XML 20 R13.htm IDEA: XBRL DOCUMENT v3.25.3
Revenue Recognition
 9 Months Ended
Sep. 30, 2025
Sales And Revenue Recognition [Abstract]  
Revenue Recognition

4. Revenue Recognition

The Company utilizes the cost-to-cost method of percentage-of-completion to recognize revenue on the majority of 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 Company 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 revenues and costs, particularly in the Transport segment. The Transport segment considers risks of contract performance such as technical requirements, schedule, duration and key contract dependencies. 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 such as new orders are received, the additional units are factored into the overall contract estimate of costs and transaction price.

Net contract adjustments impacted the Company’s results as follows (in millions, except per share amounts):

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Net sales

 

$

(3.2

)

 

$

(1.1

)

 

$

(7.7

)

 

$

(14.3

)

Operating income

 

 

(7.0

)

 

 

(7.6

)

 

 

(20.7

)

 

 

(30.4

)

Net income

 

 

(5.4

)

 

 

(5.8

)

 

 

(15.8

)

 

 

(23.2

)

Diluted earnings per share

 

$

(0.08

)

 

$

(0.09

)

 

$

(0.24

)

 

$

(0.35

)

The Transport segment incurs pre-production engineering, factory setup and other contract fulfillment costs related to products produced for its customers under long-term contracts. A deferred contract cost 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 during the contract term are also recognized as a deferred contract cost asset. Deferred contract costs related to the Next Generation Delivery Vehicles (NGDV) contract with the United States Postal Service (USPS) are amortized over the anticipated production volume of the NGDV contract. The Company periodically assesses its deferred contract costs for impairment. Impairments of deferred contract costs in the three or nine months ended September 30, 2025 or 2024 were not material.

Deferred contract costs, the majority of which are related to the NGDV contract, consisted of the following (in millions):

 

 

September 30,

 

 

December 31,

 

 

 

2025

 

 

2024

 

Engineering costs

 

$

502.9

 

 

$

506.1

 

Customer-owned tooling

 

 

277.2

 

 

 

277.3

 

Factory setup costs

 

 

52.9

 

 

 

52.5

 

Costs for anticipated contracts

 

 

1.1

 

 

 

6.7

 

Deferred contract costs

 

$

834.1

 

 

$

842.6

 

The Company estimates that approximately $165 million of deferred contract costs would not be absorbed based on existing orders at September 30, 2025.

Changes in the Company’s deferred contract costs were as follows (in millions):

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Balance at beginning of period

 

$

841.0

 

 

$

809.5

 

 

$

842.6

 

 

$

710.7

 

Additions to deferred contract costs

 

 

3.8

 

 

 

19.8

 

 

 

11.8

 

 

 

120.2

 

Amortization of deferred contract costs

 

 

(10.7

)

 

 

(1.2

)

 

 

(20.3

)

 

 

(2.8

)

Balance at end of period

 

$

834.1

 

 

$

828.1

 

 

$

834.1

 

 

$

828.1

 

 

Disaggregation of Revenue

Consolidated net sales disaggregated by segment and timing of revenue recognition are as follows (in millions):

 

 

 

Three Months Ended September 30, 2025

 

 

 

Access

 

 

Vocational

 

 

Transport

 

 

Corporate and Other

 

 

Total

 

Point in time

 

$

1,089.9

 

 

$

730.7

 

 

$

37.5

 

 

$

2.7

 

 

$

1,860.8

 

Over time

 

 

19.8

 

 

 

237.3

 

 

 

550.4

 

 

 

20.3

 

 

 

827.8

 

 

$

1,109.7

 

 

$

968.0

 

 

$

587.9

 

 

$

23.0

 

 

$

2,688.6

 

 

 

 

Three Months Ended September 30, 2024

 

 

 

Access

 

 

Vocational

 

 

Transport

 

 

Corporate and Other

 

 

Total

 

Point in time

 

$

1,347.0

 

 

$

597.2

 

 

$

6.5

 

 

$

(0.9

)

 

$

1,949.8

 

Over time

 

 

16.3

 

 

 

217.0

 

 

 

533.9

 

 

 

24.4

 

 

 

791.6

 

 

$

1,363.3

 

 

$

814.2

 

 

$

540.4

 

 

$

23.5

 

 

$

2,741.4

 

 

 

 

Nine Months Ended September 30, 2025

 

 

 

Access

 

 

Vocational

 

 

Transport

 

 

Corporate and Other

 

 

Total

 

Point in time

 

