Thank you, and good morning. Welcome to Wayside Technologies First Quarter 2017 Earnings Call. Before turning the call over to Melanie Caponegro, 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 4th quarter at approximately 5 pm Eastern Time, Thursday, April 27, 2017. Our 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.wacitechnology.com/sitecontent/webcast. This conference call and is the associated webcast contains time sensitive information that is accurate only as of today, April 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 Incorporated seems to see no obligation to update and does not intend to update any forward looking statements. Now, I'd like to turn the call over to Melanie Capinagro.
You may begin. Thank you very much. I am going to turn the call now to Simon Ninance, the company's Chairman and CEO.
Thank you, Melanie, and good morning to everyone. We had an outstanding quarter Gross profit increased 14%, income from operations increased 20% and earnings per share fully diluted increased 36% to a 1st quarter record of $0.30 per share. Our Live Boat Distribution division represented 86 percent of gross profit and 89% of segment income in the 1st quarter. Cash and long term receivables were $22,000,000 and represented a very healthy 60 percent of equity as of the end of March 2017. Regarding cash flow and capital, we are fortunate to be able to continue to return capital of use of our capital.
And this quarter, we bought back approximately 95,000 shares for a total of 1,700,000 and paid out dividends totaling $800,000. Regarding the operational side of our business. Our new headquarters now represents site at www.wasteighttechnology.com. You can actually take a virtual tour of our new headquarters, as well as get in-depth background about our culture and what we stand for in a fresh modern and functional way. We also released a new techxtend.com website as well as a major overhaul of our hosted web store for Intel software products.
In this quarter, we also received the Smart CEO Future 50 award for our significant financial and employee growth and most importantly, we, yet again, were named one of the best places to work by New Jersey Biz. We are dedicated to creating and engaging and welcoming environments for our employees. We believe it's essential to have a healthy work balance LTE work life balance and that it's possible to have both a successful career and personal life. Receiving this honor, a firm importance of putting people first and supporting a healthy and happy corporate culture. We are excited about the prospects of more software publishers joining us, Customer and vendor feedback continue to confirm that we are on the right track, our customer service is outstanding.
We care and our customer's notice. We look forward to growing
Thank you, Simon. As Simon stated earlier, we had a very good quarter when compared with Q1 2016. In fact, at $112,800,000 in revenue, it was nearly as strong as the $120,000,000 we did in Q4 2016. In Q1 twenty seventeen, we grew revenue in all geographies and business units and did the same in gross profit dollars in most of them. Net sales increased 21 percent to $112,800,000.
Lifeboat Distributions net sales in increased 21 percent to $104,500,000 and Tech extends net sales increased 19 percent to $8,300,000. Gross profit increased 14 percent to $6,800,000. Distribution gross profit increased 13 percent to $5,800,000 while tech extends gross profit increased 15 percent to $900,000. Gross profit margin, which is gross profit at margin as a percentage of net sales decreased 0.4% to 5.6% and TechXtend segment gross profit margin decreased 0.5 percentage points to 11%. We face continued margin pressure from the very large distribution companies we compete within the market.
This is reflected in the 0.4 points to our gross profit margin We've managed to overcome most of that with increased revenues in most of our vendors and customers. The Light Boat And Tech Xtend business units under the leadership of Brad Gilbertson and Kevin Aske, respectively, are currently operating smoothly and building toy continued growth this year following a very good Q1. We continue to be very 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.
Michael Vaseke will now report in the financial numbers. Mike? Thanks, Simon.
I'll now review our operating expenses and balance sheet highlights. Total SG and A expenses for The increase is mainly due to salary commissions and incentive payments to support our growth. Even though the overall spending levels are up, They increased at a lower rate than sales, resulting in a decrease in SG and A expenses as a percent of net sales to 4.4% in 2017 compared to 4.8 percent same quarter last year. As Bill noted, Our net income for the first quarter increased 28 percent over the same period last year. In addition, we repurchased 95,000 shares of our common stock in the first quarter of 2017, which in combination with the previously repurchase shares resulted in a 5% decrease in weighted average shares outstanding on a diluted basis from the same quarter last year to 4,359,000 shares.
As a result, The growth in EPS over the same quarter last year outpaced the net income growth by full 8 percentage points. Earnings per share on a fully diluted basis was $0.30 for the first quarter of 2017, a 36% increase over the $0.22 per share from the same quarter last year. Moving on to 13,500,000 pay dividends and repurchase our stock. The increase in working capital was mainly driven by higher receivables related to our higher sales over the past two quarters, and to increase payment terms for one of our major reseller accounts. Both our accounts payable and accounts receivable balances declined from seasonally high December levels, the longer payment terms on certain customer accounts resulted in an increase of approximately $1,600,000 in working capital accounts, and a corresponding decrease in cash.
During the quarter, we paid $800,000 in dividends and utilized $1,700,000 of our cash balance purchase to 95,000 shares of common stock. At March 31, 2017, we had no outstanding balances under our credit facility, stockholders' equity stood at $36,900,000 compared to $37,600,000 at the end of last year and total working capital, including cash, was $23,300,000 compared to $24,000,000 The Board of Directors declared a dividend of $0.17 per share payable on May 17 to shareholders of record on May 10. The company has now paid dividends consecutively for over 57 quarters. In conclusion, we wrapped up the quarter with solid growth in sales and net income and EPS returned significant value to our stockholders in the form of stock buybacks and dividends, while maintaining a debt free balance sheet with adequate equity and working capital levels to support our growing business. Simon, I'll turn it back to you.
