Granite Construction Incorporated Management Discusses Q3 2013 Results - Earnings Call Transcript

Nov. 4.13 | About: Granite Construction, (GVA)

Granite Construction Incorporated (NYSE:GVA)

Q3 2013 Earnings Call

November 04, 2013 11:00 am ET

Executives

James H. Roberts - Chief Executive Officer, President, Director, Member of Executive Committee and Member of Strategic Planning Committee

Laurel J. Krzeminski - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Analysts

John B. Rogers - D.A. Davidson & Co., Research Division

Jerry Revich - Goldman Sachs Group Inc., Research Division

Nicholas A. Coppola - Thompson Research Group, LLC

Alexander J. Rygiel - FBR Capital Markets & Co., Research Division

Operator

Good morning, my name is Sahid, and I will be your conference facilitator today. At this time, I'd like to welcome everyone to the Granite Construction and Investor Relations Third Quarter 2013 Earnings Conference Call. [Operator Instructions]

Please note, we will take one question and one follow-up question from each participant. Thank you.

It is now my pleasure to turn the floor over to your host, Mr. Ron Botoff, Granite Construction's Investor Relations manager. Sir, the floor is yours.

Unknown Executive

Good morning, thank you for joining our third quarter 2013 earnings call. I'm here with our President and CEO, Jim Roberts; and our Senior Vice President and CFO, Laurel Krzeminski.

As a reminder, any forward-looking statements that are made this morning are subject to risks and uncertainties that could cause actual results to differ materially from these statements and which are further described in our most recent SEC filings. Granite assumes no obligation to update any of these forward-looking statements or other information. With that, I will turn the call over to Jim.

James H. Roberts

Thank you, Ron, and good morning, everyone. As I get started this morning, I would like to thank Jacque Fourchy, for her more than a dozen year serving as the face and voice of our Investor Relations group, before the turning the reins over to Mr. Botoff in the third quarter of this year. Jacque has transitioned to focus on communications and still is an integral part of our Granite family, so thank you very much, Jacque.

Today, I will start with the focus on our Large Project segment, including an update on key projects driving results and the overall bidding and building environment. Then I will spend a minute discussing our backlog trends, including the impact from new revenue synergies. I will discuss our vertically integrated business, as well as the general scope of the continued restructuring actions we are working to finalize, and then I will close with our outlook for the remainder of 2013 and a look ahead to 2014.

Starting with Large Projects. And let's start with some very positive news out of New York from last week. We were extremely pleased to hear Governor Andrew Cuomo's announcement of the federal government's largest ever TIFIA loan for the Tappan Zee Bridge project of up to $1.6 billion. At more than $3 billion, this is not only Granite's largest ever project, with our portion of more than $700 million, it is also the largest project in the 63-year history of the New York State Thruway Authority, and among the biggest public works projects in the history of United States. This is great news for a great project, and good overall news for our industry. That said, the -- this quarter's Large Project segment results were a disappointment. The core fundamentals in the Large Project segment remained very sound with continued solid execution of mature profitable projects, including the Houston Light Rail, Queens Bored Tunnels and Selmon Expressway in Tampa providing a stable foundation. But the mix of project progression in the third quarter and throughout 2013, combined with a challenging project, outweighed our core results. We are proud of last year's third quarter Large Projects performance, which included positive forecast changes of nearly $36 million. Reflecting, at that time, a larger stable of mature profitable projects and solid execution. It is -- it also illustrates how project progression and the mix of projects in our portfolio can cost significant profit variability on a quarter-to-quarter basis. 3 more recently awarded large projects are progressing as planned: the Tappan Zee Bridge, the IH-35E in Texas, and the I-40/440 in North Carolina. These projects contributed revenue this quarter but were less than 10% complete and therefore, not yet contributing profit.

Before we update you on these projects, let me first offer an operational and financial update. This quarter and throughout 2013, we have dealt with the ongoing negative impact from a large highway project in the State of Washington. We are about 80% complete with the project and we expect to complete it in mid 2014. We have a talented senior team in place, that is committed to completing the project, expeditiously and efficiently for the owner.

During the year, and including the third quarter, we incurred significant cost overruns related to unknown conditions of bid time, design issues, scheduled delays, resequencing, as well as additional costs-related fiscal growth.

In the last 12 months, we have reported approximately $50 million in negative forecast changes related to this single project. We believe we have right for a significant cost recovery on this project, which we are pursuing diligently. All of these items are included in an ongoing claim we have in process with the project owner.

