Revenue Recognition

9 Months Ended

Sep. 30, 2022

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

The following table disaggregates our revenue by business segment by geography which provides information as to the major source of revenue. See Note 2 for additional information on our reportable business segments and the products and services sold in each segment.

	For the Three Months Ended September 30, 2022
Primary Geographic Markets	Residential Heating & Cooling		Commercial Heating & Cooling		Refrigeration		Consolidated
United States	$	779.8	$	232.5	$	99.4	$	1,111.7
Canada	55.5		20.3		—		75.8
Other international	—		0.1		57.3		57.4
Total	$	835.3	$	252.9	$	156.7	$	1,244.9

	For the Three Months Ended September 30, 2021
Primary Geographic Markets	Residential Heating & Cooling		Commercial Heating & Cooling		Refrigeration		Consolidated
United States	$	655.0	$	194.0	$	81.2	$	930.2
Canada	56.0		16.8		—		72.8
Other international	—		0.7		56.2		56.9
Total	$	711.0	$	211.5	$	137.4	$	1,059.9

	For the Nine Months Ended September 30, 2022
Primary Geographic Markets	Residential Heating & Cooling		Commercial Heating & Cooling		Refrigeration		Consolidated
United States	$	2,311.2	$	616.4	$	299.0	$	3,226.6
Canada	183.7		43.2		—		226.9
Other international	—		0.6		170.5		171.1
Total	$	2,494.9	$	660.2	$	469.5	$	3,624.6

	For the Nine Months Ended September 30, 2021
Primary Geographic Markets	Residential Heating & Cooling		Commercial Heating & Cooling		Refrigeration		Consolidated
United States	$	1,976.8	$	605.0	$	239.1	$	2,820.9
Canada	178.5		57.6		—		236.1
Other international	—		0.8		171.5		172.3
Total	$	2,155.3	$	663.4	$	410.6	$	3,229.3

Residential Heating & Cooling - We manufacture and market a broad range of furnaces, air conditioners, heat pumps, packaged heating and cooling systems, equipment and accessories to improve indoor air quality, comfort control products, replacement parts and supplies and related products for both the residential replacement and new construction markets in North America. These products are sold under various brand names and are sold either through direct sales to a network of independent installing dealers, including through our network of Lennox stores or to independent distributors. For the three months ended September 30, 2022 and 2021, direct sales represented 72% and 73% of revenues, and sales to independent distributors represented the remainder. For the nine months ended September 30, 2022 and 2021, direct sales represented 70% and 72% of revenues, and sales to independent distributors represented the remainder.

Commercial Heating & Cooling - In North America, we manufacture and sell unitary heating and cooling equipment used in light commercial applications, such as low-rise office buildings, restaurants, retail centers, churches and schools. These products are distributed primarily through commercial contractors and directly to national account customers in the planned replacement, emergency replacement and new construction markets. Lennox National Account Services provides installation, service and preventive maintenance for HVAC national account customers in the United States and Canada. For the three months ended September 30, 2022 and 2021, equipment sales represented 83% and 81% of revenues and the remainder of our revenue was generated from our service business. For the nine months ended September 30, 2022 and 2021, equipment sales represented 82% and 83% of revenues and the remainder of our revenue was generated from our service business.

Refrigeration - We manufacture and market equipment for the global commercial refrigeration markets under the Heatcraft Worldwide Refrigeration name. Our products are used in the food retail, food service, cold storage as well as non-food refrigeration markets. We sell these products to distributors, installing contractors, engineering design firms, original equipment manufacturers and end-users. In Europe, we also manufacture and sell unitary heating and cooling products and applied systems. Less than 1% of segment revenue relates to services for start-up and commissioning activities.

Contract Liabilities - Our contract liabilities consist of advance payments and deferred revenue. Net contract liabilities consisted of the following:

	September 30, 2022		December 31, 2021		$ Change		% Change
Contract liabilities - current	$	(11.8)	$	(10.2)	$	(1.6)	15.7	%
Contract liabilities - noncurrent	(6.0)		(5.5)		(0.5)		9.1	%
Total	$	(17.8)	$	(15.7)	$	(2.1)

For the three months ended September 30, 2022 and 2021, we recognized revenue of $3.6 million and $0.6 million and for the nine months ended September 30, 2022 and 2021 we recognized revenue of $9.5 million and $2.9 million related to our contract liabilities at January 1, 2022 and 2021, respectively. Impairment losses recognized in our receivables and contract assets were de minimis in 2022 and 2021.