Delaware (State or Other Jurisdiction of Incorporation) | 1-12911 (Commission File Number) | 77-0239383 (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description |
99.1 |
GRANITE CONSTRUCTION INCORPORATED | ||||
By: | /s/ Laurel J. Krzeminski | |||
Laurel J. Krzeminski | ||||
Executive Vice President and Chief Financial Officer | ||||
• | Revenues $801.3 million – up 20.2 percent year-over year |
• | Gross profit $100.7 million – up 23.9 percent year-over-year |
• | Diluted earnings per share $0.811 – up 103 percent year-over-year |
• | Revenues $2.99 billion – up 18.9 percent year-over year |
• | Gross profit $314.9 million – up 4.5 percent year-over-year |
• | SG&A expenses at 7.5 percent of revenue – down 125 basis points year-over-year |
• | Diluted earnings per share $1.711 – up 20.5 percent year-over-year |
• | Backlog increased 6.7 percent year-over-year to a year-end record $3.72 billion |
• | Revenues for 2017 were $2.99 billion, up 18.9 percent from 2016. |
• | Gross profit increased 4.5 percent year-over-year to $314.9 million, driven by improved performance in the Construction and Construction Materials segments. |
• | Gross profit margin was 10.5 percent compared with 12.0 percent in 2016. |
• | Selling, general and administrative expenses (SG&A) were $222.8 million, up 1.6 percent from $219.3 million last year. Reflecting our ongoing commitment to cost management, the modest increase was attributable primarily to personnel-related costs. |
• | Backlog ended at a year-end record $3.72 billion, up 6.7 percent from $3.48 billion in 2016. |
• | 2017 net income was $69.1 million, up 21.0 percent from the prior year. |
• | 2017 EBITDA2 was $170.2 million, with resulting EBITDA margin of 5.7 percent. |
• | Improved working capital and operating cash flow trends helped strengthen the balance sheet, as we finished the year with $366.5 million in cash and marketable securities, as of December 31, 2017. |
• | Construction revenue in 2017 was $1.66 billion, up 21.9 percent from $1.37 billion in 2016, driven by improved performance in certain Western markets, supported by steady private, non-residential construction demand. |
• | Gross profit increased to $247.0 million in 2017, up 18.1 percent from the prior year, with resulting gross profit margin in line with our mid-teens expectations at 14.8 percent, down about 50 basis points year-over-year. |
• | Construction backlog ended the year at $897.0 million, down 13.0 percent year-over-year, as mild late-2017 weather allowed us to work later in the year. Bidding opportunities and bookings also declined in the quarter, particularly in California. Early in 2018, we have begun to see an increase in lettings and related spending, as expected. |
• | Large Project Construction revenue increased 16.2 percent to $1.03 billion from $888.2 million in 2016, as Granite teams advanced work on our diverse project portfolio. |
• | Gross profit margin was 2.9 percent compared with 7.2 percent in 2016, as performance continued to be impacted by accelerated work on a number of challenging, mature projects, as well as extended timeframes for dispute resolution with owners and designers. |
• | Large project backlog totaled $2.8 billion, up 15.0 percent year-over-year, which includes the contribution of project wins aligned with our strategy to balance our portfolio with more Granite-controlled, lower-risk work over the past couple years. |
• | Construction Materials revenue increased 12.1 percent to $292.8 million compared with $261.2 million last year, primarily attributable to increased demand across geographies, as well as modest price increases. |
• | Gross profit margin in 2017 was 13.0 percent, compared with 10.7 percent in 2016, as overall public-market demand improved. Profitability also was impacted positively late in the year, as steady demand and mild late-2017 weather allowed us to work later and more efficiently than in 2016. |
• | Revenues increased 20.2 percent to $801.3 million compared with $666.7 million in the fourth quarter of 2016. |
