SOURCE: Wayside Technology Group

Wayside Technology Group

October 30, 2014 17:00 ET

Wayside Technology Group, Inc. Reports 2014 Third Quarter Results, Declares Quarterly Dividend and Names F. Duffield Meyercord as Lead Director

SHREWSBURY, NJ--(Marketwired - Oct 30, 2014) - Wayside Technology Group, Inc. (NASDAQ: WSTG

     
    Q3 2014:
Revenue:   $ 90.5 million
Income from operations:   $ 1.9 million
Net income:   $ 1.4 million
Diluted earnings per share:   $ 0.29 per share
       

Dividend declared - $0.17 per share

Wayside Technology Group, Inc. (NASDAQ: WSTG) today announced financial results for the third quarter ended September 30, 2014. The results will be discussed in a conference call to be held on Friday, October 31, 2014 at 10:00 a.m. EDT. 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.

"I am pleased to report solid financial results for Q3 2014. Overall, revenue increased 28% to a record $90.5 million and income from operations increased 6% over the same period last year," said Simon F. Nynens, Chairman and Chief Executive Officer.

Cash and long term receivables amounted to $26.4 million, representing 68% of equity as of September 30, 2014. Working capital amounted to $27.3 million, representing 70% of equity as of September 30, 2014.

Net sales for the third quarter ended September 30, 2014 increased 28% or $20.0 million to $90.5 million compared to $70.5 million for the same period in 2013. Total sales for the third quarter of 2014 for our Lifeboat Distribution segment were $77.4 million compared to $56.9 million in the third quarter of 2014, representing an increase of $20.5 million or 36%. Total sales for the third quarter of 2014 for our TechXtend segment were $13.1 million compared to $13.6 million in the third quarter of 2013, representing a decrease of $0.5 million or 4%.

The 36% increase in net sales for the Lifeboat Distribution segment was mainly a result of the strengthening of our account penetration, our continued focus on the expanding virtual infrastructure-centric business, product mix and the addition of several key product lines. The 4% decrease in net sales in the TechXtend segment was primarily due to a decrease in extended payment terms sales transactions as compared to the same period in 2013.

Gross Profit for the third quarter ended September 30, 2014 was $6.2 million, a 17% increase as compared to $5.3 million for the third quarter of 2013. Gross profit for our Lifeboat segment in the third quarter of 2014 was $4.7 million compared to $3.8 million for the third quarter of 2013, representing a 23% increase. Gross profit for our TechXtend segment was essentially flat at $1.4 million in the third quarter of 2014 and 2013.

Gross profit margin (gross profit as a percentage of net sales) for the third quarter ended September 30, 2014 was 6.8% compared to 7.5% for the third quarter of 2013. Gross profit margin for the nine months ended September 30, 2014 was 7.2% compared to 7.9% in the same period in 2013. Gross profit margin for our Lifeboat segment for the third quarter of 2014 was 6.1% compared to 6.8% for the third quarter of 2013. The decrease in gross profit margin for the Lifeboat Distribution segment was primarily caused by competitive pricing pressures and product mix. Gross profit margin for our TechXtend segment for the third quarter of 2014 was 10.9% compared to 10.4% for the third quarter of 2013, due primarily to a decline in extended payment terms sales transactions in the third quarter of 2014 as compared to the same period in 2013.

Total selling, general, and administrative ("SG&A") expenses for the third quarter of 2014 were $4.3 million compared to $3.5 million for the third quarter of 2013. This increase is primarily the result of an increase in employee and employee related expenses (salaries, commissions, bonus accruals, benefits and severance expenses of $0.3 million) and occupancy expenses in 2014 compared to 2013.

For the three months ended September 30, 2014, the Company recorded a provision for income taxes of $0.6 million or 31.6% of income, compared to $0.6 million or 30.5% of income for the same period in
2013.

Net income and diluted earnings per share for the third quarter of 2014 were $1.4 million and $0.29, respectively, compared to $1.3 million and $0.29, respectively, for the third quarter of 2013. 

On October 29, 2014, the Board of Directors declared a quarterly dividend of $.17 per share of its common stock payable November 17, 2014 to shareholders of record on November 10, 2014.

