GVA - Earnings call transcript Q4 2018 | Granite Construction Incorporated

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Operator

Good day, and welcome to the Granite Construction Fourth Quarter 2018 Earnings Conference Call. Today's conference is being recorded. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Mr. Ron Botoff. ahead. go Please

Ron Botoff

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

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

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

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

Jim Roberts

our America's we rehabilitation legacy water a united you of was they up and Thank good century growth record traction. the year, that integrated strategic our we a Granite's XXXX we year company. to you, our Ron, joining of portfolio. as a businesses outlook. with We highlighted of growth XXXX our everyone. our And gained to us sound for discuss of old. be strategic step as significant Granite's and for infrastructure this growth performance. took are performance for Granite, our and with these operations these diverse expanded drives share our major challenge execute portfolio is new for safety completion growth diversification. more morning, path next to last end-market By well-positioned evolution evolution for successfully extremely the for and forward proved plan. new into the time acquisition, today nearly phase congratulate values the core completing XXXX of Christensen strategy proudly Granite year our teams integrated that and a About and acquisition. LiquiForce This market and were we focused Layne announcement acquisitions, company subsequent the our for Thank acquisition significant even XXXX a proved acquisitions, that platform for

the all every strategies, we to continually acquired new home with culture zero employees that Our welcomed we operate macroeconomic align our nearing safe growth zero incidents which the rapidly are strive We have was in global we concerns. markets a to Granite in Granite But continue cognizant Granite's created and continue single prioritizing The private point and market healthy across expectations green of year and demands. return core data our teams our end strong to by the Certainly, points shoots day are and safely to nine businesses. given any to safety steady reach public values, introduced work goal. enthusiastically ensure on economic newly day. for we defining growth

the noted, have recently market best As current seen more decade. conditions than remain in we a

spend our I hand to I'll providing Jigisha, strategic results and our outlook. call a high-level minutes Before the XXXX to want a of view few

trends Similar weather fourth throughout last mild business carry weather XXXX, the historically business influences our to couple quarter weeks early into wet after slowing As Nature's start began of in XXXX of The slowed of high our much a six backlog West. we the Mother XXXX, forward particularly of of months volumes. the rains held year allowed the work XXXX winter earlier up committed saw rapidly first strong November. year. our in materials much accelerating Notably on impacting this came the financial and operational of much wet for in weather and late until for erratic

We will critical bidding the discipline continue and leverage creates. it emphasize to earnings

of environment profitability solid concentrate incremental Granite achieved businesses XXXX, strategy XXXX down diversification Given another XXXX, demand of profit year the be profit acquisitions, gross Overall adjusted beat contribution. improved improvement to on points and also across a from weathers alive success is for company expansion. new we a improved Granite significant of late and and net Diversification growth a XXX negative well. on basis Despite revenue recent strong and critical performance focus significantly end year in driver of and opportunity. late-season balance increased weather generating of line impact, income with year. and plan the margin adjusted EBITDA and the the revenue, and West XXXX margin is in increase, critical earnings expectations our top XX% XX% The reflecting markets expect much growth our bottom slow in profitability. nearly to XX% of acquired previous the

areas focus four discussed quite of of strategic themes benefits some have we the illustrate results that Our time. for

emphasizing portfolio with of end-market increased drivers opportunities; lower second, and fourth, with diversifying short related projects revenue growth project funding; our private and sources new, and customer focus; the with pricing, revenue our higher risk market derisking third, velocity work durations. generally but base our diversifying First,

As we these results focus continue Granite's areas will growth drive on footprint. across to into improved broad we in XXXX, to march

We are strategic enacting our in actively engaged plan.

shift segments. We to opportunities is are targets reviewing potential of bolt-on as strategy targets belief built results our as opportunities. and for for we're And intentional And our diversified upon vertically expansion model. is explore uncovering the end-market continuing risk most a more geographic opportunities to growth also well plan focus particularly already is and producing our future integrated way are transformative business. diverse that this that Granite's focused portfolio balance Granite grow end-market to appropriate pleased we

allows add project its our consistent CM/GC and qualifications with method win with California across with value strategy and add transportation roster and a and positive we our aligned becoming procurement wins procurement and value our strategic to we negotiated Importantly, emphasizing to recent and based capabilities. new returns work segment procurements risk This company. project CM/GC our our process. with purely the backlog to This in plan. growing Recent efforts, perfectly on of project Construction a Utah more Granite's delivery which or are in procurement Granite a composition on focused projects the aligns Manager/General footprint decidedly balanced best Contractor have

three environment challenge bidding and mega performance across nation specialty environment only of have growth alone. in billion complete segments CM/GC in teams legacy to nearly in continue possible. The Two were billion supported work our to expected mitigate is pointing allow in We the negotiated private to demand. XXXX. legacy the type transportation XX% market joint venture steady We project complete. in we complete build steadfast than new today more projects public and work Granite's one water $X including pursue to remain three impact provides limiting proactively also wherever healthy, below and we to backlog, $X in risk by balance This meaningful improving segment and and segment to these nearly portfolio expect critical projects. as to XXXX California work are of unconsolidated The

our We negotiated associated well-positioned level better especially position core margins Canada, more work the and outlook considerations. and disciplined revenue top we portfolio Mexico. and But for our improve. Granite environment emphasis and continues emphasis winning with project remains plan rates as our pricing, project to those continue is considerably to last within regional, a results a and extremely of end delivering coupled and pursuits our importantly, moving reflect in an winning provided bookings to mix healthy with in execute, Jigisha? for bar local, With vertically-integrated modestly our The international a and work to as segments tied expectations. opportunities location, the derisking, parts work on alternative lower of work improved have we profit and portfolio efficiently America's bottom-line for raise including it I buoyant grow, our discipline are on mind, vision that transportation, procurement and end-market returns are results an growing on XXXX, Increased diversification, national, and over hand actions risk. to water, supportive balance continue backlog With to pricing well XXXX drove flourish and strategic across and of have anticipated. Jigisha Guam, operations, in details focused Granite win our strategic and on improved bidding that declined profitability, view intentional XXXX well-positioned with as procurement we targeting are construction and on to construction outlook. in specialty growth and execution of with our foreseeable legacy types what beyond. company. and burn, in and project on activity materials future. operations project And and in our and that, duration, and geographies healthy our profitability of more but growth markets Today, our success We growth infrastructure took shift year operations

