Granite Construction CEO and president Kyle Larkin said the U.S. construction and building materials major made “significant” strides executing its strategic plan in the first three months of 2022, despite a Q1 net loss from continuing operations totalling US$19 million.
Group revenue dropped $18 million to $548 million compared to $566 million in the same 2021 quarter. Granite’s gross first-quarter profit was down $4 million to $50 million compared to $54 million in the prior year. Gross profit margin decreased to 9.1% (9.5% in Q1 2021).
Granite’s Materials segment revenue increased compared to the previous year’s first quarter as all three groups experienced increased aggregate and asphalt volumes.
Construction revenue decreased compared to the prior year largely due to a $29 million dip in Central group revenue. The Central group’s decrease in revenue, which was partially offset by strong performance in the Arizona region, was expected as the group continues to work through the Old Risk Portfolio (ORP) and works to transform the Texas and Florida regions.
The California group revenue decrease of $15 million was partially offset by an increase of $12 million in revenue in the Mountain group. Gross profit decreased compared to the prior year due to lower revenue and continued burn of lower margin work early in the year. During the quarter, the ORP revenue totalled $80 million with a gross loss and net loss, after non-controlling interest (NCI) of $3 million, compared to ORP revenue of $105 million with a gross loss of $1 million and slight net profit after NCI in the prior year.
“While the first quarter of the year is typically slower due to the seasonal nature of our business, we made significant strides executing on our strategic plan,” said Larkin. “We closed on the sale of Inliner and utilised a portion of the proceeds to pay off one half of our term loan while also repurchasing 611,000 shares. We made good progress on the previously announced divestitures of the Water Resources and Mineral Services businesses that we expect to complete later this year.
“I am pleased with the CAP distribution among our groups and with the level of bidding activity and opportunities in our markets. I believe we are well positioned to execute on our strategic plan and drive increased profitability through project execution and investment in our businesses while continuing to be opportunistic in delivering immediate value to shareholders through share repurchases.”
For the 2022 fiscal year, the company’s guidance is unchanged as follows:
- Low single digit growth in revenue from continuing operations
- Adjusted EBITDA margin from continuing operations in the range of 6% to 8%
- SG&A expense from continuing operations in the range of 8.0% to 8.5% of revenue
- Low-to-mid-20s effective tax rate range for continuing operations
- Capital expenditures in the range of $100 million to $115 million
