Granite Reports First-Quarter 2013 Financial Results *First quarter revenues increased to $378.7 million, compared with $310.2 million in the first quarter of 2012, including $63.7 million associated with the acquisition of Kenny Construction Company *Operating segment gross margins in line with last year *Balance sheet remains strong with $363.6 million in cash and marketable securities *Backlog totaled $2.4 billion compared with $1.7 billion at year-end Business Wire WATSONVILLE, Calif. -- May 09, 2013 Granite Construction Incorporated (NYSE: GVA) today reported a net loss of $22.0 million, or $0.57 per diluted share, for the first quarter of 2013 compared with a net loss of $11.8 million, or $0.31 per diluted share, for the first quarter of 2012. “As expected, we had strong backlog growth in the quarter driven by significant large project awards,” said James H. Roberts, Granite president and chief executive officer. “We remain very encouraged by the quality of our backlog and the opportunities to grow the company in 2013 and beyond. We are slated to bid approximately $13 billion of Large Project work over the next 12 months, of which Granite’s share would be approximately $6 billion. “Our integration of Kenny is progressing well, meeting our expectations, and reinforcing the continued execution of our strategic plan. We are working successfully to expand our presence into targeted end-markets such as power delivery, water and wastewater infrastructure and tunneling, all of which have attractive long-term fundamentals.” First-quarter 2013 Financial Results Total Company *Revenues for the quarter totaled $378.7 million, compared with $310.2 million in 2012. Revenues included $63.7 million from Kenny Construction Company (“Kenny”), which Granite acquired on December 31, 2012. *Gross profit margin was 7.9 percent compared with 8.0 percent in 2012. *Selling, general and administrative expenses (“SG&A”) for the first quarter were $57.7 million, compared with $45.1 million in 2012. Kenny accounted for a significant portion of the increase. *Operating loss for the quarter was $26.0 million compared with $16.3 million in the prior year. *Total contract backlog at March 31, 2013, was $2.4 billion compared with $1.7 billion at December 31, 2012 and $2.1 billion at March 31, 2012. Backlog at March 31, 2013 included $733.0 million associated with our portion of the Tappan Zee Bridge project in New York. Construction *Construction revenues in the first quarter were $177.1 million compared with $117.9 million a year ago. The increase reflects $53.3 million associated with Kenny. *Gross profit margin was 7.5 percent as compared with 7.3 percent a year ago. Included in the first quarter of 2013 was a $1.6 million amortization charge for intangible assets (acquired backlog) associated with the Kenny acquisition. There were no significant changes in project profitability from revisions in estimates during the first quarter of 2013. Large Project Construction *Large Project Construction revenues for the quarter were $171.7 million compared with $163.9 million at March 31, 2012. *Gross profit margin for the quarter was 13.2 percent compared with 13.6 percent for the same period last year. Changes in project profitability from revisions in estimates during the first quarter of 2013 resulted in a net increase of $9.2 million. Construction Materials *Construction Materials revenue for the quarter totaled $29.8 million compared with $25.6million for the same period last year. *Gross loss on the sale of construction materials was $6.0 million, essentially unchanged from a year ago. Outlook and Guidance “In the short-term, certain markets of our vertically integrated business continue to face challenges as capacity exceeds demand for both our construction services and construction materials. While we will not see a turnaround overnight, the fundamentals of our business remain extremely solid and our future is very bright,” Roberts said. “As our 2013 guidance reflects, we anticipate growing the top line of our business by at least double digits. We also anticipate that Granite will continue to generate strong cash flow, allowing us to further implement our strategic long-term plan. Our solid Large Project portfolio has created significant