Wayside Technology Group, Inc.

Good morning, everyone, and thank you for participating in today's conference call to discuss Wayside Technology Group's financial results for the first quarter ended March 31st, 2021. Joining us today are Wayside CEO, Mr. Dale Foster, the company's CFO, Mr. Michael Vesey, and the company's outside investor relations advisor, Cody Cree with Gateway Investors Relations. By now, everyone should have access to the first quarter 2021 earnings release, which went out yesterday afternoon at approximately 4.15 p.m. Eastern Time. The release is available in the investor relations section of Wayside Technology Group's website at waysidetechnology.com. This call is also available for webcast replay on the company's website. Following management remarks, we'll open the call for your questions. I'd now like to turn the call over to Mr. Cree for some introductory comments.

Thank you, James. Before I introduce Dale, I'd like to remind listeners that certain comments made in this conference call and webcast are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. These forward-looking statements are also subject generally to other risks and uncertainties that are described from time to time in the company's filings with the SEC. Do not place undue reliance on any forward-looking statements which speak only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward-looking statements. Our presentation also includes certain non-GAAP financial measures, including adjusted gross billings, adjusted EBITDA, net income excluding non-recurring costs, and non-GAAP earnings per share as supplemental measures of performance of our business. All non-GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with SEC rules. You'll find reconciliation charts and other important information in the earnings release in Form 8K we furnished to the SEC yesterday. I would now like to turn the call over to Wayside CEO, Dale Foster.

