Watsonville’s Granite Construction reports climb in earnings

GVAlogoSanta Cruz Sentinel

WATSONVILLE—The construction business is up again and Granite Construction executives predicted Friday that business will continue to pick up for the year.

“With a strong backlog of work and robust bidding activity, the outlook for continued growth remains positive,” said James Roberts, CEO and president.

The company reported that second quarter revenues were $585.9 million, up 6.5 percent from a year ago. Net income for the quarter was $13.64 million, or 34 cents earnings per diluted share, compared to $1.42 million, or 4 cents earnings per diluted share last year in the same quarter.

The company’s project backlog climbed to a record $2.6 billion for the quarter.

Although the construction portion of the total backlog increased more than 20 percent to $975 million year-over-year, revenue from that part of the business was down nearly 13 percent from a year ago mostly due to project timing, a change in the mix of power projects from 2013, and weaker-than-anticipated government work in the Northwest, according to executives.

The company has announced several large recent wins including a $75 million joint project to reconstruct a bridge in Illinois, a $48 million runway rehabilitation contract in Alaska, a $34 million highway improvement project by the Arizona Department of Transportation, and a job to manage construction of about 200 miles of Texan transmission line for an undisclosed sum.

Roberts said the company was successfully gaining traction in several of its new power markets including solar and mining as well as picking up military-related work in Guam.

“We look to execute on the momentum we built in the first half of the year,” Roberts told analysts and investors on a conference call Friday morning.

Roberts, however, continued to rail against federal legislators for failing to pass long-term transportation funding. While individual states are beginning to build their own more reliable funding resources, he warned that short-term bills undermined job stability in the industry.

In other company business, the company welcomed its newest executive, Christopher S. Miller, 47, of CH2M HILL, a 26,000-employee international engineering and construction firm. Miller will be stepping into the position of executive vice president and chief operating officer, effective Aug. 4. Miller will oversee day-to-day operations for an annual base salary of $500,000, plus a $150,000 stock award, relocation assistance and several incentive plans for compensation, retention and severance.

AT A GLANCE

Granite Construction Inc.

WHAT: Granite Construction Inc. is the holding company for Granite Construction Co., Granite Construction Northeast Inc., and Kenny Construction. The heavy civil construction contractor in the U.S. operates in 25 states, serving both public and private sector clients in the transportation, power, federal, tunneling, underground, industrial/mining and water resources markets.

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 1,600 salaried, plus about 3,500 hourly employees, a number that fluctuates seasonally.

INFORMATION: 831-724-1011; www.graniteconstruction.com

STOCK PRICE: Friday, GVA shares were up 26 cents to close at $32.81. In the last year, shares have traded between $27.88 and $40.55.

FINANCIALS: Revenues for the second quarter of 2014 were $585.87 million compared with $550.35 million a year ago in the same quarter. Net income for the quarter was $13.64 million, or 34 cents earnings per diluted share, compared to $1.42 million, or 4 cents earnings per diluted share, in the second quarter 2013. The company reported nearly $146.46 million in cash and cash equivalents.

GUIDANCE: The company maintained its guidance for the year, a revenue forecast of $2.4 billion to $2.8 billion for 2014.

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