Granite Reports Second-Quarter 2013 Financial Results

  Granite Reports Second-Quarter 2013 Financial Results

  *Record company backlog of $2.8 billion; Large Project Construction
    contract backlog increased 59% year over year to a record $2.0 billion,
    and Construction contract backlog increased 16% year over year to $807.7
    million
  *Second quarter revenues increased to $550.2 million, compared with $539.6
    million in the second quarter of 2012; gross profit margin of 9.3 percent
    down slightly from last year
  *Revenue and profit performance driven primarily by project timing in Large
    Project Construction segment

Business Wire

WATSONVILLE, Calif. -- August 1, 2013

Granite Construction Incorporated (NYSE: GVA) today reported net income
attributable to common shareholders of $2.7 million, or $0.07 per diluted
share, for the second quarter of 2013 compared with $1.9 million, or $0.05 per
diluted share, for the second quarter of 2012.

“Granite continues to focus on driving results through execution of our
strategic initiatives both to grow and to diversify the business,” said James
H. Roberts, Granite president and chief executive officer.

“The Large Projects business continues to perform as expected. Our record
backlog includes the start-up of several new projects in the second half of
2013, which will recognize profit in 2014,” Roberts said. “While our
vertically integrated business still faces market-driven, competitive
headwinds, we are benefitting from synergies with our acquisition of Kenny.”

Second-quarter 2013 Financial Results

Total Company

  *Revenues for the quarter totaled $550.2 million, compared with $539.6
    million in 2012.
  *Gross profit in the second quarter of 2013 was $51.2 million, compared
    with $51.9 million last year, with corresponding gross profit margins of
    9.3 percent and 9.6 percent. Gross profit and gross profit margin in the
    quarter were driven by the competitive environment in the Construction
    segment and project timing in the Large Project Construction segment.
  *Selling, general and administrative expenses for the second quarter were
    $46.5 million, compared with $40.8 million in 2012. Kenny Construction
    Company (Kenny) accounted for nearly all of the increase.
  *Operating income for the quarter was $8.0 million compared with $14.1
    million in the prior year.
  *Total contract backlog at June 30, 2013, was $2.8 billion compared with
    $2.0 billion at June 30, 2012. Backlog booked during the second quarter
    included $426.2 million associated with the IH-35E project in Texas and
    the I-440 project in North Carolina.

Construction

  *Construction revenues in the second quarter were $308.6 million compared
    with $245.1 million a year ago. Revenues from Kenny and certain Western
    markets outweighed weakness in California in the second quarter.
  *Gross profit margin was 8.2 percent compared with 7.3 percent a year ago.
    Construction profit performance improved despite continued margin pressure
    from an intensely competitive environment in key markets in the West.

Large Project Construction

  *Large Project Construction revenues in the second quarter were $181.4
    million compared with $228.8 million in the same period last year,
    reflecting the timing of new projects.
  *Gross profit margin for the quarter of 12.2 percent was in line with 12.3
    percent last year.

Construction Materials

  *Construction Materials revenue in the second quarter totaled $60.2 million
    compared with $63.3million for the same period last year.
  *Gross profit margin was 6.6 percent compared with 7.9 percent a year ago,
    driven by ongoing weakness in certain geographic locations.

Guidance

The Company reaffirms the 2013 guidance provided in the first quarter 2013
earnings press release with two adjustments: Large Project Construction
segment revenues are expected to be in the range of $850 million to $950
million, and cash flow from operations is expected to be $70 million to $100
million for the year.

Conference Call

Granite will conduct a conference call today, August 1, 2013 at 8 a.m. Pacific
Time/11 a.m. Eastern Time to discuss the results of the quarter ended June 30,
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 20529008. The call will be recorded and available for replay approximately
two hours after the live audio webcast through August 8, 2013 by calling (855)
859-2056. The conference ID for the replay is also 20529008.

