WATSONVILLE, Calif., Feb. 15 /PRNewswire-FirstCall/ -- Granite Construction Incorporated today announced financial results for the fourth quarter and year ended December 31, 2005. The Company reported earnings per diluted share of $0.86 for the quarter and $2.02 for the year compared with $0.47 for the fourth quarter 2004 and $1.39 for the twelve months ended December 31, 2004.
"We had a tremendous finish to our year," said William G. Dorey, president and chief executive officer. "I am extremely proud of what our people were able to accomplish this quarter and throughout the entire year. Thanks to mild weather conditions in the West, many of our branches were able to work late into the season and capitalize on what I would characterize as one of the healthiest transportation construction markets in many years," said Dorey.
Total Company Operating Results -- Quarter
Operating income increased $38.6 million to $55.8 million compared with $17.2 million for the fourth quarter ended December 31, 2004. Revenue for the fourth quarter 2005 totaled a record $679.6 million compared with $540.6 million a year ago. Total gross profit as a percent of revenue increased 5.2% to 15.6% .
Backlog at December 31, 2005 totaled $2.3 billion compared with $2.4 billion at December 31, 2004. Large projects awarded during the quarter include a highway reconstruction project in California for $62.6 million and a joint venture highway reconstruction project in Utah for $182.9 million, of which Granite's portion is $137.1.
Operating Results by Division -- Quarter
Branch Division operating income for the quarter increased 65.5% to $51.8 million compared with $31.3 million a year ago. Revenue for the division totaled $401.8 million, an increase of $82.5 million or 25.8% over the same period in 2004. Backlog increased 29.6% to $728.3 million compared with $561.9 million at December 31, 2004. Branch Division gross profit as a percent of revenue was 19.1% compared with 16.4% for the fourth quarter 2004. Operating income as a percent of revenue was 12.9% compared with 9.8% in the fourth quarter of 2004.
HCD operating income for the quarter was $4.3 million compared with essentially breakeven operating income in the fourth quarter 2004. HCD revenue for the quarter totaled $260.7 million versus $221.3 million for the same period last year. Backlog was $1.6 billion at December 31, 2005 compared with $1.9 billion at December 31, 2004. HCD gross profit as a percent of revenue increased to 6.8% compared with 3.4% for the fourth quarter 2004.
Total Company Operating Results -- Year
Operating income increased $51.3 million to $134.9 million compared with $83.6 million for the year ended December 31, 2004. Revenue for the year totaled $2.6 billion as compared with $2.1 billion in 2004. Total gross profit as a percent of revenue increased 1.7% to 12.1%.
General and administrative expenses for the year totaled $183.4 million or 6.9% of revenue compared with $157.0 million or 7.4% of revenue for 2004. The $26.4 million increase primarily reflects increases in salaries and burden as well as variable compensation associated with increased profitability.
Operating Results by Division -- Year
Branch Division operating income for the year increased 45.0% to $153.7 million compared with $106.0 million a year ago. Revenue for the division totaled $1.6 billion, an increase of $303.9 million or 23.6% over the same period in 2004. Branch Division gross profit as a percent of revenue was 16.0% for the year compared with 14.4% in 2004. Operating income as a percent of revenue for the year ended December 31, 2005 was 9.7% compared with 8.2% in the prior year.
HCD operating income for the year increased $3.5 million to $12.5 million. HCD revenue for the year totaled $1.0 billion versus $848.6 million in 2004. HCD gross profit as a percent of revenue was 4.9% for the year compared with 4.8% in 2004. Operating income as a percent of revenue was 1.2% compared with 1.1% in the prior year.
Outlook
Commenting on the Company's outlook, "We believe the prospects for our Branch Division are very exciting. Given current market conditions, we are optimistic that the division's operating performance in 2006 has the potential to be similar to our record 2005 results. In HCD, we expect continued incremental improvement in 2006 compared to 2005. We remain confident in our people and in the potential of our large project performance and are committed to improving the division's overall profitability going forward," said Dorey.
Financial Results
The financial information in this announcement reflects the Company's preliminary results subject to completion of the annual audit. Audited financial results will appear in Granite's Form 10-K, which will be filed on or before March 16, 2006.
Conference Call
Granite will conduct a conference call tomorrow, February 16, 2006, at 11:00 a.m. ET/ 8:00 a.m. PT to discuss the results for the quarter and full- year and its outlook for 2006. The conference call will be Webcast live and can be accessed at http://www.graniteconstruction.com/investor-relations .
