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. Later, we will conduct a question and As a reminder, ladies and gentlemen, this conference is being recorded. I would now like to introduce your host for today's conference, Melanie Capanegro. Ms.
Capanegro, you may begin your conference at this time.
Thank you, and good morning. Welcome to Wayside Technologies First Quarter 2018 Earnings Call. Before turning the call over to Simon Ninen, the company's Chairman and CEO, I'll dispense with the customary cautionary language and comment about the webcast for earnings call. We released earnings for the first quarter at approximately 5 pm Eastern Time, Thursday, May 3, 2 2018. The earnings release is available at the company's investor relations website at waysidetechnology dot com.
Today's call, including all questions and answers, is being webcast live and a rebroadcast will be available at www.wacitechnology.com /citeforward/content /webcast. This conference call and the associated webcast contain time sensitive information that is accurate only as of today, May 4, 2018. Discussed in our forms to update and does not intend to update any forward looking statements. Now, I would like to turn the call over to Simon Ninen.
Thank you, Melanie, and good morning to everybody. Income before tax increased 7.5% and diluted earnings per share increased 23%, a good quarter. From an operational view, we strengthened our position in the software distribution market as we signed distribution agreements with more than 10 new vendors. We also maintained our focus on costs which allowed us to drive a solid earnings performance. We continue to have one of the most conservative balance sheets as a public company and do not have a current need for debt.
Cash, vendor prepayments and long term receivables, what we internally view as total cash, amounted to 19,700,000 or 31% of our market capitalization and represented 50% or half of our equity at the end of March 2018. In addition, we have a current dividend yield of almost 5%. Including a great team and great IT infrastructure. Now I would like to hand it over to Michael VC to report on the financial numbers. Mike?
Thanks, Simon. I'll review our financial results for
the first quarter then discuss our balance sheet and liquidity. To start, you will note we adopted ASC 606 revenue from contracts with customers effective January 1, 2018, using the full retrospective method. So all comparisons reflect restatement of the prior year amounts to be consistent. Revenue net of the related cost of sales, which impacts gross margin as a percent of net sales and other operating metrics. As has been the case in recent quarters, our Lifeboat distribution business, which accounts for over 90% of net sales, has shown growth, or our techxtend business, which tends fluctuate from to $40,600,000 compared to $38,100,000 for the same quarter last year.
Lifeboat distribution net sales were up 9% for the quarter, to $36,800,000, while TechXtend net sales for the quarter were down 13% to 13.7%. As I just mentioned, the decrease in TechXtend sales due to lower extended payment term sales, which fluctuate based on market opportunity and internal capital allocation decisions. Gross profit for the quarter increased 2 Following the sales pattern, Lifeboat distribution gross profit for the quarter increased 6% to $6,100,000, while TechXtend decreased 23% to $700,000 due to the lower extended payment term sales. Gross profit margin as a percentage of net sales decreased by 70 basis points to 17.7% compared to 17.0% in the prior year. Here, you will note the percentage margins are significantly higher than reported under the prior accounting standard as a result of the net revenue reporting for certain items.
The period decreased somewhat due to growth in higher volume product lines, which carry a lower incremental margin than our overall average and general competitive pressures. Secondarily, that decline was partially offset by a shift in product mix towards subscription to maintenance products, which are recorded net of third party cost of sales. Effectively resulting in 100% reported gross margin for those products. You will see we also reported adjusted gross billings as a non GAAP operating metric in our earnings release to assist with historical comparisons. As described in the release, adjusted gross billings adjust GAAP net sales to exclude the cost of sales for products that reported net under the new standard.
Adjusted gross billings increased 11 percent to $125,100,000 compared to $112,800,000 in the prior year's quarter. Total selling, general and administrative expenses increased slightly from last year to $5,000,000 due to higher professional fees and public company costs. SG and A expenses as a percent of net sales were 12.4% in 2017 compared to 13% in the prior year's quarter. For the first quarter of 2018, the company recorded a provision for income taxes of $500,000 compared to $600,000 in the prior The effective tax rate was 23.4 percent in 2018 compared to 32% in 2017, reflecting a new corporate tax rate enacted as part of the Tax Cut And Jobs Act of 2017. Net income for the first quarter of 2018 increased 21 percent to $1,600,000 compared to $1,300,000 during the prior year.