In light of the continued growth of the business and the important strategic determinations undertaken by the Board of Directors, on October 29, 2014, the Board, recognizing that the Company's Chairman, President and Chief Executive Officer roles are unified and filled by Simon Nynens, decided to name a lead director from among its independent directors and to clearly define the lead director's role and responsibilities. The Board named F. Duffield Meyercord as its lead director. The Board believes that this action is consistent with best corporate practices, enhancing both transparency of Board actions and Board independence.

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, Flexera Software, Hewlett Packard, Infragistics, Intel Software, JetBrains, Lenovo, Microsoft, Mindjet, Samsung, SAP/Sybase, SmartBear, SolarWinds, Sophos, StorageCraft Technology, TechSmith, Telerik, 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) 
 
    September 30, 2014     December 31, 2013  
    (unaudited)        
                 
ASSETS  
                 
Current assets                
  Cash and cash equivalents   $ 15,606     $ 19,609  
  Accounts receivable, net     60,721       60,796  
  Inventory, net     1,414       1,315  
  Prepaid expenses and other current assets     845       2,117  
  Deferred income taxes     270       218  
Total current assets     78,856       84,055  
                 
Equipment and leasehold improvements, net     355       324  
Accounts receivable long-term     10,834       10,006  
Other assets     163       159  
Deferred income taxes     216       216  
                 
Total assets   $ 90,424     $ 94,760  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY  
                 
Current liabilities                
  Accounts payable and accrued expenses   $ 51,621     $ 60,039  
Total current liabilities     51,621       60,039  
                 
                 
Commitments and contingencies                
                 
Stockholders' equity                
  Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares                
  issued, and 4,881,523 and 4,653,293 shares outstanding, respectively     53       53  
  Additional paid-in capital     30,716       28,791  
  Treasury stock, at cost, 402,977 and 631,207 shares, respectively     (6,007 )     (7,017 )
  Retained earnings     14,199       12,695  
  Accumulated other comprehensive (loss) income     (158 )     199  
Total stockholders' equity     38,803       34,721  
Total liabilities and stockholders' equity   $ 90,424     $ 94,760  
                 
 
 
WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS 
(Amounts in thousands, except per share data) 
 
    Nine months ended   Three months ended  
    September 30,   September 30,  
    2014     2013   2014     2013  
    (Unaudited)   (Unaudited)  
Revenues                              
  Lifeboat segment   $ 206,655     $ 171,949   $ 77,416     $ 56,871  
  TechXtend segment     39,980       38,588     13,089       13,591  
  Total Revenue     246,635       210,537     90,505       70,462  
                               
Cost of sales                              
  Lifeboat segment     193,180       159,820     72,670       53,025  
  TechXtend segment     35,602       34,174     11,659       12,172  
  Total Cost of sales     228,782       193,994     84,329       65,197  
                               
Gross Profit                              
  Lifeboat segment     13,475       12,129     4,746       3,846  
  TechXtend segment     4,378       4,414     1,430       1,419  
  Total Gross Profit     17,853       16,543     6,176       5,265  
                               
Operating expenses                              
  Selling costs     6,453       5,835     2,379       1,830  
  Share- based compensation     853       830     278       278  
  Other general and administrative expenses     4,987       4,546     1,634       1,372  
Total Selling, general and administrative expenses     12,293       11,211     4,291       3,480  
                               
Income from operations     5,560       5,332     1,885       1,785  
                               
Interest, net     375       416     121       140  
Foreign currency transaction (loss) gain     (8 )     10     (4 )     (11 )
Income before provision for income taxes     5,927       5,758     2,002       1,914  
Provision for income taxes     2,016       1,868     632       584  
                               
Net income   $ 3,911     $ 3,890   $ 1,370     $ 1,330  
                               
Income per common share - Basic   $ 0.84     $ 0.87   $ 0.29     $ 0.30  
Income per common share - Diluted   $ 0.83     $ 0.85   $ 0.29     $ 0.29  
                               
Weighted average common shares outstanding - Basic     4,639       4,457     4,716       4,442  
Weighted average common shares outstanding - Diluted     4,685       4,568     4,736       4,551