Good morning ladies and gentlemen, and welcome to the Wayside Technology Group Conference Call. At this time, all participants are in a listen only mode. Please note that all color are limited As a reminder, ladies and gentlemen, this conference is being recorded. I would now like to introduce your host for today's conference, Melanie Caponeguro. Ms.
Caponeguro, you may begin your conference at this time.
Thank you, and good morning. Welcome to Wayside Technologies First Quarter 2019 Earnings Call. Before turning the call over to Steve DuWint, the company's President and CEO, I'll dispense with the customary cautionary language and comment about the webcast for this earnings call. We released earnings for the first quarter at approximately 5 pm Eastern Time, Wednesday, May 8, 2019. The earnings release is available at the company's investor relations website at waysidetechnology dot com.
Today's call, including technology.com/site/content/webcasts. I'd like to remind Private Securities Litigation Reform Act of 1995. Those statements are subject to risks and uncertainties that could cause actual results to differ materially. Additional information concerning these risks and uncertainties is contained in our forms 10Q10K filed with the SEC. Wayside Technology Group sees no obligation to update and does not intend to update any forward looking statements.
Our presentation also includes certain non GAAP financial measures, including adjusted gross billings, non GAAP net in come and non GAAP earnings per share. All non GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts in the earnings release and forms 8 K we furnished to the
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Hi. Steve, this is the operator. Melanie speaking has been disconnected. One moment.
Okay. Thank you. Sorry, the operator told me that you had been disconnected.
We were disconnected. Sorry about that. I'm not quite sure where we left off. Our presentation includes non GAAP financial measures, including adjusted gross billings, non GAAP net income and non GAAP earnings per share all non GAAP measures have been reconciled to the most directly comparable GAAP measures in in accordance with SEC
Mike.
Thanks, Melanie, and good morning, everyone. Thank you for joining us today to discuss our first quarter 2019 operating results. This quarter had mixed results. On the positive side, our sales and operational teams worked hard to deliver quarterly net with overall adjusted gross billings on non GAAP basis of $141,900,000 In addition, increased by 5% year over year. On the negative side, our gross margins in Q1 were squeezed due to competitive pressure and our product mix, coming down to 16.1% compared to 17% last year.
Due to our investing in 2018 in business development and field sales personnel. As a result, our net and the 2018 investment in additional personnel. Wayside's position in the marketplace has always focused on introducing new emerging vendors and technology into the IT sales channel. As you may have seen in recent press releases, we are continuing to do so, having signed several new exciting, emerging technology vendors during this past quarter. Our logistical support and our In Q1, we continued to invest in business development personnel, as well as our regional field sales team.
The business development team has been focusing on bringing new vendors into our product mix, The field sales team has been focusing on expanding and solidifying our reseller network with high touch sales support. Both efforts have been successful. We also were awarded a GSA contract this past quarter which will give our vendor partners The numbers of new technology of our reseller network gives credence to our approach. We are encouraged by the enthusiasm our reseller partners have shown in our initiative as we make investments now to position ourselves for the future. We continued to make progress towards for emerging technology vendors.
The company has historically returned some of our consistent profits to investors as a dividend with a current yield of greater than 5%. This past quarter continues to show that demand for IT solutions delivered through a reseller channel, remains strong with opportunity for share gains and growth in security hyperconverged storage, data management, and networking products. As we continue to add to our product portfolio, execute well with our field and inside sales teams, expand our customer base, and focus on controlling costs and improving our IT delivery and reporting systems, we are feeling very good about the outlook for the remainder of this year. We look forward to sharing
sir. Thanks, Steve. I'll review our financial results for the quarter then discuss our balance sheet and liquidity. Overall net sales for the quarter increased 11 Both lifeboat distribution and techxtend net sales were up, with lifeboat increasing 9% for the quarter to $40,100,000 and tech extend increasing 29 percent to $4,800,000. As we've discussed in the past, our tech extend business accounts for about 10% of our net sales, tends to fluctuate significantly from quarter to quarter based on the timing of deal flow.
