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Segment Reporting
 6 Months Ended
Jun. 30, 2025
Segment Reporting  
Segment Reporting

Note 6 - Segment Reporting

 

Segment information reported in the tables below represents the operating segments of the Company organized in a manner consistent with which separate information is available and for which segment results are evaluated regularly by our President and CEO, who is our chief operating decision-maker (CODM), in assessing performance, allocating resources and awarding incentive compensation. Prior to the fourth quarter of 2024, our activities were organized and managed in two reportable segments: facilities management and systems integration, with our procurement operating segment aggregated into the systems integration reportable segment. In the fourth quarter of 2024, we reorganized our structure such that our CODM now evaluates our operations and allocates resources on the basis of three segments.  Accordingly, we have determined that we now have three reportable segments as noted below.  Comparable prior period amounts presented have been recast to conform with the current period presentation, including the costs allocated to each reportable segment as provided to our CODM.  Our revenues are substantially all derived from the U.S. market, and all revenues presented are from external customers; we have no intercompany revenues.

 

The Company’s reportable segments are as follows:

 

 

·

Procurement: Assists our customers in procuring third-party hardware, software, and professional services on their behalf that are used in our integration services as we integrate these components to deliver a completed system to our customers. Although this activity drives some of the work done in the systems integration business, its activities and financial results are reviewed separately from the systems integration segment results.

 

·

Systems Integration: Integrates IT equipment for OEM vendors and customers to be used inside data center environments, including modular data centers. This includes AI-enabled computer technology as well as more traditional data center equipment. This segment also provides other computer equipment configuration services for our customers.

 

·

Facilities Management: Involved in the design, project management and maintenance of data centers and mission-critical business operations.

 

 

 

 

The CODM evaluates the performance of the segments based on segment revenue, gross profit and pre-tax income, including the significant expenses presented separately in the table below. Segment results are exclusive of certain activities and expenses that are not allocated to specific segments, and which are reconciled below to our consolidated pre-tax income.

When present, certain expenses within cost of revenues such as amortization of purchased intangibles and unusual and non-recurring items are not allocated to specific segments. Therefore, these amounts are excluded from segment results and included in consolidated pre-tax income.  Other consolidated assets not specifically attributable to or allocated to business segments are principally cash and cash equivalents, prepaids and deposits, certain fixed assets, and operating lease right-of use assets.  Other operating expenses in the following tables generally represent property taxes, rent and related costs, travel and entertainment, professional fees, office supplies and other similar items utilized by the specific reportable segments but not separately identified in the tables below as none of the costs is individually material.

 

Information regarding our reportable segments is presented below (in thousands): 

 

Procurement

 

 

Systems Integration

 

 

Facilities Management

 

 

Total Segments

 

Three Months Ended June 30, 2025:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$33,002

 

 

$9,486

 

 

$1,482

 

 

$43,970

 

Cost of revenue

 

 

30,463

 

 

 

5,311

 

 

 

381

 

 

 

36,155

 

Segment gross profit

 

 

2,539

 

 

 

4,175

 

 

 

1,101

 

 

 

7,815

 

Payroll and benefits excluded from cost of revenues

 

 

-

 

 

 

793

 

 

 

170

 

 

 

963

 

Depreciation and amortization expense

 

 

-

 

 

 

761

 

 

 

3

 

 

 

764

 

Other operating expenses

 

 

-

 

 

 

343

 

 

 

15

 

 

 

358

 

Interest expense

 

 

756

 

 

 

100

 

 

 

3

 

 

 

859

 

Segment pre-tax income

 

 

1,783

 

 

 

2,178

 

 

 

910

 

 

 

4,871

 

Capital expenditures

 

$-

 

 

$12,705

 

 

 

-

 

 

$12,705

 

 

 

 

Procurement

 

 

Systems Integration

 

 

Facilities Management

 

 

Total Segments

 

Three Months Ended June 30, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$4,914

 

 

$4,960

 

 

$2,285

 

 

$12,159

 

Cost of revenue

 

 

4,201

 

 

 

2,824

 

 

 

598

 

 

 

7,623

 

Segment gross profit

 

 

713

 

 

 

2,136

 

 

 

1,687

 

 

 

4,536

 

Payroll and benefits excluded from cost of revenues

 

 

-

 

 

 

490

 

 

 

103

 

 

 

593

 

Depreciation and amortization expense

 

 

-

 

 

 

91

 

 

 

26

 

 

 

117

 

Other operating expenses

 

 

-

 

 

 

349

 

 

 

(11)

 

 

338

 

Interest expense

 

