Granite Construction Incorporated (NYSE:GVA) today reported a net loss of $11.2 million for the quarter ended March 31, 2016, compared to net loss of $8.6 million in the first quarter of 2015. Losses per diluted share in the quarter were $(0.28), compared to $(0.22) in the prior-year period.
“Our first quarter performance reflects the balance of a strong start in the Construction segment with seasonal impacts to our Construction Materials segment,” said James H. Roberts, President and Chief Executive Officer of Granite Construction Incorporated.
“Wet weather slowed progress in the West early in the year, but overall we had an excellent quarter building backlog across the company,” Roberts continued. “We recognize and thank our employees for their commitment to do business the right way every day. This is reflected both in being named to the World’s Most Ethical Companies® list for the seventh year in a row, as well as our recent recognition on Forbes' list of America’s Best Mid-Size Employers.
“Record backlog and the eighth consecutive quarter of year-over-year margin expansion in the Construction segment provide a strong base for growth in 2016. At the same time, we recognize that our Large Project segment performance has significant room for improvement and is a critical focus area.” Roberts said.
First Quarter 2016 Results
Total Company
- Revenue for the first quarter of 2016 increased 4.6 percent to $439.5 million compared with $420.2 million last year.
- Gross profit in the first quarter increased 0.8 percent to $39.2 million compared with $38.9 million last year. Gross profit margin in the quarter was 8.9 percent compared with 9.3 percent in 2015.
- First quarter 2016 project claim recognition totaled $2.8 million, down from $9.7 million in the first quarter of 2015. Last year's results included a catch-up due to an accounting policy change on project claim recognition.
- First quarter 2016 selling, general and administrative (SG&A) expenses increased 10.0 percent to $56.1 million, with the increase primarily related to compensation expenses.
Construction
- Construction revenue in the first quarter of 2016 increased 11.1 percent to $209.5 million, compared with $188.5 million last year.
- Gross profit in the first quarter increased 30.8 percent to $26.9 million compared to $20.6 million last year. Gross profit margin of 12.9 percent, up from 10.9 percent a year ago, was driven by particular strength in the West.
Large Project Construction
- Large Project Construction revenue in the first quarter of 2016 increased 2.7 percent to $195.4 million, compared with $190.3 million last year.
- Gross profit in the first quarter decreased 23.0 percent to $13.5 million compared to $17.5 million last year. Gross profit margin was 6.9 percent compared with 9.2 percent in 2015, with quarterly performance impacted by project execution and owner-related issues.
Construction Materials
- Construction Materials revenue in the first quarter of 2016 decreased 16.7 percent to $34.5 million, compared with $41.4 million last year.
- The business reported a gross loss of $1.2 million compared to gross profit of $0.8 million last year. Gross profit margin declined about 540 basis points from 1.9 percent last year. Overall segment operational performance was solid across geographies, despite cold, wet weather that impacted internal and external demand. In contrast, last year's mild first quarter weather contributed to a faster start.
Outlook and Guidance
“Solid backlog trends and a relentless focus on execution continue to provide opportunities for top- and bottom-line growth,” said Roberts. “The current economic environment bodes well for our planned growth in 2016 and additional opportunities in 2017.
“With strong committed volumes across geographies in our Construction Materials segment, this portion of our business is poised to progress solidly again in 2016. In general, our vertically integrated business and Kenny remain on track to drive our growth in 2016, while Large Projects teams across the country continue to focus on improving project execution to deliver financial results,” Roberts said.
The Company’s current expectations for 2016 remain:
- Mid-single digit consolidated revenue growth
- Consolidated EBITDA margin2 of 6% to 8%
Conference Call
Granite will conduct a conference call today, April 29, 2016, at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended March 31, 2016. The Company invites investors to listen to a live audio webcast on its Investor Relations website, http://investor.graniteconstruction.com. An archive of the webcast will be available on the website approximately one hour after the call. The live call also is available by calling 1-877-328-5503; international callers may dial 1-412-317-5472. A replay will be available after the live call through May 6, 2016 by calling 1-877-344-7529, replay access code 10084779; international callers may dial 1-412-317-0088.
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. Granite specializes in complex infrastructure projects, including transportation, industrial and federal contracting, and is a proven leader in alternative procurement project delivery. Granite is an award-winning firm in safety, quality and environmental stewardship, and has been honored as one of the World’s Most Ethical Companies by Ethisphere Institute for seven consecutive years.
Granite is listed on the New York Stock Exchange and is part of the S&P MidCap 400 Index, the MSCI KLD 400 Social Index and the Russell 2000 Index. For more information, visit graniteconstruction.com.
1 The Ethisphere® Institute is an independent center of research, best practices and thought leadership. Ethisphere evaluates and benchmarks compliance and governance programs and honors superior achievement through its World’s Most Ethical Companies® recognition program.
