Note 13 - Segment and Related Information

9 Months Ended

Sep. 30, 2020

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'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. 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 of 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. The Company added the distribution of marine hose for recreational boating to this segment through the acquisition of the assets of MPI Products on

January 2, 2020.

Corporate and Other:

 

Corporate costs

not

allocated to the

three

primary business segments are aggregated with the results of DG, acquired on

April 19, 2019.

Information by industry segment is set forth below:

 

	Three Months Ended September 30, 2020
	Commercial Air Handling		Aerospace Components			Industrial Hose		Corporate and Other		Consolidated
Sales	$	10,331,592	$	4,468,253		$	6,137,905	$	340,047	$	21,277,797
Gross Profit	$	2,488,067	$	389,624		$	1,842,287	$	132,439	$	4,852,417
Operating Income	$	1,350,939	$	(146,903	)	$	860,076	$	62,305	$	2,126,417
Pretax Income	$	1,350,939	$	(254,600	)	$	764,130	$	43,952	$	1,904,421
Net Income	$	1,013,204	$	(190,950	)	$	571,747	$	32,089	$	1,426,090

	Three Months Ended September 30, 2019
	Commercial Air Handling		Aerospace Components		Industrial Hose		Corporate and Other			Consolidated
Sales	$	12,878,988	$	7,386,930	$	1,823,950	$	154,813		$	22,244,681
Gross Profit	$	2,915,768	$	1,611,656	$	403,158	$	56,981		$	4,987,563
Operating Income	$	1,509,078	$	1,073,389	$	137,640	$	(161,328	)	$	2,558,779
Pretax Income	$	1,508,945	$	830,866	$	69,698	$	(172,727	)	$	2,236,782
Net Income	$	1,131,709	$	623,151	$	50,135	$	(110,127	)	$	1,694,868

	Nine Months Ended September 30, 2020
	Commercial Air Handling		Aerospace Components			Industrial Hose		Corporate and Other			Consolidated
Sales	$	33,634,182	$	14,311,500		$	16,434,440	$	755,837		$	65,135,959
Gross Profit	$	8,429,409	$	1,160,815		$	4,693,465	$	275,910		$	14,559,599
Operating Income	$	4,536,190	$	(398,608	)	$	1,753,157	$	(95,653	)	$	5,795,086
Pretax Income	$	4,511,225	$	(802,865	)	$	1,378,946	$	(105,893	)	$	4,981,413
Net Income	$	3,383,419	$	(602,149	)	$	1,027,299	$	(78,072	)	$	3,730,497

	Nine Months Ended September 30, 2019
	Commercial Air Handling		Aerospace Components		Industrial Hose		Corporate and Other			Consolidated
Sales	$	39,504,053	$	22,864,710	$	5,554,766	$	671,875		$	68,595,404
Gross Profit	$	9,466,810	$	3,907,056	$	1,521,137	$	149,381		$	15,044,384
Operating Income	$	5,536,744	$	2,247,461	$	681,632	$	(544,434	)	$	7,921,403
Pretax Income	$	5,536,121	$	1,625,117	$	476,711	$	(590,856	)	$	7,047,093
Net Income	$	4,152,092	$	1,216,260	$	352,593	$	(449,140	)	$	5,271,805