Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 22, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity File Number | 000-03676 | |
Document Transition Report | false | |
Entity Registrant Name | VSE CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 54-0649263 | |
Entity Address, Address Line One | 6348 Walker Lane | |
Entity Address, City or Town | Alexandria, | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 22310 | |
City Area Code | 703 | |
Local Phone Number | 960-4600 | |
Title of 12(b) Security | Common Stock, par value $0.05 per share | |
Trading Symbol | VSEC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Central Index Key | 0000102752 | |
Current Fiscal Year End Date | --12-31 | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 11,050,996 |
Unaudited Consolidated Balance
Unaudited Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 551 | $ 734 |
Receivables, net | 59,135 | 70,630 |
Unbilled receivables, net | 26,953 | 46,279 |
Inventories, net | 230,816 | 218,627 |
Other current assets | 24,874 | 19,071 |
Total current assets | 342,329 | 355,341 |
Property and equipment, net | 36,264 | 43,465 |
Intangible assets, net | 107,754 | 132,175 |
Goodwill | 238,126 | 276,450 |
Operating lease - right-of-use assets | 21,399 | 20,943 |
Other assets | 24,759 | 17,490 |
Total assets | 770,631 | 845,864 |
Current liabilities: | ||
Current portion of long-term debt | 19,441 | 16,883 |
Accounts payable | 63,011 | 68,099 |
Current portion of earn-out obligation | 1,905 | 31,700 |
Accrued expenses and other current liabilities | 48,746 | 46,514 |
Dividends payable | 994 | 987 |
Total current liabilities | 134,097 | 164,183 |
Long-term debt, less current portion | 230,580 | 253,128 |
Deferred compensation | 18,905 | 18,146 |
Long-term operating lease obligations | 24,136 | 24,441 |
Earn-out obligation, less current portion | 0 | 5,000 |
Deferred tax liabilities | 12,456 | 17,865 |
Total liabilities | 420,174 | 482,763 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Common stock, par value $0.05 per share, authorized 15,000,000 shares; issued and outstanding 11,043,246 and 10,970,123, respectively | 552 | 549 |
Additional paid-in capital | 31,494 | 29,411 |
Retained earnings | 320,080 | 334,246 |
Accumulated other comprehensive loss | (1,669) | (1,105) |
Total stockholders' equity | 350,457 | 363,101 |
Total liabilities and stockholders' equity | $ 770,631 | $ 845,864 |
Unaudited Consolidated Balanc_2
Unaudited Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.05 | $ 0.05 |
Common stock, authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, issued (in shares) | 11,043,246 | 10,970,123 |
Common stock, outstanding (in shares) | 11,043,246 | 10,970,123 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 165,505 | $ 198,326 | $ 511,638 | $ 557,356 |
Costs and operating expenses: | ||||
Selling, general and administrative expenses | 885 | 541 | 2,428 | 2,911 |
Amortization of intangible assets | 4,158 | 5,014 | 13,345 | 14,985 |
Total costs and operating expenses | 151,320 | 181,111 | 468,789 | 511,912 |
Operating income before non-recurring items | 14,185 | 17,215 | 42,849 | 45,444 |
Loss on sale of a business entity and certain assets | 0 | 0 | (8,214) | 0 |
Gain on sale of property | 0 | 0 | 1,108 | 0 |
Goodwill and intangible asset impairment | 0 | 0 | (33,734) | 0 |
Operating income | 14,185 | 17,215 | 2,009 | 45,444 |
Interest expense, net | 3,530 | 3,706 | 10,088 | 10,262 |
Income (loss) before income taxes | 10,655 | 13,509 | (8,079) | 35,182 |
Provision for income taxes | 2,547 | 2,982 | 3,105 | 8,154 |
Net income (loss) | $ 8,108 | $ 10,527 | $ (11,184) | $ 27,028 |
Basic earnings (loss) per share (in dollars per share) | $ 0.73 | $ 0.96 | $ (1.01) | $ 2.47 |
Basic weighted average common shares outstanding (in shares) | 11,043,246 | 10,970,123 | 11,028,283 | 10,953,581 |
Diluted earnings (loss) per share (in dollars per share) | $ 0.73 | $ 0.95 | $ (1.01) | $ 2.45 |
Diluted weighted average shares outstanding (in shares) | 11,100,356 | 11,060,081 | 11,028,283 | 11,035,951 |
Dividends declared per share (in dollars per share) | $ 0.09 | $ 0.09 | $ 0.27 | $ 0.26 |
Products | ||||
Revenues: | ||||
Total revenues | $ 80,942 | $ 79,467 | $ 243,031 | $ 230,167 |
Costs and operating expenses: | ||||
Costs and operating expenses | 72,526 | 67,675 | 214,575 | 195,788 |
Services | ||||
Revenues: | ||||
Total revenues | 84,563 | 118,859 | 268,607 | 327,189 |
Costs and operating expenses: | ||||
Costs and operating expenses | $ 73,751 | $ 107,881 | $ 238,441 | $ 298,228 |
Unaudited Consolidated Statem_2
Unaudited Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 8,108 | $ 10,527 | $ (11,184) | $ 27,028 |
Change in fair value of interest rate swap agreements, net of tax | 388 | (16) | (564) | (1,437) |
Other comprehensive income (loss), net of tax | 388 | (16) | (564) | (1,437) |
Comprehensive income (loss) | $ 8,496 | $ 10,511 | $ (11,748) | $ 25,591 |
Unaudited Consolidated Statem_3
Unaudited Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss) |
Balance, beginning balance (in shares) at Dec. 31, 2018 | 10,886,000 | ||||||
Balance, beginning balance at Dec. 31, 2018 | $ 328,395 | $ 1,944 | $ 544 | $ 26,632 | $ 301,073 | $ 1,944 | $ 146 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 27,028 | 27,028 | |||||
Stock-based compensation (in shares) | 84,000 | ||||||
Stock-based compensation | 2,784 | $ 5 | 2,779 | ||||
Other comprehensive income (loss), net of tax | (1,437) | (1,437) | |||||
Dividends declared | (2,854) | (2,854) | |||||
Balance, ending balance (in shares) at Sep. 30, 2019 | 10,970,000 | ||||||
Balance, ending balance at Sep. 30, 2019 | 355,860 | $ 549 | 29,411 | 327,191 | (1,291) | ||
Balance, beginning balance (in shares) at Jun. 30, 2019 | 10,970,000 | ||||||
Balance, beginning balance at Jun. 30, 2019 | 346,337 | $ 549 | 29,411 | 317,652 | (1,275) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 10,527 | 10,527 | |||||
Other comprehensive income (loss), net of tax | (16) | (16) | |||||
Dividends declared | (988) | (988) | |||||
Balance, ending balance (in shares) at Sep. 30, 2019 | 10,970,000 | ||||||
Balance, ending balance at Sep. 30, 2019 | $ 355,860 | $ 549 | 29,411 | 327,191 | (1,291) | ||
Balance, beginning balance (in shares) at Dec. 31, 2019 | 10,970,123 | 10,970,000 | |||||
Balance, beginning balance at Dec. 31, 2019 | $ 363,101 | $ 549 | 29,411 | 334,246 | (1,105) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (11,184) | (11,184) | |||||
Stock-based compensation (in shares) | 73,000 | ||||||
Stock-based compensation | 2,086 | $ 3 | 2,083 | ||||
Other comprehensive income (loss), net of tax | (564) | (564) | |||||
Dividends declared | $ (2,982) | (2,982) | |||||
Balance, ending balance (in shares) at Sep. 30, 2020 | 11,043,246 | 11,043,000 | |||||
Balance, ending balance at Sep. 30, 2020 | $ 350,457 | $ 552 | 31,494 | 320,080 | (1,669) | ||
Balance, beginning balance (in shares) at Jun. 30, 2020 | 11,043,000 | ||||||
Balance, beginning balance at Jun. 30, 2020 | 342,954 | $ 552 | 31,494 | 312,965 | (2,057) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 8,108 | 8,108 | |||||
Other comprehensive income (loss), net of tax | 388 | 388 | |||||
Dividends declared | $ (993) | (993) | |||||
Balance, ending balance (in shares) at Sep. 30, 2020 | 11,043,246 | 11,043,000 | |||||
Balance, ending balance at Sep. 30, 2020 | $ 350,457 | $ 552 | $ 31,494 | $ 320,080 | $ (1,669) |
Unaudited Consolidated Statem_4
Unaudited Consolidated Statements of Stockholders' Equity (Parenthetical) | 12 Months Ended |
Dec. 31, 2018 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201602Member |
Unaudited Consolidated Statem_5
Unaudited Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (11,184) | $ 27,028 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 18,213 | 20,622 |
Deferred taxes | (2,089) | (1,230) |
Stock-based compensation | 1,723 | 2,592 |
Loss on sale of a business entity and certain assets | 8,214 | 0 |
Gain on sale of property and equipment | (928) | 0 |
