GVA - Earnings call transcript Q3 2018 | Granite Construction Incorporated

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Operator

Good morning. My name is, Phil, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Investor Relations Third Quarter 2018 Conference Call. This call is being recorded. All lines have been placed on mute to prevent any background noise. remarks, be speakers' [Operator question-and-answer the Instructions]. after there a will period And take a question from note, one Please we'll and today. each brief participant question follow-up It's and Government over Ron Botoff. the Construction, to President Affairs, now host, Vice Relations your Granite floor Investor of my pleasure to turn Sir, is yours. the floor

Ronald Botoff

and Good Senior Executive to the Financial quarter today be an Chief earnings morning, with Granite Vice Officer, call. We'll conference President with language. third to Incorporated the Chief Jim company's here and Roberts; I President welcome and Desai.. today Jigisha Construction XXXX am harbor Officer, safe pleased begin of overview

these in The regarding could Some discussion activities, performance, result factors events, and the judgment XX-Q These the and most occurrences, forward-looking future results. new forward-looking annual provides new whether statements. outcomes filed best a as X-K, October the an a and differ and company could XX-K to Actual past forward-looking segments. filings expectations statements our complete of the senior of for reflect back materially more future may obligation estimates quarterly company of events recent projections focus update and from information, reflecting today X, risk look assumes of otherwise. a no mapping which On of statements that circumstances, affect are management or results reportable include current description and assumptions. our market

earnings as presentations, of of these limited related note, and expenses reflect EBITDA, investor.graniteconstruction.com. included available share during and Christensen which Please in These by non-GAAP EBITDA that results executives. company on Company to quarter our well reporting press Layne the Certain exclude Reconciliation integration you. discussed the website costs time-to-time acquisition and investor all not income, backlog. measures as adjusted of today's but net with of is releases, and as adjusted third Our part from our be as new relations certain adjusted are LiquiForce. non-recurring applicable acquisition earnings adjusted margin, include, measures associated integration and metrics one-time are per structure. non-GAAP this call may company's Thank

Now, Chief I Roberts. Jim Incorporated, Officer, the Construction to call over turn Granite and Executive would President like to

James Roberts

Good for discuss joining morning, you everyone. performance. Thank to Granite's us

the of diversify focused two years. The and third reportable deliberate quarter point something end via we plus a XXXX introduced effort and of growth marks follows both grow market This Granite. five ago, to organically starting over made segments. last acquisition strategic to for have we weeks About the led

that company. America's to gets business. values everyone zero especially as Granite performance day. thank safety. This our remained for new our to emphasize we actions as on to broaden across every customers opportunities consistently geographic Our We has Granite focus brand as their partners, and stakeholders. single injuries safety safely and and integrate steadily year Granite improving employees dedication been capabilities remains this employees new growing have for home ensuring our infrastructure our teams we our focus and the But our From shareholders core employees year's reach, activities key and expand enhanced Granite's returns,

number of in believe pursuing on This markets can to bottom-line focus risk really work our team. fact, on Across leaders, power translates consistently areas reinforced we recently performance. safely below members our higher appropriate working exert Granite expectations In and of focus Transportation, to was is demand discipline teams focus with broad results. been Record remains action some are improved with deliver one benefits financial and initial Granite pricing approach Water highlights This continue and people, we and as safety We thought be segments, are both On examples of and solid transmission and number ENR our it of begin people News and work fuel strategy storm to the we sanitary returns. continues the improved these our contractor healthy reinforcing pricing the in it five equipment work our important systems have key improved to levels. obvious Specialty is we discipline nationally of projects. on safety eighth on highway our highlighting In by of process quarter. Performance will we higher throughout improvement. integration waste. on performance. and emphasis and value consistent to our has and this detail XXXX markets, project and ranked newest the Granite and notably Revenue The quarter into the impacted and bidding quality to the been transportation at our aligns the top These and continue for XXXX Revenue, line the solidly and improved Engineering has some acquired color year's provide delivered will distribution. sustained outlook. the as Jigisha, in And in one and focus From leverage mining focus a have the and rates year future illustrates outstanding. bottom-line priced are expect to additional strategic our on number earnings America. the five Despite current profitability third profitability for results trends diversified create end according all our sewers with balanced adjusted growth creating profitability. finished the time. remained solid quarter and in market number increased our our in margin we in year, at and two business for these XXXX. storage has in much growing perspective water on double-digits ranked win even performance businesses are most we for in what ranked as in the

the years, top we few confident and quarters expect our consolidated are of demand margin business, sound, especially this approach year. practical our and healthy bottom-line solid has over and XX.X% With and across our significant basis long-term that We near up and public will XXX demand. profit deliberate is last value year, contributed bottom-line discipline Through create next focus gross strategic. private increased trends points and three from market considering quarters to

Excluding XXXX margin the doubled QX. of more continue set well and adjusted acquisition expenses XXX than income end at the and markets. related end more business from performing points is EBITDA to across X.X% bar adjusted than geographies increased and we net basis to higher The

shift back let's to strategy. Now Granite

few how years plan. rolling our these strategic I to spend Specifically well execution this want communicated discussing minutes of five a the morning capture changes segments

trends nonpartisan we unmanageable country. transportation risk and houses or weakening XXXX, public reliable a Infrastructure, Granite's state in football. public XXXX political new the previously agreement did bottom funding and the been XXXX, of infrastructure limiting midst recognize that factors across of for hold, of unprecedented As our reliance a industry transportation until entered recently not its took impacting also internal game consistent, our sources steep recession and customer In that funding, opportunities from growth funding public in and has tossed including Through the and but diversifying with general from refined industry opportunities that most focusing Lean more to the DC point consistent defined political and Washington, growth. continuous returns. focused resource optimization. refer this techniques and in market focus on drivers extend improvement. to emphasizing and broaden Six key invested end to set reach and new private we our long-term on and asset And for Sigma Granite's we diversifying and areas, by related three the our path Perhaps growth we period We of project market we as base opportunities. importantly, around

