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This balance is primarily related to local bank debt for equipment purchases and debt associated with our real estate investments.
This amount represents shares purchased in connection with employee tax withholding for RSUs vested under our 2012 and 2021 Equity Incentive Plans and stock repurchased in 2022 under the Board-approved repurchase plan.
Excluded from the carrying value is debt discount of $22.6 million and $28.0 million as of December 31, 2021 and March 31, 2021, respectively, related to the 2.75% Convertible Notes (see Notes 2 and 15).
Included in this balance as of March 31, 2022, December 31, 2021 and March 31, 2021, was $107.5 million, $103.8 million and $95.4 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 $12.9 million related to Granite’s share of estimated recovery of back charge claims as of March 31, 2022, December 31, 2021 and March 31, 2021, respectively.
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.
The fair value of the 2.75% Convertible Notes is based on the median price of the notes in an active market. The fair value of the Credit Agreement is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 15 for more information about the 2.75% Convertible Notes and the Credit Agreement.
Included in this balance and in accrued expenses and other current liabilities on the condensed consolidated balance sheets as of March 31, 2022, December 31, 2021 and March 31, 2021 was $82.1 million, $82.1 million and $82.3 million, respectively, related to performance guarantees.
During 2021, we completed a sale-leaseback transaction for two properties in California. The sale of these properties resulted in a reduction in net property and equipment of $11.1 million and a $2.4 million addition to both right of use assets and lease liabilities on the held-for-sale balance sheets, as well as a $29.7 million gain on sales of property and equipment on the discontinued operations statements of
operations.
All marketable securities as of March 31, 2022, December 31, 2021 and March 31, 2021 were classified as held-to-maturity and consisted of U.S. Government and agency obligations and corporate commercial paper maturing in three months to five years.
In accordance with ASC Topic 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for WMS property, plant and equipment, finite-lived tangible assets and right-of-use lease assets as of December 31, 2021.
Included in this balance and in accrued expenses and other current liabilities on our condensed consolidated balance sheets was $14.9 million, $28.6 million and $55.6 million as of March 31, 2022, December 31, 2021 and March 31, 2021, respectively, related to deficits in unconsolidated construction joint ventures, which includes provisions for losses.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the quarterly period ended March 31, 2022 |
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| |
| For the transition period from ___________ to ___________ |
| |
| Commission File Number: 1-12911 |
GRANITE CONSTRUCTION INCORPORATED
State of Incorporation: | I.R.S. Employer Identification Number: |
Delaware | 77-0239383 |
Address of principal executive offices:
585 W. Beach Street
Watsonville, California 95076
(831) 724-1011
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, $0.01 par value | GVA | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐ | Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of April 22, 2022.
Class | | Outstanding |
Common stock, $0.01 par value | | 45,364,428 |
Index
EXHIBIT 101.PRE |
EXHIBIT 104 |
PART I. FINANCIAL INFORMATION
Item 1. |
FINANCIAL STATEMENTS |
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands, except share and per share data)
| | March 31, 2022 | | | December 31, 2021 | | | March 31, 2021 | |
ASSETS | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | |
Cash and cash equivalents ($100,080, $92,783 and $110,486 related to consolidated construction joint ventures (“CCJVs”)) | | $ | 360,911 | | | $ | 395,647 | | | $ | 440,833 | |
Short-term marketable securities | | | 14,953 | | | | — | | | | — | |
Receivables, net ($48,795, $49,534 and $32,539 related to CCJVs) | | | 380,502 | | | | 464,588 | | | | 393,283 | |
Contract assets ($63,952, $50,054 and $37,683 related to CCJVs) | | | 180,023 | | | | 145,437 | | | | 144,780 | |
Inventories | | | 74,356 | | | | 61,965 | | | | 65,977 | |
Equity in construction joint ventures | | | 191,183 | | | | 189,911 | | | | 186,536 | |
Other current assets ($6,841, $8,091 and $12,298 related to CCJVs) | | | 179,024 | | | | 177,210 | | | | 59,938 | |
Current assets held-for-sale | | | 211,774 | | | | 392,641 | | | | 159,394 | |
Total current assets | | | 1,592,726 | | | | 1,827,399 | | | | 1,450,741 | |
