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Granite Reports Second Quarter 2022 Results

  • Revenue guidance is unchanged despite year-to-date revenue decrease compared to the same period in the prior year as portfolio shifts to smaller, less risky projects
  • Old Risk Portfolio ("ORP") projected burn for 2022 remains on track but impacted gross profit margin during the period
  • Non-ORP gross profit margin improved compared to the same period in the prior year
  • Committed and Awarded Projects ("CAP") (1) increased $279 million sequentially ending at $4.2 billion
  • Investments in construction materials assets completed and entered into an amended credit facility to support investment and growth plan for home markets

Granite Construction Incorporated (NYSE: GVA) today announced results for the quarter ended June 30, 2022.

Second Quarter 2022 Results

Net loss from continuing operations totaled $(2) million, or $(0.05) per diluted share, compared to net income from continuing operations of $25 million, or $0.52 per diluted share, in the same period in the prior year. Adjusted net income from continuing operations (2) totaled $17 million, or $0.38 per diluted share, compared to adjusted net income from continuing operations (2) of $30 million, or $0.66 per diluted share, in the same period in the prior year.

  • Revenue decreased $67 million to $768 million compared to $835 million in the prior year.
  • Gross profit decreased $20 million to $78 million compared to $98 million in the prior year; and gross profit margin decreased to 10.2% compared to 11.8% in the prior year.
  • Selling, general, and administrative (“SG&A”) expenses were $53 million or 6.9% of revenue, compared to $59 million or 7.0% of revenue in the prior year.
  • Adjusted EBITDA (2) from continuing operations totaled $39 million compared to $62 million in the prior year.
  • CAP (2) totaled $4.2 billion, which was up $279 million sequentially and up $33 million compared to the same period in the prior year.
  • Cash and marketable securities decreased $146 million to $242 million compared to $388 million in the same period in the prior year, while debt decreased $52 million to $288 million from $340 million in the same period in the prior year.

"During the second quarter, we continued to implement our strategic plan," said Kyle Larkin, Granite President and Chief Executive Officer. "The divestiture of the remaining businesses of the legacy Water and Mineral Services group are moving forward. We also announced strategic investments in our home markets with the purchase of aggregates in Salt Lake City and a liquid asphalt terminal in California. Additionally, we secured long-term capital to support investment and growth with the execution of our amended credit facility and we executed on a $50 million accelerated share repurchase. Second quarter results were impacted by additional costs in the ORP as the portfolio continues to be challenging with our teams working to complete them as expeditiously as possible. Our estimate of remaining ORP work going into 2023 is on track and remains largely unchanged. Looking beyond the ORP, our core business is getting stronger, illustrated by improved gross profit margins excluding the ORP and higher quality CAP in mix and margin. I am pleased with our CAP of $4.2 billion as of the end of the quarter and I am optimistic about the overall environment in our markets as we move into our busiest quarter. While we still have work to do to improve margins on bid day and in project execution, we are making progress and are tracking to the strategic plan projections provided in our last earnings call. We also took an important step forward this quarter as we accrued $12 million for an expected resolution of the SEC investigation."

Larkin continued, "With our strong balance sheet and liquidity, we expect to continue to invest in our home markets organically as we also actively explore opportunistic bolt-on acquisitions. These investments should bolster and expand existing home markets and position the company for consistent profitable growth."

Six Months Ended June 2022 Results

Net loss from continuing operations totaled $(21) million, or $(0.47) per diluted share, compared to a net loss from continuing operations of $(38) million, or $(0.84) per diluted share, in the prior year. Adjusted net income from continuing operations (2) totaled $6 million, or $0.12 per diluted share, compared to adjusted net income from continuing operations (2) of $23 million, or $0.51 per diluted share, in the prior year.

  • Revenue from continuing operations decreased $85 million to $1.3 billion compared to $1.4 billion in the prior year.
  • Gross profit from continuing operations decreased $24 million to $128 million compared to $152 million in the prior year; and gross profit margin decreased to 9.7% compared to 10.8% in the prior year.
  • SG&A expenses from continuing operations were $112 million or 8.5% of revenue, compared to $120 million or 8.6% of revenue in the prior year.
  • Adjusted EBITDA (2) from continuing operations totaled $43 million compared to $71 million in the prior year.

