WATSONVILLE — Granite Construction announced a $41 million first quarter loss as expected Tuesday and executives said they doubted business would significantly pick up by year’s end.
William Dorey, chief executive officer and president, described a crowded field of competitors vying for too few projects and an uncertain outlook for transportation funding. In addition, poor weather delayed many projects.
Although there are some bright spots, such as a growing backlog of projects primarily in the Northeast and Pacific Northwest regions and some positive legislative discussions about transportation funding, Dorey said key macroeconomic factors such as private sector development and federal and state transportation funding have yet to be resolved.
“Competition for the available work remains tough and we expect gross margins on smaller projects to remain under pressure for the balance of the year,” Dorey said. Revenue on some large projects wouldn’t be recognized until next year, which would also affect this year’s balance sheet negatively.
International worries drove stocks down across the board Tuesday and, for Granite, shares tumbled more than 6.7 percent to close at $31.58.
First quarter revenue dropped 36 percent from a year ago, but the company noted that several factors boosted last year’s usually slow quarter, such as a large legal settlement and work on a large federal project to build a border fence between the U.S. and Mexico.
he value of the company’s backlog increased $177 million to $1.6 billion during the quarter. Company executives reported forays into new areas such as military and alternative energy construction and said they are hopeful about their chances to build a large infrastructure project in Guam, which will be the new location of U.S. military bases currently in Japan.
There is some hope on the political front but it has not yet translated to actual transportation funding, Dorey said.
“The ship will start to turn when the private development market resumes building,” he said.
That won’t happen until developers have worked through an inventory of buildable lots that have sat empty during the recession.
The company reported $299 million in cash and short-term marketable securities.
WHAT: One of the largest heavy civil construction contractors in the U.S.
HEADQUARTERS: 585 W. Beach St., Watsonville
STOCK PRICE: On Tuesday, shares trading on the New York Stock Exchange as GVA, dropped $2.28 to close at $31.58. In the last year, shares have traded between $27.14 and $45.94.
FINANCIALS: First quarter 2010 revenue was $220.7 million compared to $347.4 million a year ago. Net loss for the quarter was $40.95 million, or a loss of $1.09 earnings per share.
This article was published in the Santa Cruz Sentinel HERE