Business Segment Information

12 Months Ended

May 31, 2021

Business Segment Information

Business Segment Information

14. Business Segment Information

Segment Reporting

Consistent with how our chief operating decision making officer (Chief Executive Officer) evaluates performance and the way we are organized internally, we report our activities in two segments:  Aviation Services comprised of supply chain and MRO activities and Expeditionary Services comprised of manufacturing activities.

The Aviation Services segment consists of aftermarket support and services offerings that provide spare parts and maintenance support for aircraft operated by our commercial and government/defense customers.  Sales in the Aviation Services segment are derived from the sale and lease of a wide variety of new, overhauled and repaired engine and airframe parts and components to the commercial aviation and government and defense markets.  We provide customized inventory supply chain management, performance-based logistics programs, customer fleet management and operations, and aircraft component repair management services.  The segment also includes repair, maintenance and overhaul of aircraft, landing gear and components.  Cost of sales consists principally of the cost of product, direct labor, and overhead.

The Expeditionary Services segment consists of primarily manufacturing operations with sales derived from the design and manufacture of pallets, shelters, and containers used to support the U.S. military’s requirements for a mobile and agile force including engineering, design, and system integration services for specialized command and control systems.  Cost of sales consists principally of the cost of material to manufacture products, direct labor and overhead.

The accounting policies for the segments are the same as those described in Note 1.  Our chief operating decision making officer (Chief Executive Officer) evaluates performance based on the reportable segments and utilizes gross profit as a primary profitability measure.  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 differences in products and services.

14. Business Segment Information (Continued)

Selected financial information for each segment is as follows:

	For the Year Ended May 31,
	2021		2020		2019
Net sales:
Aviation Services	$	1,553.7	$	1,964.2	$	1,920.6
Expeditionary Services		98.6		107.8		131.2
	$	1,652.3	$	2,072.0	$	2,051.8

	For the Year Ended May 31,
	2021		2020		2019
Gross profit:
Aviation Services	$	263.2	$	267.3	$	313.6
Expeditionary Services		12.7		1.9		16.2
	$	275.9	$	269.2	$	329.8

	May 31,
	2021		2020
Total assets:
Aviation Services	$	1,357.2	$	1,502.5
Expeditionary Services		73.0		103.6
Corporate and discontinued operations		109.5		472.9
	$	1,539.7	$	2,079.0

	For the Year Ended May 31,
	2021		2020		2019
Capital expenditures:
Aviation Services	$	8.1	$	16.9	$	15.1
Expeditionary Services		3.1		5.4		1.4
Corporate		0.1		1.3		0.9
Total continuing operations		11.3		23.6		17.4
Discontinued operations		—		—		0.5
	$	11.3	$	23.6	$	17.9

	For the Year Ended May 31,
	2021		2020		2019
Depreciation and amortization:1
Aviation Services	$	33.7	$	39.2	$	37.5
Expeditionary Services		2.3		3.7		4.1
Corporate		9.5		8.1		14.7
	$	45.5	$	51.0	$	56.3

1 Includes amortization of stock-based compensation.

14. Business Segment Information (Continued)

The following table reconciles segment gross profit to income from continuing operations before provision for income taxes.

	For the Year Ended May 31,
	2021		2020		2019
Segment gross profit	$	275.9	$	269.2	$	329.8
Provision for doubtful accounts		(8.5)		(5.4)		(15.8)
Selling, general and administrative		(182.4)		(220.6)		(215.4)
Earnings (Loss) from joint ventures		0.2		(1.9)		(0.3)
Loss on sale of business		(20.2)		—		—
Other income (expenses), net		4.3		(2.1)		(0.8)
Interest expense		(5.0)		(9.3)		(9.5)
Interest income		0.2		0.5		1.0
Income from continuing operations before provision for income taxes	$	64.5	$	30.4	$	89.0

The U.S. Department of Defense, U.S. Department of State, other U.S. government agencies and their contractors are our only customers representing 10% or more of total sales in any of the last three fiscal years.  Sales by segment for these customers are as follows:

	For the Year Ended May 31,
	2021			2020			2019
Aviation Services	$	657.0		$	588.7		$	455.9
Expeditionary Services		81.8			79.5			90.3
	$	738.8		$	668.2		$	546.2
Percentage of total sales		44.7	%		32.2	%		26.6	%

Sales across the major customer markets for each of our operating segments for the fiscal years ended May 31, 2021, 2020 and 2019 were as follows:

	For the Year Ended May 31,
	2021		2020		2019
Aviation Services:
Commercial	$	793.9	$	1,268.9	$	1,342.3
Government and defense		759.8		695.3		578.3
	$	1,553.7	$	1,964.2	$	1,920.6
Expeditionary Services:
Commercial	$	12.5	$	24.3	$	31.6
Government and defense		86.1		83.5		99.6
	$	98.6	$	107.8	$	131.2

14. Business Segment Information (Continued)

Sales by type of product/service was as follows:

	For the Year Ended May 31,
	2021		2020		2019
Aviation supply chain	$	1,172.7	$	1,434.3	$	1,395.2
Maintenance, repair and overhaul services		381.0		529.9		525.4
Mobility products		98.6		107.8		131.2
	$	1,652.3	$	2,072.0	$	2,051.8

Geographic Data

Sales by geographic region for the fiscal years ended May 31, 2021, 2020 and 2019 were as follows:

	For the Year Ended May 31,
	2021		2020		2019
Aviation Services:
North America	$	1,255.7	$	1,505.6	$	1,426.8
Europe/Africa		207.5		330.8		323.4
Other		90.5		127.8		170.4
	$	1,553.7	$	1,964.2	$	1,920.6
Expeditionary Services:
North America	$	95.9	$	98.4	$	124.1
Europe/Africa		2.6		9.0		5.8
Other		0.1		0.4		1.3
	$	98.6	$	107.8	$	131.2

	May 31,
	2021		2020
Long-lived assets:
United States	$	419.1	$	423.9
Europe		83.1		102.1
Other		100.5		114.3
	$	602.7	$	640.3

Sales to unaffiliated customers in foreign countries (including sales through foreign sales offices of domestic subsidiaries) were approximately $370.5 million (22.4% of total sales), $591.8 million (28.6% of total sales) and $661.8 million (32.3% of total sales) in fiscal 2021, 2020 and 2019, respectively.