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 and instructions will follow at that time. As a reminder, ladies and gentlemen, this conference is being recorded. I would now like to introduce your host for today's conference, Melanie Capanygo, Ms.
Caponiggo, you may begin your conference at this time.
Thank you, and good morning. Welcome to Wayside Technologies first quarter 2016 earnings call. Before turning the call over to Simon Ninen, 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 pm Eastern Time, Thursday, April 28, 2016. The earnings release is available at the company's investor relations website at waysidetechnology dot com.
Today's call, including all questions and answers, is being webcast live and a rebroadcast will be available at www.wastebytechnology.com /earnings call. This conference call and the associated webcast contains time sensitive information that is accurate only as of today, April 29, 2016. A detailed discussion of risks and uncertainties are discussed in our Form 10Q 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 state Now, I would like to turn the call over to Simon Ninen.
Thank you, Melanie, and good morning to everybody. Considering the overall environment, we are pleased to report solid quarterly results as compared to an exceptionally strong Q1 2015. Our investments in LIFO distribution segment delivered solid results as it continued to execute on its strategic plan. Our Tech Extent segment's revenues were down compared to an exceptional 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 Cash and long term receivables amounted to almost 40% of our market cap at $31,100,000 and represented 81% of our equity as a the end of March 2016.
Now I would like to hand it over to Bill Botay, our Executive Vice President. Bill?
Thank you, Simon. Net sales for the first quarter ended March 31, 2016 increased 1% or $600,000 to $93,300,000 compared to $92,700,000 for the same period in 2015. Total sales for the first quarter of 2016 for our light boat distribution segment were $86,300,000 compared to $82,900,000 Total sales for the first quarter of 2016 for our TechXtend segment were $7,000,000 compared to $9,700,000 in the first quarter of 2015, representing a decrease of $2,800,000 or 28 percent. The 4% increase in net sales for the LIFO distribution segment was mainly a result of the addition of several key product lines and our ongoing strategy as 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 Tech Extense segment was primarily due to $2,200,000 decrease in extended payment term sales transactions and lower hardware sales of $400,000 as compared to the first quarter ended March 31, 2015. Gross profit for the first quarter ended March 31, 2016 was $6,000,000, a decrease of 6% as compared to $6,400,000 in the first quarter of 2015. Gross profit for our Lifeboat segment in the first quarter of 2016 was slightly lower at $5,100,000 compared to $5,200,000 in the first quarter of 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 percent for that line. Gross profit for our Tech Extent segment in the first quarter of 2016 was $800,000 compared to $1,100,000 for the first quarter of 2015, representing a 29% decrease.
This decrease for the Tech Xtense segment was primarily due to the decreased sales volume in our extended payment plan programs. We continue to be 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 Suisse 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, Bill. As Gavin's call 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 segments. Since Bill Baha already discussed sales and gross margin, I will start with the SG and A. Total SG and A expenses for the first quarter of 2016 were essentially flat at $4,500,000 compared to the prior year. SG and 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 $1,000,000 compared to one $300,000 in the prior year. Earnings per share on a fully diluted basis Moving on to the balance sheet. Compared to our balance sheet at December 31, 2015, the following key accounts had fluctuations. Cash increased by $500,000 to $24,300,000 at March 31, 2016, compared to $23,800,000 at December 31, 2015. This increase is comprised primarily of net cash flow from operations of $2,300,000 offset in part by dividend payments of $800,000 $900,000 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 31, 2016, we have no outstanding balances under our credit just approximately 53,000 shares of our common stock under our 10b5 stock purchase plan. We still have board authorization to repurchase up to approximately 415,000 shares. Our stockholders equity now stands at $38,600,000. At our April 25, 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 10, 2016.
The company has now paid dividends consecutive fleet for the past 53 quarters. In conclusion, the company continues to have solid operating results, a strong balance and is adequately capitalized to support our continued growth
Before starting the Q And 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 $31,000,000 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.
For questions. Our first question comes from Sam Shafer. Your line is now open.
Thank you very much for taking my question today. I'm just curious, I believe last call, the you were in the progress of moving your headquarters I'm just curious if you could provide a little bit of color on how this transition is progressing?
Yes. So, we have to we make that an in Q3 that we're looking at a new headquarters and we tentatively reached an agreement to buy our headquarters, subsequently we, 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 to 10 years. So we decided to rent 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. I'm excited about that building. It's on the 3rd floor 20,000 square foot. And 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. So everything is on track right now.
They just ended the demolition and they're ready to start building now or the inside of the building. And we look forward to going to our new office.
Great. Thanks for that. And you mentioned the growth and now that, Bill has been settled in, I'm curious if you could provide a little bit of color on the sales and revenue growth moving forward?
