Granite Reports Second-Quarter 2013 Financial Results
-- Record company backlog of $2.8 billion ; Large Project Construction
contract backlog increased 59% year over year to a record $2.0 billion ,
and Construction contract backlog increased 16% year over year to $807.7
million
-- Second quarter revenues increased to $550.2 million , compared with
$539.6 million in the second quarter of 2012; gross profit margin of 9.3
percent down slightly from last year
-- Revenue and profit performance driven primarily by project timing in
Large Project Construction segment
"Granite continues to focus on driving results through execution of our strategic initiatives both to grow and to diversify the business," said
"The Large Projects business continues to perform as expected. Our record backlog includes the start-up of several new projects in the second half of 2013, which will recognize profit in 2014," Roberts said. "While our vertically integrated business still faces market-driven, competitive headwinds, we are benefitting from synergies with our acquisition of Kenny."
Second-quarter 2013 Financial Results
-- Revenues for the quarter totaled $550.2 million , compared with $539.6
million in 2012.
-- Gross profit in the second quarter of 2013 was $51.2 million , compared
with $51.9 million last year, with corresponding gross profit margins of
9.3 percent and 9.6 percent. Gross profit and gross profit margin in the
quarter were driven by the competitive environment in the Construction
segment and project timing in the Large Project Construction segment.
-- Selling, general and administrative expenses for the second quarter were
$46.5 million , compared with $40.8 million in 2012. Kenny Construction
Company (Kenny) accounted for nearly all of the increase.
-- Operating income for the quarter was $8.0 million compared with $14.1
million in the prior year.
-- Total contract backlog at June 30, 2013 , was $2.8 billion compared with
$2.0 billion at June 30, 2012 . Backlog booked during the second quarter
included $426.2 million associated with the IH-35E project in Texas and
the I-440 project in North Carolina .
Construction
-- Construction revenues in the second quarter were $308.6 million compared
with $245.1 million a year ago. Revenues from Kenny and certain Western
markets outweighed weakness in California in the second quarter.
-- Gross profit margin was 8.2 percent compared with 7.3 percent a year
ago. Construction profit performance improved despite continued margin
pressure from an intensely competitive environment in key markets in the
West.
-- Large Project Construction revenues in the second quarter were $181.4
million compared with $228.8 million in the same period last year,
reflecting the timing of new projects.
-- Gross profit margin for the quarter of 12.2 percent was in line with
12.3 percent last year.
Construction Materials
-- Construction Materials revenue in the second quarter totaled $60.2
million compared with $63.3 million for the same period last year.
-- Gross profit margin was 6.6 percent compared with 7.9 percent a year
ago, driven by ongoing weakness in certain geographic locations.
Guidance
The Company reaffirms the 2013 guidance provided in the first quarter 2013 earnings press release with two adjustments:
Conference Call
Granite will conduct a conference call today,
About Granite
Through its offices and subsidiaries nationwide,
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, outcomes 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, outcomes 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
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)
-------------------------------------- - ----------- - ----------- - -----------
June 30, December June 30,
31,
2013 2012 2012
-------------------------------------- - ----------- - ----------- - -----------
ASSETS
Current assets
Cash and cash equivalents $ 247,833 $ 321,990 $ 237,951
Short-term marketable securities 21,271 56,088 43,260
Receivables, net 336,418 325,529 272,562
Costs and estimated earnings in excess
of billings 63,341 34,116 69,688
Inventories 68,905 59,785 67,503
Real estate held for development and
sale 50,697 50,223 57,367
Deferred income taxes 36,687 36,687 38,571
Equity in construction joint ventures 148,727 105,805 107,821
Other current assets 35,651 31,834 20,436
-------------------------------------- - - --------- - - --------- - - ---------
Total current assets 1,009,530 1,022,057 915,159
Property and equipment, net 471,265 481,478 439,664
