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; |
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 | % | |||||||||||||