Quarterly report pursuant to Section 13 or 15(d)

Business Segments and Customer Information

v3.20.2
Business Segments and Customer Information
 9 Months Ended
Sep. 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 September 30, Nine months ended September 30,
  2020 2019 2020 2019
Revenues:
Aviation $ 36,218  $ 59,186  $ 126,519  $ 163,553 
Fleet 63,719  55,369  188,145  160,878 
Federal and Defense 65,568  83,771  196,974  232,925 
Total revenues $ 165,505  $ 198,326  $ 511,638  $ 557,356 
Operating income (loss):        
Aviation $ 1,586  $ 6,568  $ (34,680) $ 14,820 
Fleet 6,589  7,843  20,509  22,388 
Federal and Defense 6,746  4,524  18,441  12,968 
Corporate/unallocated expenses (736) (1,720) (2,261) (4,732)
Operating income $ 14,185  $ 17,215  $ 2,009  $ 45,444 

Aviation segment operating income for the nine months ended September 30, 2020 was reduced by $8.2 million as a result of the loss on the sale of our Prime Turbines 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 in the second quarter of 2020. 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 September 30, Nine months ended September 30,
Customer 2020 % 2019 % 2020 % 2019 %
DoD $ 56,935  34  $ 85,053  43  $ 185,956  36  $ 222,834  40 
Other government 59,596  36  50,419  25  169,252  33  158,933  29 
Commercial 48,974  30  62,854  32  156,430  31  175,589  31 
Total $ 165,505  100  $ 198,326  100  $ 511,638  100  $ 557,356  100