Revenue Recognition

3 Months Ended

Nov. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 2 – Revenue Recognition

Contract balances

Contract assets primarily consist of unbilled receivables related to marine vessel construction for which the respective contracts do not yet permit billing at the reporting date, and railcar repair and conversion inventories. Contract liabilities primarily consist of customer prepayments for manufacturing, maintenance, and other management-type services, for which the Company has not yet satisfied the related performance obligations.

The contract balances are as follows:

(in millions)	Balance sheet classification	November 30, 2021		August 31, 2021		$ change
Contract assets	Accounts receivable, net	$	9.1	$	5.9	$	3.2
Contract assets	Inventories	$	11.7	$	6.7	$	5.0
Contract liabilities 1	Deferred revenue	$	30.6	$	36.4	$	(5.8	)

1 Contract liabilities balance includes deferred revenue within the scope of Revenue from Contracts with Customers (Topic 606).

For the three months ended November 30, 2021, the Company recognized $9.6 million of revenue that was included in Contract liabilities as of August 31, 2021.

Performance obligations

As of November 30, 2021, the Company has entered into contracts with customers for which revenue has not yet been recognized. The following table outlines estimated revenue related to performance obligations wholly or partially unsatisfied, that the Company anticipates will be recognized in future periods.

(in millions)	November 30, 2021
Revenue type:
Manufacturing – Railcar sales	$	2,471.3
Manufacturing – Marine	$	61.5
Manufacturing – Conversions	$	212.0
Management services	$	128.2
Other	$	11.1
Manufacturing – Railcars intended for syndication 1	$	370.3

1 Not a performance obligation as defined in Topic 606.

Based on current production and delivery schedules and existing contracts, approximately $1.3 billion of Railcar sales are expected to be recognized in the remaining nine months of 2022 while the remaining amount is expected to be recognized into 2024. The table above excludes estimated revenue to be recognized at the Company’s Brazilian manufacturing operations, as they are accounted for under the equity method.

Revenue amounts reflected in Railcars intended for syndication may be syndicated to third parties or held in the Company’s fleet depending on a variety of factors.

Marine revenue is expected to be recognized through 2023 as vessel construction is completed.

Conversions represent modernization orders to existing or in-service railcars and are expected to be recognized through 2023.

Management services includes management and maintenance services of which approximately 51% are expected to be performed through 2026 and the remaining amount through 2037.