Jigisha Desai

from with where good gross X.X% to up profit million. and you, fourth let's Thank totaled up Today, year XXXX's morning with everyone. revenue Jim, $XXX million, $XXX quarter start XX.X% last

Excluding million impact of acquisition-related net $XX.X or fourth share. diluted income the adjusted totaled XXXX per expenses, $X.XX quarter

with to $XXX million points. profit and revenue up billion, up basis year-over-year XX.X% profit XXX nearly consolidated XX% with XXXX, by improved margin For gross $X.XX gross was

adjusted share. XX% from And with more XX% year. million per $XXX.X EBITDA increased million in XXXX nearly adjusted basis XXXX point impact EBITDA increased expenses, the year-over-year than of an diluted income adjusted adjusted X.X% XXX to $X.XX $XXX.X net to margin year-over-year acquisition-related of last Excluding improvement or

structure scalable produce to cost continues Our results.

solely impact businesses. acquired recently of While SG&A the almost XXXX, by second half increase from higher increased year-over-year our was costs fiscal in the driven overhead

revenue. of Fiscal SG&A impact SG&A SG&A of $XXX.X XXXX. the expenses, X.X% expenses expenses of ago. to expenses with revenue acquisition-related totaled were year line or compared X.X% year Excluding revenue in X.X% million $XX.X million of legacy a were or

As cash increase balance than with more noted strong million Granite's marketable securities of is sheet attributable at and acquired this the XXXX. the to end $XXX remains in businesses.

target structure and to to working trends improved which allows execute continue our and maintain capital We cash us strong plans. capital our flow strategic

quarterly shares investing original in tracking and LiquiForce the addition returned pleased to through second date In end better $X.XX authorization. run Granite part anticipate we stock of million announced than more business million well annual shareholders our rate X.XX material very as as of of a the Layne are value deal that fourth also report regular Innovation to quarter, by to million than our our progressing completion GVA estimates. both million synergy repurchase $XX -- of dividends, I'm $XXX repurchase quarter. the $XX estimates is million

across key have A practices functional core best very Our and operations plan in both assets. come well non-core our and support component integrated enhance implemented involves teams and rationalization investment areas. efficiency to and and our together

Layne part in portfolio capital our business the fourth Former As allocation and quarter. divested of Granite planning, mistuned the management water

CMGC was results M&A has profitability in total align up on backlog our strategic enabled focus the Granite our $XXX XXXX activity slightly million figure end billion approximately as and previously are the not $X.XX disclosed this contract Our of segment projects discussion, task outlook XXXX, Transportation growth consolidated of backlog, end-market risk-weighted which with to Ramping but does will returns. enter down approved. at year-over-year, orders include

segment funding segment from from year leverage industrial Quarterly up Both Transportation XX a and points profit XX year-over-year segment XX.X% In impact year-over-year near XX.X%, had to our spite gross X.X% revenue and long-term the legacy quarter by solid increase last our in We in on operations. today profit to significant commercial increased of fourth and year-end last segment $X.XX to Transportation margin private into markets of visibility million. gross In X.X% gross segment in year projects up revenue decreased the public gross fueled billion, increasing a drive, consistent include increased late move began are X.X% year. winter basis year-over-year basis weather unconsolidated points stable Wet improving, let's margin the We $XXX full a where and this to these up fourth trends with forecast demand. results created strengthening Next a by XXXX profit year. and with adjustments, cost large projects negative to quarter XXXX uncertain X.X%. completion. attributable as profit performance.

XXXX, disciplined reshape decreased dynamics balance including transportation year-over-year of our projects fourth legacy improved as our pursuing robust $XXX we we strategies results. of one As we XX% in $X.XX Transportation portfolio, only project not annual reflected have the that is segment projects billion, backlog segment opportunities remained challenge began discussed. quarter complete. risk than three million while patiently project less CM/GC X.X% Market our and to

now segment. Let's Water the move to

to nearly to and Here, inclusion of annual an performance. year further our Quarterly more increased Full XX.X%, XXX basis. year-over-year $XXX.X projects $XX.X last the $XX.X year-over-year year. water segment's contributed margin basis million. from from points increased growth, Water nearly businesses profit incremental Water to in revenue $X.X up local in delivering from increase million backdrop newly only a Recent leading significant on steadily increasing revenue gross environment XXX to $XX.X fourth and with than up $XXX.X million acquisitions million to the year on both to Granite's in gross million. In Year-over-year last gross points gross profit at up increased on year basis of of last XXX% funding with acquired quarter, the the solid market. increased segment we and $XXX revenue profit Water improvement XXXX. execution to promising profit target are in XXXX. state a is we're the profit wastewater the million revenue from million acquisitions remains margin profit tied developing increased against healthy segment market XXX% water expanding backlog The attractive bidding segment. with And and robust XX.X%, significantly quarterly expert level. presence our infrastructure

to segment. the Specialty now Let's move

revenue and logistics, site distribution renewable In and Granite's basis, fourth source X.X% to a and management in incubator of gross mining year and weather portfolio driven development X.X% gross by Both solid with revenue development $XX.X X.X% negatively execution year points. up ended a site growth drove profit site power impacted basis. XXXX, improved a about while on less mining million diverse of healthy tunnel, XX $XXX.X million. including XX.X% year-over-year resulting power, you aware all is As $XXX.X Specialty year-over-year profit segment work. at On a decreased increased year-over-year margin In to of broadening portfolio on million mining materials XX.X% increased gross both quarter tunnel, delivered $XX.X and XXXX gross the Full energy to margin work revenue in Specialty to full and energy work. of of results, up renewable and XX.X%, to addition transmission $XXX.X as profit activities. segment Specialty profit basis fourth increased contribution quarter, year-over-year were segment Quarterly million. backlog million. profit a wet

