Revenue Recognition

12 Months Ended

Mar. 31, 2023

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:

Climate Solutions

The Climate Solutions segment principally generates revenue from selling heat transfer products, heating, ventilating, air conditioning, and refrigeration (“HVAC & refrigeration”) products, and data center cooling solutions.

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 Climate Solutions 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; the majority of the underlying sales contracts do not provide the Company with an enforceable right to payment for performance completed to date.  As a result, the Climate Solutions segment recognizes revenue for the majority of its products at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.

For the sale of heat transfer products, refrigeration products, and data center cooling solutions, 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 Climate Solutions segment recognizes revenue for these products primarily at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.

For sales to customers whose contract cancellation terms provide an enforceable right to payment, the Climate Solutions segment recognizes revenue over time based upon its estimated progress toward satisfaction of the performance obligations. The segment measures progress by evaluating the production status toward completion of ordered products not yet shipped to its customers.

Performance Technologies

The Performance Technologies segment provides products and solutions that enhance the performance of customer applications. The Performance Technologies segment designs and manufactures air- and liquid-cooled technology for vehicular, stationary power, and industrial applications. Air-cooled products include radiators, charge air coolers, condensers, and engine cooling modules. Liquid-cooled products include engine oil coolers, charge air coolers, condensers, and exhaust gas recirculation coolers. In addition, the Performance Technologies segment provides advanced solutions, which are designed to improve battery range and vehicle life, to zero-emission and hybrid commercial vehicle, automotive, bus and specialty vehicle customers. These solutions include battery thermal management systems, electronics cooling packages, and battery chillers. The advanced solutions provided by the segment also include coating products and application services that extend the life of equipment and components by protecting against corrosion.

While the Performance Technologies segment provides 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 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, the Performance Technologies segment recognizes revenue primarily at the time control is transferred to the customer based upon shipping terms, which is generally upon shipment.

In regard to the Performance Technologies 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 toward satisfaction of the performance obligations. The Performance Technologies segment measures progress by evaluating the production status of ordered products not yet shipped to the customer.

For sales of coatings products, in which the customers control the equipment being enhanced by the coating application, the Performance Technologies segment recognizes revenue over time based upon its estimated progress toward satisfaction of the performance obligations. The segment measures progress by evaluating the production status toward completion of ordered products or services not yet shipped to its customers.

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 for each of the Company’s operating segments, Climate Solutions and Performance Technologies. Each segment’s revenue is disaggregated by product group, by geographic location and based upon the timing of revenue recognition.

Effective April 1, 2022, the Company began managing its operations under two operating segments, Climate Solutions and Performance Technologies. The Climate Solutions segment includes the previously-reported Building HVAC Systems (“BHVAC”) and the Commercial and Industrial Solutions (“CIS”) segments, with the exception of CIS Coatings. The Performance Technologies segment includes the previously-reported Heavy Duty Equipment (“HDE”) and Automotive segments and the CIS Coatings business. See Note 22 for additional information regarding the Company’s operating segments. The disaggregated revenue information presented in the tables below for fiscal 2022 and 2021 has been recast to be comparable with the fiscal 2023 presentation.

	Year ended March 31, 2023
	Climate Solutions		Performance Technologies		Segment Total
Product groups:
Heat transfer	$	521.2	$	-	$	521.2
HVAC & refrigeration		336.3		-		336.3
Data center cooling		154.0		-		154.0
Air-cooled		-		658.6		658.6
Liquid-cooled		-		483.9		483.9
Advanced solutions		-		143.9		143.9
Inter-segment sales		0.4		29.8		30.2
Net sales	$	1,011.9	$	1,316.2	$	2,328.1
Geographic location:
Americas	$	580.9	$	702.0	$	1,282.9
Europe		406.0		408.5		814.5
Asia		25.0		205.7		230.7
Net sales	$	1,011.9	$	1,316.2	$	2,328.1
Timing of revenue recognition:
Products transferred at a point in time	$	959.8	$	1,242.3	$	2,202.1
Products transferred over time		52.1		73.9		126.0
Net sales	$	1,011.9	$	1,316.2	$	2,328.1

	Year ended March 31, 2022
	Climate Solutions		Performance Technologies		Segment Total
Product groups:
Heat transfer	$	488.3	$	-	$	488.3
HVAC & refrigeration		325.5		-		325.5
Data center cooling		96.3		-		96.3
Air-cooled		-		572.3		572.3
Liquid-cooled		-		448.3		448.3
Advanced solutions		-		119.4		119.4
Inter-segment sales		0.4		32.4		32.8
Net sales	$	910.5	$	1,172.4	$	2,082.9
Geographic location:
Americas	$	485.9	$	585.6	$	1,071.5
Europe		396.7		375.7		772.4
Asia		27.9		211.1		239.0
Net sales	$	910.5	$	1,172.4	$	2,082.9
Timing of revenue recognition:
Products transferred at a point in time	$	889.3	$	1,093.7	$	1,983.0
Products transferred over time		21.2		78.7		99.9
Net sales	$	910.5	$	1,172.4	$	2,082.9

	Year ended March 31, 2021
	Climate Solutions		Performance Technologies		Segment Total
Product groups:
Heat transfer	$	386.9	$	-	$	386.9
HVAC & refrigeration		279.7		-		279.7
Data center cooling		64.5		-		64.5
Air-cooled		-		520.3		520.3
Liquid-cooled		-		458.9		458.9
Advanced solutions		-		98.1		98.1
Inter-segment sales		0.1		31.5		31.6
Net sales	$	731.2	$	1,108.8	$	1,840.0
Geographic location:
Americas	$	379.7	$	472.0	$	851.7
Europe		307.0		411.1		718.1
Asia		44.5		225.7		270.2
Net sales	$	731.2	$	1,108.8	$	1,840.0
Timing of revenue recognition:
Products transferred at a point in time	$	722.7	$	1,044.7	$	1,767.4
Products transferred over time		8.5		64.1		72.6
Net sales	$	731.2	$	1,108.8	$	1,840.0

Contract Balances

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

	March 31, 2023		March 31, 2022
Contract assets	$	19.3	$	26.8
Contract liabilities		21.5		11.8

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 $7.5 million decrease in contract assets during fiscal 2023 primarily resulted from a decrease in contract assets for revenue recognized over time.

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.  The $9.7 million increase in contract liabilities during fiscal 2023 primarily resulted from payments received in advance of the Company’s satisfaction of performance obligations.