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Granite Reports Fourth Quarter and FY 2023 Results

  • Q4 revenue increased 18% year-over-year to $934 million
  • Q4 diluted EPS of $0.55 and adjusted diluted EPS (1) of $0.82
  • Operating cash flow increased $150 million sequentially
  • Committed and Awarded Projects ("CAP") (2) of $5.5 billion, a year-over-year increase of $1.1 billion
  • 2024 guidance continues to align with previously provided targets

Granite Construction Incorporated (NYSE: GVA) today announced results for the quarter and year ended December 31, 2023.

Fourth Quarter 2023 Results

Net income totaled $26 million, or $0.55 per diluted share, compared to net income of $22 million, or $0.46 per diluted share, for the same period in the prior year. Adjusted net income (1) totaled $36 million, or $0.82 per diluted share, compared to adjusted net income (1) of $25 million, or $0.56 per diluted share, for the same period in the prior year.

  • Revenue increased $145 million to $934 million compared to $789 million 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 44% and 14%, respectively, offset by a decrease in revenue of 9% in the Central Group.
  • Gross profit decreased $3 million to $94 million compared to $97 million for the same period in the prior year.
  • Selling, general, and administrative (“SG&A”) expenses were $82 million, or 8.8% of revenue, compared to $81 million, or 10.2% of revenue, for the same period in the prior year.
  • Adjusted EBITDA (1) totaled $74 million, compared to $50 million for the same period in the prior year.

“Across the Company, our teams had an outstanding fourth quarter,” said Kyle Larkin, Granite President and Chief Executive Officer. “The quarter’s strong results, however, were tempered by impacts from the legacy Tappan Zee and I-64 projects. Looking back on 2023, it was a transformative year for Granite as we delivered on our strategic plan. We met our expectations for organic revenue growth and achieved our adjusted EBITDA margin range. We continued to develop our home markets while growing what we believe is the highest quality CAP in Granite’s history by $1 billion year-over-year. We generated operating cash flow in excess of our target at 5.2% of revenue and completed acquisitions that added exclusive rights to 140 million tons of reserves and expanded our vertically integrated footprint to the Southeast. We continue to make significant progress to deliver strong, predictable profitability by focusing on our core construction skills that we have developed and honed over the past 100 years.”

“Our guidance in 2024 reflects significant revenue growth driven by the high level of our CAP, robust construction and materials markets, and contribution from the Lehman-Roberts Company and Memphis Stone & Gravel Company acquisition. Our 2024 adjusted EBITDA margin guidance range remains unchanged, and we expect to see further improvements in operating cash flow.”

Fiscal Year 2023 Results

Net income totaled $44 million, or $0.97 per diluted share, compared to net income of $83 million, or $1.70 per diluted share, in the prior year. Adjusted net income (1) totaled $140 million, or $3.14 per diluted share, compared to adjusted net income (1) of $104 million, or $2.31 per diluted share, in the prior year.

  • Revenue increased $208 million to $3.5 billion compared to $3.3 billion in the prior year.
  • Gross profit increased $27 million to $396 million compared to $369 million in the prior year.
  • SG&A expenses totaled $294 million, or 8.4% of revenue, compared to $273 million, or 8.3% of revenue, 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 $269 million compared to $210 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.

Fourth Quarter and Fiscal Year 2023 Segment Results (Unaudited - dollars in thousands)

Construction Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

Revenue

$

793,727

 

 

$

665,077

 

 

$

128,650

 

 

19.3

%

 

$

2,992,254

 

 

$

2,803,935

 

 

$

188,319

 

6.7

%

Gross profit

$

72,034

 

 

$

72,133

 

 

$

(99

)

 

(0.1

)%

 

$

325,055

 

 

$

303,881

 

 

$

21,174

 

7.0

%

Gross profit as a percent of revenue

 

9.1

%

 

 

10.8

%

 

 

 

 

 

 

10.9

%

 

 

10.8

%

 

 

 

 

Committed and Awarded Projects

December 31, 2023

 

September 30, 2023

 

Change - Quarter over Quarter

 

December 31, 2022

 

Change - Year over Year

California

$

2,436,521

 

