What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-07 · 285 added, 166 removed, 715 unchanged (39% of the section changed)

4 unchanged sentences

(Amounts in thousands, except share and per share amounts)

September 30,

Current assets:

41 unchanged sentences

62,560 53,215

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

1,156 ( 522 )

8 unchanged sentences

(Amounts in thousands, except per share data)

Six months ended

Nine months ended

Three months ended

September 30,

Cost of sales, excluding depreciation and amortization expense

5 unchanged sentences

Interest, net

Foreign currency transaction (loss) gain

Foreign currency transaction loss

Change in fair value of acquisition contingent consideration

Income before provision for income taxes

9 unchanged sentences

(Amounts in thousands)

Six months ended

Nine months ended

Three months ended

Other comprehensive (loss) income:

Foreign currency translation adjustments

Other comprehensive (loss) income

September 30,

Other comprehensive income (loss):

Foreign currency translation adjustments, net of taxes

Other comprehensive income (loss)

Comprehensive income

5 unchanged sentences

Comprehensive

(Loss) Income

Income (Loss)

Balance at January 1, 2024

26 unchanged sentences

5,284,500 $ 53 $ 35,738 672,973 $ ( 12,462 ) $ 57,862 $ ( 1,361 ) $ 79,830

— — — — — 5,459 — 5,459

Translation adjustment

— — — — — — 2,517 2,517

Dividends paid (per common share $ 0.17 )

— — — — — ( 761 ) — ( 761 )

Share-based compensation expense

— — 938 — — — — 938

Restricted stock grants (net of forfeitures)

— — — — — — — —

Treasury shares repurchased

— — — 4,737 ( 315 ) — — ( 315 )

Balance at September 30, 2024

5,284,500 $ 53 $ 36,676 677,710 $ ( 12,777 ) $ 62,560 $ 1,156 $ 87,668

Comprehensive

(Loss) Income

Income (Loss)

Balance at January 1, 2023

26 unchanged sentences

5,284,500 $ 53 $ 33,476 715,586 $ ( 12,402 ) $ 47,106 $ ( 1,251 ) $ 66,982

— — — — — 2,372 — 2,372

Translation adjustment

— — — — — — ( 1,442 ) ( 1,442 )

Dividends paid (per common share $ 0.17 )

— — — — — ( 754 ) — ( 754 )

Share-based compensation expense

— — 711 — — — — 711

Restricted stock grants (net of forfeitures)

— — ( 292 ) ( 16,737 ) 292 — — —

Treasury shares repurchased

— — — 6,023 ( 247 ) — — ( 247 )

Balance at September 30, 2023

5,284,500 $ 53 $ 33,895 704,872 $ ( 12,357 ) $ 48,724 $ ( 2,693 ) $ 67,622

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

(Amounts in thousands)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities

6 unchanged sentences

Amortization of right-of-use assets

Change in fair value of contingent earn-out consideration

Changes in operating assets and liabilities:

8 unchanged sentences

Purchase of equipment and leasehold improvements

Payment for acquisition

Net cash and cash equivalents used in investing activities

19 unchanged sentences

Notes to Condensed Consolidated Financial Statements

June 30, 2024

September 30, 2024

(Amounts in tables in thousands, except share and per share amounts)

17 unchanged sentences

Certain reclassifications and immaterial revisions have been made to the prior period financial statements to conform to the current-year presentation.

Recently Issued Accounting Standard s:

Recently Issued Accounting Standards:

In November 2023, the FASB issued Accounting Standards Update 2023 - 07 “ Segment Reporting (Topic 280 ):

5 unchanged sentences

Foreign currency transaction gains and losses are recorded as income or expenses as amounts are settled.

The net sales from our foreign operations for the three months ended June 30, 2024 and 202 3 were $ 22.9 million a nd $ 16.5 million, respectively.

The net sales from our foreign operations for the six months ended June 30, 2024 and 2023 were $ 51.1 mil lion and $ 41.1 million, respectively.

The net sales from our foreign operations for the three months ended September 30, 2024 and 2023 were $ 37.5 million a nd $ 14.0 million, respectively.

The net sales from our foreign operations for the nine months ended September 30, 2024 and 2023 were $ 88.6 mil lion and $ 55.0 million, respectively.

The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product.

In cases where the Company is not able to create a natural hedge by maintaining offsetting asset and liability amounts in the same currency, it may enter into foreign exchange contracts, typically in the form of forward purchase agreements, to facilitate the hedging of foreign currency exposures to mitigate the impact of changes in foreign currency exchange rates.

These contracts generally have terms of no more than three months.

The Company does not apply hedge accounting to these contracts and therefore the changes in fair value are recorded in earnings.

The Company does not enter into foreign exchange contracts for trading purposes and the risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the Company minimizes by limiting its counterparties to major financial institutions.

The Company recognized an unrealized loss of approximately $ 0.1 million on contracts outstanding as of September 30, 2024 , which is included in foreign currency transaction loss in the Consolidated Statements of Earnings.

Comprehensive Income:

39 unchanged sentences

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.

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 purchase consideration includes approximately $ 2.3 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 June 30, 2024 and December 31, 2023 .

Acquisition of Douglas Stewart Software & Services, LLC

On July 31, 2024, Climb Global Solutions DSS, LLC, a wholly-owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) and purchased the entire share capital of Douglas Stewart Software & Services, LLC ("DSS"), a Florida limited liability company, for an aggregate purchase price of approximately $ 20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment.

DSS distributes software to VARs and campus stores across North America in both the K- 12 and higher education markets, furthering the Company's reach into these markets.

The Purchase Agreement contains customary representations, warranties, covenants and indemnities.

The acquisition was funded utilizing cash from the Company’s balance sheet.

The financial position and operating results of DSS is included in the Company’s consolidated financial statements from the date of the acquisition.

The Company recorded net revenue for DSS of approximately $ 6.8 million and net income of approximately $ 1.0 million during the three and nine months ended September 30, 2024 , respectively.

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 third quarter of 2024, 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;

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)

Prepaid expenses and other current assets

Right-of-use asset

Accounts payable and accrued expenses

Lease liability, current portion

Lease liability, non-current portion

Intangibles - Vendor Relationships

(in thousands)

Supplementary information:

Cash paid to sellers

Contingent earn-out

Total purchase consideration

Intangible assets are comprised of approximately $ 20.6 million of vendor relationships with a weighted average amortization period of 11 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 18 – 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 included approximately $ 1.7 million fair value for potential earn-out consideration if certain targets are achieved by September 30, 2025, payable in cash.

