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 will conduct a question-and-answer session and instructions will be given at that time. Please note that all callers are limited to one question each. (Operator Instructions) As a reminder ladies and gentlemen, this conference is being 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 first quarter 2013 earnings call. Before turning the call over to Simon Nynens, the company’s Chairman and CEO, I will 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 PM Eastern Time, Thursday, April 25, 2013. 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 can be accessed via the website, earnings.com. A rebroadcast of this call will be available at waysidetechnology.com. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, April 26, 2013. 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 statement. Now, I would like to turn the call over to Simon Nynens.

Thank you, Melanie and good morning to everybody. We are pleased to report solid quarterly results as compared to Q1 2012’s exceptional revenues and considering the persistent downward price competition in the distribution segment. Our Lifeboat Distribution segment delivered solid results as it continued to execute on a strategic plan. Our TechXtend segment revenues were down compared to an exceptionally strong Q1 last year, which benefited from strong level of extended payment term sales transaction businesses in such prior period. Regarding our balance sheet and share price, if you add up our cash, marketable securities and long-term receivables, which is basically cash that we invested in financing our customers and is earning interest, you arrive at a balance of about $22 million, which is 68% of our equity. If you look at our market cap right now, this amounts to about 40% of our market cap. So, if you deduct the cash, marketable securities, and long-term receivables from our market cap, you end up with a market cap of around $33.5 million, and that for a company that generated income from operations of $8.5 million in 2012 and pays out the dividend of $0.64 a year. Now, what is it that we do? We provide easy access to the right IT products. And in addition to our electronic license delivery systems, our outstanding customer service levels, and our dedicated sales staff, this is what truly sets us apart. As we continue to explore, define, and build our competitive advantages, we continue to invest in our company. We have the tools in place to add more publishers, including a great team and a great IT infrastructure. And although we cannot influence the larger economic forces that are at work, we do look forward with great confidence in our team and in the rest of the year. Now, I would like to hand it over to Dan Jamieson, our Vice President and General Manager of our Lifeboat division. Dan?

Thank you, Simon. Lifeboat’s Q1 2013 results reflect positive year-over-year growth in revenue and a flat year-over-year result in margin. The key factors in Lifeboat’s Q1 revenue growth with the successful penetration and expansion of pivotal software lines within a variety of Lifeboat’s premier reseller accounts the LARs, the large account resellers and DMRs, the direct market resellers. Along with the success from expansion of business within targeted solution providers’ accounts including VARs, the value-added resellers, SIs, the systems integrators, and other consultancy type companies. The flat margin result is primarily attributable to continuing margin pressure across key vendor lines and in the distribution segment. Lifeboat signed 8 new distribution agreements in Q1, 2013. These new agreements will strengthen Lifeboat’s portfolio and enhance our focus in our go-to-market concentration areas, including virtualization, security, application lifecycle management, database infrastructure, application and network infrastructure, and business productivity. Thanks Simon.

Thank you, Dan. And now, I would like to hand it over to Shawn Giordano, our Vice President of our TechXtend division. Shawn?

Thank you, Simon. The TechXtend sales team delivered solid results in the first quarter of 2013 after an exceptional Q1 in 2012 which included significant growth in both our extended terms transactions as well as our solutions focus business. Our sales team continues to deliver value to our customers in the areas of virtualization in cloud, storage and data management, business intelligence and information management. Our continued focus on building long-term relationships with our clients and acting as trusted advisors enables us to help our customers to achieve business efficiencies by leveraging best of breed technologies. We believe our ability to deliver easy access to the right IT products is what sets us apart from our competitors. In conclusion I would like to thank all of our back office and support teams, without their hard work our success is not possible.

Thank you, Shawn. I would like to now hand it over to Tom Flaherty, our CFO. Tom?

