May 8, 2012
Operator
Good day and welcome to the Granite Construction First Quarter 2012 Earnings Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to turn the conference over to our host today, Ms. Jacque Fourchy, Director of Investor Relations.
Please go ahead, ma'am.
Jacque Fourchy
Good morning, and welcome to our First Quarter Earnings Conference Call. I'm here today with our President and CEO, Jim Roberts; and our Vice President and CFO, Laurel Krzeminski.
Jacque Fourchy
Before we get started, I'd like to remind you that this conference call will contain forward-looking statements that should be considered in conjunction with the cautionary statements contained in our earnings release and in our most recent SEC filings. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from these statements.
Jacque Fourchy
Granite assumes no obligation to update any of these forward-looking statements or other information. Please see our filings with the SEC, including our most recent annual report on Form 10-K, for a discussion of the specific risk factors.
Jacque Fourchy
With that, I'll turn the call over to Jim.
James Roberts
Thank you, Jacque, and good morning, everyone. First and foremost, today, I would like to emphasize how appreciative I am of our employees across the country for their hard work and commitment to Granite.
They continue to meet the challenges that we and the industry are facing, and I could not be more proud of our team. It is thanks to them that this past quarter we were recognized, for the third year in a row, as one of the World's Most Ethical Companies by Ethisphere Institute.
This recognition means a lot to us, not only does it underscore our core values; it is a testament to the way that we have done business for the past 90 years.
James Roberts
While we were fortunate to have good weather that allowed many of our business units to work throughout the quarter, it's important to remind our listeners that the Construction season in the West does not typically get up and running until the second quarter. New projects, for instance, that are awarded in the fall are often not scheduled to start until April or May.
James Roberts
Additionally, starting new projects early in the year carries risks and potential additional costs in the event we have to mitigate for weather-related issues. So mild weather can help us.
There are some seasonal aspects inherent in the first quarter and that are important to understand.
James Roberts
In general, we were pleased to see that the bidding environment continued to be very active throughout the quarter. Included in new awards through March 31 is the $230 million US 36 project in Colorado, of which our share is $115 million; as well as a $53 million highway project in Southern California; and a $56 million streetcar project in Arizona, with our share of the project valued at $29 million.
James Roberts
In terms of our existing backlog of work, the vast majority of our portfolio has performed well across the country. Starting in the East.
The Queens Bored Tunnels and Structures project is making significant headway with 2 of the 4 tunnels complete. We are mining the third and fourth tunnels as we speak.
With almost 2/3 of the project complete, the Western Wake Freeway project in North Carolina continues to meet all major milestones. The Houston Metro Light Rail is making significant progress as well and is currently a little under 50% complete.
The team is on schedule to complete 2 of the 3 main corridors by October of next year with the downtown portion scheduled for completion in 2014.
James Roberts
In the West, crews on the Mountain View Corridor project in Utah completed excavation for the main corridor and are scheduled to lay down over 200,000 tons of hot mix asphalt and 300,000 square yards of concrete paving this season. The project is currently 50% complete.
Design work on our newest project, US 36 in Colorado, is underway and construction is slated to begin this summer.
James Roberts
In line with our strategic theme to grow our Large Projects business, we are currently shortlisted on 5 megaprojects with contract values at or in excess of $1 billion each that are expected to bid later this year or early next year. These projects include the Tappan Zee and Goethals Bridge projects in New York and the Dallas Horseshoe, I-35 East and Grand Parkway projects in Texas.
In addition, we have been shortlisted of the $250 million I-275 project in Tampa and the Garden Parkway East and West projects in North Carolina, both valued at approximately $300 million. We're also close to tracking several opportunities in the $100 million to $300 million range that could provide additional opportunities later this year.
James Roberts
Okay. Now for a quick recap of where we are with the Highway Bill.
As most of you know, we are currently operating under a ninth extension of the Federal Surface Transportation Bill, which expires on June 30. Today, House and Senate leaders begin conference committee negotiations on what we are hopeful will be a 2-year Highway Bill, but at a minimum, maintains current funding levels.
The most significant outstanding issues for the conference committee to resolve are the proposed inclusion of the Keystone pipeline, and as always, funding sources for the bill.
James Roberts
The fact that there appears to be recognition from all sides that the Transportation Bill needs to get done gives us some level of optimism that we will get a bill before the June 30 deadline. Quite honestly, I am disappointed that Congress is currently only considering a 2-year bill.
