Revenue Recognition

12 Months Ended

Mar. 31, 2021

Revenue Recognition [Abstract]

Revenue Recognition

Note 3: Revenue Recognition

The Company generates revenue from selling innovative thermal management products and solutions to diversified global markets and customers.  The Company recognizes revenue based upon consideration specified in a contract and as it satisfies performance obligations by transferring control over its products to its customers, which may be at a point in time or over time.  The majority of the Company’s revenue is recognized at a point in time, based upon shipment terms.  The Company records an allowance for credit losses and accrues for estimated warranty costs at the time of sale.  These estimates are based upon historical experience, current business trends, and current economic conditions.  The Company accounts for shipping and handling activities as fulfilment costs rather than separate performance obligations, and records shipping and handling costs in cost of sales and related amounts billed to customers in net sales.  The Company establishes payment terms with its customers based upon industry and regional practices, which typically do not exceed 90 days.  As the Company expects to receive payment from its customers within one year from the time of sale, it disregards the effects of the time value of money in its determination of the transaction price.  The Company has not disclosed the value of unsatisfied performance obligations because the revenue associated with customer contracts for which the original expected performance period is greater than one year is immaterial.

The following is a description of the Company’s principal revenue-generating activities:

Building HVAC Systems (“BHVAC”)

The BHVAC segment principally generates revenue from providing a variety of heating, ventilating, and air conditioning products, primarily for commercial buildings and data centers in North America and the U.K., as well as mainland Europe and the Middle East.

Heating products are manufactured in the U.S. and are largely sold to independent distributors, who in turn market the heating products to end customers. Because these products are sold to many different customers without contractual or practical limitations, the BHVAC segment recognizes revenue at the time control is transferred to the customer, generally the independent distributor, based upon shipping terms, which is generally upon shipment.

Ventilation and air conditioning products are highly-specified to a customer’s needs; however, the underlying sales contracts do not provide the Company with an enforceable right to payment for performance completed to date. As a result, the BHVAC segment recognizes revenue for these products at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.

Commercial and Industrial Solutions (“CIS”)

The CIS segment principally generates revenue from providing thermal management products, including customized coils and coolers, to the heating, ventilating, air conditioning, and refrigeration (“HVAC&R”) markets in North America, Europe, and Asia. In addition, the segment applies corrosion protection solutions, which are referred to as coatings, to heat-transfer equipment.

For the sale of coils and coolers, individual customer purchase orders generally represent the Company’s contract with its customers. With the exception of a small number of customers, the applicable customer contracts do not provide the Company with an enforceable right to payment for performance completed to date. As a result, the CIS segment recognizes revenue for its sale of coils and coolers primarily at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.

For both sales to customers whose contract cancellation terms provide an enforceable right to payment and sales from the coatings businesses, in which the customers control the heat-transfer equipment being enhanced by the coating application, the CIS segment recognizes revenue over time based upon its estimated progress towards satisfaction of the performance obligations. The segment measures progress by evaluating the production status towards completion of ordered products or services not yet shipped to its customers.

Heavy Duty Equipment (“HDE”) and Automotive

The HDE and Automotive segments principally generate revenue from providing engineered heat transfer systems and components for use in on- and off-highway original equipment. These segments provide powertrain and engine cooling products, including, but not limited to, radiators, charge air coolers, condensers, oil coolers, EGR coolers, and fuel coolers, to original equipment manufacturers (“OEMs”) in the commercial vehicle, off-highway and automotive and light vehicle markets in the Americas, Europe, and Asia regions. In addition, the segments design customer-owned tooling for OEMs. The HDE segment also serves Brazil’s commercial vehicle and automotive aftermarkets.

While the segments provide customized production and service parts to customers under multi-year programs, these programs typically do not contain contractually-guaranteed volumes to be purchased by the customer. As a result, individual purchase orders typically represent the quantities ordered by the customer. With the exception of a small number of HDE customers, the terms within the customer agreement, purchase order, or customer-owned tooling contract do not provide the Company with an enforceable right to payment for performance completed to date. As a result, both the HDE and Automotive segments recognize revenue primarily at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.

In regard to the HDE customers with contractual cancellation terms that provide an enforceable right to payment for performance completed to date, the Company recognizes revenue over time based upon its estimated progress towards satisfaction of the performance obligations. The HDE segment measures progress by evaluating the production status of ordered products not yet shipped to the customer.

For certain customer programs, the Company agrees to provide annual price reductions based upon contract terms. For these scheduled price reductions, the Company evaluates whether the provisions represent a material right to the customer, and if so, defers associated revenue as a result.

At times, the Company makes up-front incentive payments to certain customers related to future sales under multi-year programs. The Company capitalizes these incentive payments, which it expects to recover through future sales, and amortizes the assets as a reduction to revenue when the related products are sold to customers.

