Granite Construction Incorporated
) reported a loss of $22 million or 57 cents per share in the
first quarter of 2013 compared with the prior-year loss of $11.8
million or 31 cents a share. The loss per share was wider than
the Zacks Consensus Estimate of a loss per share of 26 cents.
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Revenues improved 22% to $378.7 million on a sequential basis
attributed to strong backlog growth in the quarter, driven by
large projects awarded to the company. The results were ahead of
the Zacks Consensus Estimate of $346 million. Revenues in the
reported quarter included $63.7 million from Kenny Construction
Company which has been acquired by Granite.
Gross profit during the quarter increased 20% to $30 million from
$25 million in the prior-year quarter. Gross margin, however,
contracted 10 basis points to 7.9% in the quarter.
Selling, general and administrative expenses surged 28% to $57.7
million. A significant portion of the increase was led by the
integration of Kenny. Adjusted operating loss was $27.6 million
in the first quarter compared with $20 million in the prior-year
Net sales at the segment spiked 50% to $177 million in the
quarter, primarily due to the acquisition of Kenny. Gross profit
for the segment also increased 54% to $13 million from $8.5
million in the year-ago quarter.
Large Project Construction:
The segment reported sales of $171.7 million in the quarter
compared to $163.9 million in the year-ago quarter. The segment's
gross profit grew 2% year over year to $22.7 million.
Net sales in the reported quarter went up 16.4% year over year to
$29.8 million. However, the Construction Materials segment posted
a loss of $5.9 million in the reported quarter, flat compared to
the prior-year quarter.
Revenues at the Real Estate segment was $0.12 million compared
with $2.6 million in the year-ago quarter. However, segment's
gross profit grew nearly two-fold to $22.7 million in the
Total contract backlog as of Mar 31, 2013, was $2.4 billion
compared with $2.1 billion as of Mar 31, 2012. Backlog of 2013
included $733.0 million associated with the Tappan Zee Bridge
project in New York.
Cash and cash equivalents were $260.7 million as of Mar 31, 2013
compared with $226.2 million as of Mar 31, 2012. Long-term debt
amounted to $270 million as of Mar 31, 2013, compared with $208.5
million as of Mar 31, 2012. The debt-to-capitalization ratio
expanded to 24.1% as of Mar 31, 2013 from 20.4% as of Mar 31,
2012. Cash flow used in operating activities was $54.6 million in
the reported quarter compared with $22.8 million in the year-ago
For the full year 2013, Granite anticipates growth by at least
double digits in the top line of its business. The company also
expects to generate strong cash flow, which will allow it to
further implement strategic long-term plan. Also, recovery in the
private construction market will help drive significant long-term
operational and financial performance of Granite.
However, for the short-term, its vertically integrated business
will face challenges due to capacity exceeding demand for both
construction services and construction materials segments.
Granite forecasts construction segment revenues to be in the
range of $1.25 billion to $1.4 billion for 2013, with a
corresponding gross margin band of 8% to 10%. The company expects
Large Project Construction segment revenues to be in the range of
$850 million to $1.05 billion, with a gross margin between 12%
and 14%. Construction Materials revenues are expected to be
within $200 million and $230 million, with a gross profit margin
range of 6% to 9%.
Selling, general and administrative expenses are expected to be
between $210 million and $220 million. Granite expects capital
expenditures for the year to be in the range of $40 million to
$60 million. Cash flow from operations is likely to be in the
band of $80 million and $120 million for the year.
Watsonville, CA-based Granite Construction is one of the largest
infrastructure contractors and construction materials producers.
Granite's project teams represent some of the best in the
industry serving owners in the transportation, power, federal,
tunneling, underground, and industrial, mining and water
resources markets, which serves both public- and private-sector
Granite Construction currently retains a short-term Zacks Rank #2
(Buy). Other companies in the building and heavy construction
industry with favorable Zacks Ranks are
China Communications Construction Company
Primoris Services Corporation
Orion Marine Group, Inc
). While China Communications Construction and Primoris Services
carry a Zacks Rank #1 (Strong Buy), Orion Marine holds a Zacks
Rank #2 (Buy).