Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

The following tables show disaggregated net sales by reportable segment (Note 19) by major source, net of intercompany sales eliminations.


	Three Months Ended March 31, 2023
	AAON Oklahoma		AAON Coil Products		BASX		Total
	(in thousands)
Rooftop Units	$	180,026	$	—	$	—	$	180,026
Condensing Units	—		15,278		—		15,278
Air Handlers	—		12,221		3,038		15,259
Outdoor Mechanical Rooms	208		151		—		359
Cleanroom Systems	—		—		12,622		12,622
Data Center Cooling Solutions	—		1,446		14,476		15,922
Water-Source Heat Pumps	2,730		3,080		—		5,810
Part Sales	13,904		1		248		14,153
Other1	5,134		1,235		155		6,524
	$	202,002	$	33,412	$	30,539	$	265,953

	Three Months Ended March 31, 2022
	AAON Oklahoma		AAON Coil Products		BASX		Total
	(in thousands)
Rooftop Units	$	121,706	$	—	$	—	$	121,706
Condensing Units	242		8,976		—		9,218
Air Handlers	—		9,438		1,339		10,777
Outdoor Mechanical Rooms	554		110		—		664
Cleanroom Systems	—		—		8,039		8,039
Data Center Cooling Solutions	—		—		10,868		10,868
Water-Source Heat Pumps	2,986		2,353		—		5,339
Part Sales	10,216		—		—		10,216
Other1	4,163		1,058		723		5,944
	$	139,867	$	21,935	$	20,969	$	182,771
1 Other sales include freight, extended warranties and miscellaneous revenue.

Due to the highly customized nature of many of the Company’s products and each product not having an alternative use to the Company without significant costs to the Company, the Company recognizes revenue over time as progress is made toward satisfying the performance obligations of each contract. The Company has formal cancellation policies 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.

Contract costs include direct materials, direct labor, installation, freight and delivery, commissions and royalties. Other costs not related to contract performance, such as indirect labor and materials, small tools and supplies, operating expenses, field rework and back charges are charged to expense as incurred. Provisions for estimated losses on contracts in progress are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income, and are estimated and recognized by the Company throughout the life of the contract. The aggregate of costs incurred and income recognized on uncompleted contracts in excess of billings is shown as a contract asset within our consolidated

balance sheets, and the aggregate of billings on uncompleted contracts in excess of related costs incurred and income recognized is shown as a contract liability within our consolidated balance sheets.

For all other products that are part sales or standardized units, the Company recognizes revenue, presented net of sales tax, when it satisfies the performance obligation in its contracts. As the primary performance obligation in such a contract is delivery of the requested manufactured equipment, 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.

Historically, sales of our products were moderately seasonal with the peak period being May-October of each year due to timing of construction projects being directly related to warmer weather. However, in recent years, given the increases in demand of our product and increases in our backlog, sales have become more constant throughout the year.

Product Warranties

A provision is made for the estimated cost of maintaining product warranties to customers at the time the product is sold based upon historical claims experience by product line. The Company records a liability and an expense for estimated future warranty claims based upon historical experience and management’s estimate of the level of future claims. Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the liability and expense in the current year.

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.