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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0239383
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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585 West Beach Street
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Watsonville, California
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95076
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.01 par value
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New York Stock Exchange
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EXHIBIT 101.INS
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EXHIBIT 101.SCH
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EXHIBIT 101.CAL
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EXHIBIT 101.DEF
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EXHIBIT 101.LAB
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EXHIBIT 101.PRE
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Code of Conduct - We believe in maintaining high ethical standards through an established code of conduct and an effective company-wide compliance program, while being guided by our core values at all times.
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Environment - Our focus on sustainability encompasses many aspects of how we conduct ourselves and practice our Core Values. We believe sustainability is important to our clients, employees, shareholders, and communities, and is also a long-term business driver. By focusing on specific initiatives that address social, environmental and economic challenges, we can minimize risk and increase our competitive advantage.
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Productivity - We strive to use our resources efficiently to deliver work on time and on budget.
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Quality - We believe in satisfying our clients, preventing risk, and driving improvement by performing work right the first time.
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Safety - We believe the safety of our employees, the public and the environment is a moral obligation as well as good business. By identifying and concentrating resources to address jobsite hazards, we continually strive to eliminate our incident rates and the costs associated with accidents.
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December 31,
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2017
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2016
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Heavy construction equipment
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1,905
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1,934
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Trucks, truck-tractors, trailers and vehicles
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3,618
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3,503
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•
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the completeness and accuracy of the original bid;
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costs associated with scope changes;
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changes in costs of labor and/or materials;
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extended overhead and other costs due to owner, weather and other delays;
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subcontractor performance issues;
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changes in productivity expectations;
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site conditions that differ from those assumed in the original bid;
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changes from original design on design-build projects;
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the availability and skill level of workers in the geographic location of the project;
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a change in the availability and proximity of equipment and materials;
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our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; and
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the customer’s ability to properly administer the contract.
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Unfavorable economic conditions may have an adverse impact on our business.
Volatility in the global financial system, deterioration in general economic activity, and fiscal, monetary and other policies that the federal, state and local government(s) may enact, including infrastructure spending or deficit reduction measures, may have an adverse impact on our business, financial position, results of operations, cash flows and liquidity. In particular, low tax revenues, budget deficits, financing constraints, including timing of long-term federal, state and local funding releases, and competing priorities could negatively impact the ability of government agencies to fund existing or new infrastructure projects in the public sector. In addition, these factors could have a material adverse effect on the financial market and economic conditions in the United States as well as throughout the world, which may limit our ability and the ability of our customers to obtain financing and/or could impair our ability to execute our acquisition strategy. In addition, levels of new commercial and residential construction projects could be adversely affected by oversupply of existing inventories of commercial and residential properties, low property values and a restrictive financing environment.
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We work in a highly competitive marketplace.
We have multiple competitors in all of the areas in which we work, and some of our competitors are larger than we are and may have greater resources than we do. Government funding for public works projects is limited, thus contributing to competition for the limited number of public projects available. This increased competition may result in a decrease in new awards at acceptable profit margins. In addition, should downturns in residential and commercial construction activity occur, the competition for available public sector work would intensify, which could impact our revenue, contract backlog and profit margins.
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Government contracts generally have strict regulatory requirements.
Approximately
81.8%
of our Construction and Large Project Construction revenue in
2017
was derived from contracts funded by federal, state and local government agencies and authorities. Government contracts are subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or implied certifications of compliance. Claims for civil or criminal fraud may be brought for violations of regulations, requirements or statutes. We may also be subject to qui tam litigation brought by private individuals on behalf of the government under the Federal Civil False Claims Act, which could include claims for up to treble damages. Further, if we fail to comply with any of the regulations, requirements or statutes or if we have a substantial number of accumulated Occupational Safety and Health Administration, Mine Safety and Health Administration or other workplace safety violations, our existing government contracts could be terminated and we could be suspended from government contracting or subcontracting, including federally funded projects at the state level. Should one or more of these events occur, it could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Government contractors are subject to suspension or debarment from government contracting.
Our substantial dependence on government contracts exposes us to a variety of risks that differ from those associated with private sector contracts. Various statutes to which our operations are subject, including the Davis-Bacon Act (which regulates wages and benefits), the Walsh-Healy Act (which prescribes a minimum wage and regulates overtime and working conditions), Executive Order 11246 (which establishes equal employment opportunity and affirmative action requirements) and the Drug-Free Workplace Act, provide for mandatory suspension and/or debarment of contractors in certain circumstances involving statutory violations. In addition, the Federal Acquisition Regulation and various state statutes provide for discretionary suspension and/or debarment in certain circumstances that might call into question a contractor’s willingness or ability to act responsibly, including as a result of being convicted of, or being found civilly liable for, fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract. The scope and duration of any suspension or debarment may vary depending upon the facts and the statutory or regulatory grounds for debarment and could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Our success depends on attracting and retaining qualified personnel, joint venture partners and subcontractors in a competitive environment.
The success of our business is dependent on our ability to attract, develop and retain qualified personnel, joint venture partners, advisors and subcontractors. Changes in general or local economic conditions and the resulting impact on the labor market and on our joint venture partners may make it difficult to attract or retain qualified individuals in the geographic areas where we perform our work. If we are unable to provide competitive compensation packages, high-quality training programs and attractive work environments or to establish and maintain successful partnerships, our reputation, relationships and/or ability to profitably execute our work could be adversely impacted.
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Failure to maintain safe work sites could result in significant losses.
Construction and maintenance sites are potentially dangerous workplaces and often put our employees and others in close proximity with mechanized equipment, moving vehicles, chemical and manufacturing processes, and highly regulated materials. On many sites, we are responsible for safety and, accordingly, must implement safety procedures. If we fail to implement these procedures or if the procedures we implement are ineffective, we may suffer the loss of or injury to our employees, as well as expose ourselves to possible litigation. Our failure to maintain adequate safety standards through our safety programs could result in reduced profitability or the loss of projects or clients, and could have a material adverse impact on our financial position, results of operations, cash flows and liquidity.
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As a part of our growth strategy we have made and may make future acquisitions, and acquisitions involve many risks.
These risks include:
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difficulties integrating the operations and personnel of the acquired companies;
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diversion of management’s attention from ongoing operations;
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potential difficulties and increased costs associated with completion of any assumed construction projects;
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insufficient revenues to offset increased expenses associated with acquisitions and the potential loss of key employees or customers of the acquired companies;
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assumption of liabilities of an acquired business, including liabilities that were unknown at the time the acquisition was negotiated;
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difficulties relating to assimilating the personnel, services, and systems of an acquired business and to assimilating marketing and other operational capabilities;
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increased burdens on our staff and on our administrative, internal control and operating systems, which may hinder our legal and regulatory compliance activities;
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difficulties in applying and integrating our system of internal controls to an acquired business;
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if we issue additional equity securities, such issuances could have the effect of diluting our earnings per share as well as our existing shareholders’ individual ownership percentages in the Company;
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the recording of goodwill or other non-amortizable intangible assets that will be subject to subsequent impairment testing and potential impairment charges, as well as amortization expenses related to certain other intangible assets; and
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while we often obtain indemnification rights from the sellers of acquired businesses, such rights may be difficult to enforce, the losses may exceed any dedicated escrow funds, and the indemnitors may not have the ability to financially support the indemnity.
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An inability to obtain bonding could have a negative impact on our operations and results.
As more fully described in “Insurance and Bonding” under “Item 1. Business,” we generally are required to provide surety bonds securing our performance under the majority of our public and private sector contracts. Our inability to obtain reasonably priced surety bonds in the future and, while we monitor the financial health of our insurers and the insurance market, catastrophic events could reduce available limits or the breadth of coverage both of which could significantly affect our ability to be awarded new contracts and could, therefore, have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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We may be unable to identify and contract with qualified Disadvantaged Business Enterprise (“DBE”) contractors to perform as subcontractors.
Certain of our government agency projects contain minimum DBE participation clauses. If we subsequently fail to complete these projects with the minimum DBE participation, we may be held responsible for breach of contract, which may include restrictions on our ability to bid on future projects as well as monetary damages. To the extent we are responsible for monetary damages, the total costs of the project could exceed our original estimates, we could experience reduced profits or a loss for that project and there could be a material adverse impact to our financial position, results of operations, cash flows and liquidity.
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Fixed price and fixed unit price contracts subject us to the risk of increased project cost.
As more fully described in “Contract Provisions and Subcontracting” under “Item 1. Business,” the profitability of our fixed price and fixed unit price contracts can be adversely affected by a number of factors that can cause our actual costs to materially exceed the costs estimated at the time of our original bid. This could result in reduced profits or a loss for that project and there could be a material adverse impact to our financial position, results of operations, cash flows and liquidity.
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Design-build contracts subject us to the risk of design errors and omissions.
Design-build is increasingly being used as a method of project delivery as it provides the owner with a single point of responsibility for both design and construction. We generally subcontract design responsibility to architectural and engineering firms. However, in the event of a design error or omission causing damages, there is risk that the subcontractor or their errors and omissions insurance would not be able to absorb the liability. In this case we may be responsible, resulting in a potentially material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Many of our contracts have penalties for late completion.
In some instances, including many of our fixed price contracts, we guarantee that we will complete a project by a certain date. If we subsequently fail to complete the project as scheduled we may be held responsible for costs resulting from the delay, generally in the form of contractually agreed-upon liquidated damages. To the extent these events occur, the total cost of the project could exceed our original estimate and we could experience reduced profits or a loss on that project and there could be a material adverse impact to our financial position, results of operations, cash flows and liquidity.
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Strikes or work stoppages could have a negative impact on our operations and results.
We are party to collective bargaining agreements covering a portion of our craft workforce. Although strikes or work stoppages have not had a significant impact on our operations or results in the past, such labor actions could have a significant impact on our operations and results if they occur in the future.
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Failure of our subcontractors to perform as anticipated could have a negative impact on our results.
As further described in “Contract Provisions and Subcontracting” under “Item 1. Business,” we subcontract portions of many of our contracts to specialty subcontractors, but we are ultimately responsible for the successful completion of their work. Although we seek to require bonding or other forms of guarantees, we are not always successful in obtaining those bonds or guarantees from our higher-risk subcontractors. In this case we may be responsible for the failures on the part of our subcontractors to perform as anticipated, resulting in a potentially adverse impact on our cash flows and liquidity. In addition, the total costs of a project could exceed our original estimates and we could experience reduced profits or a loss for that project, which could have an adverse impact on our financial position, results of operations, cash flows and liquidity.
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Our joint venture contracts subject us to risks and uncertainties, some of which are outside of our control
.
As further described in Note 1 of “Notes to the Consolidated Financial Statements” and under “Item 1. Business; Joint Ventures,” we perform certain construction contracts as a limited member of joint ventures. Participating in these arrangements exposes us to risks and uncertainties, including the risk that if our partners fail to perform under joint and several liability contracts, we could be liable for completion of the entire contract. In addition, if our partners are not able or willing to provide their share of capital investment to fund the operations of the venture, there could be unanticipated costs to complete the projects, financial penalties or liquidated damages. These situations could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Our failure to adequately recover on affirmative claims brought by us against project owners or other project participants (e.g., back charges against subcontractors) for additional contract costs could have a negative impact on our liquidity and future operations.
In certain circumstances, we assert affirmative claims against project owners, engineers, consultants, subcontractors or others involved in a project for additional costs exceeding the contract price or for amounts not included in the original contract price. These types of affirmative claims occur due to matters such as delays or changes from the initial project scope, both of which may result in additional costs. Often, these affirmative claims can be the subject of lengthy arbitration or litigation proceedings, and it is difficult to accurately predict when and on what terms they will be fully resolved. The potential gross profit impact of recoveries for affirmative claims may be material in future periods when they, or a portion of them, become probable and estimable or are settled. When these types of events occur, we use working capital to cover cost overruns pending the resolution of the relevant affirmative claims and may incur additional costs when pursuing such potential recoveries. A failure to recover on these types of affirmative claims promptly and fully could have a negative impact on our financial position, results of operations, cash flows and liquidity. In addition, while clients and subcontractors may be obligated to indemnify us against certain liabilities, such third parties may refuse or be unable to pay us.
