v3.26.1
REVENUE RECOGNITION
 3 Months Ended
Mar. 31, 2026
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION REVENUE RECOGNITION
The Company accounts for revenue in accordance with ASC 606: Revenue from Contracts with Customers. Revenue is recognized when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. A significant portion of the Company's performance obligations are recognized at a point-in-time when control of the product transfers to the customer, which is generally at the time of shipment. The remaining portion of the Company’s performance obligations are recognized over time as the customer simultaneously obtains control as the Company performs work under a contract, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment.

External segment sales disaggregated by product and service are as follows:

Three Months Ended
 March 31,
(In millions)20262025
Sales Type
Product$2,214 $2,319 
Service287 253 
Climate Solutions Americas sales2,501 2,572 
Product1,154 1,071 
Service139 98 
Climate Solutions Europe sales1,293 1,169 
Product642 660 
Service192 166 
Climate Solutions Asia Pacific, Middle East & Africa sales834 826 
Product657 602 
Service56 49 
Climate Solutions Transportation sales713 651 
Net sales$5,341 $5,218 
Contract Balances

Total contract assets and contract liabilities consisted of the following:

(In millions)March 31,
2026		December 31,
2025
Contract assets (included within Other current assets)
$527 $499 
Contract assets, non-current (included within Other assets)
79 83 
Total contract assets606 582 
Contract liabilities (included within Accrued liabilities)
(722)(691)
Contract liabilities, non-current (included within Other long-term liabilities)
(208)(203)
Total contract liabilities (930)(894)
Net contract assets (liabilities)$(324)$(312)

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities. Contract assets relate to the conditional right to consideration for any completed performance under a contract when costs are incurred in excess of billings under the percentage-of-completion methodology. Contract liabilities relate to payments received in advance of performance under a contract or when the Company has a right to consideration that is conditioned upon transfer of a good or service to a customer. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract.
The Company recognized revenue of $250 million during the three months ended March 31, 2026, that related to contract liabilities as of January 1, 2026. The Company expects a majority of its current contract liabilities at the end of the period to be recognized as revenue in the next 12 months.