Granite Reports Fourth Quarter and Fiscal Year 2021 Results

Granite Reports Fourth Quarter and Fiscal Year 2021 Results

  • Committed and Awarded Projects ("CAP") (1) of $4.0 billion
  • Year-end cash and marketable securities of $411.2 million
  • Reorganized California, Mountain and Central operating groups and Construction and Materials reportable segments
  • Former Water and Minerals Services operating group is now presented as held for sale and discontinued operations

WATSONVILLE, Calif.--(BUSINESS WIRE)--Granite Construction Incorporated (NYSE:GVA) today announced results for the fourth quarter and year ended December 31, 2021.

Fiscal Year 2021 Results

Fiscal year 2021 net income totaled $10.1 million, or $0.22 per diluted share, compared to a net loss of ($145.1) million, or ($3.14) per diluted share, in the prior fiscal year. Fiscal year 2021 Adjusted net income(2), which excludes other costs(3), non-cash impairments of goodwill, transaction costs(4), gains on sales of property and amortization of debt discount related to our 2.75% convertible notes, totaled $83.2 million, or $1.80 per diluted share, compared to adjusted net income(2) of $61.1 million, or $1.33 per diluted share, for the same fiscal period last year.

  • Revenue from continuing operations decreased 3.8% in 2021 to $3.0 billion, compared to $3.1 billion in the prior year. Combined revenue including discontinued operations decreased 1.7% in 2021 to $3.5 billion, compared to $3.6 billion in the prior year.
  • Gross profit from continuing operations increased 0.3% in 2021 to $305.6 million, compared to $304.7 million in the prior year.
  • Selling, general & administrative ("SG&A") expenses from continuing operations in 2021 were $243.1 million or 8.1% of revenue, compared to $252.9 million or 8.1% of revenue in the prior year. Combined SG&A expenses including discontinued operations in 2021 were $303.0 million or 8.7% of revenue, compared to $316.3 million or 8.9% of revenue in the prior year.
  • Adjusted EBITDA(2) from continuing operations totaled $163.4 million in 2021, compared to $153.0 million in the prior year. Combined adjusted EBITDA(2) including discontinued operations was $211.6 million or combined adjusted EBITDA margin of 6.0% in 2021, compared to $183.4 million or combined adjusted EBITDA margin of 5.1% in the prior year.
  • Committed and Award Projects ("CAP") (1) totaled $4.0 billion, slightly down sequentially from the third quarter of 2021 and flat year-over-year.
  • Cash and marketable securities decreased ($19.3) million in 2021 to $411.2 million, compared to $430.5 million in the prior year, while debt remained relatively unchanged compared to the prior year.

"Three weeks ago, we announced the planned divestiture of our Water and Minerals Services Group, the change of our segments and the reorganization of our operational groups," said Kyle Larkin, Granite President and Chief Executive Officer. "In the past year, we have assembled a new executive team, exited the Northeast market, and transformed the quality of our CAP by securing additional best value procurement projects and by decreasing exposure to design build risks. We also strengthened our cash and liquidity position as we refocus our efforts on our civil construction and materials business.

"Our fourth quarter of 2021 was challenged as we worked through our Old Risk Portfolio (‘ORP’) (5) and inclement weather when compared to the prior year, particularly in the West. We continue to focus our efforts on project execution as we burn through the remaining ORP and direct our attention to transforming the Central Group. We are excited about the future as we unfold our new strategic plan. We believe that our CAP going into 2022 reflects the strength of our vertically integrated civil construction business and aligns with our new project selection criteria. At the same time, our cash and liquidity continues to be a strength and provides us flexibility to reinvest in our construction and materials businesses while returning value to shareholders as we begin Granite's next 100 years."

Fourth Quarter 2021 Results

Results for the fourth quarter of 2021 were a net loss of ($13.2) million, or ($0.28) per diluted share compared to a net income of $8.0 million, or $0.17 per diluted share, in the same period last year. Adjusted net income(2) for the fourth quarter of 2021, which excludes other costs(3), non-cash impairments of goodwill, transaction costs(4), a gain on sale of property and amortization of debt discount related to our 2.75% convertible notes, totaled $1.9 million, or $0.05 per diluted share compared to an adjusted net income of $19.5 million, or $0.42 per diluted share, in the same period last year.