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Failure to remain in compliance with covenants under our debt and credit agreements, service our indebtedness, or fund our other liquidity needs could adversely impact our business.
Our debt and credit agreements and related restrictive and financial covenants are more fully described in Note 11 of “Notes to the Consolidated Financial Statements.” Our failure to comply with any of these covenants, or to pay principal, interest or other amounts when due thereunder, would constitute an event of default under the applicable agreements. Under certain circumstances, the occurrence of an event of default under one of our debt or credit agreements (or the acceleration of the maturity of the indebtedness under one of our agreements) may constitute an event of default under one or more of our other debt or credit agreements. Default under our debt and credit agreements could result in (i) us no longer being entitled to borrow under the agreements; (ii) termination of the agreements; (iii) the requirement that any letters of credit under the agreements be cash collateralized; (iv) acceleration of the maturity of outstanding indebtedness under the agreements; and/or (v) foreclosure on any collateral securing the obligations under the agreements. If we are unable to service our debt obligations or fund our other liquidity needs, we could be forced to curtail our operations, reorganize our capital structure (including through bankruptcy proceedings) or liquidate some or all of our assets in a manner that could cause holders of our securities to experience a partial or total loss of their investment in us.
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Unavailability of insurance coverage could have a negative effect on our operations and results.
We maintain insurance coverage as part of our overall risk management strategy and pursuant to requirements to maintain specific coverage that are contained in our financing agreements and in most of our construction contracts. Although we have been able to obtain reasonably priced insurance coverage to meet our requirements in the past, there is no assurance that we will be able to do so in the future, and our inability to obtain such coverage could have an adverse impact on our ability to procure new work, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Accounting for our revenues and costs involves significant estimates.
As further described in “Critical Accounting Policies and Estimates” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” accounting for our contract-related revenues and costs, as well as other expenses, requires management to make a variety of significant estimates and assumptions. Although we believe we have sufficient experience and processes to enable us to formulate appropriate assumptions and produce reasonably dependable estimates, these assumptions and estimates may change significantly in the future and could result in the reversal of previously recognized revenue and profit. Such changes could have a material adverse effect on our financial position and results of operations.
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We use certain commodity products that are subject to significant price fluctuations.
Petroleum based products, such as fuels, lubricants, and liquid asphalt, are used to power or lubricate our equipment, operate our plants, and a significant ingredient in the asphaltic concrete we manufacture for sale to third parties and use in our asphalt paving construction projects. Although we are partially protected by asphalt or fuel price escalation clauses in some of our contracts, many contracts provide no such protection. We also use steel and other commodities in our construction projects that can be subject to significant price fluctuations. To mitigate these risks, we pre-purchase commodities, enter into supply agreements or enter into financial contracts to secure pricing. Although we have not been significantly adversely affected by price fluctuations in the past, there is no guarantee that we will not be in the future.
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We are subject to environmental and other regulation.
As more fully described in “Environmental Regulations” under “Item 1. Business,” we are subject to a number of federal, state and local laws and regulations relating to the environment, workplace safety and a variety of socioeconomic requirements. Noncompliance with such laws and regulations can result in substantial penalties, or termination or suspension of government contracts as well as civil and criminal liability. In addition, some environmental laws and regulations impose liability and responsibility on present and former owners, operators or users of facilities and sites for contamination at such facilities and sites, without regard to causation or knowledge of contamination. We occasionally evaluate various alternatives with respect to our facilities, including possible dispositions or closures. Investigations undertaken in connection with these activities may lead to discoveries of contamination that must be remediated, and closures of facilities may trigger compliance requirements that are not applicable to operating facilities. While compliance with these laws and regulations has not materially adversely affected our operations in the past, there can be no assurance that these requirements will not change and that compliance will not adversely affect our operations in the future. Furthermore, we cannot provide assurance that existing or future circumstances or developments with respect to contamination will not require us to make significant remediation or restoration expenditures.
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Weather can significantly affect our revenues and profitability.
Our ability to perform work is significantly affected by weather conditions such as precipitation and temperature. Changes in weather conditions can cause delays and otherwise significantly affect our project costs. The impact of weather conditions can result in variability in our quarterly revenues and profitability, particularly in the first and fourth quarters of the year.
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Increasing restrictions on securing aggregate reserves could negatively affect our future operations and results.
Tighter regulations and the finite nature of property containing suitable aggregate reserves are making it increasingly challenging and costly to secure aggregate reserves. Although we have thus far been able to secure reserves to support our business, our financial position, results of operations, cash flows and liquidity may be adversely affected by an increasingly difficult permitting process.
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We may be required to contribute cash to meet our unfunded pension obligations in certain multi-employer plans.
Four of our wholly-owned subsidiaries, Granite Construction Company, Granite Construction Northeast, Inc., Granite Industrial, Inc., and Kenny Construction Company, participate in various domestic multi-employer pension plans on behalf of union employees. Union employee benefits generally are based on a fixed amount for each year of service. We are required to make contributions to the plans in amounts established under collective bargaining agreements. Pension expense is recognized as contributions are made. The domestic pension plans are subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Under ERISA, a contributor to a multi-employer plan may be liable, upon termination or withdrawal from a plan, for its proportionate share of a plan’s unfunded vested liability. While we currently have no intention of withdrawing from a plan and unfunded pension obligations have not significantly affected our operations in the past, there can be no assurance that we will not be required to make material cash contributions to one or more of these plans to satisfy certain underfunded benefit obligations in the future.
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Force majeure events, including natural disasters and terrorists’ actions, could negatively impact our business, which may affect our financial condition, results of operations or cash flows.
Force majeure or extraordinary events beyond the control of the contracting parties, such as natural and man-made disasters, as well as terrorist actions, could negatively impact the economies in which we operate. We typically negotiate contract language where we are allowed certain relief from force majeure events in private client contracts and review and attempt to mitigate force majeure events in both public and private client contracts. We remain obligated to perform our services after most extraordinary events subject to relief that may be available pursuant to a force majeure clause. If we are not able to react quickly to force majeure events, our operations may be affected, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Changes to our outsourced software or infrastructure vendors as well as any sudden loss, breach of security, disruption or unexpected data or vendor loss associated with our information technology systems could have a material adverse effect on our business.
We rely on third-party software and infrastructure to run critical accounting, project management and financial information systems. If software or infrastructure vendors decide to discontinue further development, integration or long-term maintenance support for our information systems, or there is any system interruption, delay, breach of security, loss of data or loss of a vendor, we may need to migrate some or all of our accounting, project management and financial information to other systems. Despite business continuity plans, these disruptions could increase our operational expense as well as impact the management of our business operations, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Cybersecurity attacks on or breaches of our information technology environment could result in
business interruptions, remediation costs and/or legal claims
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To protect confidential customer, vendor, financial and employee information, we employ information security measures that secure our information systems from cybersecurity attacks or breaches. Even with these measures, we may be subject to unauthorized access of digital data with the intent to misappropriate information, corrupt data or cause operational disruptions. If a failure of our safeguarding measures were to occur, it could have a negative impact to our business and result in business interruptions, remediation costs and/or legal claims, which could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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A change in tax laws or regulations of any federal, state or international jurisdiction in which we operate could increase our tax burden and otherwise adversely affect our financial position, results of operations, cash flows and liquidity.
We continue to assess the impact of various U.S. federal, state, local and international legislative proposals that could result in a material increase to our U.S. federal, state, local and/or international taxes. We cannot predict whether any specific legislation will be enacted or the terms of any such legislation. However, if such proposals were to be enacted, or if modifications were to be made to certain existing regulations, the consequences could have a material adverse impact on us, including increasing our tax burden, increasing our cost of tax compliance or otherwise adversely affecting our financial position, results of operations, cash flows and liquidity.
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Our contract backlog is subject to unexpected adjustments and cancellations and could be an uncertain indicator of our future earnings.
We cannot guarantee that the revenues projected in our contract backlog will be realized or, if realized, will be profitable. Projects reflected in our contract backlog may be affected by project cancellations, scope adjustments, time extensions or other changes. Such changes may adversely affect the revenue and profit we ultimately realize on these projects.
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Our business strategy includes growing our international operations, which are subject to a number of special risks.
As part of our strategic diversification efforts, we may enter into more construction contracts in international locations, which may subject us to a number of special risks unique to foreign countries and/or operations. Due to the special risks associated with non-U.S. operations, our exposure to such risks may not be proportionate to the percentage of our revenues attributable to such operations.
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Rising inflation and/or interest rates could have an adverse effect on our business, financial condition and results of operations.
Economic factors, including inflation and fluctuations in interest rates, could have a negative impact on our business. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could have a material adverse effect on our financial position, results of operations, cash flows and liquidity.
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Permitted Reserves
for Each Product Type (tons)
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Percentage of Permitted Reserves Owned and Leased
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State
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Number of Properties
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Sand & Gravel
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Hard Rock
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Owned
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Leased
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California
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24
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239.4
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222.4
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56
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%
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44
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%
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Non-California
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37
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127.9
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90.4
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64
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%
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36
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%
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December 31,
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2017
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2016
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Aggregate crushing plants
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29
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30
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Asphalt concrete plants
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49
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50
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Cement concrete batch plants
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7
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7
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Asphalt rubber plants
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6
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6
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Lime slurry plants
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8
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8
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Land Area (acres)
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Building Square Feet
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Office and shop space (owned and leased)
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1,255
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1,435,778
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Period
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Total Number of Shares Purchased
1
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
2
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|||||
October 1 through October 31, 2017
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109
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$
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58.43
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—
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$
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200,000,000
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November 1 through November 30, 2017
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810
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$
|
64.34
|
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—
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$
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200,000,000
|
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December 1 through December 31, 2017
|
3,144
|
|
$
|
65.34
|
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—
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$
|
200,000,000
|
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Total
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4,063
|
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$
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64.96
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—
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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
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Among Granite Construction Incorporated, the S&P 500 Index
and the Dow Jones U.S. Heavy Construction Index
|
n
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Granite Construction Incorporated
|
u
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S&P 500
|
l
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DOW Jones U.S. History Construction
|
*$100 invested on 12/31/12 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
|
December 31,
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2012
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2013
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2014
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2015
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2016
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2017
|
||||||||||||
Granite Construction Incorporated
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$
|
100.00
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$
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105.77
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$
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116.62
|
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$
|
133.57
|
|
$
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173.07
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$
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201.52
|
|
S&P 500
|
100.00
|
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132.39
|
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150.51
|
|
152.59
|
|
170.84
|
|
208.14
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||||||
Dow Jones U.S. Heavy Construction
|
100.00
|
|
131.28
|
|
97.77
|
|
86.51
|
|
106.71
|
|
112.44
|
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|
•
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the completeness and accuracy of the original bid;
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•
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costs associated with scope changes;
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•
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changes in costs of labor and/or materials;
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•
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extended overhead and other costs due to owner, weather and other delays;
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•
|
subcontractor performance issues;
|
•
|
changes in productivity expectations;
|
•
|
site conditions that differ from those assumed in the original bid;
|
•
|
changes from original design on design-build projects;
|
•
|
the availability and skill level of workers in the geographic location of the project;
|
•
|
a change in the availability and proximity of equipment and materials;
|
•
|
our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; and
|
•
|
the customer’s ability to properly administer the contract.
|
|
|
|
|
•
|
Kenny Group Construction
|
•
|
Kenny Group Large Project Construction
|
•
|
Northwest Group Construction
|
•
|
Northwest Group Construction Materials
|
•
|
California Group Construction
|
•
|
a significant adverse change in legal factors or in the business climate;
|
•
|
an adverse action or assessment by a regulator;
|
•
|
a more likely than not expectation that a segment or a significant portion thereof will be sold; or
|
•
|
the testing for recoverability of a significant asset group within the segment.
