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 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 and 0 key on your touch-tone phone. 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 second quarter 2017 earnings call. Before turning the call over to Simon F. Nynens, the company's Chairman and CEO, I'll dispense with the customary cautionary language and comments about the webcast for this earnings call. We released earnings for the second quarter at approximately 5:00 P.M. Eastern Time, Thursday, July 27, 2017. 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 associated webcast contain time-sensitive information that is accurate only as of today, July 28, 2017. 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. I would like to turn the call over to Simon F. Nynens.
Thank you, Melanie. Good morning to everyone. We are pleased to report solid financial results. Our Lifeboat Distribution segment continued to deliver year-over-year sales growth, while our TechXtend division was down as compared to an exceptionally strong quarter last year. On a year-to-date basis, our earnings per share are up $0.04 or 7%. Our Lifeboat division represented 93% of our revenue and 86% of segment income in the second quarter. Our international sales were 13% of our overall revenue, equal to the second quarter of 2016. I would like to hand it over to Bill Bottai, our Executive Vice President.
Thank you, Simon. As stated earlier by Simon, we had a solid quarter when compared with Q2 2016. In Q2 2017, Lifeboat grew year-over-year. However, TechXtend was down year-over-year due to a strong quarter last year based upon a very large extended payment transaction. Net sales decreased 2% to $103 million, compared to $105 million in Q2 of 2016. Lifeboat's net sales increased 7% to $96 million, compared to $90 million in Q2 of 2016. TechXtend sales for the quarter decreased 53% to $7 million, compared to $16 million in Q2 of 2016. This decrease was primarily due to a single $7.3 million enterprise sale in Q2 of 2016. Gross profit for the quarter decreased 6% to $6.6 million, compared to $7 million for the same period in 2016.
Lifeboat's gross profit increased 1% to $5.6 million, compared to $5.5 million in the same period in 2016. TechXtend's quarterly gross profit decreased 34% to $1 million, compared to $1.5 million in Q2 of 2016. Gross profit margin, which is gross profit as a percentage of net sales, for the quarter decreased by 0.3 percentage points to 6.4%, compared to 6.7% for the same period in 2016. Lifeboat's gross margin percentage decreased by 0.3 percentage points to 5.9%, compared to 6.2% for the same period last year. TechXtend's gross profit margin increased 3.8 percentage points to 13.1%, compared to 9.3% for the same period in 2016. We introduced three new vendors into the channel through Lifeboat, including the return of a key partner that left us at the end of 2015 to go to an exclusive distribution arrangement with a large volume distributor.
While that went well for them, they recognized they were missing a key part of the market that they had through Lifeboat and elected to return to our portfolio. We continue to be excited about our future as we manage our expenses and build our product portfolio to help achieve our growth targets. Thank you. Simon, back to you.
Thank you, Bill. Now I hand it off to Michael Vesey. Mike?
Thanks, Simon. I will now review our operating expenses and balance sheet highlights. Total SG&A expenses for the quarter increased slightly from the same period last year to $4.8 million. The increase was mainly due to salary, commission, and incentive payments to support our growth. SG&A expenses as a percent of net sales increased to 4.7% compared to 4.5% for the same period last year, reflecting relatively flat expenses in relation to a lower sales number. As Bill Bottai noted, net income for the second quarter decreased 16% to $1.3 million, compared to $1.5 million last year, primarily due to a large enterprise sale we had in the 2016 results. Diluted net income per share decreased 12% to $0.30 per share, compared to $0.34 in the same period last year.
Weighted average diluted shares outstanding decreased about 5% from the prior year, reflecting share repurchases we made over the past year. On a year-to-date basis, our net income is relatively flat year-over-year at $2.6 million, and our diluted earnings per share is up 7%, reflecting the lower weighted average shares outstanding resulting from the share repurchases. Moving on to the balance sheet. Cash and cash equivalents was $9.7 million at the end of the quarter, compared to $13.5 million at the end of 2016. Our cash balance reflects an increased investment in working capital and $3.9 million of cash utilized to pay dividends and repurchase our stock. The increase in working capital was mainly driven by higher receivables related to increased payment terms for one of our major resellers and the impact of extended payment term sales.