Overall, adjusted gross billings on a non GAAP basis increased 13 percent to $141,900,000 from $125,100,000 in the prior year. Gross profit for the quarter increased 5 Life boat distribution gross profit for the quarter remained consistent with the first quarter last year at $6,200,000, while tech extended increased 46% were about $300,000. Gross profit margin as a percentage of net sales decreased by 90 basis points to 16 point margin was mainly due to Under ASC 606, gross margin as a percentage of net sales is a composite of items that are recorded net of the related cost of sales, or a 100% reported gross margin and items that are recorded on a gross basis, typically reflecting a high single digit profit margin. The weighting of the 2 product categories in the composite margin is based on a relative percentage of GAAP net revenue. During the first quarter of 2019, approximately 10.4 percent of our net revenues were from security maintenance and other products, which we reported on a net basis or an effective 100% gross margin compared to 11.6% in the same quarter last year.
This change in mix accounted for approximately 110 basis point decline in gross profit as a percentage of net sales quarter over quarter. Which was partially offset by slight increase in gross profit percentage for products recorded on a gross basis. On a non GAAP basis, gross profit margin as a percentage of adjusted gross billings declined from 5.5% to 5.1%, mainly due to shifts in product mix as some of our faster growing lines are sold at a lower average gross profit margin than our historical average. And also some competitive margin pressure. Total SG and A expenses for the quarter increased by $500,000 The net increase was additional management resources to our vendor recruitment and field sales organizations.
And as such, 2019 results reflect a full quarter of those expenses compared to a phase in last year. To support the onboarding implementation and rollout of some of our new vendors, including a dedicated team for one of our more complex lines. SG and A expenses as a percentage of net sales for the quarter were 12.3% in 2019 compared to 12.4% in 2018. As a result, pretax income for the quarter ended March 31, 2019 was $2,000,000, compared to $2,100,000 during the prior year. For the first quarter of 2019, the company recorded a provision for income taxes of $500,000, is consistent with the same period in the prior year.
As a result, net income for the quarter ended March 31, 2019, was $1,500,000 compared to 1,600,000 the same period in 2018. Diluted income per share for the quarter ended March 31, 2019, was $0.32 compared to diluted income per share of $0.36 for the same period in 2018. Moving on to the balance sheet. We continue to manage a strong balance sheet and liquidity position with cash and equivalents of $14,100,000 at the end of the period compared to $14,900,000 at the end of the year of 2018 and no outstanding borrowings under our $20,000,000 credit facility. Stockholders' equity stood at $41,500,000 compared to $40,600,000 at the end of last year.
Total working capital, including cash, was $37,000,000 compared to $36,200,000 at the end of last year. We continue to run the capital efficient business with return on invested capital of approximately 22% in Q1 2019. Compared to 19% in the same quarter last year. We calculate return on investment capital by dividing net income by our total stockholders equity less cash. We also continued On May 7, 2019, the Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable May 24, 2019, to shareholders record on May 20, 2019.
So in summary, We showed strong top line and gross margin growth this quarter overall. However, gross profit from our Lifeboat segment was impacted some delays in implementing one of our new product lines, as well as some softness in one of our key vendors compared to a strong first quarter last year. Sales expenses were up as we continue to invest in business development, sales and marketing to expand our market penetration and drive growth in gross profit. We plan to continue to monitor returns on these investments, and manage our cost structure and sales investment appropriately based on the returns we're achieving. We continue to strengthen our cash and equity position returning approximately
50 Thanks, Mike. I'm very pleased with our team's efforts in moving forward with a focused strategy and energetic pursuit of our goals. And with that operator,
you. At this time, There are no further questions. Please continue with any closing remarks.
Okay. Well, thank you very much. We appreciate everybody's listening in and supporting. And we look forward to presenting our progress along these goals at the next quarter's earnings call. Thanks everybody.
This concludes today's conference call. You may disconnect at this time and thank you for your participation.