Good morning. My name is Katherine and I will be your conference facilitator today. At this time I would like to welcome everyone to the Granite Construction Investor Relations’ Fourth Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speakers’ remarks there will be a question-and-answer period. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Granite Construction’s Director of Investor Relations, Ron Botoff. Sir, the floor is yours.

Thank you, Katherine. Good morning. Welcome to the Granite Construction Incorporated fourth quarter 2014 earnings conference call. I’m here today with our President and CEO, Jim Roberts and our Senior Vice President and CFO, Laurel Krzeminski. We begin today with an overview of the company’s Safe Harbor language. Some of the discussions today may include forward-looking statements. Actual results could differ materially from the statements made today. So please refer to Granite’s most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise. A reconciliation of non-GAAP results is included as part of our fourth quarter earnings press release. Certain non-GAAP measures may be discussed during the call and from time-to-time by the company’s executives. For more information please visit our Investor Relations website at investor.graniteconstruction.com. Thank you. Now I would like to turn the call over to Granite Construction Incorporated, Chief Executive Officer, Jim Roberts.

Thank you, Ron and good morning everyone. Before Laurel discusses our financial results and our initial 2015 outlook, today I begin by congratulating Granite teams from coast to coast, as 2014 was the safest year in our company’s history. This is a continuation of more than a decade long trend of safety improvement for Granite. We are far from finished. We continue to raise the bar in this area, always targeting an ultimate goal of zero injuries. It is this commitment that helped drive operational and financial improvement over the last 12 months. And it is this commitment that gives me confidence that operational efficiency and execution continue to gain momentum now in 2015. I also want to take just a moment to recognize Patrick Kenny, who will be retiring as Kenny Constructions Group Manager. Thank you, Patrick, for your four plus decade of service and leadership at Granite, at Kenny and in the construction industry. Last November I explained that fourth quarter results would be dependent on four factors. Project execution is the first item that we talked about last quarter. And we were pleased to see improved operating trend drive continued margin growth across the company. Excluding the impact of 2013’s restructuring charges, profit margin performance in the fourth quarter of 2014 translated into a net income increase of more than $14 million year-over-year, with 2014 annual net income improving more than $ 30 million as compared to last year. Maintaining momentum on improved project execution is a critical focus area for us as we work to execute our nearly $3 billion of backlog. Continuous improvement investment continues to drive change, uncovering opportunities and is now beginning to deliver results. Our emphasis on the process is helping us be better and more efficient in what we do every…

Thank you, Jim, and good morning everyone. Fourth quarter 2014 revenues were $590 million, down 1.4% from last year. Full year revenues were flat for the year coming in again at about $2.3 billion. Fourth quarter 2014 earnings per share was $0.43 compared to $0.02 per share for the quarter in 2013 excluding last year’s restructuring charges. 2014 earnings for the year was $0.64 a share compared to a loss of $0.17 per share for 2013 again excluding the impact of charges. Total company 2014 gross profit margin was 13.5% and 11% respectively for the quarter and year. The 520 basis points margin improvement in the quarter is a result of contributions from all segments but particularly from a strong gross profit contribution from the construction segment. And for the year gross profit growth across all three segments drove 280 basis points of margin growth with the large projects segment responsible for the majority. SG&A expenses increased slightly year-over-year to 204 million driven primarily by increased selling expenses and investment in continuous improvement. Total contract backlog at the end of 2014 was $2.7 billion, up almost 8% from 2013, with large project construction backlog of just over $2 billion, up nearly 9% in 2014. And as Jim mentioned this total does not yet include our nearly $350 million portion of the Pennsylvania Rapid Bridge Replacement Project or net of $300 million of alternative procurement work that we’re in the final phases of negotiation. Looking at the segment detail, fourth quarter construction segment revenues increased more than 6% to $313 million and gross margins improved more than 500 basis points year-over-year to 11.5%. In 2014, construction revenues totaled about $1.2 billion, down about 5% from last year. However, construction gross profit grew 11% in 2014 driving gross margins back to double-digits…

