Press Release

Granite Reports Third Quarter 2023 Results

Oct 31, 2023
  • Q3 revenue increased 11% year-over-year to $1.1 billion
  • Q3 diluted EPS of $1.13 and adjusted diluted EPS (1) of $1.69
  • Operating cash flow increased $153 million sequentially
  • Record Committed and Awarded Projects ("CAP") (2) of $5.6 billion, a sequential increase of $147 million and year-over-year increase of $1.5 billion
  • 2023 guidance and 2024 targets unchanged

WATSONVILLE, Calif.--(BUSINESS WIRE)--Granite Construction Incorporated (NYSE: GVA) today announced results for the quarter ended September 30, 2023.

Third Quarter 2023 Results

Net income totaled $58 million, or $1.13 per diluted share, compared to net income of $69 million, or $1.36 per diluted share, for the same period in the prior year. Adjusted net income (1) totaled $75 million, or $1.69 per diluted share, compared to adjusted net income (1) of $57 million, or $1.28 per diluted share, for the same period in the prior year.

  • Revenue increased $108 million to $1.1 billion compared to $1.0 billion for the same period in the prior year. Both Construction and Materials segments posted year-over-year increases with the California and Mountain Groups up 15% and 11%, respectively, as well as a slight increase in revenue in the Central Group.
  • Gross profit increased $52 million to $167 million compared to $115 million for the same period in the prior year.
  • Selling, general, and administrative (“SG&A”) expenses increased $13 million to $75 million, or 6.7% of revenue, compared to $62 million, or 6.1% of revenue, for the same period in the prior year. The increase in SG&A expenses was primarily due to $11 million of additional incentive compensation expense year-over-year.
  • Adjusted EBITDA (1) totaled $124 million, compared to $91 million for the same period in the prior year.

"I am pleased with our third quarter performance,” said Kyle Larkin, Granite President and Chief Executive Officer. “These results demonstrate the strong progress we are making towards the goals identified in our strategic plan that we introduced just over two years ago. We have built record CAP while also de-risking our project portfolio by focusing on best value projects. During this same time, we have also bolstered our materials business through both greenfield and bolt-on investments, and we improved segment margins. We are growing revenue and increasing adjusted EBITDA margin and believe we are on track to reach our 2024 financial targets.”

Nine Months Ended September 30, 2023 Results

Net income totaled $18 million, or $0.40 per diluted share, compared to net income of $61 million, or $1.25 per diluted share, for the same period in the prior year. Adjusted net income (1) totaled $103 million, or $2.32 per diluted share, compared to adjusted net income (1) of $79 million, or $1.75 per diluted share, for the same period in the prior year.

  • Revenue increased $63 million to $2.58 billion compared to $2.51 billion for the same period in the prior year.
  • Gross profit increased $29 million to $302 million compared to $273 million for the same period in the prior year.
  • SG&A expenses were $212 million, or 8.3% of revenue, compared to $192 million, or 7.6% of revenue, for the same period in the prior year. The increase was primarily driven by higher incentive compensation and non-qualified deferred compensation expenses in 2023.
  • Adjusted EBITDA (1) totaled $195 million compared to $160 million for the same period in the prior year.

(1)

 

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.

(2)

 

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.

Three and Nine Months ended September 30, 2023 (Unaudited - dollars in thousands)

Construction Segment

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

As Restated

 

Change

 

 

2023

 

 

As Restated

 

Change

 

 

2022

 

 

 

 

 

2022

 

 

Revenue

$

945,698

 

 

$

847,371

 

 

$

98,327

 

11.6

%

 

$

2,198,527

 

 

$

2,138,858

 

 

$

59,669

 

2.8

%

Gross profit

$

137,162

 

 

$

93,017

 

 

$

44,145

 

47.5

%

 

$

253,021

 

 

$

231,748

 

 

$

21,273

 

9.2

%

Gross profit as a percent of revenue

 

14.5

%

 

 

11.0

%

 

 

 

 

 

 

11.5

%

 

 

10.8

%

 

 

 

 

Committed and

Awarded Projects

September 30,

2023

 

June 30, 2023

 

Change - Quarter over

Quarter

 

September

30, 2022

 

Change - Year over Year

California

$

2,345,294

 

$

2,345,611

 

$

(317

)

 

%

 

$

1,552,939

 

$

792,355

 

51.0

%

Central

 

1,811,426

 

 

1,599,538

 

 

211,888

 

 

