Revenue Receivables and Contract Assets and Liabilities

3 Months Ended

Mar. 29, 2024

Revenue from Contract with Customer [Abstract]

Revenue Receivables and Contract Assets and Liabilities

Note 3. Revenue, Receivables and Contract Assets and Liabilities

The following table presents the Company’s revenue disaggregated by contract types:

	Three Months Ended
	March 29,		March 31,
(In thousands)	2024		2023
Fixed-price	$	113,065	$	151,528
Cost reimbursable		6,505		10,843
Equipment and labor revenue		473		1,737
Total revenue	$	120,043	$	164,108

Projects started after the AECOM Sale Transactions ("Shimmick Projects") have focused on water infrastructure and other critical infrastructure. Projects that focus on foundation drilling are referred to as "Foundations Projects". Projects that started prior to consummation of the AECOM Sale Transactions are referred to as "Legacy Projects".

The following table presents the Company’s revenue disaggregated by Shimmick Projects, Foundations Projects and Legacy Projects:

	Three Months Ended
	March 29,		March 31,
(In thousands)	2024		2023
Shimmick Projects	$	90,292	$	88,099
Foundations Projects		6,640		20,104
Legacy Projects		23,111		55,905
Total revenue	$	120,043	$	164,108

Remaining performance obligations

The Company had $1.0 billion of remaining performance obligations yet to be satisfied as of March 29, 2024. Our remaining performance obligations have a weighted average life of 2.1 years as of March 29, 2024.

Contract Balances

The following table provides information about contract assets (also referred to as costs and estimated earnings in excess of billings on uncompleted contracts and retainage receivable) and contract liabilities (also referred to as billings on uncompleted contracts in excess of costs and estimated earnings and forward loss reserve), which include assets and liabilities that are dependent upon future activity:

	March 29,			December 29,
	2024			2023			Change
(In thousands)
Contract assets, current and non-current:
Costs and estimated earnings in excess of billings on uncompleted contracts	$	136,031		$	125,943		$	10,088
Retainage receivable		46,703			48,316			(1,613	)
Total contract assets		182,734			174,259			8,475
Contract liabilities, current and non-current:
Billings on uncompleted contracts in excess of costs and estimated earnings		(43,548	)		(48,841	)		5,293
Forward loss reserve		(69,360	)		(70,159	)		799
Total contract liabilities		(112,908	)		(119,000	)		6,092
Net	$	69,826		$	55,259		$	14,567

Contract terms with customers include the timing of billing and payment, which usually differs from the timing of revenue recognition. As a result, the Company carries contract assets and liabilities within the condensed consolidated balance sheets. These contract assets and liabilities are calculated on a contract-by-contract basis and reported on a net basis at the end of each period and are classified as current or non-current. Many of the contracts under which the Company performs work also contain retainage provisions. Retainage refers to that portion of our billings held for payment by the customer pending satisfactory completion of the project. Unless reserved, the Company assumes that all amounts retained by customers under such provisions are fully collectible. These assets and liabilities are reported in the condensed consolidated balance sheets within “Contract assets, current,” “Contract assets, non-current,” “Contract liabilities, current" and “Contract liabilities, non-current." Costs and estimated earnings in excess of billings on uncompleted contracts consists of revenue recognized in excess of billings. Billings on uncompleted contracts in excess of costs and estimated earnings consists of billings in excess of revenue recognized. The Company recognized revenue of $18.9 million during the three months ended March 29, 2024 that was included in contract liabilities as of December 29, 2023.

The Company’s timing of revenue recognition may not be consistent with its rights to bill and collect cash from its clients. Those rights are generally dependent upon advance billing terms, milestone billings based on the completion of certain phases of work or when services are performed. The Company’s accounts receivable represents amounts billed to clients that have yet to be collected and represent an unconditional right to cash from its clients as presented below.

	March 29,			December 29,
	2024			2023
(In thousands)
Total accounts receivable, gross	$	50,630		$	55,202
Allowance for credit losses		(930	)		(1,024	)
Accounts receivable, net	$	49,700		$	54,178

Substantially all contract assets as of March 29, 2024 and December 29, 2023 are expected to be collected within the Company’s estimated operating cycle, except for retainage and claims pertaining to certain contracts. The Company’s operating cycle may extend beyond one year.

The Company is in the process of negotiating or awaiting approval of unapproved change orders and claims with its customers. The Company is proceeding with its contractual rights to recoup additional costs incurred from its customers based on completing work associated with change orders, including change orders with pending change order pricing, or claims related to significant changes in scope which resulted in substantial delays and additional costs in completing the work. The Company may take legal action if it and the customer cannot reach a mutually acceptable resolution.

Information about significant customers

Significant Customers as a Percentage of Accounts Receivable, Net
As of March 29, 2024
Customer one	29.6%
Customer two	17.2%
As of December 29, 2023
Customer one	32.5%
Customer two	21.7%

Significant Customers as a Percentage of Revenue
Three Months Ended March 29, 2024
Customer one	21.2%
Customer two	14.8%
Three Months Ended March 31, 2023
Customer one	19.1%
Customer two	18.4%
Customer three	16.5%

Revisions in Estimates

Changes in contract estimates resulted in net decreases in gross margin of $18 million for the three months ended March 29, 2024, primarily due to increased forecasted cost to complete loss jobs.

There were no material changes in estimates for the three months ended March 31, 2023.