Electronics distribution is a working-capital-intensive business. A SKU may sit in transit for forty days, in customs clearance for another five to ten, and on a warehouse shelf for sixty to ninety more before it ships to its end customer. Multiply that across four country operations, each running a multi-million-dollar inventory book, and the difference between disciplined and undisciplined working capital management is the difference between a profitable distributor and a slowly liquidating one.
Three principles guide how we manage working capital at Alpha Protocol. First, country-level inventory ownership. Each subsidiary owns its own balance sheet and its own inventory targets. The U.S. holding does not centralize inventory financing across regions — that would mask FX risk and remove the discipline that comes from local accountability. Second, brand-level cycle accounting. We track days inventory outstanding by brand and SKU family, not just by total. A high-velocity audio SKU and a slow-moving niche IT accessory cannot be evaluated by the same metric. Third, treasury at the holding level. While inventory is local, FX hedging, intercompany financing, and senior lender relationships are consolidated at the U.S. parent. That gives us the optionality to move working capital where the opportunity is best, without exposing operating subsidiaries to balance-sheet noise that's not theirs to manage.
For investors, this matters because working capital is where most distributor failures originate. A revenue line that grows thirty percent year-over-year can disguise an inventory base that grows fifty percent — and that's the kind of gap that ends with a forced sale of excess SKUs at margin-eroding clearance prices. Our quarterly investor package reports working-capital metrics at the consolidated and by-country level precisely so this discipline is visible, not implied.