Construction Joint Ventures

9 Months Ended

Sep. 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 nine months ended September 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 September 30, 2023, there was $204.4 million of remaining contract value on unconsolidated and line item construction joint venture contracts of which $96.7 million represented our share and the remaining $107.7 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 September 30, 2023, we were engaged in ten active CCJV projects with total contract values ranging from $46.3 million to $428.5 million for a combined total of $2.0 billion of which our share was $1.2 billion. As of September 30, 2023, our share of revenue remaining to be recognized on these CCJVs was $395.3 million and ranged from $1.9 million to $148.6 million by project. Our proportionate share of the equity in these joint ventures was between 50.0% and 70.0%. During the three and nine months ended September 30, 2023, total revenue from CCJVs was $91.2 million and $223.3 million, respectively. During the three and nine months ended September 30, 2022, total revenue from CCJVs was $117.5 million and $344.5 million, respectively. During the nine months ended September 30, 2023 and 2022, CCJVs used $36.8 million and provided $4.7 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As of September 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 September 30, 2023, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $57.9 million and ranged from $1.5 million to $33.7 million by project.

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


(in thousands)	September 30, 2023		December 31, 2022
Assets
Cash, cash equivalents and marketable securities	$	158,768	$	130,635
Other current assets (1)	684,667		681,221
Noncurrent assets	53,703		76,204
Less: partners’ interest	617,934		604,741
Granite’s interest (1),(2)	$	279,204	$	283,319
Liabilities
Current liabilities	$	206,414	$	244,411
Less: partners’ interest and adjustments (3)	119,875		130,911
Granite’s interest	$	86,539	$	113,500
Equity in construction joint ventures (4)	$	192,665	$	169,819

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of September 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 September 30, 2023 and December 31, 2022 was $85.9 million and $104.3 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $0.9 million and $2.7 million related to Granite’s share of estimated recovery of back charge claims as of September 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 $14.0 million as of both September 30, 2023 and December 31, 2022, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.


	Three Months Ended September 30,				Nine Months Ended September 30,
			As Restated				As Restated
(in thousands)	2023		2022		2023		2022
Revenue
Total	$	(18,391)	$	69,355	$	44,994	$	322,058
Less: partners’ interest and adjustments (1)	(34,395)		44,000		4,625		223,858
Granite’s interest	$	16,004	$	25,355	$	40,369	$	98,200
Cost of revenue
Total	$	(10,607)	$	81,694	$	74,328	$	332,777
Less: partners’ interest and adjustments (1)	(18,143)		48,401		38,173		209,950
Granite’s interest	$	7,536	$	33,293	$	36,155	$	122,827
Granite’s interest in gross profit (loss)	$	8,468	$	(7,938)	$	4,214	$	(24,627)
Net Income (Loss)
Total	$	(7,514)	$	(11,945)	$	(27,742)	$	(11,649)
Less: partners’ interest and adjustments (1)	(16,054)		(4,106)		(32,277)		13,418
Granite’s interest in net income (loss) (2)	$	8,540	$	(7,839)	$	4,535	$	(25,067)

(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 income (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.