Construction Joint Ventures

6 Months Ended

Jun. 30, 2023

Guarantees and Product Warranties [Abstract]

We participate in various construction joint ventures. We have determined that certain of these joint ventures are consolidated because they are variable interest entities (“VIEs”) and we are the primary beneficiary. We continually evaluate whether there are changes in the status of the VIEs or changes to the primary beneficiary designation of the VIE. Based on our assessments during the three and six months ended June 30, 2023, we determined no change was required for existing joint ventures.

Due to the joint and several nature of the performance obligations under the related owner contracts, if any of our partners fail to perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a performance guarantee). At June 30, 2023, there was $202.4 million of remaining contract value on unconsolidated and line item construction joint venture contracts of which $96.4 million represented our share and the remaining $106.0 million represented our partners’ share. We are not able to estimate amounts that may be required beyond the current remaining forecasted cost of the work to be performed. These forecasted costs could be offset by billings to the customer or by proceeds from our partners’ corporate and/or other guarantees. See Note 13 for disclosure of the performance guarantee amounts recorded in the condensed consolidated balance sheets.

Consolidated Construction Joint Ventures (“CCJVs”)

At June 30, 2023, we were engaged in eleven active CCJV projects with total contract values ranging from $17.7 million to $430.8 million for a combined total of $1.8 billion of which our share was $1.0 billion. As of June 30, 2023, our share of revenue remaining to be recognized on these CCJVs was $204.4 million and ranged from $0.5 million to $84.8 million by project. Our proportionate share of the equity in these joint ventures was between 50.0% and 70.0%. During the three and six months ended June 30, 2023 and 2022, total revenue from CCJVs was $70.8 million, $132.1 million, $122.7 million and $227.0 million, respectively. During the six months ended June 30, 2023 and 2022, CCJVs used $48.3 million and $13.4 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As of June 30, 2023, we were engaged in seven active unconsolidated joint venture projects with total contract values ranging from $5.8 million to $3.8 billion for a combined total of $7.9 billion of which our share was $2.3 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 23.0% to 50.0%. As of

June 30, 2023, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $58.6 million and ranged from $1.6 million to $34.3 million by project.

The following is summary financial information related to unconsolidated construction joint ventures:


(in thousands)	June 30, 2023		December 31, 2022
Assets
Cash, cash equivalents and marketable securities	$	110,275	$	130,635
Other current assets (1)	694,959		681,221
Noncurrent assets	60,534		76,204
Less partners’ interest	593,218		604,741
Granite’s interest (1),(2)	$	272,550	$	283,319
Liabilities
Current liabilities	$	209,643	$	244,411
Less partners’ interest and adjustments (3)	111,104		130,911
Granite’s interest	$	98,539	$	113,500
Equity in construction joint ventures (4)	$	174,011	$	169,819

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 was $58.2 million and $64.7 million, respectively, related to performance guarantees (see Note 13).

(2) Included in this balance as of June 30, 2023 and December 31, 2022 was $98.1 million and $104.3 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $2.6 million and $2.7 million related to Granite’s share of estimated recovery of back charge claims as of June 30, 2023 and December 31, 2022, respectively.

(3) Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

(4) Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets was $14.1 million and $14.0 million as of June 30, 2023 and December 31, 2022, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2023		2022		2023		2022
Revenue
Total	$	25,211	$	91,564	$	63,385	$	252,703
Less partners’ interest and adjustments (1)	15,691		68,374		39,020		179,858
Granite’s interest	$	9,520	$	23,190	$	24,365	$	72,845
Cost of revenue
Total	$	40,564	$	93,162	$	84,935	$	251,083
Less partners’ interest and adjustments (1)	25,912		56,897		56,316		161,549
Granite’s interest	14,652		36,265		28,619		89,534
Granite’s interest in gross loss	$	(5,132)	$	(13,075)	$	(4,254)	$	(16,689)
Net Income (Loss)
Total	$	(14,574)	$	(2,871)	$	(20,228)	$	296
Less partners’ interest and adjustments (1)	(9,658)		10,730		(16,223)		17,524
Granite’s interest in net loss (2)	$	(4,916)	$	(13,601)	$	(4,005)	$	(17,228)

(1)Partners’ interest and adjustments includes amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast and/or actual differences.

(2)These joint venture net loss amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.