REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2020

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts from Customers. During 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers, on a modified retrospective basis, which provided for comprehensive changes in revenue recognition and superseded nearly all existing U.S. GAAP.

The Company analyzes several factors, including but not limited to, the nature of the products being sold and contractual terms and conditions in contracts with customers to help the Company make such judgments about revenue recognition.

The Company accounts for revenue from contracts with customers when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is primarily derived from customer purchase orders, master sales agreements, and negotiated contracts, all of which represent contracts with customers.

The Company next identifies the performance obligations in the contract. A performance obligation is a promise to provide distinct goods or services. Performance obligations are the unit of account for purposes of applying the revenue standard and therefore determines when and how revenue is recognized. The Company determines the

performance obligations at contract inception based on the goods that are promised in a contract with a customer. Typical performance obligations include automotive parts, automotive tooling, rolled good media and filter bags.

The transaction price in the contract is determined based on the consideration to which the Company will be entitled in exchange for transferring products to the customer, excluding amounts collected on behalf of third parties (for example, sales taxes). The transaction price is typically included on the purchase order or included in a negotiated agreement. Certain contracts may include variable consideration in the transaction price, such as rebates, pricing discounts, price concessions, sales incentives, index pricing or other provisions that can decrease the transaction price. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on reasonably available information, such as historical customer information, current and/or forecast information and/or other relevant data. In certain circumstances where a particular outcome is probable, the Company utilizes the most likely amount to which the Company expects to be entitled. The Company accounts for consideration payable to a customer as a reduction of the transaction price thereby reducing the amount of revenue recognized. Consideration payable to a customer includes cash amounts that the Company pays, or expects to pay, to a customer based on certain contract requirements. 

The Company recognizes revenue as performance obligations are satisfied, which can be either over time or at a point in time, depending on when control of the Company’s products transfers to its customers.

In circumstances when control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue and cost at completion is complex, subject to many variables and requires judgment.

The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products to be provided. The Company generally uses the cost-to-cost measure of progress for contracts because it best depicts the transfer of control to the customer which occurs as costs are incurred on contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred.

For tooling revenue recognized over time, the Company makes judgments which include, but are not limited to, estimated costs to completion, costs incurred to date, and assessment of risks related to changes in estimates of revenues and costs. In doing so, management must make assumptions regarding the work required to fulfill the performance obligations, which is dependent upon the execution by the Company's subcontractors, among other variables and contract requirements.

Changes in estimates for revenue recognized over time are recorded by the Company in the period they become known. Changes are recognized on a cumulative catch-up basis in net sales, costs of sales, and operating income. The cumulative catch up adjustment recognizes in the current period the cumulative effect of changes in estimates on current and prior periods.

The following is a description of products and performance obligations for each of the Company's reportable segments, from which the Company generates its revenue. For more detailed information about reportable segments, see Note 15, "Segment Information", in these Notes to the Consolidated Financial Statements.

Performance Materials

Products for the Performance Materials segment include filtration media solutions primarily for air, fluid power, life science and industrial applications, gasket and sealing solutions, thermal insulation, energy storage, and other engineered products. These contracts typically have distinct performance obligations, which is the promise to transfer the media solutions to the Company’s customers.

The Company recognizes revenue at a point in time or over time, based upon when control transfers to the customer. If revenue is recognized at a point in time, the performance obligation is typically satisfied upon shipment and in accordance with shipping terms. In circumstances when control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation.

Customer payment terms are negotiated on a contract-by-contract basis and typically range from 30 to 90 days.

Technical Nonwovens

The Technical Nonwovens segment produces needle punch nonwoven solutions including industrial filtration and advanced materials products. Industrial filtration products include nonwoven rolled-good felt media and filter bags used primarily in industrial air and liquid filtration applications. Advanced materials products include nonwoven rolled good media used in commercial applications and predominantly serves the geosynthetic, automotive, industrial, medical, and safety apparel markets. The automotive media is provided to Tier 1 and Tier 2 suppliers as well as the Company’s Thermal Acoustical Solutions segment. These contracts typically have distinct performance obligations, which is the promise to transfer the industrial filtration or advanced materials products to the Company’s customers.

The Company recognizes revenue at a point in time or over time, based upon when control transfers to the customer. If revenue is recognized at a point in time, the performance obligation is typically satisfied upon shipment and in accordance with shipping terms. In circumstances when control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. For filter bag sales, the Company may enter into warranty agreements that are implied or sold with the product to provide assurance that a product will function as expected and in accordance with certain specifications. This type of warranty is not a separate performance obligation.

Customer payment terms are negotiated on a contract-by-contract basis and typically range from 30 to 90 days.

