Wayside Technology Group Reports First Quarter 2022
Wayside Technology Group Reports First Quarter 2022

Wayside Technology Group Reports First Quarter 2022

EATONTOWN, N.J., May 05, 2022 (GLOBE NEWSWIRE) — Wayside Technology Group, Inc. (NASDAQ: WSTG) (“Wayside” or the “Company”), a value-added global IT channel company providing innovative sales and distribution solutions for emerging technology vendors, is reporting results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights vs. Same Year-Ago Quarter

  • Net sales increased 14% to $71.3 million.
  • Adjusted gross billings (a non-GAAP financial measure defined below) increased 13% to $238.7 million.
  • Gross profit increased 11% to $12.0 million.
  • Net income increased 79% to $2.7 million or $0.61 per diluted share.
  • Adjusted EBITDA (a non-GAAP financial measure defined below) increased 61% to $4.2 million.

Management Commentary

“Our momentum from the end of last year has carried into the first quarter, as reflected by another period of record results and meaningful operating leverage,” said CEO Dale Foster. “Net sales and gross profit were up low double-digits, however net income and adjusted EBITDA increased more than 60%, resulting in one of our strongest quarters of effective margin.

“These results were driven by continued execution of our core initiatives – generating organic growth with existing vendors and customers while adding new emerging vendors to our line card. In Q1, we grew billings with our top 20 vendors by nearly 20% with a 24% increase in the related gross profit, reflecting the strength of relationship with our most meaningful partners.

“As we look to the remainder of the year, we have a solid foundation in place to continue driving organic growth and improve our operating leverage. We also remain active in our M&A strategy as we are evaluating multiple targets that can enhance our geographic footprint, service and solution offerings, and we look forward to delivering on both our organic and inorganic growth objectives in 2022.”

Dividend

Subsequent to the quarter end, on May 3, 2022, Wayside’s board of directors declared a quarterly dividend of $0.17 per share of its common stock payable on May 20, 2022 to shareholders of record on May 16, 2022.

First Quarter 2022 Financial Results

Net sales in the first quarter of 2022 increased 14% to $71.3 million compared to $62.8 million for the same period in 2021. In addition, adjusted gross billings in the first quarter of 2022 increased 13% to $238.7 million compared to $210.9 million for the same period in 2021. This reflects continued organic growth from new and existing vendors.

Gross profit in the first quarter of 2022 increased 11% to $12.0 million compared to $10.8 million for the same period in 2021. The increase in gross profit was driven primarily by organic growth from the top 20 vendors in both the US and Canada, in addition to the onboarding of new vendors.

Total selling, general, and administrative (“SG&A”) expenses in the first quarter of 2022 were $8.6 million compared to $8.8 million for the same period in 2021. SG&A as a percentage of net sales was 12.1% for the first quarter of 2022 compared to 14.0% in the same period in 2021. SG&A as a percentage of adjusted gross billings was 3.6% for the first quarter of 2022 compared to 4.2%.

Net income in the first quarter of 2022 increased 79% to $2.7 million or $0.61 per diluted share, compared to $1.5 million or $0.35 per diluted share for the same period in 2021.

Adjusted EBITDA in the first quarter of 2022 increased 61% to $4.2 million compared to $2.6 million for the same period in 2021. The increase was driven by strong organic growth from new and existing vendors.

Net income as a percentage of gross profit for the first quarter of 2022 was 22.6% compared to 14.0% in the year ago quarter. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, increased significantly to 35.5% in the first quarter of 2022 compared to 24.4% for the same period in 2021.

Cash and cash equivalents increased to $37.0 million on March 31, 2022 compared to $29.3 million on December 31, 2021, while working capital increased by $2.2 million during this period. The Company remained debt free on March 31, 2022, with no borrowings outstanding under either its $20 million or £8 million credit facilities.

Conference Call

The Company will conduct a conference call tomorrow, May 6, 2022, at 8:30 a.m. Eastern time to discuss its results for the first quarter ended March 31, 2022.