|
|
|
|
|
|
|
|
|
Comparative Financial Summary
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Total revenue
|
|
$
|
2,989,713
|
|
|
$
|
2,514,617
|
|
|
$
|
2,371,029
|
|
Gross profit
|
|
314,933
|
|
|
301,370
|
|
|
299,836
|
|
|||
Selling, general and administrative expenses
|
|
222,811
|
|
|
219,299
|
|
|
203,817
|
|
|||
Operating income
|
|
98,715
|
|
|
92,354
|
|
|
110,308
|
|
|||
Total other (income) expense
|
|
(5,748
|
)
|
|
(4,008
|
)
|
|
6,881
|
|
|||
Amount attributable to non-controlling interests
|
|
(6,703
|
)
|
|
(9,078
|
)
|
|
(7,763
|
)
|
|||
Net income attributable to Granite Construction Incorporated
|
|
69,098
|
|
|
57,122
|
|
|
60,485
|
|
|
|
|
|
Total Revenue by Segment
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Years Ended December 31,
|
2017
|
2016
|
|
2015
|
|||||||||||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Construction
|
$
|
1,664,708
|
|
|
55.7
|
%
|
$
|
1,365,198
|
|
|
54.3
|
%
|
|
$
|
1,262,675
|
|
|
53.2
|
%
|
Large Project Construction
|
1,032,229
|
|
|
34.5
|
|
888,193
|
|
|
35.3
|
|
|
812,720
|
|
|
34.3
|
|
|||
Construction Materials
|
292,776
|
|
|
9.8
|
|
261,226
|
|
|
10.4
|
|
|
295,634
|
|
|
12.5
|
|
|||
Total
|
$
|
2,989,713
|
|
|
100.0
|
%
|
$
|
2,514,617
|
|
|
100.0
|
%
|
|
$
|
2,371,029
|
|
|
100.0
|
%
|
Construction Revenue
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Years Ended December 31,
|
2017
|
2016
|
|
2015
|
|||||||||||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|||||||||
California:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public sector
|
$
|
442,374
|
|
|
26.5
|
%
|
$
|
370,397
|
|
|
27.1
|
%
|
|
$
|
403,904
|
|
|
32.0
|
%
|
Private sector
|
181,351
|
|
|
10.9
|
|
191,000
|
|
|
14.0
|
|
|
127,338
|
|
|
10.1
|
|
|||
Northwest:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public sector
|
568,137
|
|
|
34.1
|
|
462,529
|
|
|
34.0
|
|
|
415,787
|
|
|
32.9
|
|
|||
Private sector
|
107,482
|
|
|
6.5
|
|
93,830
|
|
|
6.9
|
|
|
109,682
|
|
|
8.7
|
|
|||
Heavy Civil:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public sector
|
53,346
|
|
|
3.2
|
|
23,829
|
|
|
1.7
|
|
|
29,505
|
|
|
2.3
|
|
|||
Private sector
|
4,212
|
|
|
0.3
|
|
651
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Kenny:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public sector
|
153,511
|
|
|
9.2
|
|
166,454
|
|
|
12.2
|
|
|
98,526
|
|
|
7.8
|
|
|||
Private sector
|
154,295
|
|
|
9.3
|
|
56,508
|
|
|
4.1
|
|
|
77,933
|
|
|
6.2
|
|
|||
Total
|
$
|
1,664,708
|
|
|
100.0
|
%
|
$
|
1,365,198
|
|
|
100.0
|
%
|
|
$
|
1,262,675
|
|
|
100.0
|
%
|
|
|
|
|
Construction Materials Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
California
|
|
$
|
178,048
|
|
|
60.8
|
%
|
|
$
|
148,778
|
|
|
57.0
|
%
|
|
$
|
191,605
|
|
|
64.8
|
%
|
Northwest
|
|
114,728
|
|
|
39.2
|
|
|
112,448
|
|
|
43.0
|
|
|
104,029
|
|
|
35.2
|
|
|||
Total
|
|
$
|
292,776
|
|
|
100.0
|
%
|
|
$
|
261,226
|
|
|
100.0
|
%
|
|
$
|
295,634
|
|
|
100.0
|
%
|
Construction Contract Backlog
|
|
|
|
|
||||||||||
December 31,
|
|
2017
|
|
2016
|
||||||||||
(dollars in thousands)
|
|
|
|
|
|
|
|
|
||||||
California:
|
|
|
|
|
|
|
|
|
||||||
Public sector
|
|
$
|
259,933
|
|
|
28.9
|
%
|
|
$
|
227,379
|
|
|
22.1
|
%
|
Private sector
|
|
109,959
|
|
|
12.3
|
|
|
73,958
|
|
|
7.2
|
|
||
Northwest:
|
|
|
|
|
|
|
|
|
|
|
||||
Public sector
|
|
223,420
|
|
|
24.9
|
|
|
311,382
|
|
|
30.2
|
|
||
Private sector
|
|
38,697
|
|
|
4.3
|
|
|
27,582
|
|
|
2.7
|
|
||
Heavy Civil:
|
|
|
|
|
|
|
|
|
|
|||||
Public sector
|
|
43,016
|
|
|
4.8
|
|
|
92,214
|
|
|
8.9
|
|
||
Private sector
|
|
—
|
|
|
—
|
|
|
4,195
|
|
|
0.4
|
|
||
Kenny:
|
|
|
|
|
|
|
|
|
||||||
Public sector
|
|
141,469
|
|
|
15.8
|
|
|
235,298
|
|
|
22.8
|
|
||
Private sector
|
|
80,461
|
|
|
9.0
|
|
|
58,479
|
|
|
5.7
|
|
||
Total
|
|
$
|
896,955
|
|
|
100.0
|
%
|
|
$
|
1,030,487
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(dollars in thousands)
|
|
|
|
|
|
|
||||||
Construction
|
|
$
|
247,014
|
|
|
$
|
209,215
|
|
|
$
|
187,506
|
|
Percent of segment revenue
|
|
14.8
|
%
|
|
15.3
|
%
|
|
14.8
|
%
|
|||
Large Project Construction
|
|
29,793
|
|
|
64,137
|
|
|
79,467
|
|
|||
Percent of segment revenue
|
|
2.9
|
|
|
7.2
|
|
|
9.8
|
|
|||
Construction Materials
|
|
38,126
|
|
|
28,018
|
|
|
32,863
|
|
|||
Percent of segment revenue
|
|
13.0
|
|
|
10.7
|
|
|
11.1
|
|
|||
Total gross profit
|
|
$
|
314,933
|
|
|
$
|
301,370
|
|
|
$
|
299,836
|
|
Percent of total revenue
|
|
10.5
|
%
|
|
12.0
|
%
|
|
12.6
|
%
|
|
|
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(dollars in thousands)
|
|
|
|
|
|
|
||||||
Selling
|
|
|
|
|
|
|
|
|
|
|||
Salaries and related expenses
|
|
$
|
45,631
|
|
|
$
|
46,015
|
|
|
$
|
43,193
|
|
Incentive compensation
|
|
4,412
|
|
|
2,650
|
|
|
3,370
|
|
|||
Restricted stock unit amortization
|
|
2,569
|
|
|
1,809
|
|
|
1,257
|
|
|||
Other selling expenses
|
|
7,688
|
|
|
10,122
|
|
|
7,940
|
|
|||
Total selling
|
|
60,300
|
|
|
60,596
|
|
|
55,760
|
|
|||
General and administrative
|
|
|
|
|
|
|
|
|
|
|||
Salaries and related expenses
|
|
77,571
|
|
|
71,032
|
|
|
67,939
|
|
|||
Incentive compensation
|
|
9,402
|
|
|
9,345
|
|
|
8,653
|
|
|||
Restricted stock unit amortization
|
|
10,996
|
|
|
9,670
|
|
|
4,611
|
|
|||
Other general and administrative expenses
|
|
64,542
|
|
|
68,656
|
|
|
66,854
|
|
|||
Total general and administrative
|
|
162,511
|
|
|
158,703
|
|
|
148,057
|
|
|||
Total selling, general and administrative
|
|
$
|
222,811
|
|
|
$
|
219,299
|
|
|
$
|
203,817
|
|
Percent of revenue
|
|
7.5
|
%
|
|
8.7
|
%
|
|
8.6
|
%
|
|
|
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
(4,742
|
)
|
|
$
|
(3,225
|
)
|
|
$
|
(2,135
|
)
|
Interest expense
|
|
10,800
|
|
|
12,366
|
|
|
14,257
|
|
|||
Equity in income of affiliates
|
|
(7,107
|
)
|
|
(7,177
|
)
|
|
(3,210
|
)
|
|||
Other income, net
|
|
(4,699
|
)
|
|
(5,972
|
)
|
|
(2,031
|
)
|
|||
Total other (income) expense
|
|
$
|
(5,748
|
)
|
|
$
|
(4,008
|
)
|
|
$
|
6,881
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(dollars in thousands)
|
|
|
|
|
|
|
||||||
Provision for income taxes
|
|
$
|
28,662
|
|
|
$
|
30,162
|
|
|
$
|
35,179
|
|
Effective tax rate
|
|
27.4
|
%
|
|
31.3
|
%
|
|
34.0
|
%
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Amount attributable to non-controlling interests
|
|
$
|
(6,703
|
)
|
|
$
|
(9,078
|
)
|
|
$
|
(7,763
|
)
|
|
|
|
|
|
|
|
|
December 31,
|
|
2017
|
|
2016
|
||||
(in thousands)
|
|
|
|
|
||||
Cash and cash equivalents excluding CCJVs
|
|
$
|
139,352
|
|
|
$
|
116,211
|
|
CCJV cash and cash equivalents
1
|
|
94,359
|
|
|
73,115
|
|
||
Total consolidated cash and cash equivalents
|
|
233,711
|
|
|
189,326
|
|
||
Short-term and long-term marketable securities
2
|
|
132,790
|
|
|
127,779
|
|
||
Total cash, cash equivalents and marketable securities
|
|
$
|
366,501
|
|
|
$
|
317,105
|
|
|
|
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating activities
|
|
$
|
146,195
|
|
|
$
|
73,146
|
|
|
$
|
66,978
|
|
Investing activities
|
|
(59,186
|
)
|
|
(96,390
|
)
|
|
(30,707
|
)
|
|||
Financing activities
|
|
(42,624
|
)
|
|
(40,266
|
)
|
|
(39,396
|
)
|
December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
$
|
479,791
|
|
|
$
|
419,345
|
|
|
$
|
340,822
|
|
Less: retentions
|
|
91,135
|
|
|
84,878
|
|
|
91,670
|
|
|||
Less: other receivables
|
|
17,014
|
|
|
17,523
|
|
|
14,033
|
|
|||
Plus: Costs and estimated earnings in excess of billings
|
|
103,965
|
|
|
73,102
|
|
|
59,070
|
|
|||
Less: Billings in excess of costs and estimated earnings
|
|
135,146
|
|
|
97,522
|
|
|
92,515
|
|
|||
Net DSO Receivables
|
|
340,461
|
|
|
292,524
|
|
|
201,674
|
|
|||
|
|
|
|
|
|
|
||||||
Current quarter total revenue
|
|
$
|
801,274
|
|
|
$
|
666,681
|
|
|
$
|
630,162
|
|
Less: Granite’s interest in unconsolidated construction joint venture
revenue
|
|
167,201
|
|
|
135,830
|
|
|
162,009
|
|
|||
Net DSO Revenue
|
|
634,073
|
|
|
530,851
|
|
|
468,153
|
|
|||
|
|
|
|
|
|
|
||||||
DSO
|
|
48
|
|
|
50
|
|
|
39
|
|
December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
(in thousands)
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
$
|
237,673
|
|
|
$
|
199,029
|
|
|
$
|
157,571
|
|
Plus: accrued expenses and other current liabilities
|
|
236,407
|
|
|
218,587
|
|
|
200,935
|
|
|||
Less: performance guarantees
|
|
88,606
|
|
|
83,110
|
|
|
65,514
|
|
|||
Less: deficit in unconsolidated construction joint ventures
|
|
15,939
|
|
|
16,648
|
|
|
8,626
|
|
|||
Net DPO Payables
|
|
369,535
|
|
|
317,858
|
|
|
284,366
|
|
|||
|
|
|
|
|
|
|
||||||
Current quarter total cost of revenue
|
|
$
|
700,567
|
|
|
$
|
585,431
|
|
|
$
|
529,538
|
|
Less: Granite’s interest in unconsolidated construction joint venture
cost of revenue |
|
165,817
|
|
|
136,396
|
|
|
148,163
|
|
|||
Plus: current quarter selling, general and administrative expenses
|
|
59,068
|
|
|
59,342
|
|
|
60,010
|
|
|||
Net DPO Expenses
|
|
593,818
|
|
|
508,377
|
|
|
441,385
|
|
|||
|
|
|
|
|
|
|
||||||
DPO
|
|
56
|
|
|
56
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
||||||||||||||
(in thousands)
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||
Long-term debt – principal
1
|
$
|
225,056
|
|
$
|
46,277
|
|
$
|
178,779
|
|
$
|
—
|
|
$
|
—
|
|
Long-term debt – interest
2
|
20,872
|
|
9,651
|
|
11,221
|
|
—
|
|
—
|
|
|||||
Operating leases
3
|
47,951
|
|
12,169
|
|
16,943
|
|
11,668
|
|
7,171
|
|
|||||
