Granite Reports First Quarter 2024 Results
- Q1 revenue increased 20% year-over-year to
$672 million - Q1 diluted EPS of
$(0.70) and adjusted diluted EPS (1) of$(0.21) - Q1 operating cash flow increased
$101 million year-over-year to$24 million - Reorganized operations to align leadership with reportable segments
First Quarter 2024 Results
Net loss attributable to Granite Construction Incorporated totaled
- Revenue increased
$112 million to$672 million compared to$560 million for the same period in the prior year. The Construction and Materials segments posted year-over-year increases of 18% and 36%, respectively. - Gross profit increased
$22 million to$54 million compared to$32 million for the same period in the prior year. - Selling, general, and administrative (“SG&A”) expenses increased
$15 million to$88 million , or 13.1%, of revenue, compared to$73 million , or 13.1%, of revenue, for the same period in the prior year. The increase in SG&A expenses was primarily due to$7 million of additional stock based compensation expense and$5 million of SG&A expenses from acquired businesses year-over-year. - Adjusted EBITDA (1) totaled
$14 million compared to$(4) million for the same period in the prior year. - Operating cash flow increased
$101 million year-over-year to$24 million , a continuation of the increases we saw in the second half of 2023. - Committed and Awarded Projects (“CAP”) (2) decreased
$47 million sequentially and increased$395 million year-over-year to$5.5 billion .
“We continued to build on our momentum from 2023, and our teams are off to a strong start in 2024 driving revenue growth and significantly improved operating cash flow compared to the first quarter of 2023,” said Kyle Larkin, Granite President and Chief Executive Officer. “In addition, during the quarter, we aligned operational leadership and decision making around the construction and materials segments. We believe this will allow us to better leverage our teams’ expertise and position us to drive top and bottom line growth in 2024 and beyond.”
(1) Adjusted net loss attributable to Granite Construction Incorporated, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures. Please refer to the description and reconciliation of non-GAAP measures in the attached tables. |
(2) CAP is comprised of revenue we expect to record in the future on executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts, as well as the general construction portion of construction manager/general contractor, construction manager/at risk and progressive design build contracts to the extent contract execution and funding is probable. |
Three Months ended March 31, 2024 (Unaudited - dollars in thousands)
Construction Segment |
||||||||||||||
|
Three Months Ended March 31, |
|||||||||||||
|
2024 |
|
2023 |
|
Change |
|||||||||
Revenue |
$ |
595,213 |
|
|
$ |
503,416 |
|
|
$ |
91,797 |
|
18.2 |
% |
|
Gross profit |
$ |
56,828 |
|
|
$ |
36,705 |
|
|
$ |
20,123 |
|
|
54.8 |
% |
Gross profit as a percent of revenue |
|
9.5 |
% |
|
|
7.3 |
% |
|
|
|
|
Revenue increased year-over-year, led by operations in
CAP remained flat at
Materials Segment |
||||||||||||||
|
Three Months Ended March 31, |
|||||||||||||
|
2024 |
|
2023 |
|
Change |
|||||||||
Revenue |
$ |
77,062 |
|
|
$ |
56,652 |
|
|
$ |
20,410 |
|
36.0 |
% |
|
Gross profit |
$ |
(2,543 |
) |
|
$ |
(4,346 |
) |
|
$ |
1,803 |
|
|
(41.5 |
)% |
Gross profit as a percent of revenue |
|
(3.3 |
)% |
|
|
(7.7 |
)% |
|
|
|
|
Revenue increased year-over-year driven by revenue from acquired businesses of
Outlook
Our guidance for 2024 is unchanged, with the exception of adjusted EBITDA margin. Adjusted EBITDA margin guidance has increased from a range of 9.0% to 11.0% to a range of 9.5% to 11.5% after giving consideration for the exclusion of stock based compensation expense in our adjusted EBITDA margin.
- Revenue in the range of
$3.8 billion to$4.0 billion - Adjusted EBITDA margin in the range of 9.5% to 11.5%
- SG&A expense in the range of 7.5% to 8.0% of revenue
- Mid-20s effective tax rate for adjusted net income
- Capital expenditures of approximately
$130 million to$150 million
We do not provide a reconciliation of forward-looking adjusted EBITDA margin or the most directly comparable forward-looking GAAP measure of net income attributable to Granite Construction Incorporated because we cannot predict with a reasonable degree of certainty and without unreasonable efforts certain components or excluded items that are inherently uncertain and depend on various factors. For these reasons, we are unable to assess the potential significance of the unavailable information.