Property and equipment, net ($13,458, $14,920 and $22,457 related to CCJVs) | | | 450,250 | | | | 433,504 | | | | 426,953 | |
Long-term marketable securities | | | 21,775 | | | | 15,600 | | | | 11,300 | |
Investments in affiliates | | | 22,987 | | | | 23,368 | | | | 27,760 | |
Goodwill | | | 53,715 | | | | 53,715 | | | | 53,715 | |
Right of use assets | | | 48,920 | | | | 49,312 | | | | 48,688 | |
Deferred income taxes, net | | | 25,880 | | | | 24,141 | | | | 40,306 | |
Other noncurrent assets | | | 65,888 | | | | 67,888 | | | | 69,291 | |
Noncurrent assets held-for-sale | | | — | | | | — | | | | 244,930 | |
Total assets | | $ | 2,282,141 | | | $ | 2,494,927 | | | $ | 2,373,684 | |
| | | | | | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | |
Current maturities of long-term debt | | $ | 8,735 | | | $ | 8,727 | | | $ | 8,700 | |
Accounts payable ($57,955, $55,012 and $52,217 related to CCJVs) | | | 285,390 | | | | 324,313 | | | | 269,497 | |
Contract liabilities ($55,085, $69,328 and $70,968 related to CCJVs) | | | 165,358 | | | | 200,041 | | | | 153,633 | |
Accrued expenses and other current liabilities ($7,535, $5,514 and $4,640 related to CCJVs) | | | 439,525 | | | | 452,829 | | | | 499,827 | |
Current liabilities held-for-sale | | | 40,246 | | | | 83,408 | | | | 68,478 | |
Total current liabilities | | | 939,254 | | | | 1,069,318 | | | | 1,000,135 | |
Long-term debt | | | 290,549 | | | | 331,191 | | | | 331,647 | |
Long-term lease liabilities | | | 32,682 | | | | 32,928 | | | | 35,540 | |
Other long-term liabilities | | | 62,493 | | | | 65,927 | | | | 64,442 | |
Long-term liabilities held-for-sale | | | — | | | | — | | | | 10,725 | |
Commitments and contingencies (see Note 18) | | | | | | | | | | | | |
Equity | | | | | | | | | | | | |
Preferred stock, $0.01 par value, authorized 3,000,000 shares, none outstanding | | | — | | | | — | | | | — | |
Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding: 45,364,137 shares as of March 31, 2022, 45,840,260 shares as of December 31, 2021 and 45,791,712 shares as of March 31, 2021 | | | 454 | | | | 458 | | | | 458 | |
Additional paid-in capital | | | 515,262 | | | | 559,752 | | | | 554,186 | |
Accumulated other comprehensive income (loss) | | | 1,573 | | | | (3,359 | ) | | | (3,714 | ) |
Retained earnings | | | 402,550 | | | | 410,831 | | | | 352,610 | |
Total Granite Construction Incorporated shareholders’ equity | | | 919,839 | | | | 967,682 | | | | 903,540 | |
Non-controlling interests | | | 37,324 | | | | 27,881 | | | | 27,655 | |
Total equity | | | 957,163 | | | | 995,563 | | | | 931,195 | |
Total liabilities and equity | | $ | 2,282,141 | | | $ | 2,494,927 | | | $ | 2,373,684 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - in thousands, except per share data)
Three Months Ended March 31, | | 2022 | | | 2021 | |
Revenue | | | | | | | | |
Construction | | $ | 474,935 | | | $ | 506,971 | |
Materials | | | 72,651 | | | | 59,361 | |
Total revenue | | | 547,586 | | | | 566,332 | |
Cost of revenue | | | | | | | | |
Construction | | | 426,743 | | | | 454,202 | |
Materials | | | 71,068 | | | | 58,418 | |
Total cost of revenue | | | 497,811 | | | | 512,620 | |
Gross profit | | | 49,775 | | | | 53,712 | |
Selling, general and administrative expenses | | | 58,501 | | | | 61,161 | |
Other costs (see Note 7) | | | 8,214 | | | | 74,309 | |
Gain on sales of property and equipment, net | | | (332 | ) | | | (2,245 | ) |
Operating loss | | | (16,608 | ) | | | (79,513 | ) |
Other (income) expense | | | | | | | | |
Interest income | | | (623 | ) | | | (233 | ) |
Interest expense | | | 3,575 | | | | 5,372 | |
Equity in (income) loss of affiliates, net | | | 306 | | | | (268 | ) |
Other (income) expense, net | | | 1,382 | | | | (226 | ) |
Total other expense, net | | | 4,640 | | | | 4,645 | |
Loss from continuing operations before benefit from income taxes | | | (21,248 | ) | | | (84,158 | ) |
Benefit from income taxes on continuing operations | | | (5,331 | ) | | | (21,757 | ) |
Net loss from continuing operations | | | (15,917 | ) | | | (62,401 | ) |
Net income (loss) from discontinued operations | | | 6,096 | | | | (2,922 | ) |
Net loss | | | (9,821 | ) | | | (65,323 | ) |
Amount attributable to non-controlling interests from continuing operations | | | (3,118 | ) | | | (872 | ) |
Net loss attributable to Granite Construction Incorporated from continuing operations | | | (19,035 | ) | | | (63,273 | ) |
Net income (loss) attributable to Granite Construction Incorporated from discontinued operations | | | 6,096 | | | | (2,922 | ) |
Net loss attributable to Granite Construction Incorporated | | $ | (12,939 | ) | | $ | (66,195 | ) |
| | | | | | | | |
Net income (loss) per share attributable to common shareholders (see Note 16): | | | | | | | | |
Basic continuing operations per share | | $ | (0.42 | ) | | $ | (1.38 | ) |
Basic discontinued operations per share | | | 0.13 | | | | (0.07 | ) |
