Granite Construction Incorporated
) dropped 11.7% since the company reported its third-quarter 2013
earnings on Nov 4. Earnings fell 70% year over year to $11
million or 28 cents per share from $37.1 million or 94 cents a
share, due to the negative impact from a large highway project in
Washington State. The results lagged the Zacks Consensus Estimate
of 78 cents.
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Granite's net sales dipped 1.8% year over year to $742 million.
The results also missed the Zacks Consensus Estimate of $906
Gross profit during the quarter dropped 46% to $54.4 million from
$101 million in the prior-year quarter. Gross margin contracted
660 basis points (bps) year over year to 7.3%.
Selling, general and administrative expenses improved 12.8% year
over year to $46.6 million. A significant portion of the increase
was led by the integration of Kenny. Adjusted operating gain was
$7.8 million versus $59.8 million in the prior-year quarter.
Net sales grew 22% year over year to $470.6 million, primarily
attributable to the Kenny acquisition and improved western
markets, partly offset by the weakness in California. Gross
profit increased 48.9% to $49.6 million from $33.3 million in the
year-ago quarter. Gross margin was 10.5%, roughly 190 bps higher
than the prior-year quarter, led by improved project execution.
Large Project Construction:
The segment reported sales of $187.8 million against $255.9
million in the year-ago quarter reflecting the timing of new
projects. The segment reported a loss of $2.5 million in the
third quarter versus gross profit of $57.8 million last year,
driven by a significant negative forecast change on a large
project in Washington State and by the timing of overall project
Net sales in the reported quarter went down 4% year over year to
$83 million. Consequently, gross profit fell 27% year over year
to $7.3 million. Gross margin contracted 270 bps year over year
Revenues at the Real Estate segment were $0.02 million compared
with $0.04 million in the year-ago quarter. Gross profit plunged
42.8% to $0.02 million.
Total contract backlog increased to $2.8 billion as of Sep 30,
2013 compared with $1.6 billion as of Sep 30, 2012.
As of Sep 30, 2013, cash and cash equivalents amounted to $212
million versus $287 million as of Sep 30, 2012. As of Sep 30,
2013 long-term debt increased to $270 million from $200 million
as of Sep 30, 2012. The debt-to-capitalization ratio expanded 490
bps to 24.6% as of Sep 30, 2013 from 19.7% as of Sep 30, 2012.
Cash used in operating activities for the nine-month period ended
Sep 30, 2013, was $64.5 million in contrast to cash from
operations of $20 million in the year-ago comparable period.
On an adjusted basis, Granite expects to report a small loss to
break-even results in the fourth quarter of 2013. For full-year
2013, Granite revised the construction segment's revenues
forecast to the range of $1.2-$1.3 billion from $1.25-$1.4
billion. Gross margin outlook for the segment was also modified
to the band of 8.5-9.5% from 8-10%. The Large Project
Construction segment's revenues were modified to the range of
$750-$800 million from $850-$950 million, with a corresponding
gross margin range of 8.5%-9.5%. Revenues from the Construction
Materials segment were changed to $220-$230 million from
$200-$230 million, with a gross margin range of 2%-3%.
Selling, general and administrative expenses were revised to the
$205-$210 million band from $210-$220 million.
Watsonville, Calif.-based Granite Construction is one of the
largest infrastructure contractors and construction materials
producing companies. Its project teams represent the best in the
industry; serving both public and private-sector clients in the
transportation, power, federal, tunneling, underground, and
industrial/mining and water resources markets.
Granite Construction currently holds a short-term Zacks Rank #3
Jiangsu Expressway Co. Ltd.
) belongs to the same industry and carries a Zacks Rank #2 (Buy).
Among Granite's peers,
Chicago Bridge & Iron Company N.V.
) reported third-quarter 2013 adjusted earnings of $121.3 million
or $1.12 per share (excluding the one- time items), in line with
the Zacks Consensus Estimate. Adjusted net income improved 46.7%
year over year on the back of strong project activities during
Great Lakes Dredge & Dock Corporation
) reported earnings per share of 2 cents in the third quarter of
2013, compared to a loss per share of 9 cents in the year-ago
quarter. Earnings missed the Zacks Consensus Estimate of 6