Granite Reports Second Quarter 2021 Results

Granite Reports Second Quarter 2021 Results

  • Q2 revenue of $964.2 million, up 5.3% for the same period year-over-year
  • Q2 diluted net income per share of $1.14, Q2 adjusted diluted net income per share of $0.91 (1)
  • Strong project execution in the Old Risk Portfolio (2) with Q2 gross profit of $2.5 million
  • Cash and marketable securities of $404.0 million, debt of $339.9 million
  • Committed and Awarded Projects ("CAP") up $280.3 million for the same period year-over-year, and slightly down sequentially reflecting Old Risk Portfolio progression
  • Closed on the sale of an office building resulting in $40.8 million of proceeds and gain on sale of $29.7 million during the quarter

WATSONVILLE, Calif.--(BUSINESS WIRE)--Granite Construction Incorporated (NYSE: GVA) today announced results for the second quarter ended June 30, 2021.

Second Quarter 2021 Results

Net income increased to $54.5 million, or $1.14 per diluted share, compared to net income of $3.4 million, or $0.07 per diluted share, for the same period year-over-year. Adjusted net income(1), which excludes other costs(3), non-cash impairments of goodwill, transaction costs (4), gain on sale of property and amortization of debt discount related to our 2.75% convertible notes, totaled $42.3 million, or $0.91 per diluted share, compared to adjusted net income of $19.1 million, or $0.41 per diluted share, for the same period year-over-year.

  • Revenue increased 5.3% to $964.2 million compared to $915.8 million for the same period year-over-year.
  • Gross profit increased to $116.9 million compared to $88.3 million for the same period year-over-year.
  • Selling, general, and administrative (“SG&A”) expenses were $74.1 million or 7.7% of revenue, compared to $78.0 million or 8.5% of revenue for the same period year-over-year.
  • Diluted net income per share increased to $1.14 compared to $0.07 for the same period year-over-year.
  • Adjusted diluted net income per share increased to $0.91 compared to $0.41 for the same period year-over-year.
  • Adjusted EBITDA(1) increased to $79.9 million, compared to $49.9 million for the same period year-over-year.
  • Committed and Awarded Projects (“CAP”) (5) totaled $4.4 billion, up $0.3 billion for the same period year-over-year, and down $6.6 million since the first quarter of 2021.
  • Cash and marketable securities increased $109.2 million to $404.0 million compared to $294.8 million for the same period year-over-year aided by a sale of a property during the quarter with proceeds of $40.8 million, while debt decreased $74.1 million to $339.9 million compared to $414.0 million for the same period year-over-year.

"I am pleased with the performance of the business this quarter as we work through the Heavy Civil Operating Group Old Risk Portfolio," said Kyle Larkin, Granite President and CEO.

“Our second quarter adjusted diluted net income per share of $0.91 and adjusted EBITDA of $79.9 million were propelled by strong results from our vertically-integrated businesses in the California and Northwest Operating Groups. Public and private markets are robust, as is demonstrated by the increases in transportation CAP within the vertically-integrated groups and in both the water and specialty segments for the same period year-over-year. Our cash and balance sheet remain strong as we head into the second half of the year.”

(1) Adjusted net income (loss), adjusted diluted income (loss) per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures. Please refer to the description and reconciliation of non-GAAP measures in the attached tables.
(2) The Heavy Civil Operating Group Old Risk Portfolio includes projects with risk criteria that do not align with Granite's new project selection criteria for the Heavy Civil Operating Group.
(3) Other costs includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of the Layne Christensen Company (“Layne”) and restructuring charges related to our Heavy Civil Operating Group.
(4) Transaction costs includes acquired intangible amortization expenses and acquisition related depreciation related to the acquisition of Layne and LiquiForce.
(5) CAP is comprised of unearned revenue and other awards, as well as awarded construction management/general contractor, construction manager at-risk, and progressive design build projects for which contract execution and funding is probable.

