Granite Reports Full Year and Fourth Quarter 2010 Results
SG&A expenses for the full year decreased 16% to $191.6 million
Total company backlog increased $497.2 million to $1.9 billion
Financial position remains strong with $395.7 million in cash, cash
equivalents and marketable securities
WATSONVILLE, Calif.--(BUSINESS WIRE)--
Granite Construction Incorporated (NYSE:GVA) today reported a net loss
of $59.0 million for the full year 2010, compared with net income of
$73.5 million for the full year 2009. Loss per share for the year was
$(1.56), compared with earnings per diluted share (EPS) of $1.90 in 2009.
For the fourth quarter of 2010, Granite reported a net loss of $50.0
million, compared with net income of $16.0 million for the fourth
quarter of 2009. Loss per share for the quarter ended December 31, 2010
was $(1.32), compared with EPS of $0.41 earned in the prior year period.
Included in the fourth quarter of 2010 were restructuring charges of
$107.3 million associated with the Company's Enterprise Improvement
Plan. The portion of restructuring charges attributable to
noncontrolling interests was approximately $20.0 million.
"During the fourth quarter, we made solid progress towards reducing our
cost structure and strengthening the business for the long-term," said
James H. Roberts, Granite President and Chief Executive Officer. "In
addition to the necessary but difficult decision to reduce our
workforce, we are focusing on optimizing our core business and have
committed to divesting of our real estate investment business over the
next three years."
Roberts continued, "We are undoubtedly operating in one of the most
difficult economic environments our company has faced in decades.
Despite these challenges, we grew backlog in both of our key segments,
maintained a solid balance sheet, and continued to position the Company
to recapture momentum in 2011."
Full Year 2010 Financial Results
Total Company
Revenue totaled $1.8 billion, compared with $2.0 billion in 2009.
Gross profit margin was 10 percent compared with 18 percent in 2009
due primarily to lower margins in our beginning backlog of work,
compared with a year ago. Also contributing to margin pressure was
$156.7 million in revenue from projects that had not yet reached the
profit recognition threshold, compared with $68.8 million a year ago.
Operating loss for the year was $109.3 million, compared with
operating income of $129.2 million in the prior year and includes
restructuring charges of $109.3 million.
SG&A expenses were $191.6 million, compared with $228.0 million for
the same period last year driven by reductions in salaries and related
expenses, incentive compensation, and discretionary spending.
Amount attributable to noncontrolling interests was a loss of $3.5
million, compared with income of $26.7 million in 2009 due to $20.0
million associated with the impairment charges taken in the fourth
quarter 2010.
Total contract backlog at December 31, 2010 was $1.9 billion, compared
with $1.4 billion at December 31, 2009.
Construction
Construction revenue for the full year totaled $943.2 million,
compared with $1.2 billion for the same period in 2009 due to a
continued weak demand in the private-sector and increased competition
for public-sector work.
Gross profit margin for the full year was 10 percent, compared with 18
percent for the same period in 2009, driven by lower volumes and
increased competition.
Large Project Construction
Large Project Construction revenue for the full year totaled $584.4
million, compared with $603.5 million for the same period last year.
Gross profit margin for the full year decreased to 12 percent,
compared with 20 percent for the same period last year as several new
projects generated revenue, but did not reach the profit recognition
threshold in 2010.
Construction Materials
Construction Materials revenue for the full year totaled $222.1
million compared with $205.9 million for the same period last year.
Gross profit margin on the sale of construction materials was 5
percent in 2010, compared with 10 percent in 2009. The decrease is
primarily attributable to an increase in fixed costs associated with
two new materials processing facilities that came online in late 2009.
Fourth Quarter 2010 Financial Results
Total Company
Revenues for the quarter totaled $417.2 million, compared with $434.7
million in 2009.
Gross profit margin decreased to 11 percent, down from 21 percent in
2009.
Operating loss for the quarter was $98.5 million, compared with
operating income of $35.6 million in the prior year. The fourth
quarter 2010 includes restructuring charges of $107.3 million related
to workforce reductions as well as real estate and fixed asset
impairment charges.
