Granite Reports Third Quarter 2021 Results

Granite Reports Third Quarter 2021 Results

  • Q3 revenue of $1.1 billion, essentially flat compared to the same period last year
  • Q3 diluted net income per share of $0.73, Q3 adjusted diluted net income per share of $0.93 (1)
  • Cash and marketable securities of $475 million, debt of $340 million
  • Committed and Awarded Projects ("CAP") up $135.4 million compared to the same period last year
  • Continued progress burning through the Old Risk Portfolio ("ORP") (2) reducing ORP CAP by $100 million during the quarter

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

Third Quarter 2021 Results

Net income increased to $35.0 million, or $0.73 per diluted share, compared to a net loss of ($91.2) million, or ($2.00) per diluted share, for the same period last year. Adjusted net income(1), 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 $43.2 million, or $0.93 per diluted share, compared to adjusted net income (1) of $53.8 million, or $1.16 per diluted share, for the same period last year.

  • Revenue of $1.1 billion, essentially flat compared to the same period last year.
  • Gross profit decreased to $119.9 million compared to $126.0 million for the same period last year, while gross profit margins remained relatively flat for the same period.
  • Selling, general, and administrative (“SG&A”) expenses were $77.6 million or 7.3% of revenue, compared to $72.9 million or 6.8% of revenue for the same period last year, primarily driven by an increase in incentive compensation expense.
  • Diluted net income per share increased to $0.73 compared to a net loss per diluted share of ($2.00) for the same period last year.
  • Adjusted diluted net income per share decreased to $0.93 compared to $1.16 for the same period last year.
  • Adjusted EBITDA(1) declined to $80.7 million, compared to $95.1 million for the same period last year.
  • Committed and Awarded Projects (“CAP”) (5) totaled $4.3 billion, up $135.4 million compared to the same period last year, and down $117.4 million since the second quarter of 2021.
  • Cash and marketable securities increased $80.9 million to $474.6 million compared to $393.7 million for the same period last year, while debt decreased $74.0 million to $339.9 million compared to $413.9 million for the same period last year.

"This quarter, we made progress by working through the challenging ORP projects in the Heavy Civil Operating Group and by growing high-quality CAP in our vertically-integrated California and Northwest Operating Groups," explained Kyle Larkin, Granite President and CEO. "There is more work to do with the ORP, and we remain focused on project execution across our business. Opportunities in our markets are robust, cash and liquidity remain a strength, and I am confident we are positioning the company to continue on its path for improved financial performance.”

(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 include 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.

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

Transportation Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

568,186

 

 

$

623,999

 

 

$

(55,813

)

 

 

(8.9

)%

 

$

1,444,450

 

 

$

1,510,001

 

 

$

(65,551

)

 

 

(4.3

)%

Gross profit

 

 

58,503

 

 

 

54,322

 

 

 

4,181

 

 

 

7.7

%

 

 

153,886

 

 

 

110,888

 

 

 

42,998

 

 

 

38.8

%

Gross profit as a percent of revenue

 

 

10.3

%

 

 

8.7

%

 

 

 

 

 

 

 

 

 

 

10.7

%

 

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

June 30, 2021

 

 

Change - Quarter over Quarter

 

 

September 30, 2020

 

 

Change - Year over Year

 

 

 

 

 

Committed and Awarded Projects

 

$

2,914,206

 

 

$

2,894,115

 

 

$

20,091

 

 

 

0.7

%

 

$

3,222,829

 

 

$

(308,623

)

 

 

(9.6

)%

 

 

 

 

Transportation revenue in the third quarter decreased compared to the same period last year because of our efforts to narrow the footprint of the Heavy Civil Operating Group and because of decreased revenue in the California Operating Group. The decreased revenue in the California Operating Group was primarily due to an extended competitive bidding environment early in 2021 contrasted with an exceptional third quarter of 2020 which was bolstered by owner worksite accommodations. Third quarter gross profit increased compared to the same period last year primarily due to a decrease in project losses related to the Heavy Civil Group ORP.

In the third quarter, the ORP revenue totaled $99.5 million with a gross loss of ($10.4) million, or a loss of ($4.9) million, net of non-controlling interest ("NCI"), compared to ORP revenue of $102.7 million and gross loss of ($31.5) million, or loss of ($22.6) million, net of NCI for the same period last year. For the nine months ended September 30, 2021, ORP revenue totaled $319.3 million with a gross loss of ($8.6) million, or loss of ($0.4) million, net of NCI compared to ORP revenue of $339.8 million with a gross loss of ($79.9) million, or loss of ($61.5) million, net of NCI for the same period last year.