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 18 – Fair Value Measurements), reflecting its assessment of the assumptions market participants 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.

The undiscounted payment of the earn-out can range from zero up to approximately $ 4.2 million and achievement is based on the post-acquisition results of DSS.

Acquisition of Data Solutions Holdings Limited

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 purchase consideration included approximately $ 2.3 million fair value for potential earn-out consideration if certain targets are achieved, payable in cash.

As of September 30, 2024 , the Company reassessed the earn-out liability and increased the fair value of the earn out liability to approximately $ 3.5 million, with $ 1.2 million adjustment recognized within change in fair value of acquisition contingent consideration during the three and nine months ended September 30, 2024 .

The earn-out liability is included in current liabilities as of September 30, 2024 and December 31, 2023 , as payment will be due during the fourth quarter of 2024.

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 11 – Credit Facilities).

The balance outstanding under the IDF at June 30, 2024 was zero, as the Company terminated the IDF during the period, compared to $ 4.3 million at December 31, 2023 , which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

The balance outstanding under the IDF at September 30, 2024 was zero , as the Company terminated the IDF during the period, compared to $ 4.3 million at December 31, 2023 , which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

During the three months ended September 30, 2024 and 2023 , the Company recognized acquisition related costs of $ 0.6 million and $ 0.2 million, respectively.

During the nine months ended September 30, 2024 and 2023 , the Company recognized acquisition related costs of $ 1.2 million and $ 0.3 million.

These acquisition related costs are reflected in the accompanying consolidated statements of earnings.

The costs incurred during the three and nine months ended September 30, 2024 primarily related to the aforementioned DSS acquisition, while the costs incurred during the prior period three and nine months ended September 30, 2023 related to the aforementioned Data Solutions acquisition.

Pro Forma Results (unaudited)

The following unaudited pro forma financial information summarizes the results of operations for the three and nine months ended September 30, 2024 and 2023 as if the acquisition of DSS and Data Solutions has been completed as of the beginning of the three and nine months ended September 30, 2024 and 2023 , respectively.

The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisitions and adjustments to reflect income taxes at a rate consistent with the tax rates of the local jurisdictions.

As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisitions had taken place on the basis assumed above, nor are they indicative of the results of future combined periods.

Nine months ended

Three months ended

September 30,

$ 318,268 $ 279,918 $ 123,437 $ 94,850

$ 13,745 $ 11,217 $ 6,295 $ 4,757

Goodwill and Other Intangible Assets:

The following table summarizes the changes in the carrying amount of goodwill for the six months ended June 30, 2024 :

The following table summarizes the changes in the carrying amount of goodwill for the nine months ended September 30, 2024 :

Balance December 31, 2023

$ 18,658 $ 8,524 $ 27,182

Goodwill acquired

$ 1,398 $ — 1,398

Translation adjustments

609 439 1,048

Balance June 30, 2024

Balance September 30, 2024

$ 20,665 $ 8,963 $ 29,628

Information related to the Company’s other intangibles, net is as follows:

As of June 30, 2024

As of September 30, 2024

Customer and vendor relationships

6 unchanged sentences

Customer relationships are amortized over thirteen years.

Vendor relationships are amortized between eight and fifteen years.

Vendor relationships are amortized betwee n eight and fifteen y ears.

Trade name is amortized over fifteen years.

During the three months ended June 30, 2024 and 2023 , the Company recognized total amortization expense for other intangib les, net of $ 0.7 million and $ 0.5 million, respectively.

During the six months ended June 30, 2024 and 2023, the Company recognized total amortization expense for other intangibles, net of $ 1.4 million and $ 1.0 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of June 30, 2024 is as follows:

2024 (excluding the six months ended June 30, 2024)

During the three months ended September 30, 2024 and 2023 , the Company recognized total amortization expense for other intangib les, net of $ 1.1 million and $ 0.5 million, respectively.

During the nine months ended September 30, 2024 and 2023 , the Company recognized total amortization expense for other intangibles, net of $ 2.5 million and $ 1.5 million, respectively.

Estimated future amortization expense of the Company’s other intangibles, net as of September 30, 2024 is as follows:

2024 (excluding the nine months ended September 30, 2024)

Right-of-use Asset and Lease Liability:

8 unchanged sentences

Information related to the Company’s ROU assets and related lease liabilities were as follows:

Six months ended

Nine months ended

September 30,

Cash paid for operating lease liabilities

2 unchanged sentences

Weighted-average discount rate

Maturities of lease liabilities as of June 30, 2024 were as follows:

2024 (excluding the six months ended June 30, 2024)

Maturities of lease liabilities as of September 30, 2024 were as follows:

2024 (excluding the nine months ended September 30, 2024)

imputed interest

3 unchanged sentences

Total lease liabilities

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable, accounts payable and term loan approximated fair value at June 30, 2024 and December 31, 2023 because of the relative short maturity of these instruments.

The carrying amounts of financial instruments, including cash and cash equivalents, short-term accounts receivable, accounts payable and term loan approximated fair value at September 30, 2024 and December 31, 2023 because of the relative short maturity of these instruments.

The Company’s accounts receivable long-term are discounted to their present value at prevailing market rates at the time of sale.

1 unchanged sentence

Equipment and leasehold improvements consist of the following:

September 30,

$ 3,540 $ 3,195

5 unchanged sentences

$ 12,151 $ 8,850

During the three months ended June 30, 2024 and 2023 , depreciation and amortization expense remained consistent at $ 0.1 million, respectively.

During the six months ended June 30, 2024 and 2023 , depreciation and amortization expense remained consistent at $ 0.3 million, respectively.

During the three months ended September 30, 2024 and 2023 , depreciation and amortization expense remained consistent at $ 0.1 million, respe ctively.

During the nine months ended September 30, 2024 and 2023 , the Company recorded depreciation and amortization expense of $ 0.4 mill ion and $ 0.5 million, respectively.

In limited circumstances, the Company offers extended payment terms to customers for periods of 12 to 36 months.