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)
                                                             
                                     June 30,     December 31,  June 30,
                                    2013         2012          2012
ASSETS
Current assets
Cash and cash equivalents             $ 247,833     $  321,990     $ 237,951
Short-term marketable securities        21,271         56,088        43,260
Receivables, net                        336,418        325,529       272,562
Costs and estimated earnings in         63,341         34,116        69,688
excess of billings
Inventories                             68,905         59,785        67,503
Real estate held for development        50,697         50,223        57,367
and sale
Deferred income taxes                   36,687         36,687        38,571
Equity in construction joint            148,727        105,805       107,821
ventures
Other current assets                  35,651       31,834      20,436
Total current assets                    1,009,530      1,022,057     915,159
Property and equipment, net             471,265        481,478       439,664
Long-term marketable securities         55,225         55,342        45,800
Investments in affiliates               31,421         30,799        28,521
Goodwill                                53,598         55,419        9,900
Other noncurrent assets               80,365       84,392      68,603
Total assets                         $ 1,701,404  $  1,729,487  $ 1,507,647
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term       $ 20          $  8,353       $ 9,102
debt
Current maturities of non-recourse      2,147          10,707        16,328
debt
Accounts payable                        188,124        202,541       186,290
Billings in excess of costs and         144,044        139,692       75,629
estimated earnings
Accrued expenses and other current    200,521      169,979     155,322
liabilities
Total current liabilities               534,856        531,272       442,671
Long-term debt                          270,148        270,148       200,168
Long-term non-recourse debt             7,354          922           4,641
Other long-term liabilities             46,817         47,124        47,393
Deferred income taxes                   8,055          8,163         3,644
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 38,852,463
shares as of June 30, 2013,             389            387           387
38,730,665 shares as of December
31, 2012 and 38,684,540 shares as
of June 30, 2012
Additional paid-in capital              121,368        117,422       112,815
Retained earnings                     682,610      712,144     667,278
Total Granite Construction              804,367        829,953       780,480
Incorporated shareholders’ equity
Noncontrolling interests              29,807       41,905      28,650
Total equity                          834,174      871,858     809,130
Total liabilities and equity         $ 1,701,404  $  1,729,487  $ 1,507,647
                                                                     

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
                                                         
                    Three Months Ended June         Six Months Ended June 30,
                    30,
                 2013          2012           2013         2012
Revenue                                                      
Construction        $  308,602     $ 245,113         $ 485,720     $ 363,059
Large Project          181,371       228,799           353,086       392,727
Construction
Construction           60,185        63,349            89,935        88,972
Materials
Real Estate         4          2,354        125        5,017   
Total revenue       550,162    539,615      928,866    849,775 
Cost of revenue
Construction           283,448       227,152           447,367       336,518
Large Project          159,283       200,560           308,278       342,239
Construction
Construction           56,231        58,349            91,955        89,922
Materials
Real Estate         3          1,638        13         4,244   
Total cost of       498,965    487,699      847,613    772,923 
revenue
Gross profit           51,197        51,916            81,253        76,852
Selling,
general and            46,454        40,806            104,112       85,882
administrative
expenses
Gain on                —             —                 497           1,888
restructuring
Gain on sales
of property and     3,306      2,954        4,394      4,871   
equipment
Operating              8,049         14,064            (17,968 )     (2,271  )
income (loss)
Other income
(expense)
Interest income        380           611               508           1,655
Interest               (3,700  )     (2,827  )         (7,345  )     (6,009  )
expense
Equity in
income (loss)          698           (484    )         275           (1,101  )
of affiliates
Other (expense)     (495    )   (5,018  )     608        1,853   
income, net
Total other         (3,117  )   (7,718  )     (5,954  )   (3,602  )
expense
Income (loss)
before
provision for          4,932         6,346             (23,922 )     (5,873  )
(benefit from)
income taxes
Provision for
(benefit from)      1,766      1,859        (7,261  )   (1,673  )
income taxes
Net income             3,166         4,487             (16,661 )     (4,200  )
(loss)
Amount
attributable to     (448    )   (2,538  )     (2,603  )   (5,624  )
noncontrolling
interests
Net income
(loss)
attributable to   $  2,718     $ 1,949       $ (19,264 )  $ (9,824  )
Granite
Construction
Incorporated
                                                                   
