Melanie Caponigro - Director, Accounting Simon Nynens - Chairman & CEO Bill Botti - EVP Kevin Scull - VP, Finance & Chief Accounting Officer.

Jeff Geygan - Milwaukee Private Wealth Management.

Welcome to Wayside Technology Group's Conference Call. [Operator Instructions]. 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 first quarter 2015 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 first quarter at approximately 5:00 PM Eastern Time, Thursday April 30, 2015. 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, May 1 , 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 andgood morning to everyone. We have an outstanding quarter. Revenue increased 29% to a first quarter record of 92.7 million. Gross profit increased 15%, an income from operations increased 27%. Our Lifeboat division represented, 89% of our revenue and 87% of segment income in the first quarter.

Cash and long-term receivables were 26.7 million and represented a very healthy 71% of equity at the end of March 2015. Working capital amounted to 32 million representing 84% of our equity. Regarding cash flow we’re very fortunate to be in a position to continue to return capital to our shareholder.

We believe strongly that we purchasing those shares represents an attractive use of our capital. This quarter we bought back approximately 156,000 shares for a total of 2.5 million and paid out dividends totaling 0.8 million. Looking at the future we continue to invest in the growth of our business.

On March 17, we announced that we hired and appointed Justin Current, Director, Professional Services. Justin has been a professional and technical service leader for distribution and software of vendor companies.

Most recently for leading software Justin launched a Global Veeam Certified Engineer and now authorized education provider program and also established professional services offering to our [indiscernible] dollars the provider of veeam backup the replication software.

And just last week we announced the addition of Brian Gilbertson, a Senior Director, New Vendor Business Development. Brian has many excellent reseller and vendor relationships in our industry and his expertise will be a tremendous asset accelerating this strategic expansion of solutions we offer to our reseller.

As well as in driving growth within a new vendor line. Regarding the offices, we’re reviewing several options for our new headquarters. We expect to move next year. Our European office will relocate to Amsterdam this Summer.

Finally we will open up offices this summer as well in Arizona to better serve our [indiscernible] and Pacific Time Zone customers. We do not expect significant cost increases through these planned moves. We were also selected again as one of the best places to work in New Jersey by NJ Biz.

This is the third straight year and best include a strong and positive culture here at Wayside Technology Group. We’re excited about the prospect of more software professionals joining us and customer and vendor feedback confirms that we’re on the right track. Our customer services are expanding. We care and our customers know this.

We look forward to growing our business. Now I would like to hand it over to Bill Botti, our Executive Vice President.

Bill?.

Thank you, Simon. As noted in our released we had a good quarter overall we revenue of 29% income from operations up 27% year-over-year. Our Lifeboat business grew robust 40% in Q1 while our TechXtend segment retracted 22% when compared to the same period last year due to a continued decrease in their extended payment term transactions.

Gross profit for our Lifeboat segment and first quarter was up 27% at 5.2 million versus 4.1 for the same period last year due to an increase in sales volume. The TechXtend segment had a higher percentage of GP compared to last year but declined 21% due to the lower volumes.

We announced the addition of two new products in the Lifeboat portfolio during Q1 with OpenDNS core site. These additions will continue to build on their solution sets for our partners.

Also announced was a key addition to Lifeboat staff, as Justin Current joined us Director, Professional Services to the assignment to build out a services portfolio and is sold through our reseller partners to improve the availability and margins for both parties like other resellers TechXtend will use the Lifeboat services for their engineering projects.

Our plans continue to be executed effectively by the organization and I expect several new lines to be brought abroad led by Brian Gilbertson and other staff additions in both organizations.

As Simon indicated in order to better serve our [indiscernible] and Pacific Timezone customers we’re expanding our inside sales team but adding a remote office in Phoenix area for this additional staff who will be assigned to the five territories in these two time zones and will augment their team mates in New Jersey already covering these areas.

We also added some lines and additional staff in our TechXtend team and 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 for TechXtend in New Jersey and the North-East and are beginning to see more solution opportunities that include higher margin, opportunities as seen by this slightly higher GP percentage for TechXtend.

We continue to manage our expenses and build our product portfolio to help achieve our continued growth targets. Simon, thank you back to you..

Thank you, Bill. Kevin Scull will now report the financial numbers.

Kevin?.

Thank you, Simon and good morning to our investors, analysts and employees. I will discuss our first quarter financial results both on a consolidated basis as well as by business segment. Net sales for the quarter were 92.7 million. This is compared to 71.7 million in Q1 last year representing a 29% increase on a consolidated basis.