Other purchase obligations
4
|
13,696
|
|
13,484
|
|
212
|
|
—
|
|
—
|
|
|||||
Deferred compensation obligations
5
|
24,696
|
|
4,298
|
|
3,580
|
|
1,881
|
|
14,937
|
|
|||||
Asset retirement obligations
6
|
22,527
|
|
4,701
|
|
5,002
|
|
2,752
|
|
10,072
|
|
|||||
Total
|
$
|
354,798
|
|
$
|
90,580
|
|
$
|
215,737
|
|
$
|
16,301
|
|
$
|
32,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
2019
|
2020
|
2021
|
2022
|
Thereafter
|
Total
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
||||||||||||||
Cash, cash equivalents, held-to-maturity investments
|
$
|
301,486
|
|
$
|
30,015
|
|
$
|
25,000
|
|
$
|
10,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
366,501
|
|
Weighted average interest rate
|
1.33
|
%
|
1.40
|
%
|
1.50
|
%
|
1.94
|
%
|
—
|
%
|
—
|
%
|
1.37
|
%
|
|||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||||||||
Fixed rate debt
|
|
|
|
|
|
|
|
||||||||||||||
Senior notes payable
|
$
|
40,000
|
|
$
|
40,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
80,000
|
|
Interest rate
|
6.11
|
%
|
6.11
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
6.11
|
%
|
|||||||
Variable rate debt
|
|
|
|
|
|
|
|
||||||||||||||
Credit Agreement - term loan
|
$
|
6,250
|
|
$
|
10,000
|
|
$
|
73,750
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
90,000
|
|
Effective interest rate
1
|
3.22
|
%
|
3.22
|
%
|
3.22
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
3.22
|
%
|
|||||||
Credit Agreement - revolving credit facility
2
|
$
|
—
|
|
$
|
—
|
|
$
|
55,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
55,000
|
|
Effective interest rate
3
|
—
|
%
|
—
|
%
|
3.44
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
3.44
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Statements
|
Page
|
Report of Independent Registered Public Accounting Firm
|
F-1 to F-2
|
Consolidated Balance Sheets at December 31, 2017 and 2016
|
F-3
|
Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016 and 2015
|
F-4
|
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2017, 2016 and 2015
|
F-5
|
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2017, 2016 and 2015
|
F-6
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015
|
F-7 to F-8
|
Notes to the Consolidated Financial Statements
|
F-9 to F-37
|
Quarterly Financial Data (unaudited)
|
F-38
|
|
|
|
|
|
|
|
|
|
|
|
|
GRANITE CONSTRUCTION INCORPORATED
|
|||||||||
CONSOLIDATED BALANCE SHEETS
|
|||||||||
(dollars in thousands, except share and per share data)
|
|||||||||
|
|
|
|
|
|
||||
December 31,
|
|
2017
|
|
2016
|
|
||||
ASSETS
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
||||
Cash and cash equivalents ($94,359 and $73,115 related to consolidated construction joint ventures (“CCJVs”))
|
|
$
|
233,711
|
|
|
$
|
189,326
|
|
|
Short-term marketable securities
|
|
67,775
|
|
|
64,884
|
|
|
||
Receivables, net ($52,031 and $52,613 related to CCJVs)
|
|
479,791
|
|
|
419,345
|
|
|
||
Costs and estimated earnings in excess of billings ($1,437 and $5,046 related to CCJVs)
|
|
103,965
|
|
|
73,102
|
|
|
||
Inventories
|
|
62,497
|
|
|
55,245
|
|
|
||
Equity in construction joint ventures
|
|
247,826
|
|
|
247,182
|
|
|
||
Other current assets ($10,384 and $7,500 related to CCJVs)
|
|
36,513
|
|
|
39,908
|
|
|
||
Total current assets
|
|
1,232,078
|
|
|
1,088,992
|
|
|
||
Property and equipment, net ($38,361 and $20,500 related to CCJVs)
|
|
407,418
|
|
|
406,650
|
|
|
||
Long-term marketable securities
|
|
65,015
|
|
|
62,895
|
|
|
||
Investments in affiliates
|
|
38,469
|
|
|
35,668
|
|
|
||
Goodwill
|
|
53,799
|
|
|
53,799
|
|
|
||
Other noncurrent assets
|
|
75,199
|
|
|
85,449
|
|
|
||
Total assets
|
|
$
|
1,871,978
|
|
|
$
|
1,733,453
|
|
|
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
|
|
||
Current maturities of long-term debt
|
|
$
|
46,048
|
|
|
$
|
14,796
|
|
|
Accounts payable ($34,795 and $26,419 related to CCJVs)
|
|
237,673
|
|
|
199,029
|
|
|
||
Billings in excess of costs and estimated earnings ($37,701 and $33,704 related to CCJVs)
|
|
135,146
|
|
|
97,522
|
|
|
||
Accrued expenses and other current liabilities ($2,126 and $1,544 related to CCJVs)
|
|
236,407
|
|
|
218,587
|
|
|
||
Total current liabilities
|
|
655,274
|
|
|
529,934
|
|
|
||
Long-term debt
|
|
178,453
|
|
|
229,498
|
|
|
||
Deferred income taxes, net
|
|
1,361
|
|
|
5,441
|
|
|
||
Other long-term liabilities
|
|
44,085
|
|
|
45,989
|
|
|
||
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 39,871,314 shares as of December 31, 2017 and
39,621,140
shares as of December 31, 2016
|
|
399
|
|
|
396
|
|
|
||
Additional paid-in capital
|
|
160,376
|
|
|
150,337
|
|
|
||
Accumulated other comprehensive income (loss)
|
|
634
|
|
|
(371
|
)
|
|
||
Retained earnings
|
|
783,699
|
|
|
735,626
|
|
|
||
Total Granite Construction Incorporated shareholders’ equity
|
|
945,108
|
|
|
885,988
|
|
|
||
Non-controlling interests
|
|
47,697
|
|
|
36,603
|
|
|
||
Total equity
|
|
992,805
|
|
|
922,591
|
|
|
||
Total liabilities and equity
|
|
$
|
1,871,978
|
|
|
$
|
1,733,453
|
|
|
|
|
|
|
GRANITE CONSTRUCTION INCORPORATED
|
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||
(in thousands, except per share data)
|
||||||||||||
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue
|
|
|
|
|
|
|
||||||
Construction
|
|
$
|
1,664,708
|
|
|
$
|
1,365,198
|
|
|
$
|
1,262,675
|
|
Large Project Construction
|
|
1,032,229
|
|
|
888,193
|
|
|
812,720
|
|
|||
Construction Materials
|
|
292,776
|
|
|
261,226
|
|
|
295,634
|
|
|||
Total revenue
|
|
2,989,713
|
|
|
2,514,617
|
|
|
2,371,029
|
|
|||
Cost of revenue
|
|
|
|
|
|
|
|
|||||
Construction
|
|
1,417,694
|
|
|
1,155,983
|
|
|
1,075,169
|
|
|||
Large Project Construction
|
|
1,002,436
|
|
|
824,056
|
|
|
733,253
|
|
|||
Construction Materials
|
|
254,650
|
|
|
233,208
|
|
|
262,771
|
|
|||
Total cost of revenue
|
|
2,674,780
|
|
|
2,213,247
|
|
|
2,071,193
|
|
|||
Gross profit
|
|
314,933
|
|
|
301,370
|
|
|
299,836
|
|
|||
Selling, general and administrative expenses
|
|
222,811
|
|
|
219,299
|
|
|
203,817
|
|
|||
Restructuring gains
|
|
(2,411
|
)
|
|
(1,925
|
)
|
|
(6,003
|
)
|
|||
Gain on sales of property and equipment
|
|
(4,182
|
)
|
|
(8,358
|
)
|
|
(8,286
|
)
|
|||
Operating income
|
|
98,715
|
|
|
92,354
|
|
|
110,308
|
|
|||
Other (income) expense
|
|
|
|
|
|
|
|
|||||
Interest income
|
|
(4,742
|
)
|
|
(3,225
|
)
|
|
(2,135
|
)
|
|||
Interest expense
|
|
10,800
|
|
|
12,366
|
|
|
14,257
|
|
|||
Equity in income of affiliates
|
|
(7,107
|
)
|
|
(7,177
|
)
|
|
(3,210
|
)
|
|||
Other income, net
|
|
(4,699
|
)
|
|
(5,972
|
)
|
|
(2,031
|
)
|
|||
Total other (income) expense
|
|
(5,748
|
)
|
|
(4,008
|
)
|
|
6,881
|
|
|||
Income before provision for income taxes
|
|
104,463
|
|
|
96,362
|
|
|
103,427
|
|
|||
Provision for income taxes
|
|
28,662
|
|
|
30,162
|
|
|
35,179
|
|
|||
Net income
|
|
75,801
|
|
|
66,200
|
|
|
68,248
|
|
|||
Amount attributable to non-controlling interests
|
|
(6,703
|
)
|
|
(9,078
|
)
|
|
(7,763
|
)
|
|||
Net income attributable to Granite Construction Incorporated
|
|
$
|
69,098
|
|
|
$
|
57,122
|
|
|
$
|
60,485
|
|
|
|
|
|
|
|
|
||||||
Net income per share attributable to common shareholders
(see Note 14)
|
|
|
|
|
|
|
|
|||||
Basic
|
|
$
|
1.74
|
|
|
$
|
1.44
|
|
|
$
|
1.54
|
|
Diluted
|
|
$
|
1.71
|
|
|
$
|
1.42
|
|
|
$
|
1.52
|
|
Weighted average shares of common stock
|
|
|
|
|
|
|
|
|||||
Basic
|
|
39,795
|
|
|
39,557
|
|
|
39,337
|
|
|||
Diluted
|
|
40,372
|
|
|
40,225
|
|
|
39,868
|
|
|||
Dividends per common share
|
|
$
|
0.52
|
|
|
$
|
0.52
|
|
|
$
|
0.52
|
|
|
|
|
|
GRANITE CONSTRUCTION INCORPORATED
|
||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||
(in thousands)
|
||||||||||||
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
|
$
|
75,801
|
|
|
$
|
66,200
|
|
|
$
|
68,248
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Net unrealized gain on derivatives
|
|
$
|
191
|
|
|
$
|
184
|
|
|
$
|
—
|
|
Less: reclassification for net losses included in interest expense
|
|
159
|
|
|
319
|
|
|
—
|
|
|||
Net change
|
|
$
|
350
|
|
|
$
|
503
|
|
|
$
|
—
|
|
Foreign currency translation adjustments, net
|
|
655
|
|
|
626
|
|
|
(1,072
|
)
|
|||
Other comprehensive income (loss)
|
|
$
|
1,005
|
|
|
$
|
1,129
|
|
|
$
|
(1,072
|
)
|
Comprehensive income
|
|
$
|
76,806
|
|
|
$
|
67,329
|
|
|
$
|
67,176
|
|
Non-controlling interests in comprehensive income
|
|
(6,703
|
)
|
|
(9,078
|
)
|
|
(7,763
|
)
|
|||
Comprehensive income attributable to Granite
|
|
$
|
70,103
|
|
|
$
|
58,251
|
|
|
$
|
59,413
|
|
|
|
|
|
GRANITE CONSTRUCTION INCORPORATED
|
|||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
|
|||||||||||||||||||||||
(in thousands, except share data)
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Outstanding Shares
|
Common Stock
|
Additional Paid-in Capital
|
Accumulated Other Comprehensive (Loss) Income
|
Retained Earnings
|
Total Granite Shareholders’ Equity
|
Non-controlling Interests
|
Total Equity
|
|||||||||||||||
Balances at December 31, 2014
|
39,186,386
|
|
$
|
392
|
|
$
|
134,605
|
|
$
|
(428
|
)
|
$
|
659,816
|
|
$
|
794,385
|
|
$
|
22,721
|
|
$
|
817,106
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
60,485
|
|
60,485
|
|
7,763
|
|
68,248
|
|
|||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
(1,072
|
)
|
—
|
|
(1,072
|
)
|
—
|
|
(1,072
|
)
|
|||||||
Restricted stock units vested
|
317,524
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
3