Long-term marketable securities 55,225 55,342 45,800
Investments in affiliates 31,421 30,799 28,521
Goodwill 53,598 55,419 9,900
Other noncurrent assets 80,365 84,392 68,603
-------------------------------------- - - --------- - - --------- - - ---------
Total assets $ 1,701,404 $ 1,729,487 $ 1,507,647
-------------------------------------- - - --------- - - --------- - - ---------
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt $ 20 $ 8,353 $ 9,102
Current maturities of non-recourse
debt 2,147 10,707 16,328
Accounts payable 188,124 202,541 186,290
Billings in excess of costs and
estimated earnings 144,044 139,692 75,629
Accrued expenses and other current
liabilities 200,521 169,979 155,322
-------------------------------------- - - --------- - - --------- - - ---------
Total current liabilities 534,856 531,272 442,671
Long-term debt 270,148 270,148 200,168
Long-term non-recourse debt 7,354 922 4,641
Other long-term liabilities 46,817 47,124 47,393
Deferred income taxes 8,055 8,163 3,644
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 38,852,463 shares as
of June 30, 2013 , 38,730,665 shares as
of December 31, 2012 and 38,684,540
shares as of June 30, 2012 389 387 387
Additional paid-in capital 121,368 117,422 112,815
Retained earnings 682,610 712,144 667,278
-------------------------------------- - - --------- - - --------- - - ---------
Total Granite Construction
Incorporated shareholders' equity 804,367 829,953 780,480
Noncontrolling interests 29,807 41,905 28,650
-------------------------------------- - - --------- - - --------- - - ---------
Total equity 834,174 871,858 809,130
-------------------------------------- - - --------- - - --------- - - ---------
Total liabilities and equity $ 1,701,404 $ 1,729,487 $ 1,507,647
-------------------------------------- - - --------- - - --------- - - ---------
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
---------------------------------------------------------------------------------------------------------------------------------
----------- - ----------- - - - ----------- - -----------
Three Months Ended June Six Months Ended June 30,
30,
------------------------- ----- -------------------------
2013 2012 2013 2012
------------------------------------------------------------------- - - ----------- - ----------- - - - ----------- - -----------
Revenue
Construction $ 308,602 $ 245,113 $ 485,720 $ 363,059
Large Project Construction 181,371 228,799 353,086 392,727
Construction Materials 60,185 63,349 89,935 88,972
Real Estate 4 2,354 125 5,017
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Total revenue 550,162 539,615 928,866 849,775
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Cost of revenue
Construction 283,448 227,152 447,367 336,518
Large Project Construction 159,283 200,560 308,278 342,239
Construction Materials 56,231 58,349 91,955 89,922
Real Estate 3 1,638 13 4,244
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Total cost of revenue 498,965 487,699 847,613 772,923
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Gross profit 51,197 51,916 81,253 76,852
Selling, general and administrative expenses 46,454 40,806 104,112 85,882
Gain on restructuring -- -- 497 1,888
Gain on sales of property and equipment 3,306 2,954 4,394 4,871
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Operating income (loss) 8,049 14,064 (17,968 ) (2,271 )
Other income (expense)
Interest income 380 611 508 1,655
Interest expense (3,700 ) (2,827 ) (7,345 ) (6,009 )
Equity in income (loss) of affiliates 698 (484 ) 275 (1,101 )
Other (expense) income, net (495 ) (5,018 ) 608 1,853
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Total other expense (3,117 ) (7,718 ) (5,954 ) (3,602 )
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Income (loss) before provision for (benefit from) income taxes 4,932 6,346 (23,922 ) (5,873 )
Provision for (benefit from) income taxes 1,766 1,859 (7,261 ) (1,673 )
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Net income (loss) 3,166 4,487 (16,661 ) (4,200 )
Amount attributable to noncontrolling interests (448 ) (2,538 ) (2,603 ) (5,624 )
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Net income (loss) attributable to Granite Construction Incorporated $ 2,718 $ 1,949 $ (19,264 ) $ (9,824 )
------------------------------------------------------------------- - - - ------- - - - ------- - - - - - ------- - - - ------- -
Net income (loss) per share attributable to common shareholders:
Basic $ 0.07 $ 0.05 $ (0.50 ) $ (0.26 )