$

2,345,294

 

$

91,227

 

 

3.9

%

 

$

1,747,163

 

$

689,358

 

39.5

%

Central

 

1,707,862

 

 

1,811,426

 

 

(103,564

)

 

(5.7

)%

 

 

1,661,613

 

 

46,249

 

2.8

%

Mountain

 

1,401,371

 

 

1,427,803

 

 

(26,432

)

 

(1.9

)%

 

 

1,076,363

 

 

325,008

 

30.2

%

Total

$

5,545,754

 

$

5,584,523

 

$

(38,769

)

 

(0.7

)%

 

$

4,485,139

 

$

1,060,615

 

23.6

%

Construction revenue in the fourth quarter increased 19% year-over-year led by the California and Mountain groups with increases of 61% and 12%, respectively, more than offsetting a reduction in revenue in the Central group of 13% driven by a reduction in the estimated probable claim recovery from the legacy Tappan Zee project. Significantly higher levels of CAP for both the California and Mountain groups allowed our teams to increase revenue during the quarter. The performance in the quarter, combined with the strong third quarter, overcame the weather-related slow start to the year and resulted in a revenue increase of 7% year-over-year for the fiscal year ended December 31, 2023.

While construction gross profit increased year-over-year for the fiscal year, gross profit margin in the fourth quarter decreased year-over-year primarily due to negative impacts from the legacy Tappan Zee and I-64 High Rise Bridge Projects. Although a non-cash event, we adjusted our probable claim recovery estimate on the Tappan Zee project to reflect developments in the dispute review process. This resulted in a negative impact to gross profit of $19 million during the fourth quarter. Even though construction activities are now substantially complete on the I-64 High Rise Bridge project, fourth quarter gross profit was negatively impacted by $14 million, or $7 million after non-controlling interest. For the year, the I-64 project’s negative impact to gross profit was $55 million, or $27 million after non-controlling interest. Excluding the impact of these two projects, construction gross profit margin was 13% in the fourth quarter and for the fiscal year.

CAP decreased $39 million sequentially and increased $1.1 billion year-over-year. Despite a slight decrease in CAP during the fourth quarter, our markets continue to be robust, and we are entering 2024 with significantly higher CAP than we began 2023. Given the current market environment and strong funding levels of state Departments of Transportation, we believe there are substantial opportunities to continue to build CAP in 2024.

Materials Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

2023

 

2022

 

Change

 

2023

 

2022

 

Change

Revenue

$

139,971

 

 

$

124,136

 

 

$

15,835

 

 

12.8

%

 

$

516,884

 

 

$

497,321

 

 

$

19,563

 

3.9

%

Gross profit

$

22,277

 

 

$

24,648

 

 

$

(2,371

)

 

(9.6

)%

 

$

71,344

 

 

$

65,613

 

 

$

5,731

 

8.7

%

Gross profit as a percent of revenue

 

15.9

%

 

 

19.9

%

 

 

 

 

 

 

13.8

%

 

 

13.2

%

 

 

 

 

Materials revenue for the fourth quarter and fiscal year ended December 31, 2023 increased compared to the same periods in the prior year, driven primarily by sales from facilities and businesses acquired in 2023 and higher asphalt and aggregate sales prices. Gross profit and gross profit margin decreased during the fourth quarter primarily due to a gross loss from our newly acquired operations, including the impact of purchase accounting, which reduced gross profit margin by 260 bps.

Outlook

Our guidance for 2024 is described below:

  • Revenue in the range of $3.8 billion to $4.0 billion
  • Adjusted EBITDA margin in the range of 9.0% to 11.0%
  • SG&A expense in the range of 7.5% to 8.0% of revenue
  • Mid-20s effective tax rate for adjusted net income
  • Capital expenditures of approximately $130 million to $150 million

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

“In 2024, we expect to achieve the revenue growth and profitability targets that we announced two years ago,” said Lisa Curtis, Executive Vice President and Chief Financial Officer. “We believe this demonstrates that we are executing on our strategic plan. Entering 2024, with CAP 24% higher year-over-year and a strong market, we expect revenue to grow significantly in 2024 to a range of $3.8 billion to $4.0 billion, inclusive of the recently acquired Lehman-Roberts Company and Memphis Stone & Gravel Company. As we have stated in the past, we expect profitability to increase to an adjusted EBITDA margin of 9.0% to 11.0% in 2024, led by our transformed project portfolio and improved materials margins. CAPEX is expected to be in a range of $130 million to $150 million, including approximately $50 million in planned strategic materials investments in land, reserves and an aggregate plant. This range also includes approximately $20 million related to a project-specific tunnel boring machine.”