• | Gross profit increased 23.9 percent year-over-year to $100.7 million, driven primarily by the strong performance of our vertically integrated business in the West, as mild late-2017 weather allowed us to work later and more efficiently than in 2016. |
• | Gross profit margin was 12.6 percent compared with 12.2 percent in 2016. |
• | SG&A expenses decreased $0.3 million from 2016, to $59.1 million. |
• | Construction segment revenue increased 19.4 percent to $429.4 million, compared with $359.7 million in the fourth quarter of 2016. Revenue growth was fueled by record segment backlog entering the quarter, combined with mild late-2017 weather, which allowed our teams to work later and more efficiently than the prior year. |
• | Gross profit margin, at 15.2 percent, remained very healthy and in line with our mid-teens expectations. Customer and project mix late in the year included low-risk, high-revenue work with below-trend margins. |
• | Large Project Construction segment revenue increased 18.2 percent to $290.9 million, compared with $246.1 million in the fourth quarter of 2016, based on execution on our broad project portfolio. |
• | Gross profit margin was 7.0 percent, up more than 150 basis points from 5.5 percent last year, as segment performance continues to reflect the impact of accelerated work on a number of challenging, mature projects, as well as extended timeframes for dispute resolution with owners and designers. |
• | Construction Materials revenue increased 33.0 percent to $80.9 million, compared with $60.9 million in the fourth quarter of 2016. Revenue growth was driven by the combination of strong market conditions aligned to mild late-2017 weather in the West, which allowed our businesses to operate efficiently to address steady demand late in the year. |
• | Gross profit margin for the quarter was 18.7 percent, compared with 10.0 percent in 2016. Operational performance remains solid, as we target continued improvement in pricing and production efficiency. |
• | High-single to low-double digit consolidated revenue growth |
• | Consolidated EBITDA margin2 of 7.0% to 8.0% |
(1) | Net Income includes a $3.7 million provisional benefit, or $0.09 per share, from the revaluation of deferred tax assets and liabilities required by the recently passed H.R. 1, commonly referred to as the Tax Cuts and Jobs Act. |
(2) | Please refer to a description and reconciliation in the attached EBITDA Reconciliation table. |
(3) | Granite only. Does not include or reflect potential impact from the acquisition announced February 14, 2018. |
GRANITE CONSTRUCTION INCORPORATED | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Unaudited - in thousands, except share and per share data) | |||||||
December 31, | December 31, | ||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 233,711 | $ | 189,326 | |||
Short-term marketable securities | 67,775 | 64,884 | |||||
Receivables, net | 479,791 | 419,345 | |||||
Costs and estimated earnings in excess of billings | 103,965 | 73,102 | |||||
Inventories | 62,497 | 55,245 | |||||
Equity in construction joint ventures | 247,826 | 247,182 | |||||
Other current assets | 36,513 | 39,908 | |||||
Total current assets | 1,232,078 | 1,088,992 | |||||
Property and equipment, net | 407,418 | 406,650 | |||||
Long-term marketable securities | 65,015 | 62,895 | |||||
Investments in affiliates | 38,469 | 35,668 | |||||
Goodwill | 53,799 | 53,799 | |||||
Other noncurrent assets | 75,199 | 85,449 | |||||
Total assets | $ | 1,871,978 | $ | 1,733,453 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities | |||||||
Current maturities of long-term debt | $ | 46,048 | $ | 14,796 | |||
Accounts payable | 237,673 | 199,029 | |||||
Billings in excess of costs and estimated earnings | 135,146 | 97,522 | |||||
Accrued expenses and other current liabilities | 236,407 | 218,587 | |||||
Total current liabilities | 655,274 | 529,934 | |||||
Long-term debt | 178,453 | 229,498 | |||||
