Granite Construction Incorporated · NYSE:GVA
Granite Construction — Q1 2022 Earnings Presentation
27 slides from Granite Construction's earnings presentation, Apr 29, 2022
Slide 1: Q1 | FY 2022 Earnings Conference Call
Granite Construction Q1 | FY 2022 Earnings Conference Call © 2022 Granite Construction. All Rights Reserved.
Slide 2: Safe Harbor
Safe Harbor Any statements contained in this presentation “may,” “will,” “should,” “could,” “would,” may be based on beliefs, assumptions or that are not based on historical facts, "guidance," “continue,” and the negatives estimates that may prove to be incorrect. In including statements regarding f
Slide 3: Strategic Update
Strategic Update © 2022 Granite Construction. All Rights Reserved.
Slide 4: Significant Accomplishments Already Made in the Last 18 Months
Significant Accomplishments Already Made in the Last 18 Months Shifted risk profile Exiting non-core Modified Operating Focused Core of our portfolio businesses Structure Investments • Transformed our CAP • Selling Water & • New executive team • Continued investment in through decreasing Mineral Ser
Slide 5: © 2022 Granite Construction. All Rights Reserved.
© 2022 Granite Construction. All Rights Reserved. 5
Slide 6: Home Market Strategy a Key Differentiator
Home Market Strategy a Key Differentiator Client Centric Focus Home Market Community Engagement Market Intelligence & Insight Blended Project Portfolio Owner and Regulator Relationships Readily Available Resources We will focus on home markets where these attributes exist, among others. With these a
Slide 7: Vertical Integration Empowers Home Markets
Vertical Integration Empowers Home Markets Why Vertical Integration Compete in markets where owning materials is necessary External AGG Sales External HMA Sales Maximize productivity and scheduling Aggregate Production HMA Production Construction Operations Ensure quality materials Leverage lower pr
Slide 8: Investment Framework for Expanding Home Market Strategy
Investment Framework for Expanding Home Market Strategy 2022-2024 2024 & Beyond SUPPORT & Solidify and Bolster Core Competencies EXPAND & Expand Into New STRENGTHEN and Strengths TRANSFORM Geographies INVESTMENT CATEGORIES INVESTMENT CATEGORIES Automation Bolt-on: Civil Home Market & Reserve Constru
Slide 9: Strategy to Support Long-Term Organic Revenue Growth
Strategy to Support Long-Term Organic Revenue Growth Impact of federal $3.4 - $3.6 infrastructure bill on revenue expected to $3.0 $3.0 - $3.1 $0.5 begin 2023 $0.4 $0.4 $0.2 $0.1 $2.9 $2.6 California and Mountain Group capitalize on healthy $2.6 public funding and private expansion FY 2021 FY 2022F
Slide 10: Increase in Profitability through Execution
Increase in Profitability through Execution Construction Materials $500 30.0% $90 30.0% $400 - $500 $75 - $85 $450 $80 25.0% 25.0% $400 $344 $70 $63 $350 $301 $57 15.0% - 20.0% $60 20.0% $103 $281 14.0%- 17.3% 17.0% $300 15.3% 16.0% 14.9% $33 $50 $43 14.0% $250 12.7% 15.0% 15.0% $40 $200 $155 12.8%
Slide 11: Reduction in SG&A as a % of Revenue to Continue
Reduction in SG&A as a % of Revenue to Continue 300 10.0% $270 - $275 $253 9.5% $238 $243 250 9.0% Focused Operations and Efficiencies 8.2% 8.1% 8.1% 7.5% - 8.5% 200 Focus on core civil construction 8.0% 8.0% 1 and materials business 150 7.5% 7.0% 100 2 Standardized processes and 6.5% best practices
Slide 12: EBITDA Margin Improvement Drivers
EBITDA Margin Improvement Drivers Tailwinds & Opportunities • Central Group margin normalization 9.0% - 11.0% 15 - 40 bps 10 - 45 bps 115 - 255 bps o ORP materially complete in 2022 220 bps • Impact of standardization on project margin fade • Impact of investment in materials to reduce cost 5.4% Hea
Slide 13: Capital Allocation Priorities
Capital Allocation Priorities 1 Maintain current level of dividend 2 Support business operations via maintenance capex (1.5% - 2.0% of annual revenue) 3 Optimize gross debt-to-capital ratio to 20%-30% through debt repayment 4 Focused growth capex and M&A to drive growth and efficiencies 5 Opportunis
Slide 14: 2022 Guidance & 2024 Targets
2022 Guidance & 2024 Targets Revenue Adjusted EBITDA Margin SG&A % Revenue $3.4 - $3.6 9.0% - 11.0% $3.0 - $3.1 $3.0 8.1% 8.0% - 8.5% 8.3% 7.5% - 8.0% 6.0% - 8.0% 7.0% 5.4% FY 2021 FY 2022F FY 2024F FY 2021 FY 2022F FY 2024F FY 2021 FY 2022F FY 2024F $ in billions © 2022 Granite Construction. All Ri
Slide 15: Q1 2022 Review
Q1 2022 Review © 2022 Granite Construction. All Rights Reserved.
Slide 16: Construction Segment Overview
Construction Segment Overview • Central group transformation and revenue decline offset by strength in Arizona • California group revenue decline with work pushed from Q1 • Mountain group revenue increase led by Utah and Washington • Bidding environments across markets are robust Q1’21 Revenue Q1’22
Slide 17: Reshaping the Project Portfolio, Q1 CAP at $3.9B
Reshaping the Project Portfolio, Q1 CAP at $3.9B Diverse Geographically Balanced Procurement Type Operating Groups 2% 22% 26% 32% Q1 49% Q1 2020 2020 20% 27% 22% Bid Build Best Value California Mountain 1% Design Build Other Old Risk Portfolio Central 8% 31% 37% Q1 45% Q1 2022 2022 46% 6% 26% *Best
Slide 18: Materials Segment Overview
Materials Segment Overview • Strong volumes for both aggregates and asphalt in Q1 • Demand continues to be strong across markets • Cost pressure partially mitigated during Q1 Q1’22 Revenue Q1’22 Revenue by Product by Group 3% 19% Asphalt California 40% Q1 57% Mountain Q1 Aggregate 61% 2022 Central 2
Slide 19: Q1'2022 Revenue and Gross Profit
Q1’2022 Revenue and Gross Profit Gross Profit Materials Revenue (7.3%) • Revenue growth led by strong (3.3%) volumes in all groups • GP increase from an increase in volumes and price increases $566 $54 offset by unfavorable oil- $548 $50 related inflation $59 $1 $2 $73 Construction • Revenue decline
Slide 20: Q1'22 Financial Performance
Q1’22 Financial Performance Key Non-GAAP 1 Metrics Q1’21 Q1’22 Adjusted EBITDA from Continuing Operations $9.3 $3.9 Adjusted EBITDA Margin Continuing Operations 1.6% 0.7% Adjusted Net Loss from Continuing Operations ($7.0) ($13.0) Adjusted Diluted EPS from Continuing Operations ($0.15) ($0.28) $ in
Slide 21: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow Operating Cash Flow Liquidity Total Debt $679 $640 $340 $227 $299 $242 $38 $452 $398 ($50) Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Revolver Availability Cash and Marketable Securities $ in millions © 2022 Granite Construction. All Rights Reserved. 21
Slide 22: Concluding Remarks
Concluding Remarks Kyle Larkin, President & Chief Executive Officer © 2022 Granite Construction. All Rights Reserved.
Slide 23: Concluding Remarks
Concluding Remarks Concluding Remarks • Executing on our Strategic Plan that will drive consistent profitability and sustainable growth • Focused on utilizing our strong cash position to return immediate value to our shareholders • Encouraged by the market environment and outlook for 2022 • Expect h
Slide 24: Q&A
Q&A © 2022 Granite Construction. All Rights Reserved.
Slide 25: Appendix
Appendix The tables below contain financial information • Other costs which include a legal settlement The methods used by the Company to calculate its calculated other than in accordance with U.S. charge, legal and accounting investigation fees, non-GAAP financial measures may differ significantly
Slide 26: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation © 2022 Granite Construction. All Rights Reserved. 26
Slide 27: Adjusted NI Reconciliation
Adjusted NI Reconciliation © 2022 Granite Construction. All Rights Reserved. 27