Granite Reports Fourth Quarter and Fiscal 2012 Results

  Granite Reports Fourth Quarter and Fiscal 2012 Results

  *Revenues for the year increased 4 percent to $2.1 billion
  *Net income of $45.3 million in 2012 compared with $51.2 million in 2011
  *Large Project Construction gross margins improved to 17.2 percent
  *Balance Sheet remains strong with $433.4 million in cash and marketable
    securities
  *Total contract backlog at December 31, 2012 of $1.7 billion, which does
    not include approximately $1.0 billion related to Granite’s portions of
    the Tappan Zee Bridge project in New York and IH-35E project in Texas
  *Acquisition of Kenny Construction Company completed on December 31, 2012

Business Wire

WATSONVILLE, Calif. -- February 28, 2013

Granite Construction Incorporated (NYSE: GVA) today reported a net income of
$45.3 million for 2012, compared to $51.2 million the prior year. Diluted
earnings per share (EPS) for the year was $1.15 compared to $1.31 in 2011.

For the fourth quarter of 2012, Granite reported a net income of $18.0
million, compared to $18.8 million for the fourth quarter of 2011. Diluted EPS
for the quarter ended December 31, 2012 was $0.46 compared to $0.48 in the
prior year period.

“Our fourth quarter results highlight the strength of our Large Project
portfolio as well as the challenging market conditions our Construction and
Construction Materials businesses continued to face in the West,” said James
H. Roberts, President and CEO of Granite Construction Incorporated. “We remain
focused on our strategic growth plan and are pleased with the progress we have
made to diversify our business portfolio, grow the Large Projects segment and
optimize our overall asset base.”

Fiscal Year 2012 Highlights:

Total Company

  *Revenues for the year were $2.1 billion, compared with $2.0 billion
    recorded in 2011.
  *Gross profit margin was 11.3 percent compared with 12.3 percent in 2011
    due to lower gross profit in both the Construction and Construction
    Materials segments partially offset by an increase in margins in the Large
    Project segment.
  *SG&A expenses for the year were $185.1 million, compared with $162.3
    million last year. The increase reflects $5.4 million associated with
    large project bid costs, $4.4 million associated with the acquisition of
    Kenny Construction and $2.0 million related to earnings in the Company’s
    deferred compensation plan.
  *Gain on sales of property and equipment was $27.4 million in 2012,
    compared with $15.8 million in 2011. The increase is associated with an
    $18.0 million gain on the sale of a quarry investment.
  *Operating income was $80.8 million in 2012, compared with $99.3 million in
    2011.
  *Total other income (expense) for the year was $0.2 million, compared with
    $(9.8) million in 2011. Other income for 2012 included a $7.4 million gain
    related to the sale of gold, a by-product of aggregate production,
    partially offset by a $2.8 million non-cash impairment loss on an
    investment in a solar-related business.
  *Net income attributable to non-controlling interests was $14.6 million,
    compared with $14.9 million the prior period.
  *Total contract backlog at December 31, 2012, was $1.7 billion compared
    with $2.0 billion a year ago. 2012 backlog includes $357 million
    attributable to the Kenny acquisition and does not include Granite’s
    approximate $733 million portion of the Tappan Zee Bridge project in New
    York or the IH-35E highway reconstruction project in Texas of which
    Granite’s portion is approximately $297 million.

Construction

  *Construction revenues for the year were $1.0 billion, in line with 2011.
  *Gross profit margin was 7.9 percent compared with 11.9 percent a year ago
    reflecting challenging market conditions, as well as increased costs to
    complete certain projects due to lower productivity than anticipated.

Large Project Construction

  *Large Project Construction revenue for the year increased 19 percent to
    $863.2 million due largely to the progress on projects awarded in late
    2010 and early 2011.
  *Gross profit margin was 17.2 percent compared with 14.4 percent in 2011
    reflecting successful execution on several large projects across the
    country offset by a downward forecast adjustment on a project in
    Washington.

Construction Materials

  *Construction Materials revenue was $230.6 million compared with $220.6
    million last year.
  *Gross profit in 2012 was $7.6 million, compared with $16.6 million in
    2011. The decline in gross profit is primarily attributable to slow
    economic conditions at certain California locations.