Disaggregation of Revenue

The tables below present revenue to external customers for each of the Company’s business segments by primary end market, geographic location, and based upon the timing of revenue recognition:

	Year ended March 31, 2021
	BHVAC		CIS		HDE		Automotive		Segment Total
Primary end market:
Commercial HVAC&R	$	181.6	$	420.6	$	-	$	-	$	602.2
Data center cooling		58.7		47.3		-		-		106.0
Industrial cooling		-		55.4		-		-		55.4
Commercial vehicle		-		-		250.4		14.4		264.8
Off-highway		-		-		260.7		3.4		264.1
Automotive and light vehicle		-		-		97.9		357.8		455.7
Other		0.3		8.7		73.1		22.7		104.8
Net sales	$	240.6	$	532.0	$	682.1	$	398.3	$	1,853.0
Geographic location:
Americas	$	144.2	$	267.7	$	388.2	$	51.0	$	851.1
Europe		96.4		219.8		133.2		282.0		731.4
Asia		-		44.5		160.7		65.3		270.5
Net sales	$	240.6	$	532.0	$	682.1	$	398.3	$	1,853.0
Timing of revenue recognition:
Products transferred at a point in time	$	240.6	$	486.3	$	655.2	$	398.3	$	1,780.4
Products transferred over time		-		45.7		26.9		-		72.6
Net sales	$	240.6	$	532.0	$	682.1	$	398.3	$	1,853.0

	Year ended March 31, 2020
	BHVAC		CIS		HDE		Automotive		Segment Total
Primary end market:
Commercial HVAC&R	$	176.6	$	463.1	$	-	$	-	$	639.7
Data center cooling		42.7		107.5		-		-		150.2
Industrial cooling		-		43.5		-		-		43.5
Commercial vehicle		-		-		302.1		21.6		323.7
Off-highway		-		-		240.8		13.1		253.9
Automotive and light vehicle		-		-		108.4		400.4		508.8
Other		1.8		9.8		94.6		9.8		116.0
Net sales	$	221.1	$	623.9	$	745.9	$	444.9	$	2,035.8
Geographic location:
Americas	$	139.1	$	345.9	$	484.5	$	70.3	$	1,039.8
Europe		82.0		232.6		141.2		321.0		776.8
Asia		-		45.4		120.2		53.6		219.2
Net sales	$	221.1	$	623.9	$	745.9	$	444.9	$	2,035.8
Timing of revenue recognition:
Products transferred at a point in time	$	221.1	$	518.2	$	715.1	$	444.9	$	1,899.3
Products transferred over time		-		105.7		30.8		-		136.5
Net sales	$	221.1	$	623.9	$	745.9	$	444.9	$	2,035.8

	Year ended March 31, 2019
	BHVAC		CIS		HDE		Automotive		Segment Total
Primary end market:
Commercial HVAC&R	$	167.7	$	506.3	$	-	$	-	$	674.0
Data center cooling		41.3		145.7		-		-		187.0
Industrial cooling		-		47.8		-		-		47.8
Commercial vehicle		-		-		352.6		35.0		387.6
Off-highway		-		-		298.1		16.0		314.1
Automotive and light vehicle		-		-		116.7		426.1		542.8
Other		3.4		7.8		104.9		11.8		127.9
Net sales	$	212.4	$	707.6	$	872.3	$	488.9	$	2,281.2
Geographic location:
Americas	$	124.9	$	413.6	$	543.0	$	71.0	$	1,152.5
Europe		87.5		244.8		177.4		369.4		879.1
Asia		-		49.2		151.9		48.5		249.6
Net sales	$	212.4	$	707.6	$	872.3	$	488.9	$	2,281.2
Timing of revenue recognition:
Products transferred at a point in time	$	212.4	$	571.1	$	829.1	$	488.9	$	2,101.5
Products transferred over time		-		136.5		43.2		-		179.7
Net sales	$	212.4	$	707.6	$	872.3	$	488.9	$	2,281.2

Contract Balances

Contract assets and contract liabilities from contracts with customers were as follows:

	March 31, 2021		March 31, 2020
Contract assets	$	5.7	$	21.7
Contract liabilities		5.6		5.6

At March 31, 2021, contract assets and contract liabilities exclude amounts classified as held for sale. See Note 2 for additional information.

Contract assets, included within other current assets in the consolidated balance sheets, primarily consist of capitalized costs related to customer-owned tooling contracts, wherein the customer has guaranteed reimbursement, and assets recorded for revenue recognized over time, which represent the Company’s rights to consideration for work completed but not yet billed. The $16.0 million decrease in contract assets during fiscal 2021 primarily resulted from a decrease in contract assets for revenue recognized over time and $7.1 million of contract assets within the liquid- and air-cooled automotive businesses that have been classified as held for sale on the March 31, 2021 consolidated balance sheet.

Contract liabilities, included within other current liabilities in the consolidated balance sheets, consist of payments received in advance of satisfying performance obligations under customer contracts, including contracts for customer-owned tooling. During fiscal 2021, increases related to customer contracts for which payment was received in advance of the Company’s satisfaction of performance obligations was offset by $2.9 million of contract liabilities within the liquid- and air-cooled automotive businesses that have been classified as held for sale on the March 31, 2021 consolidated balance sheet.