Goodwill and intangible asset impairment | 33,734 | 0 |
Earn-out obligation fair value adjustment | (3,094) | 0 |
Changes in operating assets and liabilities, net of impact of acquisitions: | ||
Receivables | 4,068 | (2,380) |
Unbilled receivables | 15,099 | (12,896) |
Inventories | (27,566) | (29,540) |
Other current assets and noncurrent assets | (2,119) | (481) |
Accounts payable and deferred compensation | (3,290) | 11,793 |
Accrued expenses and other current and noncurrent liabilities | 4,454 | 1,931 |
Net cash provided by operating activities | 35,235 | 17,439 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (2,956) | (7,689) |
Proceeds from the sale of property and equipment | 2,847 | 4 |
Proceeds from the sale of a business entity and certain assets | 20,753 | 0 |
Cash paid for acquisitions, net of cash acquired | 0 | (112,660) |
Net cash provided by (used in) investing activities | 20,644 | (120,345) |
Cash flows from financing activities: | ||
Borrowings on loan agreement | 340,679 | 382,501 |
Repayments on loan agreement | (360,794) | (274,969) |
Earn-out obligation payments | (31,701) | 0 |
Payment of debt financing costs | (636) | 0 |
Payments of taxes for equity transactions | (635) | (955) |
Dividends paid | (2,975) | (2,738) |
Net cash (used in) provided by financing activities | (56,062) | 103,839 |
Net (decrease) increase in cash and cash equivalents | (183) | 933 |
Cash and cash equivalents at beginning of period | 734 | 162 |
Cash and cash equivalents at end of period | 551 | 1,095 |
Supplemental disclosure of noncash investing and financing activities: | ||
Notes receivable from the sale of a business entity and certain assets | $ 13,129 | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Therefore, such financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in our 2019 Form 10-K. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include accruals for contract disallowance reserves, award fee revenues, costs to complete on fixed price contracts, recoverability of goodwill and intangible assets, and earn-out obligations. Coronavirus (COVID-19) Pandemic On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus disease, known as COVID-19, as a global pandemic. The pandemic and the containment and mitigation efforts by governments to attempt to control its spread created uncertainties and disruptions in the economic and financial markets. The pandemic triggered a decline in demand for our Aviation segment products and services beginning with the second quarter of 2020 and continuing through the end of the third quarter of 2020. This decrease in demand adversely impacted our operating results for the first nine months of 2020. Although demand has improved during the third quarter compared to the second quarter of 2020, it remains below the prior year. The impact of COVID-19 on us is evolving and its future effects are highly uncertain and unpredictable. We are closely monitoring the effects and risks of COVID-19 to assess its impact on our business, financial condition and results of operations. In April 2020, we completed a cost reduction plan which included a reduction in workforce. We maintain a robust continuity plan to adequately respond to situations such as the COVID-19 pandemic, including a framework for remote work arrangements, in order to effectively maintain operations, including financial reporting systems, internal controls over financial reporting and disclosure controls and procedures. Reclassifications Certain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation, which include reclassification of products and services revenue and the renaming of our three operating segments as further described in Note (8) "Business Segments and Customer Information." These reclassifications had no effect on the reported results of operations. Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates certain disclosures related to transfers and the valuation process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We adopted ASU 2018-13 in the first quarter of 2020. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We adopted ASU 2018-15 in the first quarter of 2020 and applied the standard prospectively. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisition | AcquisitionOn January 10, 2019, our wholly owned subsidiary VSE Aviation, Inc. ("VSE Aviation") acquired 100% of the equity of 1st Choice Aerospace Inc. ("1st Choice Aerospace"), a provider of maintenance, repair and overhaul ("MRO") services and products for new generation and legacy commercial aircraft. 1st Choice Aerospace has operations in Florida and Kentucky. We retained key members of 1st Choice Aerospace's management team under three five |
Divestiture
Divestiture | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Divestiture | Divestiture Prime Turbines Sale On January 28, 2020, VSE’s subsidiary VSE Aviation, Inc. entered into two definitive agreements to sell (1) Prime Turbines LLC ("Prime Turbines") and (2) certain related inventory assets to PTB Holdings USA, LLC ("PTB"). The transaction was completed on February 26, 2020 with cash proceeds of $20.0 million, including final working capital adjustments, and a note receivable of $8.3 million received as consideration. Prime Turbines is a provider of turboprop aircraft engine repair, maintenance and overhaul, including for Pratt & Whitney Canada PT6A and PT6T series engines. Prime Turbines was included in our Aviation segment. The divestiture of Prime Turbines does not have a major effect on our operations and financial results, and therefore does not qualify for reporting as a discontinued operation. As a result of the sale of the business and inventory, we derecognized the assets and liabilities of Prime Turbines and recorded a $7.5 million loss in the first quarter of 2020 which is reflected within loss on sale of a business entity and certain assets in the consolidated statements of income. The note receivable from PTB of $5.1 million and $1.4 million is included in other assets, and other current assets in our consolidated balance sheets as of September 30, 2020, respectively, which represents the present value of the consideration to be received with an imputed interest rate discount. CT Aerospace Asset Sale On June 26, 2020, VSE's subsidiary VSE Aviation, Inc. entered into an asset purchase agreement to sell CT Aerospace, LLC ("CT Aerospace") inventory and certain assets to Legacy Turbines, LLC ("Legacy Turbines") for $6.9 million, with a note receivable received as consideration. As a result of the sale, we recorded a $678 thousand loss in the second quarter of 2020 which is reflected within loss on sale of a business entity and certain assets in the consolidated statements of income. The note receivable from Legacy Turbines of $6.7 million, net of a variable discount of $275 thousand, is included in other assets in our consolidated balance sheets as of September 30, 2020. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregated Revenue Our revenues are derived from contract services performed for the United States Department of Defense ("DoD") agencies or federal civilian agencies and from the delivery of products to our customers. Our customers also include various other government agencies and commercial clients. A summary of revenues for our operating segments by customer for the three and nine months ended September 30, 2020 are as follows (in thousands): Three months ended September 30, 2020 Aviation Fleet Federal and Defense Total DoD $ 104 $ 7,275 $ 49,556 $ 56,935 Other government 39 43,973 15,584 59,596 Commercial 36,075 12,471 428 48,974 $ 36,218 $ 63,719 $ 65,568 $ 165,505 Nine months ended September 30, 2020 Aviation Fleet Federal and Defense Total DoD $ 941 $ 16,937 $ 168,078 $ 185,956 Other government 283 141,390 27,579 169,252 Commercial 125,295 29,818 1,317 156,430 $ 126,519 $ 188,145 $ 196,974 $ 511,638 A summary of revenues for our operating segments by customer for the three and nine months ended September 30, 2019 are as follows (in thousands): Three months ended September 30, 2019 Aviation Fleet Federal and Defense Total DoD $ 1,613 $ 6,935 $ 76,505 $ 85,053 Other government 734 42,419 7,266 50,419 Commercial 56,839 6,015 — 62,854 $ 59,186 $ 55,369 $ 83,771 $ 198,326 Nine months ended September 30, 2019 Aviation Fleet Federal and Defense Total DoD $ 2,768 $ 18,238 $ 201,828 $ 222,834 Other government 1,385 127,555 29,993 158,933 Commercial 159,400 15,085 1,104 175,589 $ 163,553 $ 160,878 $ 232,925 $ 557,356 We changed our disaggregated revenue by type presentation below in the first quarter of 2020 to better align with our operating segments. Revenues from our Aviation and Fleet segment are derived from repair and distribution services primarily through shorter term purchase orders from customers. Our Federal and Defense segment's revenue results from services provided on longer term contracts, including cost plus, fixed price and time and materials contract types. This change provides a clearer picture of the nature of each segment's contractual arrangements, how revenues derived from those contracts are affected by economic factors, and underlying performance trends impacting each segment. Additionally, the presentation is more in-line with how each segments' results are evaluated by our Chief Executive Officer in deciding how to allocate resources and evaluate performance. The change in disaggregated revenue presentation did not result in any changes in our reported segments and had no effect on the reported results of operations. A summary of revenues by type and operating segment for the three and nine months ended September 30, 2020 is as follows (in thousands): Three months ended September 30, 2020 Aviation Fleet Federal and Defense Total Repair $ 17,280 $ — $ — $ 17,280 Distribution 18,938 63,719 — 82,657 Cost Plus Contract — — 18,194 18,194 Fixed Price Contract — — 32,937 32,937 T&M Contract — — 14,437 14,437 Total $ 36,218 $ 63,719 $ 65,568 $ 165,505 Nine months ended September 30, 2020 Aviation Fleet Federal and Defense Total Repair $ 66,936 $ — $ — $ 66,936 Distribution 59,583 188,145 — 247,728 Cost Plus Contract — — 61,182 61,182 Fixed Price Contract — — 107,932 107,932 T&M Contract — — 27,860 27,860 Total $ 126,519 $ 188,145 $ 196,974 $ 511,638 A summary of revenues by type and operating segment for the three and nine months ended September 30, 2019 is as follows (in thousands): Three months ended September 30, 2019 Aviation Fleet Federal and Defense Total Repair $ 32,603 $ — $ — $ 32,603 Distribution 26,583 55,369 — 81,952 Cost Plus Contract — — 41,691 41,691 Fixed Price Contract — — 19,078 19,078 T&M Contract — — 23,002 23,002 Total $ 59,186 $ 55,369 $ 83,771 $ 198,326 Nine months ended September 30, 2019 Aviation Fleet Federal and Defense Total Repair $ 87,597 $ — $ — $ 87,597 Distribution 75,956 160,878 — 236,834 Cost Plus Contract — — 103,027 103,027 Fixed Price Contract — — 58,098 58,098 T&M Contract — — 71,800 71,800 Total $ 163,553 $ 160,878 $ 232,925 $ 557,356 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 related 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 $46.3 million at December 31, 2019 to $27.0 million at September 30, 2020, primarily due to the billing of our customers in excess of revenue recognized as performance obligations were satisfied. Contract liabilities, which are included in accrued expenses and other current liabilities in our consolidated balance sheet, increased from $5.0 million at December 31, 2019 to $10.4 million at September 30, 2020, primarily due to advance payments received in excess of revenue recognized. For the nine months ended September 30, 2020 and September 30, 2019, we recognized revenue that was previously included in the beginning balance of contract liabilities of $2.0 million and $2.1 million, respectively. Performance Obligations Our performance obligations are satisfied either at a point in time or over time as work progresses. The majority of our revenue recognized at a point in time is for the sale of vehicle and aircraft parts in our Fleet and Aviation segments. Revenues from products and services transferred to customers at a point in time accounted for approximately 50% of our revenues for the three and nine months ended September 30, 2020 and 43% of our revenues for the three and nine months ended September 30, 2019. Revenues from products and services transferred to customers over time accounted for approximately 50% of our revenues for the three and nine months ended September 30, 2020 and 57% of our revenues for the three and nine months ended September 30, 2019, primarily related to revenues in our Federal and Defense segment and repair services in our Aviation segment. As of September 30, 2020, the aggregate amount of transaction prices allocated to unsatisfied or partially unsatisfied performance obligations was $177 million. Performance obligations expected to be satisfied within one year and greater than one year are 90% and 10%, 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 nine months ended September 30, 2020 and September 30, 2019, revenue recognized from performance obligations satisfied in prior periods was not material. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consisted of the following (in thousands): September 30, December 31, 2020 2019 Bank credit facility - term loan $ 92,675 $ 120,800 Bank credit facility - revolver loans 160,010 152,000 Principal amount of long-term debt 252,685 272,800 Less debt issuance costs (2,664) (2,789) Total long-term debt 250,021 270,011 Less current portion (19,441) (16,883) Long-term debt, less current portion $ 230,580 $ 253,128 We have a loan agreement with a group of banks that expires in January 2023. We borrow amounts under the loan agreement to provide working capital support, fund letters of credit and finance acquisitions. The loan agreement includes term and revolving loan facilities. The revolving loan facility provides for revolving loans and letters of credit. In June 2020, we amended the loan agreement to provide increased covenant flexibility in response to changes in financial operating performance resulting from the COVID-19 pandemic. Financing costs associated with the loan agreement amendment of approximately $636 thousand were capitalized and are being amortized over the remaining term of the loan. The fair value of outstanding debt as of September 30, 2020 under our bank loan facilities approximates its carrying value using Level 2 inputs based on market data on companies with a corporate rating similar to ours that have recently priced credit facilities. Our required term and revolver loan payments after September 30, 2020 are as follows (in thousands): 2020 4,688 2021 21,562 2022 22,500 2023* 203,935 Total $ 252,685 *Includes the revolver loan required payment of $160.0 million. The maximum amount of credit available under the loan agreement for revolving loans and letters of credit as of September 30, 2020 was $350 million. We pay an unused commitment fee and fees on letters of credit that are issued. We had no letters of credit outstanding as of September 30, 2020 and $54 thousand in letters of credit outstanding as of December 31, 2019. Under the loan agreement we may elect to increase the maximum availability of the term loan facility, the revolving loan facility, or both facilities, up to an aggregate additional amount of $100 million. We pay interest on the term loan borrowings and revolving loan borrowings at LIBOR plus a base margin or at a base rate (typically the prime rate) plus a base margin. As of September 30, 2020, the LIBOR base margin was 3.00% and the base rate base margin was 1.75%. The base margins increase or decrease in increments as our Total Funded Debt/EBITDA Ratio increases or decreases. The loan agreement requires interest rate hedges on a portion of the outstanding term loan until February 6, 2021. We have executed compliant interest rate hedges. The amount of our debt with interest rate swap agreements was $145 million and $125 million as of September 30, 2020 and December 31, 2019, respectively. After taking into account the impact of interest rate swap agreements, as of September 30, 2020, interest rates on portions of our outstanding debt ranged from 3.75% to 6.31%, and the effective interest rate on our aggregate outstanding debt was 4.82%. Interest expense incurred on bank loan borrowings and interest rate hedges was approximately $3.2 million and $3.6 million for the three months ended September 30, 2020 and 2019, respectively, and $9.5 million and $9.9 million for the nine months ended September 30, 2020 and 2019, respectively. The loan agreement contains collateral requirements to secure our loan agreement obligations, restrictive covenants, a limit on annual dividends, and other affirmative and negative covenants, conditions, and limitations. The restrictive covenants include a maximum Total Funded Debt/EBITDA Ratio and a minimum Fixed Charge Coverage Ratio. We were in compliance with required ratios and other terms and conditions as of September 30, 2020. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period. Shares issued during the period are weighted for the portion of the period that they were outstanding. Our calculation of diluted earnings per common share includes the dilutive effects for an assumed vesting of restricted stock awards. The antidilutive common stock equivalents excluded from the diluted per share calculation are not material. Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Basic weighted average common shares outstanding 11,043,246 10,970,123 11,028,283 10,953,581 Effect of dilutive shares 57,110 89,958 — 82,370 Diluted weighted average common shares outstanding 11,100,356 11,060,081 11,028,283 11,035,951 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingencies We may have certain claims in the normal course of business, including legal proceedings, against us and against other parties. In our opinion, the resolution of these claims will not have a material adverse effect on our results of operations, financial position or cash flows. However, because the results of any legal proceedings cannot be predicted with certainty, the amount of loss, if any, cannot be reasonably estimated. Further, from time-to-time, government agencies investigate whether our operations are being conducted in accordance with applicable contractual and regulatory requirements. Government investigations of us, whether relating to government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed upon us, or could lead to suspension or debarment from future government contracting. Government investigations often take years to complete and many result in no adverse action against us. We believe, based upon current information, that the outcome of any such government disputes and investigations will not have a material adverse effect on our results of operations, financial condition or cash flows. |
Business Segments and Customer
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 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 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Changes in goodwill for the nine months ended September 30, 2020 are as follows (in thousands): Fleet Federal and Defense Aviation Total Balance as of December 31, 2019 $ 63,190 $ 30,883 $ 182,377 $ 276,450 Impairment charge — — (30,945) (30,945) Decrease from divestiture — — (7,379) (7,379) Balance as of September 30, 2020 $ 63,190 $ 30,883 $ 144,053 $ 238,126 We perform an annual review of goodwill for impairment during the fourth quarter and whenever events or other changes in circumstances indicate that the carrying value may not be fully recoverable. Due to the ongoing impact of the COVID-19 pandemic, we performed an interim impairment analysis during the second quarter of 2020, utilizing a quantitative approach. The result of the impairment analysis indicated that the fair value of our reporting units, with the exception of our VSE Aviation reporting unit, exceeded their carrying values and no impairment charge was required. The estimated fair value of our VSE Aviation reporting unit was determined to be below its carrying value, which resulted in a $30.9 million goodwill impairment charge in the second quarter of 2020. In the first quarter of 2020, we completed the sale of our Prime Turbines subsidiary and certain related inventory assets and recognized a loss on the sale of the business and inventory. Prime Turbines was reported within our Aviation segment. As part of determining the loss on sale, goodwill of $7.4 million was allocated to the disposal group on a relative fair value basis and was written-off upon the completion of the sale. Intangible assets, net comprised the following (in thousands): Cost Accumulated Amortization Accumulated Net Intangible Assets September 30, 2020 Contract and customer-related $ 213,194 $ (107,328) $ (3,814) $ 102,052 Acquired technologies 12,400 (10,505) — 1,895 Trade names 18,770 (14,963) — 3,807 Total $ 244,364 $ (132,796) $ (3,814) $ 107,754 December 31, 2019 Contract and customer-related $ 227,594 $ (102,169) $ (1,025) $ 124,400 Acquired technologies 12,400 (9,660) — 2,740 Trade names 18,770 (13,735) — 5,035 Total $ 258,764 $ (125,564) $ (1,025) $ 132,175 Amortization expense related to intangible assets was approximately $4.2 million and $13.3 million for the three and nine months ended September 30, 2020, respectively, and $5.0 million and $15.0 million for the three and nine months ended September 30, 2019, respectively. During the second quarter of 2020, we completed the sale of all of the inventory of the CT Aerospace subsidiary, which is reported within our Aviation segment. As a result of the sale, we concluded that the useful life of certain long-lived assets, which represented the intangible assets acquired in the acquisition of the subsidiary, was zero and that there was no ongoing expected future cash flows related to these long-lived assets and no residual value. As a result, such assets were determined to be fully impaired and an impairment charge of approximately $2.8 million, representing the carrying value of these intangible assets, was recorded during the second quarter of 2020. As the sale did not represent a disposition of a business, no goodwill was allocated to the disposal group. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The accounting standard for fair value measurements defines fair value, and establishes a market-based framework or hierarchy for measuring fair value. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows: Level 1–Observable inputs – quoted prices in active markets for identical assets and liabilities; Level 2–Observable inputs other than the quoted prices in active markets for identical assets and liabilities – includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets and amounts derived from valuation models where all significant inputs are observable in active markets; and Level 3–Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions. The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 and the level they fall within the fair value hierarchy (in thousands): Amounts Recorded at Fair Value Financial Statement Classification Fair Value Hierarchy Fair Value September 30, 2020 Fair Value December 31, 2019 Non-COLI assets held in Deferred Supplemental Compensation Plan Other assets Level 1 $ 1,056 $ 710 Interest rate swap agreements Accrued expenses Level 2 $ 2,224 $ 1,473 Earn-out obligation - short-term Current portion of earn-out obligation Level 3 $ 1,905 $ 31,700 Earn-out obligation - long-term Earn-out obligation Level 3 $ — $ 5,000 Non-COLI assets held in our deferred supplemental compensation plan consist of equity funds with fair value based on observable inputs such as quoted prices for identical assets in active markets and changes in fair value are recorded as selling, general and administrative expenses. We account for our interest rate swap agreements under the provisions