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. Please note that all callers will be 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.

Thank you, and good morning. Welcome to Wayside Technology's Fourth Quarter 2017 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 call. We released earnings for the fourth quarter at approximately 5:00 PM Eastern Time, Tuesday, February 27, 2018. 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/site/content/webcast. This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, February 28, 2018. 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, 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 everyone. Excuse my voice, I do have a cold. First, we appreciate everyone's patience as we work through the adopting of the new accounting rules related to revenue. The company will adopt ASC 606, Revenue from Contracts with Customers effective the 1st of January, 2018 using the so-called Retrospective Adoption Method. Now, Mike Vesey will go into the details. Let me start by saying that the change from gross sales to net reporting has no impact on gross profit, net income, or cash flows. What it will do is change the amount of revenue and as gross profit in dollars will stay the same, it will significantly increase our gross margin percentage. In addition, we have to account some new tax laws. We've recorded 1.6 million provision for income taxes in the fourth quarter. This increased our overall taxes to 3.5 million for the entire year. The new U.S. tax law is expected to significantly benefit our 2008 tax rate with an expected adjusted tax rate of approximately 24% to 26%. I want to thank our accounting, finance, and IT teams as they work diligently and extremely hard to get all this done. Second, I want to welcome Jeff Geygan to our Board of Directors effective yesterday, February 27, 2018. Jeff is President and CEO of Global Value Investment Corp., an investment research and advisory services firm he founded in 2007. The firm manages assets for individual and institutional clients across the United Sates, while investing on a global basis. Jeff has over 30 years of experience in the finance industry, and is an expert in financial statement analysis. We are looking forward to the insights Jeff provides from the perspective of an investor in our company as we strive to build long-term…

Thanks, Simon. I'll review our financial results for the fourth quarter, earnings per share for the quarter in the year and then discuss our balance sheet and liquidity. Overall net sales for the quarter increased 6% to $127 million compared to $120 million for the same quarter of last year. Lifeboat Distribution net sales were up 14% for the quarter to $117 million. While TechXtend net sales for the quarter were down 44% to $10 million. As Simon mentioned, the decrease in TechXtend sales was primarily driven by lower extended payment term sales, which tend to fluctuate from period-to-period based on market opportunity and internal capital allocation decisions. As previously discussed, we had a high level of those sales in Q4 last year causing a difficult comparison this year. Gross profit for the quarter, decrease 6% to $7.5 million compared to $8 million for the same period of last year, reflecting the decrease in extended payment sales. Lifeboat Distribution gross profit for the quarter increased slightly to $6.3 million from $6.2 million in 2016. While TechXtend segment gross profit decreased 34% or $600,000 compared to Q4 last year. On a full year basis, gross profit margin as a percentage of net sales decreased by 500 basis points to 6% compared to 6.5% in the prior year. The decline has the result of two factors continued price competition and a shift in product mix to our subscription and maintenance products, which typically carry a lower gross profit as a percent of sales when compared to hardware and perpetual license products. Total SG&A expenses for the quarter decreased slightly to $5 million, compared to $5.1 million for the same quarter in 2016 due to lower personnel related expenses. SG&A expenses as a percent of net sales was 4.3% in 2017 compared to…

Thank you. Sorry, operator, we can now start with the Q&A.

Hey, Simon, how are you?

Hi, good morning.

People come, people go, but I think you and I are the only constants that have been around for all the time. With that said, I think it's fair for me to make a comment given the stock performance over the last year or so, and basically not making a ripple in the investment community, I was curious to know what your plan is to sort of raise the profile of the company.

So Peter, as the largest shareholder in this company, I share your frustration in terms of share price. In order to raise our profile, we need to raise our profile first. And as I said before, in terms of our performance, and that performance is impacted by our investments. We need to invest in our future growth. We are doing that. And we are reaching out to the community. In terms of where do we - in terms of the share price, that is unfortunately, we are a market as many other public companies with a small float, and if somebody decides to start selling a certain - amount of shares that could have a significant impact on our share price, I do not think personally that it reflects fair value, and I've stated so at the comments.

Just a follow-up, given that as a public company, we don't really take advantage of being a public company and it actually cost us a lot for filings, et cetera, perhaps being a private company would be better for all parties concerned?

We do explore strategic alternatives, and we're looking at all options to create value for shareholders.

[Operator Instructions] You have a question from the line of Jim [indiscernible].

Yes, hi Simon, this is Jim.

Hi, Jim. Good morning.

Good morning. How are you?

Good. I have a cold.

So where do you - you obviously have a great balance sheet, and you're growing your revenues. And this new adoption of the plan that will raise your gross margins and lower your revenues, could you explain a little bit about how that works? And also, where do you see the great opportunities in the future for you, because you've obviously been a dynamic growth company that people are not really understanding.

So, first let me explain to you, like that, a little bit; I don't want to step on my [PCs] [ph] and our auditors toes, but just for layman terms, right, how we look at that as a business. We are dependent on the percentage of gross margin of a deal. So we look at an overall deal. And let's say it's a $100, and we look at that, what is in that for us. In terms of accounting, there are accounting rules that say, hey, if that's - are you a net - can you record that as net revenue, is it the five, let's say it's 5% or 10%, let's say it's 10% of the $100, can you record the $10 as revenue or should you report $100 as revenue? Now every public company is implementing these new rules, and some with large impact, some with small impact. For us, in terms of the way we run our business, this doesn't change it. Internally we look at - we continue to look at a deal and say, Okay, what's the accounts receivable risk, and we will include in our financial statements, if I'm correct, and Mike Vesey, I'm correct in this, a line that says, Gross bookings. We will include in those statements the information so you can see what the gross bookings are. But in addition, we now have to record that as every other company according to these new accounting rules, and we've decided to adopt that. It doesn't change our business. What we have to do to change our business, and right now we see large distributors, like I said before, there are either restructuring or under own growth path, what we've decided, what we do and we stick to that, is providing that way to the channel for all the upcoming software vendors that are out there, all the upcoming hardware vendors. We just recently announced more partnerships, and we look forward to expanding more partnerships. And when we can sell into a very happy and pleased customer base, we expect to drive results through that.

Well, a follow-up to that, and I appreciate that, is you had started a program or initiated a program where you were effectively operating some company stores, is that continuing to be a potential avenue for you to grow?

Yes, we do look at that as well. Absolutely, yes.

Okay, thanks.

All right, you are welcome.

There are no other questions at this time.

We thank everybody for their interest, and we look forward to reporting our first quarter results in the end of April or the beginning of May of this year. Thank you so much.

Thank you again for joining today's call. This concludes today's conference. You may now disconnect.