Deferred income taxes | 1,361 | 5,441 | |||||
Other long-term liabilities | 44,085 | 45,989 | |||||
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 39,871,314 shares as of December 31, 2017 and 39,621,140 shares as of December 31, 2016 | 399 | 396 | |||||
Additional paid-in capital | 160,376 | 150,337 | |||||
Accumulated other comprehensive income (loss) | 634 | (371 | ) | ||||
Retained earnings | 783,699 | 735,626 | |||||
Total Granite Construction Incorporated shareholders’ equity | 945,108 | 885,988 | |||||
Non-controlling interests | 47,697 | 36,603 | |||||
Total equity | 992,805 | 922,591 | |||||
Total liabilities and equity | $ | 1,871,978 | $ | 1,733,453 |
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(Unaudited - in thousands, except per share data) | |||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue | |||||||||||||||
Construction | $ | 429,444 | $ | 359,741 | $ | 1,664,708 | $ | 1,365,198 | |||||||
Large Project Construction | 290,888 | 246,077 | 1,032,229 | 888,193 | |||||||||||
Construction Materials | 80,942 | 60,863 | 292,776 | 261,226 | |||||||||||
Total revenue | 801,274 | 666,681 | 2,989,713 | 2,514,617 | |||||||||||
Cost of revenue | |||||||||||||||
Construction | 364,231 | 298,045 | 1,417,694 | 1,155,983 | |||||||||||
Large Project Construction | 270,530 | 232,618 | 1,002,436 | 824,056 | |||||||||||
Construction Materials | 65,806 | 54,768 | 254,650 | 233,208 | |||||||||||
Total cost of revenue | 700,567 | 585,431 | 2,674,780 | 2,213,247 | |||||||||||
Gross profit | 100,707 | 81,250 | 314,933 | 301,370 | |||||||||||
SG&A expenses | 59,068 | 59,342 | 222,811 | 219,299 | |||||||||||
Restructuring gains | (1,394 | ) | (1,000 | ) | (2,411 | ) | (1,925 | ) | |||||||
Gain on sales of property and equipment | (1,352 | ) | (5,994 | ) | (4,182 | ) | (8,358 | ) | |||||||
Operating income | 44,385 | 28,902 | 98,715 | 92,354 | |||||||||||
Other (income) expense | |||||||||||||||
Interest income | (1,386 | ) | (801 | ) | (4,742 | ) | (3,225 | ) | |||||||
Interest expense | 2,703 | 3,096 | 10,800 | 12,366 | |||||||||||
Equity in income of affiliates | (2,200 | ) | (2,594 | ) | (7,107 | ) | (7,177 | ) | |||||||
Other income, net | (1,878 | ) | (685 | ) | (4,699 | ) | (5,972 | ) | |||||||
Total other income | (2,761 | ) | (984 | ) | (5,748 | ) | (4,008 | ) | |||||||
Income before provision for income taxes | 47,146 | 29,886 | 104,463 | 96,362 | |||||||||||
Provision for income taxes | 11,821 | 10,622 | 28,662 | 30,162 | |||||||||||
Net income | 35,325 | 19,264 | 75,801 | 66,200 | |||||||||||
Amount attributable to non-controlling interests | (2,552 | ) | (3,091 | ) | (6,703 | ) | (9,078 | ) | |||||||
Net income attributable to Granite Construction Incorporated | $ | 32,773 | $ | 16,173 | $ | 69,098 | $ | 57,122 | |||||||
Net income per share attributable to common shareholders: | |||||||||||||||
Basic | $ | 0.82 | $ | 0.41 | $ | 1.74 | $ | 1.44 | |||||||
Diluted | $ | 0.81 | $ | 0.40 | $ | 1.71 | $ | 1.42 | |||||||
Weighted average shares of common stock: | |||||||||||||||
Basic | 39,857 | 39,610 | 39,795 | 39,557 | |||||||||||
Diluted | 40,387 | 40,306 | 40,372 | 40,225 |
GRANITE CONSTRUCTION INCORPORATED | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited - in thousands) | ||||||||
Years Ended December 31, | 2017 | 2016 | ||||||
Operating activities | ||||||||
Net income | $ | 75,801 | $ | 66,200 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Non-cash restructuring gains | (939 | ) | (1,000 | ) | ||||
Depreciation, depletion and amortization | 66,345 | 64,375 | ||||||
Gain on sales of property and equipment | (4,182 | ) | (8,358 | ) | ||||
Change in deferred income taxes | (4,824 | ) | 9,842 | |||||
Stock-based compensation | 15,764 | 13,383 | ||||||
Equity in net loss (income) from unconsolidated construction joint ventures | 14,634 | (15,614 | ) | |||||
Net income from affiliates | (7,107 | ) | (7,177 | ) | ||||
Changes in assets and liabilities: | (9,297 | ) | (48,505 | ) | ||||
Net cash provided by operating activities | 146,195 | 73,146 | ||||||