The decrease in Transportation CAP of $0.3 billion compared to the same period last year primarily reflects a decrease in our Heavy Civil Operating Group CAP of $0.5 billion. This was partially offset by an increase of $0.2 billion in CAP in our vertically-integrated businesses and the Midwest Operating Group.

Water Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

121,968

 

 

$

106,599

 

 

$

15,369

 

 

 

14.4

%

 

$

335,153

 

 

$

317,980

 

 

$

17,173

 

 

 

5.4

%

Gross profit

 

 

9,876

 

 

 

12,557

 

 

 

(2,681

)

 

 

(21.4

)%

 

 

29,005

 

 

 

34,483

 

 

 

(5,478

)

 

 

(15.9

)%

Gross profit as a percent of revenue

 

 

8.1

%

 

 

11.8

%

 

 

 

 

 

 

 

 

 

 

8.7

%

 

 

10.8

%

 

 

 

 

 

 

 

 

                                                                 

 

 

September 30, 2021

 

 

June 30, 2021

 

 

Change - Quarter over Quarter

 

 

September 30, 2020

 

 

Change - Year over Year

 

 

 

 

 

Committed and Awarded Projects

 

$

524,106

 

 

$

531,858

 

 

$

(7,752

)

 

 

(1.5

)%

 

$

346,253

 

 

$

177,853

 

 

 

51.4

%

 

 

 

 

Water revenue in the third quarter increased compared to the same period last year as there was continued strong demand for water supply and maintenance services within the Water & Mineral Services Group. Third quarter gross profit decreased slightly due to work on two previously disclosed challenging projects in the Heavy Civil and California Operating Groups.

Segment CAP increased $177.9 million compared to the same period last year to $524.1 million, primarily reflecting the addition of the $160 million Leon Hurse Dam project within Heavy Civil Operating Group CAP.

Specialty Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

234,300

 

 

$

205,134

 

 

$

29,166

 

 

 

14.2

%

 

$

590,245

 

 

$

513,087

 

 

$

77,158

 

 

 

15.0

%

Gross profit

 

 

30,858

 

 

 

33,292

 

 

 

(2,434

)

 

 

(7.3

)%

 

 

72,552

 

 

 

47,853

 

 

 

24,699

 

 

 

51.6

%

Gross profit as a percent of revenue

 

 

13.2

%

 

 

16.2

%

 

 

 

 

 

 

 

 

 

 

12.3

%

 

 

9.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

June 30, 2021

 

 

Change - Quarter over Quarter

 

 

September 30, 2020

 

 

Change - Year over Year

 

 

 

 

 

Committed and Awarded Projects

 

$

889,580

 

 

$

1,019,318

 

 

$

(129,738

)

 

 

(12.7

)%

 

$

623,452

 

 

$

266,128

 

 

 

42.7

%

 

 

 

 

Specialty revenue in the third quarter increased compared to the same period last year, led by work on a federal site development project in the Heavy Civil Operating Group and continued strength in mineral exploration within the mining industry in the Water and Mineral Services Operating Group. Third quarter gross profit decreased compared to the same period last year primarily due to the continued performance of disputed work on a previously disclosed tunnel project and project mix.

Segment CAP increased $266.1 million compared to the same period last year to $0.9 billion primarily due to a tunnel project in the Midwest Operating Group and mining related civil construction work in the Northwest Operating Group.

Materials Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

2021

 

 

2020

 

 

Change

 

Revenue

 

$

137,675

 

 

$

129,457

 

 

$

8,218

 

 

 

6.3

%

 

$

326,366

 

 

$

275,819

 

 

$

50,547

 

 

 

18.3

%

Gross profit

 

 

20,698

 

 

 

25,826

 

 

 

(5,128

)

 

 

(19.9

)%

 

 

44,756

 

 

 

44,915

 

 

 

(159

)

 

 

(0.4

)%

Gross profit as a percent of revenue

 

 

15.0

%

 

 

19.9

%

 

 

 

 

 

 

 

 

 

 

13.7

%

 

 

16.3

%

 

 

 

 

 

 

 

 

Materials revenue in the third quarter increased compared to the same period last year led by continued strong demand and volumes in the vertically-integrated California and Northwest Operating Groups. Third quarter gross profit decreased compared to the same period last year as oil related costs returned to 2019 levels and the current year pricing did not benefit from low fuel and liquid asphalt costs experienced during the third quarter of 2020.

Outlook

For the 2021 fiscal year, the Company reaffirms revenue guidance of low- to mid-single digit revenue growth for the 2021 fiscal year and amends adjusted EBITDA margin guidance from a range of 5.5% to 7.5 % to a range of 6.0% to 7.0%.

