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Granite Reports Second Quarter 2023 Results

  • Record Committed and Awarded Projects ("CAP") (1) of $5.4 billion, a sequential increase of $334 million and year-over-year increase of $1.2 billion
  • Q2 revenue increased $50 million year-over-year led by the California and Mountain Groups
  • Q2 diluted EPS of $(0.39) and adjusted diluted EPS (2) of $1.03

Granite Construction Incorporated (NYSE: GVA) today announced results for the quarter ended June 30, 2023.

Second Quarter 2023 Results

Net loss totaled $17 million, or $(0.39) per diluted share, compared to net income of $19 million, or $0.39 per diluted share, for the same period in the prior year. Net loss in the quarter was primarily attributable to a $51 million non-cash charge related to the refinancing of our convertible bonds and a $12 million charge for litigation. Adjusted net income (2) totaled $46 million, or $1.03 per diluted share, compared to adjusted net income (2) of $34 million, or $0.76 per diluted share, in the same period in the prior year.

  • Revenue increased $50 million to $899 million compared to $849 million in the same period in the prior year. Both Construction and Materials segments posted year-over-year increases with the California and Mountain Groups more than offsetting a slight decrease in revenue in the Central Group.
  • Gross profit increased $5 million to $103 million compared to $98 million in the same period in the prior year.
  • Selling, general, and administrative (“SG&A”) expenses increased $5 million to $65 million, or 7.2% of revenue, compared to $60 million, or 7.1% of revenue, in the same period in the prior year. The increase in SG&A expense was primarily due to higher non-qualified deferred compensation expense of $4.4 million, which was mostly offset in Other (income) expense, net.
  • Adjusted EBITDA (2) was $80 million compared to $63 million in the same period in the prior year.

"We ended the second quarter with a record CAP balance,” said Kyle Larkin, Granite President and Chief Executive Officer. “Our public and private markets remain very strong across our geographies, and we believe we are winning the work necessary to meet our 2024 growth and margin targets.”

“In the second quarter, as we expected, the California and Mountain Groups grew construction revenue year-over-year, more than offsetting the decrease in revenue in the Central Group. Our materials business, which is integral to our home market strategy, showed impressive revenue and gross profit margin growth over the prior year as we recovered from a weather-impacted first quarter of 2023. I expect we will see continued year-over-year improvement in materials and construction revenue and gross profit in the second half of the year.”

“As a reminder, we disclosed our 2024 strategic plan revenue and adjusted EBITDA margin targets back in the first quarter of 2021. Since that time, we have taken steps to de-risk the company, grow a higher-quality CAP portfolio, and with a renewed focus on operational excellence, I believe we are well on our way to meet these targets."

Six Months Ended June 30, 2023 Results

Net loss totaled $40 million, or $(0.91) per diluted share, compared to a net loss of $8 million, or $(0.18) per diluted share, in the prior year. In addition to the litigation and convertible bond charges described above, the six months ended June 30, 2023 were significantly impacted by inclement weather in the first half of the year compared to the same period in the prior year. Adjusted net income (2) totaled $28 million, or $0.63 per diluted share, compared to adjusted net income (2) of $22 million, or $0.48 per diluted share, in the prior year.

  • Revenue was flat at $1.5 billion compared to the same period in the prior year as project teams and plants rebounded from the weather-impacted first quarter.
  • Gross profit decreased $23 million to $135 million compared to $158 million in the same period in the prior year primarily due to schedule impacts on the I-64 High Rise Bridge project and weather impacts in the first quarter of 2023.
  • SG&A expenses were $138 million or 9.4% of revenue, compared to $130 million or 8.7% of revenue in the same period of the prior year primarily due to higher non-qualified deferred compensation expenses in 2023, which was mostly offset in Other (income) expense, net. Increased stock-based compensation expense also contributed to the higher SG&A expenses. These increases for the six months ended June 30, 2023 were partially offset by the sale of Inliner on March 16, 2022.
  • Adjusted EBITDA (2) totaled $71 million compared to $69 million in the prior year.

(1) CAP is comprised of revenue we expect to record in the future on executed contracts, including 100% of our consolidated joint venture contracts and our proportionate share of unconsolidated joint venture contracts, as well as the general construction portion of construction manager/general contractor, construction manager/at risk and progressive design build contracts to the extent contract execution and funding is probable.

