Good morning, 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, 2022. Joining us today are Wayside's CEO, Mr. Dale Foster; the company's CFO, Mr. Drew Clark; and the company's Investor Relations adviser, Mr. Sean Mansouri with Elevate IR. By now, everyone should have access to the second quarter 2022 earnings press release, which was issued yesterday afternoon at approximately 4:05 P.M. Eastern Time. The release is available in the Investor Relations section of Wayside Technology Group's website at waysidetechnology.com. This call will also be 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. Mansouri for introductory comments.

Thank you. Before I introduce Dale, I'd like to remind listeners that certain comments made on 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 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 are being made 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, and effective margins, 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 press release and Form 8-K we furnished to the SEC yesterday. I would now like to turn the call over to Wayside's CEO, Dale Foster.

Thank you, Sean and good morning, everyone. We continue to execute on our core initiatives during the second quarter, generating organic growth with our existing vendors and customers while adding new emerging vendors to our line card. This resulted in another strong quarter of profitability with gross profit of double digits and a significant increase in net income and adjusted EBITDA compared to the prior year. As I mentioned on past calls, we are committed to a limited and focused line card in order to partner with the most innovative technology brands in the market. Out of our 31 brands we evaluated this past quarter, we only signed agreements with six of them, including two I'd like to highlight, Hammerspace and Mirantis. Hammerspace is a market leader in the global data access marketplace and delivered the world's first and only solution to connect global users with their data and applications. Mirantis is an open source cloud computing software company with a host of cloud management products such as Mirantis Cloud Container and Kubernetes Engine. We look forward to growing our partnerships with these innovative technologies and service providers as we expand their reach through the channel. Subsequent to the quarter end, last week, we were designated as a preferred distributor in North America for HUMAN's enterprise defense platform, which enables resellers to bolster their security staff. Over 75% of all digital attacks are believed to be bot based, and bots and cyber criminals are becoming increasingly sophisticated every year. Today, HUMAN verifies the humanity of more than 15 trillion digital interactions per week, offering enterprises a platform with exceptional visibility into fraud activity across the Internet. This partnership brings even more depth to our cybersecurity vertical, which has been one of the fastest consistently growing segments of our vendor network.…

Thank you, Dale and good morning, everyone. No easy segue here, and our condolences go out to Ross's wife Terry and everyone that was close to Ross, especially our Board member, Andrew Bryant, who spent many years in industry trenches working side by side with Ross. As we review our financial results, I want to remind everyone that all comparisons and variants commentary refer to the prior year quarter, unless otherwise specified. Q2 results were highlighted by another period of improved profitability as we produced our fifth consecutive quarter of period-over-period growth in profitability. As reported in our earnings press release, adjusted gross billings, which is a non-GAAP measure, increased $6.7 million or 3% to $241.8 million compared to $235.1 million in the year ago quarter. The increase reflects continued organic growth from new and existing vendors. In addition, net sales in the second quarter of 2022 were $67.9 million compared to $75.4 million. This slight decrease is attributed to record net sales with one of our vendors in the year ago period. Excluding that vendor, the company grew net sales by nearly 10% with our remaining top 20 partners. Gross profit in the second quarter increased 14% to $12.5 million compared to $11 million for the three months ended June 30, 2021. The increase in GP was driven by organic growth with our top 20 vendors as well as a number of customers not taking advantage of early pay discounts compared to the year ago period. Our gross profit as a percentage of adjusted gross billings was 5.2% versus 4.7%, and as a percentage of net sales was 18.4% compared to 14.6% in the year ago quarter. SG&A expenses in the second quarter were $8.4 million compared to $8.5 million for the same period in 2021. SG&A as a…

Thank you. [Operator Instructions]. Our first question comes from the line of Howard Roupe [ph] as a private investor. Your line is open.

Congratulations, guys on the quarter. Can you hear me okay?

Sure can, Howard. Thanks.

Sure and condolences on the passing of your Director. That's a sad, sad news. Two questions I have. One, kind of -- two little questions for Drew. The account payable kind of ticked down by about $12 million in the quarter. Is there any reason for that, is that something going forward that's going to continue, or what was the reason for that?

