REVENUES

6 Months Ended

Mar. 31, 2023

REVENUES

REVENUES

12.  REVENUES

Disaggregation of Revenues

Revenues by customer type, geographic location, and revenue recognition method for the three and six-month periods ended March 31, 2023 are presented in the tables below as the Company deems it best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The tables below also include a reconciliation of the disaggregated revenue within each reportable segment.

Three months ended March 31, 2023	Aerospace
(In thousands)	& Defense		USG		Test		Total
Customer type:
Commercial	$	48,228	$	78,110	$	43,188	$	169,526
Government		50,754		1,051		7,805		59,610
Total revenues	$	98,982	$	79,161	$	50,993	$	229,136
Geographic location:
United States	$	82,516	$	53,020	$	27,504	$	163,040
International		16,466		26,141		23,489		66,096
Total revenues	$	98,982	$	79,161	$	50,993	$	229,136
Revenue recognition method:
Point in time	$	47,255	$	64,080	$	11,968	$	123,303
Over time		51,727		15,081		39,025		105,833
Total revenues	$	98,982	$	79,161	$	50,993	$	229,136

Six months ended March 31, 2023	Aerospace
(In thousands)	& Defense		USG		Test		Total
Customer type:
Commercial	$	84,968	$	148,273	$	89,180	$	322,421
Government		96,997		1,933		13,286		112,216
Total revenues	$	181,965	$	150,206	$	102,466	$	434,637
Geographic location:
United States	$	151,450	$	99,399	$	55,007	$	305,856
International		30,515		50,807		47,459		128,781
Total revenues	$	181,965	$	150,206	$	102,466	$	434,637
Revenue recognition method:
Point in time	$	80,859	$	120,111	$	21,069	$	222,039
Over time		101,106		30,095		81,397		212,598
Total revenues	$	181,965	$	150,206	$	102,466	$	434,637

Revenues by customer type, geographic location, and revenue recognition method for the three and six-month periods ended March 31, 2022 are presented in the tables below.

Three months ended March 31, 2022	Aerospace
(In thousands)	& Defense		USG		Test		Total
Customer type:
Commercial	$	33,562	$	63,379	$	51,903	$	148,844
Government		51,259		812		4,013		56,084
Total revenues	$	84,821	$	64,191	$	55,916	$	204,928
Geographic location:
United States	$	72,621	$	41,458	$	31,071	$	145,150
International		12,200		22,733		24,845		59,778
Total revenues	$	84,821	$	64,191	$	55,916	$	204,928
Revenue recognition method:
Point in time	$	35,666	$	51,202	$	14,838	$	101,706
Over time		49,155		12,989		41,078		103,222
Total revenues	$	84,821	$	64,191	$	55,916	$	204,928

Six months ended March 31, 2022	Aerospace
(In thousands)	& Defense		USG		Test		Total
Customer type:
Commercial	$	61,489	$	126,221	$	92,941	$	280,651
Government		93,576		1,455		6,256		101,287
Total revenues	$	155,065	$	127,676	$	99,197	$	381,938
Geographic location:
United States	$	133,313	$	80,199	$	54,047	$	267,559
International		21,752		47,477		45,150		114,379
Total revenues	$	155,065	$	127,676	$	99,197	$	381,938
Revenue recognition method:
Point in time	$	64,223	$	102,037	$	27,660	$	193,920
Over time		90,842		25,639		71,537		188,018
Total revenues	$	155,065	$	127,676	$	99,197	$	381,938

Revenue Recognition

Payment terms with our customers vary by the type and location of the customer and the products or services offered. Arrangements with customers that include payment terms extending beyond one year are not significant. The transaction price for these contracts reflects our estimate of returns and discounts, which are based on historical, current and forecasted information to determine the expected amount to which we will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation. Under the typical payment terms of our long term fixed price contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of costs incurred as the work progresses.

For our overtime revenue recognized using the output method of costs incurred, contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several months to one or more years, and the estimation of these costs requires judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change. In addition, in the USG

segment, we recognize revenue as a series of distinct services based on each day of providing services (straight-line over the contract term) for certain of our USG segment contracts. Under the typical payment terms of our service contracts, the customer pays us in advance of when services are performed. In addition, in the Test segment, we use milestones to measure progress for our Test segment contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts.

Remaining Performance Obligations

Remaining performance obligations, which is the equivalent of backlog, represent the expected transaction price allocated to contracts that the Company expects to recognize as revenue in future periods when the Company performs under the contracts. These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At March 31, 2023, the Company had $740.9 million in remaining performance obligations of which the Company expects to recognize revenues of approximately 79% in the next twelve months.

Contract assets and liabilities

Assets and liabilities related to contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. Because of the timing difference of revenue recognition and customer billing, these contracts will often result in revenue recognized in excess of billings and billings in excess of costs incurred. At March 31, 2023, contract assets and liabilities totaled $128.2 million and $131.7 million, respectively. During the first six months of 2023, the Company recognized approximately $55 million in revenues that were included in the contract liabilities balance at September 30, 2022. At September 30, 2022, contract assets and liabilities totaled $125.2 million and $137.6 million, respectively.