Good morning, ladies and gentlemen, and welcome to the Waysite Technology Group Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer As a reminder, ladies and gentlemen, this conference is being recorded. Would now like to introduce your host for today's conference, Melanie Kapanegro. Ms.
Kapanegro, you may begin your conference at this time.
Thank you and good morning. Welcome to Wayside Technologies Second Quarter 20 16 Earnings Call. Before turning the call over to Simon Nainen, 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 second quarter at approximately 5 pm Eastern Time, Thursday, July 28, 2016. 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 waysidetechnology.com/earnings call. This conference call and the associated webcast contain time sensitive information that is accurate only as of today July 29, 2016. A detailed discussion of risks and uncertainties are discussed in our Forms 10Q and also in greater detail in our and does not intend to update any forward looking statements. Now, I would like to turn the call over to Simon Nineen.
Thank you, Melanie, and good morning to everyone. We had a very solid second quarter. Revenue was up in all geos and all divisions. Overall, revenue increased to a record $105,000,000 in 1 quarter and both revenue and income from operations increased 14% compared to Q2 of last year. The second quarter.
And our international sales were 11% of our overall revenue, up slightly from 10% for Q2 of 2015. We continue to have a rock solid balance sheet with working capital of $32,000,000 or 83 percent of our equity. Allowing us to continue to invest in our own success. We paid $800,000 in dividends this quarter by the way, the 54th quarter more than 13 years of declaring very of our own shares. We released a redesigned Live Bowl website in June.
We had a great conference. For our LiveVault customers. We continue to work hard to stay on top in terms of operational efficiency, and we continue to expand our team in order to support our growth. Our new headquarters is coming along, and we expect to move in during the third quarter of 2016. In conclusion, it was a very good busy and exciting quarter.
I want to thank all of our team members for their hard work and dedication to the success of our company. Now I'd like to hand it over to Bill Bota. Bill?
Thank you, Simon. As Simon stated earlier, we had a very good quarter with improvements in all business segments across all of our geographies. Overall, revenue increased 15% to a record 105,300,000 and income from operations increased 14% over 2nd quarter ended June 30, 2016 increased 14 percent to $13,300,000 over $13,300,000 to $105,300,000 compared to $92,000,000 for the same period in 2015. Total sales for the second quarter of 2016 for our Lifeboat Distribution segment were $89,700,000 compared to $81,300,000 in the second quarter of 2015, representing an increase of $8,400,000 or 10 percent. Total sales for the second quarter of 2016 for our techxtend segment were $15,600,000 compared to $10,700,000 in the second quarter of 2015, representing an increase of $4,900,000 or 40 6%.
Gross profit for the second quarter ended June 30, 2016 was 7,000,000 an increase as compared to $6,400,000 for the second quarter of 2015. Gross profit for our Lifeco segment in the second quarter of 2016 was approximately 5 $500,000 compared to approximately $5,100,000 for the second quarter of 2015, representing a 9% increase. Gross profit for our TechXtend segment in the second quarter of 2016 was $1,500,000 compared to $1,300,000 for the second quarter of 2015 representing a 10% increase. Gross profit margin, gross profit as a percentage of net sales, for the second quarter ended 20 June 30, 2016 was 6.7% compared to 7% for the second quarter of 2015. Gross profit margin for our Lifeboat Distribution segment for the second quarter of 2016 was 6.2% compared to 6.3% for the second quarter of 2015.
The decrease in gross profit margin for the Lifeboat Distribution segment was primarily caused by a program change by one of our main vendors causing our gross margin to decline by 1.8% for that line. Gross profit margin for our techxtend segment for the second quarter of 2016 was 9.3% compared to 12.3% for the second quarter of 2015, The decrease in gross profit margin for the TechXtend segment was primarily caused by the increase in extended payment transaction with this carry low margins. As a percentage of net sales, SG and A expenses for the second quarter of 2016 were 4.5% compared to 4.8 compete within the market. We have managed to overcome that with increases in most of our vendors and customers. And our customer partner summit in Scottsdale, Arizona in June, released a new Lightboat logo brand website and it refreshed our brand image with very positive feedback from customers and suppliers.
We continue to be excited about our future. Brian Gilbertson, our new VP and General Manager for Lightboat and has begun overseeing operations there, and we'll provide even greater laser focus on our sales team and operations. We continue to manage our expenses, and build our product portfolio
Kevin Skull, who will report on the financial numbers. Kevin?