Fourth Quarter 2012 Highlights

Total Company

  *Revenue for the quarter totaled $504.8 million compared with $539.5
    million for the fourth quarter of 2011.
  *Gross profit margin for the fourth quarter of 2012 was 11.3 percent
    compared with 14.7 percent in 2011. The decrease is primarily due to lower
    gross profit in both the Construction and Construction Materials segments
    partially offset by an increase in margins in the Large Project segment.
  *Selling, general and administrative expenses for the fourth quarter
    increased $14.8 million to $57.3 million reflecting $4.7 million in costs
    associated with the pursuit of large projects and $4.4 million in
    acquisition-related costs.
  *Operating income was $21.7 million, compared with $40.1million in the
    prior year.
  *Net income attributable to noncontrolling interests was $0.4 million
    compared with $6.0 million in 2011.

Construction

  *Construction revenue for the fourth quarter 2012 was $235.3 million,
    compared with $259.2 million for the fourth quarter of 2011.
  *Gross profit margin was 7.7 percent, compared with 14.3 percent a year ago
    reflecting competitive market conditions, wet weather in the West in
    November and December, and increased costs to complete certain projects
    due to lower productivity than anticipated.

Large Project Construction

  *Large Project Construction revenue was $214.6 million, compared with
    $211.6 million.
  *Gross profit margin for the quarter was 18.7 percent, compared with 16.4
    percent for the same period last year. The increase reflects successful
    execution on several large projects across the country, partially offset
    by a downward forecast adjustment on a project Washington.

Construction Materials

  *Construction Materials revenue for the quarter was $54.9 million, compared
    with $55.5 million in the fourth quarter of 2011.
  *Gross loss on the sale of construction materials was $1.5 million,
    compared with gross profit of $5.9 million in the prior period. The fourth
    quarter of 2012 was impacted by slow economic conditions at certain
    California locations.

Outlook

“Overall, I am pleased with the direction of our company, led by the
implementation of our well-developed strategic plan. We are well prepared to
capture the benefits of our acquisition of Kenny and intend to continue to
pursue our growth plan through geographic and end market diversification in
2013,” said Roberts.

“While we are optimistic that we will see some benefit from the residential
building market towards the end of the year, we expect that our Construction
and Construction Materials businesses will continue to face challenging market
conditions throughout most of 2013. Our outlook for Large Projects, however,
remains very positive. We anticipate strong backlog growth in our Large
Projects segment in light of the strong pipeline of opportunities across the
country. We have several large projects in various stages of completion in
2013 and will be starting work on the Tappan Zee and IH-35E projects, both of
which should recognize profit in 2014.”

Conference Call

Granite will conduct a conference call today, February 28, 2013 at 8 a.m.
Pacific time/11 a.m. Eastern time to discuss the results of the quarter and
year ended December 31, 2012. Access to a live audio webcast is available at
www.graniteconstruction.com. The live conference call may be accessed by
calling (877) 643-7158. The conference ID for the live call is 99198804. The
call will be recorded and will be available for replay approximately two hours
after the live audio webcast through March 7, 2013 by calling (855) 859-2056.
The conference ID for the replay is 99198804.

About Granite

Granite is one of the nation’s leading infrastructure contractors and is
member of the S&P 400 Midcap Index, the FTSE KLD 400 Social Index and the
Russell 2000 Index. Through its wholly owned subsidiaries, Granite is one of
the nation’s largest diversified heavy civil contractors and construction
materials producers serving public- and private-sector clients nationwide. In
addition, Granite has one of the oldest and most robust ethics and compliance
programs in the industry. The Company has been recognized by Ethisphere
Institute as one of the World’s Most Ethical Companies for three straight
years. For more information, please visit graniteconstruction.com.