|
|
|||||||
Amortized restricted stock units
|
—
|
|
—
|
|
8,763
|
|
—
|
|
—
|
|
8,763
|
|
—
|
|
8,763
|
|
|||||||
Purchase of common stock
|
(114,969
|
)
|
(1
|
)
|
(3,855
|
)
|
—
|
|
—
|
|
(3,856
|
)
|
—
|
|
(3,856
|
)
|
|||||||
Cash dividends on common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(20,476
|
)
|
(20,476
|
)
|
—
|
|
(20,476
|
)
|
|||||||
Transactions with non-controlling interests, net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
400
|
|
400
|
|
|||||||
Employee Stock Purchase Plan (“ESPP”) and other
|
23,936
|
|
—
|
|
1,399
|
|
—
|
|
(394
|
)
|
1,005
|
|
—
|
|
1,005
|
|
|||||||
Balances at December 31, 2015
|
39,412,877
|
|
394
|
|
140,912
|
|
(1,500
|
)
|
699,431
|
|
839,237
|
|
30,884
|
|
870,121
|
|
|||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
57,122
|
|
57,122
|
|
9,078
|
|
66,200
|
|
|||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
1,129
|
|
—
|
|
1,129
|
|
—
|
|
1,129
|
|
|||||||
Restricted stock units vested
|
308,619
|
|
3
|
|
—
|
|
—
|
|
—
|
|
3
|
|
—
|
|
3
|
|
|||||||
Amortized restricted stock units
|
—
|
|
—
|
|
13,383
|
|
—
|
|
—
|
|
13,383
|
|
—
|
|
13,383
|
|
|||||||
Purchase of common stock
|
(116,355
|
)
|
(1
|
)
|
(5,226
|
)
|
—
|
|
—
|
|
(5,227
|
)
|
—
|
|
(5,227
|
)
|
|||||||
Cash dividends on common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(20,590
|
)
|
(20,590
|
)
|
—
|
|
(20,590
|
)
|
|||||||
Transactions with non-controlling interests, net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,359
|
)
|
(3,359
|
)
|
|||||||
ESPP and other
|
15,999
|
|
—
|
|
1,268
|
|
—
|
|
(337
|
)
|
931
|
|
—
|
|
931
|
|
|||||||
Balances at December 31, 2016
|
39,621,140
|
|
396
|
|
150,337
|
|
(371
|
)
|
735,626
|
|
885,988
|
|
36,603
|
|
922,591
|
|
|||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
69,098
|
|
69,098
|
|
6,703
|
|
75,801
|
|
|||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
1,005
|
|
—
|
|
1,005
|
|
—
|
|
1,005
|
|
|||||||
Restricted stock units vested
|
375,100
|
|
4
|
|
—
|
|
—
|
|
—
|
|
4
|
|
—
|
|
4
|
|
|||||||
Amortized restricted stock units
|
—
|
|
—
|
|
15,764
|
|
—
|
|
—
|
|
15,764
|
|
—
|
|
15,764
|
|
|||||||
Purchase of common stock
|
(140,070
|
)
|
(1
|
)
|
(6,976
|
)
|
—
|
|
—
|
|
(6,977
|
)
|
—
|
|
(6,977
|
)
|
|||||||
Cash dividends on common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
(20,720
|
)
|
(20,720
|
)
|
—
|
|
(20,720
|
)
|
|||||||
Transactions with non-controlling interests, net
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4,391
|
|
4,391
|
|
|||||||
ESPP and other
|
15,144
|
|
—
|
|
1,251
|
|
—
|
|
(305
|
)
|
946
|
|
—
|
|
946
|
|
|||||||
Balances at December 31, 2017
|
39,871,314
|
|
$
|
399
|
|
$
|
160,376
|
|
$
|
634
|
|
$
|
783,699
|
|
$
|
945,108
|
|
$
|
47,697
|
|
$
|
992,805
|
|
|
|
|
|
GRANITE CONSTRUCTION INCORPORATED
|
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||||||
(
in thousands
)
|
||||||||||||
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
75,801
|
|
|
$
|
66,200
|
|
|
$
|
68,248
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|||||
Non-cash restructuring gains
|
|
(939
|
)
|
|
(1,000
|
)
|
|
(1,044
|
)
|
|||
Depreciation, depletion and amortization
|
|
66,345
|
|
|
64,375
|
|
|
64,309
|
|
|||
Gain on sales of property and equipment
|
|
(4,182
|
)
|
|
(8,358
|
)
|
|
(8,286
|
)
|
|||
Change in deferred income taxes
|
|
(4,824
|
)
|
|
9,842
|
|
|
28,258
|
|
|||
Stock-based compensation
|
|
15,764
|
|
|
13,383
|
|
|
8,763
|
|
|||
Equity in net loss (income) from unconsolidated construction joint ventures
|
|
14,634
|
|
|
(15,614
|
)
|
|
(43,374
|
)
|
|||
Net income from affiliates
|
|
(7,107
|
)
|
|
(7,177
|
)
|
|
(3,210
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
||||||
Receivables
|
|
(60,272
|
)
|
|
(75,756
|
)
|
|
(32,877
|
)
|
|||
Costs and estimated earnings in excess of billings, net
|
|
(26,066
|
)
|
|
2,100
|
|
|
(22,374
|
)
|
|||
Inventories
|
|
(7,252
|
)
|
|
308
|
|
|
13,367
|
|
|||
Contributions to unconsolidated construction joint ventures
|
|
(16,937
|
)
|
|
(11,795
|
)
|
|
(69,313
|
)
|
|||
Distributions from unconsolidated construction joint ventures
|
|
39,955
|
|
|
19,344
|
|
|
53,367
|
|
|||
Prepaid and other assets, net
|
|
13,211
|
|
|
(13,873
|
)
|
|
(1,078
|
)
|
|||
Accounts payable
|
|
36,716
|
|
|
37,731
|
|
|
8,363
|
|
|||
Accrued expenses and other current liabilities
|
|
11,348
|
|
|
(6,564
|
)
|
|
3,859
|
|
|||
Net cash provided by operating activities
|
|
146,195
|
|
|
73,146
|
|
|
66,978
|
|
|||
Investing activities
|
|
|
|
|
|
|
|
|
||||
Purchases of marketable securities
|
|
(124,543
|
)
|
|
(129,685
|
)
|
|
(104,971
|
)
|
|||
Maturities of marketable securities
|
|
120,000
|
|
|
50,000
|
|
|
29,260
|
|
|||
Proceeds from called marketable securities
|
|
—
|
|
|
55,000
|
|
|
75,000
|
|
|||
Purchases of property and equipment ($18,309 million, $17,810 million and $0 related to CCJVs)
|
|
(67,695
|
)
|
|
(90,970
|
)
|
|
(44,179
|
)
|
|||
Proceeds from sales of property and equipment
|
|
10,202
|
|
|
12,946
|
|
|
13,148
|
|
|||
Collection of notes receivable
|
|
1,052
|
|
|
4,331
|
|
|
943
|
|
|||
Other investing activities, net
|
|
1,798
|
|
|
1,988
|
|
|
92
|
|
|||
Net cash used in investing activities
|
|
(59,186
|
)
|
|
(96,390
|
)
|
|
(30,707
|
)
|
|||
Financing activities
|
|
|
|
|
|
|
|
|
||||
Proceeds from long-term debt
|
|
25,000
|
|
|
30,000
|
|
|
30,000
|
|
|||
Debt principal payments
|
|
(45,000
|
)
|
|
(45,025
|
)
|
|
(46,763
|
)
|
|||
Cash dividends paid
|
|
(20,687
|
)
|
|
(20,563
|
)
|
|
(20,445
|
)
|
|||
Purchases of common stock
|
|
(6,977
|
)
|
|
(5,227
|
)
|
|
(3,777
|
)
|
|||
Contributions from non-controlling partners
|
|
11,500
|
|
|
5,250
|
|
|
7,462
|
|
|||
Distributions to non-controlling partners
|
|
(7,109
|
)
|
|
(5,258
|
)
|
|
(6,992
|
)
|
|||
Other financing activities
|
|
649
|
|
|
557
|
|
|
1,119
|
|
|||
Net cash used in financing activities
|
|
(42,624
|
)
|
|
(40,266
|
)
|
|
(39,396
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
|
44,385
|
|
|
(63,510
|
)
|
|
(3,125
|
)
|
|||
Cash and cash equivalents at beginning of year
|
|
189,326
|
|
|
252,836
|
|
|
255,961
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
233,711
|
|
|
$
|
189,326
|
|
|
$
|
252,836
|
|
|
|
|
|
GRANITE CONSTRUCTION INCORPORATED
|
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
|
||||||||||||
(
in thousands
)
|
||||||||||||
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Supplementary Information
|
|
|
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
|
|
|
||||||
Interest
|
|
$
|
11,446
|
|
|
$
|
13,392
|
|
|
$
|
14,601
|
|
Income taxes
|
|
33,948
|
|
|
29,872
|
|
|
4,298
|
|
|||
Other non-cash activities:
|
|
|
|
|
|
|
||||||
Performance guarantees
|
|
5,497
|
|
|
17,596
|
|
|
(10,306
|
)
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
|
||||||
Restricted stock units issued, net of forfeitures (See Note 13)
|
|
$
|
11,505
|
|
|
$
|
21,101
|
|
|
$
|
6,220
|
|
Accrued cash dividends
|
|
5,183
|
|
|
5,151
|
|
|
5,124
|
|
|||
Accrued equipment purchases
|
|
(1,945
|
)
|
|
(3,865
|
)
|
|
2,891
|
|
|
|
|
|
|
|
|
|
•
|
the completeness and accuracy of the original bid;
|
•
|
costs associated with scope changes;
|
•
|
changes in costs of labor and/or materials;
|
•
|
extended overhead and other costs due to owner, weather and other delays;
|
•
|
subcontractor performance issues;
|
•
|
changes in productivity expectations;
|
•
|
site conditions that differ from those assumed in the original bid;
|
•
|
changes from original design on design-build projects;
|
•
|
the availability and skill level of workers in the geographic location of the project;
|
•
|
a change in the availability and proximity of equipment and materials;
|
•
|
our ability to fully and promptly recover on affirmative claims and back charges for additional contract costs; and
|
•
|
the customer’s ability to properly administer the contract.
|
|
|
|
|
|
|
|
|
•
|
significant decreases in the market price of the asset;
|
•
|
significant adverse changes in legal factors or the business climate;
|
•
|
significant changes to the development or business plans of a project;
|
•
|
accumulation of costs significantly in excess of the amount originally expected for the acquisition, development or construction of the asset; and
|
•
|
current period cash flow or operating losses combined with a history of losses, or a forecast of continuing losses associated with the use of the asset.
|
|
|
|
|
•
|
Kenny Group Construction
|
•
|
Kenny Group Large Project Construction
|
•
|
Northwest Group Construction
|
•
|
Northwest Group Construction Materials
|
•
|
California Group Construction
|
•
|
a significant adverse change in legal factors or in the business climate;
|
•
|
an adverse action or assessment by a regulator;
|
•
|
a more likely than not expectation that a segment or a significant portion thereof will be sold; or
|
•
|
the testing for recoverability of a significant asset group within the segment.
|
|
|
|
|
|
|
|
|
•
|
Multiple performance obligations - In accordance with Topic 606, we have reviewed construction contracts with customers, including those related to contract modifications, to determine if there are multiple performance obligations. Based on this review, we have identified one unconsolidated joint venture contract in our Large Project Construction segment that will have multiple performance obligations.