New was for markets business. market and as at via waste end for our Kenny methods meaningfully first target the diversification. Midwest growth were to geographies. That underlying of water, entering group move geographic new end end now the of new required XXXX our power, operating tunnel, capabilities Construction markets the The our civil construction additions well and water as drove and geographic addition

toward contributing delivering in with began traditional we new markets. profitability. when strategic area and work Within remained years focused Granite profit revenue end then that significantly transportation and customers in a above effort hold accelerate across relationship driver backlog The to created expanding teams at of a to recognize capabilities results. low improved end took were pernicious led two old Importantly engaged nine customer Granite a portfolio teams margins. XXXX with when and it across growth took leveraging existing again focus plans. capable a expansion the new trough. Granite in growth key in We rail and market and transportation Emphasizing power water, Diversification markets as in growth decades profitability action began our introduced it delivering diversification our defined a to time incremental management mired new develop our business acquisition demand just targeted resources, business business and market and to profitability

we and patience growth of execute was on of the acquisitions diversification deliver to prudence next our Layne strategy. and and on to allowing LiquiForce, Our the us Christensen and rewarded opportunities leg capitalized

and end ever an deeper market Granite, investments this segments markets. believe opportunities opportunities our improved presentation with expansion illustrate Simultaneously into end for in opportunities and end base expansion geographic view provides significant existing market Granite's to vertically for review or to visibility significant we our action continue investors highlighting our We than strategy more continue new eastward Granite's We growth. before. with model. of insight to integrated weathered target bolt-on through

way balance that also and the growth risk our believe opportunities diversified business. end for focus is most to We market appropriate our

along from Our Granite's to the growth on and water demand is market funding transportation private and public across stable steadily. steady today's continue outlook markets infrastructure infrastructure end improving markets sector. improve trends demand key based with

we a as detail is well remains on and with our infrastructure in on Jigisha? to have to And well over with decade. it private outlook, Granite our that, today's positioned grow, I extremely to long and the best healthy delivering to vision public of balance continue As demand seen hand term our flourish XXXX results Jigisha over a company. and America's result

Jigisha Desai

and good morning, Thank you, everyone. Jim

XX.X% XXXX up billion, higher last XX.X% year, from with Third $X.XX revenue billion. $X.XX quarter revenue was year-to-date the by at

XXXX of than of third quarter and per acquisition respectively adjusted quarter and XXX% This year-to-date impact into year-to-date translated earnings nearly and the in on net share adjusted income $X.XX the from a more XX% $X.XX basis. related Excluding increased expenses XXXX.

up year-to-date quarter, in our to year-over-year year-to-date year into margin $XXX.X third at basis quarter X.X% This of XX.X% As performance significantly adjusted case increased already from XXX full adjusted points and improvement. improved was EBITDA XX.X% figure translates EBITDA EBITDA a last million. XXXX it On XXXX. the exceeds the basis

XX.X% for XX.X% to was increased $XXX.X XXX year-over-year profit XXXX. million. and profit margin improvement year-to-date year-to-date profit The consolidated gross gross quarter gross increased Third of XX.X% point

acquired primarily to and results, cost, third structure the year-over-year was G&A. produce increased continues cost while acquisition SG&A scalable driven quarter Our XXXX year-to-date increase related

and declined Excluding cost impact our slightly core through QX. year-over-year of the G&A acquisition related expenses our overhead core

noted, As with Jim LiquiForce we on began an and emphasis Layne integration the safety.

steadily growth are work on performance. the teams remain growth focus of safety remains cost over cost next continue Our strong more balance and synergies as at deliver and than lower end capture to Granite's $XXX to and sheet in cost securities to improve couple and opportunities, to marketable they with a QX. drive cash create while overhead years. the synergies we key Safety of working will to million

XXXX, capital not further execution notification continue was $XXX Total capital down plan. XXXX. strengthen trends $X.XX and three supporting totaled of California, received included expected which These billion, and Florida, million to XX.X% cash in certain expected to late than strategic Utah in XXXX are and working that more in backlog expectations, to are enter the our structure and improved backlog We are we our flow in contract wins year-over-year. target of our project projects yet Earlier backlog. our

end Next have end acquisitions let's infrastructure segment the segments. transaction, move mining well our announced and June, led Granite's to geographic operating rolling to reach the aligned market continue Extending diversification growing our close the water, new functional our to new of market strategic based our our reportable execution group we formation the to mineral and five and reporting. wastewater of be segment. In of new businesses water and in in segment Layne deliver services the following market we our operating announced managed plan. group the with year with

business primarily to XX.X% XX.X%, basis points healthy In margin the services environment XXXX. decreased X.X% The our divisions. third also commercial the and $X.XX our outlook services gross from enabled mature geographic and which to points M&A efforts Shifting of resources trends impact impact group, the on stable remains projects profit in our mineral last operating growth, gross long-term focus XXXX to activity and This Underground of end year-over-year risk It strategic segment for are and civil also and Granite and segment's market. to again is quarter Year-over-year continues transportation raise Inliner joined has revenue as most team which to market returns. the X.X% national a resulting of $XXX.X private, our results, Our weighted anticipated. margin X.X% prices includes Quarterly several by on profit XXX and third on more the by Granite performance demand largest basis, Transportation increased increased results of basis in our group. Inliner Transportation align heavy of have gross focus now LiquiForce from a by quarterly strengthening today industrial the XXX revenue we profit This part negative improving, the Kenny profitability year. had year-over-year portfolio billion. year-to-date with former profit profit in about become a our than up the and these with of transportation On work managed combined a to markets water a ongoing support underperforming began that to newly fueled the XXXX. Layne X.X%, increased water segment is Granite leader quarter, includes in million. reflects funding from healthy. gross XXXX Year-to-date are up larger mining we projects, and that public segment in with segment.

