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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Granite Construction Inc | NYSE:GVA | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
2.63 | 4.59% | 59.89 | 59.61 | 57.92 | 58.00 | 780,676 | 01:00:00 |
2017 Financial and Operational Highlights
Fourth Quarter
Fiscal Year
Granite Construction Incorporated (NYSE:GVA) today reported net income of $69.1 million for the year ended December 31, 2017 compared with net income of $57.1 million in the prior year. Diluted earnings per share (EPS) for the year was $1.71 compared to $1.42 per share in 2016.
Granite reported net income of $32.8 million for the quarter ended December 31, 2017, compared with net income of $16.2 million in the fourth quarter of 2016. Diluted EPS in the quarter was $0.81 compared to $0.40 per share in the prior-year period.
“Granite delivered outstanding revenue growth and improved profitability in 2017, thanks to the continued focus of our employees and teams on execution, quality and safety,” said James H. Roberts, President and Chief Executive Officer of Granite Construction Incorporated. "A mild start to winter across much of the West allowed our teams to work efficiently to execute on last quarter's all-time record backlog. With today's steady economic trends and steady-to-improving funding environments, along with our ongoing focus on operating efficiency, we expect to continue to drive strong cash flow generation and help deliver significant profit improvement in 2018 and beyond.
"The Construction segment in 2017 produced a third consecutive year with gross profit margin in line with our mid-teens expectations, and a strong year-end performance enabled our Construction Materials segment to deliver solid quarterly and annual profit and margin improvement. As we have seen for much of the past couple years, the Large Project Construction segment was the most challenging, but we expect significant improvement in the back half of 2018,” Roberts continued.
Fiscal Year 2017 Results
Total Company
Construction
Large Project Construction
Construction Materials
Fourth Quarter 2017 Results
Total Company
Construction
Large Project Construction
Construction Materials
Definitive Agreement to Acquire Layne Christensen
On February 14, 2018, Granite announced an agreement to acquire Layne Christensen Company (NASDAQ:LAYN) in a $565-million stock merger, including the assumption of net debt. "This complementary transaction is the next logical step in the evolution of Granite’s strategy, and creates a platform for growth that will deliver significant benefits for shareholders, employees, and customers," said Roberts. "The addition of Layne, a leading water management, construction and drilling company with the #1 position in well drilling and a #2 position in cured-in-place pipe (CIPP) rehabilitation, significantly enhances Granite's presence in the large, growing water infrastructure market."
The transaction is expected to close in the second quarter of 2018.
Outlook
"With voters and legislators making a concerted push for generational commitments to infrastructure investment at the state, regional, and local level, we are only now seeing the early benefits of the long-term public infrastructure funding commitments that were made last year,” Roberts continued.
"Granite teams are extremely well positioned to deliver steady growth and significantly improved profitability in 2018 and beyond. We continue to invest in opportunities for our people, leveraging their immense talents to create and sustain value from both year-end record backlog of $3.72 billion and significant, long-term growth opportunities across geographies and end markets," Roberts said.
The Company’s current expectations for 20183 are:
(1) Net Income includes a $3.7 million provisional benefit, or $0.09 per share, from the revaluation of deferred tax assets and liabilities required by the recently passed H.R. 1, commonly referred to as the Tax Cuts and Jobs Act.
(2) Please refer to a description and reconciliation in the attached EBITDA Reconciliation table.
(3) Granite only. Does not include or reflect potential impact from the acquisition announced February 14, 2018.
Conference Call
Granite will conduct a conference call today, Friday, February 16, 2018, at 8 a.m. Pacific Time/11 a.m. Eastern Time to discuss the results of the quarter ended December 31, 2017. Access to a live audio webcast is available on its Investor Relations website, investor.graniteconstruction.com. An archive of the webcast will be available on the website approximately one hour after the call. The live call also is available by calling 1-877-328-5503; international callers may dial 1-412-317-5472. A replay will be available after the live call through February 23, 2018, by calling 1-877-344-7529, replay access code 10116934; international callers may dial 1-412-317-0088.
About Granite
Through its offices and subsidiaries nationwide, Granite Construction Incorporated (NYSE: GVA) is one of the nation’s largest infrastructure contractors and construction materials producers. Granite specializes in complex infrastructure projects, including transportation, industrial and federal contracting, and is a proven leader in alternative procurement project delivery. Granite is an award-winning firm in safety, quality and environmental stewardship, and has been honored as one of the World’s Most Ethical Companies by Ethisphere Institute for nine consecutive years. Granite is listed on the New York Stock Exchange and is part of the S&P MidCap 400 Index, the MSCI KLD 400 Social Index and the Russell 2000 Index. For more information, visit graniteconstruction.com.
