Annual report pursuant to Section 13 and 15(d)

Business Segments and Customer Information

v3.10.0.1
Business Segments and Customer Information
12 Months Ended
Dec. 31, 2018
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]  
Business Segments and Customer Information
Business Segments and Customer Information

Segment Information

Beginning in 2017, we changed our structure and as a result our former IT, Energy and Management Consulting Group was combined with our Federal Services Group. Consequently, our segment financial information for 2016 has been restated to reflect such change. Management of our business operations is conducted under three reportable operating segments:

Supply Chain Management Group – Our Supply Chain Management Group supplies vehicle parts primarily through a Managed Inventory Program ("MIP") and direct sales to the USPS and to other customers.

Aviation Group – Our Aviation Group provides MRO services, parts supply and distribution, and supply chain solutions for commercial and general aviation jet aircraft engines and engine accessories.

Federal Services Group – Our Federal Services Group provides engineering, industrial, logistics, foreign military sales, legacy equipment sustainment services, IT and technical and consulting services primarily to the DoD and other government agencies.

These segments operate under separate management teams and financial information is produced for each segment. We evaluate segment performance based on consolidated revenues and operating income. Net sales of our business segments exclude intersegment sales as these activities are eliminated in consolidation.

Our segment information is as follows (in thousands):
For the years ended December 31,
 
 
 
 
 
 
2018
 
2017
 
2016
Revenues
 
 
 
 
 
Supply Chain Management Group
$
214,809

 
$
214,542

 
$
205,475

Aviation Group
145,423

 
134,809

 
133,466

Federal Services Group
336,986

 
410,762

 
352,849

Total revenues
$
697,218

 
$
760,113

 
$
691,790

 
 
 
 
 
 
Operating income:
 

 
 

 
 

Supply Chain Management Group
$
30,626

 
$
33,754

 
$
34,632

Aviation Group
11,076

 
9,695

 
12,823

Federal Services Group
15,797

 
13,419

 
7,796

Corporate expenses
(3,269
)
 
(2,543
)
 
(3,722
)
Operating income
$
54,230

 
$
54,325

 
$
51,529

 
 
 
 
 
 
Depreciation and amortization expense:
 

 
 

 
 

Supply Chain Management Group
$
7,299

 
$
6,536

 
$
6,445

Aviation Group
5,123

 
4,835

 
5,461

Federal Services Group
12,802

 
14,511

 
14,140

Total depreciation and amortization
$
25,224

 
$
25,882

 
$
26,046

 
 
 
 
 
 
Capital expenditures:
 

 
 

 
 

Supply Chain Management Group
$
802

 
$
1,376

 
$
4,195

Aviation Group
1,772

 
1,387

 
1,459

Federal Services Group
209

 
177

 
94

Corporate
334

 
373

 
1,624

Total capital expenditures
$
3,117

 
$
3,313

 
$
7,372


 
December 31,
 
2018
 
2017
Total assets:
 
 
 
Supply Chain Management Group
$
166,015

 
$
176,860

Aviation Group
316,197

 
282,738

Federal Services Group
92,098

 
102,372

Corporate
64,518

 
67,043

Total assets
$
638,828

 
$
629,013



Revenues are net of inter-segment eliminations. Corporate expenses are primarily selling, general and administrative expenses not allocated to segments. In the third quarter of 2018, we completed the sale of a contract we had been awarded by the National Institutes of Health, which resulted in a $1.7 million gain recorded within our Federal Services Group. Included in our Corporate expenses for 2016 is a charge of approximately $3.3 million for the settlement of the Heritage Litigation offset by a gain of approximately $1.4 million resulting primarily from the Maritime Administration contract close-outs. Corporate assets are primarily cash, property and equipment and investments held in separate trust.

Customer Information

Our revenues are derived from contract services performed for DoD agencies or federal civilian agencies and from the delivery of products to our clients. The USPS, U.S. Army and Army Reserve, and U.S. Navy are our largest customers. Our customers also include various other government agencies and commercial entities. Our revenue by customer is as follows for the years ended December 31, (in thousands):
 
 
Revenues by Customer
Years ended December 31,
Customer
 
2018
 
%
 
2017
 
%
 
2016
 
%
USPS
 
$
175,339

 
25.1
 
$
180,205

 
23.7
 
$
181,215

 
26.2
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Navy
 
160,952

 
23.1
 
206,644

 
27.2
 
190,155

 
27.5
U.S. Army
 
156,519

 
22.5
 
188,462

 
24.8
 
139,764

 
20.2
U.S. Air Force
 
17,023

 
2.4
 
7,123

 
0.9
 
3,482

 
0.5
Total - DoD
 
334,494

 
48.0
 
402,229

 
52.9
 
333,401

 
48.2
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Aviation
 
135,864

 
19.5
 
126,960

 
16.7
 
131,067

 
19.0
Other Commercial
 
14,742

 
2.1
 
12,498

 
1.7
 
10,721

 
1.5
Total - Commercial
 
150,606

 
21.6
 
139,458

 
18.4
 
141,788

 
20.5
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Government
 
36,779

 
5.3
 
38,221

 
5.0
 
35,386

 
5.1
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
$
697,218

 
100.0
 
$
760,113

 
100.0
 
$
691,790

 
100.0


We do not measure revenue or profit by product or service lines, either for internal management or external financial reporting purposes, because it would be impractical to do so. Products offered and services performed are determined by contract requirements and the types of products and services provided for one contract bear no relation to similar products and services provided on another contract. Products and services provided vary when new contracts begin or current contracts expire. In many cases, more than one product or service is provided under a contract or contract task order. Accordingly, cost and revenue tracking is designed to best serve contract requirements and segregating costs and revenues by product or service lines in situations for which it is not required would be difficult and costly to both us and our customers.

Geographical Information

Revenue by geography is based on the billing address of the customer. Our revenue by geographic area is as follows (in thousands):
 
 
Years ended December 31,
 
 
2018
 
2017
 
2016
United States
 
$
647,168

 
$
708,474

 
$
638,726

Other Countries (1)
 
50,050

 
51,639

 
53,064

Total revenue
 
$
697,218

 
$
760,113

 
$
691,790

(1) No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.