Second Quarter 2021 Segment Results (Unaudited - dollars in thousands)

Transportation Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

525,235

 

 

$

535,101

 

 

$

(9,866

)

 

 

(1.8

)%

 

$

876,264

 

 

$

886,002

 

 

$

(9,738

)

 

 

(1.1

)%

Gross profit

 

 

59,517

 

 

 

31,197

 

 

 

28,320

 

 

 

90.8

%

 

 

95,383

 

 

 

56,566

 

 

 

38,817

 

 

 

68.6

%

Gross profit as a percent of revenue

 

 

11.3

%

 

 

5.8

%

 

 

 

 

 

 

 

 

 

 

10.9

%

 

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

March 31, 2021

 

 

Change - Quarter over Quarter

 

 

June 30, 2020

 

 

Change - Year over Year

 

 

 

 

 

Committed and Awarded Projects

 

$

2,894,115

 

 

$

3,028,893

 

 

$

(134,778

)

 

 

(4.4

)%

 

$

3,251,646

 

 

$

(357,531

)

 

 

(11.0

)%

 

 

 

 

Transportation revenue in the second quarter decreased year-over-year as increases driven by the strong performance in the vertically-integrated California and Northwest Operating Groups were offset by decreased revenue in the Heavy Civil Operating Group. Second quarter gross profit increased for the same period year-over-year primarily due to a decrease in losses in the Heavy Civil Group Old Risk Portfolio.

In the second quarter, the Old Risk Portfolio recognized $115.7 million of revenue and gross profit of $2.5 million compared to revenue of $120.8 million and gross loss of ($35.4) million for the same period in the prior year.

Despite an increase of $201.7 million in CAP in our vertically-integrated businesses for the same period year-over-year, segment CAP decreased $0.4 billion for the same period year-over-year to $2.9 billion as Heavy Civil Operating Group CAP decreased $566.2 million.

Water Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

113,432

 

 

$

109,724

 

 

$

3,708

 

 

 

3.4

%

 

$

213,185

 

 

$

211,381

 

 

$

1,804

 

 

 

0.9

%

Gross profit

 

 

10,563

 

 

 

12,579

 

 

 

(2,016

)

 

 

(16.0

)%

 

 

19,129

 

 

 

21,926

 

 

 

(2,797

)

 

 

(12.8

)%

Gross profit as a percent of revenue

 

 

9.3

%

 

 

11.5

%

 

 

 

 

 

 

 

 

 

 

9.0

%

 

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

March 31, 2021

 

 

Change - Quarter over Quarter

 

 

June 30, 2020

 

 

Change - Year over Year

 

 

 

 

 

Committed and Awarded Projects

 

$

531,858

 

 

$

339,030

 

 

$

192,828

 

 

 

56.9

%

 

$

232,133

 

 

$

299,725

 

 

 

129.1

%

 

 

 

 

Water revenue in the second quarter increased year-over-year driven by the continued recovery from the pandemic and strong demand for water supply and maintenance services amidst the western U.S. drought conditions. Gross profit during the quarter decreased primarily due to $5.3 million in write downs on a Heavy Civil Operating Group project in the close-out phase and a California Operating Group project.

Segment CAP increased $299.7 million for the same period year-over-year to $531.9 million, reflecting strong backlog in the Water and Mineral Services Operating Group and the addition of the $160 million Leon Hurse Dam project within Heavy Civil Operating Group CAP.

Specialty Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

200,271

 

 

$

174,914

 

 

$

25,357

 

 

 

14.5

%

 

$

355,945

 

 

$

307,953

 

 

$

47,992

 

 

 

15.6

%

Gross profit

 

 

24,369

 

 

 

25,280

 

 

 

(911

)

 

 

(3.6

)%

 

 

41,694

 

 

 

14,561

 

 

 

27,133

 

 

 

186.3

%

Gross profit as a percent of revenue

 

 

12.2

%

 

 

14.5

%

 

 

 

 

 

 

 

 

 

 

11.7

%

 

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

March 31, 2021

 

 

Change - Quarter over Quarter

 

 

June 30, 2020

 

 

Change - Year over Year

 

 

 

 

 

Committed and Awarded Projects

 

$

1,019,318

 

 

$

1,083,971

 

 

$

(64,653

)

 

 

(6.0

)%

 

$

681,255

 

 

$

338,063

 

 

 

49.6

%

 

 

 

 

Specialty revenue in the second quarter increased for the same period year-over-year, led by recovery of mineral exploration within the mining industry in the Water and Mineral Services Operating Group and project progression of a federal site development project in the Heavy Civil Operating Group. Gross profit decreased as disputed work continued on a previously reported tunnel project.

Segment CAP increased $338.1 million for the same period year-over-year to over $1.0 billion led by site development projects in our vertically-integrated California and Northwest Operating Groups and the addition of a previously reported tunnel project in the Midwest Operating Group.

