Segment Information

3 Months Ended

Mar. 31, 2020

Our principal operations are organized into four reportable segments: Warehouse, Third-party managed, Transportation and Other.

•

Warehouse. Our primary source of revenues consists of rent and storage and warehouse services fees. Our rent and storage and warehouse services revenues are the key drivers of our financial performance. Rent and storage revenues consist of recurring, periodic charges related to the storage of frozen and perishable food and other products in our warehouses. We also provide these customers with a wide array of handling and other warehouse services, such as (1) receipt, handling and placement of products into our warehouses for storage and preservation, (2) retrieval of products from storage upon customer request, (3) blast freezing, which involves the rapid freezing of non-frozen products, including individual quick freezing for agricultural produce and seafood, (4) case-picking, which involves selecting product cases to build customized pallets, (5) kitting and repackaging, which involves assembling custom product packages for delivery to retailers and consumers, and labeling services, (6) order assembly and load consolidation, (7) exporting and importing support services, (8) container handling, (9) cross-docking, which involves transferring inbound products to outbound trucks utilizing our warehouse docks without storing them in our warehouses, and (10) government-approved temperature-controlled storage and inspection services. We may charge our customers in advance for storage and outbound handling fees. Cost of operations for our warehouse segment consists of power, other facilities costs, labor and other services costs.

•

Third-party managed. We receive management and incentive fees, as well as reimbursement of substantially all expenses, for warehouses and logistics services that we manage on behalf of third-party owners/customers. Cost of operations for our third-party managed segment are reimbursed on a pass-through basis (typically within two weeks), with all reimbursements, plus an applicable mark-up, recognized as revenues under the relevant accounting guidance.


•	Transportation. We charge transportation fees, including fuel surcharges, to our customers for whom we arrange the transportation of their products. Cost of operations for our transportation segment consist primarily of third-party carrier charges, which are impacted by factors affecting those carriers.


•	Other. In addition to our primary business segments, we own a limestone quarry in Carthage, Missouri. Revenues are generated from the sale of limestone mined at our quarry. Cost of operations for our quarry consist primarily of labor, equipment, fuel and explosives.

Our reportable segments are strategic business units separated by service offerings. Each reportable segment is managed separately and requires different operational and marketing strategies. The accounting polices used in the preparation of our reportable segments financial information are the same as those used in the preparation of its condensed consolidated financial statements.

Our chief operating decision maker uses revenues and segment contribution to evaluate segment performance. We calculate segment contribution as earnings before interest expense, taxes, depreciation and amortization, and exclude selling, general and administrative expense, acquisition, litigation and other expense, impairment of long-lived assets, gain or loss on sale of real estate and all components of non-operating other income and expense. Selling, general and administrative functions support all the business segments. Therefore, the related expense is not allocated to segments as the chief operating decision maker does not use it to evaluate segment performance.

Segment contribution is not a measurement of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our segment contribution as an alternative to operating income determined in accordance with GAAP.

The following table presents segment revenues and contributions with a reconciliation to income before income tax for the three months ended March 31, 2020 and 2019 (in thousands):



	Three Months Ended March 31,
	2020			2019
Segment revenues:
Warehouse	$	381,068		$	289,615
Third-party managed	64,921			64,136
Transportation	35,917			37,096
Other	2,163			2,232
Total revenues	484,069			393,079

Segment contribution:
Warehouse	126,773			90,819
Third-party managed	3,769			3,259
Transportation	4,805			4,356
Other	55			244
Total segment contribution	135,402			98,678

Reconciling items:
Depreciation, depletion and amortization	(51,604		)	(30,096		)
Selling, general and administrative expense	(36,893		)	(31,117		)
Acquisition, litigation and other	(1,688		)	(8,493		)
Impairment of long-lived assets	—			(12,555		)
Gain from sale of real estate	2,461			—
Interest expense	(23,870		)	(21,576		)
Interest income	587			1,003
Loss on debt extinguishment and modifications	(781		)	—
Foreign currency exchange (loss) gain	(492		)	60
Other income (expense), net	871			(167		)
(Loss) gain from investments in partially owned entities	(27		)	122
Income (loss) before income tax (expense) benefit	$	23,966		$	(4,141	)

The following table details our long-lived assets by reportable segments, with a reconciliation to total assets reported for each of the periods presented in the accompanying Condensed Consolidated Balance Sheets.



	March 31, 2020		December 31, 2019
	(In thousands)
Assets:
Warehouse	$	3,979,641	$	3,684,391
Managed	44,415		47,867
Transportation	45,174		50,666
Other	13,506		13,467
Total segments assets	4,082,736		3,796,391

Reconciling items:
Corporate assets	397,615		374,292
Investments in partially owned entities	23,041		—
Total reconciling items	420,656		374,292
Total assets	$	4,503,392	$	4,170,683