Conference Call

Granite will conduct a conference call today, October 28, 2021, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter ended September 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 November 4, 2021, by calling 1-877-344-7529, replay access code 10159883; 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, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, guidance, 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, demand, strategic plans, shareholder value, outcomes, outlook, guidance, 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)

 

 

September 30, 2021

 

 

December 31, 2020

 

 

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

464,049

 

 

$

436,136

 

 

$

388,024

 

Receivables, net

 

 

684,822

 

 

 

540,812

 

 

 

661,948

 

Contract assets

 

 

204,046

 

 

 

164,939

 

 

 

159,939

 

Inventories

 

 

77,412

 

 

 

82,362

 

 

 

102,111

 

Equity in construction joint ventures

 

 

195,354

 

 

 

188,798

 

 

 

184,980

 

Other current assets

 

 

39,749

 

 

 

42,199

 

 

 

48,300

 

Total current assets

 

 

1,665,432

 

 

 

1,455,246

 

 

 

1,545,302

 

Property and equipment, net

 

 

510,658

 

 

 

527,016

 

 

 

536,256

 

Long-term marketable securities

 

 

10,600

 

 

 

5,200

 

 

 

5,700

 

Investments in affiliates

 

 

72,415

 

 

 

75,287

 

 

 

76,464

 

Goodwill

 

 

116,788

 

 

 

116,777

 

 

 

116,691

 

Right of use assets

 

 

58,226

 

 

 

62,256

 

 

 

68,276

 

Deferred income taxes, net

 

 

41,228

 

 

 

41,839

 

 

 

39,439

 

Other noncurrent assets

 

 

86,409

 

 

 

96,375

 

 

 

100,145

 

Total assets

 

$

2,561,756

 

 

$

2,379,996

 

 

$

2,488,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

8,718

 

 

$

8,278

 

 

$

8,253

 

Accounts payable

 

 

397,152

 

 

 

359,160

 

 

 

385,259

 

Contract liabilities

 

 

195,267

 

 

 

171,321

 

 

 

189,430

 

Accrued expenses and other current liabilities

 

 

499,214

 

 

 

404,497

 

 

 

391,651

 

Total current liabilities

 

 

1,100,351

 

 

 

943,256

 

 

 

974,593

 

Long-term debt

 

 

331,192

 

 

 

330,522

 

 

 

405,644

 

Long-term lease liabilities

 

 

39,908

 

 

 

46,769

 

 

 

51,879

 

Deferred income taxes, net

 

 

3,168

 

 

 

3,155

 

 

 

3,417

 

Other long-term liabilities

 

 

64,783

 

 

 

64,684

 

 

 

63,741

 

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: 45,826,409 shares as of September 30, 2021, 45,668,541 shares as of December 31, 2020 and 45,655,682 shares as of September 30, 2020

 

 

458

 

 

 

457

 

 

 

457

 

Additional paid-in capital

 

 

558,121

 

 

 

555,407

 

 

 

554,303

 

Accumulated other comprehensive loss

 

 

(3,468

)

 

 

(5,035

)

 

 

(6,000

)

Retained earnings

 

 

430,074

 

 

 

424,835

 

 

 

422,846

 

Total Granite Construction Incorporated shareholders’ equity

 

 

985,185

 

 

 

975,664

 

 

 

971,606

 

Non-controlling interests

 

 

37,169

 

 

 

15,946

 

 

 

17,393

 

Total equity

 

 

1,022,354

 

 

 

991,610

 

 

 

988,999

 

Total liabilities and equity

 

$

2,561,756

 

 

$

2,379,996

 

 

$

2,488,273

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

$

568,186

 

 

$

623,999

 

 

$

1,444,450

 

 

$

1,510,001

 

Water

 

 

121,968

 

 

 

106,599

 

 

 

335,153

 

 

 

317,980

 

Specialty

 

 

234,300

 

 

 

205,134

 

 

 

590,245

 

 

 

513,087

 

Materials

 

 

137,675

 

 

 

129,457

 

 

 

326,366

 

 

 

275,819

 

Total revenue

 

 

1,062,129

 

 

 

1,065,189

 

 

 

2,696,214

 

 

 

2,616,887

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transportation

 

 

509,683

 

 

 

569,677

 

 

 

1,290,564

 

 

 

1,399,113

 

Water

 

 

112,092

 

 

 

94,042

 

 

 

306,148

 

 

 

283,497

 

Specialty

 

 

203,442

 

 

 

171,842

 

 

 

517,693

 

 

 

465,234

 

Materials

 

 

