Note 18 - Segmented Information

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 18 SEGMENTED INFORMATION

The Company conducts its business through the following two reportable segments: Extended Warranty and Leased Real Estate.

Extended Warranty Segment

Extended Warranty includes the following subsidiaries of the Company: IWS, Geminus, PWI, PWSC and Trinity (collectively, "Extended Warranty").

IWS is a licensed motor vehicle service agreement company and is a provider of after-market vehicle protection services distributed by credit unions in 25 states and the District of Columbia to their members.

Geminus primarily sells vehicle service agreements to used car buyers across the United States, through its subsidiaries, Penn and Prime. Penn and Prime distribute these products in 32 and 40 states, respectively, via independent used car dealerships and franchised car dealerships.

PWI markets, sells and administers vehicle service agreements to used car buyers in all fifty states via independent used car and franchise network of approved automobile and motorcycle dealer partners. PWI’s business model is supported by an internal sales and operations team and partners with American Auto Shield in three states with a "white label" agreement.

PWSC sells new home warranty products and provides administration services to home builders and homeowners across the United States. PWSC distributes its products and services through an in house sales team and through insurance brokers and insurance carriers throughout all states except Alaska and Louisiana.

Trinity sells HVAC, standby generator, commercial LED lighting and refrigeration warranty products and provides equipment breakdown and maintenance support services to companies across the United States. As a seller of warranty products, Trinity markets and administers product warranty contracts for certain new and used products in the HVAC, standby generator, commercial LED lighting and refrigeration industries throughout the United States. Trinity acts as an agent on behalf of the third-party insurance companies that underwrite and guaranty these warranty contracts. Trinity does not guaranty the performance underlying the warranty contracts it sells. As a provider of equipment breakdown and maintenance support services, Trinity acts as a single point of contact to its clients for both certain equipment breakdowns and scheduled maintenance of equipment. Trinity will provide such repair and breakdown services by contracting with certain HVAC providers.

Leased Real Estate Segment

Leased Real Estate includes the Company's subsidiary, CMC. CMC owns the Real Property that is leased to a third party pursuant to a long-term triple net lease. The Real Property is also subject to the Mortgage and Additional Mortgage. When assessing and measuring the operational and financial performance of the Leased Real Estate segment, interest expense related to the Mortgage and Additional Mortgage is included in Leased Real Estate's segment operating income.

Revenues and Operating Income by Reportable Segment

Results for the Company's reportable segments are based on the Company's internal financial reporting systems and are consistent with those followed in the preparation of the unaudited consolidated interim financial statements. The following tables provide financial data used by management. Segment assets are not allocated for management use and, therefore, are not included in the segment disclosures below.

Revenues by reportable segment reconciled to consolidated revenues for the three and nine months ended September 30, 2021 and September 30, 2020 were:

(in thousands)	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenues:
Extended Warranty:
Service fee and commission revenue	$	17,627	$	11,995	$	54,956	$	33,619
Total Extended Warranty		17,627		11,995		54,956		33,619
Leased Real Estate:
Rental revenue		3,341		3,341		10,023		10,023
Total Leased Real Estate		3,341		3,341		10,023		10,023
Total revenues	$	20,968	$	15,336	$	64,979	$	43,642

The operating income by reportable segment in the following table is before income taxes and includes revenues and direct segment costs. Total segment operating income reconciled to the consolidated (loss) income from continuing operations for the three and nine months ended September 30, 2021 and September 30, 2020 were:

(in thousands)	Three months ended September 30,						Nine months ended September 30,
	2021			2020			2021			2020
Segment operating income:
Extended Warranty (a)	$	1,400		$	1,205		$	9,310		$	3,340
Leased Real Estate (b)		1,095			799			86			2,234
Total segment operating income		2,495			2,004			9,396			5,574
Net investment income		389			625			1,213			2,025
Net realized gains (losses)		159			(59	)		397			157
(Loss) gain on change in fair value of equity investments		(39	)		1,177			(235	)		1,069
Gain on change in fair value of limited liability investments, at fair value		1,211			274			1,740			2,050
Net change in unrealized loss on private company investments		—			(74	)		—			(744	)
Other-than-temporary impairment loss		—			—			—			(117	)
Interest expense not allocated to segments		(1,497	)		(1,813	)		(4,642	)		(5,963	)
Other revenue and expenses not allocated to segments, net		(2,556	)		(2,462	)		(8,308	)		(7,625	)
Amortization of intangible assets		(2,432	)		(572	)		(3,425	)		(1,719	)
(Loss) gain on change in fair value of debt		(412	)		(503	)		(2,169	)		1,940
Gain on extinguishment of debt not allocated to segments		—			—			311			—
Loss from continuing operations before income tax benefit		(2,682	)		(1,403	)		(5,722	)		(3,353	)
Income tax benefit		(2,456	)		(279	)		(6,139	)		(409	)
(Loss) income from continuing operations	$	(226	)	$	(1,124	)	$	417		$	(2,944	)

(a) For the nine months ended September 30, 2021, Extended Warranty segment operating income includes gain on extinguishment of debt of $2.2 million, related to PPP loan forgiveness directly associated with the respective warranty businesses. Extended Warranty segment operating income before the gain on extinguishment of debt totaled $7.1 million for the nine months ended September 30, 2021. See Note 11, "Debt," for further discussion.  

(b) For the nine months ended September 30, 2021, includes $2.9 million expense due to the release of an indemnification receivable, which is exactly offset in net income (loss) (not shown here) by an income tax benefit of $2.9 million for the release of a liability that had been included in income taxes payable in the consolidated balance sheets.