Granite Construction Q4 2009 results: Revenue down 27%, net income down 40% but balance sheet strong
Watsonville, Calif. -based Granite Construction Inc. on Feb. 24 reported it’s fourth-quarter 2009 quarterly and full-year earnings, showing that the major construction company hasn’t escaped the recession unscathed but it’s still doing well despite the current tough economy. (Click here for the full press release on Granite Construction.)
“We delivered the goods on our projects in 2009 despite today’s macroeconomic challenges and extraordinarily competitive markets,” Granite President and Chief Executive Officer William G. Dorey said in a press release. ”A number of factors contributed to our results, including excellent execution on our projects, resolution of project issues, bidding discipline and a focus on reducing our cost structure.
“Unfortunately, we also experienced a significant decline in revenue and backlog in the West as the weak private market led to increased competition for public-sector work and lower demand for construction materials,” Dorey continued.
Granite reported a net income of $73.5 million for the full year 2009, compared with $122.4 million for the full year 2008.
Diluted earnings per share were $1.90 for the full year 2009 compared with $3.18 per diluted share for the full year 2008.
For the fourth quarter of 2009, Granite reported net income of $16.0 million, or $0.41 per diluted share. This compares with net income of $31.9 million, or $0.83 per diluted share, for the fourth quarter of 2008.
A summary of the financial results follows:
Full-year 2009 Financial Results
- Revenues for the year totaled $2.0 billion, compared with $2.7 billion in 2008, reflecting the competitive environment in Granite West and delayed notices to proceed on three large Granite East projects awarded in 2009.
- Gross profit margin was 18 percent, unchanged from a year ago reflecting excellent project execution.
- Gross profit on the sale of construction materials was $14.4 million in 2009, compared with $41.9 million in 2008, primarily as a result of significantly lower sales volume.
- General and administrative expenses were $224.9 million compared with $257.5 million in 2008. The decrease reflects $9.5 million in lower incentive compensation and salaries, a recovery of $4.6 million that provided a credit in our provision for doubtful accounts, and lower travel, relocation and occupancy costs.
- Operating income was $129.2 million compared with $216.7 million in the prior year.
- Other income was $9.7 million, compared with $16.7 million in 2008, due primarily to a 73 percent decrease in interest income resulting from lower investment interest yields on marketable securities.
- Net income attributable to noncontrolling interests in joint ventures was $26.7 million compared with $43.3 million in 2008. The decrease is associated primarily with a large settlement on a joint venture project that occurred in 2008 related to outstanding revenue issues on a project in southern California.
- At year end, cash and short-term marketable securities totaled $381.4 million, including $122.4 million in cash and cash equivalents associated with the company’s consolidated joint ventures.
- Total contract backlog at December 31, 2009, was $1.4 billion compared with $1.7 billion at December 31, 2008.
- Granite West revenues totaled $1.4 billion compared with $2.0 billion for the prior year, reflecting intense competition for public works projects, less private-sector work, as well as reduced sales of construction materials.
- Gross profit margin for the year was 17 percent compared with 18 percent last year.
- Operating income decreased to $126.5 million for the same period compared with $206.0 million in 2008.
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