Note 3 - Restatement and Recast

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Error Correction [Text Block]

3.  Restatement and Recast

Restatement and Recast Background

As disclosed in our Annual Report, we identified errors during the preparation of the Annual Report related to deferred taxes and the calculation of income tax expense of $12.3 million in connection with the sale of Inliner, which was completed in the first quarter of 2022 and was classified within discontinued operations in the Company's condensed consolidated financial statements during the first and second quarters of 2022 and in Other costs, net and Provision for income taxes during the third quarter of 2022. As a result, our previously issued unaudited quarterly financial information for each interim period within the nine months ended  September 30, 2022 require restatement. The restated financial information also includes adjustments to correct other immaterial errors in the first three quarters of 2022, including certain errors (primarily in revenue and cost of revenue, including the associated tax impact) that had previously been adjusted for as out of period corrections in the periods identified.

During the fourth quarter of 2021, we concluded that the assets and liabilities of our former Water and Mineral Services operating group (“WMS”) met the criteria for classification as held for sale and the results of operations were presented as discontinued operations. This included: our trenchless and pipe rehabilitation services business (“Inliner”); our water supply, treatment, delivery and maintenance business (“Water Resources”); and our mineral exploration drilling business (“Mineral Services”). During the first quarter of 2022, we completed the sale of Inliner. In  September 2022, we announced our decision to retain the Water Resources and Mineral Services businesses that were previously classified as held for sale and reported in discontinued operations. In connection with the reclassification of the WMS businesses from discontinued operations to continuing operations, the condensed consolidated statement of operations for the period ended March 31, 2022, as previously reported, has been recast to include Inliner through the date of sale, as well as the ongoing operations of Water Resources and Mineral Services in continuing operations.

Description of Restatement and Recast Tables

We have presented below a reconciliation from the previously reported to the restated and recast amounts for the quarter ended  March 31, 2022. The amounts labeled “As Previously Reported” were derived from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 filed on April 28, 2022.

The impacts to the condensed consolidated statements of shareholders’ equity and comprehensive income (loss) as a result of the restatement were due to the changes in net loss for the three months ended March 31, 2022. In addition, there was no impact to net cash provided by (used in) investing and financing activities for the three months ended March 31, 2022 as a result of the restatement or recast.

The effects of the prior-period errors and the discontinued operations reclassification impacts on our condensed consolidated financial statements are as follows (in thousands, except per share data):

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

Three months ended March 31, 2022		As Previously Reported			Restatement Impacts			As Restated			Discontinued Operations Reclassification Impacts			As Restated and Recast
Revenue
Construction	$	474,935		$	1,893		$	476,828		$	101,438		$	578,266
Materials		72,651			-			72,651			2,969			75,620
Total revenue		547,586			1,893			549,479			104,407			653,886
Cost of revenue
Construction		426,743			6,019			432,762			87,025			519,787
Materials		71,068			-			71,068			2,939			74,007
Total cost of revenue		497,811			6,019			503,830			89,964			593,794
Gross profit		49,775			(4,126	)		45,649			14,443			60,092
Selling, general and administrative expenses		58,501			-			58,501			11,619			70,120
Other costs, net		8,214			-			8,214			(1,935	)		6,279
Gain on sales of property and equipment, net		(332	)		-			(332	)		(266	)		(598	)
Operating loss		(16,608	)		(4,126	)		(20,734	)		5,025			(15,709	)
Other (income) expense
Interest income		(623	)		-			(623	)		53			(570	)
Interest expense		3,575			-			3,575			10			3,585
Equity in income (loss) of affiliates		306			-			306			(1,595	)		(1,289	)
Other income, net		1,382			-			1,382			(74	)		1,308
Total other expense, net		4,640			-			4,640			(1,606	)		3,034
Loss from continuing operations before income taxes		(21,248	)		(4,126	)		(25,374	)		6,631			(18,743	)
Provision for (benefit from) income taxes on continuing operations		(5,331	)		(958	)		(6,289	)		12,641			6,352
Net loss from continuing operations		(15,917	)		(3,168	)		(19,085	)		(6,010	)		(25,095	)
Net Income (loss) from discontinued operations		6,096			(12,106	)		(6,010	)		6,010			-
Net loss		(9,821	)		(15,274	)		(25,095	)		-			(25,095	)
Amount attributable to non-controlling interests		(3,118	)		1,480			(1,638	)		-			(1,638	)
Net loss attributable to Granite Construction Incorporated from continuing operations		(19,035	)		(1,688	)		(20,723	)		(6,010	)		(26,733	)
Net income (loss) attributable to Granite Construction Incorporated from discontinued operations		6,096			(12,106	)		(6,010	)		6,010			-
Net loss attributable to Granite Construction Incorporated	$	(12,939	)	$	(13,794	)	$	(26,733	)	$	-		$	(26,733	)
Net income (loss) per share attributable to common shareholders
Basic continuing operations per share	$	(0.42	)	$	(0.03	)	$	(0.45	)	$	(0.13	)	$	(0.58	)
Basic discontinued operations per share		0.13			(0.26	)		(0.13	)		0.13			-
Basic loss per share	$	(0.29	)	$	(0.29	)	$	(0.58	)	$	-		$	(0.58	)
Diluted continuing operations per share	$	(0.42	)	$	(0.03	)	$	(0.45	)	$	(0.13	)	$	(0.58	)
Diluted discontinued operations per share		0.13			(0.26	)		(0.13	)		0.13			-
Diluted loss per share	$	(0.29	)	$	(0.29	)	$	(0.58	)	$	-		$	(0.58	)
Weighted average shares outstanding:
Basic		45,730			-			45,730			-			45,730
Diluted		45,730			-			45,730			-			45,730

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Three months ended March 31, 2022	As Previously Reported			Restatement Impacts			As Restated
Operating activities
Net loss	$	(9,821	)	$	(15,274	)	$	(25,095	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization		16,737			-			16,737
Amortization related to long-term debt		652			-			652
Gain on sale of business		(6,234	)		2,956			(3,278	)
Gain on sales of property and equipment, net		(598	)		-			(598	)
Deferred income taxes		2,545			-			2,545
Stock-based compensation		2,614			-			2,614
Equity in net loss from unconsolidated joint ventures		3,627			-			3,627
Net income from affiliates		(1,289	)		-			(1,289	)
Other non-cash adjustments		(299	)		-			(299	)
Changes in assets and liabilities:
Receivables		85,957			-			85,957
Contract assets, net		(72,632	)		2,813			(69,819	)
Inventories		(13,805	)		-			(13,805	)
Contributions to unconsolidated construction joint ventures		(12,840	)		-			(12,840	)
Distributions from unconsolidated construction joint ventures and affiliates		250			-			250
Other assets, net		1,264			8,388			9,652
Accounts payable		(44,028	)		-			(44,028	)
Accrued expenses and other liabilities, net		(2,280	)		1,117			(1,163	)
Net cash used in operating activities	$	(50,180	)	$	-		$	(50,180	)