Granite Reports Second Quarter 2019 Results

Highlights

Second Quarter

  • Results impacted by previously announced non-cash after-tax charges of $106.7 million (before-tax $143.7 million) related to four legacy, unconsolidated Heavy Civil joint venture projects
  • Revenue was $789.5 million, including $114.2 million in revenue reduction due to charges
  • Strong June operational and financial performance following wet weather impacts through May
  • Committed and Awarded Projects1 (CAP) was a record $4.9 billion, up 33.4 percent year-over-year, up 8.9 percent sequentially
  • Public and private market demand remains robust

WATSONVILLE, Calif.--(BUSINESS WIRE)-- Granite Construction Incorporated (NYSE: GVA) today reported a net loss of $97.8 million ($2.09 per diluted share) for the quarter ended June 30, 2019, compared to a net loss of $8.4 million ($0.20 per diluted share) for the quarter ended June 30, 2018. On a year-to-date basis, net loss was $132.4 million, ($2.83 per diluted share) compared to a net loss of $19.8 million ($0.49 per diluted share) last year. The 2019 figures include non-cash after-tax charges of $106.7 million ($2.28 per diluted share).

“As previously announced, our second quarter results were impacted by non-cash charges related to four legacy, unconsolidated Heavy Civil joint venture projects, and we are taking additional action to de-risk the business and improve the stability and trajectory of our results,” said James H. Roberts, President and Chief Executive Officer at Granite Construction Incorporated. “We remain very encouraged by the strong underlying performance of our overall portfolio, with our construction, materials, and water businesses delivering solid second quarter results despite wet weather that continued through May. We have a robust project pipeline ahead for 2019 and beyond, with CAP at a record $4.9 billion. We remain confident that our end-market focused businesses and strategy will create significant value in the second half of 2019 and beyond for our stakeholders.”

Second quarter 2019 and 2018 results include after-tax, acquisition-related expenses of $12.0 million and $26.5 million, respectively2. Excluding the impact of acquisition-related expenses, second quarter 2019 adjusted net loss was $85.8 million3 and 2018 adjusted net income was $18.2 million3, with adjusted loss per diluted share of $1.833 and adjusted income per diluted share $0.443, respectively.

Selling, general & administrative (“SG&A”) expenses were $70.0 million for the three months ended June 30, 2019, compared to $61.3 million last year. For the first six months of 2019, SG&A expenses were $151.2 million, compared to $122.6 million during the same prior-year period. The increase is primarily attributable to businesses acquired in 2018.

Including non-cash charges in the current quarter, adjusted EBITDA3 was $(84.3) million, compared to $50.9 million last year. On a year-to-date basis, adjusted EBITDA3 totaled $(93.6) million, compared to $60.2 million last year.

Cash and marketable securities total $206.0 million as of June 30, 2019 reflecting Granite’s disciplined cash management and operational strength. This, in addition to Granite’s diverse business portfolio, positions the Company to navigate the current situation while maintaining a strong balance sheet.

The Company’s effective tax rate in the second quarter was 25.3 percent.

Second Quarter and Year-To-Date 2019 Segment Results

Transportation

  • Second quarter 2019 revenue was $404.0 million, compared to $502.7 million in last year’s quarter. This quarter’s results included a revenue reduction of $114.2 million due to increased project costs on four legacy, unconsolidated Heavy Civil joint venture projects, and corresponding reductions in project percent completion. Year-to-date 2019 revenue decreased 13.9 percent to $742.2 million (including $114.2 million negative impact), compared to $861.9 million last year. Revenue was also impacted by inclement weather that continued across the country through May.
  • Including charges of $143.7 million on four legacy, unconsolidated Heavy Civil joint venture projects, second quarter 2019 gross loss was $99.9 million, compared to gross profit of $36.0 million last year. Year-to-date gross loss was $78.6 million, compared to a gross profit of $67.4 million last year. The pre-tax charges are related to 1) increased project completion costs, which were exacerbated by schedule delays and execution of a significant amount of disputed work, and 2) a recent unfavorable court ruling on a project dispute.
  • Segment CAP totaled nearly $4.0 billion as of June 30, 2019, including $1.1 billion of construction management/general contractor (CMGC) and alternative procurement projects.