(1) CAP is comprised of revenue we expect to record in the future on executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts, as well as the general construction portion of construction manager/general contractor, construction manager/at risk and progressive design build contracts to the extent contract execution and funding is probable.

(2) Adjusted net income (loss) from continuing operations, adjusted diluted income (loss) per share from continuing operations, earnings before interest, taxes, depreciation, and amortization (“EBITDA”) from continuing operations, EBITDA margin from continuing operations, adjusted EBITDA from continuing operations, and adjusted EBITDA margin from continuing operations are non-GAAP measures. Please refer to the description and reconciliation of non-GAAP measures in the attached tables.

Second Quarter 2022 Segment Results (Unaudited - dollars in thousands)

Construction Segment

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

Change

 

2022

 

 

2021

 

 

Change

Revenue from continuing operations

 

$

632,260

 

 

$

713,425

 

 

$

(81,165

)

 

 

(11.4

)%

 

$

1,107,195

 

 

$

1,220,396

 

 

$

(113,201

)

 

 

(9.3

)%

Gross profit from continuing operations

 

 

61,166

 

 

 

76,267

 

 

 

(15,101

)

 

 

(19.8

)%

 

$

109,358

 

 

$

129,036

 

 

$

(19,678

)

 

 

(15.3

)%

Gross profit as a percent of revenue from continuing operations

 

 

9.7

%

 

 

10.7

%

 

 

 

 

 

 

 

 

 

 

9.9

%

 

 

10.6

%

 

 

 

 

 

 

 

 

Committed and Awarded Projects

 

June 30,

2022

 

 

March 31,

2022

 

 

Change - Quarter

over Quarter

 

June 30,

2021

 

 

Change - Year over

Year

California

 

$

1,629,765

 

 

$

1,480,950

 

 

$

148,815

 

 

 

10.0

%

 

$

1,358,018

 

 

$

271,747

 

 

 

20.0

%

Central

 

 

1,518,970

 

 

 

1,426,255

 

 

 

92,715

 

 

 

6.5

%

 

 

1,919,386

 

 

 

(400,416

)

 

 

(20.9

)%

Mountain

 

 

1,064,925

 

 

 

1,027,522

 

 

 

37,403

 

 

 

3.6

%

 

 

903,692

 

 

 

161,233

 

 

 

17.8

%

Total

 

$

4,213,660

 

 

$

3,934,727

 

 

$

278,933

 

 

 

7.1

%

 

$

4,181,096

 

 

$

32,564

 

 

��

0.8

%

Construction revenue in the second quarter decreased compared to the same period in the prior year primarily due to an $81 million decrease in revenue in the Central group as the transformation of its portfolio continues and ORP projects continue to move towards completion. The California group revenue decrease of $30 million in the second quarter was mostly offset by an increase of $28 million in revenue in the Mountain group. In the California Group, delays in project starts impacted revenue during the quarter despite a strong macro environment in the state. The California group ended the quarter with record CAP of $1.6 billion. Gross profit in the second quarter decreased compared to the same period in the prior year due to losses in the ORP. During the second quarter, ORP revenue totaled $49 million with a gross loss of $(21) million and net loss, after non-controlling interest ("NCI"), of $(18) million, compared to ORP revenue of $115 million with a gross profit of $2 million and net profit, after NCI of $4 million, in the same period in the prior year. While the ORP continued to progress during the quarter, the complex nature of the projects resulted in unanticipated cost increases which impacted gross profit for the quarter. Excluding the impact of ORP losses during the quarter, Construction gross profit margin was 14.1% compared to 12.3% in the prior year. For the six months ended June 30, 2022, ORP revenue totaled $129 million with a gross loss of $(24) million and net loss, after NCI of $(21) million, compared to ORP revenue of $220 million with a gross profit of $2 million and net profit, after NCI of $5 million.

CAP was up $279 million sequentially and up $33 million compared to the prior year. The $433 million year over year increase in CAP in the California and Mountain groups was partially offset by the $400 million decrease in Central group CAP.