to segment increased Fiscal Christensen points external efforts addition as sales our business gross at weather in wet throughout year-over-year last West. Materials was of above by gross ongoing $XX.X to impact profit revenue. XXXX totaled the delayed segment to external market million committed of to level, by segment materials slowed weather demand from the the Quarterly year's gross basis target driven performance sales external us our million. internal now performance, will Liner stepped-up full year revenue revenue from growth With Materials will as let's that quarter, that, million to was XX.X% about performance external XX% and margin will XXX XXXX. Moving that volume and profit subsidiary, $XXX.X volume last well profit weather Late which improving improved gross about Revenue finished help mid-XXXX and represents $XXX.X view. In Increased and of discuss this improves. with XX.X%. profit year accelerate to and XX.X% contribute Performance and million demand With acquired margin down XX.X%, were due and began to overall assumptions the segment. year. segment driven returns increased correcting demand segment. related Products, our outlook additional sales as consistent Layne fourth achieve $XX.X margins guide healthy our in some increased X%

efficiencies continue higher focus to We and recent overhead reductions on levels opportunities of in acquisitions. for our

and back portfolio over continue of We target $XXX capital years. and total targeting to a $XXX as expected percentage recent million the $XXX related or SG&A expenditure including our to to of intangibles million between couple stated amortization approximately of depreciation million, X.X% will is and of $XXX current in acquisitions. amortization between revenue rationalize of XXXX million our X% revenue and of to We anticipate next the

expected reform to provisional in and acquisition the by incurred rate rate mid-XXs tax to also tax was effective XX.X%, to low in XXXX includes impact December enacted normalize the amounts tax rate the decrease from expenses in driven recorded the impact a was XXXX, In in of XXXX. Our is which range. The due tax reform percentage tax partially to integration XXXX, XXXX. a non-deductible offset one-time by rate adjustments in to

X.X% growth revenue and expectations are: for X.X%. teens adjusted full of EBITDA year the including XXXX, contribution annual of consolidated margin Our to low acquisitions XXXX

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

Jim Roberts

very much you Jigisha. Thank

now investment. year these by passed than area. billion And local anticipates passed the Growth public improved and markets our X around we increase. growth opportunities Sound XX% in Defeat incremental that than opportunities since as spending consecutive note, known just point are California, in serving $XX measure to bottom XX-year primarily including Indiana ballot something year performance, and transportation local growth quality Senate two Sound and segment. spending, spur in for Washington in X infrastructure we second and Washington in state in measures measure doorsteps of Transportation performance better XXXX at Repair maintenance the annual the is both are dozen Granite's commitments funded Puget an significant SB for resources the with as of across a local Act our $XX level. State, measures horizon $X.X operating of growth across country, is the providing Utah, Illinois X and to State Transit Preservation noting XXXX years an The billion infrastructure serve. M along for mark of with in It's and worth now investment across sunset. in passed billion than Notably incremental $XX.X improvement Road other Washington Measure provided Jigisha system, end public state not in guidance program for for annual repairs billion incremental Bill line that safety Angeles $X Sound This inflection California the program We opportunities gas XXXX significant point transportation stepped-up profitability see strong infrastructure does state. anticipate As geographies improvement a and infrastructure that for come. November’s providing Los was tax funding XXXX. The critical election in life XXXX. plan the to connecting SB their of million California last funding one as of more of transportation that the Transit of significant another X at long-term the improved the is and proposition more and least SB funds of XXXX XX-year, top just better Accountability California's at X and beginning

in drinking and not trends build today Infrastructure growth of is segment. clean but we backdrop demand, federal XXXX in pricing local as company. also strategy such in robust level, funding. in taking discipline infrastructure future. of water that revolving Act of water as fund market a the procurement our only a bidding to Water slowing do place; backlog see Granite improving Our a programs environment of the healthy is growing full we the backlog segment across believe steadily this are Water foreseeable and remains continue to continue America’s opportunities as provide they for hold, the We the down we and Water evidence framework. demand Strong increased At emphasize are and state market state for dynamics pent-up significantly for water against

conjecture increasingly opportunity investment that but optimism funding to solutions. ace as endless Now point meet in for expand trends political significantly our At are Washington in poised seemingly the significantly the is anticipate country infrastructure. long-term be that and is are significant local growing We a infrastructure deal It funding crumbling that now we to area invest struck. surprise elusive that the must provides. agreement Discussions logical demand and incremental our to will domestic an most levels, of is state that infrastructure XXXX. may and in will some, in improving agreement optimistic produce funding infrastructure

while two XXXX for late stability outlook growth additional infrastructure a enhance long-term XXXX. if in the include overall which would as bill, early federal beginning as market not growth Our does prospects immediately passed adding

accelerate weather strong with are year's expect activity backlog has will a XXXX. the weather, growth in prepared strong current recovery we impact solid winter springboard teams when for Our finally this for demand includes a of along strong subsides. outlook and created This which

And what to view for growth This be in early markets. stakeholders. will mid key happy questions. of As is top value opportunistic and we'll end exceptional while to your cycle emphasizing positioned XXXX delivering we as growth bottom-line balance will company take American well infrastructure produce Granite beyond, to be that even our extremely discipline with and everyone,

Operator

you. Thank

question Riley [Operator session. our from We B. Please first begin Rygiel, go We FBR. will take Alex Instructions] will ahead. the now question-and-answer

Alex Rygiel

good everyone. and morning, you, Thank

Jim Roberts

Good Alex. morning,

Alex Rygiel

below complete or expect the that's last when finished? do Jim, Jigisha be project you to XX%

Jim Roberts

more take project That three will probably to two years.

Alex Rygiel

could from possibly projects? of the the quantify fourth legacy all And you Okay. then quarter adjustments

Jim Roberts

Well, have just performance from themselves, I have legacy large the bottom that you to projects. don't the QX. will this largely I tell improved the projects line QX

on we quarter-to-quarter As reduced is the be basis. stated, a have impact starting to

as produces so, results and segment getting as transportation at forward, reducing size. the years start And looking better going next we're therefore, it several better projects the these its over

Alex Rygiel

And Yeah. business way the impact to from any impact is basis across or there revenue your either weather quantify to EBITDA?

