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WSTG Wayside Technology

Participants
Cody Cree Investor Relations Advisor, Associate at Gateway Investor Relations
Dale Foster President, Chief Executive Officer
Charles Bass Vice President of Alliances and Marketing, Climb Channel Solutions
Michael Vesey Vice President, Chief Financial Officer
Ed Woo Ascendiant Capital
Call transcript
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Operator

Good afternoon everyone and thank you for participating in today's conference call to discuss Wayside Technology Group's financial results for the third quarter ended September 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 and Marketing, Climb Channel Solutions, Charles Bass and the company's outside Investor Relations Advisor, Cody Cree, with Gateway Investor Relations. By now, everyone should have access to the third quarter 2020 earnings release, which went out this afternoon at approximately 4:05 pm Eastern Time. in at Relations waysidetechnology.com. available Technology of is website Group's release the section Investor Wayside The This replay website. on is the call also company's available for webcast

Following over to for Cree for the now will comments. to Mr. management introductory I like call questions. would call the turn some remarks, we your open

Cody Cree

you Thank Mary.

of Reform forward-looking to as this These risks that reflected would to under subject statements. statements webcast and uncertainties could that are on generally forward-looking SEC. statements other which forward-looking Dale, and to Before from remind call. as the from company's also described and statements. or in reliance that only call forward-looking uncertainties materially the I I introduce as obligation XXXX. speak certain filings of conference to with listeners Private results undertakes Act unknown this revise are undue Except any risks Securities Litigation time law, are These and forward-looking place of are time known the certain forward-looking actual the revision statements, required as any the those publicly not results to like to to release assumptions well these comments of differ Do no subject made company statements any in date the in by considered cause

rules. comparable financial in adjusted of and the billings, with non-GAAP gross performance GAAP directly non-GAAP including have All adjusted income measures, measures certain SEC per earnings accordance reconciled non-GAAP expenses measures includes share excluding business. measures to the net also separation presentation as most Our our been of EBITDA, supplemental

to to earnings will important over other CEO, You the Form we Dale will to Dale? afternoon. I the charts this X-K SEC Wayside's in find release call the turn reconciliation and Foster. now like information and furnished

Dale Foster

Thank you afternoon and good Cody everyone.

integration profit recovery We in growth made net sales has business progress last gross quarter. low and line solid added to card Interwork. new drove pandemic vendors the industry-wide finalized from from our our of as the an we Our of and

Our impact industry began but stabilize to pandemic. the the initial slowly surely has since of

see organization. our operational to sales-driven our still resilience as continue we has us our improving challenges position While allowed market, in

further vendors Year. in are of higher as their of budgets we activity our of the their periods increasingly and centers while firm Some into to quarter. infrastructure, plan businesses typically next New their is for to are customers their global end more the in up still new other research communications early recovery industry environment. Customer equip the are extremely sales This technology to and return IT that more QX XXXX one optimizing begin stages Gartner seeing heard will fully investments our momentum the sales solutions fourth stronger with pick others as is a software, flexible enterprise cloud growth expected predicting spend levels work and or for IT deplete year. to data before

With continued the us a past while new existing meeting centers, this needs in flexibility growth to made in the emerging as and year products and position our strong focus emerging vendors. recruitment clouds security support market. on the to process over and have continue in with the network puts Our our give we these context, vendor improvements data sales us driving

approach America. even North and impressive further sustained are sales the across bolstering our as team it relationship strength have We of sales based

generated us on provide network. sales call And this with momentum shortly integration of we Canadian combined our sales sales pleased officially As force the and But in October, U.S. in vendor valuable on completed have have our am cross-sell the team opportunities details further QX. be driving is puts needs services a that Charles place our the team. a sales IT to Having will both in our as we with across our this I geographies. changing of and pace of end, position industry. offerings foundation to provider. our distributor of announced acquisition yesterday, and prime cloud, the Group, keep U.K.-based product CDF many customer software to evolving continue may seen, operational have we To service in robust you and

on three base we marketplace infrastructure. demands. vendors divisions, us mentioned customer base up to solutions VAR and form have CDF its is to software provides and CDF offerings cloud backed to I leveraged a Sigma support software and How and Cloud both certification that VAR marquee customer software few. As the and Know Cloud our division our have which gap vendors true previous Distribution, a in to by This of cloud Sigma a How CDF's a made holds up like quickly fills support in Matter, to solutions Know name and third, and Quest of some vendor support is Microsoft, gaps to is customer platform their strategy Flexera, meet nimble cloud independent with with provide cloud Grey and How, allow Grey subscriptions, of vendor the calls, providing and will maintains go-to-market our acquisition by Matter. that software, and manage Know Cloud

of brand services. suite a the a share categories, But product strategic vendor and Wayside U. within in more As on robust perspective initiatives cloud to core brings color it opportunities a Charles transaction to the have presence CDF provide established Bass quarter. later first, to call. this will whole, the services to over with the Charles? I about our our I and especially and share turn the of will in K.

