Revenue Recognition

9 Months Ended

Sep. 30, 2021

Revenue From Contract With Customer [Abstract]

Revenue Recognition

2. Revenue Recognition

Total revenues include sales of products and services to customers, net of any discounts or allowances, and freight revenues. Product revenues are recognized when control of the promised good is transferred to the customer, typically when finished products are shipped. Intersegment and interproduct revenues are eliminated in consolidation. Service revenues are derived from the paving business and are recognized using the percentage-of-completion method under the cost-to-cost approach. Freight revenues reflect delivery arranged by the Company using a third party on behalf of the customer and are recognized consistently with the timing of the product revenues.

Performance Obligations. Performance obligations are contractual promises to transfer or provide a distinct good or service for a stated price. The Company’s product sales agreements are single-performance obligations that are satisfied at a point in time. Performance obligations within paving service agreements are satisfied over time, primarily ranging from one day to two years. For product revenues and freight revenues, customer payment terms are generally 30 days from invoice date. Customer payments for the paving operations are based on a contractual billing schedule and are due 30 days from invoice date.

Future revenues from unsatisfied performance obligations at September 30, 2021 and 2020 were $183.0 million and $150.2 million, respectively, where the remaining periods to complete these obligations ranged from one month to 21 months and one month to 13 months, respectively.  

Revenue by Category. The following table presents the Company’s total revenues by category for each reportable segment.

	Three Months Ended
	September 30, 2021
	Products and Services		Freight		Total
	(Dollars in Millions)
East Group	$	641.8	$	42.3	$	684.1
West Group		749.0		45.8		794.8
Total Building Materials business		1,390.8		88.1		1,478.9
Magnesia Specialties		71.9		6.5		78.4
Total	$	1,462.7	$	94.6	$	1,557.3
	Three Months Ended
	September 30, 2020
	Products and Services		Freight		Total
	(Dollars in Millions)
East Group	$	514.1	$	35.2	$	549.3
West Group		671.4		39.8		711.2
Total Building Materials business		1,185.5		75.0		1,260.5
Magnesia Specialties		55.2		5.7		60.9
Total	$	1,240.7	$	80.7	$	1,321.4

Service revenues, which include paving services located in Colorado , were $100.5 million and $112.8 million for the three months ended September 30, 2021 and 2020, respectively, and are reported in the West Group .

	Nine Months Ended
	September 30, 2021
	Products and Services		Freight		Total
	(Dollars in Millions)
East Group	$	1,610.9	$	103.5	$	1,714.4
West Group		1,861.9		116.3		1,978.2
Total Building Materials business		3,472.8		219.8		3,692.6
Magnesia Specialties		207.1		17.9		225.0
Total	$	3,679.9	$	237.7	$	3,917.6
	Nine Months Ended
	September 30, 2020
	Products and Services		Freight		Total
	(Dollars in Millions)
East Group	$	1,371.8	$	94.1	$	1,465.9
West Group		1,785.4		118.8		1,904.2
Total Building Materials business		3,157.2		212.9		3,370.1
Magnesia Specialties		164.0		16.2		180.2
Total	$	3,321.2	$	229.1	$	3,550.3

Service revenues for the nine months ended September 30, 2021 and 2020 were $182.7 million and $221.3 million, respectively.

Contract Balances. Costs in excess of billings relate to the conditional right to consideration for completed contractual performance and are contract assets on the consolidated balance sheets. Costs in excess of billings are reclassified to accounts receivable when the right to consideration becomes unconditional. Billings in excess of costs relate to customers invoiced in advance of contractual performance and are contract liabilities on the consolidated balance sheets. The following table presents information about the Company’s contract balances:

(Dollars in Millions)	September 30, 2021		December 31, 2020
Costs in excess of billings	$	10.8	$	2.2
Billings in excess of costs	$	10.7	$	14.0

Revenues recognized from the beginning balance of contract liabilities for the three months ended September 30, 2021 and 2020 were $7.1 million and $8.5 million, respectively, and for the nine months ended September 30, 2021 and 2020 were $11.9 million and $7.2 million, respectively.

Retainage, which primarily relates to the paving services, represents amounts that have been billed to customers but payment withheld until final acceptance by the customer of the performance obligation.  Included in other current assets on the Company’s consolidated balance sheets, retainage was $10.0 million and $10.6 million at September 30, 2021 and December 31, 2020, respectively.

Policy Elections. When the Company arranges third-party freight to deliver products to customers, the Company has elected the delivery to be a fulfillment activity rather than a separate performance obligation.  Further, the

Company acts as a principal in the delivery arrangements and, as required by the accounting standard, the related revenues and costs are presented gross and are included in the consolidated statements of earnings.