(2) Adjusted net income, adjusted diluted earnings per share, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures. Please refer to the description and reconciliation of non-GAAP measures in the attached tables.

Second Quarter 2023 Segment Results (Unaudited - dollars in thousands)

Construction Segment

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

As Restated and Recast

 

As Recast

 

2023

2022

Change

2023

2022

Change

Revenue

$

749,413

 

$

713,221

 

$

36,192

 

5.1

%

$

1,252,829

 

$

1,291,487

 

$

(38,658

)

(3.0

)%

Gross profit

$

79,154

 

$

80,252

 

$

(1,098

)

(1.4

)%

$

115,859

 

$

138,731

 

$

(22,872

)

(16.5

)%

Gross profit as a percent of revenue

 

10.6

%

 

11.3

%

 

 

 

9.2

%

 

10.7

%

 

 

Committed and Awarded Projects

June 30, 2023

March 31, 2023

Change - Quarter over Quarter

June 30, 2022

Change - Year over Year

California

$

2,345,611

$

1,913,634

$

431,977

 

22.6

%

$

1,629,765

$

715,846

43.9

%

Central

 

1,599,538

 

1,750,375

 

(150,837

)

(8.6

%)

 

1,518,970

 

80,568

5.3

%

Mountain

 

1,492,439

 

1,439,944

 

52,495

 

3.6

%

 

1,064,925

 

427,514

40.1

%

Total

$

5,437,588

$

5,103,953

$

333,635

 

6.5

%

$

4,213,660

$

1,223,928

29.0

%

Revenue in the second quarter increased compared to the same period in the prior year led by increases in the California and Mountain Groups, which more than offset a decline in the Central Group. The increase in revenue was driven by higher levels of CAP going into the quarter that will continue to support the groups for the remainder of 2023. For the six months ended June 30, 2023, revenue declined compared to the same period in the prior year primarily due to the wind down of several large projects in the Central Group, as well as the sale of Granite Inliner in the first quarter of 2022.

Gross profit and gross profit margin during the three and six months ended June 30, 2023 were negatively impacted by additional costs on the I-64 High Rise Bridge project in Virginia. The impact to gross profit from this project in the second quarter was a $21 million decrease, and the impact after non-controlling interest was $10 million. For the six months ended June 30, 2023, the impact to gross profit from the project was $32 million and the impact after non-controlling interest was $16 million. Final completion for the project is expected early in the fourth quarter.

CAP increased $334 million sequentially and increased $1.2 billion year-over-year. Our markets have benefited from a strong public funding environment, with California leading the way. We are pursuing many opportunities that we believe will allow us to continue to build strong quality CAP in the remainder of 2023.

Materials Segment

 

 

 

 

 

 

 

 

 

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

 

 

As Recast

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

Revenue

$

149,139

 

$

136,026

 

$

13,113

9.6

%

$

205,791

 

$

211,646

 

$

(5,855

)

(2.8

)%

Gross profit

$

23,932

 

$

17,314

 

$

6,618

38.2

%

$

19,586

 

$

18,927

 

$

659

 

3.5

%

Gross profit as a percent of revenue

 

16.0

%

 

12.7

%

 

 

 

9.5

%

 

8.9

%

 

 

Materials revenue and gross profit in the second quarter increased compared to the same period of the prior year driven by higher asphalt and aggregate sales prices and increased aggregate sales volume. Aggregate sales volume increased 9% year-over-year, while asphalt sales volumes were flat.

Outlook

Our guidance for 2023 is updated as noted below:

  • Revenue in the range of $3.35 billion to $3.45 billion
  • Adjusted EBITDA margin in the range of 7.5% to 8.5%
  • SG&A expense in the range of 8.0% to 8.5% of revenue
  • Mid-20s effective tax rate for adjusted net income
  • Capital expenditures range of $100 million to $120 million

The Company does not provide a reconciliation of forward-looking adjusted EBITDA margin to the most directly comparable forward-looking GAAP measure of net income (loss) attributable to Granite Construction Incorporated because the Company cannot predict with a reasonable degree of certainty and without unreasonable efforts certain excluded items that are inherently uncertain and depend on various factors. For these reasons, we are unable to assess the probable significance of the unavailable information.

