SOURCE: Wayside Technology Group

Wayside Technology Group

October 27, 2011 17:10 ET

Wayside Technology Group, Inc. Reports 2011 Third Quarter Results and Declares Quarterly Dividend

Revenue: $63.7 Million, up 20% Year-Over-Year; Income From Operations $2.3 Million, up 17% Year-Over-Year; $.16 Quarterly Dividend Declared

SHREWSBURY, NJ--(Marketwire - Oct 27, 2011) - Wayside Technology Group, Inc. (NASDAQ: WSTG) today reported financial results for the third quarter ended September 30, 2011. The results will be discussed in a conference call to be held on Friday, October 28, 2011 at 10:00 AM Eastern time. The dial-in telephone number is (866) 861-4873 and the pass code is "WSTG."

This conference call will be available via live webcast -- in listen-mode only -- at www.earnings.com. A replay will also be available on the company's website at www.waysidetechnology.com.

Cash and marketable securities amounted to $13.3 million, representing 48% of equity as of September 30, 2011.

Net sales for the third quarter of 2011 increased 20% to $63.7 million compared to $53.0 million for the same period in 2010. Total sales for the third quarter of 2011 for our TechXtend segment (formerly Programmer's Paradise segment) were $14.6 million compared to $14.6 million in the third quarter of 2010. Total sales for the third quarter of 2011 for our Lifeboat segment were $49.1 million compared to $38.4 million in the third quarter of 2010, representing a 28% increase.

"We are very pleased to report good results during these challenging economic times," said Simon F. Nynens, Chairman and Chief Executive Officer. "To report growth compared to the third quarter of 2010 that showed revenue growth of 50% versus the third quarter of 2009 shows the quality and passion of our team."

Sales from our Lifeboat segment showed strong growth. The 28% increase in net sales in the third quarter of 2011 compared to 2010 was mainly a result of our continued focus on the expanding virtual infrastructure-centric business, the addition of several key product lines, and the strengthening of our account penetration.

Gross Profit for the quarter ended September 30, 2011 was $5.8 million compared to $5.1 million for the third quarter of 2010, representing a 12% increase. Total gross profit for our TechXtend segment was $1.7 million compared to $1.7 million in the third quarter of 2010. Total gross profit for our Lifeboat segment was $4.1 million compared to $3.4 million in the third quarter of 2010, representing a 20% increase. This increase in gross profit was due to aggressive sales volume growth within our Lifeboat segment. Vendor rebates and discounts for the quarter ended September 30, 2011 amounted to $0.7 million compared to $0.6 million for the third quarter of 2010. Vendor rebates are dependent on reaching certain targets set by our vendors.

Total gross profit, as a percentage of net sales, for the third quarter of 2011 was 9.0%, compared to 9.7% in the third quarter of 2010.

The increase in gross profit dollars and the decrease in gross profit margin as a percentage of net sales was primarily caused by the aggressive sales growth within our Lifeboat segment, competitive pricing pressure in both segments, and also in part by our having won several large bids based on aggressive pricing, which we plan to continue.

Total selling, general, and administrative ("SG&A") expenses for the third quarter of 2011 were $3.5 million compared to $3.2 million for the third quarter of 2010, which was mainly the result of a increase in employee and employee-related expenses (salaries, commissions, bonus accruals and benefits) of $0.2 million in 2011 compared to 2010. As a percentage of net sales, SG&A expenses for the third quarter of 2011 were 5.4% compared to 6.0% for the third quarter of 2010.

On October 25, 2011, the Board of Directors declared a quarterly dividend of $.16 per share of its common stock payable November 17, 2011 to shareholders of record on November 7, 2011.

About Wayside Technology Group, Inc.

Wayside Technology Group, Inc. (NASDAQ: WSTG) was founded in 1982 and is a unified and integrated technology company providing products and solutions for corporate resellers, VARs, and developers as well as business, government and educational entities. The company offers technology products from software publishers and manufacturers such as Acronis, Astaro, CA Technologies, DataCore, Doyenz, Flexera Software, GFI, Hewlett Packard, Intel Software, Lenovo, Microsoft, Mindjet, Oracle, Quest Software, SolarWinds, StorageCraft Technology, TechSmith, Veeam, and VMware.

Additional information can be found by visiting www.waysidetechnology.com.

The statements in this release concerning the Company's future prospects are forward-looking statements that involve certain risks and uncertainties. Such risks and uncertainties could cause actual results to differ materially from those indicated by such forward-looking statements, and include, without limitation, the continued acceptance of the Company's distribution channel by vendors and customers, the timely availability and acceptance of new products, product mix, market conditions, contribution of key vendor relationships and support programs, as well as factors that affect the software industry in general and other factors. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in our filings with the Securities and Exchange Commission. Except as otherwise required by law, the Company undertakes no obligation to update or revise these forward-looking statements.

-Tables Follow-

WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
September 30, 2011 December 31, 2010
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 8,857 $ 10,955
Marketable securities 4,396 4,528
Accounts receivable, net 38,592 42,486
Inventory - finished goods 1,430 1,164
Prepaid expenses and other current assets 1,512 1,250
Deferred income taxes 323 516
Total current assets 55,110 60,899
Equipment and leasehold improvements, net 507 545
Accounts receivable long-term 7,763 6,866
Other assets 37 37
Deferred income taxes 189 336
Total assets $ 63,606 $ 68,683
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 35,940 $ 41,791
Current portion- capital lease obligation 83 75
Total current liabilities 36,023 41,866
Long term portion- capital lease obligation 76 138
Total liabilities 36,099 42,004
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares issued, and 4,688,042 and 4,770,241 shares outstanding, respectively 53 53
Additional paid-in capital 26,458 25,473
Treasury stock, at cost, 596,458 and 514,259 shares, respectively (4,892 ) (3,570 )
Retained earnings 5,585 4,267
Accumulated other comprehensive income 303 456
Total stockholders' equity 27,507 26,679
Total liabilities and stockholders' equity $ 63,606 $ 68,683
WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Nine months ended Three months ended
September 30, September 30,
2011 2010 2011 2010
(Unaudited) (Unaudited)
Revenues
Lifeboat segment $ 137,621 $ 103,338 $ 49,118 $ 38,411
TechXtend segment 38,330 38,456 14,623 14,583
Total Revenue 175,951 141,794 63,741 52,994
Cost of sales
Lifeboat segment 125,804 93,910 45,013 34,980
TechXtend segment 33,964 34,097 12,971 12,880
Total Cost of sales 159,768 128,007 57,984 47,860
Gross Profit 16,183 13,787 5,757 5,134
Operating expenses
Selling costs 5,595 4,857 1,867 1,656
Stock based compensation 824 892 235 296
Other general and administrative expenses 4,216 3,622 1,363 1,229
Total Selling, general and administrative expenses 10,635 9,371 3,465 3,181
Income from operations 5,548 4,416 2,292 1,953
Interest income, net 264 316 92 104
Realized foreign exchange gain (loss) 1 3 - -
Income before income tax provision 5,813 4,735 2,384 2,057
Provision for income taxes 2,248 1,800 890 800
Net income $ 3,565 $ 2,935 $ 1,494 $ 1,257
Net income per common share - Basic $ 0.81 $ 0.67 $ 0.34 $ 0.29
Net income per common share - Diluted $ 0.77 $ 0.66 $ 0.33 $ 0.28
Weighted average common shares outstanding - Basic 4,411 4,380 4,406 4,389
Weighted average common shares outstanding - Diluted 4,618 4,475 4,575 4,502