Revenue Recognition

6 Months Ended

Jun. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 4: Revenue Recognition

Disaggregated Revenues

The Company’s primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, industrial, public authority, fire service and sale for resale customers, collectively presented as the “Regulated Businesses.” The Company also operates other businesses that provide water and wastewater services to the U.S. government on military installations, as well as municipalities, collectively presented throughout this Form 10-Q within “Other.”

Presented in the table below are operating revenues disaggregated for the three months ended June 30, 2024:

	Revenues from Contracts with Customers		Other Revenues Not from Contracts with Customers (a)		Total Operating Revenues
Regulated Businesses:
Water services:
Residential	$	579	$	1	$	580
Commercial	216		1		217
Fire service	41		—		41
Industrial	46		—		46
Public and other	68		—		68
Total water services	950		2		952
Wastewater services:
Residential	60		—		60
Commercial	16		—		16
Industrial	3		—		3
Public and other	9		—		9
Total wastewater services	88		—		88
Miscellaneous utility charges	10		—		10
Alternative revenue programs	—		5		5
Lease contract revenue	—		2		2
Total Regulated Businesses	1,048		9		1,057
Other	92		—		92
Total operating revenues	$	1,140	$	9	$	1,149

(a)Includes revenues associated with provisional rates, alternative revenue programs, lease contracts and intercompany rent, which are outside the scope of Accounting Standards Codification Topic 606, Revenue From Contracts With Customers (“ASC 606”), and accounted for under other existing GAAP.

Presented in the table below are operating revenues disaggregated for the three months ended June 30, 2023:

	Revenues from Contracts with Customers		Other Revenues Not from Contracts with Customers (a)		Total Operating Revenues
Regulated Businesses:
Water services:
Residential	$	554	$	—	$	554
Commercial	198		—		198
Fire service	39		—		39
Industrial	38		—		38
Public and other	75		—		75
Total water services	904		—		904
Wastewater services:
Residential	57		—		57
Commercial	16		—		16
Industrial	2		—		2
Public and other	7		—		7
Total wastewater services	82		—		82
Miscellaneous utility charges	9		—		9
Alternative revenue programs	—		8		8
Lease contract revenue	—		2		2
Total Regulated Businesses	995		10		1,005
Other	93		(1)		92
Total operating revenues	$	1,088	$	9	$	1,097

(a)Includes revenues associated with alternative revenue programs, lease contracts and intercompany rent, which are outside the scope of ASC 606, and accounted for under other existing GAAP.

Presented in the table below are operating revenues disaggregated for the six months ended June 30, 2024:

	Revenues from Contracts with Customers		Other Revenues Not from Contracts with Customers (a)		Total Operating Revenues
Regulated Businesses:
Water services:
Residential	$	1,083	$	1	$	1,084
Commercial	403		1		404
Fire service	82		—		82
Industrial	88		—		88
Public and other	124		—		124
Total water services	1,780		2		1,782
Wastewater services:
Residential	119		—		119
Commercial	32		—		32
Industrial	5		—		5
Public and other	17		—		17
Total wastewater services	173		—		173
Miscellaneous utility charges	19		—		19
Alternative revenue programs	—		7		7
Lease contract revenue	—		4		4
Total Regulated Businesses	1,972		13		1,985
Other	175		—		175
Total operating revenues	$	2,147	$	13	$	2,160

(a)Includes revenues associated with provisional rates, alternative revenue programs, lease contracts and intercompany rent, which are outside the scope of ASC 606, and accounted for under other existing GAAP.

Presented in the table below are operating revenues disaggregated for the six months ended June 30, 2023:

	Revenues from Contracts with Customers		Other Revenues Not from Contracts with Customers (a)		Total Operating Revenues
Regulated Businesses:
Water services:
Residential	$	1,015	$	—	$	1,015
Commercial	369		—		369
Fire service	78		—		78
Industrial	76		—		76
Public and other	131		—		131
Total water services	1,669		—		1,669
Wastewater services:
Residential	111		—		111
Commercial	30		—		30
Industrial	4		—		4
Public and other	13		—		13
Total wastewater services	158		—		158
Miscellaneous utility charges	17		—		17
Alternative revenue programs	—		17		17
Lease contract revenue	—		4		4
Total Regulated Businesses	1,844		21		1,865
Other	171		(1)		170
Total operating revenues	$	2,015	$	20	$	2,035

(a)Includes revenues associated with alternative revenue programs, lease contracts and intercompany rent, which are outside the scope of ASC 606, and accounted for under other existing GAAP.

Contract Balances

Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings, and cash collections. In the Company’s Military Services Group (“MSG”), certain contracts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Contract assets are recorded when billing occurs subsequent to revenue recognition and are reclassified to accounts receivable when billed and the right to consideration becomes unconditional. Contract liabilities are recorded when the Company receives advances from customers prior to satisfying contractual performance obligations, particularly for construction contracts, and are recognized as revenue when the associated performance obligations are satisfied.

Contract assets of $93 million and $95 million are included in unbilled revenues on the Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023, respectively. Also, contract assets of $28 million are included in other long-term assets on the Consolidated Balance Sheets as of June 30, 2024, and there were no contract assets in other long-term assets on the Consolidated Balance Sheets as of December 31, 2023. Contract liabilities of $55 million and $63 million are included in other current liabilities on the Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023, respectively. Revenues recognized for the six months ended June 30, 2024 and 2023, from amounts included in contract liabilities were $49 million and $68 million, respectively.

Remaining Performance Obligations

Remaining performance obligations (“RPOs”) represent revenues the Company expects to recognize in the future from contracts that are in progress. The Company enters into agreements for the provision of services to water and wastewater facilities for the U.S. military, municipalities and other customers. As of June 30, 2024, the Company’s operation and maintenance (“O&M”) and capital improvement contracts have RPOs. Contracts with the U.S. government for work on various military installations expire between 2051 and 2073 and have RPOs of $7.2 billion as of June 30, 2024, as measured by estimated remaining contract revenue. Such contracts are subject to customary termination provisions held by the U.S. government, prior to the agreed-upon contract expiration. Contracts with municipalities and commercial customers expire between 2026 and 2038 and have RPOs of $638 million as of June 30, 2024, as measured by estimated remaining contract revenue. Some of the Company’s long-term contracts to operate and maintain the federal government’s, a municipality’s or other party’s water or wastewater treatment and delivery facilities include responsibility for certain maintenance for some of those facilities, in exchange for an annual fee. Unless specifically required to perform certain maintenance activities, the maintenance costs are recognized when the maintenance is performed.