We have had strong sales under extended payment terms over the past several quarters, particularly in the fourth quarter of 2016 in our TechXtend segment. Therefore, we incurred the use of cash to purchase the goods sold during the first part of 2017 and will collect the proceeds from the customer over time. During the quarter, we paid $800,000 in dividends and utilized $700,000 of our cash balance to purchase about 34,000 shares of our common stock. As of June 30, 2017, we had no outstanding balances under our credit facility. Stockholders' equity was about $37.4 million, compared to $37.6 million at the end of the year. Total working capital, including cash, was $22.8 million, compared to $24 million at the end of last year. Additionally, we have about $12 million in extended term receivables due after one year, compared to about $11.1 million last year.
We plan to continue to utilize our cash and available liquidity to invest in the growth of our business. On July 25, 2017, the board of directors declared a dividend of $0.17 per share, payable on August 18 to the shareholders of record on August 11, 2017. In conclusion, our quarter was impacted by variability in sales in our TechXtend business, but our core Lifeboat Distribution business continued its top-line growth. Despite the challenging comparison with the prior year's second quarter, our net income is even with last year on a year-to-date basis, and earnings per share reflects the positive impact of our share repurchases. Simon, I turn it back to you.
Thank you, Mike. We are excited about the prospects of more software publishers joining us, and we look forward to growing our business. Operator, we can now start with the Q&A session.
Thank you. Ladies and gentlemen, at this time, if you have a question, please press the star then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. If you're using a speakerphone, please pick up the handset before asking a question. One moment please for our first question. Again, to ask a question at this time, please press star and then the number one key. Our first question comes from Bert Hochfeld. Your line is open.
Yeah. Hi, Simon. How are you?
Hi, good morning.
Good morning, Simon. Lifeboat over the years has been growing nicely, steadily, in a pretty difficult business, and I commend you on that. As a shareholder, this TechXtend drives me nuts. One quarter, I think they're doing better, and clearly, they use the company's balance sheet, but in the next quarter, it's not there. Is this fixable? What's the long-term prognosis with TechXtend, other than occasionally getting a big order?
Here's the deal on TechXtend. To just explain it to you, the TechXtend business, there's two parts to that. One is we have the flexible payment option deals. Those are multi-year or multi-quarter kind of arrangements with clients. They come to us for the software, but they also come to us for spreading their payments to aligning that with their budget. That is a very fluctuating business. The core business of TechXtend is that true value add reseller part to our clients moving from a catalog company in the '90s to now, we're installing security cameras on courthouses here locally in New Jersey. That business has transformed nicely, and you can see that as an increase in terms of gross margin. That business in and of itself, we expect to grow.
It is impacted, however, you see these flexible payment option deals by these large deals, enterprise deals, that we try to get, and we've used with our excess cash. We're working on with a capital firm to use third-party cash to do this business. I'm not gonna say no to a $6 million or $7 million deal if it adds money into our pocket and it fluctuates therefore. I think it's good for the bottom line. We ultimately manage down to the earnings per share. Like we said before, we're stewards of this company, and I'm in the same boat as you. I'm a large shareholder. Our long-term plan is for Lifeboat to start growing even more aggressively than it has been. We believe we're in a great position. The large mainstream distributors, either now in private hands or in restructuring or merging. We stay true to that core.
We distribute software and the hardware appliances if they tie into the software. Like I said, we're right on track. Our customer service is really appreciated. We know where we go there. In terms of the [Pakistan business], I really think that the core business found its niche, and I'm actually pretty excited about that core business. That's where we are long term.
Mm-hmm. Clearly, these bigger deals are not that predictable. There's no way to manage them. Is that right?
Yeah.
They just kind of come along at the whim of the customer?
Well, if we win them. There's also competitive forces at work, where other companies, large companies, suddenly have an incentive for their sales reps to have these deals done in these two quarters to take any business that they can. They come and go kind of mentality. We see this as add-on business. We try to emphasize that in the call, as we did last year as well, and saying, "Hey, this was influenced by a large FPO." It's more like on a year to date, you can make or break that quarter. Lifeboat is just, we continue to grow. As that grows, the impact of these kind of deals will lessen.
Mm-hmm. Over the years, you've never had an issue with the receivables on these deals. Give me some comfort that you won't have any issue going forward on these larger deals. How do you protect the balance sheet on that?
Thank you, and I appreciate that. Yes. Our write-off history-
Is excellent, yeah.
