Melanie Caponigro - Director of Accounting Simon Nynens - Chairman and CEO Bill Botti - Executive Vice President Kevin Scull - Vice President, Chief Accounting Officer.

Good morning, ladies and gentlemen and welcome to Wayside Technology Group conference call. At this time all participants are in listen-only mode. Later we'll conduct a question and answer session. Please note that all callers are limited to one question each.

[Operator Instructions] As a reminder ladies and gentlemen, this conference call maybe 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 and good morning. Welcome to Wayside Technology’s Fourth Quarter 2014 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 comments about the webcast for this earnings call.

We released earnings for the fourth quarter at approximately 5:00 PM Eastern Time, Thursday February 5, 2015. The earnings release is available at the Company’s Investor Relations Web site 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, February 6, 2015.

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. Now, I would like to turn the call over to Simon Nynens..

Thank you, Melanie and good morning to everybody. Q4 revenue increased 5% in Q4 to 94.1 million, gross profit decreased to 11% and income from operations decreased 22%. For the year revenue increased 13% to 341 million, gross profit increased 2% and income from operations decreased 6%.

In this year-to-date results are included severance and onetime expenses of about $400,000. In addition we invested in expanding our sales and support staffs and we added a field sales team all to support the great growth of our Lifeboat division. Our Lifeboat division represented 85% of our revenue in 2014.

Cash and long-term receivables were 31 million and represented 78% of equity or $6.29 a share as of the end of December 2014. Working capital amounted to 79% of equity also at the end of December. Our Lifeboat division continued to perform very well, revenue was up 28% in Q4 and margin was up 8%. For the year, revenue was up 22% and margin was up 10%.

Our TechXtend division underperformed significantly as compared to last year, revenue was down 57% and gross margin was down 50% for the quarter. For the year, revenue was down 20% and margin was down 19%.

Let me start with TechXtend, we had the opportunity to close several large deals in the fourth quarter of 2012 and 2013, yet unfortunately we did not have the same opportunities this year. These deals were flexible payment plan deals, meaning they typically relate into long-term receivables.

As a result of the lower volume cash increased as you saw on our balance sheet. Lifeboat performed very well in Q4, our margins stabilized and went up versus the first three quarters and we were able to further expand our reach.

Looking at the future, we have realigned our sales forces in 2014 under the guidance of Bill Botti, our Executive Vice President, who joined us in April of 2014.

Considering the continued substantial increase in our Lifeboat distribution business, we made the strategic decision to recruit talent and improved services and to build the field sales team. We believe that these investments are not only appropriate but necessary to enhance our reach and position and future growth.

We will continue to invest in our future by hiring new talent and adding new vendor partnerships. Looking at the future and also at the valuation as a company, we believe that our stock price does not properly reflect our value.

The Board has therefore approved an increase of 500,000 shares of common stock to the number of shares of common stock available for repurchase and we will continue to buy back shares according to our 10b5 plan. Total shares available for buyback are 700,000 shares as per the end of 2014.

In addition, I wanted to take this opportunity to publically congratulate Vito Legrottaglie and Kevin Scull. Vito Legrottaglie has been promoted to the position of Vice President and Chief Information Officer. Mr. Legrottaglie has been our Vice President of Operations and Information Systems since April 2007.

He previously held the position of VP of Information Systems since June 2003. Kevin Scull has been promoted to Vice President and Chief Accounting Officer, Mr. Scull has been our Vice President and Interim Chief Financial Officer since February 2014. He previously held the position of VP and Chief Accounting Officer since January 2006.

We are excited about the prospect of more software publishers joining us. Customers and their feedback confirms that we’re on the right track. Our customer service is outstanding. We care and our customers notice. We look forward to an even better 2015. Now, I would like to hand it over to Bill Botti, our Executive Vice President..

Thank you, Simon. As noted in our release, this was the tail of two quarters and the Lifeboat business grew over bust 28%, while our TechXtend segment retracted 57% when compared to the last year due to a decrease in our extended payment term transactions.

Our investment and growth strategy in Lifeboat is beginning to show return as demonstrated by the 20% growth in the quarter with an 8% increase in GP as a result of our increase sales volume. TechXtend's overall business remains solid except for the extended payment term business which are traditionally large transactions.

