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Granite Construction Inc (GVA) Q1 2021 Earnings Call Transcript

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Granite Construction Inc (NYSE: GVA)
Q1 2021 Earnings Call
May 7, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day. My name is Ailee [Phonetic] and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Granite Construction Investor Relations First Quarter 2021 Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Granite Construction Incorporated, Vice President of Investor Relations, Mike Barker. Sir, the floor is yours.

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Mike Barker -- Vice President of Investor Relations

Good morning and thank you for joining us. I'm pleased to be here today with Granite President, Kyle Larkin; and Executive Vice President and Chief Financial Officer, Lisa Curtis. Please note that today's earnings presentation will be available on the Events and Presentations page of Granites Investor Relations website. We begin today with an overview of the company's Safe Harbor language. Some of the discussion today may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are estimates, reflecting the current expectations and best judgment of senior management regarding future events, occurrences, growth, demand, strategic plans, circumstances, activities, performance, outcomes, outlook, guidance, backlog, committed and awarded projects, and results. Actual results could differ materially from statements made today.

Please refer to Granite most recent 10-K and 10-Q filings for a more complete description of risk factors that could affect these forward-looking statements. The company assumes no obligation to update forward-looking statements, whether they are results of new information, future events or otherwise, except as required by law. Certain non-GAAP measures may be discussed during today's call, and from time to time, by the company's executives. These include but are not limited to adjusted EBITDA, adjusted EBITDA margin, adjusted net income or loss and adjusted earnings or loss per share. Reconciliations of non-GAAP measures are included as part of our earnings press releases and in company presentations, which are available on our Investor Relations website. Now I would like to turn the call over to Granite President Kyle Larkin. Thank you, Mike. Good morning and thank you all for joining us on our call today. To start off the call, I would like to comment on our press release where we announced that we have reached a settlement to resolve securities litigation subject to court approval. Although it was a difficult decision, we concluded that it was in the best interest of the company, as well as our shareholders to move forward. Following court approval, we will be able to put this litigation behind us and focus on our business and people. Granite portion of the settlement is insurance is $66 million and we expect it to be paid from existing cash on hand. As Lisa will explain in further detail later in the call, despite this event, our liquidity and cash position remains strong. As I've discussed in previous calls, our core values guide us in our day-to-day operations and are serving as the foundation of our cultural reinvigoration. On the last call, I provided an overview of our sustainability core value and the efforts that are under way to drive sustainability forward at Granite. Today, I will touch on two more of our core values; safety and inclusion, and how we are integrating them into our day-to-day operations to drive desired behaviors. Granite's choice to continue to include safety as a core value is embedded in our culture and reflects our belief that the safety and well-being of our people, our partners and the public is our greatest responsibility. Every level of our organization supports our safety culture with training, planning and engagement. We approach every task with safety built into the process, and we do not sacrifice anyone safety to get the job done. While safety is front of mind every day at Granite, it is particularly timely to talk about our safety commitment on the heels of safety week, which is just concluding today. Safety week is an industry wide national event, and Granite was one of the founding members almost a decade ago. Across the country on Granite projects and in our offices, we conduct daily activities to reinforce and strengthen our commitment to safety. This week, I had the opportunity to visit Granite project teams and take part in safety meetings across the country. The planning and attention to detail that our teams presented in these safety meetings are impressive and demonstrate our focus on safety. Inclusion is a core value that was added this year, but it's been an important focus since 2019. Since it's a new core value, we want to provide additional details as to why we chose to recognize the importance of inclusion. Inclusion is how we build value in our company by welcoming contributions from all of our employees. Our differences enhance creativity and innovation to create a high performance culture and have a positive impact on how we achieve our business goals and objectives. At Granite, when we know the value of inclusion, we value and respect the workforce diverse and perspective, experience, knowledge and culture, and we are committed to an inclusive environment in which everyone feels a sense of belonging and can grow. To live this value, we must understand a couple of things. First, we know that diversity is the mix of our employees, our clients and our community and inclusion is how we make that makes work. We have made significant progress in our inclusive diversity journey, starting with our employee resource groups, Granite Resources and Opportunities for Women or GROW, and supporting and recognizing the veteran community for service. GROW advocates for and supports women who're mentoring, networking in career development, service supports and recognize employees that have served, and friends and family members employees that have served, and all branches of the military. We have also established executive inclusive diversity and multicultural councils, conducting leadership training and establishing relationships with historically black colleges and universities. In 2020, we had over 200 interns, and more than half were diverse. In addition, 1/3 of our executive team and nearly half of our Board of Directors are diverse. Looking forward, we will continue to create