13.2

%

 

 

1,527,112

 

 

284,314

 

18.6

%

Mountain

 

1,427,803

 

 

1,492,439

 

 

(64,636

)

 

(4.3

%)

 

 

996,685

 

 

431,118

 

43.3

%

Total

$

5,584,523

 

$

5,437,588

 

$

146,935

 

 

2.7

%

 

$

4,076,736

 

$

1,507,787

 

37.0

%

Revenue in the third quarter increased 12% year-over-year. This increase overcame a weather-related slow start to the year and resulted in a revenue increase of 3% for the nine-months-ended September 30, 2023 compared to the same period in the prior year. The year-over-year revenue increase in the quarter was driven by strong performances by the California and Mountain Groups, which increased revenue by 21% and 12%, respectively. Central Group revenue was flat compared to the same period in the prior year as newer projects ramp up and replace several large projects that are nearing completion.

Gross profit and gross profit margin during the three and nine months ended September 30, 2023 increased over the same periods in the prior year despite the negative impact of the I-64 High Rise Bridge Project in Virginia, which reduced gross profit in the third quarter by $8 million, and after non-controlling interest by $4 million. For the nine months ended September 30, 2023, the impact to gross profit from the project was $40 million and the impact after non-controlling interest was $20 million. Final completion for the project is expected in the fourth quarter.

CAP increased $147 million sequentially and $1.5 billion year-over-year. Both public and private markets continue to be strong and contribute to our record CAP as of the end of the quarter. With the current market environment, we believe there are substantial opportunities to build CAP in the fourth quarter and into 2024.

Materials Segment

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

Change

 

 

2023

 

 

 

2022

 

 

Change

Revenue

$

171,122

 

 

$

161,539

 

 

$

9,583

 

5.9

%

 

$

376,913

 

 

$

373,185

 

 

$

3,728

 

1.0

%

Gross profit

$

29,481

 

 

$

22,038

 

 

$

7,443

 

33.8

%

 

$

49,067

 

 

$

40,965

 

 

$

8,102

 

19.8

%

Gross profit as a percent of revenue

 

17.2

%

 

 

13.6

%

 

 

 

 

 

 

13.0

%

 

 

11.0

%

 

 

 

 

Materials revenue and gross profit for the three and nine months ended September 30, 2023 increased compared to the same periods of the prior year driven by higher asphalt and aggregate sales prices. Additionally, in 2023, oil and energy costs have normalized compared to the significant inflation in 2022 which negatively impacted materials gross profit margin in the prior year.

Outlook

Our guidance for 2023 is unchanged 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 of approximately $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 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.

Conference Call

Granite will conduct a conference call today, October 31, 2023, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter ended September 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 November 7, 2023, by calling 1-877-344-7529, replay access code 5819938; 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, 2024 targets unchanged, Committed and Awarded Projects (“CAP”), results, our belief that we are on track to reach our 2024 financial targets, the final completion of the I-64 project is expected in the fourth quarter and our belief that there are substantial opportunities to continue to build CAP in the fourth quarter and into 2024 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, 2024 targets unchanged, CAP, results, our belief that we are on track to reach our 2024 financial targets, the final completion of the I-64 project is expected in the fourth quarter and our belief that there are substantial opportunities to continue to build CAP in the fourth quarter and into 2024. 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)

 

 

September 30, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

292,124

 

$

293,991

Short-term marketable securities

 

31,278

 

 

39,374

Receivables, net

 

743,091

 

 

463,987

Contract assets

 

282,280

 

 

241,916

Inventories

 

92,131

 

 

86,809

Equity in construction joint ventures

 

206,669

 

 

183,808

Other current assets

 

47,477

 

 

37,411

Total current assets

 

1,695,050

 

 

1,347,296

Property and equipment, net

 

569,722

 

 

509,210

Long-term marketable securities

 

5,750

 

 

26,569

Investments in affiliates

 

91,101

 

 

80,725

Goodwill

 

74,264

 

 

73,703

Right of use assets

 

56,874

 

 

49,079

Deferred income taxes, net

 

29,043

 

 

22,208

Other noncurrent assets

 

58,517

 

 

59,143

Total assets

$

2,580,321

 

$

2,167,933

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities

 

 

 

Current maturities of long-term debt

$

1,475

 

$

1,447

Accounts payable

 

477,031

 

 

334,392

Contract liabilities

 

221,983

 

 

173,286

Accrued expenses and other current liabilities

 

