Annual report pursuant to Section 13 and 15(d)

BUSINESS SEGMENTS

v3.20.4
BUSINESS SEGMENTS
 12 Months Ended
Dec. 31, 2020
BUSINESS SEGMENTS  
BUSINESS SEGMENTS

NOTE O - BUSINESS SEGMENTS

Consistent  with how our chief operating  decision maker (Chairman and Chief Executive Officer) evaluates performance and utilizes gross profit as a profitability measure, we report our activities in two business segments:

·

Asset Management Solutions - comprised of activities to extract value from strategic asset acquisitions through  leasing, trading, or disassembling for product  sales

·

Tech Ops - comprised of MRO activities; and product  sales of internally developed engineered solutions and other serviceable products.

The Asset Management Solutions segment provides short-term and long-term leasing solutions of aircraft and jet engines to passenger and cargo operators worldwide. Assets considered to be at or near the end of their useful lives, supplied by our leasing portfolio or acquisitions, are analyzed for return maximization to assess whether they will be traded as whole assets or disassembled and sold as individual spare parts and components.

The Tech Ops segment consists of aftermarket support  and services businesses that provide maintenance support  for aircraft  and aircraft  components, and sale of engineered solutions. Our MRO  business also engages in longer term projects such as aircraft modifications, cargo conversions of wide-body aircraft,  and aircraft storage. The segment also includes MRO of landing gear, thrust  reversers, and other components. Cost of sales consists principally of the cost of product,  direct labor, and overhead. Our engineered solutions revenues consist of sales of products  internally developed as permitted  by Supplemental Type Certificates issued by the FAA. These products  are proprietary in nature  and function as non-original equipment manufacturer solutions to airworthiness directives and other technical challenges for operators. In order to develop these products, we engage in research and development activities. Periodically, our Tech Ops division will engage in the repair and sale of used serviceable materials through  their ability to overhaul existing inventory.

The accounting  policies for the segments are the same as those described in Note B. Gross Profit is calculated by subtracting cost of sales from sales. The assets and certain expenses related to corporate activities are not allocated to the segments. Our reportable segments are aligned principally around the differences in products  and services. The segment reporting  excludes the allocation  of selling, general and administrative expenses, interest expense and income tax expense.

Selected financial information for each segment is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

    

Year ended December 31,

 

 

2020

    

2019

    

2018

Revenues

 

 

  

 

 

  

 

 

  

Asset Management Solutions

 

 

  

 

 

  

 

 

  

Aircraft

 

$

53,639,000

 

$

98,736,000

 

$

95,353,000

Engine

 

 

45,072,000

 

 

123,088,000

 

 

149,819,000

 

 

$

98,711,000

 

$

221,824,000

 

$

245,172,000

Tech Ops

 

 

  

 

 

  

 

 

  

MRO Services

 

$

103,899,000

 

$

69,389,000

 

$

38,779,000

Product Sales

 

 

6,328,000

 

 

12,988,000

 

 

6,781,000

 

 

 

110,227,000

 

 

82,377,000

 

 

45,560,000

Total

 

$

208,938,000

 

$

304,201,000

 

$

290,732,000

 

 

 

 

 

 

 

 

 

 

 

 

    

2020

    

2019

    

2018

Gross Profit

 

 

  

 

 

  

 

 

  

Asset Management Solutions

 

 

  

 

 

  

 

 

  

Aircraft

 

$

11,914,000

 

$

27,592,000

 

$

21,708,000

Engine

 

 

17,383,000

 

 

40,113,000

 

 

41,949,000

 

 

$

29,297,000

 

$

67,705,000

 

$

63,657,000

Tech Ops

 

 

  

 

 

  

 

 

  

MRO Services

 

$

21,883,000

 

$

11,125,000

 

$

6,818,000

Product Sales

 

 

1,609,000

 

 

6,219,000

 

 

1,694,000

 

 

 

23,492,000

 

 

17,344,000

 

 

8,512,000

Total

 

$

52,789,000

 

$

85,049,000

 

$

72,169,000

 

 

 

 

 

 

 

 

 

