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Revenue
 12 Months Ended
Dec. 30, 2023
Revenue from Contract with Customer [Abstract]  
Revenue

14. Revenue

Our principal performance obligations are the sale of faucets, accessories, kitchen sinks, waste disposals, fiberglass and steel entry-door systems, storm, screen and security doors, composite decking and railing, urethane millwork, wide-opening exterior door systems and outdoor enclosures, locks, safes, safety and security devices, electronic security products, commercial cabinets, and kitchen and bath cabinets (collectively, “goods” or “products”). We recognize revenue for the sale of goods based on our assessment of when control transfers to our customers, which generally occurs upon shipment or delivery of the products. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers. Payment terms on our product sales normally range from 30 to 90 days. Taxes assessed by a governmental authority that we collect are excluded from revenue. The expected costs associated with our contractual warranties will continue to be recognized as expense when the products are sold. See Note 18, "Commitments", for further discussion.

We record estimates to reduce revenue for customer programs and incentives, which are considered variable consideration, and include price discounts, volume-based incentives, promotions and cooperative advertising when revenue is recognized in order to determine the amount of consideration the Company will ultimately be entitled to receive. These estimates are based on historical and projected experience for each type of customer. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses. In addition, we make upfront payments to customers related to certain revenue contracts. We recognize these payments in Other current assets and Other assets in our Consolidated Balance Sheet and amortize them over the contract term as a reduction of the transaction price.

We account for shipping and handling costs that occur after the customer has obtained control of a product as a fulfillment activity (i.e., as an expense) rather than as a promised service (i.e., as a revenue element). These costs are classified within selling, general and administrative expenses.

Settlement of our outstanding accounts receivable balances is normally within 30 to 90 days of the original sale transaction date. Obligations arise for us from customer rights to return our goods for any reason, including among others, product obsolescence, stock rotations, trade-in agreements for newer products and upon termination of a customer contract. We estimate future product returns at the time of sale based on historical experience and record a corresponding refund obligation, which amounted to $26.7 million and $27.2 million as of December 30, 2023 and December 31, 2022, respectively. Refund obligations are classified within Other current liabilities in our Consolidated Balance Sheet. Return assets related to the refund obligation are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. Return assets are classified within Other current assets in our Consolidated Balance Sheet and were approximately $4.0 million and $2.9 million as of December 30, 2023 and December 31, 2022, respectively.

As part of our contracts with customers, we recognize contract liabilities, principally deferred revenue. Deferred revenue liabilities represents advanced payments and billings in excess of revenue recognized. Changes in the deferred revenue liabilities are as follows:

 

(In millions)

 

 

Balance December 31, 2021

$

22.2

 

  Amount from acquisitions

 

12.0

 

  Customer deposits

 

32.2

 

  Revenue recognized

 

(32.8

)

  Foreign currency and other

 

(1.5

)

Balance December 31, 2022

$

32.1

 

  Amount from acquisitions

 

10.1

 

  Customer deposits

 

30.1

 

  Revenue recognized

 

(31.7

)

  Foreign currency and other

 

(0.4

)

Balance December 30, 2023

$

40.2

 

Deferred revenue liabilities of $32.3 million, $32.1 million and $22.2 million as of December 30, 2023, December 31, 2022 and December 31, 2021, respectively, were included in Other current liabilities in our Consolidated Balance Sheet and $ 7.9 million as of December 30, 2023, was included in Other noncurrent liabilities in our Consolidated Balance Sheet.

The Company disaggregates revenue from contracts with customers into (i) major sales distribution channels in the U.S. and (ii) total sales to customers outside the U.S. market as these categories depict the nature, amount, timing and uncertainty of revenues and cash flows that are affected by economic factors. The following table disaggregates our consolidated revenue by major sales distribution channels for the years ended December 30, 2023, and December 31, 2022 and December 31, 2021.

(In millions)

 

December 30, 2023

 

 

December 31, 2022

 

 

December 31, 2021

 

Wholesalers(a)

 

$

2,126.2

 

 

$

2,100.0

 

 

$

2,027.9

 

Home Center retailers(b)

 

 

1,163.0

 

 

 

1,270.7

 

 

 

1,254.1

 

Other retailers(c)

 

 

418.8

 

 

 

392.9

 

 

 

440.7

 

U.S. net sales

 

 

3,708.0

 

 

 

3,763.6

 

 

 

3,722.7

 

International(d)

 

 

918.2

 

 

 

959.4

 

 

 

1,078.4

 

Net sales

 

$

4,626.2

 

 

$

4,723.0

 

 

$

4,801.1

 
(a)
Represents sales to customers whose business is oriented toward builders, professional tradespeople and home remodelers, inclusive of sales through our customers’ respective internet website portals.
(b)
Represents sales to the three largest “Do-It-Yourself” retailers: The Home Depot, Inc., Lowe's Companies, Inc. and Menards, Inc., inclusive of sales through their respective internet website portals.
(c)
Represents sales principally to our mass merchant and standalone, independent e-commerce customers.
(d)
Represents sales in markets outside the United States, principally in China, Canada, Europe and Mexico.

Practical Expedients

Incremental costs of obtaining a contract include only those costs the Company incurs that would not have been incurred if the contract had not been obtained. These costs are required to be recognized as assets and amortized over the period that the related goods or services transfer to the customer. As a practical expedient, we expense as incurred costs to obtain a contract when the expected amortization period is one year or less. These costs are recorded within selling, general and administrative expenses.