|
•
|
Multiple contracts - We reviewed contracts containing task orders and identified one Large Project Construction segment contract and one Construction segment contract that 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. We have identified one unconsolidated joint venture contract in our Large Project Construction segment that will have, as of the effective date, actual and provisions for losses related to completed and uncompleted performance obligations, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|||
Number of projects with upward estimate changes
|
|
|
10
|
|
|
|
7
|
|
|
|
14
|
|
Range of increase in gross profit from each project, net
|
|
$
|
1.1 - 3.9
|
|
|
$
|
1.1 - 4.8
|
|
|
$
|
1.1 - 6.6
|
|
Increase on project profitability
|
|
$
|
17.2
|
|
|
$
|
14.2
|
|
|
$
|
30.7
|
|
Years Ended December 31,
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|||
Number of projects with downward estimate changes
|
|
|
6
|
|
|
|
7
|
|
|
|
5
|
|
Range of reduction in gross profit from each project, net
|
|
$
|
1.0 - 4.4
|
|
|
$
|
1.0 - 3.9
|
|
|
$
|
1.0 - 3.3
|
|
Decrease on project profitability
|
|
$
|
13.2
|
|
|
$
|
12.9
|
|
|
$
|
10.8
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|||
Number of projects with upward estimate changes
|
|
|
1
|
|
|
|
8
|
|
|
|
7
|
|
Range of increase in gross profit from each project, net
|
|
$
|
2.0
|
|
|
$
|
1.2 - 6.5
|
|
|
$
|
1.5 - 6.7
|
|
Increase on project profitability
|
|
$
|
2.0
|
|
|
$
|
27.2
|
|
|
$
|
27.9
|
|
Years Ended December 31,
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|||
Number of projects with downward estimate changes
|
|
|
7
|
|
|
|
5
|
|
|
|
6
|
|
Range of reduction in gross profit from each project, net
|
|
$
|
1.3 - 17.2
|
|
|
$
|
1.3 - 13.6
|
|
|
$
|
1.0 - 5.5
|
|
Decrease on project profitability
|
|
$
|
68.6
|
|
|
$
|
40.7
|
|
|
$
|
20.3
|
|
December 31,
|
|
2017
|
|
2016
|
||||
U.S. Government and agency obligations
|
|
$
|
17,910
|
|
|
$
|
10,002
|
|
Commercial paper
|
|
49,865
|
|
|
54,882
|
|
||
Total short-term marketable securities
|
|
67,775
|
|
|
64,884
|
|
||
U.S. Government and agency obligations
|
|
59,993
|
|
|
62,895
|
|
||
Corporate bonds
|
|
5,022
|
|
|
—
|
|
||
Total long-term marketable securities
|
|
65,015
|
|
|
62,895
|
|
||
Total marketable securities
|
|
$
|
132,790
|
|
|
$
|
127,779
|
|
December 31, 2017
|
|
||
Due within one year
|
$
|
67,775
|
|
Due in one to five years
|
65,015
|
|
|
Total
|
$
|
132,790
|
|
|
|
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||||
December 31, 2017
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds
|
|
$
|
37,284
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
37,284
|
|
Commercial paper
|
|
9,967
|
|
|
—
|
|
|
—
|
|
|
9,967
|
|
||||
Total assets
|
|
$
|
47,251
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47,251
|
|
|
|
Fair Value Measurement at Reporting Date Using
|
||||||||||||||
December 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds
|
|
$
|
10,057
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,057
|
|
Total assets
|
|
$
|
10,057
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,057
|
|
|
|
|
|
•
|
Asset retirement obligations adjustments were
$0.5 million
,
$2.1 million
and
$0.2 million
, respectively. See Note 8 for further information.
|
•
|
Restructuring gains associated with our EIP were
$2.4 million
,
$1.9 million
and
$6.0 million
(including amounts attributable to non-controlling interests of
$3.3 million
), during the years ended
December 31, 2017
, 2016 and 2015, respectively, primarily associated with the release of lease obligations, sale of a real estate asset related to our equity method investments and the sale of a previously impaired consolidated real estate asset.
|
December 31,
|
|
2017
|
|
2016
|
||||
Construction contracts completed and in progress:
|
|
|
|
|
||||
Billed
|
|
$
|
252,467
|
|
|
$
|
206,570
|
|
Unbilled
|
|
77,135
|
|
|
81,590
|
|
||
Retentions
|
|
91,135
|
|
|
84,878
|
|
||
Total construction contracts completed and in progress
|
|
420,737
|
|
|
373,038
|
|
||
Construction material sales
|
|
42,192
|
|
|
29,357
|
|
||
Other
|
|
17,014
|
|
|
17,523
|
|
||
Total gross receivables
|
|
479,943
|
|
|
419,918
|
|
||
Less: allowance for doubtful accounts
|
|
152
|
|
|
573
|
|
||
Total net receivables
|
|
$
|
479,791
|
|
|
$
|
419,345
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2017
|
|
2016
|
||||
Assets:
|
|
|
|
|
||||
Cash, cash equivalents and marketable securities
|
|
$
|
289,940
|
|
|
$
|
537,991
|
|
Other current assets
1
|
|
812,577
|
|
|
644,809
|
|
||
Noncurrent assets
|
|
219,825
|
|
|
207,240
|
|
||
Less partners’ interest
|
|
869,782
|
|
|
935,615
|
|
||
Granite’s interest
1,2
|
|
452,560
|
|
|
454,425
|
|
||
Liabilities:
|
|
|
|
|
||||
Current liabilities
|
|
682,832
|
|
|
696,215
|
|
||
Less partners’ interest and adjustments
3
|
|
462,159
|
|
|
472,324
|
|
||
Granite’s interest
|
|
220,673
|
|
|
223,891
|
|
||
Equity in construction joint ventures
4
|
|
$
|
231,887
|
|
|
$
|
230,534
|
|
|
|
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Total
|
|
$
|
2,057,336
|
|
|
$
|
1,958,158
|
|
|
$
|
1,924,544
|
|
Less partners’ interest and adjustments
1
|
|
1,469,550
|
|
|
1,387,532
|
|
|
1,341,334
|
|
|||
Granite’s interest
|
|
587,786
|
|
|
570,626
|
|
|
583,210
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
||||||
Total
|
|
1,995,915
|
|
|
1,915,376
|
|
|
1,819,257
|
|
|||
Less partners’ interest and adjustments
1
|
|
1,394,347
|
|
|
1,360,459
|
|
|
1,279,954
|
|
|||
Granite’s interest
|
|
601,568
|
|
|
554,917
|
|
|
539,303
|
|
|||
Granite’s interest in gross (loss) profit
|
|
$
|
(13,782
|
)
|
|
$
|
15,709
|
|
|
$
|
43,907
|
|
|
|
|
|
December 31,
|
|
2017
|
|
2016
|
||||
Equity method investments in real estate affiliates
|
|
$
|
29,472
|
|
|
$
|
25,911
|
|
Equity method investments in other affiliate
|
|
8,997
|
|
|
9,757
|
|
||
Total investments in affiliates
|
|
$
|
38,469
|
|
|
$
|
35,668
|
|
December 31,
|
|
2017
|
|
2016
|
||||
Current assets
|
|
$
|
31,320
|
|
|
$
|
30,836
|
|
Noncurrent assets
|
|
129,039
|
|
|
124,670
|
|
||
Total assets
|
|
160,359
|
|
|
155,506
|
|
||
Current liabilities
|
|
30,131
|
|
|
18,485
|
|
||
Long-term liabilities
1
|
|
31,636
|
|
|
37,217
|
|
||
Total liabilities
|
|
61,767
|
|
|
55,702
|
|
||
Net assets
|
|
98,592
|
|
|
99,804
|
|
||
Granite’s share of net assets
|
|
$
|
38,469
|
|
|
$
|
35,668
|
|
Years Ended December 31,
|
2017
|
2016
|
2015
|
||||||
Revenue
|
$
|
56,372
|
|
$
|
56,127
|
|
$
|
47,457
|
|
Gross profit
|
23,007
|
|
22,398
|
|
19,117
|
|
|||
Income before taxes
|
17,154
|
|
19,117
|
|
8,446
|
|
|||
Net income
|
17,154
|
|
19,117
|
|
8,446
|
|
|||
Granite’s interest in affiliates’ net income
|
7,107
|
|
7,177
|
|
3,210
|
|
December 31,
|
|
2017
|
|
2016
|
||||
Equipment and vehicles
|
|
$
|
778,549
|
|
|
$
|
756,602
|
|
Quarry property
|
|
182,267
|
|
|
174,839
|
|
||
Land and land improvements
|
|
108,830
|
|
|
110,999
|
|
||
Buildings and leasehold improvements
|
|
82,601
|
|
|
82,762
|
|
||
Office furniture and equipment
|
|
56,894
|
|
|
56,381
|
|
||
Property and equipment
|
|
1,209,141
|
|
|
1,181,583
|
|
||
Less: accumulated depreciation and depletion
|
|
801,723
|
|
|
774,933
|
|
||
Property and equipment, net
|
|
$
|
407,418
|
|
|
$
|
406,650
|
|
|
|
|
|
Years Ended December 31,
|
2017
|
2016
|
||||
Beginning balance
|
$
|
21,936
|
|
$
|
26,558
|
|
Revisions to estimates
|
462
|
|
(2,058
|
)
|
||
Liabilities settled
|
(966
|
)
|
(3,806
|
)
|
||
Accretion
|
1,095
|
|
1,242
|
|
||
Ending balance
|
$
|
22,527
|
|
$
|
21,936
|
|
December 31,
|
|
2017
|
|
2016
|
||||
Construction
|
|
$
|
29,260
|
|
|
$
|
29,260
|
|
Large Project Construction
|
|
22,593
|
|
|
22,593
|
|
||
Construction Materials
|
|
1,946
|
|
|
1,946
|
|
||
Total goodwill
|
|
$
|
53,799
|
|
|
$
|
53,799
|
|
|
|
|
|
Accumulated
|
|
|
||||||
December 31, 2017
|
|
Gross Value
|
|
Amortization
|
|
Net Value
|
||||||
Permits
|
|
$
|
25,959
|
|
|
$
|
(12,504
|
)
|
|
$
|
13,455
|
|
Customer lists
|
|
2,200
|
|
|
(1,467
|
)
|
|
733
|
|
|||
Trade name
|
|
4,100
|
|
|
(2,159
|
)
|
|
1,941
|
|
|||
Covenants not to compete and other
|
|
50
|
|
|
(26
|
)
|
|
24
|
|
|||
Total amortized intangible assets
|
|
$
|
32,309
|
|
|
$
|
(16,156
|
)
|
|
$
|
16,153
|
|
December 31, 2016
|
|
|
|
|
|
|
||||||
Permits
|
|
$
|
25,959
|
|
|
$
|
(11,514
|
)
|
|
$
|
14,445
|
|
Acquired backlog
|
|
1,500
|
|
|
(1,472
|
)
|
|
28
|
|
|||
Customer lists
|
|
2,200
|
|
|
(1,174
|
)
|
|
1,026
|
|
|||
Trade name
|
|
4,100
|
|
|
(1,727
|
)
|
|
2,373
|
|
|||
Covenants not to compete and other
|
|
50
|
|
|
(24
|
)
|
|
26
|
|
|||
Total amortized intangible assets
|
|
$
|
33,809
|
|
|
$
|
(15,911
|
)
|
|
$
|
17,898
|
|
|
|
|
|
December 31,
|
2017
|
2016
|
||||
Payroll and related employee benefits
|
$
|
68,210
|
|
$
|
53,802
|
|
Accrued insurance
|
39,946
|
|
44,471
|
|
||
Performance guarantees (see Note 1)
|
88,606
|
|
83,110
|
|
||
Other
|
39,645
|
|
37,204
|
|
||
Total
|
$
|
236,407
|
|
$
|
218,587
|
|
December 31,
|
2017
|
2016
|
||||
Senior notes payable
|
$
|
80,000
|
|
$
|
120,000
|
|
Credit Agreement term loan
|
90,000
|
|
95,000
|
|
||
Credit Agreement revolving credit loan
|
55,000
|
|
30,000
|
|
||
Debt issuance costs
|
(499
|
)
|
(706
|
)
|
||
Total debt
|
224,501
|
|
244,294
|
|
||
Less current maturities
|
46,048
|
|
14,796
|
|
||
Total long-term debt
|
$
|
178,453
|
|
$
|
229,498
|
|
|
|
|
|
|
|
|
|
•
|
Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.