Thank you, Simon, and good morning to everyone. Since Bill already discussed sales and gross margin, I will start with our selling, general and administrative expenses. Total selling, general and administrative SG and A expenses for the second quarter of 2016 were $4,800,000 compared to $4,400,000 for the second quarter of 2015 representing an increase of 400000 dollars or 7%. This increase is primarily the result of an increase in stock compensation, and amounts accrued for bonus expense in 2016 compared to 2015. As a percentage of net sales, SG and A expenses for the 2nd quarter or 4.5% compared to 4.8% for the same period last year.
Our net income second quarter of 2016 was $1,500,000 compared to $1,400,000 in the prior year. Earnings per share on a fully diluted base was $0.34 per share compared to $0.29 last year. Now moving on to the balance sheet. Compared to our year end balance sheet at December 31, 2015, the following key accounts had fluctuations. Cash increased by approximately $800,000 to $24,600,000 at June 30 compared to $23,800,000 at December 31, 2015.
This increase is comprised primarily of net cash, cash flow from operations of $44,700,000 offset part by dividend payments of $1,600,000 $2,000,000 of purchases of treasury stock. Accounts receivable current and long term increased by 2% and accounts payable increased by 5% primarily due to higher sales volume in the quarter compared to our Q4 2015 As of the end of the quarter, we had no outstanding balances under the credit facility. Working capital at June 30, was $31,900,000. During the quarter, we repurchased approximately 51,000 shares of our common stock under our 10b5-one stock purchase plan. We still have board authorization to repurchase up to approximately 364,000 more shares.
Our stockholder equity now stands at $38,600,000 at our July 27 2016 board meeting. The board declared a $0.17 dividend per share for its common stock payable August 18 to shareholders of record on August 8. In conclusion, the company continues to have a solid operating results, a strong balance sheet and is adequately capitalized to support our continued growth plans. I want to personally thank all of our team members worldwide. Simon, I'll turn it back to you.
Thank you, Kevin. Operator, we can now start with the Q and A session.
Thank you. Question. And our first question comes from the line of Sam Shafer. Your line is now open.
Thank you for taking my question today, guys. And want to congratulate you on passing the $100,000,000 for the quarter and a $400,000,000 run rate annually. It's a great job.
Thank you.
And Simon, I thought I know I'd asked this last quarter as well. I thought you had referenced the headquarter move, that's in progress currently?
Yes. So the, the, as anybody knows, in construction usually delays, We expect it to move in July, that's been delayed slightly to September. It's about the same footprint as we currently have. Our furniture here is fully depreciated as we work in this current building for 16 years, more than 16 years. Yes, I think close it to 17 years, right?
So we'll pick up that depreciation expense. I don't expect our occupancy costs to go up significantly. It's about the same in all in as we pay here. But we're very excited about the move. A new concept of working together.
And we're all excited to be able to move into the new building, which will be about 5 miles from where we currently are. We're renting that place for the next 10 years there.
Great. And you said it should be about the same expenses that include depreciation expense or are you solely referencing the rental expense?
It will go up slightly because of the furniture and the new IT expenses. But the way we've set up that building is to really facilitate future growth in terms of employees without the need to expand our footprint there. So it's an open concept. It's a activity based working environment So we can, we can host a lot more employees there. And what we're planning to do is build a really great beehive, our office in Arizona, our office in Toronto, our office in Amsterdam, where all the work is we basically plan to get together twice a year, And that's our central beehive to really get together and then allowing the people to work remotely, but while keeping the team spirit alive.
So that's our plan. And that's what we're piloting here at the current building and it's working very well. People are very the work from home and the flexible work environment works very well for people. And We monitor our productivity closely, and it's actually been up since we started with the pilot program. So we're excited about
Great. Glad to hear it. And moving on, I know, Bill, you had referenced mall new relationships and new vendors on the last quarter. I don't believe you did on this quarter, but I was curious how the relationships with those new vendors. I think you said micro focus NetIQ or a few of them.
Really how those have been evolving over the last quarter 6 months?
Yes, we continue to communicate with investigate new lines. It's an active part of what Brian Gupperson and I work on. Out of the lines that we've brought on, Some of them are beginning to gain traction. In fact, the micro focus opportunity continues to grow fairly rapidly. And in fact, because of that relationship, the large extended payment transaction we had, in Tech Xtend was with the micro focus as a opportunity founded on that relationship.
So, we see that being a very positive line for us. Along with a couple of the other smaller newer lines that are beginning to move past a $1,000,000 in revenue. And So we expect that process to continue.
Great. I know, last quarter you lost one key vendor and you stated the contract typically comes up for rebid about every 6 months. Is this a contract we're still actively going to go after? Has it already come up for rebid?