clarity around inclusive diversity by having dialogue concerning how we can be more inclusive. We will continue to develop talent and strengthen our talent pipeline at all levels, with a focus on women and people of color. And we will continue to build capability to training leaders and employees to challenge ourselves to be more inclusive. We know that having an inclusive environment doesn't happen overnight, it happens over time. I'm proud of our inclusion efforts and I'm excited about the culture we are creating here at Granite. Okay. Let's switch gears and talk about our business segments starting with transportation. The first quarter is typically our slowest quarter with cold and wet weather regularly hampering work in many of our markets. Even with the challenges of weather, I am pleased with the performance of the segment, not only on the top line, but also at the gross profit level due to good execution across our operating groups. Some good news to share. We continue to burn through the backlog of Heavy Civil Operating Group Old Risk portfolio with a minimal impact to gross profit during the quarter. This was a marked improvement over the last two years. The remainder of the segment, which is primarily comprised of vertically integrated projects also completed a solid first quarter, setting the stage for a busy remainder of the year. The bidding environment is strong with robust opportunities in our markets, resulting in an increase in our bid volume year-over-year. While we routinely share information about our larger project wins, we also continue to have success in winning the smaller to medium sized projects that are the foundation of our portfolio. The first quarter of the year is historically a very competitive bid environment with contractors more aggressively bidding to build backlog early in the year. We have seen this dynamic in the first quarter of 2021. We've increased bid volume and strong competition. As anticipated, transportation committed and awarded projects or CAP, decreased year-over-year with the shift in the portfolio as Heavy Civil Operating Group cap is burned and replaced with cap from our vertically integrated businesses, including best value procurement work. The extension of the FAST Act, the $13.6 billion infusion to the Highway Trust Fund for 2021 and the enactment of Coronavirus relief bills have combined to provide direct and indirect support for transportation funding. Funding is positive across our markets and we are hopeful that a federal infrastructure bill will be signed into law this year. Turning to the water segment. In the first quarter, we continue to see a recovery from the pandemic, but the deep freeze in Texas during the quarter interrupted the supply chain, resulting in a spike in resin costs. Resin is a product used in our torrentuous, secured [Phonetic] in place pipe rehabilitation business Granite Inliner. Although this segment was hardest hit by the pandemic, we are seeing an increase in bid opportunities, positive indication for the remainder of the year. As a result, water segment cap remains strong as of the end of the first quarter at $339 million. This figure does not include the recently awarded Leon Hurse Dam project in Texas for approximately $160 million, which will be included in our second quarter cap. This award is a component of the overall Lake Ralph Hall project, which will be one to Texas newest lakes and one of the state's biggest water projects in the last 30 years. Granite has a long history of working on complex dam projects and we are proud to continue this work on the Leon Hurse Dam. All levels of the government recognize the critical need to repair and support water infrastructure across the country, as seen in the ongoing discussion with the federal infrastructure bill and the Senate recently passed $35 billion water infrastructure bill. We have been successful in winning water infrastructure projects and there are multiple opportunities in the water market that Granite is currently pursuing. We believe we are well positioned to continue to procure work in this area. Moving on to the specialty segment. Our team has turned in a solid quarter and ended with a record cap of over $1 billion. In the first quarter, we added to cap a significant new $267 million tunnel project in Columbus, Ohio. We are excited to continue our relationship with the City of Columbus, where we successfully completed a large tunnel project just a couple of years ago. Additionally, operating groups continue to foster new relationships, as well as build upon existing relationships to expand our footprint with both public and private clients. Recent project wins include several projects with a variety of mining clients in different geographies across our business; a project to establish a new rail yard in the Port of Stockton, California; and a federal project to expand a military facility in Guam. Both the private and public markets within the diverse specialty segment continue to be strong, with investment driven by the overall positive economic outlook. The segment is a growing area of our business and we look for that to continue in 2021 and beyond. Moving on to the material segment. The first quarter results were terrific in our seasonally slowest quarter. We ended the quarter with significantly higher material orders compared to the prior year, which resulted in higher sales volumes in 2021 led by the California operating group. As of the end of the quarter, materials orders continue to outpace the prior year with strong demand in both California and Northwest operating groups. This demand is a positive indicator for the remainder of 2021; not only in the material segment, but also for our vertically integrated construction businesses. As of the end of the first quarter, our consolidated cap is $4.5 billion, an increase during the quarter of over $170 million compared to year-end levels. Cap in our Specialty and Water segments continues to grow as we pursue end market diversification. The old risk portfolio, design build cap, continues to decline as our risk profile has transformed following our new project selection criteria. And finally, our cap portfolio is more evenly distributed across operating group geographies. As I mentioned on previous calls, we have been transforming our cap portfolio focused on reducing risk. Our teams have made significant progress and continue to execute on our plan. With that, I'm going to turn it over to Lisa to discuss our financial results. Lisa?

