Note 10 - Construction Joint Ventures

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Construction Joint Ventures [Text Block]

10.  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, 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  March 31, 2023, there was $245.2 million of remaining contract value on unconsolidated and line item construction joint venture contracts of which $109.4 million represented our share and the remaining $135.8 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  March 31, 2023, we were engaged in eleven active CCJV projects with total contract values ranging from $6.1 million to $432.5 million for a combined total of $1.7 billion of which our share was $1.0 billion. As of March 31, 2023, our share of revenue remaining to be recognized on these CCJVs was $181.3 million and ranged from $0.9 million to $85.1 million by project. Our proportionate share of the equity in these joint ventures was between 50.0% and 70.0%. During the three months ended March 31, 2023 and 2022, total revenue from CCJVs was $61.3 million and $104.3 million, respectively. During the three months ended March 31, 2023 and 2022, CCJVs used $24.8 million and $7.6 million of operating cash flows, respectively. 

Unconsolidated Construction Joint Ventures

As of  March 31, 2023, we were engaged in seven active unconsolidated joint venture projects with total contract values ranging from $12.3 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  March 31, 2023, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $72.4 million and ranged from $3.2 million to $34.4 million by project.

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

(in thousands)	March 31, 2023		December 31, 2022
Assets
Cash, cash equivalents and marketable securities	$	110,403	$	130,635
Other current assets (1)		689,945		681,221
Noncurrent assets		71,603		76,204
Less partners’ interest		596,487		604,741
Granite’s interest (1),(2)	$	275,464	$	283,319
Liabilities
Current liabilities	$	236,063	$	244,411
Less partners’ interest and adjustments (3)		128,166		130,911
Granite’s interest	$	107,897	$	113,500
Equity in construction joint ventures (4)	$	167,567	$	169,819

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of  March 31, 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 March 31, 2023 and  December 31, 2022 was $96.6 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  March 31, 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 $14.5 million and $14.0 million as of  March 31, 2023 and  December 31, 2022, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.

		Three Months Ended March 31,
(in thousands)		2023			2022
Revenue
Total	$	38,174		$	161,139
Less partners’ interest and adjustments (1)		23,329			111,484
Granite’s interest	$	14,845		$	49,655
Cost of revenue
Total	$	44,371		$	157,921
Less partners’ interest and adjustments (1)		30,404			104,652
Granite’s interest		13,967			53,269
Granite’s interest in gross profit (loss)	$	878		$	(3,614	)
Net Income (Loss)
Total	$	(5,654	)	$	3,167
Less partners’ interest and adjustments (1)		(6,565	)		6,794
Granite’s interest in net income (loss) (2)	$	911		$	(3,627	)

(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.