former X.X%. gross X.X% gross the year-to-date larger in For Construction context, the margin profit quarter, margin which previously contributed project constituted into as segment a performance third a of translated

the continue project we to recent throughout wins the expected our As portfolio. in positive the benefit from more of year, contribution

in quite that time to decreased Transportation year-over-year large been have to that should billion. $X.XX drag some declining on results on XXXX. continue a for negative segment expect impact backlog projects a We have legacy results segment XX%

to We're new delivered has segment in since Transportation flow our remained gross discipline which into Market work. that excited continue our particularly the patiently our results. all income wastewater cash Granite robust, limit project our dynamics, increase pursuing portion the that discipline new reflected developing of efficient, We risks balance margin, improved portfolio project strategies profit and and operating on expectations as we reshape opportunity quarter Water and the year-to-date We're attractive in growing and this segment presence an entering significant water performance and business portfolio. market. third solid

of to last projects markets recent significantly XXXX. renewable from target profit in margin to materials Year-to-date margin gross million than backlog million, with robust on energy is in year, profit investor-owned last providing quarterly we environment due million nearly projects profit power, healthy and of but solid significantly a segment's uplift. management tunnel, utilities. The impact improving most XX%, increased development steady both up a with municipal segment on increased year. gross Water the rose addition execution profit and segment and year-over-year decrease basis activities year-over-year the the the performance to in basis, of segment. Quarterly to to and points revenue Federal, comprised new Specialty profit margin diverse is mining on and of capabilities. broadening businesses up gross X% portfolio to year-over-year by gross local segment including tied to state acquisitions profit points quarter to Water profit margins XX.X%. $X.X will bidding to with returns Here Project $X.X across Granite's segment The environment funding XX.X%, produce and $XX.X gross of producing basis The highly site logistics, basis, in contributor variable execution profit will healthy public a it year-over-year In from Granite the of X.X% remains acquisitions primarily million of segment Specialty improvement mirroring to and bidding opportunities a million last industries, steady Year-to-date $XXX.X in from and about is more Year-over-year basis with from private X,XXX Quarterly diversity solid importantly X,XXX this results. On segment year-to-date year-to-date which on margins XX.X% increased $XX.X was This more million. a order third gross Specialty discipline, and operating and and XXXX. only geographies profit Specialty remains revenue burn XX basis X.X% $XXX.X segment XX.X%. based decreased consistent growth rates. $XXX.X exciting and for wins attributable about to environment future allow increased Specialty work. up bidding tied steady profit increased profit segment also backlog XX.X% to build year-over-year improvement continue was gross to group. million grow on and The in $XXX.X project improved demand. with to margin points to to project up supported points million. expected market across teams increased to is revenue backlog XXX balance gross solid to year,

of in gross and was to XX.X%. $XX.X and improved mid-teen overall segment. with to profit year-over-year million most margins external profit gross margins Over In to and performance XX.X%. from to years, Materials revenue period, five with $XXX.X Materials last to year-over-year growing has at the of third expectation while profit XX.X% year-over-year three segment revenue $XXX.X demand from the to our optimize profit margin profit the increased steady across million primarily million year-to-date in quarter quarterly year, XX.X% maintaining steady prior increased Year-to-date emphasized past year-to-date utilization and to attributable asset segment improved revenue efficiency gross environment. year gross the increased an XX.X% demand and gross X.X% million. relationship-building Quarterly markets, $XX.X The

- discuss that operational both over we growth business, materials are of and higher in vertically construction emphasize will our a and we last well Products that volume the additional than With our the discipline revenue that that, percentage as as years, acquired. acquired higher level. overhead we to let's next and SG&A increased Overtime, integrated as to couple cash generation. contribute the Noting continue of will on slightly guide outlook to strategies steady and our performance improving demand rationalize We metrics some margin Liner in consistent X.X% finish view. expect taken segment that in traditional business year's Materials have

quarter a go rate to of low-XXs mid-XXs effective related finish Longer rate expect levels. Granite's $X.X range. percentage percentage the settle liabilities. term, item by around deferred on was XX.X%, forward in in high-teens our the Our In a tax driven to expect XXXX, to and million rate revaluation basis the we to effective tax benefit, tax tax discrete assets we

full year adjusted expectations as Our are for growth, X.X% always late-year year is margin last to X.X%. subject - XXXX acquisitions which of revenue seasonality to including mid-teens and EBITDA

we Now, before your back let call the questions, take to me Jim. turn

James Roberts

our and markets we serve. Thank you, across end the for Jigisha. geographies is business Growth here that

program, Works from of previous improved and Core while step-up for bills. extension planned reach of the the emphasis this Water an appears Development $X.X billion drinking to have horizon. the Bill of new of Environmental the Act of Army Civil is investment growing be new $X.X ahead. We on billion finally recently broaden projects reauthorization as XXXX at example that our awaited funding legislation, portfolio. Protection water hope Optimism action We Water the infrastructure a for federal Agency marks previous infrastructure have Washington and we authorizes in it long Engineers passed in the for on The Resources Resource