355,987

 

 

288,469

Total current liabilities

 

1,056,476

 

 

797,594

Long-term debt

 

403,785

 

 

286,934

Long-term lease liabilities

 

42,198

 

 

32,170

Deferred income taxes, net

 

3,812

 

 

1,891

Other long-term liabilities

 

67,473

 

 

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: 43,926,576 shares as of September 30, 2023 and 43,743,907 shares as of December 31, 2022

 

439

 

 

437

Additional paid-in capital

 

472,379

 

 

470,407

Accumulated other comprehensive income

 

894

 

 

788

Retained earnings

 

481,636

 

 

481,384

Total Granite Construction Incorporated shareholders’ equity

 

955,348

 

 

953,016

Non-controlling interests

 

51,229

 

 

32,129

Total equity

 

1,006,577

 

 

985,145

Total liabilities and equity

$

2,580,321

 

$

2,167,933

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

       

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2023

 

 

As Restated(1)

 

 

2023

 

 

As Restated(1)

 

 

2022

 

 

 

 

2022

 

Revenue

 

 

 

 

 

 

 

Construction

$

945,698

 

 

$

847,371

 

 

$

2,198,527

 

 

$

2,138,858

 

Materials

 

171,122

 

 

 

161,539

 

 

 

376,913

 

 

 

373,185

 

Total revenue

 

1,116,820

 

 

 

1,008,910

 

 

 

2,575,440

 

 

 

2,512,043

 

Cost of revenue

 

 

 

 

 

 

 

Construction

 

808,536

 

 

 

754,354

 

 

 

1,945,506

 

 

 

1,907,110

 

Materials

 

141,641

 

 

 

139,501

 

 

 

327,846

 

 

 

332,220

 

Total cost of revenue

 

950,177

 

 

 

893,855

 

 

 

2,273,352

 

 

 

2,239,330

 

Gross profit

 

166,643

 

 

 

115,055

 

 

 

302,088

 

 

 

272,713

 

Selling, general and administrative expenses

 

74,794

 

 

 

61,795

 

 

 

212,479

 

 

 

192,036

 

Other costs, net

 

19,843

 

 

 

(490

)

 

 

37,973

 

 

 

22,401

 

Gain on sales of property and equipment, net

 

(1,812

)

 

 

(949

)

 

 

(7,793

)

 

 

(10,462

)

Operating income

 

73,818

 

 

 

54,699

 

 

 

59,429

 

 

 

68,738

 

Other (income) expense

 

 

 

 

 

 

 

Loss on debt extinguishment

 

 

 

 

 

 

 

51,052

 

 

 

 

Interest income

 

(4,293

)

 

 

(1,894

)

 

 

(11,287

)

 

 

(3,246

)

Interest expense

 

4,877

 

 

 

2,519

 

 

 

11,899

 

 

 

10,003

 

Equity in income of affiliates, net

 

(7,147

)

 

 

(3,491

)

 

 

(19,378

)

 

 

(9,656

)

Other (income) expense, net

 

462

 

 

 

77

 

 

 

(2,713

)

 

 

4,646

 

Total other (income) expense, net

 

(6,101

)

 

 

(2,789

)

 

 

29,573

 

 

 

1,747

 

Income before income taxes

 

79,919

 

 

 

57,488

 

 

 

29,856

 

 

 

66,991

 

Provision for (benefit from) income taxes

 

22,423

 

 

 

(7,710

)

 

 

21,978

 

 

 

7,310

 

Net income

 

57,496

 

 

 

65,198

 

 

 

7,878

 

 

 

59,681

 

Amount attributable to non-controlling interests

 

128

 

 

 

4,104

 

 

 

9,723

 

 

 

1,569

 

Net income attributable to Granite Construction Incorporated

$

57,624

 

 

$

69,302

 

 

$

17,601

 

 

$

61,250

 

 

 

 

 

 

 

 

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic

$

1.31

 

 

$

1.58

 

 

$

0.40

 

 

$

1.37

 

Diluted

$

1.13

 

 

$

1.36

 

 

$

0.40

 

 

$

1.25

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

43,924

 

 

 

43,973

 

 

 

43,861

 

 

 

44,739

 

Diluted

 

53,612

 

 

 

51,863

 

 

 

44,447

 

 

 

52,613

 

(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 was necessary.

