Quarterly report pursuant to Section 13 or 15(d)

Business Segments and Customer Information

v3.20.2
Business Segments and Customer Information
 6 Months Ended
Jun. 30, 2020
Segment Reporting [Abstract]  
Business Segments and Customer Information Business Segments and Customer Information

Business Segments

The following business segments names were changed effective January 1, 2020 as indicated below. The organization and financial reporting structure was not impacted by this change.

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

Aviation – Distribution and Maintenance, Repair and Overhaul ("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 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. Our segment information is as follows (in thousands):
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenues:
 
 
 
 
 
 
 
 
Aviation
 
$
32,221

 
$
54,997

 
$
90,301

 
$
104,367

Fleet
 
71,222

 
53,805

 
124,426

 
105,509

Federal and Defense
 
65,272

 
80,309

 
131,406

 
149,154

Total revenues
 
$
168,715

 
$
189,111

 
$
346,133

 
$
359,030

 
 
 
 
 
 
 
 
 
Operating (loss) income:
 
 

 
 

 
 

 
 

Aviation
 
$
(34,387
)
 
$
5,204

 
$
(36,267
)
 
$
8,252

Fleet
 
7,014

 
7,557

 
13,920

 
14,545

Federal and Defense
 
6,772

 
5,059

 
11,696

 
8,444

Corporate/unallocated expenses
 
(1,309
)
 
(1,404
)
 
(1,525
)
 
(3,012
)
Operating (loss) income
 
$
(21,910
)
 
$
16,416

 
$
(12,176
)
 
$
28,229



Our Aviation segment operating income for the second quarter of 2020 was reduced by $33.7 million as a result of the goodwill and intangible asset impairment loss and by $678 thousand as a result of the loss on the asset sale of CT Aerospace inventory. See Note (3) "Divestitures" and Note (9) "Goodwill and Intangible Assets" for additional details regarding these items.

Aviation segment operating income for the six months ended June 30, 2020 was reduced by $8.2 million as a result of the loss on the sale of our Prime Turbines LLC subsidiary and certain related inventory assets in the first quarter of 2020 plus the loss on CT Aerospace inventory sale in the second quarter of 2020 and by the goodwill and intangible asset impairment loss of $33.7 million. The decreases were offset by a gain of $1.1 million realized upon the completion of a sale-leaseback transaction for a property we owned in Miami, Florida during the first quarter of 2020.

In the first quarter of 2020, we closed on a sale-leaseback agreement involving land and an office building utilized by our Aviation segment to conduct operations in Miami, Florida. Under the agreement, the land and building, with a net book value of $1.3 million was sold for a sale price of $2.6 million and leased back under a 6-year term operating lease commencing upon the closing of the transaction. The lease provides us with an option to extend the lease upon the expiration of its term in April 2026 for two additional five-year periods. In connection with the sale and leaseback transaction, we recognized the gain after incurring $200 thousand in selling expenses.

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 (in thousands):
 
 
Three months ended June 30,
 
Six months ended June 30,
Customer
 
2020
 
%
 
2019
 
%
 
2020
 
%
 
2019
 
%
DoD
 
$
64,887

 
38
 
$
75,080

 
40
 
$
129,021

 
37
 
$
137,781

 
38
Other government
 
63,666

 
38
 
54,855

 
29
 
109,656

 
32
 
108,514

 
31
Commercial
 
40,162

 
24
 
59,176

 
31
 
107,456

 
31
 
112,735

 
31
Total
 
$
168,715

 
100
 
189,111

 
100
 
$
346,133

 
100
 
359,030

 
100