Water

  • Second quarter 2019 revenue was $112.8 million compared to $51.6 million in last year’s quarter. Year-to-date 2019 revenue was $212.1 million, compared to $91.7 million last year. The revenue increases were primarily related to 2018 acquisitions, though operations were impacted by inclement weather experienced across our operations through May.
  • Second quarter 2019 gross profit was $11.3 million compared to $5.5 million last year, with gross profit margin slightly lower at 10.0 percent. Year-to-date gross profit was $19.4 million, compared to $17.0 million last year. Year-to-date gross profit margin was 9.1 percent, down from 18.6 percent in 2018, which included non-recurring emergency work.
  • Segment CAP totaled $318.1 million as of June 30, 2019.

Specialty

  • Second quarter 2019 revenue was $175.1 million, compared to $151.8 million in last year’s quarter. Year-to-date 2019 revenue was $315.8 million, compared to $270.3 million last year. The revenue increases were primarily related to the acquisition of the Layne Christensen Company in June 2018.
  • Second quarter 2019 gross profit was $22.2 million compared to $21.5 million last year, with gross profit margin of 12.7 percent down from 14.1 percent last year. Year-to-date gross profit was $37.1 million, compared to $37.2 million last year, with gross profit margin of 11.7 percent, down from 13.8 percent in 2018. The margin was adversely impacted by project delays and by a labor dispute, resolved late in the quarter, that temporarily disrupted a key customer’s operations.
  • Segment CAP totaled $559.3 million as of June 30, 2019.

Materials

  • Second quarter 2019 revenue was $97.6 million, compared to $100.9 million in last year’s quarter. Year-to-date 2019 revenue was $139.3 million, compared to $146.7 million last year. The decrease is attributable to inclement weather across the western United States through May.
  • Second quarter 2019 gross profit was $14.0 million, compared to $17.5 million last year, with gross profit margin of 14.3 percent down from 17.3 percent in 2018. Year-to-date gross profit was $10.2 million, compared to $15.0 million last year, with gross profit margin of 7.4 percent, down from 10.2 percent in 2018 as wet weather persisted all the way through May, slowing plant productivity.

Outlook and Guidance

On July 29, 2019, Granite announced that it has accelerated its strategic review of the Heavy Civil operating group with a clear objective to expedite the Company’s plan to reduce risk and exposure to the large, complex projects business. “This next step in de-risking our portfolio is critical on our path to produce predictable, consistent results,” Roberts said. “This action, coupled with a robust economic environment in our core business, creates profitable growth opportunities across geographies and end markets. Importantly, we just celebrated the one-year anniversary of the Layne Christensen acquisition and the completion of their systems conversion. This allows our companies to operate on one platform, providing increased efficiencies as we enter the back half of 2019.”

Roberts concluded, “Although our second quarter results reflected near-term challenges, we are energized to leverage the Company’s immense skill sets and broad capabilities and capitalize on a market that is both healthy and opportunistic. Now is the time to unlock the earnings power of our Company.”

The Company’s expectations for 2019 are:

• High single-digit consolidated revenue growth

• Adjusted EBITDA margin of 4.0 percent to 5.0 percent, including the impact of the charges

(1) Committed and Awarded Projects (“CAP”) is comprised of unearned revenue and other awards, as well as CMGC and alternative procurement projects.

(2) Acquisition-related expenses include acquisition, integration, acquired intangible amortization expenses, acquisition-related depreciation and synergy costs.

(3) Adjusted net income (loss), adjusted diluted income (loss) per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), 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.

