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Revenue Recognition | 6 Months Ended
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Jun. 30, 2022
Sales And Revenue Recognition [Abstract] |
Revenue Recognition | 2. Revenue Recognition The Defense segment utilizes the cost-to-cost method of percentage-of-completion to recognize revenue on its performance obligations that are satisfied over time because it best depicts the transfer of control to the customer. Under the cost-to-cost method of percentage-of-completion, the Defense segment measures progress based on the ratio of costs incurred to date to total estimated costs for the performance obligation. The Company recognizes changes in estimated sales or costs and the resulting profit or loss on a cumulative basis. Contract adjustments represent the cumulative effect of the changes on prior periods. If a loss is expected on a performance obligation, the complete estimated loss is recorded in the period in which the loss is identified. There is significant judgment involved in estimating sales and costs within the Defense segment. Each contract is evaluated at contract inception to identify risks and estimate revenue and costs. In performing this evaluation, the Defense segment considers risks of contract performance such as technical requirements, schedule, duration and key contract dependencies. These considerations are then factored into the Company’s estimated revenue and costs. Preliminary contract estimates are subject to change throughout the duration of the contract as additional information becomes available that impacts risks and estimated revenue and costs. In addition, as contract modifications (e.g., new orders) are received, the additional units are factored into the overall contract estimate of costs and transaction price. Contract adjustments impacted the Company’s results as follows (in millions, except per share amounts):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net sales |  | $ | (18.2 | ) |  | $ | 5.1 |  |  | $ | (23.6 | ) |  | $ | 1.2 |
Operating income |  |  | (23.6 | ) |  |  | 3.2 |  |  |  | (31.7 | ) |  |  | (0.7 | )
Net income |  |  | (18.1 | ) |  |  | 2.5 |  |  |  | (24.3 | ) |  |  | (0.5 | )
Diluted earnings per share |  | $ | (0.27 | ) |  | $ | 0.04 |  |  | $ | (0.37 | ) |  | $ | — |
Disaggregation of Revenue Consolidated net sales disaggregated by segment and timing of revenue recognition are as follows (in millions):
|  | Three Months Ended June 30, 2022 |
|  | Access Equipment |  |  | Defense |  |  | Fire & Emergency |  |  | Commercial |  |  | Corporate and Intersegment Eliminations |  |  | Total |
Point in time |  | $ | 965.4 |  |  | $ | 2.2 |  |  | $ | 271.4 |  |  | $ | 167.7 |  |  | $ | (2.2 | ) |  | $ | 1,404.5 |
Over time |  |  | 11.7 |  |  |  | 537.1 |  |  |  | 5.1 |  |  |  | 107.6 |  |  |  | — |  |  |  | 661.5 |
|  | $ | 977.1 |  |  | $ | 539.3 |  |  | $ | 276.5 |  |  | $ | 275.3 |  |  | $ | (2.2 | ) |  | $ | 2,066.0 |
|  | Three Months Ended June 30, 2021 |
|  | Access Equipment |  |  | Defense |  |  | Fire & Emergency |  |  | Commercial |  |  | Corporate and Intersegment Eliminations |  |  | Total |
Point in time |  | $ | 907.1 |  |  | $ | 10.1 |  |  | $ | 297.8 |  |  | $ | 155.7 |  |  | $ | (6.4 | ) |  | $ | 1,364.3 |
Over time |  |  | 17.2 |  |  |  | 700.3 |  |  |  | 4.7 |  |  |  | 122.4 |  |  |  | (0.1 | ) |  |  | 844.5 |
|  | $ | 924.3 |  |  | $ | 710.4 |  |  | $ | 302.5 |  |  | $ | 278.1 |  |  | $ | (6.5 | ) |  | $ | 2,208.8 |
|  | Six Months Ended June 30, 2022 |
|  | Access Equipment |  |  | Defense |  |  | Fire & Emergency |  |  | Commercial |  |  | Corporate and Intersegment Eliminations |  |  | Total |
Point in time |  | $ | 1,835.3 |  |  | $ | 4.3 |  |  | $ | 554.0 |  |  | $ | 322.0 |  |  | $ | (4.5 | ) |  | $ | 2,711.1 |
Over time |  |  | 24.9 |  |  |  | 1,070.6 |  |  |  | 10.4 |  |  |  | 194.7 |  |  |  | — |  |  |  | 1,300.6 |
|  | $ | 1,860.2 |  |  | $ | 1,074.9 |  |  | $ | 564.4 |  |  | $ | 516.7 |  |  | $ | (4.5 | ) |  | $ | 4,011.7 |
|  | Six Months Ended June 30, 2021 |
|  | Access Equipment |  |  | Defense |  |  | Fire & Emergency |  |  | Commercial |  |  | Corporate and Intersegment Eliminations |  |  | Total |
Point in time |  | $ | 1,628.2 |  |  | $ | 20.4 |  |  | $ | 605.4 |  |  | $ | 282.2 |  |  | $ | (13.5 | ) |  | $ | 2,522.7 |
Over time |  |  | 34.3 |  |  |  | 1,304.7 |  |  |  | 9.6 |  |  |  | 225.9 |  |  |  | 0.6 |  |  |  | 1,575.1 |
|  | $ | 1,662.5 |  |  | $ | 1,325.1 |  |  | $ | 615.0 |  |  | $ | 508.1 |  |  | $ | (12.9 | ) |  | $ | 4,097.8 |
See Note 18 of the Notes to Condensed Consolidated Financial Statements for further disaggregated sales information. Contract Assets and Contract Liabilities The Company is generally entitled to bill its customers upon satisfaction of its performance obligations, except for its long-term contracts in the Defense segment which typically allow for billing upon acceptance of the finished goods, payments received from customers in advance of performance and extended warranties that are billed in advance of the warranty coverage period. Customer payment is usually received shortly after billing and payment terms generally do not exceed one year. See Note 7 of the Notes to Condensed Consolidated Financial Statements for additional information on the Company’s receivables balances. With the exception of the Fire & Emergency segment, the Company’s contracts typically do not contain a significant financing component. In the Fire & Emergency segment, customers earn interest on customer advances at a rate determined in a separate financing transaction between the Fire & Emergency segment and the customer at contract inception. Interest of $6.0 million and $11.0 million were recorded in “Interest expense” in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022, respectively, and $4.4 million and $8.9 million for the three and six months ended June 30, 2021, respectively, for amounts due on customer advances. The timing of billing does not always match the timing of revenue recognition. In instances where a customer pays consideration in advance or when the Company is entitled to bill a customer in advance of recognizing the related revenue, the Company records a contract liability. The Company reduces contract liabilities when the Company transfers control of the promised goods and services. Contract liabilities consisted of the following (in millions):
