Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 26, 2024 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Entity Registrant Name | Climb Global Solutions, Inc. | ||
Entity File Number | 000-26408 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 13-3136104 | ||
Entity Address, Address Line One | 4 Industrial Way West, Suite 300 | ||
Entity Address, City or Town | Eatontown | ||
Entity Address, State or Province | NJ | ||
Entity Address, Postal Zip Code | 07724 | ||
City Area Code | 732 | ||
Local Phone Number | 389-0932 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | CLMB | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Central Index Key | 0000945983 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 4,567,568 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
ICFR Auditor Attestation Flag | true | ||
Error correction flag | false | ||
Auditor Name | BDO USA, P.C. | ||
Auditor Firm ID | 243 | ||
Auditor Location | Woodbridge, New Jersey | ||
Document Annual Report | true | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 197.4 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 36,295 | $ 20,245 |
Accounts receivable, net of allowance for doubtful accounts of $709 and $842, respectively | 222,269 | 154,596 |
Inventory, net | 3,741 | 4,766 |
Vendor prepayments and advances | 890 | |
Prepaid expenses and other current assets | 6,755 | 4,141 |
Total current assets | 269,060 | 184,638 |
Equipment and leasehold improvements, net | 8,850 | 3,515 |
Goodwill | 27,182 | 18,963 |
Other intangibles, net | 26,930 | 19,693 |
Right-of-use assets, net | 878 | 1,235 |
Accounts receivable, net of current portion | 797 | 3,114 |
Other assets | 1,077 | 350 |
Deferred income tax assets | 324 | 348 |
Total assets | 335,098 | 231,856 |
Current liabilities: | ||
Accounts payable and accrued expenses | 249,648 | 160,650 |
Lease liability, current portion | 450 | 521 |
Term loan, current portion | 540 | 520 |
Total current liabilities | 250,638 | 161,691 |
Lease liability, net of current portion | 879 | 1,296 |
Deferred income tax liabilities | 5,554 | 4,137 |
Term loan, net of current portion | 752 | 1,292 |
Non-current liabilities | 2,505 | 2,866 |
Total liabilities | 260,328 | 171,282 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,573,448 and 4,478,432 shares outstanding, respectively | 53 | 53 |
Additional paid-in capital | 34,647 | 32,715 |
Treasury stock, at cost, 711,052 and 806,068 shares, respectively | (12,623) | (13,230) |
Retained earnings | 53,215 | 43,904 |
Accumulated other comprehensive loss | (522) | (2,868) |
Total stockholders' equity | 74,770 | 60,574 |
Total liabilities and stockholders' equity | $ 335,098 | $ 231,856 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Consolidated Balance Sheets | ||
Accounts receivable, allowances (in dollars) | $ 709 | $ 842 |
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 10,000,000 | 10,000,000 |
Common Stock, shares issued | 5,284,500 | 5,284,500 |
Common Stock, shares outstanding | 4,573,448 | 4,478,432 |
Treasury stock, shares | 711,052 | 806,068 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Consolidated Statements of Earnings | ||
Net sales | $ 352,013 | $ 304,348 |
Cost of sales | 287,766 | 250,254 |
Gross profit | 64,247 | 54,094 |
Selling, general, and administrative expenses | 44,330 | 34,144 |
Acquisition related costs | 629 | 582 |
Depreciation and amortization expense | 2,798 | 2,054 |
Income from operations | 16,490 | 17,314 |
Other income: | ||
Interest, net | 927 | 159 |
Foreign currency transaction loss | (636) | (941) |
Income before provision for income taxes | 16,781 | 16,532 |
Provision for income taxes | 4,458 | 4,035 |
Net income | $ 12,323 | $ 12,497 |
Income per common share-Basic | $ 2.72 | $ 2.81 |
Income per common share-Diluted | $ 2.72 | $ 2.81 |
Weighted average common shares outstanding - Basic (in shares) | 4,401 | 4,331 |
Weighted average common shares outstanding - Diluted (in shares) | 4,401 | 4,331 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 12,323 | $ 12,497 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 2,346 | (2,618) |
Other comprehensive income (loss) | 2,346 | (2,618) |
Comprehensive income | $ 14,669 | $ 9,879 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Treasury | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total |
Balance at Dec. 31, 2021 | $ 53 | $ 32,087 | $ (13,870) | $ 34,396 | $ (250) | $ 52,416 |
Balance (in shares) at Dec. 31, 2021 | 5,284,500 | |||||
Treasury Stock, balance (in shares) at Dec. 31, 2021 | 859,828 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 12,497 | 12,497 | ||||
Translation adjustment | (2,618) | (2,618) | ||||
Dividends paid | (2,989) | (2,989) | ||||
Share-based compensation expense | 1,923 | 1,923 | ||||
Restricted stock grants (net of forfeitures) | (1,295) | $ 1,295 | ||||
Restricted stock grants (net of forfeitures) (in shares) | (74,449) | |||||
Treasury shares repurchased | $ (655) | (655) | ||||
Treasury shares repurchased (in shares) | 20,689 | |||||
Balance at Dec. 31, 2022 | $ 53 | 32,715 | $ (13,230) | 43,904 | (2,868) | $ 60,574 |
Balance (in shares) at Dec. 31, 2022 | 5,284,500 | 5,284,500 | ||||
Treasury Stock, balance (in shares) at Dec. 31, 2022 | 806,068 | 806,068 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 12,323 | $ 12,323 | ||||
Translation adjustment | 2,346 | 2,346 | ||||
Dividends paid | (3,012) | (3,012) | ||||
Share-based compensation expense | 4,246 | 4,246 | ||||
Restricted stock grants (net of forfeitures) | (2,314) | $ 2,314 | ||||
Restricted stock grants (net of forfeitures) (in shares) | (132,526) | |||||
Treasury shares repurchased | $ (1,707) | (1,707) | ||||
Treasury shares repurchased (in shares) | 37,510 | |||||
Balance at Dec. 31, 2023 | $ 53 | $ 34,647 | $ (12,623) | $ 53,215 | $ (522) | $ 74,770 |
Balance (in shares) at Dec. 31, 2023 | 5,284,500 | 5,284,500 | ||||
Treasury Stock, balance (in shares) at Dec. 31, 2023 | 711,052 | 711,052 |
Consolidated Statements of St_2
Consolidated Statements of Stockholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Consolidated Statements of Stockholders' Equity | ||
Dividends paid per common share (in dollars per share) | $ 0.68 | $ 0.68 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities | ||
Net income | $ 12,323 | $ 12,497 |
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: | ||
Depreciation and amortization expense | 2,798 | 2,066 |
Provision for doubtful accounts | 54 | 19 |
Deferred income tax benefit | (383) | (535) |
Share-based compensation expense | 4,148 | 1,897 |
Amortization of discount on accounts receivable | (50) | (109) |
Amortization of right-of-use assets | 366 | 426 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (29,621) | (35,826) |
Inventory | 3,601 | (2,751) |
Prepaid expenses and other current assets | (2,446) | 1,025 |
Vendor prepayments | 890 | (230) |
Accounts payable and accrued expenses | 49,674 | 25,411 |
Lease liability, net | (495) | (503) |
Other assets and liabilities | 1,264 | 1,174 |
Net cash and cash equivalents provided by operating activities | 42,123 | 4,561 |
Cash flows from investing activities | ||
Purchase of equipment and leasehold improvements | (4,989) | (2,502) |
Payment for acquisitions, net of cash acquired | (12,678) | (8,511) |
Net cash and cash equivalents used in investing activities | (17,667) | (11,013) |
Cash flows from financing activities | ||
Purchase of treasury stock | (1,707) | (655) |
Borrowings under credit facilities | 10,000 | |
Repayments of borrowings under credit facilities | (13,074) | |
Borrowings under term loan | 2,148 | |
Repayments of borrowings under term loan | (520) | (336) |
Dividends paid | (3,012) | (2,989) |
Payments of deferred financing costs | (637) | |
Net cash and cash equivalents used in financing activities | (8,950) | (1,832) |
Effect of foreign exchange rate on cash and cash equivalents | 544 | (743) |
Net increase (decrease) in cash and cash equivalents | 16,050 | (9,027) |
Cash and cash equivalents at beginning of period | 20,245 | 29,272 |
Cash and cash equivalents at end of period | 36,295 | 20,245 |
Supplementary disclosure of cash flow information: | ||
Income taxes paid | 5,434 | 4,278 |
Interest paid | 180 | 50 |
Supplementary disclosure of non-cash investing and financing activities | ||
Contingent earn-out | $ 2,227 | $ 1,771 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2023 | |
Description of Business | |
Description of Business | Note 1. Description of Business Climb Global Solutions, Inc. and Subsidiaries (the “Company”), was incorporated in Delaware in 1982. The Company distributes technology products developed by others to resellers who in turn sell to end customers worldwide. The Company also is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide. The Company also operates in Canada, the United Kingdom and Europe. The Company offers an extensive line of products from leading software vendors and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management and other technically sophisticated domains as well as computer hardware. 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 under the name “Climb Channel Solutions”. The “Solutions” segment is a cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide under the names “Grey Matter”. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Principles of Consolidation and Operations The consolidated financial statements include the accounts of Climb Global Solutions, Inc. and its wholly owned . All intercompany transactions and balances have been eliminated. Business Combinations We apply the provisions of ASC 805, Business Combinations (“ASC 805”), in accounting for our acquisitions. ASC 805 requires that we evaluate whether a transaction pertains to an acquisition of assets, or to an acquisition of a business. A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose of providing a return to investors. Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets and liabilities assumed on a relative fair value basis; whereas the acquisition of a business requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Our valuation of acquired assets and assumed liabilities requires estimates, especially with respect to intangible assets that was derived using valuation techniques and models such as the income approach. Such models require use of estimates including discount rates, and future expected revenue. The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected cash flows over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured and expected volatility. Based upon these assumptions, the initial contingent consideration is then valued using a Monte Carlo simulation. We have used third-party qualified specialists to assist management in determining the fair value of assets acquired and liabilities assumed. This includes assistance with the determination of economic useful lives and valuation of identifiable intangibles. We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. As a result, during the measurement period, which may be up to one year from the business acquisition date, we record certain adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. All acquisition-related costs are accounted for as expenses in the period in which they are incurred. Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in acquisition related costs in the consolidated statement of earnings. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make extensive use of certain estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The significant areas of estimation include but are not limited to accounting for allowance for expected credit losses, sales returns, allocation of revenue in multiple deliverable arrangements, principal vs. agent considerations, income taxes, depreciation, amortization of intangible assets, contingencies and stock-based compensation. Actual results could differ from those estimates. Net Income Per Common Share Our basic and diluted earnings per share are computed using the two-class method. The two-class method is an earnings allocation method that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security. A reconciliation of the numerators and denominators of the basic and diluted per share computations follows: Year ended December 31, 2023 2022 Numerator: Net income $ 12,323 $ 12,497 Less distributed and undistributed income allocated to participating securities 323 317 Net income attributable to common shareholders 12,000 12,180 Denominator: Weighted average common shares (Basic) 4,401 4,331 Weighted average common shares including assumed conversions (Diluted) 4,401 4,331 Basic net income per share $ 2.72 $ 2.81 Diluted net income per share $ 2.72 $ 2.81 Cash Equivalents The Company considers all liquid short-term investments with maturities of 90 days or less when purchased to be cash equivalents. Accounts Receivable Accounts receivable principally represents amounts collectible from our customers. The Company performs ongoing credit evaluations of its customers but generally does not require collateral to support any outstanding obligation. From time to time, we sell accounts receivable to a financial institution on a non-recourse basis for cash, less a discount. The Company has no significant retained interests or servicing liabilities related to the accounts receivable sold. Proceeds from the sale of receivables approximated their discounted book value and were included in operating cash flows on the Consolidated Statements of Cash Flows. Allowances for Expected Credit Losses The Company maintains allowances for expected credit losses for estimated losses resulting from the inability of its customers to make required payments. Management determines the estimate of the allowance for expected credit losses by considering a number of factors, including historical experience, aging of the accounts receivable, as well as current market conditions and future forecasts of our customers’ ability to make payments for goods and services. At the time of sale, we record an estimate for sales returns based on historical experience, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets. If actual sales returns are greater than estimated by management, an additional returns allowance may be required as an offset to net sales. Deferred Financing Costs Deferred financing costs, such as financial advisory and other professional fees are capitalized and recognized in interest, net over the life of the related debt instrument using the straight-line method. Deferred financing costs associated with the Company’s revolving credit facility are presented as an asset, within other assets on the Consolidated Balance Sheets. Foreign Currency Translation Assets and liabilities of the Company’s foreign subsidiaries have been translated using the end of the reporting period exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the period. Cumulative translation adjustments have been classified within accumulated other comprehensive loss, which is a separate component of stockholders’ equity in accordance FASB ASC Topic No. 220, “Comprehensive Income”. Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled. For foreign currency remeasurement from each local currency into the appropriate functional currency, monetary assets and liabilities are remeasured to functional currencies using current exchange rates in effect at the balance sheet date. Gains or losses from these remeasurements have been included in the Company's Consolidated Statements of Earnings. Non-monetary assets and liabilities are recorded at historical exchange rates. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations in credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents, at times, may exceed federally insured limits. The Company’s cash and cash equivalents are deposited primarily in banking institutions with global operations. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Financial Instruments The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2023 and 2022, because of the relative short maturity of these instruments. The Company’s accounts receivable-long-term is discounted to its present value at prevailing market rates at the time of sale which, approximates fair value as of December 31, 2023 and 2022. Inventory Inventory, consisting primarily of finished products held for resale, is valued based on the first-in-first-out method of accounting and is stated at the lower of cost or net realizable value. Equipment and Leasehold Improvements Equipment and leasehold improvements are stated at cost or fair value, if purchased as part of a business combination. Equipment depreciation is calculated using the straight-line method over three Software Development Costs Goodwill In a qualitative assessment, we assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, after assessing the totality of events or circumstances, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform the quantitative goodwill impairment test. We may also elect the unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. In the quantitative impairment test, we compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. Conversely, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Determining the fair value of a reporting unit is judgmental in nature and requires the use of estimates and assumptions, including net sales growth rates, gross profit margins, operating margins, discount rates and future market conditions, among others. Any changes in the judgments, estimates or assumptions used could produce different results. Intangible Assets Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives, which is determined based on their expected period of benefit. Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset's carrying amount over its fair value. In addition, each quarter, the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each of these intangible assets. If the Company were to determine that a change to the remaining estimated useful life of an intangible asset was necessary, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life. Comprehensive Income Comprehensive income consists of net income for the year and the impact of unrealized foreign currency translation adjustments. The foreign currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in international subsidiaries. Revenue Recognition The Company’s revenues primarily result from the sale of various technology products and services, including third-party products, third-party software and third-party maintenance, software support and services. The Company recognizes revenue as control of the third-party products and third-party software is transferred to customers, which generally happens at the point of shipment or fulfilment and at the point that our customers and vendors accept the terms and conditions of the arrangement for third-party maintenance, software support and services. The Company has contracts with certain customers where the Company’s performance obligation is to arrange for the products or services to be provided by another party. In these arrangements, as the Company assumes an agency relationship in the transaction, revenue is recognized in the amount of the net fee associated with serving as an agent. These arrangements primarily relate to third party maintenance, cloud services and certain security software whose intended functionality is dependent on third party maintenance. The Company allows its customers to return product for exchange or credit subject to certain limitations. A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded upon product return. The Company also provides rebates and other discounts to certain customers which are considered variable consideration. A provision for customer rebates and other discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience. The Company considers shipping and handling activities as costs to fulfill the sales of products. Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of sales. Taxes imposed by governmental authorities on the Company’s revenue producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales. The Company disaggregates its operating revenue by segment, geography and timing of revenue recognition, which the Company believes provides a meaningful depiction of the nature of its revenue. For additional information, see Note 13 (Industry, Segment and Geographic Information). Hardware and software products sold by the Company are generally delivered via shipment from the Company’s facilities, drop shipment directly from the vendor, or by electronic delivery of keys for software products. The majority of the Company’s business involves shipments directly from its vendors to its customers, in these transactions, the Company is generally responsible for negotiating price both with the vendor and customer, payment to the vendor, establishing payment terms with the customer, product returns, and has risk of loss if the customer does not make payment. As the principal with the customer, the Company recognizes revenue upon receiving notification from the vendor that the product was shipped. Control of software products is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale. The Company performs an analysis of the number of days of sales in-transit to customers at the end of each reporting period based on an analysis of commercial delivery terms that include drop-shipment arrangements. This analysis is the basis upon which the Company estimates the amount of net sales in-transit at the end of the period and adjusts revenue and the related costs to reflect only what has been delivered to the customer. Changes in delivery patterns may result in a different number of business days estimated to make this adjustment. The Company also performs a weighted average analysis of the estimated number of days between order fulfillment and beginning of the renewal term for term licenses recorded on a gross basis, and a deferral estimate is recorded for term license renewals fulfilled prior to commencement date. Generally, software products are sold with accompanying third-party delivered software assurance, which is a product that allows customers to upgrade, at no additional cost, to the latest technology if new capabilities are introduced during the period that the software assurance is in effect. The Company evaluates whether the software assurance is a separate performance obligation by assessing if the third-party delivered software assurance is critical or essential to the core functionality of the software itself. This involves considering if the software provides its original intended functionality to the customer without the updates, if the customer would ascribe a higher value to the upgrades versus the up-front deliverable, if the customer would expect frequent intelligence updates to the software (such as updates that maintain the original functionality), and if the customer chooses to not delay or always install upgrades. If the Company determines that the accompanying third-party delivered software assurance is critical or essential to the core functionality of the software license, the software license and the accompanying third-party delivered software assurance are recognized as a single performance obligation. The value of the product is primarily the accompanying support delivered by a third party and therefore the Company is acting as an agent in these transactions and recognizes them on a net basis at the point the associated software license is delivered to the customer. The Company sells cloud computing solutions that utilize third-party vendors to enable customers to access data center functionality in a cloud-based solution, including storage, computing and networking and access to software in the cloud that enhances office productivity, provides security or assists in collaboration. The Company recognizes revenue for cloud computing solutions for arrangements with one-time invoicing to the customer at the time of invoice on a net basis as the Company is acting as an agent in the transaction. For monthly subscription-based arrangements, the Company is acting as an agent in the transaction and recognizes revenue as it invoices the customer for its monthly usage on a net basis. For software licenses where the accompanying third-party delivered software assurance is not critical or essential to the core functionality, the software assurance is recognized as a separate performance obligation, with the associated revenue recognized on a net basis at the point the related software license is delivered to the customer. The Company also sells some of its products and services as part of bundled contract arrangements containing multiple deliverables, which may include a combination of products and services. For each deliverable that represents a distinct performance obligation, total arrangement consideration is allocated based upon the standalone selling prices (“SSP”) of each performance obligation. SSP is determined based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through established standard prices, we use judgement and estimate the standalone selling price considering available information such as market pricing and pricing related to similar products. Freight The Company records freight billed to its customers as net sales and the related freight costs as cost of sales when the underlying product revenue is recognized. For freight not billed to its customers, the Company records the freight costs as cost of sales. The Company’s typical shipping terms result in shipping being performed before the customer obtains control of the product. The Company considers shipping to be a fulfillment activity and not a separate performance obligation. Commissions The Company pays commissions and related payroll taxes to sales personnel when customers are invoiced. These costs are recorded as selling general and administrative expenses in the period earned as all our performance obligations are complete within a short window of processing the order. Stock-Based Compensation The Company has stockholder-approved stock incentive plans for employees and directors. Stock-based compensation is recognized based on the grant date fair value and is recognized as expense on a straight-line basis over the requisite service period. Operating Segments Treasury Stock Treasury stock is accounted for at cost. Shares repurchased by the Company are held in treasury for general corporate purposes, including issuances under equity incentive plans. The reissuance of shares from treasury stock is based on the weighted average purchase price of the shares. Interest, net Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. This method also requires a valuation allowance against the net deferred tax asset if, based on the weighted available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense when assessed. The Company accounts for uncertainties in accordance with FASB ASC 740 “Income Taxes”. This standard clarified the accounting for uncertainties in income taxes. The standard prescribes criteria for recognition and measurement of tax positions. It also provides guidance on derecognition, classification, interest and penalties, and disclosures related to income taxes associated with uncertain tax positions. The Company classifies all deferred tax asset or liabilities as non-current on the balance sheet. Foreign Exchange Recently Issued Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic Effective January 1, 2023, the Company adopted the new credit loss standard and it did not have an impact on the Company’s financial statements. In July 2023, the FASB issued Accounting Standards Update 2023-03, “ Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), Compensation — Stock Compensation (Topic 718) .” This ASU amends various paragraphs in the accounting codification pursuant to the issuance of Commission Staff Accounting Bulletin (“SAB”) number 120. The ASU provides clarifying guidance related to employee and non-employee share-based payment accounting, including guidance related to spring-loaded awards. ASU 2023-03 was effective upon issuance. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements. In November 2023, the FASB issued Accounting Standards Update 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The Company will adopt the update in the first quarter of 2024 but does not expect there to be a material effect on our consolidated financial statements. |