Conference Call

Granite will conduct a conference call today, August 2, 2019, at 5:00 a.m. Pacific Time/8:00 a.m. Eastern Time to discuss the results of the quarter ended June 30, 2019. The Company invites investors to listen to a live audio webcast on its Investor Relations website, https://investor.graniteconstruction.com. The live call is available by calling 1-800-353-6461; international callers may dial 1-334-323-0501. 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 August 9, 2019, by calling 1-888-203-1112, replay access code 8102255; international callers may dial 1-719-457-0820.

About Granite

Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYSE: GVA) is a full-suite provider in the transportation, water infrastructure and mineral exploration markets. Granite is America’s Infrastructure Company as well as an award-winning firm in safety, quality and environmental stewardship. The Company has been honored as one of the World’s Most Ethical Companies by Ethisphere Institute for ten consecutive years. Granite is listed on the New York Stock Exchange and is part of the S&P MidCap 400 Index, the MSCI KLD 400 Social Index and the Russell 2000 Index. For more information, visit www.graniteconstruction.com 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, 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, 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)

 

 

June 30,

 

December 31,

 

June 30,

   

2019

 

2018

 

2018

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

144,958

 

 

$

272,804

 

 

$

195,515

 

Short-term marketable securities

 

 

41,037

 

 

 

30,002

 

 

 

20,014

 

Receivables, net

 

 

551,958

 

 

 

473,246

 

 

 

492,718

 

Contract assets

 

 

257,650

 

 

 

219,754

 

 

 

265,190

 

Inventories

 

 

102,163

 

 

 

88,623

 

 

 

96,024

 

Equity in construction joint ventures

 

 

241,786

 

 

 

282,229

 

 

 

252,467

 

Other current assets

 

 

63,056

 

 

 

48,731

 

 

 

49,100

 

Total current assets

 

 

1,402,608

 

 

 

1,415,389

 

 

 

1,371,028

 

Property and equipment, net

 

 

557,118

 

 

 

549,688

 

 

 

595,787

 

Long-term marketable securities

 

 

20,000

 

 

 

36,098

 

 

 

61,191

 

Investments in affiliates

 

 

82,109

 

 

 

84,354

 

 

 

99,495

 

Goodwill

 

 

264,107

 

 

 

259,471

 

 

 

246,881

 

Right of use assets

 

 

73,439

 

 

 

 

 

 

 

Deferred income taxes, net

 

 

36,055

 

 

 

2,918

 

 

 

25,135

 

Other noncurrent assets

 

 

122,705

 

 

 

128,683

 

 

 

156,808

 

Total assets

 

$

2,558,141

 

 

$

2,476,601

 

 

$

2,556,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

48,397

 

 

$

47,286

 

 

$

207,982

 

Accounts payable

 

 

303,128

 

 

 

251,481

 

 

 

303,885

 

Contract liabilities

 

 

119,289

 

 

 

105,449

 

 

 

91,864

 

Accrued expenses and other current liabilities

 

 

339,047

 

 

 

273,626

 

 

 

293,959

 

Total current liabilities

 

 

809,861

 

 

 

677,842

 

 

 

897,690

 

Long-term debt

 

 

366,896

 

 

 

335,119

 

 

 

280,710

 

Lease liabilities

 

 

60,868

 

 

 

 

 

 

 

Deferred income taxes, net

 

 

4,680

 

 

 

4,317

 

 

 

5,759

 

Other long-term liabilities

 

 

58,268

 

 

 

61,689

 

 

 

71,180

 

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: 46,838,199 shares as of June 30, 2019, 46,665,889 shares as of December 31, 2018 and 45,688,582 shares as of June 30, 2018

 

 

468

 

 

 

467

 

 

 

457

 

Additional paid-in capital

 

 

568,264

 

 

 

564,559

 

 

 

516,680

 

Accumulated other comprehensive (loss) income

 

 

(3,448

)

 

 

(749

)

 

 

1,022

 

Retained earnings

 

 

642,124

 

 

 

787,356

 

 

 

737,417

 

Total Granite Construction Incorporated shareholders’ equity

 

 

1,207,408

 

 

