Annual report pursuant to Section 13 and 15(d)

Business Segments and Customer Information

v3.20.1
Business Segments and Customer Information
12 Months Ended
Dec. 31, 2019
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]  
Business Segments and Customer Information
Business Segments and Customer Information

Segment Information

Management of our business operations is conducted under three reportable operating segments:

Aviation Group – Our Aviation Group provides international parts supply and distribution, supply chain solutions, component and engine accessory repair services supporting global aftermarket commercial and business and general aviation customers through product distribution and MRO services.

Supply Chain Management Group – Our Supply Chain Management Group provides parts supply, inventory management, e-commerce fulfillment, logistics, data management, and other services to assist aftermarket United States Postal Service ("USPS"), DoD and aftermarket commercial high duty-cycle truck and fleet customers.

Federal Services Group – Our Federal Services Group provides aftermarket refurbishment and sustainment services to extend and maintain the life cycle of military vehicles, ships, and aircraft for the DoD. The group provides foreign military sales services, engineering, logistics, maintenance, configuration management, prototyping, technology, and field support services to the DoD and other customers. We also provide energy consulting services and healthcare IT and IT data solutions.
 
The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by our Chief Executive Officer in deciding how to allocate resources and in assessing performance. 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,
 
2019
 
2018
 
2017
Revenues
 
 
 
 
 
Aviation Group
$
224,546

 
$
145,423

 
$
134,809

Supply Chain Management Group
214,520

 
214,809

 
214,542

Federal Services Group
313,561

 
336,986

 
410,762

Total revenues
$
752,627

 
$
697,218

 
$
760,113

 
 
 
 
 
 
Operating income:
 

 
 

 
 

Aviation Group
$
17,901

 
$
11,076

 
$
9,695

Supply Chain Management Group
29,819

 
30,626

 
33,754

Federal Services Group
18,144

 
15,797

 
13,419

Corporate expenses
(5,607
)
 
(3,269
)
 
(2,543
)
Operating income
$
60,257

 
$
54,230

 
$
54,325

 
 
 
 
 
 
Depreciation and amortization expense:
 

 
 

 
 

Aviation Group
$
12,546

 
$
5,123

 
$
4,835

Supply Chain Management Group
11,085

 
7,299

 
6,536

Federal Services Group
3,296

 
12,802

 
14,511

Total depreciation and amortization
$
26,927

 
$
25,224

 
$
25,882

 
 
 
 
 
 
Capital expenditures:
 

 
 

 
 

Aviation Group
$
8,396

 
$
1,772

 
$
1,387

Supply Chain Management Group
1,076

 
802

 
1,376

Federal Services Group
58

 
209

 
177

Corporate
130

 
334

 
373

Total capital expenditures
$
9,660

 
$
3,117

 
$
3,313



 
December 31,
 
2019
 
2018
Total assets:
 
 
 
Aviation Group
$
522,446

 
$
316,197

Supply Chain Management Group
170,142

 
166,015

Federal Services Group
88,966

 
92,098

Corporate
64,310

 
64,518

Total assets
$
845,864

 
$
638,828



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. Corporate assets are primarily cash, property and equipment and investments held in separate trust.

In 2019, we allocated depreciation and amortization expense to each segment based on the segment in which each asset was utilized. In 2018 and 2017, the allocation method for certain amortization expenses was based on each segment’s percentage of overall cost. The primary reason for the change is to allocate depreciation and amortization expense to a specific segment depending on the asset deployment. Depreciation and amortization expense by segment for 2018 and 2017 was not recast for these allocation changes, and this change did not impact our previously reported consolidated financial results. The impact for 2018, under the new allocation method, would have been a decrease in depreciation and amortization expense for the Federal Services Group of $8.1 million, with a corresponding increase for Aviation Group and Supply Chain Group of $3.7 million and $4.4 million, respectively. The impact for 2017 would have been a decrease in depreciation and amortization expense for the Federal Services Group of $9.1 million, with a corresponding increase for Aviation Group and Supply Chain Group of $4.1 million and $5.0 million, respectively.

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 commercial 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):
 
 
(in thousands)
Years ended December 31,
Source of Revenues
 
2019
 
%
 
2018
 
%
 
2017
 
%
DoD
 
$
304,334

 
41
 
$
334,494

 
48
 
$
402,229

 
53
Other government
 
205,775

 
27
 
212,118

 
30
 
218,426

 
29
Commercial
 
242,518

 
32
 
150,606

 
22
 
139,458

 
18
Total Revenues
 
$
752,627

 
100
 
$
697,218

 
100
 
$
760,113

 
100

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 are 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,
 
 
2019
 
2018
 
2017
United States
 
$
659,451

 
$
647,168

 
$
708,474

Other Countries (1)
 
93,176

 
50,050

 
51,639

Total revenue
 
$
752,627

 
$
697,218

 
$
760,113

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