Exhibit 99.1
Granite Construction Incorporated Reports Second Quarter 2005 Results
WATSONVILLE, Calif., July 27 /PRNewswire-FirstCall/ -- Granite Construction Incorporated (NYSE: GVA) today announced its results for the second quarter ended June 30, 2005. The Company reported net income for the quarter of $15.0 million, or $0.36 per diluted share. This compares with net income of $13.8 million, or $0.34 per diluted share for the same period last year. For the six-month period ended June 30, 2005, net income was $6.7 million or $0.16 per share on a diluted basis compared with $4.7 million or $0.11 per share for the same period in 2004. As previously disclosed, a $9.3 million accrual related to a judgment in a civil lawsuit in Nevada is included in the second quarter 2005 results.
William G. Dorey, president and chief executive officer, said, “We are pleased with our second quarter results, which reflect the strength of our business in the West. The Branch Division results, in particular, demonstrate our ability to capitalize on the demand for our construction services and materials in what can be characterized as the healthiest business conditions we have experienced in many years.”
Commenting on the Company’s outlook, “We believe the current prospects for our Branch Division are very exciting and the long-term prospects for our Heavy Construction Division (HCD) are encouraging. Based on the strength of the private sector market, along with improved public sector funding, we expect operating income for the Branch Division to exceed that of 2004. Our second quarter results for HCD, however, highlight our challenge to improve the profitability on our large projects. We are working diligently to improve large project performance and continue to anticipate these efforts will be reflected in the performance of the division by year end.”
Operating Results -- Quarter and Year-To-Date
For the second quarter of 2005, total revenue increased 21.1% to $676.7 million compared with $558.8 million a year ago. Total gross profit as a percent of revenue for the second quarter 2005 increased to 11.3% compared with 10.7% for the same period last year. Operating income increased to $29.0 million for the second quarter of 2005 compared with $24.9 million for the second quarter 2004.
For the six-month period ended June 30, 2005, revenue for the Company totaled $1.1 billion compared with $895.8 million for the same period last year. Total gross profit as a percent of revenue for the six months ended June 30, 2005 increased to 9.4% compared with 7.9% last year. Operating income for the six month period increased to $17.1 million compared with $12.4 million for the same period in 2004.
Total company backlog at June 30, 2005 was $2.5 billion compared with $2.0 billion a year ago. New awards for the second quarter 2005 include a $44.9 million site preparation project in New York, a $23.7 million highway project in Alaska, a $17.3 million paving project in Texas and a $14.2 million highway project in Utah.
Results by Segment
HCD revenue for the quarter totaled $276.3 million versus $220.1 million for the same period last year. HCD backlog increased $474.3 million to $1.9 billion compared with $1.4 billion for the same period last year. HCD gross profit as a percent of revenue decreased in the quarter to 5.5% compared with 8.3% in the prior period. This decrease reflects a net reduction of gross profit of approximately $11.0 million resulting from changes in the costs to complete compared with $5.4 million in the second quarter 2004. As a product of lower gross profit in the quarter, operating income for HCD decreased 22.3% for the second quarter 2005 to $8.0 million compared with $10.3 million in the prior year.
For the six-month period ended June 30, 2005, HCD revenue totaled $478.2 million compared with $390.2 million for the same period last year. HCD gross profit as a percent of revenue for the six months ended June 30, 2005 increased to 4.7% compared with 3.8% last year. HCD operating income for the six month period increased to $6.7 million compared with a loss of $1.0 million for the same period in 2004.
Branch Division revenue for the quarter totaled $400.4 million, an increase of $61.8 million or 18.2% over the same period in 2004. Backlog for the Branch Division decreased slightly in the second quarter 2005 to $647.9 million compared with $660.1 million for the second quarter 2004. Branch Division gross profit as a percent of revenue increased for the second quarter 2005 to 15.4% compared with 12.3% for the second quarter 2004 due to an increase in profitability on our construction work and the sales of our construction materials. Branch Division operating income increased $6.8 million for the quarter to $30.5 million compared with $23.7 million for the second quarter last year. Second quarter 2005 operating results for the Branch Division includes the $9.3 million provision for a legal judgment.
For the six-month period ended June 30, 2005, Branch Division revenue totaled $619.4 million compared with $505.6 million for the same period last year. Branch Division gross profit as a percent of revenue for the six months ended June 30, 2005 increased to 13.1% compared with 11.1% last year. Operating income for the division increased to $29.5 million for the same period compared with $18.0 million in 2004.
