VSE Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Revenue

Revenue

6 Months Ended

Jun. 30, 2018

Revenue from Contract with Customer [Abstract]

Disaggregated Revenue

Our revenues are derived from contract services performed for United States Department of Defense ("DoD") agencies or federal civilian agencies and from the delivery of products to our clients. Our customers also include various other government agencies and commercial entities.

A summary of revenues for our operating groups by customer for the three and six months ended June 30, 2018 is as follows (in thousands):



	Three months ended June 30, 2018
Customer	Supply Chain Management		Aviation		Federal Services		Total
U.S. Postal Services	$	43,089	$	—	$	—	$	43,089
DoD	7,525		1,025		73,637		82,187
Commercial	3,413		34,037		31		37,481
Other Government	236		742		6,659		7,637
	$	54,263	$	35,804	$	80,327	$	170,394



	Six months ended June 30, 2018
Customer	Supply Chain Management		Aviation		Federal Services		Total
U.S. Postal Services	$	87,120	$	—	$	—	$	87,120
DoD	15,701		2,240		151,899		169,840
Commercial	6,799		65,572		233		72,604
Other Government	507		742		16,478		17,727
	$	110,127	$	68,554	$	168,610	$	347,291

A summary of revenues for our operating groups by contract type for the three and six months ended June 30, 2018 is as follows (in thousands):



	Three months ended June 30, 2018
Contract Type	Supply Chain Management		Aviation		Federal Services		Total
Cost-type	$	—	$	701	$	41,801	$	42,502
Fixed-price	54,263		19,869		17,204		91,336
Time and materials	—		15,234		21,322		36,556
Total revenues	$	54,263	$	35,804	$	80,327	$	170,394



	Six months ended June 30, 2018
Contract Type	Supply Chain Management		Aviation		Federal Services		Total
Cost-type	$	—	$	1,098	$	92,922	$	94,020
Fixed-price	110,127		39,373		32,343		181,843
Time and materials	—		28,083		43,345		71,428
Total revenues	$	110,127	$	68,554	$	168,610	$	347,291

Contract Balances

Billed receivables, unbilled receivables (contract assets), and contract liabilities are the results of revenue recognition, customer billing, and timing of payment receipts. Billed receivables, net, represent unconditional rights to consideration under the terms of the contract and include amounts billed and currently due from our customers. Unbilled receivables represent our right to consideration in exchange for goods or services that we have transferred to the customer prior to us having the right to payment for such goods or services. Contract liabilities are recorded when customers remit contractual cash payments in advance of us satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period of time.

We present our unbilled receivables and contract liabilities on a contract-by-contract basis. If a contract liability exists, it is netted against the unbilled receivables balance for that contract. Unbilled receivables decreased from $47.6 million at adoption of ASC 606 on January 1, 2018 to $38.0 million at June 30, 2018, primarily due to billings in excess of revenue recognized. Contract liabilities, which are included in accrued expenses and other current liabilities in our consolidated balance sheet, decreased from $9.8 million at adoption of ASC 606 on January 1, 2018 to $3.9 million at June 30, 2018, primarily due to revenue recognized in excess of advance payments received. For the three and six months ended June 30, 2018, we recognized revenue of $1.2 million and $7.7 million that was previously included in the beginning balance of contract liabilities.

Performance Obligations

Our performance obligations are satisfied over time as work progresses or at a point in time. Revenues from products and services transferred to customers over time accounted for approximately 57% of our revenues for the three and six months ended June 30, 2018, primarily related to revenues in our Federal Services Group and for MRO services in our Aviation Group. Revenues from products and services transferred to customers at a point in time accounted for approximately 43% of our revenues for the three and six months ended June 30, 2018. The majority of our revenue recognized at a point in time is for the sale of vehicle and aircraft parts in our Supply Chain Management and Aviation groups.

As of June 30, 2018, the aggregate amount of transaction prices allocated to unsatisfied or partially unsatisfied performance obligations was $339 million. Performance obligations expected to be satisfied within one year and greater than one year are 96% and 4%, respectively. We have applied the practical expedient for certain parts sales and MRO services to exclude the amount of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which we recognize revenue in proportion to the amount we have the right to invoice for services performed.

During the six months ended June 30, 2018, revenue recognized from performance obligations related to prior periods was not material.