|  | June 30, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Customer advances |  | $ | 757.1 |  |  | $ | 690.9 |
Other current liabilities |  |  | 77.2 |  |  |  | 81.9 |
Long-term customer advances |  |  | 550.2 |  |  |  | 207.0 |
Other long-term liabilities |  |  | 59.2 |  |  |  | 54.9 |
Total contract liabilities |  | $ | 1,443.7 |  |  | $ | 1,034.7 |
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Beginning liabilities recognized in revenue |  | $ | 196.5 |  |  | $ | 158.2 |  |  | $ | 314.8 |  |  | $ | 288.0 |
In instances where the Company recognizes revenue prior to having an unconditional right to payment, the Company records a contract asset. The Company reduces contract assets when the Company has an unconditional right to payment. The Company periodically assesses its contract assets for impairment. Contract assets and liabilities are determined on a net basis for each contract. The Company did no t record any impairment losses on contract assets during the three or six months ended June 30, 2022 or 2021. The Defense segment incurs pre-production engineering, factory setup and other contract fulfillment costs related to products produced for its customers under long-term supply agreements. An asset is recognized for costs incurred to fulfill an existing contract or highly-probable anticipated contract if such costs generate or enhance resources that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. Costs related to customer-owned tooling that will be used in production and for which the customer has provided a non-cancelable right to use the tooling to perform under a long-term supply agreement are also recognized as an asset. Under the Next Generation Delivery Vehicles (NGDV) contract with the United States Postal Service (USPS), the Company has determined that it does not transfer control of any goods or services to the USPS until the construction of the production vehicles. These costs will be amortized over the anticipated production volume of the NGDV contract. Deferred contract fulfillment and customer-owned tooling costs are included in “Other long-term assets” within the Company’s Condensed Consolidated Balance Sheets. The Company periodically assesses its contract fulfillment and customer-owned tooling for impairment. The Company did no t record any impairment losses on contract fulfillment or customer-owned tooling costs during the three or six months ended June 30, 2022 or 2021. Deferred contract related costs, the majority of which related to the NGDV contract, consisted of the following (in millions):
|  | June 30, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Costs for anticipated contracts |  | $ | 5.5 |  |  | $ | 4.9 |
Engineering costs |  |  | 147.8 |  |  |  | 60.0 |
Factory setup costs |  |  | 14.5 |  |  |  | 4.1 |
Customer-owned tooling |  |  | 39.0 |  |  |  | 4.2 |
Deferred contract related costs |  | $ | 206.8 |  |  | $ | 73.2 |
The Company offers a variety of service-type warranties, including optionally priced extended warranty programs. Outstanding balances related to service-type warranties are included within contract liabilities. Revenue related to service-type warranties is deferred until after the expiration of the standard warranty period. The revenue is then recognized in income over the term of the extended warranty period in proportion to the costs that are expected to be incurred. Changes in the Company’s service-type warranties were as follows (in millions):
|  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |
Balance at beginning of period |  | $ | 66.9 |  |  | $ | 63.0 |
Deferred revenue for new service warranties |  |  | 14.8 |  |  |  | 14.2 |
Amortization of deferred revenue |  |  | (10.6 | ) |  |  | (12.6 | )
Foreign currency translation |  |  | (0.5 | ) |  |  | (0.1 | )
Balance at end of period |  | $ | 70.6 |  |  | $ | 64.5 |
Classification of service-type warranties in the Condensed Consolidated Balance Sheets consisted of the following (in millions):
|  | June 30, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Other current liabilities |  | $ | 24.4 |  |  | $ | 22.3 |
Other long-term liabilities |  |  | 46.2 |  |  |  | 44.6 |
|  | $ | 70.6 |  |  | $ | 66.9 |
Remaining Performance Obligations As of June 30, 2022, the Company had unsatisfied performance obligations for contracts with an original duration greater than one year totaling $8.44 billion, of which $1.48 billion is expected to be satisfied and revenue recognized in the remaining six months of fiscal 2022, $2.58 billion is expected to be recognized in fiscal 2023 and $4.37 billion is expected to be satisfied and revenue recognized beyond fiscal 2023.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 + Details
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