  • Revenue from continuing operations decreased 17.7% in the fourth quarter of 2021 to $683.2 million compared to $830.4 million in the same period last year.
  • Gross profit from continuing operations decreased to $51.7 million in the fourth quarter of 2021 compared to $93.3 million in the same period last year.
  • SG&A expenses from continuing operations in the fourth quarter of 2021 were $62.2 million or 9.1% of revenue, compared to $75.9 million or 9.1% of revenue in the same period last year.
  • Adjusted EBITDA (2) from continuing operations decreased to $24.3 million in the fourth quarter of 2021 compared to $45.5 million in the same period last year.

(1) CAP is comprised of the revenue we expect to record in the future on awarded 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.
(2) 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.
(3) Other costs include a legal settlement charge, legal and accounting investigation fees, divestiture expenses and restructuring charges.
(4) Transaction costs include acquired intangible amortization expenses and acquisition-related depreciation related to the acquisition of Layne Christensen Company ("Layne") and Liquiforce.
(5) The Old Risk Portfolio includes projects with risk criteria that do not align with Granite's new project selection criteria.

Fourth Quarter and Fiscal Year 2021 Segment Results (Unaudited - dollars in thousands)

Construction Segment

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue from continuing operations

 

$

588,488

 

 

$

730,814

 

 

$

(142,326

)

 

 

(19.5

)%

 

$

2,602,306

 

 

$

2,764,094

 

 

$

(161,788

)

 

 

(5.9

)%

Gross profit from continuing operations

 

 

37,131

 

 

 

73,556

 

 

 

(36,425

)

 

 

(49.5

)%

 

 

248,350

 

 

 

241,444

 

 

 

6,906

 

 

 

2.9

%

Gross profit as a percent of revenue from continuing operations

 

 

6.3

%

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

9.5

%

 

 

8.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

2021

 

 

September 30,

2021

 

 

Change - Quarter over

Quarter

 

 

December 31,

2020

 

 

Change - Year over Year

 

Committed and Awarded Projects

 

$

4,010,064

 

 

$

4,065,096

 

 

$

(55,032

)

 

 

(1.4

)%

 

$

4,025,485

 

 

$

(15,421

)

 

 

(0.4

)%

 

 

 

 

Construction revenue in the fourth quarter decreased compared to the same period last year primarily due to the impact of inclement weather in California contrasted with a mostly dry fourth quarter of 2020 and combined with a decrease in revenue driven by the continued transformation of the Central group portfolio. Fourth quarter gross profit decreased compared to the same period last year primarily due to lower revenue, the impact of project mix year over year, and project execution. In the fourth quarter, the ORP revenue totaled $65.9 million with a gross loss of ($24.8) million or a loss of ($15.6) million, net of non-controlling interest ("NCI"), compared to ORP revenue of $102.9 million with a gross loss of ($25.0) million or a loss of ($19.0) million, net of NCI for the same period last year.

For the year ended December 31, 2021, construction revenue decreased compared to last year due primarily to an extended competitive bidding environment in 2021, weather impacts in the fourth quarter in the California group and a decrease in revenue in the Central group. Gross profit increased primarily as a result of less ORP losses in the current year partially offset by reduced gross profit from lower revenue and project execution. In fiscal year 2021, the ORP revenue totaled $385.2 million with a gross loss of ($33.4) million or a net loss of ($16.0) million, net of NCI, compared to ORP revenue of $409.7 million with a gross loss of ($105.0) million or a net loss of ($80.6) million, net of NCI, for the same period last year.

CAP decreased slightly compared to the same period last year primarily due to continued progression of ORP projects within the Central group despite increases in Mountain and California group CAP.