Conference Call
Granite will conduct a conference call today, May 2, 2024, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter ended March 31, 2024. The Company invites investors to listen to a live audio webcast of the investor conference call on its Investor Relations website, https://investor.graniteconstruction.com. The investor conference call will also be available by calling 1-877-328-5503; international callers may dial 1-412-317-5472. An archive of the webcast will be available on Granite's Investor Relations website approximately one hour after the call. A replay will be available after the live call through May 9, 2024, by calling 1-877-344-7529, replay access code 5065393; international callers may dial 1-412-317-0088.
About Granite
Granite is America’s Infrastructure Company™. Incorporated since 1922, Granite (NYSE:GVA) is one of the largest diversified construction and construction materials companies in
Forward-looking Statements
Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2024 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, that our reorganized operations will allow us to better leverage our teams’ expertise and position us to drive top and bottom line growth in 2024 and beyond, CAP and results constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” "guidance" and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2024 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, that our reorganized operations will allow us to better leverage our teams’ expertise and position us to drive top and bottom line growth in 2024 and beyond, CAP and results. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.
GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited - in thousands, except share and per share data) |
|||||||
|
March 31, 2024 |
|
December 31, 2023 |
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
321,752 |
|
$ |
417,663 |
||
Short-term marketable securities |
|
15,500 |
|
|
|
35,863 |
|
Receivables, net |
|
429,830 |
|
|
|
598,705 |
|
Contract assets |
|
306,004 |
|
|
|
262,987 |
|
Inventories |
|
116,957 |
|
|
|
103,898 |
|
Equity in construction joint ventures |
|
168,985 |
|
|
|
171,233 |
|
Other current assets |
|
59,078 |
|
|
|
53,102 |
|
Total current assets |
|
1,418,106 |
|
|
|
1,643,451 |
|
Property and equipment, net |
|
665,524 |
|
|
|
662,864 |
|
Investments in affiliates |
|
92,677 |
|
|
|
92,910 |
|
Goodwill |
|
160,842 |
|
|
|
155,004 |
|
Intangible assets |
|
113,201 |
|
|
|
117,322 |
|
Right of use assets |
|
79,580 |
|
|
|
78,176 |
|
Deferred income taxes, net |
|
8,108 |
|
|
|
8,179 |
|
Other noncurrent assets |
|
56,997 |
|
|
|
55,634 |
|
Total assets |
$ |
2,595,035 |
|
|
$ |
2,813,540 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Current maturities of long-term debt |
$ |
39,986 |
|
|
$ |
39,932 |
|
Accounts payable |
|
347,382 |
|
|
|
408,363 |
|
Contract liabilities |
|
223,964 |
|
|
|
243,848 |
|
Accrued expenses and other current liabilities |
|
325,103 |
|
|
|
337,740 |
|
Total current liabilities |
|
936,435 |
|
|
|
1,029,883 |
|
Long-term debt |
|
513,203 |
|
|
|
614,781 |
|
Long-term lease liabilities |
|
65,115 |
|
|
|
63,548 |
|
Deferred income taxes, net |
|
3,636 |
|
|
|
3,708 |
|
Other long-term liabilities |
|
72,041 |
|
|
|
74,654 |
|
Commitments and contingencies |
|
|
|
||||
Equity |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
441 |
|
|
|
439 |
|
Additional paid-in capital |
|
479,680 |
|
|
|
474,134 |
|
Accumulated other comprehensive income |
|
1,290 |
|
|
|
881 |
|
Retained earnings |
|
465,047 |
|
|
|
501,844 |
|
Total Granite Construction Incorporated shareholders’ equity |
|
946,458 |
|
|
|
977,298 |
|
Non-controlling interests |
|
58,147 |
|
|
|
49,668 |
|
Total equity |
|
1,004,605 |
|
|
|
1,026,966 |
|
Total liabilities and equity |
$ |
2,595,035 |
|
|
$ |
2,813,540 |
|
GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited - in thousands, except per share data) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
Revenue |
|
|
|
||||
Construction |
$ |
595,213 |
|
|
$ |
503,416 |
|
Materials |
|
77,062 |
|
|
|
56,652 |
|
Total revenue |
|
672,275 |
|
|
|
560,068 |
|
Cost of revenue |
|
|
|
||||
Construction |
|
538,385 |
|
|
|
466,711 |
|
Materials |
