Granite Reports Fourth Quarter and Fiscal Year 2020 Results

Granite Reports Fourth Quarter and Fiscal Year 2020 Results

  • Record full year operating cash flow of $268.5 million
  • Year-end cash balance was $441.3 million, an increase of $146.3 million from prior year
  • Focused on project execution, de-risking portfolio and maximizing free cash flow and returns in 2021
  • Initiating 2021 Adjusted EBITDA(1) margin guidance

WATSONVILLE, Calif.--(BUSINESS WIRE)--Granite Construction Incorporated (NYSE: GVA) today announced results for the fourth quarter and year ended December 31, 2020.

Fiscal Year 2020 Results

Fiscal year 2020 net loss totaled ($145.1) million, or ($3.18) per diluted share, compared to a net loss of ($60.2) million, or ($1.29) per diluted share, in the prior year. Adjusted net income(1) for fiscal year 2020 totaled $60.0 million, or $1.30 per diluted share, compared to an adjusted net loss of ($27.2) million, or ($0.58) per diluted share, in the prior year. Adjusted net income (loss) excludes transaction costs(2), amortization of debt discount, non-recurring legal and accounting investigation costs and non-cash impairment charges.

  • Revenue increased 3.4% in 2020 to $3.6 billion, compared to $3.4 billion in the prior year.
  • Gross profit increased 55.5% in 2020 to $344.8 million, compared to $221.7 million in the prior year.
  • Selling, general & administrative (“SG&A”) expenses in 2020 were $353.3 million or 9.9% of revenue, compared to $308.0 million or 8.9% of revenue in the prior year. The increase was primarily attributable to $35.6 million of non-recurring legal and accounting investigation fees.
  • Adjusted EBITDA (1) increased to $189.7 million in 2020, compared to $71.7 million in the prior year.
  • Committed and Award Projects (“CAP”) (3) totaled $4.3 billion, down 2.3% year-over-year. The year-over-year decrease in CAP reflects backlog burn of the Heavy Civil Operating Group Old Risk Portfolio(4) partially offset by successful pursuits of best-value procurement work.(5)
  • Operating cash flow increased $157.0 million in 2020 to a Granite record $268.5 million, compared to $111.4 million in the prior year.
  • Balance sheet remains strong with cash and marketable securities increasing $146.3 million in 2020 to $441.3 million, compared to $295.1 million in the prior year, while debt decreased $25.6 million to $338.8 million compared to $364.4 million in the prior year.

“Fiscal year 2020 was one of the most challenging years in Granite’s history as we navigated the pandemic and the Audit/Compliance Committee’s internal investigation,” said Kyle Larkin, Granite President. “Despite these challenges, our teams performed well, particularly in our vertically integrated businesses. Our continued focus on enhancing profit and cash flow produced record operating cash flow in 2020. Looking ahead, we remain committed to positioning our balance sheet and CAP for future growth and success. While we continue to manage risk in the Heavy Civil Operating Group, I am confident that we have established the appropriate parameters to not only execute on existing projects, but also rebuild the portfolio by prioritizing projects with an appropriate risk profile as we leverage federal, state and local infrastructure funding opportunities.”

Fourth Quarter 2020 Results

Results for the fourth quarter of 2020 were net income of $8.0 million, or $0.17 per diluted share compared to a net loss of ($19.4) million, or ($0.42) per diluted share, in the prior year. Adjusted net income(1) for the fourth quarter of 2020, which excludes transaction costs(2), amortization of debt discount and non-recurring legal and accounting investigation costs, was $18.8 million, or $0.41 per diluted share compared to an adjusted net loss of ($12.5) million, or ($0.27) per diluted share, in the prior year.