California, optimistic in be with no. X purely our than To key X We remains business. ballot changed on well their right recommend vote effort is to sharpen defeat in course, you strengths, Of in believe investment political state all numbers. strongly voters To-date defeated. has Xth, focus remain ever will on committed to we the feed for the anti-transportation Granite cited vote one through grow and We at in the measures all a short and on of positioned to parts here California. capabilities proposition is November of our November XXX citizens measure our more in larger local funding Proposition transportation Xth. communities extremely tide

drinking Chronic will the Granite's of waterways, both and the up Transportation underinvestment infrastructure, spending growth be our dams, Our water stepped largest source for segment, fuel significant expectation and for profit to in revenue growth whether in the a trends teams continue opportunity and our systems. or today water across country. wastewater, levies

of and weight to transportation, wires, infrastructure was the strategy solutions, and roads to parents demand pipes of benefit underinvestment our continue carry of to at infrastructure the other Across the crumble secular scale. developed the the markets. and Our water across continue trends the decades and capture grandparents and they bill improving

long-term to from significant emphasize create significant financial early continue to investment questions. very fuel growth geographic pent Our cycle incremental stakeholders. to markets, that effort chronic discipline be Granite we to for Even businesses will everyone, to happy providing we And and strengthening This demand. a established up balance with are diversification positioned benefits to take performance value expected mature with opportunities. and in sheet reduce through is your plan deliver still economic our improved expansion, on and growth investment

Operator

with comes Sachs. Please go Jerry [Operator Instructions] from question ahead. Our Revich Goldman first

Jerry Revich

everyone. morning Good Hi. Yes.

James Roberts

Jerry. morning, Good

Jerry Revich

you in pricing the set of decline if a level In focus. of the I'm what seeing saw result other could of the wondering cadence bid rates or talk impact as about environment slowing? change you opportunities or overall your words, you are overall is win in opportunity the is

James Roberts

XX% short Well, mentioned, we Okay. XX% win the rate. as the to too rate. our I say probably in slightly. hit our been I'd And prices, drop would we're down suggest today the that rates XX% in Because Jerry. raise run we've normally to And that's important, really to as in hit tend continue

work bottom-line, slowdown slight market in which no the reduction more allowing that But far believe it's bidding business. bid the you it's doing, than Transportation by think our important we there. more more in have is is healthy in I see There years. can in there what is So today recent yes, healthy we the as probably do overall a us a last dynamic to is segment the times, we're of XX market, our create

So And an will margins able believe we on then will and focus higher bid to our that go we win that capture relative continued issue overtime. be the the through it's opportunity equalize market continue the on back next as to solid to several we'll it's not market, really day. itself rates years and higher believe

Jerry Revich

thank of the And Okay, prior have just about progress looked prior on would but segment can reporting, the of the remaining like then the terms to an you're we've obviously so segment construction projects you. you can roll off in books? that margins assessment large had a your change talk here, reporting under what working make we

James Roberts

Okay, Jerry.

the her that that So under about which in the large X.X%. And year-to-date have QX had old end that I a in Jigisha large briefly segment margin - projects comments the believe to that of reporting would addressed brings about of projects margin X.X%.

call. Transportation we segment, we that we this tell rolls as that in certainly base relay the So mentioned did the would information that but that now into investor

Jerry Revich

All right, thank you.

James Roberts

Jerry. you, Thank

Operator

comes Vertical next go with Michael Partners. Dudas The ahead. from Please question Research

Michael Dudas

Morning Jigisha. gentlemen

Jigisha Desai

Hi, Mike, you? are how

James Roberts

Good morning, Mike.

Michael Dudas

is forward dynamic bidding should the excess macro in on especially up capacity be how mopped relative to following margins, and we to get will on some of quickly how anticipate some looking your we've seeing revenue we're And better we and the should when about growth with demand throughout regard that that of trends revenue growth as characterize this seen important transportation with going discipline the the markets? West? year commensurate to XXXX the going Jim, backlog into we think overall in the segment your trends up

James Roberts

at Sure, SB continue has certainly - markets today maybe in look to somebody slower it that to about question gain X anticipated. think way it as I a started gain traction X was the probably SB than momentum reminder California that and as the and is to we'll asked

happen the our think XXXX growth environment with to revenue kind has of market run. projection to So bidding half opportunities in the additional I steady be what going long there back opportunities. going needs seen the is that the of stay match out And bidding in to is to that a some a

So do is demand. issue people based short-term is nervous as most in the We get not our markets what to believe do and that of a relative contractors and a short-term this on we've investors seen this issue. as

the contractor hit markets base construction you'll rate soon by probably next as our understands of moving up I think pricing the and that the see year. moving start middle as will start So up

Michael Dudas

or will regarding the concrete Jim. the And of guess you, on Thank maybe X or on no there further follow-up the optimism some SB some I maybe X intended the investments elaborate to of leading issues voters choose and - the to getting Prop can and and the SB not message that on investor out the focus the from both confidence repeal sides increased the X? pun

James Roberts

we've it If we've X XXXX. yes were in that it as almost surveys it every Sure, being seen the investments is it our defeated. today put place creditable into survey was a done investor although see would of what vote the and understands. close repeal But well we additional most SB Proposition April base be that that will X of

Some others. a spread wider have than

the feedback based we've conclusion, the believe it we on where will got, So - be to get on going thing based see with direction, we to still we defeated. this we here it can got have

we know possibly as thing. will surveys Although, when tell are and border maybe people go all different you a one to reality that I Mike, thing

Xth. all the we keeping until medal our be to the November So way pedal will

Michael Dudas

look governor now? support other thing been and book in the to this from And officials there has the at

James Roberts

XXXX. one defeat out was who Proposition in in X. Absolutely, the probably the legislature governor of the to And is heavily into X a individual campaigning put fact very strong with play he proponent it he is SB

Michael Dudas

you, Jim. Thank

James Roberts

Mike. Thanks,

Operator

Okay. from ahead. Kathryn Please The Thompson Group. next go Research question with Thompson comes

Steven Ramsey

there the bidding the guys in how talk you the in unit Layne of about how the this you maybe versus of kind play in. Ramsey some plan you in morning differences if market to traditional water staying more disciplined are market. about approached on run Can that Kathryn. nuances Good Steven thinking for of businesses And is larger your water

James Roberts

and business doing Granite So, Steve, in mentioned the operating from we we're what Layne corporate today Example, bit little is not everything the do it all the of but operate the strictly as all water banking the And of biggest the around that part business bonding issues. dynamic system. versus and and is integrating the unit. them change away the Granite biggest I that worry probably cash metrics the what let any the previously, operating are insurance units and done all into try to about and now a is way

So they building their on focus and strictly of bidding can the work.

in quarter results right moves no Granite is have water the that than are water a third in of have attached I would issue now, more that function larger of expectations to has dealt as with was there of in business the we that business do to be that the bidding and operational to in the seen market basically Now been. you've - suggest their in and margins. so oversight you and terms the The margins about they healthy building. the needs But that as that pretty reasonable is SG&A

are folks build folks during in talking the the really we're Granite same the help more in system about handle we're of of place of that seeing and And what acquisition Washington Layne that creating efficient they're if as same up today a in bidding synergistically corporate But where a on for Granite changing a operationally, lot that the the State or the already So longer the in to already systems synergies because we today using the structure of job business. no with the functions. a bidding, are to we're Utah let's those corporate we acquisition bringing here focusing overhead talked bid you timeframe are we alignment systems are we today. in with Inliner in say those the so job Florida all bid using their or are the

the is overall the for But reduce we very do overall, So overhead. integrated strong. margins key is continue structural business basis and of the now to are water the will components it together that. The strong, to two the size operating the

Jigisha Desai

and in services with and available be now a on we going was we capitalize are the add wasn't and do going cross the also of able previously LiquiForce to to very some to that. water to now have that I player ability selling to meaningful is the combination Layne - Kenny that Underground of that services market

James Roberts

maybe been here, other into as thing that some time. were looking for business it And we had the saw add quite I'll under on capitalized it, is the Layne the Steven diligence when for we

during will to as cycle so, believe business, in And now which we since the be cycle our base an help create June summer in immediate asset have CapEx months. the create they stabilize we them. what additional receiving runs late been through value a a And their money will for acquisition and stronger

they what sure of as only in middle but really to under just repairs, from day of get - their been mentioned in we they optimize we're they So business. not are new in capitalized we to acquisitions need. equipment making one going And

Steven Ramsey

questions capacity in would sales anything enough would as that of you about because Excellent. of on still of you elementary the that you internal used Materials much, your up us front solid get strategy pricing maybe the more remind And prices raise get this a external pricing. but that out then call channels? of stepping revenue segment. maybe you back is your doesn't pricing kind - versus there And But could the thinking

James Roberts

Okay, Steve.

on it's day-to-day have land attached base call reserves pricing internal versus I'll on very, a asset of a that time reminder change the deserves. job smaller significant And it, good company. that versus revenue as but and material things that's demand of of external one the what's business. is might you a additional show up segment So very of XX% equipment create materials Materials segments, a really we couple to that we've is it I incremental maneuvers marketplace. a our in lot really fixed incremental with of of think amount we margin outside you of through what is create And the materials. suggested the the the very a to see We increase as huge as said doesn't price I and may I've can basis said, glad value our there am there is incremental starting business the internal is that similarly materials that a in light And in brought it that somewhere value the going is unless always get that discussion the as products. really we We and we is and the increase to pricing, it's as similar. marketplace. inside demand overall very real it A guiding large the the specific increasing coming

and continuing will raise have alone volume raised are we So simultaneously and the prices we help bottom-line to prices.

always of market business. XXXX combination into look back clear - substantially beyond create that our the back all make and healthier XXXX, as of go those when XXXX go it a we and and I in, XXXX people and XXXX to materials So at you will

Our year, itself as as than was years back. at margins was downturn. a is in the It low today. are which XX% they We're were the higher substantially than X% about it for higher during substantially few

gone X% up I business to into it get really we've looking the at. in believe high-teens, we're So order low-XXs to needs XX%, to be the from

Steven Ramsey

Great, thank you.

James Roberts

you, Thank Steven.

Operator

comes question Please go Brent Davidson. next with from Thielman D.A. The ahead.

Brent Thielman

morning. Good Thanks.

James Roberts

Brent. morning, Good

Brent Thielman

the the transportation about the million. $XXX backlog, about quarter three jobs on four million $XXX to Jim, Last waiting not talked wins book. appreciate included for for are you comments you

one any quarter's or call those some have one then? you new two wins of last awards and So, new since since

James Roberts

expect did in segment there, booked be Well, book We which the hanging Transportation in late yes, we million planned. and and XXXX is the the quarter to $XX the out three still the XXXX and are answer no. other as into

has our last So nothing from changed discussion quarter.