|
•
|
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
|
•
|
If we chose to stop participating in some of the multi-employer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
|
|
|
|
|
|
Pension Plan Employer Identification Number
|
Pension Protection Act (“PPA”) Certified Zone Status
1
|
FIP / RP Status Pending / Implemented
2
|
Contributions
|
Surcharge Imposed
|
Expiration Date of Collective Bargaining Agreement
3
|
|||||||||
Pension Trust Fund
|
2017
|
2016
|
2017
|
2016
|
2015
|
||||||||||
Locals 302 and 612 IUOE-Employers Construction Industry Retirement Plan
|
91-6028571
|
Green
|
Green
|
No
|
$
|
3,646
|
|
$
|
3,113
|
|
$
|
3,000
|
|
No
|
12/31/2017
5/31/2018 12/31/2019 |
Pension Trust Fund for Operating Engineers Pension Plan
|
94-6090764
|
Red
|
Red
|
Yes
|
10,431
|
|
9,266
|
|
9,070
|
|
No
|
1/31/2018
10/31/2018 6/30/2019 5/15/2020 6/15/2020 6/30/2020 9/30/2020 |
|||
Operating Engineers Pension Trust Fund
|
95-6032478
|
Yellow
|
Red
|
Yes
|
4,692
|
|
5,357
|
|
3,647
|
|
No
|
6/30/2019
|
|||
Laborers Pension Trust Fund for Northern California
|
94-6277608
|
Yellow
|
Yellow
|
Yes
|
2,464
|
|
2,215
|
|
2,403
|
|
No
|
6/30/2019
|
|||
Construction Laborers Pension Trust for Southern California
|
43-6159056
|
Green
|
Green
|
No
|
2,002
|
|
2,095
|
|
1,349
|
|
No
|
6/30/2018
|
|||
Laborers Pension Fund
|
36-2514514
|
Green
|
Green
|
No
|
3,208
|
|
2,328
|
|
1,919
|
|
No
|
5/31/2021
|
|||
All other funds (38 as of December 31, 2017)
|
|
|
|
|
10,341
|
|
8,708
|
|
7,171
|
|
|
|
|||
|
|
|
Total Contributions:
|
$
|
36,784
|
|
$
|
33,082
|
|
$
|
28,559
|
|
|
|
|
|
|
|
Years Ended December 31,
|
2017
|
2016
|
2015
|
||||||||||||
|
RSUs
|
Weighted-Average Grant-Date Fair Value per RSU
|
RSUs
|
Weighted-Average Grant-Date Fair Value per RSU
|
RSUs
|
Weighted-Average Grant-Date Fair Value per RSU
|
|||||||||
Outstanding, beginning balance
|
681
|
|
$
|
39.15
|
|
451
|
|
$
|
32.73
|
|
565
|
|
$
|
31.38
|
|
Granted
|
259
|
|
51.31
|
|
572
|
|
43.17
|
|
228
|
|
33.40
|
|
|||
Vested
|
(372
|
)
|
43.89
|
|
(307
|
)
|
36.24
|
|
(300
|
)
|
31.50
|
|
|||
Forfeited
|
(44
|
)
|
43.51
|
|
(35
|
)
|
40.97
|
|
(42
|
)
|
33.38
|
|
|||
Outstanding, ending balance
|
524
|
|
$
|
41.51
|
|
681
|
|
$
|
39.15
|
|
451
|
|
$
|
32.73
|
|
|
|
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator (basic and diluted):
|
|
|
|
|
|
|
|
|||||
Net income allocated to common shareholders for basic calculation
|
|
$
|
69,098
|
|
|
$
|
57,122
|
|
|
$
|
60,485
|
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
|
|||||
Weighted average common shares outstanding, basic
|
|
39,795
|
|
|
39,557
|
|
|
39,337
|
|
|||
Dilutive effect of stock options and restricted stock units
|
|
577
|
|
|
668
|
|
|
531
|
|
|||
Weighted average common shares outstanding, diluted
|
|
40,372
|
|
|
40,225
|
|
|
39,868
|
|
|||
Net income per share, basic
|
|
$
|
1.74
|
|
|
$
|
1.44
|
|
|
$
|
1.54
|
|
Net income per share, diluted
|
|
$
|
1.71
|
|
|
$
|
1.42
|
|
|
$
|
1.52
|
|
Years Ended December 31,
|
2017
|
2016
|
2015
|
||||||
Federal:
|
|
|
|
||||||
Current
|
$
|
27,877
|
|
$
|
15,657
|
|
$
|
4,810
|
|
Deferred
|
(4,397
|
)
|
9,919
|
|
25,955
|
|
|||
Total federal
|
23,480
|
|
25,576
|
|
30,765
|
|
|||
State:
|
|
|
|
|
|||||
Current
|
5,520
|
|
4,567
|
|
1,914
|
|
|||
Deferred
|
(338
|
)
|
19
|
|
2,500
|
|
|||
Total state
|
5,182
|
|
4,586
|
|
4,414
|
|
|||
Total provision for income taxes
|
$
|
28,662
|
|
$
|
30,162
|
|
$
|
35,179
|
|
Years Ended December 31,
|
2017
|
2016
|
2015
|
||||||||||||
Federal statutory tax
|
$
|
36,562
|
|
35.0
|
%
|
$
|
33,728
|
|
35.0
|
%
|
$
|
35,165
|
|
34.0
|
%
|
State taxes, net of federal tax benefit
|
3,814
|
|
3.7
|
|
2,990
|
|
3.1
|
|
3,769
|
|
3.6
|
|
|||
Percentage depletion deduction
|
(1,368
|
)
|
(1.3
|
)
|
(1,352
|
)
|
(1.4
|
)
|
(1,444
|
)
|
(1.4
|
)
|
|||
Domestic production activities deduction
|
(2,765
|
)
|
(2.7
|
)
|
(1,624
|
)
|
(1.7
|
)
|
(306
|
)
|
(0.3
|
)
|
|||
Non-controlling interests
|
(2,346
|
)
|
(2.3
|
)
|
(3,177
|
)
|
(3.3
|
)
|
(2,639
|
)
|
(2.6
|
)
|
|||
Nondeductible expenses
|
1,128
|
|
1.1
|
|
1,094
|
|
1.1
|
|
219
|
|
0.2
|
|
|||
Tax Cuts and Jobs Act of 2017
|
(3,664
|
)
|
(3.5
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Other
|
(2,699
|
)
|
(2.6
|
)
|
(1,497
|
)
|
(1.5
|
)
|
415
|
|
0.5
|
|
|||
Total
|
$
|
28,662
|
|
27.4
|
%
|
$
|
30,162
|
|
31.3
|
%
|
$
|
35,179
|
|
34.0
|
%
|
|
|
|
|
December 31,
|
2017
|
2016
|
||||
Long-term deferred tax assets:
|
|
|
|
|||
Receivables
|
$
|
526
|
|
$
|
573
|
|
Inventory
|
1,513
|
|
2,212
|
|
||
Insurance
|
7,401
|
|
12,524
|
|
||
Deferred compensation
|
8,985
|
|
12,740
|
|
||
Other accrued liabilities
|
1,525
|
|
2,294
|
|
||
Accrued compensation
|
1,738
|
|
11,031
|
|
||
Other
|
1,379
|
|
2,481
|
|
||
Net operating loss carryforwards
|
2,614
|
|
2,341
|
|
||
Valuation allowance
|
(2,471
|
)
|
(2,153
|
)
|
||
Total long-term deferred tax assets
|
23,210
|
|
44,043
|
|
||
Long-term deferred tax liabilities:
|
|
|
||||
Property and equipment
|
16,832
|
|
29,400
|
|
||
Contract income recognition
|
7,739
|
|
20,084
|
|
||
Total long-term deferred tax liabilities
|
24,571
|
|
49,484
|
|
||
Net long-term deferred tax liabilities
|
$
|
(1,361
|
)
|
$
|
(5,441
|
)
|
December 31,
|
2017
|
2016
|
2015
|
||||||
Beginning balance
|
$
|
2,153
|
|
$
|
641
|
|
$
|
1,185
|
|
Additions (deductions), net
|
318
|
|
1,512
|
|
(544
|
)
|
|||
Ending balance
|
$
|
2,471
|
|
$
|
2,153
|
|
$
|
641
|
|
|
|
|
|
December 31,
|
2017
|
2016
|
2015
|
||||||
Beginning balance
|
$
|
3,262
|
|
$
|
1,578
|
|
$
|
887
|
|
Gross increases – current period tax positions
|
—
|
|
1,902
|
|
1,006
|
|
|||
Gross decreases – current period tax positions
|
(73
|
)
|
(125
|
)
|
(156
|
)
|
|||
Gross increases – prior period tax positions
|
1
|
|
2
|
|
—
|
|
|||
Gross decreases – prior period tax positions
|
(6
|
)
|
(5
|
)
|
—
|
|
|||
Settlements with taxing authorities/lapse of statute of limitations
|
(13
|
)
|
(90
|
)
|
(159
|
)
|
|||
Ending balance
|
$
|
3,171
|
|
$
|
3,262
|
|
$
|
1,578
|
|
Years Ending December 31,
|
|
|
|
2018
|
$
|
12,169
|
|
2019
|
8,946
|
|
|
2020
|
7,997
|
|
|
2021
|
6,874
|
|
|
2022
|
4,794
|
|
|
Later years (through 2046)
|
7,171
|
|
|
Total
|
$
|
47,951
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Construction
|
|
Large Project Construction
|
|
Construction Materials
|
|
Total
|
||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue from reportable segments
|
|
$
|
1,664,708
|
|
|
$
|
1,032,229
|
|
|
$
|
467,140
|
|
|
$
|
3,164,077
|
|
Elimination of intersegment revenue
|
|
—
|
|
|
—
|
|
|
(174,364
|
)
|
|
(174,364
|
)
|
||||
Revenue from external customers
|
|
1,664,708
|
|
|
1,032,229
|
|
|
292,776
|
|
|
2,989,713
|
|
||||
Gross profit
|
|
247,014
|
|
|
29,793
|
|
|
38,126
|
|
|
314,933
|
|
||||
Depreciation, depletion and amortization
|
|
22,517
|
|
|
11,087
|
|
|
22,393
|
|
|
55,997
|
|
||||
Segment assets
|
|
136,031
|
|
|
340,105
|
|
|
282,709
|
|
|
758,845
|
|
||||
2016
|
|
|
|
|
|
|
|
|
|
|||||||
Total revenue from reportable segments
|
|
$
|
1,365,198
|
|
|
$
|
888,193
|
|
|
$
|
425,029
|
|
|
$
|
2,678,420
|
|
Elimination of intersegment revenue
|
|
—
|
|
|
—
|
|
|
(163,803
|
)
|
|
(163,803
|
)
|
||||
Revenue from external customers
|
|
1,365,198
|
|
|
888,193
|
|
|
261,226
|
|
|
2,514,617
|
|
||||
Gross profit
|
|
209,215
|
|
|
64,137
|
|
|
28,018
|
|
|
301,370
|
|
||||
Depreciation, depletion and amortization
|
|
22,816
|
|
|
6,796
|
|
|
23,437
|
|
|
53,049
|
|
||||
Segment assets
|
|
151,475
|
|
|
314,823
|
|
|
282,472
|
|
|
748,770
|
|
||||
2015
|
|
|
|
|
|
|
|
|
|
|||||||
Total revenue from reportable segments
|
|
$
|
1,262,675
|
|
|
$
|
812,720
|
|
|
$
|
432,284
|
|
|
$
|
2,507,679
|
|
Elimination of intersegment revenue
|
|
—
|
|
|
—
|
|
|
(136,650
|
)
|
|
(136,650
|
)
|
||||
Revenue from external customers
|
|
1,262,675
|
|
|
812,720
|
|
|
295,634
|
|
|
2,371,029
|
|
||||
Gross profit
|
|
187,506
|
|
|
79,467
|
|
|
32,863
|
|
|
299,836
|
|
||||
Depreciation, depletion and amortization
|
|
20,117
|
|
|
10,343
|
|
|
22,389
|
|
|
52,849
|
|
||||
Segment assets
|
|
139,399
|
|
|
274,975
|
|
|
288,900
|
|
|
703,274
|
|
Years Ended December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total gross profit from reportable segments
|
|
$
|
314,933
|
|
|
$
|
301,370
|
|
|
$
|
299,836
|
|
Selling, general and administrative expenses