of ASC 815, Derivatives and Hedging , and have determined that our swap agreements qualify as highly effective cash flow hedges. We evaluate our hedges to determine their effectiveness and as of September 30, 2020 and December 31, 2019, the swaps were determined to be fully effective. Accordingly, the fair value of the swap agreements, which is a liability recorded in accrued expenses and other current liabilities in our consolidated balance sheets, was approximately $2.2 million and $1.5 million at September 30, 2020 and December 31, 2019, respectively. The offset, net of an income tax effect of approximately $555 thousand and $367 thousand, was included in accumulated other comprehensive income in the accompanying balance sheets as of September 30, 2020 and December 31, 2019, respectively. The amounts paid and received on the swap agreements are recorded in interest expense in the period during which the related floating-rate interest is incurred. We expect the hedges to remain fully effective during the remaining terms of the swap agreements. We determine the fair value of the swap agreements based on a valuation model using primarily observable market data inputs. We utilized an income approach to determine the fair value of our 1st Choice Aerospace acquisition earn-out obligation. Significant unobservable inputs used to value the contingent consideration include projected revenue and cost of services and the discount rate. If a significant increase or decrease in the discount rate occurred in isolation, the result could be significantly higher or lower fair value measurement. Changes in earn-out obligation measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2020 are as follows (in thousands): Current portion Long-term portion Total Balance as of December 31, 2019 $ 31,700 $ 5,000 $ 36,700 Earn-out payments (31,700) — (31,700) Fair value adjustment included in costs and operating expenses (3,095) — (3,095) Reclassification from long-term to current 5,000 (5,000) — Balance as of September 30, 2020 $ 1,905 $ — $ 1,905 Measurements on a Non-recurring Basis The following table presents changes in the Level 3 fair value of certain assets measured on a non-recurring basis for the nine months ended September 30, 2020 (in thousands): Goodwill Assets subject to impairment charges Carrying value prior to impairment $ 174,998 Impairment charge (30,945) Carrying value after impairment 144,053 Carrying value of assets not subject to impairment charge 94,073 Balance as of September 30, 2020 $ 238,126 Goodwill is tested annually or upon the occurrence of a triggering event indicating that an impairment loss may have been incurred. Goodwill is measured on a non-recurring basis using fair value measurements with unobservable inputs (Level 3). The goodwill fair value is determined using a weighting of fair values derived from the income and market approach. Fair value is measured as of the impairment date. Goodwill was impaired and written down to its estimated fair value during the second quarter of 2020. For further discussion of the impairment, refer to Note (9) "Goodwill and Intangible Assets." |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense during interim periods is based on our estimated annual effective income tax rate plus any discrete items that are recorded in the period in which they occur. Our tax rate is affected by discrete items that may occur in any given year, but may not be consistent from year to year. Our effective tax rate was 23.9% and (38.4)% for the three and nine months ended September 30, 2020, respectively, and 22.1% and 23.2% for the three and nine months ended September 30, 2019, respectively. The difference in the effective tax rate for the nine months ended September 30, 2020 compared to the same period of prior year primarily results from the following: 1) approximately $16.4 million of our goodwill impairment loss that is non-deductible for income tax purposes, and 2) a full valuation allowance established to offset the capital loss benefit in connection with our sale of Prime Turbines due to a lack of anticipated capital gain income in the carryforward period. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements Not Yet Adopted | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating our contracts and the optional expedients provided by the new standard. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting | Our accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to SEC Form 10-Q and Article 10 of SEC Regulation S-X. Therefore, such financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in our 2019 Form 10-K. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020. |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates affecting the financial statements include accruals for contract disallowance reserves, award fee revenues, costs to complete on fixed price contracts, recoverability of goodwill and intangible assets, and earn-out obligations. |
Reclassifications | ReclassificationsCertain reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation, which include reclassification of products and services revenue and the renaming of our three operating segments as further described in Note (8) "Business Segments and Customer Information." |
Recently Adopted Accounting Pronouncements, Significant Accounting Policies Update, and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates certain disclosures related to transfers and the valuation process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We adopted ASU 2018-13 in the first quarter of 2020. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows. In August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation costs in cloud computing arrangements. The new standard is effective for fiscal years beginning after December 15, 2019 with early adoption permitted. We adopted ASU 2018-15 in the first quarter of 2020 and applied the standard prospectively. The adoption did not have a material impact on our consolidated financial position, results of operations or cash flows. In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating our contracts and the optional expedients provided by the new standard. |
Earnings Per Share | Basic earnings per share ("EPS") is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period. Shares issued during the period are weighted for the portion of the period that they were outstanding. Our calculation of diluted earnings per common share includes the dilutive effects for an assumed vesting of restricted stock awards. |
Business Segments | 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. |
Fair Value Measurements | The accounting standard for fair value measurements defines fair value, and establishes a market-based framework or hierarchy for measuring fair value. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows: Level 1–Observable inputs – quoted prices in active markets for identical assets and liabilities; Level 2–Observable inputs other than the quoted prices in active markets for identical assets and liabilities – includes quoted prices for similar instruments, quoted prices for identical or similar instruments in inactive markets and amounts derived from valuation models where all significant inputs are observable in active markets; and Level 3–Unobservable inputs – includes amounts derived from valuation models where one or more significant inputs are unobservable and require us to develop relevant assumptions. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | A summary of revenues for our operating segments by customer for the three and nine months ended September 30, 2020 are as follows (in thousands): Three months ended September 30, 2020 Aviation Fleet Federal and Defense Total DoD $ 104 $ 7,275 $ 49,556 $ 56,935 Other government 39 43,973 15,584 59,596 Commercial 36,075 12,471 428 48,974 $ 36,218 $ 63,719 $ 65,568 $ 165,505 Nine months ended September 30, 2020 Aviation Fleet Federal and Defense Total DoD $ 941 $ 16,937 $ 168,078 $ 185,956 Other government 283 141,390 27,579 169,252 Commercial 125,295 29,818 1,317 156,430 $ 126,519 $ 188,145 $ 196,974 $ 511,638 A summary of revenues for our operating segments by customer for the three and nine months ended September 30, 2019 are as follows (in thousands): Three months ended September 30, 2019 Aviation Fleet Federal and Defense Total DoD $ 1,613 $ 6,935 $ 76,505 $ 85,053 Other government 734 42,419 7,266 50,419 Commercial 56,839 6,015 — 62,854 $ 59,186 $ 55,369 $ 83,771 $ 198,326 Nine months ended September 30, 2019 Aviation Fleet Federal and Defense Total DoD $ 2,768 $ 18,238 $ 201,828 $ 222,834 Other government 1,385 127,555 29,993 158,933 Commercial 159,400 15,085 1,104 175,589 $ 163,553 $ 160,878 $ 232,925 $ 557,356 A summary of revenues by type and operating segment for the three and nine months ended September 30, 2020 is as follows (in thousands): Three months ended September 30, 2020 Aviation Fleet Federal and Defense Total Repair $ 17,280 $ — $ — $ 17,280 Distribution 18,938 63,719 — 82,657 Cost Plus Contract — — 18,194 18,194 Fixed Price Contract — — 32,937 32,937 T&M Contract — — 14,437 14,437 Total $ 36,218 $ 63,719 $ 65,568 $ 165,505 Nine months ended September 30, 2020 Aviation Fleet Federal and Defense Total Repair $ 66,936 $ — $ — $ 66,936 Distribution 59,583 188,145 — 247,728 Cost Plus Contract — — 61,182 61,182 Fixed Price Contract — — 107,932 107,932 T&M Contract — — 27,860 27,860 Total $ 126,519 $ 188,145 $ 196,974 $ 511,638 A summary of revenues by type and operating segment for the three and nine months ended September 30, 2019 is as follows (in thousands): Three months ended September 30, 2019 Aviation Fleet Federal and Defense Total Repair $ 32,603 $ — $ — $ 32,603 Distribution 26,583 55,369 — 81,952 Cost Plus Contract — — 41,691 41,691 Fixed Price Contract — — 19,078 19,078 T&M Contract — — 23,002 23,002 Total $ 59,186 $ 55,369 $ 83,771 $ 198,326 Nine months ended September 30, 2019 Aviation Fleet Federal and Defense Total Repair $ 87,597 $ — $ — $ 87,597 Distribution 75,956 160,878 — 236,834 Cost Plus Contract — — 103,027 103,027 Fixed Price Contract — — 58,098 58,098 T&M Contract — — 71,800 71,800 Total $ 163,553 $ 160,878 $ 232,925 $ 557,356 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following (in thousands): September 30, December 31, 2020 2019 Bank credit facility - term loan $ 92,675 $ 120,800 Bank credit facility - revolver loans 160,010 152,000 Principal amount of long-term debt 252,685 272,800 Less debt issuance costs (2,664) (2,789) Total long-term debt 250,021 270,011 Less current portion (19,441) (16,883) Long-term debt, less current portion $ 230,580 $ 253,128 |
Schedule of Term Loan Payments | Our required term and revolver loan payments after September 30, 2020 are as follows (in thousands): 2020 4,688 2021 21,562 2022 22,500 2023* 203,935 Total $ 252,685 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Basic weighted average common shares outstanding 11,043,246 10,970,123 11,028,283 10,953,581 Effect of dilutive shares 57,110 89,958 — 82,370 Diluted weighted average common shares outstanding 11,100,356 11,060,081 11,028,283 11,035,951 |
Business Segments and Custome_2
Business Segments and Customer Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | 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 |
Revenue by Customer | 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 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill by Operating Segment | Changes in goodwill for the nine months ended September 30, 2020 are as follows (in thousands): Fleet Federal and Defense Aviation Total Balance as of December 31, 2019 $ 63,190 $ 30,883 $ 182,377 $ 276,450 Impairment charge — — (30,945) (30,945) Decrease from divestiture — — (7,379) (7,379) Balance as of September 30, 2020 $ 63,190 $ 30,883 $ 144,053 $ 238,126 |
Schedule of Intangible Assets | Intangible assets, net comprised the following (in thousands): Cost Accumulated Amortization Accumulated Net Intangible Assets September 30, 2020 Contract and customer-related $ 213,194 $ (107,328) $ (3,814) $ 102,052 Acquired technologies 12,400 (10,505) — 1,895 Trade names 18,770 (14,963) — 3,807 Total $ 244,364 $ (132,796) $ (3,814) $ 107,754 December 31, 2019 Contract and customer-related $ 227,594 $ (102,169) $ (1,025) $ 124,400 Acquired technologies 12,400 (9,660) — 2,740 Trade names 18,770 (13,735) — 5,035 Total $ 258,764 $ (125,564) $ (1,025) $ 132,175 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities | The following table summarizes the financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019 and the level they fall within the fair value hierarchy (in thousands): Amounts Recorded at Fair Value Financial Statement Classification Fair Value Hierarchy Fair Value September 30, 2020 Fair Value December 31, 2019 Non-COLI assets held in Deferred Supplemental Compensation Plan Other assets Level 1 $ 1,056 $ 710 Interest rate swap agreements Accrued expenses Level 2 $ 2,224 $ 1,473 Earn-out obligation - short-term Current portion of earn-out obligation Level 3 $ 1,905 $ 31,700 Earn-out obligation - long-term Earn-out obligation Level 3 $ — $ 5,000 |
Fair Value Measured on a Recurring Basis | Changes in earn-out obligation measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine months ended September 30, 2020 are as follows (in thousands): Current portion Long-term portion Total Balance as of December 31, 2019 $ 31,700 $ 5,000 $ 36,700 Earn-out payments (31,700) — (31,700) Fair value adjustment included in costs and operating expenses (3,095) — (3,095) Reclassification from long-term to current 5,000 (5,000) — Balance as of September 30, 2020 $ 1,905 $ — $ 1,905 |
Fair Value Measurements on a Non-recurring Basis | The following table presents changes in the Level 3 fair value of certain assets measured on a non-recurring basis for the nine months ended September 30, 2020 (in thousands): Goodwill Assets subject to impairment charges Carrying value prior to impairment $ 174,998 Impairment charge (30,945) Carrying value after impairment 144,053 Carrying value of assets not subject to impairment charge 94,073 Balance as of September 30, 2020 $ 238,126 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2020segment | |
Accounting Policies [Abstract] | |
Number of reportable operating segments | 3 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) - USD ($) | Jan. 10, 2019 | Jan. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||||
Current portion of earn-out obligation | $ 1,905,000 | $ 31,700,000 | ||
Employment Contracts | ||||
Business Acquisition [Line Items] | ||||
Term of contract (in years) | 3 years | |||
Noncompete Agreements | ||||
Business Acquisition [Line Items] | ||||
Term of contract (in years) | 5 years | |||
1st Choice Aerospace | ||||
Business Acquisition [Line Items] | ||||
Business acquisition, percentage acquired | 100.00% | |||
Earn-out payments | $ 40,000,000 | |||
Consideration payment | $ 31,700,000 |
Divestiture (Details)
Divestiture (Details) $ in Thousands | Jun. 26, 2020USD ($) | Feb. 26, 2020USD ($) | Sep. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jan. 28, 2020agreement |
Schedule of Business Divestitures, by Divestiture [Line Items] | ||||||||
Loss on sale of a business entity and certain assets | $ 0 | $ 0 | $ (8,214) | $ 0 | ||||
Loss on sale of business | 0 | $ 0 | 8,214 | $ 0 | ||||
Prime Turbines | ||||||||
Schedule of Business Divestitures, by Divestiture [Line Items] | ||||||||
Number of sale agreements | agreement | 2 | |||||||
Proceeds from sale of business | $ 20,000 | |||||||
Note receivable | $ 8,300 | |||||||
Loss on sale of a business entity and certain assets | $ (7,500) | |||||||
Loss on sale of business | $ 7,500 | |||||||
CT Aerospace | ||||||||
Schedule of Business Divestitures, by Divestiture [Line Items] | ||||||||
Proceeds from sale of business | $ 6,900 | |||||||
Loss on sale of a business entity and certain assets | (678) | |||||||
Loss on sale of business | 678 | |||||||
Legacy Turbines | ||||||||