Jim Roberts

Yeah, that's an impact depends line, what impacted. situation, interesting by could the the best we’re could the we certainly no even have about versus last bottom one talked Alex. substantial, it somewhere we in $X.XX, been weeks if it on to That's at the had and adjustment. for on been being the been than $X.XX different If have weather along could tend just and on Christmas, it dry on was. the have the more day weather And substantially what bottom end less, a we could keep all or through moving line of general. it the depending way If share it be six in it's

Alex Rygiel

looking lastly upon what opportunities you in initiative, as could the expand and your sector? And the you're third private at

Jim Roberts

okay. Well,

So in We really sectors. the a commercial the a built lot of rebound sector. of residential in activity private we've found and industrial lot up never sector, the

companies high-tech over western highlighted the a with directly market we So all working demand, lot we've private are from U.S. of a that today.

the We're rail the into with major industrial companies. we're the rail working businesses. the On side, on side refining working

nice going sectors both and into XXXX a quite in those are areas. So both backlog we healthy have quite those of of

Alex Rygiel

Thank much. you helpful. Very very

Jim Roberts

Thanks, Alex.

Operator

Michael take will question from We Dudas next ahead. Vertical Please go our Research. from

Michael Dudas

gentlemen, and morning, Jigisha. Good

Jigisha Desai

Hey, good morning.

Jim Roberts

Mike. morning, Good

Ron Botoff

Good morning, Mike.

Michael Dudas

XXXX you and Jim, XXXX? Layne as they margins in we backlog XXXX are move current how it to the let segments, in into thoughts business, the in relative more on share middle side? sounds much diligence is me your XXXX to just the part to ending the to knee -- that revenues look part due what are and at type maybe where look XXXX, And to that, you potentials with relative in see across some or how shorter the does booking And activities backlog. we going where backlog going back LiquiForce end segments year. forward? in on how had Year business primarily the we board like of burn transport see the the move that duration And of an this and

Jim Roberts

if me, going I to just remind flow missed okay? me something, I'm on three And Mike. there please down areas. Okay, different

Michael Dudas

Thank you.

Jim Roberts

to as that stated the of backlog, the the certainly the and tell at gross better. doubt better. in Water as is getting that release we're there XX any backlog issues continues by to it Relative makes that we've over from better segment procured in segment off operate is XXXX a portion XXXX. Mike having last the that work expectation margin segments. than to And large adding healthier those But automatically can That's months, of no project than smaller increased it our and backlog, backlog the had, burning margin we've and you the margin results on we some that has increased. was higher other Certainly, the in adding Water projects the

today have previous than a with is recent years. in margin backlog our we healthier that much So

getting only answers earnings perspective, an very hope Mike, planned field, well. tell in and But integration. that going I I'm question. Jigisha that absolutely progressing Layne So out will as bit are from talk the you to LiquiForce I about work a let tell work. press We're I not getting little over yesterday, work. excited line We're lining a at business you release we look the the how I country. bidding can all we're had and see you'll lateral main I am. the

area. work metal nice the environments business mining, municipality backlog on a drilling industrial side, the drilling of side. goes has pricing stable, stayed strong the and Services the On the and seeing precious and down then Mineral the are up And quite in we're that in mining

and I And to call think on going healthy you then Jigisha, So in a we very bit maybe see you're about margins. can it Mineral little and Layne Services the now add environment that's Water a going integration. be Granite to

Jigisha Desai

Yes.

companies the office personal both -- on and going of addressed of now the second then of done of integrations. the of in issues all extremely quarter integration system And we're been think is I well. that focus will related of the back XXXX. had the short-term kind to be XXXX. some by the majority that integrating expect really And we Lot

And reinvesting definitely a It a and we reinvesting -- small it's the business. pointed in somewhat are in the burn gross the they profile Jim We charge capital work. jobs, with was of business. of do profit so lot out, the type as quick

been a a it's really contribution positive portfolio from a diversification, So to…

Jim Roberts

are margins overall helping of actually the margin The the company. Yes.

Jigisha Desai

Yes. Exactly.

Jim Roberts

so And things that working we little many the work hard starting that on a there SG&A. bit are to that we're Mike noted in was script we on are

Jigisha Desai

Yes.

Jim Roberts

probably where is we're fast year the move continue that Water segment overall, middle the happy. migrate going. we into about we I'm to that But the the it's is the just an businesses of year, excited going Specialty the as expectations way and of one segment SG&A Which area manage the and WMS. into our really from will beat We perspective that

Now, burn. last thing you the project the mentioned was

backlog. quarters, things Mike, the smaller is three I've over quicker four last one lowered that mentioned that or basically has burn the work, overall So, of the

the fourth will I quarter fact nice fast. necessarily backlog we a doesn't gets smaller say it in Although, show where a as had despite obviously the backlog very so have healthy and burned up that we work

these the soon, the be will and hard see here be would there that of lot burn we day water, this hitting attempt higher because per you'll it basis. calculate per to on local than on we optimize jobs; duration. historically our will gate that of a be try and literally side hopefully the have on the and work, burn quicker smaller day, fact spring, to margin We a margins per coming what ramp-up out faster shorter on day revenue revenue of So, in the

So, we of strong. gate should come out pretty the

Michael Dudas

next that other be very follow-up going projects, money, funding through with and the officials bids these One, counties to indirect My to is top or out, California coming and Are is relative high-speed just kind years? implications any that And expected SB the the Thank local states with to that because rail impact thoughts of civil construction wanting state, the helpful. that's the to was the get cancellation projects towards you. two-fold. direct local, or of able of and there the That's get and on to revenues like announced how Jim market? impact spend over then X issues required? all any prepared that get work California

Jim Roberts

participant first Sure, we High-speed say as state and away five high-speed is broader below and a directly then our high-speed were of been out would me number get first stayed it, years about went so on let product I may -- that in been four, rail. entities. not we very know rail ago We've we'll talk procurement the and rail the not have let the rail. far go me you we about strategy local when high-speed close something into from

segment transportation day-to-day contractors in basis in Now, with are the rail major high-speed with building that a California. said, are of general we people the State on of most not that the compete that

So, not rail don't canceled, see high-speed I or down, slowed or gets delayed. whether

