Annual report [Section 13 and 15(d), not S-K Item 405]

REVENUE

v3.25.4
REVENUE
 12 Months Ended
Dec. 31, 2025
Revenue from Contract with Customer [Abstract]  
REVENUE REVENUE
Revenue is recognized when, or as, the Company transfers control of promised products or services to a customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those products or services. Sales shown on the Company’s Consolidated Statements of Operations are from contracts with customers.
Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 90 days after the performance obligation has been satisfied; or in certain cases, up-front deposits. In circumstances where the timing of revenue recognition differs from the timing of receipt of consideration, the Company has determined that the Company’s contracts generally do not include a significant financing component. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from sales.
The Company recognizes an asset for the incremental, material costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year and the costs are expected to be recovered. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer. The Company has elected the practical expedient available under ASC 340-40-25-4 to immediately expense the incremental cost of obtaining a contract when the expected benefit of those costs is less than one year. As of December 31, 2025 and 2024, the Company did not have material incremental costs on any open contracts with an original expected duration of greater than one year.
The Company recognizes an asset for certain, material costs to fulfill a contract if it is determined that the costs relate directly to a contract or an anticipated contract that can be specifically identified, generate or enhance resources that will be used in satisfying performance obligations in the future, and are expected to be recovered. Such costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods to which the asset relates. Start-up costs are expensed as incurred. Capitalized fulfillment costs are included in Inventories in the accompanying Consolidated Balance Sheets. Should future orders not materialize or it is determined the costs are no longer probable of recovery, the capitalized costs are written off. The Company has capitalized $6.0 million and $8.3 million of costs as of December 31, 2025 and 2024, respectively. Amortization of fulfillment costs recognized within Cost of Products Sold was $3.5 million and $3.1 million in 2025 and 2024, respectively. No amortization of fulfillment costs was recorded in 2023.
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts which are, therefore, not distinct. Thus, the contract’s
transaction price is the revenue recognized when or as that performance obligation is satisfied. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations.
In contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation based on the estimated standalone selling price of each distinct good or service in the contract. In these cases, the Company uses an expected cost plus margin approach to determine the standalone selling price for each performance obligation. Shipping and handling activities that occur after the customer has obtained control of the good are considered fulfillment activities, not performance obligations.
Contract modifications are routine in the performance of our contracts, and contracts may be modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as new contracts. The effect of modifications has been reflected when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price.
The majority of the Company’s revenue from contracts with customers is recognized at a point in time, when the customer obtains control of the promised product. In general, the customer has obtained control when they have legal title, significant risks and rewards of ownership of the asset, and the Company has a present right to payment for the product. From time to time, contracts may contain variable consideration, which could include incremental fees or penalty provisions related with performance. In these situations, variable consideration is included in the estimated transaction price based on an assessment of all information (i.e., historical, current and forecasted) that is reasonably available to the Company and updated at the end of each reporting period as additional information becomes available. Most of our contracts do not contain rights to return product; where this right does exist, it is evaluated as possible variable consideration.
For contracts that are subject to the requirement to accrue anticipated losses, the Company recognizes the entire anticipated loss in the period that the loss becomes probable.
For contracts with customers in which the Company promises to provide a product to the customer that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time, using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material and overhead.
The Company also recognizes revenue from service contracts (including service-type warranties) over time. The Company recognizes revenue over time during the term of the agreement as the customer is simultaneously receiving and consuming the benefits provided throughout the Company’s performance. The Company typically recognizes revenue over time using a cost-to-cost method, where revenues are recognized proportionally as costs are incurred, or on a straight-line basis throughout the contract period.
On December 31, 2025, we had $674.5 million of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately $533.1 million of our remaining performance obligations as revenue in 2026.
Costs in excess of billings includes unbilled amounts resulting from revenues under contracts with customers that are satisfied over time and when the cost-to-cost measurement method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Costs in excess of billings are classified as current assets, within Accounts Receivable, Net of Allowance for Estimated Credit Losses on our Consolidated Balance Sheets.
Billings in excess of cost includes billings in excess of revenue recognized as well as other elements of deferred revenue, which includes advanced payments, up-front payments, and progress billing payments. Billings in excess of cost are reported in our Consolidated Balance Sheets classified as current liabilities, within Customer Advance Payments and Deferred Revenue, and non-current liabilities, within Other Liabilities.
The Company’s contract assets and contract liabilities consist primarily of costs and profits in excess of billings and billings in excess of cost and profits, respectively. The following table presents the beginning and ending balances of contract assets and contract liabilities:
(In thousands) Contract Assets Contract Liabilities
Beginning Balance, January 1, 2025
 $ 54,171  $ 28,171 
Ending Balance, December 31, 2025
 $ 54,687  $ 26,962 
The increase in contract assets reflects the net impact of new revenue recognized in excess of billings exceeding billing of previously unbilled revenue during the period, partially offset by $8.3 million in revisions of estimated costs to complete certain long-term mass transit Test contracts which were recorded in 2025. The revisions resulted in reduced revenue recognized during 2025 due to lower estimates of the percentage of work completed on the programs. The decrease in contract liabilities reflects the net impact of revenue recognized in excess of new customer advances or deferred revenues recorded.
We recognized $20.8 million and $16.8 million during the year ended December 31, 2025 and 2024, respectively, in revenues that were included in the contract liability balance at the beginning of the period.
The following table presents our revenue disaggregated by Market Segments as of December 31 as follows:
(In thousands) 2025 2024 2023
Aerospace Segment
Commercial Transport
 $ 599,301  $ 524,572  $ 432,199 
Military Aircraft
 116,276  88,019  61,617 
General Aviation
 69,834  74,344  80,842 
Other
 11,908  19,749  30,172 
Aerospace Total 797,319  706,684  604,830 
Test Systems Segment
Government & Defense
 64,809  88,742  84,376 
Test Systems Total 64,809  88,742  84,376 
Total $ 862,128  $ 795,426  $ 689,206 
The following table presents our revenue disaggregated by Product Lines as of December 31 as follows:
(In thousands) 2025 2024 2023
Aerospace Segment
Electrical Power & Motion
 $ 410,382  $ 359,043  $ 268,049 
Lighting & Safety
 208,897  179,403  157,434 
Avionics
 123,422  120,183  113,117 
Systems Certification
 29,069  17,003  26,255 
Structures
 13,641  11,303  9,803 
Other
 11,908  19,749  30,172 
Aerospace Total 797,319  706,684  604,830 
Test Systems 64,809  88,742  84,376 
Total $ 862,128  $ 795,426  $ 689,206