Granite(GVA) - 2024 Q1 - Quarterly Results

First Quarter 2024 Financial Highlights Overall Performance Summary Granite Construction reported a 20% revenue increase and a significant turnaround in operating cash flow in Q1 2024 Net Loss and EPS Attributable to Granite | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Loss Attributable to Granite | $(31) million | $(23) million | | Diluted EPS | $(0.70) | $(0.53) | | Adjusted Net Loss Attributable to Granite | $(9) million | $(14) million | | Adjusted Diluted EPS | $(0.21) | $(0.33) | Key Financial Metrics | Metric | Q1 2024 | Change (YoY) | | :--- | :--- | :--- | | Revenue | $672 million | +20% | | Operating Cash Flow | $24 million | +$101 million | | Committed and Awarded Projects (CAP) | $5.5 billion | +$395 million | - CEO Kyle Larkin highlighted a strong start to 2024, building on momentum from 2023 with significant revenue growth and improved operating cash flow The company realigned its operational leadership around the construction and materials segments to better leverage expertise and drive growth[4] - Selling, general, and administrative (SG&A) expenses increased by $15 million year-over-year, primarily due to $7 million in additional stock-based compensation and $5 million from acquired businesses SG&A as a percentage of revenue remained flat at 13.1%[7] Segment Performance Construction Segment Construction segment revenue grew 18.2% to $595.2 million, with gross profit up 54.8% and robust CAP at $5.5 billion Construction Segment Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $595.2 million | $503.4 million | +18.2% | | Gross Profit | $56.8 million | $36.7 million | +54.8% | | Gross Profit Margin | 9.5% | 7.3% | +2.2 percentage points | - Revenue growth was led by operations in California, Utah, and the Midwest, benefiting from better weather in 2024 and a higher backlog (CAP) Acquired businesses contributed $6 million to revenue[8] - The increase in gross profit was attributed to higher revenue and a decrease in negative revisions in estimates However, this was partially offset by $5 million in gross losses from acquired businesses, which included $3 million in purchase accounting-related depreciation and amortization[8] - Committed and Awarded Projects (CAP) increased by $395 million year-over-year to $5.5 billion, remaining flat sequentially The company sees substantial opportunities to build CAP throughout 2024 in strong public and private markets[9] Materials Segment Materials segment revenue increased 36.0% to $77.1 million, with gross loss improving to $2.5 million Materials Segment Performance | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $77.1 million | $56.7 million | +36.0% | | Gross Profit (Loss) | $(2.5) million | $(4.3) million | +41.5% | | Gross Profit Margin | (3.3)% | (7.7)% | +4.4 percentage points | - Revenue growth was driven by $10 million from acquired businesses, higher asphalt and aggregate sales prices, and increased volumes from more favorable weather conditions in 2024[10] - Gross profit improved due to higher sales prices but was partially offset by a $3 million gross loss from acquired businesses, of which $2 million was related to purchase accounting step-up depreciation and amortization[10] 2024 Outlook Fiscal Year 2024 Guidance Granite updated its 2024 guidance, raising adjusted EBITDA margin to 9.5%-11.5% due to stock-based compensation exclusion - The company increased its adjusted EBITDA margin guidance for 2024 to a range of 9.5% to 11.5%, up from 9.0% to 11.0%, to account for the exclusion of stock-based compensation expense in the calculation[11] Fiscal Year 2024 Guidance | Metric | 2024 Guidance | | :--- | :--- | | Revenue | $3.8 billion to $4.0 billion | | Adjusted EBITDA margin | 9.5% to 11.5% | | SG&A expense (% of revenue) | 7.5% to 8.0% | | Effective tax rate (for adjusted net income) | Mid-20s | | Capital expenditures | $130 million to $150 million | Financial Statements Condensed Consolidated Balance Sheets Total assets decreased to $2.60 billion as of March 31, 2024, driven by lower cash and receivables Condensed Consolidated Balance Sheets | Balance Sheet Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $321.8 million | $417.7 million | | Total current assets | $1,418.1 million | $1,643.5 million | | Total assets | $2,595.0 million | $2,813.5 million | | Total current liabilities | $936.4 million | $1,029.9 million | | Total liabilities | $1,590.4 million | $1,786.6 million | | Total equity | $1,004.6 million | $1,027.0 million | Condensed Consolidated Statements of Operations Q1 2024 revenue increased to $672.3 million, but net loss widened to $31.0 million due to higher costs Condensed Consolidated Statements of Operations | Income Statement Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenue | $672.3 million | $560.1 million | | Gross Profit | $54.3 million | $32.4 million | | Operating Loss | $(43.3) million | $(43.2) million | | Net Loss Attributable to Granite | $(31.0) million | $(23.0) million | | Diluted Loss Per Share | $(0.70) | $(0.53) | Condensed Consolidated Statements of Cash Flows Operating cash flow significantly improved to $24.1 million in Q1 2024, reducing net cash decrease Condensed Consolidated Statements of Cash Flows | Cash Flow Item (Three Months Ended March 31) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $24.1 million | $(76.7) million | | Net cash used in investing activities | $(10.8) million | $(24.3) million | | Net cash provided by (used in) financing activities | $(109.2) million | $6.8 million | | Net decrease in cash | $(95.9) million | $(94.2) million | | Cash at end of period | $321.8 million | $199.8 million | Non-GAAP Financial Measures Reconciliation EBITDA and Adjusted EBITDA Reconciliation Adjusted EBITDA significantly improved to $14.1 million in Q1 2024, reflecting a revised calculation excluding stock-based compensation EBITDA and Adjusted EBITDA Reconciliation | Reconciliation Item (Three Months Ended March 31) | 2024 | 2023 | | :--- | :--- | :--- | | Net loss attributable to Granite | $(31.0) million | $(23.0) million | | EBITDA | $(9.9) million | $(13.5) million | | Adjusted EBITDA | $14.1 million | $(4.1) million | | Adjusted EBITDA margin | 2.1% | (0.7)% | - In the first quarter of 2024, the company revised its adjusted EBITDA calculation to exclude the impact of stock-based compensation expense Prior period figures have been recast to conform to the new presentation[30] Adjusted Net Income (Loss) Reconciliation Adjusted net loss improved to $9.2 million in Q1 2024, with adjusted diluted EPS at $(0.21) Adjusted Net Income (Loss) Reconciliation | Reconciliation Item (Three Months Ended March 31) | 2024 | 2023 | | :--- | :--- | :--- | | Net loss attributable to Granite | $(31.0) million | $(23.0) million | | After-tax adjusting items | $21.8 million | $8.8 million | | Adjusted net loss attributable to Granite | $(9.2) million | $(14.3) million | | Diluted net loss per share | $(0.70) | $(0.53) | | Adjusted diluted loss per share | $(0.21) | $(0.33) | - Similar to Adjusted EBITDA, the adjusted net income calculation was revised in Q1 2024 to exclude stock-based compensation expense, and prior period calculations were recast for comparability[32]