Materials Segment

 

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue from continuing operations

 

$

94,708

 

 

$

99,576

 

 

$

(4,868

)

 

 

(4.9

)%

 

$

407,747

 

 

$

364,785

 

 

$

42,962

 

 

 

11.8

%

Gross profit from continuing operations

 

 

14,521

 

 

 

19,763

 

 

 

(5,242

)

 

 

(26.5

)%

 

 

57,206

 

 

 

63,209

 

 

 

(6,003

)

 

 

(9.5

)%

Gross profit as a percent of revenue from continuing operations

 

 

15.3

%

 

 

19.8

%

 

 

 

 

 

 

 

 

 

 

14.0

%

 

 

17.3

%

 

 

 

 

 

 

 

 

Materials revenue for the fourth quarter decreased compared to the same period last year primarily due to lower aggregate and asphalt volumes in the California group because of wet weather. Materials gross profit in the fourth quarter decreased due to lower volumes in California combined with higher fuel and liquid asphalt costs compared to the fourth quarter of 2020.

For fiscal year 2021, materials revenue increased compared to the same period last year from higher sales volumes driven by mostly dry weather in the first three quarters of the year. For fiscal year 2021, gross profit decreased compared to the same period last year driven by higher fuel and liquid asphalt costs compared to 2020.

Outlook and Guidance

The Company's expectations for 2022 are:

  • Low single digit growth in revenue from continuing operations
  • Adjusted EBITDA margin from continuing operations in the range of 6% to 8%
  • SG&A Expense from continuing operations in the range of 8.0% to 8.5% of revenue
  • Low to mid-20s effective tax rate range for continuing operations
  • Capital expenditures in the range of $100 million to $115 million

"We begin 2022 as a changed company from a year ago, but we still have work to do," said Kyle Larkin. "While we expect to grow revenue in the California and Mountain groups, that growth will be offset by lower revenue in the Central group as we transform that business and work through the ORP. We have made significant progress as we burn through the ORP with the majority of those projects to be completed in 2022. While the Central group revenue is expected to decline, during the year we anticipate growing CAP while strengthening our home markets in alignment with our new strategic plan. We expect our profitability to increase with an adjusted EBITDA margin range from continuing operations of 6% to 8%. The changes we have made to transform our organization by driving efficiency and improved project execution will benefit us in 2022 and will continue into 2023 and beyond."

Conference Call

Granite will conduct a conference call today, February 25, 2022, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results for the quarter and year ended December 31, 2021. 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 1-877-328-5503; international callers may dial 1-412-317-5472. 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 March 3, 2022, by calling 1-877-344-7529, replay access code 9446786; 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 civil construction provider. 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, opportunities, circumstances, activities, performance, growth, declines, expected completion of projects in the ORP, demand, strategic plans, shareholder value, outcomes, outlook, revenue, adjusted EBITDA margin, SG&A, effective tax rate, and capital expenditures guidance for 2022, profitability, 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,” "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, declines, expected completion of projects in the ORP, demand, strategic plans, shareholder value, outcomes, outlook, revenue and adjusted EBITDA margin guidance for 2022, profitability, 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

CONSOLIDATED BALANCE SHEETS

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

             

December 31,

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

395,647

 

 

$

425,292

 

Receivables, net

 

 

464,588

 

 

 

437,558

 

Contract assets

 

 

145,437

 

 

 

132,097

 

Inventories

 

 

61,965

 

 

 

62,471

 

Equity in construction joint ventures

 

 

189,911

 

 

 

188,798

 

Other current assets

 

 

177,210

 

 

 

37,767

 

Current assets held-for-sale

 

 

392,641

 

 

 

171,263

 

Total current assets

 

 

1,827,399

 

 

 

1,455,246

 

Property and equipment, net

 

 

433,504

 

 

 

421,149

 

Long-term marketable securities

 

 

15,600

 

 

 

5,200

 

Investments in affiliates

 

 

23,368

 

 

 

27,637

 

Goodwill

 

 

53,715

 

 

 

53,715

 

Right of use assets

 

 

49,312

 

 

 

52,987

 

Deferred income taxes, net

 

 

24,141

 

 

 

43,111

 

Other noncurrent assets

 

 

67,888

 

 

 

68,847

 

Noncurrent assets held-for-sale

 

 

 

 

 

252,104

 

Total assets

 

$

2,494,927

 

 

$

2,379,996

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

8,727

 

 

$

8,278

 

Accounts payable

 

 

324,313

 

 

 

321,347

 

Contract liabilities

 

 

200,041

 