3 unchanged sentences

Accounts receivable long term, net consists of the following:

September 30,

Total amount due from customer

1 unchanged sentence

unamortized discount

( 15 ) ( 12 )

current portion included in accounts receivable

( 445 ) ( 828 )

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.8 million, $ 0.4 million, $ 0.4 million during each of the 12 -month periods ending June 30, 2025, 2026, and 2027, respectively.

The undiscounted cash flows to be received by the Company relating to these accounts receivable long-term is expected to be $ 0.4 million du ring each of the 12 -month periods ending September 30, 2025, 2026, and 2027.

Accounts payable and accrued expenses consist of the following:

September 30,

Trade accounts payable

10 unchanged sentences

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 June 30, 2024 .

There were no amounts outstanding under the Credit Agreement as of September 30, 2024 .

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.

10 unchanged sentences

The borrowing under the Term Loan bears interest at a rate of 3.73 % per annum and is being repaid over forty-eight monthly installments of principal and interest through April 2026.

At June 30, 2024 and December 31, 2023 , the Company had $ 1.0 million an d $ 1.3 million outstanding under the Term Loan, respectively.

At June 30, 2024 , future principal payments under the Term Loan are as follows:

2024 (excluding the six months ended June 30, 2024)

At September 30, 2024 and December 31, 2023 , the Company had $ 0.9 million an d $ 1.3 million outstanding under the Term Loan, respectively.

At September 30, 2024 , future principal payments under the Term Loan are as follows:

2024 (excluding the nine months ended September 30, 2024)

In connection with the acquisition of Data Solutions (See Note 6– 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 Company subsequently terminated the IDF during the quarter ended June 30, 2024.

The Company subsequently terminated the IDF during the nine months ended September 30, 2024 .

The proceeds from the IDF were used for working capital needs of Data Solutions.

1 unchanged sentence

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 balance outstanding under the IDF at June 30, 2024 was zero , as the Company terminated the IDF during the period, compared to $ 4.3 million at December 31, 2023 , which is included in accounts payable and accrued expenses on the Consolidated Balance Sheets.

Earnings Per Share:

5 unchanged sentences

A reconciliation of the numerators and denominators of the basic and diluted per share computations follows:

Six months ended

Nine months ended

Three months ended

September 30,

$ 11,620 $ 7,077 $ 5,459 $ 2,372

Less distributed and undistributed income allocated to participating securities

288 171 139 61

Net income attributable to common shareholders

11,332 6,906 5,320 2,311

Weighted average common shares (Basic)

4,458 4,392 4,476 4,414

Weighted average common shares including assumed conversions (Diluted)

4,458 4,392 4,476 4,414

Basic net income per share

$ 2.54 $ 1.57 $ 1.19 $ 0.52

Diluted net income per share

$ 2.54 $ 1.57 $ 1.19 $ 0.52

Major Customers and Vendors:

The Company had one major vendor that accounted fo r 10 % of total purchases during the three months ended June 30, 2024 , and 12 % of total purchases during the three months ended June 30, 2023 .

The Company ha d one m ajor vendor that accounted fo r 13 % o f total purchases during the six months ended June 30, 2024 , and 17 % of total purchases during the six months ended June 30, 2023 .

The Company had two major customers that accounted for 18% , respectively, of its net sales during the three months ended June 30, 2024 , and 22 % and 14 %, respectively, of its net sales during the three months ended June 30, 2023 .

The Company had two major customers that accounted for 19 % and 16 %, respectively, of its net sales during the six months ended June 30, 2024 , and 21 % and 14%, respectively, of its net sales during the six months ended June 30, 2023 .

These same customers accounted for 14 % and 10%, res pectively, of total net accounts receivable as of June 30, 2024 , and 15 % and 6%, respectively, of total net accounts receivable as of December 31, 2023 .

The Company had one major vendor that accounted f or 8 % of total purchases during the three months ended September 30, 2024 , and 15 % of total purchases during the three months ended September 30, 2023 .

The Company ha d one m ajor vendor that account ed for 11 % of total purchases during the nine months ended September 30, 2024 , and 16 % of total purchases during the nine months ended September 30, 2023 .

The Company had two major customers that accounted for 16 % and 13 %, respectively, of its net sales during the three months ended September 30, 2024 , and 21 % and 17 %, respectively, of its net sales during the three months ended September 30, 2023 .

The Company had two major customers that accounted for 18 % and 15 %, respectively, of its net sales during the nine months ended September 30, 2024 , and 21 % and 15 %, respectively, of its net sales during the nine months ended September 30, 2023 .

These same customers accounted for 13 % and 6%, res pectively, of total net accounts receivable as of September 30, 2024 , and 15 % and 6 %, respectively, of total net accounts receivable as of December 31, 2023 .

Income Taxes:

6 unchanged sentences

The tota l 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 June 30, 2024 , the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 190,917 .

As of September 30, 2024 , the number of shares of Common Stock available for future award grants to employees, officers and directors under the 2021 Plan is 190,917 .

The 2012 Stock-Based Compensation Plan (the “2012 Plan”) authorized 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.

Immediately prior to the replacement of the 2012 Plan by the 2021 Plan, there were 352,158 shar es 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 June 30, 2024 , the number of shares of Common Stock available under the 2012 Plan was zero.

During the six months ended June 30, 2024 , the Company granted a total of 51,812 s hares of Restricted Stock to directors, officers and employees.

As of September 30, 2024 , the number of shares of Common Stock available under the 2012 Plan was zero .

During the nine months ended September 30, 2024 , the Company granted a total of 51,812 shares of Restricted Stock to directors, officers and employees.

These shares of Restricted Stock vest immediately, over time in three equal installments or over time in sixteen equal quarterly installments.

During the six months ended June 30, 2024, a total of 1,661 shares of Restricted Stock were forfeited.

During the six months ended June 30, 2023 , the Company granted a total of 115,789 shares of Restricted Stock to officers and employees.

During the nine months ended September 30, 2024 , a total of 1,661 sh ares of Restricted Stock were forfeited.

During the nine months ended September 30, 2023 , the Company granted a total of 132,526 shares of Restricted Stock to officers and employees.

These shares of Restricted Stock vest immediately, over time in three equal installments or over time in sixteen equal quarterly installments.

A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 and 2021 Plans as of June 30, 2024 , and changes during the six months then ended is as follows:

A summary of nonvested shares of Restricted Stock awards outstanding under the 2012 and 2021 Plans as of September 30, 2024 , and changes during the nine months then ended is as follows:

Average Grant

6 unchanged sentences

( 1,661 ) 42.58

Nonvested shares at June 30, 2024

Nonvested shares at September 30, 2024

129,094 $ 45.85

As of June 30, 2024 , there is approximately $ 5.9 million of total unrecognized compensation costs related to nonvested share-based compensation arrangements.

