Construction Joint Ventures

9 Months Ended

Sep. 30, 2024

Guarantees and Product Warranties [Abstract]

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, 2024, 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). 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”)

As of September 30, 2024, we were engaged in ten active CCJV projects. 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, 2024 and 2023, total revenue from CCJVs was $101.3 million, $265.1 million, $91.2 million, and $223.3 million, respectively. During the nine months ended September 30, 2024 and 2023, CCJVs provided $33.0 million and used $36.8 million of operating cash flows, respectively. As of September 30, 2024, our share of revenue remaining to be recognized on these CCJVs was $375.8 million and ranged from $1.3 million to $140.1 million by project.

Unconsolidated Construction Joint Ventures

As of September 30, 2024, we were engaged in five active unconsolidated construction joint venture projects. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 30.0% to 50.0%. As of September 30, 2024, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $31.4 million and ranged from $0.7 million to $24.6 million by project.

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


(in thousands)	September 30, 2024		December 31, 2023
Assets:
Cash, cash equivalents and marketable securities	$	113,587	$	117,962
Other current assets (1)	599,976		666,536
Noncurrent assets	37,036		52,580
Less: partners’ interest	520,025		574,723
Granite’s interest (1),(2)	$	230,574	$	262,355
Liabilities:
Current liabilities	$	152,481	$	191,175
Less: partners’ interest and adjustments (3)	61,493		85,131
Granite’s interest	$	90,988	$	106,044
Equity in construction joint ventures (4)	$	139,586	$	156,311

(1) Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 was $57.8 million related to performance guarantees (see Note 13).

(2) Included in this balance as of September 30, 2024 and December 31, 2023 was $68.4 million and $66.6 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $1.7 million related to Granite’s share of estimated recovery of back charge claims as of September 30, 2024 and December 31, 2023, 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 $4.5 million and $14.9 million as of September 30, 2024 and December 31, 2023, 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)	2024		2023		2024		2023
Revenue:
Total	$	15,996	$	(18,391)	$	46,361	$	44,994
Less: partners’ interest and adjustments (1)	8,206		(34,395)		21,148		4,625
Granite’s interest	$	7,790	$	16,004	$	25,213	$	40,369
Cost of revenue:
Total	$	23,462	$	(10,607)	$	69,559	$	74,328
Less: partners’ interest and adjustments (1)	13,756		(18,143)		42,132		38,173
Granite’s interest	$	9,706	$	7,536	$	27,427	$	36,155
Granite’s interest in gross profit (loss)	$	(1,916)	$	8,468	$	(2,214)	$	4,214
Net Income (Loss):
Total	$	(5,667)	$	(7,514)	$	(17,766)	$	(27,742)
Less: partners’ interest and adjustments (1)	(4,264)		(16,054)		(17,115)		(32,277)
Granite’s interest in net income (loss) (2)	$	(1,403)	$	8,540	$	(651)	$	4,535

(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 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.