Dive Brief: On its first earnings call with Wall Street analysts in 16 months yesterday, Granite Construction issued a memorandum responsible for accounting irregularities in its heavy civil pool that led to an internal investigation as well as subpoenas from the Securities and Exchange Commission. But the company said that even as it continues to work to put the issues behind it, it sees an opportunity for increased federal and state spending to get out of the pandemic. After releasing restated financial statements last week for 2017, 2018 and the first nine months of 2019, Granite announced its third-quarter year-to-date results for 2020 on Thursday, as it came one step closer to bringing its books back into compliance. Revenue of $ 2.6 billion for the nine months ended September 30 increased 2.2% on the year. It ended the third quarter of 2020 with a backlog of $ 4.2 billion, which he said was slightly higher than the second-quarter results, but 10% lower than the $ 4.7 billion in the third quarter of 2019. Kyle Larkin, a 25-year veterinarian at the company, said: His appointment as chief of the 99-year-old, California-based contractor in September. “This is not a granite, and we cannot allow it to happen again.” Dive Insight: During the call, Larkin explained that the company’s internal investigation had uncovered issues with the timely recording of projected costs in its heavy civilian pool. Since taking the helm last fall, he has said he has led a “cultural revitalization” to emphasize clear rules and promote transparency. “We spent a lot of time reflecting on our core values and developing a framework that encourages and allows our employees to understand and comply with all of our policies and procedures,” said Larkin. The company has submitted quarterly reports for the first, second, and third quarters of 2020 after yesterday’s call, and plans to complete its annual report for 2020 by the end of March to bring it back into full reporting compliance. Larkin said that Kyle Larkin Granite is purposefully working by accumulating $ 1 billion in her heavy civilian pool, to shed the jobs it is offered for in that business unit. While the group’s projects in the past routinely exceeded $ 500 million, the company is now focusing on moving away from what Larkin called “mega” projects to target those between $ 20 million and $ 500 million instead. “We have made a decision not to pursue large design and construction projects, as we have limited and / or incomplete project design at the time of bidding,” he said. “We still enjoy the design and build projects, but they have to be very small in volume … and we have to be able to price the work accordingly.” Larkin said the company sees an opportunity to emerge from the pandemic, as relief funding is liberalized and state and local governments return to full employment. He cited a one-year extension to America’s Surface Transportation Reform Act, an injection of $ 13.6 billion into the Highways Trust approved by Congress in late 2020, in addition to $ 10 billion in relief funding for state transportation departments. He, like other construction executives in recent earnings calls, signaled President Joe Biden’s push for multi-trillion infrastructure. “We are optimistic that the bipartisan federal infrastructure bill can be passed this year, which should effectively drive our final transportation markets,” said Larkin.
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