  • Revenue increased 6.8% in the fourth quarter of 2020 to $945.6 million compared to $885.6 million in the fourth quarter of 2019.
  • Gross profit increased to $106.6 million in the fourth quarter of 2020 compared to $51.2 million in the fourth quarter of 2019.
  • SG&A expenses in the fourth quarter of 2020 were $100.8 million or 10.7% of revenue, compared to $83.4 million or 9.4% of revenue in the fourth quarter of 2019. The increase was primarily attributable to non-recurring legal and accounting investigation fees.
  • Adjusted EBITDA (1) increased to $56.6 million in the fourth quarter of 2020 compared to $8.5 million in the fourth quarter of 2019.

(1) Adjusted net income (loss), adjusted diluted income (loss) 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) Transaction costs include acquisition, integration, acquired intangible amortization expenses, acquisition-related depreciation and synergy costs.
(3) CAP is comprised of contract backlog (unearned revenue and other awards), as well as awarded construction management/general contractor, construction manager at-risk, and progressive design build projects not yet included in contract backlog.
(4) The Heavy Civil Operating Group Old Risk Portfolio include projects with risk criteria that do not align with Granite’s new project selection criteria for the Heavy Civil Operating Group.
(5) Best value procurement work includes construction management/general contractor, construction management at-risk, and progressive design build projects.

Fourth Quarter and Fiscal Year 2020 Segment Results (Unaudited - dollars in thousands)

Transportation Segment

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

Revenue

 

$

507,988

 

 

$

484,572

 

 

$

23,416

 

 

 

4.8

%

 

$

2,017,989

 

 

$

1,892,149

 

 

$

125,840

 

 

 

6.7

%

Gross profit

 

 

22,860

 

 

 

23,985

 

 

 

(1,125

)

 

 

(4.7

)%

 

 

133,748

 

 

 

55,001

 

 

 

78,747

 

 

 

143.2

%

Gross profit as a percent of revenue

 

 

4.5

%

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

6.6

%

 

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

2020

 

 

2019

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Committed and Awarded Projects

 

$

3,192,588

 

 

$

3,458,632

 

 

$

(266,044

)

 

 

(7.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fourth quarter of 2020, Transportation segment revenue increased year-over-year primarily driven by growth in California operations. Quarterly segment gross profit margin of 4.5% reflects progress working through the Heavy Civil Operating Group Old Risk Portfolio which offset the exceptional performance of the vertically-integrated businesses. In the fourth quarter, the Heavy Civil Operating Group Old Risk Portfolio recognized $107.1 million of revenue and a gross loss of ($22.4) million compared to revenue of $135.6 million and a gross loss of ($25.4) million for the fourth quarter of 2019.

For the year ended December 31, 2020, revenue and gross profit increases were driven by strength in the Company’s vertically-integrated businesses, which was partially offset by burn of the Heavy Civil Operating Group Old Risk Portfolio. In fiscal year 2020, the Heavy Civil Operating Group Old Risk Portfolio reported $458.6 million of revenue and a gross loss of ($102.9) million compared to revenue of $609.0 million and a gross loss of ($154.6) million for the year ended December 31, 2019.

Segment CAP decreased $0.3 billion year-over-year to $3.2 billion as Granite burned through its backlog of the Heavy Civil Operating Group Old Risk Portfolio.

Water Segment

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

Revenue

 

$

122,337

 

 

$

123,174

 

 

$

(837

)

 

 

(0.7

)%

 

$

440,317

 

 

$

468,730

 

 

$

(28,413

)

 

 

(6.1

)%

Gross profit

 

 

19,758

 

 

 

(1,319

)

 

 

21,077

 

 

 

(1,598.0

)%

 

 

54,241

 

 

 

29,766

 

 

 

24,475

 

 

 

82.2

%

Gross profit as a percent of revenue

 

 

16.2

%

 

 

(1.1

)%

 

 

 

 

 

 

 

 

 

 

12.3

%

 

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

2020

 

 

2019

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Committed and Awarded Projects

 

$

311,741

 

 

$

226,023

 

 

$

85,718

 

 

 

37.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fourth quarter of 2020, Water segment revenue was flat and gross profit increased year-over-year primarily due to the absence of significant project write downs experienced in the fourth quarter of 2019.