Selling, general and administrative expenses decreased $16.7 million
quarter over quarter to $39.8 million.
Amount attributable to noncontrolling interests was a loss of $15.4
million, compared with income of $11.0 million in 2009 due to $20.0
million associated with the impairment charges taken in the fourth
quarter 2010.
Construction
Construction revenues for the quarter totaled $214.1 million, compared
with $239.6 million for the same period in 2009.
Gross profit margin for the fourth quarter was 12 percent compared
with 20 percent for the same period last year. The decrease was
affected by overall lower demand and lower margins due to the
competitive environment.
Large Project Construction
Large Project Construction revenues for the quarter totaled $154.8
million, compared with $147.5 million for the same period in 2009.
Gross profit margin for the fourth quarter was 11 percent, compared
with 26 percent for the same period last year, reflecting an increase
in revenue on projects that have yet to reach the profit recognition
threshold.
Construction Materials
Construction Materials revenue for the quarter totaled $46.7 million,
compared with $47.3 million for the same period in 2009.
Gross profit on the sale of construction materials was 5 percent,
compared with 8 percent for the same period in 2009.
Outlook
"The actions we are taking to reduce our cost structure are expected to
lead to a substantial improvement in our bottom line results in 2011. In
addition, we anticipate a positive impact to earnings from some large
projects reaching the profit recognition threshold. While the pipeline
of large project bidding opportunities remains full, our goal is to
build high quality backlog that will provide the best return for our
shareholders. The large project construction market offers a great deal
of near-term growth potential for our business and we are excited about
the opportunities that this segment of our business will provide.
"Our Construction segment is starting 2011 with a healthy backlog of
work; however, we anticipate the competitive environment will remain
very tough. Additionally, we expect the demand for our services and
construction materials from the private-sector in the west will remain
under pressure for the balance of the year.
"Funding for transportation infrastructure will continue to be a focus
for us this year as we advocate for a multi-year highway bill that will
provide the industry with much needed visibility. Despite these
macro-economic challenges, we will continue to move forward with our
strategy to operate our business as efficiently and effectively as
possible," said Roberts.
Conference Call
Granite will conduct a conference call tomorrow, February 24, 2011, at 8
a.m. Pacific time/11 a.m. Eastern time to discuss the results of the
fofdfsdfsdfasdfurth quarter and year ended December 31, 2010. Access to
a live audio webcast is available at www.graniteconstruction.com/investor-relations.
The live conference call may be accessed by calling (877) 693-6483,
or (706) 758-5304 for international listeners. The conference ID for the
call is 41332342. The call will be recorded and will be available for
replay from approximately two hours after the live audio webcast through
March 10, 2011, by calling (800) 642-1687 or (706) 645-9291. The
conference ID for the recording is 41332342.
About Granite
Granite Construction Incorporated is a member of the S&P 400 Midcap
Index, the FTSE KLD 400 Social Index and the Russell 2000 Index. Granite
Construction Company, a wholly owned subsidiary, is one of the nation's
largest diversified heavy civil contractors and construction materials
producers. Granite Construction Company serves public- and
private-sector clients through its offices and subsidiaries nationwide.
For more information about Granite, please visit its website at www.graniteconstruction.com.
Forward-looking Statements
This news release contains statements that are not based on historical
facts and which may be forward-looking in nature. Under the Private
Securities Litigation Reform Act of 1995, a "safe harbor" may be
provided to Granite for certain of these forward-looking statements.
Words such as outlook, believes, expects, appears, may, will, should,
anticipates and the negatives thereof or comparable terminology are
intended to identify these forward-looking statements. These
forward-looking statements are estimates reflecting the best judgment of
Granite's senior management and are based on its current expectations
and projections concerning future events, many of which are outside of
Granite's control and involve a number of risks and uncertainties that
could cause actual results to differ materially from those suggested by
the forward-looking statements. Factors that might cause or contribute
to such differences include, but are not limited to, those risks
described in Granite's Annual Report under "Item 1A. Risk Factors."