Basic loss per share | | $ | (0.29 | ) | | $ | (1.45 | ) |
| | | | | | | | |
Diluted continuing operations per share | | $ | (0.42 | ) | | $ | (1.38 | ) |
Diluted discontinued operations per share | | | 0.13 | | | | (0.07 | ) |
Diluted loss per share | | $ | (0.29 | ) | | $ | (1.45 | ) |
| | | | | | | | |
Weighted average shares outstanding: | | | | | | | | |
Basic | | | 45,730 | | | | 45,697 | |
Diluted | | | 45,730 | | | | 45,697 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited - in thousands)
Three Months Ended March 31, | | 2022 | | | 2021 | |
Net loss | | $ | (9,821 | ) | | $ | (65,323 | ) |
Other comprehensive income, net of tax: | | | | | | | | |
Net unrealized gain on cash flow hedges | | $ | 2,436 | | | $ | 934 | |
Less: reclassification for net gains included in interest expense | | | 1,760 | | | | 610 | |
Net change | | $ | 4,196 | | | $ | 1,544 | |
Foreign currency translation adjustments, net | | | 736 | | | | (225 | ) |
Other comprehensive income | | $ | 4,932 | | | $ | 1,319 | |
Comprehensive loss | | $ | (4,889 | ) | | $ | (64,004 | ) |
Non-controlling interests in comprehensive income | | | (3,118 | ) | | | (872 | ) |
Comprehensive loss attributable to Granite Construction Incorporated | | $ | (8,007 | ) | | $ | (64,876 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited - in thousands, except share data)
| | | Outstanding Shares | | | | Common Stock | | | | Additional Paid-In Capital | | | | Accumulated Other Comprehensive Income (Loss) | | | | Retained Earnings | | | | Total Granite Shareholders’ Equity | | | | Non-controlling Interests | | | | Total Equity | |
Balances at December 31, 2021 | | | 45,840,260 | | | $ | 458 | | | $ | 559,752 | | | $ | (3,359 | ) | | $ | 410,831 | | | $ | 967,682 | | | $ | 27,881 | | | $ | 995,563 | |
Cumulative effect of newly adopted accounting standard (see Note 2) | | | — | | | | — | | | | (26,961 | ) | | | — | | | $ | 10,543 | | | $ | (16,418 | ) | | | — | | | $ | (16,418 | ) |
Balances at January 1, 2022 | | | 45,840,260 | | | | 458 | | | | 532,791 | | | | (3,359 | ) | | | 421,374 | | | | 951,264 | | | | 27,881 | | | | 979,145 | |
Net income (loss) | | | — | | | | — | | | | — | | | | — | | | | (12,939 | ) | | | (12,939 | ) | | | 3,118 | | | | (9,821 | ) |
Other comprehensive income | | | — | | | | — | | | | — | | | | 4,932 | | | | — | | | | 4,932 | | | | — | | | | 4,932 | |
Purchases of common stock (1) | | | (665,880 | ) | | | (6 | ) | | | (20,206 | ) | | | — | | | | — | | | | (20,212 | ) | | | — | | | | (20,212 | ) |
RSUs vested | | | 190,170 | | | | 2 | | | | (2 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
Dividends on common stock ($0.13 per share) | | | — | | | | — | | | | 69 | | | | — | | | | (5,885 | ) | | | (5,816 | ) | | | — | | | | (5,816 | ) |
Transactions with non-controlling interests | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6,325 | | | | 6,325 | |
Stock-based compensation expense and other | | | (413 | ) | | | — | | | | 2,610 | | | | — | | | | — | | | | 2,610 | | | | — | | | | 2,610 | |
Balances at March 31, 2022 | | | 45,364,137 | | | $ | 454 | | | $ | 515,262 | | | $ | 1,573 | | | $ | 402,550 | | | $ | 919,839 | | | $ | 37,324 | | | $ | 957,163 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balances at December 31, 2020 | | | 45,668,541 | | | $ | 457 | | | $ | 555,407 | | | $ | (5,035 | ) | | $ | 424,835 | | | $ | 975,664 | | | $ | 15,946 | | | $ | 991,610 | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | (66,195 | ) | | | (66,195 | ) | | | 872 | | | | (65,323 | ) |
Other comprehensive income | | | — | | | | — | | | | — | | | | 1,319 | | | | — | | | | 1,319 | | | | — | | | | 1,319 | |
Purchases of common stock (1) | | | (57,618 | ) | | | (1 | ) | | | (2,298 | ) | | | — | | | | — | | | | (2,299 | ) | | | — | | | | (2,299 | ) |
RSUs vested | | | 181,575 | | | | 2 | | | | (2 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
Dividends on common stock ($0.13 per share) | | | — | | | | — | | | | — | | | | — | | | | (5,953 | ) | | | (5,953 | ) | | | — | | | | (5,953 | ) |
Transactions with non-controlling interests | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,837 | | | | 10,837 | |
Stock-based compensation expense and other | | | (786 | ) | | | — | | | | 1,079 | | | | 2 | | | | (77 | ) | | | 1,004 | | | | — | | | | 1,004 | |
Balances at March 31, 2021 | | | 45,791,712 | | | $ | 458 | | | $ | 554,186 | | | $ | (3,714 | ) | | $ | 352,610 | | | $ | 903,540 | | | $ | 27,655 | | | $ | 931,195 | |
(1) This amount represents shares purchased in connection with employee tax withholding for RSUs vested under our 2012 and 2021 Equity Incentive Plans and stock repurchased in 2022 under the Board-approved repurchase plan.
The accompanying notes are an integral part of these condensed consolidated financial statements.
