Revenue Recognition

6 Months Ended

Jun. 30, 2023

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

6. 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. All amount presented reflect the revised segment presentation.

	For the Three Months Ended June 30, 2023
Primary Geographic Markets	Residential		Commercial		Corporate and Other		Consolidated
United States	$	868.5	$	382.2	$	—	$	1,250.7
Canada	67.7		25.3		—		93.0
Other international	—		—		67.7		67.7
Total	$	936.2	$	407.5	$	67.7	$	1,411.4

	For the Three Months Ended June 30, 2022(1)
Primary Geographic Markets	Residential		Commercial		Corporate and Other		Consolidated
United States	$	901.8	$	315.0	$	—	$	1,216.8
Canada	75.7		12.4		—		88.1
Other international	—		—		61.4		61.4
Total	$	977.5	$	327.4	$	61.4	$	1,366.3

	For the Six Months Ended June 30, 2023
Primary Geographic Markets	Residential		Commercial		Corporate and Other		Consolidated
United States	$	1,507.8	$	676.7	$	—	$	2,184.5
Canada	109.4		39.4		—		148.8
Other international	—		—		127.4		127.4
Total	$	1,617.2	$	716.1	$	127.4	$	2,460.7

	For the Six Months Ended June 30, 2022 (1)
Primary Geographic Markets	Residential		Commercial		Corporate and Other		Consolidated
United States	$	1,531.4	$	583.6	$	—	$	2,115.0
Canada	128.2		22.8		—		151.0
Other international	—		0.5		113.2		113.7
Total	$	1,659.6	$	606.9	$	113.2	$	2,379.7

(1) As discussed in Note 2, we adjusted our segment reporting to include the results of our Heatcraft businesses in Commercial and the results of our European portfolio in Corporate and Other. The amounts for the three and six months ended June 30, 2022 have been recast to reflect the revised segment presentation.

Residential - 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 June 30, 2023 and 2022, direct sales represented 76% and 70% of revenues, and sales to independent distributors represented the remainder. For the six months ended June 30, 2023 and 2022, direct sales represented 73% and 69% of revenues, and sales to independent distributors represented the remainder.

Commercial - 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. We manufacture and market equipment for the 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. 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 June 30, 2023 and 2022, equipment sales represented 87% and 88% of revenues and the remainder of our revenue was generated from our service business. For the six months ended June 30, 2023 and 2022, equipment sales represented 86% and 87% of revenues and the remainder of our revenue was generated from our service business.

Corporate and Other - In Europe, we manufacture and market equipment for the global commercial refrigeration markets. We also manufacture and sell unitary heating and cooling products and applied systems. A de minimis amount 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:

	As of June 30, 2023		As of December 31, 2022
Contract liabilities - current	$	(13.4)	$	(9.6)
Contract liabilities - noncurrent	(6.9)		(6.4)
Total	$	(20.3)	$	(16.0)

For the three months ended June 30, 2023 and 2022, we recognized revenue of $1.2 million and $2.1 million and for the six months ended we recognized revenue of $4.2 million and $5.9 million related to our contract liabilities at January 1, 2023 and 2022, respectively. Impairment losses recognized in our receivables and contract assets were de minimis in 2023 and 2022.