Conference Call

Granite will conduct a conference call today, February 22, 2024, at 8:00 a.m. Pacific Time/11:00 a.m. Eastern Time to discuss the results of the quarter and fiscal year ended December 31, 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 February 29, 2024, by calling 1-877-344-7529, replay access code 3276603; 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, X, Facebook and Instagram.

Forward-looking Statements

Any statements contained in this press 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, 2024 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, CAP, results, delivery of strong, predictable profitability, our guidance in 2024 reflects significant revenue growth driven by high levels of CAP, robust construction and materials markets and contributions from acquisitions, our adjusted EBITDA margin guidance remaining unchanged, our expectations to realize further increases in operating cash flow, our belief that there are substantial opportunities to build CAP in 2024, our expectations to achieve the revenue growth and profitability targets we previously announced, we expect revenue to grow significantly in 2024 and we expect profitability to increase in 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, 2024 fiscal year guidance for revenue, adjusted EBITDA margin, SG&A expense, effective tax rate, and capital expenditures, CAP, results, delivery of strong, predictable profitability, our guidance in 2024 reflects significant revenue growth driven by high levels of CAP, robust construction and materials markets and contributions from acquisitions, our adjusted EBITDA margin guidance remaining unchanged, our expectations to realize further increases in operating cash flow, our belief that there are substantial opportunities to build CAP in 2024, our expectations to achieve the revenue growth and profitability targets we previously announced, we expect revenue to grow significantly in 2024 and we expect profitability to increase in 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 press 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)

 

 

December 31, 2023

 

December 31, 2022

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

417,663

 

$

293,991

Short-term marketable securities

 

35,863

 

 

39,374

Receivables, net

 

598,705

 

 

463,987

Contract assets

 

262,987

 

 

241,916

Inventories

 

103,898

 

 

86,809

Equity in unconsolidated construction joint ventures

 

171,233

 

 

183,808

Other current assets

 

53,102

 

 

37,411

Total current assets

 

1,643,451

 

 

1,347,296

Property and equipment, net

 

662,864

 

 

509,210

Long-term marketable securities

 

 

 

26,569

Investments in affiliates

 

92,910

 

 

80,725

Goodwill

 

155,004

 

 

73,703

Intangible assets

 

117,322

 

 

9,212

Right of use assets

 

78,176

 

 

49,079

Deferred income taxes, net

 

8,179

 

 

22,208

Other noncurrent assets

 

55,634

 

 

49,931

Total assets

$

2,813,540

 

$

2,167,933

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities

 

 

 

Current maturities of long-term debt

$

39,932

 

$

1,447

Accounts payable

 

408,363

 

 

334,392

Contract liabilities

 

243,848

 

 

173,286

Accrued expenses and other current liabilities

 

337,740

 

 

288,469

Total current liabilities

 

1,029,883

 

 

797,594

Long-term debt

 

614,781

 

 

286,934

Long-term lease liabilities

 

63,548

 

 

32,170

Deferred income taxes, net

 

3,708

 

 

1,891

Other long-term liabilities

 

74,654

 

 

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: 43,944,118 shares as of December 31, 2023 and 43,743,907 shares as of December 31, 2022

 

439

 

 

437

Additional paid-in capital

 

474,134

 

 

470,407

Accumulated other comprehensive income

 

881

 

 

788

Retained earnings

 

501,844

 

 

481,384

Total Granite Construction Incorporated shareholders’ equity

 

977,298

 

 

953,016

Non-controlling interests

 

49,668

 

 

32,129

Total equity

 

1,026,966

 

 

985,145

Total liabilities and equity

$

2,813,540

 

$

2,167,933

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

2023

 