Kyle Larkin added, "Although our teams recovered well from the wet first quarter and continued to win work across the company, we are lowering our expectation for the amount of work that will be completed in 2023. However, we continue to believe that our record CAP will drive expected revenue growth in 2024 and 2025. Additionally, we are narrowing the range of our guidance for adjusted EBITDA margin to 7.5% to 8.5% for 2023 primarily due to the losses incurred on the I-64 High Rise Bridge project. As I have discussed in the past, we are executing on our plan and believe that the work we have been adding to CAP supports our 2024 target of 9.0% to 11.0% adjusted EBITDA margin."

Conference Call

Granite will conduct a conference call today, July 27, 2023, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter ended June 30, 2023. The Company invites investors to listen to a live audio webcast of the investor conference call on its Investor Relations website, https://investor.graniteconstruction.com. The investor conference call will also be available by calling 1-877-328-5503; international callers may dial 1-412-317-5472. An archive of the webcast will be available on Granite's Investor Relations website approximately one hour after the call. A replay will be available after the live call through August 3, 2023, by calling 1-877-344-7529, replay access code 9668964; international callers may dial 1-412-317-0088.

About Granite

Granite is America’s Infrastructure Company™. Incorporated since 1922, Granite (NYSE:GVA) is one of the largest diversified construction and construction materials companies in the United States as well as a full-suite civil construction provider. Granite’s Code of Conduct and strong Core Values guide the Company and its employees to uphold the highest ethical standards. Granite is an industry leader in safety and an award-winning firm in quality and sustainability. For more information, visit graniteconstruction.com, and connect with Granite on LinkedIn, Twitter, Facebook, and Instagram.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2023 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, Committed and Awarded Projects (“CAP”), results, our belief that we are winning the work necessary to meet both our growth and margin targets in 2024, our expectation that we will continue to see year-over-year improvement in materials and construction revenue and gross profit in the second half of the year, our 2024 strategic plan revenue and adjusted EBITDA margin targets, our belief that we are well on our way to meet those targets, higher levels of CAP going into the quarter will continue to support the groups for the remainder of 2023, final completion of the I-64 project is expected early in the fourth quarter, our pursuit of opportunities that we believe will allow us to continue to build strong quality CAP in the remainder of 2023, lowering expectation for work to be completed in 2023, record backlog will drive expected revenue growth in 2024 and 2025, narrowing adjusted EBITDA margin guidance and our belief that the work we have been adding to CAP supports our 2024 target of 9.0% to 11.0% adjusted EBITDA margin constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by words such as “future,” “outlook,” “assumes,” “believes,” “expects,” “estimates,” “anticipates,” “intends,” “plans,” “appears,” “may,” “will,” “should,” “could,” “would,” “continue,” "guidance" and the negatives thereof or other comparable terminology or by the context in which they are made. These forward-looking statements are estimates reflecting the best judgment of senior management and reflect our current expectations regarding future events, occurrences, opportunities, circumstances, activities, performance, growth, demand, strategic plans, shareholder value, outcomes, outlook, 2023 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, CAP, results, our belief that we are winning the work necessary to meet both our growth and margin targets in 2024, our expectation that we will continue to see year-over-year improvement in materials and construction revenue and gross profit in the second half of the year, our 2024 strategic plan revenue and adjusted EBITDA margin targets, our belief that we are well on our way to meet those targets, higher levels of CAP going into the quarter will continue to support the groups for the remainder of 2023, final completion of the I-64 project is expected early in the fourth quarter, our pursuit of opportunities that we believe will allow us to continue to build strong quality CAP in the remainder of 2023, lowering expectation for work to be completed in 2023, record backlog will drive expected revenue growth in 2024 and 2025, narrowing adjusted EBITDA margin guidance and our belief that the work we have been adding to CAP supports our 2024 target of 9.0% to 11.0% adjusted EBITDA margin. These expectations may or may not be realized. Some of these expectations may be based on beliefs, assumptions or estimates that may prove to be incorrect. In addition, our business and operations involve numerous risks and uncertainties, many of which are beyond our control, which could result in our expectations not being realized or otherwise materially affect our business, financial condition, results of operations, cash flows and liquidity. Such risks and uncertainties include, but are not limited to, those described in greater detail in our filings with the Securities and Exchange Commission, particularly those described in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Due to the inherent risks and uncertainties associated with our forward-looking statements, the reader is cautioned not to place undue reliance on them. The reader is also cautioned that the forward-looking statements contained herein speak only as of the date of this news release and, except as required by law; we undertake no obligation to revise or update any forward-looking statements for any reason.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - in thousands, except share and per share data)