Thank you, Simon and good morning to our investors, analysts, employees and friends. I will discuss our first quarter financial results both on a consolidated basis as well as by segment. Net sales for the first quarter of 2013 were $66 million. This is compared to $66.9 million in Q1 last year representing a 1% decrease on a consolidated basis. Sales for our Lifeboat Distribution segment were $59.3 million compared to $49.3 million last year representing a 9% increase. This increase was mainly a result of strengthening of our account penetrations, our continued focus on expanding virtual infrastructure-centric business and the cumulative impact of key profit line additions. Sales for our TechXtend segment were $12 million compared to $17.6 million last year, representing a 31% decrease. The 31% decrease was primarily due to a decrease in extended payment term transactions as compared to exceptionally strong extended payment term sales in the first quarter ended March 31, 2012. On a consolidated basis, our gross profit was $5.3 million compared to $5.6 million for the first quarter of 2012 representing a 5% decrease. Our gross profit margin was 8.1% compared to 8.3% last year. Lifeboat Distribution’s gross profit was flat as compared to last year. Although Lifeboat Distribution’s net sales increased, its gross profit remained consistent due to a decrease in its gross profit margin. Lifeboat’s gross profit margin was 7% as compared to 7.7% last year and was impacted primarily by continued pricing pressures within this segment. Our TechXtend segment’s gross profit decreased by 14%, however, gross profit margin was up at 12.7% as compared to 10.1% last year. The decrease in gross profit dollars and the increase in gross profit margin was primarily due to lower volume of extended payment term deals which are typically at lower gross profit margin…

Thank you, Tom. Now, before we start with the Q&A session, a couple of more comments and also there was a question e-mailed to us, the person could be on the call, but I think more people would have this question and saying what about the European sales office, what about the Canadian sales office, and is there feasibility to continue European sales office? With regards to our European sales office, our European sales actually went up in the first quarter. It’s still relatively small compared to our overall sales. It’s about – our overall sales if you look at international, it’s as a percentage of revenue it’s about 16% versus the Q1 of 2012 17%. And it’s about $12 million versus $11 million this year. The main reason for that decline is the decline in our Canadian sales. Canada, as you can also see the reports from other distributors, the overall IT, the environment was depressed. In addition, especially in our sector, we got hit hard with both – we lost some lines, and there was significant pricing pressure. So, that is something that we have to closely monitor for the remainder of the year. And we have put an action plan in place to get that business back and grow our business in Canada. So, that is definitely on our plan to address in Q2. On the European sales office in and of itself is doing good, compared to last year. We continue to monitor that very closely. It’s profitable, and we also have a little part of our APAC business out of that office, and we continue to be excited about the growth opportunities internationally, including Latin America and the APAC region, so that with regards to our European sales office now. And if you would ask…

Thank you. (Operator Instructions) We have a question from (Chris Parker).

Yes, Simon and everyone else good morning, I am a long-time shareholder and want to recall a few years ago when VMware was a big product of yours and it got commoditized, and I think you did an exceptional job one of the best business transformations I have seen of rebounding from having one of your main cash counts commoditized and really transformed the business.

Thank you, sir. I appreciate that feedback.

You’re welcome. It seems that maybe now you are – we are working harder and harder to tread water and hiring more headcount, but that’s not really resulting in increased sales or profits. And I am just wondering if there is any transformation or fix in the works for that where you think you could do something like you did when VMware was commoditized. And the second part to the question is in lieu of that, if there isn’t some action there, is it possible to use some of the balance sheet assets to either increase the dividend or maybe it’s even smarter to increase share repurchases, which would decrease the cost of funding the dividend. So, maybe leveraging some balance sheet assets to more share repurchases would help with increasing the dividend later, making it less costly?

Right, right. First of all, thank you for your complements, really appreciate that I am sure the team here we’ve worked hard to accomplish that. It was not a secret sauce, it’s as blocking and tackling and its adding more publishers. And it’s really investing in people long-term. If you look at the first quarter of 2013, I am still pleased with the results considering if you look at our results in terms of income from operations and you compare that to equity – return on equity is high. And we continued to pay that dividend. In terms of the business transformation, internally we say it’s our – we just had our take off event and surpassed to $1 billion. We definitely we strive to win from our competition and then the main reason for that is we see ourselves as providing easier access to IT products than our competition does. So, what kind of business transformation does that mean for us going forward? I think we have to – the two-pronged approach for TechXtend business is to continue to have these large financial deals, to grow those, in addition to really start not only selling the products, but with consultative approach making sure that these people come to us for more and more products. And that’s our approach, however, that is not something that is done in two or three weeks that’s going to take time. And if you look at the costs for TechXtend division in the first quarter and you will see that they are actually up whereas our sales were down. Now we could start cutting headcount and to get to our financial results. However there were some real investments made in a consultative approach hiring more people with technical knowledge as well as hiring people…

Thank you. Our next question comes from (indiscernible).