Investing activities | ||||||||
Purchases of marketable securities | (124,543 | ) | (129,685 | ) | ||||
Maturities of marketable securities | 120,000 | 50,000 | ||||||
Proceeds from called marketable securities | — | 55,000 | ||||||
Purchases of property and equipment | (67,695 | ) | (90,970 | ) | ||||
Proceeds from sales of property and equipment | 10,202 | 12,946 | ||||||
Collection of notes receivable | 1,052 | 4,331 | ||||||
Other investing activities, net | 1,798 | 1,988 | ||||||
Net cash used in investing activities | (59,186 | ) | (96,390 | ) | ||||
Financing activities | ||||||||
Proceeds from long-term debt | 25,000 | 30,000 | ||||||
Debt principal payments | (45,000 | ) | (45,025 | ) | ||||
Cash dividends paid | (20,687 | ) | (20,563 | ) | ||||
Purchases of common stock | (6,977 | ) | (5,227 | ) | ||||
Contributions from non-controlling partners | 11,500 | 5,250 | ||||||
Distributions to non-controlling partners | (7,109 | ) | (5,258 | ) | ||||
Other financing activities | 649 | 557 | ||||||
Net cash used in financing activities | (42,624 | ) | (40,266 | ) | ||||
Increase (decrease) in cash and cash equivalents | 44,385 | (63,510 | ) | |||||
Cash and cash equivalents at beginning of year | 189,326 | 252,836 | ||||||
Cash and cash equivalents at end of year | $ | 233,711 | $ | 189,326 |
GRANITE CONSTRUCTION INCORPORATED | ||||||||||||||||||||||||
Business Segment Information | ||||||||||||||||||||||||
(Unaudited - dollars in thousands) | ||||||||||||||||||||||||
Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||||||||
Construction | Large Project Construction | Construction Materials | Construction | Large Project Construction | Construction Materials | |||||||||||||||||||
2017 | ||||||||||||||||||||||||
Revenue | $ | 429,444 | $ | 290,888 | $ | 80,942 | $ | 1,664,708 | $ | 1,032,229 | $ | 292,776 | ||||||||||||
Gross profit | 65,213 | 20,358 | 15,136 | 247,014 | 29,793 | 38,126 | ||||||||||||||||||
Gross profit as a percent of revenue | 15.2 | % | 7.0 | % | 18.7 | % | 14.8 | % | 2.9 | % | 13.0 | % | ||||||||||||
2016 | ||||||||||||||||||||||||
Revenue | $ | 359,741 | $ | 246,077 | $ | 60,863 | $ | 1,365,198 | $ | 888,193 | $ | 261,226 | ||||||||||||
Gross profit | 61,696 | 13,459 | 6,095 | 209,215 | 64,137 | 28,018 | ||||||||||||||||||
Gross profit as a percent of revenue | 17.2 | % | 5.5 | % | 10.0 | % | 15.3 | % | 7.2 | % | 10.7 | % | ||||||||||||
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||||
Contract Backlog by Segment | |||||||||||||||
(Unaudited - dollars in thousands) | |||||||||||||||
December 31, 2017 | December 31, 2016 | ||||||||||||||
Construction | $ | 896,955 | 24.1 | % | $ | 1,030,487 | 29.6 | % | |||||||
Large Project Construction | 2,821,202 | 75.9 | % | 2,453,918 | 70.4 | % | |||||||||
Total | $ | 3,718,157 | 100.0 | % | $ | 3,484,405 | 100.0 | % |
GRANITE CONSTRUCTION INCORPORATED | |||||||||||||
EBITDA(1) | |||||||||||||
(Unaudited - dollars in thousands) | |||||||||||||
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Net income attributable to Granite Construction Incorporated | $ | 32,773 | $ | 16,173 | $ | 69,098 | $ | 57,122 | |||||
Depreciation, depletion and amortization expense(2) | 17,823 | 17,738 | 66,345 | 64,375 | |||||||||
Provision for income taxes | 11,821 | 10,622 | 28,662 | 30,162 | |||||||||
Interest expense, net of interest income | 1,317 | 2,295 | 6,058 | 9,141 | |||||||||
EBITDA | $ | 63,734 | $ | 46,828 | $ | 170,163 | $ | 160,800 | |||||
Consolidated EBITDA Margin(3) | 8.0% | 7.0% | 5.7% | 6.4% | |||||||||
Note: | |||||||||||||
(1)We define EBITDA as GAAP net income 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 consolidated statements of operations of Granite Construction Incorporated. | |||||||||||||
(3)Represents EBITDA divided by consolidated revenue. Consolidated revenue was $801,274 and $2,989,713 for three and twelve months ended December 31, 2017, respectively, and $666,681 and $2,514,617 for three and twelve months ended December 31, 2016, respectively, |