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Revenue Recognition
6 Months Ended
Jun. 30, 2019
Disaggregation Of Revenue [Abstract]  
Revenue Recognition

NOTE 9 – REVENUE RECOGNITION

Disaggregation of Revenue

The Company disaggregates revenue from clients, most of which is earned over time, into categories that depict how the nature, amount and uncertainty of revenue and cash flows are affected by economic factors. Those categories are client market, client type and contract mix. Client market revenue information provides insight into the breadth of the Company’s expertise. In classifying revenue by client market, the Company attributes revenue from a client to the market that the Company believes is the client’s primary market. The Company also classifies revenue by the type of entity for which it does business, which is an indicator of the diversity of its client base. The Company attributes revenue generated from being a subcontractor to a commercial company as government revenue when the ultimate client is a government agency or department. Finally, disaggregation by contract mix provides insight in terms of the degree of performance risk that the Company has assumed. Fixed-price contracts are considered to provide the highest amount of performance risk as the Company is required to deliver a scope of work or level of effort for a negotiated fixed price. Time-and-materials contracts require the Company to provide skilled employees on contracts for negotiated fixed hourly rates. Since the Company is not required to deliver a scope of work, but merely skilled employees, it considers these contracts to be less risky than a fixed-price agreement. Cost-based contracts are considered to provide the lowest amount of performance risk since the Company is generally reimbursed for all contract costs incurred in performance of contract deliverables with only the amount of incentive or award fees (if applicable) dependent on the achievement of negotiated performance requirements.  

Increases in revenue from energy, environment, and infrastructure client markets, and U.S. state and local governments in the three and six months ended June 30, 2019 compared to the prior year period were primarily due to work performed on disaster recovery and relief efforts which also caused an increase in revenue generated through time-and-materials contracts. Consumer and financial services client market revenue increased primarily due to acquisitions during the prior year.

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Client Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy, environment, and infrastructure

 

$

166,998

 

 

 

46

%

 

$

133,276

 

 

 

41

%

 

$

320,988

 

 

 

46

%

 

$

257,526

 

 

 

41

%

Health, education, and social programs

 

 

133,919

 

 

 

36

%

 

 

131,141

 

 

 

41

%

 

 

255,057

 

 

 

36

%

 

 

254,069

 

 

 

41

%

Safety and security

 

 

29,818

 

 

 

8

%

 

 

27,491

 

 

 

8

%

 

 

59,047

 

 

 

8

%

 

 

52,966

 

 

 

8

%

Consumer and financial services

 

 

35,982

 

 

 

10

%

 

 

32,407

 

 

 

10

%

 

 

72,879

 

 

 

10

%

 

 

62,534

 

 

 

10

%

Total

 

$

366,717

 

 

 

100

%

 

$

324,315

 

 

 

100

%

 

$

707,971

 

 

 

100

%

 

$

627,095

 

 

 

100

%

 

 

 

Three Months Ended

 

 

Six Months Ended June 30,

 

 

 

June 30, 2019

 

 

June 30, 2018

 

 

2019

 

 

2018

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Client Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. federal government

 

$

141,193

 

 

 

38

%

 

$

139,517

 

 

 

43

%

 

$

273,363

 

 

 

39

%

 

$

273,750

 

 

 

44

%

U.S. state and local government

 

 

72,893

 

 

 

20

%

 

 

34,532

 

 

 

11

%

 

 

138,400

 

 

 

19

%

 

 

65,889

 

 

 

10

%

International government

 

 

31,652

 

 

 

9

%

 

 

34,615

 

 

 

11

%

 

 

58,865

 

 

 

8

%

 

 

63,383

 

 

 

10

%

Total Government

 

 

245,738

 

 

 

67

%

 

 

208,664

 

 

 

65

%

 

 

470,628

 

 

 

66

%

 

 

403,022

 

 

 

64

%

Commercial

 

 

120,979

 

 

 

33

%

 

 

115,651

 

 

 

35

%

 

 

237,343

 

 

 

34

%

 

 

224,073

 

 

 

36

%

Total

 

$

366,717

 

 

 

100

%

 

$

324,315

 

 

 

100

%

 

$

707,971

 

 

 

100

%

 

$

627,095

 

 

 

100

%

 

 

 

Three Months Ended

 

 

Six Months Ended June 30,

 

 

 

June 30, 2019

 

 

June 30, 2018

 

 

2019

 

 

2018

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Contract Mix:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time-and-materials

 

$

167,457

 

 

 

46

%

 

$

128,103

 

 

 

39

%

 

$

323,459

 

 

 

46

%

 

$

252,290

 

 

 

40

%

Fixed price

 

 

146,516

 

 

 

40

%

 

 

136,220

 

 

 

42

%

 

 

280,119

 

 

 

40

%

 

 

258,609

 

 

 

41

%

Cost-based

 

 

52,744

 

 

 

14

%

 

 

59,992

 

 

 

19

%

 

 

104,393

 

 

 

14

%

 

 

116,196

 

 

 

19

%

Total

 

$

366,717

 

 

 

100

%

 

$

324,315

 

 

 

100

%

 

$

707,971

 

 

 

100

%

 

$

627,095

 

 

 

100

%

Contract Balances:

Contract assets consist primarily of unbilled amounts resulting from long-term contracts when revenue recognized exceeds the amount billed often due to billing schedule timing. Contract liabilities result from advance payments received on a contract or from billings in excess of revenue recognized on long-term contracts due to billing schedule timing. The net contact assets (liabilities) increased $15.3 million due primarily to increases in contract assets and by a slight decrease in contract liabilities. The increase in contract assets is primarily due to hurricane relief and rebuild work for U.S. state and local governments, which is considered part of the energy, environment and infrastructure client market, and most of which has been performed on time-and-materials agreements. There were no material changes to contract balances due to impairments or business combinations during the period.

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

$ Change

 

 

% Change

 

Contract assets

 

$

141,960

 

 

$

126,688

 

 

$

15,272

 

 

 

12.1

%

Contract liabilities

 

 

(33,435

)

 

 

(33,494

)

 

 

59

 

 

 

(0.2

%)

Net contract assets (liabilities)

 

$

108,525

 

 

$

93,194

 

 

$

15,331

 

 

 

16.5

%

Performance Obligations:

The Company had $1.5 billion in unfulfilled performance obligations as of June 30, 2019, which primarily entail the future delivery of services for which revenue will be recognized over time. The obligations relate to continued or additional services required on contracts and were generally valued using an estimated cost plus margin approach, with variable consideration being estimated at the most likely amount.  The Company expects to satisfy these performance obligations, on average, in one to two years.