 

 

162,925

 

Accrued expenses and other current liabilities

 

 

452,829

 

 

 

381,747

 

Current liabilities held-for-sale

 

 

83,408

 

 

 

68,959

 

Total current liabilities

 

 

1,069,318

 

 

 

943,256

 

Long-term debt

 

 

331,191

 

 

 

330,522

 

Long-term lease liabilities

 

 

32,928

 

 

 

39,816

 

Deferred income taxes, net

 

 

1,856

 

 

 

2,022

 

Other long-term liabilities

 

 

64,071

 

 

 

62,420

 

Long-term liabilities held-for-sale

 

 

 

 

 

10,350

 

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: 45,840,260 shares as of December 31, 2021 and 45,668,541 shares as of December 31, 2020

 

 

458

 

 

 

457

 

Additional paid-in capital

 

 

559,752

 

 

 

555,407

 

Accumulated other comprehensive loss

 

 

(3,359

)

 

 

(5,035

)

Retained earnings

 

 

410,831

 

 

 

424,835

 

Total Granite Construction Incorporated shareholders’ equity

 

 

967,682

 

 

 

975,664

 

Non-controlling interests

 

 

27,881

 

 

 

15,946

 

Total equity

 

 

995,563

 

 

 

991,610

 

Total liabilities and equity

 

$

2,494,927

 

 

$

2,379,996

 


GRANITE CONSTRUCTION INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

     

 

Three Months Ended

December 31,

Years Ended

December 31,

 

2021

 

2020

 

2021

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Construction

$

588,488

 

$

730,814

 

$

2,602,306

 

$

2,764,094

 

Materials

 

94,708

   

99,576

   

407,747

   

364,785

 

Total revenue

 

683,196

   

830,390

   

3,010,053

   

3,128,879

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

551,357

   

657,258

   

2,353,956

   

2,522,650

 

Materials

 

80,187

   

79,813

   

350,541

   

301,576

 

Total cost of revenue

 

631,544

   

737,071

   

2,704,497

   

2,824,226

 

Gross profit

 

51,652

   

93,319

   

305,556

   

304,653

 

Selling, general and administrative expenses

 

62,214

   

75,904

   

243,083

   

252,879

 

Other costs

 

10,364

   

8,195

   

95,155

   

36,964

 

Gain on sales of property and equipment, net

 

(26,002

)

 

(1,752

)

 

(33,781

)

 

(4,925

)

Operating income

 

5,076

   

10,972

   

1,099

   

19,735

 

Other (income) expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

(487

)

 

(251

)

 

(1,178

)

 

(3,017

)

Interest expense

 

4,279

   

5,868

   

20,282

   

23,866

 

Equity in income of affiliates, net

 

(92

)

 

(2,580

)

 

(3,465

)

 

(5,191

)

Other income, net

 

(2,804

)

 

(3,878

)

 

(5,044

)

 

(4,068

)

Total other (income) expense, net

 

896

   

(841

)

 

10,595

   

11,590

 

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

 

4,180

   

11,813

   

(9,496

)

 

8,145

 

Provision for (benefit from) income taxes on continuing operations

 

4,586

   

9,300

   

(1,237

)

 

9,927

 

Net income (loss) from continuing operations

 

(406

)

 

2,513

   

(8,259

)

 

(1,782

)

Net (loss) income from discontinued operations

 

(20,027

)

 

3,174

   

10,673

   

(164,399

)

Net income (loss)

 

(20,433

)

 

5,687

   

2,414

   

(166,181

)

Amount attributable to non-controlling interests from continuing operations

 

7,220

   

2,323

   

7,682

   

21,064

 

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

 

6,814

   

4,836

   

(577

)

 

19,282

 

Net income (loss) attributable to Granite Construction Incorporated from discontinued operations

 

(20,027

)

 

3,174

   

10,673

   

(164,399

)

Net income (loss) attributable to Granite Construction Incorporated

$

(13,213

)

$

8,010

 

$

10,096

 

$

(145,117

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data

 

 

 

 

 

 

 

 

 

 

 

 

Basic continuing operations per share

$

0.15

 

$

0.11

 

$

(0.01

)

$

0.42

 