The increase in earnings was primarily driven by increased gross margin contribution from our Lifeboat business and the impact of the new tax law. Diluted earnings per share for the first quarter of 2018 increased 23 percent to $0.36 a share compared to $0.29 a share for the same period last year. As noted in previous quarters, we recalculated and restated our previously reported earnings per share amounts using the 2 class method to be consistent with the current year calculations. Now moving on to our balance sheet. We continue to manage a strong balance sheet and liquidity position with cash and equivalents of $7,000,000 at the end of the period compared to $5,500,000 at the end of 2017 and an additional $20,000,000 available to us under our credit facility.
The increase in cash reflects a profitable quarter and positive impacts to operating cash flow resulting from the utilization of vendor prepayments made in 2017 and reduced long term receivables from extended payment sales. We paid approximately $800,000 in dividends during the quarter, And then, and as of March 31, 2018, stockholders' equity was $39,800,000 compared to $38,700,000 at the end of last year. Total working capital, including cash, was $29,300,000 compared to $29,900,000 at the end of last year. In addition, Our long term receivable balances of approximately $7,500,000, which are not included in working capital are available to us as sources of future liquidity. On May 2, 2018, the Board of Directors declared a quarterly dividend of $0.17 per share of its common stock payable on May 21, 2018 to shareholders of record on May 14, 2018.
And finally, a quick review of the details on our adoption of ASC 606, We adopted a new standard ASC 606 revenue from contracts with customers effective January 1, 2018 using a retrospective adoption method Under this method, we will present revenue for all periods presented as if the standard had been adopted at the beginning of each period presented. The most significant impact of the adoption of the standard for us relates to the recognition of revenue for certain third party subscriptions, maintenance and services. Historically, we have accounted for most sales on a gross basis, with third party costs included in cost of sales. Under a new standard, we will account for revenues from sale of certain items on a net basis. The change from gross sale to net reporting has no impact on gross profit, net income or cash flows.
However, it does increase gross profit as a percentage of sales. The adoption of the standard resulted in a reduction of net sales and corresponding reduction of cost of sales of $84,500,000 74,700,000 for the first quarter of 2018 2017, respectively. We have attached tables summarizing the impact of these adoption to our financial statements and will include additional information, in our Form 10 Q to be filed shortly. Simon?
Thank you, Mike. Now before we start the Q and A session, a couple of more thoughts. We thank marketing team. We strive to give our customers the absolute best buying experience. This year, we made it to number 34 in New Jersey's best places to work a great testament to our forward thinking culture.
We look forward to a great confidence in the people who make these results possible. Our team here at Wayset Technology Group. And to them, I say thank you for your hard work during this past quarter, and thank you, thank you for your continued passion to win. Thank you, operator. We can now start the Q and A session.
Thank the sir.
Good morning. Very good to report. I was just wondering if there's any effort made. I know that your small cap company and you don't want to pay for a coverage, but is there any interest in getting some analysts to look at your company? Got a great dividend you've got a long term record, a lot going for you, and it seemed that nobody knows about it.
Yes. Hi, Lou. This is Mike Veezy. And, I think the answer is yes. We, we're going to look at creating some market awareness in the upcoming year.
We've been focused in the past year on kind of adjusting to be an accelerated filer. And putting some things in place where we could approach the market a little bit more proactively, and we will be looking at that on a going forward basis.
That's good. The momentum that you've created in this quarter, do you expect it to pretty much carry through as the quarter's progression? Or is there something that might interfere with the progress of the company?
In our industry, we fight for sales on every single month. There are no long term contracts. It's a very good start to the year. And we look forward to it with great confidence. However, it's early in the year.
And as I said before, it's very hard to give a forward looking industry.
At this time there are no further questions. Please continue with any closing remarks.
Thank you for your interest in our company. We look forward to reporting our second quarter results at the end of July or the beginning of August. Thank you so much.
This concludes today's conference call. You may disconnect at this time and thank you for your participation.