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

9 Months Ended

Sep. 30, 2018

Receivables [Abstract]

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

Note 5 – 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, 2018			December 31, 2017
Contract billings	$	520.8		$	683.9
Less allowance for doubtful accounts	(11.6		)	(8.2		)
Accounts receivable, net of allowance	$	509.2		$	675.7
Retainage	320.8			323.1
Costs and earnings in excess of billings	1,538.6			599.2
Retainage and costs and earnings in excess of billings (together, “contract assets”)	$	1,859.4		$	922.3
Accounts receivable, net	$	2,368.6		$	1,598.0

Contract billings represent the amount of performance obligations that have been billed but not yet collected. Contract assets consist of costs and earnings in excess of billings (“CIEB”) and retainage. CIEB, which is also referred to as work in process, represents the estimated value of unbilled work for projects with performance obligations recognized over time. 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 (generally, from 5% to 10% of contract billings). Retainage is not considered to be a significant financing component because the intent is to protect the customer. CIEB and retainage amounts are generally classified as current assets within the Company’s consolidated balance sheets. Retainage that has been billed, but is not due until completion of performance and acceptance by customers, is generally expected to be collected within one year. Accounts receivable expected to be collected beyond one year are recorded within other long-term assets.

The increase in the CIEB balance for the nine month period ended September 30, 2018 was driven largely by long-haul project activity and timing of billings within the Company’s Oil and Gas segment, which the Company expects will be significantly reduced during the fourth quarter through normal billing and collection processes.

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 billings in excess of costs and earnings (“BIEC”). BIEC is not considered to be a significant financing component because it is generally used to meet working capital demands that can be higher in the early stages of a contract. Contract liabilities consist primarily of such BIEC, which are generally classified within current liabilities on the Company’s consolidated balance sheets. BIEC totaled approximately $189.3 million and $194.5 million as of September 30, 2018 and December 31, 2017, respectively. For the three and nine month periods ended September 30, 2018, the Company recognized revenue of approximately $25.4 million and $125.6 million, respectively, related to amounts that were included in BIEC as of December 31, 2017, resulting primarily from the advancement of physical progress on the respective projects during the period. Contract liabilities also include the amount of any accrued project losses, which are classified within other current liabilities on the Company’s consolidated balance sheets. Total contract liabilities, including accrued project losses, totaled approximately $197.2 million and $206.1 million as of September 30, 2018 and December 31, 2017, respectively.

Provisions for doubtful accounts for each of the three month periods ended September 30, 2018 and 2017 totaled $2.1 million and $0.4 million, respectively, and for the nine month periods ended September 30, 2018 and 2017, totaled $3.5 million and $1.1 million, respectively. Impairment losses on contract assets were not material for the three and nine month periods ended September 30, 2018.

The Company is party to non-recourse financing arrangements in the ordinary course of business, under which certain receivables are settled with the customer’s bank in return for a nominal fee. These arrangements, under which amounts can vary based on levels of activity, interest rates and changes in customer payment terms, improve the collection cycle time of the related receivables. Cash collected from these arrangements is reflected within cash provided by operating activities in the consolidated statements of cash flows. The discount charge, which is included within interest expense, net, totaled approximately $3.2 million and $2.1 million for the three month periods ended September 30, 2018 and 2017, respectively, and totaled approximately $8.2 million and $4.7 million for the nine month periods ended September 30, 2018 and 2017, respectively.