With that being said, 2 years is certainly better than what we have seen with these short-term extensions over the past 3 years. I look forward to the day when we have visionary leadership in Washington that will ultimately fully fund the development of our infrastructure over a long period of time.
I'm optimistic that this will occur in the foreseeable future.
James Roberts
Before turning the call over to Laurel, I'd like to address the recent news regarding the US 20 project in Oregon. As we stated in our press release last week, this has been an extremely challenging project for everyone involved.
Although we were confident in our position regarding disputes with the Oregon Department of Transportation, law suits are costly and time consuming, and we felt it was in our best interest to put this matter behind us. Solving this issue was a positive for Granite as it allows us to move forward with a full focus on growing our company.
James Roberts
So with that, I will turn the call over to Laurel, who will provide detail on our results by business segment and our outlook for 2012. Laurel?
Laurel Krzeminski
Thank you, Jim, and good morning, everyone. Looking first at the total company for the quarter.
Net loss per diluted share was $0.31 compared with the prior year's net loss per diluted share of $0.24. Revenues were $310 million compared with $257 million in 2011.
The gross profit margin for the quarter was 8% compared with 12% in the first quarter of last year.
Laurel Krzeminski
Looking at the segment detail. Construction segment revenue for the quarter increased 27% to $118 million, driven by a healthy volume of backlog acquired in 2011 and mild weather throughout the West.
Gross profit margin was 7%, up slightly from a year ago.
Laurel Krzeminski
Large Project Construction revenues increased 19% to $164 million. Gross profit margin was 14% compared with 23% a year ago.
As a function of timing, first quarter 2011 gross profit included the impact of reaching the profit recognition threshold on the Queens Bored Tunnel project.
Laurel Krzeminski
Finally, revenues for the Construction Materials segment increased $2 million to $26 million in the first quarter of 2012. The gross loss on materials sales was $6 million compared with $7 million a year ago, reflecting ongoing weak demand for materials.
Laurel Krzeminski
Selling, general and administrative expenses totaled $43 million, essentially unchanged from a year ago. We currently anticipate SG&A expenses for 2012 to be in the range of $170 million to $180 million.
Laurel Krzeminski
Our cash position remains solid. Cash and marketable securities totaled $367 million at the end of the first quarter, which includes $69 million associated with consolidated joint ventures compared with $108 million last year.
Planned capital expenditures for 2012 are expected to be approximately $50 million.
Laurel Krzeminski
The tax rate in the first quarter of 2012 was 28.9% compared with 41.9% in the first quarter of 2011. The first quarter of 2011 included a favorable tax settlement with the IRS for which we didn't have a similar benefit in 2012.
Looking ahead, we expect our tax rate at year end to be in the range of 27% to 31%.
Laurel Krzeminski
Turning to guidance. We currently expect revenue for the Construction segment to be in the range of $1 billion to $1.1 billion with a corresponding gross profit margin in the range of 9% to 11%.
We expect revenues in the Large Project Construction segment to be in the range of $1 billion to $1.1 billion with a corresponding gross profit margin in the range of 12% to 14%.
Laurel Krzeminski
Construction Materials revenue is expected to be in the range of $200 million to $220 million with a corresponding gross profit margin in the range of 7% to 9%. Noncontrolling interest for the total company is expected to be approximately $15 million to $18 million for the year.
Laurel Krzeminski
With that, I'll turn the call back to Jim.
James Roberts
Thank you, Laurel. I would now like to spend a few minutes on our strategic growth plan, which includes transforming and growing our vertically integrated business, growing our Large Projects business, diversifying our portfolio and optimizing our asset base.
I am pleased with the progress we have made in each of these areas over the first quarter, particularly as it relates to our diversification efforts. We are seeking expansion opportunities in the federal, industrial, power, rail and water markets to increase investment in business development.
James Roberts
In addition, we are actively pursuing the acquisition market with dedicated resources charged with developing relationships with firms that will allow us to expand in the new geographic territories, as well as in the new markets. The active engagement of our teams across the country in their day-to-day business, as well as the execution of our strategic growth plans, is both exciting and opportunistic.
This is especially true as we celebrate our 90th year anniversary in 2012. We are proud of what we have accomplished and are looking forward to a vibrant future for many generations to come.