Acquisition
Acquisition | 12 Months Ended |
Dec. 31, 2023 | |
Acquisition | |
Acquisition | 3. Acquisition Acquisition of Data Solutions Holdings Limited On October 6, 2023, the Company entered into a Share Purchase Agreement and purchased the entire share capital of Data Solutions Holdings Limited (“Data Solutions”) for an aggregate purchase price of approximately €15.0 million (equivalent to $15.9 million USD), subject to certain working capital and other adjustments, paid at closing plus a potential post-closing earn-out. The allocation of the purchase price was based on the estimated fair value of Data Solutions’ net tangible and identifiable intangible assets as of the date of the acquisition. The transaction was accounted for under the purchase method of accounting. The financial position and operating results of Data Solutions is included in the Company’s consolidated financial statements from the date of the acquisition. The Company recorded net revenue for Data Solutions of approximately $14.3 million and net income of approximately $0.8 million during the year ended December 31, 2023. The impact of the acquisition’s preliminary purchase price allocations on the Company’s consolidated balance sheet and the acquisition date fair value of the total consideration transferred is depicted in the table below. Due to the timing of the closing of the transaction in the fourth quarter of 2023, the Company has not yet completed its evaluation and determination of certain assets acquired and liabilities assumed, primarily the final valuation of goodwill and intangible assets and the final evaluation and assessment of income tax accounts; therefore, the final fair value of the assets acquired and liabilities assumed, which will be completed within the measurement period of up to one year from the acquisition date, may vary from the Company’s preliminary estimates: (in thousands) Cash $ 3,190 Accounts receivable 32,503 Inventory 2,460 Other current assets 99 Equipment and leasehold improvements 800 Vendor relationships (10-year weighted average useful life) 8,269 Goodwill 7,143 Accounts payable and other current liabilities (34,793) Deferred tax liability (1,576) Net assets $ 18,095 (in thousands) Supplementary information: Cash paid to sellers $ 15,868 Contingent earn-out 2,227 Total purchase consideration $ 18,095 Cash paid to sellers 15,868 Cash acquired in acquisition (3,190) Net cash paid for acquisition $ 12,678 Intangible assets are comprised of approximately $8.3 million of vendor relationships with a weighted average amortization period of 10 years, representing the expected period of benefits. Goodwill, which was allocated to the Distribution segment, is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes. The Company used the income approach to value the intangible assets, representing acquired vendor relationships. The fair value measurements were primarily based on significant inputs that are not observable, which are categorized as a Level 3 measurement in the fair value hierarchy (See Note 14 – Fair Value Measurements). Inputs used to value these intangible assets include the discount rate, projection of all future cash flows, long-term growth rates, vendor attrition rates and applicable income tax rates. The excess purchase price recorded to goodwill primarily represents the future economic benefits the Company expects to achieve as a result of combining operations and expanding vendor relationships. The purchase consideration includes approximately $2.2 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash. The earn-out liability is included in current liabilities as of December 31, 2023. There were no material changes in fair value since the acquisition date. The fair value earn-out measurement was primarily based on inputs that are not observable, which are categorized as a Level 3 measurement in the fair value hierarchy (See Note 14 – Fair Value Measurements), would use to value these liabilities. The undiscounted payment of the earn-out can range from zero up to approximately $3.9 million and achievement is based on the post-acquisition results of Data Solutions. In connection with the acquisition of Data Solutions on October 6, 2023, the Company acquired an invoice discounting facility (“IDF”) that is with recourse to the Company (See Note 8 – Credit Facilities). The balance outstanding under the IDF at December 31, 2023 was $4.3 million, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets. Acquisition related costs remained consistent at approximately $0.6 million for the years ended December 31, 2023 and 2022, respectively, which is reflected in the accompanying consolidated statements of earnings. The costs incurred during the year ended December 31, 2023 related to the aforementioned Data Solutions acquisition, while the costs incurred during the prior period ended December 31, 2022 related to the Spinnakar Limited acquisition. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | 4. Goodwill and Other Intangible Assets Distribution Solutions Consolidated Balance January 1, 2022 $ 8,141 $ 9,047 $ 17,188 Goodwill acquired 3,244 — 3,244 Translation adjustments (703) (766) (1,469) Balance December 31, 2022 $ 10,682 $ 8,281 $ 18,963 Goodwill acquired 7,143 — 7,143 Translation adjustments 833 243 1,076 Balance December 31, 2023 $ 18,658 $ 8,524 $ 27,182 Information related to the Company’s other intangibles, net is as follows: As of December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer and vendor relationships $ 30,968 4,424 $ 26,544 Trade name 489 103 386 Total $ 31,457 $ 4,527 $ 26,930 As of December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer and vendor relationships $ 21,457 $ 2,165 $ 19,292 Trade name 468 67 401 Total $ 21,925 $ 2,232 $ 19,693 Customer relationships are amortized over thirteen years. Vendor relationships are amortized between eight The Company recognized total amortization expense for other intangibles, net of $2.2 million and $1.2 million during the years ended December 31, 2023 and 2022, respectively. Estimated future amortization expense of the Company’s other intangibles, net as of December 31, 2023 is as follows: 2024 $ 3,037 2025 3,037 2026 3,037 2027 3,037 2028 3,037 Thereafter 11,745 Total $ 26,930 |
Right-of-use Asset and Lease Li
Right-of-use Asset and Lease Liability | 12 Months Ended |
Dec. 31, 2023 | |
Right-of-use Asset and Lease Liability | |
Right-of-use Asset and Lease Liability | 5. Right-of-use Asset and Lease Liability The Company has entered into operating leases for office and warehouse facilities, which have terms at lease commencement that range from 1 years to 11 years. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets and lease expense for these leases is recognized on a straight-line basis over the lease term. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date of the lease based on the present value of the lease payments over the lease term. As our leases do not provide a readily determinable implicit rate, we use an incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Operating lease expense is recognized on a straight-line basis over the lease term and included in selling, general and administrative expenses. Information related to the Company’s right-of-use assets and related lease liabilities were as follows: Year ended December 31, 2023 2022 Cash paid for operating lease liabilities $ 627 $ 647 Right-of-use assets obtained in exchange for new operating lease obligations $ — $ 63 Weighted-average remaining lease term 3.2 years 3.9 years Weighted-average discount rate 3.6% 3.5% Maturities of lease liabilities as of December 31, 2023 were as follows: 2024 $ 575 2025 553 2026 548 2027 115 1,791 Less: imputed interest (462) Total lease liabilities $ 1,329 Lease liabilities, current portion 450 Lease liabilities, net of current portion 879 Total lease liabilities $ 1,329 |
Balance Sheet Detail
Balance Sheet Detail | 12 Months Ended |
Dec. 31, 2023 | |
Balance Sheet Detail | |
Balance Sheet Detail | 6. Balance Sheet Detail Equipment and leasehold improvements, net consist of the following: December 31, December 31, 2023 2022 Equipment $ 3,195 $ 2,720 Capitalized software 6,890 2,997 Buildings 709 — Leasehold improvements 2,385 1,848 13,179 7,565 Less accumulated depreciation and amortization (4,329) (4,050) $ 8,850 $ 3,515 Depreciation expense relating to equipment, leasehold improvements and buildings, net was $0.6 million and $0.4 million during the years ended December 31, 2023 and 2022, respectively. Amortization expense relating to capitalized software was $0.1 million and $0.4 million during the years ended December 31, 2023 and 2022. Accounts receivable – long term, net consist of the following: December 31, December 31, 2023 2022 Total amount due from customer $ 1,637 $ 5,213 Less: unamortized discount (12) (188) Less: current portion included in accounts receivable (828) (1,911) $ 797 $ 3,114 Accounts payable and accrued expenses consist of the following: December 31, December 31, 2023 2022 Trade accounts payable $ 218,717 $ 151,180 Accrued expenses 22,903 8,459 Other accounts payable and accrued expenses 8,028 1,011 $ 249,648 $ 160,650 Accumulated other comprehensive loss consists of the following: December 31, December 31, 2023 2022 Foreign currency translation adjustments $ 2,346 $ (2,618) $ 2,346 $ (2,618) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income Taxes | 7. Income Taxes Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets are as follows: December 31, December 31, 2023 2022 Deferred tax assets: Accruals and reserves $ 574 $ 631 Deferred rent credit 115 146 Depreciation and amortization 55 38 Total deferred tax assets 744 815 Deferred tax liabilities: Depreciation and amortization (5,974) (4,604) Total deferred tax liabilities (5,974) (4,604) Net deferred tax (liabilities) asset $ (5,230) $ (3,789) The provision for income taxes is as follows: Year ended December 31, 2023 2022 Current: Federal $ 2,793 $ 2,694 State 676 622 Foreign 1,372 1,254 4,841 4,570 Deferred: Federal 32 (124) State 10 (30) Foreign (425) (381) (383) (535) $ 4,458 $ 4,035 Effective Tax Rate 26.6 % 24.4 % The reasons for the difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes are as follows: Year ended December 31, 2023 2022 Statutory rate applied to pretax income $ 3,524 $ 3,472 Other permanent items 569 156 State income taxes, net of federal income tax benefit 542 468 Acquisition related costs 132 — Other items — 11 Dividends (3) (9) GILTI, net of foreign tax credits (11) (50) Foreign income taxes (under) over U.S. statutory rate (46) 137 Stock compensation (249) (150) Income tax expense $ 4,458 $ 4,035 The Company has analyzed filing positions in all the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal consolidated tax return, its state tax returns, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions. As of December 31, 2023, the Company’s 2020 through 2022 Federal tax returns remain open for examination. The Company’s various states and Canadian tax returns are open for examination for the years 2019 through 2022. The Company’s tax return in the United Kingdom is open for examination for the years 2021 and 2022. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax law applied to the facts of each matter. For financial reporting purposes, income before income taxes includes the following components: Year ended December 31, 2023 2022 United States $ 11,990 $ 12,968 Foreign 4,791 3,564 $ 16,781 $ 16,532 There was no activity related to the Company’s unrecognized tax benefits during the year ended December 31, 2023 and December 31, 2022. During the years ended December 31, 2023 and 2022, the Company incurred interest and penalties of zero, respectively, related to these uncertain tax benefits. |
Credit Facilities
Credit Facilities | 12 Months Ended |
Dec. 31, 2023 | |
Credit Facilities | |