 

1,351,633

 

 

 

1,255,576

 

Non-controlling interests

 

 

50,160

 

 

 

46,001

 

 

 

45,410

 

Total equity

 

 

1,257,568

 

 

 

1,397,634

 

 

 

1,300,986

 

Total liabilities and equity

 

$

2,558,141

 

 

$

2,476,601

 

 

$

2,556,325

 

 

GRANITE CONSTRUCTION INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

403,978

 

 

$

502,711

 

 

$

742,188

 

 

$

861,856

 

Water

 

 

112,831

 

 

 

51,618

 

 

 

212,086

 

 

 

91,659

 

Specialty

 

 

175,084

 

 

 

151,842

 

 

 

315,777

 

 

 

270,313

 

Materials

 

 

97,647

 

 

 

100,948

 

 

 

139,290

 

 

 

146,670

 

Total revenue

 

 

789,540

 

 

 

807,119

 

 

 

1,409,341

 

 

 

1,370,498

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

503,857

 

 

 

466,748

 

 

 

820,817

 

 

 

794,431

 

Water

 

 

101,568

 

 

 

46,168

 

 

 

192,704

 

 

 

74,645

 

Specialty

 

 

152,874

 

 

 

130,366

 

 

 

278,700

 

 

 

233,101

 

Materials

 

 

83,645

 

 

 

83,468

 

 

 

129,046

 

 

 

131,669

 

Total cost of revenue

 

 

841,944

 

 

 

726,750

 

 

 

1,421,267

 

 

 

1,233,846

 

Gross (loss) profit

 

 

(52,404

)

 

 

80,369

 

 

 

(11,926

)

 

 

136,652

 

Selling, general and administrative expenses

 

 

69,998

 

 

 

61,316

 

 

 

151,153

 

 

 

122,568

 

Acquisition and integration expenses

 

 

9,177

 

 

 

26,287

 

 

 

12,500

 

 

 

34,696

 

Gain on sales of property and equipment

 

 

(4,935

)

 

 

(1,505

)

 

 

(6,835

)

 

 

(2,048

)

Operating loss

 

 

(126,644

)

 

 

(5,729

)

 

 

(168,744

)

 

 

(18,564

)

Other (income) expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(1,728

)

 

 

(1,173

)

 

 

(4,544

)

 

 

(2,694

)

Interest expense

 

 

4,158

 

 

 

3,203

 

 

 

8,172

 

 

 

5,638

 

Equity in income of affiliates

 

 

(2,594

)

 

 

(3,534

)

 

 

(3,884

)

 

 

(3,758

)

Other income, net

 

 

(759

)

 

 

(940

)

 

 

(2,521

)

 

 

(672

)

Total other income

 

 

(923

)

 

 

(2,444

)

 

 

(2,777

)

 

 

(1,486

)

Loss before (benefit from) provision for income taxes

 

 

(125,721

)

 

 

(3,285

)

 

 

(165,967

)

 

 

(17,078

)

(Benefit from) provision for income taxes

 

 

(31,760

)

 

 

2,796

 

 

 

(40,925

)

 

 

(1,335

)

Net loss

 

 

(93,961

)

 

 

(6,081

)

 

 

(125,042

)

 

 

(15,743

)

Amount attributable to non-controlling interests

 

 

(3,875

)

 

 

(2,304

)

 

 

(7,368

)

 

 

(4,065

)

Net loss attributable to Granite Construction Incorporated

 

$

(97,836

)

 

$

(8,385

)

 

$

(132,410

)

 

$

(19,808

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common

shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(2.09

)

 

$

(0.20

)

 

$

(2.83

)

 

$

(0.49

)

Diluted

 

$

(2.09

)

 

$

(0.20

)

 

$

(2.83

)

 

$

(0.49

)

Weighted average shares of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

46,824

 

 

 

41,044

 

 

 

46,762

 

 

 

40,074

 

Diluted

 

 

46,824

 

 

 

41,044

 

 