For the year ended December 31, 2020, Water segment revenue decreased due to project delays and limited crew availability attributable to COVID-19. Segment gross profit increased year-over-year due to the absence of significant project write downs experienced in 2019.

Segment CAP increased $85.7 million year-over-year to $311.7 million, primarily reflecting the addition of five trenchless sewer contracts in the third quarter of 2020 totaling $148 million.

Specialty Segment

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

Revenue

 

$

210,304

 

 

$

189,040

 

 

$

21,264

 

 

 

11.2

%

 

$

723,391

 

 

$

727,537

 

 

$

(4,146

)

 

 

(0.6

)%

Gross profit

 

 

44,327

 

 

 

13,090

 

 

 

31,237

 

 

 

238.6

%

 

 

92,180

 

 

 

86,729

 

 

 

5,451

 

 

 

6.3

%

Gross profit as a percent of revenue

 

 

21.1

%

 

 

6.9

%

 

 

 

 

 

 

 

 

 

 

12.7

%

 

 

11.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

2020

 

 

2019

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Committed and Awarded Projects

 

$

776,888

 

 

$

696,570

 

 

$

80,318

 

 

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fourth quarter of 2020, Specialty segment revenue increased year-over-year driven by strong site development and renewable energy projects in both private and public markets. Segment reported gross profit for the quarter increased year-over-year, reflecting increased activity in the California operations and improved project execution compared to the fourth quarter of 2019.

For the fiscal year 2020, Specialty segment revenue decreased primarily due to COVID-19 headwinds. Segment gross profit for the fiscal year increased driven by strong project execution, partially offset by a write down related to disputed cost overruns on a tunneling project.

Specialty segment CAP increased $80.3 million year-over-year to $776.9 million, a record high, reflecting the results of the Company's relationships with private and public customers.

Materials Segment

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2020

 

 

2019

 

 

Change

 

 

2020

 

 

2019

 

 

Change

 

Revenue

 

$

104,943

 

 

$

88,801

 

 

$

16,142

 

 

 

18.2

%

 

$

380,762

 

 

$

357,190

 

 

$

23,572

 

 

 

6.6

%

Gross profit

 

 

19,704

 

 

 

15,468

 

 

 

4,236

 

 

 

27.4

%

 

 

64,619

 

 

 

50,182

 

 

 

14,437

 

 

 

28.8

%

Gross profit as a percent of revenue

 

 

18.8

%

 

 

17.4

%

 

 

 

 

 

 

 

 

 

 

17.0

%

 

 

14.0

%

 

 

 

 

 

 

 

 

For the fourth quarter of 2020, Materials segment revenue and gross profit increased year-over-year compared to the prior year quarter reflecting strong sales volumes due in part to favorable weather in the West.

For the year ended December 31, 2020, Materials segment revenue and gross profit increased compared to 2019 largely due to increased sales volumes and operational efficiencies.

Outlook and Guidance

The Company’s expectations for 2021 are:

  • Low- to mid-single digit revenue growth
  • Adjusted EBITDA margin in the range of 5.5% to 7.5%

Conference Call

Granite will conduct a conference call today, March 30, 2021, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results for the quarter and fiscal year ended December 31, 2020. The Company invites investors to listen to a live audio webcast on its Investor Relations website, investor.graniteconstruction.com. The live call is available by calling 1-866-807-9684; international callers may dial 1-412-317-5415. An archive of the webcast will be available on the website approximately one hour after the call. A replay will be available after the live call through April 6, 2021, by calling 1-877-344-7529, replay access code 10153446; 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 the United States as well as a full-suite provider in the transportation, water infrastructure and mineral exploration markets. Granite’s Code of Conduct and strong Core Values guide the Company and its employees to uphold the highest ethical standards. Granite is an industry leader in safety and an award-winning firm in quality and sustainability. For more information, visit the Granite website, and connect with Granite on LinkedIn, Twitter, Facebook and Instagram.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, Committed and Awarded Projects (“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,” 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, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, 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 specifically 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

CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

December 31,

 

2020

 

 

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

436,136

 

 

$

262,273

 

Short-term marketable securities

 

 

 

 

 

27,799

 

Receivables, net

 

 

540,812

 

 

 

547,417

 

Contract assets

 

 

164,939

 

 

 

211,441

 

Inventories

 

 

82,362

 

 

 

88,885

 

Equity in construction joint ventures

 

 

188,798

 

 

 

193,110

 

Other current assets

 

 

42,199

 

 

 

46,016

 

Total current assets

 

 

1,455,246

 

 

 

1,376,941

 

Property and equipment, net

 

 

527,016

 

 

 

542,297

 

Long-term marketable securities

 

 

5,200

 

 

 

5,000

 

Investments in affiliates

 

 

75,287

 

 

 

84,176

 

Goodwill

 

 

116,777

 

 

 

264,279

 

Right of use assets

 

 

62,256

 

 

 

72,534

 

Deferred income taxes, net

 

 

41,839

 

 

 

50,158

 

Other noncurrent assets

 

 

96,375

 

 

 

106,703

 

Total assets

 

$

2,379,996

 

 

$

2,502,088

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

8,278

 

 

$

8,244

 

Accounts payable

 

 

359,160

 

 

 

400,775

 

Contract liabilities

 

 

171,321

 

 

 

95,737

 

Accrued expenses and other current liabilities

 

 

404,497

 

 

 

337,300

 

Total current liabilities

 

 

943,256

 

 

 

842,056

 

Long-term debt

 

 

330,522

 

 

 

356,108

 

Lease liabilities

 

 

46,769

 

 

 

58,618

 

Deferred income taxes, net

 

 

3,155

 

 

 

3,754

 

Other long-term liabilities

 

 

64,684

 

 

 

63,136

 

Commitments and contingencies

 

 

 

 

 

 

 

 

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; issued and outstanding: 45,668,541 shares as of December 31, 2020, 45,503,805 shares as of December 31, 2019

 

 

457

 

 

 

456

 

Additional paid-in capital

 

 

555,407

 

 

 

549,307

 

Accumulated other comprehensive loss

 

 

(5,035

)

 

 

(2,645

)

Retained earnings

 

 

424,835

 

 

 

594,353

 

Total Granite Construction Incorporated shareholders’ equity

 

 

975,664

 

 

 

1,141,471

 

Non-controlling interests

 

 

15,946

 

 

 

36,945

 

Total equity

 

 

991,610

 

 

 

1,178,416

 

Total liabilities and equity

 

$

2,379,996

 

 

$

2,502,088

 


GRANITE CONSTRUCTION INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

507,988

 

 

$

484,572

 

 

$

2,017,989

 

 

$

1,892,149

 

Water

 

 

122,337

 

 

 

123,174

 

 

 

440,317

 

 

 

468,730

 

Specialty

 

 

210,304

 

 

 

189,040

 

 

 

723,391

 

 

 

727,537

 

Materials

 

 

104,943

 

 

 

88,801

 

 

 

380,762

 

 

 

357,190

 

Total revenue

 

 

945,572

 

 

 

885,587

 

 

 

3,562,459

 

 

 

3,445,606

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

485,128

 

 

 

460,587

 

 

 

1,884,241

 

 

 

1,837,148

 

Water

 

 

102,579

 

 

 

124,493

 

 

 

386,076

 

 

 

438,964

 

Specialty

 

 

165,977

 

 

 

175,950

 

 

 

631,211

 

 

 

640,808

 

Materials

 

 

85,239

 

 

 

73,333

 

 

 

316,143

 

 

 

307,008

 

Total cost of revenue

 

 

838,923

 

 

 

834,363

 

 

 

3,217,671

 

 

 

3,223,928

 

Gross profit

 

 

106,649

 

 