2 Please refer to the description and non-GAAP reconciliation in the attached tables.
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, | ||||||||||
| 2016 | 2015 | 2015 | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 198,298 | $ | 252,836 | $ | 239,403 | ||||||
| Short-term marketable securities | 43,001 | 25,043 | 19,282 | |||||||||
| Receivables, net | 307,483 | 340,822 | 271,328 | |||||||||
| Costs and estimated earnings in excess of billings | 76,972 | 59,070 | 56,907 | |||||||||
| Inventories | 59,444 | 55,553 | 64,636 | |||||||||
| Equity in construction joint ventures | 240,480 | 224,689 | 197,570 | |||||||||
| Other current assets | 37,100 | 26,985 | 38,102 | |||||||||
| Total current assets | 962,778 | 984,998 | 887,228 | |||||||||
| Property and equipment, net | 398,750 | 385,129 | 399,910 | |||||||||
| Long-term marketable securities | 72,653 | 80,652 | 80,522 | |||||||||
| Investments in affiliates | 34,619 | 33,182 | 32,031 | |||||||||
| Goodwill | 53,799 | 53,799 | 53,799 | |||||||||
| Deferred income taxes, net | 5,119 | 4,329 | 32,616 | |||||||||
| Other noncurrent assets | 84,512 | 84,789 | 76,237 | |||||||||
| Total assets | $ | 1,612,230 | $ | 1,626,878 | $ | 1,562,343 | ||||||
| LIABILITIES AND EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Current maturities of long-term debt | $ | 14,795 | $ | 14,800 | $ | 22 | ||||||
| Accounts payable | 139,215 | 157,571 | 121,013 | |||||||||
| Billings in excess of costs and estimated earnings | 89,188 | 92,515 | 95,328 | |||||||||
| Accrued expenses and other current liabilities | 226,276 | 200,935 | 231,690 | |||||||||
| Total current liabilities | 469,474 | 465,821 | 448,053 | |||||||||
| Long-term debt | 243,099 | 244,323 | 269,535 | |||||||||
| Other long-term liabilities | 43,913 | 46,613 | 42,058 | |||||||||
| 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: 39,563,620 shares as of March 31, 2016, 39,412,877 shares as of December 31, 2015 and 39,342,647 shares as of March 31, 2015 | 396 | 394 | 393 | |||||||||
| Additional paid-in capital | 145,663 | 140,912 | 134,894 | |||||||||
| Accumulated other comprehensive loss | (1,569 | ) | (1,500 | ) | (932 | ) | ||||||
| Retained earnings | 683,037 | 699,431 | 645,931 | |||||||||
| Total Granite Construction Incorporated shareholders’ equity | 827,527 | 839,237 | 780,286 | |||||||||
| Non-controlling interests | 28,217 | 30,884 | 22,411 | |||||||||
| Total equity | 855,744 | 870,121 | 802,697 | |||||||||
| Total liabilities and equity | $ | 1,612,230 | $ | 1,626,878 | $ | 1,562,343 | ||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Unaudited - in thousands, except per share data) | ||||||||
| Three Months Ended March 31, | 2016 | 2015 | ||||||
| Revenue | ||||||||
| Construction | $ | 209,487 | $ | 188,520 | ||||
| Large Project Construction | 195,449 | 190,305 | ||||||
| Construction Materials | 34,516 | 41,424 | ||||||
| Total revenue | 439,452 | 420,249 | ||||||
| Cost of revenue | ||||||||
| Construction | 182,554 | 167,925 | ||||||
| Large Project Construction | 181,944 | 172,769 | ||||||
| Construction Materials | 35,709 | 40,626 | ||||||
| Total cost of revenue | 400,207 | 381,320 | ||||||
| Gross profit | 39,245 | 38,929 | ||||||
| Selling, general and administrative expenses | 56,133 | 51,023 | ||||||
| Gain on sales of property and equipment | (600 | ) | (811 | ) | ||||
| Operating loss | (16,288 | ) | (11,283 | ) | ||||
| Other (income) expense | ||||||||
| Interest income | (836 | ) | (442 | ) | ||||
| Interest expense | 3,049 | 3,496 | ||||||
| Equity in (income) loss of affiliates | (1,442 | ) | 63 | |||||
| Other income, net | (1,372 | ) | (1,284 | ) | ||||
| Total other (income) expense | (601 | ) | 1,833 | |||||
| Loss before benefit from income taxes | (15,687 | ) | (13,116 | ) | ||||
| Benefit from income taxes | (5,177 | ) | (4,506 | ) | ||||
| Net loss | (10,510 | ) | (8,610 | ) | ||||
| Amount attributable to non-controlling interests | (678 | ) | 50 | |||||
| Net loss attributable to Granite Construction Incorporated | $ | (11,188 | ) | $ | (8,560 | ) | ||
| Net loss per share attributable to common shareholders: | ||||||||
| Basic | $ | (0.28 | ) | $ | (0.22 | ) | ||
| Diluted | $ | (0.28 | ) | $ | (0.22 | ) | ||
| Weighted average shares of common stock: | ||||||||
| Basic | 39,433 | 39,215 | ||||||
| Diluted | 39,433 | 39,215 | ||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited - in thousands) | ||||||||
