UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 000-26408
Wayside Technology Group, Inc.
(Exact name of registrant as specified in its charter)
|
Delaware |
|
13-3136104 |
|
(State or other jurisdiction of |
|
(I.R.S. Employer Identification No.) |
|
incorporation or organization) |
|
|
4 Industrial Way West, Suite 300, Eatontown, New Jersey 07724
(Address of principal executive offices)
(732) 389-8950
Registrant’s Telephone Number
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Check One:
|
Large Accelerated Filer ☐ |
|
Accelerated Filer ☐ |
|
|
|
Smaller Reporting Company ☒ |
|
Non-Accelerated Filer ☒ |
|
Emerging Growth Company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 4,505,693 outstanding shares of common stock, par value $.01 per share (“Common Stock”) as of November 5, 2019, not including 778,807 shares classified as treasury stock.
Securities registered pursuant to Section 12(b) of the Act:
|
|
Trading Symbol |
|
Name of each exchange on which registered: |
|
|
Common stock, $.01 par value |
|
WSTG |
|
The NASDAQ Global Market |
Wayside Technology Group, Inc. and Subsidiaries
2
PART I — FINANCIAL INFORMATION
Wayside Technology Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Amounts in thousands, except share and per share amounts)
|
|
|
September 30, |
|
December 31, |
|
||
|
|
|
2019 |
|
2018 |
|
||
|
|
|
(Unaudited) |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
10,157 |
|
$ |
14,883 |
|
|
Accounts receivable, net of allowances of $720 and $785, respectively |
|
|
86,436 |
|
|
81,351 |
|
|
Inventory, net |
|
|
2,356 |
|
|
1,473 |
|
|
Vendor prepayments |
|
|
187 |
|
|
3,172 |
|
|
Prepaid expenses and other current assets |
|
|
2,224 |
|
|
1,988 |
|
|
Total current assets |
|
|
101,360 |
|
|
102,867 |
|
|
|
|
|
|
|
|
|
|
|
Equipment and leasehold improvements, net |
|
|
1,308 |
|
|
1,588 |
|
|
Right-of-use assets, net |
|
|
1,881 |
|
|
— |
|
|
Accounts receivable-long-term, net |
|
|
2,040 |
|
|
3,156 |
|
|
Other assets |
|
|
138 |
|
|
215 |
|
|
Deferred income taxes |
|
|
98 |
|
|
145 |
|
|
|
|
$ |
106,825 |
|
$ |
107,971 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
60,361 |
|
$ |
66,653 |
|
|
Lease liability, current portion |
|
|
397 |
|
|
— |
|
|
Total current liabilities |
|
|
60,758 |
|
|
66,653 |
|
|
|
|
|
|
|
|
|
|
|
Lease liability, net of current portion |
|
|
2,250 |
|
|
— |
|
|
Deferred rent and tenant allowances |
|
|
— |
|
|
745 |
|
|
Total liabilities |
|
|
63,008 |
|
|
67,398 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,507,215 and 4,496,494 shares outstanding, respectively |
|
|
53 |
|
|
53 |
|
|
Additional paid-in capital |
|
|
32,735 |
|
|
32,392 |
|
|
Treasury stock, at cost, 777,285 and 788,006 shares, respectively |
|
|
(13,235) |
|
|
(13,447) |
|
|
Retained earnings |
|
|
25,458 |
|
|
22,994 |
|
|
Accumulated other comprehensive loss |
|
|
(1,194) |
|
|
(1,419) |
|
|
Total stockholders’ equity |
|
|
43,817 |
|
|
40,573 |
|
|
|
|
$ |
106,825 |
|
$ |
107,971 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Wayside Technology Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)
(Amounts in thousands, except per share data)
|
|
|
Nine months ended |
|
Three months ended |
|
||||||||
|
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
147,897 |
|
$ |
132,389 |
|
$ |
52,363 |
|
$ |
47,923 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
125,789 |
|
|
112,693 |
|
|
45,308 |
|
|
41,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
22,108 |
|
|
19,696 |
|
|
7,055 |
|
|
6,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses |
|
|
16,075 |
|
|
15,248 |
|
|
5,087 |
|
|
4,903 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separation expenses |
|
|
100 |
|
|
2,446 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
5,933 |
|
|
2,002 |
|
|
1,968 |
|
|
1,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net |
|
|
416 |
|
|
744 |
|
|
118 |
|
|
296 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction gain (loss) |
|
|
39 |
|
|
40 |
|
|
(52) |
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for income taxes |
|
|
6,388 |
|
|
2,786 |
|
|
2,034 |
|
|
1,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
1,624 |
|
|
987 |
|
|
589 |
|
|
420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
4,764 |
|
$ |
1,799 |
|
$ |
1,445 |
|
$ |
1,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share-Basic |
|
$ |
1.06 |
|
$ |
0.40 |
|
$ |
0.32 |
|
$ |