|
79,605 |
|
|
|
60,998 |
|
Total cost of revenue |
|
617,990 |
|
|
|
527,709 |
|
Gross profit |
|
54,285 |
|
|
|
32,359 |
|
Selling, general and administrative expenses |
|
87,993 |
|
|
|
73,122 |
|
Other costs, net |
|
11,010 |
|
|
|
4,523 |
|
Gain on sales of property and equipment, net |
|
(1,418 |
) |
|
|
(2,037 |
) |
Operating loss |
|
(43,300 |
) |
|
|
(43,249 |
) |
Other (income) expense |
|
|
|
||||
Interest income |
|
(6,702 |
) |
|
|
(3,762 |
) |
Interest expense |
|
8,083 |
|
|
|
2,891 |
|
Equity in income of affiliates, net |
|
(3,970 |
) |
|
|
(5,187 |
) |
Other income, net |
|
(1,743 |
) |
|
|
(1,950 |
) |
Total other income, net |
|
(4,332 |
) |
|
|
(8,008 |
) |
Loss before income taxes |
|
(38,968 |
) |
|
|
(35,241 |
) |
Benefit from income taxes |
|
(9,526 |
) |
|
|
(9,469 |
) |
Net loss |
|
(29,442 |
) |
|
|
(25,772 |
) |
Amount attributable to non-controlling interests |
|
(1,541 |
) |
|
|
2,749 |
|
Net loss attributable to Granite Construction Incorporated |
$ |
(30,983 |
) |
|
$ |
(23,023 |
) |
|
|
|
|
||||
Net loss per share attributable to common shareholders: |
|
|
|
||||
Basic |
$ |
(0.70 |
) |
|
$ |
(0.53 |
) |
Diluted |
$ |
(0.70 |
) |
|
$ |
(0.53 |
) |
Weighted average shares outstanding: |
|
|
|
||||
Basic |
|
43,988 |
|
|
|
43,764 |
|
Diluted |
|
43,988 |
|
|
|
43,764 |
|
GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands) |
|||||||
Three Months Ended March 31, |
2024 |
|
2023 |
||||
Operating activities |
|
|
|
||||
Net loss |
$ |
(29,442 |
) |
|
$ |
(25,772 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
||||
Depreciation, depletion and amortization |
|
29,068 |
|
|
|
19,733 |
|
Amortization related to long-term debt |
|
758 |
|
|
|
472 |
|
Gain on sales of property and equipment, net |
|
(1,418 |
) |
|
|
(2,037 |
) |
Stock-based compensation |
|
12,895 |
|
|
|
4,828 |
|
Equity in net income from unconsolidated construction joint ventures |
|
(2,290 |
) |
|
|
(911 |
) |
Net income from affiliates |
|
(3,970 |
) |
|
|
(5,187 |
) |
Other non-cash adjustments |
|
(691 |
) |
|
|
(151 |
) |
Changes in assets and liabilities |
|
19,163 |
|
|
|
(67,663 |
) |
Net cash provided by (used in) operating activities |
$ |
24,073 |
|
|
$ |
(76,688 |
) |
Investing activities |
|
|
|
||||
Maturities of marketable securities |
|
20,000 |
|
|
|
10,000 |
|
Purchases of property and equipment |
|
(27,871 |
) |
|
|
(40,461 |
) |
Proceeds from sales of property and equipment |
|
2,535 |
|
|
|
4,518 |
|
Proceeds from company owned life insurance |
|
— |
|
|
|
1,545 |
|
Return of investment in affiliates |
|
693 |
|
|
|
— |
|
Cash paid for purchase price adjustments on business acquisition |
|
(6,119 |
) |
|
|
— |
|
Collection of notes receivable |
|
— |
|
|
|
62 |
|
Net cash used in investing activities |
$ |
(10,762 |
) |
|
$ |
(24,336 |
) |
Financing activities |
|
|
|
||||
Debt principal repayments |
|
(102,140 |
) |
|
|
(256 |
) |
Cash dividends paid |
|
(5,713 |
) |
|
|
(5,687 |
) |
Repurchases of common stock |
|
(7,416 |
) |
|
|
(3,523 |
) |
Contributions from non-controlling partners |
|
10,000 |
|
|
|
17,600 |
|
Distributions to non-controlling partners |
|
(3,950 |
) |
|
|
(1,350 |
) |
Other financing activities, net |
|
(3 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
$ |
(109,222 |
) |
|
$ |
6,784 |
|
Net decrease in cash, cash equivalents |
|
(95,911 |
) |
|
|
(94,240 |
) |
Cash, cash equivalents at beginning of period |
|
417,663 |
|
|
|
293,991 |
|
Cash, cash equivalents at end of period |
$ |
321,752 |
|
|
$ |
199,751 |
|
Non-GAAP Financial Information
The tables below contain financial information calculated other than in accordance with
We provide adjusted income (loss) before income taxes, adjusted provision for (benefit from) income taxes, adjusted net income (loss) attributable to Granite Construction Incorporated, adjusted diluted weighted average shares of common stock and adjusted diluted earnings (loss) per share attributable to common shareholders, non-GAAP measures, to indicate the impact of the following:
- Other costs, net as described above;
- Transaction costs which include acquired intangible amortization expense and acquisition-related depreciation in 2024 and 2023, and
- Stock-based compensation expense.