 

 

June 30, 2023

December 31, 2022

ASSETS

 

 

Current assets

 

 

Cash and cash equivalents

$

214,446

$

293,991

Short-term marketable securities

 

24,981

 

39,374

Receivables, net

 

636,797

 

463,987

Contract assets

 

288,349

 

241,916

Inventories

 

92,151

 

86,809

Equity in construction joint ventures

 

188,093

 

183,808

Other current assets

 

46,376

 

37,411

Total current assets

 

1,491,193

 

1,347,296

Property and equipment, net

 

564,077

 

509,210

Long-term marketable securities

 

11,575

 

26,569

Investments in affiliates

 

86,611

 

80,725

Goodwill

 

78,603

 

73,703

Right of use assets

 

53,509

 

49,079

Deferred income taxes, net

 

31,304

 

22,208

Other noncurrent assets

 

59,706

 

59,143

Total assets

$

2,376,578

$

2,167,933

 

 

 

LIABILITIES AND EQUITY

 

 

Current liabilities

 

 

Current maturities of long-term debt

$

1,466

$

1,447

Accounts payable

 

382,458

 

334,392

Contract liabilities

 

173,288

 

173,286

Accrued expenses and other current liabilities

 

310,022

 

288,469

Total current liabilities

 

867,234

 

797,594

Long-term debt

 

458,692

 

286,934

Long-term lease liabilities

 

38,397

 

32,170

Deferred income taxes, net

 

4,571

 

1,891

Other long-term liabilities

 

66,234

 

64,199

Commitments and contingencies

 

 

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: 43,918,798 shares as of June 30, 2023 and 43,743,907 shares as of December 31, 2022

 

439

 

437

Additional paid-in capital

 

470,511

 

470,407

Accumulated other comprehensive income

 

795

 

788

Retained earnings

 

429,797

 

481,384

Total Granite Construction Incorporated shareholders’ equity

 

901,542

 

953,016

Non-controlling interests

 

39,908

 

32,129

Total equity

 

941,450

 

985,145

Total liabilities and equity

$

2,376,578

$

2,167,933

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

As Restated

and Recast

As Restated

and Recast

2023

 

2022

 

2023

 

2022

Revenue

 

 

 

 

Construction

$

749,413

 

$

713,221

 

$

1,252,829

 

$

1,291,487

 

Materials

 

149,139

 

 

136,026

 

 

205,791

 

 

211,646

 

Total revenue

 

898,552

 

 

849,247

 

 

1,458,620

 

 

1,503,133

 

Cost of revenue

 

 

 

 

Construction

 

670,259

 

 

632,969

 

 

1,136,970

 

 

1,152,756

 

Materials

 

125,207

 

 

118,712

 

 

186,205

 

 

192,719

 

Total cost of revenue

 

795,466

 

 

751,681

 

 

1,323,175

 

 

1,345,475

 

Gross profit

 

103,086

 

 

97,566

 

 

135,445

 

 

157,658

 

Selling, general and administrative expenses

 

64,563

 

 

60,121

 

 

137,685

 

 

130,241

 

Other costs, net

 

13,607

 

 

16,612

 

 

18,130

 

 

22,891

 

Gain on sales of property and equipment, net

 

(3,944

)

 

(8,915

)

 

(5,981

)

 

(9,513

)

Operating income (loss)

 

28,860

 

 

29,748

 

 

(14,389

)

 

14,039

 

Other (income) expense

 

 

 

 

Loss on debt extinguishment

 

51,052

 

 

 

 

51,052

 

 

 

Interest income

 

(3,232

)

 

(782

)

 

(6,994

)

 

(1,352

)

Interest expense

 

4,131

 

 

3,899

 

 

7,022

 

 

7,484

 

