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REVENUE RECOGNITION | 12 Months Ended
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Dec. 31, 2023
REVENUE RECOGNITION |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION Performance Obligations Performance Obligations Satisfied at a Point in Time The Company considers control of most products to transfer at a single point in time when control is transferred to the customer, generally when the products are shipped in accordance with an agreement and/or purchase order. Control is defined as the ability to direct the use of and obtain substantially all of the remaining benefits of the product. The Company satisfies its performance obligations under a contract with a customer by transferring goods and services in exchange for generally monetary consideration from the customer. The Company considers the customer’s purchase order, and the Company’s corresponding sales order acknowledgment as the contract with the customer. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Nature of Goods and Services The Company sells component and integrated controlled motion solutions to end customers and original equipment manufacturers (“OEM’s”) through the Company’s own direct sales force and authorized manufacturers’ representatives and distributors. The Company’s products include brushed and brushless DC motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, and other controlled motion-related products. The Company’s target markets include Industrial, Vehicle, Medical, and Aerospace & Defense. Determining the Transaction Price The majority of the Company’s contracts have an original duration of less than one year. For these contracts, the Company applies the practical expedient and therefore does not consider the effects of the time value of money. For multiyear contracts, the Company uses judgment to determine whether there is a significant financing component. These contracts are generally those in which the customer has made an up-front payment. Contracts that management determines to include a significant financing component are discounted at the Company’s incremental borrowing rate. The Company incurs interest expense and accrues a contract liability. As the Company satisfies performance obligations and recognizes revenue from these contracts, interest expense is recognized simultaneously. Management does not have any contracts that include a significant financing component as of December 31, 2023. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers into geographical regions and target markets. The Company determines that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. As noted in Note 14, Segment Information, the Company’s business consists of one reportable segment. ​ The revenues by geography in the table below are revenues derived from the Company’s foreign subsidiaries as provided in Note 14. A reconciliation of disaggregated revenue to segment revenue as well as revenue by geographical regions is provided in Note 14. The Company’s disaggregated revenues are as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended December 31,
Target Market | ​ | 2023 |  | 2022 | ​ | 2021
Industrial | ​ | $ | 257,004 | ​ | $ | 193,290 | ​ | $ | 135,440
Vehicle | ​ | ​ | 133,488 | ​ | ​ | 130,436 | ​ | ​ | 129,835
Medical | ​ |  | 84,515 | ​ |  | 85,113 | ​ |  | 86,129
Aerospace & Defense | ​ |  | 78,175 | ​ |  | 70,193 | ​ |  | 31,746
Distribution and Other | ​ |  | 25,452 | ​ |  | 23,956 | ​ |  | 20,366
Total | ​ | $ | 578,634 | ​ | $ | 502,988 | ​ | $ | 403,516
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended December 31,
Geography | ​ | 2023 |  | 2022 | ​ | 2021
North America (primarily U.S.) | ​ | $ | 399,224 | ​ | $ | 337,768 | ​ | $ | 239,528
Europe | ​ |  | 150,608 | ​ |  | 130,018 | ​ |  | 129,414
Asia-Pacific | ​ |  | 28,802 | ​ |  | 35,202 | ​ |  | 34,574
Total | ​ | $ | 578,634 | ​ | $ | 502,988 | ​ | $ | 403,516
​ Contract Balances When the timing of the Company’s delivery of product is different from the timing of the payments made by customers, the Company recognizes either a contract asset (performance precedes customer payment) or a contract liability (customer payment precedes performance). Typically, contracts are paid in arrears and are recognized as receivables after the Company considers whether a significant financing component exists. Backlog represents written firm orders from a customer to deliver products and, in the case of blanket purchase orders, only includes the portion of the order for which a schedule or release has been agreed to with the customer. We believe our backlog represents our unsatisfied or partially unsatisfied performance obligations. Backlog as of December 31, 2023 was $276,093. The Company expects to recognize 85% of these performance obligations within the next twelve months with the remaining amount recognized between one and two years. The opening and closing balances of the Company’s contract liability are as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | December 31, | ​ | December 31,
​ | ​ | 2023 | ​ | 2022
Contract liabilities in accrued liabilities | ​ | $ | 2,137 | ​ | $ | 4,807
Contract liabilities in other long-term liabilities | ​ | ​ | 8 | ​ | ​ | 19
​ | ​ | $ | 2,145 | ​ | $ | 4,826
​ | ​ | ​ | ​ | ​ | ​ | ​
​ The difference between the opening and closing balances of the Company’s contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment as well as balances assumed in acquisitions. In the years ended December 31, 2023 and 2022, the Company recognized revenue of $4,211 and $2,307, respectively, that was included in the opening contract liabilities balance. Significant Payment Terms The Company’s contracts with its customers state the final terms of the sale, including the description, quantity, and price of each product or service purchased. Payments are typically due in full within 30-60 days of delivery. Since the customer agrees to a stated rate and price in the contract that do not vary over the contract, the majority of contracts do not contain variable consideration. Returns, Refunds, and Warranties In the normal course of business, the Company does not accept product returns unless the item is defective as manufactured. The Company establishes provisions for estimated returns and warranties. All contracts include a standard warranty clause to guarantee that the product complies with agreed specifications. Practical Expedients Incremental costs of obtaining a contract - the Company elected to expense the incremental costs of obtaining a contract when the amortization period for such contracts would have been one year or less. Time value of money - the Company elected not to adjust the promised amount of consideration for the effects of the time value of money for contracts in which the anticipated period between when the Company transfers the goods or services to the customer and when the customer pays is equal to one year or less.

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