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 

Nine Months Ended September 30,

 

2023

 

 

As Restated

 

 

2022

 

Operating activities

 

 

 

Net income

$

7,878

 

 

$

59,681

 

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

 

 

 

Depreciation, depletion and amortization

 

65,298

 

 

 

61,714

 

Amortization related to long-term debt

 

1,689

 

 

 

1,901

 

Non-cash loss on debt extinguishment

 

51,052

 

 

 

 

Gain on sale of business

 

 

 

 

(3,278

)

Gain on sales of property and equipment, net

 

(7,793

)

 

 

(10,462

)

Deferred income taxes

 

1,542

 

 

 

(17,819

)

Stock-based compensation

 

8,630

 

 

 

6,151

 

Equity in net (income) loss from unconsolidated joint ventures

 

(4,535

)

 

 

25,066

 

Net income from affiliates

 

(19,378

)

 

 

(9,656

)

Other non-cash adjustments

 

5,659

 

 

 

38

 

Changes in assets and liabilities

 

(75,844

)

 

 

(127,967

)

Net cash provided by (used in) operating activities

$

34,198

 

 

$

(14,631

)

Investing activities

 

 

 

Purchases of marketable securities

 

(9,740

)

 

 

(59,810

)

Maturities of marketable securities

 

40,000

 

 

 

15,000

 

Purchases of property and equipment

 

(108,963

)

 

 

(97,753

)

Proceeds from sales of property and equipment

 

14,613

 

 

 

21,110

 

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

 

 

 

 

(7,560

)

Collection of notes receivable

 

208

 

 

 

316

 

Net cash provided by (used in) investing activities

$

(89,270

)

 

$

13,874

 

Financing activities

 

 

 

Proceeds from long-term debt

 

55,000

 

 

 

50,000

 

Debt principal repayments

 

(304,851

)

 

 

(124,911

)

Capped call transactions

 

(53,035

)

 

 

 

Redemption of warrants

 

(13,201

)

 

 

 

Proceeds from issuance of 3.75% Convertible Notes

 

373,750

 

 

 

 

Debt issuance costs

 

(10,024

)

 

 

 

Cash dividends paid

 

(17,101

)

 

 

(17,587

)

Repurchases of common stock

 

(3,900

)

 

 

(70,724

)

Contributions from non-controlling partners

 

35,400

 

 

 

11,925

 

Distributions to non-controlling partners

 

(9,100

)

 

 

(6,725

)

Other financing activities, net

 

267

 

 

 

208

 

Net cash provided by (used in) financing activities

$

53,205

 

 

$

(157,814

)

Net decrease in cash, cash equivalents and restricted cash

 

(1,867

)

 

 

(158,571

)

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

$

292,124

 

 

$

255,084

 

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, non-cash impairment charges 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 as described above;
  • 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, tax basis difference on held for sale entities and establishment of valuation allowance.

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

September 30,

 

Nine Months Ended

September 30,

 

 

2023

 

 

As Restated

 

 

2023

 

 

As Restated

 

 

2022

 

 

 

 

2022

 

EBITDA:

 

 

 

 

 

 

 

Net income attributable to Granite Construction Incorporated

$

57,624

 

 

$

69,302

 

 

$

17,601

 

 

$

61,250

 

Net income margin (2)

 

5.2

%

 

 

6.9

%

 

 

0.7

%

 

 

2.4

%

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization expense (3)

 

23,911

 

 

 

29,610

 

 

 

65,722

 

 

 

62,437

 

Provision for (benefit from) income taxes

 

22,423

 

 

 

(7,710

)

 

 

21,978

 

 

 

7,310

 

Interest expense, net

 

584

 

 

 

625

 

 

 

612

 

 

 

6,757

 

EBITDA(1)

$

104,542

 

 

$

91,827

 

 

$

105,913

 

 

$

137,754

 

EBITDA margin(1)(2)

 

9.4

%

 

 

9.1

%

 

 

4.1

%

 

 

5.5

%

 

 

 

 

 

 

 

 

ADJUSTED EBITDA:

 

 

 

 

 

 

 

Other costs, net

 

19,843

 

 

 

(490

)

 

 

37,973

 

 

 

22,401

 

Loss on debt extinguishment

 

 

 

 

 

 

 

51,052

 

 

 

 

Adjusted EBITDA(1)

$

124,385

 

 

$

91,337

 

 

$

194,938

 

 

$

160,155

 

Adjusted EBITDA margin(1)(2)

 

11.1

%

 

 

9.1

%

 

 

7.6

%

 