2022

 

2023

 

2022

Revenue

 

 

 

 

 

 

 

Construction

$

793,727

 

 

$

665,077

 

 

$

2,992,254

 

 

$

2,803,935

 

Materials

 

139,971

 

 

 

124,136

 

 

 

516,884

 

 

 

497,321

 

Total revenue

 

933,698

 

 

 

789,213

 

 

 

3,509,138

 

 

 

3,301,256

 

Cost of revenue

 

 

 

 

 

 

 

Construction

 

721,693

 

 

 

592,944

 

 

 

2,667,199

 

 

 

2,500,054

 

Materials

 

117,694

 

 

 

99,488

 

 

 

445,540

 

 

 

431,708

 

Total cost of revenue

 

839,387

 

 

 

692,432

 

 

 

3,112,739

 

 

 

2,931,762

 

Gross profit

 

94,311

 

 

 

96,781

 

 

 

396,399

 

 

 

369,494

 

Selling, general and administrative expenses

 

81,987

 

 

 

80,574

 

 

 

294,466

 

 

 

272,610

 

Other costs, net

 

12,244

 

 

 

1,719

 

 

 

50,217

 

 

 

24,120

 

Gain on sales of property and equipment, net

 

(20,553

)

 

 

(2,155

)

 

 

(28,346

)

 

 

(12,617

)

Operating income

 

20,633

 

 

 

16,643

 

 

 

80,062

 

 

 

85,381

 

Other (income) expense

 

 

 

 

 

 

 

Loss on debt extinguishment

 

 

 

 

 

 

 

51,052

 

 

 

 

Interest income

 

(6,251

)

 

 

(3,282

)

 

 

(17,538

)

 

 

(6,528

)

Interest expense

 

6,563

 

 

 

2,621

 

 

 

18,462

 

 

 

12,624

 

Equity in income of affiliates, net

 

(6,370

)

 

 

(3,915

)

 

 

(25,748

)

 

 

(13,571

)

Other (income) expense, net

 

(3,307

)

 

 

(3,607

)

 

 

(6,020

)

 

 

1,039

 

Total other (income) expense, net

 

(9,365

)

 

 

(8,183

)

 

 

20,208

 

 

 

(6,436

)

Income before income taxes

 

29,998

 

 

 

24,826

 

 

 

59,854

 

 

 

91,817

 

Provision for income taxes

 

8,289

 

 

 

5,650

 

 

 

30,267

 

 

 

12,960

 

Net income

 

21,709

 

 

 

19,176

 

 

 

29,587

 

 

 

78,857

 

Amount attributable to non-controlling interests

 

4,289

 

 

 

2,876

 

 

 

14,012

 

 

 

4,445

 

Net income attributable to Granite Construction Incorporated

$

25,998

 

 

$

22,052

 

 

$

43,599

 

 

$

83,302

 

 

 

 

 

 

 

 

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic

$

0.59

 

 

$

0.50

 

 

$

0.99

 

 

$

1.87

 

Diluted

$

0.55

 

 

$

0.46

 

 

$

0.97

 

 

$

1.70

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

43,934

 

 

 

43,732

 

 

 

43,879

 

 

 

44,485

 

Diluted

 

53,605

 

 

 

51,475

 

 

 

52,565

 

 

 

52,326

 

GRANITE CONSTRUCTION INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - in thousands)

 

Years Ended December 31,

2023

 

2022

Operating activities

 

 

 

Net income

$

29,587

 

 

$

78,857

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation, depletion and amortization

 

92,270

 

 

 

82,569

 

Amortization related to long-term debt

 

2,390

 

 

 

2,366

 

Non-cash loss on debt extinguishment

 

51,052

 

 

 

 

Gain on sales of property and equipment, net

 

(28,346

)

 

 

(12,617

)

Deferred income taxes

 

26,556

 

 

 

5,447

 

Stock-based compensation

 

10,477

 

 

 

7,765

 

Equity in net loss from unconsolidated construction joint ventures

 

18,617

 

 

 

19,676

 

Net income from affiliates

 

(25,748

)

 

 

(13,571

)

Other non-cash adjustments

 

5,695

 

