WATSONVILLE, Calif., Feb 14, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Granite Construction Incorporated (NYSE: GVA) today announced an organizational realignment of its business operations. The realignment is designed to accommodate growth of the Company's vertically integrated Branch business in the west and improve profitability on its large, complex Heavy Construction Division ("HCD") projects. Implementation of the strategic and organizational realignment is currently underway and is expected to take approximately twelve months to complete.
"The actions announced today lay the foundation for growth that is a natural evolution of a healthy, growing and financially strong company," said William G. Dorey, President and Chief Executive Officer. "The cornerstone of our corporate strategy over the coming years is to expand our vertically integrated branch business model into new geographies in the west and right- size our large projects business. This new structure will allow us to take full advantage of the long-term opportunities and strong market conditions we foresee for our business."
Dorey continued, "Granite has tremendous capabilities and outstanding people. The expertise, know-how and commitment of our people throughout the country is truly remarkable and is what makes us among the most capable and experienced in the industry. I am confident that this strategic and organizational realignment of our business is in the best interest of our people and our shareholders. I am excited about the opportunities in Granite's future and believe we will be a much stronger and more profitable company as a result of these actions."
Highlights of today's announcement include: -- Geographic realignment into Granite West and Granite East -- Right-sizing large projects business -- Realigning large projects resources -- Realigning individual branches under three separate operating groups -- Retaining successful decentralized branch operating structure -- Adding branch management structure to support growth of vertical integration strategy
Led by Senior Vice President James H. Roberts, Granite West will be structured to strategically support the growth of the Company's construction and construction materials businesses. The western portion of the Company's current large project business will be integrated into Granite West by carefully capitalizing on Granite West's capacity, people and assets, as well as its extensive and proven management and support structure.
The Company will retain its successful decentralized operating structure within Granite West, with each of its branch locations aligning under one of three Operating Groups: Northwest, Northern California and Southwest. Each branch will remain intact with little or no change in their operations and will report to a newly created position, Granite West Group Vice President. Each of the three Group Vice Presidents will oversee three to six branches and will have the responsibility to stimulate strategic thinking and growth in their geographic territory. Among other key benefits, this structure will allow Granite West to utilize its resources and market knowledge to take advantage of the larger projects we expect to be let as a result of healthy state funding and the recently passed Propositions in California.
"Our expectation is that we can maximize the use of our existing assets and minimize our risk profile by properly preparing for the medium to large- size projects that ideally utilize our own construction materials," said Dorey. "More importantly, we intend to build this capacity slowly in the west so we do not impact our local business units' normal project portfolio."
Led by Senior Vice President Michael F. Donnino, Granite East will be aligned to focus on enhancing project management oversight and discipline from estimating through execution. Granite East will leverage its resources and core capabilities in areas where it has local knowledge, local relationships, and local resources. It will be operated out of three regional offices: the Central Region, based in Dallas, Texas; the Southeast Region, based in Tampa, Florida; and the Northeast Region, based in Tarrytown, New York.
"The underperformance on our large projects has been unacceptable and it is critical that we take the necessary steps to right-size this business. We believe our technical capabilities to build large, complex projects of high quality are among the best in the industry and we are committed to get it right," said Dorey. "We see this realignment as a positive approach to ensure that our expertise is deployed properly to allow us to capture all of the profit potential on this large work," Dorey added.
On going operational improvements in its large projects business include: -- Improving the project selection process to ensure Granite only pursues projects that match its capabilities. -- Improving administrative oversight, systems and project controls to provide for greater accuracy of forecasts and better management oversight. -- Improving training and project execution to achieve project bid margins. -- Improving project issue resolution to bring project issues to a more timely and satisfactory close. -- Continuing to monitor and evaluate the large projects business.
The Company expects 2007 consolidated revenue in the Heavy Construction Division to be approximately $800.0 million. This compares with $1.1 billion in revenue for the division in 2006.
"Our revenue forecast for HCD is an indication that our strategy to right- size this business is having a positive impact. I am confident that the actions we are taking to strategically realign this business will provide us with an opportunity to further develop our proven network in Granite West and allow us to focus our management and talent on a more suitable business in Granite East," said Dorey.
Chart of New Organizational Structure
A downloadable presentation, including a detailed organization chart outlining the new structure, is available at http://www.graniteconstruction.com/investor-relations under the Presentations section.
Granite will conduct a conference call today at 2:30 p.m. PT/ 5:30 p.m. ET. The conference call will be Webcast live and can be accessed at http://www.graniteconstruction.com/investor-relations. The live conference call may also be accessed by calling (877) 864-2735 in the U.S. and Canada and (706) 634-7039 for international listeners. A replay will be available approximately two hours after the live call through Friday, March 2nd by calling (800) 642-1687 or (706) 645-9291. The conference ID for both the live call and the replay is 6555946.
Granite, a member of the S&P 400 Midcap Index, the Domini 400 Social Index and the Russell 2000, is one of the nation's largest diversified heavy civil contractors and construction materials producers. Granite Construction serves public and private sector clients through its offices nationwide. For the 4th straight year, Granite was named to FORTUNE'S List of 100 Best Companies to Work For. For more information about the company, please visit their website at http://www.graniteconstruction.com.
This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represents our management's beliefs and assumptions concerning future events such as statements related to the existence of bidding opportunities and economic conditions on the Company's future results. Additionally, forward-looking statements include statements that can be identified by the use of forward- looking terminology such as "believes," "expects," "appears," "may," "will," "should," "look for," or "anticipates," or the negative thereof or comparable terminology, or by discussions of strategy. All such forward-looking statements are subject to risks and uncertainties that could cause actual results of operations and financial condition and other events, as well as the timing thereof, to differ materially from those expressed or implied in such forward-looking statements. Specific risk factors include, without limitation, changes in the composition of applicable federal and state legislation appropriation committees; federal and state appropriation changes for infrastructure spending; the general state of the economy; job productivity; accuracy of project estimates; weather conditions; competition and pricing pressures; and state referendums and initiatives. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. You should also understand that many important factors in addition to those discussed, referred to or incorporated by reference in this press release, could cause our results to differ materially from those expressed in the forward-looking statements. In light of these risks and uncertainties, it is important to be aware that the forward-looking events discussed in this release may not occur. We undertake no obligation to revise or update publicly any forward-looking statements to conform the statement to actual results or changes in the Company's expectations.
For further information regarding risks and uncertainties associated with Granite's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operation" and "Risk Factors" sections of Granite's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Granite's investor relations department at (831) 724-1011 or at Granite's website at http://www.graniteconstruction.com.
SOURCE Granite Construction Incorporated
Jacque Underdown, +1-831-761-4741
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