Management believes that these additional non-GAAP financial measures facilitate comparisons between industry peer companies, and management uses these non-GAAP financial measures in evaluating the Company's performance. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with GAAP. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to similar measures provided by other companies.
GRANITE CONSTRUCTION INCORPORATED EBITDA AND ADJUSTED EBITDA(1) (Unaudited - dollars in thousands) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
EBITDA: |
|
|
|
||||
Net loss attributable to Granite Construction Incorporated |
$ |
(30,983 |
) |
|
$ |
(23,023 |
) |
Net loss margin (2) |
|
(4.6 |
)% |
|
|
(4.1 |
)% |
|
|
|
|
||||
Depreciation, depletion and amortization expense (3) |
|
29,273 |
|
|
|
19,874 |
|
Benefit from income taxes |
|
(9,526 |
) |
|
|
(9,469 |
) |
Interest (income) expense, net |
|
1,381 |
|
|
|
(871 |
) |
EBITDA(1) |
$ |
(9,855 |
) |
|
$ |
(13,489 |
) |
EBITDA margin(1)(2) |
|
(1.5 |
)% |
|
|
(2.4 |
)% |
|
|
|
|
||||
ADJUSTED EBITDA: |
|
|
|
||||
Other costs, net |
|
11,010 |
|
|
|
4,523 |
|
Stock-based compensation (4) |
|
12,895 |
|
|
|
4,828 |
|
Adjusted EBITDA(1) |
$ |
14,050 |
|
|
$ |
(4,138 |
) |
Adjusted EBITDA margin(1)(2) |
|
2.1 |
% |
|
|
(0.7 |
)% |
(1) We define EBITDA as GAAP net income attributable to Granite Construction Incorporated, adjusted for net interest expense, taxes, depreciation, depletion and amortization. Adjusted EBITDA and adjusted EBITDA margin exclude the impact of Other costs, net, and stock-based compensation expense, as described above. |
|||||||
(2) Represents net loss, EBITDA and adjusted EBITDA divided by consolidated revenue of |
|||||||
(3) Amount includes the sum of depreciation, depletion and amortization which are classified as cost of revenue and selling, general and administrative expenses in the condensed consolidated statements of operations. |
|||||||
(4) In the first quarter of 2024, we revised the adjusted EBITDA calculation to exclude the impact of stock-based compensation expense. The prior period adjusted EBITDA has been recast to conform to current presentation. |
GRANITE CONSTRUCTION INCORPORATED ADJUSTED NET INCOME (LOSS) RECONCILIATION (Unaudited - in thousands, except per share data) |
|||||||
|
Three Months Ended March 31, |
||||||
|
2024 |
|
2023 |
||||
Loss before income taxes |
$ |
(38,968 |
) |
|
$ |
(35,241 |
) |
Other costs, net |
|
11,010 |
|
|
|
4,523 |
|
Transaction costs |
|
5,593 |
|
|
|
2,494 |
|
Stock-based compensation (1) |
|
12,895 |
|
|
|
4,828 |
|
Adjusted loss before income taxes |
$ |
(9,470 |
) |
|
$ |
(23,396 |
) |
|
|
|
|
||||
Benefit from income taxes |
$ |
(9,526 |
) |
|
$ |
(9,469 |
) |
Tax effect of adjusting items (2) |
|
7,669 |
|
|
|
3,080 |
|
Adjusted benefit from income taxes |
$ |
(1,857 |
) |
|
$ |
(6,389 |
) |
|
|
|
|
||||
Net loss attributable to Granite Construction Incorporated |
$ |
(30,983 |
) |
|
$ |
(23,023 |
) |
After-tax adjusting items |
|
21,829 |
|
|
|
8,765 |
|
Adjusted net loss attributable to Granite Construction Incorporated |
$ |
(9,154 |
) |
|
$ |
(14,258 |
) |
|
|
|
|
||||
Diluted weighted average shares of common stock |
|
43,988 |
|
|
|
43,764 |
|
|
|
|
|
||||
Diluted net loss per share attributable to common shareholders |
$ |
(0.70 |
) |
|
$ |
(0.53 |
) |
After-tax adjusting items per share attributable to common shareholders |
|
0.49 |
|
|
|
0.20 |
|
Adjusted diluted loss per share attributable to common shareholders |
$ |
(0.21 |
) |
|
$ |
(0.33 |
) |
(1) In the first quarter of 2024, we revised the adjusted net income calculation to exclude the impact of stock-based compensation expense. The prior period adjusted net income and diluted loss per share calculations have been recast to conform to current presentation. |
|||||||
(2) The tax effect of adjusting items was calculated using the Company’s estimated annual statutory tax |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240501078447/en/
Investors
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Erin Kuhlman, 831-768-4111
Source: Granite Construction Incorporated