Thank you, Laurel. In much of the West improved weather has allowed us an early start in regaining the momentum we built in our vertically integrated business last fall. And as we all look forward to an end of the current challenging winter conditions across the Midwest, Northeast and Southeast, we will immediately be ramping up our crews to accelerate activities on those projects affected by the cold winter weather. A new highway bill is a critical factor to allow our customers to make-up for the last several years of delayed infrastructure investment. This pent-up demand at the federal state and local levels all represents opportunities for growth beyond what we have talked about today. Despite funding challenges our backlog continuous to grow in our construction and large project segments and we also have a solid backlog in our construction materials business as well. We expect 2015 will be a year of growth in both revenue and profitability driven by strong backlog, improved operating capabilities and our unrelenting focus on continuous improvement. And with that, we will take your questions.

[Operator Instructions]. Our first question comes from Nick Coppola with Thompson Research.

On the slower large project progression, in your opening comments you referenced award delays and weather and was that largely about I-4 and broad-based winter weather? Is there any further color you can add on really the drivers of that, that four large project progressions?

Yes, thank you Nick and nice to hear from you. Yes, I think two things. First of all, the start on I-4 was later than we anticipated and I mentioned that a couple of times along with Laurel. And the progression on the Pennsylvania job, it looks like it will be put into backlog when the financial close occurs, hopefully in March. I said in late first quarter maybe even in the second quarter. And then on top of that we also have two large alternative procurement projects that we’re negotiating now that we had anticipated to put into backlog last year and they did not occur last year, but we are now strongly anticipate to occur in the first part of this year. So kind of that’s the combination of large project slowdowns that I talked about.

Okay. And we’re looking for I-4 to reach profit recognition in ’16 now?

No, I think that our anticipation is that it will progress as planned. We’ll move forward in 2015 what the expectation that will probably have some type of recognition on that job in 2015.

Okay, okay. And then last question for you just on weather in Q1 and so a lot country having some pretty severe winter weather, clearly last year was pretty bad as well. So just any kind commentary in Q1 in terms of project actually given the winter weather?

Well Nick it’s interesting, because when you cover the whole country, you get the good, the bad and the ugly every single day with weather. So certainly in the Northeast and the Southeast and the Midwest were slow, because of the weather. But then again on the West Coast for the last month, it’s been dry, unusually dry. So we got a good start on the West Coast. So that’s the advantage of having a diversified geographic businesses, you’re going to be slow in some areas and have the benefit in another area. So probably pretty much as planned right now. I would say though one of the key factors we’re looking at in and the East is how quickly they come out of this winter weather. And we typically do not anticipate a great deal of work in the first quarter in the East or the Northwest due to the weather in the Midwest and hopefully by the end of March, Mother Nature cooperates and we’re able to get back on the ground on most of our projects at the end of March or early April.

Okay, that’s great. Thanks for taking my question.

Thanks Nick.

Our next question comes from Jerry Revich with Goldman Sachs.

Hi, good morning.

Good morning, Jerry.

I’m wondering Jim if you could just frame out the longer term outlook for PPP projects. I know you have some better visibility longer term on those and you probably did a couple of years ago. Can you just provide the outlook beyond ‘15 based on the pre-bid work that you’re doing, how does that look?

Yeah, that’s a good question Jerry. There is no doubt that PPPs probably got partnerships, so those of you that aren’t aware of the terminology, there is no doubt that it’s ramping up and it’s ramping up rapidly. One of the things that I will say is that, I see more and more and more of this occurring Jerry and I see more of the alternative financing mechanism coming into the play. Certainly TPI has a large play on that and certainly the next highway bill will have another large play on that. We are looking that trying to [indiscernible], we are looking at our state and our agencies are becoming more sophisticated and this is a big plus for PPPs because they are understanding that there are alternatives to having 100% funding upfront. And with that I would say some of the smaller states are now getting into the PPPs and that’s going to be real positive. So I see nothing but PPPs sector actually improving and increasing over the next 12 to 24 months.

