Exhibit 99.1

Picture 1

Wayside Technology Group, Inc. Reports 2019 Second Quarter Results

and Declares Quarterly Dividend

 

 

 

 

 

 

Q2 2019:

Q2 2018:

Net sales:

$50.7 million

$43.9 million

Net income (loss):

$1.9 million

($1.1 million)

Diluted earnings (loss) per share:

$0.41 per share

($0.25 per share)

Net income excluding separation expenses,

 

 

net of related taxes:

$1.9 million (non-GAAP)

$0.9 million (non-GAAP)

Diluted earnings per share excluding separation

 

 

expenses, net of related taxes:

$0.43 per share (non-GAAP)

$0.20 per share (non-GAAP)

Dividend declared per share:

$0.17 per share

$0.17 per share

 

 

 

EATONTOWN, NJ, August 7, 2019

 – Wayside Technology Group, Inc. (NASDAQ: WSTG) today announced financial results for the second quarter ended June 30, 2019.    The results will be discussed in a conference call to be held on Thursday, August 8, 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 West and can be accessed at Wayside Technology’s website at www.waysidetechnology.com/site/content/webcasts.  

“We are pleased to report double digit growth on both the gross profit and net income lines for the quarter” said Michael Vesey, Vice President and Chief Financial Officer. “More importantly, the growth was driven by our core strategy of investing in vendor recruitment and field sales at our Lifeboat distribution business. We began to show some traction from this investment in the first quarter of 2019, and the momentum has carried through to the current quarters results.”

 

Operating Results Highlights:

 

Net sales for the quarter ended June 30, 2019 increased 15% to $50.7 million compared to $43.9 million for the same period in 2018. Lifeboat Distribution segment net sales for the quarter ended June 30, 2019 increased 23% to $47.3 million compared to $38.3 million for the same period in 2018. TechXtend segment net sales for the quarter ended June 30, 2019 decreased 40% to $3.4 million compared to $5.6 million for the same period in 2018.

 

Adjusted gross billings (non-GAAP) for the quarter ended June 30, 2019 increased 22% to $142.6 million compared to $116.6 million for the same period last year (see attached table for a discussion of adjusted gross billings).

 

Gross profit for the quarter ended June 30, 2019 increased 20% to $7.8 million compared to $6.5 million for the same period in 2018. Lifeboat Distribution segment gross profit for the quarter ended June 30, 2019 increased 35% to $7.1 million compared to $5.3 million for the same period in 2018. TechXtend segment gross profit for the quarter ended June 30, 2019 decreased 43% to $0.7 million compared to $1.2 million for the same period in 2018.

 

Gross profit margin (gross profit as a percentage of net sales) for the quarter ended June 30, 2019 increased by 0.6 percentage points to 15.4% compared to 14.8% for the same period in 2018. Lifeboat

Distribution segment gross profit margin for the quarter ended June 30, 2019 increased by 1.3 percentage points to 15.1% compared to 13.8% for the same period in 2018. TechXtend segment gross profit margin for the quarter ended June 30, 2019 decreased 1.2 percentage points to 20.7% compared to 21.9% for the same period in 2018. The overall increase in gross profit margin was primarily caused by an increase 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 June 30, 2019 increased to $5.5 million compared to $5.3 million for the same period in 2018, primarily due to higher employee related expenses including salary, commission and bonus expense as a result of increased sales personnel to support new vendor lines. SG&A expenses were 10.8% of net sales for the quarter ended June 30, 2019 compared to 12.1% for the same period in 2018.

 

The Company recorded a provision for income taxes for the quarter ended June 30, 2019 of $0.5 million compared to $0.1 million for the same period in 2018. The Company’s prior year provision for income taxes was impacted  by limitations on the deductibility of executive compensation resulting from Section 162(m) of the Internal Revenue Code and adjustments to the accrual for state income taxes in states which have enacted economic nexus statutes.

 

The Company reported net income of $1.9 million for the quarter ended June 30, 2019 compared to a net loss of $1.1 million for the same period in 2018. The current year net income was impacted by separation expenses related to the departure of the Company’s former President, Chief Executive Officer and member of the Board and the prior year net loss was impacted by separation expenses related to the departure of the Company’s former Chairman, President and Chief Executive Officer. Net income excluding the impact of the separation expenses, net of taxes (non-GAAP), was $1.9 million for the quarter ended June 30, 2019 compared to $0.9 million for the same period in 2018 (see attached table for a discussion of net income excluding the impact of separation expenses, net of taxes).

