Wayside Technology Group, Inc. Reports 2019 First Quarter Results and Declares Quarterly Dividend

First quarter 2019 Financial Highlights:

Net sales $44.9 million
Net income $1.5 million
Diluted net income per share $0.32 per share
   

Dividend declared - $0.17 per share

EATONTOWN, N.J., May 08, 2019 (GLOBE NEWSWIRE) -- Wayside Technology Group, Inc. (NASDAQ: WSTG) today announced financial results for the first quarter ended March 31, 2019.  The results will be discussed in a conference call to be held on Thursday, May 9, 2019 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.

“We are encouraged with our progress towards our strategic goals this quarter,” said Steve DeWindt, President and Chief Executive Officer. “We are continuing to invest in sales, marketing and vendor recruitment to position us to deliver top quality services to our partners and are seeing the results in increases in sales and gross profit. I am looking forward to continuing our success as the go-to channel partner for emerging technology lines.”

Operating Results Highlights:

Net sales for the quarter ended March 31, 2019 increased 11% to $44.9 million compared to $40.5 million for the same period in 2018. Lifeboat Distribution segment net sales for the quarter ended March 31, 2019 increased 9% to $40.1 million compared to $36.8 million for the same period in 2018. TechXtend segment net sales for the quarter ended March 31, 2019 increased 29% to $4.8 million compared to $3.7 million for the same period in 2018.

Adjusted gross billings (non-GAAP) for the quarter ended March 31, 2019 increased 13% to $141.9 million compared to $125.1 million for the same period last year (see attached table for a discussion of adjusted gross billings).

Gross profit for the quarter ended March 31, 2019 increased 5% to $7.2 million compared to $6.9 million for the same period in 2018. Lifeboat Distribution segment gross profit for the quarter ended March 31, 2019 remained consistent at $6.2 million when compared to the same period in 2018. TechXtend segment gross profit for the quarter ended March 31, 2019 increased 46% to $1.0 million compared to $0.7 million for the same period in 2018.

Gross profit margin (gross profit as a percentage of net sales) for the quarter ended March 31, 2019 decreased by 0.9 percentage points to 16.1% compared to 17.0% for the same period in 2018. Lifeboat Distribution segment gross profit margin for the quarter ended March 31, 2019 decreased by 1.3 percentage points to 15.5% compared to 16.8% for the same period in 2018. TechXtend segment gross profit margin for the quarter ended March 31, 2019 increased 2.5 percentage points to 21.6% compared to 19.1% for the same period in 2018. The overall decrease in gross profit margin was primarily caused by a decline in the percentage mix of our products which are recorded net of the related cost of sales, or an effective 100% gross margin.

Total selling, general, and administrative (“SG&A”) expenses for the quarter ended March 31, 2019 increased to $5.5 million compared to $5.0 million for the same period in 2018, primarily due to higher business development and field sales personnel expenses. SG&A expenses were 12.3% of net sales for the quarter ended March 31, 2019 compared to 12.4% for the same period in 2018.

The Company recorded a provision for income taxes of $0.5 million for each of the quarters ended March 31, 2019 and 2018.

The Company reported net income of $1.5 million for the quarter ended March 31, 2019 compared to $1.6 million for the same period in 2018.

Diluted earnings per share for the quarter ended March 31, 2019 was $0.32 compared to diluted earnings per share of $0.36 for the same period in 2018.

On May 7, 2019, the Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable May 24, 2019 to shareholders of record on May 20, 2019.

Non-GAAP measures

As is further discussed in the attached tables, we use non-GAAP measures including Adjusted gross billings as supplemental measures of the performance of our business.  Our use of these measures has limitations and you should not consider them in isolation or use them as substitutes for analysis of our financial results under US GAAP. The attached tables provide a reconciliation of each non-GAAP measure to the most nearly comparable measure under US GAAP.

About Wayside Technology Group, Inc.

Wayside Technology Group, Inc. (NASDAQ: WSTG) is an IT channel company providing innovative sales and distribution solutions to technology vendors, resellers and system integrators since 1982. Wayside operates Lifeboat Distribution, a value-added distributor for virtualization/cloud computing, security, application and network infrastructure, business continuity/disaster recovery, database infrastructure and management, application lifecycle management, science/engineering, and other technically sophisticated products. The company helps vendors recruit and build multinational solution provider networks, power their networks, and drive incremental sales revenues that complement existing sales channels. Lifeboat Distribution services thousands of solution providers, VARs, systems integrators, corporate resellers, and consultants worldwide, helping them power a rich opportunity stream and build profitable product and service businesses. The Company also offers specialty solutions to end user customers through its TechXtend business.

