REVENUES

6 Months Ended

Jun. 30, 2020

REVENUES

REVENUES

15. REVENUES

Revenue Recognition

Product and Sold Equipment

Product revenue is generated from cleaning, sanitizing, water, energy and colloidal silica products sold to customers. In addition, the Company sells equipment which may be used in combination with its specialized products. Revenue recognized from product and sold equipment is recognized at the point in time when the obligations in the contract with the customer are satisfied, which generally occurs with the transfer of the product or delivery of the equipment.

Service and Lease Equipment

Service and lease equipment revenue is generated from providing services or leasing equipment to customers. Service offerings include installing or repairing certain types of equipment, activities that supplement or replace headcount at the customer location, or fulfilling deliverables included in the contract. Services provided in Other primarily includes services designed to detect, eliminate and prevent pests. Global Industrial segment services are associated with water treatment and paper process applications, Global Institutional services include water treatment programs and process applications, and wash process solutions and Global Healthcare and Life Sciences services include pharmaceutical, personal care, infection and containment control solutions. Revenue recognized from leased equipment primarily relates to warewashing and water treatment equipment. Service revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized over time using costs incurred to date because the effort provided by the field selling and service organization represents services provided, which corresponds with the transfer of control. Revenue for leased equipment is accounted for under Topic 842 Leases and recognized on a straight-line basis over the length of the lease contract. In the second quarter ended June 30, 2020, the Company provided a one-time lease billing suspension of approximately $38 million to certain restaurant customers within the Institutional Segment, in recognition of the impact of the COVID-19 pandemic. There was no substantial change to the consideration expected to be received under the lease arrangement.

The Company’s operating lease revenue was as follows:

	Second Quarter Ended				Six Months Ended
	June 30				June 30
(millions)	2020		2019		2020		2019
Operating lease revenue*		$65.4		$102.7		$173.3		$203.8

*Includes immaterial variable lease revenue

The following table shows principal activities, separated by reportable segments, from which the Company generates its revenue. The reportable segments have been revised to align with the Company’s reportable segments in the current year. Corporate segment includes sales to ChampionX under the Master Cross Supply and Product Transfer agreements entered into as part of the ChampionX Separation. For more information about the Company’s reportable segments, refer to Note 16.

Net sales at public exchange rates by reportable segment are as follows:

	Second Quarter Ended				Six Months Ended
	June 30				June 30
(millions)	2020		2019		2020		2019
Global Industrial
Product and sold equipment		$1,231.3		$1,301.0		$2,463.3		$2,513.5
Service and lease equipment		193.9		200.0		395.9		388.7
Global Institutional
Product and sold equipment		596.4		937.6		1,485.0		1,792.9
Service and lease equipment		111.7		172.8		290.1		338.3
Global Healthcare and Life Sciences
Product and sold equipment		271.9		230.9		494.0		440.5
Service and lease equipment		26.6		21.0		48.3		38.9
Other
Product and sold equipment		55.2		90.5		136.5		172.9
Service and lease equipment		186.4		215.3		380.9		408.1
Corporate
Product and sold equipment		12.3		-		12.3		-
Total
Total product and sold equipment		$2,167.1		$2,560.0		$4,591.1		$4,919.8
Total service and lease equipment		$518.6		$609.1		$1,115.2		$1,174.0

Net sales at public exchange rates by geographic region for the second quarter ended June 30 are as follows:

	Global				Global				Global Healthcare
	Industrial				Institutional				and Life Sciences				Other				Corporate
(millions)	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
North America		$658.0		$710.3		$492.7		$812.2		$104.6		$103.3		$152.6		$188.2		$12.3		$-
Europe		308.6		305.8		106.1		157.6		171.9		137.6		45.3		66.7		-		-
Asia Pacific		184.7		191.4		46.0		59.2		13.4		4.6		15.1		17.9		-		-
Latin America		115.9		130.7		30.3		40.3		1.8		1.2		10.8		12.1		-		-
Greater China		78.2		82.5		10.6		13.2		5.7		4.6		3.0		4.4		-		-
Middle East and Africa		79.8		80.3		22.4		27.9		1.1		0.6		14.8		16.5		-		-
Total		$1,425.2		$1,501.0		$708.1		$1,110.4		$298.5		$251.9		$241.6		$305.8		$12.3		$-

Net sales at public exchange rates by geographic region for the six months ended June 30 are as follows:

	Global				Global				Global Healthcare
	Industrial				Institutional				and Life Sciences				Other				Corporate
(millions)	2020		2019		2020		2019		2020		2019		2020		2019		2020		2019
North America		$1,349.6		$1,383.8		$1,272.3		$1,552.3		$212.6		$203.2		$320.9		$354.8		$12.3		$-
Europe		589.8		582.8		248.6		300.7		292.1		257.4		105.0		125.1		-		-
Asia Pacific		368.4		373.1		106.0		115.2		23.9		8.2		33.2		36.0		-		-
Latin America		245.0		255.9		70.1		79.8		2.8		2.2		22.8		24.5		-		-
Greater China		152.4		149.9		22.0		24.1		9.2		7.4		7.2		8.5		-		-
Middle East and Africa		154.0		156.7		56.1		59.1		1.7		1.0		28.3		32.1		-		-
Total		$2,859.2		$2,902.2		$1,775.1		$2,131.2		$542.3		$479.4		$517.4		$581.0		$12.3		$-

Net sales by geographic region were determined based on origin of sale. Revenues in the United States made up 53% and 54% of total during the six months ended June 30, 2020 and 2019, respectively.

Contract Liability

Payments received from customers are based on invoices or billing schedules as established in contracts with customers. Accounts receivable are recorded when the right to consideration becomes unconditional. The contract liability relates to billings in advance of performance (primarily service obligations) under the contract. Contract liabilities are recognized as revenue when the performance obligation has been performed, which primarily occurs during the subsequent quarter.

	June 30		June 30
(millions)	2020		2019
Contract liability as of beginning of the year		$76.7		$67.7
Revenue recognized in the year from:
Amounts included in the contract liability at the beginning of the year		(76.7)		(67.7)
Increases due to billings excluding amounts recognized as revenue during the year ended		73.5		72.2
Business combinations		0.5		3.0
Contract liability as of end of period		$74.0		$75.2