Revenue Recognition and Contracts with Customers

3 Months Ended

Jun. 30, 2022

Change in Contract with Customer, Asset and Liability [Abstract]

Revenue Recognition and Contracts with Customers

4. REVENUE RECOGNITION AND CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

The Company disaggregates revenue based on the method of measuring satisfaction of the performance obligation either over time or at a point in time. Additionally, the Company disaggregates revenue based upon the end market where products and services are transferred to the customer. The Company’s principal operating segments and related revenue are discussed in Note 11, Segments.

The following table shows disaggregated net sales satisfied overtime and at a point in time (excluding intercompany sales) for the three months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022		2021
Systems & Support
Satisfied over time	$	120,718	$	118,981
Satisfied at a point in time		133,402		138,222
Revenue from contracts with customers		254,120		257,203
Amortization of acquired contract liabilities		523		1,202
Total revenue		254,643		258,405
Aerospace Structures
Satisfied over time	$	89,592	$	129,523
Satisfied at a point in time		5,149		8,706
Revenue from contracts with customers		94,741		138,229
Amortization of acquired contract liabilities		—		12
Total revenue		94,741		138,241
	$	349,384	$	396,646

The following table shows disaggregated net sales by end market (excluding intercompany sales) for the three months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022		2021
Systems & Support
OEM Commercial	$	78,020	$	59,239
OEM Military		56,936		76,695
MRO Commercial		60,039		55,847
MRO Military		50,946		59,112
Non-aviation		8,179		6,310
Revenue from contracts with customers		254,120		257,203
Amortization of acquired contract liabilities		523		1,202
Total revenue	$	254,643	$	258,405
Aerospace Structures
OEM Commercial	$	90,519	$	121,692
OEM Military		28		12,651
MRO Commercial		3,144		2,816
MRO Military		—		1,052
Non-aviation		1,050		18
Revenue from contracts with customers		94,741		138,229
Amortization of acquired contract liabilities		—		12
Total revenue		94,741		138,241
	$	349,384	$	396,646

Contract Assets and Liabilities

Contract assets primarily represent revenues recognized for performance obligations that have been satisfied or partially satisfied but for which amounts have not been billed. This typically occurs when revenue is recognized over time but the Company's contractual right to bill the customer and receive payment is conditional upon the satisfaction of additional performance obligations in the contract, such as final delivery of the product. Contract assets are typically derecognized when billed in accordance with the terms of the contract. The Company pools contract assets that share underlying risk characteristics and records an allowance for expected credit losses based on a combination of prior experience, current economic conditions and management’s expectations of future economic conditions, and specific collectibility matters when they arise. Contract assets are presented net of this reserve

on the condensed consolidated balance sheets. For the three months ended June 30, 2022 and 2021, credit loss expense and write-offs related to contract assets were immaterial.

Contract liabilities are recorded when customers remit contractual cash payments in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time. Contract liabilities other than those pertaining to forward loss reserves are derecognized when or as revenue is recognized.

Contract modifications can also impact contract asset and liability balances. When contracts are modified to account for changes in contract specifications and requirements, the Company considers whether the modification either creates new or changes the existing enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification to an existing contract on the transaction price and the Company's measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at relative stand-alone selling price, they are accounted for as a new contract and performance obligation and are recognized prospectively.

Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. The following table summarizes the Company's contract assets and liabilities balances:

	June 30, 2022			March 31, 2022			Change
Contract assets	$	97,394		$	101,893		$	(4,499	)
Contract liabilities		(54,947	)		(172,862	)		117,915
Net contract liability	$	42,447		$	(70,969	)	$	113,416

During the three months ended June 30, 2022, the Company recognized revenue due to changes in estimates associated with performance obligations satisfied or partially satisfied in previous periods of $11,747. The change in contract assets is the result of amounts billed in excess of revenue recognized during the three months ended June 30, 2022. The change in contract liabilities is the result of revenue recognized in excess of the receipt of additional customer advances as well as the classification of approximately $103,803 of customer advance repayment obligations that were assumed by the buyer of the Stuart, Florida, manufacturing operations as a result of current period divestiture negotiations and have now been classified within liabilities related to assets held for sale on the accompanying condensed consolidated balance sheet as of June 30, 2022. For the three months ended June 30, 2022, the Company recognized $15,220 of revenue that was included in the contract liability balance at the beginning of the period.

Performance Obligations

Customers generally contract with the Company for requirements in a segment relating to a specific program, and the Company’s performance obligations consist of a wide range of engineering design services and manufactured components, as well as spare parts and repairs for OEMs. A single contract may contain multiple performance obligations consisting of both recurring and nonrecurring elements.

As of June 30, 2022, the Company has the following unsatisfied, or partially unsatisfied, performance obligations that are expected to be recognized in the future as noted in the table below. The Company expects options to be exercised in addition to the amounts presented below.

	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Unsatisfied performance obligations	$	1,829,569	$	916,200	$	890,235	$	23,134	$	—

Of the total unsatisfied performance obligations included in the table above as of June 30, 2022, approximately $531,000, related to divestitures occurring subsequent to June 30, 2022, as disclosed in note 13.