Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Revenue from Contracts with Customers

Overview

The Company recognizes revenue when the Company has satisfied its obligation and control is transferred to the customer. The amount of revenue recognized includes adjustments for any variable consideration, such as rebates, sales discounts, liquidated damages, etc., which are included in the transaction price, and allocated to each performance obligation. The variable consideration is estimated throughout the course of the contract using the Company’s best estimates.

The majority of the Company’s revenues are derived from short duration contracts and revenue is recognized at a single point in time when control is transferred to the customer, generally at shipment or when delivery has occurred or services have been rendered.

The Company has certain long duration engineered to order (“ETO”) contracts that require highly engineered solutions designed to customer specific applications. For contracts where the contractual deliverables have no alternative use and the contract termination clauses provide for the recovery of cost plus a reasonable margin, revenue is recognized over time based on the Company’s progress in satisfying the contractual performance obligations, generally measured as the ratio of actual costs incurred

to date to the estimated total costs to complete the contract. For contracts with termination provisions that do not provide for recovery of cost and a reasonable margin, revenue is recognized at a point in time, generally at shipment or delivery to the customer. Identification of performance obligations, determination of alternative use, assessment of contractual language regarding termination provisions, and estimation of total project costs are all significant judgments required in the application of ASC 606.

Contractual specifications and requirements may be modified. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. In the event a contract modification is for goods or services that are not distinct in the contract, and therefore, form part of a single performance obligation that is partially satisfied as of the modification date, the effect of the contract modification on the transaction price and the Company’s measure of progress for the performance obligation to which it relates, is recognized on a cumulative catch-up basis.

Taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Sales commissions are generally due at either collection of payment from customers or recognition of revenue. Applying the practical expedient from ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in “Selling and administrative expenses” in the Condensed Consolidated Statements of Operations.

Disaggregation of Revenue

The following tables provide disaggregated revenue by reportable segment for the three month periods ended March 31, 2021 and 2020.

	For the Three Month Period Ended March 31, 2021
	Industrial Technologies and Services		Precision and Science Technologies		Specialty Vehicle Technologies		Total
Primary Geographic Markets
United States	$	353.1	$	98.1	$	202.9	$	654.1
Other Americas	60.2		3.5		12.1		75.8
Total Americas	413.3		101.6		215.0		729.9
EMEIA	319.4		80.1		15.7		415.2
Asia Pacific	181.1		34.0		9.6		224.7
Total	$	913.8	$	215.7	$	240.3	$	1,369.8
Product Categories
Original equipment	$	528.7	$	178.7	$	184.6	$	892.0
Aftermarket	385.1		37.0		55.7		477.8
Total	$	913.8	$	215.7	$	240.3	$	1,369.8
Pattern of Revenue Recognition
Revenue recognized at point in time(1)	$	847.9	$	214.8	$	233.4	$	1,296.1
Revenue recognized over time(2)	65.9		0.9		6.9		73.7
Total	$	913.8	$	215.7	$	240.3	$	1,369.8

	For the Three Month Period Ended March 31, 2020
	Industrial Technologies and Services		Precision and Science Technologies		Specialty Vehicle Technologies		Total
Primary Geographic Markets
United States	$	177.2	$	49.3	$	73.6	$	300.1
Other Americas	45.3		4.9		4.8		55.0
Total Americas	222.5		54.2		78.4		355.1
EMEIA	200.6		40.9		5.4		246.9
Asia Pacific	80.9		17.8		2.8		101.5
Total	$	504.0	$	112.9	$	86.6	$	703.5
Product Categories
Original equipment	$	303.3	$	99.0	$	72.6	$	474.9
Aftermarket	200.7		13.9		14.0		228.6
Total	$	504.0	$	112.9	$	86.6	$	703.5
Pattern of Revenue Recognition
Revenue recognized at point in time(1)	$	459.4	$	112.9	$	84.5	$	656.8
Revenue recognized over time(2)	44.6		—		2.1		46.7
Total	$	504.0	$	112.9	$	86.6	$	703.5

(1)Revenues from short and long duration product and service contracts recognized at a point in time when control is transferred to the customer generally when product delivery has occurred and services have been rendered.

(2)Revenues primarily from long duration ETO product contracts and certain contracts for delivery of a significant volume of substantially similar products recognized over time as contractual performance obligations are completed.

Performance Obligations

The majority of the Company’s contracts have a single performance obligation as the promise to transfer goods and/or services. For contracts with multiple performance obligations, the Company utilizes observable prices to determine standalone selling price or cost plus margin if a standalone price is not available. The Company has elected to account for shipping and handling activities as fulfillment costs and not a separate performance obligation. If control transfers and related revenue is recognized for the related good before the shipping and handling activities occur, the related costs of those shipping and handling activities are accrued.

The Company’s primary performance obligations include delivering standard or configured to order (“CTO”) goods to customers, designing and manufacturing a broad range of equipment customized to a customer’s specifications in ETO arrangements, rendering of services (maintenance and repair contracts), and certain extended or service type warranties. For incidental items that are immaterial in the context of the contract, costs are expensed as incurred or accrued at delivery.

As of March 31, 2021, for contracts with an original duration greater than one year, the Company expects to recognize revenue in the future related to unsatisfied (or partially satisfied) performance obligations of $406.1 million in the next twelve months and $304.5 million in periods thereafter. The performance obligations that are unsatisfied (or partially satisfied) are primarily related to orders for goods or services that were placed prior to the end of the reporting period and have not been delivered to the customer, on-going work on ETO contracts where revenue is recognized over time and service contracts with an original duration greater than one year.

Contract Balances

The following table provides the contract balances as of March 31, 2021 and December 31, 2020 presented in the Condensed Consolidated Balance Sheets.

	March 31, 2021		December 31, 2020
Accounts receivable, net	$	978.1	$	934.4
Contract assets	55.1		60.5
Contract liabilities	192.6		175.7

Accounts receivable, net – Amounts due where the Company’s right to receive cash is unconditional. Customer receivables are recorded at face amount less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for expected losses as a result of customers’ inability to make required payments. Management evaluates the aging of customer receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of customer receivables that may not be collected in the future and records the appropriate provision.

The allowance for credit losses for the three month periods ended March 31, 2021 and 2020 consisted of the following.

	For the Three Month Period Ended March 31, 2021
Balance at beginning of the period	$	52.7
Provision charged to expense	0.4
Write-offs, net of recoveries	(1.5)
Foreign currency translation and other	(1.0)
Balance at end of the period	$	50.6

Contract assets – The Company’s rights to consideration for the satisfaction of performance obligations subject to constraints apart from timing. Contract assets are transferred to receivables when the right to collect consideration becomes unconditional. Contract assets are presented net of progress billings and related advances from customers.

Contract liabilities – Advance payments received from customers for contracts for which revenue is not yet recognized. Contract liability balances are generally recognized in revenue within twelve months.

Contract assets and liabilities are reported in the Condensed Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Contract assets and liabilities are presented net on a contract level, where required.

Payments from customers are generally due 30-60 days after invoicing. Invoicing for sales of standard products generally coincides with shipment or delivery of goods. Invoicing for CTO and ETO contracts typically follows a schedule for billing at contractual milestones. Payment milestones normally include down payments upon the contract signing, completion of product design, completion of customer’s preliminary inspection, shipment or delivery, completion of installation, and customer’s on-site inspection. The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities) on the Condensed Consolidated Balance Sheets.

The Company has elected the practical expedient from ASC 606-10-32-18 and does not adjust the transaction price for the effects of a financing component if, at contract inception, the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.