Basic discontinued operations per share

 

(0.44

)

 

0.07

   

0.23

   

(3.60

)

Basic earnings per share

$

(0.29

)

$

0.18

 

$

0.22

 

$

(3.18

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted continuing operations per share

$

0.14

 

$

0.10

 

$

(0.01

)

$

0.42

 

Diluted discontinued operations per share

 

(0.42

)

 

0.07

   

0.23

   

(3.56

)

Diluted earnings per share

$

(0.28

)

$

0.17

 

$

0.22

 

$

(3.14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

45,832

   

45,660

   

45,788

   

45,614

 

Diluted

 

47,838

   

46,275

   

45,788

   

46,203

 

GRANITE CONSTRUCTION INCORPORATED

SUMMARIZED STATEMENT OF OPERATIONS - DISCONTINUED OPERATIONS

(Unaudited - in thousands)

             

 

 

Three Months Ended

December 31,

 

 

Years Ended

December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

122,455

 

 

$

115,182

 

 

$

491,812

 

 

$

433,580

 

Cost of revenue

 

 

111,661

 

 

 

101,852

 

 

 

434,723

 

 

 

393,445

 

Selling, general and administrative expenses

 

 

14,409

 

 

 

16,727

 

 

 

59,932

 

 

 

63,405

 

Non-cash impairment charges

 

 

-

 

 

 

-

 

 

 

-

 

 

 

156,690

 

Other costs

 

 

4,432

 

 

 

(94

)

 

 

6,196

 

 

 

125

 

Gain on sales of property and equipment, net

 

 

(1,088

)

 

 

(308

)

 

 

(32,658

)

 

 

(2,005

)

Other (income) expense, net

 

 

9

 

 

 

(1,807

)

 

 

(8,004

)

 

 

(3,472

)

Provision for (benefit from) income taxes

 

 

13,059

 

 

 

(4,362

)

 

 

20,950

 

 

 

(10,209

)

Net income (loss) from discontinued operations

 

$

(20,027

)

 

$

3,174

 

 

$

10,673

 

 

$

(164,399

)

GRANITE CONSTRUCTION INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

             

Years Ended December 31,

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

2,414

 

 

$

(166,181

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

109,050

 

 

 

112,958

 

Amortization related to the 2.75% Convertible Notes

 

 

9,448

 

 

 

8,693

 

Gain on sales of property and equipment, net

 

 

(66,439

)

 

 

(6,930

)

Deferred income taxes

 

 

16,600

 

 

 

8,817

 

Stock-based compensation

 

 

6,407

 

 

 

6,377

 

Equity in net loss from unconsolidated joint ventures

 

 

765

 

 

 

51,486

 

Net income from affiliates

 

 

(12,586

)

 

 

(8,783

)

Non-cash impairment charges

 

 

 

 

 

156,690

 

Other non-cash adjustments

 

 

 

 

 

1,729

 

Changes in assets and liabilities

 

 

(43,728

)

 

 

103,604

 

Net cash provided by operating activities

 

$

21,931

 

 

$

268,460

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(10,000

)

 

 

(9,996

)

Maturities of marketable securities

 

 

 

 

 

10,000

 

Proceeds from called marketable securities

 

 

 

 

 

24,996

 

Purchases of property and equipment

 

 

(94,810

)

 

 

(93,253

)

Proceeds from sales of property and equipment

 

 

94,802

 

 

 

16,702

 

Proceeds from the sale of a business

 

 

 

 

 

5,000

 

Issuance of notes receivable, net of collection

 

 

(11,470

)

 

 

5,289

 

Net cash used in investing activities

 

$

(21,478

)

 

$

(41,262

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from debt

 

 

 

 

 

50,000

 

Debt principal repayments

 

 

(8,922

)

 

 

(83,433

)

Cash dividends paid

 

 

(23,804

)

 

 

(23,712

)

Repurchases of common stock

 

 

(2,730

)

 

 

(885

)

Contributions from non-controlling partners

 

 

20,126

 

 

 

11,875

 

Distributions to non-controlling partners

 

 

(9,514

)

 

 

(11,810

)

Other financing activities, net

 

 

398

 

 

 

307

 

