Note 13 - Segment and Related Information

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

13. SEGMENT AND RELATED INFORMATION  

As of January 1, 2021, the Company elected to report operations for two business segments: (1) Commercial Air Handling Equipment, and (2) Industrial and Transportation Products. The decision to change from three to two reportable business segments was the result of a board-level discussion and was deemed appropriate given the size of the Company. 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.

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 and Transportation Products: 

The Industrial and Transportation Products 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 purchased all of the issued and outstanding shares of capital stock of CAD Enterprises, Inc.(“CAD”) in Phoenix, Arizona on July 1, 2018. CAD 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.  CAD’s 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. The Company added the distribution of marine hose to this segment through the acquisition of the assets of MPI Products, Inc. (“MPI”) on January 2, 2020. MPI specialized in rubber and plastic marine hose for the recreational boating industry. MPI offers certified products that meet marine industry standards and regulations. Effective April 19, 2019, the Company, completed the acquisition of substantially all of the assets of Data Genomix, Inc., an Ohio corporation (“DG”). DG is in the business of developing and commercializing marketing and data analytic technology applications. The Company purchased all of the issued and outstanding membership interests of KT Acquisition LLC (name later changed to Komtek Forge LLC), in Worcester, Massachusetts on January 15, 2021. Komtek Forge LLC is a supplier of highly engineered forgings for the aerospace, industrial gas turbine, medical prosthetics, alternative energy, petrochemical and defense industries. The Company purchased all of the membership interests of Global-Tek-Manufacturing LLC (“Global-Tek”), in Ceiba, Puerto Rico and substantially all of the assets of Machining Technology L.L.C. (“Machining Technologies”), in Longmont, Colorado on March 2, 2021. Global-Tek and Machining Technologies specialize in providing customers with highly engineered manufacturing solutions, including CNC machining, anodizing, electro polishing and laser marking for customers in the defense, aerospace and medical device markets. The Company purchased substantially all of the assets of Emergency Hydraulics LLC (“Emergency Hydraulics”), in Ocala, Florida on July 1, 2021. Emergency Hydraulics provides hydraulic hoses, air tank assemblies and related products to manufacturers of firefighting trucks and other emergency vehicles.

Corporate and Other: 

Corporate costs not allocated to the two primary business segments are aggregated here.

Information by industry segment is set forth below: 

	Three Months Ended September 30, 2021
	Commercial Air Handling		Industrial And Transportation Products		Corporate and Other			Consolidated
Sales	$	8,854,347	$	17,543,510	$	-		$	26,397,857
Gross Profit	$	1,420,320	$	3,977,389	$	-		$	5,397,709
Operating Income	$	291,729	$	1,603,125	$	(26,073	)	$	1,868,781
Pretax Income	$	297,692	$	1,734,115	$	(540,407	)	$	1,491,400
Net Income	$	223,269	$	1,379,982	$	(405,374	)	$	1,197,877

	Three Months Ended September 30, 2020 (1)
	Commercial Air Handling		Industrial And Transportation Products		Corporate and Other		Consolidated
Sales	$	10,331,592	$	10,946,205	$	-	$	21,277,797
Gross Profit	$	2,488,067	$	2,364,350	$	-	$	4,852,417
Operating Income	$	1,350,939	$	659,286	$	116,192	$	2,126,417
Pretax Income	$	1,350,939	$	455,643	$	97,839	$	1,904,421
Net Income	$	1,013,204	$	339,878	$	73,008	$	1,426,090

	Nine Months Ended September 30, 2021
	Commercial Air Handling		Industrial And Transportation Products		Corporate and Other			Consolidated
Sales	$	27,591,991	$	49,249,754	$	-		$	76,841,745
Gross Profit	$	5,681,179	$	11,499,037	$	706		$	17,180,922
Operating Income	$	2,182,452	$	4,687,388	$	(555,802	)	$	6,314,038
Pretax Income	$	2,188,415	$	4,417,620	$	148,780		$	6,754,815
Net Income	$	1,641,311	$	3,471,748	$	475,540		$	5,588,599

	Nine Months Ended September 30, 2020 (1)
	Commercial Air Handling		Industrial And Transportation Products		Corporate and Other		Consolidated
Sales	$	33,634,182	$	31,501,777	$	-	$	65,135,959
Gross Profit	$	8,429,409	$	6,130,190	$	-	$	14,559,599
Operating Income	$	4,536,190	$	1,201,023	$	57,873	$	5,795,086
Pretax Income	$	4,511,225	$	422,555	$	47,633	$	4,981,413
Net Income	$	3,383,419	$	309,197	$	37,881	$	3,730,497

(1) Segment information for the three and nine month periods ended September 30, 2020 has been restated to reflect the change in reportable segments.