Now please remember, we do not accrue for any estimated claim recovery. We only book revenue from a claim once it has been agreed to and executed by all parties.

Onto the progress of some of our key projects. On the Tappan Zee Bridge, as I mentioned earlier, the financing news is great and the project is accelerating. The mobilization of our Marine fleet continues. Dredging for 2013 season was completed. The initial test pilot program was completed. And production piling began during the quarter. The project is on schedule and is on budget.

The IH-35E project in Texas, the owner exercised all of their options, which brings the job to over $1 billion, of which our portion is more than $350 million. The start-up phase of the project including a right-away acquisition, design and utility relocation is progressing on schedule and field construction will begin this month.

Although it is still early, the $130 million I-40/440 project in North Carolina is also well into its startup phase including mobilization design and some fieldwork. These projects represent more than $1 billion of our backlog and we currently expect all 3 to recognize profit in late 2014.

Importantly, though we are not simply focused on the business we already won. The Large Projects business remains competitive, while the near and midterm bidding pipeline remains very healthy.

In the near term, through the third quarter of 2014, we expect to bid on more than $10 billion of large projects, more than half of the value of the work we are bidding in the next year represents potential Granite revenue. And beyond 2014, we are tracking an additional $20 billion in Large Projects. As we have noted before, the success of many of our large Projects starts with the project team. And I am pleased to say, that we'll have strong team in partnerships already established for many of the project in our pipeline.

Granite is dedicated to grow this segment of our business by winning our share of upcoming large project opportunities. And as you can see, the large project market remains very robust. While the bidding environment is currently healthy, long-term dedicated federal funding remains a concern. We have talked in detail, previously, about the 2-year Federal Highway Bill, MAP-21, which importantly, increased TIFIA financing. This bill expires in September of 2014 and will need strong attention from Congress in early 2014 to provide the long-term stability of the new Highway Bill.

Funding and financing stability ultimately remains critical to driving progress on important infrastructure investment, at the federal state and local levels.

Total company backlog in the third quarter is at record levels at $2.75 billion. Large Project backlog is also at record levels at $2 billion. This quarter, the composition of Large Projects backlog changed somewhat, as we booked a milestone win by our power division in the quarter of more than $175 million. This win provides an early look at the powerful revenue synergies that our diversification strategy already is providing. We will continue to build and leverage these early successes within Kenny.

The vertically-integrated business, comprised of the Construction segment and the Construction Materials segment had mixed results in the quarter. I was very pleased to see nearly 200 basis points of Construction segment gross margin year-over-year improvement in the third quarter. We are seeing increasing signs of overall economic improvement in some of our markets, but certainly in not all of our markets. Construction backlog at more than $700 million is up more than 30% year-over-year and it continues to trend positively pointing to continued growth in 2014. The materials business did benefit from some pricing improvement in the quarter compared to the third quarter of 2012 but aggregate volumes remain weak in certain markets.

As noted in our press release, as well as in previous quarterly filings, we expect to finalize restructuring actions related to our 2010 enterprise improvement plan before the end of the year.

Throughout 2013, we are focused our analytics on certain real estate assets, as well as certain underperforming materials segment assets. Optimizing our business portfolio with a key tenet of Granite's strategic plan.

As previously mentioned, optimization may include divestiture, closure, impairment or even partnering arrangements to enhance our return on assets, as well as operating income in both the short and the long-term.

We will make final decisions on our restructuring efforts in the coming weeks and we will communicate the expected total financial impacts and the expected resulting benefits of these actions in the fourth quarter. We cannot predict exactly when demand in both the public and private markets will recover materially to drive strong improvement in our vertically integrated business.

However, some markets are showing improvement and backlog trends point to stronger 2014, which is a nice change in this area of our business. The private sector continues to build momentum, coupled with state and local budget showing increased revenues. Every market is unique, but overall, we're very encouraged.

The Kenny acquisition is performing as planned for 2013 and beginning to provide additional growth opportunities for 2014 and beyond. And the mix and timing of our Large Projects portfolio is pointing to improved revenues and profits as well.

We are committed to drive growth at Granite by executing on our strategic plan. We are transforming, growing the vertically-integrated business. We're growing our Large Projects business, we are growing through diversification and we're optimizing our business portfolio.

We continue to make progress on our plan and grow our business in order to drive results for our shareholders.

With that, I will turn the call over to Laurel. Laurel?