 

Diluted earnings per share for the quarter ended June 30, 2019 was $0.41 compared to diluted loss per share of $0.25 for the same period in 2018. Diluted earnings per share, excluding the impact of separation expenses, net of taxes (non-GAAP) was $0.43 for the quarter ended June 30, 2019 compared to $0.20 for the same period in 2018.

 

On August 6, 2019, the Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable August 23, 2019 to shareholders of record on August 19, 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)

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

    

2019

    

2018

    

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

9,374

 

$

14,883

 

Accounts receivable, net of allowances of $722 and $785, respectively

 

 

86,043

 

 

81,351

 

Inventory, net

 

 

1,447

 

 

1,473

 

Vendor prepayments

 

 

 —

 

 

3,172

 

Prepaid expenses and other current assets

 

 

2,534

 

 

1,988

 

Total current assets

 

 

99,398

 

 

102,867

 

 

 

 

 

 

 

 

 

Equipment and leasehold improvements, net

 

 

1,420

 

 

1,588

 

Right-of-use assets, net

 

 

1,975

 

 

 —

 

Accounts receivable-long-term, net

 

 

2,705

 

 

3,156

 

Other assets

 

 

156

 

 

215

 

Deferred income taxes

 

 

10

 

 

145

 

 

 

$

105,664

 

$

107,971

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

60,086

 

$

66,653

 

Lease liability, current portion

 

 

404

 

 

 —

 

Total current liabilities

 

 

60,490

 

 

66,653

 

 

 

 

 

 

 

 

 

Lease liability, net of current portion

 

 

2,358

 

 

 —

 

Deferred rent and tenant allowances

 

 

 —

 

 

745

 

Total liabilities

 

 

62,848

 

 

67,398

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Common stock, $.01 par value; 10,000,000 shares authorized; 5,284,500 shares issued: 4,507,982 and 4,496,494 shares outstanding, respectively

 

 

53

 

 

53

 

Additional paid-in capital

 

 

32,467

 

 

32,392

 

Treasury stock, at cost, 776,518 and 788,006 shares, respectively

 

 

(13,232)

 

 

(13,447)

 

Retained earnings

 

 

24,780

 

 

22,994

 

Accumulated other comprehensive loss

 

 

(1,252)

 

 

(1,419)

 

Total stockholders’ equity

 

 

42,816

 

 

40,573

 

 

 

$

105,664

 

$

107,971

 

WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

( Amounts in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

Three months ended

 

 

June 30,

 

June 30,

 

 

2019

    

2018

    

2019

    

2018

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

Lifeboat segment

 

$

87,376

 

$

75,162

 

$

47,320

 

$

38,324

TechXtend segment

 

 

8,158

 

 

9,304

 

 

3,356

 

 

5,590

Total net sales

 

 

95,534

 

 

84,466

 

 

50,676

 

 

43,914

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

Lifeboat segment

 

 

74,054

 

 

63,702

 

 

40,196

 

 

33,049

TechXtend segment

 

 

6,427

 

 

7,371

 

 

2,661

 

 

4,367

Total Cost of sales

 

 

80,481

 

 

71,073

 

 

42,857

 

 

37,416

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

15,053

 

 

13,393

 

 

7,819

 

 

6,498

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

 

Selling costs

 

 

5,847

 

 

5,117

 

 

2,926

 

 

2,682

Share-based compensation

 

 

333

 

 

726

 

 

169

 

 

377

Separation expenses (1)

 

 

100

 

 

2,446

 

 

100

 

 

2,446

Other general and administrative expenses

 

 

4,808

 

 

4,503

 

 

2,377

 

 

2,239

Total selling, general and administrative expenses

 

 

11,088

 

 

12,792

 

 

5,572

 

 

7,744

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

3,965

 

 

601

 

 

2,247

 

 

(1,246)

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest, net

 

 

298

 

 

449

 

 

129

 

 

210

Foreign currency transaction gain

 

 

91

 

 

(2)

 

 

29

 

 

(3)

Income before provision for income taxes

 

 

4,354

 

 

1,048

 

 

2,405

 

 

(1,039)

Provision for income taxes

 

 

1,035

 

 