Forward-looking Statements
All statements included or incorporated by reference in this communication, other than statements or characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Granite’s current expectations, estimates and projections about its business and industry, management’s beliefs, and certain assumptions made by Granite and Layne, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words. Examples of such forward-looking statements include, but are not limited to: (1) references to the anticipated benefits of the proposed transaction; (2) the expected future capabilities and served markets of the individual and/or combined companies; (3) projections of financial results, whether by specific market segment, or as a whole, and whether for each individual company or the combined company; (4) market expansion opportunities and segments that may benefit from sales growth as a result of changes in market share or existing markets; (5) the financing components of the proposed transaction; (6) potential credit scenarios, together with sources and uses of cash; and (7) the expected date of closing of the transaction.
These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially and adversely from those expressed in any forward-looking statement. Important risk factors that may cause such a difference in connection with the proposed transaction include, but are not limited to, the following factors: (1) the risk that the conditions to the closing of the transaction are not satisfied, including the risk that required approvals for the transaction from governmental authorities or the stockholders of Layne are not obtained; (2) litigation relating to the transaction; (3) uncertainties as to the timing of the consummation of the transaction and the ability of each party to consummate the transaction; (4) risks that the proposed transaction disrupts the current plans and operations of Granite or Layne; (5) the ability of Granite or Layne to retain and hire key personnel; (6) competitive responses to the proposed transaction and the impact of competitive products; (7) unexpected costs, charges or expenses resulting from the transaction; (8) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; (9) the combined companies’ ability to achieve the growth prospects and synergies expected from the transaction, as well as delays, challenges and expenses associated with integrating the combined companies’ existing businesses; (10) the terms and availability of the indebtedness planned to be incurred in connection with the transaction; and (11) legislative, regulatory and economic developments, including changing business conditions in the construction industry and overall economy as well as the financial performance and expectations of Granite and Layne’s existing and prospective customers. These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in the proxy statement/prospectus that will be included in the Registration Statement on Form S-4 that Granite will file with the Securities and Exchange Commission (“SEC”) in connection with the proposed transaction. Investors and potential investors are urged not to place undue reliance on forward-looking statements in this document, which speak only as of this date. Neither Granite nor Layne undertakes any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances. Nothing contained herein constitutes or will be deemed to constitute a forecast, projection or estimate of the future financial performance of Granite, Layne, or the combined company, following the implementation of the proposed transaction or otherwise.
In addition, actual results are subject to other risks and uncertainties that relate more broadly to Granite’s overall business, including those more fully described in Granite’s filings with the SEC including its annual report on Form 10-K for the fiscal year ended December 31, 2016, and Layne’s overall business and financial condition, including those more fully described in Layne’s filings with the SEC including its annual report on Form 10-K for the fiscal year ended January 31, 2017.
No Offer or Solicitation
This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
Additional Information and Where to Find It
In connection with the proposed transaction, Granite will file a registration statement on Form S-4, which will include a preliminary prospectus of Granite and a preliminary proxy statement of Layne (the “proxy statement/prospectus”), and each party will file other documents regarding the proposed transaction with the SEC. The registration statement has not yet become effective and the proxy statement/prospectus included therein is in preliminary form. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A definitive proxy statement/prospectus will be sent to Layne’s stockholders.
You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). In addition, investors and stockholders will be able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC by Granite on Granite’s Investor Relations website (investor.Granite.com) or by writing to Granite, Investor Relations, 585 West Beach Street, Watsonville, CA 95076 (for documents filed with the SEC by Granite), or by Layne on Layne’s Investor Relations website (investor.laynechristensen.com) or by writing to Layne Company, Investor Relations, 1800 Hughes Landing Boulevard, Suite 800, The Woodlands, TX 77380 (for documents filed with the SEC by Layne).
Participants in the Solicitation
Granite, Layne, and certain of their respective directors, executive officers, other members of management and employees and agents retained, may, under SEC rules, be deemed to be participants in the solicitation of proxies from Layne stockholders in connection with the proposed transaction. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of Layne stockholders in connection with the proposed transaction will be set forth in the proxy statement/prospectus when it is filed with the SEC. You can find more detailed information about Granite’s executive officers and directors in its definitive proxy statement filed with the SEC on April 25, 2017. You can find more detailed information about Layne’s executive officers and directors in its definitive proxy statement filed with the SEC on April 28, 2017. Additional information about Granite’s executive officers and directors and Layne’s executive officers and directors will be provided in the above-referenced Registration Statement on Form S-4 when it becomes available.
