Annual report pursuant to Section 13 and 15(d)

Revenue from Contracts with Customers

v3.21.1
Revenue from Contracts with Customers
 12 Months Ended
Mar. 31, 2021
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customers Revenue from Contracts with Customers    
    The core principle of the revenue recognition standard is to recognize revenue that reflects the consideration the Company expects to receive for goods or services when or as the promised goods or services are transferred to customers. Accounting Standards Codification Topic 606, Revenue from Contracts with Customers ("ASC 606") requires more judgment than previous guidance, as management will need to consider the terms of the contract and all relevant facts and circumstances when applying the revenue recognition standard. Management performs the following five steps when applying the revenue recognition standard: (i) identify each contract with customers, (ii) identify each performance obligation in the contracts with customers, (iii) estimate the transaction price (including any variable consideration), (iv) allocate the transaction price to each performance obligation and (v) recognize revenue as each performance obligation is satisfied.
Description of Product and Service Offerings and Revenue Recognition Policies
    We principally provide a (i) suite of products, including heating units, heating cables, tubing bundles, control systems including industry-leading customized software solutions, environmental heating solutions, process heating solutions, temporary heating and lighting, filtration, and transportation products and (ii) services, including design optimization, engineering, installation and maintenance services required to deliver comprehensive solutions to complex projects. The performance obligations associated with our product sales are generally recognized at a point in time. Where products and services are provided together under a time and materials contract, the performance obligations are satisfied over time. We also provide fixed-fee turnkey solutions consisting of products and services under which the related performance obligations are satisfied over time.
    In addition, we offer temporary power products that are designed to provide a safe and efficient means of supplying temporary electrical power distribution and lighting at energy infrastructure facilities for new construction and during maintenance and turnaround projects at operating facilities. Revenues associated with the rental of the temporary power products have historically been less than 5% of our total revenues and are recognized under ASC 842.
    Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for transferring such goods or providing such services. We account for a contract when a customer provides us with a firm purchase order or other contract that identifies the goods or services to be provided, the payment terms for those services, and when collectability of the consideration due is probable. Generally, our payment terms do not exceed 30 days for product sales, while terms for our projects can vary based on milestones or other key deliverable-based increments.
Performance Obligations
    A performance obligation is a promise to provide the customer with a good or service. At contract inception, the Company will assess the goods or services promised in the contract with a customer and shall identify, as a performance obligation, each promise to transfer to the customer either: (i) a good or service (or a bundle of goods or services) or (ii) a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer. For contracts with multiple performance obligations, standalone selling price is generally readily observable.
    Revenue from products transferred to customers at a point in time is recognized when obligations under the terms of the contract with the customer are satisfied; generally this occurs with the transfer of control upon shipment. Revenue from
products transferred to customers at a point in time accounted for approximately 58.6% and 59.6% of revenue for the fiscal year ended March 31, 2021 and 2020, respectively.
    
    Our revenues that are recognized over time include (i) products and services which are billed on a time and materials basis, and (ii) fixed fee contracts for complex turnkey solutions. Revenue from products and services transferred to customers over time accounted for approximately 41.4% and 40.4% of revenue for the fiscal year ended March 31, 2021 and 2020, respectively.

    For our time and materials service contracts, we recognize revenues as the products and services are provided over the term of the contract and have determined that the stated rate for installation services and products is representative of the stand-alone selling price for those services and products.
    Our turnkey projects, or fixed fee projects, offer our customers a comprehensive solution for heat tracing from the initial planning stage through engineering/design, manufacture, installation and final proof-of-performance and acceptance testing. Turnkey services also include project planning, product supply, system integration, commissioning and on-going maintenance. Turnkey solutions, containing multiple deliverables, are customer specific and do not have an alternative use and present an unconditional right to payment, and thus are treated as a single performance obligation with revenues recognized over time as work progresses.

    For revenue recognized under fixed fee turnkey contracts, we measure the costs incurred that contribute towards the satisfaction of our performance obligation as a percentage of the total cost of production (the “cost-to-cost method”), and we recognize a proportionate amount of contract revenue, as the cost-to-cost method appropriately depicts performance towards satisfaction of the performance obligation. Changes to the original cost amount may be required during the life of the contract and such estimates are reviewed on a regular basis. Sales and gross profits are adjusted using the cumulative catch-up method for revisions in estimated contract costs. Reviews of estimates have not generally resulted in significant adjustments to our results of operations.
    