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
  (Unaudited)
(Amounts in thousands, except share and per share amounts)
         
    March 31,
2019
  December 31,
2018
         
ASSETS
         
Current assets      
  Cash and cash equivalents $ 14,062     $ 14,883  
  Accounts receivable, net of allowances of $743 and $785, respectively   84,206       81,351  
  Inventory, net   1,638       1,473  
  Vendor prepayments   1,575       3,172  
  Prepaid expenses and other current assets   2,718       1,988  
Total current assets   104,199       102,867  
         
Equipment and leasehold improvements, net   1,539       1,588  
Right-of-use assets, net   2,069        
Accounts receivable long-term, net   3,097       3,156  
Other assets   181       215  
Deferred income taxes   79       145  
         
Total assets $ 111,164     $ 107,971  
         
LIABILITIES AND STOCKHOLDERS' EQUITY
         
Current liabilities      
  Accounts payable and accrued expenses $ 66,748     $ 66,653  
  Lease liability, current portion   410        
Total current liabilities   67,158       66,653  
         
  Lease liability, net of current portion   2,465        
  Deferred rent and tenant allowances         745  
         
Total liabilities   69,623       67,398  
         
         
Stockholders' equity      
  Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares    
  issued, and 4,513,369 and 4,496,494 shares outstanding , respectively   53       53  
  Additional paid-in capital   32,239       32,392  
  Treasury stock, at cost, 771,131 and 788,006 shares, respectively   (13,149 )     (13,447 )
  Retained earnings   23,690       22,994  
  Accumulated other comprehensive loss   (1,292 )     (1,419 )
Total stockholders' equity   41,541       40,573  
Total liabilities and stockholders' equity $ 111,164     $ 107,971  
         


 
WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in thousands, except per share data)
                 
    Three months ended
    March 31,
    2019   2018
Net Sales      
  Lifeboat segment $ 40,055     $ 36,838  
  TechXtend segment   4,803       3,714  
  Total net sales   44,858       40,552  
         
Cost of sales      
  Lifeboat segment   33,857       30,654  
  TechXtend segment   3,767       3,004  
  Total cost of sales   37,624       33,658  
         
Gross profit   7,234       6,894  
         
Operating expenses      
  Selling costs   2,921       2,435  
  Share- based compensation   165       349  
  Other general and administrative expenses   2,429       2,263  
Total operating expenses   5,515       5,047  
         
Income from operations   1,719       1,847  
         
Interest, net   169       238  
Foreign currency transaction gain   62       2  
Income before provision for income taxes   1,950       2,087  
Provision for income taxes   487       489  
         
Net income $ 1,463     $ 1,598  
         
Income per common share - Basic $ 0.32     $ 0.36  
Income per common share - Diluted $ 0.32     $ 0.36  
         
Weighted average common shares outstanding - Basic   4,404       4,301  
Weighted average common shares outstanding - Diluted   4,404       4,301  
         
Dividends paid per common share $ 0.17     $ 0.17  
         


       
Supplemental Revenue Information (unaudited)      
                 
  The table below presents net sales by disaggregated revenue category:      
         
    Three months ended
    March 31,   March 31,
  Net Sales 2019   2018
         
  Hardware, software and other products $ 40,189     $ 35,862  
  Software - security & highly interdependent with support   1,892       2,103  
  Maintenance, support & other services   2,777       2,587  
  Net sales $ 44,858     $ 40,552  
         
Reconciliation of GAAP and Non-GAAP Financial Measures (unaudited)      
         
  The table below presents net sales reconciled to adjusted gross billings (Non-GAAP):    
         
    Three months ended
  Adjusted Gross Billings (Non-GAAP) (1) March 31,   March 31,
    2019   2018
  Net sales $ 44,858     $ 40,552  
  Costs of sales related to Software – security and highly interdependent with support and maintenance, support and other services   97,008       84,532  
  Adjusted gross billings (Non-GAAP) $ 141,866     $ 125,084  
         

 

(1) We define adjusted gross billings as net sales in accordance with US GAAP, adjusted for the cost of sales related to Software – security and highly interdependent with support and Maintenance, support and other services. We provided a reconciliation of Adjusted gross billings to net sales, which is the most directly comparable US GAAP measure. We use Adjusted gross billings of product and services as a supplemental measure of our performance to gain insight into the volume of business generated by our business, and to analyze the changes to our accounts receivable and accounts payable. Our use of Adjusted gross billings of product and services as analytical tools has limitations, and you should not consider them in isolation or as substitutes for analysis of our financial results as reported under U.S. GAAP. In addition, other companies, including companies in our industry, might calculate Adjusted gross billings of product and services or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Wayside Logo.jpg

Source: Wayside Technology Group, Inc.