GRANITE CONSTRUCTION INCORPORATED CONSOLIDATED BALANCE SHEETS (Unaudited - in thousands, except share and per share data) December 31, December 31, 2017 2016ASSETS
Current assets Cash and cash equivalents $ 233,711 $ 189,326 Short-term marketable securities 67,775 64,884 Receivables, net 479,791 419,345 Costs and estimated earnings in excess of billings 103,965 73,102 Inventories 62,497 55,245 Equity in construction joint ventures 247,826 247,182 Other current assets 36,513 39,908 Total current assets 1,232,078 1,088,992 Property and equipment, net 407,418 406,650 Long-term marketable securities 65,015 62,895 Investments in affiliates 38,469 35,668 Goodwill 53,799 53,799 Other noncurrent assets 75,199 85,449 Total assets $ 1,871,978 $ 1,733,453 LIABILITIES AND EQUITY Current liabilities Current maturities of long-term debt $ 46,048 $ 14,796 Accounts payable 237,673 199,029 Billings in excess of costs and estimated earnings 135,146 97,522 Accrued expenses and other current liabilities 236,407 218,587 Total current liabilities 655,274 529,934 Long-term debt 178,453 229,498 Deferred income taxes 1,361 5,441 Other long-term liabilities 44,085 45,989 Equity Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding — — Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding 39,871,314 shares as of December 31, 2017 and 39,621,140 shares as of December 31, 2016 399 396 Additional paid-in capital 160,376 150,337 Accumulated other comprehensive income (loss) 634 (371 ) Retained earnings 783,699 735,626 Total Granite Construction Incorporated shareholders’ equity 945,108 885,988 Non-controlling interests 47,697 36,603 Total equity 992,805 922,591 Total liabilities and equity $ 1,871,978 $ 1,733,453 GRANITE CONSTRUCTION INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited - in thousands, except per share data)Three Months EndedDecember 31,
Years Ended December 31,
2017 2016 2017 2016 Revenue Construction $ 429,444 $ 359,741 $ 1,664,708 $ 1,365,198 Large Project Construction 290,888 246,077 1,032,229 888,193 Construction Materials 80,942 60,863 292,776 261,226 Total revenue 801,274 666,681 2,989,713 2,514,617 Cost of revenue Construction 364,231 298,045 1,417,694 1,155,983 Large Project Construction 270,530 232,618 1,002,436 824,056 Construction Materials 65,806 54,768 254,650 233,208 Total cost of revenue 700,567 585,431 2,674,780 2,213,247 Gross profit 100,707 81,250 314,933 301,370 SG&A expenses 59,068 59,342 222,811 219,299Restructuring gains
(1,394 ) (1,000 ) (2,411 ) (1,925 ) Gain on sales of property and equipment (1,352 ) (5,994 ) (4,182 ) (8,358 ) Operating income 44,385 28,902 98,715 92,354 Other (income) expense Interest income (1,386 ) (801 ) (4,742 ) (3,225 ) Interest expense 2,703 3,096 10,800 12,366 Equity in income of affiliates (2,200 ) (2,594 ) (7,107 ) (7,177 ) Other income, net (1,878 ) (685 ) (4,699 ) (5,972 ) Total other income (2,761 ) (984 ) (5,748 ) (4,008 ) Income before provision for income taxes 47,146 29,886 104,463 96,362 Provision for income taxes 11,821 10,622 28,662 30,162 Net income 35,325 19,264 75,801 66,200 Amount attributable to non-controlling interests (2,552 ) (3,091 ) (6,703 ) (9,078 ) Net income attributable to Granite Construction Incorporated $ 32,773 $ 16,173 $ 69,098 $ 57,122 Net income per share attributable to common shareholders: Basic $ 0.82 $ 0.41 $ 1.74 $ 1.44 Diluted $ 0.81 $ 0.40 $ 1.71 $ 1.42 Weighted average shares of common stock: Basic 39,857 39,610 39,795 39,557 Diluted 40,387 40,306 40,372 40,225 GRANITE CONSTRUCTION INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - in thousands) Years Ended December 31, 2017 2016 Operating activities Net income $ 75,801 $ 66,200 Adjustments to reconcile net income to net cash provided by operating activities: Non-cash restructuring gains (939 ) (1,000 ) Depreciation, depletion and amortization 66,345 64,375 Gain on sales of property and equipment (4,182 ) (8,358 ) Change in deferred income taxes (4,824 ) 9,842 Stock-based compensation 15,764 13,383 Equity in net loss (income) from unconsolidated construction joint ventures 14,634 (15,614 ) Net income from affiliates (7,107 ) (7,177 ) Changes