And is it possible to get a sense for, I guess ultimate magnitude of work that you are looking at that could be awarded back half ‘15 or 2016 on those types of projects and just compare that to the bid activity we’ve see more recently, just to frame for us whether the opportunity is expanding?

I would say this, there is a host of them that are on the list to be bid in 2015 and certainly for us it depends on if we are successful on the projects and we’ve have been very successful on PPPs to-date certainly the latest being the PA 500. So I think the key ingredient here is going to be really just what jobs comes out to bid and when they get awarded. So I guess my point would be I don’t have a number, they are incorporated in that $15 billion to $20 billion number over the next two years. PPPs are part of those large projects.

Okay and in terms of just the timing of awards in 2015 on some of the larger projects can you talk about your expectations, is there anything coming up in the early part of the year or as you alluded to a moment ago is most of the activity back half weighted?

Well, no, the back half weighted, let me if I can pull up that little bit. There are several jobs that have bid and we are waiting for results on and there are jobs that we are in negotiation phase that we are waiting to actually have signed contracts on. So those contracts when we actually sign them will get booked at that point in time. So I think there is some real positive opportunities in the first half to actually get them booked and in the backlog. There is also a host of projects that we are bidding right now that depending on how quick they turnaround would most likely be put into backlog in the third or fourth quarter. Typically it takes three to six months to get the large projects in to backlog. So outside of the ones I mentioned, which is about $600 million of backlog, between the PA500 and the other alternative work, the remainder of the large projects would not be probably put into backlog until the second half of the year.

Thank you very much.

Thank you Jerry.

[Operator Instructions]. Our next question comes from Alex Rygiel with FBR Capital Markets.

Thank you. Good morning everyone.

Good morning Alex.

Jim, could you quantify what’s GVA’s portion of the $19 billion large project bid line is, in pipeline

I’m sorry, try it again, Alex.

The $19 billion that you mentioned sort of as your large project bid pipeline, what portion of that would be GVA’s sort of own teaming kind of portion?

Yes, typically what I mentioned it was somewhere between 35% to 50%. So you could say little less than half.

Okay and what is GVA’s traditional win rate in T&D.

Actually pretty darn good in T&D and again those are all done with mostly private customers. So it doesn’t have the open results that you might kind of know in a typical bidding environment. So sometimes they even shelve projects, sometimes they delay them, sometimes they add on to your projects. But I would say we are one of only maybe a couple, two or three bidders and we certainly get our share.

And lastly, are you seeing any irrational bidding on the large projects, either from domestic or international participants?

Well, Alex absolutely, I see it all the time. I see every once while a project will get some numbers that we just can’t comprehend. And I don’t think it’s just from one sector international or not, but I do see the trend across the board of prices increasing in the large projects business because I think there are several reasons for it, first of all it’s been a robust market and people have got nice backlog. Most of our competitors have nice backlog just like we do. And also these jobs are getting larger and with the large size of these projects, the risk goes up and therefore as I mentioned in the script as well that the expectation of a return comes back to be -- has to higher as well. And the complexities of these jobs are certainly very complex compared to the -- what they used to be five years ago. So yes, I see the market stabilizing actually and I see really our competitors bringing up their expectations to meet what we've been saying are our expectations which are mid-teen margins in this part of the business. And I think that you're going to see the whole market rise with the tide.

That's great to hear, good luck next year.

Thank you.

Our next question comes from Michael Dudas with Sterne Agee.

Good morning, Jim and Laurel.

Good morning.

Good morning Mike.

First question on the unresolved issues of one out of five were resolved. Did that one meet your expectations and the kind a preliminary guidance in numbers you put forth is that assume -- what's that assume relative to those, the timing and the proceeds of those types of awards?