Laurel J. Krzeminski

Thank you, Jim, and good morning, everyone. Revenues in the third quarter were $742 million, up 1.8% from last year. Earnings per diluted share were $0.28 compared with $0.94 last year. Gross profit margin for the quarter was 7.3%, down from 13.9% last year, driven by weaker-than-expected Large Projects segment profitability. Total contract backlog at the end of the third quarter was $2.8 billion, compared with $1.6 billion last year. As Jim mentioned, this includes the booking of our power division win, with more than $175 million. However, it does not include our City of Chicago underground contracts valued at more than $140 million, which are booked into backlog as task orders are executed.

Looking at segment detail. Construction segment revenues were $471 million compared with $386 million last year, and gross margin improved to 10.5% in the third quarter from 8.6% last year.

Large Project Construction segment revenues were $188 million in the third quarter compared with $256 million last year. The segment posted a loss of $2.5 million in the third quarter compared with gross profit of $57.8 million last year.

As mentioned, the unfavorable year-over-year variance was driven by forecast changes and by strong 2012 comparisons related to project timing.

Please note, it's our policy to recognize additional costs when known and future claims and change order revenue is recognized only when signed contract changes are executed.

On a longer-term basis, we continue to expect average gross margins in the mid-teens in the Large Project segment. Annual segment gross margin performance from 2010 through 2012 in Large Projects, averaged more than 14%. We will continue to grow this business with a keen eye on risk and associated returns expectation.

Revenues for the Construction Materials segment decreased 4% to $83 million. Materials gross margin in the third quarter of 8.8%, reflects a decline from 11.5% last year.

Third quarter SG&A was $46.6 million, compared with $41.3 million a year ago, with the increase associated with Kenny. We remain focused on continued opportunities to reduce or at least maintain costs, as we look ahead to 2014.

This year's operating cash flow performance is well below expectations, and a definite part of my focus. Despite this, Granite continues to have a strong balance sheet, as cash and marketable securities totaled nearly $300 million at quarter end, including consolidated construction joint ventures.

Before I talk about our fourth quarter expectations, let's spend just a couple of moments on our outlook and our guidance policies. Over the past 6 months, we have spoken with Granite's shareholders, analysts and investors about guidance practices and metrics. We welcome continued input on the topic and the metrics you would like to see most. Early feedback, both internal and external, has focused on consolidated revenue, earnings per share and a number of non-GAAP metrics. We'll provide you with additional updates as we finalize our plan.

In terms of guidance for the fourth quarter, we currently expect between breakeven net income to a small loss, before the impact of anticipated restructuring charges. Our guidance for 2013 is as follows: Construction segment revenues are expected to total $1.2 billion to $1.3 billion, with a corresponding gross profit margin of 8.5% to 9.5%; Large Project Construction segment revenues are expected to be in the range of $750 million to $800 million, with a corresponding gross profit margin of 8.5% to 9.5%; Construction Materials revenues are expected to be $220 million to $230 million, with a corresponding gross profit margin of 2% to 3%; selling, general and administrative expenses are expected to be $205 million to $210 million for the year.

2013 has, in many ways, been the transition year we anticipated, with the Kenny acquisition, the ramp-up of new large projects and the continued slow road to recovery in our vertically integrated regions.

Unfortunately, we could not anticipate the additional impact from the Large Project in the Northwest. Though it is still too early to offer detail, Jim and I, both, fully expect 2014 to leverage the strides made in this year's transition and to provide a clear pathway to long-term profitable growth.

Thank you. Now, before we begin Q&A, I'll turn the call back to Jim.

James H. Roberts

Thank you, Laurel. I want to reiterate that although our quarter had a significant negative impact with the Large Project write-down. Our backlog is strong, our strategic plan is on target. Overall, our markets are improving and our diversification efforts are working very nicely.

With that, we look forward to a strong 2014. And now, let's open it up for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from John Rogers from D.A. Davidson.

John B. Rogers - D.A. Davidson & Co., Research Division

A couple of things. First of all, in terms of the revenue ramp that you've seen on the Large Project side of the business, sequentially, we've seen the higher quarters and setting aside margins for a second. Based on your schedule, does that continue now for the next 5 or 6 quarters, Jim?

James H. Roberts

Okay. With the backlog, it really depends on the ramp-up of the projects and the answer is, in general, yes. All of the projects that I mentioned: the Tappan Zee, IH- 35E, I-40/440 plus several others, Sam Clemente dam. We just got a job in Florida this last week. They are all starting to accelerate. And they -- what happened during the second and third quarter was there was a slow start up, some of them got delayed. So in general, John, the answer is yes. There should be a ramp up of revenue production on our Large Projects going forward.

