Granite Construction revenues drop, net income climbs

Santa Cruz Sentinel

WATSONVILLE — Two weeks after announcing layoffs that cut its workforce by 13 percent, Granite Construction announced third quarter revenues were down more than $49 million from last year but net income climbed more than $8 million.

Lower demand for services in the West was due to budget uncertainties and highly competitive market conditions, but the company experienced a slight pickup in demand for construction materials during the third quarter, said James H. Roberts, president and chief executive officer. Roberts told analysts Tuesday that it was a “mixed bag.” The strategy, he said, is to play “both offense and defense to ensure that we structure the business to take advantage of the opportunity as well as make the tough decisions that will help get us through this downturn.”

Part of the defense, announced Oct. 25 , was a company-wide restructuring that included a 227-person layoff, or 13 percent of the total work force. Some positions will be “streamlined” and consolidated into other offices as well in the coming months, Roberts said.

“While necessary, the decision to reduce our work force was incredibly difficult because of the personal impact it has on all of our people,” Roberts said.

The company also announced it was initiating a divestiture of its real estate investment business and certain fixed assets to focus on core business as part of an “enterprise improvement plan.”

While the cuts and other changes are expected to cost the company between $99 million and $145 million, most of which will be recognized in the current fourth quarter, the estimated savings is expected to be between $36 million and $40 million annually.
The company’s offensive strategy is described as continuing to diversify the kinds of projects it bids on to incorporate alternative and traditional energy, heavy and light rail transportation and federal government work.

Roberts cited a $126 million Folsom Dam project and a $306 million project in Washington as well as new awards during the quarter including a $125.9 million auxiliary spillway control structure and a $77.7 million rail project in California and $47.7 million company share of a freeway reconstruction project in Utah. Total contract backlog at the end of the third quarter was $1.6 billion, or essentially flat compared to a year ago.

Next year could bring good news for more transportation funding in California as well as at the federal level, Roberts said. The private sector market in California, however, continues to look weak. Roberts reported that one of three current bids on military related projects in Guam was not accepted, but Granite expects to bid next year on Guam projects valued at more than $700 million.

“In many respects we are getting back to basics and focusing our energy on those things that we do well and are within our control,” Roberts said.

In other news, the company introduced its new chief financial officer and vice president, Laurel Krzeminski, who was appointed by the board of directors Nov. 3. Krzeminski, 56, joined the company as corporate controller in 2008 and had been serving as interim chief financial officer since June 1.

In her new position, Krzeminski’s annual base salary increased from $240,000 to $350,000 in addition to annual bonus opportunities topping $208,000 and a vehicle allowance of $1,000 per month, according to company documents filed with the Security and Exchange Commission.

Krzeminski’s previous positions include working with The Gillette Co., Duracell and Braun North American business units.


HEADQUARTERS: 585 W. Beach St., Watsonville
STOCK PRICE: On Tuesday, shares trading on the New York Stock Exchange as GVA climbed 23 cents to close at $26.80. In the last year, shares have traded between $21.22 and $36.
FINANCIALS: First quarter 2010 revenue was $670.85 million compared to $720.28 million a year ago. Net income for the quarter was $43.3 million, or 99 cents earnings per share, compared to net income of $36.54 million or 79 cents per share, a year ago.
GUIDANCE: The company expects construction segment revenue of $925 million to $1.1 billion and construction materials segment revenue of $200 million to $250 million for the year. Net income attributable to non-controlling interests is expected to be about $20 million for 2010, excluding restructuring charges.

This article first appeared here.


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