Diluted $ 0.07 $ 0.05 $ (0.50 ) $ (0.26 )
Weighted average shares of common stock:
Basic 38,829 38,471 38,720 38,368
Diluted 39,769 39,151 38,720 38,368
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GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
--------------------------------------------------------------------------- - ----------- - -----------
Six Months Ended June 30, 2013 2012
--------------------------------------------------------------------------- - ----------- - -----------
Operating activities
Net loss $ (16,661 ) $ (4,200 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization 33,988 29,573
Non-cash restructuring, net (497 ) (1,888 )
Other non-cash impairment charges - 2,752
Gain on sales of property and equipment (4,394 ) (4,871 )
Stock-based compensation 8,101 6,492
Changes in assets and liabilities (72,185 ) (62,482 )
--------------------------------------------------------------------------- - - ------- - - - ------- -
Net cash used in operating activities (51,648 ) (34,624 )
--------------------------------------------------------------------------- - - ------- - - - ------- -
Investing activities
Purchases of marketable securities (14,975 ) (39,945 )
Maturities of marketable securities 43,000 65,100
Proceeds from sale of marketable securities 5,000 35,000
Additions to property and equipment (19,422 ) (19,855 )
Proceeds from sales of property and equipment 8,481 6,078
Payment of Kenny post-closing adjustments (4,621 ) -
Other investing activities, net 163 (978 )
--------------------------------------------------------------------------- - - ------- - - - ------- -
Net cash provided by investing activities 17,626 45,400
--------------------------------------------------------------------------- - - ------- - - - ------- -
Financing activities
Long-term debt principal payments (10,594 ) (10,834 )
Cash dividends paid (10,078 ) (10,050 )
Purchase of common stock (5,022 ) (4,054 )
Contributions from noncontrolling partners 6,001 -
Distributions from noncontrolling partners (21,142 ) (5,440 )
Other financing activities, net 700 563
--------------------------------------------------------------------------- - - ------- - - - ------- -
Net cash used in financing activities (40,135 ) (29,815 )
--------------------------------------------------------------------------- - - ------- - - - ------- -
Decrease in cash and cash equivalents (74,157 ) (19,039 )
Cash and cash equivalents at beginning of period 321,990 256,990
--------------------------------------------------------------------------- - - ------- - - - ------- -
Cash and cash equivalents at end of period $ 247,833 $ 237,951
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GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
------------------------------------------- ----------- - ----------- - ---------- - --------- ----------- - ----------- - ----------- - ---------
Three Months Ended June 30, Six Months Ended June 30,
Large Large
Project Constructio Real Project Construction Real
Construction Construction Materials Estate Construction Construction Materials Estate
------------------------------------------- ----------- - ----------- - ---------- - --------- ----------- - ----------- - ----------- - ---------
2013
Revenue $ 308,602 $ 181,371 $ 60,185 $ 4 $ 485,720 $ 353,086 $ 89,935 $ 125
Gross profit (loss) 25,154 22,088 3,954 1 38,353 44,808 (2,020 ) 112
Gross profit (loss) as a percent of revenue 8.2 % 12.2 % 6.6 % 25.0 % 7.9 % 12.7 % (2.2 )% 89.6 %
2012
Revenue $ 245,113 $ 228,799 $ 63,349 $ 2,354 $ 363,059 $ 392,727 $ 88,972 $ 5,017
Gross profit (loss) 17,961 28,239 5,000 716 26,541 50,488 (950 ) 773
Gross profit (loss) as a percent of revenue 7.3 % 12.3 % 7.9 % 30.4 % 7.3 % 12.9 % (1.1 )% 15.4 %
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GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
--------------------------- - ----------- - ------- - ----------- - ------- - ----------- - -------
Contract Backlog by Segment June 30, 2013 March 31, 2013 June 30, 2012
--------------------------- - --------------------- - --------------------- - ---------------------
Construction $ 807,686 28.9 % $ 740,259 30.8 % $ 697,535 35.8 %
Large Project Construction 1,989,156 71.1 % 1,660,056 69.2 % 1,252,828 64.2 %
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Total $ 2,796,842 100.0 % $ 2,400,315 100.0 % $ 1,950,363 100.0 %
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Source: Granite Construction Incorporated 