Granite Construction Awarded $48M Contract - Analyst Blog

Granite Construction Incorporated GVA has been awarded a $48 million runway rehabilitation contract by the Alaska Department of Transportation and Public Facilities.

The scope of work entails rehabilitation of Runway 7L/25R at the Ted Stevens Anchorage International Airport. Improvements include rehabilitation of connecting taxiways, replacement and upgrading of airfield lighting and signage, and construction of a new access road. Granite Construction's crew will place over 225,000 tons of hot-mix asphalt and import approximately 350,000 tons of borrow material.

The job will be completed under two separate notices to proceed valued at $19 million and $29 million, respectively. Construction is slated to start in second-quarter 2014 and expected to be completed by fourth-quarter 2015.

On Apr 30, Granite Construction reported adjusted first-quarter loss per share of 49 cents compared with the year-ago quarter's loss per share of 57 cents. The company's net sales edged up 0.3% year over year to $380 million as increase in Large Project Construction and Construction Material sales were offset by declines in the Construction and Real Estate segments.

Total contract backlog increased to $2.6 billion as of Mar 31, 2014 from $2.5 billion as of Dec 31, 2013 and $2.4 billion as of Mar 31, 2013.

For 2014, Granite Construction expects revenues in the range of $2.4 billion to $2.8 billion. Gross profit is expected to improve significantly over the 2013 level. Consolidated EBITDA margin is projected in the range of 5% to 7%.

Granite Construction's backlog, project funding and financing have improved and private constructions are also showing signs of growth. Furthermore, underground diversification opportunities in power and tunnel position the company for growth. The backlog at quarter end reflects a diverse, healthy portfolio of projects which bodes well for the company. Both the Construction and Large Project Construction segments are expected to gain momentum starting second quarter with Large Project recognition later in the year, driving overall performance in 2014.

Watsonville, CA-based Granite Construction is a leading infrastructure contractor and construction materials producing company. Its project teams represent the best in the industry, serving both public and private-sector clients in transportation, power, federal, tunneling, underground, industrial/mining and water resources markets.

Granite Construction currently carries a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the building and heavy construction industry worth considering are EMCOR Group Inc. EME, Sterling Construction Co. Inc. STRL and Tutor Perini Corporation TPC. All of these carry a Zacks Rank #2 (Buy).