Revenue from Lessor Arrangements and Contracts with Customers

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Lessor Arrangements and Contracts with Customers

Revenue from Lessor Arrangements and Contracts with Customers

The majority of the Company’s revenue is generated from short-term arrangements associated with the production and sale of concrete admixtures and cement additives within its Specialty Construction Chemicals ("SCC") operating segment, as well as sheet and liquid membrane systems and other specialty products designed to protect the building envelope within its Specialty Building Materials ("SBM") operating segment. Short-term arrangements within its SCC operating segment involve selling concrete admixtures and providing dispensers to customers. Such arrangements contain a lease element due to the customer's right to control the use of dispensers over a period of time in exchange for consideration. For arrangements within the SBM operating segment, the transfer of control takes place at a point in time when products are shipped to the customer.

The Company generates revenue from long-term arrangements within its SCC operating segment, which generally consist of VERIFI® and Ductilcrete sales arrangements.

VERIFI® sales arrangements involve installing equipment on the customers’ trucks and at their plants, as well as performing slump management and truck location tracking services. The Company recognizes lease and service revenue for these arrangements. Revenue generated from VERIFI® sales arrangements represented less than 10% of the Company's consolidated revenue during the three and six months ended June 30, 2021 and 2020.

During the three months ended June 30, 2021 and 2020, the Company recognized lease revenue of $9.8 million and $9.1 million, respectively, and service revenue of $2.3 million and $1.6 million, respectively. During the six months ended June 30, 2021 and 2020, the Company recognized lease revenue of $19.2 million and $17.9 million, respectively, and service revenue of $4.3 million and $3.0 million, respectively. Lease revenue consists of dispenser lease revenue of $6.1 million and $6.4 million during the three months ended June 30, 2021 and 2020, respectively, and $12.2 million and $13.1 million during the six months ended June 30, 2021 and 2020, respectively, as well as an allocated portion of VERIFI® fixed fees and variable slump management fees. Service revenue consists of an allocated portion of VERIFI® fixed fees and variable slump management fees. Lease and service revenue is included within "Net sales" in the accompanying unaudited Consolidated Statements of Operations.

Revenue generated from Ductilcrete sales arrangements represented less than 10% of the Company's consolidated revenue during the three and six months ended June 30, 2021 and 2020.

The Company’s revenue is principally recognized as goods and services are delivered and performance obligations are satisfied upon delivery. The Company has certain long-term arrangements resulting in remaining obligations for which the work has not been performed or has been partially performed. As of June 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $10.1 million, including the estimated transaction price to be earned as revenue over the remaining term of these contracts, which is generally one to five years. The Company’s contract assets and liabilities resulting from its contracts in

the SCC or SBM operating segments were not material as of June 30, 2021 and December 31, 2020. Additionally, the amounts recorded in the accompanying unaudited Consolidated Statements of Operations during the three and six months ended June 30, 2021 and 2020 related to changes in the contract assets and liabilities were not material.

For further information on revenue recognition related to product sale arrangements, please refer to Note 2, "Revenue from Lessor Arrangements and Contracts with Customers", to the Company’s Consolidated Financial Statements included in the 2020 Annual Report on Form 10-K.