GRANITE CONSTRUCTION INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
Three Months Ended March 31, | | 2022 | | | 2021 | |
Operating activities | | | | | | | | |
Net loss | | $ | (9,821 | ) | | $ | (65,323 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | | | |
Depreciation, depletion and amortization | | | 16,737 | | | | 24,581 | |
Amortization related to long-term debt (see Note 15) | | | 652 | | | | 2,314 | |
Gain on sale of discontinued operations (see Note 3) | | | (6,234 | ) | | | — | |
Gain on sales of property and equipment, net | | | (598 | ) | | | (2,554 | ) |
Deferred income taxes | | | 2,545 | | | | — | |
Stock-based compensation | | | 2,614 | | | | 1,065 | |
Equity in net (income) loss from unconsolidated joint ventures | | | 3,627 | | | | (418 | ) |
Net income from affiliates | | | (1,289 | ) | | | (1,808 | ) |
Other non-cash adjustments | | | (299 | ) | | | (573 | ) |
Changes in assets and liabilities: | | | | | | | | |
Deposit/insurance receivable for legal settlement (see Note 18) | | | — | | | | (63,000 | ) |
Receivables | | | 85,957 | | | | 123,749 | |
Contract assets, net | | | (72,632 | ) | | | (33,432 | ) |
Inventories | | | (13,805 | ) | | | (4,249 | ) |
Contributions to unconsolidated construction joint ventures | | | (12,840 | ) | | | (22,180 | ) |
Distributions from unconsolidated construction joint ventures and affiliates | | | 250 | | | | 1,684 | |
Other assets, net | | | 1,264 | | | | (21,116 | ) |
Accounts payable | | | (44,028 | ) | | | (49,399 | ) |
Accrual for legal settlement (see Note 18) | | | — | | | | 129,000 | |
Accrued expenses and other liabilities, net | | | (2,280 | ) | | | 19,746 | |
Net cash provided by (used in) operating activities | | $ | (50,180 | ) | | $ | 38,087 | |
Investing activities | | | | | | | | |
Purchases of marketable securities | | | (19,940 | ) | | | (5,000 | ) |
Purchases of property and equipment | | | (31,269 | ) | | | (18,777 | ) |
Proceeds from sales of property and equipment | | | 2,483 | | | | 3,004 | |
Proceeds from the sale of discontinued operations (see Note 3) | | | 142,571 | | | | — | |
Issuance of notes receivable | | | (4,560 | ) | | | — | |
Collection of notes receivable | | | 111 | | | | 4,470 | |
Net cash provided by (used in) investing activities | | $ | 89,396 | | | $ | (16,303 | ) |
Financing activities | | | | | | | | |
Debt principal repayments | | | (63,059 | ) | | | (2,150 | ) |
Cash dividends paid | | | (5,959 | ) | | | (5,937 | ) |
Repurchases of common stock | | | (20,212 | ) | | | (2,299 | ) |
Contributions from non-controlling partners | | | 6,325 | | | | 8,361 | |
Distributions to non-controlling partners | | | — | | | | (2,902 | ) |
Other financing activities, net | | | 1 | | | | (65 | ) |
Net cash used in financing activities | | $ | (82,904 | ) | | $ | (4,992 | ) |
Net increase (decrease) in cash, cash equivalents and restricted cash | | | (43,688 | ) | | | 16,792 | |
Cash, cash equivalents and $1,512 in restricted cash at beginning of each period | | | 413,655 | | | | 437,648 | |
Cash, cash equivalents and $1,512 in restricted cash at end of each period | | $ | 369,967 | | | $ | 454,440 | |
Less: Cash, cash equivalents and $1,512 in restricted cash included in current assets held-for-sale at end of each period | | | 9,056 | | | | 13,607 | |
Cash and cash equivalents of continuing operations at end of period | | $ | 360,911 | | | $ | 440,833 | |
| | | | | | | | |
Supplementary Information | | | | | | | | |
Right of use assets obtained in exchange for lease obligations | | $ | 3,502 | | | $ | 603 | |
Cash paid for operating lease liabilities | | $ | 5,862 | | | $ | 5,457 | |
Cash paid during the period for: | | | | | | | | |
Interest | | $ | 2,090 | | | $ | 2,544 | |
Income taxes | | $ | 2 | | | $ | 148 | |
Non-cash investing and financing activities: | | | | | | | | |
RSUs issued, net of forfeitures | | $ | 6,606 | | | $ | (133 | ) |
Dividends declared but not paid | | $ | 5,897 | | | $ | 5,953 | |
Accrued equipment purchases | | $ | 5,511 | | | $ | 2,443 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements included herein have been prepared by Granite Construction Incorporated (“we,” “us,” “our,” the “Company” or “Granite”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), are unaudited and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 (“Annual Report”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. Further, the condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to state fairly our financial position at March 31, 2022 and 2021 and the results of our operations and cash flows for the periods presented. The December 31, 2021 condensed consolidated balance sheet data included herein was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP.
We prepared the accompanying condensed consolidated financial statements on the same basis as our annual consolidated financial statements, except for the adoption of Accounting Standards Update (“ASU”) 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) on January 1, 2022, the impact of which is described in Note 2.
Reclassifications: Certain reclassifications of prior period amounts have been made to conform to the current period presentation.
As discussed in more detail in Note 3, we concluded that our former Water and Mineral Services operating group (“WMS”) met the criteria for held for sale during the fourth quarter of 2021 and met the criteria for discontinued operation classification. As a result, WMS is presented in the condensed consolidated statements of operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses are presented in the condensed consolidated balance sheets as assets and liabilities held for sale.
Our operations are typically affected more by weather conditions during the first and fourth quarters of our fiscal year which may alter our construction schedules and can create variability in our revenues and profitability. Therefore, the results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.
2. Recently Issued and Adopted Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for the effects of the transition away from LIBOR and other reference rates. Also, in January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which provided clarification guidance to ASU 2020-04. These ASUs are effective at our option beginning with our quarter ended March 31, 2020 through December 31, 2022, and we expect to adopt these ASUs in the second quarter of 2022. As our Third Amended and Restated Credit Agreement dated May 18, 2021, as subsequently amended (the “Credit Agreement”) currently incorporates the use of the secured overnight financing rate as an alternative to LIBOR, we do not expect the adoption of these ASUs to have a material impact on our condensed consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, which simplifies the accounting for convertible instruments resulting in accounting for convertible debt instruments as a single liability measured at its amortized cost and ASU 2020-06 is applicable to our 2.75% convertible senior notes due 2024 (“2.75% Convertible Notes;” see Note 15 for further discussion on these notes). In addition, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and eliminates the treasury stock method for convertible debt. We adopted ASU 2020-06 effective January 1, 2022, using the modified retrospective transition approach under which financial results reported in prior periods were not adjusted. Upon adoption, we recorded a net cumulative increase to debt of approximately $22.0 million and to deferred tax assets of $5.6 million, offset by a decrease to additional paid-in capital and retained earnings of $16.4 million.
