SOURCE: Wayside Technology Group

Wayside Technology Group

October 27, 2016 17:00 ET

Wayside Technology Group, Inc. Reports 2016 Third Quarter Results and Declares Quarterly Dividend

EATONTOWN, NJ--(Marketwired - Oct 27, 2016) - Wayside Technology Group, Inc. (NASDAQ: WSTG)

     
    Q3 2016:
Revenue:   $99.6 million
Income from operations:   $2.0 million
Net income:   $1.4 million
Diluted earnings per share:   $0.31 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, 2016. The results will be discussed in a conference call to be held on Friday, October 28, 2016 at 10:00 a.m. EDT. The dial-in telephone number is (866) 814-8482 and the pass code is "WSTG." This conference call will be webcast by NASDAQ OMX and can be accessed at Wayside Technology's website at www.waysidetechnology.com/earnings-call.

"We are pleased to report solid quarterly results as compared to a strong Q3 2015," said Simon F. Nynens, Chairman and Chief Executive Officer. "We see opportunities for growth in the remainder of this year. We bought back a total of approximately 86,000 shares in the third quarter of 2016 and we still have approximately 278,000 shares of Common Stock available for future repurchase. We will continue to buy back shares according to our 10-b5 Stock Repurchase Plan."

Net sales for the third quarter ended September 30, 2016 increased 2% or $1.9 million to $99.6 million compared to $97.7 million for the same period in 2015. Total sales for the third quarter of 2016 for our Lifeboat Distribution segment were $91.1 million compared to $86.1 million in the third quarter of 2015, representing an increase of $5.0 million or 6%. Total sales for the third quarter of 2016 for our TechXtend segment were $8.5 million compared to $11.6 million in the third quarter of 2015, representing a decrease of $3.1 million or 27%.

The 6% increase in net sales for the Lifeboat Distribution segment resulted mainly from the addition of several key product lines and our ongoing strategy of strengthening our account penetration. This was partially offset by lower sales to certain resellers, resulting from changes in product mix upon annual contract renewals. The 27% decrease in net sales in the TechXtend segment was primarily due variability in larger software sales transactions, including extended payment terms sales, when compared to the third quarter of the prior year.

Cash and long term receivables amounted to $27.8 million, representing 73% of equity as of September 30, 2016. Working capital amounted to $28.8 million, representing 76% of equity as of September 30, 2016.

Gross Profit for the third quarter ended September 30, 2016 was $6.4 million, a 7% decrease compared to $6.9 million for the third quarter of 2015. Gross profit for our Lifeboat segment in the third quarter of 2016 was $5.4 million compared to $5.5 million for the third quarter of 2015, representing a 1% decrease. Gross profit for our TechXtend segment in the third quarter of 2016 was $0.9 million compared to $1.4 million for the third quarter of 2015, representing a 33% decrease.

Gross profit margin (gross profit as a percentage of net sales) for the third quarter ended September 30, 2016 was 6.4% compared to 7.0% for the third quarter of 2015. Gross profit margin for our Lifeboat Distribution segment for the third quarter of 2016 was 6.0% compared to 6.4% for the third quarter of 2015. The decrease in gross profit margin for the Lifeboat Distribution segment was largely the result of a program change by one of our main vendors, which caused gross margins to decline by 1.8% for that line. Gross profit margin for our TechXtend segment for the third quarter of 2016 was 11.0% compared to 12.0% for the third quarter of 2015. The decrease in gross profit margin for the TechXtend segment was primarily caused by variability in gross profit margins on larger sales transactions, when compared to those in the same quarter last year.

Total selling, general, and administrative ("SG&A") expenses for the third quarter of 2016 were $4.4 million compared to $4.6 million for the third quarter of 2015, representing a decrease of $0.3 million or 6%. This decrease was primarily the result of lower bonus expense, partially offset by increased stock compensation and occupancy costs in 2016, compared to 2015. As a percentage of net sales, SG&A expenses for the third quarter of 2016 were 4.4% compared to 4.7% for the third quarter of 2015.