Except as required by law, Granite undertakes no obligation to revise or
update any forward-looking statements for any reason. As a result, the
reader is cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release.
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share and per share data)
December 31,
December 31,
2010
2009
ASSETS
Current assets
Cash and cash equivalents
$
252,022
$
338,956
Short-term marketable securities
109,447
42,448
Receivables, net
243,986
280,252
Costs and estimated earnings in excess of billings
10,519
10,619
Inventories
51,018
45,800
Real estate held for development and sale
75,716
139,449
Deferred income taxes
53,877
31,034
Equity in construction joint ventures
74,716
67,693
Other current assets
42,555
50,467
Total current assets
913,856
1,006,718
Property and equipment, net
473,607
520,778
Long-term marketable securities
34,259
76,937
Investments in affiliates
31,410
24,644
Other noncurrent assets
82,401
80,498
Total assets
$
1,535,533
$
1,709,575
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt
$
8,359
$
15,017
Current maturities of non-recourse debt
29,760
43,961
Accounts payable
129,700
131,251
Billings in excess of costs and estimated earnings
120,185
156,041
Accrued expenses and other current liabilities
150,773
159,843
Total current liabilities
438,777
506,113
Long-term debt
217,014
225,203
Long-term non-recourse debt
25,337
19,485
Other long-term liabilities
47,996
48,998
Deferred income taxes
10,774
27,220
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 in
2010 and 2009; issued and outstanding 38,745,542 shares as of
December 31, 2010 and 38,635,021 shares as of December 31,
2009
387
386
Additional paid-in capital
104,232
94,633
Retained earnings
656,412
735,632
Total Granite Construction Incorporated shareholders' equity
761,031
830,651
Noncontrolling interests
34,604
51,905
Total equity
795,635
882,556
Total liabilities and equity
$
1,535,533
$
1,709,575
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
Three Months Ended
Years Ended
December 31,
December 31,
2010
2009
2010
2009
Revenue
Construction
$
214,127
$
239,633
$
943,245
$
1,151,743
Large project construction
154,781
147,516
584,406
603,517
Construction materials
46,677
47,257
222,058
205,945
Real estate
1,643
342
13,256
2,274
Total revenue
417,228
434,748
1,762,965
1,963,479
Cost of revenue
Construction
187,831
190,758
847,536
942,256
Large project construction
137,108
108,812
517,099
483,417
Construction materials
44,151
43,637
210,040
184,705
Real estate
1,921
320
10,506
3,592
Total cost of revenue
371,011
343,527
1,585,181
1,613,970
Gross profit
46,217
91,221
177,784
349,509
Selling, general and administrative expenses
39,766
56,422
191,593
228,046
Restructuring charges
107,297
9,453
109,279
9,453
Gain on sales of property and equipment
2,331
10,291
13,748
17,169
Operating (loss) income
(98,515
)
35,637
(109,340
)
129,179
Other income (expense)
Interest income
833
1,135
4,980
5,049
Interest expense
(2,446
)
(5,170
)
(9,740
)
(15,756
)
Equity in income of affiliates
933
3,336
756
7,696
Other income, net
1,114
4,405
6,968
12,683
Total other income
434
3,706
2,964
9,672
(Loss) income before (benefit from) provision for income taxes
(98,081
)
39,343
(106,376
)
138,851
(Benefit from) provision for income taxes
(32,695
)
12,334
(43,928
)
38,650
Net (loss) income
(65,386
)
27,009
(62,448
)
100,201
Amount attributable to noncontrolling interests
15,367
(10,976
)
3,465
(26,701
)
Net (loss) income attributable to Granite Construction Incorporated
$
(50,019
)
$
16,033
$
(58,983
)
$
73,500
Net (loss) income per share attributable to common shareholders:
Basic (1)
$
