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Actionable news in GVA: GRANITE CONSTRUCTION Inc,

UNITED STATES

PART I. FINANCIAL INFORMATION
Item 1.Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2017, December 31, 2016 and September 30, 2016
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017 and 2016
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016
Notes to the Condensed Consolidated Financial Statements
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
PART II. OTHER INFORMATION
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 4.Mine Safety Disclosures
Item 6.Exhibits
SIGNATURES
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32
EXHIBIT 95
EXHIBIT 101.INS
EXHIBIT 101.SCH
EXHIBIT 101.CAL
EXHIBIT 101.DEF
EXHIBIT 101.LAB
EXHIBIT 101.PRE
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share and per share data)
September 30,
2017
December 31,
2016
September 30,
2016
ASSETS
Current assets
Cash and cash equivalents ($71,328, $73,115 and $47,803 related to consolidated construction joint ventures (“CCJVs”))$185,516
$189,326
$150,225
Short-term marketable securities47,814
64,884
54,863
Receivables, net ($51,079, $52,613 and $77,012 related to CCJVs)627,081
419,345
512,752
Costs and estimated earnings in excess of billings ($3,035, $5,046 and $2,940 related to CCJVs)94,527
73,102
80,032
Inventories62,059
55,245
61,015
Equity in construction joint ventures242,358
247,182
263,180
Other current assets ($6,033, $7,500 and $8,649 related to CCJVs)26,612
39,908
28,047
Total current assets1,285,967
1,088,992
1,150,114
Property and equipment, net ($33,754, $20,500 and $15,302 related to CCJVs)412,174
406,650
407,327
Long-term marketable securities69,991
62,895
52,908
Investments in affiliates39,946
35,668
34,356
Goodwill53,799
53,799
53,799
Deferred income taxes, net

5,223
Other noncurrent assets85,411
85,449
81,540
Total assets$1,947,288
$1,733,453
$1,785,267
LIABILITIES AND EQUITY


Current liabilities


Current maturities of long-term debt$14,796
$14,796
$14,795
Accounts payable ($27,443, $26,419 and $20,654 related to CCJVs)286,913
199,029
223,612
Billings in excess of costs and estimated earnings ($38,581, $33,704 and $34,994 related to CCJVs)168,707
97,522
116,151
Accrued expenses and other current liabilities ($1,354, $1,544 and $817 related to CCJVs)246,775
218,587
237,534
Total current liabilities717,191
529,934
592,092
Long-term debt225,922
229,498
240,715
Deferred income taxes, net5,932
5,441

Other long-term liabilities46,435
45,989
46,270
Commitments and contingencies





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: 39,850,587 shares as of September 30, 2017, 39,621,140 shares as of December 31, 2016 and 39,601,569 shares as of September 30, 2016399
396
396
Additional paid-in capital157,734
150,337
147,583
Accumulated other comprehensive income (loss)240
(371)(1,524)
Retained earnings756,183
735,626
724,691
Total Granite Construction Incorporated shareholders’ equity914,556
885,988
871,146
Non-controlling interests37,252
36,603
35,044
Total equity951,808
922,591
906,190
Total liabilities and equity$1,947,288
$1,733,453
$1,785,267
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
Three Months Ended September 30,Nine Months Ended September 30,
2017201620172016
Revenue
Construction$579,146
$464,624
$1,235,264
$1,005,457
Large Project Construction279,845
249,345
741,341
642,116
Construction Materials98,135
89,936
211,834
200,363
Total revenue957,126
803,905
2,188,439
1,847,936
Cost of revenue
Construction487,798
393,094
1,053,463
857,938
Large Project Construction273,460
225,826
731,906
591,438
Construction Materials81,338
77,311
188,844
178,440
Total cost of revenue842,596
696,231
1,974,213
1,627,816
Gross profit114,530
107,674
214,226
220,120
Selling, general and administrative expenses49,501
54,194
162,726
159,032
Gain on sales of property and equipment(1,753)(398)(2,830)(2,364)
Operating income 66,782
53,878
54,330
63,452
Other (income) expense
Interest income(1,141)(790)(3,356)(2,424)
Interest expense2,660
3,034
8,097
9,270
Equity in income of affiliates(2,732)(2,424)(4,907)(4,583)
Other income, net(1,309)(732)(2,821)(5,287)
Total other income(2,522)(912)(2,987)(3,024)
Income before provision for income taxes69,304
54,790
57,317
66,476
Provision for income taxes21,249
16,617
16,841
19,540
Net income48,055
38,173
40,476
46,936
Amount attributable to non-controlling interests(2,073)(982)(4,151)(5,987)
Net income attributable to Granite Construction Incorporated$45,982
$37,191
$36,325
$40,949
Net income per share attributable to common shareholders (see Note 11)
Basic$1.15
$0.94
$0.91
$1.04
Diluted$1.14
$0.92
$0.90
$1.02
Weighted average shares of common stock
Basic39,844
39,599
39,774
39,539
Diluted40,387
40,313
40,367
40,205
Dividends per common share$0.13
$0.13
$0.39
$0.39
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited - in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2017201620172016
Net income$48,055
$38,173
$40,476
$46,936
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on derivatives$46
$382
$(163)$(1,016)
Less: reclassification for net losses included in interest expense25
126
141
226
Net change$71
$508
$(22)$(790)
Foreign currency translation adjustments, net98
(221)633
766
Other comprehensive income (loss)$169
$287
$611
$(24)
Comprehensive income $48,224
$38,460
$41,087
$46,912
Non-controlling interests in comprehensive income(2,073)(982)(4,151)(5,987)
Comprehensive income attributable to Granite$46,151
$37,478
$36,936
$40,925
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Nine Months Ended September 30,20172016
Operating activities
Net income$40,476
$46,936
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization48,522
46,637
Gain on sales of property and equipment, net(2,830)(2,364)
Stock-based compensation13,580
11,013
Equity in net loss (income) from unconsolidated joint ventures15,415
(15,903)
Gain on real estate entity
(2,452)
Net income from affiliates(4,907)(4,583)
Changes in assets and liabilities:
Receivables(207,908)(169,678)
Costs and estimated earnings in excess of billings, net14,726
1,793
Inventories(6,814)(5,462)
Contributions to unconsolidated construction joint ventures(3,937)(11,545)
Distributions from unconsolidated construction joint ventures33,374
5,850
Other assets, net10,523
(2,209)
Accounts payable90,799
62,787
Accrued expenses and other current liabilities, net23,595
19,782
Net cash provided by (used in) operating activities64,614
(19,398)
Investing activities

Purchases of marketable securities(79,708)
(84,758)
Maturities of marketable securities90,000

30,000
Proceeds from called marketable securities

50,000
Purchases of property and equipment ($13,537 and $9,976 related to CCJVs)(56,808)
(67,889)
Proceeds from sales of property and equipment5,107

5,790
Distributions from affiliates
2,233
Other investing activities, net2,321

3,847
Net cash used in investing activities(39,088)
(60,777)
Financing activities

Long-term debt principal repayments(3,750)
(3,750)
Cash dividends paid(15,506)
(15,415)
Repurchases of common stock(6,713)
(4,946)
(Distributions to) contributions from non-controlling partners, net(3,500)1,522
Other financing activities, net133

153
Net cash used in financing activities(29,336)
(22,436)
Decrease in cash and cash equivalents(3,810)
(102,611)
Cash and cash equivalents at beginning of period189,326

252,836
Cash and cash equivalents at end of period$185,516

$150,225
Supplementary Information
Cash paid during the period for:
Interest$6,720
$7,557
Income taxes2,689
6,748
Other non-cash operating activities:
Performance guarantees$5,761
$17,596
Non-cash investing and financing activities:

Restricted stock units issued, net of forfeitures$11,184
$21,057
Accrued cash dividends5,181
5,148
Accrued equipment purchases2,440
(3,453)
Multiple performance obligations - In accordance with Topic 606, construction contracts with customers, including those related to contract modifications, will be reviewed to determine if there are multiple performance obligations. If separate performance obligations are identified, the timing of revenue recognition could be impacted. Based on our assessment to-date of currently active construction contracts with customers, we have identified one unconsolidated joint venture contract in our Large Project Construction segment that will have multiple performance obligations.
Multiple contracts - Contracts containing task orders may be determined to consist of multiple individual contracts as defined by Topic 606. Based on our assessment to-date of currently active construction contracts with customers, we have identified one Large Project Construction segment contract and one Construction segment contract that will consist of multiple individual contracts as defined by Topic 606.
Provision for losses - Provisions for losses will be recognized in the consolidated statements of operations for the full amount of estimated losses at the uncompleted performance obligation level whenever evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue. Currently provisions for losses are recorded at the contract level. Based on our assessment to-date of currently active construction contracts with customers, we have identified one unconsolidated joint venture contract in our Large Project Construction segment that will have actual and provisions for losses related to completed and uncompleted performance obligations, respectively.

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