 

46,762

 

 

 

40,074

 

Dividends per common share

 

$

0.13

 

 

$

0.13

 

 

$

0.26

 

 

$

0.26

 

 

GRANITE CONSTRUCTION INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

Six Months Ended June 30,

 

2019

 

2018

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(125,042

)

 

$

(15,743

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

61,747

 

 

 

43,547

 

Gain on sales of property and equipment, net

 

 

(6,835

)

 

 

(2,048

)

Change in deferred income taxes

 

 

(35,192

)

 

 

 

Stock-based compensation

 

 

7,221

 

 

 

10,193

 

Equity in net loss from unconsolidated joint ventures

 

 

105,834

 

 

 

13,418

 

Net income from affiliates

 

 

(3,884

)

 

 

(3,758

)

Other non-cash adjustments

 

 

4,630

 

 

 

 

Changes in assets and liabilities, net of the effects of acquisitions

 

 

(101,994

)

 

 

(121,054

)

Net cash used in operating activities

 

 

(93,515

)

 

 

(75,445

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

 

 

 

(9,952

)

Maturities of marketable securities

 

 

5,000

 

 

 

60,000

 

Purchases of property and equipment

 

 

(54,354

)

 

 

(36,471

)

Proceeds from sales of property and equipment

 

 

7,870

 

 

 

2,704

 

Cash paid to purchase businesses, net of cash and restricted cash acquired

 

 

(6,227

)

 

 

(55,030

)

Other investing activities, net

 

 

(215

)

 

 

269

 

Net cash used in investing activities

 

 

(47,926

)

 

 

(38,480

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from debt

 

 

75,499

 

 

 

105,250

 

Debt principal repayments

 

 

(43,842

)

 

 

(1,250

)

Cash dividends paid

 

 

(12,152

)

 

 

(10,389

)

Repurchases of common stock

 

 

(3,948

)

 

 

(6,165

)

Distributions to non-controlling partners

 

 

(3,200

)

 

 

(6,400

)

Other financing activities, net

 

 

1,238

 

 

 

429

 

Net cash provided by financing activities

 

 

13,595

 

 

 

81,475

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(127,846

)

 

 

(32,450

)

Cash and cash equivalents and restricted cash of $5,825 and $0 at beginning of each period

 

 

278,629

 

 

 

233,711

 

Cash, cash equivalents and restricted cash of $5,825 and $5,746 at end of each period

 

$

150,783

 

 

$

201,261

 

 

GRANITE CONSTRUCTION INCORPORATED

Business Segment Information

(Unaudited - dollars in thousands)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

403,978

 

 

$

502,711

 

 

$

742,188

 

 

$

861,856

 

Water

 

 

112,831

 

 

 

51,618

 

 

 

212,086

 

 

 

91,659

 

Specialty

 

 

175,084

 

 

 

151,842

 

 

 

315,777

 

 

 

270,313

 

Materials

 

 

97,647

 

 

 

100,948

 

 

 

139,290

 

 

 

146,670

 

Total revenue

 

$

789,540

 

 

$

807,119

 

 

$

1,409,341

 

 

$

1,370,498

 

Gross (loss) profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

(99,879

)

 

$

35,963

 

 

$

(78,629

)

 

$

67,425

 

Water

 

 

11,263

 

 

 

5,450

 

 

 

19,382

 

 

 

17,014

 

Specialty

 

 

22,210

 

 

 

21,476

 

 

 

37,077

 

 

 

37,212

 

Materials

 

 

14,002

 

 

 

17,480

 

 

 

10,244

 

 

 

15,001

 

Total gross (loss) profit

 

$

(52,404

)

 

$

80,369

 

 

$

(11,926

)

 

$

136,652

 

Gross (loss) profit as a percent of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

(24.7

%)

 

 

7.2

%

 

 

(10.6

%)

 

 

7.8

%

Water

 

 

10.0

 

 

 

10.6

 

 

 

9.1

 

 

 

18.6

 