Sales for our Lifeboat distribution segment were 82.9 million and represent 89% of total revenue during the quarter. Lifeboat sales reflect a 40% increase compared to Q1 last year. The increase in sales in the Lifeboat statement was mainly a result of the addition of several key product lines and strengthening of our account penetration.

Sales for our TechXtend segment were 9.7 million compared to 12.5 million in the prior year representing a 22% decrease. A decrease in sales in the TechXtend segment was primarily due to decrease in extended payment term transactions and larger transactions as compared to the prior year.

On a consolidated basis our gross profit was 6.4 million compared to 5.5 million for the first quarter of 2014 representing a 15% increase. Our gross profit margin percent for the quarter were 6.9% compared to 7.7% in the prior year. Lifeboat distributions gross profit for the quarter was 5.2 million.

This compared to 4.1 million in the prior year and this represents a 27% increase. This increase was primarily due to higher sales volume in the current year. Our TechXtend segments gross profit was 1.1 million and decreased by 21% compared to the prior year. The decrease in margin for our TechXtend segment was due to lower sales volume.

Total selling, general and administrative expenses were 4.5 million compared to 4 million in the prior year. This increase is primarily the result of an increase in Lifeboat distributions employee and employee related expenses, salaries, commissions, bonus and benefits in 2005 -- '15 compared to 2014.

We plan to continue to invest to grow our Lifeboat segment. Our net income for the quarter was 1.3 million compared to 1.1 million in the prior year. Earnings per share on a fully dilutive basis were 28% per share compared to the $0.23 in the prior year.

Now moving on to the balance sheet, compared to our year-end balance sheet the following counts have fluctuations, cash flow is a healthy 21.4 million at quarter end compared to 23.1 million at year-end.

This decrease is comprised primarily of stock purchases of 2.5 million and dividend payments of 800,000 offset by cash flow from operations of 1.5 million. The accounts receivable current and long term decreased by 8%, the decrease is primarily due to a lower level of sales compared to the fourth quarter of 2014.

Accounts payable on accrued expenses decreased by 8% also due to lower sales volume and an increase in early payment discounts taken by the company in the current year.

The company has no debt, we do however have a $10 million revolving credit facility that can be used for working capital including financing of larger extended payment term sales transaction. As of March 31, we have no outstanding balance under the facility. Working capital at the end of the quarter was 31.6 million.

During the quarter we have repurchased approximately a 156,000 shares of our stock. We still have Board authorization to buyback approximately 555,000 shares.

Our stockholders equity now stands at 37.6 million and our April 29, Board of Director's meeting the Board declared a dividend of $0.17 per share for it's common stock payable May 20th to shareholders record on May 13, 2015.

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, Kevin. Operator, we can now start the Q&A session..

[Operator Instructions]. Your first question comes from Jeff Geygan from Milwaukee Private Wealth Management. Your line is open. Please go ahead..

Bill, can you please elaborate on the services portfolio that Justin will be heading up, how does that really fits into your overall business strategy and how that potentially effects your margin?.

The program we’re building is to provide a combination of a vendor oriented specific services as changed by the recent release of Veeam services for health checks and implementation services of the skew basis that allows our reseller partners to add a skew to their quotes and sales processes that allow the product to get installed by an engineer remotely and ensure a competent install and a good customer experience.

Our intension is to expand that type of service to other vendors like SOHOs and unit trends and more creating for the resellers of those product lines and ability to capture service revenue that they might not currently be doing depending upon the reseller. Some do some do not but now we provide that expansion.

Also we were working with our vendor partners directly to provide an expanded capability for their service organizations and capabilities to do similar type of thing for them actually taking on some of their implementation services for their professional services organization. This is another route to market that we’re exploring with our suppliers.

And thirdly, there is a custom support implementation capability that allows for custom statement of work development for project base orientation and project management and this whole process we had previously when Justin worked as part of my organization at Alternative Technology in Arrow and our partners found that they were able to use our engineers to augment the peaks in their service requirements while they staff directly for their [indiscernible].

So we could take some of that load off of that -- our engineers would be spread across multiple resellers, so our utilization always remained high and we’re driven directly by profits offsetting their costs in improving the profits for us.

It creates an overall improvement in our gross profit percentage as we drive this forward during 2015 and '16 which should have a positive impact on our OI for both our partners and for us directly.

So while the revenue needle won't move significantly as compared to our larger distribution revenue the profit number should be driven in the positive fashion disproportionate to that revenue..

Thank you. At this time there are no further questions. Please continue with any closing remarks..

We want to thank our investors, our employees and our partners and our customers for their interest in our company and we look forward to reporting our second quarter results at the end of July, 2015. Thank you..

This concludes today's conference call. You may disconnect at this time. Thank you for your participation..