James Roberts
And with that, I will turn the call back to our moderator, and we will be happy to answer your questions.
Operator
[Operator Instructions] And we have a question from the line of Avi Fisher with BMO Capital.
Avram Fisher
Jim or Laurel, could you sort of quantify how much of the ODOT charge is included in guidance?
James Roberts
Well, let me see if I can put the ODOT situation in a bigger bundle in just that. I think the way to look at it is we settled -- you saw the press release last week.
We settled -- what, a $15 million payment to the Oregon Department of Transportation. We had embedded that into projections for that job.
So really, the guidance includes that as a lost job, but it was mostly taken care of in previous forecast. So what would have happened, on the flipside, is if we have not had to make a payment of that size, we should -- could have had less than that amount fall on the bottom line.
That will not occur this year. But the full $15 million is embedded into our guidance and it is behind us.
And we are very happy.
Avram Fisher
And just so I understand, it was also -- it was embedded in guidance, but it's also almost been accrued, like this isn't incremental?
James Roberts
Yes. What happens is that when we project the lost job from an accounting perspective, we immediately take the loss on the entire projected loss.
So we had known over the last several years that the US 20 job was going to be a lost job for the company. And as we updated our forecast, we would take the additional loss in each of those quarters that we updated a loss forecast.
Laurel Krzeminski
So Avi, there's no significant impact to our financials this year.
Avram Fisher
Got you. Okay.
And it would have been included in the previous -- when you had previously reset the project?
James Roberts
Yes. And actually, we reset it several times over the last several years, so we're constantly -- was resetting and taking the loss in those quarters when we updated the forecast.
Avram Fisher
And then regarding, obviously, the claims and benefits in Large Projects, are there any that you can call out that are expected to hit in 2012?
James Roberts
Any claims?
Avram Fisher
I guess traffic recognitions is what I meant. I apologize.
Laurel Krzeminski
Yes. We have 5 jobs that we expect to reach profit recognition this year, Folsom Dam, the Leroy Selmon redecking project in Florida, Chisholm Trail, our Guam job and Miramar job.
So we expect that to be in the second half of the year. So right now, if we'll be issuing our 10-Q later today, you'll see that we have Large Project revenue with no profit of $18 million this year.
Last year at this time, we had $47 million in revenue with no profit on it yet.
Avram Fisher
Okay. And the expectation of this profit is included in the guidance, I presume.
Laurel Krzeminski
Yes.
John Rogers
Okay. And finally, just one quick question.
I'm curious about what you're seeing in terms of material and labor costs. We're seeing, in certain areas, diesel costs are coming down but asphalt costs are growing.
It seems like wage rates are holding flat. I wonder if you could talk a little bit about those.
James Roberts
Well, let me talk about diesel. Diesel has come down a little bit.
And again, for us, we do forecast somewhat of a futures pricing on diesel side, so I don't think whether it comes down slightly or goes up slightly that it has a significant impact on our company. Asphalt, we do see that moving based on supply and demand.
And again, majority of our asphalt is from a fixed-price basis, so I don't see the ups or downs in the liquid asphalt market having a significant hit or bottom line add this year because the majority of it is firm priced for us on a project basis, Avi. Labor, overall, we're seeing in the neighborhood of 3% increases in a lot of our labor collective bargaining agreements, 2% to 3%, so there's a slight uptick in the labor market.
But again, those are anticipated. They are negotiated, and they are embedded into the costs of doing our individual projects.
Operator
And our next question is from the line of Joe Ritchie with Goldman Sachs.
Joseph Ritchie
So Jim, maybe you can talk a little bit more about these large projects that you're tracking. You've been shortlisted, you said, for $5 billion-plus projects.
Maybe tell us a little bit about the funding for those projects and your confidence that they’ll move forward by the end of this year or early next.
James Roberts
Well, again, we've been shortlisted on a whole bunch of projects. The 5 mega ones that I mentioned that are the $1 billion-plus size projects, I think I mentioned the Tappan Zee Bridge and the Goethals Bridge in New York, the funding -- the intention there for the Tappan Zee Bridge is that it will be funded.
I think they're going through some funding mechanisms now to make sure that it is funded. The Goethals Bridge is very possibly going to be a little bit of a public, private partnership procurement process, so there will be some private funding to move the Goethals Bridge forward.
That's intended to bid at the end of this year. The other ones I mentioned were Grand Parkway in Houston.
That is a $1.5 billion design-build project. It is fully funded by Texas DOT.
I think the other one I mentioned was the I-35 East in Dallas. That's another $1.5 billion project that is fully funded by the Texas DOT.
And the other one I mentioned was the Horseshoe project, the Pegasus Horseshoe project in Dallas. That's about a $700 million design-build project that is also fully funded by the Texas DOT.
So out of those, the 2 New York jobs are the ones that still have some funding issues assigned to them. Tappan Zee, they're looking to try to get that fully funded prior to the bid, as I understand it.
But the Goethals Bridge will take a private partnership funding effort.
Joseph Ritchie
That's really helpful color. And perhaps just shifting gears a little bit, on guidance, you guys did a pretty wide guidance range for 2012.
You just take the lower and upper ends of each one of your expected ranges. So just curiosity, what are the kind of key swing factors that gets you to either the lower or upper end of those ranges?
James Roberts
Well, really, the key factors are in the Construction and the Materials business. Again, those are current businesses.
And those are -- we're at the very beginning of the year. We're in a heavy bidding season.
Typically, the heavy bidding season is in the second and third quarter. And then we typically build out a big portion of that work during the same calendar year.
So that will just depend on how successful we are in the bidding environment over the next, I'd say, 3 to 5 months. And that's why we try to give a little wide range in the Construction and Materials business at this point in time.
The Materials business on the other side is the -- from the external sales side, we are starting to see a little uptick in the private market. And if that continues, we could get to the upper range if we see some private markets starting to break loose a little bit.
There's a little bit of a light at the end of the tunnel today. So we'll see where that goes over the next several months as well.
The large project range really comes down to how well we build the work that we have under contract today. We know the work that is on our books that will affect our earnings.
The question, obviously, is how we perform over the next 6 to 9 months. We'll determine whether we're in the low end of the range on Large Projects or on the upper end of the range.
Joseph Ritchie
Okay. And then just on the small projects, specifically, I take a look at your guidance range for the year, what I think as interesting is that it's actually lower than what you guys were able to do last year.
And obviously, the competitive environment has remained pretty fierce, but it surprises me that it seems like it's actually gotten slightly worse. So maybe if you can provide some color on that, that would be helpful.
James Roberts
Well, I think one of the things that is important is that last year, the second half of the year, we performed very, very well in our Construction segment. And as we go into the year this year, so far, we're seeing it very competitive.
Again, the reason that the guidance is out there at that point right now is that it's still a lot of unknown. So it will really depend on the success level we have over the next 3 or 4 months in the bidding.
Laurel Krzeminski
I would say, Joe, we're not seeing it get better, we're not seeing it get worse. It's pretty static.
Operator
And our next question is from Nick Coppola with Thompson Research Group.
Nicholas Coppola
I have a question for you on your Large Project revenue guidance. It implies a pretty big year-over-year increase.
And obviously, it's kind of lumpy by nature. Are you assuming that you're going to win any of these big projects you're talking about?
Or is it more working off, I guess, backlog that you have? And what is the variance of, like, I guess you could -- looking at 5 megaprojects, you could win, potentially, none of them or you could win several of them.
It just seems like, I guess, there could be a pretty big swing factor there. Any thoughts about that?
James Roberts
Yes, Nick. I think the key ingredient on the Large Projects is that we are right in the middle of building a whole string of projects, and we're in the heart of building.
And I can list off 9 or 10 projects that we are undergoing today, including the QBT, the Houston Light Rail, the Western Wake in North Carolina, Mountain View Corridor in Utah, the SR 520 in Washington, the Folsom Dam in Sacramento, US 36 will be going in Colorado, and the Selmon redeck job in Florida and the Chisholm Trail job in Texas. All of these jobs are going to be in full swing and are in full swing this year.
So that's where the revenue is coming from. It has not been -- we have not incorporated the great deal of revenue from the new projects.
A lot of them will be bidding in the second half of the year. They will be going underway.
And they really will not be impacting the revenue a great deal for the year.
Nicholas Coppola
Right. That makes sense.
And then in the Construction segment, can you talk a little bit about what margins look like on new awards? I guess there was a strong performance last year, but still, I guess your margin guidance implies lower year-over-year gross margin.
What do new awards look like? Have we turned a corner, or getting any closer to turning a corner?
James Roberts
Well, I think that Jacque mentioned earlier that the Construction segment is a still under fierce competitive environment. And I think our guidance is where the new awards are coming in at today, the key ingredient for us will be to beat those estimates and try to increase those margin expectations.
But it is a fiercely competitive environment in the small work today, and I don't see the current work that we're bidding changing very much at all.
Operator
And our next question is from the line of Jack Kasprzak with BB&T.
John Kasprzak
With regard to the question on the guidance, Jim, I mean, isn't it usually the case that early in the year, it's maybe a little more competitive as yourselves as maybe competitors are trying to get some backlog built and it's really more into the middle or latter part of the year that you'll get a better view of whether that competitive environment's different or not?
James Roberts
Well, I would hope so. That's -- Jack, you've been covering Granite for a long time, and that historically has been the case about people like to build backlog in the first half of the year, and we've been able to pick up some really good backlog in the second half of the year.
I think that really depends on the overall amount of work out in the marketplace. And if we see the work bid, when it's supposed to bid, not be delayed, that might happen in the second half of the year.
I think that we are not planning on that right now. We are planning on it to be a fiercely competitive environment throughout the entire year.
But you are right historically, that we've been able to pick up some higher margin and some good backlog in the second half of the year.
John Kasprzak
Okay. One of the large projects, I think, has been mentioned in the past was not mentioned today is the Dulles Metro project.
Is that still on the list? Or where does that stand?
James Roberts
It is still on the list. And it should be bidding sometime at the end of the year.
I just didn't put it on one of the mega jobs, I probably could have because it is about a $1.5 billion job. So what I tried to do was put the ones on the list that I think had already had been shortlisted on.
But we certainly are pursuing the Dulles job as well.
John Rogers
I got you. And is your -- is Granite's participation in these various projects, I mean, it's typically pretty high in terms of your percentage participation.
Is that generally true here across the board?
James Roberts
Well, they vary dramatically from job to job, depending on our position. In some cases, we're the sponsor.
And in some cases, we are a minority partner. So typically, I mean, a good range on the average, I averaged them up the other day.
It's somewhere around 40% to 50%.
John Rogers
Okay.
James Roberts
On the average. When you look at them all up together, we're typically about 40% to 50% partner.
Laurel Krzeminski
Jack, to circle back on the list, we're waiting on the RFQ but expect to bid in 2013. So it's not on our...
John Kasprzak
I got you. So it's 2013 now?
James Roberts
Yes. It's been on 2012 for a long time, but it continues to get delayed a little bit.
It should be early 2013 assuming no other delays get named on it.
John Rogers
I got you. Okay.
That makes sense. And California, still seeing some relatively good flow of opportunities there.
I mean, that's obviously the epicenter of competition, but in terms of just the flow of projects, I think it's been pretty good. Your Construction backlog has been performing well.
Is that still the case?
James Roberts
It is. California has a lot of work to bid between now and October.
The key for us is to get our share. And so yes, I think it's very active.
It is very competitive though, as you said. So -- but there is a lot of work to bid in California, both in the Construction market and in the Large Projects market.
Operator
[Operator Instructions] And our next question is from the line of John Rogers with DA Davidson.
John Rogers
Most of my questions relative to margins have been asked, but in terms of the Materials business, are you expecting a need for private sector? I mean, you mentioned it a little bit, but is that really what -- I mean, to get margins back, what they've been historically?
James Roberts
John, I think that the answer to that is yes. If we track the private market sector of new permits and starts relative to our Materials business, there is a direct linkage.
And we need the private market to really have that Construction Materials business get back to the expectations that we have for margins.
John Rogers
All right. And Jim, specifically the housing sector?
James Roberts
Housing sector drives -- although I would say, the commercial does help because it usually follows the residential. But we do look at housing starts as really the precursor to bringing in the Materials back online.
John Rogers
Okay. And then you mentioned a little bit in your opening comments about acquisitions and being out there.
Can you give us a sense how close you are to doing something?
James Roberts
Well, we're active in a lot of respects in most of those sectors. We are out developing relationships with firms, not only from an acquisition standpoint, just from a partnership standpoint, to get into these sectors.
Our business development team has been very, very busy. From an acquisition standpoint, we're actively pursuing acquisitions today, and I hope that there's a chance that we could perform an acquisition in 2012.
And if not, certainly, we are hopeful in 2013.
John Rogers
Okay. And in terms of some of the private market sectors that you mentioned, I mean, is there an opportunity that we could see some announcements on project awards or some of significant size this year?
James Roberts
Well, we're pursuing a lot of them in the industrial side. I think there's a -- you probably don't see it.
And they don't come to the forefront in the size of a large project. But we're now doing work for ConocoPhillips up on the North Slope.
We're working for Tesoro up in the Seattle market. They're construction jobs.
They're not large project jobs, but they are of nice size jobs. And we have made some really good inroads into the power market with some smaller work, but they just don't come out to the individual projects because they're not slated as large projects.
John Rogers
Okay. But are there larger project opportunities this year that you bid on?
James Roberts
I'm not sure.
John Rogers
Or [indiscernible] negotiated?
James Roberts
Yes, I think they're negotiated. And most of them are under the $75 million range, so they would probably fall on the Construction segment, John.
Operator
And our next question is from the line of Brian Rafn with Morgan Dempsey.
Brian Rafn
If you look back -- maybe a strategic question for you Jim, if you go back 10, 15 years, the branch business, the turn business, what you guys now call Construction, was you work with private sector, 60% to 70%, 75% of the business, you had a nice housing run from 1991 to 2006. If you look forward -- going forward, with all the infrastructure demands, what we would kind of say the large project or the heavy civil, do you see more of a balance towards the hot larger project business in that branch business may have had its day in the sun and it's going to be a little more even?
Or do you see a resurrection at some point of the old turn business coming back?
James Roberts
Well, first of all, Brian, I'm wondering why you're asking me about 15 years plus ago. I'm assuming that's because I'm the old guy on the call here that's been around that long.
Brian Rafn
Yes.
James Roberts
Yes, there you go. No, I don't think that necessarily, we're looking that the branch vertically integrated business has really seen its day.
I think it will come back. And our strategic plan that we've laid out for the company going forward shows growth in that part of the business.
But I think that what we have done has suggested that we also are going to grow in different sectors as well. And that's why I laid out the water, the industrial, the power segments and the federal, is because I think that as we grow the company, we want to diversify our overall portfolio but I do think that our vertically integrated business will come back.
And I think that we are seeing some slight signs of private market resurrection today. And I think that for the overall economy to come back, that private market has to come back, and that will help fuel the future growth of our vertically integrated business.
So I think the day will come. I just think we need to be patient on that part of our business and diversify in the meantime.
Brian Rafn
Yes. Okay.
In some of that incremental, you mentioned kind of light at the end of the tunnel a little bit. Is that modest resurrection in that turn business, is it a resurrection in the private side?
Or would it be smaller state local highway jobs?
James Roberts
I would say private, the private side. I think there's -- when I said light at the end of the tunnel, what I was focusing on there was the private side.
I think the public side has its issues, plus or minus. I think the local entities are going to need to find out their own funding mechanisms and really redo their budgetary constraints relative to transportation.
And I think the states are starting to do that already and have already brought back and are focusing on transportation along with the feds. But I think that the private sector is starting.
There's just a slight signs out there that we are seeing some permits starting to come back in the housing market, which obviously it drives our Materials business.
Avram Fisher
Yes. Okay, okay.
If you looked at, and I think the question was asked, episodically, you've seen kind of the front-loading in the first quarter. Some of the regionals build backlog.
You guys kind of stand back a little and cherry-pick a little more and build backlog later towards the year. Could you give us a sense, was the pressure and the rapid buildup in some of the backlog in 2012 any worse than it was in 2011 or 2010?
Or has it been just kind of about the same?
James Roberts
If you're talking about how our backlog is performing relative to previous years, Brian?
Brian Rafn
No. I'm just talking about kind of just your overall competitive structure, not what maybe Granite has done.
But would you say 2012, that kind of fever pitch that a lot of the regionals will go out and build backlog very quick and are a little less price sensitive. Is that any worse in 2012 than it was perhaps competitively in 2011?
James Roberts
Well, I think every market's different. But overall, I would suggest it's very similar to what we've seen in the last 2 years.
Avram Fisher
Okay, okay. And then on the kind of the Highway Bill.
Is the TEA-21, is that kind of 6-year bill? Is that kind of, you think, historically gone by the wayside?