Net cash used in financing activities

 

$

(24,446

)

 

$

(57,658

)

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

 

$

(23,993

)

 

$

169,540

 

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

 

 

437,648

 

 

 

268,108

 

Cash, cash equivalents and $1,512 in restricted cash at end of both periods

 

$

413,655

 

 

$

437,648

 

Less: Cash, cash equivalents and $1,512 in restricted cash included in current assets held-for-sale at end of both periods

 

 

(18,008

)

 

 

(12,356

)

Cash and cash equivalents of continuing operations at end of period

 

$

395,647

 

 

$

425,292

 

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 from continuing operations, EBITDA from discontinued operations and combined EBITDA and EBITDA margin from continuing operations, EBITDA margin from discontinued operations and combined 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 adjusted EBITDA from continuing operations, adjusted EBITDA from discontinued operations and combined adjusted EBITDA and adjusted EBITDA margin from continuing operations, adjusted EBITDA margin from discontinued operations and combined adjusted EBITDA margin non-GAAP measures to indicate the impact of:

  • Other costs which include a legal settlement charge, legal and accounting investigation fees, divestiture expenses and restructuring charges;
  • Non-cash impairments related to goodwill and investments in affiliates in 2020; and
  • Gains on sales of property.

We provide adjusted income (loss) before provision for (benefit from) income taxes from continuing operations, adjusted provision for (benefit from) income taxes, adjusted net income (loss) from discontinued operations attributable to Granite Construction Incorporated, adjusted net income from continuing operations attributable to Granite Construction Incorporated, adjusted net income attributable to Granite Construction Incorporated, adjusted diluted weighted average shares of common stock, and adjusted diluted net income per share attributable to common shareholders, non-GAAP measures, to indicate the impact of the following:

  • Other costs which include a legal settlement charge, legal and accounting investigation fees, divestiture expenses and restructuring charges;
  • Non-cash impairments related to goodwill and investments in affiliates in 2020;
  • Gains on sales of property;
  • Transaction costs which includes acquired intangible amortization expenses and acquisition related depreciation related to the acquisition of Layne and LiquiForce;
  • Amortization of debt discount related to our 2.75% Convertible Notes; and
  • The impact of the purchased equity derivative instrument which offsets any potential-dilution from the 2.75% Convertible Notes above the $31.47 conversion price up to a share price of $53.44.

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Continuing Operations - EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

 

$

6,814

 

 

$

4,836

 

 

$

(577

)

 

$

19,282

 

Depreciation, depletion and amortization expense from continuing operations(2)

 

 

18,583

 

 

 

17,528

 

 

 

70,777

 

 

 

65,939

 

(Benefit from) provision for income taxes from continuing operations

 

 

4,586

 

 

 

9,300

 

 

 

(1,237

)

 

 

9,927

 

Interest expense, net of interest income from continuing operations

 

 

3,792

 

 

 

5,617

 

 

 

19,104

 

 

 

20,849

 

EBITDA from continuing operations(1)

 

$

33,775

 

 

$

37,281

 

 

$

88,067

 

 

$

115,997

 

EBITDA margin from continuing operations(1)(3)

 

 

4.9

%

 

 

4.5

%

 

 

2.9

%

 

 

3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations - ADJUSTED EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other costs

 

$

10,364

 

 

$

8,195

 

 

$

95,155

 

 

$

36,964

 

Gain on sale of property related to continuing operations

 

 

(19,791

)

 

 

 

 

 

(19,791

)

 

 

 

Adjusted EBITDA from continuing operations(1)

 

$

24,348

 

 

$

45,476

 

 

$

163,431

 

 

$

152,961

 

Adjusted EBITDA margin from continuing operations(1)(3)

 

 

3.6

%

 

 

5.5

%

 

 

5.4

%

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations - EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income from discontinued operations

 

$

(20,027

)

 

$

3,174

 

 

$

10,673

 

 

$

(164,399

)

Depreciation, depletion and amortization expense from discontinued operations(2)

 

 

9,781

 

 

 

10,977

 

 

 

39,556

 

 

 

48,010

 

Provision for (benefit from) income taxes from discontinued operations

 

 

13,059

 