As of September 30, 2024 , there is approximately $ 5.2 m illion of total unrecognized compensation costs related to nonvested share-based compensation arrangements.

The unrecognized compensation cost is expected to be recognized over a weighted-average period of 2.2 y ears.

During the three months ended June 30, 2024 and 2023 , the Company recognized share-based compensation expense of $ 1.1 million and $ 2.2 million, respectively.

During the six months ended June 30, 2024 and 2023 , the Company recognized share-based compensation expense of $ 1.9 million and $ 2.7 million, respectively.

During the three months ended September 30, 2024 and 2023 , the Company recognized share-based compensation expense of $ 0.9 mill ion and $ 0.7 million, respectively.

During the nine months ended September 30, 2024 and 2023 , the Company recognized share-based compensation expense o f $ 2.8 million and $ 3.4 million, respectively.

Segment Information:

10 unchanged sentences

The “Solutions” segment is a provider of cloud solutions 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.

The Company's reportable segments are based on products and services delivered, and the Company's CODM decides how to assess performance and allocate resources based on segment.

Segment income is based on segment revenue less the respective segment’s cost of revenues as well as segment direct costs (including such items as payroll costs and payroll related costs, such as profit sharing, incentive awards and insurance) and excluding general and administrative expenses not attributed to an individual segment business unit.

2 unchanged sentences

The following segment reporting information of the Company is provided:

Six months ended

Nine months ended

Three months ended

September 30,

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

17 unchanged sentences

Acquisition related costs

1,201 277 609 246

Depreciation and amortization expense

4 unchanged sentences

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

Change in fair value of acquisition contingent consideration

( 1,152 ) — ( 1,152 ) —

Income before taxes

1 unchanged sentence

Excludes general corporate expenses including interest and foreign currency transaction loss

September 30,

Selected Assets by Segment:

6 unchanged sentences

$ 371,940 $ 335,098

Geographic areas and net sales mix related to operations for the three and six months ended June 30, 2024 and 2023 were as follows.

Geographic areas and net sales mix related to operations for the three and nine months ended September 30, 2024 and 2023 were as follows.

Revenue is allocated to a geographic area based on the location of the sale, which is generally the customer’s country of domicile.

Six months ended

Nine months ended

Three months ended

June 30, 2024

September 30, 2024

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

11 unchanged sentences

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

Six months ended

Nine months ended

Three months ended

June 30, 2023

September 30, 2023

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

13 unchanged sentences

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

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

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

September 30,

Identifiable Assets by Geographic Areas

5 unchanged sentences

Related Party Transactions:

The Company made sales to a customer where a family member of one of our executives had a minority ownership position.

The minority ownership position has been terminated as of June 30, 2024.

During the three months ended June 30, 2024 and 2023 , net sales to this customer totaled approximately zero and $ 0.5 million, respectively.

During the six months ended June 30, 2024 and 2023 , net sales to this customer totaled approximately $ 0.7 m illion and $ 1.0 million, respectively.

Amounts due from this customer as of June 30, 2024 and December 31, 2023 were approximat ely zero a nd less than $ 0.1 million, respectively, which was settled in cash subsequent to each period end.

The Company made sales to a customer where a family member of one of our executives previously had a minority ownership position.

The minority ownership position terminated during the nine months ended September 30, 2024 .

During the three months ended September 30, 2024 , there were no sales to this customer prior to the ownership position termination.

During the three months ended September 30, 2023 , net sales to this customer totaled approximately $ 0.3 million.

During the nine months ended September 30, 2024 and 2023 , net sales to this customer totaled approximately $ 0.7 million and $ 1.3 million, respectively.

Amounts due from this customer as of September 30, 2024 and December 31, 2023 were zero and less than $ 0.1 million, respectively, which was settled in cash subsequent to each period end.

Fair Value Measurements

7 unchanged sentences

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 June 30, 2024 and December 31, 2023 , respectively, are as follows:

As of June 30, 2024

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 September 30, 2024 and December 31, 2023 , respectively, are as follows:

As of September 30, 2024

Treasury bills

23 unchanged sentences

Balance December 31, 2023

DSS acquisition - contingent earn-out

Contingent earnout paid

Change in fair value of acquisition contingent consideration

Translation adjustments

Balance June 30, 2024

There were no material changes in fair value since the respective acquisition dates associated with the contingent earn-outs.

Subsequent Events

On July 31, 2024, Climb Global Solutions DSS, LLC (“Buyer”), a wholly-owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) and purchased the entire share capital of Douglas Stewart Software & Services, LLC ("DSS"), a Florida limited liability company, for an aggregate purchase price of approximately $ 20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment.

DSS distributes software to VARs and campus stores across North America in both the K- 12 and higher education markets.

The Purchase Agreement contains customary representations, warranties, covenants and indemnities.

The acquisition was funded utilizing cash from the Company’s balance sheet.

Due to the timing of the closing of the acquisition subsequent to the end of the reporting period, the acquisition is subject to post-closing adjustments and the purchase price allocation is not yet complete.

Balance September 30, 2024

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations.

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Historically we have sought to return value to investors through the payment of quarterly dividends and share repurchases.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $0.3 million, r espectively, during the three months ended June 30, 2024.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $1.0 million, respectively, during the three months ended June 30, 2023.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $0.3 million, r espectively, during the three months ended September 30, 2024.

Total dividends paid and the dollar value of the shares repurchased were $0.8 million and $0.2 million, respectively, during the three months ended September 30, 2023.

The payment of future dividends and share repurchases is at the discretion of our Board of Directors and dependent on results of operations, projected capital requirements, applicable legal, tax and regulatory restrictions, and other factors the Board of Directors may find relevant.

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Financial Overview

Net sales increased 13%, or $10.4 million, to $92.1 mi llion for the three months ended June 30, 2024 compared to $81.7 million for the same period in the prior year.

Gross pro fit increased 36%, or $4.9 million, to $18.6 milli on for the three months ended June 30, 2024, compared to $13.7 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expense s increased 12%, or $1.4 million, to $13.0 million for the three months ended June 30, 2024 compared to $11.6 million for the same period in the prior year.