First follow of those and are in-state most one think them in international or anticipate or them all of that will the transportation of really out-of-state I I rest contractors therefore doesn't there's be that are contractor from contracts contractors. completed segment and an the -- are underway -- somewhat that's all,

build going somewhere will slows do bags their pack to they're see where else go high-speed I going you're what if to and is work go some large can they the down. think design

Granite impact I They strategy. high-speed part having all. it transportation strong really the an been the don't see of competitors not So, in don't I their changing rail to-date. have at on segment see

or conjecture or I So, phase left what money not, you all happens think refunds California not build have politically. next they we'll that's to at the or see Whether point. this

They State not the back really of Mike, done work State in street work own we hit concern fast Now, that of the street. to most the lot originally the to do There a Group SB as the is when overall California. state Professional done California And California X designs. could lettings, was on of put know Engineers of good design in-house of by it's the the point. design the State the their of enough

what Granite. is really said, work targeted first did which good so was they maintenance they that with for So

start be jobs. they the would which took in employing a the chunk rehabilitation that the that large XXXX they to maintenance the asphalt So and XXXX is the of -- upgrading were concrete big XXXX, monies overlays, even work, maybe

completed. While underway capital on their and large design folks could projects get design

for that slight So years. with big for things are At interestingly external which pent-up these already XXXX they a by local the that have design and level, in in the to do mind work. see nature lot to to work. more at going seen while do and overlays they they the of a state way. level, they products of design I improvement what many go think do widening And you're work And demand bidding enough maintenance we market their is, out the the

to will problem able We've street. get at they on in six to getting when street them always out seen local the be figured that little level, out out nine of well. They're to measure faster projects months. they a way the as pass already So the to capital local next money move a improvement do never within a doing their that. They've the the

I So delay level. will projects projects is be maybe a issue will I maintenance an be being capital then little at all. see see state money which the the there offset at local And don't by

Michael Dudas

very were much. Thank You you helpful. very

Jigisha Desai

welcome. You’re

Operator

next ahead. Research We from will go take Group. our question Please Steven from Thompson Ramsey

Brian Biros

my question. on for taking for This you is Thank actually Steven. Biros Brian

Jim Roberts

Brian. Hey

Brian Biros

for one year funding ask it's I fiscal funding. the to first of XXXX. I X wanted about year SB the in believe full

from provided into type color might lettings be come helpful? you on some actually dollars think will on projects of any I how and that slow color those think you soon those would

Jim Roberts

Okay.

to well First up last billion. this year ramped where year of was billion over all it $X that, $X.X fiscal it's

that SB all, few year. XXXX significant nicely the in – So I the is X enough ago, street to hit it as up the interestingly first a minutes ramp pretty now XXXX, hitting X to of And X in what projects hit year XXXX to Mike is as somewhat then holidays a projects. until happening work And little after materials. was up Prop explained November saw during the knowing going is Granite is mentioned slowdown vote work there's maintenance Brian We I monies street. street year a compared the use the are everybody and February. last fiscal of XXXX, that that, with And the the delay in in these and on January

the the are gas they're the asphalts, very the the the moneys California. street as the will for tax now. I it see into So they widening both move into and -- don't it's bidding work State say a the we manner January and that months proficient months and the I monies this. of the February on summer. the were spring of in concretes, it's show work at nice the and State getting spending all down slowing California can that it's

going work. I you're street; capital as see XXXX projects of we improvement end to the more starting hit the the think some intersections, the the big to interchanges of larger

The alternative Jigisha as been certainly thing their I on that, as stated. some a And CM/GC those obligating of is and into other nice quite is that's mentioned are we've mentioned which monies successful happening we've they earlier. projects

of the orders. jobs. they and selected so, that, the come allocating will We've State are we been the jobs today of is build of that a with California. And money CM/GC And it to work some process in were CM/GC work way negotiating to the task out

orders. built already out million $XXX awarded you million That's might they the kind will $XX same $XX It that might happening So job, if $XXX will task in job be $XX burn, expect come a million million of in task probably well. it's orders. as be as million

jobs starting burning the the strong the mid-year, a sense to by and to I'm engineering see end and work has capital here CM/GC say, and bidding the probably will you'll year rollout design And work in So knowing completed. those let's going maintenance just then of that start be is today. improvement projects

Brian Biros

Thank in I strength believe you. of the past about quick Good follow I A you Southeast. up. the out color. coming guess, regionally, talked

specific type projects there? increased work strength? you share states If are any And states the in the that seeing of driving kind can specifically of you're the

Jim Roberts

North healthy been really the corridor. in including mean than South benefits we in as as have the Southeast, little then, higher But those they are today, we states the time for and and a the of three all mentioned, now, Georgia Obviously, million believe Carolina a I we Carolina, some Southeast, and Georgia are of Carolina will always We've plus other produce long-term Yeah. program programs as states, states. seen quite and bidding projects programs. states We're the three in North go we market transportation of said, those strongest projects, Southeast. transportation larger Florida, are in of that $XXX some in it's Florida, adjacent But West. in different the we forward. strong the

Brian Biros

you. Thank Great.

Jim Roberts

Thank you.

Operator

We D.A. next Please our will take ahead. from from question go Newby Bill Davidson.

Bill Newby

thanks and my for questions. guys taking morning, Good

Jim Roberts

Sure, Bill.

Jigisha Desai

Sure.

Ron Botoff

Good morning, Bill.

Bill Newby

what with complete, two you on you Just exactly hand associated when and projects. are about have I a what do couple that expecting how and thinking over the XX% do you loose are the -- off on when the guess ends guess, of risk you those I are is problem completely to left left?

