WATSONVILLE — The continued economic slowdown, especially in the public sector realm, has continued to cut into revenues for heavy civil contractor Granite Construction, which reported Thursday a $59 million net loss for the year.
The company, which last year announced layoffs and plans to sell its real estate investment business, still managed, however, to increase its national backlog of projects by 30 percent during the year.
“Overall, our business performed well last year in the face of one of the toughest environments we have experienced in decades,” said Jim Roberts, chief executive officer and president.
In a conference call with analysts and investors, Roberts said the company was continuing to lower its cost structure and focus on bidding select jobs in which the company appeared to have a clear advantage.
“We have made significant headway to position the company for long-term growth in what continues to be a very challenging market,” he said.
The private construction market has stalled, creating an influx of competitors bidding on public sector projects. It had an impact on the company’s construction and materials segments last year, Roberts said.
Construction segment revenue decreased 11 percent to $214 million. Large project construction group revenues, however, climbed from $147.5 million in fourth quarter 2009 to $154.8 million by year-end 2010. Construction materials revenue for the quarter dropped from $47.3 million to $46.7 million in the fourth quarter.
For the year, construction revenue dropped from $1.2 billion in 2009 to $943.2 million last year. Large project construction revenue dropped from $603.5 million in 2009 to $584.4 million in 2010. Construction materials revenue increased in the year from $205.9 million in 2009 to $222.1 million in 2010.
The company also recognized a $107 million restructuring charge in the fourth quarter.
In addition to being more selective about projects, the company has continued to try to diversify into new markets, such as energy and rail projects.
Roberts said the backlog growth was encouraging, but he didn’t expect the larger economic picture to improve until there was both an increase in public sector funding for the long-term and resurgence in private funding.
“While we believe the private development market has bottomed, we do not believe we will see improvement in the near term,” Roberts said. “We expect it will bounce along the bottom for the next 12-18 months, particularly in some of the markets we serve including California, Arizona, Washington and Nevada.”
While Congress is likely to approve another short-term extension of the Federal Highway Bill, according to Roberts, “Short-term fixes are not the solution.” And, while President Barack Obama has shown support for increasing funding for infrastructure, there is ongoing disagreement about how to pay for it.
“Despite these macro-economic challenges, we will continue to move forward with our strategy to operate our business as efficiently and effectively as possible,” Roberts said. “We are on the right path.”
Granite Construction Inc.
WHAT: Granite Construction Inc. is the holding company for Granite Construction Co., one of the largest heavy civil construction contractors that serves both public and private sector clients in the U.S.
HEADQUARTERS: 585 W. Beach St., Watsonville
BACKGROUND: Founded in 1922, the company incorporated in 1990
LEADERSHIP: James H. Roberts, chief executive officer and president
EMPLOYEES: Granite employed about 1,500 salaried employees and about 800 hourly employees at year-end. On average during the year, the company employs about 2,400 hourly workers.
INFORMATION: 724-1011; www.graniteconstruction.com
STOCK PRICE: On Thursday, shares trading on the New York Stock Exchange as GVA, climbed 64 cents to close at $27.85. In the last year, shares have traded between $21.22 and $34.58.
FINANCIALS: Fourth quarter 2010 revenue was $417.2 million, compared $434.7 million a year ago. Net loss for the quarter was $50 million, or a loss of $1.32 per share, compared to net income of $16 million, 41 cents per share, a year ago. The company recognized $107.3 million in restructuring charges during the fourth quarter 2010. For 2010, Revenues were $1.8 billion compared to $2 billion in 2009. The company reported a net loss of $59 million, or a loss of $1.56 earnings per diluted share, compared with net income of $73.5 million for 2009, $1.90 earnings per diluted share in 2009.
At year-end, total backlog was $1.9 billion, compared to $1.4 billion at the end of 2009.
The company reported $395.7 million in cash, cash equivalents and marketable securities.
GUIDANCE: The company forecast continued weak demand for both public sector infrastructure projects and private sector commercial and residential development which would negatively impact revenues.