Good afternoon, everyone. And thank you for participating in today's conference call to discuss Wayside Technology Group's Financial Results for the Second Quarter Ended June 30, 2020. Joining us today are Wayside's CEO, Mr. Dale Foster; the Company's CFO, Mr. Michael Vesey; the Company's Vice President of Alliances for Lifeboat Distribution, Charles Bass; and the Company's outside Investor Relations Advisor, Sean Mansouri, with Gateway Investor Relations. By now, everyone should have access to the second quarter 2020 earnings release, which went out this morning at approximately 4:05 pm 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 would now like to turn the call over to Mr. Mansouri for some introductory comments.

Thank you, Shri. 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 separation expenses; 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 the SEC rules. You'll find reconciliation charts and other important information in the earnings release and Form 8-K we furnished to the SEC this afternoon. I'll now turn the call over to Wayside's CEO, Dale Foster.

Thank you, Sean, and good afternoon, everyone. First and foremost, the health and welfare of employees, vendors and customers remains our top priority during difficult times. Despite the obvious COVID-19 challenges the world faced during the second quarter, we continued to execute on our strategic plan and serve as a valuable partner to our vendors and customers as we navigate the effects of the pandemic. I've been very impressed with the way our team has risen to the occasion and the focus they have demonstrated. In fact, although several of our key vendors experienced softer volumes in this quarter, which in turn impacted our margins and profitability, we drove a 12% increase in sales during one of the most turbulent periods of recent memory. Our sales partially benefited from the acquisition of Interwork in May, but we also generated growth with other emerging vendors on our line card. Our ability to grow even in this challenging environment underscores the continued demand for our high-touch approach to selling and servicing our customers' needs. I'm very grateful for our team's resilience and dedication. Across our industry, technology vendors struggled with supply chain disruption, postponed customer orders or delayed projects with various -- within market cycles. Small to medium-sized businesses in particular have been severely impacted by the economic shock of the pandemic, especially as they were quickly required to shift to remote work on the onset of lockdown orders. However, many vendors and customers have utilized this time to focus on optimizing resources and costs, often by implementing technology solutions to make our operations more efficient for their customers and employees alike. In this environment, we are focused on partnering with current vendors to help them meet their customers’ evolving technology needs. We also continue to add vendors -- new vendors to…

Thank you, Dale, and good afternoon, everyone. As Dale just mentioned, we were excited to rebrand our company from Lifeboats and Climb Channel Solutions during the quarter. We've received very positive feedback. Customers and vendors have already commended us for making the change to reflect our strategic focus on emerging data center and cloud based brands. Although we have a new name, we’re operating with sustained, highly dedicated sales team, and we're proud to be going to market with a name that better represents our operational progress and high-touch differentiated service levels. All of our representatives are committed to further executing on our vendor alliance strategy through identifying and evaluating and onboarding, emerging tech partners that we can grow with for years to come. During the quarter, we added several key new vendors that illustrate the breadth of emerging partners that will drive our future success. One of those partners was Zendesk. Zendesk is a extremely successful SaaS company that makes -- supports sales and customer engagement software and it's quick to implement. It scales to fit changing business needs. They're a publicly traded company that has shown excellent growth and market penetration. They came to Climb to enhance their existing routes to market and drive incremental sales through distribution. On the other hand, another vendor we added in the quarter was Liqid, which is a information technology Company that provides comprehensive composable infrastructure. Their product is a leading edge and potentially disruptive technology in the market. And they're a fairly early stage startup that's just beginning to create their routes to market. They came to Climb, so that we could help them effectively create their sales channel together. We believe these two vendors additions kind of reflects our ability to partner with different types of technology companies at various…

Thanks, Charles and good afternoon, everyone. First, I'd like to remind everyone that our second quarter financials include operating results of Interwork effective May 1, 2020. Now, turning to the quarter. Net sales in Q2 increased 12% to $56.6 million compared to $50.7 million for the same period in 2019. Climb Channel Solutions, formerly Lifeboat Distribution segment net sales, in the second quarter increased 15% to $54.2 million compared to $47.3 million, while TechXtend segment net sales were $2.4 million compared to $3.4 million in the prior year. Adjusted gross billings, a non-GAAP measure, increased 11% in the second quarter to $158.7 million compared to $142.6 million for the same period last year. Gross profit in the second quarter was $7.1 million compared to $7.8 million for the same period in 2019. While we are driving revenue growth with new vendors and inorganic growth, we've been challenged by lower gross margins, resulting in part from accelerated discounts and rebates, and partly due to lower volumes from some of our established vendors, which we believe is a transitionary situation related to the current macroeconomic environment. Year-over-year comparisons were also impacted by approximately $400,000 of nonrecurring benefits related to vendor discounts and marketing event income realized in the second quarter of 2019 that did not occur in 2021. One of the accelerated discounts we proactively implemented this year was an early pay discount program with a large customer of ours, which is very much a net positive for us. Under the new terms, we're conceiving approximately $300,000 of gross profit per quarter going forward in exchange for reducing the collection cycle by approximately 60 days. This program drove our cash position of 3 times to $45 million this quarter. Moving on, SG&A expenses in the second quarter were $6.4 million compared to…

