Accounts Receivable, Net of Allowance, and Contract Assets and Liabilities

9 Months Ended

Sep. 30, 2023

Accounts Receivable, Net of Allowance, and Contract Assets and Liabilities

The following table provides details of accounts receivable, net of allowance, and contract assets (together, “accounts receivable, net”) as of the dates indicated (in millions):


	September 30, 2023		December 31, 2022
Contract billings	$	1,551.8	$	1,408.1
Less allowance	(8.9)		(8.4)
Accounts receivable, net of allowance	$	1,542.9	$	1,399.7

Retainage	351.0		401.9
Unbilled receivables	1,616.0		1,328.0
Contract assets	$	1,967.0	$	1,729.9

Contract billings represent the amount of performance obligations that have been billed but not yet collected, whereas contract assets consist of unbilled receivables and retainage. Unbilled receivables represent the estimated value of unbilled work for projects with performance obligations recognized over time. Unbilled receivables, which are included in contract assets, include amounts for work performed for which the Company has an unconditional right to receive payment and that are not subject to the completion of any other specific task, other than the billing itself. Retainage represents a portion of the contract amount that has been billed, but for which the contract allows the customer to retain a portion of the billed amount until final contract settlement, which is generally, from 5% to 10% of contract billings. The increase in unbilled receivables as of September 30, 2023 was driven, in large part, by ordinary course project activity associated with higher levels of revenue in the Company’s Oil and Gas segment, as well as timing of billings across the Company’s segments. For the nine month period ended September 30, 2023, provisions for credit losses totaled a recovery of approximately $0.1 million, and for the nine month period ended September 30, 2022, provisions for credit losses totaled approximately $0.7 million. Impairment losses on contract assets were not material in either period.

Contract liabilities consist primarily of deferred revenue. Under certain contracts, the Company may be entitled to invoice the customer and receive payments in advance of performing the related contract work. In those instances, the Company recognizes a liability for advance billings in excess of revenue recognized, which is referred to as deferred revenue. Contract liabilities also include the amount of any accrued project losses. Total contract liabilities, including accrued project losses, totaled approximately $506.5 million and $406.2 million as of September 30, 2023 and December 31, 2022, respectively, of which deferred revenue comprised approximately $496.0 million and $390.3 million, respectively. The increase in contract liabilities as of September 30, 2023 was driven primarily by ordinary course project activity, including in connection with new project starts within the Company’s Clean Energy and Infrastructure segment. For the nine month period ended September 30, 2023, the Company recognized revenue of approximately $355.3 million related to amounts that were included in deferred revenue as of December 31, 2022, resulting primarily from the advancement of physical progress on the related projects during the period, including amounts from recently acquired businesses.

The Company is party to non-recourse financing arrangements in the ordinary course of business, under which certain receivables are sold to a financial institution in return for a nominal fee. In certain instances, the Company continues to service the transferred receivable, for which the corresponding servicing assets or liabilities are not material. For the nine month period ended September 30, 2023, the Company sold approximately $50 million of receivables under this program, and as of September 30, 2023, the Company had approximately $47 million of outstanding sold receivables, which are excluded from Accounts Receivable, net of Allowance, in the consolidated balance sheets. The servicing of such receivables is not considered to constitute significant continuing involvement and the receivables are correspondingly accounted for as sales under ASC Topic 860, “Transfers and Servicing.” Cash collections from such financing arrangements are reflected within operating activities in the consolidated statements of cash flows. The Company is also party to an arrangement with a customer, which allows for early collection of receivables for a nominal fee, at the Company’s option. Discount charges related to these arrangements, which are included within interest expense, net, totaled approximately $3.8 million and $2.4 million for the three month periods ended September 30, 2023 and 2022, respectively, and totaled $11.8 million and $4.9 million, respectively, for the nine month periods ended September 30, 2023 and 2022.