Major Contractor Discloses Financial Misstatements
General contractor and construction materials provider Granite Construction said its 2017 financial statements can't be relied upon because of misstatements.
In a late July filing with the Securities and Exchange Commission, the Santa Cruz County, California-based company also said its 2018 annual report and reports for the first three quarters of 2019 shouldn't be relied upon due to misstatements.
Granite is one of the largest construction and construction materials companies in the U.S., reporting a 2018 revenue of almost $900M and earning work on big projects like Mission Rock in San Francisco.
Granite's disclosure is its second of the kind and resulted from an independent investigation into forecasts for its heavy civil operating group. In its first filing, Granite said it anticipates its corrections will result in a decrease in the company's net income for 2018.
The conclusions were drawn by a company audit committee that found forecasting for its heavy civil group, which includes large transportation and infrastructure projects, didn't adhere to its standard operating procedures for forecasting and risk management.
Granite said in its filing it is working to correct its financial statements and that it intends to file its reworked statements "as soon as practicable," but it is right now unable to estimate the amount and effect of restatements needed for 2017 through 2019.
Granite Construction declined to comment beyond its recent disclosures.
The company has faced losses in its heavy civil group. In Q3 of last year, the group saw a $69.3M loss, which CEO James H. Roberts said was primarily driven by disputed work, though the company hasn't identified its disputed projects.
The company said last year it will move away from megaprojects in its heavy civil division. It has yet to file year-end financial statements for 2019 or for the first two quarters of this year.