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Revenue Recognition
 9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue Recognition Revenue Recognition
 
Disaggregated net sales by major source:
Three Months EndedNine Months Ended
September 30,
2020		September 30,
2019		September 30,
2020		September 30,
2019
(in thousands)
Rooftop units$102,750 $78,432 $312,725 $255,532 
Condensing units6,304 4,416 15,307 13,622 
Air handlers5,805 6,523 18,068 18,150 
Outdoor mechanical rooms867 181 2,216 1,488 
Water source heat pumps6,770 8,751 14,269 21,417 
Part sales10,484 10,313 24,562 25,602 
Other1,792 4,884 10,704 10,948 
Net Sales
$134,772 $113,500 $397,851 $346,759 
Disaggregated units sold by major source:
Three Months EndedNine Months Ended
September 30,
2020		September 30,
2019		September 30,
2020		September 30,
2019
Rooftop units4,372 3,520 12,179 11,079 
Condensing units593 418 1,447 1,291 
Air handlers534 552 1,545 1,669 
Outdoor mechanical rooms6 7 22 28 
Water source heat pumps1,847 1,311 5,109 5,977 
Total Units
7,352 5,808 20,302 20,044 

The Company recognizes revenue, presented net of sales tax, when it satisfies the performance obligation in its contracts. The primary performance obligation in our contract is delivery of the requested manufactured equipment. Most of the Company’s products are highly customized, cannot be resold to other customers and the cost of rework to be resold is not economical. The Company has a formal cancellation policy and generally does not accept returns on these units. As a result, many of the Company’s products do not have an alternative use and therefore, for these products we recognize revenue over the time it takes to produce the unit. For all other products that are part sales or standardized units, we satisfy the performance obligation when the control is passed to the customer, generally at time of shipment. Final sales prices are fixed based on purchase orders. Sales allowances and customer incentives are treated as reductions to sales and are provided for based on historical experiences and current estimates. Sales of our products are moderately seasonal with the peak period being May-October of each year.

We are responsible for billings and collections resulting from all sales transactions, including those initiated by our independent manufacturer representatives (“Representatives”). Representatives are national companies that are in the business of providing HVAC units and other related products and services to customers. The end user customer orders a bundled group of products and services from the Representative and expects the Representative to fulfill the order. These additional products and services may include controls purchased from another manufacturer to operate the unit, start-up services, and curbs for supporting the unit (“Third Party Products”). All are associated with the purchase of a HVAC unit but may be provided by the Representative or another third party. Only after the specifications are agreed to by the Representative and the customer, and the decision is made to use an AAON HVAC unit, will we receive notice of the order. We establish the amount we must receive for our HVAC unit (“minimum sales price”), but do not control the total order price that is negotiated by the Representative with the end user customer. The Representatives submit the total order price to us for invoicing and collection. The total order price includes our minimum sales price and an additional amount which may include both the Representatives’ fee and amounts due for additional products and services required by the customer. The Company is considered the principal for the equipment we design and manufacture and records that revenue gross. The Company has no control over the Third Party Products to the end customer and the Company is under no obligation related to the Third Party Products. Amounts related to Third Party Products are not recognized as revenue but are recorded as a liability and are included in accrued liabilities on the consolidated balance sheet.

The Representatives’ fee and Third Party Products amounts (“Due to Representatives”) are paid only after all amounts associated with the order are collected from the customer. The amount of payments to our Representatives were $11.5 million and $12.7 million for the three months ended September 30, 2020 and 2019, respectively. The amount of payments to our Representatives were $39.0 million and $34.4 million for the nine months ended September 30, 2020 and 2019, respectively.

The Company also sells extended warranties on parts for various lengths of time ranging from six months to 10 years. Revenue for these separately priced warranties is deferred and recognized on a straight-line basis over the separately priced warranty period.