Granite Construction Q4 2009 results: Revenue down 27%, net income down 40% but balance sheet strong
- Granite East revenues totaled $550.2 million compared with $695.0 million in the prior year.
- Gross profit margin for the year was 20 percent, compared with 18 percent for the same period last year, driven primarily by a quality project portfolio, improved project execution and issue resolutions with project owners.
- Operating income totaled $85.7 million compared with $94.2 million in 2008.
- Fourth-quarter 2009 Financial Results
- Revenues for the quarter totaled $434.7 million, compared with $627.3 million in 2008, driven primarily by a reduction in Granite West revenue.
- Gross profit margin increased to 21 percent, up from 19 percent in 2008, reflecting higher gross profit margins in both divisions.
- Operating income for the quarter was $35.6 million compared with $58.4 million in the prior year.
- Other income for the quarter was $3.7 million compared with $6.8 million last year. In 2008, the company recognized a pre-tax gain related to the sale of an investment in an affiliate, which was partially offset by a $10.9 million loss on available-for-sale securities.
- General and administrative expenses decreased $4.0 million in the fourth quarter of 2009 to $55.1 million. The decrease reflects approximately $2.0 million in lower incentive compensation and salary expense.
- During the fourth quarter of 2009, the company recorded a $9.5 million restructuring charge which includes $7.0 million associated with a reduction in force and an impairment of $2.5 million related to selected plant facilities in the Pacific Northwest.
- Net income attributable to noncontrolling interests in joint ventures was $11.0 million compared with $12.3 million in 2008.
- Granite West revenues for the quarter totaled $301.6 million, compared with $463.2 million for the same period in 2008, reflecting decreases in public- and private-sector work, and sales of construction materials.
- Gross profit margin for the fourth quarter was 18 percent, unchanged from a year ago.
- Operating income for the quarter totaled $28.4 million compared with $51.3 million for the same period last year.
- Granite East
- Granite East revenues for the quarter totaled $132.8 million compared with $163.2 million for the same period last year.
- Gross profit margin for the quarter increased to 26 percent, compared with 21 percent for the same period last year, due primarily to the settlement of outstanding revenue issues and the completion of a large project.
- Operating income for the quarter increased $3.5 million to $30.5 million.
Dorey says that 2010 will prove to be very challenging.
“Backlog in the East increased, however, our backlog in the West is down substantially as we continue to face intense competitive pressure for the available public-sector work,” he said in a press release. “While we expect some benefit from large projects reaching the profit recognition threshold this year, the positive impact will not offset the lower margins we anticipate from our work in the West.”
Dorey notes that public works funding challenges will continue as many states and local agencies adjust their budgets to compensate for lower tax revenues.
“Based on current expectations, our earnings will be lower in 2010 than what we achieved in 2009,” Dorey said in a press release.
“Despite our current challenges, we are encouraged about the longer-term prospects for our business,” he continued. “We are increasing our business development efforts, strengthening our alliances with well-established partners and pursuing work in new markets, as well as in our traditional transportation-related markets. In addition to several conventional and solar-related energy projects, we are also pursuing substantially more federal government work.”