Revenue Recognition

9 Months Ended

Sep. 30, 2020

Deferred Revenue Disclosure [Abstract]

As part of the Company's revenue recognition analysis, it concluded that it has two separate performance obligations, and accordingly, two separate revenue streams: products and services. Under the definition of a contract as defined by ASC 606, the Company considers contracts to be created at the time an order to purchase product is agreed upon regardless of whether or not there is a written contract.

Performance Obligations

Lawson has two operating segments; the Lawson segment and the Bolt Supply segment.

The Lawson segment has two distinct performance obligations offered to its customers: a product performance obligation and a service performance obligation. Although the Company has identified that it offers its customers both a product and a service obligation, the customer only receives one invoice per transaction with no price breakout between these obligations. The Company does not price its offerings based on any breakout between these obligations.

The Lawson segment, including the recent Partsmaster acquisition, offers a vendor managed inventory ("VMI") service proposition to its customers. A portion of these services, primarily related to stocking of product and maintenance of the MRO inventory, is provided a short period of time after control of the purchased product has been transferred to the customer. Since some components of VMI service have not been provided at the time the control of the product transfers to the customer, that portion of expected consideration is deferred until the time that those services have been provided.

The Bolt Supply segment does not provide VMI services for its customers or provide services in addition to product sales to customers.

In previous financial statements, the Company presented the disaggregated components of total revenue: product revenue and service revenue, along with the cost of sales associated with each of these revenue streams as the service revenues exceeded 10% of consolidated sales. Since the Company qualifies as a smaller reporting company, the Company has elected to discontinue disclosure of the disaggregated components of revenue and cost of sales in its condensed consolidated statements of income and comprehensive income and in the related notes to the condensed consolidated financial statements. This presentation decision is effective beginning with this Quarterly Report on Form 10-Q for the period ended September 30, 2020. For the three and nine months ended September 30, 2019, service revenue of $10.3 million and $29.9 million, respectively, were reported as service revenue which have now been combined as reported within total revenue.

Disaggregated revenue by geographic area follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2020		2019		2020		2019

United States	$	72,030	$	75,160	$	202,709	$	225,327
Canada	18,247		19,619		50,749		56,892
Consolidated total	$	90,277	$	94,779	$	253,458	$	282,219

Disaggregated revenue by product type follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019

Fastening Systems	22.3	%	24.1	%	22.7	%	24.0	%
Specialty Chemicals	13.3	%	11.7	%	11.7	%	11.6	%
Fluid Power	12.6	%	15.1	%	13.2	%	15.2	%
Cutting Tools and Abrasives	12.2	%	13.1	%	13.1	%	13.1	%
Electrical	10.0	%	10.4	%	10.2	%	10.8	%
Safety	7.0	%	4.7	%	6.4	%	4.7	%
Aftermarket Automotive Supplies	7.0	%	7.6	%	7.1	%	7.9	%
Welding and Metal Repair	1.4	%	1.3	%	1.4	%	1.5	%
Other	14.2	%	12.0	%	14.2	%	11.2	%
Consolidated Total	100.0%		100.0%		100.0%		100.0%