Commitment and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company is a party to claims and lawsuits arising out of its business and that of its consolidated subsidiaries, which may include, but are not limited to, matters involving property damage; personal injury; and environmental, contractual, statutory and regulatory obligations. The Company accrues a liability for those contingencies when the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not accrue a liability when the likelihood of an incurrence of a loss is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote. For contingencies where an unfavorable outcome is probable or reasonably possible and which are material, the Company discloses the nature of the contingency and, in some circumstances, an estimate of the possible loss.

Litigation

As of September 30, 2024 and December 31, 2023, the Company accrued for litigation-related contingent liabilities that have not been discounted of $1.4 million and $0.1 million, respectively, in Other accrued liabilities on the unaudited condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, the Company also recorded corresponding insurance claim receivables of $1.4 million and $0.1 million, respectively, related to the accrued liabilities in Prepayments and other current assets on the unaudited condensed consolidated balance sheets. The Company determined that the outcome of the outstanding litigation cases should be covered by the Company’s insurance carrier, and any amounts due related to the litigation are expected to be paid directly by the Company’s insurance carrier. As such, the contingency liability and corresponding insurance claim receivables as of September 30, 2024 and December 31, 2023, reflect the fact that the Company would not be responsible for amounts resulting from the litigation.

The Company will continue to monitor each matter and adjust accruals as necessary based on new information and further developments. Management believes that the outcomes with respect to probable and reasonably possible losses in excess of the amounts accrued, net of insurance recoveries, while uncertain, either cannot be estimated or will not have a material effect upon the Company’s financial position, results of operations or cash flows. Unless otherwise required by GAAP, legal costs are expensed as they are incurred and are included in Selling, general and administrative expenses on the unaudited condensed consolidated statements of income.

Guarantees

In the normal course of business, the Company has surety bonds related to construction contracts of its subsidiaries. These bonds relate to certain public and private sector contracts to secure contractual performance, including completion of agreed upon contract terms, timing and price, payments to subcontractors and suppliers, and protection for customers from fraudulent practices. In the event a subsidiary of the Company does not fulfill a bonded obligation, the Company would be responsible to the surety bond company for completion of the bonded contract or obligation. A large portion of the surety bonds are expected to expire within the next 12 months; however, the Company likely will continue to enter into surety bonds for its subsidiaries in the future. As of September 30, 2024 and December 31, 2023, the maximum potential amount of payments the Company would be required to make under the outstanding surety bonds was approximately $845.3 million and $299.9 million, respectively, which were not reflected on the unaudited condensed consolidated balance sheets.

The Company has outstanding guarantees to third parties that guarantee the performance of certain subsidiaries of the Company. These guarantees are related to contracts for contracting services. As of September 30, 2024 and December 31, 2023, the fixed maximum amounts guaranteed under these agreements aggregated to $557.5 million

and $341.4 million, respectively. The scheduled expiration of the maximum amounts guaranteed aggregate to $13.3 million for the remainder of 2024, $186.7 million in 2025, $312.6 million in 2026, $43.5 million in 2027, $1.0 million in 2028 and $0.4 million thereafter. There were no amounts outstanding under the previously mentioned guarantees and the maximum amounts guaranteed were not reflected on the unaudited condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023. However, in the event of default under these guarantee obligations, the Company would be required to make payments to satisfy its guarantees.

The Company also has outstanding letters of credit to third parties. As of September 30, 2024 and December 31, 2023, the fixed maximum amounts guaranteed under these letters of credit aggregated to $2.2 million and $0.2 million, respectively, all of which expire within the next 12 months. There were no amounts outstanding under the previously mentioned letters of credit as of September 30, 2024 or December 31, 2023. In the event of default under these letter-of-credit obligations, the Company would be obligated for reimbursement of payments made under the letters of credit.

In addition, the Company has issued guarantees to third parties related to the routine purchase of maintenance items, materials and lease obligations for which no fixed maximum amounts have been specified. These guarantees have no scheduled maturity date. In the event a subsidiary of the Company defaults under these obligations, the Company would be required to make payments to satisfy these guarantees. An immaterial amount of outstanding guarantees by the Company were reflected on the unaudited condensed consolidated balance sheets in Operating lease right-of-use assets, Current portion of operating lease liabilities and/or Operating lease liabilities as of September 30, 2024 and December 31, 2023.