Wayside Technology Group, Inc. Reports 2017 Third Quarter Results and Declares Quarterly Dividend

Eatontown, New Jersey, UNITED STATES


  Q3 2017:
   
Revenue:  $106.6 million
Income from operations: $1.8 million
Net income: $1.3 million
Diluted earnings per share: $0.30 per share

Dividend declared - $0.17 per share

EATONTOWN, N.J., Oct. 26, 2017 (GLOBE NEWSWIRE) -- Wayside Technology Group, Inc. (NASDAQ:WSTG) today announced financial results for the third quarter ended September 30, 2017.  The results will be discussed in a conference call to be held on Friday, October 27, 2017 at 10:00 a.m. EDT.  The dial-in telephone number is (844) 683-0552 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/site/content/webcasts.

“Despite intense market competition, we delivered satisfactory results. Net sales increased 7% and earnings per share increased slightly to $0.30 per share for the quarter,” said Simon F. Nynens, Chairman and Chief Executive Officer.  “On a year-to-date basis, our earnings per share are up $0.04 or 5%.

“I would also like to share that William Botti has announced his intention to retire from his position as Executive Vice President effective December 31, 2017. Bill will continue in his current role as he transitions his responsibilities to other team members. We would like to thank Bill for his contributions during his tenure as a member of our team.”

Operating Results:

Net sales for the quarter ended September 30, 2017 increased 7% to $106.6 million compared to $99.6 million for the same period in 2016 as growth in our Lifeboat Distribution segment was offset by a decline in TechXtend net sales. Lifeboat Distribution segment net sales for the quarter ended September 30, 2017 increased 10% to $100.2 million, compared to $91.1 million for the same period in 2016. TechXtend segment net sales for the quarter ended September 30, 2017 decreased 24% to $6.5 million, compared to $8.5 million for the same period in 2016, due to a decline in extended payment term transactions which typically vary significantly from quarter to quarter based on the timing of IT spending decisions by our larger customers.

Gross profit for the quarter ended September 30, 2017 decreased 2% to $6.2 million compared to $6.4 million for the same period in 2016. Lifeboat Distribution segment gross profit for the quarter ended September 30, 2017 and 2016 was consistent with the prior year at $5.4 million. TechXtend segment gross profit for the third quarter of 2017 decreased 11% to $0.8 million, compared to $0.9 million in 2016.

Gross profit margin (gross profit as a percentage of net sales) for the quarter ended September 30, 2017 decreased by 0.5 percentage points to 5.9%, compared to 6.4% for the same period in 2016. Lifeboat Distribution segment gross profit margin for the quarter ended September 30, 2017 decreased by 0.6 percentage points to 5.4%, compared to 6.0% for the same period last year. TechXtend segment gross profit margin for the quarter ended September 30, 2017 increased 1.8 percentage points to 12.8%, compared to 11.0% for the same period in 2016.

Total selling, general, and administrative (“SG&A”) expenses for the quarter ended September 30, 2017 increased 2% or $0.1 million over the same quarter last year to $4.5 million. The increase in general and administrative expenses is primarily due to increased employee related expenses. SG&A expenses as a percentage of net sales were 4.2% in 2017 compared to 4.4% in 2016 due to the increase in net sales.

Net income for the quarter ended September 30, 2017 was $1.3 million. Diluted earnings per share for the quarter ended September 30, 2017 increased 2% to $0.30, compared to $0.29, for the same period in 2016, as restated to be presented on a comparable basis with the current year (see explanatory note 1 in the attached tables). The increase in earnings per share was due to a lower number of weighted average diluted shares outstanding resulting from repurchases of our common stock. 

On October 24, 2017, the Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable November 17, 2017 to shareholders of record on November 10, 2017.

For the quarter ended September 30, 2017, the Company recorded a provision for income taxes of $0.7 million.