 

310

 

 

 

44

 

 

 

22

 

 

 

376

 

Segment pre-tax income (loss)

 

 

403

 

 

 

1,162

 

 

 

1,547

 

 

 

3,112

 

Capital expenditures

 

$-

 

 

$1,682

 

 

$-

 

 

$1,682

 

 

 

 

Procurement

 

 

Systems Integration

 

 

Facilities Management

 

 

Total Segments

 

Six Months Ended June 30, 2025:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$123,179

 

 

$16,970

 

 

$2,780

 

 

$142,929

 

Cost of revenue

 

 

113,612

 

 

 

11,144

 

 

 

1,148

 

 

 

125,904

 

Segment gross profit

 

 

9,567

 

 

 

5,826

 

 

 

1,632

 

 

 

17,025

 

Payroll and benefits excluded from cost of revenues

 

 

-

 

 

 

1,624

 

 

 

309

 

 

 

1,933

 

Depreciation and amortization expense

 

 

-

 

 

 

940

 

 

 

6

 

 

 

946

 

Other operating expenses

 

 

14

 

 

 

623

 

 

 

24

 

 

 

661

 

Interest expense

 

 

2,108

 

 

 

202

 

 

 

17

 

 

 

2,327

 

Segment pre-tax income

 

 

7,445

 

 

 

2,437

 

 

 

1,276

 

 

 

11,158

 

Capital expenditures

 

$-

 

 

$27,574

 

 

 

-

 

 

$27,574

 

 

 

Procurement

 

 

Systems Integration

 

 

Facilities Management

 

 

Total Segments

 

Six Months Ended June 30, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$16,538

 

 

$7,083

 

 

$4,431

 

 

$28,052

 

Cost of revenue

 

 

14,916

 

 

 

4,343

 

 

 

1,543

 

 

 

20,802

 

Segment gross profit

 

 

1,622

 

 

 

2,740

 

 

 

2,888

 

 

 

7,250

 

Payroll and benefits excluded from cost of revenues

 

 

-

 

 

 

920

 

 

 

232

 

 

 

1,152

 

Depreciation and amortization expense

 

 

-

 

 

 

150

 

 

 

38

 

 

 

188

 

Other operating expenses

 

 

-

 

 

 

510

 

 

 

5

 

 

 

515

 

Interest expense

 

 

594

 

 

 

78

 

 

 

32

 

 

 

704

 

Segment pre-tax income (loss)

 

 

1,028

 

 

 

1,082

 

 

 

2,581

 

 

 

4,691

 

Capital expenditures

 

$-

 

 

$1,721

 

 

$-

 

 

$1,721

 

 

The table below reconciles total segment pre-tax income for each period presented above to consolidated pre-tax income (in thousands):

 

 

 

Three Months Ended

June 30,

(unaudited)

 

 

Six Months Ended

June 30,

(unaudited)

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Total segment pre-tax income (loss)

 

$4,871

 

 

$3,112

 

 

$11,158

 

 

$4,691

 

Less: Unallocated SG&A, depreciation and other operating expenses

 

 

3,494

 

 

 

1,790

 

 

 

7,136

 

 

 

3,443

 

Plus: Unallocated interest income, net

 

 

175

 

 

 

106

 

 

 

558

 

 

 

205

 

Less other expense (plus other income)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Consolidated pre-tax income

 

$1,552

 

 

$1,428

 

 

$4,580

 

 

$1,453

 

 

The table below presents segment total assets for June 30, 2025 and December 31, 2024 (in thousands):

 

 

 

Procurement

 

 

Systems Integration

 

 

Facilities Management

 

 

Total Segments

 

Total Segment Assets at June 30, 2025

 

$28,452

 

 

$38,789

 

 

$2,773

 

 

$70,014

 

Total Segment Assets at December 31, 2024

 

 

19,319

 

 

 

25,855

 

 

 

932

 

 

 

46,106

 

 

The table below reconciles combined segment total assets for each period presented above to consolidated total assets (in thousands):

 

 

 

June 30, 2025

(unaudited)

 

 

December 31, 2024

 

Combined total assets included in segments

 

$70,014

 

 

$46,106

 

Plus items not allocated to segments:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

41,836

 

 

 

23,222

 

Prepaid expenses and other current assets

 

 

1,055

 

 

 

230

 

Property and equipment, net

 

 

979

 

 

 

29

 

Lease right-of-use asset

 

 

22,939

 

 

 

24,213

 

Other assets

 

 

2,647

 

 

 

2,768

 

Consolidated total assets

 

$139,470

 

 

$96,568