Second Quarter Conference Call Information
The Company will host a conference call on Thursday, July 28, 2005, at 11:00 a.m. Eastern time. Investors and other interested parties may access the call live by dialing 800-362-0571, 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 August 3, 2005. In the U.S. and Canada, dial 888-203-1112. For international listeners, dial 719-457-0820. The pass code for the recording is 3947976. 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
June 30, | | Variance | |
| |
| |
| |
Operations | | 2005 | | 2004 | | Amount | | Percent | |
| |
| |
| |
| |
| |
Revenue | | $ | 676,704 | | $ | 558,754 | | $ | 117,950 | | | 21.1 | |
Gross profit | | $ | 76,707 | | $ | 59,744 | | $ | 16,963 | | | 28.4 | |
Gross profit as a percent of revenue | | | 11.3 | % | | 10.7 | % | | 0.6 | % | | — | |
General and administrative expenses | | $ | 40,606 | | $ | 35,914 | | $ | (4,692 | ) | | (13.1 | ) |
G&A expenses as a percent of revenue | | | 6.0 | % | | 6.4 | % | | 0.4 | % | | — | |
Provision for legal judgment | | $ | 9,300 | | | — | | $ | (9,300 | ) | | — | |
Gain on sales of property and equipment | | $ | 2,189 | | $ | 1,109 | | $ | 1,080 | | | 97.4 | |
Other income (expense) | | | | | | | | | | | | | |
Interest income | | $ | 1,968 | | $ | 1,317 | | $ | 651 | | | 49.4 | |
Interest expense | | $ | (1,636 | ) | $ | (1,859 | ) | $ | 223 | | | 12.0 | |
Equity in (loss) income of affiliates | | $ | (17 | ) | $ | 2,766 | | $ | (2,783 | ) | | **** | |
Other, net | | $ | (651 | ) | $ | (7 | ) | $ | (644 | ) | | **** | |
Total other income (expense) | | $ | (336 | ) | $ | 2,217 | | $ | (2,553 | ) | | **** | |
Income before provision for income taxes and minority interest | | $ | 28,654 | | $ | 27,156 | | $ | 1,498 | | | 5.5 | |
Minority interest | | $ | (5,480 | ) | $ | (4,111 | ) | $ | (1,369 | ) | | (33.3 | ) |
Net income | | $ | 14,954 | | $ | 13,806 | | $ | 1,148 | | | 8.3 | |
Net income per share: | | | | | | | | | | | | | |
Basic | | $ | 0.37 | | $ | 0.34 | | $ | 0.03 | | | 8.8 | |
Diluted | | $ | 0.36 | | $ | 0.34 | | $ | 0.02 | | | 5.9 | |
Weighted average shares of common stock: | | | | | | | | | | | | | |
Basic | | | 40,638 | | | 40,417 | | | 221 | | | 0.5 | |
Diluted | | | 41,212 | | | 41,018 | | | 194 | | | 0.5 | |
| | June 30,
2005 | | Dec. 31,
2004 | | Variance | |
| | | |
| |
Financial Position | | | | Amount | | Percent | |
| |
| |
| |
| |
| |
Working capital | | $ | 312,917 | | $ | 355,927 | | $ | (43,010 | ) | | (12.1 | ) |
Current ratio | | | 1.57 | | | 1.76 | | | (0.19 | ) | | (10.8 | ) |
Long-term debt | | $ | 130,427 | | $ | 148,503 | | $ | (18,076 | ) | | (12.2 | ) |
Total liabilities to equity ratio | | | 1.45 | | | 1.32 | | | 0.13 | | | 9.8 | |
Shareholders’ equity | | $ | 549,135 | | $ | 550,474 | | $ | (1,339 | ) | | (0.2 | ) |
Total assets | | $ | 1,347,875 | | $ | 1,277,954 | | $ | 69,921 | | | 5.5 | |
Book value per common share | | $ | 13.16 | | $ | 13.23 | | $ | (0.07 | ) | | (0.5 | ) |
Backlog | | $ | 2,500,307 | | $ | 2,437,994 | | $ | 62,313 | | | 2.6 | |
| | Six Months Ended
June 30, | | Variance | |
| |
| |
| |
Operations | | 2005 | | 2004 | | Amount | | Percent | |
| |
| |
| |
| |
| |
Revenue | | $ | 1,097,638 | | $ | 895,772 | | $ | 201,866 | | | 22.5 | |
Gross profit | | $ | 103,647 | | $ | 70,428 | | $ | 33,219 | | | 47.2 | |
Gross profit as a percent of revenue | | | 9.4 | % | | 7.9 | % | | 1.5 | % | | — | |
General and administrative expenses | | $ | 79,476 | | $ | 72,458 | | $ | (7,018 | ) | | (9.7 | ) |