Schedule of Business Divestitures, by Divestiture [Line Items] | ||||||||
Note receivable, net | 6,700 | 6,700 | ||||||
Other assets | PTB | ||||||||
Schedule of Business Divestitures, by Divestiture [Line Items] | ||||||||
Note receivable | 5,100 | 5,100 | ||||||
Other assets | Legacy Turbines | ||||||||
Schedule of Business Divestitures, by Divestiture [Line Items] | ||||||||
Variable discount | 275 | 275 | ||||||
Other current assets | PTB | ||||||||
Schedule of Business Divestitures, by Divestiture [Line Items] | ||||||||
Note receivable | $ 1,400 | $ 1,400 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 165,505 | $ 198,326 | $ 511,638 | $ 557,356 |
Repair | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 17,280 | 32,603 | 66,936 | 87,597 |
Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 82,657 | 81,952 | 247,728 | 236,834 |
Cost Plus Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 18,194 | 41,691 | 61,182 | 103,027 |
Fixed Price Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 32,937 | 19,078 | 107,932 | 58,098 |
T&M Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 14,437 | 23,002 | 27,860 | 71,800 |
DoD | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 56,935 | 85,053 | 185,956 | 222,834 |
Other government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 59,596 | 50,419 | 169,252 | 158,933 |
Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 48,974 | 62,854 | 156,430 | 175,589 |
Aviation | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 36,218 | 59,186 | 126,519 | 163,553 |
Aviation | Repair | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 17,280 | 32,603 | 66,936 | 87,597 |
Aviation | Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 18,938 | 26,583 | 59,583 | 75,956 |
Aviation | Cost Plus Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Aviation | Fixed Price Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Aviation | T&M Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Aviation | DoD | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 104 | 1,613 | 941 | 2,768 |
Aviation | Other government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 39 | 734 | 283 | 1,385 |
Aviation | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 36,075 | 56,839 | 125,295 | 159,400 |
Fleet | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 63,719 | 55,369 | 188,145 | 160,878 |
Fleet | Repair | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Fleet | Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 63,719 | 55,369 | 188,145 | 160,878 |
Fleet | Cost Plus Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Fleet | Fixed Price Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Fleet | T&M Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Fleet | DoD | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 7,275 | 6,935 | 16,937 | 18,238 |
Fleet | Other government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 43,973 | 42,419 | 141,390 | 127,555 |
Fleet | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 12,471 | 6,015 | 29,818 | 15,085 |
Federal and Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 65,568 | 83,771 | 196,974 | 232,925 |
Federal and Defense | Repair | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Federal and Defense | Distribution | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Federal and Defense | Cost Plus Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 18,194 | 41,691 | 61,182 | 103,027 |
Federal and Defense | Fixed Price Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 32,937 | 19,078 | 107,932 | 58,098 |
Federal and Defense | T&M Contract | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 14,437 | 23,002 | 27,860 | 71,800 |
Federal and Defense | DoD | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 49,556 | 76,505 | 168,078 | 201,828 |
Federal and Defense | Other government | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 15,584 | 7,266 | 27,579 | 29,993 |
Federal and Defense | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 428 | $ 0 | $ 1,317 | $ 1,104 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Unbilled receivables, net | $ 26,953 | $ 26,953 | $ 46,279 | ||
Contract with customer, liability | 10,400 | 10,400 | $ 5,000 | ||
Contract with customer, liability, revenue recognized | 2,000 | $ 2,100 | |||
Revenue, remaining performance obligation | $ 177,000 | $ 177,000 | |||
Sales Revenue, Net | Product Concentration Risk | Transferred at Point in Time | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Concentration risk, percentage | 50.00% | 43.00% | 50.00% | 43.00% | |
Sales Revenue, Net | Product Concentration Risk | Transferred over Time | |||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||||
Concentration risk, percentage | 50.00% | 57.00% | 50.00% | 57.00% |
Revenue - Performance Obligatio
Revenue - Performance Obligations (Details) | Sep. 30, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 90.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, percentage | 10.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
Debt - Long-term debt (Details)
Debt - Long-term debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 252,685 | $ 272,800 |
Less debt issuance costs | (2,664) | (2,789) |
Total long-term debt | 250,021 | 270,011 |
Less current portion | (19,441) | (16,883) |
Long-term debt, less current portion | 230,580 | 253,128 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Long-term debt | 92,675 | 120,800 |
Revolving Loans | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 160,010 | $ 152,000 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 2,664,000 | $ 2,664,000 | $ 2,789,000 | ||
LIBOR | |||||
Debt Instrument [Line Items] | |||||
Base margin | 3.00% | ||||
Base Rate | |||||
Debt Instrument [Line Items] | |||||
Base margin | 1.75% | ||||
Amended and Restated | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 636,000 | $ 636,000 | |||
Increase in maximum availability | $ 100,000,000 | ||||
Effective interest rate | 4.82% | 4.82% | |||
Interest expense, net | $ 3,200,000 | $ 3,600,000 | $ 9,500,000 | $ 9,900,000 | |
Amended and Restated | Swap | |||||
Debt Instrument [Line Items] | |||||
Derivative notional amount | 145,000,000 | 145,000,000 | 125,000,000 | ||
Revolving Loans | |||||
Debt Instrument [Line Items] | |||||
Revolving loans maximum borrowing capacity | 350,000,000 | 350,000,000 | |||
Letters of credit outstanding | $ 0 | $ 0 | $ 54,000 | ||
Minimum | Amended and Restated | |||||
Debt Instrument [Line Items] | |||||
Interest rate range | 3.75% | 3.75% | |||
Maximum | Amended and Restated | |||||
Debt Instrument [Line Items] | |||||
Interest rate range | 6.31% | 6.31% |
Debt - Loan Payments (Details)
Debt - Loan Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
2020 | $ 4,688 | |
2021 | 21,562 | |
2022 | 22,500 | |
2023 | 203,935 | |
Long-term debt | 252,685 | $ 272,800 |
Long-term debt | 252,685 | 272,800 |
Revolving Loans | ||
Long-term Debt, Fiscal Year Maturity [Abstract] | ||
Long-term debt | 160,010 | 152,000 |
Long-term debt | $ 160,010 | $ 152,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Earnings Per Share [Abstract] | ||||
Basic weighted average common shares outstanding (in shares) | 11,043,246 | 10,970,123 | 11,028,283 | 10,953,581 |
Effect of dilutive shares (in shares) | 57,110 | 89,958 | 0 | 82,370 |
Diluted weighted average common shares outstanding (in shares) | 11,100,356 | 11,060,081 | 11,028,283 | 11,035,951 |
Business Segments and Custome_3
Business Segments and Customer Information - Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($)lease_renewal_periods | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Segment Reporting [Abstract] | ||||||
Number of reportable operating segments | segment | 3 | |||||
Segment Reporting Information [Line Items] | ||||||
Revenues | $ 165,505 | $ 198,326 | $ 511,638 | $ 557,356 | ||
Operating income (loss) | 14,185 | 17,215 | 2,009 | 45,444 | ||
Goodwill and intangible asset impairment | 0 | 0 | (33,734) | 0 | ||
