Good morning, ladies and gentlemen, 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, and instructions will follow at that time. If anyone should require assistance during this conference, please press star then zero on your touch-tone 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 Capenigo. Ms. Capenigo, you may begin your conference at this time.
Thank you. Good morning. Welcome to Wayside Technology's first quarter 2016 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 this webcast for this earnings call. We released earnings for the first quarter at approximately 5:00 P.M. Eastern Time, Thursday, April 28th, 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 www.waysidetechnology.com/earnings-call. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, April 29th, 2016. A detailed discussion of risks and uncertainties are discussed in our Form 10-Q, and also in greater detail in our Form 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 Nynens.
Thank you, Melanie. Good morning to everybody. Considering the overall environment, we are pleased to report solid quarterly result as compared to an exceptionally strong Q1 2015. Our investments in Lifeboat Distribution Segment delivered solid results as it continued to execute on its strategic plan. Our TechXtend Segment's revenues were down compared to an exceptionally strong Q1 last year, which benefited from a strong level of extended payment term sales transaction business. We bought back a total of approximately 53,000 shares in the first quarter of 2016, and we still have approximately 415,000 shares of our common stock available for future repurchase. We will continue to buy back shares according to our 10b5 stock repurchase plan. Cash and long-term receivables amounted to almost 40% of our market cap at $31.1 million and represented 81% of our equity as of the end of March 2016.
Now, I would like to hand it over to Vito Legrottaglie, our Executive Vice President. Vito?
Thank you, Simon. Net sales for the first quarter ended March 31, 2016, increased 1%, or $0.6 million to $93.3 million, compared to $92.7 million for the same period in 2015. Total sales for the first quarter of 2016 for our Lifeboat Distribution segment were $86.3 million, compared to $82.9 million in the first quarter of 2015, representing an increase of $3.4 million or 4%. Total sales for the first quarter of 2016 for our TechXtend segment were $7 million compared to $9.7 million in the first quarter of 2015, representing a decrease of $2.8 million or 28%. The 4% increase in net sales for the Lifeboat Distribution segment was mainly a result of the addition of several key product lines and our ongoing strategy of strengthening of our account penetration. This was offset in part by lower sales to one of our key accounts.
The 28% decrease in net sales in the TechXtend segment was primarily due to $2.2 million decrease in extended payment term sales transactions and lower hardware sales of $0.4 million as compared to the first quarter ended March 31, 2015. Gross profit for the first quarter, ended March 31, 2016, was $6 million, a decrease of 6% as compared to $6.4 million in the first quarter of 2015. Gross profit for our Lifeboat segment in the first quarter of 2016 was slightly lower at $5.1 million, compared to $5.2 million in the first quarter 2015, representing a 2% decrease. This decrease in gross profit margin for the Lifeboat Distribution segment was impacted by the product mix sold, as well as by a program change of one of our main vendors, causing gross margins to decline by 2.7% for that line.
Gross profit for our TechXtend segment in the first quarter of 2016 was $0.8 million, compared to $1.1 million for the first quarter of 2015, representing a 29% decrease. This decrease for the TechXtend segment was primarily due to the decreased sales volume in our extended payment plan programs. We continue to be excited about our future. We continue to add lines, and we continue to invest in our professional services. We feel strongly that this is the right direction. We are also excited about the expansion of our relationship with Micro Focus and the addition of Novell, NetIQ, and SUSE to our portfolio. We continue to manage our expenses and build our product portfolio to help achieve our growth targets. Thank you. Simon, back to you.
Thank you, Vito. As Shawn Giordano is out of the office due to a personal matter, Melanie will now report on the financial numbers. Melanie?
Thank you, Simon, and good morning to investors, analysts, and employees. I will discuss our first quarter financial results, both on a consolidated basis as well as by business segment. Since Vito Legrottaglie already discussed sales and gross margins, I will start with the SG&A. Total SG&A expenses for the first quarter of 2016 were essentially flat at $4.5 million compared to the prior year. SG&A expenses as a percentage of net sales were 4.8% in 2016 compared to 4.9% in 2015. Our net income for the first quarter of 2016 was $1 million compared to $1.3 million in the prior year. Earnings per share on a fully diluted basis was $0.22 per share compared to $0.28 last year. Moving on to the balance sheet. Compared to our balance sheet at December 31st, 2015, the following key accounts had fluctuations.
