Quarterly report pursuant to Section 13 or 15(d)

Business Segments and Customer Information

v3.21.2
Business Segments and Customer Information
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Business Segments and Customer Information Business Segments and Customer Information
Business Segments

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

Aviation – Distribution and MRO Services
Our Aviation segment provides aftermarket repair and distribution services to commercial, business and general aviation, cargo, military and defense, and rotorcraft customers globally. Core services include parts distribution, engine accessory maintenance, MRO services, rotable exchange and supply chain services.

Fleet – Distribution and Fleet Services
Our Fleet segment provides parts, inventory management, e-commerce fulfillment, logistics, supply chain support and other services to support the commercial aftermarket medium- and heavy-duty truck market, the United States Postal Service ("USPS"), and the DoD. Core services include vehicle parts distribution, sourcing, IT solutions, customized fleet logistics, warehousing, kitting, just-in-time supply chain management, alternative product sourcing, and engineering and technical support.

Federal and Defense – Logistics and Sustainment Services
Our Federal and Defense segment provides aftermarket MRO and logistics services to improve operational readiness and extend the life cycle of military vehicles, ships and aircraft for the DoD, federal agencies and international defense customers. Core services include base operations support; procurement; supply chain management; vehicle, maritime and aircraft sustainment services; IT services and energy consulting.
The operating segments reported below are our segments 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. Corporate expenses are primarily selling, general and administrative expenses not allocated to segments. Our segment information is as follows (in thousands):

  Three months ended September 30, Nine months ended September 30,
  2021 2020 2021 2020
Revenues:
Aviation $ 73,124  $ 36,218  $ 165,010  $ 126,519 
Fleet 60,268  63,719  173,072  188,145 
Federal and Defense 67,190  65,568  202,593  196,974 
Total revenues $ 200,582  $ 165,505  $ 540,675  $ 511,638 
Operating income (loss):        
Aviation $ 3,719  $ 1,586  $ (18,885) $ (34,680)
Fleet 5,387  6,589  15,128  20,509 
Federal and Defense 5,386  6,746  17,410  18,441 
Corporate/unallocated expenses (600) (736) (2,872) (2,261)
Operating income $ 13,892  $ 14,185  $ 10,781  $ 2,009 

Our Aviation segment operating income for the first nine months of 2021 was reduced by $23.7 million primarily attributable to an inventory reserve expense which was recorded in the second quarter of 2021. The inventory reserve increase was primarily due to excess quantities of inventory at levels higher than our updated forecasts of future demand. The continued effects of the COVID-19 pandemic on commercial air travel for our region-specific distribution programs, entered into prior to 2019, resulted in lowered demand assumptions.

Customer Information

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 (in thousands):
  Three months ended September 30, Nine months ended September 30,
Customer 2021 % 2020 % 2021 % 2020 %
Commercial $ 94,163  47  $ 48,974  30  $ 218,544  41  $ 156,430  31 
DoD 60,862  30  56,935  34  173,501  32  185,956  36 
Other government 45,557  23  59,596  36  148,630  27  169,252  33 
Total $ 200,582  100  $ 165,505  100  $ 540,675  100  $ 511,638  100