Thank you, Mike.
Our first question comes from the line of Jeff Keegan of Global Value Investments. Your line is now open.
Hey, good morning, gentlemen. Good morning. Very nice quarter. I've seen your websites, excellent upgrade on those.
Thank you. Yeah. They worked hard and at the teams. And, and we're excited about that. Fresh new look helps.
Yeah, I agree. The virtual tour is, a nice addition to.
Right, right. And especially the vendors visit us, it's, that we have more vendors visiting us than customers. And it really represents them, the kind of distributor that they want to see in terms of the new fresh culture and the way we work together is really what they would like to see.
Fantastic. So can you talk a little bit about your vendor development and how progressing and the evidence that we have good new vendors in the pipeline?
Yes. So in terms of vendor development, I'll let Bill go first and I'll follow-up.
That's an ongoing process. We're currently in discussion with several vendors. Of course, all of those dialogs are done under NDA, so I can't give you any specifics at this time. Bill? Yes, hello.
No, regrettably he cut out is
your way? Yes. I'm sorry. I'll take over. I'll take over.
We have a bad connection. Seems to be and I apologize for that. So as Bill said, with those vendors that we're currently in negotiations and we're, of course, under NDA, we cannot discuss those. And there is a good pipeline. In terms of timing, if you look at the growth in the first quarter, that came from our current vendors, definitely also came from vendors that we signed up last 2, 3 years.
There's a there continues to be a healthy interest in terms of the large distributors, the ownership model, you know, tech data, buying Avnet, and, and is involved in incorporating that into there, but Ingram Michael now in the Chinese hands. So in terms of our, competition there remains strong interest from vendors, the medium size as well as large size to work with us. So, we continue to be excited about those prospects And, but like we said, we're really keen on making sure that we can provide value to them and can hit the ground running. So that, that's our main objective.
Great. Good color. Thank you. With respect to, use of cash at one point believe you'd retained outside counsel to help you navigate the market to see if there was any perspective intelligent acquisition. I thought that relationship may have ceased, but can you give us some sense of what the landscape looks like?
Yes. So we so we hire an investment banker to really on a 6 month basis to really go out there aggressively and see if there are any acquisitions that, to your point, make sense and then we can incorporate. And the main thing we wanted to accomplish is is 1 and 1 really 3? Can we really incorporate, get some synergies out there and continue to grow? We haven't found that nor did we, yeah, we wanted to see really what is out there, really an extensive surge of what is out there right now.
We continue to look for acquisitions. In terms of our cash, we all agree an acquisition would make the most sense. A risk 3 acquisition will make the most sense. Unfortunately, they don't exist. You always take on some level of risk.
So you try to stay as close to your current business as you can and a business that you understand. That's the point where the acquisitions that we looked at in the last 6 months, and we really looked at a lot the possible acquisition targets, we're a little further away from our core model. Looking at our internal growth, We decided that at this moment, we're not going to explore those, but what we are going to do is we're going to continue to look for possible acquisition model. While we are doing that, we look at a conservative use of our cash, we all agreed that there is excess cash on our balance sheet how much that is something that we, as management, in close cooperation with the board, we view on a quarterly basis and say, what is a reasonable level because we are in a growing business and we do need that cash to facilitate the growth. So what and then so your second option would be buying back shares.
3rd option is to increase the dividend or to at least keep the dividend very comfortable that we can keep the dividend and the increase of dividend is something that we are discussing as the board as well. But as you've seen from our past of the 57 quarters it was, Mike, a long, long time. We, if we increase the dividend, we try to at least maintain that dividend. So we're conservative when it comes to increases in terms of
I appreciate that. You touched a little bit on the share buyback, spent about $1,700,000 de facto. We've made a decision to buy a company that we know very well, which is our own. So can you talk a little bit about how you view the value of our stock when you think about going to the marketplace to buy shares?
Sure. And I want to start off with fact that I'm not a stock valuation expert nor do we have employee anybody who is stock valuation experts. I leave the performance of the stock up to the market. I do believe in one factor that is that the market will follow performance sooner or later. The waves, we might not be able to time those, but I do believe if we perform well that stock is going to follow.
Now regarding our valuation, the following: RPE ratio is in the low to mid teens. And the market is our competition is at least higher, but they're all above, I believe, about 20. So we're low to mid teens there over 20. In terms of EBITDA, including cash, we're at around 8 times valuation and excluding cash, we're around 7 times EBITDA. So that considered to the overall market is lower.
Now whether I want to say that is undervalued stock or a great value stock, I'm not sure about those valuers. I do believe it's a great investment for us. We also have a dividend yield of around yet in the past years, we've shown strong growth. And for the long term investors, that has been very good. And we continue to believe that is a very good option and that's why
I would agree in terms of your ability to affect growth in your top line, which you've done very well and consistently over time. I would also add to your commentary that if your market cap is $90,000,000 and you have $20,000,000 ish in cash, which you really do in terms of cash and long term receivables, that the valuation starts to look far, far more attractive and to boot, the dividend has, as you've mentioned, been paid consistently 57 quarters. So I think you guys are doing a good job. Appreciate your time today. Wanna wish you luck going forward.
Thank you, Jeff. Really appreciate that. Thank
I'm showing no further questions at this time.
Thank you. I appreciate everyone's interest in our company, and we look forward to reporting or regarding our second quarter performance at the end of July of this year. Thank you so much.
Ladies and gentlemen, thank you for participating in today's conference. That does conclude today's program. You all disconnect. Everyone, have a great