 

 

222

 

Changes in assets and liabilities

 

1,157

 

 

 

(115,067

)

Net cash provided by operating activities

$

183,707

 

 

$

55,647

 

Investing activities

 

 

 

Purchases of marketable securities

 

(9,740

)

 

 

(94,104

)

Maturities of marketable securities

 

40,000

 

 

 

45,000

 

Proceeds from called marketable securities

 

 

 

 

6

 

Purchases of property and equipment

 

(140,384

)

 

 

(121,612

)

Proceeds from sales of property and equipment

 

38,109

 

 

 

26,064

 

Proceeds from company-owned life insurance

 

1,545

 

 

 

 

Proceeds from the sale of business

 

 

 

 

140,576

 

Acquisition of businesses, net of cash acquired

 

(294,018

)

 

 

 

Issuance of notes receivable

 

 

 

 

(7,560

)

Collection of notes receivable

 

5,198

 

 

 

630

 

Net cash used in investing activities

$

(359,290

)

 

$

(11,000

)

Financing activities

 

 

 

Proceeds from debt

 

305,000

 

 

 

50,000

 

Debt principal repayments

 

(305,118

)

 

 

(125,164

)

Capped call transactions

 

(53,035

)

 

 

 

Redemption of warrants

 

(13,201

)

 

 

 

Proceeds from issuance of 3.75% Convertible Notes

 

373,750

 

 

 

 

Debt issuance costs

 

(10,865

)

 

 

 

Cash dividends paid

 

(22,811

)

 

 

(23,271

)

Repurchases of common stock

 

(4,124

)

 

 

(70,898

)

Contributions from non-controlling partners

 

43,300

 

 

 

13,150

 

Distributions to non-controlling partners

 

(14,224

)

 

 

(8,567

)

Other financing activities, net

 

583

 

 

 

439

 

Net cash provided by (used in) financing activities

$

299,255

 

 

$

(164,311

)

Net increase (decrease) in cash, cash equivalents and restricted cash

$

123,672

 

 

$

(119,664

)

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

$

417,663

 

 

$

293,991

 

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 in 2023 and other costs, net, which include investigation-related legal fees, strategic acquisition costs, a litigation charge and costs and non-cash impairment charges related to the wind down of our international mineral services operations in 2023, and investigation-related legal fees, settlement charges, divestiture costs 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 include acquired intangible amortization expense and acquisition-related depreciation in 2023 and 2022;
  • Loss on debt extinguishment in 2023, and
  • Income taxes related to the disposal of Inliner goodwill and tax basis difference on held for sale entities in 2022 and establishment of valuation allowance in 2023.

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 December 31,

 

Years ended December 31,

 

2023

 

2022

 

2023

 

2022

EBITDA:

 

 

 

 

 

 

 

Net income attributable to Granite Construction Incorporated

$ 25,998

 

$ 22,052

 

$ 43,599

 

$ 83,302

Net income margin (2)

2.8 %

 

2.8 %

 

1.2 %

 

2.5 %

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization expense (3)

27,144

 

21,181

 

92,866

 

83,618

Provision for income taxes

8,289

 

5,650

 

30,267

 

12,960

Interest (income) expense, net

312

 

(661)

 

924

 

6,096

EBITDA(1)

$ 61,743

 

$ 48,222

 

$ 167,656

 

$ 185,976

EBITDA margin(1)(2)

6.6 %

 

6.1 %

 

4.8 %

 

5.6 %

 

 

 

 

 

 

 

 

ADJUSTED EBITDA:

 

 

 

 

 

 

 

Other costs, net

$ 12,244

 

$ 1,719

 

$ 50,217

 

$ 24,120

Loss on debt extinguishment

 

 

51,052

 

Adjusted EBITDA(1)

$ 73,987

 

$ 49,941

 

$ 268,925

 

$ 210,096

Adjusted EBITDA margin(1)(2)

7.9 %

 

6.3 %

 

7.7 %

 

6.4 %

(1)

We define EBITDA as GAAP net income attributable to Granite Construction Incorporated, adjusted for net interest (income) 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 $934 million and $789 million, for the three months ended December 31, 2023 and 2022, respectively, and $3.5 billion and $3.3 billion for the fiscal year ended December 31, 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 consolidated statements of operations.

