Granite Construction Incorporated
) reported adjusted fourth-quarter 2013 earnings of 2 cents per
share and loss per share of 17 cents for full-year 2013. Both the
results outperformed the Zacks Consensus Estimate of a loss per
share of 3 cents in the fourth quarter and loss per share of 24
cents for full-year 2013.
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Including the impact of restructuring and impairment charges
related to its 2010 Enterprise Improvement, the company reported
a loss per share of 74 cents in the fourth quarter compared with
earnings per share of 46 cents in the prior-year quarter. In
2013, the company reported a loss per share of 94 cents compared
with earnings per share of $1.17 in 2012.
Granite's net sales increased 18% year over year to $598 million
but missed the Zacks Consensus Estimate of $623 million. In 2013,
revenues increased 9% year over year to $2.27 billion, falling
short of the Zacks Consensus Estimate of $2.29 billion.
Cost of sales went up 22% to $548 million in the quarter.
Consequently, gross profit dropped 12% to $50 million from $57
million in the prior-year quarter. Gross margin contracted 300
basis points (bps) year over year to 8.3% as lower gross profit
in the Large Project Construction and Construction segments
offset an increase in gross profit of Construction Materials
Selling, general and administrative expenses declined 12% year
over year to $50 million. This was due to decrease in pre-bid
costs, incentive compensation and the non recurrence of
fourth-quarter 2012 acquisition costs related to Kenny. Granite
Construction reported an operating loss of $0.7 million versus
$0.5 million in the prior-year quarter.
Construction: Net sales grew 25% year over year to $295 million,
primarily attributable to the Kenny acquisition. Gross profit
edged up 1% to $18.4 million from the year-ago quarter. Gross
margin was 6.2%, down 150 bps from the prior-year quarter as
weaker performance in certain Western markets offset the positive
impact of the Kenny acquisition.
Large Project Construction: The segment reported sales of $238
million against $214 million in the year-ago quarter. It reported
gross profit of $30 million in the fourth quarter, down from $40
million in the last-year quarter. Consequently, gross margin
contracted 630 bps year over year to 12.4%.
Construction Materials: Net sales in the reported quarter went up
18% year over year to $65 million. The segment reported gross
profit of $1.7 million compared with gross loss of $1.5 million
in the prior-year quarter. Gross loss margin was 2.6% compared
with a loss of 2.7% in the prior-year quarter driven by overall
Total contract backlog increased to $2.5 billion as of Dec 31,
2013 compared with $1.7 billion as of Dec 31, 2012. The increase
reflects the addition of the Tappan Zee Bridge project in New
York, the IH-35E highway reconstruction project in Texas, the
I-40/440 project in North Carolina, as well as an overall
increase in the Construction segment backlog.
As of Dec 31, 2013, cash and cash equivalents amounted to $229
million versus $322 million as of Dec 31, 2012. As of Dec 31,
2013, long-term debt remained flat at $270 million compared with
Dec 31, 2012. The debt-to-capitalization ratio also remained flat
at 26% as of Dec 31, 2013 compared with Dec 30, 2012. Cash flow
from operating activities for 2013 was $5.4 million compared with
$92 million in the prior year.
Granite Construction's backlog , project funding and financing
have improved and private constructions are also showing signs of
growth. Furthermore, diversification opportunities underground,
in power and tunnel also position Granite Construction for
growth. Its backlog at 2013 end reflects a diverse, healthy
portfolio of projects which bodes well for the company. In 2014,
the company expects to bid on more than $13 billion of large
projects. The company foresees an additional $20 billion in large
projects beyond 2014.
Watsonville, Calif.-based Granite Construction is a leading
infrastructure contractor and construction materials producing
company. Its project teams represent the best in the industry;
serving both public and private-sector clients in transportation,
power, federal, tunneling, underground, industrial/mining and
water resources markets.
Granite Construction currently holds a short-term Zacks Rank #5
(Strong Sell). A better-ranked stock in the building and heavy
construction industry is
Orion Marine Group, Inc
), carrying a Zacks Rank #2 (Buy).
Among Granite Construction's peers,
Chicago Bridge & Iron Company N.V.
) posted fourth-quarter adjusted earnings of $1.91 per share
(excluding the one-time items), well exceeding the Zacks
Consensus Estimate of $1.17 per share and its year-ago quarter's
earnings of 95 cents.
Tutor Perini Corporation
), reported a 3% year-over-year increase in its fourth-quarter
adjusted earnings to 68 cents per share, ahead of the Zacks
Consensus Estimate of 61 cents.