Materials Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

125,234

 

 

$

96,032

 

 

$

29,202

 

 

 

30.4

%

 

$

188,691

 

 

$

146,362

 

 

$

42,329

 

 

 

28.9

%

Gross profit

 

 

22,497

 

 

 

19,287

 

 

 

3,210

 

 

 

16.6

%

 

 

24,058

 

 

 

19,089

 

 

 

4,969

 

 

 

26.0

%

Gross profit as a percent of revenue

 

 

18.0

%

 

 

20.1

%

 

 

 

 

 

 

 

 

 

 

12.7

%

 

 

13.0

%

 

 

 

 

 

 

 

 

Materials revenue and gross profit in the second quarter increased year-over-year due to continued strong demand and higher volumes in both asphalt and aggregates in the vertically-integrated California and Northwest Operating Groups.

Outlook

The Company reaffirms our guidance for 2021:

- Low- to mid-single digit revenue growth
- Adjusted EBITDA margin of 5.5% to 7.5%

Conference Call

Granite will conduct a conference call today, July 29, 2021, at 9:00 a.m. Pacific Time/12:00 p.m. Eastern Time to discuss the results of the quarter ended June 30, 2021. The Company invites investors to listen to a live audio webcast of the investor conference call on its Investor Relations website, https://investor.graniteconstruction.com. The investor conference call will also be available by calling 1-866-807-9684; international callers may dial 1-412-317-5415. An archive of the webcast will be available on Granite's Investor Relations website approximately one hour after the call. A replay will be available after the live call through August 5, 2021, by calling 1-877-344-7529, replay access code 10158812; international callers may dial 1-412-317-0088.

About Granite

Granite is America’s Infrastructure Company™. Incorporated since 1922, Granite (NYSE:GVA) is one of the largest diversified construction and construction materials companies in the United States as well as a full-suite provider in the transportation, water infrastructure and mineral exploration markets. Granite’s Code of Conduct and strong Core Values guide the Company and its employees to uphold the highest ethical standards. Granite is an industry leader in safety and an award-winning firm in quality and sustainability. For more information, visit the Granite website, and connect with Granite on LinkedIn, Twitter, Facebook and Instagram.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, Committed and Awarded Projects (“CAP”) and results, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” "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, circumstances, activities, performance, growth, demand, strategic plans, outcomes, outlook, guidance, backlog, CAP and results. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

 

 

June 30, 2021

 

 

December 31, 2020

 

 

June 30, 2020

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

393,181

 

 

$

436,136

 

 

$

288,922

 

Receivables, net

 

 

646,940

 

 

 

540,812

 

 

 

596,922

 

Contract assets

 

 

194,483

 

 

 

164,939

 

 

 

191,919

 

Inventories

 

 

88,424

 

 

 

82,362

 

 

 

105,023

 

Equity in construction joint ventures

 

 

195,430

 

 

 

188,798

 

 

 

183,542

 

Other current assets

 

 

47,976

 

 

 

42,199

 

 

 

57,614

 

Total current assets

 

 

1,566,434

 

 

 

1,455,246

 

 

 

1,423,942

 

Property and equipment, net

 

 

517,143

 

 

 

527,016

 

 

 

540,053

 

Long-term marketable securities

 

 

10,850

 

 

 

5,200

 

 

 

5,896

 

Investments in affiliates

 

 

75,625

 

 

 

75,287

 

 

 

74,511

 

Goodwill

 

 

116,839

 

 

 

116,777

 

 

 

248,690

 

Right of use assets

 

 

59,219

 

 

 

62,256

 

 

 

72,244

 

Deferred income taxes, net

 

 

41,085

 

 

 

41,839

 

 

 

40,926

 

Other noncurrent assets

 

 

91,703

 

 

 

96,375

 

 

 

102,392

 

Total assets

 

$

2,478,898

 

 

$

2,379,996

 

 

$

2,508,654

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

8,709

 

 

$

8,278

 

 

$

8,253

 

Accounts payable

 

 

379,008

 

 

 

359,160

 

 

 

358,401

 

Contract liabilities

 

 

174,850

 

 

 

171,321

 

 

 

159,818

 

Accrued expenses and other current liabilities

 

 

485,718

 

 

 

404,497

 

 

 

363,128

 