|
|
222,811
|
|
|
219,299
|
|
|
203,817
|
|
|||
Restructuring gains
|
|
(2,411
|
)
|
|
(1,925
|
)
|
|
(6,003
|
)
|
|||
Gain on sales of property and equipment
|
|
(4,182
|
)
|
|
(8,358
|
)
|
|
(8,286
|
)
|
|||
Total other (income) expense
|
|
(5,748
|
)
|
|
(4,008
|
)
|
|
6,881
|
|
|||
Income before provision for income taxes
|
|
$
|
104,463
|
|
|
$
|
96,362
|
|
|
$
|
103,427
|
|
December 31,
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total assets for reportable segments
|
|
$
|
758,845
|
|
|
$
|
748,770
|
|
|
$
|
703,274
|
|
Assets not allocated to segments:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
233,711
|
|
|
189,326
|
|
|
252,836
|
|
|||
Short-term and long-term marketable securities
|
|
132,790
|
|
|
127,779
|
|
|
105,695
|
|
|||
Receivables, net
|
|
479,791
|
|
|
419,345
|
|
|
340,822
|
|
|||
Deferred income taxes, net
|
|
—
|
|
|
—
|
|
|
4,329
|
|
|||
Other current assets, excluding segment assets
|
|
140,478
|
|
|
113,010
|
|
|
85,556
|
|
|||
Property and equipment, net, excluding segment assets
|
|
29,242
|
|
|
32,397
|
|
|
36,721
|
|
|||
Investments in affiliates
|
|
38,469
|
|
|
35,668
|
|
|
33,182
|
|
|||
Other noncurrent assets, excluding segment assets
|
|
58,652
|
|
|
67,158
|
|
|
64,463
|
|
|||
Consolidated total assets
|
|
$
|
1,871,978
|
|
|
$
|
1,733,453
|
|
|
$
|
1,626,878
|
|
|
|
|
|
|
|
|
|
QUARTERLY FINANCIAL DATA
|
|
|
|
|
|
|
||||||
(unaudited - dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
|
||||
2017 Quarters Ended
|
December 31,
|
September 30,
|
June 30,
|
March 31,
|
||||||||
Revenue
|
$
|
801,274
|
|
$
|
957,126
|
|
$
|
762,913
|
|
$
|
468,400
|
|
Gross profit
|
100,707
|
|
114,530
|
|
74,570
|
|
25,126
|
|
||||
As a percent of revenue
|
12.6
|
%
|
12.0
|
%
|
9.8
|
%
|
5.4
|
%
|
||||
Net income (loss)
|
$
|
35,325
|
|
$
|
48,055
|
|
$
|
16,272
|
|
$
|
(23,851
|
)
|
As a percent of revenue
|
4.4
|
%
|
5.0
|
%
|
2.1
|
%
|
(5.1
|
)%
|
||||
Net income (loss) attributable to Granite
|
$
|
32,773
|
|
$
|
45,982
|
|
$
|
14,133
|
|
$
|
(23,790
|
)
|
As a percent of revenue
|
4.1
|
%
|
4.8
|
%
|
1.9
|
%
|
(5.1
|
)%
|
||||
Net income (loss) per share attributable to
common shareholders:
|
|
|
|
|
||||||||
Basic
|
$
|
0.82
|
|
$
|
1.15
|
|
$
|
0.35
|
|
$
|
(0.60
|
)
|
Diluted
|
$
|
0.81
|
|
$
|
1.14
|
|
$
|
0.35
|
|
$
|
(0.60
|
)
|
2016 Quarters Ended
|
December 31,
|
September 30,
|
June 30,
|
March 31,
|
||||||||
Revenue
|
$
|
666,681
|
|
$
|
803,905
|
|
$
|
604,579
|
|
$
|
439,452
|
|
Gross profit
|
81,250
|
|
107,674
|
|
73,201
|
|
39,245
|
|
||||
As a percent of revenue
|
12.2
|
%
|
13.4
|
%
|
12.1
|
%
|
8.9
|
%
|
||||
Net income (loss)
|
$
|
19,264
|
|
$
|
38,172
|
|
$
|
18,526
|
|
$
|
(9,762
|
)
|
As a percent of revenue
|
2.9
|
%
|
4.7
|
%
|
3.1
|
%
|
(2.2
|
)%
|
||||
Net income (loss) attributable to Granite
|
$
|
16,173
|
|
$
|
37,190
|
|
$
|
14,199
|
|
$
|
(10,440
|
)
|
As a percent of revenue
|
2.4
|
%
|
4.6
|
%
|
2.3
|
%
|
(2.4
|
)%
|
||||
Net income (loss) per share attributable to
common shareholders:
|
|
|
|
|
||||||||
Basic
|
$
|
0.41
|
|
$
|
0.94
|
|
$
|
0.36
|
|
$
|
(0.27
|
)
|
Diluted
|
$
|
0.40
|
|
$
|
0.92
|
|
$
|
0.35
|
|
$
|
(0.27
|
)
|
|
|
|
|
Exhibit No.
|
|
Exhibit Description
|
2.1
|
*
|
|
2.2
|
*
|
|
3.1
|
*
|
|
3.2
|
*
|
|
10.1
|
*
**
|
|
10.2
|
*
**
|
|
10.2.a
|
*
**
|
|
10.7
|
*
|
|
10.8
|
*
|
|
10.9
|
*
|
|
10.11
|
*
**
|
|
10.12
|
*
**
|
|
10.13
|
*
**
|
|
10.14
|
*
**
|
|
10.15
|
*
**
|
|
10.16
|
*
**
|
|
10.17
|
*
**
|
|
10.18
|
*
**
|
|
10.19
|
*
**
|
|
10.20
|
*
**
|
|
10.21
|
*
**
|
|
10.22
|
*
**
|
|
10.23
|
*
**
|
|
10.24
|
*
**
|
Exhibit No.
|
|
Exhibit Description
|
10.25
|
*
|
|
10.26
|
*
|
|
10.27
|
*
|
|
18.1
|
*
|
|
21
|
†
|
|
23.1
|
†
|
|
31.1
|
†
|
|
31.2
|
†
|
|
32
|
††
|
|
95
|
†
|
|
101.INS
|
†
|
XBRL Instance Document
|
101.SCH
|
†
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
†
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
†
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
†
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
†
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
GRANITE CONSTRUCTION INCORPORATED
|
|
|
|
|
|
By: /s/ Laurel J. Krzeminski
|
|
|
Laurel J. Krzeminski
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
/s/ William H. Powell
|
|
William H. Powell, Chairman of the Board and Director
|
February 16, 2018
|
|
|
/s/ James H. Roberts
|
|
James H. Roberts, President and Chief Executive Officer
|
February 16, 2018
|
|
|
By: /s/ Laurel J. Krzeminski
|
|
Laurel J. Krzeminski
|
February 16, 2018
|
|
|
/s/ Claes G. Bjork
|
|
Claes G. Bjork, Director
|
February 16, 2018
|
|
|
/s/ James W. Bradford, Jr.
|
|
James W. Bradford, Jr., Director
|
February 16, 2018
|
|
|
/s/ David C. Darnell
|
|
David C. Darnell, Director
|
February 16, 2018
|
|
|
/s/ Patricia D. Galloway
|
|
Patricia D. Galloway, Director
|
February 16, 2018
|
|
|
/s/ David H. Kelsey
|
|
David H. Kelsey, Director
|
February 16, 2018
|
|
|
/s/ Celeste B. Mastin
|
|
Celeste B. Mastin, Director
|
February 16, 2018
|
|
|
/s/ Michael F. McNally
|
|
Michael F. McNally, Director
|
February 16, 2018
|
|
|
/s/ Gaddi H. Vasquez
|
|
Gaddi H. Vasquez, Director
|
February 16, 2018
|
|
|
Subsidiary
|
State of
Incorporation
|
Name Under Which
Subsidiary Does Business
|
Granite Construction Company
|
California
|
Granite Construction Company
|
California Granite Company
|
||
C.B. Concrete Company
|
||
Concrete Products Company
|
||
Dayton Materials
|
||
Granite Construction Company of California
|
||
Granite Construction Company of Connecticut
|
||
Granite Construction Company of Nebraska
|
||
Granite Construction Supply
|
||
Granite-Trumbull
|
||
Kenny Construction Company
|
Illinois
|
Kenny Construction Company
|
1.
|
I have reviewed this Annual Report on Form 10-K of Granite Construction Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
February 16, 2018
|
/s/ James H. Roberts
|
|
|
James H. Roberts
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Granite Construction Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Dated:
|
February 16, 2018
|
/s/ Laurel J. Krzeminski
|
|
|
Laurel J. Krzeminski
|
|
|
Executive Vice President and Chief Financial Officer
|
Dated:
|
February 16, 2018
|
/s/ James H. Roberts
|
|
|
James H. Roberts
|
|
|
President and Chief Executive Officer
|
Dated:
|
February 16, 2018
|
/s/ Laurel J. Krzeminski
|
|
|
Laurel J. Krzeminski
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(dollars in thousands)
|
Year Ended
|
Year Ended
|
||||||||
|
December 31, 2017
|
December 31, 2016
|
||||||||
Name of Mine
|
Section 104
1
|
Proposed Assessments
2
|
Section 104
1
|
Proposed Assessments
2
|
||||||
Bee Rock Quarry
|
—
|
|
—
|
|
1
|
|
0.3
|
|
||
Capay Facility
|
1
|
|
0.3
|
|
—
|
|
—
|
|
||
Conrock
|
—
|
|
—
|
|
1
|
|
0.3
|
|
||
Lockwood Quarry
|
—
|
|
—
|
|
4
|
|
2.0
|
|
||
N50
|
2
|
|
1.9
|
|
—
|
|
—
|
|
||
Rosemary Quarry
|
—
|
|
—
|
|
4
|
|
1.0
|
|
||
Singer Pit
|
—
|
|
—
|
|
1
|
|
1.4
|
|
||
Swan Pit
|
1
|
|
1.2
|
|
—
|
|
—
|
|
||
Wade Sand
|
—
|
|
—
|
|
1
|
|
0.1
|
|
||
Walker Pit
|
—
|
|
—
|
|
1
|
|
0.3
|
|
||
Whatcom Plant
|
1
|
|
0.4
|
|
1
|
|
0.1
|
|
||
Total
|
5
|
|
$
|
3.8
|
|
14
|
|
$
|
5.5
|
|
•
|
For the years ended December 31,
2017
and
2016
, MSHA did not issue any order requiring persons to be withdrawn from the areas affected by any alleged violations of mandatory health or safety standards under Section 104(b) of the Mine Act.
|
•
|
MSHA did not identify any flagrant violations under Section 110(b)(2) of the Mine Act.
|
•
|
We did not experience any mining-related fatalities.
|
•
|
We did not receive written notice of a pattern of violations of mandatory health or safety standards from MSHA under Section 104(e) of the Mine Act or written notice of the potential to have a pattern of violations of mandatory health or safety standards from MSHA.
|
•
|
MSHA did not issue any citations and orders for an alleged unwarrantable failure of the mine operator to comply with mandatory health or safety standards under Section 104(d) of the Mine Act during the years ended
December 31, 2017
and
December 31, 2016
.
|
•
|
MSHA issued one imminent danger order requiring immediate withdrawal from the affected areas under Section 107(a) of the Mine Act during the year ended
December 31, 2017
and did not issue any imminent danger orders during the year ended
December 31, 2016
.
|