Business Segments

9 Months Ended

Sep. 30, 2016

Business Segments [Abstract]

Business Segments

(11)     Business Segments

The Company offers general contracting, pre-construction planning and comprehensive project management services, including planning and scheduling of manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract. The Company also offers self-performed construction services: site work, concrete forming and placement, steel erection, electrical, mechanical, plumbing and heating, ventilation and air conditioning (HVAC). As described below, our business is conducted through three segments: Civil, Building and Specialty Contractors. These segments are determined based on how the Company’s Chairman and Chief Executive Officer (chief operating decision maker) aggregates business units when evaluating performance and allocating resources.

The Civil segment specializes in public works construction and the replacement and reconstruction of infrastructure. The civil contracting services include construction and rehabilitation of highways, bridges, tunnels, mass-transit systems, and water management and wastewater treatment facilities.

The Building segment has significant experience providing services to a number of specialized building markets for private and public works customers, including the high-rise residential, hospitality and gaming, transportation, health care, commercial and government offices, sports and entertainment, education, correctional facilities, biotech, pharmaceutical, industrial and high-tech markets.

The Specialty Contractors segment specializes in electrical, mechanical, plumbing, HVAC, fire protection systems and pneumatically placed concrete for a full range of civil and building construction projects in the industrial, commercial, hospitality and gaming, and mass-transit end markets. This segment provides the Company with unique strengths and capabilities that allow the Company to position itself as a full-service contractor with greater control over scheduled work, project delivery and risk management.

The following table sets forth certain reportable segment information relating to the Company’s operations for the three and nine months ended September 30, 2016 and 2015:

	Reportable Segments
					Specialty							Consolidated
(in thousands)	Civil			Building	Contractors		Total		Corporate			Total
Three Months Ended September 30, 2016
Total revenue	$	506,100	$	560,795	$	331,613	$	1,398,508	$	—		$	1,398,508
Elimination of intersegment revenue		(47,277)		(18,253)		—		(65,530)		—			(65,530)
Revenue from external customers	$	458,823	$	542,542	$	331,613	$	1,332,978	$	—		$	1,332,978
Income from construction operations	$	50,307	$	13,296	$	11,084	$	74,687	$	(13,768)	(a)	$	60,919
Three Months Ended September 30, 2015
Total revenue	$	604,317	$	506,259	$	325,365	$	1,435,941	$	—		$	1,435,941
Elimination of intersegment revenue		(64,067)		(31,135)		—		(95,202)		—			(95,202)
Revenue from external customers	$	540,250	$	475,124	$	325,365	$	1,340,739	$	—		$	1,340,739
Income from construction operations	$	43,183	$	6,763	$	4,741	$	54,687	$	(15,713)	(a)	$	38,974
Nine Months Ended September 30, 2016
Total revenue	$	1,378,531	$	1,594,946	$	932,288	$	3,905,765	$	—		$	3,905,765
Elimination of intersegment revenue		(118,143)		(61,145)		—		(179,288)		—			(179,288)
Revenue from external customers	$	1,260,388	$	1,533,801	$	932,288	$	3,726,477	$	—		$	3,726,477
Income from construction operations	$	129,028	$	38,969	$	25,910	$	193,907	$	(44,037)	(a)	$	149,870
Nine Months Ended September 30, 2015
Total revenue	$	1,570,553	$	1,394,568	$	945,181	$	3,910,302	$	—		$	3,910,302
Elimination of intersegment revenue		(121,449)		(69,211)		—		(190,660)		—			(190,660)
Revenue from external customers	$	1,449,104	$	1,325,357	$	945,181	$	3,719,642	$	—		$	3,719,642
Income from construction operations	$	120,106	$	(8,107)	$	29,008	$	141,007	$	(51,068)	(a)	$	89,939

(a) Consists primarily of corporate general and administrative expenses.

During the three months ended September 30, 2016, there were no material adjustments recorded. For the nine months ended September 30, 2016, the Company recorded net favorable adjustments in the first quarter totaling $3.0 million in income from construction operations ($0.04 per diluted share) for various Five Star Electric projects in New York in the Specialty Contractors segment. These included the following offsetting adjustments: a favorable adjustment of $14.0 million for a completed project ($0.17 per diluted share) and an unfavorable adjustment of $13.8 million for a project that is substantially complete ($0.17 per diluted share).

During the third quarter of 2015, the Company recorded an unfavorable adjustment totaling $23.9 million ($0.28 per diluted share) in the Civil segment for an adverse legal decision related to a long-standing litigation matter, for which the Company assumed liability as part of an acquisition in 2011. In the same quarter, the Company also recorded favorable adjustments totaling $13.7 million ($0.16 per diluted share) for a Civil segment runway reconstruction project related to the estimated cost to complete and the achievement of certain performance-based milestones, as well as unfavorable adjustments in the Specialty Contractors segment totaling $13.9 million ($0.16 per diluted share) related to a number of Five Star Electric projects in New York, none of which were individually material. During the nine months ended September 30, 2015, the Company recorded unfavorable adjustments totaling $21.4 million ($0.25 per diluted share) related to changes in the estimated cost to complete a certain Building segment project.

Income from construction operations for the three and nine months ended September 30, 2016 includes depreciation and amortization of $12.7 million and $33.3 million for the Civil segment, $0.5 million and $1.6 million for the Building segment, $1.2 million and $3.8 million for the Specialty Contractors segment and $2.9 million and $8.6 million for Corporate, respectively. Income from construction operations for the three and nine months ended September 30, 2015 includes depreciation and amortization of $5.6 million and $16.9 million for the Civil segment, $0.6 million and $2.1 million for the Building segment, $1.4 million and $4.1 million for the Specialty Contractors segment and $2.9 million and $7.9 million for Corporate, respectively.

A reconciliation of segment results to the consolidated income before income taxes is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2016		2015		2016		2015
Income from construction operations	$	60,919	$	38,974	$	149,870	$	89,939
Other income, net		2,048		6,195		5,214		6,098
Interest expense		(15,041)		(11,214)		(44,655)		(33,885)
Income before income taxes	$	47,926	$	33,955	$	110,429	$	62,152

Total assets by segment are as follows:

(in thousands)	September 30, 2016		December 31, 2015
Civil	$	2,082,218	$	1,962,503
Building		895,198		797,386
Specialty Contractors		826,144		860,285
Corporate and other (a)		417,406		416,503
Total Assets	$	4,220,966	$	4,036,677

(a) Consists principally of cash and cash equivalents as well as corporate transportation and other equipment.