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Revenue Recognition
9 Months Ended
Sep. 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 market, and U.S. state and local governments in the three and nine months ended September 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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Client Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy, environment, and infrastructure

 

$

172,217

 

 

 

46

%

 

$

147,914

 

 

 

44

%

 

$

492,509

 

 

 

46

%

 

$

404,870

 

 

 

42

%

Health, education, and social programs

 

 

138,699

 

 

 

37

%

 

 

126,424

 

 

 

38

%

 

 

394,288

 

 

 

36

%

 

 

381,063

 

 

 

40

%

Safety and security

 

 

29,682

 

 

 

8

%

 

 

29,478

 

 

 

9

%

 

 

88,913

 

 

 

8

%

 

 

82,444

 

 

 

8

%

Consumer and financial services

 

 

33,320

 

 

 

9

%

 

 

29,152

 

 

 

9

%

 

 

106,179

 

 

 

10

%

 

 

91,686

 

 

 

10

%

Total

 

$

373,918

 

 

 

100

%

 

$

332,968

 

 

 

100

%

 

$

1,081,889

 

 

 

100

%

 

$

960,063

 

 

 

100

%

 

 

 

Three Months Ended

 

 

Nine Months Ended September 30,

 

 

 

September 30, 2019

 

 

September 30, 2018

 

 

2019

 

 

2018

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Client Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. federal government

 

$

148,181

 

 

 

40

%

 

$

140,276

 

 

 

42

%

 

$

421,287

 

 

 

39

%

 

$

413,599

 

 

 

43

%

U.S. state and local government

 

 

71,540

 

 

 

19

%

 

 

55,525

 

 

 

17

%

 

 

210,324

 

 

 

19

%

 

 

121,114

 

 

 

13

%

International government

 

 

28,020

 

 

 

7

%

 

 

26,559

 

 

 

8

%

 

 

86,885

 

 

 

8

%

 

 

89,950

 

 

 

9

%

Total Government

 

 

247,741

 

 

 

66

%

 

 

222,360

 

 

 

67

%

 

 

718,496

 

 

 

66

%

 

 

624,663

 

 

 

65

%

Commercial

 

 

126,177

 

 

 

34

%

 

 

110,608

 

 

 

33

%

 

 

363,393

 

 

 

34

%

 

 

335,400

 

 

 

35

%

Total

 

$

373,918

 

 

 

100

%

 

$

332,968

 

 

 

100

%

 

$

1,081,889

 

 

 

100

%

 

$

960,063

 

 

 

100

%

 

 

 

Three Months Ended

 

 

Nine Months Ended September 30,

 

 

 

September 30, 2019

 

 

September 30, 2018

 

 

2019

 

 

2018

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Contract Mix:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time-and-materials

 

$

184,330

 

 

 

49

%

 

$

146,525

 

 

 

44

%

 

$

507,926

 

 

 

47

%

 

$

398,815

 

 

 

42

%

Fixed price

 

 

135,274

 

 

 

36

%

 

 

126,126

 

 

 

38

%

 

 

415,258

 

 

 

38

%

 

 

384,751

 

 

 

40

%

Cost-based

 

 

54,314

 

 

 

15

%

 

 

60,317

 

 

 

18

%

 

 

158,705

 

 

 

15

%

 

 

176,497

 

 

 

18

%

Total

 

$

373,918

 

 

 

100

%

 

$

332,968

 

 

 

100

%

 

$

1,081,889

 

 

 

100

%

 

$

960,063

 

 

 

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 $27.8 million. 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.

 

 

 

September 30, 2019

 

 

December 31, 2018

 

 

$ Change

 

 

% Change

 

Contract assets

 

$

153,055

 

 

$

126,688

 

 

$

26,367

 

 

 

20.8

%

Contract liabilities

 

 

(32,086

)

 

 

(33,494

)

 

 

1,408

 

 

 

(4.2

%)

Net contract assets (liabilities)

 

$

120,969

 

 

$

93,194

 

 

$

27,775

 

 

 

29.8

%

Performance Obligations:

The Company had $1.6 billion in unfulfilled performance obligations as of September 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.