Total current liabilities

 

 

1,048,285

 

 

 

943,256

 

 

 

889,600

 

Long-term debt

 

 

331,222

 

 

 

330,522

 

 

 

405,770

 

Long-term lease liabilities

 

 

41,816

 

 

 

46,769

 

 

 

56,071

 

Deferred income taxes, net

 

 

3,166

 

 

 

3,155

 

 

 

3,335

 

Other long-term liabilities

 

 

66,167

 

 

 

64,684

 

 

 

63,118

 

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: 45,818,719 shares as of June 30, 2021, 45,668,541 shares as of December 31, 2020 and 45,651,914 shares as of June 30, 2020

 

 

458

 

 

 

457

 

 

 

458

 

Additional paid-in capital

 

 

556,615

 

 

 

555,407

 

 

 

553,038

 

Accumulated other comprehensive loss

 

 

(2,750

)

 

 

(5,035

)

 

 

(5,800

)

Retained earnings

 

 

401,061

 

 

 

424,835

 

 

 

520,025

 

Total Granite Construction Incorporated shareholders’ equity

 

 

955,384

 

 

 

975,664

 

 

 

1,067,721

 

Non-controlling interests

 

 

32,858

 

 

 

15,946

 

 

 

23,039

 

Total equity

 

 

988,242

 

 

 

991,610

 

 

 

1,090,760

 

Total liabilities and equity

 

$

2,478,898

 

 

$

2,379,996

 

 

$

2,508,654

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

525,235

 

 

$

535,101

 

 

$

876,264

 

 

$

886,002

 

Water

 

 

113,432

 

 

 

109,724

 

 

 

213,185

 

 

 

211,381

 

Specialty

 

 

200,271

 

 

 

174,914

 

 

 

355,945

 

 

 

307,953

 

Materials

 

 

125,234

 

 

 

96,032

 

 

 

188,691

 

 

 

146,362

 

Total revenue

 

 

964,172

 

 

 

915,771

 

 

 

1,634,085

 

 

 

1,551,698

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

465,718

 

 

 

503,904

 

 

 

780,881

 

 

 

829,436

 

Water

 

 

102,869

 

 

 

97,145

 

 

 

194,056

 

 

 

189,455

 

Specialty

 

 

175,902

 

 

 

149,634

 

 

 

314,251

 

 

 

293,392

 

Materials

 

 

102,737

 

 

 

76,745

 

 

 

164,633

 

 

 

127,273

 

Total cost of revenue

 

 

847,226

 

 

 

827,428

 

 

 

1,453,821

 

 

 

1,439,556

 

Gross profit

 

 

116,946

 

 

 

88,343

 

 

 

180,264

 

 

 

112,142

 

Selling, general and administrative expenses

 

 

74,069

 

 

 

78,023

 

 

 

149,797

 

 

 

151,239

 

Non-cash impairment charges

 

 

 

 

 

 

 

 

 

 

 

24,413

 

Other costs

 

 

5,953

 

 

 

13,659

 

 

 

81,788

 

 

 

18,824

 

Gain on sales of property and equipment, net

 

 

(31,636

)

 

 

(1,190

)

 

 

(34,190

)

 

 

(1,813

)

Operating income (loss)

 

 

68,560

 

 

 

(2,149

)

 

 

(17,131

)

 

 

(80,521

)

Other (income) expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(188

)

 

 

(767

)

 

 

(444

)

 

 

(2,058

)

Interest expense

 

 

5,507

 

 

 

6,549

 

 

 

10,888

 

 

 

11,543

 

Equity in income of affiliates, net

 

 

(6,231

)

 

 

(2,016

)

 

 

(8,039

)

 

 

(2,062

)

Other (income) expense, net

 

 

(1,894

)

 

 

(3,160

)

 

 

(3,124

)

 

 

2,059

 

Total other (income) expense

 

 

(2,806

)

 

 

606

 

 

 

(719

)

 

 

9,482

 

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

 

 

71,366

 

 

 

(2,755

)

 

 

(16,412

)

 

 

(90,003

)

Provision for (benefit from) income taxes

 

 

15,619

 

 

 

(1,782

)

 

 

(6,836

)

 

 

(16,492

)

Net income (loss)

 

 

55,747

 

 

 

(973

)

 

 

(9,576

)

 

 

(73,511

)

Amount attributable to non-controlling interests

 

