ConDig (08-Aug-18). A rise in acquisition expenses following the purchase of Layne Christensen Co pushed Granite Construction Inc into the red in the second quarter of this year.
The Watsonville, California-based civil contractor and construction materials producer booked a net loss of $8.3 million in the quarter ended June 30 compared with profit of $14.1 million in the same period last year. But the company did manage to pare losses compared with the first quarter when it reported a net loss of $11.4 million for the quarter ended March 31.
It comes as the Granite said that second quarter selling, general and administrative expenses were $61.3 million, or 7.6% of revenue, compared with $51.4 million, or 6.7% of revenue, last year.
The rise in expenses follows the company’s purchase of water management and drilling service provider Layne Christensen Co in a stock-for-stock $565 million deal in February.
This outweighed a 5.8% rise in revenue to $807.1 million from $762.9 in the year-ago period.
Granite reported that the company’s total project backlog was $3.65 billion, down 10.1% year-over-year. But added that it had received notification of four project wins after the close of the second quarter.
“State-and local-led program expansions, coupled with growing federal government investment, and continued private-sector strength are fueling the healthiest market conditions we have experienced in more than a decade. We are particularly encouraged that our core business continues to deliver on project pursuits as well as day-to-day execution,” said Granite president and chief executive officer James H. Roberts.
Looking forward, Granite said it expected consolidated revenue growth this year in the mid-to-high teens and a consolidated adjusted earnings before interest, taxes, depreciation, and amortization, margin of 7-8%.
Last month, a subsidiary of Granite won a $39 million contract to revamp the Westbound section of I-90 in Chicago, Illinois.
The US construction industry remains robust, with latest figures from Dodge Data & Analytics showing that construction starts jumped up 11% in June to a seasonally adjusted annual rate of $896.3 billion.
The increase marked the second double-digit gain in a row, following the 15% hike that was reported for May.
The rise in June follows a 57% surge in nonresidential building, which benefitted from the start of two large manufacturing plant projects and two substantial office building projects.
Residential building rose 4%, while nonbuilding construction (public works and electric utilities) declined 28% in June.