Specialty

 

 

12.7

 

 

 

14.1

 

 

 

11.7

 

 

 

13.8

 

Materials

 

 

14.3

 

 

 

17.3

 

 

 

7.4

 

 

 

10.2

 

Total gross (loss) profit as a percent of total revenue

 

 

(6.6

%)

 

 

10.0

%

 

 

(0.8

%)

 

 

10.0

%

 

GRANITE CONSTRUCTION INCORPORATED

Committed and Awarded Projects

(Unaudited - dollars in thousands)

 

 

 

June 30, 2019

 

March 31, 2019

 

June 30, 2018

Unearned revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

2,921,437

 

 

79.1

%

$

2,187,300

 

 

76.4

%

$

2,594,464

 

 

75.9

%

Water

 

 

253,418

 

 

6.9

 

 

 

220,303

 

 

7.7

 

 

 

275,932

 

 

8.1

 

 

Specialty

 

 

517,457

 

 

14.0

 

 

 

456,008

 

 

15.9

 

 

 

545,944

 

 

16.0

 

 

Total unearned revenue

 

 

3,692,312

 

 

100.0

 

 

 

2,863,611

 

 

100.0

 

 

 

3,416,340

 

 

100.0

 

 

Other awards(1)

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

18,290

 

 

14.7

 

 

 

595,952

 

 

81.9

 

 

 

42,591

 

 

18.1

 

 

Water

 

 

64,693

 

 

51.8

 

 

 

97,479

 

 

13.4

 

 

 

122,954

 

 

52.2

 

 

Specialty

 

 

41,807

 

 

33.5

 

 

 

34,223

 

 

4.7

 

 

 

70,037

 

 

29.7

 

 

Total other awards

 

 

124,790

 

 

100.0

 

 

 

727,654

 

 

100.0

 

 

 

235,582

 

 

100.0

 

 

Total contract backlog(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

2,939,727

 

 

77.0

 

 

 

2,783,252

 

 

77.5

 

 

 

2,637,055

 

 

72.2

 

 

Water

 

 

318,111

 

 

8.3

 

 

 

317,782

 

 

8.8

 

 

 

398,886

 

 

10.9

 

 

Specialty

 

 

559,264

 

 

14.7

 

 

 

490,231

 

 

13.7

 

 

 

615,981

 

 

16.9

 

 

Total contract backlog(2)

 

 

3,817,102

 

 

100.0

 

 

 

3,591,265

 

 

100.0

 

 

 

3,651,922

 

 

100.0

 

 

Alternative procurement work(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

1,055,751

 

 

100.0

 

 

 

884,000

 

 

100.0

 

 

 

 

 

 

 

Water

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specialty

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total alternative procurement work(3)

 

 

1,055,751

 

 

100.0

 

 

 

884,000

 

 

100.0

 

 

 

 

 

 

 

Committed and Awarded Projects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

3,995,478

 

 

82.0

 

 

 

3,667,252

 

 

81.9

 

 

 

2,637,055

 

 

72.2

 

 

Water

 

 

318,111

 

 

6.5

 

 

 

317,782

 

 

7.1

 

 

 

398,886

 

 

10.9

 

 

Specialty

 

 

559,264

 

 

11.5

 

 

 

490,231

 

 

11.0

 

 

 

615,981

 

 

16.9

 

 

Total Committed and Awarded Projects

 

$

4,872,853

 

 

100.0

%

$

4,475,265

 

 

100.0

%

$

3,651,922

 

 

100.0

%

(1) Other awards include unissued task orders and unexercised contract options to the extent their issuance or exercise is probable as well as contract awards to the extent we believe contract execution and funding is probable.

(2) Contract Backlog is calculated by adding Unearned Revenue and Other Awards.

(3)Alternative Procurement Work represents Construction Manager/General Contractor projects that will enter backlog as task orders are issued in 2019 and over the next few years.