Credit Facilities | 8. Credit Facilities On May 18, 2023, the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPM”), providing for a revolving credit facility of up to $50.0 million subject to a borrowing base, including the issuance of letters of credit and swingline loans not to exceed $2.5 million and $5.0 million, respectively, at any time outstanding. In addition, subject to certain conditions enumerated in the Credit Agreement, the Company has the right to increase the revolving credit facility by a total amount not to exceed $20.0 million. The proceeds of the revolving loans, letters of credit and swingline loans under the Credit Agreement may be used for working capital needs, general corporate purposes and for acquisitions permitted by the terms of the Credit Agreement. All outstanding loans issued pursuant to the Credit Agreement become due and payable on May 18, 2028. There were no amounts outstanding under the Credit Agreement as of December 31, 2023. Outstanding Loans comprising (i) ABR Borrowings bear interest at the ABR plus the Applicable Rate, (ii) Term Benchmark Borrowings bear interest at the Adjusted Term SOFR Rate or the Adjusted EURIBOR Rate, as applicable, plus the Applicable Rate and (iii) RFR Loans bear interest at a rate per annum equal to the applicable Adjusted Daily Simple RFR plus the Applicable Rate. The Applicable Rate for borrowings varies (i) in the case of ABR Borrowings, from 0.50% to 0.75% and (ii) in the case of Term Benchmark Borrowings and RFR Loans, from 1.50% to 1.75%. The Credit Agreement contains customary affirmative covenants, such as financial statement and collateral reporting requirements. The Credit Agreement also contains customary negative covenants that limit the ability of the Company to, among other things, incur indebtedness, create liens or permit encumbrances, or undergo certain fundamental changes. Additionally, under certain circumstances, the Company is required to maintain a minimum fixed charge coverage ratio. In connection with entering into the Credit Agreement, the Company voluntarily terminated its existing revolving credit agreement, dated November 15, 2017 with Citibank N.A. (“Previous Credit Facility”). As of December 31, 2023, the Company had no borrowings outstanding under the Previous Credit Facility. On April 8, 2022, the Company entered into a $2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc. pursuant to a Master Loan and Security Agreement. The proceeds from the Term Loan will be used to fund certain capital expenditures. The borrowing under the Term Loan bears interest at a rate of 3.73% per annum and is being repaid over forty-eight As of December 31, 2023 and 2022, the Company had $1.3 million and $1.8 million outstanding under the Term Loan, respectively. As of December 31, 2023, future principal payments under the Term Loan are as follows: 2024 540 2025 560 2026 192 Total $ 1,292 In connection with the acquisition of Data Solutions (See Note 3 – Acquisition), the Company acquired an IDF that is with recourse to the Company. Data Solutions had previously entered into the IDF with AIB Commercial Finance Limited (“AIB”) pursuant to a Debt Purchase Agreement. The proceeds from the IDF will be used for working capital needs of Data Solutions. Borrowings under the IDF are based on accounts receivable up to 80% of the outstanding accounts receivable balance. The discount rate under the IDF is equal to 2.5% above AIB’s applicable lending rates that vary based on the currency of the accounts receivable. The outstanding balance under the IDF at December 31, 2023 was $4.3 million, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets. |
Stockholders' Equity and Stock
Stockholders' Equity and Stock Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity and Stock Based Compensation | |
Stockholders' Equity and Stock Based Compensation | 9. Stockholders’ Equity and Stock-Based Compensation The 2021 Omnibus Incentive Plan (the “2021 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The 2021 Plan was approved by the Company’s stockholders at the 2021 Annual Meeting in June 2021. The total number of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) initially available for award under the 2021 Plan was 500,000 shares. As of December 31, 2023, the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 241,068. The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorizes the grant of Stock Options, Stock Units, Stock Appreciation Rights, Restricted Stock, Deferred Stock, Stock Bonuses and other equity-based awards. The total number of shares of the Company’s Common Stock initially available for award under the 2012 Plan was 600,000, which was increased to 1,000,000 shares by stockholder approval at the Company’s 2018 Annual Meeting in June 2018. Immediately prior to the replacement of the 2012 Plan by the 2021 Plan, there were 352,158 shares of Common Stock available under the 2012 Plan. The 2012 Plan has been replaced by the 2021 Plan and none of the remaining shares of Common Stock authorized under the 2012 Plan will be transferred to or used under the 2021 Plan nor will any awards under the 2012 Plan that are forfeited increase the shares available for awards under the 2021 Plan. As of December 31, 2023, the number of shares of Common Stock available under the 2012 Plan is zero. During the year ended December 31, 2023, the Company granted a total of 132,526 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest immediately, over time in three equal installments or over time in up to sixteen equal quarterly installments. During the year ended December 31, 2022, the Company granted a total of 78,505 shares of Restricted Stock to officers, directors and employees. These shares of Restricted Stock vest immediately or over time in up to sixteen equal quarterly installments. During the year ended December 31, 2022, 4,056 shares of Restricted Stock were forfeited as a result of officers and employees terminating employment with the Company. There was no options activity during the year ended December 31, 2023 and 2022 and there were no options outstanding or exercisable at December 31, 2023 and 2022, respectively, under both the Company’s 2012 Plan and 2021 Plan. Under the various plans, options that are cancelled can be reissued. At December 31, 2023, no cancelled options were reserved for future reissuance. A summary of nonvested shares of Restricted Stock awards outstanding under the Company’s 2012 Plan as of December 31, 2023, and 2022 and changes during the years ended December 31, 2023 and 2022 is as follows: Weighted Average Grant Date Shares Fair Value Nonvested shares at January 1, 2022 122,102 $ 18.35 Granted in 2022 78,505 31.83 Vested in 2022 (75,492) 21.93 Forfeited in 2022 (4,056) 19.20 Nonvested shares at December 31, 2022 121,059 $ 24.83 Granted in 2023 132,526 44.99 Vested in 2023 (110,291) 33.92 Forfeited in 2023 — — Nonvested shares at December 31, 2023 143,294 $ 36.48 As of December 31, 2023, there was approximately $4.5 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements. The unrecognized compensation cost is expected to be recognized over a weighted-average period of 1.5 years. For the years ended December 31, 2023 and 2022, the Company recognized share-based compensation cost of approximately $4.1 million and $1.9 million, respectively, which is included in selling, general and administrative expenses. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2023 | |
Defined Contribution Plan | |
Defined Contribution Plan | 10. Defined Contribution Plan The Company maintains a defined contribution plan covering substantially all employees. Participating employees may make contributions to the plan, through payroll deductions. Matching contributions are made by the Company equal to 50% of the employee’s contribution to the extent such employee contribution did not exceed 8% of their compensation. During the years ended December 31, 2023 and 2022, the Company expensed approximately $0.5 million and $0.3 million, respectively, related to this plan. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies Severance Plan The Board of Directors of the Company previously approved the Climb Global Solutions, Inc. Executive Severance and Change in Control Plan (the “Severance Plan”), which supersedes and replaces all other severance arrangements between the Company and its executive officers, which previously had been governed by separate legacy employment agreements and offer letters. The Severance Plan provides severance benefits upon a qualifying termination of employment (“Covered Termination”) of an executive officer. The Severance Plan provides for three tiers of severance benefits in the event of a Covered Termination based on the executive’s seniority and position, including payment of 6-18 months of base salary, a pro rata payment of such executive’s bonus for the year in which the Covered Termination occurred, and a COBRA subsidy during the severance period. In the event the Covered Termination in connection with a change of control, the Severance Plan provides for increased severance benefits, including payment of 18-24 months of base salary, payment of such executive’s target bonus for the year in which the Covered Termination occurred, double trigger vesting acceleration of equity awards, and a COBRA subsidy during the severance period. Other As of December 31, 2023, the Company has no standby letters of credit, has no standby repurchase obligations or other commercial commitments. The Company has a line of credit see Note 8 (Credit Facility). Other than employment agreements, other management compensation arrangements and related party transactions as disclosed in Note 12, the Company is not engaged in any other transactions with related parties. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions The Company made sales to a customer where a family member of one of our executive’s has a minority ownership position. During the year ended December 31, 2023 and 2022, net sales to this customer totaled $1.4 million and $1.8 million, respectively, and amounts due from this customer as of December 31, 2023 and 2022 totaled less than $0.1 million and $0.1 million, respectively. |
Industry, Segment and Geographi
Industry, Segment and Geographic Financial Information | 12 Months Ended |
Dec. 31, 2023 | |
Segment Information | |
Industry, Segment and Geographic Financial Information | 13. Industry, Segment and Geographic Financial Information 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. 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 CODM is the Chief Executive Officer. 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 cloud solutions provider and value-added reseller of software, hardware and services to customers worldwide. As permitted by FASB ASC Topic 280, the Company has utilized the aggregation criteria in combining its operations in Canada, Europe and the United Kingdom with the domestic segments as the international operations provide the same products and services to similar clients and are considered together when the Company’s CODM decides how to allocate resources. Segment income is based on segment net sales less the respective segment’s cost of sales 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 and inventory 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: Year ended December 31, 2023 2022 Net Sales: Distribution $ 325,262 $ 282,509 Solutions 26,751 21,839 352,013 304,348 Gross Profit: Distribution $ 53,363 $ 44,970 Solutions 10,884 9,124 64,247 54,094 Direct Costs: Distribution $ 22,467 $ 15,804 Solutions 5,238 4,296 27,705 20,100 Segment Income Before Taxes: (1) Distribution $ 30,896 $ 29,166 Solutions 5,646 4,828 Segment Income Before Taxes 36,542 33,994 General and administrative $ 16,625 $ 14,044 Acquisition related costs 629 582 Depreciation and amortization expense 2,798 2,054 Interest, net 927 159 Foreign currency transaction loss (636) (941) Income before taxes $ 16,781 $ 16,532 (1) Excludes general corporate expenses including acquisition related costs, amortization and depreciation expense, interest, and foreign currency transaction (loss) gain. As of As of December 31, December 31, Selected Assets by Segment: 2023 2022 Distribution $ 242,927 $ 180,602 Solutions 37,992 21,420 Segment Select Assets 280,919 202,022 Corporate Assets 54,179 29,834 Total Assets $ 335,098 $ 231,856 Geographic areas and net sales mix related to operations for the year ended December 31, 2023 and 2022 were as follows. Net sales is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile. Year ended December 31, 2023 Distribution Solutions Total Geography USA $ 244,261 $ 15,425 $ 259,686 Europe and United Kingdom 57,253 10,167 67,420 Canada 23,748 1,159 24,907 Total net sales $ 325,262 $ 26,751 $ 352,013 Timing of Revenue Recognition Transferred at a point in time where the Company is principal (1) $ 286,051 $ 19,853 $ 305,904 Transferred at a point in time where the Company is agent (2) 39,211 6,898 46,109 Total net sales $ 325,262 $ 26,751 $ 352,013 Year ended December 31, 2022 Distribution Solutions Total Geography USA $ 225,380 $ 11,137 $ 236,517 Europe and United Kingdom 34,423 9,171 43,594 Canada 22,706 1,531 24,237 Total net sales $ 282,509 $ 21,839 $ 304,348 Timing of Revenue Recognition Transferred at a point in time where the Company is principal (1) $ 251,334 $ 15,044 $ 266,378 Transferred at a point in time where the Company is agent (2) 31,175 6,795 37,970 Total net sales $ 282,509 $ 21,839 $ 304,348 (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 December 31, 2023 and 2022 were as follows. December 31, December 31, Identifiable Assets by Geographic Areas 2023 2022 USA $ 171,080 $ 137,877 Canada 23,994 27,597 Europe and United Kingdom 140,024 66,382 Total $ 335,098 $ 231,856 For the year ended December 31, 2023, the Company had two customers that accounted for 20%, and 15%, respectively, of consolidated net sales and as of December 31, 2023, 15% and 6%, respectively, of total net accounts receivable. For the year ended December 31, 2023, the Company had one vendor that accounted for 14% of our consolidated purchases. For the year ended December 31, 2022, the Company had two customers that accounted for 21%, and 16%, respectively, of consolidated net sales and as of December 31, 2022, 16% and 18%, respectively, of total net accounts receivable. For the year ended December 31, 2022, the Company had one vendor that accounted for 17% of our consolidated purchases. Our top five customers accounted for 51% of consolidated net sales for the years ended December 31, 2023 and 2022, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 14. Fair Value Measurements Fair value is defined under US GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – observable inputs such as quoted prices for identical instruments traded in active markets. Level 2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques. The Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy as of December 31, 2023 and 2022, respectively, are as follows: As of December 31, 2023 Level 1 Level 2 Level 3 Total Assets: Treasury bills $ 5,096 $ — $ — $ 5,096 Total assets $ 5,096 $ — $ — $ 5,096 Liabilities: Contingent earn-out $ — $ — $ 4,189 $ 4,189 Total liabilities $ — $ — $ 4,189 $ 4,189 As of December 31, 2022 Assets: Treasury bills $ — $ — $ — $ — Total assets $ — $ — $ — $ — Liabilities: Contingent earn-out $ — $ — $ 1,777 $ 1,777 Total liabilities $ — $ — $ 1,777 $ 1,777 In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. Observable or market inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions based on the best information available. The approach to estimating the contingent earn-out associated with the Company’s business combinations uses unobservable factors such as projected cash flows over the term of the contingent earn-out periods. The Company’s investment in treasury bills are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy. The Company’s contingent earn-out liability is measured at fair value on a recurring basis and is classified as level 3 within the fair value hierarchy. During the fourth quarter of each year, the Company evaluates goodwill for impairment at the reporting unit level. The Company uses qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a goodwill impairment test. This measurement is classified based on level 3 input. The following table presents the changes in the Company’s level 3 financial instruments measured at fair value on a recurring basis: Balance January 1, 2022 $ — Spinnakar acquisition - contingent earn-out 1,771 Translation adjustments 6 Balance December 31, 2022 $ 1,777 Data Solutions acquisition - contingent earn-out 2,227 Translation adjustments 185 Balance December 31, 2023 $ 4,189 There were no material changes in fair value since the respective acquisition dates associated with the contingent earn-outs. |
