Granite reports bright quarter with net income up 47 percent, $3.8B project backlog

James Roberts, Granite Construction president and chief executive. (contributed photo)
James Roberts, Granite Construction president and chief executive. (contributed photo)

WATSONVILLE—Although the second quarter started slowly for Granite Construction, the overall report from executives to investors Friday was that the improving economy is reflected in the company’s stronger revenues, a 47 percent jump in year-over-year net income and a record project backlog of, up 25 percent to nearly $3.8 billion.

Company revenues climbed 6.2 percent from the previous year to $604.2 million for the quarter; net income climbed from $9.6 million to $14.1 million.

It was “the best second quarter since 2009,” said Laurel Krezeminski, executive vice president and chief financial officer.

James Roberts, chief executive officer and president, said the heavy construction contractor’s efforts to diversify geographically and into new construction markets have paid off. Much of the revenue increase came from in the company’s Construction division, which reported a $46 million revenue jump for the first six months of the year compared to the same period in 2015.

“Results improved again despite continued tepid public spending trends,” Roberts said on a webcast conference call with analysts and investors. “I must admit, I do not tire of discussing another quarter of year-over-year construction segment market expansion, the ninth consecutive quarter and the 12th quarter out of the past 14.”

That said, the company stumbled in the area of large projects, reporting a 7.9 percent year-over-year increase, but experiencing delays on several projects due to numerous factors. Roberts described it as “a notable disappointment” that fell below company expectations. The company also sells construction materials and that segment was also down 6 percent in the quarter from a year ago.

“Certainly there are standout areas, some positive and some less so,” Roberts said.

The transportation infrastructure continues to suffer, Roberts said, reiterating concerns that he has noted many times in recent years. State level funding for transportation in California is expected to decrease again “without prompt action.”

The company announced several large recent project wins this month including an $874 million joint contract to build an elevated guideway and stations around the Honolulu International Airport, a $279 million joint contract to build a tunnel in Hartford, Connecticut, a $130 million highway project in Northern California and a $20 million contract to rehabilitate part of the Anchorage airport.

“We’ve been attacking the commercial market much stronger than have in the past,” Roberts said, noting work into new markets such as high tech companies, solar, water and energy markets, as well as a bigger federal market. “All this is exactly as planned, so we would not be reliant on transportation, but it doesn’t mean we aren’t excited about where transportation is going because I do think that there will be a significant infusion at the end of the year.”

When one analyst asked him about his political preference, the CEO declined to state, saying only that both parties have talked about supporting transportation. Historically Democrats have been more proactive in attempting to get funding on the street, he said, but “in either case I think you’re going to see infrastructure investment go to another level with the next president … It’s a real positive for our business either way.”

 

GRANITE CONSTRUCTION

WHAT: Granite Construction Inc. is a national civil contractor and construction materials producer, specializing in complex infrastructure projects, including transportation, industrial and federal contracting.

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: As of Dec. 31, the company employed about 1,800 full-time employees. During 2015, there was an average of 2,500 hourly employees.

INFORMATION: 831-724-1011; graniteconstruction.com

STOCK PRICE: GVA shares were down 96 cents Friday to close at $49.78. In the last year, shares have traded between $28.45–$51.31.

FINANCIALS: Second quarter revenue was $604.58 million, compared with $569.24 million a year ago in the same quarter. Net income was $14.13 million, or 35 cents earnings per diluted share, compared to$9.61 million last year, or 24 cents earnings per diluted share, in the second quarter 2015. The company reported about $161.22 million in cash and cash equivalents. The company backlog was $3.8 billion.

GUIDANCE: The company reaffirmed its guidance for 2016 of mid-single-digit consolidated revenue growth.

 

This article is published in the Santa Cruz Sentinel.

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