G&A expenses as a percent of revenue | | | 7.2 | % | | 8.1 | % | | 0.9 | % | | — | |
Provision for legal judgment | | $ | 9,300 | | | — | | $ | (9,300 | ) | | — | |
Gain on sales of property and equipment | | $ | 2,215 | | $ | 14,439 | | $ | (12,224 | ) | | (84.7 | ) |
Other income (expense) | | | | | | | | | | | | | |
Interest income | | $ | 4,127 | | $ | 2,715 | | $ | 1,412 | | | 52.0 | |
Interest expense | | $ | (3,667 | ) | $ | (3,599 | ) | $ | (68 | ) | | (1.9 | ) |
Equity in (loss) income of affiliates | | $ | (77 | ) | $ | 2,873 | | $ | (2,950 | ) | | **** | |
Other, net | | $ | (724 | ) | $ | 95 | | $ | (819 | ) | | **** | |
Total other income (expense) | | $ | (341 | ) | $ | 2,084 | | $ | (2,425 | ) | | **** | |
Income before provision for income taxes and minority interest | | $ | 16,745 | | $ | 14,493 | | $ | 2,252 | | | 15.5 | |
Minority interest | | $ | (5,530 | ) | $ | (4,941 | ) | $ | (589 | ) | | (11.9 | ) |
Net income | | $ | 6,687 | | $ | 4,697 | | $ | 1,990 | | | 42.4 | |
Net income per share: | | | | | | | | | | | | | |
Basic | | $ | 0.16 | | $ | 0.12 | | $ | 0.04 | | | 33.3 | |
Diluted | | $ | 0.16 | | $ | 0.11 | | $ | 0.05 | | | 45.5 | |
Weighted average shares of common stock: | | | | | | | | | | | | | |
Basic | | | 40,562 | | | 40,341 | | | 221 | | | 0.5 | |
Diluted | | | 41,118 | | | 40,919 | | | 199 | | | 0.5 | |
| | June 30, | | Variance | |
| |
| |
| |
Financial Position | | 2005 | | 2004 | | Amount | | Percent | |
| |
| |
| |
| |
| |
Working capital | | $ | 312,917 | | $ | 288,732 | | $ | 24,185 | | | 8.4 | |
Current ratio | | | 1.57 | | | 1.64 | | | (0.07 | ) | | (4.3 | ) |
Long-term debt | | $ | 130,427 | | $ | 131,592 | | $ | (1,165 | ) | | (0.9 | ) |
Total liabilities to equity ratio | | | 1.45 | | | 1.37 | | | 0.08 | | | 5.8 | |
Shareholders’ equity | | $ | 549,135 | | $ | 501,733 | | $ | 47,402 | | | 9.4 | |
Total assets | | $ | 1,347,875 | | $ | 1,190,510 | | $ | 157,365 | | | 13.2 | |
Book value per common share | | $ | 13.16 | | $ | 12.06 | | $ | 1.10 | | | 9.1 | |
Backlog | | $ | 2,500,307 | | $ | 2,038,169 | | $ | 462,138 | | | 22.7 | |
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands, except share and per share data)
| | June 30,
2005 | | December 31,
2004 | |
| |
| |
| |
Assets | | | | | | | |
Current assets | | | | | | | |
Cash and cash equivalents | | $ | 116,988 | | $ | 161,627 | |
Short-term marketable securities | | | 60,751 | | | 102,237 | |
Accounts receivable, net | | | 498,892 | | | 357,842 | |
Costs and estimated earnings in excess of billings | | | 51,233 | | | 54,384 | |
Inventories | | | 34,377 | | | 31,711 | |
Deferred income taxes | | | 20,947 | | | 21,012 | |
Equity in construction joint ventures | | | 21,167 | | | 20,895 | |
Other current assets | | | 62,176 | | | 75,630 | |
Total current assets | | | 866,531 | | | 825,338 | |
Property and equipment, net | | | 397,476 | | | 376,197 | |
Long-term marketable securities | | | 23,718 | | | 13,828 | |
Investment in affiliates | | | 10,844 | | | 10,725 | |
Other assets | | | 49,306 | | | 51,866 | |
Total assets | | $ | 1,347,875 | | $ | 1,277,954 | |
Liabilities and Shareholders’ Equity | | | | | | | |
Current liabilities | | | | | | | |
Current maturities of long-term debt | | $ | 22,639 | | $ | 15,861 | |
Accounts payable | | | 256,888 | | | 191,782 | |
Billings in excess of costs and estimated earnings | | | 148,161 | | | 144,401 | |
Accrued expenses and other current liabilities | | | 125,926 | | | 117,367 | |
Total current liabilities | | | 553,614 | | | 469,411 | |