opportunities to continue to grow this part of the business. In addition to leveraging Kenny’s existing capabilities and presence in the power, underground and tunnel markets, we are confident that a recovery in the private construction market will help drive significant long-term operational and financial performance.” The Company’s guidance for 2013 is as follows: Construction segment revenues are expected to total $1.25 billion to $1.4 billion, with a corresponding gross profit margin of 8 percent to 10 percent. Large Project Construction segment revenues are expected to be in the range of $850 million to $1.05 billion, with a corresponding gross profit margin of 12 percent to 14 percent. Construction Materials revenues are expected to be $200 million to $230 million, with a corresponding gross profit margin of 6 percent to 9 percent. Selling, general and administrative expenses are expected to be $210 million to $220 million for the year. Gains on sales of property and equipment are expected to be in the range of $10 million to $20 million, and net income attributable to non-controlling interest in joint ventures for the total company is expected to be $15 million to $20 million. Granite expects the tax rate for 2013 to be in the range of 27 percent to 31 percent, with planned capital expenditures of $40 million to $60 million. Cash flow from operations is expected to total between $80 million and $120 million for the year. Conference Call Granite will conduct a conference call today, May 9, 2013 at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended March 31, 2013. Access to a live audio webcast is available at http://investor.graniteconstruction.com/index.cfm. The live conference call may be accessed by calling (877) 643-7158. The conference ID for the live call is 46628022. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through May 16, 2013 by calling (855) 859-2056. The conference ID for the replay is also 46628022. About Granite Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYSE: GVA) is one of the nation’s largest infrastructure contractors and construction materials producers. Incorporated in 1922, Granite serves public- and private-sector clients on projects both small and large. Granite’s project teams represent some of the best in the industry serving owners in the transportation, power, federal, tunneling, underground, and industrial/mining and water resources markets. In 2013, the Company was recognized by the Ethisphere Institute as one of the World’s Most Ethical Companies for the fourth year in a row. For more information please visit www.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 CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited - in thousands, except share and per share data) March 31, December 31, March 31, 2013 2012 2012 ASSETS Current assets Cash and cash equivalents $ 260,773 $ 321,990 $ 226,226 Short-term marketable 44,841 56,088 70,444 securities Receivables, net 260,231 325,529 208,707 Costs and estimated earnings 48,428 34,116 49,962 in excess of billings Inventories 66,291 59,785 67,782 Real estate held for 50,303 50,223 58,363 development and sale Deferred income taxes 36,687 36,687 38,571 Equity in construction joint 171,265 105,805 91,951 ventures Other current assets 37,401 31,834 34,882 Total current assets 976,220 1,022,057 846,888 Property and equipment, net 477,666 481,478 442,132 Long-term marketable 57,958 55,342 70,114 securities Investments in affiliates 30,742 30,799 30,972 Goodwill 53,593 55,419 9,900 Other noncurrent assets 82,531 84,392 69,949 Total assets $ 1,678,710 $ 1,729,487 $ 1,469,955 LIABILITIES AND EQUITY Current liabilities Current maturities of $ 8,353 $ 8,353 $ 9,102 long-term debt Current maturities of 4,132 10,707 19,765 non-recourse debt Accounts payable 169,940 202,541 129,480 Billings in excess of costs 124,609 139,692 87,370 and estimated earnings Accrued expenses and other 188,685 169,979 148,196 current liabilities Total current liabilities 495,719 531,272 393,913 Long-term debt 270,148 270,148 208,501 Long-term non-recourse debt 7,628 922 1,371 Other long-term liabilities 49,231 47,124 50,011 Deferred income taxes 8,055 8,163 3,393 Equity Preferred stock, $0.01 par value, authorized 3,000,000 — — — shares, none