Forward-looking Statements

Any statements contained in this news release that are not based on historical
facts, including statements regarding future events, occurrences,
circumstances, activities, performance, outcomes and results, constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are identified
by words such as “future,” “outlook,” “assumes,” “believes,” “expects,”
“estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,”
“should,” “could,” “would,” “continue,” and the negatives thereof or other
comparable terminology or by the context in which they are made. These
forward-looking statements are estimates reflecting the best judgment of
senior management and reflect our current expectations regarding future
events, occurrences, circumstances, activities, performance, outcomes and
results. These expectations may or may not be realized. Some of these
expectations may be based on beliefs, assumptions or estimates that may prove
to be incorrect. In addition, our business and operations involve numerous
risks and uncertainties, many of which are beyond our control, which could
result in our expectations not being realized or otherwise materially affect
our business, financial condition, results of operations, cash flows and
liquidity. Such risks and uncertainties include, but are not limited to, those
described in greater detail in our filings with the 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)
                                                               
December 31,                                        2012         2011
ASSETS                                                          
Current assets
Cash and cash equivalents                            $ 321,990     $ 256,990
Short-term marketable securities                       56,088        70,408
Receivables, net                                       325,529       251,838
Costs and estimated earnings in excess of billings     34,116        37,703
Inventories                                            59,785        50,975
Real estate held for development and sale              50,223        67,037
Deferred income taxes                                  36,687        38,571
Equity in construction joint ventures                  105,805       101,029
Other current assets                                 31,834      35,171
Total current assets                                   1,022,057     909,722
Property and equipment, net                            481,478       447,140
Long-term marketable securities                        55,342        79,250
Investments in affiliates                              30,799        31,071
Goodwill                                               55,419        9,900
Other noncurrent assets                              84,392      70,716
Total assets                                        $ 1,729,487  $ 1,547,799
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt                 $ 8,353       $ 9,102
Current maturities of non-recourse debt                10,707        23,071
Accounts payable                                       202,541       158,660
Billings in excess of costs and estimated earnings     139,692       90,845
Accrued expenses and other current liabilities       169,979     166,790
Total current liabilities                              531,272       448,468
Long-term debt                                         270,148       208,501
Long-term non-recourse debt                            922           9,912
Other long-term liabilities                            47,124        49,221
Deferred income taxes                                  8,163         4,034
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             387           387
38,730,665 shares as of December 31, 2012 and
38,682,771 shares as of December 31, 2011
Additional paid-in capital                             117,422       111,514
Retained earnings                                    712,144     687,296
Total Granite Construction Incorporated                829,953       799,197
shareholders’ equity
Noncontrolling interests                             41,905      28,466
Total equity                                         871,858     827,663
Total liabilities and equity                        $ 1,729,487  $ 1,547,799

                                                         
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
                                                         
                     Three Months Ended          Years Ended
                                              
                     December 31,                December 31,
                   2012         2011         2012           2011
Revenue                                                       
Construction         $ 235,303     $ 259,221     $ 984,106       $ 1,043,614
Large project          214,572       211,565       863,217         725,043
construction
Construction           54,888        55,500        230,642         220,583
materials
Real estate          18         13,262     5,072        20,291    
Total revenue        504,781    539,548    2,083,037    2,009,531 
Cost of revenue
Construction           217,155       222,197       906,143         919,108
Large project          174,456       176,970       714,799         620,935
construction
Construction           56,349        49,613        223,070         203,942
materials
Real estate          13         11,642     4,266        17,583    
Total cost of        447,973    460,422    1,848,278    1,761,568 
revenue
Gross profit           56,808        79,126        234,759         247,963
Selling, general
and administrative     57,298        42,536        185,099         162,302
expenses
Restructuring
(gains) charges,       (1,200  )     670           (3,728    )     2,181
net
Gain on sales of
property and         20,954     4,217      27,447       15,789    
equipment
Operating income       21,664        40,137        80,835          99,269
Other income
(expense)
Interest income        486           583           2,626           2,878
Interest expense       (2,033  )     (2,709  )     (10,603   )     (10,362   )
Equity in income       1,608         750           1,988           2,193
of affiliates
Other income         2,316      (2,594  )   6,183        (4,545    )
(expense), net
Total other income   2,377      (3,970  )   194          (9,836    )
(expense)
Income before
provision for          24,041        36,167        81,029          89,433
income taxes
Provision for        5,667      11,375     21,109       23,348    
income taxes
Net income             18,374        24,792        59,920          66,085
Amount
attributable to      (387    )   (6,038  )   (14,637   )   (14,924   )
noncontrolling
interests
Net income
attributable to
Granite             $ 17,987    $ 18,754    $ 45,283      $ 51,161    
Construction
Incorporated
                                                                 
