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Revenue Recognition
6 Months Ended
Jun. 30, 2020
Revenue From Contract With Customer [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 markets provide 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. 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.  

Changes in the three and six months ended June 30, 2020 compared to the prior year period were primarily from the increase of revenue in the health, education, and social programs client market as a result of additional work performed for U.S. government clients, including the ITG acquisition, offset by decreases in revenue from the commercial clients primarily in the consumer and financial services and health, education and social programs markets and decreases in the U.S. state and local clients in the energy, environment, and infrastructure markets. Similarly, for the three and six months ended June 30, 2020 revenue from time-and-materials and cost-based contracts increased while revenue from fixed price contracts decreased compared to the prior year period.

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Client Markets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy, environment, and infrastructure

 

$

151,481

 

 

 

43

%

 

$

166,520

 

 

 

45

%

 

$

303,839

 

 

 

43

%

 

$

320,035

 

 

 

45

%

Health, education, and social programs

 

 

148,528

 

 

 

42

%

 

 

134,346

 

 

 

37

%

 

 

291,114

 

 

 

41

%

 

 

256,255

 

 

 

36

%

Safety and security

 

 

31,440

 

 

 

9

%

 

 

30,030

 

 

 

8

%

 

 

63,025

 

 

 

9

%

 

 

59,581

 

 

 

9

%

Consumer and financial services

 

 

22,538

 

 

 

6

%

 

 

35,821

 

 

 

10

%

 

 

54,247

 

 

 

7

%

 

 

72,100

 

 

 

10

%

Total

 

$

353,987

 

 

 

100

%

 

$

366,717

 

 

 

100

%

 

$

712,225

 

 

 

100

%

 

$

707,971

 

 

 

100

%

 

 

 

Three Months Ended

 

 

Six Months Ended June 30,

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

2020

 

 

2019

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Client Type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. federal government

 

$

170,748

 

 

 

48

%

 

$

141,253

 

 

 

38

%

 

$

326,318

 

 

 

46

%

 

$

273,465

 

 

 

39

%

U.S. state and local government

 

 

57,982

 

 

 

17

%

 

 

73,101

 

 

 

20

%

 

 

119,288

 

 

 

17

%

 

 

138,928

 

 

 

20

%

International government

 

 

18,098

 

 

 

5

%

 

 

31,617

 

 

 

9

%

 

 

41,190

 

 

 

6

%

 

 

58,751

 

 

 

8

%

Total Government

 

 

246,828

 

 

 

70

%

 

 

245,971

 

 

 

67

%

 

 

486,796

 

 

 

69

%

 

 

471,144

 

 

 

67

%

Commercial

 

 

107,159

 

 

 

30

%

 

 

120,746

 

 

 

33

%

 

 

225,429

 

 

 

31

%

 

 

236,827

 

 

 

33

%

Total

 

$

353,987

 

 

 

100

%

 

$

366,717

 

 

 

100

%

 

$

712,225

 

 

 

100

%

 

$

707,971

 

 

 

100

%

 

 

 

Three Months Ended

 

 

Six Months Ended June 30,

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

2020

 

 

2019

 

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

 

Dollars

 

 

Percent

 

Contract Mix:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Time-and-materials

 

$

168,489

 

 

 

48

%

 

$

167,009

 

 

 

46

%

 

$

336,639

 

 

 

47

%

 

$

322,191

 

 

 

45

%

Fixed price

 

 

123,970

 

 

 

35

%

 

 

146,967

 

 

 

40

%

 

 

257,122

 

 

 

36

%

 

 

281,416

 

 

 

40

%

Cost-based

 

 

61,528

 

 

 

17

%

 

 

52,741

 

 

 

14

%

 

 

118,464

 

 

 

17

%

 

 

104,364

 

 

 

15

%

Total

 

$

353,987

 

 

 

100

%

 

$

366,717

 

 

 

100

%

 

$

712,225

 

 

 

100

%

 

$

707,971

 

 

 

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 contract assets (liabilities) as of June 30, 2020 increased by $15.5 million as compared to December 31, 2019. The increase in net contract assets (liabilities) is primarily due to work in the health, education and social programs, including the ITG acquisition, and energy, environmental, and infrastructure client markets, offset by consumer and financial services markets. There were no material changes to contract balances due to impairments during the period.

 

 

 

June 30, 2020

 

 

December 31, 2019

 

 

$ Change

 

 

% Change

 

Contract assets

 

$

150,577

 

 

$

142,337

 

 

$

8,240

 

 

 

5.8

%

Contract liabilities

 

 

(30,135

)

 

 

(37,413

)

 

 

7,278

 

 

 

(19.5

%)

Net contract assets (liabilities)

 

$

120,442

 

 

$

104,924

 

 

$

15,518

 

 

 

14.8

%

Performance Obligations:

The Company had $1.5 billion in unfulfilled performance obligations as of June 30, 2020, 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.