    

2020

    

2019

Total Assets

 

 

  

 

 

  

Asset Management Solutions

 

$

277,016,000

 

$

254,324,000

Tech Ops

 

 

108,622,000

 

 

88,129,000

Corporate

 

 

3,492,000

 

 

1,531,000

 

 

$

389,130,000

 

$

343,984,000

 

 

 

 

 

 

 

 

 

 

 

 

    

2020

    

2019

 

2018

Total Depreciation and Amortization Expense

 

 

  

 

 

  

 

 

 

Asset Management Solutions

 

$

21,210,000

 

$

28,579,000

 

$

27,611,000

Tech Ops

 

 

2,600,000

 

 

1,301,000

 

 

865,000

Corporate

 

 

413,000

 

 

201,000

 

 

1,350,000

 

 

$

24,223,000

 

$

30,081,000

 

$

29,826,000

Total Capital Expenditures

 

 

 

 

 

 

 

 

 

Asset Management Solutions

 

$

5,128,000

 

$

36,479,000

 

$

7,623,000

Tech Ops

 

 

1,965,000

 

 

1,500,000

 

 

1,033,000

Corporate

 

 

172,000

 

 

149,000

 

 

168,000

 

 

$

7,265,000

 

$

38,128,000

 

$

8,824,000

 

The following table reconciles segment gross profit to net income from continuing  operations for the years ended December 31:

 

 

 

 

 

 

 

 

 

 

 

 

    

2020

    

2019

    

2018

Segment gross profit

 

$

52,789,000

 

$

85,049,000

 

$

72,169,000

Selling, general and administrative expenses

 

 

(55,635,000)

 

 

(59,814,000)

 

 

(46,612,000)

CARES Act Proceeds

 

 

12,693,000

 

 

 —

 

 

 —

Transaction costs

 

 

1,436,000

 

 

(3,176,000)

 

 

(51,000)

Interest expense, net

 

 

(1,645,000)

 

 

(3,007,000)

 

 

(2,375,000)

Other income, net

 

 

494,000

 

 

611,000

 

 

367,000

Income tax benefit

 

 

(1,649,000)

 

 

(4,164,000)

 

 

3,227,000

Net income from continuing operations

 

$

8,483,000

 

$

15,499,000

 

$

26,725,000

 

The following table presents revenues based on the customers’ geographic location and long-lived assets located in the United States, our country of domicile, for the years ended December 31,

 

 

 

 

 

 

 

 

 

 

 

Revenues

    

2020

    

2019

    

2018

Domestic

 

$

92,837,000

 

$

105,083,000

 

$

135,892,000

Foreign

 

 

116,101,000

 

 

199,118,000

 

 

154,840,000

Total revenues

 

$

208,938,000

 

$

304,201,000

 

$

290,732,000

 

 

 

 

 

 

 

 

Long-lived assets

    

2020

    

2019

Domestic

 

$

108,796,000

 

$

113,966,000

Foreign

 

 

34,111,000

 

 

39,626,000

Total long-lived assets

 

$

142,907,000

 

$

153,592,000

 

As of December 31, 2019, the Company  had one customer representing 10% or more of total sales. Total sales to that customer amounted to $49,085,000 and was included in the asset management segment. As of December 31, 2018, the Company had one customer representing 10% or more of total sales. Total sales to that customer amounted to $53,687,000 and was included in the asset management segment. No such concentrations existed for the year ended December 31, 2020.

Intersegment sales includes amounts  invoiced by a segment for work performed  for another  segment. Amounts  are based on actual work performed  or products  sold and agreed-upon pricing which is intended to be reflective of the contribution made by the supplying business segment. All intersegment  transactions have been eliminated upon consolidation. Intersegment revenue is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

    

Year ended December 31,

 

 

2020

 

2019

    

2018

Asset Management Solutions

 

$

3,346,000

 

$

334,000

 

$

233,000

Tech Ops

 

 

1,650,000

 

 

2,015,000

 

 

4,055,000

Total intersegment revenues

 

$

4,996,000

 

$

2,349,000

 

$

4,288,000