That one, that one has not come up for rebid. But depending upon the customers, some product lines are quarterly, some are twice a year and somewhere annually. So it depends on the customer and the product line on how they bid the process out. But it's it's a continual process. We will always go after the business.
Sometimes you win, sometimes you lose.
Great, great. And just a few more, there was a large increase in tech extend. I think that was really the first increase of that size for a few quarters, you had stated that it was a result of the extended payment terms I was curious, I thought the extended payment terms kind of flow into the accounts receivable long term, which actually declined quarter over quarter. Am I looking at that wrong?
This is Kevin. I can answer that question. As Bill mentioned, we had a large deal with the through Micro Focus to one of our tech extend customers. And it was an extended payment transaction, but it doesn't gap to 1 year the accounts receivable long term, are those receivables do greater than a year?
So this
just had extended payment terms, but it didn't go out a year.
Oh, okay. That makes sense. And then one last question, and then I'll go back into queue. I see that you have been purchasing, stocks for the company and the treasury, for a while now over the last quarter, I think, is just about $1,000,000. But it seems that as you're doing, so you're issuing stock for management, basically resulting in a net net position.
As you're aware, the stock price really hasn't improved very much over the past 2 years. And I'm just curious with a large cash position. How does the company feel about rewarding some of their more long term patient shareholders?
As I said, this is the more than 13 years of declaring very healthy quarterly dividend. We also, as I mentioned in a believe I mentioned at the end of our last quarterly conference call, we are retaining, an investment banker to take a really close look acquisitions. And that's something that we discussed at the board. I know we've talked about it before, but we continue to periodically really explore all of our strategic options in terms of cash. But if you're looking at our growth and the cash flow during the quarter, we do now more than what we did in 2004 in a year.
In one quarter. We continue to grow very, very healthily and we need that cash to in order to to support a future growth. Now not all of that cash, that's why we continue to pay a quarterly dividend, but a one off payment and dividends wouldn't do much to our stock. It's discontinued expansion of our company, which will reward shareholders and will reward us as management. So that's our it
sounded like you said you were actively engaging investment bankers last quarter to look forward?
No, we will start. We explored that option last quarter. We will start working with them. September and, and, so they're going to look for, to really explore all the strategic options in terms of acquisitions for they're going to take a really close look for us. So that's where we're currently at.
Great, great. And I'll step back in the queue here. Thank you guys very much. Congratulations on the great quarter and the $100,000,000 accomplishment.
Thanks, Tim. Appreciate it. Have a good weekend.
You as well.
Thank you. And we do have a question from the line of Aaron Leahman, a private investor. Your line is now open.
Hello. Congratulations again on another wonderful quarter as the previous questioner had mentioned, have been a patient shareholder for all these years, not unhappy, but I'm not happy about not realizing full potential of this, stock given your balance sheet and given your growth as a company. You are engaging an investment banker for September, beginning September to look for acquisitions. Is he also going to possibly seek out a buyer that can give you a more immediate gratification of the whole company as a whole?
We always are open for those discussions. As I said before, it would require significant premium over our stock for us to sell this company. We really believe in the future of our company. But I can never take that off the table if somebody would come to us with a very healthy offer than all the shareholders have to consider that. That people are always exploring those kinds of options.
It would take a very significant uptake over our current share price as we really believe in the future of our
Okay. Thank you.
You're welcome.
Thank you. And we do have a follow-up from the line of Sam Shafer. Your line is now open.
Thank you guys for taking the follow-up. And just looking at gross margin, it's kind of trended down over time. And I'm curious if you could comment a little bit on, really how we should look at that moving forward?
Yes. As I said before, that continues to be a major trend in our industry, revenue going up and the gross margin going down. We're really our it is our plan really to increase income from operations to run the most efficient machine that we can and to really not lose lines on gross margin, but be able to take them and still make a profit on them. So we expect to continue margin pressure on that line. We try to counter that with professional services, the addition of really focused on our the expansion of our Far sales to VARs, the specialized VARs and the addition of new key lines as Billy alluded to in terms of like higher gross profit lines, which are the smaller lines.
But you have to offset that. You can only focus on so many lines. And where if we want to be a true value added distributor, you can only focus on so many lines. You only can be knowledge on so many lines. So that's how we counter that.
And just like to put a comment in here at the end, it would be if the company feels the stock is undervalued and going to continue to buy it, it would be great to see senior management or the board members step out and buy some stock in the open market?
Sure. Thank you.
Thank you. At this time there are no further questions. Please continue with any closing remarks.
Thank you. We appreciate your interest in our company and we look forward to reporting our Q3 results at the end of October of this year. Thank you.