Jim Roberts

Bill. question, Good Yes.

you're this get So really owners. out the is, closing point, selling to them of the what doing jobs and to when kind we you're

do that then, XXXX. hand both of We to on have complete us punch And of in completed that through we the we're a work process, to not in most keys, asked a should a so we And bit first work be list much. six of go literally items little that we the them process the call jobs, where owner before speak. to months

maintain the are of and and -- them we've environments a lot in keys now of sections Now in operating handed roads were are required that where they already projects, to of respects, already the open. the larger these they most

that job, for it even a on as hang be some away take the disputes. will from will focus the move So significant that have year, and hand after projects that with two with we disputes owners. work the those physically the will of some keys the outstanding will dispute of time while. jobs, we really And middle to settle lingering probably these both on In key the the but settlement. on, say, the go from And be to two will let's event

with We months. work are very is line in anticipated end is But short-lived, say, will comfortable six that physical an the that environment our I'd up we recovery. in

Bill Newby

-- time guess, who I it's progress, of to, and And this Okay. knows? line, second that started guess, that settlement then get year I expect guess I in the dispute half

Jim Roberts

Well already it's It's interesting Bill. started.

these and in the or on the settle lot global I at issue. So will a jobs, call lot issues the outside ongoing that these up are choose a try them major build pull a discussion end of into job, of you pick of times certain up we the mega disputes. and to end settlement come call we how all and a you global somewhat larger how But jobs with there what

cases So years. by amount dialing have the I hope disputes in both and will both may physically not be just we really of that's these we're take that really been settled to sides in the -- the the already on leave worked time job from what could it doesn't. take and

of lot lot the being a in resolved are as But see. disputes of we'll move so a And along. we cases

Bill Newby

revs, any Okay. you going a then one to here. for drag I on Is that at us That's project us X% guidance give on there? guess give little bit to from I of way less that's of there could guidance bit And you what's guess any there on a look XXXX? in last XX%, the helpful. than guide you for is XXXX? Is that be the expected Do can than going project less

Jim Roberts

and and the incorporated provided than revenue Jigisha provided less both it's press release. not is guidance big that the our less guidance. revenue. part XX% in it's baked -- certainly, of one it's I company. earnings the in anticipated overall we mean, into the it's Well you that the from and than into a X% I script of all mean, our to But job

of inside revenue little and or it's provided. progress bit So a that slower, guidance EBITDA a a do the worse, whether faster or little little of we already a little

Bill Newby

Okay. Appreciate Very guys. helpful. Thanks it.

Jim Roberts

very you much. Thank

Operator

over take question Please from will We next Goldman ahead. Sachs. Revich from go the Jerry

Ben Burud

This Jerry. Hi, for Burud everyone. is on good Ben morning

Jim Roberts

Good morning.

Jigisha Desai

Good morning, Ben.

Ben Burud

Good morning.

last acceleration an year. from do you mid single-digit the Can growth came the to the implies in half of you what mid in expect growth drivers what decline guidance a of back XXXX sales organic in so and your year-over-year called? are single-digit So the acceleration talk about

Jim Roberts

as the Okay, ballpark minute, think for and I focus to to where acquisition and looking of time. ingredient shorter we at as Remember, from quicker faster key in burn will the a as that really growth I'm we we said think And so come work organic anticipate relative a growth where I Mother the Nature generating expect going from. work on period to bidding. so allows soon accelerate we're revenue of and will in we're type bidding we're organic comes of and burn you're to that it type

nicely So the and we organic see into for the that's growth up why the call mid-single moment. ramping mid-single digits we'll it

there integration full half really already the of -- business -- side, get some done up half second we've anticipate nice of work first in acquisition because integration will really that's a that the that XXXX to nicely. we that of and that work -- the and on again story ramp year significant Now

can add more Jigisha help be That been can that means to we we As to gain with a business. the provide traction little we build Granite and as crews more expand will which able CapEx equipment said, to slower.

country people hiring be that of We the side expect. facilitate the across the right mode the in growth are in in the business, our business. now, acquisition hiring are organic to to of both portion the we In and operations able the we

in the nice healthy So, are and acquisition organic environment both growth a environments, today.

Ben Burud

losses from And seven-ish XXXX, to large have as in looks that's it other up, the percent adjusted essentially moving XXXX that, X.X in pieces EBITDA as simple keep margin do to like it or it. we Got mind? you guidance is in construction get rolling should X.X, the

Jim Roberts

me parts that's moving part But elaborate a bit. bunch there’s let it. of certainly Well, of here. little And a

markets, all in So general. first would expect we transportation certainly the growth in of of all

the for because say your off roll burn of that in, also issues, project health the west, work, in but expand we smaller you your some the I'd the of economic environment on market work of You large construction.

up So we see that part nicely. ramping

full year on segment, the on margins still of And the do up segment. books. our to water a On margin work we're materials see the margin having spot that is we materials contributing by this a a year EBITDA We gaining segment, traction. the higher stronger not ended quarter We quarter getting up the is is due at to that or lost business It want too. of but be. part materials we where weather to ramping

work our only our type materials As help efficiently, it as burn more of burn that wouldn't revenue, segment work material incorporating construction bidding well. our do overall into we and our help that we're will and segment be we will not work and the

think driving for of projects, it's those just that projects growth the will I XXXX. with the business large rest So growth of think I slowing don't really it's the couple the down bottom line health and for the

Ben Burud

you. Thank it. Got

Jim Roberts

Okay. Thank you.

Operator

Instructions] our Thank from from take ahead. next will you. Joe Giordano [Operator question Please Cowen. We go

Joe Giordano

good everyone, morning. Hi,

Jigisha Desai

Good morning.

Jim Roberts

Joe. Good morning,

Joe Giordano

So, should that kind in maybe talk little what but we know can you saw when last you're dollar of huge about year? time to there it a like caused bit SB what confusion look X, I visibility what a not guys I – thinking expect next from a was and seeing what and about are what around. we about for assets you consternation about guys might amount coming know relative it standpoint you

there be color next guess as I any year, So that as for will helpful?