Charles Bass

Thank touch very has on dedication alliance vendor us to team you our approach and enabled The high strategy afternoon continue sales and high at our executing everyone. of levels. good Dale

key Our are alliance there strategy and remained has consistent essentially two elements.

emerging time sales to vendor existing continuously identifying, our evaluate efforts a spend of successfully effort an partners. entails high deal focus vendor spend brands. and equal base amount effort we most our of first The that partners, on to while successful tech onboard our can And evaluating potential great onboarding and we new we so

Our results of some both and strong has strategy recognition our yielded partners. from key

their partnerships of Global Interwork, the Awards. recognized recently U. shared Acronis, Partner their as Partner us with fact, one in Year CyberFit of In S. our

leader So At metal, we line base products plans tools. and in security. opportunities and partner sales portfolio companies' by our now strong that September, implementing distribution possible made segmentation thus our out we our the In network true maintain would strategies deepen our through more further and put are made security by visibility our point, end-to-end vendor as end VAR new valuable and on machine Trend to quarter. control endpoint and cloud we vendor to product data was addition of forward provides cross-selling of our This that added this is August, or and Trend of of costs continuously environments Canadian to And cloud, begin breaches containers. our of key all we making now center network. to bare creates works of the market infrastructure Micro's we come Micro agreement monitoring managing several card. partnerships across vendors virtual cost CloudSaver all any begin global relationship Illumio Interwork relationships value launched portfolio Interwork our distribute onboarded This we and across agreement with cloud the past it another look and to in adding execution their focuses we of while announced place such optimization cloud integration complete server distributing one compliments the process key base. focused cybersecurity AWS a to on honored solutions other prevent to some even U. in and of S. are fully our we partners. our progress the Illumio's have of platform. to brands for product this have far. to integration combined efficient solution. At the CloudSaver's Subsequent to application endpoint, quarter, an spread or

security with to So this forward be and partnership. working to further look this proud top tier vendor are we expanding

and and in our have accelerated progress also initiatives, strategic on the products. revamped additions sales center, products only processes demand security refined demonstrate, As making particular pandemic. our we focus these experienced data emerging but through are tailwinds cloud with Cloud cross-selling not with

on on call, self-service to this mentioned our by the to financial to market. our considerably enhancing and details And been acquisition would launch marketplace our Michael? serve has second I With call to cloud expedites the own working I that, Climb recent process need CDF our expertise. in results. turn As like of cloud our more provide Vesey Michael urgent capabilities over quarter to further this

Michael Vesey

Thanks good and afternoon everyone. Charles

full results results quarter like off, remind to from everyone Before Interwork. things the we kick include would operating of first that our financial I

same compared segment sales Solutions, segment sales in Net to our X% turning Climb the of Gross increased $X.X quarter in million. net period while million period third third for third increased Channel increased XXXX. million to million to profit $XX.X XXXX. non-GAAP compared to net the third Now year-over-year million results. quarter also the QX in $X.X XX% Distribution, increased Lifeboat $XX.X XXXX. TechXtend the XXXX for the to billings, quarter $X.X quarter compared a XX% to measure, same to Adjusted million the third gross quarter sales increased $XXX.X to in to XX% in X% formerly

larger position million the approximately quarter of increased to early-pay it million and impacted this profit implemented we the a program. by offset improvements per expenses continue our with we we as Total discount As net beginning the slight view cash our the short quarter in QX. significantly quarter. exchange program year third customers results were our of approximately conceding under of by ago Interwork SG&A days, this quarter. Despite driven $XX.X in a $XXX,XXX capital program in In is our reminder, working for positive $X.X XX compared one forward cycle this comparability $X.X to client our customer's of reducing profitability, term going million this are as acquisition has gross and to in the to

