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Granite publish final financial results of 2020

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World Trenchless,


Granite Construction Incorporated (Granite) have announced fiscal year 2020 and 4Q2020 results.

Fiscal Year 2020 Results

Fiscal year 2020 net loss totalled US$145.1 million, or US$3.18 per diluted share, compared to a net loss of US$60.2 million, or US$1.29 per diluted share, in 2019. Adjusted net income (1) for fiscal year 2020 totalled US$60 million, or US$1.30 per diluted share, compared to an adjusted net loss of US$27.2 million, or US$0.58 per diluted share, in 2019. Adjusted net income (loss) excludes transaction costs (2), amortisation of debt discount, non-recurring legal and accounting investigation costs and non-cash impairment charges.

Revenue increased 3.4% in 2020 to US$3.6 billion, compared to US$3.4 billion in 2020.

Gross profit increased 55.5% in 2020 to US$344.8 million, compared to US$221.7 million in 2020.

Selling, general and administrative expenses in 2020 were US$353.3 million or 9.9% of revenue, compared to US$308 million or 8.9% of revenue in 2019. The increase was primarily attributable to US$35.6 million of non-recurring legal and accounting investigation fees.

Adjusted EBITDA (1) increased to US$189.7 million in 2020, compared to $71.7 million in 2019.

Committed and Award Projects (CAP) (3) totalled US$4.3 billion, down 2.3% y/y. The y/y decrease in CAP reflects backlog burn of the Heavy Civil Operating Group Old Risk Portfolio (4) partially offset by successful pursuits of best-value procurement work (5).

Operating cash flow increased US$157 million in 2020 to a Granite record of US$268.5 million, compared to US$111.4 million in 2019.

Balance sheet remains strong with cash and marketable securities increasing from US$146.3 million in 2020 to US$441.3 million, compared to US$295.1 million in the prior year, while debt decreased US$25.6 million to US$338.8 million compared to US$364.4 million in the prior year.

“Fiscal year 2020 was one of the most challenging years in Granite’s history as we navigated the pandemic and the Audit/Compliance Committee’s internal investigation,” said Kyle Larkin, Granite President. “Despite these challenges, our teams performed well, particularly in our vertically integrated businesses. Our continued focus on enhancing profit and cash flow produced record operating cash flow in 2020. Looking ahead, we remain committed to positioning our balance sheet and CAP for future growth and success. While we continue to manage risk in the Heavy Civil Operating Group, I am confident that we have established the appropriate parameters to not only execute on existing projects, but also rebuild the portfolio by prioritising projects with an appropriate risk profile as we leverage federal, state and local infrastructure funding opportunities.”

4Q2020 results

Results for 4Q2020 were net income of US$8 million, or US$0.17 per diluted share compared to a net loss of US$19.4 million, or US$0.42 per diluted share, in the prior year. Adjusted net income (1) for 4Q2020, which excludes transaction costs (2), amortisation of debt discount and non-recurring legal and accounting investigation costs, was US$18.8 million, or US$0.41 per diluted share compared to an adjusted net loss of US$12.5 million, or US$0.27 per diluted share, in 2019.

Revenue increased 6.8% in 4Q2020 to US$945.6 million compared to US$885.6 million in 4Q2019.

Gross profit increased to US$106.6 million in 4Q2020 compared to US$51.2 million in 4Q2019.

Selling, general and administrative expenses in 4Q2020 were US$100.8 million or 10.7% of revenue, compared to US$83.4 million or 9.4% of revenue in 4Q2019. The increase was primarily attributable to non-recurring legal and accounting investigation fees.

Adjusted EBITDA (1) increased to US$56.6 million in 4Q2020 compared to US$8.5 million in 4Q2019.

(1) Adjusted net income (loss), adjusted diluted income (loss) per share, earnings before interest, taxes, depreciation, and amortisation (EBITDA), EBITDA margin, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures.

(2) Transaction costs include acquisition, integration, acquired intangible amortisation expenses, acquisition-related depreciation and synergy costs.

(3) CAP is comprised of contract backlog (unearned revenue and other awards), as well as awarded construction management/general contractor, construction manager at-risk, and progressive design build projects not yet included in contract backlog.

(4) The Heavy Civil Operating Group Old Risk Portfolio include projects with risk criteria that do not align with Granite’s new project selection criteria for the Heavy Civil Operating Group.

(5) Best value procurement work includes construction management/general contractor, construction management at-risk, and progressive design build projects.

For 4Q2020, water segment revenue was flat and gross profit increased y/y primarily due to the absence of significant project write downs experienced in 4Q2019.

For the year ended 31 December 2020, Water segment revenue decreased due to project delays and limited crew availability attributable to COVID-19. Segment gross profit increased y/y due to the absence of significant project write downs experienced in 2019.

Segment CAP increased US$85.7 million y/y to US$311.7 million, primarily reflecting the addition of five trenchless sewer contracts in 3Q2020 totalling US$148 million.

Read the article online at: https://www.worldtrenchless.com/special-reports/06042021/granite-publish-final-financial-results-of-2020/

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