Schedule II--Valuation and Qual
Schedule II--Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2023 | |
Schedule II--Valuation and Qualifying Accounts | |
Schedule II--Valuation and Qualifying Accounts | Climb Global Solutions, Inc. and Subsidiaries Schedule II--Valuation and Qualifying Accounts (Amounts in thousands) Charged to Beginning Cost and Ending Description Balance Expense Deductions Balance Year ended December 31, 2022 Allowance for doubtful accounts $ 881 $ 19 $ 58 $ 842 Year ended December 31, 2023 Allowance for expected credit losses (1) $ 842 $ 54 $ 187 $ 709 (1) Previously referred to as Allowance for doubtful accounts. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation and Operations | Principles of Consolidation and Operations The consolidated financial statements include the accounts of Climb Global Solutions, Inc. and its wholly owned . All intercompany transactions and balances have been eliminated. |
Business Combinations | Business Combinations We apply the provisions of ASC 805, Business Combinations (“ASC 805”), in accounting for our acquisitions. ASC 805 requires that we evaluate whether a transaction pertains to an acquisition of assets, or to an acquisition of a business. A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose of providing a return to investors. Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets and liabilities assumed on a relative fair value basis; whereas the acquisition of a business requires us to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Our valuation of acquired assets and assumed liabilities requires estimates, especially with respect to intangible assets that was derived using valuation techniques and models such as the income approach. Such models require use of estimates including discount rates, and future expected revenue. The approach to estimating an initial contingent consideration associated with the purchase price also uses similar unobservable factors such as projected cash flows over the term of the contingent earn-out period, discounted for the period over which the initial contingent consideration is measured and expected volatility. Based upon these assumptions, the initial contingent consideration is then valued using a Monte Carlo simulation. We have used third-party qualified specialists to assist management in determining the fair value of assets acquired and liabilities assumed. This includes assistance with the determination of economic useful lives and valuation of identifiable intangibles. We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. As a result, during the measurement period, which may be up to one year from the business acquisition date, we record certain adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. All acquisition-related costs are accounted for as expenses in the period in which they are incurred. Contingent consideration is remeasured each reporting period using Level 3 inputs, and the change in fair value, including accretion for the passage of time, is recognized in acquisition related costs in the consolidated statement of earnings. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make extensive use of certain estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The significant areas of estimation include but are not limited to accounting for allowance for expected credit losses, sales returns, allocation of revenue in multiple deliverable arrangements, principal vs. agent considerations, income taxes, depreciation, amortization of intangible assets, contingencies and stock-based compensation. Actual results could differ from those estimates. |
Net Income Per Common Share | Net Income Per Common Share Our basic and diluted earnings per share are computed using the two-class method. The two-class method is an earnings allocation method that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock awards that include non-forfeitable rights to dividends are considered participating securities. Per share amounts are computed by dividing net income available to common shareholders by the weighted average shares outstanding during each period. Diluted and basic earnings per share are the same because the restricted shares are the only potentially dilutive security. A reconciliation of the numerators and denominators of the basic and diluted per share computations follows: Year ended December 31, 2023 2022 Numerator: Net income $ 12,323 $ 12,497 Less distributed and undistributed income allocated to participating securities 323 317 Net income attributable to common shareholders 12,000 12,180 Denominator: Weighted average common shares (Basic) 4,401 4,331 Weighted average common shares including assumed conversions (Diluted) 4,401 4,331 Basic net income per share $ 2.72 $ 2.81 Diluted net income per share $ 2.72 $ 2.81 |
Cash Equivalents | Cash Equivalents The Company considers all liquid short-term investments with maturities of 90 days or less when purchased to be cash equivalents. |
Accounts Receivable | Accounts Receivable Accounts receivable principally represents amounts collectible from our customers. The Company performs ongoing credit evaluations of its customers but generally does not require collateral to support any outstanding obligation. From time to time, we sell accounts receivable to a financial institution on a non-recourse basis for cash, less a discount. The Company has no significant retained interests or servicing liabilities related to the accounts receivable sold. Proceeds from the sale of receivables approximated their discounted book value and were included in operating cash flows on the Consolidated Statements of Cash Flows. |
Allowances for Expected Credit Losses | Allowances for Expected Credit Losses The Company maintains allowances for expected credit losses for estimated losses resulting from the inability of its customers to make required payments. Management determines the estimate of the allowance for expected credit losses by considering a number of factors, including historical experience, aging of the accounts receivable, as well as current market conditions and future forecasts of our customers’ ability to make payments for goods and services. At the time of sale, we record an estimate for sales returns based on historical experience, which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets. If actual sales returns are greater than estimated by management, an additional returns allowance may be required as an offset to net sales. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs, such as financial advisory and other professional fees are capitalized and recognized in interest, net over the life of the related debt instrument using the straight-line method. Deferred financing costs associated with the Company’s revolving credit facility are presented as an asset, within other assets on the Consolidated Balance Sheets. |
Foreign Currency Translation | Foreign Currency Translation Assets and liabilities of the Company’s foreign subsidiaries have been translated using the end of the reporting period exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the period. Cumulative translation adjustments have been classified within accumulated other comprehensive loss, which is a separate component of stockholders’ equity in accordance FASB ASC Topic No. 220, “Comprehensive Income”. Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled. For foreign currency remeasurement from each local currency into the appropriate functional currency, monetary assets and liabilities are remeasured to functional currencies using current exchange rates in effect at the balance sheet date. Gains or losses from these remeasurements have been included in the Company's Consolidated Statements of Earnings. Non-monetary assets and liabilities are recorded at historical exchange rates. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations in credit risk consist of cash and cash equivalents. The Company’s cash and cash equivalents, at times, may exceed federally insured limits. The Company’s cash and cash equivalents are deposited primarily in banking institutions with global operations. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. |
Financial Instruments | Financial Instruments The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximated fair value as of December 31, 2023 and 2022, because of the relative short maturity of these instruments. The Company’s accounts receivable-long-term is discounted to its present value at prevailing market rates at the time of sale which, approximates fair value as of December 31, 2023 and 2022. |
Inventory | Inventory Inventory, consisting primarily of finished products held for resale, is valued based on the first-in-first-out method of accounting and is stated at the lower of cost or net realizable value. |
Equipment and Leasehold Improvements | Equipment and Leasehold Improvements Equipment and leasehold improvements are stated at cost or fair value, if purchased as part of a business combination. Equipment depreciation is calculated using the straight-line method over three |
Software Development Costs | Software Development Costs |
Goodwill and Intangible Assets | Goodwill In a qualitative assessment, we assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, after assessing the totality of events or circumstances, we determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then the quantitative goodwill impairment test is unnecessary. If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we perform the quantitative goodwill impairment test. We may also elect the unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the quantitative goodwill impairment test. In the quantitative impairment test, we compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired. Conversely, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Determining the fair value of a reporting unit is judgmental in nature and requires the use of estimates and assumptions, including net sales growth rates, gross profit margins, operating margins, discount rates and future market conditions, among others. Any changes in the judgments, estimates or assumptions used could produce different results. Intangible Assets Intangible assets with determinable lives are amortized on a straight-line basis over their respective estimated useful lives, which is determined based on their expected period of benefit. Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset's carrying amount over its fair value. In addition, each quarter, the Company evaluates whether events and circumstances warrant a revision to the remaining estimated useful life of each of these intangible assets. If the Company were to determine that a change to the remaining estimated useful life of an intangible asset was necessary, then the remaining carrying amount of the intangible asset would be amortized prospectively over that revised remaining useful life. |
Comprehensive Income | Comprehensive Income Comprehensive income consists of net income for the year and the impact of unrealized foreign currency translation adjustments. The foreign currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in international subsidiaries. |
