Exhibit 99.1
GRANITE CONSTRUCTION INCORPORATED REPORTS RECORD SECOND QUARTER 2006 RESULTS;
TOTAL COMPANY OPERATING INCOME INCREASES 66%
WATSONVILLE, Calif., July 26 /PRNewswire-FirstCall/ -- Granite Construction
Incorporated (NYSE: GVA) today announced its results for the second quarter
ended June 30, 2006. The Company reported net income for the quarter of $33.3
million, or $0.80 per diluted share. This compares with net income of $15.0
million, or $0.36 per diluted share for the same period last year. For the
six-month period ended June 30, 2006, net income was $31.9 million or $0.77 per
share on a diluted basis compared with $6.7 million or $0.16 per share for the
same period in 2005.
William G. Dorey, president and chief executive officer, said, "Our second
quarter results are a product of a tremendous performance turned in by our
Branch Division and their ability to capitalize on a very strong market in the
West. Our building season in the West is clearly off to a record start with
demand for our construction services and aggregate materials healthier than we
have experienced in many years. This strong marketplace is supporting price
increases for our aggregate materials as well as higher gross profit margins in
our construction business."
"While we were very pleased with our Branch Division results, as well as our
overall company performance, the quarter was negatively impacted by
disappointing financial results in our Heavy Construction Division (HCD). We
believe there is considerable upside to this business and we remain committed to
our strategy to improve the division's overall profitability," said Dorey.
He added, "As a result of our second quarter performance, operating cash
flow continues to improve, which is contributing to an already strong balance
sheet. We continue to look for opportunities to expand our aggregate business
and are pleased to have the financial capacity to support our growth goals."
Operating Results - Quarter and Year-To-Date
For the second quarter of 2006, total revenue increased 20% to $812.0
million compared with $676.7 million a year ago. Total gross profit as a percent
of revenue for the second quarter 2006 increased to 11.5% compared with 11.3%
for the same period last year. Operating income increased to $48.2 million for
the second quarter of 2006 compared with $29.0 million for the second quarter of
2005.
Other income for the quarter ended June 30, 2006 was positively impacted by
the gain of approximately $3.2 million from the sale of gold, which is a
by-product of one of our aggregate mining operations and held for investment.
Additionally, interest income significantly increased in the quarter as a result
of higher average yield on a higher level of interest bearing investments.
For the six-month period ended June 30, 2006, revenue for the Company
totaled $1.3 billion compared with $1.1 billion for the same period last year.
Total gross profit as a percent of revenue for the six months ended June 30,
2006 increased to 10.2% compared with 9.4% last year. Operating income for the
six month period increased to $44.4 million compared with $17.1 million for the
same period in 2005.
Total Company backlog at June 30, 2006 remained flat at $2.5 billion
compared to a year ago. New awards for the second quarter 2006 include a joint
venture bridge project in Louisiana for $348 million, of which Granite's portion
is $87 million.
Also included in operating income for the three- and six-month periods ended
June 30, 2006 are approximately $16.7 million and $15.5 million, respectively,
related to the sales of certain real estate development assets associated with
the Company's Granite Land Company subsidiary. Our minority partners' share of
this income is approximately $8.0 million for both the three- and six-month
periods ended June 30, 2006.
Results by Segment
HCD revenue for the quarter totaled $307.1 million versus $276.3 million for
the same period last year. HCD backlog decreased $338.0 million to $1.5 billion
compared with $1.9 billion for the same period last year. Gross margin as a
percent of revenue was a loss of 3.7% compared with a profit of 5.5% in the
prior period. This decrease reflects a net reduction of gross profit of
approximately $27.1 million resulting from changes in estimates of project
profitability compared with a net reduction of $11.0 million in the second
quarter 2005. Largely as a product of these estimate changes in the second
quarter 2006, operating loss for HCD totaled $18.9 million compared with
operating income of $8.0 million for the same period in 2005.
For the six-month period ended June 30, 2006, HCD revenue totaled $551.9
million compared with $478.2 million for the same period last year. Gross margin
as a percent of revenue for the six months ended June 30, 2006 was a loss of
2.6% compared with a profit of 4.7% last year. Operating loss for HCD totaled
$31.0 million for the six-month period compared with operating income of $6.7
million for the same period in 2005.
Branch Division revenue for the quarter totaled $471.3 million, an increase
of $71.1 million or 18% over the same period in 2005. Backlog for the Branch
Division increased to $978.4 million compared with $647.9 million for the second
quarter 2005. Gross profit as a percent of revenue increased for the second
quarter 2006 to 18.4% compared with 15.4% for the second quarter 2005 due to an
increase in profitability on our construction work and the sales of our
construction materials. Branch Division operating income increased $31.0 million
for the quarter to $61.5 million compared with $30.5 million for the second
quarter last year. Second quarter 2005 operating results for the Branch Division
include a $9.3 million provision for a legal judgment.