Equity in income of affiliates, net

 

(7,044

)

 

(4,876

)

 

(12,231

)

 

(6,165

)

Other (income) expense, net

 

(1,225

)

 

3,261

 

 

(3,175

)

 

4,569

 

Total other expense, net

 

43,682

 

 

1,502

 

 

35,674

 

 

4,536

 

Income (loss) before income taxes

 

(14,822

)

 

28,246

 

 

(50,063

)

 

9,503

 

Provision for (benefit from) income taxes

 

9,024

 

 

8,668

 

 

(445

)

 

15,020

 

Net income (loss)

 

(23,846

)

 

19,578

 

 

(49,618

)

 

(5,517

)

Amount attributable to non-controlling interests

 

6,846

 

 

(897

)

 

9,595

 

 

(2,535

)

Net income (loss) attributable to Granite Construction Incorporated

$

(17,000

)

$

18,681

 

$

(40,023

)

$

(8,052

)

 

 

 

 

 

Net income (loss) per share attributable to common shareholders:

 

 

 

 

Basic

$

(0.39

)

$

0.42

 

$

(0.91

)

$

(0.18

)

Diluted

$

(0.39

)

$

0.39

 

$

(0.91

)

$

(0.18

)

Weighted average shares outstanding:

 

 

 

 

Basic

 

43,892

 

 

44,534

 

 

43,829

 

 

45,128

 

Diluted

 

43,892

 

 

52,295

 

 

43,829

 

 

45,128

 

(1)

As previously disclosed in our 2022 Annual Report on Form 10-K filed on February 21, 2023, the restatement of our unaudited quarterly financial information for the first three quarters in the year ended December 31, 2022 is necessary. In addition to those restatements, the financial information for the three and six months ended June 30, 2022 presented herein includes adjustments to retrospectively reclassify the results of the former Water and Mineral Services businesses from discontinued operations to continuing operations.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 

As Restated

Six Months Ended June 30,

2023

2022

Operating activities

 

 

Net loss

$

(49,618

)

$

(5,517

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation, depletion and amortization

 

41,528

 

 

32,328

 

Amortization related to long-term debt

 

988

 

 

1,423

 

Non-cash loss on debt extinguishment

 

51,052

 

 

 

Gain on sale of business

 

 

 

(6,234

)

Gain on sales of property and equipment, net

 

(5,981

)

 

(9,513

)

Deferred income taxes

 

 

 

2,545

 

Stock-based compensation

 

6,702

 

 

4,376

 

Equity in net loss from unconsolidated joint ventures

 

4,005

 

 

17,228

 

Net income from affiliates

 

(12,231

)

 

(6,165

)

Other non-cash adjustments

 

(7

)

 

(84

)

Changes in assets and liabilities

 

(155,386

)

 

(133,665

)

Net cash used in operating activities

 

(118,948

)

 

(103,278

)

Investing activities

 

 

Purchases of marketable securities

 

 

 

(49,968

)

Maturities of marketable securities

 

30,000

 

 

 

Purchases of property and equipment

 

(79,689

)

 

(73,216

)

Proceeds from sales of property and equipment

 

10,564

 

 

15,289

 

Proceeds from company owned life insurance

 

1,545

 

 

 

Proceeds from the sale of business

 

 

 

142,571

 

Acquisition of business

 

(26,933

)

 

 

Issuance of notes receivable

 

 

 

(4,560

)

Collection of notes receivable

 

135

 

 

201

 

Net cash provided by (used in) investing activities

 

(64,378

)

 

30,317

 

Financing activities

 

 

Proceeds from long-term debt

 

55,000

 

 

50,000

 

Debt principal repayments

 

(249,589

)

 

(124,660

)

Issuance of capped call

 

(53,035

)

 

 

Redemption of warrant

 

(13,201

)

 

 

Proceeds from issuance of 3.75% Convertible Notes

 

373,750

 

 

 

Debt issuance costs

 

(9,806

)

 

 

Cash dividends paid

 

(11,391

)

 

(11,857

)

Repurchases of common stock

 

(3,766

)

 

(70,374

)

Contributions from non-controlling partners

 

22,400

 

 

6,327

 

Distributions to non-controlling partners

 

(6,850

)

 