GRANITE CONSTRUCTION INCORPORATED

ADJUSTED NET INCOME RECONCILIATION

(Unaudited - in thousands, except per share data)

 

 

Three Months Ended

December 31,

 

Years Ended

December 31,

 

2023

 

2022

 

2023

 

2022

Income before income taxes

$

29,998

 

 

$

24,826

 

 

$

59,854

 

 

$

91,817

 

Other costs, net

 

12,244

 

 

 

1,719

 

 

 

50,217

 

 

 

24,120

 

Transaction costs

 

1,660

 

 

 

1,736

 

 

 

6,706

 

 

 

9,680

 

Loss on debt extinguishment

 

 

 

 

 

 

 

51,052

 

 

 

 

Adjusted income before income taxes

$

43,902

 

 

$

28,281

 

 

$

167,829

 

 

$

125,617

 

 

 

 

 

 

 

 

 

Provision for income taxes

$

8,289

 

 

$

5,650

 

 

$

30,267

 

 

$

12,960

 

Tax effect of goodwill disposal related to sale of business

 

 

 

 

 

 

 

 

 

 

(10,070

)

Tax basis difference on held for sale entities

 

 

 

 

 

 

 

 

 

 

17,691

 

Tax expense to establish valuation allowance

 

 

 

 

 

 

 

(1,542

)

 

 

 

Tax effect of adjusting items (1)

 

3,615

 

 

 

899

 

 

 

13,491

 

 

 

5,668

 

Adjusted provision for income taxes

$

11,904

 

 

$

6,549

 

 

$

42,216

 

 

$

26,249

 

 

 

 

 

 

 

 

 

Net income attributable to Granite Construction Incorporated

$

25,998

 

 

$

22,052

 

 

$

43,599

 

 

$

83,302

 

After-tax adjusting items

 

10,289

 

 

 

2,556

 

 

 

96,026

 

 

 

20,511

 

Adjusted net income attributable to Granite Construction Incorporated

$

36,287

 

 

$

24,608

 

 

$

139,625

 

 

$

103,813

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of common stock (2)

 

53,605

 

 

 

51,475

 

 

 

52,565

 

 

 

52,326

 

Less: dilutive effect of Convertible Notes (3)

 

(9,099

)

 

 

(7,309

)

 

 

(8,103

)

 

 

(7,309

)

Adjusted diluted weighted average shares of common stock

 

44,506

 

 

 

44,166

 

 

 

44,462

 

 

 

45,018

 

 

 

 

 

 

 

 

 

Diluted net income per share attributable to common shareholders

$

0.55

 

 

$

0.46

 

 

$

0.97

 

 

$

1.70

 

After-tax adjusting items per share attributable to common shareholders

 

0.27

 

 

 

0.10

 

 

 

2.17

 

 

 

0.61

 

Adjusted diluted earnings per share attributable to common shareholders

$

0.82

 

 

$

0.56

 

 

$

3.14

 

 

$

2.31

 

(1)

The tax effect of adjusting items was calculated using our estimated annual statutory tax rate. The tax effect of adjusting items for the fiscal year ended December 31, 2023 excludes the $51 million loss on debt extinguishment and $5 million non-cash impairment charges included in “Other costs, net” which are not tax deductible. The tax effect of adjusting items for the fiscal year ended December 31, 2022 excludes a $12 million charge 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 per share attributable to Granite Construction Incorporated of the 2.75% Convertible Notes and the 3.75% Convertible Notes potentially converting into 9,099,009 shares of common stock for the fourth quarter ended December 31, 2023 and 7,308,848 shares of common stock for the fourth quarter and fiscal year ended December 31, 2022. For the fiscal year ended December 31, 2023, the potential dilutive effect of 995,847 shares related to the 2.75% Convertible Notes is not included as their inclusion would be antidilutive resulting in 8,103,162 potentially converting into shares of common stock.

(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.

 

Contacts

Investors

Wenjun Xu, 831-761-7861

Or

Media

Erin Kuhlman, 831-768-4111

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