 

 

(4,362

)

 

 

20,950

 

 

 

(10,209

)

Interest expense, net of interest income from discontinued operations

 

 

489

 

 

 

399

 

 

 

459

 

 

 

255

 

EBITDA from discontinued operations(1)

 

$

3,302

 

 

$

10,188

 

 

$

71,638

 

 

$

(126,343

)

EBITDA margin from discontinued operations(1)(3)

 

 

2.7

%

 

 

8.9

%

 

 

14.6

%

 

 

(29.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations - ADJUSTED EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other costs related to discontinued operations

 

 

4,432

 

 

 

(94

)

 

 

6,196

 

 

 

125

 

Gain on sale of property related to discontinued operations

 

 

 

 

 

 

 

 

(29,688

)

 

 

 

Non-cash impairment charges related to discontinued operations

 

 

 

 

 

 

 

 

 

 

 

156,690

 

Adjusted EBITDA from discontinued operations(1)

 

$

7,734

 

 

$

10,094

 

 

$

48,146

 

 

$

30,472

 

Adjusted EBITDA margin from discontinued operations(1)(3)

 

 

6.3

%

 

 

8.8

%

 

 

9.8

%

 

 

7.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Combined Operations - EBITDA & ADJUSTED EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(1)

 

$

37,077

 

 

$

47,469

 

 

$

159,705

 

 

$

(10,346

)

EBITDA margin(1)(3)

 

 

4.6

%

 

 

5.0

%

 

 

4.6

%

 

 

(0.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

32,082

 

 

$

55,570

 

 

$

211,577

 

 

$

183,433

 

Adjusted EBITDA margin(1)(3)

 

 

4.0

%

 

 

5.9

%

 

 

6.0

%

 

 

5.1

%

(1) We define EBITDA from continuing operations as U.S. GAAP net income (loss) attributable to Granite Construction Incorporated from continuing operations, adjusted for net interest expense, taxes and depreciation, depletion and amortization. We defined EBITDA from discontinued operations as net income (loss) from discontinued operations adjusted for net interest expense, taxes, and depreciation, depletion and amortization. Adjusted EBITDA and adjusted EBITDA margin from continuing operations, discontinued operations, and combined exclude the impact of other costs, non-cash impairment charges and gain on sale of property as described above.
(2) Depreciation, depletion and amortization expense previously reported for the three months and year ended December 31, 2020 included expenses of $2.0 million and $7.7 million, respectively, of amortization related to the 2.75% Convertible Notes which were also included in interest expense in the consolidated statements of operations. Depreciation, depletion and amortization expense for the three months and year ended December 31, 2020 have been adjusted to remove this interest expense.
(3) Represents EBITDA or adjusted EBITDA divided by revenue for the respective period. For EBITDA and adjusted EBITDA margin from continuing operations, revenue from continuing operations was $683.2 million and $830.4 million for the three months ended December 31, 2021 and 2020, respectively, and $3.0 billion and $3.1 billion for the years ended December 31, 2021 and 2020, respectively. For EBITDA and adjusted EBITDA margin from discontinued operations, revenue from discontinued operations was $122.5 million and $115.2 million for the three months ended December 31, 2021 and 2020, respectively, and $491.8 million and $433.6 million for the years ended December 31, 2021 and 2020, respectively. For consolidated EBITDA and adjusted EBITDA margin, consolidated revenue was $805.7 million and $945.6 million for the three months ended December 31, 2021 and 2020, respectively, and $3.5 billion and $3.6 billion for the years ended December 31, 2021 and 2020, 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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

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

 

$

4,180

 

 

$

11,813

 

 

$

(9,496

)

 

$

8,145

 

Other costs

 

 

10,364

 

 

 

8,195

 

 

 

95,155

 

 

 

36,964

 

Amortization of debt discount

 

 

1,811

 

 

 

1,696

 

 

 

7,051

 

 

 

6,606

 

Gain on sale of property

 

 

(19,791

)

 

 

 

 

 

(19,791

)

 

 

 

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

 

$

(3,436

)

 

$

21,704

 

 

$

72,919

 

 

$

51,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

$

4,586

 

 

$

9,300

 

 