Company Description
Granite, a member of the S&P 400 Midcap Index, the Domini 400 Social Index and the Russell 2000, is one of the nation's largest diversified heavy civil contractors and construction materials producers. Granite Construction serves public and private sector clients through its offices nationwide. For more information about the company, please visit their website at http://www.graniteconstruction.com/.
This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represents our management's beliefs and assumptions concerning future events such as statements related to the existence of bidding opportunities and economic conditions on the Company's future results. Additionally, forward-looking statements include statements that can be identified by the use of forward- looking terminology such as "believes," "expects," "appears," "may," "will," "should," "look for," or "anticipates," or the negative thereof or comparable terminology, or by discussions of strategy.
All such forward-looking statements are subject to risks and uncertainties that could cause actual results of operations and financial condition and other events, as well as the timing thereof, to differ materially from those expressed or implied in such forward-looking statements. Specific risk factors include, without limitation, changes in the composition of applicable federal and state legislation appropriation committees; federal and state appropriation changes for infrastructure spending; the general state of the economy; job productivity; accuracy of project estimates; weather conditions; competition and pricing pressures; and state referendums and initiatives. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. You should also understand that many important factors in addition to those discussed, referred to or incorporated by reference in this press release, could cause our results to differ materially from those expressed in the forward looking statements. In light of these risks and uncertainties, it is important to be aware that the forward looking events discussed in this release may not occur. We undertake no obligation to revise or update publicly any forward-looking statements to conform the statement to actual results or changes in the Company's expectations.
For further information regarding risks and uncertainties associated with Granite's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operation" and "Risk Factors" sections of Granite's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Granite's investor relations department at (831) 724-1011 or at Granite's website at http://www.graniteconstruction.com/.
GRANITE CONSTRUCTION INCORPORATED
COMPARATIVE FINANCIAL SUMMARY
(Unaudited - In Thousands, Except Per Share Data)
Three Months Ended
December 31, Variance
Operations 2005 2004 Amount Percent
Revenue
Construction $583,831 $477,989 $105,842 22.1
Material sales $95,721 $62,626 $33,095 52.8
Total revenue $679,552 $540,615 $138,937 25.7
Cost of revenue
Construction $501,690 $432,544 $(69,146) (16.0)
Material sales $71,838 $51,826 $(20,012) (38.6)
Total cost of revenue $573,528 $484,370 $(89,158) (18.4)
Gross profit $106,024 $56,245 $49,779 88.5
Gross profit as a percent
of revenue 15.6% 10.4% 5.2% --
General and administrative
expenses $53,767 $40,570 $(13,197) (32.5)
G&A expenses as a percent
of revenue 7.9% 7.5% (0.4%) --
Provision for legal judgment -- -- -- --
Gain on sales of property and
equipment $3,579 $1,489 $2,090 ****
Other income (expense)
Interest income $4,753 $3,894 $859 22.1
Interest expense $(1,531) $(1,779) $248 13.9
Equity in income of
affiliates $1,489 $3,286 $(1,797) (54.7)
Other, net $1,806 $4,285 $(2,479) (57.9)
Total other income $6,517 $9,686 $(3,169) (32.7)
Income before provision for
income taxes and minority
interest $62,353 $26,850 $35,503 ****
Minority interest $(8,447) $(607) $(7,840) ****
Net income $35,812 $19,525 $16,287 83.4
Net income per share:
Basic $0.88 $0.48 $0.40 83.3
Diluted $0.86 $0.47 $0.39 83.0
Weighted average shares of common
stock:
Basic 40,676 40,444 232 0.6
Diluted 41,417 41,200 217 0.5
Year Ended
December 31, Variance
Operations 2005 2004 Amount Percent
Revenue
Construction $2,307,062 $1,871,859 $435,203 23.2
Material sales $334,290 $264,353 $69,937 26.5
Total revenue $2,641,352 $2,136,212 $505,140 23.6
