D. REVENUE
Our revenues are derived from sales to customers in the following geographic areas: North America and International, which are particularly in Europe. Net sales from these geographic areas, by segment, were as follows, in millions:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2025 |
| Plumbing Products | | Decorative Architectural Products | | Total |
| Primary geographic areas: | | | | | |
| North America | $ | 3,380 | | | $ | 2,570 | | | $ | 5,950 | |
| International | 1,612 | | | — | | | 1,612 | |
| Total | $ | 4,992 | | | $ | 2,570 | | | $ | 7,562 | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2024 |
| Plumbing Products | | Decorative Architectural Products | | Total |
| Primary geographic areas: | | | | | |
| North America | $ | 3,289 | | | $ | 2,975 | | | $ | 6,264 | |
| International | 1,564 | | | — | | | 1,564 | |
| Total | $ | 4,853 | | | $ | 2,975 | | | $ | 7,828 | |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, 2023 |
| Plumbing Products | | Decorative Architectural Products | | Total |
| Primary geographic areas: | | | | | |
| North America | $ | 3,259 | | | $ | 3,125 | | | $ | 6,384 | |
| International | 1,583 | | | — | | | 1,583 | |
| Total | $ | 4,842 | | | $ | 3,125 | | | $ | 7,967 | |
We recognized increases to revenue of $3 million, $10 million, and $12 million in 2025, 2024, and 2023, respectively, for variable consideration related to performance obligations settled in previous periods.
We record contract assets for items for which we have satisfied our performance obligation but our receipt of payment is contingent upon delivery or other circumstances other than the passage of time. Our contract assets are recorded in prepaid expenses and other in our consolidated balance sheets. Our contract assets generally become unconditional and are reclassified to receivables in the quarter subsequent to each balance sheet date. Our contract asset balance was $2 million at both December 31, 2025 and 2024.
We record contract liabilities primarily for deferred revenue. Our contract liabilities are recorded in accrued liabilities in our consolidated balance sheets. Our contract liabilities are generally recognized to net sales in the immediately subsequent reporting period. Our contract liability balance was $57 million and $45 million at December 31, 2025 and 2024, respectively.
D. REVENUE (Concluded)
Changes in the allowance for credit losses deducted from accounts receivable were as follows, in millions:
| | | | | | | | | | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| Balance at January 1 | $ | 10 | | | $ | 11 | |
| Provision for expected credit losses during the period | 5 | | | 4 | |
| Write-offs charged against the allowance | (7) | | | (6) | |
| Recoveries of amounts previously written off | 4 | | | 2 | |
| | | |
| Balance at December 31 | $ | 12 | | | $ | 10 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.