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

3 Months Ended

Mar. 31, 2024

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):


	March 31, 2024		December 31, 2023
Contract billings	$	1,330.7	$	1,385.2
Less allowance	(20.2)		(15.1)
Accounts receivable, net of allowance	$	1,310.5	$	1,370.1

Retainage	342.0		356.4
Unbilled receivables	1,243.0		1,400.0
Contract assets	$	1,585.0	$	1,756.4

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. For the three month periods ended March 31, 2024 and 2023, provisions for credit losses totaled approximately $5.2 million, including certain project-specific reserves, and $0.5 million, respectively. 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 $548.6 million and $481.0 million as of March 31, 2024 and December 31, 2023, respectively, of which deferred revenue comprised approximately $543.1 million and $475.2 million, respectively. For the three month periods ended March 31, 2024 and 2023, the Company recognized revenue of approximately $292.1 million and $287.6 million, respectively, related to amounts that were included in deferred revenue as of December 31, 2023 and 2022, respectively, resulting primarily from the advancement of physical progress on the related projects during the respective periods, including amounts from recently acquired businesses.

The Company is party to certain 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. Beginning in the third quarter of 2023, the Company entered into certain additional non-recourse financing arrangements under which it continues to manage collections for the transferred receivables, and for which the corresponding servicing assets or liabilities are not material. For the three month period ended March 31, 2024, the Company sold approximately $98 million of receivables under financing arrangements for which it continues to manage collections for the transferred receivable, and, as of March 31, 2024 and December 31, 2023, outstanding sold receivables related thereto totaled approximately $97 million and $64 million, respectively, which amounts are excluded from Accounts Receivable, net of Allowance, in the consolidated balance sheets. The Company’s involvement in the collection process for these receivables is not considered to constitute significant continuing involvement, and, therefore, the receivables are accounted for as a sale under ASC Topic 860, Transfers and Servicing. Cash collections from the sale of receivables are reflected within operating activities in the consolidated statements of cash flows. The Company is also party to arrangements with certain customers that allow for early collection of receivables for a nominal fee, at the Company’s option. Discount charges related to the above described financing arrangements, which are included within interest expense, net, totaled approximately $5.1 million and $3.8 million for the three month periods ended March 31, 2024 and 2023, respectively