Note 10 - Operating Segment Information

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 10 – Operating Segment Information:

As described in Note 1, effective in the second quarter of 2022, the Company realigned its reportable segments to correspond with changes to its organizational responsibilities, management structure and operating model. We have reclassified prior period segment disclosures to conform to the current period presentation. As a result of the change, the Company manages and reports the following segments:

Branded Products segment: Primarily through our signature marketing brands BAMKO® and HPI®, we produce and sell customized merchandising solutions, promotional products and branded uniform programs. Branded products are sold to customers in a wide range of industries, including retail, hotel, food service, entertainment, tech, transportation and other industries. The segment currently has sales offices in the United States, Brazil and Canada, with support services in China and India.

Healthcare Apparel segment: Primarily through our signature marketing brands Fashion Seal Healthcare® and WonderWink®, we manufacture (through third parties or our own facilities) and sell a wide range of healthcare apparel, such as scrubs, lab coats, protective apparel and patient gowns. This segment sells healthcare service apparel to healthcare laundries, dealers, distributors and retailers primarily in the United States.

Contact Centers: Through multiple The Office Gurus® entities, including our subsidiaries in El Salvador, Belize, Jamaica, Dominican Republic and the United States (collectively, “TOG”), we provide outsourced, nearshore business process outsourcing, contact and call-center support services to North American customers.

Intersegment eliminations include the elimination of revenues and costs from services provided by the Contact Centers segment to the Company’s two other segments. Such costs are recognized as selling and administrative expenses in the Branded Products and Healthcare Apparel segments. Income and expenses related to corporate functions that are not specifically attributable to an individual reportable segment are presented within Other in the tables below.

The Company evaluates the performance of each operating segment based on several factors of which the primary financial measures are net sales and income before taxes on income.

The following tables set forth financial information related to the Company’s operating segments (in thousands):

	Branded Products			Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
As of and For the Three Months Ended September 30, 2022:
Net sales	$	86,769		$	30,039	$	23,363	$	(1,468	)	$	-		$	138,703
Cost of goods sold		60,600			18,609		9,453		(596	)		-			88,066
Gross margin		26,169			11,430		13,910		(872	)		-			50,637
Selling and administrative expenses		22,257			10,161		9,520		(872	)		2,749			43,815
Goodwill impairment charge		21,460			-		-		-			-			21,460
Other periodic pension cost		-			-		-		-			528			528
Interest expense		87			32		-		-			1,675			1,794
Income (loss) before taxes on income	$	(17,635	)	$	1,237	$	4,390	$	-		$	(4,952	)	$	(16,960	)
Depreciation and amortization	$	1,724		$	973	$	653	$	-		$	51		$	3,401
Capital expenditures	$	2,062		$	498	$	1,622	$	-		$	-		$	4,182
Total assets	$	224,854		$	160,919	$	44,519	$	-		$	37,015		$	467,307

	Branded Products		Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
As of and For the Three Months Ended September 30, 2021:
Net sales	$	71,651	$	35,482	$	18,040	$	(1,847	)	$	-		$	123,326
Cost of goods sold		49,914		20,886		7,555		(843	)		-			77,512
Gross margin		21,737		14,596		10,485		(1,004	)		-			45,814
Selling and administrative expenses		16,860		8,984		6,576		(1,004	)		3,643			35,059
Other periodic pension cost		-		-		-		-			459			459
Interest expense		11		18		-		-			291			320
Income (loss) before taxes on income	$	4,866	$	5,594	$	3,909	$	-		$	(4,393	)	$	9,976
Depreciation and amortization	$	1,131	$	797	$	398	$	-		$	20		$	2,346
Capital expenditures	$	1,017	$	379	$	1,733	$	-		$	-		$	3,129
Total assets	$	205,268	$	164,748	$	28,062	$	-		$	24,451		$	422,529

	Branded Products			Healthcare Apparel			Contact Centers		Intersegment Eliminations			Other			Total
As of and For the Nine Months Ended September 30, 2022:
Net sales	$	285,891		$	86,895		$	62,803	$	(5,371	)	$	-		$	430,218
Cost of goods sold		202,422			56,066			25,438		(2,259	)		-			281,667
Gross margin		83,469			30,829			37,365		(3,112	)		-			148,551
Selling and administrative expenses		67,818			30,049			24,294		(3,112	)		12,949			131,998
Goodwill impairment charge		25,595			20,323			-		-			-			45,918
Intangible assets impairment charge		5,581			-			-		-			-			5,581
Other periodic pension cost		-			-			-		-			1,584			1,584
Interest expense		205			84			-		-			2,387			2,676
Income (loss) before taxes on income	$	(15,730	)	$	(19,627	)	$	13,071	$	-		$	(16,920	)	$	(39,206	)
Depreciation and amortization	$	4,696		$	2,942		$	1,697	$	-		$	169		$	9,504
Capital expenditures	$	5,006		$	1,748		$	4,393	$	-		$	74		$	11,221
Total assets	$	224,854		$	160,919		$	44,519	$	-		$	37,015		$	467,307

	Branded Products		Healthcare Apparel		Contact Centers		Intersegment Eliminations			Other			Total
As of and For the Nine Months Ended September 30, 2021:
Net sales	$	244,664	$	108,782	$	46,723	$	(5,209	)	$	-		$	394,960
Cost of goods sold		169,307		66,696		19,233		(2,291	)		-			252,945
Gross margin		75,357		42,086		27,490		(2,918	)		-			142,015
Selling and administrative expenses		50,179		26,165		16,860		(2,918	)		13,790			104,076
Other periodic pension cost		-		-		-		-			1,328			1,328
Pension plan termination charge		-		-		-		-			6,945			6,945
Interest expense		63		136		-		-			726			925
Income (loss) before taxes on income	$	25,115	$	15,785	$	10,630	$	-		$	(22,789	)	$	28,741
Depreciation and amortization	$	3,078	$	2,545	$	1,014	$	-		$	82		$	6,719
Capital expenditures	$	6,926	$	4,680	$	2,849	$	-		$	-		$	14,455
Total assets	$	205,268	$	164,748	$	28,062	$	-		$	24,451		$	422,529