As of March 31, 2022, the 2.75% Convertible Notes comprised our only convertible debt instrument. The 2.75% Convertible Notes were issued in November 2019 in an aggregate principal amount of $230.0 million, with an interest rate of 2.75% and a maturity date of 2024. The 2.75% Convertible Notes are convertible at the option of the holders prior to May 1, 2024 only during certain periods and upon the occurrence of certain events. After May 1, 2024, the 2.75% Convertible Notes will be convertible at the option of the holders at any time until October 30, 2024.
The conversion rate applicable to the 2.75% Convertible Notes is 31.7776 shares of Granite common stock per $1,000 principal amount of 2.75% Convertible Notes, which is equivalent to an initial conversion price of approximately $31.47 per share of Granite common stock. Upon conversion, we will pay or deliver shares of Granite common stock or a combination of cash and shares of Granite common stock, at our election. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2.75% Convertible Notes, (the “Indenture”) or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its 2.75% Convertible Notes in connection with such a make-whole fundamental change or notice of redemption.
On or after November 7, 2022, we have the option to redeem for cash all or any portion of the 2.75% Convertible Notes if the last reported sale price of our common stock is equal to or greater than 130% of the conversion price for a specified period of time. Upon the occurrence of a “fundamental change” as defined in the Indenture, holders may require us to repurchase for cash all or any portion of their 2.75% Convertible Notes at a price equal to 100% of the principal amount plus any accrued and unpaid interest. In addition, as described in the Indenture, certain events of default including, but not limited to, bankruptcy, insolvency or reorganization, may result in the 2.75% Convertible Notes becoming due and payable immediately.
In connection with the adoption of ASU 2020-06, we implemented the following accounting policy as of January 1, 2022:
Computation of Earnings per Share: Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares include common share equivalents issued under the terms of the 2012 and 2021 Equity Incentive Plans and common share equivalents issuable under our 2.75% Convertible Notes using the if-converted method. Dilutive potential common shares also include common share equivalents issuable under the terms of our warrants assuming the share price of our common stock was in excess of $53.44, the exercise price of warrants.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
3. Discontinued Operations
During the fourth quarter of 2021, our Board of Directors approved a plan to sell the businesses in WMS within the next twelve months. This includes: 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”). After consideration of the relevant facts, we concluded the assets and liabilities of our WMS businesses met the criteria for classification as held for sale. We concluded the proposed disposal activities represented a strategic shift that would have a major effect on our operations and financial results and qualified for presentation as discontinued operations in accordance with FASB Accounting Standards Codification (“ASC”) Topic 205-20, Presentation of financial statements - Discontinued operations. Accordingly, the financial results of these businesses are presented in the condensed consolidated statement of operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses not sold as of the balance sheet date are presented in the condensed consolidated balance sheets as assets and liabilities held for sale for all periods presented.
On March 16, 2022, we completed the sale of Inliner to Inland Pipe Rehabilitation LLC (“IPR”) and 1000097155 Ontario Inc. (“Ontario” and together with IPR, the “Purchasers”), investment affiliates of J.F. Lehman & Company, for a purchase price of $159.7 million, subject to certain adjustments. As a result of the sale, we received cash proceeds of $142.6 million based on preliminary post-closing adjustments and we recognized a gain of $6.2 million. The gain on sale was included in the net income from discontinued operations in the condensed consolidated statements of operations during the three months ended March 31, 2022. The Water Resources and Mineral Services businesses continued to meet the criteria for classification as held-for-sale and the financial results remain in discontinued operations as of March 31, 2022 and are expected to be sold within the next 12 months.
The following table presents summarized balance sheet information of assets and liabilities held-for-sale:
(in thousands) | | March 31, 2022 | | | December 31, 2021 | | | March 31, 2021 | |
Cash and cash equivalents | | $ | 7,544 | | | $ | 16,496 | | | $ | 12,095 | |
Receivables, net | | | 54,652 | | | | 102,208 | | | | 81,877 | |
Contract assets | | | 16,700 | | | | 41,340 | | | | 40,440 | |
Inventories | | | 11,954 | | | | 19,625 | | | | 20,635 | |
Other current assets | | | 1,270 | | | | 1,781 | | | | 4,347 | |
Property and equipment, net | | | 40,490 | | | | 70,912 | | | | 101,220 | |
Investments in affiliates | | | 50,453 | | | | 48,675 | | | | 47,399 | |
Goodwill | | | 19,982 | | | | 63,063 | | | | 63,092 | |
Right of use assets | | | 4,839 | | | | 12,365 | | | | 8,362 | |
Other noncurrent assets | | | 3,890 | | | | 16,176 | | | | 24,857 | |
Total assets classified as held-for-sale | | $ | 211,774 | | | $ | 392,641 | | | $ | 404,324 | |
| | | | | | | | | | | | |
Accounts payable | | $ | 16,682 | | | $ | 37,997 | | | $ | 37,337 | |
Contract liabilities | | | 3,447 | | | | 7,129 | | | | 6,516 | |
Other current liabilities | | | 15,808 | | | | 27,764 | | | | 24,625 | |
Long-term lease liabilities | | | 2,641 | | | | 8,352 | | | | 6,167 | |
Other long-term liabilities | | | 1,668 | | | | 2,166 | | | | 4,558 | |