Cost of revenue
Construction $2,060,680 $1,701,277 $(359,403) (21.1)
Material sales $261,300 $212,914 $(48,386) (22.7)
Total cost of
revenue $2,321,980 $1,914,191 $(407,789) (21.3)
Gross profit $319,372 $222,021 $97,351 43.8
Gross profit as a
percent of revenue 12.1% 10.4% 1.7% --
General and administrative
expenses $183,392 $157,035 $(26,357) (16.8)
G&A expenses as a
percent of revenue 6.9% 7.4% 0.5% --
Provision for legal judgment $9,300 -- $(9,300) --
Gain on sales of property
and equipment $8,235 $18,566 $(10,331) (55.6)
Other income (expense)
Interest income $11,573 $7,962 $3,611 45.4
Interest expense $(6,932) $(7,191) $259 3.6
Equity in income of
affiliates $1,497 $6,162 $(4,665) (75.7)
Other, net $1,258 $4,439 $(3,181) (71.7)
Total other income $7,396 $11,372 $(3,976) (35.0)
Income before provision for
income taxes and minority
interest $142,311 $94,924 $47,387 49.9
Minority interest $(17,748) $(9,440) $(8,308) (88.0)
Net income $83,150 $57,007 $26,143 45.9
Net income per share:
Basic $2.05 $1.41 $0.64 45.4
Diluted $2.02 $1.39 $0.63 45.3
Weighted average shares of
common stock:
Basic 40,614 40,390 224 0.6
Diluted 41,249 41,031 218 0.5
**** Represents percentages greater than 100%
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - In thousands, except share and per share data)
December 31, December 31,
2005 2004
Assets
Current assets
Cash and cash equivalents $199,881 $161,627
Short-term marketable securities 68,540 102,237
Accounts receivable, net 476,453 357,842
Costs and estimated earnings in excess
of billings 43,660 54,384
Inventories 33,161 31,711
Deferred income taxes 22,996 21,012
Equity in construction joint ventures 27,408 20,895
Other current assets 104,849 75,630
Total current assets 976,948 825,338
Property and equipment, net 397,111 376,197
Long-term marketable securities 32,960 13,828
Investment in affiliates 15,855 10,725
Other assets 49,356 51,866
Total assets $1,472,230 $1,277,954
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt $26,888 $15,861
Accounts payable 232,807 191,782
Billings in excess of costs and
estimated earnings 208,883 144,401
Accrued expenses and other current
liabilities 140,569 117,367
Total current liabilities 609,147 469,411
Long-term debt 124,415 148,503
Other long-term liabilities 46,556 40,641
Deferred income taxes 37,325 44,135
Minority interest in consolidated subsidiaries 33,227 24,790
Shareholders' equity
Preferred stock, $0.01 par value,
authorized 3,000,000 shares; none
outstanding -- --
Common stock, $0.01 par value,
authorized 100,000,000 shares;
issued and outstanding 41,682,010
shares in 2005 and 41,612,319 shares
in 2004 417 416
Additional paid-in capital 80,619 76,766
Unearned compensation (10,179) (10,818)
Retained earnings 549,101 482,635
Accumulated other comprehensive income 1,602 1,475
Total shareholders' equity 621,560 550,474
Total liabilities and
shareholders' equity $1,472,230 $1,277,954
December 31, December 31,
Financial Position 2005 2004
Working capital $367,801 $355,927
Current ratio 1.60 1.76
Debt to total capitalization 0.20 0.23
Total liabilities to equity ratio 1.37 1.32
GRANITE CONSTRUCTION INCORPORATED
REVENUE AND BACKLOG ANALYSIS
(Unaudited - Dollars In Thousands)
BY MARKET SECTOR
Revenue
Year Ended December 31, Variance
2005 2004 Amount Percent
Public Sector $1,808,026 $1,553,097 $254,929 16.4
Private Sector 499,036 318,762 180,274 56.6
Aggregate sales 334,290 264,353 69,937 26.5
$2,641,352 $2,136,212 $505,140 23.6
Backlog
December 31, Variance
2005 2004 Amount Percent
Public Sector $2,083,824 $2,205,783 $(121,959) (5.5)
Private Sector 247,716 232,211 15,505 6.7
$2,331,540 $2,437,994 $(106,454) (4.4)
BY GEOGRAPHIC AREA
Revenue
Year Ended December 31, Variance
2005 2004 Amount Percent
California $1,028,041 $761,365 $266,676 35.0
West (Excl. CA) 820,236 634,206 186,030 29.3
Midwest 77,104 84,587 (7,483) (8.8)
Northeast 299,950 297,423 2,527 0.8
South 416,021 358,631 57,390 16.0
$2,641,352 $2,136,212 $505,140 23.6
Backlog
December 31, Variance
2005 2004 Amount Percent
California $598,914 $607,737 $(8,823) (1.5)
West (Excl. CA) 587,801 369,294 218,507 59.2
Midwest 44,883 120,578 (75,695) (62.8)
Northeast 441,140 582,780 (141,640) (24.3)
South 658,802 757,605 (98,803) (13.0)
$2,331,540 $2,437,994 $(106,454) (4.4)
First Call Analyst:
FCMN Contact: debbie.peterson@gcinc.com