Materials Segment

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

Change

 

2022

 

 

2021

 

 

Change

Revenue from continuing operations

 

$

136,026

 

 

$

121,246

 

 

$

14,780

 

 

 

12.2

%

 

$

208,677

 

 

$

180,607

 

 

$

28,070

 

 

 

15.5

%

Gross profit from continuing operations

 

 

17,314

 

 

 

21,965

 

 

 

(4,651

)

 

 

(21.2

)%

 

$

18,897

 

 

$

22,908

 

 

$

(4,011

)

 

 

(17.5

)%

Gross profit as a percent of revenue from continuing operations

 

 

12.7

%

 

 

18.1

%

 

 

 

 

 

 

 

 

 

 

9.1

%

 

 

12.7

%

 

 

 

 

 

 

 

 

Materials revenue in the second quarter increased compared to the same period in the prior year as price increases in both aggregates and asphalt more than offset volume decreases in aggregates and asphalt. Gross profit and gross profit margin were negatively impacted year over year by higher fuel and liquid asphalt costs as many sales completed in the second quarter were fulfilling orders placed prior to the energy surcharges being implemented in early April. This price impact associated with the timing difference is expected to decline in the third quarter.

Outlook

For the 2022 fiscal year, the Company is revising adjusted EBITDA margin guidance to a range of 5.5% - 6.5% from a range of 6% - 8%. The remaining guidance below is unchanged:

  • Low single digit growth in revenue from continuing operations
  • SG&A expense from continuing operations in the range of 8.0% to 8.5% of revenue
  • Low-to-mid-20s effective tax rate range
  • Capital expenditures in the range of $100 million to $115 million

Conference Call

Granite will conduct a conference call today, July 28, 2022, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter ended June 30, 2022. The Company invites investors to listen to a live audio webcast of the investor conference call on its Investor Relations website, https://investor.graniteconstruction.com. The investor conference call will also be available by calling 1-877-328-5503; international callers may dial 1-412-317-5472. An archive of the webcast will be available on Granite's Investor Relations website approximately one hour after the call. A replay will be available after the live call through August 4, 2022, by calling 1-877-344-7529, replay access code 2178808; international callers may dial 1-412-317-0088.

About Granite

Granite is America’s Infrastructure Company™. Incorporated since 1922, Granite (NYSE:GVA) is one of the largest diversified construction and construction materials companies in the United States as well as a full-suite civil construction provider. Granite’s Code of Conduct and strong Core Values guide the Company and its employees to uphold the highest ethical standards. Granite is an industry leader in safety and an award-winning firm in quality and sustainability. For more information, visit the graniteconstruction.com, and connect with Granite on LinkedIn, Twitter, Facebook and Instagram.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2022 fiscal year guidance for revenue from continuing operations, Adjusted EBITDA margin from continuing operations, SG&A expense from continuing operations, effective tax rate, and capital expenditures, Committed and Awarded Projects (“CAP”), results, the expected sale of the Water Resources and Mineral Services businesses, expected full-year revenue growth to be unchanged, the ORP projected burn for 2022, the expected resolution of the SEC investigation, continued investments in our home markets both organically and through bolt-on transactions and that pricing impacts resulting from timing differences are expected to decline in the third quarter constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” "guidance" and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2022 fiscal year guidance for revenue from continuing operations, Adjusted EBITDA margin from continuing operations, SG&A expense from continuing operations, effective tax rate, and capital expenditures, CAP, results, the expected sale of the Water Resources and Mineral Services businesses, expected full-year revenue growth to be unchanged, the ORP projected burn for 2022, the expected resolution of the SEC investigation, continued investments in our home markets both organically and through bolt-on transactions and that pricing impacts resulting from timing differences are expected to decline in the third quarter. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

 

 

June 30, 2022

 

 

December 31, 2021

 

 

June 30, 2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

175,022

 

 

$

395,647

 

 

$

377,620

 

Short-term marketable securities

 

 

45,000

 

 

 

 

 

 

 

Receivables, net

 

 

527,277

 

 

 

464,588

 

 

 

543,914

 

Contract assets

 

 

190,187

 

 

 

145,437

 

 

 

154,542

 

Inventories

 

 

78,634

 

 

 

61,965

 

 

 

66,584

 

Equity in construction joint ventures

 

 

187,028

 

 

 

189,911

 

 

 

195,430

 

Other current assets

 

 

167,349

 

 

 

177,210

 

 

 

44,076

 

Current assets held-for-sale

 

 

222,779

 

 

 

392,641

 

 

 

184,267

 

Total current assets

 

 

1,593,276

 

 

 

1,827,399

 

 

 

1,566,433

 

Property and equipment, net

 

 

464,593

 

 

 

433,504

 