Or are we going to see more of a shorter 2-, 3-year build type going forward? Or do you actually see perhaps with some austerity in Washington, that we might get back to the old 6-year bills?
James Roberts
Well, let me rephrase that a little bit because I was -- I'm pretty about passionate this subject, Brian, and that's why I brought it up in my script. I think where we're at today with the conference committee, which is beginning today, the House brings in a 90-day bill to get us through September 30 and then the Senate brings in a 2-year bill, and thank you to Barbara Boxer for doing that, on the Senate side, so the best we're going to get now is a 2-year bill.
And I think that, that is not good in the long run for the infrastructure improvements to our country. I think we have to get back to a long-term bill.
Otherwise, we are not going to be able to plan as the individual states and the municipalities need to plan for long-term growth for capacity and for maintenance. So I think we have a short-term issue relative to getting a 2-year bill passed.
I hope we do get a 2-year bill passed. I think we have to get down to a long-term visionary bill that allows us long-term vision and significant growth in the investment.
Avram Fisher
Okay. And then the $1 billion projects you talked about, Tappan Zee, Goethals Bridge, I-35, Garden Park, Pegasus, the Horseshoe, are those all design build?
James Roberts
Let me see here. I'm looking at them right now to make sure that I answer that correctly.
I think they are. I'm not sure about Goethals, if that is a design build, although I think it is probably is.
It's a PPP. Garden Parkway is, I 35 East.
Let me see here. I'm not sure if that one is, the Horseshoe project.
It is a design build. So most of them are design builds, yes.
And I'm not positive on a couple of them. But yes, I think in general, design builds on Tappan Zee, design build on Grand Parkway, design build on the Horseshoe.
I-35 East and Goethals, I'm not sure.
Brian Rafn
Yes. Okay.
And if you look kind of the large -- I'm just curious, kind of from an engineering standpoint, on the Large Project, the old heavy civil, are you seeing a different or bidding out a different mix of projects, in other words, if you might have done more bridges and highways in the past and now you may be looking at dams or canals or subways? Are you doing any -- in addition to going in the water, industrial and power, are you doing any mix of type of projects different on the transit side?
James Roberts
Well, I think that's a great question because evolutionary, in our history, Granite has built our company around certain types of civil projects. There was a day when we started in California and built the California aqueduct system as a big part of the growth of our company.
And then we got into the water system relative to dams, and we've started some large dam projects throughout the Western U.S. Today, as I say, if you look at what we're seeing here, you look at Tappan Zee and Goethals as being 2 really updating huge structures that are no longer really meeting the needs of capacity and certainly maintenance, and then you're looking at capacity issues on the other projects, so today, we're seeing transportation projects that are really looking at capacity issues.
And I'm hoping that the day comes back to where we are also building big water projects because I think that's going to be a huge market going forward. But it is -- it does change over a period of time.
And Brian, by the way, all 5 of these jobs that I mentioned, as I look into them in more detail, they are all design build.
Brian Rafn
Okay, okay. Fair enough.
And I also asked in the past, are you continuing to use the mobility of crews around the country in 2012? Is that an ongoing evolution versus what you might have done in 2011 or 2010?
James Roberts
We are continuing to try to have our people mobilize and move all over the country. They are doing more than what we have in the past.
It is still difficult. As we mentioned, mobilizing people with the housing market the way it is today if they own homes is very difficult.
But yes, we are. Our crews are moving.
Our project managers, our project engineers are moving throughout the U.S. to the projects that we have procured.
And I think that's a real positive for us to be able to build all types of work in all parts of the country.
Brian Rafn
Yes. And then I'll just give you one more.
I've asked in the past on kind of vertically integrating East of the Mississippi River with quarries and asphalt. Obviously, land is not -- it's a little more constrained versus where you are out West.
Is that -- is it a pricing issue on that? Or is it contingent on maybe a rebound in the turn business and the private sector versus doing a deal out East?
James Roberts
Yes. I think, Brian, for us for doing a deal out East is just finding the right opportunity.
We'd love to have a vertically integrated business in the East. We just have to have the right opportunity come our way, and we would seriously look at it.
Operator
And we have a question from the line of Joe Ritchie with Goldman Sachs.
Joseph Ritchie
I just had 2 quick follow-up questions. First, Laurel, I know maybe too early to tell at this point, but do we have a sense for, looking out into 2013, whether there are certain projects that are going to hit the profit recognition threshold in that period?
