Note 3 - Revenue Recognition

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(3) Revenue Recognition

The Company recognizes revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for promised goods or services. The Company recognizes revenue in accordance with the core principles of ASC 606 which include (1) identifying the contract with a customer, (2) identifying separate performance obligations within the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue. The Company recognizes all but an immaterial portion of its product sales upon shipment. The Company recognizes revenue from the sale of tooling and machinery primarily upon customer acceptance, with the exception of certain tooling where control does not transfer to the customer, resulting in revenue being recognized over the estimated time for which parts are produced with the use of each respective tool. The Company recognizes revenue from engineering services, which are primarily product development services, as the services are performed or as otherwise determined based on the substance of the agreement. The Company recognizes revenue from bill and hold transactions at the time the specified goods are complete and available to the customer. In the ordinary course of business, the Company accepts sales returns from customers for defective goods, such amounts being immaterial. Although only applicable to an insignificant number of transactions, the Company has elected to exclude sales taxes from the transaction price. The Company has elected to account for shipping and handling activities for which the Company is responsible under the terms and conditions of the sale not as performance obligations but rather as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the good and are expensed when revenue is recognized.

Disaggregated Revenue

The following table presents the Company’s revenue disaggregated by the major types of goods and services sold to the Company’s customers (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Net sales of:	2022		2021		2022		2021
Products	$	89,672	$	49,466	$	159,137	$	96,789
Tooling and Machinery		2,846		332		3,324		744
Engineering services		1,825		857		3,124		1,721
Total net sales	$	94,343	$	50,655	$	165,585	$	99,254

Contract balances

Timing of revenue recognition may differ from the timing of invoicing to customers.  When invoicing occurs prior to revenue recognition, the Company has contract liabilities included within “deferred revenue” on the condensed consolidated balance sheet.

The following table presents a roll-forward of contract liabilities activity for the six-month periods ended June 30, 2022 and 2021 (in thousands):

	Contract Liabilities
	Six Months Ended June 30,
	2022			2021
Deferred revenue - beginning of period	$	4,247		$	1,887
Increases due to consideration received from customers		3,378			1,869
Revenue recognized		(2,013	)		(727	)
Deferred revenue - end of period	$	5,612		$	3,029

Revenue recognized during the six-month periods ended June 30, 2022 and 2021 from amounts included in deferred revenue at the beginning of the period were approximately $1.8 million and $0.4 million, respectively. 

When invoicing occurs after revenue recognition, the Company has contract assets, included within “receivables” on the condensed consolidated balance sheet.

The following table presents a roll-forward of contract assets activity for the six-month periods ended June 30, 2022 and 2021 (in thousands):

	Contract Assets
	Six Months Ended June 30,
	2022			2021
Unbilled receivables - beginning of period	$	74		$	271
Increases due to revenue recognized, not invoiced to customers		1,937			935
Decreases due to customer invoicing		(1,784	)		(1,008	)
Unbilled receivables - end of period	$	227		$	198