Yes, sure. So our first quarter, if you look at our competition, Ingram Micro report at this morning, significantly down as well as our lot of people in the IT industry. And what we saw was, actually good growth there were 2 issues this quarter that we also mentioned in our press release that, that made headwinds for us. One was, we lost a very competitive bid to one of our key accounts and that was about $4,000,000 that we lost there in revenue. But the spite that we still grew 4% in the live vote, live vote sales.
And the second thing is that one of our main vendors lower their overall channel margin to the distribution to all their distributors. And that impacted our margin by 2.7%. So the main vendor in terms of the decline in the lower channel rebate to all distributors That's going to continue. But we are signing up vendors as we stated last quarter as well. We're aggressively signing up new vendors.
We expect, we expect growth from that in the remainder of 2016. And the bids are coming out every 6 months for that, for that vendor. So we do 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. So we have to do what net net is good business for us.
So with those two factors, I'm actually positive about the remainder of 2016. And again, we cannot give forward looking information, but April was much better than January February, and March started to stabilize in April for us is much better. So that's what I could currently see what's out there. Bill, 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. And in these kinds of times, the larger companies get very aggressive and henceforth we were aggressive in our bid, but we still we still lost that. And 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 a well to the the uptick in the rest of the things that we're doing.
And 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. And, in a in a lot of these headwinds, we continue to row effectively against our competitors.
Right. So we're watching our expenses, considering these headwinds, but our midterm to long term business plan not changed. We're seeing a lot of positive signs from our customers with regards to the professional services, And in addition, we're rebranding the Liveboat brand. We're redesigning our website, our e commerce sites right now as we speak that will be released in Q2, Q3. So lots of good things are happening.
Unfortunately, business comes in waves. And, and we have to get through this to get to our back on plan. We see the early signs of that in April.
Great. Thank you for the additional color. And just one more question, if I may. Do you have, as you're well aware, a very strong balance sheet, your cash position continues to grow. And as you stated, it's a very large percentage of your equity and market cap and you are continuing to buyback treasury stock as well.
I was just curious if you could provide a little bit of color on the plans for that cash and then the plans for all the treasury stock that's being held by the company?
Yes. So we personally think it's a very good investment in terms of the return on their 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 and what that is, somebody buys software, now and wants to pay us in 3 equal parts, which is better for them, cash flow wise or budget wise. And there's good margin opportunities in them.
So we continue to pursue those. And for that, we need, we need part of that cash. In addition, we're looking at acquisitions but I've said that a long time. We're actually actively looking to reengage again with investment advisors see if there are there's currently opportunities out there. We owe that to all of you as shareholders and to ourselves as shareholders to review that.
So we're 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 Tech Extense segment or both?
So we looked at that a couple of years ago. We said, it might be actually be good to buy a software publisher. And because they carry much higher margins, but that's a totally different business. So after some good and hard thinking, What we are looking for is to expand in our live distribution side of the business and then especially in the services side. So 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 TecExend side.
Interesting. Well, thank you very much. And I hope you guys have a good luck moving forward.
Thank you. Have a good weekend.
And our next question comes from Jane Lindenman. Your line is now open.
Good morning. A couple of questions. First of all, I think the client as a shareholder, I'm kind of disappointed in the quarter. But, going forward, what specifically are you doing to, have tech extend rebound to its previous levels?
So considering a tech extent, a large portion of that business is And by the way, we are all a shareholders disappointed. I'd like to report 30% growth every single quarter. Unfortunately, their headwinds and we're dependent on a lot of factors. And despite being close to $400,000,000 a year, we're still a small player in the field. We actively look at profitable opportunities for us to pursue.
Unfortunately, in January February, there was simply none. And that comes with the business. Trust me, we have long meetings internally here to see how we can approach that. But I do think there are opportunities for us, for the remainder of the the year. Because despite some of our competition, right away, start writing restructuring plans, we did let some people go and we're watching our expenses carefully.
But you should not, shoot yourself in the foot while you're trying to make 1 quarter and really jeopardize through 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 to 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. And in terms of the tech extend business, how do we plan to turn that around? As by really aggressively looking for really good salespeople.
And I got to tell you, tech expanded in Canada. We expanded our team there. And 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 a better environment for the extended payment terms business in Q2 and we'll continue to monitor that.
Okay. My other question, regard the company is is purchasing stock, but, other than exercising and sale of options, I haven't seen any of the, people, offices, 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 of purchasing stock?
So
I'm the 2nd largest shareholder. I have an enormous portion of my personal wealth invested in this company. And I cannot speak for the other directors. I know they have, they have, 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, but I agree with you. It's a good opportunity and that 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.
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. You may all disconnect at this time. Thank you for your participation.