Jim Roberts

Joe. Sure,

start of the be about out of today, question was kind I interesting we thinking thinking the the investments an box that's thought. come first might that fact and In federal program.

inadequacy FAST that And Act be the funded I'm that $XXX infrastructure weren't opportunity would And ability term incorporate billion mentioned through build thing the job. larger the of seen I worried of by believe But In August. administration case today because that the private personally, I -- Act, solvency of the date shore Congress about will program Trust of of the there an exploration Trust And the six didn't the extension. to the a five-year the Fund. lot work the end FAST do that it October real here. said always Act, to not that Highway Highway scenario, things the Trust our believe with worse not sector XXXX. on up term the job Highway a that the I Fund continue. one get our larger substantially discussion the the service going do to substantially with and we earlier that if there's we've is So, that's happy we the in next really could get run months up bill Reminder with through FAST Feds was component transportation just as there's longer longer by and have end I in place higher a of August, to a of shore Fund.

think big growth yes, I the that discussion have and when want some it. but And the as into in with grow any of got transportation going to said and earnings an haven't That's the the growth. government earlier. put clear I I one don't for do healthy said, already that high All funding. XXXX made is bill consider thing so high doesn't infrastructure We what stability can want foundation all. the stability. they not are we for at, propositions. we need that They the forward-looking guidance got But environments. states, them are it Act the stability the because pie, and And we is Fed's. the FAST the overall the of that And our just the term we of all a looking long-term the this I in growth, be revenue got the Those that growth are passed, was to we have to reiterated What as it the that back drivers out infrastructure stable of Joe, be of typically longer we federal the I of programs want aren't note, the well. is we the to large at bill. local, Fed we're out we've to speak, size be I creating

in the water, So, what going was be which included was and that infrastructure bill. power, discussed to is we transportation want

very going right about last all. thing FAST at go a by our So, something passed then quickly and it pass and of would in new plan. extend October. does to Act done administration if it I new get don't obviously not They August. they the line the say something certainly done XXXX. didn't get in I we'll I'll XXXX, then, by sunset falls But that something am something good in get and end back if concerned they it, I'm certainly, there's believe Congress will -- with shot past, the that

Joe Giordano

touch helpful. That's margins. on wanted just I Thanks. to

X%, So, for weren't for X% talking weather bit Obviously, little XQ. in half the but weather the was at guys XXXX the of assume. also first you're end to a you year, tremendous a zero impact guiding year, I of

relative So, just you like you of you the -- and maybe non-weather puts if low about guys talk takes original can the said about you to when your raised, came EBITDA original in target. end performance the in

Jim Roberts

Yes.

anticipated fine. not a rain would those it that We rained three and is then you're us for that rain dries where continue. what up And right we you're happened will deals and five along it to happened was would and cranking -- So, Thanksgiving, it days quarter; again, one out What and that were rain was if day, does later. around quickly rain days dry the started of would Joe. one right exactly in nice getting third What -- happen we had that West.

got Xst we hold around to really So, foot December. of a

to doesn’t amortizing it some change the performance Now, down. But occur speak. if when business fixed the the of that a of cost slows margins project so the on doesn't

down the our the the a amortized equipment field over because It's can't don't down. It's really that construction, we've that entire operations are the the now get materials slowing it's our the business coming stream. part part because materials a on managing to of people play who shut So, haul. revenue

the continue will as were as Mother a a doesn't as of a performance fixed the really us those quarter on that and It of events. December. be we out be have place to change didn’t really which the we margin means it's on month work. It good we So, of role combination a amortize soon be and just allows long-term Nature come in cost first role certainly good the all -- of to to

Joe Giordano

impact would that number? That

Jim Roberts

didn't I'm quite sorry; hear I question. the

Joe Giordano

specifically out call that There that was non-weather change that related nothing like your you progression? was

Jim Roberts

projects thing the of only the adjustments. a But rest to get of we the fact it. was legacy were negative large No, that we mention just didn't separately no. had couple work, It the

Joe Giordano

guys. Thanks, enough. Fair

Joe Giordano

Okay. Thanks, Joe.

Operator

Capital Please Brian go Morgan from Dempsey from Management. our next Hamilton ahead. We will question take

Brian Rafn

How Brian This Rafn. Good is you morning doing? everybody. are

Jim Roberts

Brian. Hi,

Jigisha Desai

Brian. Hi,

Jim Roberts

to from Good hear you.

Brian Rafn

side Yeah, transit if you've ask walked be the a from for let project side? what little revenue size and looked size, spot away at me guys, on heavy build, the design for -- what of job would type and in the spot duration you your sweet your transit sweet civil maybe

Jim Roberts

first all Brian. Well between fewer bet, would be billion. jobs there of You than greater $X

-- advantageous this wheel that on. it our don't an we I say billion, over have to say a will house want in we won't job I Although right position that build but be $X has to something

we three burn. general mega jobs five we And jobs, into in it more last doesn't and we trying years, than to because predict at I just less want years out, maybe no look say, that billion the doesn't probably work. $X these quicker have get So really than years, as It X.X future work. jobs

materials, are labor, what don't the know You going markets resources, be other environment. for the to like macro

I'll own to our take build control speaking the that we the literally premise under is, So so destiny, less. Design is, okay. of -- billion But the build want role say in lead okay. less be Design $X X.X or or only job, Brian. in we

we’re really might we up in maybe job XP XX would burn a be a probably venture ourselves $X job position a of So or in at joint go bidding environment in ourselves and strong to sponsor procure made want maybe both on we any in out our owners. projects. billion. by some towards be horizon through either not the not fast of better. they going negotiated take to the or that bid. get or out it's low-cost even commitment the But disputes XX see CM/GC, and ideally the to better over and with non-sponsored is more open the got I on as going is being the jobs nature. special we less one unless And we by design design position by our upfront. come right, But where forward, end XX We what have be will and work not on progressive owner, do lead with of a what's these and to work CM the based there risk, don't work and being literally approach type build be a all that that upfront XX and one qualifications okay, transparent the out can of non-sponsored we build way the the the will sophisticated is the very We we what's go being design-build build a where the work and bid, provider believe do that owners to not negotiating in type

Now goal That forward. going want disputes Granite. any we inside a is don't

and the disputes procurement billion job. $X.X $XXX owner and job, methods believe allow come going there And of different to are we no will and that of where the build we types we shaking next we’re So million out the onto or hands happen.

