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, 2022Time: 8:30 a.m. Eastern timeToll-free
dial-in number: (800) 319-4610International dial-in number: (604)
638-5340Conference 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 ClarkChief Financial Officer(732)
389-0932drew@waysidetechnology.com
Investor Relations Contact
Sean Mansouri, CFAElevate IR(720)
330-2829WSTG@elevate-ir.com
|
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.
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