Okay, so first of all Mike, yes the resolution that we were able to capture in the fourth quarter didn't meet our expectations. And typically as a note relative to that kind of a thought, we typically don't resolve them unless they meet our expectations. And that's one of the reasons why it tends to take so long, is that we feel very strongly that we want to be fair and open from the beginning and if we resolve the dispute at something less than we feel is due to us, we typically take it all the way through the judicial system because of the way we approach it from the very beginning. Now as far as the other four unresolved and actually a longer list than that, we do probability weigh them and look at them when we look at guidance, certainly not at the high end, certainly not at the low end, but we probability weigh them when we look down the road.

Fair enough and my follow-up Jim is just to clarify you said in your remarks about potential highway bill. You said end of year you are talking calendar year, or government fiscal year and on top of that, what's your observations or what's happened since November elections where we are today and what your contacts or lobbyists are imparting to as how we get there relative to agreement -- on a funding side.

Okay first of all I am going to give myself some wiggle room that's why I said the end of the year. And for those people that aren't really insiders on what's goes on, on the Hill there, there fiscal year would be September 30th. So certainly there is a three month gap in the fiscal year versus the Federal fiscal year versus the calendar year. So I gave my little room to maneuver there I said 2015. I do think that what I hear is this Mike that chances are that we're not going to get something between now and the end of May. There is a across the hall, there is the Senate and the House, the T&I committee and the EPW committee is the lead or the lead committees relative to a federal highway bill. They are basically in agreement that it needs to be a long-term highway bill, it needs to be Index of some nature and it needs to be -- it needs to have growth attached to it from where we are today at the $40 billion level. So that's all good. And that long-term visibility is a huge play for the states. That's what they need to get themselves the confidence to put work on the street. So I'm glad to hear that that everybody is focusing on a long-term build, not a patchwork one or two year build. Now obviously the one thing that has been kind of struggling for everybody is how do you fund it. And we're finding ways now, we're hearing that the repatriation, the gas tax, everything is back on the table. And that's good news but what we are also hearing is that the Highway Trust Fund will need an infusion before September 30th. It will be able to support itself through May. It will likely get into a significant issue on its balance sometime in Late August and maybe even in July. So the Congress is going to have to make some movement relative to keeping that Highway Trust Fund fall in the summer. That will help be another catalyst for creating a longer term resolution and certainly one of those resolutions could also be an attachment to the general fund, which I mentioned in the last quarter is how most countries actually focused on infrastructures they consider to be a priority. So it is actually part of the general fund rather than an independent funding stream. So realistically everybody is kind of getting to an agreement today on long term indexed increases, everybody is in agreement that it need to get done in 2015. My concern is I don’t think the funding issue is going to get resolved in May, it could get resolved by September but what I said was the end of year.

Jim, I appreciate that. Thank you very much.

Thanks Mike.

[Operator Instructions]. Our next question comes from Brian Rafn with Morgan Dempsey Capital Management.

Good morning everybody.

Good morning Brian.

Jim, could you just give us a little bit of visibility or sense going into 2015 versus maybe going in to 2014, what the smaller construction, the branch, the old branch turn business looks like, whether that be state highways, county highways, industrial sub divisions, what does that business look like, your backlog is up about 4.63% net, give us a tone as you go into ‘15?

