Contract assets include unbilled amounts typically resulting from revenues under contracts when the over time method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer. Contract assets are transferred to Accounts receivable, net when the entitlement to pay becomes unconditional and the customer is invoiced. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract liabilities are included in Accrued liabilities in the Consolidated Balance Sheets.

Contract assets and Contract liabilities are reported on the Consolidated Balance Sheets in a net position on a contract-by-contract basis at the end of each reporting period.

As of June 30, 2026 and December 31, 2025, Contract assets and Contract liabilities consisted of the following:


(in thousands)	June 30, 2026		December 31, 2025
Contract assets	$	77,758	$	87,573
Allowance for expected credit losses	(471)		(471)
Contract assets, net	$	77,287	$	87,102

Contract liabilities	$	36,585	$	33,397

Contract assets, net decreased $9.8 million during the six months ended June 30, 2026, primarily due to a decrease in unbilled revenue related to commercial and defense programs. There were no impairment losses related to our Contract assets during the six months ended June 30, 2026 and June 30, 2025.

Contract liabilities increased $3.2 million for the period ended June 30, 2026 compared to December 31, 2025, primarily due to amounts invoiced to customers for contracts that were in a contract liability position exceeding the revenue recognition from satisfied performance obligations. Revenue recognized for the six months ended June 30, 2026 and 2025 that was included in the Contract liability balance at the beginning of the year was $20.8 million and $4.8 million, respectively.