WATSONVILLE – Granite Construction‘s third quarter profits dipped slightly from last year amid “intense” competition in the construction industry, but overall revenues climbed nearly 8 percent and the company built its project backlog by $200 million, the company announced Thursday.
Company shares spiked more than 19 percent Thursday, to close at $26.56 after executives spoke with investors on a morning webcast conference call.
Avram Fisher, an analyst with BMO Capital Markets, praised the company on cost controls and said it was “an impressive quarter” for Granite.
Third quarter net income was about $36.5 million or 93 cents per diluted share, compared with $38.68 million, or 99 cents per diluted share, a year ago.
James Roberts, chief executive officer and president of Granite, said the company’s most recent numbers are a testimony to employees, recent cuts and a revamped business model.
“Unfortunately we have yet to see an improvement in the overall economy as well as the competitive environment in the construction industry,” he said. Bid lists are still long with competitors and federal transportation funding remains uncertain. “Given this level of competitiveness, the status quo is not an option.”
Roberts said the company has been aggressively bidding on new projects and the $1.84 billion backlog will be growing by another $410 million worth of projects by the end of the year. The company’s large projects division alone plans to bid on more than $9 billion worth of projects by the end of 2012, he said.
On Thursday, the company announced that it had won a $90 million bid on a military facilities project in Guam of which the company’s portion is 45 percent.
“This is one of the first bids we have submitted to date for work in Guam,” Roberts said. “We are very excited about this opportunity and expect to bid anywhere from about $300 million to $600 million of additional work on the island within the next 12 to 18 months.
During the downturn, the company has turned to new markets such as alternative energy construction and military projects. Last month, the company announced it had built its own solar plant at its Coalinga construction materials facility. The 8-acre, 1-megawatt installation will reduce the facility’s carbon footprint by more than 50 percent, according to the company. It also serves as an example that Granite has experience building large solar projects, the company said.
“Our strategy is to focus our energy on those things we do well and are within our control,” Roberts said. “Our markets will not improve overnight but by operating as efficiently and as effectively as possible, I’m very confident we are making the strategic decisions necessary to diversify, reduce cost and leverage our core capabilities to grow a business.”
AT A GLANCE
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: The company employs about 1,424 salaried employees and 3,516 hourly employees throughout the country. About 374 employees work in Monterey Bay and Watsonville offices.
INFORMATION: 724-1011; www.graniteconstruction.com
STOCK PRICE: On Thursday, shares trading on the New York Stock Exchange climbed $4.25 to close at $26.56. In the last year, shares have traded between $16.92 and $29.73.
FINANCIALS: Third quarter revenues were $728.58 million compared with $670.85 million in 2010. Net income was $36.47 million, or 93 cents per diluted share, compared with $38.68 million, or 99 cents per diluted share, a year ago.
Total contract backlog was $1.84 billion compared with $1.64 billion a year ago and the company reported having $330 million in cash, cash equivalents and marketable securities, down from $388 million a year ago.
GUIDANCE: The company expects construction segment revenue to be $1 billion-$1.1 billion. Large Project Construction segment revenue is expected to be $650 million-$700 million. Construction materials segment revenue is expected to be $190 million-$210 million.
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