outstanding Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding 38,810,255 shares as of March 31, 2013, 388 387 386 38,730,665 shares as of December 31, 2012 and 38,621,370 shares as of March 31, 2012 Additional paid-in capital 118,265 117,422 110,432 Retained earnings 685,023 712,144 670,462 Total Granite Construction Incorporated shareholders’ 803,676 829,953 781,280 equity Noncontrolling interests 44,253 41,905 31,486 Total equity 847,929 871,858 812,766 Total liabilities and equity $ 1,678,710 $ 1,729,487 $ 1,469,955 GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited - in thousands, except per share data) Three Months Ended March 31, 2013 2012 Revenue Construction $ 177,119 $ 117,946 Large Project Construction 171,714 163,928 Construction Materials 29,750 25,623 Real Estate 121 2,663 Total revenue 378,704 310,160 Cost of revenue Construction 163,918 109,366 Large Project Construction 148,993 141,679 Construction Materials 35,724 31,573 Real Estate 11 2,606 Total cost of revenue 348,646 285,224 Gross profit 30,058 24,936 Selling, general and administrative expenses 57,659 45,090 Gain on restructuring 498 1,902 Gain on sales of property and equipment 1,087 1,917 Operating loss (26,016 ) (16,335 ) Other (expense) income Interest income 129 1,044 Interest expense (3,646 ) (3,182 ) Equity in loss of affiliates (423 ) (617 ) Other income, net 1,103 6,871 Total other (expense) income (2,837 ) 4,116 Loss before benefit from income taxes (28,853 ) (12,219 ) Benefit from income taxes (9,027 ) (3,532 ) Net loss (19,826 ) (8,687 ) Amount attributable to noncontrolling (2,156 ) (3,086 ) interests Net loss attributable to Granite Construction $ (21,982 ) $ (11,773 ) Incorporated Net loss per share attributable to common shareholders: Basic $ (0.57 ) $ (0.31 ) Diluted $ (0.57 ) $ (0.31 ) Weighted average shares of common stock: Basic 38,610 38,265 Diluted 38,610 38,265 GRANITE CONSTRUCTION INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands) Three Months Ended March 31, 2013 2012 Operating activities Net loss $ (19,826 ) $ (8,687 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation, depletion and amortization 15,970 14,961 Gain on sales of property and equipment (1,087 ) (1,917 ) Stock-based compensation 5,386 4,196 Changes in assets and liabilities (55,096 ) (31,426 ) Net cash used in operating activities (54,653 ) (22,873 ) Investing activities Purchases of marketable securities (14,975 ) (24,987 ) Maturities of marketable securities 20,000 15,000 Proceeds from sale of marketable securities 5,000 20,000 Additions to property and equipment (9,956 ) (9,225 ) Proceeds from sales of property and equipment 3,417 2,883 Other investing activities, net (57 ) (294 ) Net cash provided by investing activities 3,429 3,377 Financing activities Long-term debt principal payments — (2,500 ) Cash dividends paid (5,045 ) (5,021 ) Purchase of common stock (4,907 ) (3,837 ) Other financing activities, net (41 ) 90 Net cash used in financing activities (9,993 ) (11,268 ) Decrease in cash and cash equivalents (61,217 ) (30,764 ) Cash and cash equivalents at beginning of 321,990 256,990 period Cash and cash equivalents at end of period $ 260,773 $ 226,226 GRANITE CONSTRUCTION INCORPORATED Business Segment Information (Unaudited - dollars in thousands) Three Months Ended March 31, Large Project Construction Construction Construction Materials Real Estate 2013 Revenue $ 177,119 $ 171,714 $ 29,750 $ 121 Gross profit 13,201 22,721 (5,974 ) 110 (loss) Gross profit as 7.5 % 13.2 % (20.1 )% 90.9 % a percent of revenue 2012 Revenue $ 117,946 $ 163,928 $ 25,623 $ 2,663 Gross profit 8,580 22,249 (5,950 ) 57 (loss) Gross profit as 7.3 % 13.6 % (23.2 )% 2.1 % a percent of revenue GRANITE CONSTRUCTION INCORPORATED Contract Backlog by Segment (Unaudited - dollars in thousands) Contract Backlog by March 31, 2013 December 31, 2012 March 31, 2012 Segment Construction $ 740,259 30.8 % $ 629,898 36.9 % $ 622,240 29.9 % Large Project 1,660,056 69.2 % 1,077,417 63.1 % 1,460,674 70.1 % Construction Total $ 2,400,315 100.0 % $ 1,707,315 100.0 % $ 2,082,914 100.0 % Contact: Granite Construction Incorporated Jacque Fourchy, 831-761-4741
Granite Reports First-Quarter 2013 Financial Results
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