Granite Materials Segment Revenues Increase

Granite Construction Inc. reported a net loss of $153.1 million and $3.36 per diluted share for the nine months ended Sept. 30, 2020, compared to a net loss of $40.8 million and $0.87 per diluted share year-over-year. 

The net loss included $194.4 million of transaction costs, amortization of debt discount, non-recurring legal and accounting investigation costs and non-cash impairment charges, after-taxes, compared to $26.1 million year-over-year. 

Excluding the impact of these expenses and charges, adjusted net income for the nine months ended Sept. 30, 2020 was $41.3 million and $0.89 per diluted share compared to an adjusted net loss of $14.7 million and $0.31 per diluted share year-over-year. Prior period financial information included herein reflects the impact of the previously disclosed restatement of the first three quarters in the year ended Dec. 31, 2019.

For the nine months ended Sept. 30, 2020, the company’s strong vertically-integrated business results continued and it reduced project write downs within the Heavy Civil Operating Group. Revenue increased $56.9 million to $2.6 billion year-over-year, and gross profit margin increased to 9.1%, compared to 6.7% year-over-year. 

For the first nine months of 2020, SG&A expenses totaled $252.6 million, up $28.0 million year-over-year from $224.6 million. The 2020 increase is attributable to non-recurring legal and accounting costs of $28.4 million related to the Audit/Compliance Committee investigation.

Materials segment revenue increased year over year primarily due to higher external sales volumes when compared to prior-year results, which were impacted by inclement weather. Materials segment gross profit and gross profit margin increased due to an increase in sales volumes as well as achievement of operational efficiencies.

The company ended the third quarter of 2020 with Committed and Awarded Projects (CAP) of $4.2 billion, up sequentially, which includes $1.4 billion of best-value procurement work. CAP balance decreased $0.5 billion year-over-year reflecting lower Heavy Civil Operating Group contract backlog. Cash and marketable securities totaled $393.7 million as of Sept. 30, 2020, compared to $232.6 million as of Sept. 30, 2019, reflecting Granite’s disciplined cash management and the favorable settlement of several claims during 2020.

“We shortly expect to achieve another significant milestone as we become current with our SEC filings and compliant with NYSE listing requirements,” said Kyle Larkin, Granite president. “I am very proud of the teams that have worked long hours to make this happen. We still have work to do, as we have already announced we will be late with our 2020 Form 10-K filing. Importantly, this should not adversely affect our listing status with the NYSE or other stakeholder relationships subject to reporting requirements.

“Despite the pandemic and its challenges, most of our businesses performed very well, all the while building quality work for our customers,” said Larkin. “Our vertically integrated businesses have delivered exceptional results despite the unprecedented environment.

Further, the newly established leadership team in the Heavy Civil Operating Group continues to make solid progress working through their portfolio of projects while pursuing new opportunities that meet our updated risk criteria. These efforts, in addition to prudent cash management and the favorable settlement of several significant claims, culminated in the highest operating cash flow we have achieved since 2006. I am confident in Granite’s outlook and look forward to sharing more with you when we finalize the review of our strategic plan.”

Related posts