in assets and liabilities: (9,297 ) (48,505 ) Net cash provided by operating activities 146,195 73,146 Investing activities Purchases of marketable securities (124,543 ) (129,685 ) Maturities of marketable securities 120,000 50,000 Proceeds from called marketable securities — 55,000 Purchases of property and equipment (67,695 ) (90,970 ) Proceeds from sales of property and equipment 10,202 12,946 Collection of notes receivable 1,052 4,331 Other investing activities, net 1,798 1,988 Net cash used in investing activities (59,186 ) (96,390 ) Financing activities Proceeds from long-term debt 25,000 30,000 Debt principal payments (45,000 ) (45,025 ) Cash dividends paid (20,687 ) (20,563 ) Purchases of common stock (6,977 ) (5,227 ) Contributions from non-controlling partners 11,500 5,250 Distributions to non-controlling partners (7,109 ) (5,258 ) Other financing activities 649 557 Net cash used in financing activities (42,624 ) (40,266 ) Increase (decrease) in cash and cash equivalents 44,385 (63,510 ) Cash and cash equivalents at beginning of year 189,326 252,836 Cash and cash equivalents at end of year $ 233,711 $ 189,326 GRANITE CONSTRUCTION INCORPORATED Business Segment Information (Unaudited - dollars in thousands) Three Months Ended December 31, Years Ended December 31, ConstructionLarge ProjectConstruction
ConstructionMaterials
ConstructionLarge ProjectConstruction
ConstructionMaterials
2017 Revenue $ 429,444 $ 290,888 $ 80,942 $ 1,664,708 $ 1,032,229 $ 292,776 Gross profit 65,213 20,358 15,136 247,014 29,793 38,126 Gross profit as a percent of revenue 15.2 % 7.0 % 18.7 % 14.8 % 2.9 % 13.0 % 2016 Revenue $ 359,741 $ 246,077 $ 60,863 $ 1,365,198 $ 888,193 $ 261,226 Gross profit 61,696 13,459 6,095 209,215 64,137 28,018 Gross profit as a percent of revenue 17.2 % 5.5 % 10.0 % 15.3 % 7.2 % 10.7 % GRANITE CONSTRUCTION INCORPORATED Contract Backlog by Segment (Unaudited - dollars in thousands)December 31, 2017 December 31, 2016 Construction $ 896,955 24.1 % $ 1,030,487 29.6 % Large Project Construction 2,821,202 75.9 % 2,453,918 70.4 % Total $ 3,718,157 100.0 % $ 3,484,405 100.0 % GRANITE CONSTRUCTION INCORPORATED EBITDA(1) (Unaudited - dollars in thousands)
Three Months EndedDecember 31,
Years EndedDecember 31,
2017 2016 2017 2016 Net income attributable to Granite Construction Incorporated $ 32,773 $ 16,173 $ 69,098 $ 57,122 Depreciation, depletion and amortization expense(2) 17,823 17,738 66,345 64,375 Provision for income taxes 11,821 10,622 28,662 30,162 Interest expense, net of interest income 1,317 2,295 6,058 9,141 EBITDA $ 63,734 $ 46,828 $ 170,163 $ 160,800 Consolidated EBITDA Margin(3) 8.0% 7.0% 5.7% 6.4% Note: (1)We define EBITDA as GAAP net income attributable to Granite Construction Incorporated, adjusted for interest, taxes, depreciation, depletion and amortization. We believe this non-GAAP financial measure and the associated margin are useful in evaluating operating performance and are regularly used by security analysts, institutional investors and other interested parties in reviewing the Company. However, the reader is cautioned that any non-GAAP financial measures provided by the Company are provided in addition to, and not as alternatives for, the Company's reported results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures provided by the Company may not be comparable to similar measures provided by other companies. (2)Amount includes the sum of depreciation, depletion and amortization which are classified as Cost of Revenue and Selling, General and Administrative expenses in the consolidated statements of operations of Granite Construction Incorporated. (3)Represents EBITDA divided by consolidated revenue. Consolidated revenue was $801,274 and $2,989,713 for three and twelve months ended December 31, 2017, respectively, and $666,681 and $2,514,617 for three and twelve months ended December 31, 2016, respectively,
View source version on businesswire.com: http://www.businesswire.com/news/home/20180216005172/en/
Granite Construction IncorporatedMediaJacque Fourchy, 831-761-4741orInvestorsRon Botoff, 831-728-7532
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