Revenue

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue

Note 9 – Revenue

The Company’s revenues are generated primarily from its manufacturing services, which entails the sale of manufactured products built to customer specifications. The Company also generates revenue from design, development and engineering services, in addition to the sale of other inventory.

Revenue is measured based on the consideration specified in a contract with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a manufactured product to a customer. The Company’s contracts with customers are generally short-term in nature. The Company applies the optional exemption related to short-term performance obligations and does not disclose information about remaining performance obligations that have original expected durations of one year or less. Customers are generally billed when the product is shipped or as services are performed. Under the majority of the Company’s manufacturing contracts with customers, the customer controls all of the work-in-progress as products are being built. Revenues under these contracts are recognized progressively based on the cost-to-cost method. For other manufacturing contracts, the customer does not take control of the product until it is completed. Under these contracts, the Company recognizes revenue upon transfer of control of the product to the customer, which is generally when goods are shipped. Revenue from design, development and engineering services is recognized over time as the services are performed. As a general matter, the Company assumes no significant obligations after shipment as it typically warrants workmanship only. Therefore, the warranty provisions are generally not significant.

If the Company records revenue, but does not issue an invoice, a contract asset is recognized. The contract asset is transferred to accounts receivable when the entitlement to payment becomes unconditional.

Taxes assessed by governmental authorities that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of sales.

Disaggregation of revenue

In the following tables, revenue is disaggregated by market sector. The tables also include a reconciliation of the disaggregated revenue with the reportable operating segments. Elimination of intersegment sales includes intersegment sales between reportable operating segments.

	Reportable Operating Segments
	Three Months Ended March 31, 2023
(in thousands)	Americas		Asia		Europe		Total
Market Sector:
Industrials	$	29,048	$	80,052	$	34,426	$	143,526
A&D		66,302		7,923		5,190		79,415
Medical		68,282		54,158		14,609		137,049
Semi-Cap		60,949		64,737		22,783		148,469
Advanced Computing		88,604		7,394		—		95,998
Next Generation Communications		51,389		38,803		46		90,238
External revenue		364,574		253,067		77,054		694,695
Elimination of intersegment sales		32,633		14,976		801		48,410
Segment revenue	$	397,207	$	268,043	$	77,855	$	743,105

	Three Months Ended March 31, 2022
(in thousands)	Americas		Asia		Europe		Total
Market Sector:
Industrials	$	18,726	$	84,458	$	33,962	$	137,146
A&D		68,701		7,015		5,471		81,187
Medical		67,979		38,993		9,901		116,873
Semi-Cap		66,323		96,818		20,296		183,437
Advanced Computing		44,626		10,430		—		55,056
Next Generation Communications		27,514		34,765		105		62,384
External revenue		293,869		272,479		69,735		636,083
Elimination of intersegment sales		11,711		14,767		606		27,084
Segment revenue	$	305,580	$	287,246	$	70,341	$	663,167

During the three months ended March 31, 2023 and 2022, 90.4% and 89.3%, respectfully, of the Company’s revenue was recognized as products and services that were transferred over time.

The timing of revenue recognition, billings and cash collections result in billed accounts receivable, contract assets and advance payments from customers.

As of March 31, 2023 and December 31, 2022, the Company had $194.1 million and $183.6 million, respectively, in contract assets from contracts with customers. The contract assets primarily relate to the Company’s right to consideration for work completed but not billed at the reporting date. The contract assets are transferred to accounts receivable when the rights become unconditional.

Significant changes in the contract asset balance during the period are as follows:

	Three Months Ended March 31,
(in thousands)	2023			2022
Beginning balance	$	183,613		$	155,243
Revenue recognized		630,774			569,191
Amounts collected or invoiced		(620,253	)		(555,759	)
Ending balance	$	194,134		$	168,675

As of March 31, 2023 and December 31, 2022, the Company had $185.8 million and $197.9 million, respectively, in advance payments from customers. Of those amounts, $166.7 million and $178.9 million, respectively, were customer deposits and prepayments of inventory and $19.1 million and $18.9 million, respectively, were related to the contractual timing of payments. The advance payments are not considered a significant financing component because they are used to meet working capital demands of a contract, offset inventory risks and protect the Company from the failure of other parties to fulfill obligations under a contract.