Revenue Recognition | Revenue Recognition The Company’s revenues primarily result from the sale of various technology products and services, including third-party products, third-party software and third-party maintenance, software support and services. The Company recognizes revenue as control of the third-party products and third-party software is transferred to customers, which generally happens at the point of shipment or fulfilment and at the point that our customers and vendors accept the terms and conditions of the arrangement for third-party maintenance, software support and services. The Company has contracts with certain customers where the Company’s performance obligation is to arrange for the products or services to be provided by another party. In these arrangements, as the Company assumes an agency relationship in the transaction, revenue is recognized in the amount of the net fee associated with serving as an agent. These arrangements primarily relate to third party maintenance, cloud services and certain security software whose intended functionality is dependent on third party maintenance. The Company allows its customers to return product for exchange or credit subject to certain limitations. A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded upon product return. The Company also provides rebates and other discounts to certain customers which are considered variable consideration. A provision for customer rebates and other discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience. The Company considers shipping and handling activities as costs to fulfill the sales of products. Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of sales. Taxes imposed by governmental authorities on the Company’s revenue producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales. The Company disaggregates its operating revenue by segment, geography and timing of revenue recognition, which the Company believes provides a meaningful depiction of the nature of its revenue. For additional information, see Note 13 (Industry, Segment and Geographic Information). Hardware and software products sold by the Company are generally delivered via shipment from the Company’s facilities, drop shipment directly from the vendor, or by electronic delivery of keys for software products. The majority of the Company’s business involves shipments directly from its vendors to its customers, in these transactions, the Company is generally responsible for negotiating price both with the vendor and customer, payment to the vendor, establishing payment terms with the customer, product returns, and has risk of loss if the customer does not make payment. As the principal with the customer, the Company recognizes revenue upon receiving notification from the vendor that the product was shipped. Control of software products is deemed to have passed to the customer when they acquire the right to use or copy the software under license as substantially all product functionality is available to the customer at the time of sale. The Company performs an analysis of the number of days of sales in-transit to customers at the end of each reporting period based on an analysis of commercial delivery terms that include drop-shipment arrangements. This analysis is the basis upon which the Company estimates the amount of net sales in-transit at the end of the period and adjusts revenue and the related costs to reflect only what has been delivered to the customer. Changes in delivery patterns may result in a different number of business days estimated to make this adjustment. The Company also performs a weighted average analysis of the estimated number of days between order fulfillment and beginning of the renewal term for term licenses recorded on a gross basis, and a deferral estimate is recorded for term license renewals fulfilled prior to commencement date. Generally, software products are sold with accompanying third-party delivered software assurance, which is a product that allows customers to upgrade, at no additional cost, to the latest technology if new capabilities are introduced during the period that the software assurance is in effect. The Company evaluates whether the software assurance is a separate performance obligation by assessing if the third-party delivered software assurance is critical or essential to the core functionality of the software itself. This involves considering if the software provides its original intended functionality to the customer without the updates, if the customer would ascribe a higher value to the upgrades versus the up-front deliverable, if the customer would expect frequent intelligence updates to the software (such as updates that maintain the original functionality), and if the customer chooses to not delay or always install upgrades. If the Company determines that the accompanying third-party delivered software assurance is critical or essential to the core functionality of the software license, the software license and the accompanying third-party delivered software assurance are recognized as a single performance obligation. The value of the product is primarily the accompanying support delivered by a third party and therefore the Company is acting as an agent in these transactions and recognizes them on a net basis at the point the associated software license is delivered to the customer. The Company sells cloud computing solutions that utilize third-party vendors to enable customers to access data center functionality in a cloud-based solution, including storage, computing and networking and access to software in the cloud that enhances office productivity, provides security or assists in collaboration. The Company recognizes revenue for cloud computing solutions for arrangements with one-time invoicing to the customer at the time of invoice on a net basis as the Company is acting as an agent in the transaction. For monthly subscription-based arrangements, the Company is acting as an agent in the transaction and recognizes revenue as it invoices the customer for its monthly usage on a net basis. For software licenses where the accompanying third-party delivered software assurance is not critical or essential to the core functionality, the software assurance is recognized as a separate performance obligation, with the associated revenue recognized on a net basis at the point the related software license is delivered to the customer. The Company also sells some of its products and services as part of bundled contract arrangements containing multiple deliverables, which may include a combination of products and services. For each deliverable that represents a distinct performance obligation, total arrangement consideration is allocated based upon the standalone selling prices (“SSP”) of each performance obligation. SSP is determined based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through established standard prices, we use judgement and estimate the standalone selling price considering available information such as market pricing and pricing related to similar products. |
Freight | Freight The Company records freight billed to its customers as net sales and the related freight costs as cost of sales when the underlying product revenue is recognized. For freight not billed to its customers, the Company records the freight costs as cost of sales. The Company’s typical shipping terms result in shipping being performed before the customer obtains control of the product. The Company considers shipping to be a fulfillment activity and not a separate performance obligation. |
Commissions | Commissions The Company pays commissions and related payroll taxes to sales personnel when customers are invoiced. These costs are recorded as selling general and administrative expenses in the period earned as all our performance obligations are complete within a short window of processing the order. |
Stock-Based Compensation | Stock-Based Compensation The Company has stockholder-approved stock incentive plans for employees and directors. Stock-based compensation is recognized based on the grant date fair value and is recognized as expense on a straight-line basis over the requisite service period. |
Operating Segments | Operating Segments |
Treasury Stock | Treasury Stock Treasury stock is accounted for at cost. Shares repurchased by the Company are held in treasury for general corporate purposes, including issuances under equity incentive plans. The reissuance of shares from treasury stock is based on the weighted average purchase price of the shares. |
Interest, net | Interest, net |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. This method also requires a valuation allowance against the net deferred tax asset if, based on the weighted available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense when assessed. The Company accounts for uncertainties in accordance with FASB ASC 740 “Income Taxes”. This standard clarified the accounting for uncertainties in income taxes. The standard prescribes criteria for recognition and measurement of tax positions. It also provides guidance on derecognition, classification, interest and penalties, and disclosures related to income taxes associated with uncertain tax positions. The Company classifies all deferred tax asset or liabilities as non-current on the balance sheet. |
Foreign exchange | Foreign Exchange |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)” Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic Effective January 1, 2023, the Company adopted the new credit loss standard and it did not have an impact on the Company’s financial statements. In July 2023, the FASB issued Accounting Standards Update 2023-03, “ Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), Compensation — Stock Compensation (Topic 718) .” This ASU amends various paragraphs in the accounting codification pursuant to the issuance of Commission Staff Accounting Bulletin (“SAB”) number 120. The ASU provides clarifying guidance related to employee and non-employee share-based payment accounting, including guidance related to spring-loaded awards. ASU 2023-03 was effective upon issuance. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements. In November 2023, the FASB issued Accounting Standards Update 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”. The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The Company will adopt the update in the first quarter of 2024 but does not expect there to be a material effect on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of the numerators and denominators of the basic and diluted per share computations | Year ended December 31, 2023 2022 Numerator: Net income $ 12,323 $ 12,497 Less distributed and undistributed income allocated to participating securities 323 317 Net income attributable to common shareholders 12,000 12,180 Denominator: Weighted average common shares (Basic) 4,401 4,331 Weighted average common shares including assumed conversions (Diluted) 4,401 4,331 Basic net income per share $ 2.72 $ 2.81 Diluted net income per share $ 2.72 $ 2.81 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Acquisition | |
Summary of purchase price allocations | (in thousands) Cash $ 3,190 Accounts receivable 32,503 Inventory 2,460 Other current assets 99 Equipment and leasehold improvements 800 Vendor relationships (10-year weighted average useful life) 8,269 Goodwill 7,143 Accounts payable and other current liabilities (34,793) Deferred tax liability (1,576) Net assets $ 18,095 |
Summary of supplementary information related to acquisition | (in thousands) Supplementary information: Cash paid to sellers $ 15,868 Contingent earn-out 2,227 Total purchase consideration $ 18,095 Cash paid to sellers 15,868 Cash acquired in acquisition (3,190) Net cash paid for acquisition $ 12,678 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Other Intangible Assets | |
Summary of goodwill | Distribution Solutions Consolidated Balance January 1, 2022 $ 8,141 $ 9,047 $ 17,188 Goodwill acquired 3,244 — 3,244 Translation adjustments (703) (766) (1,469) Balance December 31, 2022 $ 10,682 $ 8,281 $ 18,963 Goodwill acquired 7,143 — 7,143 Translation adjustments 833 243 1,076 Balance December 31, 2023 $ 18,658 $ 8,524 $ 27,182 |
Summary of other intangibles, net | As of December 31, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer and vendor relationships $ 30,968 4,424 $ 26,544 Trade name 489 103 386 Total $ 31,457 $ 4,527 $ 26,930 As of December 31, 2022 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer and vendor relationships $ 21,457 $ 2,165 $ 19,292 Trade name 468 67 401 Total $ 21,925 $ 2,232 $ 19,693 |
Schedule of estimated future amortization expense of other intangible assets | 2024 $ 3,037 2025 3,037 2026 3,037 2027 3,037 2028 3,037 Thereafter 11,745 Total $ 26,930 |
Right-of-use Asset and Lease _2
Right-of-use Asset and Lease Liability (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Right-of-use Asset and Lease Liability | |
Schedule of information relating to right-of-use assets and related lease liabilities | Year ended December 31, 2023 2022 Cash paid for operating lease liabilities $ 627 $ 647 Right-of-use assets obtained in exchange for new operating lease obligations $ — $ 63 Weighted-average remaining lease term 3.2 years 3.9 years Weighted-average discount rate 3.6% 3.5% |
Schedule of maturities of lease liabilities | Maturities of lease liabilities as of December 31, 2023 were as follows: 2024 $ 575 2025 553 2026 548 2027 115 1,791 Less: imputed interest (462) Total lease liabilities $ 1,329 Lease liabilities, current portion 450 Lease liabilities, net of current portion 879 Total lease liabilities $ 1,329 |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Balance Sheet Detail | |
Schedule of equipment and leasehold improvements | December 31, December 31, 2023 2022 Equipment $ 3,195 $ 2,720 Capitalized software 6,890 2,997 Buildings 709 — Leasehold improvements 2,385 1,848 13,179 7,565 Less accumulated depreciation and amortization (4,329) (4,050) $ 8,850 $ 3,515 |
Schedule of accounts receivable - long term, net | December 31, December 31, 2023 2022 Total amount due from customer $ 1,637 $ 5,213 Less: unamortized discount (12) (188) Less: current portion included in accounts receivable (828) (1,911) $ 797 $ 3,114 |
Schedule of accounts payable and accrued expenses | December 31, December 31, 2023 2022 Trade accounts payable $ 218,717 $ 151,180 Accrued expenses 22,903 8,459 Other accounts payable and accrued expenses 8,028 1,011 $ 249,648 $ 160,650 |
Schedule of accumulated other comprehensive loss | December 31, December 31, 2023 2022 Foreign currency translation adjustments $ 2,346 $ (2,618) $ 2,346 $ (2,618) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of deferred tax assets and liabilities | December 31, December 31, 2023 2022 Deferred tax assets: Accruals and reserves $ 574 $ 631 Deferred rent credit 115 146 Depreciation and amortization 55 38 Total deferred tax assets 744 815 Deferred tax liabilities: Depreciation and amortization (5,974) (4,604) Total deferred tax liabilities (5,974) (4,604) Net deferred tax (liabilities) asset $ (5,230) $ (3,789) |
Schedule of provision for income taxes | Year ended December 31, 2023 2022 Current: Federal $ 2,793 $ 2,694 State 676 622 Foreign 1,372 1,254 4,841 4,570 Deferred: Federal 32 (124) State 10 (30) Foreign (425) (381) (383) (535) $ 4,458 $ 4,035 Effective Tax Rate 26.6 % 24.4 % |