For the six-month period ended June 30, 2006, Branch Division revenue
totaled $722.4 million compared with $618.9 million for the same period last
year. Gross profit as a percent of revenue for the six months ended June 30,
2006 increased to 18.1% compared with 13.2% last year. Operating income for the
division increased to $80.3 million for the same period compared with $29.5
million in 2005.
Outlook
The Company anticipates that the current healthy public sector bidding
environment for its Branch Division will continue through 2006 and will likely
offset any impact from the slowdown in its residential site development
business. Therefore, the Company now expects 2006 operating income for the
Branch Division to exceed the record level reached in 2005. Given the
performance through the end of the second quarter, the Company now expects 2006
operating results for HCD to be break even, provided several HCD projects reach
the percentage of completion threshold needed for profit recognition.
Second Quarter Conference Call Information
The Company will host a conference call on Thursday, July 27, 2006, at 11:00
a.m. Eastern time. Investors and other interested parties may access the call
live by dialing (877) 864-2735 in the U.S. and Canada. For international
listeners, dial (706) 634-7039. The conference ID is 1673829. 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 4, 2006. In the U.S. and Canada, dial (800)
642-1687. For international listeners, dial (706) 645-9291. 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
----------------------------- -----------------------------
2006 2005 Amount Percent
------------ ------------ ------------ ------------
Revenue
Construction $ 703,486 $ 592,128 $ 111,358 18.8
Material sales $ 108,551 $ 84,576 $ 23,975 28.3
Total revenue $ 812,037 $ 676,704 $ 135,333 20.0
Cost of revenue
Construction $ 638,253 $ 534,431 $ (103,822) (19.4)
Material sales $ 80,674 $ 65,566 $ (15,108) (23.0)
Total cost of revenue $ 718,927 $ 599,997 $ (118,930) (19.8)
Gross profit $ 93,110 $ 76,707 $ 16,403 21.4
Gross profit as a percent of revenue 11.5% 11.3% 0.2% --
General and administrative
expenses $ 48,935 $ 40,606 $ (8,329) (20.5)
G&A expenses as a percent of revenue 6.0% 6.0% -- --
Provision for legal judgment -- $ 9,300 $ 9,300 100.0
Gain on sales of property and equipment $ 4,049 $ 2,189 $ 1,860 85.0
Other income (expense)
Interest income $ 4,944 $ 1,968 $ 2,976 ****
Interest expense $ (1,391) $ (1,636) $ 245 15.0
Equity in income (loss) of affiliates $ 828 $ (17) $ 845 ****
Other, net $ 3,314 $ (651) $ 3,965 ****
Total other
income (expense) $ 7,695 $ (336) $ 8,031 ****
Income before provision
for income taxes and
minority interest $ 55,919 $ 28,654 $ 27,265 95.2
Minority interest $ (5,585) $ (5,480) $ (105) (1.9)
Net income $ 33,289 $ 14,954 $ 18,335 ****
Net income per share:
Basic $ 0.81 $ 0.37 $ 0.44 ****
Diluted $ 0.80 $ 0.36 $ 0.44 ****
Weighted average shares of common stock:
Basic 40,896 40,638 258 0.6
Diluted 41,466 41,212 254 0.6
Six Months Ended
June 30, Variance
----------------------------- -----------------------------
2006 2005 Amount Percent
------------ ------------ ------------ ------------
Revenue
Construction $ 1,137,824 $ 966,841 $ 170,983 17.7
Material sales $ 170,181 $ 130,797 $ 39,384 30.1
Total revenue $ 1,308,005 $ 1,097,638 $ 210,367 19.2
Cost of revenue
Construction $ 1,042,213 $ 888,812 $ (153,401) (17.3)
Material sales $ 132,447 $ 105,179 $ (27,268) (25.9)
Total cost of revenue $ 1,174,660 $ 993,991 $ (180,669) (18.2)
Gross profit $ 133,345 $ 103,647 $ 29,698 28.7
Gross profit as a percent of revenue 10.2% 9.4% 0.8% --
General and administrative
expenses $ 97,191 $ 79,476 $ (17,715) (22.3)
G&A expenses as a percent of revenue 7.4% 7.2% (0.2)% --
Provision for legal judgment -- $ 9,300 $ 9,300 100.0
Gain on sales of property and equipment $ 8,287 $ 2,215 $ 6,072 ****
Other income (expense)
Interest income $ 9,677 $ 4,127 $ 5,550 ****
Interest expense $ (2,786) $ (3,667) $ 881 24.0
Equity in income
(loss) of affiliates $ 751 $ (77) $ 828 ****
Other, net $ 2,708 $ (724) $ 3,432 ****
Total other income (expense) $ 10,350 $ (341) $ 10,691 ****
