Good morning, ladies and gentlemen, and welcome to the Wayside Technology Group conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. Please note that all callers are limited to one question each. If anyone should require assistance during the conference, please press the star 0 keys on your touchtone telephone. As a reminder, ladies and gentlemen, this conference is being recorded. I would now like to introduce your host for today's conference, Melanie Caponigro. Ms. Caponigro, you may begin your conference at this time.
Thank you. Good morning. Welcome to Wayside Technology's first quarter 2018 earnings call. Before turning the call over to Simon Nynens, the company's Chairman 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 5:00 P.M. Eastern Time, Thursday, May 3rd, 2018. The earnings release is available at the company's investor relations website at waysidetechnology.com. Today's call, including all questions and answers is being webcast live, and a rebroadcast will be available at www.waysidetechnology.com/site/content/webcasts. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, May 4th, 2018. A detailed discussion of risks and uncertainties are discussed in our Forms 10-Q and also in greater detail in our Forms 10-K. Wayside Technology Group, Inc.
sees no obligation to update and does not intend to update any forward-looking statements. Now I would like to turn the call over to Simon Nynens.
Thank you, Melanie. 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 $19.7 million 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%.
We have the tools in place to add more publishers, including a great team and great IT infrastructure. I would like to hand it over to Michael Vesey 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 1st, 2018, using the full retrospective method. All comparisons reflect restatement of the prior year amounts to be consistent. The adoption had no impact on income from operations. However, we now report a substantial portion of our revenue net of the related cost of sales, which impacts gross margin as a % 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, while our TechXtend business, which tends to fluctuate from period to period based on the level of extended payment term sales, declined.
Overall net sales for the quarter increased 6% to $40.6 million compared to $38.1 million for the same quarter last year. Lifeboat Distribution net sales were up 9% for the quarter to $36.8 million, while TechXtend net sales for the quarter were down 13% to 13.7%. As I just mentioned, the decrease in TechXtend sales was 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% to $6.9 million compared to $6.8 million for the same period last year. Following the sales pattern, Lifeboat Distribution gross profit for the quarter increased 6% to $6.1 million, while TechXtend decreased 23% to $700,000 due to lower extended payment term sales. Gross profit margin as a percentage of net sales decreased by 70 basis points to 17.0% compared to 17.70% 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-over-period change in gross profit margin is the result of several factors. First, our margins for hardware and software products 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 and 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 are reported net under the new standard. Adjusted gross billings increased 11% to $125.1 million compared to $112.8 million in the prior year's quarter. Total selling general and administrative expenses increased slightly from last year to $5 million due to higher professional fees and public company costs. SG&A expenses as a percent of net sales were 12.4% in 2018 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 year. The effective tax rate was 23.4% in 2018 compared to 32% in 2018, reflecting the new corporate tax rate enacted as part of the Tax Cuts and Jobs Act of 2018.
Net income for the first quarter of 2018 increased 21% to $1.6 million, compared to $1.3 million 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% 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 two-class method to be consistent with the current year calculations. Moving on to our balance sheet.
We continue to manage a strong balance sheet and liquidity position with cash and equivalents of $7 million at the end of the period, compared to $5.5 million at the end of 2017, and an additional $20 million 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 as of March 31st, 2018, stockholders' equity was $39.8 million, compared to $38.7 million at the end of last year. Total working capital, including cash, was $29.3 million, compared to $29.9 million at the end of last year.
Our long-term receivable balances of approximately $7.5 million, which are not included in working capital, are available to us as sources of future liquidity. On May 2nd, 2018, the board of directors declared a quarterly dividend of $0.17 per share of its common stock, payable on May 21st, 2018, to shareholders of record on May 14, 2018. Finally, a quick review of the details on our adoption of ASC 606. We adopted the new standard, ASC 606, revenue from contracts with customers, effective January 1st, 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 the new standard, we will account for revenues from the 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 $84.5 million and $74.7 million for the first quarter of 2018 and 2017, respectively. We have attached tables summarizing the impact of the adoption to our financial statements and will include additional information in our Form 10-Q to be filed shortly. Simon?
Thank you, Mike. Before we start the Q&A session, a couple of more thoughts. We thank our customers and vendors for their trust and partnership. We are a flexible, proactive, and knowledgeable partner who acts like an extension of a vendor's sales and marketing team. We strive to give our customers the absolute best buying experience. This year, we made it to number 34 on New Jersey's best places to work, a great testament to our forward-thinking culture. We look forward with great confidence in the people who make these results possible, our team here at Wayside Technology Group. To them, I say thank you for your hard work during this past quarter, and thank you for your continued passion to win. Thank you, operator. We can now start the Q&A session.
Thank you. Ladies and gentlemen, at this time, if you have a question, please press the star then one key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. If you are using a speakerphone, please pick up the handset before asking a question. One moment please, for the first question. Your first question comes from Lou Molzer. Your line is open.
Good morning. A very good report. I was just wondering if there's any effort made. I know that you're a small-cap company, and you don't want to pay for coverage, but is there any interest in getting some analysts to look at your company? You've got a great dividend, you've got a long-term record, a lot going for you, and it would seem that nobody knows about it.
Yeah. Hi, Lou. This is Mike Vesey. I think the answer is yes. 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 being an accelerated filer and putting some things in place where we could approach the market a little bit more proactively. 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 quarters progress, 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. We look forward with great confidence. However, it's early in the year. As I said before, it's very hard to give forward-looking information in our industry.
Okay. Thanks.
Thank you.
Thank you. 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. Thank you for your participation.