Extended Maintenance Contracts and Warranty Reserve

12 Months Ended

Dec. 31, 2024

Extended Maintenance Contracts and Warranty Reserve.

Extended Maintenance Contracts and Warranty Reserve

13. Extended Maintenance Contracts and Warranty Reserve

Loss Accrual

On a quarterly basis, we evaluate any potential losses related to our extended maintenance contracts for sales of equipment, related infrastructure and other that have been sold. The following table shows the roll forward of balances in the accrual for loss contracts (in thousands):

	Year ended		Year ended
	December 31, 2024		December 31, 2023
Beginning balance	$	137,853	$	81,066
Provision for loss accrual		45,226		85,375
Releases to service cost of sales		(51,578)		(29,713)
Increase to loss accrual related to customer warrants		3,313		971
Foreign currency translation adjustment		(458)		154
Ending balance	$	134,356	$	137,853

The Company decreased the provision for loss accrual primarily due to improved pricing structure and reduction of new GenDrive deployments in 2024, partially offset by an increase in the provision related to stationary systems.

Product Warranty Reserve

On a quarterly basis, we evaluate our product warranty reserve. The Company applies a failure rate based on product type on a contract-by-contract basis to determine its product warranty reserve liability. The following table shows the roll forward of product warranty reserve (in thousands):

	Year ended		Year ended
	December 31, 2024		December 31, 2023
Beginning balance	$	8,044	$	2,954
Additional provision due to new issuances		8,864		7,599
Adjustments to existing warranty provisions		(4,801)		(2,509)
Releases due to cash receipts		—		—
Ending balance	$	12,107	$	8,044

The product warranty reserve balance increased during the year ended December 31, 2024 primarily due to an increase in electrolyzer systems for which revenue was recognized.