 

51,224

 

 

 

344,788

 

 

 

221,678

 

Selling, general and administrative expenses

 

 

100,752

 

 

 

83,404

 

 

 

353,320

 

 

 

307,981

 

Acquisition and integration expenses

 

 

(20

)

 

 

1,530

 

 

 

53

 

 

 

15,299

 

Non-cash impairment charges

 

 

 

 

 

 

 

 

156,690

 

 

 

 

Gain on sales of property and equipment

 

 

(2,060

)

 

 

(4,767

)

 

 

(6,930

)

 

 

(18,703

)

Operating income (loss)

 

 

7,977

 

 

 

(28,943

)

 

 

(158,345

)

 

 

(82,899

)

Other expense (income)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(283

)

 

 

(1,176

)

 

 

(3,096

)

 

 

(7,433

)

Interest expense

 

 

6,298

 

 

 

5,363

 

 

 

24,200

 

 

 

18,374

 

Equity in income of affiliates, net

 

 

(4,368

)

 

 

(1,295

)

 

 

(8,783

)

 

 

(11,454

)

Other income, net

 

 

(4,295

)

 

 

(2,914

)

 

 

(4,203

)

 

 

(5,308

)

Total other (income) expense

 

 

(2,648

)

 

 

(22

)

 

 

8,118

 

 

 

(5,821

)

Income (loss) before provision for (benefit from) income taxes

 

 

10,625

 

 

 

(28,921

)

 

 

(166,463

)

 

 

(77,078

)

Provision for (benefit from) income taxes

 

 

4,938

 

 

 

(8,860

)

 

 

(282

)

 

 

(20,376

)

Net income (loss)

 

 

5,687

 

 

 

(20,061

)

 

 

(166,181

)

 

 

(56,702

)

Amount attributable to non-controlling interests

 

 

2,323

 

 

 

681

 

 

 

21,064

 

 

 

(3,489

)

Net income (loss) attributable to Granite Construction Incorporated

 

$

8,010

 

 

$

(19,380

)

 

$

(145,117

)

 

$

(60,191

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

 

$

(0.42

)

 

$

(3.18

)

 

$

(1.29

)

Diluted

 

$

0.17

 

 

$

(0.42

)

 

$

(3.18

)

 

$

(1.29

)

Weighted average shares of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

45,660

 

 

 

45,930

 

 

 

45,614

 

 

 

46,559

 

Diluted

 

 

46,275

 

 

 

45,930

 

 

 

45,614

 

 

 

46,559

 

Dividends per common share

 

$

0.13

 

 

$

0.13

 

 

$

0.52

 

 

$

0.52

 


GRANITE CONSTRUCTION INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

Years Ended December 31,

 

2020

 

 

2019

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(166,181

)

 

$

(56,702

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

112,958

 

 

 

121,993

 

Amortization related to the 2.75% Convertible Notes

 

 

8,693

 

 

 

1,425

 

Gain on sales of property and equipment, net

 

 

(6,930

)

 

 

(18,703

)

Deferred income taxes

 

 

8,817

 

 

 

(22,924

)

Stock-based compensation

 

 

6,377

 

 

 

10,213

 

Equity in net loss from unconsolidated joint ventures

 

 

51,486

 

 

 

120,632

 

Net income from affiliates

 

 

(8,783

)

 

 

(11,454

)

Non-cash impairment charges

 

 

156,690

 

 

 

 

Other non-cash adjustments

 

 

1,729

 

 

 

4,020

 

Changes in assets and liabilities, net of the effect of an acquisition in 2019

 

 

103,604

 

 

 

(37,062

)

Net cash provided by operating activities

 

 

268,460

 

 

 

111,438

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(9,996

)

 

 

 

Maturities of marketable securities

 

 

10,000

 

 

 

30,000

 

Proceeds from called marketable securities

 

 

24,996

 

 

 

 

Purchases of property and equipment

 

 

(93,253

)

 

 