116,977

 

 

 

103,631

 

 

 

281,610

 

 

 

230,904

 

Total cost of revenue

 

 

942,194

 

 

 

939,192

 

 

 

2,396,015

 

 

 

2,378,748

 

Gross profit

 

 

119,935

 

 

 

125,997

 

 

 

300,199

 

 

 

238,139

 

Selling, general and administrative expenses

 

 

77,603

 

 

 

72,889

 

 

 

227,400

 

 

 

224,128

 

Non-cash impairment charges

 

 

 

 

 

132,277

 

 

 

 

 

 

156,690

 

Other costs

 

 

3,759

 

 

 

9,689

 

 

 

85,547

 

 

 

28,513

 

Gain on sales of property and equipment, net

 

 

(5,159

)

 

 

(3,057

)

 

 

(39,349

)

 

 

(4,870

)

Operating income (loss)

 

 

43,732

 

 

 

(85,801

)

 

 

26,601

 

 

 

(166,322

)

Other (income) expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(293

)

 

 

(755

)

 

 

(737

)

 

 

(2,813

)

Interest expense

 

 

5,131

 

 

 

6,359

 

 

 

16,019

 

 

 

17,902

 

Equity in income of affiliates, net

 

 

(2,539

)

 

 

(2,353

)

 

 

(10,578

)

 

 

(4,415

)

Other expense (income), net

 

 

106

 

 

 

(1,967

)

 

 

(3,018

)

 

 

92

 

Total other expense, net

 

 

2,405

 

 

 

1,284

 

 

 

1,686

 

 

 

10,766

 

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

 

 

41,327

 

 

 

(87,085

)

 

 

24,915

 

 

 

(177,088

)

Provision for (benefit from) income taxes

 

 

8,904

 

 

 

11,272

 

 

 

2,068

 

 

 

(5,220

)

Net income (loss)

 

 

32,423

 

 

 

(98,357

)

 

 

22,847

 

 

 

(171,868

)

Amount attributable to non-controlling interests

 

 

2,620

 

 

 

7,195

 

 

 

462

 

 

 

18,741

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

35,043

 

 

$

(91,162

)

 

$

23,309

 

 

$

(153,127

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.76

 

 

$

(2.00

)

 

$

0.51

 

 

$

(3.36

)

Diluted

 

$

0.73

 

 

$

(2.00

)

 

$

0.49

 

 

$

(3.36

)

Weighted average shares of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

45,821

 

 

 

45,654

 

 

 

45,773

 

 

 

45,598

 

Diluted

 

 

47,906

 

 

 

45,654

 

 

 

47,522

 

 

 

45,598

 

Dividends per common share

 

$

0.13

 

 

$

0.13

 

 

$

0.39

 

 

$

0.39

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

Nine Months Ended September 30,

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

22,847

 

 

$

(171,868

)

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

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

81,008

 

 

 

84,713

 

Amortization related to the 2.75% Convertible Notes

 

7,038

 

 

 

6,458

 

Gain on sales of property and equipment, net

 

(39,349

)

 

 

(4,870

)

Stock-based compensation

 

5,181

 

 

 

5,203

 

Equity in net (income) loss from unconsolidated joint ventures

 

(8,027

)

 

 

38,529

 

Net income from affiliates

 

(10,578

)

 

 

(4,415

)

Non-cash impairment charges

 

 

 

 

156,690

 

Other non-cash adjustments

 

664

 

 

 

3,067

 

Changes in assets and liabilities

 

1,138

 

 

 

25,159

 

Net cash provided by operating activities

 

59,922

 

 

 

138,666

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

(5,000

)

 

 

(9,996

)

Maturities of marketable securities

 

 

 

 

10,000

 

Proceeds from called marketable securities

 

 

 

 

24,996

 

Purchases of property and equipment

 

(72,964

)

 

 

(74,901

)

Proceeds from sales of property and equipment

 

58,002

 

 

 

12,283

 

Other investing activities, net

 

2,581

 

 

 

(4,283

)

Net cash used in investing activities

 

(17,381

)

 

 

(41,901

)

Financing activities

 

 

 

 

 

 

 

 

Proceeds from debt

 

 

 

 

50,000

 

Debt principal repayments

 

(6,795

)

 

 

(6,321

)

Cash dividends paid

 

(17,846

)

 

 

(17,777

)

Repurchases of common stock

 

(2,603

)

 

 

(753

)

Contributions from non-controlling partners

 

15,701

 

 

 

9,250

 

Distributions to non-controlling partners

 

(3,022

)

 

 

(10,060

)

Other financing activities, net

 

(63

)

 

 