Depreciation and amortization expen se increased 43%, or $0.3 million, to $0.9 m illion for the three months ended June 30, 2024 compared to $0.6 million for the same period in the prior year.

Net inco me increased 148%, or $2.0 million, to $3.4 million for the three months ended June 30, 2024 compared to $1.4 million for the same period in the prior year.

Diluted income per share increas ed 142%, or $0.44, to $0.75 for the three months ended June 30, 2024 compared to $0.31 for the same period in the prior year.

Net sales increased 52%, or $40.8 million, to $119.3 million f or the three months ended September 30, 2024 compared to $78.5 million for the same period in the prior year.

Gross profit increased 70%, or $10.0 million, to $24.3 milli on for the three months ended September 30, 2024, compared to $14.3 million for the same period in the prior year.

Selling, general and administrative (“SG&A”) expens es increased 38%, or $3.8 million, to $13.9 million for the three months ended September 30, 2024 compared to $10.1 million for the same period in the prior year.

Depreciation and amortization expense increased 94%, or $0.6 million, to $1.2 m illion for the three months ended September 30, 2024 compared to $0.6 million for the same period in the prior year.

Net inco me increased 130%, or $3.1 million, to $5.5 mi llion for the three months ended September 30, 2024 compared to $2.4 million for the same period in the prior year.

Diluted income per share increa sed 129%, or $0.67 to $1.19 fo r the three months ended September 30, 2024 compared to $0.52 for the same period in the prior year.

Critical Accounting Policies and Estimates

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There were no contracts outstanding as of June 30, 2024.

The Company recognized an unrealized loss of approximately $0.1 million on contracts outstanding as of September 30, 2024.

Recently Issued Accounting Pronouncements

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This comparison of financial results is not necessarily indicative of future results:

Six months ended

Nine months ended

Three months ended

September 30,

Cost of sales

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These key indicators include financial information that is prepared in accordance with US GAAP and presented in our Consolidated Financial Statements as well as non-US GAAP performance measurement tools.

Six months ended

Nine months ended

Three months ended

September 30,

Adjusted gross billings (Non-GAAP)

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We consider gross profit growth and effective margin to be key metrics in evaluating our business.

During the three months ended June 30, 2024, gross prof it increased 36%, or $4.9 million, to $18.6 m illion compared to $13.7 million for the same period in the prior year while effec tive margin increased to 37.3% compared to 34.2% f or the same period in the prior year.

During the six months ended June 30, 2024, gross profit increased 23%, or $6.7 million, to $35.6 million compar ed to $28.9 million for the same period in the prior year while effective margi n decreased to 35.0% compared to 35.8% f or the same period in the prior year.

During the three months ended September 30, 2024 , gross profit increased 70%, or $10.0 million, to $24.3 millio n compared to $14.3 million for the same period in the prior year while effec tive margin increased to 40.9% compared to 35.5% f or the same period in the prior year.

During the nine months ended September 30, 2024, gross profi t increased 39%, or $16.6 million, to $59.8 million compar ed to $43.2 million for the same period in the prior year while effective margin increased to 37.4% compared to 35.7% f or the same period in the prior year.

Reconciliations of Non-GAAP Financial Measures

Six months ended

Nine months ended

Three months ended

September 30,

Reconciliation of net sales to adjusted gross billings (Non-GAAP):

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In addition, other companies, including companies in our industry, might calculate adjusted gross billings of product and services or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Six months ended

Nine months ended

Three months ended

September 30,

Net income reconciled to adjusted EBITDA (Non-GAAP):

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In addition, other companies, including companies in our industry, might calculate adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

On July 31, 2024, we completed the acquisition of DSS for an aggregate purchase price of approximately $20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment.

On October 6, 2023, we completed the acquisition of 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 operating results of Data Solutions are included in our operating results from the date of acquisition.

Operating results of Data Solutions are included in our Distribution segment.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

The operating results of DSS and Data Solutions are included in our operating results from the dates of acquisition.

The operating results of DSS and Data Solutions are included in our Distribution segment.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net Sales and Adjusted Gross Billings

Net sales for the three months ended June 30, 2024 incr eased 13%, or $10.4 million, to $92.1 m illion compared to $81.7 million for the same period in the prior year.

Adjusted gross billings for the thre e months ended June 30, 2024 increased 31%, or $85.1 million, to $359.8 million compared to $274.7 million for the same period in the prior year.

Net sales and adjusted gross billings increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisition of Data Solutions.

Net sales for the three months ended September 30, 2024 increased 52%, or $40.8 million, to $119.3 million compared to $78.5 million for the same period in the prior year.

Adjusted gross billings for the thre e months ended September 30, 2024 increased 65%, or $183.3 million, to $465.2 million compared to $281.9 million for the same period in the prior year.

Net sales and adjusted gross billings increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Adjusted gross billings increased at a greater rate than net sales due to differences in the product mix between the two periods.

During the three months ended June 30, 2024 , adjusted gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the three months ended June 30, 2023 , adjusted gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Distribution segment net sales for the three months ended June 30, 2024 i ncreased 15%, or $11.7 million, to $87.8 milli on compared to $76.1 million for the same period in the prior year.

Adjusted gross billings for the Distribution segm ent for the three months ended June 30, 2024 increased 33%, or $84.2 million, to $340.1 million compared to $255.8 million for the same period in the prior year.

During the three months ended September 30, 2024 , adjusted gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the three months ended September 30, 2023 , adjusted gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Distribution segment net sales for the three months ended September 30, 2024 increased 55%, or $39.7 million, to $111.9 million compared to $72.2 million for the same period in the prior year.

Adjusted gross billings for the Distribution segment for the three months ended September 30, 2024 increased 69%, or $179.8 million, to $441.4 million compared to $261.6 million for the same period in the prior year.

Net sales increased at a lesser rate than adjusted gross billings increased due to the aforementioned differences in the product mix between the two periods.

Solutions segment net sales for the three months ended June 30, 2024, dec reased 24%, or $1.4 million, to $4.2 mill ion compared to $5.6 million for the same period in the prior year.

Adjusted gross billings for the Solutions segment for the three months ended June 30, 2024 incr eased 5%, or $0.9 million, to $19.8 m illion compared to $18.9 million for the same period in the prior ye ar.

Net sales decreased while adjusted gross billings increased due to the aforementioned differences in the product mix between the two periods.