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Thank you, Kyle. Starting with revenue and gross profit. The first quarter delivered strong results on both measures. First quarter consolidated revenue grew 5% year-over-year to $670 million with gross profit increasing 166% year-over-year to $63 million with a gross profit margin of just under 10%.

Within our transportation segment, revenue was up slightly year-over-year to $351 million, led by an increase from the California Operating Group, which offset a revenue decrease from the Heavy Civil Operating Group. Transportation gross profit for the quarter increased 41% to $36 million, resulting in a gross profit margin of 10%. The increase in gross profit was primarily due to a decrease in project losses from the Heavy Civil Operating Group Old Risk portfolio. Losses from the Old Risk portfolio in the first quarter of 2021 under $1 million, compared to losses of $13 million in the first quarter of 2020. The Old Risk portfolio, backlog decreased by nearly $100 million during the quarter, which is on pace to meet our estimated project burn of $425 million to $475 million during 2021 that I mentioned in our last call. Our team's execution in the first quarter, serve to mitigate exposure in the old risk portfolio, and we are optimistic this will continue in the future.

In our water segment, first quarter revenue was down 2% year-over-year as the segment continued its recovery from the COVID-19 pandemic. Water gross profit for the first quarter decreased to 8% to $9 million, resulting in a gross profit margin of 9%. This decrease in gross profit was primarily due to temporarily higher resin costs and Granite Inliner associated with supply chain disruptions due to winter weather events in Texas.

Moving on to the Specialty segment. First quarter revenue increased 17% year-over-year to $156 million. Specialty gross profit increased 262% to $17 million with a gross profit margin of 11%. As a reminder, there was a significant write down during the first quarter of 2020 related to a dispute on a tunneling project, which reduced gross profit in the prior year.

Finally, the Materials segment completed an exceptional first quarter with a revenue increase of 26% year-over-year to $63 million in 2021. This increase was largely due to strong sales volumes in the West. Materials gross profit increased to $2 million, resulting in a gross profit margin of just under 3% as compared to breakeven in the prior year. This increase in the gross profit was also primarily related to higher volumes across the business.