 

(1,286

)

 

 

4,378

 

 

 

(2,158

)

 

 

11,546

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

54,461

 

 

$

3,405

 

 

$

(11,734

)

 

$

(61,965

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.19

 

 

$

0.07

 

 

$

(0.26

)

 

$

(1.36

)

Diluted

 

$

1.14

 

 

$

0.07

 

 

$

(0.26

)

 

$

(1.36

)

Weighted average shares of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

45,798

 

 

 

45,620

 

 

 

45,748

 

 

 

45,570

 

Diluted

 

 

47,798

 

 

 

46,281

 

 

 

45,748

 

 

 

45,570

 

Dividends per common share

 

$

0.13

 

 

$

0.13

 

 

$

0.26

 

 

$

0.26

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 

Six Months Ended June 30,

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(9,576

)

 

$

(73,511

)

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

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

52,853

 

 

 

57,269

 

Amortization related to the 2.75% Convertible Notes

 

 

4,666

 

 

 

4,255

 

Gain on sales of property and equipment, net

 

 

(34,190

)

 

 

(1,813

)

Stock-based compensation

 

 

3,642

 

 

 

3,936

 

Equity in net (income) loss from unconsolidated joint ventures

 

 

(6,972

)

 

 

30,506

 

Net income from affiliates

 

 

(8,039

)

 

 

(2,062

)

Non-cash impairment charges

 

 

 

 

 

24,413

 

Other non-cash adjustments

 

 

1,483

 

 

 

1,832

 

Changes in assets and liabilities

 

 

(34,871

)

 

 

(32,342

)

Net cash (used in) provided by operating activities

 

 

(31,004

)

 

 

12,483

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(5,000

)

 

 

(4,996

)

Maturities of marketable securities

 

 

 

 

 

10,000

 

Proceeds from called marketable securities

 

 

 

 

 

20,000

 

Purchases of property and equipment

 

 

(46,437

)

 

 

(52,236

)

Proceeds from sales of property and equipment

 

 

48,517

 

 

 

7,278

 

Other investing activities, net

 

 

4,581

 

 

 

(1,453

)

Net cash provided by (used in) investing activities

 

 

1,661

 

 

 

(21,407

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from debt

 

 

 

 

 

50,000

 

Debt principal repayments

 

 

(4,677

)

 

 

(4,212

)

Cash dividends paid

 

 

(11,890

)

 

 

(11,842

)

Repurchases of common stock

 

 

(2,497

)

 

 

(728

)

Contributions from non-controlling partners

 

 

11,350

 

 

 

5,500

 

Distributions to non-controlling partners

 

 

(5,836

)

 

 

(7,860

)

Other financing activities, net

 

 

(62

)

 

 

392

 

Net cash (used in) provided by financing activities

 

 

(13,612

)

 

 

31,250

 

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

 

 

(42,955

)

 

 

22,326

 

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

 

$

394,693

 

 

$

290,434

 

Non-GAAP Financial Information

The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Specifically, management believes that non-GAAP financial measures such as EBITDA and EBITDA margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing adjusted EBITDA and adjusted EBITDA margin non-GAAP measures to indicate the impact of:

  • Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of Layne and restructuring charges related to our Heavy Civil Operating Group;
  • Non-cash impairments related to goodwill and investments in affiliates in 2020; and
  • Gain on sale of a property.

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

  • Other costs which includes the settlement charge, legal and accounting investigation fees, integration expenses related to the acquisition of the Layne and restructuring charges related to our Heavy Civil Operating Group;
  • Non-cash impairments related to goodwill and investments in affiliates in 2020;
  • Gain on sale of a 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 AND ADJUSTED EBITDA(1)

(Unaudited - dollars in thousands)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

54,461

 

 

$

3,405

 

 

$

(11,734

)

 

$

(61,965

)

Depreciation, depletion and amortization expense(2)

 

 

28,272

 

 

 

28,822

 

 

 

52,853

 

 

 

57,269

 

Provision for (benefit from) income taxes

 

 

15,619

 

 

 

(1,782

)

 

 

(6,836

)

 

 

(16,492

)

Interest expense, net of interest income

 

 

5,319

 

 

 

5,782

 

 

 

10,444

 

 

 

9,485

 

EBITDA(1)

 

$

103,671

 

 

$

36,227

 

 

$

44,727

 

 

$

(11,703

)