(6,700

)

Other financing activities, net

 

269

 

 

209

 

Net cash provided by (used in) financing activities

 

103,781

 

 

(157,055

)

Net decrease in cash, cash equivalents and restricted cash

 

(79,545

)

 

(230,016

)

Cash, cash equivalents and $0 and $1,512 in restricted cash at beginning of period

 

293,991

 

 

413,655

 

Cash, cash equivalents and $0 in restricted cash at end of period

$

214,446

 

$

183,639

 

Non-GAAP Financial Information

The tables below contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, management believes that non-GAAP financial measures such as EBITDA and EBITDA margin are useful in evaluating operating performance and are regularly used by securities analysts, institutional investors and other interested parties, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. We are also providing adjusted EBITDA and adjusted EBITDA margin, non-GAAP measures, to indicate the impact of loss on debt extinguishment and other costs, net, which include investigation-related legal fees and settlement charges, a litigation charge, reorganization costs, strategic acquisition and divestiture expenses, and a gain on sale of a business in 2022.

We provide adjusted income before income taxes, adjusted provision for income taxes, adjusted net income attributable to Granite Construction Incorporated, adjusted diluted weighted average shares of common stock and adjusted diluted earnings per share attributable to common shareholders, non-GAAP measures, to indicate the impact of the following:

  • Other costs, net;
  • Transaction costs which includes acquired intangible amortization expense and acquisition related depreciation related to the acquisition of Layne and Liquiforce;
  • Loss on debt extinguishment, and
  • Income taxes related to the disposal of Inliner goodwill.

Management believes that these additional non-GAAP financial measures facilitate comparisons between industry peer companies, and management uses these non-GAAP financial measures in evaluating the Company's performance. 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. Items that may have a significant impact on the Company's financial position, results of operations and cash flows must be considered when assessing the Company's actual financial condition and performance regardless of whether these items are included in non-GAAP financial measures. 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.

GRANITE CONSTRUCTION INCORPORATED

EBITDA AND ADJUSTED EBITDA(1)

(Unaudited - dollars in thousands)

 

 

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

As Restated

and Recast

As Restated

and Recast

 

 

2023

 

2022

 

2023

 

2022

EBITDA:

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated

$

(17,000

)

$

18,681

 

$

(40,023

)

$

(8,052

)

Net income (loss) margin (2)

 

(1.9

)%

 

2.2

%

 

(2.7

)%

 

(0.5

)%

 

 

 

 

 

Depreciation, depletion and amortization expense (3)

 

21,937

 

 

15,769

 

 

41,811

 

 

32,827

 

Provision for (benefit from) income taxes

 

9,024

 

 

8,668

 

 

(445

)

 

15,020

 

Interest expense, net

 

899

 

 

3,117

 

 

28

 

 

6,132

 

EBITDA(1)

$

14,860

 

$

46,235

 

$

1,371

 

$

45,927

 

EBITDA margin(1)(2)

 

1.7

%

 

5.4

%

 

0.1

%

 

3.1

%

 

 

 

 

 

ADJUSTED EBITDA:

 

 

 

 

Other costs, net

 

13,607

 

 

16,612

 

 

18,130

 

 

22,891

 

Loss on debt extinguishment

 

51,052

 

 

 

 

51,052

 

 

 

Adjusted EBITDA(1)

$

79,519

 

$

62,847

 

$

70,553

 

$

68,818

 

Adjusted EBITDA margin(1)(2)

 

8.8

%

 

7.4

%

 

4.8

%

 

4.6

%

(1)

We define EBITDA as GAAP net income (loss) attributable to Granite Construction Incorporated, adjusted for net interest expense, taxes, depreciation, depletion and amortization. Adjusted EBITDA and adjusted EBITDA margin exclude the impact of Other costs, net, and loss on debt extinguishment, as described above.

(2)

Represents net income (loss), EBITDA and adjusted EBITDA divided by consolidated revenue of $899 million and $849 million, for the three months ended June 30, 2023 and 2022, respectively and $1.5 billion and $1.5 billion for the six months ended June 30, 2023 and 2022, respectively.

(3)

Amount includes the sum of depreciation, depletion and amortization which are classified as cost of revenue and selling, general and administrative expenses in the condensed consolidated statements of operations.