(106,828

)

Proceeds from sales of property and equipment

 

 

16,702

 

 

 

37,091

 

Cash paid to purchase business

 

 

 

 

 

(6,227

)

Proceeds from the sale of an investment

 

 

5,000

 

 

 

 

Other investing activities, net

 

 

5,289

 

 

 

5,642

 

Net cash used in investing activities

 

 

(41,262

)

 

 

(40,322

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from debt

 

 

50,000

 

 

 

105,574

 

Proceeds from issuance of 2.75% Convertible Notes, net

 

 

 

 

 

230,000

 

Proceeds from issuance of warrants, net

 

 

 

 

 

11,500

 

Purchase of Hedge Option, net

 

 

 

 

 

(37,375

)

Debt principal repayments

 

 

(83,433

)

 

 

(313,150

)

Cash dividends paid

 

 

(23,712

)

 

 

(24,316

)

Repurchases of common stock

 

 

(885

)

 

 

(36,900

)

Contributions from non-controlling partners

 

 

11,875

 

 

 

68

 

Distributions to non-controlling partners

 

 

(11,810

)

 

 

(12,235

)

Debt issuance costs

 

 

 

 

 

(6,507

)

Other financing activities, net

 

 

307

 

 

 

1,704

 

Net cash used in financing activities

 

 

(57,658

)

 

 

(81,637

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

169,540

 

 

 

(10,521

)

Cash, cash equivalents and $5,835 and $5,825 in restricted cash at beginning of period

 

 

268,108

 

 

 

278,629

 

Cash, cash equivalents and $1,512 and $5,835 in restricted cash at end of period

 

$

437,648

 

 

$

268,108

 


Non-GAAP Financial Information

The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Specifically, management believes that non-GAAP financial measures such as EBITDA and EBITDA margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing additional non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted income (loss) before benefit from income taxes, adjusted provision for (benefit from) income taxes, adjusted net income (loss) attributable to Granite Construction Incorporated and adjusted diluted net income (loss) per share to indicate the impact of amortization of debt discount related to our convertible notes and non-recurring acquisition, integration, acquired intangible amortization expenses, acquisition related depreciation and synergy costs (collectively referred to as “transaction costs”) related to the acquisition of the Layne Christensen Company and LiquiForce and other significant non-recurring items as required. Acquisition and integration costs include external transaction costs, professional fees and internal travel. Synergy costs include expenses incurred which will be eliminated as the integration of Layne and LiquiForce is completed.

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 U.S. 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. The Company does not provide a reconciliation of forward-looking adjusted EBITDA margin to the most directly comparable forward-looking GAAP measure of net income (loss) attributable to Granite Construction Incorporated because the timing and amount of the excluded items are unreasonably difficult to fully and accurately estimate.

GRANITE CONSTRUCTION INCORPORATED

EBITDA(1)

(Unaudited - dollars in thousands)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

8,010

 

 

$

(19,380

)

 

$

(145,117

)

 

$

(60,191

)

Depreciation, depletion and amortization expense(2)

 

 

30,480

 

 

 

30,718

 

 

 

121,651

 

 

 

123,418

 

Provision for (benefit from) income taxes

 

 

4,938

 

 

 

(8,860

)

 

 

(282

)

 

 

(20,376

)

Interest expense, net of interest income

 

 

6,015

 

 

 

4,187

 

 

 

21,104

 

 

 

10,941

 

EBITDA(1)

 

$

49,443

 

 

$

6,665

 

 

$

(2,644

)

 

$

53,792

 

EBITDA margin(3)

 

 

5.2

%

 

 

0.8

%

 

 

(0.1

%)

 

 

1.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-recurring legal and accounting fees

 

$

7,135

 

 

$

 

 

$

35,575

 

 

$

 

Non-cash impairment charges

 

 

 

 

 

 

 

 

156,690

 

 

 

 

Transaction costs

 

$

(20

)

 

$

1,811

 

 

$

53

 

 

$

17,944

 

Adjusted EBITDA(1)

 

$

56,558

 

 

$

8,476

 

 

$

189,674

 

 

$

71,736

 

Adjusted EBITDA margin(3)

 

 

6.0

%

 

 

1.0

%

 

 

5.3

%

 

 

2.1

%

(1) We define EBITDA as U.S. GAAP net income (loss) 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 non-recurring legal and accounting fees, non-cash impairment charges and transaction costs as defined above.