0.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share-Diluted |
|
$ |
1.06 |
|
$ |
0.40 |
|
$ |
0.32 |
|
$ |
0.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding — Basic |
|
|
4,415 |
|
|
4,344 |
|
|
4,428 |
|
|
4,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding — Diluted |
|
|
4,415 |
|
|
4,344 |
|
|
4,428 |
|
|
4,386 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per common share |
|
$ |
0.51 |
|
$ |
0.51 |
|
$ |
0.17 |
|
$ |
0.17 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Wayside Technology Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(Amounts in thousands)
|
|
|
Nine months ended |
|
Three months ended |
|
||||||||
|
|
|
September 30, |
|
September 30, |
|
||||||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
4,764 |
|
$ |
1,799 |
|
$ |
1,445 |
|
$ |
1,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
225 |
|
|
(269) |
|
|
58 |
|
|
58 |
|
|
Other comprehensive income (loss) |
|
|
225 |
|
|
(269) |
|
|
58 |
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
4,989 |
|
$ |
1,530 |
|
$ |
1,503 |
|
$ |
1,376 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Wayside Technology Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(Amounts in thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
||
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
||
|
|
|
Common Stock |
|
Paid-In |
|
Treasury |
|
Retained |
|
Comprehensive |
|
|
|
|||||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Shares |
|
Amount |
|
Earnings |
|
Loss |
|
Total |
||||||
|
Balance at January 1, 2019 |
|
5,284,500 |
|
|
53 |
|
|
32,392 |
|
788,006 |
|
|
(13,447) |
|
|
22,994 |
|
|
(1,419) |
|
|
40,573 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,463 |
|
|
— |
|
|
1,463 |
|
Translation adjustment |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
127 |
|
|
127 |
|
Dividends paid |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(767) |
|
|
— |
|
|
(767) |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
165 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
165 |
|
Restricted stock grants (net of forfeitures) |
|
— |
|
|
— |
|
|
(318) |
|
(18,780) |
|
|
318 |
|
|
— |
|
|
— |
|
|
— |
|
Treasury shares repurchased |
|
— |
|
|
— |
|
|
— |
|
1,905 |
|
|
(20) |
|
|
— |
|
|
— |
|
|
(20) |
|
Balance at April 1, 2019 |
|
5,284,500 |
|
|
53 |
|
|
32,239 |
|
771,131 |
|
|
(13,149) |
|
|
23,690 |
|
|
(1,292) |
|
|
41,541 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,857 |
|
|
— |
|
|
1,857 |
|
Translation adjustment |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
40 |
|
|
40 |
|
Dividends paid |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(767) |
|
|
— |
|
|
(767) |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
169 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
169 |
|
Restricted stock grants (net of forfeitures) |
|
— |
|
|
— |
|
|
59 |
|
3,500 |
|
|
(59) |
|
|
— |
|
|
— |
|
|
— |
|
Treasury shares repurchased |
|
— |
|
|
— |
|
|
— |
|
1,887 |
|
|
(24) |
|
|
— |
|
|
— |
|
|
(24) |
|
Balance at July 1, 2019 |
|
5,284,500 |
|
|
53 |
|
|
32,467 |
|
776,518 |
|
|
(13,232) |
|
|
24,780 |
|
|
(1,252) |
|
|
42,816 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,445 |
|
|
— |
|
|
1,445 |
|
Translation adjustment |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
58 |
|
|
58 |
|
Dividends paid |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(767) |
|
|
— |
|
|
(767) |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
287 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
287 |
|
Restricted stock grants (net of forfeitures) |
|
— |
|
|
— |
|
|
(19) |
|
(1,095) |
|
|
19 |
|
|
— |
|
|
— |
|
|
— |
|
Treasury shares repurchased |
|
— |
|
|
— |
|
|
— |
|
1,862 |
|
|
(22) |
|
|
— |
|
|
— |
|
|
(22) |
|
Balance at September 30, 2019 |
|
5,284,500 |
|
$ |
53 |
|
$ |
32,735 |
|
777,285 |
|
$ |
(13,235) |
|
$ |
25,458 |
|
$ |
(1,194) |
|
$ |
43,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
||
|
|
|
Common Stock |
|
Paid-In |
|
Treasury |
|
Retained |
|
Comprehensive |
|
|
|
|||||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Shares |
|
Amount |
|
Earnings |
|
Loss |
|
Total |
||||||
|
Balance at January 1, 2018 |
|
5,284,500 |
|
|
53 |
|
|
31,257 |
|
829,671 |
|
|
(14,207) |
|
|
22,522 |
|
|
(913) |
|
|
38,712 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,597 |
|
|
— |
|
|
1,597 |
|
Translation adjustment |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(180) |
