Note 11 - Construction Joint Ventures

6 Months Ended

Jun. 30, 2022

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 and six months ended June 30, 2022, 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, 2022, there was approximately $309.7 million of construction revenue to be recognized on unconsolidated construction joint venture contracts of which $110.3 million represented our share and the remaining $199.4 million 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  June 30, 2022, we were engaged in nine active CCJV projects with total contract values ranging from $12.1 million to $439.4 million for a combined total of $1.8 billion of which our share was $1.0 billion. As of June 30, 2022, our share of revenue remaining to be recognized on these CCJVs was $225.9 million and ranged from $4.7 million to $56.2 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, 2022 and 2021, total revenue from CCJVs was $119.4 million, $227.0 million, $114.9 million and $197.5 million, respectively. During the six months ended June 30, 2022, CCJVs used $13.4 million of operating cash flows and during the six months ended June 30, 2021, CCJVs provided $19.4 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As of  June 30, 2022, we were engaged in eight active unconsolidated joint venture projects with total contract values ranging from $12.3 million to $3.8 billion for a combined total of $9.7 billion of which our share was $2.7 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20.0% to 50.0%. As of  June 30, 2022, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $110.3 million and ranged from $1.1 million to $34.8 million by project.

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

(in thousands)	June 30, 2022		December 31, 2021		June 30, 2021
Assets
Cash, cash equivalents and marketable securities	$	148,446	$	182,891	$	139,381
Other current assets (1)		672,274		661,342		795,440
Noncurrent assets		85,863		103,579		140,160
Less partners’ interest		602,618		633,634		716,678
Granite’s interest (1),(2)	$	303,965	$	314,178	$	358,303
Liabilities
Current liabilities	$	228,686	$	307,674	$	432,130
Less partners’ interest and adjustments (3)		99,053		154,771		235,649
Granite’s interest	$	129,633	$	152,903	$	196,481
Equity in construction joint ventures (4)	$	174,332	$	161,275	$	161,822

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of  June 30, 2022,  December 31, 2021 and  June 30, 2021 was $77.4 million, $82.1 million and $82.3 million, respectively, related to performance guarantees.

(2) Included in this balance as of June 30, 2022, December 31, 2021 and June 30, 2021, was $109.5 million, $103.8 million and $96.7 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $2.9 million, $10.7 million and $14.1 million related to Granite’s share of estimated recovery of back charge claims as of  June 30, 2022,  December 31, 2021 and  June 30, 2021, 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 $12.7 million, $28.6 million and $33.6 million as of  June 30, 2022,  December 31, 2021 and June 30, 2021, 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)	2022			2021		2022			2021
Revenue
Total	$	91,564		$	263,558	$	252,703		$	495,600
Less partners’ interest and adjustments (1)		68,374			176,657		179,858			328,977
Granite’s interest		23,190			86,901	$	72,845		$	166,623
Cost of revenue
Total		93,162			249,494	$	251,083		$	497,564
Less partners’ interest and adjustments (1)		56,897			169,041		161,549			337,775
Granite’s interest		36,265			80,453	$	89,534		$	159,789
Granite’s interest in gross profit (loss)	$	(13,075	)	$	6,448		(16,689	)	$	6,834
Net Income (Loss)
Total	$	(2,871	)	$	13,813	$	296		$	(2,190	)
Less partners’ interest and adjustments (1)		10,730			7,262		17,524			(9,159	)
Granite’s interest in net income (loss) (2)	$	(13,601	)	$	6,551	$	(17,228	)	$	6,969

(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.