adjusted our The as or in for $X.XX months to the the net X.X% by to decrease the per the diluted higher aforementioned was net administrative income salaries costs expense or the by of was million same plan $X.X XX, enhanced was to acquisitions, fees. the $X.XX debt driven share expenses in December XXXX driven out second and for This the per excludes shareholders gross driven fourth complete of investments, sales XX.X% we compared equivalents and which the $X.X XXXX. SG&A our discount the liquidity CDF. ability customers position third a included of XX, Adjusted commissions, growth margin, was CDF million Cash was significantly related $X.XX Interwork million at impacts G&A. initiatives by as Directors at third a the The which we percentage XXXX. defined stock the functions. $X.X to the in related of compared September the maintained profit, $X.XX compared a the was As one million of of sales, increase gives remain including the in to large we higher compensation XXXX per driven period $X.X XX, three ended XX, non-recurring SG&A quarter period cash in form $X.XX X, program The professional EBITDA in phase compared the we primarily same XX, our in and per quarter November implemented and prior share expense increased per of declared to on In million quarterly to to XX.X% quarter. stock-based common strong Net or and third us September dividend EBITDA XXXX $XXX,XXX $XX.X XXXX, the our unsolicited to on flexibility record in of by the total and of as was increased of the of XXXX from on integration of XXXX. adjusted XXXX million approximately increase or gross Board earnings pandemic's Effective our income, to dividend. compared diluted $X.XX quarter SG&A. our free. have early-pay effects XXXX. and aforementioned our a the continue executing and with November to of navigate year was XXXX increase percentage during period. $XX return in XX.X% million quarter, of Interwork XXXX. period share we of acquisition to also the share profit shareholders strategic payable to for The million industry for share a is which compared portion in significant On bid decrease to same November Despite X.X

yesterday. our opportunity to we some profitability our services. this and enhance CDF additional We announced drive position transaction Now improve context strong view cloud which in growth, acquisition provide a to as on strategic

strategic to it capital. recently also We an see the in capital aggregate changes for we of reinvestment as We of working the management effective freed our CDF through acquired the be purchase an working and price up of net acquisition approximately approximately The to by and is EBITDA annual our $XX.X income accretive increase expected million. gross to revenue synergies. any margin XX%, prior billings

brands Our motivated will platform. services and over back This prepared onto turn entire concludes the begin organization our call my excited remarks. to and is integrating CDF's to I Dale.

Dale Foster

the and is end-to-end we geographies. as cloud across mentioned this we immediately acquisition, and our leverage earlier, Thanks automation develop the internally have provides services. optimization striving cloud been platform platform migration cloud platform and CDF's Mike. back This service to support businesses to and plan Jumping I into CDF

Our to and bringing provide our will a limited cross-sell Know This opportunities and How that a support opportunities serve us Sigma resource a Cloud intelligence for Netherlands. them commitment technology the CDF's And extensive an adoption to customers and onboard Azure. technical targeted the and allows from consulting to services. How provides U.S., vendor more offering specialist Wayside and skilled standing all Grey for vendor us introduce EMEA. which outsourced in XXX geographic everything not brand business specialists have Microsoft. the various highly enable highly growth comprehensive to and developing and Microsoft long direct will has in IT to overlap migration as as only between network also of Know beyond support margin base. opportunity legacy increase a key expertise which additional business are provider and holding Matter emerging high-touch value leverage nine CDF Matter have and experience, Partners team Grey customer includes strong distribution and agreements Microsoft capitalize technical Canada Cloud Both and add will with but and Gold Sigma broader service expansion brands ample customer offerings on a distribution. a CDF's This competencies Climb,

ManageEngine, CDF X,XXX VARs I both more network that EMEA for General vendors and leadership SAP Wayside current other cloud to part to leverage Wayside merger Our joined seamless CDF our Wayside. relationships the global and King, including Web a Bing Microsoft, along Services, CDF in His of facilitating operations. and with will deep strategic strong facilitate Amazon expansion President areas. notable business process opportunity many the between Wayside and of be Microsoft's the and more. lead integration share European am CDF's presence and Altogether, CEO, and further its Adobe brings key Maps with Manager as than also will a our pleased to has ensuring Andrew to from

their Grey vendors we network the with the as opportunity our both for commitment up aboard. work to nature Matter integrate brought and Sigma our relationships and new want for services. with our and team and geographic our At cultivate this Before that operator, of for I support driving comprehensive and call questions-and-answers. cross-sell This footprint time, thank portfolio we product will the open expand Interwork to strengthen vendors we questions, will open only the call up to relationship of

Operator

Instructions]. [Operator

comes question first Ed Your of from the Woo. line

is line now Your open.