Loss on sale of business | 0 | 0 | 8,214 | 0 | ||
Gain on sale of property | 0 | 0 | 1,108 | 0 | ||
Miami, Florida | ||||||
Segment Reporting Information [Line Items] | ||||||
Sale-leaseback agreement, net book value | $ 1,300 | |||||
Sale-leaseback agreement, gain (loss) | $ 2,600 | |||||
Lease term (in years) | 6 years | |||||
Number of renewal options | lease_renewal_periods | 2 | |||||
Lease renewal term | 5 years | |||||
Gain on sale of property | $ 200 | |||||
Aviation | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 36,218 | 59,186 | 126,519 | 163,553 | ||
Aviation | Miami, Florida | ||||||
Segment Reporting Information [Line Items] | ||||||
Gain on sale of property | $ 1,100 | |||||
Fleet | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 63,719 | 55,369 | 188,145 | 160,878 | ||
Federal and Defense | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 65,568 | 83,771 | 196,974 | 232,925 | ||
Operating Segments | Aviation | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 36,218 | 59,186 | 126,519 | 163,553 | ||
Operating income (loss) | 1,586 | 6,568 | (34,680) | 14,820 | ||
Operating Segments | Fleet | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 63,719 | 55,369 | 188,145 | 160,878 | ||
Operating income (loss) | 6,589 | 7,843 | 20,509 | 22,388 | ||
Operating Segments | Federal and Defense | ||||||
Segment Reporting Information [Line Items] | ||||||
Revenues | 65,568 | 83,771 | 196,974 | 232,925 | ||
Operating income (loss) | 6,746 | 4,524 | 18,441 | 12,968 | ||
Corporate/unallocated expenses | ||||||
Segment Reporting Information [Line Items] | ||||||
Operating income (loss) | $ (736) | $ (1,720) | (2,261) | $ (4,732) | ||
Prime Turbines | Aviation | ||||||
Segment Reporting Information [Line Items] | ||||||
Goodwill and intangible asset impairment | $ (33,700) | |||||
Loss on sale of business | $ 8,200 |
Business Segments and Custome_4
Business Segments and Customer Information - Major Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue, Major Customer [Line Items] | ||||
Revenues | $ 165,505 | $ 198,326 | $ 511,638 | $ 557,356 |
DoD | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | 56,935 | 85,053 | 185,956 | 222,834 |
Other government | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | 59,596 | 50,419 | 169,252 | 158,933 |
Commercial | ||||
Revenue, Major Customer [Line Items] | ||||
Revenues | $ 48,974 | $ 62,854 | $ 156,430 | $ 175,589 |
Customer Concentration Risk | Sales Revenue, Net | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of revenue by customer | 100.00% | 100.00% | 100.00% | 100.00% |
Customer Concentration Risk | Sales Revenue, Net | DoD | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of revenue by customer | 34.00% | 43.00% | 36.00% | 40.00% |
Customer Concentration Risk | Sales Revenue, Net | Other government | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of revenue by customer | 36.00% | 25.00% | 33.00% | 29.00% |
Customer Concentration Risk | Sales Revenue, Net | Commercial | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of revenue by customer | 30.00% | 32.00% | 31.00% | 31.00% |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill Roll Forward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | |
Goodwill [Roll Forward] | |||
Balance as of beginning of period | $ 276,450 | $ 276,450 | |
Impairment charge | (30,945) | ||
Decrease from divestiture | (7,379) | ||
Balance as of end of period | 238,126 | ||
Fleet | |||
Goodwill [Roll Forward] | |||
Balance as of beginning of period | 63,190 | 63,190 | |
Impairment charge | 0 | ||
Decrease from divestiture | 0 | ||
Balance as of end of period | 63,190 | ||
Federal and Defense | |||
Goodwill [Roll Forward] | |||
Balance as of beginning of period | 30,883 | 30,883 | |
Impairment charge | 0 | ||
Decrease from divestiture | 0 | ||
Balance as of end of period | 30,883 | ||
Aviation | |||
Goodwill [Roll Forward] | |||
Balance as of beginning of period | 182,377 | 182,377 | |
Impairment charge | $ (30,945) | ||
Decrease from divestiture | $ (7,400) | (7,379) | |
Balance as of end of period | $ 144,053 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | $ 244,364 | $ 244,364 | $ 258,764 | |||
Accumulated Amortization | (132,796) | (132,796) | (125,564) | |||
Accumulated Impairment Loss | (3,814) | (3,814) | (1,025) | |||
Net Intangible Assets | 107,754 | 107,754 | 132,175 | |||
Amortization of intangible assets | 4,200 | $ 5,000 | 13,300 | $ 15,000 | ||
Impairment charge | 30,945 | |||||
Aviation | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Impairment charge | $ 30,945 | |||||
Aviation | CT Aerospace | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Impairment charge | $ 2,800 | |||||
Contract and customer-related | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | 213,194 | 213,194 | 227,594 | |||
Accumulated Amortization | (107,328) | (107,328) | (102,169) | |||
Accumulated Impairment Loss | (3,814) | (3,814) | (1,025) | |||
Net Intangible Assets | 102,052 | 102,052 | 124,400 | |||
Acquired technologies | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | 12,400 | 12,400 | 12,400 | |||
Accumulated Amortization | (10,505) | (10,505) | (9,660) | |||
Accumulated Impairment Loss | 0 | 0 | 0 | |||
Net Intangible Assets | 1,895 | 1,895 | 2,740 | |||
Trade names | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Cost | 18,770 | 18,770 | 18,770 | |||
Accumulated Amortization | (14,963) | (14,963) | (13,735) | |||
Accumulated Impairment Loss | 0 | 0 | 0 | |||
Net Intangible Assets | $ 3,807 | $ 3,807 | $ 5,035 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Earn-out obligation - short-term | $ 1,905 | $ 31,700 |
Earn-out obligation - long-term | 0 | 5,000 |
Fair Value, Measurements, Recurring | Level 1 | Other assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Non-COLI assets held in Deferred Supplemental Compensation Plan | 1,056 | 710 |
Fair Value, Measurements, Recurring | Level 2 | Accrued expenses | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap agreements | 2,224 | 1,473 |
Fair Value, Measurements, Recurring | Level 3 | Earn-out obligation | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Earn-out obligation - short-term | 1,905 | 31,700 |
Earn-out obligation - long-term | $ 0 | $ 5,000 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Income tax expense benefit on interest rate swap | $ 555 | $ 367 |
Accrued expenses | Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap agreements | $ 2,224 | $ 1,473 |
Fair Value Measurements - Earn-
Fair Value Measurements - Earn-out Obligation Measured on Recurring Basis (Details) - Level 3 - Fair Value, Measurements, Recurring $ in Thousands | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 36,700 |
Earn-out payments | (31,700) |
Fair value adjustment included in costs and operating expenses | (3,095) |
Reclassification from long-term to current | 0 |
Ending balance | 1,905 |
Current Portion | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 31,700 |
Earn-out payments | (31,700) |
Fair value adjustment included in costs and operating expenses | (3,095) |
Reclassification from long-term to current | 5,000 |
Ending balance | 1,905 |
Long-term Portion | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 5,000 |
Earn-out payments | 0 |
Fair value adjustment included in costs and operating expenses | 0 |
Reclassification from long-term to current | (5,000) |
Ending balance | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 Fair Value of Certain Assets Measured on a Non-recurring Basis (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill [Roll Forward] | ||
Carrying value prior to impairment | $ 174,998 | |
Impairment charge | (30,945) | |
Carrying value after impairment | 144,053 | |
Carrying value of assets not subject to impairment charge | 94,073 | |
Balance as of June 30, 2020 | $ 238,126 | $ 276,450 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 23.90% | 22.10% | (38.40%) | 23.20% |
Effective income tax rate reconciliation, nondeductible expense, impairment losses | $ 16.4 |