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Discontinued Operations, Goodwill, and Intangible Assets

9 Months Ended

Jun. 30, 2024

Discontinued Operations, Goodwill, and Intangible Assets

Discontinued Operations, Goodwill, and Intangible Assets

3. Discontinued Operations, Goodwill and Intangible Assets

In the first quarter of fiscal 2020, management approved a plan to dispose of via sale the Company’s self-perform at-risk construction businesses. These businesses include the Company’s civil infrastructure, power, and oil and gas construction businesses that were previously reported in the Company’s Construction Services segment. After consideration of the relevant facts, the Company concluded the assets and liabilities of its self-perform at-risk construction businesses met the criteria for classification as held for sale. The Company concluded the actual and proposed disposal activities represented a strategic shift that would have a major effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB ASC 205-20. Accordingly, the financial results of the self-perform at-risk construction businesses are presented in the Consolidated Statement of Operations as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses not sold as of the balance sheet date are presented in the Consolidated Balance Sheets as assets and liabilities held for sale for both periods presented.

The Company completed the sale of its power and oil and gas construction businesses in fiscal 2021 and fiscal 2022, respectively. The Company completed the sale of its civil infrastructure construction business to affiliates of Oroco Capital in the second quarter of fiscal 2021. In the second quarter of fiscal 2024 and 2023, the Company recorded losses related to revised estimates of its contingent consideration receivable recognized in its civil infrastructure construction business of $103.1 million and $38.9 million, respectively.

During the third quarter of fiscal 2024, the Company resolved contingencies related to the sale of its civil infrastructure construction business and received equity in the counterparty, and the Company recorded a $12.7 million gain based on the fair value of the equity received. Concurrently, the Company participated as a member of a lending group in a revolving credit facility for the counterparty, committing to fund $30 million that matures in May 2029. As of June 30, 2024, the Company has funded $27.1 million, all of which was classified as a cash outflow in other investing activities and outstanding.

The following table represents summarized balance sheet information of assets and liabilities held for sale (in millions):


	June 30,		September 30,
	2024		2023

Cash and cash equivalents	$	3.4	$	1.9
Receivables and contract assets		132.6		93.3
Other		—		—
Current assets held for sale	$	136.0	$	95.2

Property and equipment, net	$	16.6	$	14.2
Write-down of assets to fair value less cost to sell		(16.6)		(14.2)
Non-current assets held for sale	$	—	$	—

Accounts payable and accrued expenses	$	65.8		45.6
Current liabilities held for sale	$	65.8	$	45.6

Long-term liabilities held for sale	$	0.8	$	0.8

The following table represents summarized income statement information of discontinued operations (in millions):


	Three months ended				Nine months ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023

Revenue	$	37.3	$	69.1	$	138.4	$	169.6
Cost of revenue		41.8		76.0		139.5		178.4
Gross loss		(4.5)		(6.9)		(1.1)		(8.8)
Equity in earnings of joint ventures		—		—		(3.4)		(1.7)
Income (loss) on disposal activities		12.7		(2.6)		(100.4)		(42.8)
Transaction costs		—		—		(0.2)		(0.2)
Income (loss) from operations		8.2		(9.5)		(105.1)		(53.5)
Other expense		(0.6)		(0.5)		(1.7)		(0.5)
Income (loss) before taxes		7.6		(10.0)		(106.8)		(54.0)
Income tax expense (benefit)		1.9		(2.4)		(1.8)		(4.2)
Net income (loss) from discontinuing operations	$	5.7	$	(7.6)	$	(105.0)	$	(49.8)

The significant components included in our Consolidated Statement of Cash Flows for the discontinued operations are as follows (in millions):


	Three months ended				Nine months ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023

Payments for capital expenditures	$	(0.3)	$	(0.6)	$	(2.4)	$	(5.1)

The Company completed one acquisition in the first quarter of fiscal 2024. The changes in the carrying value of goodwill by reportable segment for the nine months ended June 30, 2024 were as follows:


			Foreign
	September 30,		Exchange				June 30,
	2023		Impact		Acquired		2024

	(in millions)
Americas	$	2,614.0	$	(1.5)	$	12.1	$	2,624.6
International		804.9		18.7		—		823.6
Total	$	3,418.9	$	17.2	$	12.1	$	3,448.2

The gross amounts and accumulated amortization of the Company’s acquired identifiable intangible assets with finite useful lives as of June 30, 2024 and September 30, 2023, included in intangible assets—net, in the accompanying consolidated balance sheets, were as follows:


	June 30, 2024						September 30, 2023
	Gross		Accumulated		Intangible		Gross		Accumulated		Intangible		Amortization
	Amount		Amortization		Assets, Net		Amount		Amortization		Assets, Net		Period

	(in millions)												(years)
Backlog and Customer relationships	$	671.6	$	(660.1)	$	11.5	$	663.8	$	(646.0)	$	17.8	1 - 11

Amortization expense of acquired intangible assets included within cost of revenue was $14.1 million and $13.9 million for the nine months ended June 30, 2024 and 2023, respectively. The following table presents estimated amortization expense of existing intangible assets for the remainder of fiscal 2024 and for the succeeding years:


Fiscal Year	(in millions)
2024 (three months remaining)	$	4.6
2025		2.1
2026		1.5
2027		1.5
2028		1.5
Thereafter		0.3
Total	$	11.5