Net income
(loss) per
share
attributable to
common
shareholders:
Basic               $  0.07        $ 0.05            $ (0.50   )   $ (0.26   )
Diluted             $  0.07        $ 0.05            $ (0.50   )   $ (0.26   )
Weighted
average shares
of common
stock:
Basic                  38,829        38,471            38,720        38,368
Diluted             39,769     39,151       38,720     38,368  
                                                                             

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
                                                               
Six Months Ended June 30,                           2013         2012
Operating activities                                            
Net loss                                             $ (16,661 )   $ (4,200  )
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation, depletion and amortization               33,988        29,573
Non-cash restructuring, net                            (497    )     (1,888  )
Other non-cash impairment charges                      -             2,752
Gain on sales of property and equipment                (4,394  )     (4,871  )
Stock-based compensation                               8,101         6,492
Changes in assets and liabilities                    (72,185 )   (62,482 )
Net cash used in operating activities                (51,648 )   (34,624 )
Investing activities
Purchases of marketable securities                     (14,975 )     (39,945 )
Maturities of marketable securities                    43,000        65,100
Proceeds from sale of marketable securities            5,000         35,000
Additions to property and equipment                    (19,422 )     (19,855 )
Proceeds from sales of property and equipment          8,481         6,078
Payment of Kenny post-closing adjustments              (4,621  )     -
Other investing activities, net                      163        (978    )
Net cash provided by investing activities            17,626     45,400  
Financing activities
Long-term debt principal payments                      (10,594 )     (10,834 )
Cash dividends paid                                    (10,078 )     (10,050 )
Purchase of common stock                               (5,022  )     (4,054  )
Contributions from noncontrolling partners             6,001         -
Distributions from noncontrolling partners             (21,142 )     (5,440  )
Other financing activities, net                      700        563     
Net cash used in financing activities                (40,135 )   (29,815 )
Decrease in cash and cash equivalents                  (74,157 )     (19,039 )
Cash and cash equivalents at beginning of period     321,990    256,990 
Cash and cash equivalents at end of period          $ 247,833   $ 237,951 
                                                                             

GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
                                                                                                
          Three Months Ended June 30,                              Six Months Ended June 30,
                         Large          Construction   Real                       Large          Construction   Real
         Construction  Project       Materials     Estate      Construction  Project       Materials     Estate
                         Construction                                             Construction
                                                                                                         
2013
Revenue   $  308,602     $  181,371     $  60,185      $ 4         $  485,720     $  353,086     $  89,935      $ 125
Gross
profit       25,154         22,088         3,954         1            38,353         44,808         (2,020 )      112
(loss)
Gross
profit
(loss)
as a         8.2     %      12.2    %      6.6     %     25.0  %      7.9     %      12.7    %      (2.2   )%     89.6  %
percent
of
revenue
                                                                                                                
2012
Revenue   $  245,113     $  228,799     $  63,349      $ 2,354     $  363,059     $  392,727     $  88,972      $ 5,017
Gross
profit       17,961         28,239         5,000         716          26,541         50,488         (950   )      773
(loss)
Gross
profit
(loss)
as a         7.3     %      12.3    %      7.9     %     30.4  %      7.3     %      12.9    %      (1.1   )%     15.4  %
percent
of
revenue
                                                                                         
                                                                                                                        

GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
                                                                 
Contract
Backlog by    June 30, 2013          March 31, 2013         June 30, 2012
Segment
                                                                      
Construction   $ 807,686     28.9  %   $ 740,259     30.8  %   $ 697,535     35.8  %
Large
Project        1,989,156  71.1  %   1,660,056  69.2  %   1,252,828  64.2  %
Construction
                                                                             
Total         $ 2,796,842  100.0 %  $ 2,400,315  100.0 %  $ 1,950,363  100.0 %

Contact:

Granite Construction Incorporated
Ron Botoff, 831-728-7532
 
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