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Note 10 - Construction Joint Ventures | 9 Months Ended
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Sep. 30, 2021
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 and nine months ended September 30, 2021, 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 September 30, 2021, there was approximately $0.8 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $0.3 billion represented our share and the remaining $0.5 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 September 30, 2021, we were engaged in eight active CCJV projects with total contract values ranging from $2.3 million to $437.5 million and a combined total of $1.6 billion of which our share was $914.8 million. As of September 30, 2021, our share of revenue remaining to be recognized on these CCJVs was $292.6 million and ranged from $0.8 million to $97.3 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, 2021, total revenue from CCJVs was $117.4 million and $314.9 million, respectively, and during the three and nine months ended September 30, 2020, total revenue from CCJVs was $79.2 million and $219.9 million, respectively. During the nine months ended September 30, 2021 and 2020, CCJVs provided $17.5 million and $17.0 million of operating cash flows, respectively. Unconsolidated Construction Joint Ventures As of September 30, 2021, we were engaged in ten active unconsolidated joint venture projects with total contract values ranging from $13.7 million to $3.8 billion for a combined total of $11.6 billion of which our share was $3.4 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20.0% to 50.0%. As of September 30, 2021, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $225.8 million and ranged from $1.2 million to $52.8 million by project. The following is summary financial information related to our unconsolidated construction joint ventures:
(in thousands) |  | September 30, 2021 |  |  | December 31, 2020 |  |  | September 30, 2020 |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Cash, cash equivalents and marketable securities |  | $ | 159,187 |  |  | $ | 181,889 |  |  | $ | 211,483 |
Other current assets (1) |  |  | 765,319 |  |  |  | 767,803 |  |  |  | 874,396 |
Noncurrent assets |  |  | 111,981 |  |  |  | 164,022 |  |  |  | 176,195 |
Less partners’ interest |  |  | 692,226 |  |  |  | 751,125 |  |  |  | 849,213 |
Granite’s interest (1),(2) |  |  | 344,261 |  |  |  | 362,589 |  |  |  | 412,861 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  | 396,154 |  |  |  | 482,562 |  |  |  | 514,739 |
Less partners’ interest and adjustments (3) |  |  | 227,372 |  |  |  | 226,308 |  |  |  | 211,749 |
Granite’s interest |  |  | 168,782 |  |  |  | 256,254 |  |  |  | 302,990 |
Equity in construction joint ventures (4) |  | $ | 175,479 |  |  | $ | 106,335 |  |  | $ | 109,871 |
(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets was $82.3 million as of September 30, 2021, December 31, 2020 and September 30, 2020 related to performance guarantees. (2) Included in this balance as of September 30, 2021, December 31, 2020 and September 30, 2020, was $101.9 million, $88.7 million and $86.2 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $14.1 million, $13.1 million and $13.8 million as of September 30, 2021, December 31, 2020 and September 30, 2020, respectively, related to Granite’s share of estimated recovery of back charge claims. (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 $19.9 million, $82.5 million and $75.1 million as of September 30, 2021, December 31, 2020 and September 30, 2020, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
(in thousands) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | 194,486 |  |  | $ | 293,733 |  |  | $ | 690,086 |  |  | $ | 740,224 |
Less partners’ interest and adjustments (1) |  |  | 113,205 |  |  |  | 206,032 |  |  |  | 442,182 |  |  |  | 471,999 |
Granite’s interest |  |  | 81,281 |  |  |  | 87,701 |  |  |  | 247,904 |  |  |  | 268,225 |
Cost of revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  |  | 203,786 |  |  |  | 299,776 |  |  |  | 701,350 |  |  |  | 884,991 |
Less partners’ interest and adjustments (1) |  |  | 123,461 |  |  |  | 203,932 |  |  |  | 461,236 |  |  |  | 578,235 |
Granite’s interest |  |  | 80,325 |  |  |  | 95,844 |  |  |  | 240,114 |  |  |  | 306,756 |
Granite’s interest in gross profit (loss) |  | $ | 956 |  |  | $ | (8,143 | ) |  | $ | 7,790 |  |  | $ | (38,531 | )
(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 and nine months ended September 30, 2021, unconsolidated construction joint venture net loss was $(9.3) million and $(11.5) million, respectively, of which our share was net income of $1.0 million and $8.0 million, respectively. During the three and nine months ended September 30, 2020, unconsolidated construction joint venture net loss was $(6.0) million and $(144.5) million, respectively, of which our share was $(8.0) million and $(38.5) million, respectively. During both 2021 and 2020, there were variances on five projects between our estimated total revenue and cost of revenue when compared to that of our partners’ due to timing of recognition from differing accounting policies and public company quarterly reporting requirements. 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. Line Item Joint Ventures As of September 30, 2021, we were engaged in three active line item joint venture construction projects with a total contract value of $337.0 million of which our portion was $221.9 million. As of September 30, 2021, our share of revenue remaining to be recognized on these line item joint ventures was $84.6 million. During the three and nine months ended September 30, 2021, our portion of revenue from line item joint ventures was $26.3 million and $55.0 million, respectively. During the three and nine months ended September 30, 2020, our portion of revenue from line item joint ventures was $27.5 million and $58.7 million, respectively. GRANITE CONSTRUCTION INCORPORATED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (Unaudited)

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