Total liabilities classified as held-for-sale | | $ | 40,246 | | | $ | 83,408 | | | $ | 79,203 | |
The following table represents summarized statements of operations information of discontinued operations (in thousands):
Three Months Ended March 31, | | 2022 | | | 2021 | |
Revenue | | $ | 102,961 | | | $ | 103,581 | |
Cost of revenue | | | 88,727 | | | | 93,975 | |
Gross profit | | | 14,234 | | | | 9,606 | |
Selling, general and administrative expenses | | | 11,618 | | | | 14,568 | |
Other costs | | | 1,343 | | | | 1,526 | |
Gain on sale of discontinued operations | | | (6,234 | ) | | | — | |
Gain on sales of property and equipment, net | | | (266 | ) | | | (310 | ) |
Operating income (loss) | | | 7,773 | | | | (6,178 | ) |
Other income, net | | | (1,608 | ) | | | (2,558 | ) |
Income (loss) from discontinued operations before provision for (benefit from) income taxes | | | 9,381 | | | | (3,620 | ) |
Provision for (benefit from) income taxes | | | 3,285 | | | | (698 | ) |
Net income (loss) from discontinued operations | | $ | 6,096 | | | $ | (2,922 | ) |
As required per ASC Topic 205-20, Presentation of financial statements - Discontinued operation, components included in the condensed consolidated statement of cash flows for the discontinued operations are as follows (in thousands):
| | | | |
Three Months Ended March 31, | 2022 | 2021 |
Depreciation, depletion and amortization (1) | $ | — | $ | 10,059 |
Gain on sale of discontinued operations | $ | 6,234 | $ | — |
Purchases of property and equipment | $ | 3,376 | $ | 3,307 |
Proceeds from sale of discontinued operations | $ | 142,571 | $ | — |
(1) - In accordance with ASC Topic 360, Property, Plant, and Equipment, we ceased recording depreciation and amortization for WMS property, plant and equipment, finite-lived tangible assets and right-of-use lease assets as of December 31, 2021.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
4. Revisions in Estimates
Our profit recognition related to construction contracts is based on estimates of transaction price and costs to complete each project. These estimates can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, and uncertainties are resolved. Changes in estimates of transaction price and costs to complete may result in the reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate. In addition, the estimated or actual recovery related to estimated costs associated with unresolved affirmative claims and back charges may be recorded in future periods or may be at values below the associated cost, which can cause fluctuations in the gross profit impact from revisions in estimates.
When we experience significant revisions in our estimates, we undergo a process that includes reviewing the nature of the changes to ensure that there are no material amounts that should have been recorded in a prior period rather than as revisions in estimates for the current period. For revisions in estimates, generally we use the cumulative catch-up method for changes to the transaction price that are part of a single performance obligation. Under this method, revisions in estimates are accounted for in their entirety in the period of change. There can be no assurance that we will not experience further changes in circumstances or otherwise be required to revise our estimates in the future.
In our review of these changes for the three months ended March 31, 2022 and 2021, we did not identify any material amounts that should have been recorded in a prior period.
There were no increases or decreases from revisions in estimates, which individually had an impact of $5.0 million or more on gross profit for the three months ended March 31, 2022. During the three months ended March 31, 2021, there was one project with a decrease from revisions in estimates that had an impact to gross profit of $5.3 million, to net loss from continuing operations of $4.1 million and to diluted loss per share from continuing operations of $0.09. This decrease was due to additional costs from lower productivity than originally anticipated and weather impacts.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
5. Disaggregation of Revenue
We disaggregate our revenue based on our reportable segments (see Note 19) and operating groups as these are the formats that are regularly reviewed by management. Our reportable segments are: Construction and Materials. In alphabetical order, our operating groups from continuing operations are: California, Central and Mountain. The following tables present our disaggregated revenue from continuing operations by operating group (in thousands):
Three Months Ended March 31,
2022 | | Construction | | | Materials | | | Total | |
California | | $ | 144,387 | | | $ | 45,687 | | | $ | 190,074 | |
Central | | | 224,093 | | | | 10,362 | | | | 234,455 | |
Mountain | | | 106,455 | | | | 16,602 | | | | 123,057 | |
Total | | $ | 474,935 | | | $ | 72,651 | | | $ | 547,586 | |
2021 | | Construction | | | Materials | | | Total | |
California | | $ | 159,266 | | | $ | 41,956 | | | $ | 201,222 | |
Central | | | 253,293 | | | | 8,380 | | | | 261,673 | |
Mountain | | | 94,412 | | | | 9,025 | | | | 103,437 | |
Total | | $ | 506,971 | | | $ | 59,361 | | | $ | 566,332 | |
6. Unearned Revenue
The following table presents our unearned revenue from continuing operations as of the respective periods:
(in thousands) | | March 31, 2022 | | | December 31, 2021 | | | March 31, 2021 | |
California | | $ | 768,013 | | | $ | 771,759 | | | $ | 834,815 | |
Central | | | 1,192,812 | | | | 1,334,901 | | | | 1,798,761 | |
Mountain | | | 530,712 | | | | 488,425 | | | | 537,976 | |
Total | | $ | 2,491,537 | | | $ | 2,595,085 | | | $ | 3,171,552 | |
All unearned revenue is in the Construction segment. Approximately $ 2.0 billion of the March 31, 2022 unearned revenue is expected to be recognized within the next twelve months and the remaining amount will be recognized thereafter.