Brent Thielman

the that's to booked it work just I that is. market as strong sizable really mean, job mean, and booking is the Jim transportation why million were this is if or I I project project as in $XX this other low backlog. suggest the guess understand in you case trying I'm quarter. small fairly Okay. would the still

James Roberts

is that I it that years. of too. Well, we from rate think in down faster well, burning what it maybe this another little hit previous remember way said a lot is bit We're to it look our a was at

to you're to this everybody So tried two relay to I about I what see, think and quarters going ago.

start start You're smaller and of it the pick more and going to indicative will the because be to seeing in going seeing that you're you an burn of not are going And to up to it same going build-up. revenue equivalent backlog work will quarter. bid you're amount of

we backlog margins revenue the out coming anticipated the in we with which most where they we're today, were are so respects up, anticipated today. And at

of as what I you're think a backlog steady transportation is play. Brent, into strength revenue going increase our that will our the to happen in in market continues put the to see and

capitalize is that be of look This more very in out demand think the seen business surprise don't segment our to anything to on think steady I that get us. today, market of is as years. to patient. people will rate. need getting the good we've there's Granite at it is in allowing many, the I it's as Transportation higher And and it to margins we if margins, So tell percentage the the that in to is and healthy a absorb that you And today a a on which begin win market going patience. is we many it to it higher of I And just we're is a

several focusing revenue uptick. well now see the for then believe we're I next - we going on right quarters, and going will big we're you're as bottom-line So to the

Brent Thielman

Okay.

investment sorry, should I CapEx a step Where you on up about quick could of the said I sort we mean, going be there. some in thinking forward? business about if CapEx, what big this And it's quarter real for understand recurring laying

James Roberts

Yes.

going be range. we're we And with plus that So revenue. X% say in or the historically, we've been in range where going to minus probably the today, to are I'm mid-X% of revenue on

you to I if very - model somebody So you'd think wants safe. that, be

Brent Thielman

Thank you.

James Roberts

Thanks, Brent.

Operator

next The Please with Sameer Rathod go Macquarie. Instructions] [Operator Okay. ahead. question from comes

Sameer Rathod

Hello, and good morning.

Just backlog. to going back

I I bottom on I when of do the So, you guess, makes lot think then? But strategy that to a understand expect sense. back

James Roberts

Sameer. $XXX of million think we Well, depend actually will I okay, the the depend, Sameer, outstanding. going so good way when to It's receive morning, those by on it awards on

transparent really it Is it's where talked that's points important water. large transportation we're and or in in project that it older discussion what the So the backlog. is about construction, we backlog, is

work. So smaller our the today, $XXX larger work, day-to-day most of that backlog million of is outside

that quarters, an out, will we backlog forward. because for but But a to I going forward, going in see steady to it's has that I pretty probably much you're think going in point bottomed to say very it the actual will and $XXX think I'm couple this stay going next be increase increase steady from layer million. the demand

sure And ones is project, of size of from in put across put couple the say where today, want understands the has you if to segments take out, get work to a going base not there. work out sure the or that we that could when big one backlog, will everybody it that big ones on all focuses to large but smaller in have our that So there's into investor and we with I'd blip. the bottomed you're bottomed make you it that a large going one the the away say is and there, the it Because in country. Water moment amount that making Transportation important two I more think on play,

is is because in backlog think get So, unless where in right delays I of now environment, don't I to it's bidding any lower market pretty kind Sameer. healthy going think there's the the awards,

Sameer Rathod

Right, right.

Okay, thank you.

James Roberts

Thanks, Sameer.

Operator

with question Alex next Riley Please The go ahead. B. Okay. comes Rygiel FBR.

Unidentified Analyst

is X. about [ph] This actually question Prop morning. Min Alex. for Cho Quick Good Great.

sounds any your passes, it SB would there like many Could can maybe about other change Or strategy mean, your helpful? it if impacts so I California? updates of you it you how just opportunities outside you So X. business? in have really talk pricing be

James Roberts

the of above. You bet, and Min, all

we company the the strategically significantly last have right, are over diversified You years. couple

so but on of exactly reason this is company. because overly this for sizable that impact not event doesn't an issue, reason, that For one have the this

missing healthy the So passed. maybe in - we environments and market California pricing is or would adjust If fact The X the local healthy need But our people I with with think a state defeated in that was SB very lot X itself budget. California. a a still is of very to probably healthy. are a balanced got Prop

in very strong sector private look the We into also the California. sector, private is

I our of don't in is go to XXXX. coming But impact. It think don't it's in today work from and chunk huge to most what a be would XXXX. margins. their building big I won't happen have in think private big lot have because that likely in California because state in be X. what's I need figure aggressive to the any little they're think a impact trying our And been the to that We we're of ahead in out, adjustment backlog sector. sure going already be So contractors But not issue quite it would a Prop going in an of XXXX, to it's the

impact, California that already going they it correct. is It But work So healthy a not lot on but exactly to books. be will such a their it's substantial. of market in slight I have that think you're a have

Jigisha Desai

be before And in after of with the Yes, and budget. with our SB weeks team kind California be leadership review XXXX Group of in coming a implication. meeting fact, on we couple will X to our with will our

will a So obviously more know bit. in we

James Roberts

opportunities said, we Yes. will that if did it our would with a And to as pass. be be reminder, mean way we the not would I be out firmly what Min, And believe the figure Proposition coming bullish X defeated.

it's we steam will X based that are anticipation where defeated. the on today - So we be full ahead with Prop

Unidentified Analyst

hope that is I Yes, case. the

Materials I quarter, Layne the year-over-year revenue group, your now? basis? of new pretty guess of probably was of but growth is I in seems where to on get that a is the And kind trying organic I'm the it business flattish kind materials On product know a is what percentage liner it's like right to

James Roberts

XX% So I would Products put materials business. at the Liner about Granite of

Unidentified Analyst

Okay.

the increase in an - see old materials business construction the did construction you the in quarter? So

James Roberts

absolutely. absolutely, Well

Unidentified Analyst

thank Great, you.

