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Note 11 - Product Warranty Obligations

12 Months Ended

Dec. 31, 2022

Product Warranty Disclosure [Text Block]

11.

Product Warranty Obligations

The Company records a liability for standard product warranty obligations accounted for as assurance warranties at the time of sale of the related product to a customer based on historical warranty experience. The Company also records a liability for specific warranty matters when they become known and are reasonably estimable. The following is a tabular reconciliation of the Company’s standard product warranty liability accounted for as an assurance warranty:

	*Year Ended December 31,*
	*2022*			*2021*			*2020*
Balance at beginning of period	$	94,213		$	59,218		$	49,316
Product warranty reserve assumed in acquisition		-			3,932			124
Payments		(77,476	)		(42,682	)		(33,496	)
Provision for warranty issued		80,340			69,280			42,093
Changes in estimates for pre-existing warranties (1)		40,934			4,465			1,181
Balance at end of period	$	138,011		$	94,213		$	59,218

(1)	Includes a specific warranty provision recorded during the third quarter of 2022 in the amount of $37,338 to address certain clean energy product related matters.

The Company also sells extended warranty coverage for certain products, which it accounts for as a service warranty. The sales of extended warranties are recorded as deferred revenue, and typically have a duration of five to ten years. The deferred revenue related to extended warranty coverage is amortized over the duration of the extended warranty contract period, following the standard warranty period, using the straight-line method. The Company believes the straight-line method is appropriate because the performance obligation is satisfied based on the passage of time. The amortization of deferred revenue is recorded to net sales in the consolidated statements of comprehensive income. The following is a tabular reconciliation of the deferred revenue related to extended warranty coverage:

	*Year Ended December 31,*
	*2022*			*2021*			*2020*
Balance at beginning of period	$	111,647		$	89,788		$	78,738
Deferred revenue contracts issued		42,869			41,560			26,968
Amortization of deferred revenue contracts		(21,703	)		(19,701	)		(15,918	)
Balance at end of period	$	132,813		$	111,647		$	89,788

The timing of recognition of the Company’s deferred revenue balance related to extended warranties at December 31, 2022 is as follows:

2023	$	30,291
2024		24,472
2025		22,120
2026		17,803
After 2026		38,127
Total	$	132,813

The Company has a post-sale extended warranty marketing agreement with a third party, pursuant to which the Company is required to pay fees to the third-party service provider based on the number of extended warranty contracts that they sell, which it classifies as costs to obtain a contract. These fees are deferred and recorded as other assets in the consolidated balance sheets, and then amortized to net sales in the consolidated statements of comprehensive income over the same period that the underlying deferred revenue is recognized. Deferred contract costs as of December 31, 2022 and 2021 were $9,199 and $8,479, respectively. Amortization of deferred contract costs recorded during the years ended December 31, 2022, 2021 and 2020 was $1,932, $1,739, and $1,303, respectively.

Standard product warranty obligations and extended warranty related deferred revenues are included in the consolidated balance sheets as follows:

	*December 31,*
	*2022*		*2021*
Product warranty liability
Current portion - accrued product warranty	$	89,141	$	59,052
Long-term portion - other long-term liabilities		48,870		35,161
Total	$	138,011	$	94,213

Deferred revenue related to extended warranties
Current portion - other accrued liabilities	$	30,291	$	20,556
Long-term portion - other long-term liabilities		102,522		91,091
Total	$	132,813	$	111,647