REVENUE RECOGNITION AND CONTRACTS

12 Months Ended

Dec. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION AND CONTRACTS

REVENUE RECOGNITION AND CONTRACTS

Revenue Recognition

We generate the vast majority of our revenues from the supply of, and aftermarket services for, steam-generating, environmental and auxiliary equipment. We also earn revenue from the supply of custom-engineered cooling systems for steam applications along with related aftermarket services. Our revenue recognition accounting policy is described in more detail in Note 2.

Contract Balances

The following represents the components of Contracts in progress and Advance billings on contracts included in the Consolidated Balance Sheets:

(in thousands)	December 31, 2023		December 31, 2022		$ Change		% Change
Contract assets - included in contracts in progress:
Costs incurred less costs of revenue recognized	$	37,556	$	62,662	$	(25,106)	(40)	%
Revenues recognized less billings to customers	52,498		55,518		(3,020)		(5)	%
Contracts in progress	$	90,054	$	118,180	$	(28,126)	(24)	%
Contract liabilities - included in advance billings on contracts:
Billings to customers less revenues recognized	$	76,032	$	111,159	$	(35,127)	(32)	%
Costs of revenue recognized less cost incurred	5,066		19,786		(14,720)		(74)	%
Advance billings on contracts	$	81,098	$	130,945	$	(49,847)	(38)	%
Net contract balance	$	8,956	$	(12,765)	$	21,721	170	%
Accrued contract losses	$	522	$	180	$	342	190	%

The following amounts represent retainage on contracts:

(in thousands)	December 31, 2023		December 31, 2022		$ Change		% Change
Retainage expected to be collected within one year	$	2,584	$	3,076	$	(492)	(16)	%
Retainage expected to be collected after one year	1,466		786		680		87	%
Total retainage	$	4,050	$	3,862	$	188	5	%

Retainage expected to be collected in 2024 is included in Accounts receivable – trade, net in the Consolidated Balance Sheets. Retainage expected to be collected after one year is included in Other assets in the Consolidated Balance Sheets. All long-term retainage at December 31, 2023 is expected to be collected by the end of 2025.

Backlog

At December 31, 2023 we had $644.5 million of remaining performance obligations, including $114.0 million of performance obligations associated with O&M contracts being exited, which are also referred to as total backlog. We expect to recognize approximately 69%, 14% and 17% of its remaining performance obligations as revenue in 2024, 2025 and thereafter, respectively.

Changes in Contract Estimates

In the years ended December 31, 2023, 2022 and 2021 we recognized changes in estimated gross profit related to long-term contracts accounted for on the over time basis, which are summarized as follows:

	Year ended December 31,
(in thousands)	2023		2022		2021
Increases in gross profit for changes in estimates	$	11,356	$	15,067	$	16,042
Decreases in gross profit for changes in estimates	(10,407)		(8,586)		(6,531)
Net changes in gross profit for changes in estimates	$	949	$	6,481	$	9,511

Loss Contracts from Continuing Operations

During the year ended December 31, 2023, we recorded $3.9 million in net losses from changes in estimated costs to complete eight B&W Thermal contracts in loss positions.