| Goodwill and Other Intangible Assets, Net |
3. Goodwill and Other Intangible Assets, Net During the fourth quarter of fiscal 2026, our chief operating decision making officer (“CODM”) implemented changes in how he organizes the business, allocates resources, and assesses performance. Specifically, the business units within our Integrated Solutions segment have been realigned, resulting in the following changes: | ● | Combine our government programs activities and our Mobility Systems business, previously reported as Expeditionary Services, into a new operating segment named Government Solutions; |
| ● | Re-position our software platform to our Repair and Engineering segment, which is renamed Repair, Engineering, and Software; and |
| ● | Legacy Commercial Programs, the remaining business unit within the Integrated Solutions segment, will be separately reported as its own operating segment. |
These changes resulted in the following four operating segments: | ● | Parts Supply remains unchanged from the prior structure, primarily consisting of distribution of new parts and sales of used serviceable material, including aircraft, engine and airframe parts and components; |
| ● | Repair, Engineering, and Software primarily consists of Airframe MRO, Component MRO, and our software platforms, including Trax, Aerostrat, Airvoyant, and Airinmar; |
| ● | Government Solutions primarily consists of our fleet management and operations of customer-owned aircraft, customized performance-based supply chain logistics programs in support of the U.S. Department of War (“DoW”), the U.S. Department of State (“DoS”) and foreign governments and the engineering, design, integration, manufacture, and repair of pallets, shelters, and containers; and |
| ● | Legacy Commercial Programs consists of asset-heavy flight hour-based component repair programs for commercial airlines and distribution of consumables and expendables inventory, previously reported within Integrated Solutions. During the fourth quarter of fiscal 2026, we announced our intention to exit our Legacy Commercial Programs business as it requires significant asset pools and no longer meets our capital return thresholds. We anticipate that the wind-down of this segment will take approximately three to four years as the Legacy Commercial Programs’ existing customer contracts are terminated and its rotable assets are sold. |
Prior to the change in segments, each of our operating segments was comprised of a single reporting unit. Following the segment changes, we have six reporting units with our Repair, Engineering, and Software and Government Solutions segments each having two reporting units. During the fourth quarter of fiscal 2026, the goodwill of the former Integrated Solutions operating segment of $92.7 million was allocated to the new reporting units based on their relative fair values. We performed quantitative impairment assessments for the impacted reporting units immediately before and after the reassignment and determined no impairment existed. As part of the goodwill re-allocation, the Legacy Commercial Programs segment was assigned goodwill of $16.4 million. As the wind-down of its operations and sale of its assets occurs over the next three to four years, the fair value of the segment will progressively decrease which will ultimately result in the full impairment of the Legacy Commercial Programs goodwill in a future period or periods. Changes in the carrying amount of goodwill by segment for fiscal 2026 and 2025 are as follows: | | | | | | | | | | | | | | | | | | | | | | | | Current Segments | | Former Segments | | | | | | | | | Repair, | | | | | Legacy | | | | | | | | | | | | Parts | | Engineering | | Government | | Commercial | | Integrated | | Expeditionary | | | | | Supply | | and Software | | Solutions | | Programs | | Solutions | | Services | | Total | Balance as of May 31, 2024 | | $ | 38.9 | | $ | 416.6 | | $ | — | | $ | — | | $ | 80.5 | | $ | 18.8 | | $ | 554.8 | Acquisition | | | — | | | (10.4) | | | — | | | — | | | — | | | — | | | (10.4) | Sale of Landing Gear Overhaul business | | | — | | | (14.6) | | | — | | | — | | | — | | | — | | | (14.6) | Foreign currency translation adjustments | | | — | | | 0.1 | | | — | | | — | | | 0.9 | | | — | | | 1.0 | Balance as of May 31, 2025 | | | 38.9 | | | 391.7 | | | — | | | — | | | 81.4 | | | 18.8 | | | 530.8 | Acquisitions | | | 9.1 | | | 29.1 | | | — | | | — | | | 11.3 | | | — | | | 49.5 | Goodwill re-allocation | | | — | | | 29.8 | | | 65.3 | | | 16.4 | | | (92.7) | | | (18.8) | | | — | Balance as of May 31, 2026 | | $ | 48.0 | | $ | 450.6 | | $ | 65.3 | | $ | 16.4 | | $ | — | | $ | — | | $ | 580.3 |
We utilized the qualitative assessment approach for all reporting units which considers general economic conditions, industry specific performance, changes in reporting unit carrying values, and assumptions used in the most recent fair value calculation. We concluded it was more likely than not that the fair value of each reporting unit exceeded its carrying value at May 31, 2026, and thus no impairment charges were recorded. Intangible assets, other than goodwill, are comprised of the following: | | | | | | | | | | | | May 31, 2026 | | | | | | Accumulated | | | | | | Gross | | Amortization | | Net | Amortizable intangible assets: | | | | | | | | | | Customer relationships | | $ | 184.6 | | $ | (35.6) | | $ | 149.0 | Developed technology | | | 110.2 | | | (13.1) | | | 97.1 | Backlog | | | 16.4 | | | (5.0) | | | 11.4 | | | | 311.2 | | | (53.7) | | | 257.5 | Unamortized intangible assets: | | | | | | | | | | Trademarks | | | 24.1 | | | — | | | 24.1 | | | $ | 335.3 | | $ | (53.7) | | $ | 281.6 |
| | | | | | | | | | | | May 31, 2025 | | | | | | Accumulated | | | | | | Gross | | Amortization | | Net | Amortizable intangible assets: | | | | | | | | | | Customer relationships | | $ | 136.6 | | $ | (21.9) | | $ | 114.7 | Developed technology | | | 105.3 | | | (7.6) | | | 97.7 | | | | 241.9 | | | (29.5) | | | 212.4 | Unamortized intangible assets: | | | | | | | | | | Trademarks | | | 7.2 | | | — | | | 7.2 | | | $ | 249.1 | | $ | (29.5) | | $ | 219.6 |
Customer relationships are being amortized over 10-20 years, developed technology is being amortized over 20 years and backlog is being amortized over 27 months. Amortization expense recorded during fiscal 2026, 2025, and 2024 was $24.1 million, $16.2 million, and $7.3 million, respectively. The estimated aggregate amount of amortization expense for intangible assets in each of the next five fiscal years is $27.7 million in 2027, $24.5 million in 2028, and $20.1 million in each of 2029, 2030, and 2031.
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