During the three months ended June 30, 2024, the Company had two major customers that accounted fo r 18%, respectively, of our total net sales.

During the three months ended June 30, 2023, the Company had two m ajor customers that accounted for 22% and 14%, respectively, of our total net sales.

The Company had one m ajor vendor that accounted for 10% of total purchases during the three months ended June 30, 2024 and 12% of total purchases during the three months ended June 30, 2023.

Gross profit for the three months ended June 30, 2024 increased 36%, or $4.9 million, to $18.6 mi llion compared to $13.7 million for the same period in the prior year.

Gross profit increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisition of Data Solutions.

Distribution segment gross profit for the three months ended June 30, 2024 inc reased 42%, or $4.6 million, to $15.7 m i llion compared to $11.1 million for the same period in the prior year.

The increase in Distribution segment gross profit was due to the aforementioned organic growth from our existing vendor partnerships as well as the contribution from the acquisition of Data Solutions , partially offset by higher early pay discounts and other rebates and discounts offered to our customers as a percentage of adjusted gross billings.

Solutions segment gross profit for the three months ended June 30, 2024 inc reased 10%, or $0.3 million, to $2.9 million compared to $2.6 million for the same period in the prior ye ar.

Solutions segment net sales for the three months ended September 30, 2024 , increased 20%, or $1.3 million, to $7.5 million compared to $6.2 million for the same period in the prior year.

Adjusted gross billings for the Solutions segment for the three months ended September 30, 2024 increased 17%, or $3.5 million, to $23.8 m il lion compared to $20.3 million for the same period in the prior year.

Net sales increased at a lesser rate than adjusted gross billings due to differences in the product mix between the two periods.

During the three months ended September 30, 2024, the Company had two major customers that accounted for 16% and 13%, resp ectively, of our total net sales.

During the three months ended September 30, 2023, the Company had two m ajor customers that accounted for 21% and 17%, respectively, of our total net sales.

The Company had one m ajor vendor that accounted fo r 8% of tot al purchases during the three months ended September 30, 2024 and 15% of total purchases during the three months ended September 30, 2023.

Gross profit for the three months ended September 30, 2024 increased 70%, or $10.0 million, to $24.3 million compared to $14.3 million for the same period in the prior year.

Gross profit increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Distribution segment gross profit for the three months ended September 30, 2024 increased 85%, or $9.9 million, to $21.6 million compared to $11.7 million for the same period in the prior year.

The increase in Distribution segment gross profit was due to the aforementioned organic growth from our existing vendor partnerships as well as the contribution from the acquisitions of DSS and Data Solutions, partially offset by higher early pay discounts and other rebates and discounts offered to our customers as a percentage of adjusted gross billings.

Solutions segment gross profit for the three months ended September 30, 2024 increased 4%, or $0.1 million, to $2.7 million compared to $2.6 million for the same period in the prior year.

This increase was driven by the aforementioned increase in adjusted gross billings compared to the same period in the prior year.

Customer rebates and discounts for the three months ended June 30, 2024 were $3.2 mi llion compared to $2.5 million for the same period in the prior year.

Customer rebates and discounts for the three months ended September 30, 2024 we re $3.9 million compared to $2.8 million for the same period in the prior year.

Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.

Vendor rebates and discounts for the three months ended June 30, 2024 were $1.6 m illion compared to $2.1 million for the same period in the prior year.

Vendor rebates and discounts for the three months ended September 30, 2024 were $0.8 million compared to $2.3 million for the same period in the prior year.

Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors.

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Selling, General and Administrative Expenses

SG&A expenses for the three months ended June 30, 2024 increased 12%, or $1.4 million, to $13.0 million compared to $11.6 million for the same period in the prior year primarily due to the impact of the acquisition of Data Solutions.

SG&A expenses were 3.6% of adjusted gross billings for the three months ended June 30, 2024, compared to 4.2% for the same period in the prior year.

SG&A expenses for the three months ended September 30, 2024 increased 38%, or $3.8 million, to $13.9 million compared to $10.1 million for the same period in the prior year primarily due to the impact of the acquisition of DSS.

SG&A expenses were 3.0% of adjusted gross billings for the three months ended September 30, 2024 , compared to 3.6% for the same period in the prior year.

The Company expects that its SG&A expenses, as a percentage of adjusted gross billings, may vary depending on changes in sales volume, as well as the levels of continuing investments to drive future growth.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended June 30, 2024, inc reased 43%, or $0.3 million, to $0.9 mi llion compared to $0.6 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the Data Solutions acquisition.

Depreciation and amortization expense for the three months ended September 30, 2024 , increased 94%, or $0.6 million, to $1.2 million compared to $0.6 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the DSS and Data Solutions acquisitions.

Acquisition Related Costs

Acquisition related costs for the three months ended June 30, 2024 were $0.5 million, which were costs incurred in conjunction with the acquisition of Douglas Stewart Software & Services, LLC discussed below, compared to less than $0.1 million for the same period in the prior year.

For the three months ended June 30, 2024 and 2023, the Company recorded a provision for income taxes of $1.0 mill ion and $0.5 million, respectively.

The effective tax rate for the three months ended June 30, 2024 and 2023 was 22.8% and 2 4.9%, r espectively.

The change in effective tax rate for the three months ended June 30, 2024 compared to the same period in the prior year is a result of limitations on the deductibility of certain executive compensation amounts during the current period.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

Acquisition related costs for the three months ended September 30, 2024 were $0.6 million, which were primarily costs incurred in conjunction with the acquisition of DSS, compared to $0.

2 million for the same period in the prior year, which were costs incurred in conjunction with the acquisition of Data Solutions.

For the three months ended September 30, 2024 and 2023, the Company recorded a provision for income taxes of $1.7 mill ion and $1.1 million, respectively.

The effective tax rate for the three months ended September 30, 2024 and 2023 w as 23.3% and 31.6 %, r espectively.

The change in effective tax rate for the three months ended September 30, 2024 compared to the same period in the prior year was impacted by changes in the mix of jurisdictions in which taxable income was earned, as well as the prior year period included limitations on the deductibility of certain executive compensation amounts .

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net Sales and Adjusted Gross Billings

Net sales for the six months ended June 30, 2024 inc reased 11%, or $17.7 million, to $184.5 mil lion compared to $166.8 million for the same period in the prior year.