(2) Amount includes the sum of depreciation, depletion and amortization which are classified as cost of revenue and selling, general and administrative expenses in the consolidated statements of operations of Granite Construction Incorporated.

(3) Represents EBITDA or Adjusted EBITDA divided by consolidated revenue of $945.6 million and $885.6 million for the three months ended December 31, 2020 and 2019, respectively, and $3.6 billion and $3.4 billion for the years ended December 31, 2020 and 2019, respectively.

GRANITE CONSTRUCTION INCORPORATED

Adjusted Net (Loss) Income Reconciliation

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Income (loss) before provision for (benefit from) income taxes

 

$

10,625

 

 

$

(28,921

)

 

$

(166,463

)

 

$

(77,078

)

Transaction costs

 

 

5,696

 

 

 

8,170

 

 

 

23,287

 

 

 

43,497

 

Amortization of debt discount(1)

 

 

1,696

 

 

 

1,071

 

 

 

6,606

 

 

 

1,071

 

Non-cash impairment

 

 

 

 

 

 

 

 

156,690

 

 

 

 

Non-recurring legal and accounting fees

 

 

7,135

 

 

 

 

 

 

35,575

 

 

 

 

Adjusted income (loss) before provision for (benefit from) income taxes

 

$

25,152

 

 

$

(19,680

)

 

$

55,695

 

 

$

(32,510

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

$

4,938

 

 

$

(8,860

)

 

$

(282

)

 

$

(20,376

)

Tax effect of the transaction costs and amortization of debt discount(2)

 

 

3,777

 

 

 

2,403

 

 

 

17,022

 

 

 

11,588

 

Adjusted provision for (benefit from) income taxes

 

$

8,715

 

 

$

(6,457

)

 

$

16,740

 

 

$

(8,788

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

8,010

 

 

$

(19,380

)

 

$

(145,117

)

 

$

(60,191

)

After-tax transaction costs, amortization of debt discount, non-cash impairment and non-recurring legal and accounting fees

 

 

10,750

 

 

 

6,838

 

 

 

205,136

 

 

 

32,980

 

Adjusted net income (loss) attributable to Granite Construction Incorporated

 

$

18,760

 

 

$

(12,542

)

 

$

60,019

 

 

$

(27,211

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share attributable to common shareholders

 

$

0.17

 

 

$

(0.42

)

 

$

(3.18

)

 

$

(1.29

)

After-tax transaction costs and amortization of debt discount

 

 

0.24

 

 

 

0.15

 

 

 

4.48

 

 

 

0.71

 

Adjusted diluted net income (loss) per share attributable to common shareholders

 

$

0.41

 

 

$

(0.27

)

 

$

1.30

 

 

$

(0.58

)

(1) Under U.S. GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, the $230.0 million aggregate principal amount of convertible senior notes that were issued in November 2019 (the “2.75 % Convertible Notes”), are separated into liability and equity components on the consolidated balance sheets. The equity component represents the excess of the $230.0 million principal amount of the 2.75% Convertible Notes over the carrying amount of the liability component (“debt discount”). We are amortizing the debt discount to interest expense using an effective interest rate of 6.62% over the expected life of the 2.75% Convertible Notes.

(2) The tax effect of transaction costs was calculated using the Company’s estimated annual statutory tax rate.

Source: Granite Construction Incorporated

Investors
Wenjun Xu, 831-761-7861

Or

Media
Erin Kuhlman, 831-768-4111

Source: Granite Construction Incorporated