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Acquisition Activity Impacts Granite Construction's First Quarter


Granite Construction Inc. reported a net loss of $11.4 million for the quarter ended March 31, 2018, compared to a net loss of $23.8 million in the first quarter of 2017. First quarter 2018 results include the impact of acquisition expenses related to Granite’s announced and pending acquisition of Layne Christensen Co. and from its recently completed purchase of LiquiForce. 

"We were pleased to deliver solid results with a record-revenue first quarter, carrying through some of the momentum we created in 2017," said James H. Roberts, president and chief executive officer of Granite Construction. "All three segments delivered strong revenue growth and improved year-over-year margins. Our Construction segment led the way, with the Construction Materials segment producing strong top-line revenue growth in our seasonally weakest quarter. The Large Project Construction segment again produced solid revenue growth and improved profitability, driven primarily by the contribution of newer projects in our portfolio. While work on under-performing, mature projects had less impact in the first quarter, it remained a drag on overall profitability, and it is expected to negatively impact margins through much of 2018.

"The near- and long-term outlook for demand and funding of infrastructure investment continues to improve," Roberts said. "Backlog trends remain steady, even with more than 20 percent revenue growth in the first quarter. Large Project Construction segment backlog at $2.61 billion and Construction segment backlog at nearly $1 billion points to continued solid demand. The integration of LiquiForce is moving along as planned, and the integration planning related to our announced acquisition of Layne Christensen is progressing very well. Considering the progress that our joint integration teams have made to date, we are increasingly confident that this deal represents the ideal combination of value creation for all stakeholders. We remain on track for a successful closing in the second quarter of 2018."

Construction Materials revenue increased 32.5 percent to $45.7 million, compared with $34.5 million last year. The division's gross loss of $2.5 million improved 47.9percent from a loss of $4.8 million last year. 

While remaining negative in the quarter, gross profit margin improved more than 800 basis points from last year to (5.4) percent. The gross profit and margin improvement was attributable primarily to improved external demand across geographies in the West. 

"Our results and our outlook reflect our focus on execution of our strategic and operating plans, building and investing to capture the benefits of positive market trends. Demand continues to point to growth fueled by private market opportunities now combining with improving public funding trends across geographies and end markets. These early-stage dynamics point to broad opportunities for the next three years or more. Aligned to our emphasis on efficiency and disciplined cost control, our expectations for steady top-line growth and solid bottom-line improvement remain in place across our business for 2018 and beyond," concluded Roberts.