• Operating segment results reflect successful execution of Large Projects and ongoing competitive environment in the West
• Cash and marketable securities increased $42.3 million to $372.3 million
• Credit facility increased to $215 million; renewed until October 2016

WATSONVILLE, Calif.--(BUSINESS WIRE)-- Granite Construction Incorporated (NYSE: GVA) today reported net income attributable to common shareholders of $37.1 million, or $0.94 per diluted share, for the third quarter of 2012 compared with $36.5 million, or $0.93 per diluted share, the prior year.

"Granite's third quarter results reflect a continuation of the strong performance and momentum we have been seeing from our Large Project segment offset by ongoing competitive headwinds in the Construction and Construction Materials segments," said
James H. Roberts, Granite's president and chief executive officer. "We continue to follow a well-developed plan to strengthen and grow our business, which includes diversifying and leveraging our core capabilities in the federal, water and power markets. We remain focused on maintaining a solid balance sheet and healthy liquidity while continuing to take the actions necessary to position the company to deliver long-term profitable growth."

Third-quarter 2012 Financial Results

Total Company

• Revenue totaled $728.5 million compared with $728.6 million in 2011 reflecting a decrease in Construction segment revenue offset by increases in Large Project segment revenue.
• Gross profit margin for the third quarter was 13.9 percent compared with 12.9 percent a year ago.
• Selling, general and administrative expenses for the third quarter increased $2.2 million to $41.3 million primarily due to changes in the fair market value of a liability related to the Company's non-qualified deferred compensation plan.
• Operating income for the quarter was $61.4 million compared with $60.4 million in the prior year.
• Other income (expense) for the quarter was $1.4 million, an increase of $4.3 million which includes a gain in the value of the investment portfolio associated with the Company's non-qualified deferred compensation plan of which there is an offsetting charge in SG&A expenses.
• Net income attributable to non-controlling interests in joint ventures was $8.6 million compared with $5.9 million in 2011.
• Total contract backlog at September 30, 2012, was $1.6 billion compared with $1.8 billion a year ago. New awards for the quarter include a $27.6 million highway project and a $24.2 million private-sector solar project, both in California. Backlog at September 30, 2012 does not include any Large Project awards during the quarter.
• Cash and marketable securities at September 30, 2012 was $372.3 million compared with $330.0 million at September 30, 2011.

Construction

• Construction revenue for the quarter decreased to $385.7 million compared with $431.1 million in 2011 as a result of the competitive public-sector bidding environment.
• Gross profit margin for the third quarter was 8.6 percent compared with 13.6 percent a year ago. The results reflect challenging market conditions, as well as increased cost to complete certain projects.

Large Project

• Large Project Construction revenue for the quarter increased to $255.9 million compared with $213.3 million, reflecting progress on several Large Projects across the country.
• Gross profit margin for the quarter was 22.6 percent compared with 12 percent for the same period last year. The increase is primarily due to lower than anticipated costs on several Large Projects, as well as the resolution of various outstanding issues with contract owners.

Construction Materials

• Construction Materials revenue for the quarter totaled $86.8 million, compared with $83.2 million for the same period last year.
• Gross profit on the sale of construction materials was 11.5 percent which is in line with the same period in 2011.

Outlook

Based on its year-to-date performance, the company is updating its guidance for the Large Project segment and now expects revenue to be between $900.0 and $950.0 million with gross margin of 16 to 17 percent. The Company is also updating its revenue guidance for the Construction segment and now expects revenue to be $1.0 to $1.05 billion. Gross margin guidance is still expected to be between 8 and 9 percent. The Company is also updating its revenue guidance for the Construction Materials segment and now expects revenue to be $210 to $220 million with gross margins of 6 to 7 percent.

Net income attributable to non-controlling interests is now expected to be approximately $18 million for the year.

Conference Call

Granite will conduct a conference call today, November 7, 2012 at 8 a.m. Pacific time/11 a.m. Eastern Time to discuss the results of the quarter ended September 30, 2012. Access to a live audio webcast is available at http://investor.graniteconstruction.com/index.cfm . The live conference call may be accessed by calling (877) 643-7158. The conference ID for the live call is 55054260. The call will be recorded and will be available for replay approximately two hours after the live audio webcast through November 14, 2012 by calling (855) 859-2056. The conference ID for the replay is also 55054260.

About Granite

Granite is one of the nation's leading infrastructure contractors and is member of the S&P 400 Midcap Index, the FTSE KLD 400 Social Index and the Russell 2000 Index. Through its wholly owned subsidiary, Granite is one of the nation's largest diversified heavy civil contractors and construction materials producers serving public- and private-sector clients nationwide. In addition, Granite has one of the oldest and most robust ethics and compliance programs in the industry. The Company has been recognized by the Ethisphere Institute as one of the World's Most Ethical Companies for the third year in a row. For more information, please visit graniteconstruction.com.

Forward-looking Statements

Any statements contained in this news release that are not based on historical facts, including statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results, 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," 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, circumstances, activities, performance, outcomes and results. 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 specifically described in our Annual Report on Form 10-K under "Item 1A. Risk Factors" and Quarterly Reports on Form 10-Q under "Part II, Item 1A. Risk Factors."

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,				December 31,				September 30,
		2012				2011				2011
ASSETS
Current assets
Cash and cash equivalents		$	287,322			$	256,990			$	193,099
Short-term marketable securities			47,185				70,408				77,389
Receivables, net			363,455				251,838				357,807
Costs and estimated earnings in excess of billings			49,548				37,703				45,884
Inventories			63,999				50,975				57,987
Real estate held for development and sale			57,964				67,037				79,173
Deferred income taxes			38,571				38,571				52,714
Equity in construction joint ventures			97,890				101,029				97,415
Other current assets			13,974				35,171				29,526
Total current assets			1,019,908				909,722				990,994
Property and equipment, net			432,293				447,140				453,822
Long-term marketable securities			37,802				79,250				59,509
Investments in affiliates			30,257				31,071				33,435
Other noncurrent assets			78,375				80,616				80,709
Total assets		$	1,598,635			$	1,547,799			$	1,618,469
LIABILITIES AND EQUITY
Current liabilities
Current maturities of long-term debt		$	8,352			$	9,102			$	8,351
Current maturities of non-recourse debt			16,712				23,071				16,690
Accounts payable			209,683				158,660				216,600
Billings in excess of costs and estimated earnings			91,348				90,845				89,505
Accrued expenses and other current liabilities			167,166				166,790				185,624
Total current liabilities			493,261				448,468				516,770
Long-term debt			200,168				208,501				208,519
Long-term non-recourse debt			4,375				9,912				27,755
Other long-term liabilities			47,913				49,221				46,985
Deferred income taxes			3,644				4,034				10,330
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 38,706,966 shares as of September 30, 2012, 38,682,771 shares as of December 31, 2011 and 38,664,403 shares as of September 30, 2011			387				387				387
Additional paid-in capital			114,917				111,514				108,096
Retained earnings			699,277				687,296				673,626
Total Granite Construction Incorporated shareholders' equity			814,581				799,197				782,109
Noncontrolling interests			34,693				28,466				26,001
Total equity			849,274				827,663				808,110
Total liabilities and equity		$	1,598,635			$	1,547,799			$	1,618,469

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited - in thousands, except per share data)
		Three Months Ended September 30,											Nine Months Ended September 30,
		2012					2011						2012					2011
Revenue
Construction		$	385,744				$	431,101					$	748,803				$	784,393
Large project construction			255,918					213,320						648,645					513,478
Construction materials			86,782					83,171						175,754					165,083
Real estate			38					986						5,055					7,029
Total revenue			728,482					728,578						1,578,257					1,469,983
Cost of revenue
Construction			352,471					372,561						688,989					696,911
Large project construction			198,104					187,763						540,343					443,965
Construction materials			76,798					73,617						166,720					154,329
Real estate			10					744						4,254					5,941
Total cost of revenue			627,383					634,685						1,400,306					1,301,146
Gross profit			101,099					93,893						177,951					168,837
Selling, general and administrative expenses			41,280					39,112						125,274					121,277
Gain on sales of property and equipment			1,622					5,598						6,493					11,572
Operating income			61,441					60,379						59,170					59,132
Other income (expense)
Interest income			485					476						2,140					2,295
Interest expense			(2,561	)				(3,418	)					(8,570	)				(7,653	)
Equity in income of affiliates			1,481					1,881						380					1,443
Other income (expense), net			2,013					(1,833	)					3,866					(1,951	)
Total other income (expense)			1,418					(2,894	)					(2,184	)				(5,866	)
Income before provision for income taxes			62,859					57,485						56,986					53,266
Provision for income taxes			17,113					15,109						15,440					11,973
Net income			45,746					42,376						41,546					41,293
Amount attributable to noncontrolling interests			(8,625	)				(5,908	)					(14,249	)				(8,886	)
Net income attributable to Granite Construction Incorporated		$	37,121				$	36,468					$	27,297				$	32,407
Net income per share attributable to common shareholders:
Basic		$	0.96				$	0.94					$	0.71				$	0.84
Diluted		$	0.94				$	0.93					$	0.70				$	0.83
Weighted average shares of common stock:
Basic			38,518					38,172						38,418					38,092
Diluted			39,141					38,598						39,013					38,428

GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Nine Months Ended September 30,		2012					2011
Operating activities
Net income		$	41,546				$	41,293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			43,651					45,691
Non-cash restructuring, net			(1,782	)				1,031
Other non-cash impairment charges			3,101					-
Gain on sales of property and equipment			(6,493	)				(11,572	)
Stock-based compensation			8,910					8,994
(Gain) loss on company owned life insurance			(1,829	)				639
Changes in assets and liabilities			(66,941	)				(84,058	)
Net cash provided by operating activities			20,163					2,018
Investing activities
Purchases of marketable securities			(59,936	)				(115,146	)
Maturities of marketable securities			70,100					85,875
Proceeds from sale of marketable securities			55,000					33,268
Additions to property and equipment			(25,971	)				(34,748	)
Proceeds from sales of property and equipment			8,368					20,071
Other investing activities, net			1,165					2,313
Net cash provided by (used in) investing activities			48,726					(8,367	)
Financing activities
Long-term debt principal payments			(11,584	)				(17,293	)
Cash dividends paid			(15,078	)				(15,090	)
Purchase of common stock			(4,521	)				(3,840	)
Distributions to noncontrolling partners, net			(8,022	)				(17,489	)
Other financing activities			648					1,138
Net cash used in financing activities			(38,557	)				(52,574	)
Increase (decrease) in cash and cash equivalents			30,332					(58,923	)
Cash and cash equivalents at beginning of period			256,990					252,022
Cash and cash equivalents at end of period		$	287,322				$	193,099

GRANITE CONSTRUCTION INCORPORATED
Business Segment Information
(Unaudited - dollars in thousands)
		Three Months Ended September 30,																		Nine Months Ended September 30,
		Construction				Large Project Construction				Construction Materials				Real Estate						Construction				Large Project Construction				Construction Materials				Real Estate
2012
Revenue		$	385,744			$	255,918			$	86,782			$	38					$	748,803			$	648,645			$	175,754			$	5,055
Gross profit			33,273				57,814				9,984				28						59,814				108,302				9,034				801
Gross profit as a percent of revenue			8.6	%			22.6	%			11.5	%			73.7	%					8.0	%			16.7	%			5.1	%			15.8	%
2011
Revenue		$	431,101			$	213,320			$	83,171			$	986					$	784,393			$	513,478			$	165,083			$	7,029
Gross profit			58,540				25,557				9,554				242						87,482				69,513				10,754				1,088
Gross profit as a percent of revenue			13.6	%			12.0	%			11.5	%			24.5	%					11.2	%			13.5	%			6.5	%			15.5	%

GRANITE CONSTRUCTION INCORPORATED
Contract Backlog by Segment
(Unaudited - dollars in thousands)
Contract Backlog by Segment		September 30, 2012							June 30, 2012							September 30, 2011
Construction		$	530,291		33.3	%			$	697,535		35.8	%			$	562,705		30.5	%
Large Project Construction			1,061,143		66.7	%				1,252,828		64.2	%				1,280,945		69.5	%
Total		$	1,591,434		100.0	%			$	1,950,363		100.0	%			$	1,843,650		100.0	%

Granite Construction Incorporated

Jacque Fourchy, 831-761-4741

Source: Granite Construction Incorporated

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