Hello, Simon. I appreciate being on the call. I am a Private Investor also happen to be in private equity and I have a decent stake in the company. And I have kind of a two part question arguably, it’s really two questions, but it supposed to be one question. One thing for the question is just I would suggest certainly for the team to consider going private in this sort of scenario given that the stock is not particularly liquid and just given the public expenses. I would certainly recommend considering that. In terms of my question, my question is if you look at the two divisions in the most recent quarter, TechXtend, obviously there is revenue softness, but the margin actually with a decent amount, better. And with respect to that segment, the question is really what do you expect to continue? And the Lifeboat side from where I said it looks like the margins are stabilized, they haven’t improved, but if you take a full year 2012 margin on that segment it’s 7.2, and in the most recent quarter, it’s 7.1, so it appears like it stabilized and if that was the case and you can continue here favorable sales trends, which have been going on for quite sometime. We would expect to get some kick – earnings kick out of that side of it going forward as the comps get a little easier from a margin perspective. So, anyway, those are the questions really the trends on TechXtend and Lifeboat, whether you think the margins is kind of, I guess, TechXtend, whether the higher margin was a bit in your favor, whether you think there maybe a trend there. And on the revenue side and then whether Lifeboat margins have stabilized and you think you can continue on your continually upward sales trend on that division.

Okay, perfect. First of all, thank you for your investment and for your time this morning. With regards to going private like I just commented we like to be a big company and we like to play as a big company. So, our goal is definitely to continue to win market share and to continue to grow our business. We are really passionate about that. That’s what it’s all about for us. If we are going private, if the share price really continues to be undervalued, if that is of an opportunity for us to grow our business, I would consider. Again, I am mostly concerned about growing our business and winning market share, but that is as a private company or as a public company that is of a secondary interest in it. I personally believe that being a public company does not cost us as much as people think it is. If you look at it, you also need Board of Directors with the size our company, you need a Board of Directors, we need proper infrastructure, we need a financial infrastructure, but there are some cost savings definitely in terms of being a private company versus a public company. However, I don’t like to run the company for financial gains or losses or anything like that. I’d like to run the company to really grow and win from my competition and grow this company into offering services and creating value for our customers, and we are really all passionate about that. So, I hope it answers your question. If it is an opportunity and it’s just a great opportunity for us to take this company private, we believe in it, we will, but I also think that if we want to be a large company, we need to be public. On TechXtend margins, the main reason that they were higher than last quarter is because of those large deals. Those large deals want to over $0.5 million typically tend to represent less margin as a percentage. So, those large deals impact the overall gross margin percentage. Now, it’s definitely it’s our objective to grow the overall gross margin as a percentage as well, but what you see is that revenue is higher and more of those large deals come in that the overall gross margin percentages is lower, but the gross margin dollars increased. And with regards to Lifeboat, the margin being stabilized, that’s exactly what we see as well and we hope to continue to grow and add lines this year and indeed show that revenue growth. Dan?

Yeah, I mean, just add to that along those lines and chiming to Simon’s comment earlier, regardless of what the competition is doing and we have to react to that. What we really try to do is view in our people that especially in this comment, it’s always important to decide who you want to work with. But right now and this climate is just as important probably even more important to decide who you don’t want to work with. So, what we have been doing in a real concentrated sense is really focusing on the partnerships and in relationships that can deliver the maximum ROI in a very tough environment and that continues, we are going to continue to do that, we are going to continue to go to our strengths, and we have the strong value proposition. We are very attractive in the niche that we are into the distributions here. And I think we are growing as a truly value-added distributor, a specialty distributor focused on software.

Thank you.

Thank you.

(Operator Instructions) I am showing no one in queue at this time. Please continue with any closing remarks.

Thank you for your interest in our company, and we look forward to reporting our second quarter results at the end of July of this year. Thank you.