Revenue Recognition

12 Months Ended

Mar. 31, 2025

Revenue Recognition.

Revenue Recognition

Note 3:  Revenue Recognition

The Company sells thermal management products and solutions in a wide array of commercial, industrial, and building HVAC&R markets. In addition, the Company sells engineered heat transfer systems and high-quality heat transfer components for use in on- and off-highway original OEM vehicular applications. 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. As the majority of the underlying sales contracts for its highly-specified products do not provide the Company with an enforceable right to payment for performance completed to date in the event of cancellation, the Company recognizes the majority of its revenue at a point in time, based upon shipment terms. For the limited number of customer contracts 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 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 fulfillment 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 provides energy-efficient, climate-controlled solutions and components for a wide array of applications. The Climate Solutions segment sells data center cooling solutions, heat transfer products, and HVAC&R products. Data center cooling products include IT cooling solutions, including precision air conditioning units for data center applications; computer room air conditioning and computer room air handler units; hybrid fan coils; fan walls; chillers; condensers; condensing units; and liquid cooling solutions for high-density computing, including coolant distribution units and immersion solutions. Heat transfer products include heat exchanger coils and coating products that extend the life of equipment and components by protecting against corrosion. Heating products include unit heaters, roof-mounted direct- and indirect-fired makeup air units, duct furnaces, infrared units and perimeter heating products. Indoor air quality products include ventilation and air conditioning products, such as single packaged unit ventilators, modular chillers, air handler units, condensing units and ceiling cassettes. Refrigeration products include evaporator unit coolers, remote condensers and fluid, gas, dry, and brine coolers. In addition, the segment provides products to the industrial power generation markets.

For the majority of its sales, individual customer purchase orders represent the Climate Solutions segment’s contract with its customers and the segment recognizes revenue when it transfers control over its products to its customers, based upon shipment terms. Heating products are largely sold to independent distributors in the U.S., who in turn market the heating products to end customers. The Climate Solutions segment recognizes coatings product sales over-time, since the customers control the equipment being enhanced by the coating application. In addition, for sales to customers whose contract cancellation terms provide an enforceable right to payment for customized products and solutions, the Climate Solutions segment recognizes revenue over time based upon its estimated progress toward satisfaction of the performance obligations.

Performance Technologies

The Performance Technologies segment provides products and solutions that enhance the performance of customer applications and develops solutions that provide mission critical energy for a variety of end market applications. The Performance Technologies segment designs and manufactures products and solutions using air-cooled and liquid-cooled technology for vehicular, stationary power, and industrial applications. In addition, the Performance Technologies segment provides advanced thermal solutions to zero-emission and hybrid commercial vehicle and off-highway customers. Air-cooled products consist primarily of powertrain cooling products, such as radiators, condensers, engine cooling modules, charge air coolers, fan shrouds, and surge tanks; and cooling module generator sets. Liquid-cooled products include engine oil coolers, EGR coolers, liquid charge air coolers, transmission and retarder oil coolers, chillers, and condensers. The segment’s advanced solutions include battery thermal management systems, electronics cooling packages, and battery chillers.

While the Performance Technologies segment provides customized production and service parts to customers under multi-year agreements, these agreements 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.

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 and by geographic location.

Effective April 1, 2024, the Company moved its Coatings business, which was previously managed by and reported within the Performance Technologies segment, under the leadership of the Climate Solutions segment. See Note 22 for additional segment financial information. The disaggregated revenue information presented in the tables below for fiscal 2024 and 2023 has been recast to be comparable with the fiscal 2025 presentation.

	Year ended March 31, 2025
	Climate		Performance		Segment
	Solutions		Technologies		Total
Product groups:
Data center cooling	$	644.2	$	—	$	644.2
Heat transfer		402.9		—		402.9
HVAC&R		393.5		—		393.5
Air-cooled		—		609.0		609.0
Liquid-cooled		—		404.5		404.5
Advanced solutions		—		129.4		129.4
Inter-segment sales		0.2		20.6		20.8
Net sales	$	1,440.8	$	1,163.5	$	2,604.3
Geographic location:
Americas	$	997.8	$	695.6	$	1,693.4
Europe		415.8		295.9		711.7
Asia		27.2		172.0		199.2
Net sales	$	1,440.8	$	1,163.5	$	2,604.3

	Year ended March 31, 2024
	Climate		Performance		Segment
	Solutions		Technologies		Total
Product groups:
Data center cooling	$	294.2	$	—	$	294.2
Heat transfer		473.4		—		473.4
HVAC&R		340.5		—		340.5
Air-cooled		—		681.2		681.2
Liquid-cooled		—		491.6		491.6
Advanced solutions		—		126.9		126.9
Inter-segment sales		—		21.6		21.6
Net sales	$	1,108.1	$	1,321.3	$	2,429.4
Geographic location:
Americas	$	649.0	$	721.0	$	1,370.0
Europe		432.7		406.8		839.5
Asia		26.4		193.5		219.9
Net sales	$	1,108.1	$	1,321.3	$	2,429.4

	Year ended March 31, 2023
	Climate		Performance		Segment
	Solutions		Technologies		Total
Product groups:
Data center cooling	$	173.8	$	—	$	173.8
Heat transfer		541.3		—		541.3
HVAC&R		341.0		—		341.0
Air-cooled		—		658.6		658.6
Liquid-cooled		—		483.9		483.9
Advanced solutions		—		99.3		99.3
Inter-segment sales		0.6		25.7		26.3
Net sales	$	1,056.7	$	1,267.5	$	2,324.2
Geographic location:
Americas	$	615.4	$	664.6	$	1,280.0
Europe		416.3		397.2		813.5
Asia		25.0		205.7		230.7
Net sales	$	1,056.7	$	1,267.5	$	2,324.2

Contract balances

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

	March 31, 2025		March 31, 2024
Contract assets	$	13.3	$	12.9
Contract liabilities		35.1		79.4

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 $0.4 million increase in contract assets during fiscal 2025 primarily resulted from an increase in contract assets for revenue recognized over time, partially offset by a decrease in capitalized costs related to customer-owned tooling contracts.

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 data center cooling products and customer-owned tooling. The $44.3 million decrease in contract liabilities during fiscal 2025 primarily resulted from the Company’s satisfaction of performance obligations under contracts that had required advanced payments, largely associated with long inventory lead times.