Granite Announces Record Earnings for 2007
"Today we are reporting the highest net income in our Company's 85-year history," said
For the fourth quarter 2007, total revenue was
Other income for the quarter ended
Total company backlog at
General and Administrative expenses for the year totaled
"While G&A has increased considerably in 2007, we believe that the increased investment will provide the infrastructure and oversight necessary to maximize the profitability of our work and execute our long-term growth strategy," said Dorey.
Minority interest for the year ended
During the fourth quarter ended
Results by Segment
Granite East revenue for the quarter decreased 16% to
For the year ended
Granite West revenue for the quarter totaled
For the year ended
Granite
For the year ended
Outlook
"The diversity and resiliency of our business model will prove to be extremely valuable in 2008 as we confront the economic challenges facing us in the West and capitalize on the opportunities to increase profitability in the East.
"We are very pleased to see earnings improvement from our Granite East business and we expect that to continue through 2008. Driven by a strong backlog of work and better execution, we are currently forecasting Granite East to achieve low double digit gross margins in 2008. We have targeted several projects in each of our three Granite East regions that we will pursue in 2008; however, we will remain very selective with regard to the projects we will bid. Our strategy for this business has not changed. We will continue to focus on our home markets and expect to maintain a Granite East business with revenues which allow us the best opportunity to maximize profitability and successfully execute at the project level.
"We anticipate 2008 to be a challenging year for Granite West due to the continued downturn in the housing market, which is expected to negatively impact several of our branches, particularly in the
Financial Results
The 2007 and 2006 financial information in this announcement reflects the Company's organizational and strategic realignment and are preliminary subject to completion of the annual audit. The final annual financial results will appear in Granite's Form 10-K, which will be filed on or before
Conference Call
Granite will conduct a conference call tomorrow,
About Granite
Forward-Looking Statements
This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represents our management's beliefs and assumptions concerning future events such as statements related to the existence of bidding opportunities and economic conditions on the Company's future results. Additionally, forward-looking statements include statements that can be identified by the use of forward- looking terminology such as "believes," "expects," "appears," "may," "will," "should," "look for," or "anticipates," or the negative thereof or comparable terminology, or by discussions of strategy.
All such forward-looking statements are subject to risks and uncertainties that could cause actual results of operations and financial condition and other events, as well as the timing thereof, to differ materially from those expressed or implied in such forward-looking statements. Specific risk factors include, without limitation, changes in the composition of applicable federal and state legislation appropriation committees; federal and state appropriation changes for infrastructure spending; the general state of the economy; job productivity; accuracy of project estimates; weather conditions; competition and pricing pressures; and state referendums and initiatives. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. You should also understand that many important factors in addition to those discussed, referred to or incorporated by reference in this press release, could cause our results to differ materially from those expressed in the forward-looking statements. In light of these risks and uncertainties, it is important to be aware that the forward-looking events discussed in this release may not occur. We undertake no obligation to revise or update publicly any forward-looking statements to conform the statement to actual results or changes in the Company's expectations.
For further information regarding risks and uncertainties associated with Granite's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operation" and "Risk Factors" sections of Granite's
GRANITE CONSTRUCTION INCORPORATED
COMPARATIVE FINANCIAL SUMMARY
(Unaudited - In Thousands, Except Per Share Data)
Three Months Ended
December 31, Variance
2007 2006 Amount Percent
Revenue
Construction $542,864 $612,925 $(70,061) (11.4)
Material sales $86,045 $106,603 $(20,558) (19.3)
Real estate $4,156 $399 $3,757 ****
Total revenue $633,065 $719,927 $(86,862) (12.1)
Cost of revenue
Construction $458,104 $580,917 $122,813 21.1
Material sales $71,118 $82,423 $11,305 13.7
Real estate $5,406 $144 $(5,262) ****
Total cost of revenue $534,628 $663,484 $128,856 19.4
Gross profit $98,437 $56,443 $41,994 74.4
Gross profit as a percent
of revenue 15.5% 7.8% 7.7% -
General and administrative
expenses $63,069 $48,530 $(14,539) (30.0)
G&A expenses as a percent
of revenue 10.0% 6.7% (3.3%) -
Reversal of legal judgment - $(4,800) $(4,800) (100.0)
Impairment of goodwill - $18,011 $18,011 100.0
Gain on sales of property
and equipment $2,290 $891 $1,399 ****
Other income (expense)
Interest income $6,129 $7,380 $(1,251) (17.0)
Interest expense $(1,369) $(387) ($982) ****