Cash increased by $500,000 to $24.3 million at March 31st, 2016, compared to $23.8 million at December 31st, 2015. This increase is comprised primarily of net cash flow from operations of $2.3 million, offset in part by dividend payments of $0.8 million and $0.9 million of purchase of treasury stock. Accounts receivable and long-term decreased by 6%, and accounts payable decreased by 5%, primarily due to lower sales volume in the current quarter compared to Q4 2015. As of March 31st, 2016, we have no outstanding balances under our credit facility. Working capital at March 31st, 2016, was $31 million. During the quarter, we repurchased approximately 53,000 shares of our common stock under our 10b5-1 stock purchase plan. We still have board authorization to repurchase up to approximately 415,000 shares. Our stockholders' equity now stands at $38.6 million.
At our April 25th, 2016, board meeting, the board of directors declared a $0.17 dividend per share for its common stock payable May 17th to shareholders of record on May 10th, 2016. The company has now paid dividends consecutively for the past 53 quarters. In conclusion, the company continues to have solid operating results, a strong balance sheet, and is adequately capitalized to support our continued growth plans. Simon, I turn it back to you.
Thank you, Melanie. Before starting the Q&A session, I'd like to just state again that we remain focused on providing our customers with excellent customer service, providing our employees with a great and rewarding working environment. With a current dividend yield of about 4% and over $31 million, more than a third of our market cap in cash and long-term receivables, we are confident in the performance of our stock price. 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 the 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 are using a speakerphone, please pick up the handset before asking a question. One moment for the first question. Our first question comes from Sam Schaefer. Your line is now open.
Thank you very much for taking my question today. I'm just curious, I believe last call, you were in the progress of moving your headquarters, and I'm just curious if you could provide a little bit of color on how this transition is progressing.
Yeah. We made that announcement in Q3 that we're looking at a new headquarters, and we tentatively reached an agreement to buy our headquarters. Subsequently, we discovered numerous issues with moving to that building, including a large property tax issue that we could potentially run into in the next 5-10 years. We decided to go back to an office that we could rent. We found that office. We're moving to our new headquarters in the third quarter, probably the end of July, beginning of August. Excited about that building. It's on the third floor, 20,000 sq ft. What we're going to do with activity-based working is to give everybody a great working environment, but to make sure that we can fully utilize that building and can house a lot more employees in that building, considering our growth plans. Everything is on track right now.
They just ended the demolition, they're ready to start building now, the inside of the building. We look forward to going to our new office.
Great. Thanks for that. You mentioned the growth now that Vito has been settled in, I'm curious if you could provide a little bit of color on the sales and revenue growth moving forward.
Sure. Our first quarter, if you look at our competition, Ingram Micro reported this morning, significantly down, as well as a lot of people in the IT industry. What we saw was, actually good growth. There were two issues this quarter that we also mentioned in our press release that made headwinds for us. One was, we lost a very competitive bid to one of our key accounts, that was about $4 million that we lost there in revenue. Despite that, we still grew 4% in the Lifeboat sales. The second thing is that one of our main vendors lowered their overall channel margin to the distribution to all their distributors, that impacted our margin by 2.7%. The main vendor in terms of the decline in the lower channel rebate to all distributors, that's going to continue.
We are signing up vendors, as we stated last quarter as well. We're aggressively signing up new vendors. We expect growth from that in the remainder of 2016. The bids are coming out every six months for that vendor. We do expect to go in aggressively again and try to recapture that business. However, as we stated before, we are here to maximize our income from operations, our net income. We have to do what net-net is good business for us. With those two factors, I'm actually positive about the remainder of 2016. Again, we cannot give forward-looking information, but the April was much better than January and February, March started to stabilize, April for us is much better. That's what I could currently see what's out there. Vito, maybe you want to add some flavor to that as well.
Sure, Simon. In face of the headwinds that are going on in the industry, as Simon mentioned, a lot of IT people, both vendors and distribution and large resellers, are all reporting softer spend. In these kinds of times, the larger companies get very aggressive. Henceforth, we were aggressive in our bid, we still lost that. At the end of the day, those come and they go. As you capture new lines, you capture new bids, it goes up and down. In light of that headwind and the change in margin by one of our key vendors, the fact that we were able to increase revenues speaks well to the uptick in the rest of the things that we're doing. As we add and gain momentum with these new lines that have higher margins, we can balance these things.
Our goal is to continue to grow the product portfolio, to continue to provide solutions, educations, and services. These are things that take time to mature and develop as part of our strategy, but that's ultimately where we're headed. In light of these headwinds, we continue to row effectively against our competitors.