For the three months ended September 30, 2016, the Company recorded a provision for income taxes of $704,000 or 33.8% of income, compared to $805,000 or 34.1% of income for the same period in 2015.

Net income and diluted earnings per share for the third quarter of 2016 were $1.4 million and $0.31, respectively, compared to $1.6 million and $0.33, respectively, for the third quarter of 2015. 

On October 25, 2016, the Board of Directors declared a quarterly dividend of $.17 per share of common stock payable November 18, 2016 to shareholders of record on November 8, 2016.

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 Bluebeam Software, CA Technologies, Dell/Dell Software, ExaGrid Systems, Flexera Software, Hewlett Packard, Infragistics, Intel Software, Lenovo, Micro Focus, Microsoft, Mindjet, Samsung, SmartBear Software, SolarWinds, Sophos, StorageCraft Technology, Super Micro Computer, Inc., 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)  
             
    September 30, 2016     December 31, 2015  
    (unaudited)        
                 
ASSETS  
                 
Current assets                
  Cash and cash equivalents   $ 20,958     $ 23,823  
  Accounts receivable, net     62,160       58,965  
  Inventory, net     1,903       1,954  
  Prepaid expenses and other current assets     1,197       989  
  Deferred income taxes     253       260  
Total current assets     86,471       85,991  
                 
Equipment and leasehold improvements, net     1,793       362  
Accounts receivable long-term     6,797       7,386  
Other assets     125       82  
Deferred income taxes     236       261  
                 
Total assets   $ 95,422     $ 94,082  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY  
                 
Current liabilities                
  Accounts payable and accrued expenses   $ 57,643     $ 55,423  
Total current liabilities     57,643       55,423  
                 
Commitments and contingencies                
                 
Stockholders' equity                
  Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares issued, and 4,658,320 and 4,700,812 shares outstanding, respectively    
53
     
53
 
  Additional paid-in capital     32,666       32,540  
  Treasury stock, at cost, 626,180 and 583,688 shares, respectively     (12,751 )     (10,296 )
  Retained earnings     19,322       17,813  
  Accumulated other comprehensive loss     (1,511 )     (1,451 )
Total stockholders' equity     37,779       38,659  
Total liabilities and stockholders' equity   $ 95,422     $ 94,082  
                 
   
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,  
    2016     2015     2016   2015  
    (Unaudited)     (Unaudited)  
Revenues                              
  Lifeboat segment   $ 267,113     $ 250,287     $ 91,114   $ 86,082  
  TechXtend segment     31,054       32,027       8,472     11,571  
  Total Revenue     298,167       282,314       99,586     97,653  
                               
Cost of sales                              
  Lifeboat segment     250,974       234,450       85,674     80,589  
  TechXtend segment     27,868       28,202       7,540     10,184  
  Total Cost of sales     278,842       262,652       93,214     90,773  
                               
Gross Profit     19,325       19,662       6,372     6,880  
                               
Operating expenses                              
  Selling costs     6,995       7,484       2,336     2,572  
  Share-based compensation     1,168       797       329     263  
  Other general and administrative expenses     5,407       5,252       1,686     1,783  
Total Selling, general and administrative expenses     13,570       13,533       4,351     4,618  
                               
Income from operations     5,755       6,129       2,021     2,262  
                               
Interest income, net     183       297       58     100  
Foreign currency transaction (loss) gain     (1 )     (9 )     3     (4 )
Income before provision for income taxes     5,937       6,417       2,082     2,358  
Provision for income taxes     2,008       2,199       704     805  
                               
Net income   $ 3,929     $ 4,218     $ 1,378   $ 1,553  
                               
Income per common share - Basic   $ 0.87     $ 0.91     $ 0.31   $ 0.34  
Income per common share - Diluted   $ 0.86     $ 0.90     $ 0.31   $ 0.33  
                               
Weighted average common shares outstanding - Basic     4,537       4,652       4,507     4,624  
Weighted average common shares outstanding - Diluted     4,548       4,673       4,518     4,643