    At March 31, 2021, revenues associated with our open performance obligations totaled $114,200, representing our combined backlog and deferred revenue. Within this amount, approximately $20,774 will be earned as revenue in excess of one year. We expect to recognize the remaining revenues associated with unsatisfied or partially satisfied performance obligations within twelve months.
    
Pricing and Sales Incentives
    
    Pricing is established at or prior to the time of sale with our customers and we record sales at the agreed-upon net selling price. Generally, we do not enter into sales contracts with customers that offer sales discounts or incentives.

Optional Exemptions, Practical Expedients and Policy Elections

    We expense the incremental costs of obtaining a contract when incurred because the amortization period would be less than one year.
    
    The Company has elected to treat shipping and handling activities as a cost of fulfillment rather than a separate performance obligation.
 
    The Company has elected to exclude all sales and other similar taxes from the transaction price. Accordingly, the Company presents all collections from customers for sales and other similar taxes on a net basis, rather than having to assess whether the Company is acting as an agent or a principal in each taxing jurisdiction.
 
    The Company adopted ASC 606 as of April 1, 2018 using the modified retrospective method for all contracts not completed as of the date of adoption. For contracts that were modified before the effective date, the Company utilized the practical expedient to consider the aggregate effect of all modifications when identifying performance obligations and allocating transaction price.

Contract Assets and Liabilities

    Contract assets and liabilities are presented on our consolidated balance sheet. Contract assets consist of unbilled amounts resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. In addition, contract assets contain labor and material costs
incurred under our time and material service contracts that have not been billed to the customer. Contract liabilities represent deferred revenue from advanced customer payments or billings in excess of costs incurred or revenue earned. The Company invoices customers pursuant to the terms of their related contract. Invoiced amounts are applied to individual contracts and an associated amount is either classified as a contract asset or contract liability depending on whether the revenue associated with the amounts billed had been earned (contract asset) or not (contract liability).
    
    As of March 31, 2021 and 2020, contract assets were $11,379 and $10,194, respectively. There were no impairment losses recognized on our contract assets for the twelve months ended March 31, 2021 and 2020. As of March 31, 2021 and 2020, contract liabilities were $2,959 and $4,538, respectively. The majority of contract liabilities at March 31, 2020 were recognized in revenue as of March 31, 2021.    
    
Disaggregation of Revenue
    We disaggregate our revenue from contracts with customers by geographic location, revenues recognized at point in time and revenues recognized over time, as we believe these best depict the nature of our sales and the regions in which those sales are earned and managed.
    Disaggregation of revenues from contracts with customers for fiscal 2021, 2020 and 2019 are as follows:
Fiscal Year Ended March 31, 2021
Revenues recognized at point in time Revenues recognized over time Total
United States and Latin America $ 47,599  $ 47,842  $ 95,441 
Canada 67,451  23,402  90,853 
Europe, Middle East and Africa 29,304  24,915  54,219 
Asia-Pacific 17,448  18,220  35,668 
Total revenues $ 161,802  $ 114,379  $ 276,181 
Fiscal Year Ended March 31, 2020
Revenues recognized at point in time Revenues recognized over time Total
United States and Latin America $ 72,334  $ 83,131  $ 155,465 
Canada 106,577  21,787  128,364 
Europe, Middle East and Africa 31,028  22,734  53,762 
Asia-Pacific 18,558  27,337  45,895 
Total revenues $ 228,497  $ 154,989  $ 383,486 
Fiscal Year Ended March 31, 2019
Revenues recognized at point in time Revenues recognized over time Total
United States and Latin America $ 71,865  $ 93,783  $ 165,648 
Canada 102,997  24,395  127,392 
Europe, Middle East and Africa 46,210  31,298  77,508 
Asia-Pacific 26,534  15,560  42,094 
Total revenues $ 247,606  $ 165,036  $ 412,642