Wayside Technology Group, Inc. Reports 2007 Third Quarter Results and Declares Quarterly Dividend
SHREWSBURY, N.J.--(BUSINESS WIRE)--
Wayside Technology Group, Inc. (NASDAQ: WSTG) today reported financial results for the third quarter ended September 30, 2007. The results will be discussed in a conference call to be held on Friday, October 26, 2007 at 10:00 AM Eastern time. The dial-in telephone number is (866) 814-8483 and the pass code is "WSTG".
This conference call will be available via live webcast -- in listen-mode only -- at www.earnings.com. A replay will be available on our website at www.waysidetechnology.com.
Net sales for the third quarter of 2007 decreased 14% or $6.9 million to $41.8 million compared to $48.7 million for the same period in 2006. Total sales for the third quarter of 2007 for our Lifeboat segment were $30.8 million compared to $31.5 million in the third quarter of 2006, representing a 2% decrease. Total sales for the third quarter of 2007 for our Programmer's Paradise segment were $11.0 million compared to $17.2 million in the third quarter of 2006, representing a 36% decrease. On a sequential basis, sales for our Programmer's Paradise segment increased 6% as compared to the second quarter of 2007. Gross profit margin, as a percentage of net sales, for the quarter ending September 30, 2007 was 9.9% compared to 9.0% in the third quarter of 2006.
"We continued to implement our plan to deemphasize the lowest margin segments of the VMware business while new VMware distributors adopted ultra low pricing strategies," said Simon F. Nynens, chairman and chief executive officer. "As a result our VMware labeled sales declined $9.5 million in the third quarter. Excluding VMware, sales of our higher margin lines increased by $2.5 million or 10%."
"VMware remains our single largest vendor and represents 30% of our third quarter revenue. We continue to be a strong partner for VMware and we continue to focus on virtualization. We expect VMware, as well as products complementary to VMware, to be a major driver of growth and profitability in the future," said Simon Nynens. "We recently received certification for our distribution business to act as a VMware Authorized Consulting Partner (VAC) and we launched a brand new incentive program, Lifeboat*Points, designed to leverage Lifeboat's technical consulting and other services, and to stimulate the growth of VMware ecosystem solutions. We also expect to grow our sales by adding new software lines and penetrating new accounts."
On October 24, 2007, the Board of Directors declared a quarterly dividend of $.15 per share of its common stock payable November 20, 2007 to shareholders of record on November 6, 2007.
In the Lifeboat Distribution segment, sales for the third quarter of 2007 decreased by 2%, compared to the year-earlier period, as we continued to deemphasize the lowest margin segments of the VMware business. Our remaining distribution lines showed strong growth. Excluding VMware, sales increased by $5.7 million or 41%.
In the Programmer's Paradise segment, sales for the third quarter of 2007 decreased by $6.2 million, compared with the year-earlier period, primarily due to declining VMware sales as well as increased competition in the "direct to end user" segment of our business. The decline in VMware sales is mainly due to a change in the government's GSA program by VMware. VMware has selected an exclusive reseller/distributor for GSA government sales. Programmer's Paradise now receives a referral fee for VMware GSA sales. This has a positive impact on gross margins; however, as a result, VMware's sales for our Programmer's Paradise segment decreased $3.1 million.
Gross profit for the quarter ended September 30, 2007 was $4.1 million compared to $4.4 million in the third quarter of 2006, a 6% decrease. Total gross profit for our Programmer's Paradise segment for the quarter ended September 30, 2007 was $1.4 million compared to $2.1 million in the third quarter of 2006, representing a 32% decrease. Total gross profit for our Lifeboat segment for the quarter ended September 30, 2007 was $2.7 million compared to $2.3 million in the third quarter of 2006, representing a 19% increase.
Total selling, general, and administrative ("SG&A") expenses for the third quarter of 2007 were $3.0 million compared to $3.1 million in the third quarter of 2006.
Net income for the third quarter of 2007 amounted to $822,000 or 2.0% of net sales as compared to $859,000 or 1.8% for the same period in 2006.
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 generated sales of $182 million in 2006, and was ranked No. 8 on BusinessWeek's list of hot growth companies in June 2006. The company offers technology products from software publishers and manufacturers such as Microsoft, CA, IBM, VMware, Borland, Quest Software, Compuware, Infragistics, ComponentOne, Macrovision, and Adobe.
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 include the continued acceptance of the Company's distribution channel by vendors and customers, the timely availability and acceptance of new products, and contribution of key vendor relationships and support programs. 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.
WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
September 30, December 31,
2007 2006
------------- ------------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 9,270 $ 13,832
Marketable securities 9,421 7,032
Accounts receivable, net 20,150 28,045
Inventory - finished goods 1,249 1,265
Prepaid expenses and other current assets 848 607
Deferred income taxes 926 1,632
------------- ------------
Total current assets 41,864 52,413
Equipment and leasehold improvements, net 620 488
Other assets 2,096 2,927
Deferred income taxes 1,127 1,453
------------- ------------
Total assets $ 45,707 $ 57,281
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 21,691 $ 35,304
Dividend payable - 638
------------- ------------
Total current liabilities 21,691 35,942
Other liabilities 20 41
------------- ------------
Total liabilities 21,711 35,983
Commitments and contingencies
Stockholders' equity
Common stock, $.01 par value; authorized,
10,000,000 shares; issued 5,284,500 shares 53 53
Additional paid-in capital 29,406 29,252
Treasury stock, at cost, 584,751 shares and
687,879 shares, respectively (2,376) (1,905)
Accumulated deficit (3,530) (6,302)
Accumulated other comprehensive income 443 200
------------- ------------
Total stockholders' equity 23,996 21,298
------------- ------------
Total liabilities and stockholders' equity $ 45,707 $ 57,281
============= ============
WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
(Unaudited)
(In thousands, except per share data)
Nine months ended Three months ended
September 30, September 30,
2007 2006 2007 2006
-------- -------- --------- --------
Net Sales $132,752 $125,479 $41,790 $48,679
Cost of sales 119,834 113,196 37,664 44,299
-------- -------- --------- --------
Gross profit 12,918 12,283 4,126 4,380
Selling, general and
administrative expenses 8,998 8,999 2,962 3,109
-------- -------- --------- --------
Income from operations 3,920 3,284 1,164 1,271
Interest income, net 749 501 257 222
Realized foreign exchange gain 1 2 1 1
-------- -------- --------- --------
Income before income tax
provision 4,670 3,787 1,422 1,494
Provision for income taxes 1,898 1,556 600 635
-------- -------- --------- --------
Net income $ 2,772 $ 2,231 $ 822 $ 859
======== ======== ========= ========
Net income per common share -
Basic $ 0.63 $ 0.54 $ 0.19 $ 0.20
======== ======== ========= ========
Net income per common share -
Diluted $ 0.59 $ 0.50 $ 0.18 $ 0.19
================= ==================
Weighted average common shares
outstanding - Basic 4,395 4,162 4,426 4,213
======== ======== ========= ========
Weighted average common shares
outstanding - Diluted 4,682 4,495 4,674 4,548
======== ======== ========= ========
Reconciliation to comprehensive
income:
---------------------------------
Net income $ 2,772 $ 2,231 $ 822 $ 859
Other comprehensive income, net
of tax:
Unrealized gain on marketable
securities 4 21 4 6
Foreign currency translation
adjustments 239 74 77 16
-------- -------- --------- --------
Total comprehensive income $ 3,015 $ 2,326 $ 903 $ 881
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Source: Wayside Technology Group, Inc.
Released October 25, 2007