John B. Rogers - D.A. Davidson & Co., Research Division

Okay. And then my second question is, just in terms of the restructuring that you're referring to here. Are you -- and I know it's probably not complete yet, but are you looking at writing assets down?

James H. Roberts

Try that again, John.

John B. Rogers - D.A. Davidson & Co., Research Division

Sorry, are you looking to writing assets down to market? Or I'm a little confused on what the restructuring would be. Because I always -- I already thought you've taken your organizational changes.

James H. Roberts

Okay. So if you remember back in 2010, our enterprise improvement plan was the beginning of what we said was a 3-year plan to look at our assets, both in our real estate portfolio and in some other underperforming assets. The majority of what we've been working on over the last 3 years has been to divest of assets, that we thought were underperforming in the real estate segment. We still have some of those and the intent of the restructuring, which we've been communicating to our investors is to focus on impairing some of those assets down to market, if we believe, market is lower than we're at today, and conclude that by the end of 2013. And that has been a 3-year project that we've been working on and stating so in our filings. In addition, we have underperforming assets in our materials segment that are mostly from the quarry side that we are looking at writing down also, because they have no future benefit to the company. So it's a combination of those 2, John, which has previously been discussed and this would be the tail end of our 3-year plan. Laurel?

Laurel J. Krzeminski

Yes, and John, I just want to add something on the real estate divestiture plans. In some of the cases, we thought we were going to stay in some of these investments and develop them. And the biggest thing we're looking at now is we're to the end of the 3 years, it's taken a lot longer for the market to recover than we had anticipated or hoped. And so now, we're looking at our plans and saying, "Do we want to not develop them?" And instead, accelerate the sales, which is what results in an impairment.

Operator

And our next question comes from Jerry Revich from Goldman Sachs.

Jerry Revich - Goldman Sachs Group Inc., Research Division

Jim, can you talk about the competitive environment that you're seeing today? Obviously, a healthy dose of activity. Are you seeing that translate into the industry being more disciplined on the types of bids that you're seeing from competitors? And also, can you just provide some more context on what the broad areas of disagreement are on Northwest project? And whether, I guess, there's a systematic element of a disagreement there?

James H. Roberts

Sure. Let me focus on the market first, and then I'll discuss, Jerry, the Large Project in the Northwest. Two, and as we look at our markets, we definitely look at Large Projects as an individual market and we look at the Construction and materials market as a second market. Large Projects, I mentioned, Jerry, is very healthy. The Bid lists continues just to be robust. And we are entering a phase, I think in the entire market, which we like, where they are shortlisting teams on projects before we bid them, which means that now, there are 3 or 4 competitors typically on these Large Projects, which gives us a much better opportunity of winning each project. So large projects, the competition is very sophisticated. Has high expectations of return for associated risks and so I think that market, and I'm comfortable that market will continue to perform very well, again, with quarter-to-quarter, a little volatility based on the way that we account for certain profitability thresholds and claim recovery. The I business or the Construction segment. Like I mentioned in my discussion points, Jerry, it is actually becoming better as well. We are starting to see increased margin opportunities and we are starting to see shorter bid lists. So that is really nice, and that really stems from: A, the private sector starting to see some signs of vitality, along with really nicely seeing state and local budgets coming back. And those have really been hidden over the last 3 or 4 years, where they've been really struggling on the revenue side. And we're starting to see revenue pickup on the local and state levels, which is really making those programs stronger as well. So I think, that market is getting better and that's really indicated by the gross margins you see in the third quarter, up almost 2 points in the Construction segment. Okay. Let me talk a little bit about the Large Project in the Northwest because we have talked about it several times, not only in our press release but in our discussions earlier. This is a Large Project that we've had ongoing now for about 3 years. We have a dispute with the owner, which is really a formal process of a claim. We have filed a large claim on the job, we have been through a dispute review board process already, we have a good owner, an owner that we've worked with a lot in the Northwest, and we are following the contractual requirements of the contract, which requires us to file a claim if we have a dispute in what we expect to receive in terms of revenue. That process will most likely take through the first quarter of next year and hopefully, we will be seeing some settlement. Or if we do not get settlements, certainly, we'll go through additional processes as well. We think, we have a very strong case. It has been a significant write-down over the last 12 months, as I mentioned. A very strong portion of that write-down has been submitted in our claim recovery. And we are following the process with the owner. And again, it takes time but due to our policies and procedures, we will not recognize any revenue on that until we actually settled with the owner.