Net income per
share attributable
to common
shareholders:
Basic                $ 0.46        $ 0.48        $ 1.17          $ 1.32
Diluted              $ 0.46        $ 0.48        $ 1.15          $ 1.31
Weighted average
shares of common
stock:
Basic                  38,534        38,191        38,447          38,117
Diluted              39,207     38,607     39,076       38,473    


GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
                                                              
Years Ended December 31,                          2012          2011
Operating activities                                           
Net income                                         $ 59,920       $ 66,085
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-cash restructuring, net                          (3,093   )     1,678
Other non-cash impairment charges                    3,238          5,067
Depreciation, depletion and amortization             56,101         60,546
Gain on sales of property and equipment              (27,447  )     (15,789  )
Change in deferred income tax                        6,013          8,566
Stock-based compensation                             11,475         12,155
Changes in assets and liabilities, net of the      (14,417  )   (45,963  )
effects of acquisition
Net cash provided by operating activities          91,790      92,345   
Investing activities
Purchases of marketable securities                   (124,596 )     (155,122 )
Maturities of marketable securities                  90,100         110,875
Proceeds from sale of marketable securities          75,000         33,268
Additions to property and equipment                  (37,622  )     (45,035  )
Proceeds from sales of property and equipment        34,392         27,959
Acquisition of business, net of cash acquired        (79,640  )     —
Other investing activities, net                    (188     )   327      
Net cash used in investing activities              (42,554  )   (27,728  )
Financing activities
Proceeds from long-term debt                         70,495         2,122
Long-term debt principal payments                    (11,751  )     (16,907  )
Cash dividends paid                                  (20,117  )     (20,117  )
Purchase of common stock                             (4,853   )     (4,029   )
Distributions to noncontrolling partners, net        (15,988  )     (21,062  )
Other financing activities, net                    (2,022   )   344      
Net cash provided by (used in) financing           15,764      (59,649  )
activities
Increase in cash and cash equivalents                65,000         4,968
Cash and cash equivalents at beginning of period   256,990     252,022  
Cash and cash equivalents at end of period        $ 321,990    $ 256,990  


GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
                                                                                                  
         Three Months Ended December 31,                          Years Ended December 31,
                         Large          Construction   Real                         Large          Construction   Real
        Construction  Project       Materials     Estate      Construction   Project       Materials     Estate
                         Construction                                               Construction
                                                                                                            
2012
Revenue   $  235,303     $  214,572     $  54,888      $ 18         $ 984,106       $  863,217     $  230,642     $ 5,072
Gross
profit       18,148         40,116         (1,461 )      5            77,963           148,418        7,572         806
(loss)
Gross
profit
(loss)
as a         7.7     %      18.7    %      (2.7   )%     27.8   %     7.9       %      17.2    %      3.3     %     15.9   %
percent
of
revenue
                                                                                                                  
2011
Revenue   $  259,221     $  211,565     $  55,500      $ 13,262     $ 1,043,614     $  725,043     $  220,583     $ 20,291
Gross        37,024         34,595         5,887         1,620        124,506          104,108        16,641        2,708
profit
Gross
profit
as a       14.3    %    16.4    %    10.6   %    12.2   %   11.9      %    14.4    %    7.5     %   13.3   %
percent
of
revenue


GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
                                                            
Contract Backlog by Segment  December 31, 2012      December 31, 2011
Construction                 $ 629,898    36.9  %  $ 513,624    25.4  %
Large project construction    1,077,417  63.1  %   1,508,830  74.6  %
Total                        $ 1,707,315  100.0 %  $ 2,022,454  100.0 %

Contact:

Granite Construction Incorporated
Jacque Fourchy, 831-761-4741
 
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