Thermal Acoustical Solutions

Products for the Thermal Acoustical Solutions segment are composed of parts and tooling product types. The parts products include a full range of innovative engineered products to assist in noise and heat abatement within the transportation and industrial sectors. Part products include thermally shield sensitive components that protect from high heat, improve exhaust gas treatment, lower harmful emissions and assist in the reduction of noise vibration and harshness. Generally, products are sold to original equipment manufacturers and Tier 1 suppliers. The Company also enters into contractual agreements with certain customers within the automotive industry, to design and develop molds, dies and tools, which the Company refers to as tooling product.

For part type products, customer contracts typically have distinct performance obligations, which is the promise to transfer manufactured parts to these customers. The Company recognizes parts revenue at a point in time or over time, based upon when control transfers to the customer. If revenue is recognized at a point in time, the performance obligation is typically satisfied upon shipment and in accordance with shipping terms. In circumstances when control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation.

For tooling type products, customer contracts typically have distinct performance obligations and are generally completed within one year. The Company periodically enters into multiple contracts with a customer at or near the same time which may be combined for purposes of determining the appropriate transaction price. The Company allocates the transaction price to each performance obligation in the contract based on a relative stand-alone selling price using costs incurred plus an expected margin. The corresponding revenues are recognized over time as the related performance obligations are satisfied.

Customer payment terms for part type products are negotiated on a contract-by-contract basis and typically range from 30 to 90 days. Customer payment terms for tooling type products typically range from 30 to 90 days after title transfers to the customer. Occasionally customers make progress payments as the tool is constructed.

Contract Assets and Contract Liabilities

Contract assets consists of unbilled amounts typically resulting from sales under contracts when the over-time method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. These unbilled accounts receivable in contract assets are transferred to accounts receivable upon invoicing, generally when the right to payment becomes unconditional, in which case payment is due based only upon the passage of time.

Contract liabilities consists of advance payments received from customers and billings in excess of costs. Contract liabilities generally represent the Company’s obligation to transfer its products to its customers for which the

Company has received consideration from its customers. Contract liabilities are included in Other accrued liabilities on the Company’s Consolidated Balance Sheets.

Contract assets and liabilities consisted of the following:

	At December 31,
In thousands	2020		2019		Dollar Change
Contract assets	$	32,403	$	28,245	$	4,158
Contract liabilities	$	3,686	$	1,441	$	2,245

The $4.2 million increase in contract assets from December 31, 2019 to December 31, 2020 was primarily due to the timing of billings related to last-time buys of membrane-based filtration media in the Company's Netherlands facility that will be closed in 2021 and, to a lesser extent, the timing of tooling billings to customers.

The $2.2 million increase in contract liabilities from December 31, 2019 to December 31, 2020 was primarily due to an increase in customer deposits, partially offset by $1.1 million of revenue recognized in 2020 related to contract liabilities at December 31, 2019.

Disaggregation of Revenue

The Company disaggregates revenue from customers by geographic region, which best depicts how the nature, amount, timing, and uncertainty of the Company's revenue and cash flows are affected by economic factors. Disaggregated revenue by geographical region, based on the region in which the sales originated, for the years ended December 31, 2020, 2019, and 2018 were as follows:

	For the Year Ended December 31, 2020
In thousands	North America		Europe		Asia		Total Net Sales
Performance Materials	$	181,741	$	73,378	$	9,526	$	264,645
Technical Nonwovens	134,509		64,624		23,207		222,340
Thermal Acoustical Solutions	195,223		83,253		16,331		294,807
Eliminations and Other	(16,998)		(753)		—		(17,751)
Consolidated Net Sales	$	494,475	$	220,502	$	49,064	$	764,041

	For the Year Ended December 31, 2019
In thousands	North America		Europe		Asia		Total Net Sales
Performance Materials	$	176,094	$	61,889	$	7,497	$	245,480
Technical Nonwovens	157,579		68,456		29,311		255,346
Thermal Acoustical Solutions	245,870		98,221		17,486		361,577
Eliminations and Other	(24,287)		(718)		—		(25,005)
Consolidated Net Sales	$	555,256	$	227,848	$	54,294	$	837,398

	For the Year Ended December 31, 2018
In thousands	North America		Europe		Asia		Total Net Sales
Performance Materials	$	117,313	$	49,055	$	2,849	$	169,217
Technical Nonwovens	167,519		73,912		35,640		277,071
Thermal Acoustical Solutions	250,133		99,529		15,765		365,427
Eliminations and Other	(25,121)		(697)		—		(25,818)
Consolidated Net Sales	$	509,844	$	221,799	$	54,254	$	785,897