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, Bitdefender, Bluebeam Software, Dell/Dell Software, erwin, 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 –

Investor Relations Contact:
Michael Vesey, Vice President and Chief Financial Officer
Wayside Technology Group, Inc.
(732) 389-0932
michael.vesey@waysidetechnology.com


 
WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
 
 September 30,
2017
 December 31,
2016
 (unaudited)  
    
ASSETS
    
Current assets   
Cash and cash equivalents$4,065  $13,524 
Accounts receivable, net of allowances of $2,641 and $2,293, respectively 63,683   83,317 
Inventory, net 2,403   2,324 
Vendor prepayments 7,471    
Prepaid expenses and other current assets 788   948 
Total current assets 78,410   100,113 
    
Equipment and leasehold improvements, net 1,924   1,937 
Accounts receivable long-term 10,243   11,119 
Other assets 204   113 
Deferred income taxes 235   416 
    
Total assets$91,016  $113,698 
    
LIABILITIES AND STOCKHOLDERS' EQUITY
    
Current liabilities   
Accounts payable and accrued expenses$50,922  $76,087 
Revolving credit facility 2,000   - 
Total current liabilities 52,922   76,087 
    
    
Commitments and contingencies   
    
Stockholders' equity   
Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares  
issued, and 4,681,964 and 4,555,434 shares outstanding, respectively 53   53 
Additional paid-in capital 30,694   30,683 
Treasury stock, at cost, 802,536 and 729,066 shares, respectively (13,855)  (12,029)
Retained earnings 22,152   20,515 
Accumulated other comprehensive loss (950)  (1,611)
Total stockholders' equity 38,094   37,611 
Total liabilities and stockholders' equity$91,016  $113,698 
    


 
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,
 2017 2016
 2017 2016
 (Unaudited) (Unaudited)
Revenues       
Lifeboat segment$300,344 $267,113  $100,188 $91,114
TechXtend segment 22,079  31,054   6,458  8,472
Total Revenue 322,423  298,167   106,646  99,586
        
Cost of sales       
Lifeboat segment 283,471  250,974   94,771  85,674
TechXtend segment 19,377  27,868   5,632  7,540
Total Cost of sales 302,848  278,842   100,403  93,214
        
Gross Profit 19,575  19,325   6,243  6,372
        
Operating expenses       
Selling costs 7,504  6,995   2,339  2,336
Share- based compensation 1,026  1,168   323  329
Other general and administrative expenses 5,731  5,407   1,789  1,686
Total Selling, general and administrative expenses 14,261  13,570   4,451  4,351
        
Income from operations 5,314  5,755   1,792  2,021
        
Interest, net 466  183   145  58
Foreign currency transaction gain (loss) 22  (1)  73  3
Income before provision for income taxes 5,802  5,937   2,010  2,082
Provision for income taxes 1,867  2,008   669  704
        
Net income$3,935 $3,929  $1,341 $1,378
        
Income per common share - Basic$0.87 $0.83  $0.30 $0.29
Income per common share - Diluted$0.87 $0.83  $0.30 $0.29
        
Weighted average common shares outstanding – Basic- (1) 4,303  4,537   4,283  4,507
Weighted average common shares outstanding – Diluted- (1) 4,303  4,537   4,283  4,507

NOTE 1: Earnings per share for the three and nine months ended September 30, 2016 were recalculated and restated using the two class method, to be presented on a comparable basis with the same periods in 2017. In 2017 the Company determined it should be reporting earnings per share using the two class method, which treats unvested restricted shares granted under our 2012 Stock-Based Compensation Plan that are entitled to receive non-forfeitable dividends as participating securities. The change had an immaterial impact on previously reported earnings per share (and no net income impact), however, the amounts presented in these tables have been re-stated to correct the error in prior periods for comparability purposes.


The table below shows basic and diluted EPS as previously reported and as restated (see NOTE 1):

  2016
  Nine months
ended
September 30,
 Three months
ended
September 30,
As Previously Reported:   
Income per common share - Basic$0.87 $0.31
Income per common share - Diluted$0.86 $0.31
     
Weighted average common shares outstanding - Basic 4,537  4,507
Weighted average common shares outstanding - Diluted 4,548  4,518
     
As Restated:   
Income per common share - Basic$0.83 $0.29
Income per common share - Diluted$0.83 $0.29
     
Weighted average common shares outstanding – Basic 4,537  4,507
Weighted average common shares outstanding – Diluted 4,537  4,507