Adjusted gross billings for the six months ended June 30, 2024 increased 23%, or $133.7 million, to $715.1 m illion compared to $581.4 million for the same period in the prior year.

Net sales and adjusted gross billings increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisition of Data Solutions.

Net sales for the nine months ended September 30, 2024 increased 24%, or $58.6 million, to $303.8 mil lion compared to $245.2 million for the same period in the prior year.

Adjusted gross billings for the nine months ended September 30, 2024 increased 37%, or $317.0 million, to $1,180.3 million compared to $863 .3 million for the same period in the prior year.

Net sales and adjusted gross billings increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Adjusted gross billings increased at a greater rate than net sales due to differences in the product mix between the two periods and an unfavorable impact of foreign exchange rates.

During the six months ended June 30, 2024 , adjusted gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the six months ended June 30, 2023 , adjusted gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Distri bution segment net sales for the six months ended June 30, 2024 increased 13%, or $20.0 million, to $174.7 million compared to $154.7 million for the same period in the prior year.

Adjusted gross billings for the Distribution segment for the six months ended June 30, 2024 increased 24%, or $131.1 million, to $674.7 millio n compared to $543.6 million for the same period in the prior year.

During the nine months ended September 30, 2024 , adjusted gross billings included a greater percentage of security, maintenance and cloud products, which are recorded net of related cost of sales, while during the nine months ended September 30, 2023 , adjusted gross billings included a greater percentage of hardware and software products, which are recorded on a gross basis.

Distri bution segment net sales for the nine months ended September 30, 2024 increased 26%, or $59.6 million, to $286.5 million compared to $226.9 million for the same period in the prior year.

Adjusted gross billings for the Distribution segment for the nine months ended September 30, 2024 increased 38%, or $308.4 million, to $1113.6 millio n compared to $805.2 million for the same period in the prior year.

Net sales increased at a lesser rate than adjusted gross billings due to the aforementioned differences in the product mix between the two period s.

Solutions segment net sales for the six months ended June 30, 2024, decreased 19%, or $2.3 million, to $9.8 millio n compared to $12.1 million for the same period in the prior year.

Adjusted gross billings for the Solutions segment for the six months ended June 30, 2024 i ncreased 7%, or $2.5 million, to $40.4 m illion compared to $37.9 million for the same period in the prior year.

So lutions segment net sales for the nine months ended September 30, 2024 , decreased 6%, or $1.0 million, to 17.3 million compared to $18.3 million for the same period in the prior year.

Adjusted gross billings for the Solutions segment for the nine months ended September 30, 2024 increased 15%, or $8.6 million, to $66.7 m illion compared to $58.1 million for the same period in the prior year.

Net sales decreased while adjusted gross billings increased due to the aforementioned differences in the product mix between the two periods.

During the six months ended June 30, 2024, the Company had two m ajor customers that accounted fo r 19% and 16%, respectively, of our total net sales.

During the six months ended June 30, 2023, the Company had two major customers that accounted for 21% and 14%, respectively, of our total net sales.

The Company had one major vendor that accounted for 13%, respectively, of total purchases during the six months ended June 30, 2024 and 17% of to tal purchases during the six months ended June 30, 2023.

Gross profit for the six months ended June 30, 2024 incr eased 23%, or $6.7 million, to $35.6 mi llion compared to $28.9 million for the same period in the prior year.

Gross profit increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisition of Data Solutions.

Distribution segment gross profit for the six months ended June 30, 2024 in creased 26%, or $6.1 million, to $29.9 mi llion compared to $23.8 million for the same period in the prior year.

The increase in Distribution segment gross profit was due to the aforementioned organic growth from our existing vendor partnerships as well as the contribution from the acquisition of Data Solutions, partially offset by higher early pay discounts and other rebates and discounts offered to our customers as a percentage of adjusted gross billings.

Solutions segment gross profit for the six months ended June 30, 2024 in creased 11%, or $0.6 million, to $5.7 mil lion compared to $5.1 million for the same period in the pri or year.

During the nine months ended September 30, 2024, the Company had two m ajor customers that accounted f or 15% and 18%, r espectively, of our total net sales.

During the nine months ended September 30, 2023, the Company had two major customers that accounted for 21% and 15%, respectively, of our total net sales.

The Company had one major vendor that accounted for 11%, respectively, of total purchases during the nine months ended September 30, 2024 and 16% of to tal purchases during the nine months ended September 30, 2023.

Gross profit for the nine months ended September 30, 2024 increased 39%, or $16.6 million, to $59.8 mil lion compared to $43.2 million for the same period in the prior year.

Gross profit increased due to both organic growth from our existing vendor partnerships as well as the impact of the acquisitions of DSS and Data Solutions.

Distribution segment gross profit for the nine months ended September 30, 2024 increased 45%, or $16.0 million, to $51.5 million compared to $35.5 million for the same period in the prior year.

The increase in Distribution segment gross profit was due to the aforementioned organic growth from our existing vendor partnerships as well as the contribution from the acquisitions of DSS and Data Solutions, partially offset by higher early pay discounts and other rebates and discounts offered to our customers as a percentage of adjusted gross billings.

Solutions segment gross profit for the nine months ended September 30, 2024 increased 9%, or $0.7 million, to $8.4 millio n compared to $7.7 million for the same period in the pri or year.

This increase was driven by the aforementioned increase in adjusted gross billings compared to the same period in the prior year.

Customer rebates and discounts for the six months ended June 30, 2024 were $6.6 mill ion compared to $6.4 million for the sam e period in the prior year.

Customer rebates and discounts for the nine months ended September 30, 2024 were $10.4 mill ion compared to $9.2 million for the sam e period in the prior year.

Customer rebates and discounts vary based on terms of rebate and early pay discount programs offered to customers and timing of payments ultimately received from our customers.

Vendor rebates and discounts for the six months ended June 30, 2024 wer e $3.6 million compared to $3.8 million for the same period in the prior year.

Vendor rebates and discounts for the nine months ended September 30, 2024 wer e $4.4 million compared to $6.1 million for the same period in the prior year.

Vendor rebates are dependent on programs offered by our vendors and in some cases reaching certain volume targets set by our vendors or meeting certain early payment programs offered by our vendors.