7. Other Costs
Other costs included in the condensed consolidated statements of operations for the quarter ended March 31, 2022 primarily consisted of non-recurring legal fees related to the lawsuits discussed in Note 18. Other costs included in the condensed consolidated statements of operations for the quarter ended March 31, 2021 primarily consisted of $66 million in net settlement charges incurred during 2021 as further described in Note 18 and non-recurring legal and accounting fees related to the Audit/Compliance Committee’s independent investigation of prior-period reporting for the former Heavy Civil operating group, which was completed in early 2021.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
8. Contract Assets and Liabilities
During the three months ended March 31, 2022 and 2021, we recognized revenue of $159.9 million and $139.2 million, respectively, that was included in the contract liability balances at December 31, 2021 and 2020, respectively.
As a result of changes in contract transaction price related to performance obligations that were satisfied or partially satisfied prior to the end of the periods, we recognized revenue of $41.1 million and $61.5 million during the three months ended March 31, 2022 and 2021, respectively. The changes in contract transaction price were from items such as executed or estimated change orders and unresolved contract modifications and claims.
As of March 31, 2022, December 31, 2021 and March 31, 2021, the aggregate claim recovery estimates included in contract asset balances were $38.6 million, $39.0 million and $38.9 million, respectively.
The components of the contract asset balances as of the respective dates were as follows:
(in thousands) | | | March 31, 2022 | | | | December 31, 2021 | | | | March 31, 2021 | |
Costs in excess of billings and estimated earnings | | $ | 45,393 | | | $ | 14,158 | | | $ | 39,410 | |
Contract retention | | | 134,630 | | | | 131,279 | | | | 105,370 | |
Total contract assets | | $ | 180,023 | | | $ | 145,437 | | | $ | 144,780 | |
As of March 31, 2022, December 31, 2021 and March 31, 2021, contract retention receivable from Brightline Trains Florida LLC represented 14.6%, 17.2% and 13.5%, respectively, of total contract assets. No other contract retention receivable individually exceeded 10% of total contract assets at any of the presented dates. The majority of the contract retention balance is expected to be collected within one year.
The components of the contract liability balances as of the respective dates were as follows:
(in thousands) | | | March 31, 2022 | | | | December 31, 2021 | | | | March 31, 2021 | |
Billings in excess of costs and estimated earnings, net of retention | | $ | 142,065 | | | $ | 169,542 | | | $ | 126,850 | |
Provisions for losses | | | 23,293 | | | | 30,499 | | | | 26,783 | |
Total contract liabilities | | $ | 165,358 | | | $ | 200,041 | | | $ | 153,633 | |
9. Receivables, net
Receivables include billed and unbilled amounts for services provided to clients for which we have an unconditional right to payment as of the end of the applicable period and generally do not bear interest. The following table presents major categories of receivables:
(in thousands) | | March 31, 2022 | | | December 31, 2021 | | | March 31, 2021 | |
Contracts completed and in progress: | | | | | | | | | | | | |
Billed | | $ | 158,762 | | | $ | 236,053 | | | $ | 137,174 | |
Unbilled | | | 111,058 | | | | 126,371 | | | | 111,654 | |
Total contracts completed and in progress | | | 269,820 | | | | 362,424 | | | | 248,828 | |
Materials sales | | | 45,967 | | | | 43,746 | | | | 35,252 | |
Other | | | 65,520 | | | | 59,496 | | | | 110,487 | |
Total gross receivables | | | 381,307 | | | | 465,666 | | | | 394,567 | |
Less: allowance for credit losses | | | 805 | | | | 1,078 | | | | 1,284 | |
Total net receivables | | $ | 380,502 | | | $ | 464,588 | | | $ | 393,283 | |
Included in other receivables at March 31, 2022, December 31, 2021 and March 31, 2021, were items such as estimated recovery from back charge claims, notes receivable, insurance receivable, fuel tax refunds and income tax refunds. Other receivables at March 31, 2022 and December 31, 2021 also included $24.9 million and $20.4 million of working capital contributions in the form of a loan to a partner in one of our unconsolidated joint ventures that bears interest at prime plus 3.00% per annum. Other than the $63.0 million insurance receivable as of March 31, 2021 related to the settlement discussed in Note 18, no other receivable individually exceeded 10% of total net receivables at any of these dates.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
10. Fair Value Measurement
The following tables summarize significant assets and liabilities measured at fair value in the condensed consolidated balance sheets on a recurring basis for each of the fair value levels (in thousands):
| | Fair Value Measurement at Reporting Date Using | |
March 31, 2022 | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Cash equivalents | | | | | | | | | | | | | | | | |
Money market funds | | $ | 21,237 | | | $ | — | | | $ | — | | | $ | 21,237 | |
Other current assets | | | | | | | | | | | | | | | | |
Commodity swap | | | — | | | | 3,047 | | | | — | | | | 3,047 | |
Total assets | | $ | 21,237 | | | $ | 3,047 | | | $ | — | | | $ | 24,284 | |
Accrued and other current liabilities | | | | | | | | | | | | | | | | |
Interest rate swap | | $ | — | | | $ | 507 | | | $ | — | | | $ | 507 | |
Total liabilities | | $ | — | | | $ | 507 | | | $ | — | | | $ | 507 | |
December 31, 2021 | | | | | | | | | | | | | | | | |
Cash equivalents | | | | | | | | | | | | | | | | |
Money market funds | | $ | 65,233 | | | $ | — | | | $ | — | | | $ | 65,233 | |
Total assets | | $ | 65,233 | | | $ | — | | | $ | — | | | $ | 65,233 | |
Accrued and other current liabilities | | | | | | | | | | | | | | | | |
Interest rate swap | | $ | — | | | $ | 3,514 | | | $ | — | | | $ | 3,514 | |
Total liabilities | | $ | — | | | $ | 3,514 | | | $ | — | | | $ | 3,514 | |
March 31, 2021 | | | | | | | | | | | | | | | | |
Cash equivalents | | | | | | | | | | | | | | | | |
Money market funds | | $ | 42,488 | | | $ | — | | | $ | — | | | $ | 42,488 | |
Other current assets | | | | | | | | | | | | | | | | |
Commodity swap | | | — | | | | 1,106 | | | | — | | | | 1,106 | |
Total assets | | $ | 42,488 | | | $ | 1,106 | | | $ | — | | | $ | 43,594 | |
Accrued and other current liabilities | | | | | | | | | | | | | | | | |
Interest rate swap | | $ | — | | | $ | 6,535 | | | $ | — | | | $ | 6,535 | |
Total liabilities | | $ | — | | | $ | 6,535 | | | $ | — | | | $ | 6,535 | |
Interest Rate Swaps
In connection with entering into the Credit Agreement, we entered into two interest rate swaps with a combined initial notional amount of $150.0 million, an effective date of May 2018 and maturity dates in May 2023. The interest rate swaps were designated as cash flow hedges through the three months ended March 31, 2021 and de-designated as cash flow hedges during the three months ended June 30, 2021. The impact from the interest rate swap de-designation that was included in interest expense on the condensed consolidated statements of operations was $0.7 million for the three months ended March 31, 2022.