Yeah, that’s really a good question relative to what we consider obviously the largest portion of our company, Brian. So couple of things you mentioned backlog’s up which is a good thing. I would say that as you noticed in our results, margins are up and that’s really important in this business, to see margins creeping up annually really sets the tone for a better business then what we’ve seen many years. So the construction part’s up and I think the other part that we ought to really pay close attention to is the materials business. Those margins are up significantly from where we were last year and we expect that business to get better and better and better as 2015 progresses. We got a really nice backlog in our materials business which we don’t really capture in any kind of information and we consider to be backlog relative to tonnages and things of that nature, for [indiscernible] aggregates. I think it’s a healthier market then it was 12 months ago and I also think we’ve done a couple of things, to position ourselves substantially better brand. First of all we’ve diversify our overall portfolio in the construction area, by doing some mining work. Now we are doing oil and gas. When I say oil and gas, somebody might say well that’s not a very great market today, well the kind of work that we are doing is maintenance in a lot of the refinery facilities and things that have to be done and that is actually a very strong business. And the mining business even with some of the pricing structure changing over the last 12 months we are starting to see some work that is right in line with our heavy silver business that’s growing as well. And then the other thing that really focuses on the construction business is our T&D business. Most of our T&D work is located in that construction segment and we are hoping we will get some of the bigger work that will move it into large projects as well. But that business is actually quite strong. So I actually think the construction business is in a better, substantially better position than it was 12 months ago.

Okay, good answer. Can you just run through some of the projects. I didn’t maybe catch your opening remarks, some of the specific projects on heavy silver side?

Well, I can. Typically I’ll give you just a small list of some that we’ve got going on. Let’s see here, we’ve got $1 billion job in corporate bidding with Harbor Bridge, we’re just still online for the Purple line which is several billion in Maryland, we’ve got work in New York City, the Grand Central Terminal station is coming out to bid, that’s $0.5 billion. There is another large project going on in Houston with the Grand Parkway this year, that’s closing in on $1 billion. We’ve got some nice tunnel work that we are bidding across the country as well. Those jobs are little smaller somewhere in the $200 million to $500 million range. We are seeing work out in the west. We are seeing some work in the Las Vegas area which is really nice to see, that market come back after it was hit very, very hard during the recession. There is actually $500 million to $600 million project we are bidding there. We are actually bidding another $1 billion job in the Phoenix market on the 202 Loop. So that’s another nice sizable job. We are seeing work in -- let’s see here in Colorado, we are bidding more work there, we are actually bidding a $1 billion job out in Los Angeles too. So as you can tell we are bidding all over the country.

Okay, you guys have been very, very measured, a lot of discipline in what you guys used to say getting bids right on bid day, even going back to Bill Dorey’s day, when you talk about changed orders and unresolved claims as you guys get into a lot of big design build. Are you seeing any higher frequency of change orders or unresolved claims versus where you might have been four, five years ago, because as your business becomes more complex, as the progress are more complex are these unresolved issues more complex?

Okay. Well there are two questions Brian and I think it’s a good observation on I’ll call them the mega jobs, because they’re certainly more complex and they certainly, as we get into design build finance and all the different areas that bring complexity to this work, there are more issues. I will say this though that in the majority of our work we do not have big claims. We work very hard with the owners to resolve them as the disputes arise and with the hundreds of jobs that we have across the country, having five large claims outstanding at the end of last year really suggests that almost all the time we’ll resolve them as they’re going on. Now the problem is that as they get significant size than, if they aren’t resolve quarter-to-quarter than sometimes you see some financial ups and downs. And I think that’s part of what we try to disclose to our shareholders every time is that you have to expect that. It’s going to go up and down by the quarter. But no, I don’t think that the claims are necessarily getting more numerous, but I do think there are larger because of the size of the jobs.

Okay, thanks guys. I’ll get back inline. Thanks.

Okay, Brian. Thank you.

This is end of our question-and-answer session. And now I would like to turn the call back over to our host.

Okay, everybody. Well, thank you for questions and again I want to congratulate the Granite team across the country on the record 2014 safety performance and our continued focus to ensure that all of our employees go home safely each and every day. I look forward to working with all of you in 2015. To all of our investors please do not hesitate to reach out to see if we will be able to make it your way soon. We’ll be in L.A., we’ll be in San Francisco over the next week. And finally, Laurel, Ron and I are available for follow-up questions today if you have any further questions. So thank you everybody.

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.