Turning now to our non-GAAP financial metrics. Adjusted EBITDA for the first quarter increased $35 million year-over-year to $17 million, resulting in an adjusted EBITDA margin of over 2% for the quarter. The increase in adjusted EBITDA was driven in part by improvement in project execution, as we continue to burn through the Heavy Civil Operating Group Old Risk gross portfolio during the first quarter of 2021. In addition, we also benefited from improvements in gross profit in the Specialty and Materials segments year-over-year. Our first quarter resulted in an adjusted net loss of $5 million, which was a $27 million improvement from an adjusted net loss of $32 million in the prior year.

As a reminder, these non-GAAP financial metrics are adjusted to exclude other costs, which includes the impact of the legal settlement and legal and accounting fees, non-cash impairments of goodwill, transaction costs and amortization of debt discount.

Now turning to cash and liquidity. We had another strong cash quarter with cash from operations of $38 million and a net increase in cash during the quarter of $17 million compared to year-end. This was an outstanding result for the first quarter of the year. We ended the first quarter with cash and marketable securities of over $464 million and our teams remain focused on working capital management. Upon court approval and finalization of the securities litigation settlement, we expect to pay our portion from existing cash on hand. While we anticipate seasonal cash trends to be consistent with prior year patterns, our 2021 cash projections for the remainder of the year remains solid. With the completion of the first quarter, we are reiterating our guidance for the full fiscal year 2021.

There are opportunities within each of our markets and very active bid schedules across the company. We believe we can capitalize on these opportunities to achieve low to mid-single digit revenue growth. SG&A increased $2.5 million year-over-year to $76 million, which was 11.3% of revenue for the first quarter. This increase was primarily attributable to a change in the fair market value of our non-qualified deferred compensation plan liability of $5 million year-over-year. This increase is offset by corresponding investment gains and other income and expense, net. For the full year, our guidance is unchanged with an expected SG&A expense of 8.5% to 9% of revenue. During the first quarter, we had solid execution across all groups and segments. We expect this execution will allow us to achieve an adjusted EBITDA margin range of 5.5% to 7.5%.

With that, I will turn it back over to Kyle for closing remarks.

Kyle Larkin -- President

Thanks, Lisa. Let me close with the following points. In what is typically a seasonally tough quarter, we are pleased with our first quarter performance across the company. Our teams have done a great job maintaining focus on execution, particularly in the oil risk portfolio. We believe the Securities litigation settlement is in the best interest of the company-hander shareholders. This will allow us to focus on execution in 2021 as we work to refresh our longer-term strategic plan. Across our markets, we are seeing a healthy bidding environment, but we have opportunities to continue the transformation of our portfolio and build quality cap.

Finally, we are optimistic about the funding environment. The economy appears to be strong with continued investment from the private market and public funding environment. The public funding environment has been supported by direct and indirect infrastructure legislation from several different measures and we remain hopeful the enactment of a federal infrastructure bill will occur this year and will serve to further strengthen the environment in 2021 to 2022 and beyond.

Operator, I will now turn it back to you for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Brent Thielman with DA Davidson.

Brent Thielman -- DA Davidson -- Analyst

Right. Thank you. Good morning.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Good morning, Brett.

Brent Thielman -- DA Davidson -- Analyst

I guess first question, pretty significant growth in cap within the Specialty and Water segments in the first quarter even on a sequential basis. Can you help us think about that through the timing of conversion about awarded work, I know water tends to be a little faster burn, but could we see the majority of that work in specialty move through this year?

Kyle Larkin -- President

Yes. So this is Kyle. And Brett, we can talk a little bit about that. Certainly, we anticipate in the specialty segment that that's going to convert relatively quickly. A big piece of that was the specialty, and the specialty segment was the project in Ohio for the tunnel group. And that job has been awarded. We anticipate that we'll get kicked off and that will convert relatively quickly. In general, a lot of the specialty work is site development projects, data centers, supporting commercial builders and networks converts relatively quickly as well.

