Quarterly report pursuant to Section 13 or 15(d)

Note 16 - Segment Information

v3.24.3
Note 16 - Segment Information
 9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

16.          Segment Information:

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The Company distributes software developed by others through resellers indirectly to customers worldwide.  We also resell computer software and hardware developed by others and provide technical services directly to customers worldwide.

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FASB ASC Topic 280, “Segment Reporting,” requires that public companies report profits and losses and certain other information on their “reportable operating segments” in their annual and interim financial statements. The internal organization used by the public company’s Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources determines the basis for reportable operating segments. The Company’s Chief Executive Officer, who has been identified as the Company’s CODM, primarily uses operating income as the measure of profit or loss to assess segment performance and allocate resources. Operating income represents net sales less costs of sales, excluding depreciation and amortization expense and operating expenses. Net sales and cost of sales, excluding depreciation and amortization expense are directly attributed to each segment. The majority of operating expenses are also directly attributed to each segment, while certain other operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated.

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The Company is organized into two reportable operating segments. The “Distribution” segment distributes technical software to corporate resellers, value added resellers (VARs), consultants and systems integrators worldwide. The “Solutions” segment is a provider of cloud solutions and value-added reseller of software, hardware and services to customers worldwide. The Company's reportable segments are based on products and services delivered, and the Company's CODM decides how to assess performance and allocate resources based on segment.

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Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit. The Company only identifies accounts receivable, vendor prepayments, inventory, goodwill and intangible assets by segment as shown below as “Selected Assets” by segment; it does not allocate its other assets, including capital expenditures by segment. The following segment reporting information of the Company is provided:

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Nine months ended

    

Three months ended

  

​

  

September 30,

    

September 30,

  

​

  

2024

    

2023

    

2024

    

2023

  

Net Sales:

  

​

    

​

    

​

    

​

  

Distribution

   $ 286,523     $ 226,905     $ 111,861     $ 72,227  

Solutions

     17,324       18,324       7,488       6,230  

​

     303,847       245,229       119,349       78,457  

Gross Profit:

  

​

    

​

    

​

    

​

  

Distribution

   $ 51,454     $ 35,472     $ 21,557     $ 11,671  

Solutions

     8,379       7,704       2,700       2,603  

​

     59,833       43,176       24,257       14,274  

Direct Costs:

  

​

    

​

    

​

    

​

  

Distribution

   $ 23,342     $ 15,225     $ 8,430     $ 5,249  

Solutions

     4,013       3,844       1,330       1,226  

​

     27,355       19,069       9,760       6,475  

Segment Income Before Taxes: (1)

  

​

    

​

    

​

    

​

  

Distribution

   $ 28,112     $ 20,247     $ 13,127     $ 6,422  

Solutions

     4,366       3,860       1,370       1,377  

Segment Income Before Taxes

     32,478       24,107       14,497       7,799  

​

  

​

    

​

    

​

    

​

  

General and administrative

   $ 12,078     $ 12,861     $ 4,177     $ 3,647  

Acquisition related costs

     1,201       277       609       246  

Depreciation and amortization expense

     2,933       1,934       1,197       617  

Interest, net

     755       760       198       318  

Foreign currency transaction loss

     (688 )     (100 )     (442 )     (140 )

Change in fair value of acquisition contingent consideration

     (1,152 )     —       (1,152 )     —  

Income before taxes

   $ 15,181     $ 9,695     $ 7,118     $ 3,467  

 

(1)

Excludes general corporate expenses including interest and foreign currency transaction loss

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​

  

As of

    

As of

  

​

  

September 30,

    

December 31,

  

Selected Assets by Segment:

  

2024

    

2023

  

​

  

​

    

​

  

Distribution

   $ 306,914     $ 242,927  

Solutions

     21,860       37,992  

Segment Select Assets

     328,774       280,919  

Corporate Assets

     43,166       54,179  

Total Assets

   $ 371,940     $ 335,098  

 

Geographic areas and net sales mix related to operations for the three and nine months ended September 30, 2024 and 2023 were as follows. Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.

 ​

   

Nine months ended

    

Three months ended

  
   

September 30, 2024

    

September 30, 2024

  

​

  

Distribution

    

Solutions

    

Total

    

Distribution

    

Solutions

    

Total

  

Geography

                  

​

                    

​

  

USA

   $ 208,462     $ 6,808     $ 215,270     $ 78,012     $ 3,818     $ 81,830  

Europe and United Kingdom

     62,135       9,702       71,837       29,494       3,418       32,912  

Canada

     15,926       814       16,740       4,355       252       4,607  

Total net sales

   $ 286,523     $ 17,324     $ 303,847     $ 111,861     $ 7,488     $ 119,349  

​

  

​

    

​

    

​

    

​

    

​

    

​

  

Timing of Revenue Recognition

                  

​

                    

​

  

Transferred at a point in time where the Company is principal (1)

   $ 253,027     $ 10,969     $ 263,996     $ 101,561     $ 5,074     $ 106,635  

Transferred at a point in time where the Company is agent (2)

     33,496       6,355       39,851       10,300       2,414       12,714  

Total net sales

   $ 286,523     $ 17,324     $ 303,847     $ 111,861     $ 7,488     $ 119,349  

 

   

Nine months ended

    

Three months ended

  
   

September 30, 2023

    

September 30, 2023

  

​

  

Distribution

    

Solutions

    

Total

    

Distribution

    

Solutions

    

Total

  

Geography

                  

​

                    

​

  

USA

   $ 180,278     $ 9,908     $ 190,186     $ 60,891     $ 3,605     $ 64,496  

Europe and United Kingdom

     28,903       7,508       36,411       6,353       2,418       8,771  

Canada

     17,724       908       18,632       4,983       207       5,190  

Total net sales

   $ 226,905     $ 18,324     $ 245,229     $ 72,227     $ 6,230     $ 78,457  

​

  

​

    

​

    

​

    

​

    

​

    

​

  

Timing of Revenue Recognition

                  

​

                    

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Transferred at a point in time where the Company is principal (1)

   $ 200,027     $ 13,290     $ 213,317     $ 63,587     $ 4,422     $ 68,009  

Transferred at a point in time where the Company is agent (2)

     26,878       5,034       31,912       8,640       1,808       10,448  

Total net sales

   $ 226,905     $ 18,324     $ 245,229     $ 72,227     $ 6,230     $ 78,457  

 

(1)

Includes net sales from third-party hardware and software products.

 ​

(2)

Includes net sales from third-party maintenance, software support and services.

 ​

Geographic identifiable assets related to operations as of  September 30, 2024 and  December 31, 2023 were as follows.

 ​

​

  

September 30,

    

December 31,

  

Identifiable Assets by Geographic Areas

  

2024

    

2023

  

USA

   $ 226,717     $ 171,080  

Canada

     25,345       23,994  

Europe and United Kingdom

     119,878       140,024  

Total

   $ 371,940     $ 335,098