Schedule of difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes | Year ended December 31, 2023 2022 Statutory rate applied to pretax income $ 3,524 $ 3,472 Other permanent items 569 156 State income taxes, net of federal income tax benefit 542 468 Acquisition related costs 132 — Other items — 11 Dividends (3) (9) GILTI, net of foreign tax credits (11) (50) Foreign income taxes (under) over U.S. statutory rate (46) 137 Stock compensation (249) (150) Income tax expense $ 4,458 $ 4,035 |
Schedule of components of income before income taxes | Year ended December 31, 2023 2022 United States $ 11,990 $ 12,968 Foreign 4,791 3,564 $ 16,781 $ 16,532 |
Credit Facilities (Tables)
Credit Facilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Credit Facilities | |
Schedule of future principal payments under the term loan | 2024 540 2025 560 2026 192 Total $ 1,292 |
Stockholders' Equity and Stoc_2
Stockholders' Equity and Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity and Stock Based Compensation | |
Summary of nonvested shares of Restricted Stock awards outstanding and the changes during the period | Weighted Average Grant Date Shares Fair Value Nonvested shares at January 1, 2022 122,102 $ 18.35 Granted in 2022 78,505 31.83 Vested in 2022 (75,492) 21.93 Forfeited in 2022 (4,056) 19.20 Nonvested shares at December 31, 2022 121,059 $ 24.83 Granted in 2023 132,526 44.99 Vested in 2023 (110,291) 33.92 Forfeited in 2023 — — Nonvested shares at December 31, 2023 143,294 $ 36.48 |
Industry, Segment and Geograp_2
Industry, Segment and Geographic Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Information | |
Schedule of segment reporting information | Year ended December 31, 2023 2022 Net Sales: Distribution $ 325,262 $ 282,509 Solutions 26,751 21,839 352,013 304,348 Gross Profit: Distribution $ 53,363 $ 44,970 Solutions 10,884 9,124 64,247 54,094 Direct Costs: Distribution $ 22,467 $ 15,804 Solutions 5,238 4,296 27,705 20,100 Segment Income Before Taxes: (1) Distribution $ 30,896 $ 29,166 Solutions 5,646 4,828 Segment Income Before Taxes 36,542 33,994 General and administrative $ 16,625 $ 14,044 Acquisition related costs 629 582 Depreciation and amortization expense 2,798 2,054 Interest, net 927 159 Foreign currency transaction loss (636) (941) Income before taxes $ 16,781 $ 16,532 (1) Excludes general corporate expenses including acquisition related costs, amortization and depreciation expense, interest, and foreign currency transaction (loss) gain. As of As of December 31, December 31, Selected Assets by Segment: 2023 2022 Distribution $ 242,927 $ 180,602 Solutions 37,992 21,420 Segment Select Assets 280,919 202,022 Corporate Assets 54,179 29,834 Total Assets $ 335,098 $ 231,856 |
Schedule of net sales to identifiable assets by geographic areas | Year ended December 31, 2023 Distribution Solutions Total Geography USA $ 244,261 $ 15,425 $ 259,686 Europe and United Kingdom 57,253 10,167 67,420 Canada 23,748 1,159 24,907 Total net sales $ 325,262 $ 26,751 $ 352,013 Timing of Revenue Recognition Transferred at a point in time where the Company is principal (1) $ 286,051 $ 19,853 $ 305,904 Transferred at a point in time where the Company is agent (2) 39,211 6,898 46,109 Total net sales $ 325,262 $ 26,751 $ 352,013 Year ended December 31, 2022 Distribution Solutions Total Geography USA $ 225,380 $ 11,137 $ 236,517 Europe and United Kingdom 34,423 9,171 43,594 Canada 22,706 1,531 24,237 Total net sales $ 282,509 $ 21,839 $ 304,348 Timing of Revenue Recognition Transferred at a point in time where the Company is principal (1) $ 251,334 $ 15,044 $ 266,378 Transferred at a point in time where the Company is agent (2) 31,175 6,795 37,970 Total net sales $ 282,509 $ 21,839 $ 304,348 (1) Includes net sales from third-party hardware and software products. (2) Includes net sales from third-party maintenance, software support and services. |
Summary of identifiable assets by geographic area | December 31, December 31, Identifiable Assets by Geographic Areas 2023 2022 USA $ 171,080 $ 137,877 Canada 23,994 27,597 Europe and United Kingdom 140,024 66,382 Total $ 335,098 $ 231,856 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Schedule of assets and liabilities that are measured at fair value on a recurring basis | As of December 31, 2023 Level 1 Level 2 Level 3 Total Assets: Treasury bills $ 5,096 $ — $ — $ 5,096 Total assets $ 5,096 $ — $ — $ 5,096 Liabilities: Contingent earn-out $ — $ — $ 4,189 $ 4,189 Total liabilities $ — $ — $ 4,189 $ 4,189 As of December 31, 2022 Assets: Treasury bills $ — $ — $ — $ — Total assets $ — $ — $ — $ — Liabilities: Contingent earn-out $ — $ — $ 1,777 $ 1,777 Total liabilities $ — $ — $ 1,777 $ 1,777 |
Schedule of changes in the company's level 3 financial instruments measured at fair value on a recurring basis | Balance January 1, 2022 $ — Spinnakar acquisition - contingent earn-out 1,771 Translation adjustments 6 Balance December 31, 2022 $ 1,777 Data Solutions acquisition - contingent earn-out 2,227 Translation adjustments 185 Balance December 31, 2023 $ 4,189 |
Description of Business (Detail
Description of Business (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
Description of Business | |
Number of reportable operating segments | 2 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator: | ||
Net income | $ 12,323 | $ 12,497 |
Less distributed and undistributed income allocated to participating securities | 323 | 317 |
Net income attributable to common shareholders | $ 12,000 | $ 12,180 |
Denominator: | ||
Weighted average common shares (Basic) | 4,401 | 4,331 |
Weighted average common shares including assumed conversions (Diluted) | 4,401 | 4,331 |
Basic net income per share (in dollars per share) | $ 2.72 | $ 2.81 |
Diluted net income per share (in dollars per share) | $ 2.72 | $ 2.81 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Miscellaneous (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | |
Equipment and leasehold improvements | ||
Number of reportable operating segments | segment | 2 | |
Equipment | Minimum | ||
Equipment and leasehold improvements | ||
Useful lives of assets | 3 years | |
Equipment | Maximum | ||
Equipment and leasehold improvements | ||
Useful lives of assets | 5 years | |
Capitalized software | ||
Equipment and leasehold improvements | ||
Software development costs, gross | $ 6.9 | $ 2.4 |
Capitalized software for internal use | ||
Equipment and leasehold improvements | ||
Software development costs, gross | $ 6.9 | $ 2.3 |
Acquisition (Details)
Acquisition (Details) $ in Thousands, £ in Millions | 3 Months Ended | 12 Months Ended | |||
Oct. 06, 2023 USD ($) | Oct. 06, 2023 GBP (£) | Dec. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Acquisition details | |||||
Acquisition related costs | $ 629 | $ 582 | |||
Accounts payable and accrued expenses | Invoice Discounting Facility | |||||
Acquisition details | |||||
Invoice discounting facility acquired | $ 4,300 | ||||
Vendor relationships | |||||
Acquisition details | |||||
Useful life | 10 years | 10 years | |||
Data Solutions Holdings Limited | |||||
Acquisition details | |||||
Aggregate purchase price | $ 15,900 | £ 15 | |||
Revenue | $ 14,300 | ||||
Net income | $ 800 | ||||
Vendor relationships | 8,269 | ||||
Fair value of earn-out liability | 2,200 | ||||
Data Solutions Holdings Limited | Minimum | |||||
Acquisition details | |||||
Undiscounted payment of the earn-out consideration | 0 | ||||
Data Solutions Holdings Limited | Maximum | |||||
Acquisition details | |||||
Undiscounted payment of the earn-out consideration | 3,900 | ||||
Data Solutions Holdings Limited | Vendor relationships | |||||
Acquisition details | |||||
Vendor relationships | $ 8,300 | ||||
Useful life | 10 years | 10 years | |||
Spinnakar Limited | |||||
Acquisition details | |||||
Acquisition related costs | $ 600 | $ 600 |
Acquisition - Assets and Liabil
Acquisition - Assets and Liabilities (Details) - USD ($) $ in Thousands | Oct. 06, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||||
Goodwill | $ 27,182 | $ 18,963 | $ 17,188 | |
Vendor relationships | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||||
Useful life | 10 years | |||
Data Solutions Holdings Limited | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||||
Cash | $ 3,190 | |||
Accounts receivable | 32,503 | |||
Inventory | 2,460 | |||
Other current assets | 99 | |||
Equipment and leasehold improvements | 800 | |||
Vendor relationships | 8,269 | |||
Goodwill | 7,143 | |||
Accounts payable and other current liabilities | (34,793) | |||
Deferred tax liability | (1,576) | |||
Net assets | 18,095 | |||
Data Solutions Holdings Limited | Vendor relationships | ||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | ||||
Vendor relationships | $ 8,300 | |||
Useful life | 10 years |
Acquisition - Supplementary inf
Acquisition - Supplementary information (Details) - Data Solutions Holdings Limited $ in Thousands | Oct. 06, 2023 USD ($) |
Business Acquisition [Line Items] | |
Cash paid to sellers | $ 15,868 |
Contingent earn-out | 2,227 |
Total purchase consideration | 18,095 |
Cash acquired in acquisition | (3,190) |
Net cash paid for acquisition | $ 12,678 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Summary of goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | ||
Beginning Balance | $ 18,963 | $ 17,188 |
Goodwill acquired | 7,143 | 3,244 |
Translation adjustments | 1,076 | (1,469) |
Ending Balance | 27,182 | 18,963 |
Distribution | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 10,682 | 8,141 |
Goodwill acquired | 7,143 | 3,244 |
Translation adjustments | 833 | (703) |
Ending Balance | 18,658 | 10,682 |
Solutions | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 8,281 | 9,047 |
Translation adjustments | 243 | (766) |
Ending Balance | $ 8,524 | $ 8,281 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Other intangibles, net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 31,457 | $ 21,925 |
Accumulated Amortization | 4,527 | 2,232 |
Total | 26,930 | 19,693 |
Amortization expense | 2,200 | 1,200 |
Customer and vendor relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 21,457 | |
Accumulated Amortization | 2,165 | |
Total | 19,292 | |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 489 | 468 |
Accumulated Amortization | 103 | 67 |
Total | $ 386 | $ 401 |
Amortization period | 15 years | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 30,968 | |
Accumulated Amortization | 4,424 | |
Total | $ 26,544 | |
Amortization period | 13 years | |
Vendor relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 8 years | |
Vendor relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization period | 15 years |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Future amortization expense (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2024 | $ 3,037 | |
2025 | 3,037 | |
2026 | 3,037 | |
2027 | 3,037 | |
2028 | 3,037 | |
Thereafter | 11,745 | |
Total | $ 26,930 | $ 19,693 |
Right-of-use Asset and Lease _3
Right-of-use Asset and Lease Liability (Details) | Dec. 31, 2023 |
Minimum | |
Right-of-use Asset and Lease Liability | |
Lease term | 1 year |
Maximum | |
Right-of-use Asset and Lease Liability | |
Lease term | 11 years |
Right-of-use Asset and Lease _4
Right-of-use Asset and Lease Liability - Operating lease information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Right-of-use Asset and Lease Liability | ||
Cash paid for operating lease liabilities | $ 627 | $ 647 |
Right-of-use assets obtained in exchange for new operating lease obligations | $ 63 | |
Weighted-average remaining lease term | 3 years 2 months 12 days | 3 years 10 months 24 days |
Weighted-average discount rate | 3.60% | 3.50% |
Right-of-use Asset and Lease _5
Right-of-use Asset and Lease Liability - Maturities of lease liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Maturities of lease liabilities | ||
2024 | $ 575 | |
2025 | 553 | |
2026 | 548 | |
2027 | 115 | |
Total | 1,791 | |
Less: imputed interest | (462) | |
Total lease liabilities | 1,329 | |
Lease liability, current portion | 450 | $ 521 |
Lease liability, net of current portion | $ 879 | $ 1,296 |
Balance Sheet Detail (Details)
Balance Sheet Detail (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | $ 13,179 | $ 7,565 |
Less accumulated depreciation and amortization | (4,329) | (4,050) |
Equipment and leasehold improvements, net | 8,850 | 3,515 |
Depreciation | 600 | 400 |
Equipment | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | 3,195 | 2,720 |
Capitalized software | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | 6,890 | 2,997 |
Amortization | 100 | 400 |
Buildings | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | 709 | |
Leasehold improvements | ||
Equipment and leasehold improvements | ||
Equipment and leasehold improvements, gross | $ 2,385 | $ 1,848 |
Balance Sheet Detail - Accounts
Balance Sheet Detail - Accounts receivable - long term, net (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Accounts receivable - long term | ||
Total amount due from customer | $ 1,637 | $ 5,213 |
Less: unamortized discount | (12) | (188) |
Less: current portion included in accounts receivable | (828) | (1,911) |
Total of accounts receivable, long term, net | $ 797 | $ 3,114 |
Balance Sheet Detail - Accoun_2
Balance Sheet Detail - Accounts payable and accrued expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Accounts payable and accrued expenses | ||
Trade accounts payable | $ 218,717 | $ 151,180 |
Accrued expenses | 22,903 | 8,459 |
Other accounts payable and accrued expenses | 8,028 | 1,011 |
Accounts payable and accrued expenses | 249,648 | 160,650 |
Accumulated other comprehensive loss | (522) | (2,868) |
Foreign currency translation adjustments | ||
Accounts payable and accrued expenses | ||
Accumulated other comprehensive loss | $ 2,346 | $ (2,618) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets - (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Accruals and reserves | $ 574 | $ 631 |
Deferred rent credit | 115 | 146 |
Depreciation and amortization | 55 | 38 |
Total deferred tax assets | 744 | 815 |