 

 

432,896

 

Long-term marketable securities

 

 

21,675

 

 

 

15,600

 

 

 

10,850

 

Investments in affiliates

 

 

23,203

 

 

 

23,368

 

 

 

25,317

 

Goodwill

 

 

53,715

 

 

 

53,715

 

 

 

53,715

 

Right of use assets

 

 

45,404

 

 

 

49,312

 

 

 

47,181

 

Deferred income taxes, net

 

 

25,458

 

 

 

24,141

 

 

 

42,230

 

Other noncurrent assets

 

 

64,008

 

 

 

67,888

 

 

 

70,148

 

Noncurrent assets held-for-sale

 

 

 

 

 

 

 

 

230,128

 

Total assets

 

$

2,291,332

 

 

$

2,494,927

 

 

$

2,478,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

$

1,429

 

 

$

8,727

 

 

$

8,709

 

Accounts payable

 

 

331,728

 

 

 

324,313

 

 

 

334,158

 

Contract liabilities

 

 

179,322

 

 

 

200,041

 

 

 

166,415

 

Accrued expenses and other current liabilities

 

 

435,061

 

 

 

452,829

 

 

 

459,517

 

Current liabilities held-for-sale

 

 

46,706

 

 

 

83,408

 

 

 

79,487

 

Total current liabilities

 

 

994,246

 

 

 

1,069,318

 

 

 

1,048,286

 

Long-term debt

 

 

286,801

 

 

 

331,191

 

 

 

331,222

 

Long-term lease liabilities

 

 

31,182

 

 

 

32,928

 

 

 

33,577

 

Other long-term liabilities

 

 

61,868

 

 

 

65,927

 

 

 

66,995

 

Long-term liabilities held-for-sale

 

 

 

 

 

 

 

 

10,576

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

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: 44,078,469 shares as of June 30, 2022, 45,840,260 shares as of December 31, 2021 and 45,818,719 shares as of June 30, 2021

 

 

441

 

 

 

458

 

 

 

458

 

Additional paid-in capital

 

 

467,159

 

 

 

559,752

 

 

 

556,615

 

Accumulated other comprehensive income (loss)

 

 

2,388

 

 

 

(3,359

)

 

 

(2,750

)

Retained earnings

 

 

413,931

 

 

 

410,831

 

 

 

401,061

 

Total Granite Construction Incorporated shareholders’ equity

 

 

883,919

 

 

 

967,682

 

 

 

955,384

 

Non-controlling interests

 

 

33,316

 

 

 

27,881

 

 

 

32,858

 

Total equity

 

 

917,235

 

 

 

995,563

 

 

 

988,242

 

Total liabilities and equity

 

$

2,291,332

 

 

$

2,494,927

 

 

$

2,478,898

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

$

632,260

 

 

$

713,425

 

 

$

1,107,195

 

 

$

1,220,396

 

Materials

 

 

136,026

 

 

 

121,246

 

 

 

208,677

 

 

 

180,607

 

Total revenue

 

 

768,286

 

 

 

834,671

 

 

 

1,315,872

 

 

 

1,401,003

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction

 

 

571,094

 

 

 

637,158

 

 

 

997,837

 

 

 

1,091,360

 

Materials

 

 

118,712

 

 

 

99,281

 

 

 

189,780

 

 

 

157,699

 

Total cost of revenue

 

 

689,806

 

 

 

736,439

 

 

 

1,187,617

 

 

 

1,249,059

 

Gross profit

 

 

78,480

 

 

 

98,232

 

 

 

128,255

 

 

 

151,944

 

Selling, general and administrative expenses

 

 

53,162

 

 

 

58,628

 

 

 

111,663

 

 

 

119,789

 

Other costs

 

 

20,177

 

 

 

5,868

 

 

 

28,391

 

 

 

80,177

 

Gain on sales of property and equipment, net

 

 

(385

)

 

 

(1,052

)

 

 

(717

)

 

 

(3,297

)

Operating income (loss)

 

 

5,526

 

 

 

34,788

 

 

 

(11,082

)

 

 

(44,725

)

Other (income) expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(782

)

 

 

(162

)

 

 

(1,405

)

 

 

(395

)

Interest expense

 

 

3,896

 

 

 

5,502

 

 

 

7,471

 

 

 

10,874

 

Equity in income of affiliates, net

 

 

(541

)

 

 

(2,607

)

 

 

(235

)

 

 

(2,875

)

Other (income) expense, net

 

 

3,357

 

 

 

(1,800

)

 

 

4,739

 

 

 

(2,026

)

Total other expense, net

 

 

5,930

 

 

 

933

 

 

 

10,570

 

 

 

5,578

 

Income (loss) from continuing operations before income taxes

 

 

(404

)

 

 

33,855

 

 

 

(21,652

)

 

 

(50,303

)

Provision for (benefit from) income taxes on continuing operations

 

 

2,549

 

 

 

7,710

 

 

 

(2,782

)

 

 

(14,047

)

Net income (loss) from continuing operations

 

 

(2,953

)

 

 

26,145

 

 

 

(18,870

)

 

 

(36,256

)

Net income from discontinued operations

 

 

19,521

 

 

 

29,602

 

 

 

25,617

 

 

 

26,680

 

Net income (loss)

 

 

16,568

 

 

 

55,747

 

 

 

6,747

 

 

 

(9,576

)

Amount attributable to non-controlling interests from continuing operations

 

 

583

 

 

 

(1,286

)

 

 

(2,535

)

 

 

(2,158

)

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

 

 

(2,370

)

 

 

24,859

 

 

 

(21,405

)

 

 

(38,414

)

Net income attributable to Granite Construction Incorporated from discontinued operations

 

 

19,521

 

 

 

29,602

 

 

 

25,617

 

 

 

26,680

 

Net income (loss) attributable to Granite Construction Incorporated

 

$

17,151

 

 

$

54,461

 

 

$

4,212

 

 

$

(11,734

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic continuing operations per share

 

$

(0.05

)

 

$

0.54

 

 

$

(0.47

)

 

$

(0.84

)

Basic discontinued operations per share

 

 

0.44

 

 

 

0.65

 

 

 

0.57

 

 

 

0.58

 

Basic earnings (loss) per share

 

$

0.39

 

 

$

1.19

 

 

$

0.10

 

 

$

(0.26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted continuing operations per share

 

$

(0.05

)

 

$

0.52

 

 

$

(0.47

)

 

$

(0.84

)

Diluted discontinued operations per share

 

 

0.44

 

 

 

0.62

 

 

 

0.57

 

 

 

0.58

 

Diluted earnings (loss) per share

 

$

0.39

 

 

$

1.14

 

 

$

0.10

 

 

$

(0.26

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,534

 

 

 

45,798

 

 

 

45,128

 

 

 

45,748

 

Diluted

 

 

44,534

 

 

 

47,798

 

 

 

45,128

 

 

 

45,748

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

Operating activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

6,747

 

 

$

(9,576

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

32,328

 

 

 

52,853

 

Amortization related to long-term debt

 

 

1,423

 

 

 

4,666

 

Gain on sale of discontinued operations

 

 

(6,234

)

 

 

 

Gain on sales of property and equipment, net

 

 

(9,513

)

 

 

(34,190

)

Deferred income taxes

 

 

2,545

 

 

 

 

Stock-based compensation

 

 

4,376

 

 

 

3,642

 

Equity in net (income) loss from unconsolidated joint ventures

 

 

17,228

 

 

 

(6,972

)

Net loss from affiliates

 

 

(6,165

)

 

 

(8,039

)

Other non-cash adjustments

 

 

(84

)

 

 

1,483

 

Changes in assets and liabilities

 

 

(145,929

)

 

 

(34,871

)

Net cash used in operating activities

 

$

(103,278

)

 

$

(31,004

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(49,968

)

 

 

(5,000

)

Purchases of property and equipment

 

 

(73,216

)

 

 

(46,437

)

Proceeds from sales of property and equipment

 

 

15,289

 

 

 

48,517

 

Proceeds from the sale of discontinued operations

 

 

142,571

 

 

 

 

Issuance of notes receivable

 

 

(4,560

)

 

 

 

Collection of notes receivable

 

 

201

 

 

 

4,581

 

Net cash provided by investing activities

 

$

30,317

 

 

$

1,661

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from long-term debt

 

 

50,000

 

 

 

 

Debt principal repayments

 

 

(124,660

)

 

 

(4,677

)

Cash dividends paid

 

 

(11,857

)

 

 

(11,890

)

Repurchases of common stock

 

 

(70,374

)

 

 

(2,497

)

Contributions from non-controlling partners

 

 

6,327

 

 

 

11,350

 

Distributions to non-controlling partners

 

 

(6,700

)

 

 

(5,836

)

Other financing activities, net

 

 

209

 

 

 

(62

)

Net cash used in financing activities

 

$

(157,055

)

 

$

(13,612

)

Net decrease in cash, cash equivalents and restricted cash

 

$

(230,016

)

 

$

(42,955

)

Cash, cash equivalents and $1,512 in restricted cash at beginning of each period

 

 

413,655

 

 

 

437,648

 

Cash, cash equivalents and $0 and $1,512 in restricted cash at end of each period

 

$

183,639

 

 

$

394,693

 

Less: Cash, cash equivalents and $0 and $1,512 in restricted cash included in current assets held-for-sale at end of each period

 

 

8,617

 

 

 

17,073

 

Cash and cash equivalents of continuing operations at end of period

 

$

175,022

 

 

$

377,620

 

Non-GAAP Financial Information

The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Specifically, management believes that non-GAAP financial measures such as EBITDA from continuing operations and EBITDA margin from continuing operations are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing adjusted EBITDA from continuing operations and adjusted EBITDA margin from continuing operations, non-GAAP measures, to indicate the impact of Other costs which include a legal settlement charge, legal and accounting investigation fees, an accrual relating to the expected resolution of the SEC investigation, divestiture expenses and restructuring charges.

We provide adjusted income (loss) before provision for (benefit from) income taxes from continuing operations, adjusted provision for (benefit from) income taxes, adjusted net income (loss) attributable to Granite Construction Incorporated from continuing operations, and adjusted diluted earnings per share attributable to common shareholders from continuing operations, non-GAAP measures, to indicate the impact of the following:

  • Other costs which include a legal settlement charge, legal and accounting investigation fees, an accrual relating to the expected resolution of the SEC investigation, divestiture expenses and restructuring charges; and
  • Interest expense and amortization of debt discount related to our 2.75% Convertible Notes.

Management believes that these additional non-GAAP financial measures facilitate comparisons between industry peer companies and management uses these non-GAAP financial measures in evaluating the Company's performance. 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 U.S. GAAP. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. 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. The Company does not provide a reconciliation of forward-looking adjusted EBITDA margin from continuing operations to the most directly comparable forward-looking GAAP measure of net income (loss) attributable to Granite Construction Incorporated from continuing operations because the timing and amount of the excluded items are unreasonably difficult to fully and accurately estimate.

GRANITE CONSTRUCTION INCORPORATED

EBITDA AND ADJUSTED EBITDA(1)

(Unaudited - dollars in thousands)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Continuing Operations - EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

 

$

(2,370

)

 

$

24,859

 

 

$

(21,405

)

 

$

(38,414

)

Depreciation, depletion and amortization expense from continuing operations(2)

 

 

15,846

 

 

 

18,412

 

 

 

32,904

 

 

 

33,255

 

Provision for (benefit from) income taxes on continuing operations

 

 

2,549

 

 

 

7,710

 

 

 

(2,782

)

 

 

(14,047

)

Interest expense, net of interest income from continuing operations

 

 

3,114

 

 

 

5,340

 

 

 

6,066

 

 

 

10,479

 

EBITDA from continuing operations(1)

 

$

19,139

 

 

$

56,321

 

 

$

14,783

 

 

$

(8,727

)

EBITDA margin from continuing operations(1)(3)

 

 

2.5

%

 

 

6.7

%

 

 

1.1

%

 

 

-0.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing Operations - ADJUSTED EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other costs

 

$

20,177

 

 

$

5,868

 

 

$

28,391

 

 

$

80,177

 

Adjusted EBITDA from continuing operations(1)

 

$

39,316

 

 

$

62,189

 

 

$

43,174

 

 

$

71,450

 

Adjusted EBITDA margin from continuing operations(1)(3)

 

 

5.1

%

 

 

7.5

%

 

 

3.3

%

 

 

5.1

%

(1)

We define EBITDA from continuing operations as U.S. GAAP net income (loss) attributable to Granite Construction Incorporated from continuing operations, adjusted for net interest expense, taxes, depreciation, depletion and amortization. Adjusted EBITDA and adjusted EBITDA margin from continuing operations exclude the impact of Other costs as described above.

(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 condensed consolidated statements of operations.

(3)

Represents EBITDA and adjusted EBITDA from continuing operations divided by consolidated revenue from continuing operations of $768 million, $835 million, $1,316 million and $1,401 million for the three and six months ended June 30, 2022 and 2021, respectively.

GRANITE CONSTRUCTION INCORPORATED

ADJUSTED NET INCOME RECONCILIATION

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Income (loss) from continuing operations before income taxes

 

$

(404

)

 

$

33,855

 

 

$

(21,652

)

 

$

(50,303

)

Interest expense related to 2.75% Convertible Notes (1)

 

 

1,912

 

 

 

 

 

 

3,825

 

 

 

 

Other costs

 

 

20,177

 

 

 

5,868

 

 

 

28,391

 

 

 

80,177

 

Amortization of debt discount

 

 

 

 

 

1,753

 

 

 

 

 

 

3,468

 

Adjusted income before income taxes from continuing operations

 

$

21,685

 

 

$

41,476

 

 

$

10,564

 

 

$

33,342

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

 

$

2,549

 

 

$

7,710

 

 

$

(2,782

)

 

$

(14,047

)

Tax effect of adjusting items (2)

 

 

2,623

 

 

 

1,981

 

 

 

5,256

 

 

 

21,748

 

Adjusted provision for income taxes

 

$

5,172

 

 

$

9,691

 

 

$

2,474

 

 

$

7,701

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated from continuing operations

 

$

(2,370

)

 

$

24,859

 

 

$

(21,405

)

 

$

(38,414

)

After-tax adjusting items

 

 

19,466

 

 

 

5,640

 

 

 

26,960

 

 

 

61,897

 

Adjusted net income attributable to Granite Construction Incorporated from continuing operations

 

$

17,096

 

 

$

30,499

 

 

$

5,555

 

 

$

23,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of common stock

 

 

44,534

 

 

 

47,798

 

 

 

45,128

 

 

 

45,748

 

Add: dilutive effect of restricted stock units and 2.75% Convertible Notes (3)

 

 

7,761

 

 

 

 

 

 

7,802

 

 

 

1,569

 

Less: dilutive effect of 2.75% Convertible Notes (4)

 

 

(7,309

)

 

 

(1,546

)

 

 

(7,309

)

 

 

(1,066

)

Adjusted diluted weighted average shares of common stock

 

 

44,986

 

 

 

46,252

 

 

 

45,621

 

 

 

46,251

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted income per share attributable to common shareholders for continuing operations

 

$

0.38

 

 

$

0.66

 

 

$

0.12

 

 

$

0.51

 

(1)

On January 1, 2022, we adopted ASU 2020-06 that requires the application of the if-converted method for calculating diluted earnings per share. In accordance with the if-converted method, during 2022 interest expense related to the 2.75% Convertible Notes is added back to income in order to calculate adjusted diluted earnings per share attributable to common shareholders.

(2)

The tax effect of adjusting items was calculated using the Company’s estimated annual statutory tax rate. The tax effect of adjusting items for the three and six months ended June 30, 2022 excludes the $12 million accrual for the expected resolution of the SEC investigation which is not tax deductible.

(3)

Represents the dilutive effect on adjusted net income attributable to Granite Construction Incorporated of 452,000 related to restricted stock units and 7,309,000 related to the 2.75% Convertible Notes potentially converting into shares for the three months ended June 30, 2022. Represents the dilutive effect on adjusted net income attributable to Granite Construction Incorporated of 493,000 and 503,000 shares related to restricted stock units and 7,309,000 and 1,066,000 shares related to the 2.75% Convertible Notes potentially converting into shares for the six months ended June 30, 2022 and 2021, respectively.

(4)

When calculating diluted net income (loss) per share attributable to common shareholders, U.S. GAAP requires that we include potential share dilution from the 2.75% Convertible Notes as though the shares were converted at the beginning of the period. For the purposes of calculating adjusted diluted net income per share attributable to common shareholders, the dilutive effect from the 2.75% Convertible Notes is removed to reflect the impact of the purchased equity derivative instrument which offsets any potential share dilution from the 2.75% Convertible Notes if they were to be converted.

 

Contacts

Investors

Wenjun Xu, 831-761-7861

Or

Media

Erin Kuhlman, 831-768-4111

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