Quarterly report [Sections 13 or 15(d)]

Note 17 - Industry, Segment and Geographic Financial Information

v3.26.1
Note 17 - Industry, Segment and Geographic Financial Information
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

17.          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, evaluates the performance of both reportable segments based on segment income. Net sales, gross profit, and operating expenses are also monitored closely. This information is used to measure segment profitability, allocate resources, and make budgeting and forecasting decisions about the reportable segments. The CODM also uses these measures to monitor trends in year over year performance comparisons, sequential quarter performance comparisons, and to compare actual results to forecasts. More disaggregated information about operating expense is only reviewed by the CODM on a consolidated basis. Segment 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, 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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Three months ended

  
   

March 31,

  
   

2026

    

2025

  

Net Sales:

            

Distribution

   $ 177,102     $ 132,162  

Solutions

     5,274       5,882  
      182,376       138,044  

Cost of Sales:

            

Distribution

   $ 153,746     $ 111,764  

Solutions

     2,130       2,884  
      155,876       114,648  

Direct Costs:

            

Distribution

   $ 12,836     $ 9,462  

Solutions

     1,619       1,470  
      14,455       10,932  

Segment Income: (1)

            

Distribution

   $ 10,520     $ 10,936  

Solutions

     1,525       1,528  

Segment Income

     12,045       12,464  
                 

General and administrative

   $ 5,877     $ 5,823  

Acquisition related costs

     301       126  

Depreciation and amortization expense

     1,983       1,737  

Interest, net

     142       186  

Foreign currency transaction gain (loss)

     144       (580 )

Change in fair value of acquisition contingent consideration

     —       (136 )

Income before taxes

   $ 4,170     $ 4,248  

 

(1)

Excludes general corporate expenses including acquisition related costs, amortization and depreciation expense, interest, foreign currency transaction (loss) gain, and change in fair value of acquisition contingent consideration.

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As of

    

As of

  
   

March 31,

    

December 31,

  

Selected Assets by Segment:

  

2026

    

2025

  
             

Distribution

   $ 369,142     $ 375,024  

Solutions

     21,537       22,124  

Segment Select Assets

     390,679       397,148  

Corporate Assets

     68,159       63,085  

Total Assets

   $ 458,838     $ 460,233  

 

Geographic areas and net sales mix related to operations for the three months ended March 31, 2026 and 2025 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.

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Three months ended

  
   

March 31, 2026

  
   

Distribution

    

Solutions

    

Total

  

Geography

                      

USA

   $ 147,826     $ 1,542     $ 149,368  

United Kingdom

     12,069       3,472       15,541  

Europe

     5,283       70       5,353  

Canada

     11,924       190       12,114  

Total net sales

   $ 177,102     $ 5,274     $ 182,376  
                   

Timing of Revenue Recognition

                      

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

   $ 168,106     $ 3,550     $ 171,656  

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

     8,996       1,724       10,720  

Total net sales

   $ 177,102     $ 5,274     $ 182,376  

 

   

Three months ended

  
   

March 31, 2025

  
   

Distribution

    

Solutions

    

Total

  

Geography

                      

USA

   $ 105,088     $ 1,954     $ 107,042  

United Kingdom

     13,836       3,707       17,543  

Europe

     4,758       72       4,830  

Canada

     8,480       149       8,629  

Total net sales

   $ 132,162     $ 5,882     $ 138,044  
                   

Timing of Revenue Recognition

                      

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

   $ 118,988     $ 4,299     $ 123,287  

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

     13,174       1,583       14,757  

Total net sales

   $ 132,162     $ 5,882     $ 138,044  

 

(1)

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

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(2)

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

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Geographic identifiable assets related to operations as of  March 31, 2026 and  December 31, 2025 were as follows.

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March 31,

    

December 31,

  

Identifiable Assets by Geographic Areas

  

2026

    

2025

  

USA

   $ 281,657     $ 266,238  

United Kingdom

   $ 86,184     $ 125,191  

Europe

     49,125       37,031  

Canada

     41,872       31,773  

Total

   $ 458,838     $ 460,233