55,000			33,268
Additions to property and equipment		(25,971	)		(34,748	)
Proceeds from sales of property and equipment		8,368			20,071
Other investing activities, net		1,165			2,313
Net cash provided by (used in) investing activities		48,726			(8,367	)
Financing activities
Long-term debt principal payments		(11,584	)		(17,293	)
Cash dividends paid		(15,078	)		(15,090	)
Purchase of common stock		(4,521	)		(3,840	)
Distributions to noncontrolling partners, net		(8,022	)		(17,489	)
Other financing activities		648			1,138
Net cash used in financing activities		(38,557	)		(52,574	)
Increase (decrease) in cash and cash equivalents		30,332			(58,923	)
Cash and cash equivalents at beginning of period		256,990			252,022
Cash and cash equivalents at end of period	$	287,322		$	193,099

GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
	Three Months Ended September 30,												Nine Months Ended September 30,
	Construction			Large Project Construction			Construction Materials			Real Estate			Construction			Large Project Construction			Construction Materials			Real Estate
2012
Revenue	$	385,744		$	255,918		$	86,782		$	38		$	748,803		$	648,645		$	175,754		$	5,055
Gross profit		33,273			57,814			9,984			28			59,814			108,302			9,034			801
Gross profit as a percent of revenue		8.6	%		22.6	%		11.5	%		73.7	%		8.0	%		16.7	%		5.1	%		15.8	%
2011
Revenue	$	431,101		$	213,320		$	83,171		$	986		$	784,393		$	513,478		$	165,083		$	7,029
Gross profit		58,540			25,557			9,554			242			87,482			69,513			10,754			1,088
Gross profit as a percent of revenue		13.6	%		12.0	%		11.5	%		24.5	%		11.2	%		13.5	%		6.5	%		15.5	%

GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
Contract Backlog by Segment	September 30, 2012				June 30, 2012				September 30, 2011
Construction	$	530,291	33.3	%	$	697,535	35.8	%	$	562,705	30.5	%
Large Project Construction		1,061,143	66.7	%		1,252,828	64.2	%		1,280,945	69.5	%
Total	$	1,591,434	100.0	%	$	1,950,363	100.0	%	$	1,843,650	100.0	%

CONTACT:
Granite Construction Incorporated
Jacque Fourchy, 831-761-4741