SOURCE: Wayside Technology Group

Wayside Technology Group

February 05, 2015 17:00 ET

Wayside Technology Group, Inc. Reports 2014 Fourth Quarter & Full Year Results and Declares Quarterly Dividend

Vito Legrottaglie and Kevin Scull Promoted

SHREWSBURY, NJ--(Marketwired - Feb 5, 2015) - Wayside Technology Group, Inc. (NASDAQ: WSTG)

    Q4 2014:   Year 2014:
Revenue:   $94.1 million   $340.8 million
Income from operations:   $2.7 million   $8.3 million
Net income:   $1.8 million   $5.8 million
Diluted earnings per share:   $0.39 per share   $1.23 per share
         
Dividend declared - $0.17 per share    

Wayside Technology Group, Inc. (NASDAQ: WSTG) today announced financial results for the fourth quarter and year ended December 31, 2014. The results will be discussed in a conference call to be held on Friday, February 6, 2015 at 10:00 a.m. EST. The dial-in telephone number is (866) 847-7864 and the pass code is "WSTG." This conference call will be webcast by NASDAQ OMX and can be accessed at Wayside Technology's Web site at www.waysidetechnology.com/earnings-call.

Cash and long term receivables amounted to $30.8 million as compared to $29.6 million as of December 31, 2013. Cash and long term receivables represented 78% of equity and amounted to $6.29 per share as of December 31, 2014. Working capital amounted to $31.2 million, representing 79% of equity as of December 31, 2014.

"2014 was another strong year for Wayside, despite the fact that our TechXtend division underperformed in the fourth quarter, with a 13% overall increase in revenue. We continued to execute our strategy of increased market penetration and adding new product lines to our portfolio. We will continue to invest in our future by hiring new talent and adding new vendor partnerships," said Simon F. Nynens, Chairman and Chief Executive Officer. "In December 2014, the Board approved an increase of 500,000 shares of Common Stock to the number of shares of Common Stock available for repurchase and we will continue to buy back shares according to our 10-b5 Stock Repurchase Plan."

Net sales for the fourth quarter ended December 31, 2014 increased 5% to $94.1 million compared to $89.9 million for the same period in 2013. Net sales for the fourth quarter of 2014 for our Lifeboat Distribution segment were $83.8 million compared to $65.7 million in the fourth quarter of 2013, representing an increase of 28%. Net sales for the fourth quarter of 2014 for our TechXtend segment were $10.3 million compared to $24.2 million in the fourth quarter of 2013, representing a decrease of 57%.

Net sales for the year ended December 31, 2014 increased 13% to $340.8 million compared to $300.4 million in 2013. Net sales for our Lifeboat Distribution segment in 2014 were $290.4 million compared to $237.6 million in 2013, representing a 22% increase. Total sales for the TechXtend segment in 2014 amounted to $50.3 million, compared to $62.8 million in 2013, representing a decrease of 20%.

The increases in net sales for the three months and full year ended December 31, 2014, compared to the same periods in 2013, in our Lifeboat Distribution segment were mainly a result of the strengthening of our account penetration and the addition of several key product lines. The decreases in net sales for the three months and full year ended December 31, 2014, compared to the same periods in 2013, in our TechXtend segment were primarily due to a decrease in extended payment terms sales transactions in the fourth quarter of 2014.

Gross profit for the fourth quarter of 2014 was $7.0 million compared to $7.8 million for the fourth quarter of 2013 representing a decrease of 11%. Gross profit for our Lifeboat Distribution segment for the fourth quarter of 2014 was $5.7 million compared to $5.3 million in the fourth quarter of 2013, representing an 8% increase. Gross profit for our TechXtend segment for the fourth quarter of 2014 was $1.2 million compared to $2.5 million in the fourth quarter of 2013, representing a 50% decrease. Vendor rebates and discounts for the quarter ended December 31, 2014 amounted to $0.5 million compared to $0.7 million for the fourth quarter of 2013.

Gross profit for the year 2014 was $24.8 million compared to $24.4 million in 2013, a 2% increase. Gross profit for our Lifeboat Distribution segment in 2014 was $19.2 million compared to $17.4 million in 2013, representing a 10% increase. The increase in gross profit for the Lifeboat Distribution segment was due to increased sales volume. Gross profit for our TechXtend segment in 2014 was $5.6 million compared to $6.9 million in 2013, representing a 19% decrease. The decrease in gross profit for the TechXtend segment was the result of decreased sales volume, including a decrease in extended payment terms sales transactions, offset in part by a higher gross margin in 2014 as compared to 2013. Vendor rebates and discounts for the year ended December 31, 2014 amounted to $1.6 million compared to $1.7 million for 2013.

Gross profit margin (gross profit as a percentage of net sales) for 2014 was 7.3% compared to 8.1% in 2013. Gross profit margin for our Lifeboat Distribution segment in 2014 was 6.6% in 2014 compared to 7.3% in 2013. Gross profit margin for our TechXtend segment in 2014 was 11.2% compared to 11.0% in 2013. The increase in gross profit dollars and the decrease in gross profit margins were primarily caused by the sales growth and product mix within our Lifeboat Distribution segment which carries lower margins than our TechXtend segment. 