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Selling, General and Administrative Expenses

SG&A expenses for the six months ended June 30, 2024 incre ased 17%, or 3.7 million, to $25.5 m illion compared to $21.8 million for the same period in the prior year, primarily due to the impact of the acquisition of Data Solutions.

SG&A expenses wer e 3.6% of adj usted gross billings for the six months ended June 30, 2024, compared to 3.7% for the same period in the prior year.

SG&A expenses for the nine months ended September 30, 2024 increased 23%, or $7.4 million, to $39.4 million compared to $31.9 mil lion for the same period in the prior ye ar, primarily due to the impact of the acquisition of DSS.

SG& A expenses wer e 3.3% of adj usted gross billings for the nine months ended September 30, 2024, compared to 3.7% for the same period in the prior year.

Depreciation and Amortization Expense

Depreciation and amortization expense for the six months ended June 30, 2024, increa sed 32%, or $0.4 million, to $1.7 mil lion compared to $1.3 million for the same period in the prior year, primarily due to the amortization of intangible assets acquired in the Data Solutions acquisition.

Depreciation and amortization expense for the nine months ended September 30, 2024, increased 54%, or $1.1 million, to $3.0 mil lion compared to $1.9 million for the same period in the prio r year, primarily due to the amortization of intangible assets acquired in the DSS acquisition.

Acquisition Related Costs

Acquisition related costs for the six months ended June 30, 2024 were $0.6 million, which were costs incurred in conjunction with the acquisition of Douglas Stewart Software & Services, LLC discussed below, compared to less than $0.1 million for the sa me period in the prior year.

For the six months ended June 30, 2024 and 2023, the Company recorded a provision for income taxes of $1.9 mi llion and $1.5 million, respectively.

The effective tax rate for the six months ended June 30, 2024 and 2023 wa s 23.6% an d 24.5%, respectively.

The change in the effective tax rate for the six months ended June 30, 2024 compared to the same period in the prior year is a result of limitations on the deductibility of certain executive compensation amounts during the current period.

Subsequent to June 30, 2024, on July 31, 2024, Climb Global Solutions DSS, LLC (“Buyer”), a wholly-owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) and purchased the entire share capital of Douglas Stewart Software & Services, LLC, a Florida limited liability company, for an aggregate purchase price of approximately $20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment.

The Purchase Agreement contains customary representations, warranties, covenants and indemnities.

Acquisition related costs for the nine months ended September 30, 2024 were $1.2 million, which were primarily costs incurred in conjunction with the acquisition of DSS, compared to $0.3 million for the sa me period in the prior year, which were costs incurred in conjunction with the acquisition of Data Solutions.

For the nine months ended September 30, 2024 and 2023, the Company recorded a provision for income taxes of $3.6 mi llion and $2.6 million, respectively.

The effective tax rate for the nine months ended September 30, 2024 and 2023 wa s 23.5% an d 27.0%, respectively.

The change in the effective tax rate for the nine months ended September 30, 2024 compared to the same period in the prior year was impacted by changes in the mix of jurisdictions in which taxable income was earned, as well as the prior year period included limitations on the deductibility of certain executive compensation amounts.

Liquidity and Capital Resources

Our cash and cash equivalents as of June 30, 2024 in creased 33%, or $12.1 million, to $48.4 million compared to $36.3 million as of December 31, 2023.

Net cash and cash equivalents provided by operating activities for the six months ended June 30, 2024 was $21.3 million, comprised primarily of changes in operating assets and liabilities o f $11.5 milli on and net income adjusted for non-cash item s of $9.8 million.

Net cash and cash equivalents used in investing activities during the six months ended June 30, 2024 consisted of $2.4 million purchases of fixed assets supporting our ongoing ERP project.

Net cash and cash equivalents used in financing activities during the six months ended June 30, 2024 w as $6.9 mill ion, comprised of dividend payments on our Common Stock of $1.5 million, purchases of treasury stock of $0.7 million, repayments of borrowings under term loan of $0.3 mil lion and repayments of borrowings under credit facil ities of $4.2 m illion.

Subsequent to June 30, 2024, the Company entered into the Purchase Agreement on July 31, 2024 to purchase Douglas Stewart Software & Services, LLC for an aggregate purchase price of approximately $20.3 million (subject to certain adjustments) plus a potential post-closing earnout payment.

Our cash and cash equivalents as of September 30, 2024 decreased 39%, or $14.2 million, to $22.1 million c ompared to $36.3 million as of December 31, 2023.

Net cash and cash equivalents provided by operating activities for the nine months ended September 30, 2024 was $17.8 million, com prised primarily of net income adjusted for non-cash items of $18.7 million, partially offset by changes in operating assets and liabilities of $0.9 million.

Net cash and cash equivalents used in investing activities during the nine months ended September 30, 2024 was $24.3 million, comprised of $3.6 million purchases of fixed assets supporting our ongoing ERP project and $20.7 million payment for the DSS acquisition.

Net cash and cash equivalents used in financing activities during the nine months ended September 30, 2024 w as $8.1 mill ion, comprised of dividend payments on our Common Stock of $2.3 million, purchases of treasury stock of $1.0 million, repayments of borrowings under term loan of $0.4 mil lion and repayments of borrowings under credit facil ities of $4.2 mi llion.

On May 18, 2023, the Company entered into a revolving credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A.

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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 June 30, 2024.

There were no amounts outstanding under the Credit Agreement as of September 30, 2024.

On April 8, 2022, the Company entered into a $2.1 million term loan (the “Term Loan”) with First American Commercial Bancorp, Inc.

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The borrowing under the Term Loan bears interest at a rate of 3.73% per annum and is being repaid over forty-eight monthly installments of principal and interest through April 2026.

As of June 30, 2024, the Company had $ 1.0 million outstanding under the Term Loan.

As of September 30, 2024, the Company ha d $0.9 m illion outstanding under the Term Loan.

In connection with the acquisition of Data Solutions, the Company acquired an invoice discounting facility (“IDF”) that was with recourse to the Company.

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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.

At June 30, 2024, the outstanding balance under the IDF at was zero, as the Company terminated the IDF during the period .

At September 30, 2024 , the outstanding balance under the IDF at was zero, as the Company terminated the IDF during the period.

We anticipate that our working capital needs will increase as we invest in the growth of our business.

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Off-Balance Sheet Arrangements

As of June 30, 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934, as amended.

As of September 30, 2024, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934, as amended.

Quantitative and Qualitative Disclosures about Market Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements