Granite Execs See Light at End of Turnaround Tunnel
Granite Execs See Light at End of Turnaround Tunnel
Abstract
July 28, 2022 Richard Korman KEYWORDS Construction / Fixed price contracting / Granite Construction Order Reprints No Comments Granite Construction's executives believe they see the end of a three-year-plus effort to work through profit-thin or money-losing large infrastructure projects and instead limit risk and boost profits by competing for smaller jobs, including those awarded on a best-value basis or performed via a construction manager-general contractor arrangement. For the first half of 2022, the company reported July 28 a net loss from overall continuing operations of $18 million, compared to a $36-million loss in the same period last year. With $21 million from the sale of some company assets, Granite was able to show an improved company-wide net income of $4.2 million, compared to a loss of $11.7 million for the same period last year. Some of the good news is that the company believes by next year there will only be $50 million more of work it wishes to "Burn through" on the profit-challenged big legacy project portfolio. In response to a question during a conference call for investment analysts, he added: "These are getting completed and next year will be down to $50 million."The company continues to "See measurable progress" in its construction and materials units, Larkin also said. Granite has set a company profitability goal for 2024 of between 9% and 11%. Its revised profitability target for 2022 is now 5.5%-6.5%Lisa Curtis, Granite's chief financial officer, said the company was "Pleased with the progress but unfortunately the improvement in profits was overshadowed by losses in the ORP which is why we remain laser-focused on completing projects in the ORP." Granite reports that it still has plenty of cash and it continues to employ some of the cash in stock buybacks and possible acquisitions. In 2019, before a change in the executive suite, the company decided to stop pursuing additional large design-build infrastructure work, often done in joint ventures.