Total selling, general, and administrative ("SG&A") expenses for the fourth quarter of 2014 were $4.2 million compared to $4.3 million for the fourth quarter of 2013. Total SG&A expenses for 2014 were $16.5 million compared to $15.5 million in 2013, representing an increase of $1.0 million or 6.5%.

For the fourth quarter and year ended December 31, 2014, the Company recorded a provision for income taxes of $1.0 million and $3.0 million, respectively. 

Net income and diluted earnings per share for the fourth quarter of 2014 were $1.8 million and $0.39, respectively, compared to $2.5 million and $0.55, respectively for the fourth quarter of 2013. Net income and diluted earnings per share for 2014 were $5.8 million and $1.23, respectively, compared to $6.4 million and $1.41, respectively in 2013.

On February 4, 2015, the Board of Directors declared a quarterly dividend of $.17 per share of its common stock payable February 27, 2015 to shareholders of record on February 18, 2015.

In addition, Vito Legrottaglie has been promoted to the position of Vice President and Chief Information Officer. Mr. Legrottaglie has been our Vice President of Operations and Information Systems since April 2007. He previously held the position of Vice President of Information Systems since June 2003. Kevin Scull has been promoted to Vice President and Chief Accounting Officer. Mr. Scull has been our Vice President and Interim Chief Financial Officer since February 2014. He previously held the position of Vice President and Chief Accounting Officer since January 2006.

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 including Acronis, Bluebeam Software, CA Technologies, Dell/Dell Software, ExaGrid Systems, Flexera Software, Hewlett Packard, Infragistics, Intel Software, Lenovo, Microsoft, Mindjet, Samsung, SmartBear Software, SolarWinds, Sophos, StorageCraft Technology, TechSmith, Unitrends, Veeam Software 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  
(Amounts in thousands, except share and per share amounts)  
             
    December 31, 2014     December 31, 2013  
    (unaudited)        
             
ASSETS  
             
Current assets            
  Cash and cash equivalents   $ 23,124     $ 19,609  
  Accounts receivable, net     60,782       60,796  
  Inventory, net     1,491       1,315  
  Prepaid expenses and other current assets     933       2,117  
  Deferred income taxes     245       218  
Total current assets     86,575       84,055  
                 
Equipment and leasehold improvements, net     412       324  
Accounts receivable long-term     7,660       10,006  
Other assets     152       159  
Deferred income taxes     182       216  
                 
Total assets   $ 94,981     $ 94,760  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY  
                 
Current liabilities                
  Accounts payable and accrued expenses   $ 55,414     $ 60,039  
Total current liabilities     55,414       60,039  
                 
                 
Commitments and contingencies                
                 
Stockholders' equity                
  Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares issued, and 4,890,756 and 4,653,293 shares outstanding in 2014 and 2013, respectively     53       53  
  Additional paid-in capital     31,013       28,791  
  Treasury stock, at cost, 393,744 and 543,627 shares, respectively     (6,166 )     (7,017 )
  Retained earnings     15,225       12,695  
  Accumulated other comprehensive (loss) income     (558 )     199  
Total stockholders' equity     39,567       34,721  
Total liabilities and stockholders' equity   $ 94,981     $ 94,760  
                 
                 
                 
WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS  
(Amounts in thousands, except per share data)  
                       
    Year ended   Three months ended  
    December 31,   December 31,  
    2014     2013   2014     2013  
    (Unaudited)      (Unaudited)  
Revenues                      
  Lifeboat Distribution segment   $ 290,449     $ 237,632   $ 83,794     $ 65,683  
  TechXtend segment     50,309       62,758     10,329       24,170  
  Total Revenue     340,758       300,390     94,123       89,853  
                               
Cost of sales                              
  Lifeboat Distribution segment     271,255       220,184     78,075       60,364  
  TechXtend segment     44,693       55,851     9,091       21,677  
  Total Cost of sales     315,948       276,035     87,166       82,041  
                               
Gross profit     24,810       24,355     6,957       7,812  
                               
Operating expenses                              
  Selling costs     8,764       7,997     2,311       2,162  
  Stock based compensation     1,305       1,127     452       297  
  Other general and administrative expenses     6,444       6,381     1,457       1,835  
Total Selling, general and administrative expenses     16,513       15,505     4,220       4,294  
                               
Income from operations     8,297       8,850     2,737       3,518  
                               
Interest income, net     472       562     97       146  
Foreign currency translation     (11 )     -     (3 )     (10 )
Income before income tax provision     8,758       9,412     2,831       3,654  
Provision for income taxes     2,998       3,019     982       1,151  
                               
Net income   $ 5,760     $ 6,393   $ 1,849     $ 2,503  
                               
Net income per common share - Basic   $ 1.24     $ 1.44   $ 0.39     $ 0.56  
Net income per common share - Diluted   $ 1.23     $ 1.41   $ 0.39     $ 0.55  
                               
Weighted average common shares outstanding - Basic     4,661       4,454     4,727       4,444  
Weighted average common shares outstanding - Diluted     4,702       4,526     4,752       4,521