Brent Thielman -- DA Davidson -- Analyst

Okay. And I guess my follow up, I mean, the 10% gross margin and transportation in a first quarter is particularly good for this time of the year. And I don't think weather was entirely in your favor this period. So, I guess just looking for any additional color, is it -- the work that you're pursuing, Kyle, just the execution, would love to just get some more color on that, that margin this quarter.

Kyle Larkin -- President

Yes, I would say, the weather was actually pretty good in the West. And so we saw similar weather this year in Q1 that we saw in 2020. So, that's certainly helped that segment. And just in general, I think our teams executed very well in Q1, which they've kind of building on some really strong momentum coming from 2020.

Brent Thielman -- DA Davidson -- Analyst

Okay, thank you.

Kyle Larkin -- President

Thank you. Our next question comes from Michael Dudas with Vertical Research Partners.

Michael Dudas -- Vertical Research Partners -- Analyst

Good morning, gentlemen, Lisa.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Hey, good morning, Mike.

Kyle Larkin -- President

Good morning.

Michael Dudas -- Vertical Research Partners -- Analyst

Kyle, you mentioned about the first quarter competitive nature on bidding from the competitors and such, as you've gotten through April looking into May, are you still -- are you able to be more selective? Have competitors backlogs been filling up rather quickly? And maybe as you talked about, as you indicated your range between 5.5% and 7.5% EBITDA for 2021, what are some of the drivers that might move you from one end of the range to the other?

Kyle Larkin -- President

Okay. So, we'll start with the first question. It is around the bid environment. We are seeing a really nice bid environment across our entire portfolio. Certainly, that's being led with our VI [Phonetic] business where we're actually increasing the amount of work, we're bidding even on some of the large projects under our new new risk portfolio profile. And even the water segment as you've seen. So, we're really pleased with the amount of work that's out in front of us and our bid schedule is stronger than it was last year at this time, which is really good news. In terms of the competition, I think, it's a little bit different everywhere. We're still seeing a lot of competitors on bid day. But we are seeing opportunities in certain markets, but we've been able to start raising prices moving forward.

That said, we are being selective on some of the larger projects. We certainly don't want to go backwards. We want to really drive our business toward the new risk profile. And so, that Leon Hurse Dam project was a nice representation of that.

The second part of your question is around the key drivers and in terms of the guidance. And there's really three components that we would probably put that into. One is around project execution. So, we've been acutely focused on execution across all parts of our business. And primarily, in the Heavy Civil Group around the old risk portfolio. And so, we're actually really, really pleased with the performance. Our burn rate is right on target with what we shared with everybody in the last couple of calls. And the margins, although there is a little bit of some margin fade, there is also some margin gain within those projects. So, we haven't seen that for quite some time. And all in all, it had little effect on the gross profit for the quarter. So, execution is obviously a big piece. And so, we're quite pleased with our execution in Q1.

The second is weather. Obviously, weather is a factor, primarily in Q1 and Q4. And so, we got through Q1 with nice weather, very comparable to 2020. And then, obviously, we don't know what Q4 is going to look like but we're hopeful that it will work out well for us. And really, the third is just our ability to win work and put work in place in 2021. So, that's something that our teams are focused on. As I mentioned, the opportunities are out there in front of us. So, that's really good news. And now our teams just have to go out and capture the work and then deliver on it in '21. And if we can do that -- and if those three things line up, then that would move us to the upper end of our guidance.

Michael Dudas -- Vertical Research Partners -- Analyst

It sounds like you've got comfortable with your revenue coverage, like what you have in the pipeline relative to your revenue with targets that you've set out for '21?

Kyle Larkin -- President

Yes. Yes, I think we feel good.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

We do. And, Mike, this is Lisa. Just to add a little bit on that, on cap. We're continuing to see the shift in mix that started last year. So, while Heavy Civil Group, that portion in the portfolio continues to decrease as expected, we're still maintaining our overall cap balance. So, we're seeing increase in the vertically integrated business in our water business. And then, what we have in the end of Q1 does not even include the $160 million Leon Hurse Dam project. Of course, specialty is up.

