Annual report pursuant to Section 13 and 15(d)

Business Segments and Customer Information

v3.20.4
Business Segments and Customer Information
 12 Months Ended
Dec. 31, 2020
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 – Distribution and MRO Services
Our Aviation segment (formerly Aviation Group) provides aftermarket repair and distribution services to commercial, cargo, business and general aviation, 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 (formerly Supply Chain Management Group) 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 United States Department of Defense ("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 (formerly Federal Services Group) 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 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 inter-segment sales as these activities are eliminated in consolidation.
Our segment information is as follows (in thousands):
For the years ended December 31,
  2020 2019 2018
Revenues
Aviation $ 165,070  $ 224,546  $ 145,423 
Fleet 242,170  214,520  214,809 
Federal and Defense 254,419  313,561  336,986 
Total revenues $ 661,659  $ 752,627  $ 697,218 
Operating income (loss):      
Aviation $ (35,513) $ 17,901  $ 11,076 
Fleet 26,659  29,819  30,626 
Federal and Defense 26,309  18,144  15,797 
Corporate expenses (3,532) (5,607) (3,269)
Operating income $ 13,923  $ 60,257  $ 54,230 
Depreciation and amortization expense:      
Aviation $ 10,874  $ 12,546  $ 5,123 
Fleet 10,260  11,085  7,299 
Federal and Defense 3,001  3,296  12,802 
Total depreciation and amortization $ 24,135  $ 26,927  $ 25,224 
Capital expenditures:      
Aviation $ 3,445  $ 8,396  $ 1,772 
Fleet 675  1,076  802 
Federal and Defense 148  58  209 
Corporate 159  130  334 
Total capital expenditures $ 4,427  $ 9,660  $ 3,117 

  December 31,
  2020 2019
Total assets:
Aviation $ 478,861  $ 522,446 
Fleet 161,088  170,142 
Federal and Defense 66,808  88,966 
Corporate 73,324  64,310 
Total assets $ 780,081  $ 845,864 

Revenues are net of inter-segment eliminations. Corporate expenses are primarily selling, general and administrative expenses not allocated to segments. Corporate assets are primarily cash, property and equipment and investments held in separate trust.

In 2020 and 2019, we allocated depreciation and amortization expense to each segment based on the segment in which each asset was utilized. In 2018, 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 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 and Defense segment of $8.1 million, with a corresponding increase for Aviation segment and Fleet segment of $3.7 million and $4.4 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):
Years ended December 31,
Source of Revenues 2020 % 2019 % 2018 %
DoD $ 236,397  36  $ 304,334  41  $ 334,494  48 
Other government 216,957  33  205,775  27  212,118  30 
Commercial 208,305  31  242,518  32  150,606  22 
Total Revenues $ 661,659  100  $ 752,627  100  $ 697,218  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,
  2020 2019 2018
United States $ 598,142  $ 659,451  $ 647,168 
Other Countries (1)
63,517  93,176  50,050 
Total revenue $ 661,659  $ 752,627  $ 697,218 
(1) No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.