$

3,268.1

 

 

$

2,089.2

 

 

$

60.9

 

 

$

12.8

 

 

$

5,431.0

 

Over time

 

 

54.7

 

 

 

715.3

 

 

 

1,469.1

 

 

 

63.4

 

 

 

2,302.5

 

 

$

3,322.8

 

 

$

2,804.5

 

 

$

1,530.0

 

 

$

76.2

 

 

$

7,733.5

 

 

 

 

Nine Months Ended September 30, 2024

 

 

 

Access

 

 

Vocational

 

 

Transport

 

 

Corporate and Other

 

 

Total

 

Point in time

 

$

3,956.9

 

 

$

1,777.2

 

 

$

11.7

 

 

$

(2.7

)

 

$

5,743.1

 

Over time

 

 

50.8

 

 

 

652.5

 

 

 

1,609.7

 

 

 

76.0

 

 

 

2,389.0

 

 

$

4,007.7

 

 

$

2,429.7

 

 

$

1,621.4

 

 

$

73.3

 

 

$

8,132.1

 

See Note 20 for further disaggregated sales information.

Contract Assets and Contract Liabilities

The timing of billing does not always match the timing of revenue recognition. In instances where the Company recognizes revenue prior to billing, the Company records a contract asset (i.e., unbilled receivables). The Company reduces contract assets when the Company has an unconditional right to payment. The Company periodically assesses its contract assets for impairment. The Company did not record any impairment losses on contract assets during the three or nine months ended September 30, 2025 or 2024.

The Company is generally entitled to bill its customers upon satisfaction of its performance obligations, except for its long-term contracts in the Transport segment which typically allow for billing upon acceptance of the finished goods, payments received from customers in advance of performance, payments for rights to purchase future goods and extended warranties that are billed in advance of the warranty coverage period. Customer payment terms generally do not exceed one year. See Note 9 for additional information on the Company’s receivables balances.

With the exception of Pierce Manufacturing Inc. (Pierce) in the Vocational segment, the Company’s contracts typically do not contain a significant financing component. Pierce customers earn interest on customer advances at a rate determined in a separate financing transaction between Pierce and the customer. Interest on customer advances is recorded in “Interest expense” and was $13.2 million and $10.1 million for the three months ended September 30, 2025 and 2024, respectively, and $36.5 million and $28.1 million for the nine months ended September 30, 2025 and 2024, respectively.

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 assets and liabilities are determined on a net basis for each contract.

Contract liabilities consisted of the following (in millions):

 

 

September 30,

 

 

December 31,

 

 

 

2025

 

 

2024

 

Customer advances

 

$

673.3

 

 

$

648.8

 

Other current liabilities

 

 

114.9

 

 

 

113.6

 

Non-current customer advances

 

 

1,151.5

 

 

 

1,154.4

 

Other non-current liabilities

 

 

80.6

 

 

 

72.7

 

Total contract liabilities

 

$

2,020.3

 

 

$

1,989.5

 

Revenue recognized during the period from beginning of the year contract liabilities was as follows (in millions):

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Beginning liabilities recognized in revenue

 

$

153.3

 

 

$

130.9

 

 

$

514.2

 

 

$

490.2

 

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 over the term of the service-type 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):

 

 

Nine Months Ended
September 30,

 

 

 

2025

 

 

2024

 

Balance at beginning of period

 

$

96.0

 

 

$

85.4

 

Deferred revenue for new service warranties

 

 

40.5

 

 

 

34.1

 

Amortization of service warranty revenue

 

 

(30.3

)

 

 

(22.9

)

Foreign currency translation

 

 

1.2

 

 

 

(0.1

)

Balance at end of period

 

$

107.4

 

 

$

96.5

 

Classification of service-type warranties in the Condensed Consolidated Balance Sheets consisted of the following (in millions):

 

 

September 30,

 

 

December 31,

 

 

 

2025

 

 

2024

 

Other current liabilities

 

$

38.6

 

 

$

36.0

 

Other non-current liabilities

 

 

68.8

 

 

 

60.0

 

 

$

107.4

 

 

$

96.0

 

 

Remaining Performance Obligations

As of September 30, 2025, the Company had unsatisfied performance obligations for contracts with an original duration greater than one year totaling $12.4 billion, of which $1.1 billion is expected to be satisfied and recognized in revenue in the remaining three months of 2025, $5.1 billion is expected to be satisfied and recognized in revenue in 2026 and $6.3 billion is expected to be satisfied and recognized in revenue beyond 2026.