Yeah. Over the 16 years that we've done it, Kevin Scull is with me, I think it's less than $150,000. Yeah. As a percentage, it's 0.001% of all the deals. Now, I got to tell you, we would've done the deal with Lehman Brothers. I would've done that. We try to restrict ourselves to high-quality credit. That's another reason that we're walking into, in terms of growing Lifeboat now, we're using more and more capital to finance the growth in Lifeboat. Listen, we had a lot of excess cash on our balance sheet, and we were and we still are looking for that right acquisition. That has heated up. Like I said, we've hired an investment banker that we're definitely reviewing more deals than we have in the past. We have that excess cash.
Years ago, we said, we're going to start paying some of that excess cash back to our shareholders, which we started doing with a dividend yield. The excess cash that we had on our balance sheet was invested in very low-interest deals. Then we found out that we can do a multi-year deal with a client, a very high respected client, and we can enhance our sales that way. We review the credit in much detail. We haven't had any major write-offs to speak of. That's where we are.
Okay. All right. Thank you. Continued good success.
Trust me, we fight as hard as we can to produce the numbers that we have in the first quarter. That is our goal. Trust me.
Okay. Thank you.
I appreciate your support.
Our next question comes from Peter Lux. Your line is open.
Hey, Simon. How are you doing?
Hey, good morning, Peter.
Although I've moved away, I'm still watching.
Good. You got the internet.
Well, that's true. A couple of things. You and I go back a long time. Maybe I'm one of the stockholders of a long standing. As far as I know, we've been looking for an acquisition since the year one. Although that sounds good, it never has happened. Hopefully, at some point, it will be an accretive deal, but I don't have any hopes. Some of the excess cash we've been thinking about, perhaps in addition to buying shares, bumping the dividend. We talked about that item for an item quarter after quarter, and we tend to hoard our cash, and have used it to buy shares, which is a way to give money back to the shareholders. Is it now time to sort of bump the dividend in your and the board's feeling?
Peter, we have a lot of confidence in the future of our company. The dividend declared was definitely discussed at our board meeting and something we will discuss again in the future. We keep a very close eye on the level of dividend. You and I talked, we were looking at acquisitions. I think our stock price was at $3 when we talked. I also think that over the 14 years that, as you said, you've been waiting. I think we have paid out more than $50 million in dividends. We have a market cap of $90 million. If you look at our extended receivables, which is basically excess cash that we've used, including our cash, we're still at very healthy levels. We've returned an enormous amount of cash to the shareholders. In addition, we've bought back shares.
We are a growth company that is also a cash cow, that's rare. Especially considering our stellar balance sheet. We are going to use our balance sheet to leap forward, we have to build on a good basis. It's nice to do things very rapidly. As I said before, and you met me day one, this is a multi-decade plan. This is not a two-year plan to ramp up sales and then dump the stock and leave. That was never our plan. We're building a real company here, unfortunately, that takes time.
I had spoken, I guess it's to Bill Bottai. One of the things you had talked about adding new publishers, I had given him a significant lead and he never followed up. If he wants to give me a call, I can refresh that with him. This is a company that I know pretty well out here in Ohio, that he should be talking to, you guys should be talking to. Perhaps you should have him call me.
Absolutely. Just so you know, adding publishers is our number one priority, and we manage that very closely. Definitely I think we could take it off, Bill can explain to you why or what progress or why there was no progress made. I'm sure there is an explanation, I appreciate your support and passion, Peter.
Okay. One other thing, I'll let you go. Good luck. I noticed that there is an issue over the time, the liquidity factor, the way the stock trades, the gaps in trading and so forth. I did notice that Kevin, who I know for a while, did liquidate some shares, and that's his prerogative during the year. I think it was 3,400 or something like that. Did the company buy back his shares or did he sell them in the market, which would be more difficult than selling 3,400 shares at one time?
No, he sold them in the market, I've sold shares over the years, as with most people, there's not a lot of shares that we all sold. Those were minor amount of shares from what I feel. I've talked to shareholders. The movement of those shares is pretty liquid. If you have a large position, it's pretty liquid. It's just that there's not a lot of buying and selling, we're not the only company in that predicament. There's a lot of our companies, hence our desire for a more aggressive growth.
Okay. Listen, I'll keep watching, have Bill call me, and we'll talk again. Good luck.
Great. Thank you, Peter. Have a good weekend.
Thank you. At this time, there are no further questions. Please continue with any closing remarks.
Thank you. We appreciate everyone's support and attention to our interest in our company. We look forward to reporting our Q3 numbers at the end of October this year. Thank you so much.
Thank you. This concludes today's conference. You may disconnect at this time. Thank you for your participation.