Revenue Recognition

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

Revenue Recognition

Note 11   Revenue Recognition

Revenue for sales of products and services is derived from contracts with customers.  The products and services promised in contracts include the sale of municipal water and flow instrumentation products, such as flow meters and radios, software access and other ancillary services.  Contracts generally state the terms of sale, including the description, quantity and price of each product or service.  Since the customer typically agrees to a stated rate and price in the contract that does not vary over the life of the contract, the majority of the Company's contracts do not contain variable consideration.  The Company establishes a provision for estimated warranty and returns as well as certain after sale costs as discussed in Note 2 "Additional Financial Information Disclosures" in the Notes to Unaudited Consolidated Condensed Financial Statements.

In accordance with ASU No. 2016-10 “Revenue from Contracts with Customers” (“Topic 606”), the Company disaggregates revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred.  The Company determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606 which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

Information regarding revenues disaggregated by geographic area is as follows:

	Three months ended June 30,				Six months ended June 30,
(In thousands)	2020		2019		2020		2019
Revenues:
United States	$	80,754	$	90,258	$	175,246	$	181,757
Foreign:
Asia		1,437		2,287		2,985		3,739
Canada		2,125		3,821		5,261		7,318
Europe		3,293		4,449		8,068		9,801
Mexico		1,025		1,003		2,995		1,837
Middle East		2,218		1,481		3,755		3,065
Other		267		243		1,317		906
Total	$	91,119	$	103,542	$	199,627	$	208,423

Information regarding revenues disaggregated by the timing of when goods and services are transferred is as follows:

	Three months ended June 30,				Six months ended June 30,
(In thousands)	2020		2019		2020		2019
Revenue recognized over time	$	5,177	$	4,003	$	9,981	$	7,756
Revenue recognized at a point in time		85,942		99,539		189,646		200,667
Total	$	91,119	$	103,542	$	199,627	$	208,423

The Company performs its obligations under a contract by shipping products or performing services in exchange for consideration.  The Company typically invoices its customers as soon as control of an asset is transferred and a receivable to the Company is established.  The Company, however, recognizes a contract liability when a customer prepays for goods or services and the Company has not transferred control of the goods or services.

The closing balances of the Company's receivables and contract liabilities are as follows:

	June 30, 2020		December 31, 2019
(In thousands)
Receivables	$	54,021	$	61,365
Contract liabilities		22,056		20,143

Contract liabilities are included in payables and other long-term liabilities on the Company’s Condensed Consolidated Balance Sheets.  The balance of contract assets was immaterial as the Company did not have a significant amount of uninvoiced receivables in the three and six-month periods ended June 30, 2020 and twelve-month period ended December 31, 2019.

As of June 30, 2020, the Company had certain contracts with unsatisfied performance obligations.  For contracts recorded as contract liabilities, $22.1 million was the aggregate amount of the transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied as of the end of the reporting period.  The Company estimates that revenue recognized from satisfying those performance obligations will be approximately $5.0 million in 2020, $2.0 million in each year from 2021 through 2025 and $7.1 million thereafter.   

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of measurement in Topic 606.  At contract inception, the Company assesses the products and services promised in its contracts with customers.  The Company then identifies performance obligations to transfer distinct products or services to the customer.  In order to identify performance obligations, the Company considers all of the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

The Company's performance obligations are satisfied at a point in time or over time as work progresses.  Revenue from products and services transferred to customers at a single point in time accounted for 94.3% and 96.1% of net sales for the three-month periods ended June 30, 2020 and 2019, respectively. Revenue from products and services transferred to customers at a single point in time accounted for 95.0% and 96.3% of net sales for the six-month periods ended June 30, 2020 and 2019, respectively.  The majority of the Company's revenue recognized at a point in time is for the sale of municipal and flow

instrumentation products.  Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer during shipping.

Revenue from services transferred to customers over time accounted for 5.7% and 3.9% of net sales for the three-month periods ended June 30, 2020 and 2019, respectively.  Revenue from services transferred to customers over time accounted for 5.0% and 3.7% of net sales for the six-month periods ended June 30, 2020 and 2019, respectively.  The majority of the Company's revenue that is recognized over time relates to the BEACON® AMA software as a service, but also includes training, certain installation and other revenues.