Non-GAAP Financial Information

The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“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 loss before (benefit from) provision for income taxes, adjusted benefit from (provision for) income taxes, adjusted net (loss) income attributable to Granite Construction Incorporated and adjusted diluted net (loss) income per share to indicate the impact of 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. 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 securities analysts, institutional investors and other interested parties. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with GAAP. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to similar measures provided by other companies. 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 June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Net loss attributable to Granite Construction Incorporated

 

$

(97,836

)

 

$

(8,385

)

 

$

(132,410

)

 

$

(19,808

)

Depreciation, depletion and amortization expense(2)

 

 

32,901

 

 

 

28,036

 

 

 

61,747

 

 

 

43,547

 

(Benefit from) provision for income taxes

 

 

(31,760

)

 

 

2,796

 

 

 

(40,925

)

 

 

(1,335

)

Interest expense, net of interest income

 

 

2,430

 

 

 

2,030

 

 

 

3,628

 

 

 

2,944

 

EBITDA

 

$

(94,265

)

 

$

24,477

 

 

$

(107,960

)

 

$

25,348

 

EBITDA margin(3)

 

 

(11.9

%)

 

 

3.0

%

 

 

(7.7

%)

 

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs

 

$

9,990

 

 

$

26,438

 

 

$

14,314

 

 

$

34,847

 

Adjusted EBITDA(1)

 

$

(84,275

)

 

$

50,915

 

 

$

(93,646

)

 

$

60,195

 

Adjusted EBITDA margin(1)

 

 

(10.7

%)

 

 

6.3

%

 

 

(6.6

%)

 

 

4.4

%

(1) We define EBITDA as GAAP net 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 acquisition and integration expenses and synergies.

(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 condensed consolidated statements of operations of Granite Construction Incorporated.

(3) Represents EBITDA divided by consolidated revenue of $789.5 million and $1.41 billion for the three and six months ended June 30, 2019, respectively, and $807.1 and $1.37 billion for three and six months ended June 30, 2018, respectively.

 

GRANITE CONSTRUCTION INCORPORATED

Adjusted Net (Loss) Income Reconciliation(1)

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2019

 

2018

 

2019

 

2018

Loss before (benefit from) provision for income taxes

 

$

(125,721

)

 

$

(3,285

)

 

$

(165,967

)

 

$

(17,078

)

Transaction costs

 

 

16,263

 

 

 

29,505

 

 

 

27,265

 

 

 

37,914

 

Adjusted loss before (benefit from) provision for income taxes

 

$

(109,458

)

 

$

26,220

 

 

$

(138,702

)

 

$

20,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Benefit from) provision for income taxes

 

$

(31,760

)

 

$

2,796

 

 

$

(40,925

)

 

$

(1,335

)

Tax effect of the transaction costs(1)

 

 

4,228

 

 

 

2,966

 

 

 

7,089

 

 

 

4,963

 

Adjusted (benefit from) provision for income taxes

 

$

(27,532

)

 

$

5,762

 

 

$

(33,836

)

 

$

3,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to Granite Construction Incorporated

 

$

(97,836

)

 

$

(8,385

)

 

$

(132,410

)

 

$

(19,808

)

After-tax transaction costs

 

 

12,035

 

 

 

26,539

 

 

 

20,176

 

 

 

32,951

 

Adjusted net (loss) income attributable to Granite Construction Incorporated

 

$

(85,801

)

 

$

18,154

 

 

$

(112,234

)

 

$

13,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net loss per share attributable to common shareholders

 

$

(2.09

)

 

$

(0.20

)

 

$

(2.83

)

 

$

(0.49

)

After-tax transaction costs

 

 

0.26

 

 

 

0.64

 

 

 

0.43

 

 

 

0.82

 

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

 

$

(1.83

)

 

$

0.44

 

 

$

(2.40

)

 

$

0.33

 

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

Source: Granite Construction Incorporated

Investors

Lisa Curtis, 831-728-7532

Or

Media

Jacque Fourchy, 831-761-4741

Source: Granite Construction Incorporated