Wayside management will host the conference call, followed by a question-and-answer period.

Date: Friday, May 6, 2022
Time: 8:30 a.m. Eastern time
Toll-free dial-in number: (800) 319-4610
International dial-in number: (604) 638-5340
Conference ID: 10019052

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Elevate IR at (720) 330-2829.

The conference call will be broadcast live and available for replay here and on the investor relations section of the Company’s website at www.waysidetechnology.com.

About Wayside Technology Group

Wayside Technology Group, Inc. (NASDAQ: WSTG) is a value-added IT distribution and solutions company specializing in emerging and disruptive technologies. Wayside operates across the US, Canada and Europe through multiple business units, including Climb Channel Solutions, Grey Matter and CloudKnowHow. The Company provides IT distribution and solutions for emerging companies in the Security, Data Management, Connectivity, Storage & HCI, Virtualization & Cloud, and Software & ALM industries.

Additional information can be found by visiting www.waysidetechnology.com.

Non-GAAP Financial Measures

Wayside Technology uses non-GAAP financial measures, including adjusted gross billings and adjusted EBITDA, as supplemental measures of the performance of the Company’s business. Use of these financial measures has limitations, and you should not consider them in isolation or use them as substitutes for analysis of Wayside’s financial results under generally accepted accounting principles in the United States of America (“U.S. GAAP”). The attached tables provide a reconciliation of each non-GAAP financial measure to the most nearly comparable measure under U.S. GAAP.

Forward-Looking Statements

The statements in this release concerning the Company’s future prospects are forward-looking statements that involve certain risks and uncertainties. In this press release, forward-looking statements can be identified by words such as “believes,” “expects,” “intends,” “anticipates,” “plans,” “estimates,” “projects,” “forecasts,” “should,” “could,” “would,” “will,” “confident,” “may,” “can,” “potential,” “possible,” “proposed,” “in process,” “under construction,” “in development,” “opportunity,” “target,” “outlook,” “maintain,” “continue,” “goal,” “aim,” “commit,” or similar expressions, or when we discuss our priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations. Factors, among others, that could cause actual results and events to differ materially from those described in any forward-looking statements 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, inflation, as well as factors that affect the software industry in general and other factors. Currently, one of the most significant factors, however, is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the Company, the global economy, and financial markets. The extent to which COVID-19 impacts the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, including the impact on the Company’s reseller partners and the end customer markets they serve, among others. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company’s filings with the Securities and Exchange Commission.

Company Contact

Drew Clark
Chief Financial Officer
(732) 389-0932
[email protected]

Investor Relations Contact

Sean Mansouri, CFA
Elevate IR
(720) 330-2829
[email protected]

 WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
(Amounts in thousands, except share and per share amounts)
     
  March 31,
2022
 December 31,
2021
     
ASSETS
     
Current assets   
 Cash and cash equivalents$37,047  $29,272 
 Accounts receivable, net of allowance for doubtful accounts of $931 and $881, respectively 114,331   122,502 
 Inventory, net 1,742   2,022 
 Vendor prepayments and advances 760   661 
 Prepaid expenses and other current assets 4,372   4,871 
Total current assets 158,252   159,328 
     
Equipment and leasehold improvements, net 1,937   1,932 
Goodwill 16,860   17,188 
Other intangibles, net 9,597   9,950 
Right-of-use assets, net 1,572   1,628 
Accounts receivable long-term, net 59   78 
Other assets 417   459 
Deferred income tax assets 76   189 
     
Total assets$188,770  $190,752 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY
     
Current liabilities   
 Accounts payable and accrued expenses$130,805  $134,271 
 Lease liability, current portion 498   475 
Total current liabilities 131,303   134,746 
     
 Lease liability, net of current portion 1,704   1,810 
 Deferred income tax liabilities 1,826   1,780 
 Non-current liabilities 28    
     
