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WSTG...Mixed bag...Sales lower, profits higher...Wayside Technology Group Reports Second Quarter 2022 Results

Net Income Up 56% to $2.8 Million or $0.63 per Share, with Adjusted EBITDA (non-GAAP) up 27% to $4.5 Million

Fifth Consecutive Quarter of Double-Digit Profitability Improvements

EATONTOWN, N.J., Aug. 03, 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 second quarter ended June 30, 2022.

Second Quarter 2022 Summary vs. Same Year-Ago Quarter

Net sales were $67.9 million compared to $75.4 million.
Adjusted gross billings (a non-GAAP financial measure defined below) increased 3% to $241.8 million.
Gross profit increased 14% to $12.5 million.
Net income increased 56% to $2.8 million or $0.63 per diluted share.
Adjusted EBITDA (a non-GAAP financial measure defined below) increased 27% to $4.5 million.
Management Commentary

“Our Q2 results were highlighted by another period of improved profitability as we generated a double digit increase in gross profit and material increases in net income and adjusted EBITDA,” said CEO Dale Foster. “We also expanded our leadership team during the quarter with the promotion of Tim Popovich as President of Climb North America. With over 18 years of experience at Climb and even longer in the IT channel, Tim brings a wealth of expertise to the business as a key executive.

“As we progress through the second half of the year, we plan to continue executing on our core initiatives – generating organic growth with existing vendors and customers while adding new emerging vendors to our line card. We will also continue to evaluate M&A opportunities that can enhance our geographic footprint and service offerings and anticipate sharing further updates this quarter. We are closely monitoring the evolving macroeconomic conditions and its potential impact on our business, however we believe we are well positioned to continue driving growth through our global network of vendors and customers.”

Dividend

Subsequent to quarter end, on August 2, 2022, Wayside’s board of directors declared a quarterly dividend of $0.17 per share of its common stock payable on August 19, 2022 to shareholders of record on August 15, 2022.

Second Quarter 2022 Financial Results

Net sales in the second quarter of 2022 were $67.9 million compared to $75.4 million for the same period in 2021. The decrease is attributed to record net sales with one of the Company’s vendors in the same period in 2021 and an unfavorable impact of foreign exchange rates. Excluding that vendor and the unfavorable impact of foreign exchange rates, the Company grew net sales by nearly 10% with the remaining top 20 partners. In addition, adjusted gross billings in the second quarter of 2022 increased $6.7 million to $241.8 million compared to $235.1 million for the same period in 2021, an increase of 3%.

Gross profit in the second quarter of 2022 increased 14% to $12.5 million compared to $11.0 million for the same period in 2021. The increase in gross profit was driven by organic growth with the Company’s top 20 vendors, as well as fewer customers taking advantage of early-pay discounts compared to the year-ago period.

Total selling, general, and administrative (“SG&A”) expenses in the second quarter of 2022 were $8.4 million compared to $8.5 million for the same period in 2021. SG&A as a percentage of net sales was 12.3% for the second quarter of 2022 compared to 11.3% in the same period in 2021. SG&A as a percentage of adjusted gross billings was 3.5% for the second quarter of 2022 compared to 3.6%.

Net income in the second quarter of 2022 increased 56% to $2.8 million or $0.63 per diluted share, compared to $1.8 million or $0.41 per diluted share for the same period in 2021.

Adjusted EBITDA in the second quarter of 2022 increased 27% to $4.5 million compared to $3.5 million for the same period in 2021.

Net income as a percentage of gross profit for the second quarter of 2022 was 22.4% compared to 16.3% in the year ago quarter. Effective margin, which is defined as adjusted EBITDA as a percentage of gross profit, increased to 35.8% in the second quarter of 2022 compared to 32.0% for the same period in 2021.

On June 30, 2022, cash and cash equivalents remained flat at $29.3 million compared to December 31, 2021, while working capital increased by $5.4 million during this period. The Company had $2.1 million of debt on June 30, 2022, with no borrowings outstanding under either its $20 million or £8 million credit facilities.