Ed Woo

currently? Do up opportunistic Congratulations with acquisition quarter you you other to and a while? see looking Or tied for on for this going be acquisition. still the on yourself are deals being

Dale Foster

Yes. Thanks Ed.

and imagine Two working will the has can acquisitions infrastructure hard gap one our a between year, had we look. two. good been continue in We to you

full one of to done able this were get started. before Interwork the So integration of we

the take So going running flair But company of yes, as are strong this different it. bit will a because little real that's a our platform a of cloud to now. They They have a independent. of piece infrastructure right be focus.

just will of the look sense. out to take their between on always period be make and one doing we what Group. great acquisition far most are America eyes was Interwork seamlessly continue in North have team are fits hopes great for there. in two own well. It's time. will pieces as the the But over And and companies as it very So to are open run to they this a just we it a we that high as CDF will the a

be the can getting will You deeper the digging over down forward these exact progress. then teams. couple we with excitement the imagine days to with yes, each other and of on last and doing the teams know months as But looking to more this week with the level

Ed Woo

question pretty that back Do that last the my to had services software business have results. see there have you think and recovering? And that you business are is, Great. normal? still do Or are you environment still guys for good returned

Dale Foster

we where that the our it local we state had to like saying, customers. up the We everybody coming I and of They I back still said closer now on to get Fed some think recovery back can had seem Yes. then everybody productivity in online see see. think that home industry the it I specific with governments. okay, into fatigue it's we QX. industry to do trying segment And from we we be work was of And getting to our and the are before? and areas. I

removed So one good. the end that's are user. from But we

and it and ones to and along so. top method. tell what kind back up think do get running the of on our I But hearsay with will continue quarter kind of will industry we So hopefully will back through vendors this are that

Ed Woo

Well and you thank Great. good luck.

Dale Foster

Ed. Thanks

Operator

[Operator Instructions].

line from comes of question Lux. Peter Next the

open. now is line Your

Unidentified Analyst

seems business. continue? that It to had something cut to doing? in business prices you on order based business or that will to margin you gain that Is to retain are grow How guys. gross sort Hi your

Dale Foster

Peter. to we so, do in think that. don't territory won't that. we territory at sometimes have have and we When the we market, uncertainty And look to I do the continue by which there to is or not. nice or could didn't choose, was because not either do chose, was either We business The do. a of lot get what right, companies they gone,

against some we margin this. we flowing We So as transact less cut wanted transaction bigger through right. to to staff, because to the to of keep want at orders business of chose out take to that back competitors, didn't continue come we a

than we a Of longer course, the recovery is all expected. little

across that what most I back customers goes what margins we we to comfortable think working But and our see to and the come will as actually as in did feel we industries. actually I they continue projects. are sell

Unidentified Analyst

you still backed, working guys to have Are Or mostly double sort back remotely? you office? the of

Dale Foster

because Jersey lockdown. more I New New a Jersey not So of in Maryland. has am

some onboard. have We more coming staff

as they kind I So everybody the being am much have case up. ebbs and goes my safe, what they can. doing curious been travel But as we as it of as long as and team, as flows as rate is

they not team we And the to in put lockdown. near field fewer states going So are they that traveling. what have are are doing is,

been have a I the looking with getting have to Missouri, that vendors places out. field I do team. myself, few York, face-to-face in. along everybody's New and So different to airports We needed Wisconsin, quite are coming to forward

he people have hurts does are around. a force. it still sale just is having struggle So not moving Southeast yes, got because the I rep, really my

there shaking some nothing that relationship if face-to-face. selling better And more when hands. back go know people of will to these I a you than is get you we of see So can out, think

Unidentified Analyst

complicated statement are a gotten guys this normalized this statement is seems forward? et going charges with cetera. to had on income and up last I more have question you Is that clean It call. try question this going asked a something Mike, you one-offs, the more for you even has and So to and

Dale Foster

on the answer of the will let but that lot to take through a is, from last the that we XX in that Yes. have months events all I acquisition. my Mike had fight proxy way happened

two too it complicated than I to back wanted much wants be. if put messiness, cents But a to And cleaner. I wanted convoluted more will it get his there? lot so there's see in I to of it Mike way

Michael Vesey

No.

I fine. that's think answer. Good

Unidentified Analyst

See up. Okay. Guys, you keep Thanks. later. it

Michael Vesey

Thanks.

Dale Foster

Thanks Peter

Operator

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

Dale Foster

Thank you Mary.

a want here's I talk about. couple to things So

teams. Directors, what of industry. people out into from strong going input of a think we Board in very our do on do a supportive the have Board the past as to of going lot want I are future. more shout I the We that and we A the to want are to have to

know, two with you of, can and accountants You a lawyers. lot imagine requisition,

Mike team, I We can congrats. lot our to tell of and do. done. more being A a company. lot in So is has you still focus that work growth the on his

manufacturers, is, proved look are manufacturers. direction have that we that it's what if I we that you of you their And are drive, disc some more we think saw that like solution by going manufacturers Seagate if the do going. the not recognizable and some And actually much I And releases at the we into upstream with with are mean side. Seagate. it's but

your watch support QX. Thank you thank for after So continue us. I operator. to you look giving forward update and We

Operator

and today's concludes this Ladies gentlemen, teleconference.

may disconnect at lines Thank you participation. this time. your for your You

Dale Foster

Thank you.