As stated previously we're focusing our efforts in TechXtend in New Jersey and the northeast and are beginning to see more solution opportunities that include higher margin opportunities.

The new field sales organization brought on in Q3 and Q4 within Lifeboat are a big part of our increase expenses in Lifeboat, but are responsible for recruiting a combined 284 new resellers to the Lifeboat that should provide a good return in 2015.

We're actively seeking partnerships with select vendors as part of our strategy to become more solutions oriented, similar to our announcement last week of a partnership with [indiscernible] storage. We continue to manage our expenses and build our product portfolio to help achieve our continued growth targets. Thank you. Simon, back to you. .

Thank you, Bill.

Kevin Scull will now report on the financial numbers, Kevin?.

Thank you, Simon and good morning to investors, analysts and employees. I will discuss our fourth quarter financial results, both on a consolidated basis as well as by business segment. Net sales for the quarter were 94.1 million. This is compared to 89.9 million last year, representing a 5% increase on a consolidated basis.

Sales for our Lifeboat Distribution segment were 83.8 million and represent 89% of our total revenues during the quarter. Lifeboat sales reflected 28% increase compared to Q4 last year. The increase in sales in the Lifeboat segment was mainly the result of the strengthening of our account penetration and the addition of several key product lines.

Sales for our TechXtend segment were 10.3 million, compared to 24.2 million in Q4 last year, representing a 57% decrease. The decrease in sales as mentioned was primarily due to a decrease in our extended payment term sales transactions in the current quarter.

On a consolidated basis, our gross profit was 7 million compared to 7.8 million for the fourth quarter of 2013 representing 11% decrease. Our gross profit margin for the quarter was 7.4% compared to 8.7% last year. Lifeboat Distribution’s gross profit for the quarter was 5.7 million, this compared to 5.3 million last year, representing 11% increase.

This increase was primarily due to higher sales volume in the current year. Our TechXtend segment's gross profit was 1.2 million and decreased by 50% as compared to the prior year. The decrease in gross profit was primarily due to decreased extended payment sales transaction in the quarter.

Vendor rebates and discounts for the quarter amounted 500,000 or 0.5% of net sales compared to 700,000 or 0.8% of net sales for the prior year. Total selling, general and administrative expenses were 4.2 million compared to 4.3 million in the prior year. Our net income for the quarter was 1.8 million compared to 2.5 million last year.

Earnings per share on a fully diluted basis were $0.39 per share compared to $0.55 in the prior year. Moving on to the balance sheet; compared to our prior year end, the following key accounts had its fluctuations. Cash was a healthy 23.1 million at year-end compared to 19.6 million last year.

This increase was comprised primarily of 5.7 million generated from net cash flow from operations and 1.8 million received from stock options. This was offset by dividend payments of 3.2 million and 700,000 of purchase of treasury stock.

Accounts receivable, current and long-term decrease by 3%, this was primarily due to a lower level of extended payment term transactions in 2014. Accounts payable and accrued expenses decreased by 8% due to decrease in large extended payment term transactions. The company has no debt.

We do have a $10 million revolving credit facility that can be used for working capital purposes, including financing of larger deals. As of December 31st, we have no outstanding balances under the credit facility. Working capital at year-end was 31 million.

During the quarter we repurchased approximately 11,000 shares of our common stock under our stock purchase plan. We still have authorization to buyback approximately [199,000] shares under this plan. We have Board authorization to repurchase up to approximately 700,000 shares. Our stockholder equity now stands at 39.6 million.

At our February 5th, 2015, Board Meeting, the Board of Directors declared a $0.17 dividend per share for its common stock payable February 27th. The company has now paid dividends consecutively for the last 48 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. I want to personally thank all of our team members worldwide. Simon, I turn it back to you..

Thank you, Kevin. Operator we can now start with Q&A session..

Operator:.

Thank you. I thank everybody for their interest in our company. We look forward to reporting our first quarter results in April of 2015..

Ladies and gentlemen, this concludes today's conference call. You may all disconnect at this time and thank you for your participation..