Jerry Revich - Goldman Sachs Group Inc., Research Division

Okay, Jim, as a follow-up, you mentioned that the Large Construction projects are now being run with 3 to 4 teams. Is that a recent development or does that reflect the fact that you just have much bigger jobs moving forward then you did, maybe, a year or 2 ago?

James H. Roberts

Well, I think it's actually becoming a requirement from most of the competitive bidding environment. When the amount of monies that we spend upfront, Jerry, in the process is pretty significant. And I think, the industry has really worked nicely to tell the owners that if you're going to want some strong teams bidding your work, that we're going to have to have less people shortlisted because of the size of the upfront money. And we have excellent partners that we've already teamed with on these jobs. And we agree in advance to only look at jobs that we believe we have a strong chance of obtaining, which means, we love or actually really enjoy the SOQ process, we call it statement of qualifications, where they short list the teams, which gives us the higher opportunity. So I think, it's heading that direction on the Larger Projects. And I think, the industry as well as the owners, have agreed that that's the right path for the projects.

Operator

[Operator Instructions] And our next question comes from Nick Coppola from Thompson Research.

Nicholas A. Coppola - Thompson Research Group, LLC

So if MAP-21 expiring in less than a year now, what are your thoughts on the next Highway Bill? And it might be a bit early, but what are you hearing in terms of early indications from DC? And what do you think it could look like?

James H. Roberts

Well, I'll tell you. I've been back in DC and actually, testified in front of the Senate, EPW Committee. And there's a strong sense that there are certain things in the current bill that are working well and certain things that aren't. And let me just talk briefly about what's working well. Transportation Infrastructure Finance and Innovation Act is working well. And I know the Senate side would love to really enhance that portion of the upcoming bill. We've increased it to a $1.75 billion leverage ratio over the next year, which creates upward of, potentially, $50 billion of additional work, and it's working. You saw that in the New York State Thruway Authority receiving the TIFIA loan just last week. So I think, that's going to get enhanced as we go forward. I do think, there is a fundamental issue in the Highway Bill funding that is a problem. And that is the gas tax program. And there are people on the Hill, today, that are believing that a gas tax adjustment is appropriate. It is not politically positive, it's not politically popular to increase the gas tax, but even indexing, it would make a huge change. So with that, the good and the bad, we're going to have a difficult time probably getting a robust bill done by September. I mean, if you listen to the -- some of the discussions on the Hill, there's a chance for a continuation of the current bill with similar funding, the way it is. And if that happened, there might be an opportunity to increase the TIFIA size to the program. And really, I think, it's going to depend on how much other activities going on in Congress during the first half of the year, to see if they can actually focus on the Highway Bill. It's been a secondary effort up for the last couple of years. And it's starting to gain momentum whether or not it will be completed before 2014 is questionable.

Nicholas A. Coppola - Thompson Research Group, LLC

Right, right, that's helpful color. And then, switching gears a bit. Can you talk a little bit about Kenny's performance in the quarter? And what kind of revenue synergies you're seeing? I heard you talk about that $175 million project. Any kind of qualitative color there about what kind of revenue synergies you're seeing?

James H. Roberts

Yes. I think that Kenny business is working well. We've got majority of the integration and transition processes behind us. We are seeing some of the synergies in -- that's the power division win, it's a large materials management's contract, that's in the U.S. We're also seeing some opportunities up above in Canada as well. We've got new projects going on there. Also, the Kenny business is teaming up with our Large Projects team to bid some tunnel work, which is really nice to see. I would say the Kenny integration and transition has gone very well and the power division, when we mentioned, was trying to just show that these were the kind of things that a larger company can bring to the table to help the Kenny team in growing their business. And it's working very nicely.

Nicholas A. Coppola - Thompson Research Group, LLC

Okay. And what kind of margins are they posting in the Construction segment? And just thinking about the year-over-year improvement in Construction margin, should we be thinking about Kenny as being one of the drivers there?

James H. Roberts

Well, it's part of it, but it's not a majority driver. It is that they have strong margins in the Construction segment, as well as -- but a much smaller revenue size. So it doesn't have a huge impact on the overall Granite margins. I would say this in the Construction segment, that those 2 points increase in GPM in the third quarter is indicative of all parts of our business. So that's really a good sign. But the Kenny business, again the construction segment is somewhere in the 10% to 15% range of the overall volumes. So it doesn't have an overall affect on the GPM, but it is a -- operating at a strong level.