Thank you, Mike. And before we open up the call for questions, I wanted to provide a deeper update on our integration of Interwork. For the full integration anticipated to be completed during the fourth quarter of this year, I'm pleased to report that the overall integration up to this point is progressing very well, and meeting and in certain aspects exceeding our expectations. Our Canadian and U.S. Climb Channel sales teams, along with their respective marketing teams are both integrated now. And as Charles referenced, they are already working to deepen our relationships with existing vendors and customers in both geographies. We continue to expect an additional $1 million annualized adjusted EBITDA from Interwork after driving further operational and financial synergies over the next couple of quarters. To summarize our call today, we have effectively navigated one of the most challenging periods of time in our nation's history. We continued to serve as a vital partner to our vendors and customers, as reflected by our margin and profitability concessions in some areas over the near term. We know that deepening our relationships and being there for vendors when they need us most will only benefit our business in the long run. We have more cash on hand today than ever before to continue driving growth with emerging vendors on our line card and further diversify our revenue streams. And last, in a very short period of time, we've begun to realize the benefits from this management team’s first acquisition at Wayside. We are very much in the early innings of accelerating growth and profitability for years ahead as we position ourselves as a premier technology distributor for emerging data center, cloud and security products. And operator, we’ll now open up the call for Q&A.

Thank you. [Operator Instructions] Our first question will come from Ed Woo with Ascendiant Capital. Please go ahead.

Yes. Congratulations on the quarter and also on the integration of acquisition. My question is, do you feel that you could do additional acquisitions near term? And also, what does the M&A landscape look like? Has there been more opportunities and have valuations come down?

Thanks, Ed. This is Dale. A couple of things on that. I mean, we'll do the same thing, right? We're looking for organic growth. I mean, that's a focus that we deal with every day. And then, the inorganic side, you're right. I mean, what are the actual targets that are out there? And it depends on how far out of our sweet spot that we want to go to look at those targets. There are targets, throughout all the different geographies. But, it really depends how far out of that. And Interwork was just such a good fit for us. And we're finding out that’s even better fit for us with the teams, and who they brought over, and who we got to know and where they fit into organization. So, that was a very easy one. And looking back on it was the right thing to do. So, we'll continue to look for those, more in the cloud space, of course, and of course in the software application pieces.

Great. And then, my next question is, I know, you may say that you had some pockets of growth, but then you had some other partners that have lower revenue. What are you seeing currently? Are you seeing just a generalized return back for some of those other customers or is it going to be a longer time path to return back to business?

It's not -- and not that we’ve talked about [Technical Difficulty]. But, I mean, as far as you look at what we saw, and it was more of a delay than anything else. So, everybody goes into lockdown. Everybody gets working from home. And it seems like, hey, it's good, it's fresh, everybody is getting things done. But, then it's kind of like a fatigue set in, and it's just the processing all the way to the end user that I think delays a lot of things. So, we haven't seen orders that we were tracking disappear. It's just taken longer to process and we'll see that in this quarter start to picking back up.

Great. Well, thanks for answering my questions. And I wish you guys good luck.

Thanks, Ed. I appreciate it.

At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Foster for closing remarks.

Thanks, operator. And just to follow up, we had our Board meeting last week, and we have new Board members on, we have a refresh Board that subsequently from two years ago. It's just been a very positive impact. It becomes more of a business discussion than a lot of these meetings that we have. So, I want to thank them, thank the executive team, and most of all, the employees have been great. Everybody stepped up. They figured out how they were going to do and be productive at home. And we're seeing that and we did that very quickly in Q2. And it's just following on. We're hoping that the customers and vendors catch up as quickly as we were able to transfer to that during that lockdown order. So, thank you to the shareholders and this will conclude our call.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.