GRANITE CONSTRUCTION INCORPORATED

ADJUSTED NET INCOME (LOSS) RECONCILIATION

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

As Restated

and Recast

As Restated

and Recast

 

 

2023

 

2022

 

2023

 

2022

Income (loss) before income taxes

$

(14,822

)

$

28,246

 

$

(50,063

)

$

9,503

 

Other costs, net

 

13,607

 

 

16,612

 

 

18,130

 

 

22,891

 

Transaction costs

 

2,460

 

 

 

 

4,954

 

 

 

Loss on debt extinguishment

 

51,052

 

 

 

 

51,052

 

 

 

Adjusted income before income taxes

$

52,297

 

$

44,858

 

$

24,073

 

$

32,394

 

 

 

 

 

 

Provision for (benefit from) income taxes

$

9,024

 

$

8,668

 

$

(445

)

$

15,020

 

Tax effect of goodwill disposal related to sale of business

 

 

 

 

 

 

 

(10,070

)

Tax effect of adjusting items (1)

 

4,177

 

 

1,199

 

 

6,002

 

 

2,832

 

Adjusted provision for income taxes

$

13,201

 

$

9,867

 

$

5,557

 

$

7,782

 

 

 

 

 

 

Net income (loss) attributable to Granite Construction Incorporated

$

(17,000

)

$

18,681

 

$

(40,023

)

$

(8,052

)

After-tax adjusting items

 

62,942

 

 

15,413

 

 

68,134

 

 

30,129

 

Adjusted net income attributable to Granite Construction Incorporated

$

45,942

 

$

34,094

 

$

28,111

 

$

22,077

 

 

 

 

 

 

Diluted weighted average shares of common stock

 

43,892

 

 

52,295

 

 

43,829

 

 

45,128

 

Add: dilutive effect of restricted stock units and Convertible Notes (2)

 

10,681

 

 

 

 

10,679

 

 

7,802

 

Less: dilutive effect of Convertible Notes (3)

 

(10,095

)

 

(7,309

)

 

(10,095

)

 

(7,309

)

Adjusted diluted weighted average shares of common stock

 

44,478

 

 

44,986

 

 

44,413

 

 

45,621

 

 

 

 

 

 

Diluted net income (loss) per share attributable to common shareholders

$

(0.39

)

$

0.39

 

$

(0.91

)

$

(0.18

)

After-tax adjusting items per share attributable to common shareholders

 

1.42

 

 

0.37

 

 

1.54

 

 

0.66

 

Adjusted diluted earnings per share attributable to common shareholders

$

1.03

 

$

0.76

 

$

0.63

 

$

0.48

 

(1)

The tax effect of adjusting items was calculated using the Company’s estimated annual statutory tax rate. The tax effect of adjusting items for the three and six months ended June 30, 2023 excludes the $51 million loss on debt extinguishment which is not tax deductible. The tax effect of adjusting items for the three and six months ended June 30, 2022 excludes a $12 million accrual related to the resolution of the SEC investigation which is not tax deductible.

(2)

Represents the dilutive effect on adjusted net income attributable to Granite Construction Incorporated of 586,000, 584,000 and 493,000 related to restricted stock units and 10,095,000, 10,095,000 and 7,309,000 related to the 2.75% Convertible Notes and the 3.75% Convertible Notes potentially converting into shares for the three months ended June 30, 2023 and the six months ended June 30, 2023 and 2022, respectively.

(3)

When calculating diluted net income (loss) attributable to common shareholders, GAAP requires that we include potential share dilution from the 2.75% Convertible Notes and the 3.75% Convertible Notes. For the purposes of calculating adjusted diluted net income per share attributable to common shareholders, the dilutive effect from the 2.75% Convertible Notes and 3.75% Convertible Notes is removed to reflect the impact of the purchased equity derivative instruments which offset any potential share dilution above the $31.47 conversion price up to a share price of $53.44 for the 2.75% Convertible Notes and above the $46.12 conversion price up to a share price of $79.83 for the 3.75% Convertible Notes. The average share price did not exceed $53.44 in any period.

 

Contacts

Investors

Wenjun Xu, 831-761-7861

Or

Media

Erin Kuhlman, 831-768-4111

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