Operator

And our next question comes from Alex Rygiel from FBR Capital Markets.

Alexander J. Rygiel - FBR Capital Markets & Co., Research Division

A couple of quick questions. First, Jim, can you talk a little bit about sort of the award opportunities out there in the marketplace right now? What you're bidding on? And more importantly, focus on sort of what you think that award timeline could look like over the next 3 to 6 months? I mean, should we expect a number of large projects to be awarded by year-end? Or should we be thinking about more first half 2014?

James H. Roberts

Okay. So Large Projects again, is been really over the last couple of years, Alex, very solid player for us. But I would say, one of the things I saw occur in 2013, which was a surprise in some respects with projects being delayed and pushed out towards the tail end of 2013 and the early part of 2014. So I would not expect a significant amount of awards in the fourth quarter, although, we have several projects that we are bidding. And we just actually were apparent low-bidder on a nice job in Florida last week. So some of those jobs are going to hit, but I think, you're going to see the big influx in the first and second quarter of 2015. I'm showing on my list about $6 billion bidding between just now and the end of the first quarter. So that's -- it's a huge amount of work to get those projects in place. But what happens is that a lot of times, the owner takes their time to review the bids and come back with an award that could take a month or 2 or even longer after the submittal. So my suggestion, Alex, is first quarter, we should hear some hopefully, some nice awards. Second quarter, even stronger, fourth quarter of this year is probably questionable.

Alexander J. Rygiel - FBR Capital Markets & Co., Research Division

That's helpful. And then also, as it relates to the 4 or 5 Large Projects you're working on right now. Will any of them hit the profit threshold in 2Q of '14?

James H. Roberts

No. I think the ones that I mentioned, the Tappan Zee, the IH-35, the I-40/440 and even there's a dam project that we're building in California, all of them are looking in the later part of the year, of next year. That's again based on our 25% threshold.

Operator

And our next question comes from John Rogers from D.A. Davidson.

John B. Rogers - D.A. Davidson & Co., Research Division

Just wanted to follow-up. First of all, on the Highway 520 project to the one in Washington State. The original claims on that, didn't you have some claims back, I don't know, a year or so ago? And have those been settled?

James H. Roberts

Yes, there's some minor ones, John. That we worked at that we're like, we're not the major redesign issues. They were just individual components of the projects that yes, they've been ongoing and some of the smaller ones have been settled.

John B. Rogers - D.A. Davidson & Co., Research Division

Okay. And in terms of what's in your backlog now, Jim, on the Large Project side? How much of that backlog are you the lead on the project versus minority partner?

James H. Roberts

I have to do that calculation. I can't tell you of top of my head, John. Certainly, we'll be able to work on that and let you know. It varies as project by project. But we can certainly tell you. I don't have that of top of my head.

John B. Rogers - D.A. Davidson & Co., Research Division

Okay, I'd appreciate it. And then one other, if I just could. On the power line project that Kenny was awarded the $175 million, are you self-performing that entire project?

James H. Roberts

No. The Kenny power division does a lot of, what we call materials management, logistics and construction management. So there will be doing -- a really majority of the work is going to be doing managing the job itself.

John B. Rogers - D.A. Davidson & Co., Research Division

Okay, that helps. So the margin opportunities on that, are they comparable to you or they less than your regular Construction business?

James H. Roberts

Well, I think, the way I would put it, John, is that some of those projects have lower margins. Others of our projects have margins that are well in excess of mid-teens, so as we continue to mold some of the power division wins and with the other large projects, we're still looking at mid-teens across-the-board. And so, I would not like to talk about individual margins on individual projects.

Operator

And this ends our Q&A session for today. I would like to hand the conference back over to our host for any closing remarks.

James H. Roberts

Well, thank you, everybody for your questions. I want to close by thanking our employees across the country. They are the primary reason we have been successful in the past and they continue to be the key of our future. We look forward to seeing some of you next Wednesday in Boston, at the Goldman Sachs Industrials Conference and on Thursday, in New York. And Laurel, Ron and I are, of course, are always available for follow-up, if you have any further questions. Thank you, everyone.

Operator

Ladies and gentlemen, and thanks for participating in today's conference. This concludes our program for today. You may all disconnect, and have a wonderful day.

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Granite Construction (GVA): Q3 EPS of $0.28 misses by $0.50. Revenue of $741.57M misses by $159.23M. (PR)