(1.32
)
$
0.41
$
(1.56
)
$
1.91
Diluted (1)
$
(1.32
)
$
0.41
$
(1.56
)
$
1.90
Weighted average shares of common stock:
Basic
37,875
37,608
37,820
37,566
Diluted
37,875
37,723
37,820
37,683
Note:
(1) Computed using the two-class method, except when in a net loss
position
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Years Ended December 31,
2010
2009
Operating activities
Net (loss) income
$
(62,448
)
$
100,201
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Restructuring impairment charges
93,862
1,449
Other impairment charges
821
4,110
Inventory written down
2,846
3,097
Depreciation, depletion and amortization
74,435
80,195
Provision for (recovery of) doubtful accounts
368
(4,404
)
Gain on sales of property and equipment
(13,748
)
(17,169
)
Change in deferred income taxes
(39,289
)
21,107
Stock-based compensation
13,040
10,765
Loss (gain) from marketable securities
680
(485
)
Gain on company owned life insurance
(3,321
)
(2,551
)
Equity in income of affiliates
(756
)
(7,696
)
Changes in assets and liabilities, net of the effects of
consolidations
(37,172
)
(124,318
)
Net cash provided by operating activities
29,318
64,301
Investing activities
Purchases of marketable securities
(121,626
)
(99,011
)
Maturities of marketable securities
74,000
36,970
Proceeds from sale of marketable securities
15,000
7,966
Purchase of company owned life insurance
(8,195
)
(8,000
)
Proceeds from company owned life insurance
2,078
-
Additions to property and equipment
(37,004
)
(87,645
)
Proceeds from sales of property and equipment
21,148
23,020
Purchase of private preferred stock
(6,400
)
-
Contributions to affiliates, net
(1,658
)
(4,969
)
Issuance of notes receivable
(1,313
)
(11,314
)
Collection of notes receivable
3,126
13,104
Other investing activities
409
-
Net cash used in investing activities
(60,435
)
(129,879
)
Financing activities
Proceeds from long-term debt
1,918
10,750
Long-term debt principal payments
(19,829
)
(18,856
)
Cash dividends paid
(20,150
)
(20,057
)
Purchase of common stock
(3,641
)
(3,431
)
Contributions from noncontrolling partners
7,321
420
Distributions to noncontrolling partners
(21,498
)
(26,019
)
Other financing activities, net
62
884
Net cash used in financing activities
(55,817
)
(56,309
)
Decrease in cash and cash equivalents
(86,934
)
(121,887
)
Cash and cash equivalents at beginning of year
338,956
460,843
Cash and cash equivalents at end of year
$
252,022
$
338,956
GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - in thousands)
Three Months Ended December 31,
Years Ended December 31,
Construction
Large Project Construction
Construction Materials
Real Estate
Construction
Large Project Construction
Construction Materials
Real Estate
2010
Revenue
$
214,127
$
154,781
$
46,677
$
1,643
$
943,245
$
584,406
$
222,058
$
13,256
Gross profit (loss)
$
26,296
$
17,673
$
2,526
$
(278
)
$
95,709
$
67,307
$
12,018
$
2,750
Gross profit (loss) as a percent of revenue
12.3
%
11.4
%
5.4
%
-16.9
%
10.1
%
11.5
%
5.4
%
20.7
%
2009
Revenue
$
239,633
$
147,516
$
47,257
$
342
$
1,151,743
$
603,517
$
205,945
$
2,274
Gross profit (loss)
$
48,875
$
38,704
$
3,620
$
22
$
209,487
$
120,100
$
21,240
$
(1,318
)
Gross profit (loss) as a percent of revenue
20.4
%
26.2
%
7.7
%
6.4
%
18.2
%
19.9
%
10.3
%
-58.0
%
GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - in thousands)
December 31, 2010
December 31, 2009
Construction
$
465,271
24.5
%
$
359,359
25.6
%
Large Project Construction
1,433,899
75.5
%
1,042,629
74.4
%
Total
$
1,899,170
100.0
%
$
1,401,988
100.0
%
Granite Construction Incorporated Jacque Fourchy, 831-761-4741
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