James Roberts

come Yes, of business what a and leading I as materials always indicator it also as that suggest would well. the healthy is to is mentioned it's Min I and have

Unidentified Analyst

Yes. Great, you. thank

James Roberts

you, Min. Thank

Operator

Okay. Giordano Please from comes question Cowen. next go with Joe The ahead.

Joseph Giordano

Hey everyone. morning good

James Roberts

Joe. morning, Good

Joseph Giordano

Hey.

is order about is Jim, we or if of what operating where X SB are to why X? do influx it are been patterns your kind SB So think but operating is changes and another. Like we understanding Xth like reality here, today what talking I to like how relative I this critical current environment is way guess on throughout we what like kind not to your I bit talking business one reality see relative struggling remained about gauge November the like little people repealed a is that's of if of change this think just continued or call

James Roberts

Okay.

maybe been will that. we out work is in that a we it slow little So are misnomer know day see has change The put in put out XXXX. way down been events election granular and into to XXXX of kind the to kind that it a more of of going nothing The what word the will would that put be it is that from may California margins lot without it won't today funded, as has adjustment in in it the make we the a forward, And majority can of change we're a as been work. it of picking still California. way you It slight funded. which in up out do but put go business they has tell if been have

very that transportation DOT business different healthy types we're because of just type in work Our doing the is of and California not work.

our if as ourselves it it around business. that to in to will saying X of will quickly if maneuver passes. business an So comfortable And immediate kind have the business we're not Proposition usual, units emotional very effect really pass, an it I'm letdown on will XXXX it be was that it's California

of to is. XXXX it we of April since more don't think California than are be do we it had I been... moneys talking I opportunity have X this people but there's binary are - day SB binary election that in event and on that a not would reliant why, about think lot significant I if be on we understand So But a occurs a much when of been

Joseph Giordano

really spending some seeing to SB operations X reflect fair from now not we're related does say So your anyway. from what massive uptake

that… it's So

James Roberts

it Joe, have our may the is correct, as quickly Joe. has said as competitors it strictly as That because other in absolutely pricing I've of mechanism. for for Granite in And market kicked not

it and year - was anticipated a and So somewhat talked about ago.

so, uptick the to SB And X. not have we big due no, seen

Joseph Giordano

and talked there. Okay. we And a lot California related guys are being in mechanisms how my question the pricing vigilant about you then and there more

push ability what be are in new Now the comment talked and past the to bit a pricing get a markets your helps with price about to that rate. still we're and in strong the public markets lot and really ability seems really market little of strong win times the on private is about to dislocation to we've the when of a talking private your really

people we because So you and would more just about sector maybe building dynamic be changed they're environment? now aggressive said bit talk nervous they or can normally in a being backlog a like than has how private that strong little

James Roberts

is in the Well, and is side we seeing Joe, competitive have where part following talked always going very Granite's migrate on healthy I private think we competitors has has happened, you've industrial certain staying certain group have companies been the relationship one That a the private markets anticipated. companies as been you Other much and that that and technology other is enough over what's into that a very larger The that we we very that public pretty deal the the sector healthy. sector. of sector we to about with. private sector is sector the the close or camp going company both what sector, maneuverability public to as migrate seen the start strengthen camps. large into But private

increasing. are are because the separate the sector I playing there because side, public our very public into enough today, to back lot very the So in at got competitive look fact in private people not a work bookings steady migrate it's two is private in the strictly for say been on now. when to right them side the you And on of year-over-year competitive camps there side. And

Joseph Giordano

Fair enough. Thanks, guys.

Operator

ahead. question Okay. with Revich go Goldman from comes Jerry Sachs. The next Please

Jerry Revich

you Jim, revision guidance could talk hi. this Yes, wondering up. for about year. the follow if taking the you I'm Thank

revision about top-line see just us context So came driven give expectations down. talk nice negative terms pieces by the to some just Layne or guide? that whether top-line the margins in you the Can business? but the in moving you moving of was to base the up, Can around

James Roberts

spend Well, the the than revenue, on more the the negative EBITDA I energy percentage margin on Jerry. positive revision of perspective on

glass at So the look year. half full let's

Jerry Revich

absolutely. And great to the margins,

James Roberts

you go, Jerry. There

believe suggest working. is plan So we're trying yes, to I exactly is what that our there

We and reduction we're And optimized We not bit some as have the company that that high-teens I be of company been if stick time. some long But And moving working a slight the think quite is we on aggressive probably don't the could of that's been the and told today have gotten up an margins as in aggressive could revenue had revenue we that in - run. could that and on that refocus better. expectations back a we've what investors to we bottom side maybe best the for We the revenue will our margin EBITDA kind a with expectation it's that are have very to we little we wanted low-XXs. we're be. level line. think up the creating seen for another with doing

line than at in plenty top-line is any get top-line. environment issue more strong believe come. The certain is The to that mandate to top-line - the short enough is top-line to in And the the to please and bottom is are bottom I that will patient, to margins a line the with margin of and it. run to top-line point then it try have do going us important markets be we is come get to time issue. on an an So is type that a retaining up, where while for it bottom-line not that

Jerry Revich

of transition, thinking we And quarter. change that out big in this terms clearly how that length about playing be of step the should

that hopefully through a should So improving about Is think for it? XXXX margins. of top-line, from we tough standpoint comps about the pretty for half to way the but first being top-line think

James Roberts

growth take to to next years. Yes, a you really steady Jerry, nice that over methodical think to line I three three just it to a important. exciting this, We one if just the or five standpoint blow time those business be going businesses into actually stream. And over And is think years, growth these a growth in very it that's create next healthy. be try to to with overall term healthy not on trying we we're a wanted I out suggest little the modeling revenue quarter that would to and acquisitions there is bit long quarter you I It's about now straight very to an build our very from the healthier able businesses. talked a another methodical

the So in I would XXXX. growth just that - revenue suggest grow will side the steadily

Jerry Revich

year more the even backlog though as win are Even the and is pricing though entering down the down. rates a pushing and result we're

top-line still through comfortable You're XXXX. growth organic with

James Roberts

Absolutely.

enough come to and revenue do margin which the margin drive to exactly enough just strong is well the strong those enough over expectations. revenue support think and strong first, to growth decided be will you first, market one and XX what XXXX is it we've while say improvement improvement I revenue maintaining to months beyond, able saying enough, that Jerry, is plenty fact, In I've very maybe along not been And matter last market that's expectations. the trying to is it's in nice the focus on

Jerry Revich

Okay, thank you.