Total liabilities 134,861   138,336 
     
     
Stockholders’ equity   
 Common stock, $.01 par value; 10,000,000 shares authorized, 5,284,500 shares   
 issued, and 4,447,053 and 4,424,672 shares outstanding , respectively 53   53 
 Additional paid-in capital 31,954   32,087 
 Treasury stock, at cost, 837,447 and 859,828 shares, respectively (13,584)  (13,870)
 Retained earnings 36,362   34,396 
 Accumulated other comprehensive loss (876)  (250)
Total stockholders’ equity 53,909   52,416 
Total liabilities and stockholders’ equity$188,770  $190,752 
     

 

WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Amounts in thousands, except per share data)
      
   Three months ended
   March 31,
    2022   2021 
      
Net Sales  $71,319  $62,813 
      
Cost of sales  59,338   51,970 
      
Gross profit  11,981   10,843 
      
      
Selling, general and administrative expenses  8,249   8,412 
Amortization & depreciation expense  357   399 
Total selling, general and administrative expenses  8,606   8,811 
      
Income from operations  3,375   2,032 
      
Interest, net  (10)  10 
Foreign currency transaction gain (loss)  143   (91)
Income before provision for income taxes  3,508   1,951 
Provision for income taxes  796   431 
      
Net income $2,712  $1,520 
      
Income per common share – Basic $0.61  $0.35 
Income per common share – Diluted $0.61  $0.35 
      
Weighted average common shares outstanding – Basic  4,309   4,247 
Weighted average common shares outstanding – Diluted 4,309   4,247 
      
Dividends paid per common share $0.17  $0.17 
Reconciliation of GAAP and Non-GAAP Financial Measures (unaudited)   
(Amounts in thousands, except per share data)    
      
 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,
   2022 2021
 Net sales $71,319 $62,813
 Costs of sales related to sales where the Company is an agent  167,378  148,048
 Adjusted gross billings (Non-GAAP) $238,697 $210,861
      

(1) We define adjusted gross billings as net sales in accordance with US GAAP, adjusted for the cost of sales related to sales where the Company is an agent. 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 table below presents net income reconciled to adjusted EBITDA (2):
      
   Three months ended
   March 31, March 31,
Net income reconciled to adjusted EBITDA:  2022   2021 
      
Net income $2,712  $1,520 
 Provision for income taxes  796   431 
 Depreciation and amortization  357   399 
 Interest expense  15   18 
EBITDA  3,880   2,368 
 Share- based compensation  369   279 
Adjusted EBITDA $4,249  $2,647 
      
      
   Three months ended
   March 31, March 31,
Components of interest, net  2022   2021 
      
 Amortization of discount on accounts receivable with extended payment terms $(3) $(25)
 Interest income  (2)  (3)
 Interest expense  15   18 
Interest, net $10  $(10)
      

(2) We define adjusted EBITDA, as net income, plus provision for income taxes, depreciation, amortization, share-based compensation and interest. We define effective margin as adjusted EBITDA as a percentage of gross profit. We provided a reconciliation of adjusted EBITDA to net income, which is the most directly comparable US GAAP measure. We use adjusted EBITDA as a supplemental measure of our performance to gain insight into our businesses profitability when compared to the prior year and our competitors. Adjusted EBITDA is also a component to our financial covenants in our credit facility. Our use of adjusted EBITDA 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 adjusted EBITDA, or similarly titled measures differently, which may reduce their usefulness as comparative measures.

Wayside Technology Group Inc

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Wayside Technology Group Reports First Quarter 2022

EATONTOWN, N.J., May 05, 2022 (GLOBE NEWSWIRE) — Wayside Technology Group, Inc. (NASDAQ: WSTG) (“Wayside” or the “Company”), a value-added global IT channel company providing innovative sales and distribution solutions for emerging technology vendors, is reporting results for the first quarter ended March 31, 2022. First Quarter 2022 Highlights vs. Same Year-Ago Quarter Net sales […]

Published on : May 8, 2022 at 10:07 AM

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