Long-term debt | | | 130,427 | | | 148,503 | |
Other long-term liabilities | | | 43,044 | | | 40,641 | |
Deferred income taxes | | | 44,135 | | | 44,135 | |
Minority interest in consolidated subsidiaries | | | 27,520 | | | 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 41,714,138 shares in 2005 and 41,612,319 shares in 2004 | | | 417 | | | 416 | |
Additional paid-in capital | | | 79,603 | | | 76,766 | |
Unearned compensation | | | (13,380 | ) | | (10,818 | ) |
Retained earnings | | | 480,979 | | | 482,635 | |
Accumulated other comprehensive income | | | 1,516 | | | 1,475 | |
Total shareholders’ equity | | | 549,135 | | | 550,474 | |
Total liabilities and shareholders’ equity | | $ | 1,347,875 | | $ | 1,277,954 | |
GRANITE CONSTRUCTION INCORPORATED
REVENUE AND BACKLOG ANALYSIS
(Unaudited - Dollars In Thousands)
BY MARKET SECTOR
| | Revenue | |
| |
| |
| | Three Months Ended
June 30, | | Variance | |
| |
| |
| |
| | 2005 | | 2004 | | Amount | | Percent | |
| |
| |
| |
| |
| |
Contracts | | | | | | | | | | | | | |
Federal | | $ | 24,528 | | $ | 37,801 | | $ | (13,273 | ) | | (35.1 | ) |
State | | | 202,006 | | | 201,802 | | | 204 | | | 0.1 | |
Local | | | 239,975 | | | 171,594 | | | 68,381 | | | 39.9 | |
Total public sector | | | 466,509 | | | 411,197 | | | 55,312 | | | 13.5 | |
Private sector | | | 125,620 | | | 76,521 | | | 49,099 | | | 64.2 | |
Aggregate sales | | | 84,575 | | | 71,036 | | | 13,539 | | | 19.1 | |
| | $ | 676,704 | | $ | 558,754 | | $ | 117,950 | | | 21.1 | |
| | Backlog | |
| |
| |
| | June 30, | | Variance | |
| |
| |
| |
| | 2005 | | 2004 | | Amount | | Percent | |
| |
| |
| |
| |
| |
Contracts | | | | | | | | | | | | | |
Federal | | $ | 99,365 | | $ | 113,384 | | $ | (14,019 | ) | | (12.4 | ) |
State | | | 995,024 | | | 711,242 | | | 283,782 | | | 39.9 | |
Local | | | 1,156,403 | | | 1,002,397 | | | 154,006 | | | 15.4 | |
Total public sector | | | 2,250,792 | | | 1,827,023 | | | 423,769 | | | 23.2 | |
Private sector | | | 249,515 | | | 211,146 | | | 38,369 | | | 18.2 | |
Aggregate sales | | | — | | | — | | | — | | | — | |
| | $ | 2,500,307 | | $ | 2,038,169 | | $ | 462,138 | | | 22.7 | |
BY GEOGRAPHIC AREA
| | Revenue | |
| |
| |
| | Three Months Ended
June 30, | | Variance | |
| |
| |
| |
| | 2005 | | 2004 | | Amount | | Percent | |
| |
| |
| |
| |
| |
California | | $ | 259,449 | | $ | 188,737 | | $ | 70,712 | | | 37.5 | |
West (Excl. CA) | | | 208,847 | | | 173,713 | | | 35,134 | | | 20.2 | |
Midwest | | | 28,457 | | | 17,457 | | | 11,000 | | | 63.0 | |
Northeast | | | 77,700 | | | 80,243 | | | (2,543 | ) | | (3.2 | ) |
South | | | 102,251 | | | 98,604 | | | 3,647 | | | 3.7 | |
| | $ | 676,704 | | $ | 558,754 | | $ | 117,950 | | | 21.1 | |
BY GEOGRAPHIC AREA
| | Backlog | |
| |
| |
| | June 30, | | Variance | |
| |
| |
| |
| | 2005 | | 2004 | | Amount | | Percent | |
| |
| |
| |
| |
| |
California | | $ | 576,783 | | $ | 322,591 | | $ | 254,192 | | | 78.8 | |
West (Excl. CA) | | | 380,632 | | | 442,695 | | | (62,063 | ) | | (14.0 | ) |
Midwest | | | 85,915 | | | 32,507 | | | 53,408 | | | **** | |
Northeast | | | 636,723 | | | 683,054 | | | (46,331 | ) | | (6.8 | ) |
South | | | 820,254 | | | 557,322 | | | 262,932 | | | 47.2 | |
| | $ | 2,500,307 | | $ | 2,038,169 | | $ | 462,138 | | | 22.7 | |
|
**** Represents percentages greater than 100% |
SOURCE Granite Construction Incorporated
-0- 07/27/2005
/CONTACT: Jacque Underdown of Granite Construction Incorporated,
+1-831-761-4741, or Jacque.Underdown@gcinc.com/
/Web site: http://www.graniteconstruction.com /
