Note 13 - Segment and Related Information

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

1

3

. SEGMENT AND RELATED INFORMATION

  

The Company operates

three

reportable business segments: (

1

) Aerospace Components, (

2

) Commercial Air Handling, (

3

) and Industrial Hose.  The Company operated the Test and Measurement business segment through

June 1, 2018,

at which time it was sold to Hickok Waekon, LLC. The Company's management evaluates segment performance based primarily on operating income. Certain corporate costs are allocated to the segments and interest expense directly related to financing the acquisition of a business is allocated to that segment, respectively.  Intangible assets are allocated to each segment and the related amortization of these assets are recorded in selling, general and administrative expenses.

Aerospace Components:

The Aerospace Components segment was added

July 1, 2018,

when the Company purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc. (“CAD”) in Phoenix, Arizona. This segment manufactures precision components primarily for customers in the aerospace industry.  This segment provides complete end-to-end engineering, machining, grinding, welding, brazing, heat treat and assembly solutions.  Utilizing state-of-the-art machining and welding technologies, this segment is an industry leader in providing complex components produced from nickel-based superalloys and stainless steels.  Our quality certifications include ISO

9001:2015/AS9100D,

as well as Nadcap accreditation for Fluorescent Penetrant Inspection (FPI), Heat Treating/Braze, Non-Conventional Machining EDM, TIG/E-Beam welding.

Commercial Air Handling:

The Commercial Air Handling segment was added

June 1, 2017,

when the Company purchased certain assets and assumed certain liabilities of Air Enterprises Acquisition LLC in Akron, Ohio. The acquired business, which operates under the name Air Enterprises, is an industry leader in designing, manufacturing and installing large-scale commercial, institutional, and industrial custom air handling solutions. Its customers are typically in the health care, education, pharmaceutical and industrial manufacturing markets in the United States. This segment also sells to select international markets. The custom air handling units are constructed of non-corrosive aluminum, resulting in sustainable, long-lasting, and energy efficient solutions with life expectancies of

50

years or more. These products are distributed through a network of sales representatives, based on relationships with health care networks, building contractors and engineering firms. The custom air handling equipment is designed, manufactured and installed under the brand names FactoryBilt® and SiteBilt®. FactoryBilt® air handling solutions are designed, fabricated and assembled in a vertically integrated process entirely within the Akron, Ohio facility. SiteBilt® air handling solutions are designed and fabricated in Akron, but are then crated and shipped to the field and assembled on-site.

Industrial Hose:

 

The Industrial Hose segment was added

July 1, 2016,

when the Company purchased the assets of the Federal Hose Manufacturing, LLC in Painesville, Ohio. This business segment includes the manufacture of flexible interlocking metal hoses and the distribution of silicone and hydraulic hoses. Metal hoses are sold primarily to major heavy-duty truck manufacturers and major aftermarket suppliers in North America. Metal hoses are also sold into the agricultural, industrial and petrochemical markets. Silicone hoses are distributed to a number of industries in North America, including agriculture and general industrial markets.

Test and Measurement:

 

The Test and Measurement segment is the legacy business that was started in

1910

when the Company was founded, and was sold

June 1, 2018.

This business segment included electronic testing products designed and manufactured for the automotive and trucking industries and includes indicators and gauges for the locomotive and aircraft industries. The automotive diagnostic products are sold to original equipment manufacturers and to the aftermarket under several brand names and through a variety of distribution methods. In the aircraft industry, primary customers are manufacturers of commercial, military and personal airplanes. In the locomotive industry, indicators and gauges are sold to manufacturers and servicers of railroad equipment and locomotives.

Information by industry segment is set forth below:

 

	Three Months Ended
	March 31
	2019			2018
Sales
Commercial Air Handling	$	11,744,561		$	9,115,937
Test and Measurement		274,032			1,071,847
Industrial Hose		1,797,091			1,690,916
Aerospace Components		8,020,403			-
Total Sales	$	21,836,087		$	11,878,700
Gross Profit
Commercial Air Handling	$	3,001,933		$	2,147,125
Test and Measurement		45,214			475,026
Industrial Hose		525,735			396,290
Aerospace Components		1,257,006			-
Total Gross Profit	$	4,829,888		$	3,018,441
Operating Income
Commercial Air Handling	$	1,782,987		$	880,106
Test and Measurement		45,214			(110,031	)
Industrial Hose		248,291			140,012
Aerospace Components		759,609			-
Unallocated Corporate General		(265,030	)		(267,002	)
Total Operating Income	$	2,571,071		$	643,085
Income Before Provision for Income Taxes
Commercial Air Handling	$	1,782,696		$	865,205
Test and Measurement		45,214			(128,949	)
Industrial Hose		192,479			100,189
Aerospace Components		562,956			-
Loss on sale of business		-			-
Unallocated Corporate General & Other		(254,473	)		(338,109	)
Income Before Provision for Income Taxes	$	2,328,872		$	498,336