324

 

Net cash (used in) provided by financing activities

 

(14,628

)

 

 

24,663

 

Net increase in cash, cash equivalents and restricted cash

 

27,913

 

 

 

121,428

 

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 each period

 

$

465,561

 

 

$

389,536

 

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 income before provision for (benefit from) income taxes, adjusted provision for income taxes, 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 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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

35,043

 

 

$

(91,162

)

 

$

23,309

 

 

$

(153,127

)

Depreciation, depletion and amortization expense(2)

 

 

28,155

 

 

 

27,444

 

 

 

81,008

 

 

 

84,713

 

Provision for (benefit from) income taxes

 

 

8,904

 

 

 

11,272

 

 

 

2,068

 

 

 

(5,220

)

Interest expense, net of interest income

 

 

4,838

 

 

 

5,604

 

 

 

15,282

 

 

 

15,089

 

EBITDA(1)

 

$

76,940

 

 

$

(46,842

)

 

$

121,667

 

 

$

(58,545

)

EBITDA margin(1)(3)

 

 

7.2

%

 

 

(4.4

)%

 

 

4.5

%

 

 

-2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other costs

 

$

3,759

 

 

$

9,689

 

 

$

85,547

 

 

$

28,513

 

Non-cash impairment charges

 

 

 

 

 

132,277

 

 

 

 

 

 

156,690

 

Gain on sale of property

 

 

 

 

 

 

 

 

(29,688

)

 

 

 

Adjusted EBITDA(1)

 

$

80,699

 

 

$

95,124

 

 

$

177,526

 

 

$

126,658

 

Adjusted EBITDA margin(1)(3)

 

 

7.6

%

 

 

8.9

%

 

 

6.6

%

 

 

4.8

%

(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 $1.1 billion for both the three months ended September 30, 2021 and 2020, respectively, and $2.7 billion and $2.6 billion for the nine months ended September 30, 2021 and 2020, respectively.

GRANITE CONSTRUCTION INCORPORATED

Adjusted Net Income Reconciliation

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

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

 

$

41,327

 

 

$

(87,085

)

 

$

24,915

 

 

$

(177,088

)

Other costs

 

 

3,759

 

 

 

9,689

 

 

 

85,547

 

 

 

28,513

 

Non-cash impairment charges

 

 

 

 

 

132,277

 

 

 

 

 

 

156,690

 

Transaction costs

 

 

5,435

 

 

 

5,730

 

 

 

16,201

 

 

 

17,518

 

Amortization of debt discount

 

 

1,772

 

 

 

1,661

 

 

 

5,240

 

 

 

4,910

 

Gain on sale of property

 

 

 

 

 

 

 

 

(29,688

)

 

 

 

Adjusted income before provision for (benefit from) income taxes

 

$

52,293

 

 

$

62,272

 

 

$

102,215

 

 

$

30,543

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

$

8,904

 

 

$

11,272

 

 

$

2,068

 

 

$

(5,220

)

Tax effect of adjusting items (1)

 

 

2,851

 

 

 

4,441

 

 

 

20,098

 

 

 

13,245

 

Adjusted provision for income taxes

 

$

11,755

 

 

$

15,713

 

 

$

22,166

 

 

$

8,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

35,043

 

 

$

(91,162

)

 

$

23,309

 

 

$

(153,127

)

After-tax adjusting items

 

 

8,115

 

 

 

144,916

 

 

 

57,202

 

 

 

194,386

 

Adjusted net income attributable to Granite Construction Incorporated

 

$

43,158

 

 

$

53,754

 

 

$

80,511

 

 

$

41,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of common stock

 

 

47,906

 

 

 

45,654

 

 

 

47,522

 

 

 

45,598

 

Less: 2.75% Convertible Notes dilutive effect (2)

 

 

(1,522

)

 

 

 

 

 

(1,226

)

 

 

 

Adjusted diluted weighted average shares of common stock

 

 

46,384

 

 

 

45,654

 

 

 

46,296

 

 

 

45,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

0.73

 

 

$

(2.00

)

 

$

0.49

 

 

$

(3.36

)

After-tax adjusting items per share attributable to common shareholders

 

 

0.20

 

 

 

3.16

 

 

 

1.25

 

 

 

4.25

 

Adjusted diluted net income per share attributable to common shareholders

 

$

0.93

 

 

$

1.16

 

 

$

1.74

 

 

$

0.89

 

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

(2) 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 nine months ended September 30, 2021, our average share price was above the conversion price resulting in accounting dilution under U.S. GAAP of 1.5 million and 1.2 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 loss per share for the three and nine months ended September 30, 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