During the three months ended March 31, 2022, we terminated $60.9 million, or 50%, of the notional amount of our floating-to-fixed interest rate swaps in connection with the prepayment of the same amount of our term loan (see Note 15).
Commodity Swaps
As of March 31, 2022, we held commodity swaps for crude oil designated as cash flow hedges with a total outstanding notional amount of $17.9 million maturing by October 31, 2022. The financial statement impact during the three months ended March 31, 2022 was a realized gain of $0.4 million and an unrealized gain of $3.3 million. As of March 31, 2021, we held commodity swaps for crude oil that were designated as cash flow hedges, maturing in September and October 2021. The total commodity swap gain for these swaps was $1.0 million.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Other Assets and Liabilities
The carrying values and estimated fair values of financial instruments that are not required to be recorded at fair value in the condensed consolidated balance sheets were as follows:
| | | March 31, 2022 | | | December 31, 2021 | | | March 31, 2021 | |
(in thousands) | Fair Value Hierarchy | | Carrying Value | | | Fair Value | | | Carrying Value | | | Fair Value | | | Carrying Value | | | Fair Value | |
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Held-to-maturity marketable securities (1) | Level 1 | | $ | 36,728 | | | $ | 35,909 | | | $ | 15,600 | | | $ | 15,459 | | | $ | 11,300 | | | $ | 11,258 | |
Liabilities (including current maturities): | | | | | | | | | | | | | | | | | | | | | | | | | |
2.75% Convertible Notes (2),(3) | Level 2 | | $ | 230,000 | | | $ | 276,288 | | | $ | 207,354 | | | $ | 313,785 | | | $ | 202,018 | | | $ | 324,013 | |
Credit Agreement - term loan (2) | Level 3 | | $ | 60,938 | | | $ | 62,861 | | | $ | 123,750 | | | $ | 124,598 | | | $ | 129,375 | | | $ | 130,645 | |
(1) All marketable securities as of March 31, 2022, December 31, 2021 and March 31, 2021 were classified as held-to-maturity and consisted of U.S. Government and agency obligations and corporate commercial paper maturing in three months to five years.
(2) The fair value of the 2.75% Convertible Notes is based on the median price of the notes in an active market. The fair value of the Credit Agreement is based on borrowing rates available to us for long-term loans with similar terms, average maturities, and credit risk. See Note 15 for more information about the 2.75% Convertible Notes and the Credit Agreement.
(3) Excluded from the carrying value is debt discount of $22.6 million and $28.0 million as of December 31, 2021 and March 31, 2021, respectively, related to the 2.75% Convertible Notes (see Notes 2 and 15).
During the three months ended March 31, 2022 and 2021, we did not record any fair value adjustments related to nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.
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 months ended March 31, 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 March 31, 2022, there was approximately $0.5 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $0.2 billion represented our share and the remaining $0.3 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 March 31, 2022, we were engaged in nine active CCJV projects with total contract values ranging from $12.0 million to $437.2 million for a combined total of $1.7 billion of which our share was $960.0 million. As of March 31, 2022, our share of revenue remaining to be recognized on these CCJVs was $227.2 million and ranged from $6.5 million to $68.4 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, 2022 and 2021, total revenue from CCJVs was $107.6 million and $82.6 million, respectively. During the three months ended March 31, 2022 and 2021, CCJVs provided $(7.6) million and $13.8 million of operating cash flows, respectively.
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Unconsolidated Construction Joint Ventures
As of March 31, 2022, we were engaged in nine active unconsolidated joint venture projects with total contract values ranging from $13.9 million to $3.8 billion for a combined total of $10.7 billion of which our share was $3.0 billion. Our proportionate share of the equity in these unconsolidated construction joint ventures ranged from 20.0% to 50.0%. As of March 31, 2022, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $135.7 million and ranged from $1.3 million to $36.1 million by project.
The following is summary financial information related to unconsolidated construction joint ventures:
(in thousands) | | March 31, 2022 | | | December 31, 2021 | | | March 31, 2021 | |
Assets | | | | | | | | | | | | |
Cash, cash equivalents and marketable securities | | $ | 157,869 | | | $ | 182,891 | | | $ | 161,574 | |
Other current assets (1) | | |