And then, we're still seeing a good market for the CMGC work. And when we look at the pipeline for Heavy Civil Group, a large component of that is the CMGC, kind of, best value procurement work. So, it's nice to see that strategy continuing to play out for us.

Michael Dudas -- Vertical Research Partners -- Analyst

I appreciate it. And then, just my quick follow up would be on material side. Certainly, a very good start. Q1, we've been hearing from other building products providers, good pricing, good volume expectations, do you see that in your worlds, on the asphalt side? Any price cost issues that we might see roll through? But I would think that given your opportunities for the bidding and for the good start that that Materials segment could see some upside as we move through 2021.

Kyle Larkin -- President

Yes. We think that we are encouraged by what we saw in Q1. I think that's more indicative of overall better market, and we do think that there is going to be opportunities for us to push pricing in certain markets this year.

Michael Dudas -- Vertical Research Partners -- Analyst

Excellent.

Operator

Our next question comes from Steven Ramsey with Thompson Research Group.

Steven Ramsey -- Thompson Research Group -- Analyst

Hey, Good morning.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Hey, good morning, Steven.

Steven Ramsey -- Thompson Research Group -- Analyst

Maybe to start with, I guess just to think about winning work in a competitive bidding environment, I know it's always competitive. I mean, is the bidding environment now similar to the past, all in, and in what ways is it different in may be a good or bad way?

And then, lastly there, in what segment is bidding most challenging?

Kyle Larkin -- President

Okay. Well, I would say that I have mentioned before that the bidding environment, it goes through different stages throughout the year where contractors backlog, maybe midyear, they burn through it and they get a little more aggressive in Q4, Q1. And we're seeing that normal pattern today. Although I'd say, maybe, it's a little bit more intensified in transportation today just because a lot of contractors burn through backlog. And with the pandemic, some agencies just held back on lettings. So, we are seeing competition in many of our markets extend a little further than typical, but our teams have done a really nice job of continuing to capture work. Some markets have already shown improvement. And so, we're able to be a little more selective in building the right backlog and our business in those markets. I would say, again, now transportation is where we see the most competition in our segments today.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

But overall lettings, what the states municipalities are putting out, is very strong.

Steven Ramsey -- Thompson Research Group -- Analyst

Okay. Okay, good. And then, thinking about the Material segment, maybe to ask a little bit differently than it was, orders up in materials, and how much of that is due to the vertically integrated business being up strongly? How much of that is external customers? And turning to kind of combine your thoughts on the last question; tough bidding environment and transportation combined with rising costs, does that present price cost challenges down the road or are you factoring that into your positive pricing outlook?

Kyle Larkin -- President

Okay. Let me start with the materials question. The sales volumes are up and demand is up external and internal. So, for our VI business, as well as our external sales. So, we're seeing it in on both sides. So, I think that's even better news if you look at our materials business. In terms of rising costs, we do have the ability to price that into our work. Certainly, the one that jumps out today would be more around diesel and we anticipated that we would see diesel increases in 2021. So, our work that we're pursuing today has those anticipated increases already built in for the most part.

And then, a lot of our customers have escalation clauses certainly around things like steel, which we've seen, there is some steel increases out there, cement, and others, as applicable.

Steven Ramsey -- Thompson Research Group -- Analyst

Great, thank you.

Kyle Larkin -- President

Thank you.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Thank you.

Operator

[Operator Instructions] Our next question comes from Jerry Revich with Goldman Sachs.

Jerry Revich -- Goldman Sachs -- Analyst

Yes, hi, good morning.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Good morning.

Kyle Larkin -- President

Good morning.