 

6.4

%

(1)

 

We define EBITDA as GAAP net income 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, EBITDA and adjusted EBITDA divided by consolidated revenue of $1.1 billion and $1.0 billion, for the three months ended September 30, 2023 and 2022, respectively and $2.6 billion and $2.5 billion for the nine months ended September 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

September 30,

 

Nine Months Ended

September 30,

 

 

2023

 

 

As Restated

 

 

2023

 

 

As Restated

 

 

2022

 

 

 

 

2022

 

Income before income taxes

$

79,919

 

 

$

57,488

 

 

$

29,856

 

 

$

66,991

 

Other costs, net

 

19,843

 

 

 

(490

)

 

 

37,973

 

 

 

22,401

 

Transaction costs

 

92

 

 

 

8,012

 

 

 

5,046

 

 

 

8,012

 

Loss on debt extinguishment

 

 

 

 

 

 

 

51,052

 

 

 

 

Adjusted income before income taxes

$

99,854

 

 

$

65,010

 

 

$

123,927

 

 

$

97,404

 

 

 

 

 

 

 

 

 

Provision for (benefit from) income taxes

$

22,423

 

 

$

(7,710

)

 

$

21,978

 

 

$

7,310

 

Tax effect of goodwill disposal related to sale of business

 

 

 

 

 

 

 

 

 

 

(10,070

)

Tax basis difference on held for sale entities

 

 

 

 

17,691

 

 

 

 

 

 

17,691

 

Tax expense to establish valuation allowance

 

(1,542

)

 

 

 

 

 

(1,542

)

 

 

 

Tax effect of adjusting items (1)

 

3,874

 

 

 

1,956

 

 

 

9,876

 

 

 

4,787

 

Adjusted provision for income taxes

$

24,755

 

 

$

11,937

 

 

$

30,312

 

 

$

19,718

 

 

 

 

 

 

 

 

 

Net income attributable to Granite Construction Incorporated

$

57,624

 

 

$

69,302

 

 

$

17,601

 

 

$

61,250

 

After-tax adjusting items

 

17,603

 

 

 

(12,125

)

 

 

85,737

 

 

 

18,005

 

Adjusted net income attributable to Granite Construction Incorporated

$

75,227

 

 

$

57,177

 

 

$

103,338

 

 

$

79,255

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of common stock (2)

 

53,612

 

 

 

51,863

 

 

 

44,447

 

 

 

52,613

 

Less: dilutive effect of Convertible Notes (3)

 

(9,099

)

 

 

(7,309

)

 

 

 

 

 

(7,309

)

Adjusted diluted weighted average shares of common stock

 

44,513

 

 

 

44,554

 

 

 

44,447

 

 

 

45,304

 

 

 

 

 

 

 

 

 

Diluted net income per share attributable to common shareholders

$

1.13

 

 

$

1.36

 

 

$

0.40

 

 

$

1.25

 

After-tax adjusting items per share attributable to common shareholders

 

0.56

 

 

 

(0.08

)

 

 

1.92

 

 

 

0.50

 

Adjusted diluted earnings per share attributable to common shareholders

$

1.69

 

 

$

1.28

 

 

$

2.32

 

 

$

1.75

 

(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 nine months ended September 30, 2023 excludes the $51 million loss on debt extinguishment and $5.0 million non-cash impairment charges included in “Other costs, net” which are not tax deductible. The tax effect of adjusting items for the three and nine months ended September 30, 2022 excludes a $12 million accrual related to the resolution of the SEC investigation which is not tax deductible.

(2)

 

Diluted weighted average shares of common stock includes the dilutive effect on net income attributable to Granite Construction Incorporated of the 2.75% Convertible Notes and the 3.75% Convertible Notes potentially converting into 9,099 shares of common stock for the three months ended September 30, 2023 and 7,309 shares of common stock for the three and nine months ended September 30, 2022. For the nine months ended September 30, 2023, the potential dilutive effect of the 9,099 shares related to the 2.75% Convertible Notes and the 3.75% Convertible Notes is not included as their inclusion would be antidilutive.

(3)

 

When calculating diluted net income attributable to common shareholders, GAAP requires that we include potential share dilution from the 2.75% Convertible Notes and the 3.75% Convertible Notes when not antidilutive. 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.

 

Investors



Wenjun Xu, 831-761-7861

Or

Media



Erin Kuhlman, 831-768-4111

Source: Granite Construction Incorporated

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