EBITDA margin(1)(3)

 

 

10.8

%

 

 

4.0

%

 

 

2.7

%

 

 

-0.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other costs

 

$

5,953

 

 

$

13,659

 

 

$

81,788

 

 

$

18,824

 

Non-cash impairment charges

 

 

 

 

 

 

 

 

 

 

 

24,413

 

Gain on sale of property

 

 

(29,688

)

 

 

 

 

 

(29,688

)

 

 

 

Adjusted EBITDA(1)

 

$

79,936

 

 

$

49,886

 

 

$

96,827

 

 

$

31,534

 

Adjusted EBITDA margin(1)(3)

 

 

8.3

%

 

 

5.4

%

 

 

5.9

%

 

 

2.0

%

(1) We define EBITDA as U.S. GAAP net income (loss) attributable to Granite Construction Incorporated, adjusted for net interest expense, taxes, depreciation, depletion and amortization. Adjusted EBITDA and adjusted EBITDA margin exclude the impact of other costs, non-cash impairment charges, and a gain on sale of property.
(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 and Adjusted EBITDA divided by consolidated revenue of $1.0 billion and $0.9 billion for the three months ended June 30, 2021 and 2020, respectively, and $1.6 billion for both the six months ended June 30, 2021 and 2020.

GRANITE CONSTRUCTION INCORPORATED

Adjusted Net Income (Loss) Reconciliation

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

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

 

$

71,366

 

 

$

(2,755

)

 

$

(16,412

)

 

$

(90,003

)

Other costs

 

 

5,953

 

 

 

13,659

 

 

 

81,788

 

 

 

18,824

 

Non-cash impairment charges

 

 

 

 

 

 

 

 

 

 

 

24,413

 

Transaction costs

 

 

5,516

 

 

 

5,874

 

 

 

10,766

 

 

 

11,788

 

Amortization of debt discount

 

 

1,753

 

 

 

1,642

 

 

 

3,468

 

 

 

3,249

 

Gain on sale of property

 

 

(29,688

)

 

 

 

 

 

(29,688

)

 

 

 

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

 

$

54,900

 

 

$

18,420

 

 

$

49,922

 

 

$

(31,729

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

$

15,619

 

 

$

(1,782

)

 

$

(6,836

)

 

$

(16,492

)

Tax effect of adjusting items (1)

 

 

(4,281

)

 

 

5,506

 

 

 

17,247

 

 

 

8,804

 

Adjusted provision for (benefit from) income taxes

 

$

11,338

 

 

$

3,724

 

 

$

10,411

 

 

$

(7,688

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

54,461

 

 

$

3,405

 

 

$

(11,734

)

 

$

(61,965

)

After-tax adjusting items

 

 

(12,185

)

 

 

15,669

 

 

 

49,087

 

 

 

49,470

 

Adjusted net income (loss) attributable to Granite Construction Incorporated

 

$

42,276

 

 

$

19,074

 

 

$

37,353

 

 

$

(12,495

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of common stock

 

 

47,798

 

 

 

46,281

 

 

 

45,748

 

 

 

45,570

 

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

 

 

-

 

 

 

-

 

 

 

1,569

 

 

 

-

 

Less: 2.75% Convertible Notes dilutive effect (3)

 

 

(1,546

)

 

 

-

 

 

 

(1,066

)

 

 

-

 

Adjusted diluted weighted average shares of common stock

 

 

46,252

 

 

 

46,281

 

 

 

46,251

 

 

 

45,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

1.14

 

 

$

0.07

 

 

$

(0.26

)

 

$

(1.36

)

After-tax adjusting items per share attributable to common shareholders

 

 

(0.23

)

 

 

0.34

 

 

 

1.07

 

 

 

1.09

 

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

 

$

0.91

 

 

$

0.41

 

 

$

0.81

 

 

$

(0.27

)

(1) The tax effect of adjusting items was calculated using the Company’s estimated annual statutory tax rate.
(2) Represents the dilutive effect on adjusted net income attributable to Granite Construction Incorporated for the six months ended June 30, 2021 of 503,000 shares related to restricted stock units and 1,066,000 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 and six months ended June 30, 2021, our average share price was above the conversion price resulting in accounting dilution under U.S. GAAP of 1,546,000 and 1,066,000 shares, respectively. For the purposes of calculating adjusted diluted net income (loss) 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 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