Thank you, Cody, and good morning, everyone. We continue to drive our growth strategy during the first quarter, giving our business a solid foundation for 2021. Despite a tough comparable prior year period, our gross profit reached $10.8 million, which is a company record, and we continue year-over-year growth across net sales and adjusted gross billings. While we continue to make strategic investments ahead of our growth objectives, The benefits of these investments have yet to fully flow through our profitability. However, we expect to build on this bottom-line growth over time as we continue to work and expand our vendor network and drive integration and synergies with our recent acquisitions. The three core growth drivers we laid out last quarter underscore our progress during Q1, and they will guide our work for the rest of this year. As a brief reminder, these initiatives are as follows. First, drive organic revenue growth from our business by deepening existing vendor relationships. Secondly, further enhance our vendor line card by adding new and emerging vendors with above-average long-term growth potential. And third, utilize our balance sheet and free cash flow to identify and make accretive and strategic acquisitions while working to improve our overall profit margin. This strategic framework provides a useful structure for evaluating not only our quarter-to-quarter progress, but also the long-term operational and financial trajectory of our business. With that in mind, I'd like to review each of these core growth drivers in greater detail within the context of our Q1 performance. To begin in deepening, our vendor relations would remain focused on helping our vendors navigate this current environment as their end customers work to enhance their IT infrastructures. With today's work landscapes becoming increasingly driven by hybrid solutions, including cloud-based and on-premise technologies, this has accelerated our many businesses' technology adoption timelines. Customers' changing needs have shifted our product mix from quarter to quarter, making our expectations inherently choppy as we adapt to meet their needs. During Q1, security, data center, and cloud products garnered a greater portion of demand within our portfolio. replacing hardware as our top-selling product category from last quarter. We recognize these IT needs will continue to evolve, even as the broader macroeconomic recovery from the pandemic gradually advances, and we're working to optimally position and diversify our portfolio to support these needs. These recent spending trends on security, data center, and cloud product lines point to another concept that underlies our current strategy, the prevalence of the cloud. According to a recent guide published by IDC, spending on security products is expected to reach over $23 billion by the end of this year, driven by the rapid growth and adoption of cloud-driven market remote work solutions. In their current state, our portfolio and vendor line card already includes growing exposure to cloud and cloud-adjacent products. Our work to further support and diversify our network will help us continue to build on our platform as an incubator for emerging vendors, ones that are not only serving today's IT needs, but also preparing customers for their IT needs of tomorrow. Next, we're continuing to focus on developing emerging vendors with long-term growth potential to establish mutually beneficial partnerships. To discuss this in conjunction with our current line card, let me now turn to our second core growth driver, and highlight some of the important vendor updates and wins from the quarter. In April, Climb Channel Solutions was awarded the title of Disney of the Year by Tintory, a wholly-owned subsidiary of Data Direct Networks. We have had a long-running distribution partnership with Tintory's intelligent infrastructure products, and we're honored to have received this recognition of our high-touch sales approach and expertise. As we collaborate among U.S., Canada, and EMEA sales teams, we're further expanding our global reach of our line card. This includes several new key wins from the relationships we're building through our recently acquired CDF network. For instance, carrying forward the momentum we generated with security products this quarter, one of our established vendors, Sophos, is launching its next generation firewall product, and we've added this enhanced product to our distribution portfolio. Keeping with the UK, we've also continued to drive growth with digital transformation and enterprise software provider. Given the remarkable success we've had with Micro Focus over the past four quarters in North America, we're now turning our attention to Europe to do more of the same. One other key new product we've added to our distributed suite is Bing Mapping by Microsoft, which we've started distributing across our global footprint. This Microsoft mapping platform integrates with Office 365 functionality on key features and empowers developers and enterprises alike to build intelligent, location-enabled capabilities. Having this product in our portfolio is a significant added resource to our offerings and will help us as we continue to expand and go deeper into the independent software vendor, or ISVs, customer marketplace where we currently sell Intel software-focused products. These incremental UK vendor and product additions dovetail into our progress on our third core driver, which is using our balance sheet liquidity to identify accretive acquisitions and enhance our margin profiles. As we continue to develop our vendor network and advance the full integration of CDF, we're supported by a strong balance sheet as well as the capabilities of our recent acquisitions added to our platform, particularly around cloud services. As I stated last quarter, being able to leverage the skill set of CDF's cloud know-hows team Our adoption and migration experts allow us to provide customers with services ranging from everyday technical support to specialized consulting. This elevates our approach beyond our typical IT distribution function and offers us a new avenue to expanding overall operating profit margin. Further, the cloud products and consultative services we offer through Sigma, Gray Matter, and Cloud Know How, respectively, have accelerated our long-running development of our internal cloud marketplace. This platform can be utilized by each of our subsidiary businesses across all geographies. We expect to launch the marketplace in full this month. The first vendors to be added to the marketplace are Acronis, Bitdefender, and Trend Micro, with many more in line to launch in short order. As we launch cloud-specific vendors, as well as vendors that are moving to subscription-based cloud model, we're taking the same high-touch approach to these relationships as we have historically done throughout our strong partner network. We're positioning ourselves to be the premier choice of emerging cloud vendors and products as we set them up on our platform, get them tapped into our expanding global distribution network, and enable them to grow and increase their brand profile within the IT distribution and solutions marketplace. To conclude, let me say we've made progress advancing our integration efforts, identifying cross-selling opportunities within the U.S., Canada, and EMEA, and working to update our vendor contracts for global coverage. One of the newest vendor brands, Wasabi Technologies, is an excellent example of that. Wasabi is a cloud storage company that delivers low-cost, fast, and reliable cloud storage. They have already partnered with five other brands on the climb line card. Additionally, Wasabi just announced it received $112 million in Series C round of funding that will help expand their global channel ecosystem and provide further value to our customers. It's opportunities like these that will be instrumental in driving growth as we continue to leverage our legacy and recently acquired expanded distribution network. To be sure, we still have considerable work to do in order to achieve our desired level of growth and profitability that we believe our expanded platform is now capable of achieving. As we look out at the balance of 2021, we see plenty of growth opportunities to capture with an often winding road to get there as we meet our vendors' evolving needs. We look forward to making progress to reach our short-term and long-term goals in continuing our strong partnership with our current and future vendors. I will now turn over the call to Mike to discuss our financial results. Mike.