No, just the normal cycle of our treasury management and cash management function. So we had a vendor that requested from us an earlier payment to meet one of their internal requirements. So we were happy to accommodate that because we have plenty of working capital, cash on the balance sheet, and there was some additional margin associated with that payment. So that may have influenced the net balance of AP and working capital at the end of the quarter, but nothing that would be indicative that will have much of a variance in our kind of working capital levels or cash position until we are able to deploy that into some acquisitions.

Okay. And similar on the term loan, can you give the reasoning for the term loan in the quarter, the borrowings?

Yes, as mentioned, we are in the process of implementing the ERP we selected, and we looked at -- we could fund that with cash, we could fund it with a variable rate revolver, and we decided that based on the outlook and the perspective of a rising interest rate environment and inflationary increases that we could lock in four-year term financing for that at a very attractive rate, 3.73%. So that was the rationale to do that.

And do you see that continuing to be increasing or was it staying the same or what do you see going forward on that?

Well, that's the balance we amortize over a 48-month period. So that will continue to amortize off as we pay down principal and the interest component. And I don't think we'll put on any other intermediate type of financing or any other capital projects because that's really the only CAPEX we have in the foreseeable future other than acquisitions.

Okay. And then much bigger. Dale, can you -- I understand, given the tragedy, the lack of kind of laying out the overall vision here today. But can you give a little color going forward, I mean, another, you guys are one of the most boring companies that I invest in and boring in a good way. I mean you just continue to perform exactly as the people expect, and you're growing the bottom line and you're focused on it, and that's all great. Is this just a linear process from here, can you give just a little bit of color of what you see going forward, I mean gross margin ticks up, that's nice, adjusted gross billings goes up, and your product offerings are selective, but well received and profitable, is this a linear pathway going forward, can you just kind of give some color on that?

It is to a point, Howard, and that is we're going to do the same things we did in 2020. We acquired a couple of companies, get them integrated. I've talked about it probably too much to the teams and the Board about having the right culture fit when we acquire a company. And the two that we chose, one, we had -- we got to spend a lot of time with them in Canada, not as much time with our CDF Group in the UK. And during COVID, we've made that up over this past nine months and had multiple trips, multiple team members out there. And we do have a great team, and we could say, hey, maybe we just got lucky with picking them. I think some of it had to do with the ownership that they had that we got along with through the whole acquisition process. So if you take a look at our core business, we're going to do the same thing. We are going to continue to add vendors. We're going to continue jettison the ones that are nonperformers, and we'll put them into our group called Climb Elevate so that when they get to the right stage in their life cycle, if it fits for us, we'll bring them back into the core and launch with them. Other than that, you'll see our acquisitions that we're looking at that will plug on and get into the same flow that we do with Interwork and CDF and then you'll see that jump up. And then our goal is the same thing. When you say we're boring, just another linear growth with that add-on and continue to build that in regions that we think we can have the biggest impact and also provide the best value for our vendors, right, because our vendors want reach, and they like the reach that we have in the regions, so why not have the same kind of region in additional regions that we're in right now today?

Great, thanks. And congratulations on another great boring quarter.

Thanks Howard, appreciate it.

Thank you. I'm not showing any further questions in the queue. I'd like to turn the call back over to Dale for any closing remarks.

Yes, thanks Albert, and thanks to our shareholders, thanks to our Board members and our employees. We have a lot of good things coming on. I know that we've talked in our internal meetings about a recession, are we in one, are we entering one. We're making plans for that. We believe that being a software delivery company, we won't be hit by the logistics problems that has been seen over the last couple of years. But we'll continue to -- due to things like Howard said, to be a little boring, but the same thing and work on our integrations that we have going forward. So if you look at us, we'll talk about it in the next meeting as well, that ERP is super important to us as an overall company as we get everybody on the same systems and then be able to track things and watch our progress a little easier internally. So thanks for your support as always.

And this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.