Acquisition expense $(7,752) - ($7,752) -
Equity in income of
affiliates $846 $636 $210 33.0
Other, net $6,555 $(96) $6,651 ****
Total other income $4,409 $7,533 $(3,124) (41.5)
Income before provision for
income taxes and
minority interest $42,067 $3,126 $38,941 ****
Minority interest $(7,109) $(599) $(6,510) ****
Net income $17,168 $2,917 $14,251 ****
Net income per share:
Basic $0.43 $0.07 $0.36 ****
Diluted $0.42 $0.07 $0.35 ****
Weighted average shares
of common stock:
Basic 40,275 40,935 (660) (1.6)
Diluted 40,802 41,581 (779) (1.9)
Year Ended
December 31, Variance
2007 2006 Amount Percent
Revenue
Construction $2,321,502 $2,524,454 $(202,952) (8.0)
Material sales $375,700 $410,159 $(34,459) (8.4)
Real estate $40,712 $34,991 $5,721 16.3
Total revenue $2,737,914 $2,969,604 $(231,690) (7.8)
Cost of revenue
Construction $2,002,064 $2,343,134 $341,070 14.6
Material sales $300,234 $313,329 $13,095 4.2
Real estate $24,872 $17,421 $(7,451) (42.8)
Total cost of
revenue $2,327,170 $2,673,884 $346,714 13.0
Gross profit $410,744 $295,720 $115,024 38.9
Gross profit as a
percent of revenue 15.0% 10.0% 5.0% -
General and administrative
expenses $246,202 $204,281 $(41,921) (20.5)
G&A expenses as a
percent of revenue 9.0% 6.9% (2.1%) -
Reversal of legal judgment - $(4,800) $(4,800) (100.0)
Impairment of goodwill - $18,011 $18,011 100.0
Gain on sales of property
and equipment $10,343 $10,408 $(65) (0.6)
Other income (expense)
Interest income $26,925 $24,112 $2,813 11.7
Interest expense $(6,367) $(4,492) $(1,875) (41.7)
Acquisition expense $(7,752) - $(7,752) -
Equity in income of
affiliates $5,205 $2,157 $3,048 ****
Other, net $5,498 $2,604 $2,894 ****
Total other income $23,509 $24,381 $(872) (3.6)
Income before provision for
income taxes and
minority interest $198,394 $113,017 $85,377 75.5
Minority interest $(20,859) $6,170 $(27,029) ****
Net income $112,065 $80,509 $31,556 39.2
Net income per share:
Basic $2.74 $1.97 $0.77 39.1
Diluted $2.71 $1.94 $0.77 39.7
Weighted average shares of
common stock:
Basic 40,866 40,874 (8) -
Diluted 41,389 41,471 (82) (0.2)
**** Represents percentages greater than 100%
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands, except share and per share data)
December 31, December 31,
2007 2006
Assets
Current assets
Cash and cash equivalents $352,434 $204,893
Short-term marketable securities 77,758 141,037
Accounts receivable, net 397,097 492,229
Costs and estimated earnings in
excess of billings 17,957 15,797
Inventories 55,557 41,529
Real estate held for development and sale 51,688 55,888
Deferred income taxes 43,713 36,776
Equity in construction joint ventures 34,340 31,912
Other current assets 96,969 63,144
Total current assets 1,127,513 1,083,205
Property and equipment, net 502,901 429,966
Long-term marketable securities 55,156 48,948
Investment in affiliates 26,475 21,471
Other assets 74,373 49,248
Total assets $1,786,418 $1,632,838
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $28,696 $28,660
Accounts payable 213,135 257,612
Billings in excess of costs and
estimated earnings 275,849 287,843
Accrued expenses and other current
liabilities 212,265 189,328
Total current liabilities 729,945 763,443
Long-term debt 268,417 78,576
Other long-term liabilities 46,441 58,419
Deferred income taxes 17,945 22,324
Minority interest in consolidated
subsidiaries 23,471 15,532
Shareholders' equity
Preferred stock, $0.01 par value, authorized
3,000,000 shares; none outstanding - -
Common stock, $0.01 par value, authorized
150,000,000 shares in 2007 and in 2006;
issued and outstanding 39,450,923 shares
in 2007 and 41,833,559 shares in 2006 395 418
Additional paid-in capital 79,007 78,620
Retained earnings 619,699 612,875
Accumulated other comprehensive income 1,098 2,631
Total shareholders' equity 700,199 694,544
Total liabilities and
shareholders' equity $1,786,418 $1,632,838
December 31, December 31,
Financial Position 2007 2006
Working capital $397,568 $319,762
Current ratio 1.54 1.42
Debt to total capitalization 0.30 0.13
Total liabilities to equity ratio 1.55 1.35
GRANITE CONSTRUCTION INCORPORATED
REVENUE AND BACKLOG ANALYSIS
(Unaudited - Dollars In Thousands)
BY MARKET SECTOR
Revenue
Year Ended December 31, Variance
2007 2006 Amount Percent
Public Sector $1,906,705 $2,026,001 $(119,296) (5.9)
Private Sector 414,797 498,453 (83,656) (16.8)
Material sales 375,700 410,159 (34,459) (8.4)
Other 40,712 34,991 5,721 16.3
$2,737,914 $2,969,604 $(231,690) (7.8)
Backlog
December 31, Variance
2007 2006 Amount Percent
Public Sector $1,964,262 $2,067,550 $(103,288) (5.0)
Private Sector 120,283 189,037 (68,754) (36.4)
Material sales - - - -
Other - - - -
$2,084,545 $2,256,587 $(172,042) (7.6)
BY GEOGRAPHIC AREA
Revenue
Year Ended December 31, Variance
2007 2006 Amount Percent
California $1,107,023 $1,299,022 $(191,999) (14.8)
West (Excl. CA) 894,968 868,424 26,544 3.1
Midwest 93,896 43,480 50,416 ****
Northeast 196,653 259,463 (62,810) (24.2)
Southeast 299,135 281,568 17,567 6.2
South 146,239 217,647 (71,408) (32.8)
$2,737,914 $2,969,604 $(231,690) (7.8)
Backlog
December 31, Variance
2007 2006 Amount Percent
California $430,775 $559,769 $(128,994) (23.0)
West (Excl. CA) 434,165 516,614 (82,449) (16.0)
Midwest 328,971 422,941 (93,970) (22.2)
Northeast 133,052 219,835 (86,783) (39.5)
Southeast 613,372 322,619 290,753 90.1
South 144,210 214,809 (70,599) (32.9)
$2,084,545 $2,256,587 $(172,042) (7.6)
**** Represents percentages greater than 100%
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