Deferred tax liabilities: | ||
Depreciation and amortization | (5,974) | (4,604) |
Total deferred tax liabilities | (5,974) | (4,604) |
Net deferred tax (liabilities) asset | $ (5,230) | $ (3,789) |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current: | ||
Federal | $ 2,793 | $ 2,694 |
State | 676 | 622 |
Foreign | 1,372 | 1,254 |
Total current income tax | 4,841 | 4,570 |
Deferred: | ||
Federal | 32 | (124) |
State | 10 | (30) |
Foreign | (425) | (381) |
Total deferred income tax | (383) | (535) |
Income tax expense | $ 4,458 | $ 4,035 |
Effective tax rate (as a percent) | 26.60% | 24.40% |
Income Taxes - Reconciliations
Income Taxes - Reconciliations and Components of Income - (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Reconciliation of difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes | ||
Statutory rate applied to pretax income | $ 3,524 | $ 3,472 |
Other permanent items | 569 | 156 |
State income taxes, net of federal income tax benefit | 542 | 468 |
Acquisition related costs | 132 | |
Other items | 11 | |
Dividends | (3) | (9) |
GILTI, net of foreign tax credits | (11) | (50) |
Foreign income taxes (under) over U.S. statutory rate | (46) | 137 |
Stock compensation | (249) | (150) |
Income tax expense | 4,458 | 4,035 |
Components of income before income taxes | ||
United States | 11,990 | 12,968 |
Foreign | 4,791 | 3,564 |
Income before provision for income taxes | $ 16,781 | $ 16,532 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits - (Details) - USD ($) $ in Thousands | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | |
Withholding taxes related to repatriation | $ 0 | ||
Unrecognized tax benefits | 0 | $ 0 | |
Interest and penalties related to uncertain tax positions | $ 0 | ||
Canada | |||
Undistributed earnings | 9,200 | ||
United Kingdom | |||
Undistributed earnings | $ 5,300 | ||
Ireland | |||
Undistributed earnings | $ 900 |
Credit Facilities (Details)
Credit Facilities (Details) | 12 Months Ended | ||||
Apr. 08, 2022 USD ($) | Dec. 31, 2023 USD ($) | Oct. 06, 2023 USD ($) | May 18, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Credit Facilities | |||||
Standby letters of credit | $ 0 | ||||
Interest rate | 3.73% | ||||
Debt Instrument, Face Amount | $ 2,100,000 | ||||
Debt Instrument, Term | 48 months | ||||
Long-term Debt | 1,300,000 | $ 1,800,000 | |||
Credit Facility | |||||
Credit Facilities | |||||
Maximum borrowing capacity | $ 50,000,000 | ||||
Maximum additional borrowing capacity | 20,000,000 | ||||
Borrowings outstanding | $ 0 | ||||
Credit Facility | Minimum | |||||
Credit Facilities | |||||
Standby letters of credit | 2,500,000 | ||||
Credit Facility | Minimum | Alternate Base Rate | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 0.50% | ||||
Credit Facility | Minimum | Risk Free Rate | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 1.50% | ||||
Credit Facility | Maximum | |||||
Credit Facilities | |||||
Standby letters of credit | $ 5,000,000 | ||||
Credit Facility | Maximum | Alternate Base Rate | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 0.75% | ||||
Credit Facility | Maximum | Risk Free Rate | |||||
Credit Facilities | |||||
Interest rate margin (as a percent) | 1.75% | ||||
Invoice Discounting Facility | |||||
Credit Facilities | |||||
Interest rate | 2.50% | ||||
Borrowings, Percent of Accounts Receivable | 0.80 | ||||
Borrowings as a percent of outstanding accounts receivable | 0.80 | ||||
Invoice Discounting Facility | Accounts payable and accrued expenses | |||||
Credit Facilities | |||||
Invoice discounting facility acquired | $ 4,300,000 |
Credit Facilities - Future Prin
Credit Facilities - Future Principal Payments Under Term Loan (Details) - Term Loans $ in Thousands | Dec. 31, 2023 USD ($) |
Principal Payments Under The Term Loan | |
2024 | $ 540 |
2025 | 560 |
2026 | 192 |
Total | $ 1,292 |
Stockholders' Equity and Stoc_3
Stockholders' Equity and Stock Based Compensation - Plans and options (Details) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2018 | May 31, 2018 |
Stock-based compensation | ||||
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Options reserved for future issuance (in shares) | 0 | |||
Options outstanding | 0 | 0 | ||
Options exercisable | 0 | 0 | ||
2021 Plan | ||||
Stock-based compensation | ||||
Common Stock, par value (in dollars per share) | $ 0.01 | |||
Number of shares of common stock initially available for award | 500,000 | |||
Options reserved for future issuance (in shares) | 241,068 | |||
2012 Plan | ||||
Stock-based compensation | ||||
Number of shares of common stock initially available for award | 1,000,000 | 600,000 | ||
Options reserved for future issuance (in shares) | 0 | 352,158 |
Stockholders' Equity and Stoc_4
Stockholders' Equity and Stock Based Compensation - Nonvested (Details) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2023 USD ($) installment item $ / shares shares | Dec. 31, 2022 USD ($) installment $ / shares shares | |
Selling, general and administrative expenses | ||
Weighted Average Grant Date Fair Value | ||
Share-based compensation expense | $ | $ 4.1 | $ 1.9 |
Restricted stock | ||
Shares | ||
Nonvested shares at the beginning of the period | shares | 121,059 | 122,102 |
Granted (in shares) | shares | 132,526 | 78,505 |
Vested (in shares) | shares | (110,291) | (75,492) |
Forfeited (in shares) | shares | (4,056) | |
Nonvested shares at the end of the period | shares | 143,294 | 121,059 |
Number of equal installments for vesting of awards | item | 3 | |
Weighted Average Grant Date Fair Value | ||
Nonvested shares at the beginning of period (in dollars per share) | $ / shares | $ 24.83 | $ 18.35 |
Granted (in dollars per share) | $ / shares | 44.99 | 31.83 |
Vested (in dollars per share) | $ / shares | 33.92 | 21.93 |
Forfeited (in dollars per share) | $ / shares | 19.20 | |
Nonvested shares at the end of period (in dollars per share) | $ / shares | $ 36.48 | $ 24.83 |
Unrecognized compensation cost (in dollars) | $ | $ 4.5 | |
Weighted average period for recognition of unrecognized compensation cost | 1 year 6 months | |
Restricted stock | Maximum | ||
Shares | ||
Number of equal quarterly installments for vesting of awards | installment | 16 | 16 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Defined Contribution Plan | ||
Company's matching contributions equal to each employee's contribution (as a percent) | 50% | |
Maximum contribution of employees as a percentage of their compensation | 8% | |
Employer contributions | $ 0.5 | $ 0.3 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Other | |
Standby letters of credit | $ 0 |
Standby repurchase obligations or other commercial commitments | $ 0 |
Minimum | CEO | |
Contingencies | |
Period for severance payments | 6 months |
Period in which additional severance can be paid if there is a change in control | 18 months |
Maximum | CEO | |
Contingencies | |
Period for severance payments | 18 months |
Period in which additional severance can be paid if there is a change in control | 24 months |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Sales to related parties | $ 352,013 | $ 304,348 |
Family member of executive | Related Party | ||
Sales to related parties | 1,400 | 1,800 |
Due from related party | $ 100 | $ 100 |
Industry, Segment and Geograp_3
Industry, Segment and Geographic Financial Information (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | |
Segment reporting information | ||
Number of reportable operating segments | segment | 2 | |
Net sales | $ 352,013 | $ 304,348 |
Gross profit | 64,247 | 54,094 |
Direct Costs | 27,705 | 20,100 |
Segment Income Before Taxes | 36,542 | 33,994 |
General and administrative | 16,625 | 14,044 |
Acquisition related costs | 629 | 582 |
Depreciation and amortization expense | 2,798 | 2,054 |
Interest, net | 927 | 159 |
Foreign currency transaction loss | (636) | (941) |
Income before provision for income taxes | 16,781 | 16,532 |
Distribution | ||
Segment reporting information | ||
Net sales | 325,262 | 282,509 |
Gross profit | 53,363 | 44,970 |
Direct Costs | 22,467 | 15,804 |
Segment Income Before Taxes | 30,896 | 29,166 |
Solutions | ||
Segment reporting information | ||
Net sales | 26,751 | 21,839 |
Gross profit | 10,884 | 9,124 |
Direct Costs | 5,238 | 4,296 |
Segment Income Before Taxes | $ 5,646 | $ 4,828 |
Industry, Segment and Geograp_4
Industry, Segment and Geographic Financial Information - Selected Assets by Segment (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Segment Reporting Information [Line Items] | ||
Total Assets | $ 335,098 | $ 231,856 |
Segment Total | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 280,919 | 202,022 |
Corporate Assets | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 54,179 | 29,834 |
Distribution | Segment Total | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 242,927 | 180,602 |
Solutions | Segment Total | ||
Segment Reporting Information [Line Items] | ||
Total Assets | $ 37,992 | $ 21,420 |
Industry, Segment and Geograp_5
Industry, Segment and Geographic Financial Information - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 352,013 | $ 304,348 |
Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 325,262 | 282,509 |
Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 26,751 | 21,839 |
USA | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 259,686 | 236,517 |
USA | Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 244,261 | 225,380 |
USA | Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 15,425 | 11,137 |
Europe and United Kingdom | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 67,420 | 43,594 |
Europe and United Kingdom | Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 57,253 | 34,423 |
Europe and United Kingdom | Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 10,167 | 9,171 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 24,907 | 24,237 |
Canada | Distribution | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 23,748 | 22,706 |
Canada | Solutions | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 1,159 | 1,531 |
Company As Principal | Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 305,904 | 266,378 |
Company As Principal | Distribution | Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 286,051 | 251,334 |
Company As Principal | Solutions | Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 19,853 | 15,044 |
Company As Agent | Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 46,109 | 37,970 |
Company As Agent | Distribution | Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 39,211 | 31,175 |
Company As Agent | Solutions | Transferred at Point in Time | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 6,898 | $ 6,795 |
Industry, Segment and Geograp_6
Industry, Segment and Geographic Financial Information - Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||
Identifiable Assets by Geographic Areas | $ 335,098 | $ 231,856 |
USA | ||
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||
Identifiable Assets by Geographic Areas | 171,080 | 137,877 |
Canada | ||
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||
Identifiable Assets by Geographic Areas | 23,994 | 27,597 |
Europe and United Kingdom | ||
Net sales to unaffiliated customers and identifiable assets by geographic areas | ||
Identifiable Assets by Geographic Areas | $ 140,024 | $ 66,382 |
Industry, Segment and Geograp_7
Industry, Segment and Geographic Financial Information - Concentration (Details) | 12 Months Ended | |
Dec. 31, 2023 item customer | Dec. 31, 2022 item customer | |
Top five customers | ||
Significant Customers and Vendors | ||
Number of customers | 5 | 5 |
Net sales | Customer concentration risk | ||
Significant Customers and Vendors | ||
Number of customers | 2 | 2 |
Net sales | Customer one | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 20% | 21% |
Net sales | Customer two | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 15% | 16% |
Net sales | Top five customers | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 51% | 51% |
Net accounts receivable | Customer one | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 15% | 16% |
Net accounts receivable | Customer two | Customer concentration risk | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 6% | 18% |
Purchases | Vendor concentration risk | ||
Significant Customers and Vendors | ||
Number of customers | item | 1 | 1 |
Purchases | Vendor concentration risk | Vendor One | ||
Significant Customers and Vendors | ||
Percentage of concentration risk | 14% | 17% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring member - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Assets: | ||
Total assets | $ 5,096 | |
Liabilities: | ||
Contingent earn-out | 4,189 | $ 1,777 |
Total liabilities | 4,189 | 1,777 |
Treasury bills | ||
Assets: | ||
Treasury bills | 5,096 | |
Level 1 | ||
Assets: | ||
Total assets | 5,096 | |
Level 1 | Treasury bills | ||
Assets: | ||
Treasury bills | 5,096 | |
Level 3 | ||
Liabilities: | ||
Contingent earn-out | 4,189 | 1,777 |
Total liabilities | $ 4,189 | $ 1,777 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Financial Instruments (Details) - Recurring member - Level 3 - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value Measurements | ||
Beginning balance | $ 1,777 | |
Translation adjustments | 185 | $ 6 |
Ending balance | 4,189 | 1,777 |
Spinnakar Limited | ||
Fair Value Measurements | ||
Acquisition - contingent earn-out | $ 1,771 | |
Data Solutions Holdings Limited | ||
Fair Value Measurements | ||
Acquisition - contingent earn-out | $ 2,227 |
Schedule II--Valuation and Qu_2
Schedule II--Valuation and Qualifying Accounts (Details) - Allowances for accounts receivable - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Valuation and qualifying accounts | ||
Beginning Balance | $ 842 | $ 881 |
Charged to Cost and Expense | 54 | 19 |
Deductions | 187 | 58 |
Ending Balance | $ 709 | $ 842 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 12,323 | $ 12,497 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |