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Note 3 - Revenue Recognition
 3 Months Ended
Mar. 31, 2023
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

(3)

Revenue Recognition

 

The Company recognizes revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for promised goods or services. The Company recognizes revenue in accordance with the core principles of ASC 606 which include (1) identifying the contract with a customer, (2) identifying separate performance obligations within the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue. The Company recognizes all but an immaterial portion of its product sales upon shipment. The Company recognizes revenue from the sale of tooling and machinery upon customer acceptance. The Company recognizes revenue from engineering services, which are primarily product development services, as the services are performed or as otherwise determined based on the substance of the agreement. The Company recognizes revenue from bill and hold transactions at the time the specified goods are complete and available to the customer. In the ordinary course of business, the Company accepts sales returns from customers for defective goods, such amounts being immaterial. Although only applicable to an insignificant number of transactions, the Company has elected to exclude sales taxes from the transaction price. The Company has elected to account for shipping and handling activities for which the Company is responsible under the terms and conditions of the sale not as performance obligations but rather as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the good and are expensed when revenue is recognized.

 

Disaggregated Revenue

 

The following table presents the Company’s revenue disaggregated by the major types of goods and services sold to the Company’s customers (in thousands):

 

  

Three Months Ended

 
  

March 31,

 

Net sales of:

 

2023

  

2022

 

Products

 $94,692  $69,505 

Tooling and Machinery

  1,294   478 

Engineering services

  1,767   1,259 

Total net sales

 $97,753  $71,242 

 

Contract balances

 

Timing of revenue recognition may differ from the timing of invoicing to customers. When invoicing occurs prior to revenue recognition, the Company has contract liabilities included within “deferred revenue” on the condensed consolidated balance sheet.

 

The following table presents opening and closing balances of contract liabilities for the three-month periods ended March 31, 2023 and 2022 (in thousands):

 

  

Contract Liabilities

 
  

Three Months Ended
March 31,

 
  

2023

  

2022

 

Deferred revenue - beginning of period

 $4,679  $4,247 

Increases due to consideration received from customers

  999   1,116 

Revenue recognized

  (2,096)  (323)

Deferred revenue - end of period

 $3,582  $5,040 

 

Revenue recognized during the three-month periods ended March 31, 2023 and 2022 from amounts included in deferred revenue at the beginning of the period were approximately $1.9 million and $273 thousand, respectively.

 

When invoicing occurs after revenue recognition, the Company has contract assets, included within “receivables, net” on the condensed consolidated balance sheets.

 

The following table presents opening and closing balances of contract assets for the three-month periods ended March 31, 2023 and 2022 (in thousands):

 

  

Contract Assets

 
  

Three Months Ended
March 31,

 
  

2023

  

2022

 

Unbilled Receivables - beginning of period

 $270  $74 

Increases due to revenue recognized, not invoiced to customers

  1,379   740 

Decreases due to customer invoicing

  (1,326)  (412)

Unbilled Receivables - end of period

 $323  $402