568

 

 

548

 

 

78

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,319

 

$

480

 

$

1,857

 

$

(1,117)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income per common share - Basic

 

$

0.74

 

$

0.10

 

$

0.41

 

$

(0.25)

Income per common share - Diluted 

 

$

0.74

 

$

0.10

 

$

0.41

 

$

(0.25)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - Basic

 

 

4,408

 

 

4,323

 

 

4,412

 

 

4,344

Weighted average common shares outstanding - Diluted

 

 

4,408

 

 

4,323

 

 

4,412

 

 

4,344

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid per common share

 

$

0.34

 

$

0.34

 

$

0.17

 

 

0.17

 

(1) Includes $1,661 of stock compensation during the three and six months ended June 30, 2018.

Supplemental Revenue Information (unaudited)

 

The table below presents net sales by disaggregated revenue category:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

Three months ended

 

 

June 30,

 

 

June 30,

 

 

2019

 

 

2018

 

 

2019

    

2018

Net Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hardware, software and other products

 

$

85,974

 

$

75,973

 

$

45,784

 

$

40,111

Software - security & highly interdependent with support

 

 

3,620

 

 

3,596

 

 

1,727

 

 

1,493

Maintenance, support & other services

 

 

5,940

 

 

4,897

 

 

3,165

 

 

2,310

Net sales

 

$

95,534

 

$

84,466

 

$

50,676

 

$

43,914

 

Reconciliation of GAAP and Non-GAAP Financial Measures (unaudited)

 

The table below presents net sales reconciled to adjusted gross billings (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

Three months ended

 

 

June 30,

 

 

June 30,

 

 

2019

 

2018

 

 

2019

    

2018

Adjusted gross billings (Non-GAAP) (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

95,534

 

$

84,466

 

$

50,676

 

$

43,914

Cost of sales related to Software - security and highly interdependent with support and maintenance, support and other services

 

 

188,927

 

 

157,172

 

 

91,918

 

 

72,641

Adjusted gross billings (Non-GAAP)

 

$

284,461

 

$

241,638

 

$

142,594

 

$

116,555

 

(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 US 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.

The tables below present net income (loss) reconciled to net income excluding separation expenses, net of taxes (Non-GAAP) and diluted earnings (loss) per share to diluted earnings per share, excluding separation expenses, net of taxes (Non-GAAP) (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

Three months ended

 

 

June 30,

 

 

June 30,

 

 

2019

 

 

2018

 

 

2019

    

2018

Net income (loss) reconciled to net income excluding separation expenses, net of taxes (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

3,319

 

$

480

 

$

1,857

 

$

(1,117)

Separation expenses

 

 

100

 

 

2,446

 

 

100

 

 

2,446

Income tax benefits related to separation expenses

 

 

(24)

 

 

(438)

 

 

(24)

 

 

(438)

Net income excluding separation expenses, net of taxes

 

$

3,395

 

$

2,488

 

$

1,933

 

$

891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

Three months ended

 

 

June 30,

 

 

June 30,

 

 

2019

 

 

2018

 

 

2019

    

2018

Diluted earnings (loss) per share reconciled to diluted earnings per share excluding separation expenses, net of taxes  (Non-GAAP):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

$

0.74

 

$

0.10

 

$

0.41

 

$

(0.25)

Separation expenses

 

 

0.01

 

 

0.55

 

 

0.02

 

 

0.55

Income tax benefit related to separation expenses

 

 

 -

 

 

(0.10)

 

 

 -

 

 

(0.10)

Diluted earnings per share excluding separation expenses, net of taxes

 

$

0.75

 

$

0.55

 

$

0.43

 

$

0.20

 

 

(2)

We define net income excluding separation expenses, net of taxes, as net income, plus separation expense, less the income tax benefit attributable to the separation expenses. We provided a reconciliation of net income excluding separation expenses, net of taxes, to net income, as well as the related amounts per share, which are the most directly comparable US GAAP measure. We use net income excluding separation expense as a supplemental measure of our performance to gain insight into comparison of our businesses profitability when compared to the prior year. Our use of net income excluding separation expenses, net of taxes has limitations, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under US GAAP. In addition, other companies, including companies in our industry, might calculate separation expenses net of taxes, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

 


The following information was filed by Wayside Technology Group, Inc. (WSTG) on Wednesday, August 7, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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