Note 11 - Construction Joint Ventures

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Construction Joint Ventures [Text Block]

11.  Construction Joint Ventures

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 months ended March 31, 2020, 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 the 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  March 31, 2020, there was approximately $2.3 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $822.4 million represented our share and the remaining $1.5 billion represented our partners’ share. We are not able to estimate amounts that may be required beyond the remaining cost of the work to be performed. These costs could be offset by billings to the customer or by proceeds from our partners’ corporate and/or other guarantees.

Consolidated Construction Joint Ventures (“CCJVs”)

At March 31, 2020, we were engaged in seven active CCJV projects with total contract values ranging from $0.7 million to $410.5 million and a combined total of $1.6 billion of which our share was $919.7 million. Our share of revenue remaining to be recognized on these CCJVs was $499.2 million and ranged from $0.2 million to $203.2 million. Our proportionate share of the equity in these joint ventures was between 50% and 65%. During the three months ended March 31, 2020 and 2019 total revenue from CCJVs was $54.7 million and $63.0 million, respectively. During the three months ended March 31, 2020 and 2019, CCJVs provided $17.1 million and $3.1 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As of  March 31, 2020, we were engaged in nine active unconsolidated joint venture projects with total contract values ranging from $11.6 million to $3.8 billion for a combined total of $11.4 billion of which our share was $3.3 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20% to 50%. As of  March 31, 2020, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $671.4 million and ranged from $1.2 million to $192.2 million.

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

					As Restated
(in thousands)	March 31, 2020		December 31, 2019		March 31, 2019
Assets
Cash, cash equivalents and marketable securities	$	144,472	$	179,049	$	281,355
Other current assets (1)		821,399		972,840		847,789
Noncurrent assets		203,520		207,584		215,129
Less partners’ interest		785,876		904,565		885,901
Granite’s interest (1),(2)		383,515		454,908		458,372
Liabilities						0
Current liabilities		555,380		581,199		533,325
Less partners’ interest and adjustments (3)		289,165		243,202		249,206
Granite’s interest		266,215		337,997		284,119
Equity in construction joint ventures (4)	$	117,300	$	116,911	$	174,253

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets was $81.9 million related to performance guarantees as of both  March 31, 2020 and  December 31, 2019 and $88.2 million as of  March 31, 2019.

(2) Included in this balance as of  March 31, 2020, December 31, 2019 and  March 31, 2019 was $117.1 million, $116.8 million and $96.2 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $18.2 million, $15.9 million and $17.9 million related to Granite’s share of estimated recovery of back charge claims as of  March 31, 2020,  December 31, 2019 and  March 31, 2019, 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 $ 73.2 million, $ 76.2 million and $ 45.7 million, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses, as of  March 31, 2020,  December 31, 2019 and  March 31, 2019.

	Three Months Ended March 31,
				As Restated
(in thousands)	2020			2019
Revenue
Total	$	62,030		$	415,934
Less partners’ interest and adjustments (1)		(21,672	)		305,418
Granite’s interest		83,702			110,516
Cost of revenue
Total		228,460			411,485
Less partners’ interest and adjustments (1)		132,743			280,427
Granite’s interest		95,717			131,058
Granite’s interest in gross loss	$	(12,015	)	$	(20,542	)

(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 differences.

During the three months ended March 31, 2020 and 2019 unconsolidated construction joint venture net (loss)/income was $(166.0) million and $5.2 million, respectively, of which our share was net loss of $(11.8) million and $(20.3) million, respectively. The differences between our share of the joint venture net loss when compared to the joint venture net (loss)/income primarily resulted from differences between our estimated total revenue and cost of revenue when compared to that of our partners’ on five and four projects during 2020 and 2019, respectively. The differences are due to timing differences from varying accounting policies and in public company quarterly reporting requirements. These joint venture net (loss)/income 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.

Line Item Joint Ventures

As of March 31, 2020, we had four active line item joint venture construction projects with a total contract value of $327.8 million of which our portion was $181.9 million. As of  March 31, 2020, our share of revenue remaining to be recognized on these line item joint ventures was $151.0 million. During the three months ended March 31, 2020, our portion of revenue from line item joint ventures was $12.8 million. During the three months ended March 31, 2019, our portion of revenue from line item joint ventures was $0.4 million.