Income before provision
for income taxes and
minority interest $ 54,791 $ 16,745 $ 38,046 ****
Minority interest $ (6,652) $ (5,530) $ (1,122) (20.3)
Net income $ 31,867 $ 6,687 $ 25,180 ****
Net income per share:
Basic $ 0.78 $ 0.16 $ 0.62 ****
Diluted $ 0.77 $ 0.16 $ 0.61 ****
Weighted average shares of common stock:
Basic 40,818 40,562 256 0.6
Diluted 41,378 41,118 260 0.6
**** Represents percentages greater than 100%
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands, except share and per share data)
June 30, December 31,
2006 2005
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 304,976 $ 199,881
Short-term marketable securities 74,775 68,540
Accounts receivable, net 530,882 476,453
Costs and estimated earnings in
excess of billings 32,882 43,660
Inventories 39,532 33,161
Real estate held for sale 42,572 46,889
Deferred income taxes 22,830 22,996
Equity in construction joint
ventures 31,641 27,408
Other current assets 47,373 57,960
Total current assets 1,127,463 976,948
Property and equipment, net 419,757 397,111
Long-term marketable securities 47,688 32,960
Investment in affiliates 16,076 15,855
Other assets 46,313 49,356
Total assets $ 1,657,297 $ 1,472,230
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $ 29,424 $ 26,888
Accounts payable 309,199 232,807
Billings in excess of costs and estimated earnings 278,499 208,883
Accrued expenses and other current liabilities 178,989 140,569
Total current liabilities 796,111 609,147
Long-term debt 105,757 124,415
Other long-term liabilities 53,885 46,556
Deferred income taxes 37,325 37,325
Minority interest in consolidated
subsidiaries 18,741 33,227
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
41,836,889 shares in
2006 and 41,682,010 shares in 2005 418 417
Additional paid-in capital 70,636 80,619
Retained earnings 572,601 549,101
Accumulated other comprehensive income 1,823 1,602
Unearned compensation -- (10,179)
Total shareholders' equity 645,478 621,560
Total liabilities and
shareholders' equity $ 1,657,297 $ 1,472,230
June 30, December 31,
Financial Position 2006 2005
- ------------------------------------------------------------ ------------ ------------
Working capital $ 331,352 $ 367,801
Current ratio 1.42 1.60
Debt to total capitalization 0.17 0.20
Total liabilities to equity ratio 1.57 1.37
GRANITE CONSTRUCTION INCORPORATED
REVENUE AND BACKLOG ANALYSIS
(Unaudited - Dollars In Thousands)
BY MARKET SECTOR
Revenue
Three Months Ended June 30, Variance
--------------------------- ---------------------------
2006 2005 Amount Percent
------------ ------------ ------------ ------------
Public Sector $ 554,059 $ 466,509 $ 87,550 18.8
Private Sector 115,778 125,363 (9,585) (7.6)
Aggregate sales 108,551 84,575 23,976 28.3
Other 33,649 257 33,392 ****
$ 812,037 $ 676,704 $ 135,333 20.0
Backlog
June 30, Variance
--------------------------- ---------------------------
2006 2005 Amount Percent
------------ ------------ ------------ ------------
Public Sector $ 2,175,021 $ 2,250,792 $ (75,771) (3.4)
Private Sector 317,845 249,515 68,330 27.4
$ 2,492,866 $ 2,500,307 $ (7,441) (0.3)
BY GEOGRAPHIC AREA
Revenue
Three Months Ended June 30, Variance
--------------------------- ---------------------------
2006 2005 Amount Percent
------------ ------------ ------------ ------------
California $ 333,215 $ 259,449 $ 73,766 28.4
West (Excl. CA) 246,901 208,847 38,054 18.2
Midwest 19,162 28,457 (9,295) (32.7)
Northeast 75,575 77,700 (2,125) (2.7)
South 137,184 102,251 34,933 34.2
$ 812,037 $ 676,704 $ 135,333 20.0
Backlog
June 30, Variance
--------------------------- ---------------------------
2006 2005 Amount Percent
------------ ------------ ------------ ------------
California $ 655,071 $ 576,783 $ 78,288 13.6
West (Excl. CA) 723,387 380,632 342,755 90.0
Midwest 17,134 85,915 (68,781) (80.1)
Northeast 312,105 636,723 (324,618) (51.0)
South 785,169 820,254 (35,085) (4.3)
$ 2,492,866 $ 2,500,307 $ (7,441) (0.3)
**** Represents percentages greater than 100%
SOURCE Granite Construction Incorporated
-0- 07/26/2006
/CONTACT: Investor Relations, Jacque Underdown, +1-831-761-4741, or
Jacque.Underdown@gcinc.com/
/Web site: http://www.graniteconstruction.com/