Brian Rafn

bidding win and your what on today of they evolved contractors? How have And your versus other are Got seeing ago? you years guys between to relative you day? quotes where might rates you. been competitive has bid X then kind What per X,

Jim Roberts

the genesis Okay. That's of our there really Brian. strategy

But and year, doubt progress have months at as hit get to different. happens healthy, we really the we well. saturation go saw the that investor to we and structure it's markets seeing better. previously. And our rate get had all as we And have potentially are that work we healthy. from ability raised as we told which somewhat of better and prices. our change watch they XXXX through starting the to started a we these the And when they lower that We XX, ago. XX our that, When hit doing with than base markets competition started get no market their rate the the better market to get there realizes is And margin point where interesting and

So a ago. that we started year

our can healthy. backlog see You is

those before. capacity. regional regional Our large margins And in have they were players are local markets than don't the healthier the

starting differently. probably what understanding I months as understanding quickly, they historically. players. XX our there which but Granite ago, And will competitors an does, they're quickly is they And rates labor the they to I components. competitors environment, on and the those starting both In as haven’t done But national larger jobs environment the So well changing on the build at XXXX follow saturated move higher believe saturated productions that And will their as change more market bidding the with are see it they is happening Brian see flow, happen. and because there cash lead; that very realistic opportunity competition appetite to international are, not the projects, the win think are margins is I contractual I is project believe they requirements because and look started among the our have up, or those understanding to being XX, our following up. just well being

And somebody in to that in months barrel the it's going to XXXX come paying-off healthy. to healthy, the happy of we and just so it -- first, win out say I'm have to speak. today So that is in rates the first backlog our very had couple is

got do making changing and the think the five get the I XX So years. years over instead used the would were -- over they that competition last back last to is earnings the likely that they've of market of kind to

Brian Rafn

adding And ability is much and you. capital you you surprised the Jim your add? or water undercapitalized. of plan how quickly you little crews that kind expansion at you can can and talked then on moving to about Got side, How expand pent-up

Jim Roberts

be as not difficult -- difficult probably it's at. and how or as as thought as would we you moving look planned. we're depending And on So I it

Let of older first kind me first -- all thing. replacing just of the is equipment

not drill they we that be productions the actually ground. is crew liners wet-out its to in facilities. broilers facility truck, field, liner building whether the that new causes We're reduced whether So where prepare older to go a equipment wet-out into its efficient call the rigs,

teams it's not their enhance all, expand upgrading it first productivity which margins. So will of expand the revenue, the that will equipment but have. will And necessarily that

Jigisha Desai

Yes.

Jim Roberts

which we in well than ahead that on said were is And first older doing get are costs upgrading to planned do. want just build today want you're really folks one then nature, Jigisha say, revenue our to going and whether of I and work comfortable then that we're is about planned. the going rigs the second and it if And fleet. it literally for going to again a the selling we're will fixed drill certainly crew, good so and capital both people can think $X that and we or so expansion And or better to the But run projection things is broiler the And thing they and are to equipment are, and we're what spend it's it think to to new operational line And both that you million the of equipment, side. thing. as methodically bottom going investment old I trucks we lining expand who I'm lining crew. whether they're very as adding which the get one that I even we're the of probably business, line do going that But good actually integration asking $X think as businesses, to far thing, million their is to planned. CapEx that doing because

Jigisha Desai

think ready, can where This very about to opportunity also on. And your get for up there is I come consolidation. is we market. for point mean, how I and is crew opportunity bolt-ons that quickly fragmented this the

definitely look we and so our we're existing being on really expect is as getting we line at with in where assets But methodical obviously their has focus Jim this in is we're investing opportunity. that are And been pointed very to equipment how be business. out our capital initial

Ron Botoff

It's well. going

Jigisha Desai

going It is really well.

Brian Rafn

Yes. Yes.

of that is Let the them or to applied talked ask military day some of heavy your and in your mining always transit you solar bid culture niche businesses are other me of of versus some the talk, base say the or some that discipline -- relative is kind that. How or about here side? we've just side uniform how projects,

Jim Roberts

okay. Well, Yes.

patience they if on projects. And they need minimum can. the segments. we to desire minimum keep expectations. level as So have the thresholds those to call margin margins well And off then field have set The all every is expectations Granite of our even run a expectations of across similar those moving day, discipline a change into of and And Jigisha believe one Brian of for do on nature. minimum higher is can't that set portfolio, we who me that are they they a given knowing the is and of environment you myself. well. people make they have wants interesting. an or that manager And And it especially bid can our imagine you businesses environment and to set the in have larger There paying group to they expectations been a as or is groups what in in if a operating reach of as minimum similar our a

didn't bottom maybe was that so market years the times have see ago they as more Today Brian. don't being them three on any we So aggressive work, I as tight when than some am aggressive our and It created patients jobs value line. driver. everything creation. not these that a today that is have and really It's discipline revenue is revenue get operation They so folks. we

Jigisha Desai

Yes. revisit saying, bid review question given hit them to And operations ask as team, third part want said, been expectations. be and one the I to of ratio of And do no, the impacted, patient. need that our had leadership had day my we they with quarter, after the quarterly every

patient from be is we and way. leadership to to just our nice on So the operational hear work to need it's say, really our

I... So

Jim Roberts

you. it's And obviously

Jigisha Desai

Right.

Jim Roberts

the So it's Brian. in plan, whole -- our everybody believes

Brian Rafn

got you, Got you.

of the east side challenge? the Mississippi on still a Jim. Just more, side, Vertical quarry integration River, or one material

Jim Roberts

And you, and Still tell would opportunities east a done. actively not challenge, we've we engaged a strong but of still desire I where we're a not in Mississippi desire. in are and the successful XXXX

get this, of until east going the Or We Atlantic get work will Mississippi. the all Ocean. to I way east we our are way say we're the to to going continually

Jigisha Desai

Yes. go. you There

Brian Rafn

guys. right, Thanks. All

Jim Roberts

Brian. Thanks,

Operator

would This question-and-answer the our like to to closing concludes session. our for host over I any back turn conference remarks.

Jim Roberts

around All the that investors for and XXXX. be operations Quick for visiting investors Ron the and your and at shareholders throughout questions. right, on thank everybody. and our Well, note will you Jigisha, road I country our conferences

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

Jigisha, available are questions. and you. I any day. if always, further Ron to Thank great And has As follow-up, everybody anybody a have

Jigisha Desai

Thank you.

Operator

now has presentation. The today's concluded. Thank conference for you attending

Granite Construction (GVA) 20 Feb 192018 Q4 Earnings call transcript