Or is it still too early?
Laurel Krzeminski
Well, obviously, potentially new ones that we get this year, we can get back to you on that, I don't have -- yes, well, yes.
Joseph Ritchie
Okay. I can follow up after the call.
That's fine. And then the last question I had was, this quarter, you guys had mentioned that there was somewhat of a favorable impact to weather.
Did you guys try to quantify that at all?
James Roberts
We really don't. I think that certainly, the weather was -- actually, January and February were good.
March was wet here in the West. But we don't try to quantify it because as I mentioned in the script, Joe, a lot of times, they just don't start the work, we don't plan to start to work, and therefore, even if it's good weather, we don't start to work.
It's very difficult to quantify. I think the key ingredient is we did get more work done.
You saw that from our revenues in the first quarter. So that's probably the best way to quantify how much the weather impacted us.
Operator
And we have a question from the line of Avi Fisher with BMO Capital.
Avram Fisher
In your 16% at the medium revenue guidance in -- I'm sorry, in the revenue guidance for Materials, which at the median, is down 5%. Can you talk a little bit about the price versus volume mix?
Because it looks like prices are going up in the California aggregates market.
James Roberts
Yes. Avi, I think that that’s a good observation.
I think that we see some slight uptick in the prices, not a dramatic uptick but in the 2% to 3% range. Again, for us, it is so early in the year for us to be able to forecast and give guidance on the volume.
You've got a pretty wide spread there. I think we're at the top end of that range last year.
I think we gave similar guidance at this point time last year. So really, it will depend on how successful we are in the bids going forward.
Remember, our Construction business, our Materials business, we provided a lot of materials to the third-party contractors and depending on how successful those bids are in the first and second quarter will dictate our volume going forward. Slight uptick in pricing, pretty good market overall, we need the private sector to come back to really get that thing moving.
Avram Fisher
But did anything happen last year? I mean, there wasn't too much private sector activity last year that would have explained why volume would be down year-over-year?
James Roberts
Well, again, I think it's pretty much where we thought it was last year at this time. And in the fourth quarter, we did see an uptick in some private sector.
That's why I said there is a little bit of at the end of the tunnel. We're a little cautious right now because that is something that we hope takes place, but we're not sure that, that private sector really is going to have the momentum going forward for the rest of the year.
So I think in the next quarter, we'll give you a much stronger guidance.
Avram Fisher
Is it appropriate to say that caution is kind of an overriding part of your guidance?
James Roberts
Well, I think anytime in the first quarter, we want to be cautious. And we have a little wider window there because especially in the Construction and the Materials business, there's so much what will be determined in the next 3 or 4 months in the bidding environment that we just don't want to be overoptimistic or to the point where we misguide you.
So given the wide range there, I think it’s very appropriate right now.
Avram Fisher
Understood. And just a quick follow-up on the Materials gross profit ranges, 7% to 9%, are you where you want to be?
Excluding the bigger market and the volumes, are you where you want to be in the capacity utilization and getting the right number of labor out on the -- at the aggregates facilities?
James Roberts
Can you restate that? I'm not sure I understood.
Avram Fisher
I guess at your margin guidance and materials, are you where you want to be in terms of capacity utilization and asset utilization on Materials given -- holding volume flat?
James Roberts
Well, absolutely not. I mean, I think that we're -- we have a significant additional capacity and utilization opportunities in our Materials business.
Remember, we built that business when we were in a much stronger Materials segment or timing. And no, we're undercapacity, underutilization.
Our crews are doing an excellent job trying to optimize our cost basis during these depressed times, but we have a significant amount of capacity and utilization opportunity going forward.
James Roberts
[
p id="-1" name="Operator" /> This concludes the Q&A portion of today's conference call. At this time, I'd like to turn the call back to Mr.
Roberts for closing comments.
James Roberts
Yes. Thank you, very much.
As always, we appreciate your questions, everybody. And we appreciate, again, all the hard work that our employees are doing.
They're doing a wonderful job during this very, very difficult times. We appreciate everybody's interest in Granite.
And if you have any additional questions, please do not hesitate to call us. Thank you, everyone.
Operator
Ladies and gentlemen, thank you for participation in the Granite Construction First Quarter 2012 Earnings Conference Call. This does conclude the program.
You may now disconnect. Thank you, and have a wonderful day.