|
|
(180) |
|
Dividends paid |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(764) |
|
|
— |
|
|
(764) |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
349 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
349 |
|
Restricted stock grants (net of forfeitures) |
|
— |
|
|
— |
|
|
(706) |
|
(60,500) |
|
|
871 |
|
|
— |
|
|
— |
|
|
165 |
|
Treasury shares repurchased |
|
— |
|
|
— |
|
|
— |
|
9,126 |
|
|
(127) |
|
|
— |
|
|
— |
|
|
(127) |
|
Balance at April 1, 2018 |
|
5,284,500 |
|
|
53 |
|
|
30,900 |
|
778,297 |
|
|
(13,463) |
|
|
23,355 |
|
|
(1,093) |
|
|
39,752 |
|
Net loss |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(1,117) |
|
|
— |
|
|
(1,117) |
|
Translation adjustment |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(147) |
|
|
(147) |
|
Dividends paid |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(771) |
|
|
— |
|
|
(771) |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
2,038 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,038 |
|
Restricted stock grants (net of forfeitures) |
|
— |
|
|
— |
|
|
(584) |
|
(35,000) |
|
|
584 |
|
|
— |
|
|
— |
|
|
— |
|
Treasury shares repurchased |
|
— |
|
|
— |
|
|
— |
|
61,416 |
|
|
(866) |
|
|
— |
|
|
— |
|
|
(866) |
|
Balance at July 1, 2018 |
|
5,284,500 |
|
|
53 |
|
|
32,354 |
|
804,713 |
|
|
(13,745) |
|
|
21,467 |
|
|
(1,240) |
|
|
38,889 |
|
Net income |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
1,318 |
|
|
— |
|
|
1,318 |
|
Translation adjustment |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
58 |
|
|
58 |
|
Dividends paid |
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
(765) |
|
|
— |
|
|
(765) |
|
Share-based compensation expense |
|
— |
|
|
— |
|
|
231 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
231 |
|
Restricted stock grants (net of forfeitures) |
|
— |
|
|
— |
|
|
(344) |
|
(20,324) |
|
|
344 |
|
|
— |
|
|
— |
|
|
— |
|
Treasury shares repurchased |
|
— |
|
|
— |
|
|
— |
|
1,888 |
|
|
(25) |
|
|
— |
|
|
— |
|
|
(25) |
|
Balance at September 30, 2018 |
|
5,284,500 |
|
$ |
53 |
|
$ |
32,241 |
|
786,277 |
|
$ |
(13,426) |
|
$ |
22,020 |
|
$ |
(1,182) |
|
$ |
39,706 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Wayside Technology Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
|
|
|
Nine months ended |
|
||||
|
|
|
September 30, |
|
||||
|
|
|
2019 |
|
2018 |
|
||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
4,764 |
|
$ |
1,799 |
|
|
Adjustments to reconcile net income to net cash and cash equivalents (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
|
380 |
|
|
358 |
|
|
Deferred income tax expense |
|
|
47 |
|
|
7 |
|
|
Share-based compensation expense |
|
|
620 |
|
|
2,618 |
|
|
Loss on disposal of fixed assets |
|
|
— |
|
|
22 |
|
|
Amortization of discount on accounts receivable |
|
|
(389) |
|
|
(734) |
|
|
Amortization of right-of-use assets |
|
|
282 |
|
|
— |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(3,406) |
|
|
(3,413) |
|
|
Inventory |
|
|
(881) |
|
|
1,029 |
|
|
Prepaid expenses and other current assets |
|
|
(231) |
|
|
24 |
|
|
Vendor prepayments |
|
|
2,984 |
|
|
2,867 |
|
|
Accounts payable and accrued expenses |
|
|
(6,341) |
|
|
163 |
|
|
Lease liability, net |
|
|
(260) |
|
|
— |
|
|
Other assets and liabilities |
|
|
67 |
|
|
(109) |
|
|
Net cash and cash equivalents (used in) provided by operating activities |
|
|
(2,364) |
|
|
4,631 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of equipment and leasehold improvements |
|
|
(92) |
|
|
(243) |
|
|
Net cash and cash equivalents used in investing activities |
|
|
(92) |
|
|
(243) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Purchase of treasury stock |
|
|
(66) |
|
|
(1,018) |
|
|
Borrowings under revolving credit facility |
|
|
— |
|
|
10,000 |
|
|
Repayments of borrowings under revolving credit facility |
|
|
— |
|
|
(10,000) |
|
|
Dividends paid |
|
|
(2,301) |
|
|
(2,301) |
|
|
Net cash and cash equivalents used in financing activities |
|
|
(2,367) |
|
|
(3,319) |
|
|
|
|
|
|
|
|
|
|
|
Effect of foreign exchange rate on cash and cash equivalents |
|
|
97 |
|
|
(135) |
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
|
|
(4,726) |
|
|
934 |
|
|
Cash and cash equivalents at beginning of period |
|
|
14,883 |
|
|
5,530 |
|
|
Cash and cash equivalents at end of period |
|
$ |
10,157 |
|
$ |
6,464 |
|
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
1,982 |
||||