Right. We're watching our expenses, considering these headwinds, our midterm to long-term business plan has not changed. We're seeing a lot of positive signs from our customers with regards to the professional services. In addition, we're rebranding the Lifeboat brand. We're redesigning our website, our e-commerce sites right now as we speak. That will be released in Q2, Q3. Lots of good things are happening. Unfortunately, business comes in waves, we have to get through this to get back on plan. We see the early signs of that in April.
Great. Thank you for the additional color. Just one more question, if I may.
Sure.
You have, as you're well aware, a very strong balance sheet. Your cash position continues to grow. As you stated, it's a very large percentage of your equity and market cap. You are continuing to buy back treasury stock as well. I was just curious if you could provide a little bit of color on the plans for that cash. Then the plans for all the treasury stock that's being held by the company.
We personally think it's a very good investment in terms of the return on our equity and considering the performance of our stock price. We think it's a very good investment of us to invest in our future and in our own stock. We also utilize that cash for these extended finance opportunities, those extended payment term business transactions. What that is, somebody buys software now and wants to pay us in three equal parts, which is better for them cash flow-wise or budget-wise. There's good margin opportunities in them, so we continue to pursue those. For that, we need part of that cash. In addition, we're looking at acquisitions, I've said that a long time. We're actually actively looking to reengage again with investment advisors to see if there's currently opportunities out there.
We owe that to all of you as shareholders and to ourselves as shareholders to review that. That's definitely in the works to do that this year, to actively reengage and see what opportunities are out there.
Is that in the Lifeboat or TechXtend segment, or both?
We looked at that a couple of years ago. We said, "It might be actually be good to buy a software publisher," because they carry much higher margins. That's a totally different business. After some good and hard thinking, what we are looking for is to expand in our Lifeboat Distribution side of the business and then especially in the services side. The people who have consultants and service the VAR community, those kind of companies would be good for us to look at. Primarily in the Lifeboat. I do not expect to make a major acquisition on the TechXtend side.
Interesting. Well, thank you very much, hope you guys have good luck moving forward.
Thank you. Have a good weekend.
Our next question comes from Jane Lindenman. Your line is now open.
Good morning. A couple of questions. First of all, I think, as a shareholder, I'm kind of disappointed in the quarter. Going forward, what specifically are you doing to have TechXtend rebound to its previous levels?
By the way, we are all, as shareholders, disappointed. I'd like to report 30% growth every single quarter. Unfortunately, there are headwinds, and we're dependent on a lot of factors, and despite being close to $400 million a year, we're still a small player in the field. We actively look at profitable opportunities for us to pursue. Unfortunately, in January and February, there were simply none. That comes with the business. Trust me, we have long meetings internally here to see how we can approach that. I do think there are opportunities for us for the remainder of the year, because despite some of our competition who right away start writing restructuring plans, we did let some people go, and we're watching our expenses carefully.
You should not shoot yourself in the foot while you're trying to make one quarter and really jeopardize the future of your company. There are a lot of things that still have to pan out. We made investments, strategic investments, and we're still paying money for instance, the professional services. We're losing money on that. The opportunities are out there. There are large opportunities out there, and we will continue to monitor that. I think overall, as a return on equity, we're still doing pretty good, still a highly profitable company. In terms of the TechXtend business, how do we plan to turn that around? A, is by really aggressively looking for really good salespeople.
I got to tell you, at TechXtend in Canada, we expanded our team there. The expansion of the team made an immediate impact on our business, and I think that's the way forward. We need good sales reps. We see better environment for the extended payment terms business in Q2, and we'll continue to monitor that.
Okay. My other question regards the company is purchasing stock, but other than exercising and sale of options, I haven't seen any of the people, officers, and directors purchasing stock. If the company feels that it's a good value at these prices, why haven't we seen some of the insiders purchasing stock?
I'm the second-largest shareholder. I have an enormous portion of my personal wealth invested in this company. I cannot speak for the other directors. I know they made investments. They did buy shares. I don't personally want to incentivize them to buy. Everybody makes their own investment decisions. I think those are different things. I agree with you, it's a good opportunity, and that is exactly why we're buying back and utilizing our cash as a company to buy back our own stock.
All right. Well, thank you for taking my questions, and good luck in the future.
Thank you so much.
Thank you. At this time, there are no further questions. Please continue with any closing remarks.
We thank you for your interest in our company, we look forward to reporting our results in July to report our progress for the second quarter. Thank you so much.
This concludes today's conference call. You may all disconnect your line.