| Three Months Ended March 31, | 2016 | 2015 | ||||||
| Operating activities | ||||||||
| Net loss | $ | (10,510 | ) | $ | (8,610 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation, depletion and amortization | 13,736 | 15,627 | ||||||
| Gain on sales of property and equipment | (600 | ) | (811 | ) | ||||
| Stock-based compensation | 5,985 | 3,163 | ||||||
| Equity in net income from unconsolidated joint ventures | (8,538 | ) | (11,271 | ) | ||||
| Changes in assets and liabilities | (10,507 | ) | (5,016 | ) | ||||
| Net cash used in operating activities | (10,434 | ) | (6,918 | ) | ||||
| Investing activities | ||||||||
| Purchases of marketable securities | (19,948 | ) | (9,988 | ) | ||||
| Maturities of marketable securities | 5,000 | 10,000 | ||||||
| Proceeds from called marketable securities | 5,000 | 5,000 | ||||||
| Purchases of property and equipment | (24,565 | ) | (7,607 | ) | ||||
| Proceeds from sales of property and equipment | 772 | 1,089 | ||||||
| Other investing activities, net | (274 | ) | 383 | |||||
| Net cash used in investing activities | (34,015 | ) | (1,123 | ) | ||||
| Financing activities | ||||||||
| Long-term debt principal payments | (1,250 | ) | (306 | ) | ||||
| Cash dividends paid | (5,124 | ) | (5,094 | ) | ||||
| Repurchase of common stock | (4,459 | ) | (3,191 | ) | ||||
| Other financing activities, net | 744 | 74 | ||||||
| Net cash used in financing activities | (10,089 | ) | (8,517 | ) | ||||
| Decrease in cash and cash equivalents | (54,538 | ) | (16,558 | ) | ||||
| Cash and cash equivalents at beginning of period | 252,836 | 255,961 | ||||||
| Cash and cash equivalents at end of period | $ | 198,298 | $ | 239,403 | ||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||
| Business Segment Information | ||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||
| Large Project | Construction | |||||||||||
Three Months Ended March 31, | Construction | Construction | Materials | |||||||||
| 2016 | ||||||||||||
| Revenue | $ | 209,487 | $ | 195,449 | $ | 34,516 | ||||||
| Gross profit (loss) | 26,933 | 13,505 | (1,193 | ) | ||||||||
| Gross profit (loss) as a percent of revenue | 12.9 | % | 6.9 | % | (3.5 | )% | ||||||
| 2015 | ||||||||||||
| Revenue | $ | 188,520 | $ | 190,305 | $ | 41,424 | ||||||
| Gross profit | 20,595 | 17,536 | 798 | |||||||||
| Gross profit as a percent of revenue | 10.9 | % | 9.2 | % | 1.9 | % | ||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||
| Contract Backlog by Segment | ||||||||||||||||||
| (Unaudited - dollars in thousands) | ||||||||||||||||||
| March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||||||||
| Construction | $ | 999,980 | 29.5 | % | $ | 860,657 | 29.6 | % | $ | 749,261 | 25.5 | % | ||||||
| Large Project Construction | 2,386,019 | 70.5 | % | 2,047,781 | 70.4 | % | 2,187,888 | 74.5 | % | |||||||||
| Total | $ | 3,385,999 | 100.0 | % | $ | 2,908,438 | 100.0 | % | $ | 2,937,149 | 100.0 | % | ||||||
| GRANITE CONSTRUCTION INCORPORATED | ||||||||
| EBITDA(1) | ||||||||
| (Unaudited - dollars in thousands) | ||||||||
| Three Months Ended March 31, | 2016 | 2015 | ||||||
| Net loss attributable to Granite Construction Incorporated | $ | (11,188 | ) | $ | (8,560 | ) | ||
| Depreciation, depletion and amortization expense(2) | 13,736 | 15,627 | ||||||
| Benefit from income taxes | (5,177 | ) | (4,506 | ) | ||||
| Interest expense, net of interest income | 2,213 | 3,054 | ||||||
| EBITDA | $ | (416 | ) | $ | 5,615 | |||
| Consolidated EBITDA Margin(3) | (0.1 | )% | 1.3 | % | ||||
| Note: | ||||||||
| (1)We define EBITDA as GAAP net income (loss) attributable to Granite Construction Incorporated, adjusted for interest, taxes, depreciation, depletion and amortization. We believe this non-GAAP financial measure and the associated margin are useful in evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in reviewing the Company. 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 GAAP. 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. | ||||||||
| (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 divided by consolidated revenue. Consolidated revenue was $439,452 and $420,249 for three months ended March 31, 2016 and 2015, respectively. | ||||||||
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Contacts:
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