Revenue Recognition

6 Months Ended

Feb. 29, 2020

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 and repair services, for which the respective contracts do not yet permit billing at the reporting date. 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 opening and closing balances of the Company’s contract balances are as follows:

(in thousands)	Balance sheet classification	February 29, 2020		August 31, 2019		$ change
Contract assets	Inventories	$	7,472	$	10,196	$	(2,724	)
Contract liabilities 1	Deferred revenue	$	55,844	$	52,118	$	3,726

^{1 Contract liabilities balance includes deferred revenue within the scope of Topic 606.}

For the three and six months ended February 29, 2020, the Company recognized $3.8 million and $24.5 million of revenue that was included in Contract liabilities as of August 31, 2019.

Performance obligations

As of February 29, 2020, 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)	February 29, 2020
Revenue type:
Manufacturing – Railcar sales	$	2,698.1
Manufacturing – Marine	$	58.8
Services	$	140.1
Other	$	43.6
Manufacturing – Railcars intended for syndication 1	$	261.5

^{1 Not a performance obligation as defined in Topic 606: Contracts with Customers}

Based on current production and delivery schedules and existing contracts, approximately $0.9 billion of the Railcar sales amount is expected to be recognized in the remaining six months of 2020 while the remaining amount is expected to be recognized through 2024. The table above excludes estimated revenue to be recognized at the Company’s Brazilian manufacturing operation, 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 2021 as vessel construction is completed.

Services includes management and maintenance services of which approximately 51% are expected to be performed through 2024 and the remaining amount through 2037.