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Note 11 - Product Warranty Obligations
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
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,

 
  

2024

  

2023

  

2022

 

Balance at beginning of period

 $116,408  $138,011  $94,213 

Payments

  (88,990)  (92,200)  (77,476)

Provision for warranty issued

  77,802   67,104   80,340 

Changes in estimates for pre-existing warranties (1)

  5,767   3,493   40,934 

Balance at end of period

 $110,987  $116,408  $138,011 

 

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

 
  

2024

  

2023

  

2022

 

Balance at beginning of period

 $155,870  $132,813  $111,647 

Deferred revenue contracts issued

  60,651   48,107   42,869 

Amortization of deferred revenue contracts

  (29,599)  (25,050)  (21,703)

Balance at end of period

 $186,922  $155,870  $132,813 

 

The timing of recognition of the Company’s deferred revenue balance related to extended warranties as of  December 31, 2024 is as follows:

 

2025

 $34,069 

2026

  35,267 

2027

  32,315 

2028

  25,822 

2029

  19,897 

After 2029

  39,552 

Total

 $186,922 

 

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 the provider sells, which it classifies as costs to obtain a contract. These fees are deferred and recorded as other assets in the consolidated balance sheets, and are 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, 2024 and 2023 were $17,140 and $10,153, respectively. Amortization of deferred contract costs recorded during the years ended December 31, 2024, 2023 and 2022 was $2,958, $2,306, and $1,932, respectively.

 

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

 

  

December 31,

 
  

2024

  

2023

 

Product warranty liability:

        

Current portion - Accrued product warranty

 $56,127  $65,298 

Long-term portion - other long-term liabilities

  54,860   51,110 

Total

 $110,987  $116,408 
         

Deferred revenue related to extended warranties:

        

Current portion - other accrued liabilities

 $34,069  $28,203 

Long-term portion - Deferred revenue

  152,853   127,667 

Total

 $186,922  $155,870