Annual report pursuant to Section 13 and 15(d)

Revenue from Contracts with Customers

v3.23.1
Revenue from Contracts with Customers
 12 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue from Contract with Customers Revenue from Contracts with Customers    
    Please refer to Note 1, "Organization and Summary of Significant Accounting Policies" for more information regarding our revenue recognition policy.
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 62.9%, 60.4% and 58.6% of revenue for the fiscal year ended March 31, 2023, 2022, and 2021, 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 37.1%, 39.6% and 41.4% of revenue for the fiscal years ended March 31, 2023, 2022, and 2021, 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, 2023, revenues associated with our open performance obligations totaled $163,300, representing our combined backlog and deferred revenue. Within this amount, approximately $11,621 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.
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, 2023 and 2022, contract assets were $16,272 and $19,626, respectively. There were no impairment losses recognized on our contract assets for the year ended March 31, 2023, 2022, or 2021. As of March 31, 2023 and 2022, contract liabilities were $8,483 and $8,010, respectively. The majority of contract liabilities at March 31, 2022 were recognized in revenue as of March 31, 2023.    
Disaggregation of Revenue
    We disaggregate our revenue from contracts with customers by geographic location as well as revenue 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.
Revenue recognized at a point-in-time based on when control transitions to the customer and is generally related to our product sales. Moreover, point-in-time revenue does not typically require engineering or installation services. Revenue recognized over time occurs on our projects where engineering or installation services, or a combination of the two, are required. We recognize revenue related to such projects in a systematic way that reflects the transfer of service to the customer.
    Disaggregation of revenues from contracts with customers for fiscal 2023, 2022 and 2021 are as follows:
Fiscal Year Ended March 31, 2023
Revenues recognized at point in time Revenues recognized over time Total
United States and Latin America $ 116,924  $ 92,230  $ 209,154 
Canada 116,112  37,855  153,967 
Europe, Middle East and Africa 23,483  19,676  43,159 
Asia-Pacific 20,780  13,530  34,310 
Total revenues $ 277,299  $ 163,291  $ 440,590 
Fiscal Year Ended March 31, 2022
Revenues recognized at point in time Revenues recognized over time Total
United States and Latin America $ 75,115  $ 79,072  $ 154,187 
Canada 92,071  23,371  115,442 
Europe, Middle East and Africa 27,306  27,431  54,737 
Asia-Pacific 20,317  10,991  31,308 
Total revenues $ 214,809  $ 140,865  $ 355,674 
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