Jerry Revich -- Goldman Sachs -- Analyst

I'm wondering if you could talk about just the overall bid pursuit pipeline that you folks are looking at today. And just to quantify some of the prior comments on the bid environment, Kyle, if you don't mind, how does that compare today versus last year as you look across the footprint based on everything you're tracking?

Kyle Larkin -- President

I'd say it's up. So, just in general, on projects under about $150 million, we're up probably about $400 million to $500 million for this, even this month versus what we've seen in the prior year. So, quite a bit. Projects over $150 million -- again, we've been a lot more selective in what we're pursuing and how we're pursuing it. As Lisa mentioned, the type of work that we're pursuing over on $150 million, a lot of that is best value procurement. Almost 3/4 of it is best value procurement. And even with the new constraints we have put on ourselves, the projects over $150 million, the pipeline is very consistent with last year, if not up slightly.

Jerry Revich -- Goldman Sachs -- Analyst

Okay. And in terms of, with the business model transition, it's been nice to see the pipeline up with the more strict standards. Can you talk about whether that's a function of the market evolving on risk terms overall or are you seeing, in other words, the same level of discipline out of your competitors or is it just a function of the market for this type of procurement is just larger than what the company has viewed as possible in the past?

Kyle Larkin -- President

Yes, I think it's just a shift. I think instead of pursuing large, I call mega projects, we were pursuing smaller large projects that allow our teams to estimate more work and procure more projects. Although the dollar amount might be smaller today on the large project side, our average job size in the pursuit is around $300 million. So, it's a lot less than what it used to be. And that's something that we, that was internally directed.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Yes. Jerry, this is Lisa. So, those what we would consider higher-risk projects are still out there. We're just -- we've made the internal decision to not pursue those, so.

Jerry Revich -- Goldman Sachs -- Analyst

Okay, thank you. And then, in terms of on the execution on the legacy projects, really excellent performance this quarter. Can you just talk about what went right for you folks because obviously for these types of projects, history would dictate that there is risk of writedowns from an accounting standpoint as you progress toward project completion and you folks were able to avoid that this quarter. So, can you just talk about where productivity improved and just could you give us a little bit more context on what went well?

Kyle Larkin -- President

Yes. Yes. And unfortunately, we were out this week with safety week and we got to me a lot of our teams on some of these tough jobs. And I mean credit to them, they're working really hard to focus and bringing these jobs to completion. I think through all of our work over the last year; bidding processes and controls and ultimately getting our forecast right, I think that's a contributor as well. And we're at a point now where we did have a couple of fades in terms of our forecast margin. And we had some -- the gain margin that kind of offset each other to the point we are. I do -- obviously, it's the old risk portfolio. I think that we have to recognize and respect the risks associated with that portfolio, but I do believe our teams are asking at a high level on those projects. And as I said, they are focused on bringing those things to completion.

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Yes, Jerry, just to add on to what Kyle was saying as just a reminder. We still have approximately $600 million in our portfolio to work through. So, again, great. It was a really good first quarter. And we've been relentless on many fronts on dealing with these riskier project. So, good to get through Q1.

Jerry Revich -- Goldman Sachs -- Analyst

Great, thank you.

Operator

This will end our Q&A session. I'd like to turn the call back over to Mr. Larkin.

Kyle Larkin -- President

Okay. Well, thank you for your questions. As always, I want to thank all of our employees for everything you do, every day for Granite and for our customers. Your hard work and dedication is the cornerstone of Granite success.

And with that, thank you for your continued interest in Granite. We look forward to speaking with everyone very soon. Thank you.

Operator

[Operator Ending Remarks]

Duration: 38 minutes

Call participants:

Mike Barker -- Vice President of Investor Relations

Lisa Curtis -- Executive Vice President, Chief Financial Officer

Kyle Larkin -- President

Brent Thielman -- DA Davidson -- Analyst

Michael Dudas -- Vertical Research Partners -- Analyst

Steven Ramsey -- Thompson Research Group -- Analyst

Jerry Revich -- Goldman Sachs -- Analyst

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