Revenue Recognition

12 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when obligations under the terms of a contract with the customer are satisfied. For the majority of the Company's product sales, revenue is recognized at a point-in-time when control of the product is transferred to the customer, which generally occurs when the product is shipped from the Company's manufacturing facility to the customer. When contracts include multiple products to be delivered to the customer, generally each product is separately priced and is determined to be distinct within the context of the contract. Other than a standard assurance-type warranty that the product will conform to agreed-upon specifications, there are generally no other significant post-shipment obligations. The expected costs associated with standard warranties continues to be recognized as an expense when the products are sold.

When the contract provides the customer the right to return eligible products or when the customer is part of a sales rebate program, the Company reduces revenue at the point of sale using current facts and historical experience by using an estimate for expected product returns and rebates associated with the transaction. The Company adjusts these estimates at the earlier of when the most likely amount of consideration that is expected to be received changes or when the consideration becomes fixed. Accordingly, an increase or decrease to revenue is recognized at that time.

Sales and other taxes collected concurrent with revenue-producing activities are excluded from revenue. The Company has elected to recognize the cost for freight and shipping when control of products has transferred to the customer as a component of cost of sales in the consolidated statements of operations. The Company classifies shipping and handling fees billed to customers as net sales and the corresponding costs are classified as cost of sales in the consolidated statements of operations.

Revenue by Category

The Company has two business segments, Process & Motion Control and Water Management. The following tables present our revenue disaggregated by customer type and geography (in millions):


	Year Ended
	March 31, 2020		March 31, 2019		March 31, 2018
Original equipment manufacturers/end users	$	766.8	$	768.5	$	690.5
Maintenance, repair, and operations	591.4		612.1		550.7
Total Process & Motion Control	$	1,358.2	$	1,380.6	$	1,241.2

Water safety, quality, flow control and conservation	$	661.0	$	624.4	$	566.9
Water infrastructure	49.1		45.9		43.5
Total Water Management	$	710.1	$	670.3	$	610.4


	Year Ended March 31, 2020						Year Ended March 31, 2019						Year Ended March 31, 2018
	Process & Motion Control		Water Management		Process & Motion Control		Water Management		Process & Motion Control		Water Management
United States and Canada	$	870.6	$	694.1	$	898.7	$	654.5	$	848.3	$	598.4
Europe	298.9		—		327.5		—		255.5		—
Rest of world	188.7		16.0		154.4		15.8		137.4		12.0
Total	$	1,358.2	$	710.1	$	1,380.6	$	670.3	$	1,241.2	$	610.4

Contract Balances

For substantially all of the Company's Process & Motion Control and Water Management product sales, the customer is billed 100% of the contract value when the product ships and payment is generally due 30 days from shipment. Certain contracts include longer payment periods; however, the Company has elected to utilize the practical expedient in which the Company will only recognize a financing component to the sale if payment is due more than one year from the date of shipment.

The Company receives payment from customers based on the contractual billing schedule and specific performance requirements established in the contract. Billings are recorded as accounts receivable when an unconditional right to the contractual consideration exists. Contract assets arise when the Company performs by transferring goods or services to a

customer before the customer pays consideration, or before the customer’s payment is due. A contract liability exists when the Company has received consideration or the amount is due from the customer in advance of revenue recognition. Contract liabilities and contract assets are recognized in Other current liabilities and Receivables, net, respectively, in the Company's consolidated balance sheets.

The following table presents changes in the Company’s contract assets and liabilities during the year ended March 31, 2020 (in millions):


	Balance Sheet Classification	March 31, 2019		Additions		Deductions		March 31, 2020
Contract Assets	Receivables, net	$	2.6	$	1.6	$	(3.7)	$	0.5
Contract Liabilities (1)	Other current liabilities	$	5.1	$	21.4	$	(19.2)	$	7.3

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(1)Contract liabilities are reduced when revenue is recognized.

Backlog

The Company has backlog of $380.7 million and $372.5 million as of March 31, 2020 and March 31, 2019, respectively, which represents the most likely amount of consideration expected to be received in satisfying the remaining backlog under open contracts. The Company has elected to use the optional exemption provided by ASC 606-10-50-14A for variable consideration, and has not included estimated rebates in the amount of unsatisfied performance obligations. The Company expects to recognize approximately 89% of the backlog as revenue in fiscal 2021 and the remaining 11% in fiscal 2022 and beyond.

Timing of Performance Obligations Satisfied at a Point in Time

The Company determined that the customer is able to control the product when it is delivered to them; thus, depending on the shipping terms, control will transfer at different points between the Company's manufacturing facility or warehouse and the customer’s location. The Company considers control to have transferred upon shipment or delivery because the Company has a present right to payment at that time, the customer has legal title to the asset, the Company has transferred physical possession of the asset and the customer has significant risks and rewards of ownership of the asset.

Variable Consideration

The Company provides volume-based rebates and the right to return product to certain customers, which are accrued for based on current facts and historical experience. Rebates are paid either on an annual or quarterly basis. There are no other significant variable consideration elements included in the Company's contracts with customers.

Contract Costs

The Company has elected to expense contract costs as incurred if the amortization period is expected to be one year or less. If the amortization period of these costs is expected to be greater than one year, the costs would be subject to capitalization. As of March 31, 2020 and March 31, 2019, respectively, the contract assets capitalized, as well as amortization recognized in fiscal 2020 and 2019, are not significant and there have been no impairment losses recognized.