$

(1,237

)

 

$

9,927

 

Tax effect of adjusting items (1)

 

 

(2,954

)

 

 

2,571

 

 

 

20,454

 

 

 

11,328

 

Adjusted provision for (benefit from) income taxes

 

$

1,632

 

 

$

11,871

 

 

$

19,217

 

 

$

21,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated from discontinued operations

 

$

(20,027

)

 

$

3,174

 

 

$

10,673

 

 

$

(164,399

)

Other costs

 

 

3,279

 

 

 

(70

)

 

 

4,584

 

 

 

93

 

Non-cash impairment charges

 

 

 

 

 

 

 

 

 

 

 

156,690

 

Transaction costs

 

 

4,121

 

 

 

4,231

 

 

 

16,110

 

 

 

17,194

 

Tax basis difference on held-for-sale entities

 

 

12,400

 

 

 

 

 

 

12,400

 

 

 

 

Gain on sale of property

 

 

 

 

 

 

 

 

(21,969

)

 

 

 

Adjusted net income (loss) attributable to Granite Construction Incorporated from discontinued operations

 

$

(227

)

 

$

7,335

 

 

$

21,798

 

 

$

9,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

 

$

6,814

 

 

$

4,836

 

 

$

(577

)

 

$

19,282

 

After-tax adjusting items

 

 

(4,662

)

 

 

7,320

 

 

 

61,961

 

 

 

32,242

 

Adjusted net income attributable to Granite Construction Incorporated from continuing operations

 

$

2,152

 

 

$

12,156

 

 

$

61,384

 

 

$

51,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income attributable to Granite Construction

 

$

1,925

 

 

$

19,491

 

 

$

83,182

 

 

$

61,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of common stock

 

 

47,838

 

 

 

46,275

 

 

 

45,788

 

 

 

46,203

 

Add: dilutive effect of restricted stock units and 2.75% Convertible Notes (2)

 

 

 

 

 

 

 

 

1,812

 

 

 

 

Less: 2.75% Convertible Notes dilutive effect (3)

 

 

(1,434

)

 

 

 

 

 

(1,279

)

 

 

 

Adjusted diluted weighted average shares of common stock

 

 

46,404

 

 

 

46,275

 

 

 

46,321

 

 

 

46,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted earnings per share attributable to common shareholders for continuing operations

 

$

0.05

 

 

$

0.26

 

 

$

1.33

 

 

$

1.12

 

Adjusted diluted earnings per share attributable to common shareholders for discontinued operations

 

 

 

 

 

0.16

 

 

 

0.47

 

 

 

0.21

 

Adjusted diluted earnings per share attributable to common shareholders

 

$

0.05

 

 

$

0.42

 

 

$

1.80

 

 

$

1.33

 

(1) The tax effect of adjusting items was calculated using the Company’s statutory tax rate.
(2) Represents the dilutive effect on adjusted net income attributable to Granite Construction Incorporated for the year ended December 31, 2021 of 533,000 shares related to restricted stock units and 1,279,000 shares related to the 2.75% Convertible Notes potentially converting into shares.
(3) When calculating diluted net income (loss) per share attributable to common shareholders, U.S. GAAP requires that we include potential share dilution from the 2.75% Convertible Notes when our average share price during the period is above the conversion price of $31.47. During the three months and year ended December 31, 2021, our average share price was above the conversion price resulting in accounting dilution under U.S. GAAP of 1.4 million and 1.3 million shares, respectively. For the purposes of calculating adjusted diluted net income per share attributable to common shareholders, the dilutive effect from the 2.75% Convertible Notes is removed to reflect the impact of the purchased equity derivative instrument which offsets any potential share dilution from the 2.75% Convertible Notes above the $31.47 conversion price up to a share price of $53.44. The number of shares used in calculating diluted net income per share for the three months and year ended December 31, 2020 excluded the potential dilution from the 2.75% Convertible Notes converting into shares of common stock as the average price of our common stock was below $31.47 per share for those periods. The average share price did not exceed $53.44 in any period.

Investors

Wenjun Xu, 831-761-7861

Or

Media

Erin Kuhlman, 831-768-4111

Source: Granite Construction Incorporated