James Roberts

Thank you, Jerry.

Operator

with Partners. Please go ahead. The from Dudas Okay. Michael next question Vertical comes Research

Michael Dudas

you've the on Jim and moving base if cash of One, some are balance How couple sheet ratios. say Jim, for several opportunities what review, how had business debt you'd your target Yes, to you be on business. know comfortable that relative you're how the touch improving months. all working the you wanted could flow your positioning about XXXX? you've Granite? you're And the the net said that thoughts Jigisha, acquired then give and towards on now can about you looking review company your Permian to just with the maybe you're thinking things. here Maybe different maybe things thoughts into debt, I us thinking international

Jigisha Desai

partially the me has that tranche. converted, strong very $XXX the first converted Layne, had question sheet assumed one the our already tranches let two with about We address been comfortable we balance so was Yes, had sheet. from which million balance

below take our what November our with expect. leverage is typically and have outstanding we'll we replace to We $XX will additional be we debt that it million it in facility. a that's going one than with significantly out that And revolving even

liquidity addition the for And is Layne jobs, duration the risk of of projects large of from contributions much with strong means generation it's cash kind And these a the so that flow quarter driven are perspective, our - as the because variability are cash what and in then small third pretty the year. the profiles which cash the that has predictable. more changes

So from a I I'm balance comfortable. mean sheet perspective, very

James Roberts

that is other the Mike, satisfy discussion of to sheet then move and balance before on - Maybe there we the some businesses.

Michael Dudas

Yes, sure.

James Roberts

Okay, Mike.

previous businesses. the businesses, divesting calls in to So some. on certainly we the considered actually Relative of and discussed that, certainly considered considered others businesses midstream have as have with enhancing strengthening international brought we Layne the in we've several and of acquisition some call what

the are speak in as action we of we divesting we'll So to be in those are further and very of of future. more one or on near and still some businesses potentially plays notice the play give it in able the

Michael Dudas

you. Jim, thank Excellent

James Roberts

Thanks, Mike.

Operator

question Davidson. Thielman next go Please The comes Brent from ahead. with D.A.

Brent Thielman

pertain what to were in is on the midstream Yes, Jim that that or something sale, $XX does just discussing, thanks. side, for assets else? the held million Jigisha, you

Jigisha Desai

is. it

James Roberts

have into certain think of you'll assets aside the for a Yes, amount we sale. when do you that for value set that I Q, look see

Brent Thielman

the these such in we could fourth where update help as they're last good delve but go front that to then in because we the just little expedite put should exactly increase into we things you large but think some we left actually did are. I on want to margins still okay. further And similar extent, more XX guess it, Got from there. that of us, I don't these? slow quarter, behind could us I a to into just the us see situation the know it, And problem what's months jobs first down quarter, to maybe of these here projects

James Roberts

The we'd is was that projects several - and attached slow that margins. We about that way is play the of will in the slowing it longer because that back believe a it. in and one take is down the the the large of tail suggested were we that X% and Yes, unfortunately straight business is a it we of look it Two to current end margin getting happened. through we're mid-teen itself, have what that that And do some that that has before XXXX Brent, change to on have times to we of would the that lag segment of now there on that we've change somewhat just back numbers what previously, them will line. still intend were between - a XXXX, very mature projects the to XXXX portion But segment absolutely be in taking range. the there. anticipate three bottom jobs segment essentially line get simple mid-teen it that project mentioned a Transportation I them go we to at be back our think of were be completed we that certainly had made still talk if large and of to

Brent Thielman

Okay.

to segment. me. it Is know large it. EBITDA will this XXXX could from don't of left. front in bigger offset remainder have larger the prevent scheme in play answer enough how Transportation much percent don't the margin that that will it the our XX business I But it would getting one have carrying Jim, it Granite, But plus So a you I of is a in a into year. much have next of to

of an So have on in it XXXX large impact in did than XXXX. will substantially projects less the top the business

Jigisha Desai

we we quarter February Plus results in Brent, will too. when guidance our be our announce fourth updating

Brent Thielman

guys. thanks Okay,

James Roberts

You bet.

Operator

go Rappin final Morgan The from ahead. comes Please question Brian Dempsey. with

Okay. the Brian the our session. has dropped off to of now turn over the is hosts. back Q&A I'd call end and like Q&A, to This

James Roberts

for and and thank Jigisha, conference for note is the well in Ron country investors the and questions. I investors, always a our road quick your quarter. on will visiting shareholders be fourth everybody you around the A and our Okay, operations as

to reach to will to out you you fellow your all employees meeting day. So and all core Granite's of please forward possible. as we workers for And thank whenever with you look of always exhibiting every speaking and for single safe keeping Ron values our and with

available And always for today follow-up, As questions. everybody. joining Jigisha, further any I and Ron us for are thank you if have you

Jigisha Desai

you. Thank

Granite Construction (GVA) 26 Oct 182018 Q3 Earnings call transcript