Good afternoon, ladies and gentlemen, and welcome to the Fourth Quarter 2017 Connection's Earnings Conference Call. My name is Amanda and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question-and-answer session. As a reminder, this conference call is the property of Connection and may not be recorded or rebroadcast without specific permission from the company. On the call today is Tim McGrath, President and Chief Executive Officer; and Colin McGuinness, Director of Accounting and Financial Reporting. Unfortunately, Bill Schulze, our Interim CFO is unavailable to attend today's call. Any statements or references made during the conference call that are not statements of historical facts, may be deemed to be forward-looking statements. In particular, various remarks that management may make about the company's future expectations, plans, and prospects, constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's Annual Report on Form 10-K for the year ended December 31, 2016, which is on file with the Securities and Exchange Commission, as well as in other documents that the company files with the Commission from time to time. In addition, any forward-looking statements represent management's views of today and should not be relied upon as representing views as of any subsequent date. While the company may elect to update forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so, even if estimates change, and therefore, you should not rely on these forward-looking statements as representing views as of any date subsequent to today. During this call, GAAP and non-GAAP financial measures will be discussed. A reconciliation between the two is available in today's earnings release and on the company's website. Today's call is being webcast and will be available on Connection's website. The earnings release is also available on the website. I would now like to turn the call over to Tim McGrath. Please proceed, sir.

Thank you. Good afternoon everyone and thank you for joining us today to review the company's fourth quarter financial results. As we review our results, please note that unless otherwise stated, all of our fourth quarter 2017 comparisons are being made against fourth quarter 2016. Net sales in the fourth quarter grew by $27 million or 4% to a record $762 million, led by 7.6% growth in business solutions and 7.2% growth in enterprise solutions. We also saw strong growth in the vertical markets of retail, manufacturing, and finance. Q4 was a strong quarter for our Business Solutions segment which serves small-to-medium sized businesses. We saw growth in both client devices and advanced technology. Sales for this segment grew 7.6% to a record $298 million. Desktop revenues grew 31% and mobility grew 7%. The client device refresh continues for the fourth straight quarter as SMB customers upgraded in an effort to increase productivity and enhance security. Advanced technology which includes converged data center products, services, and software also grew in the quarter. Although net common [ph] store sales declined server sales increased 26% and software grew 15%. In total, advanced technology sales represented a record 48% of overall sales for business solutions. Sales of enterprise solutions businesses large account grew 7.2% to a record $309 million. Our enterprise customers increased their IT investments in the quarter driven by large project rollouts. In addition, Q4 software revenues grew 16% and storage grew 37%. Client devices grew 6% and represented 30% of overall revenues for the large account segments. Consistent with industry trends, we're seeing companies looking to transform their business with technology and a digital first strategy. For example, work force productivity is driving a client device refresh. In addition, we strong growth in service and managed services. Sales for public…

Thank you. [Operator Instructions] Our first question is from the line of Adam Tindle of Raymond James. Your line is open.

Okay, thanks and good afternoon. I just wanted to start on the competitive environment Tim. I think in the press release you talked about an ongoing competitive environment in the public sector and large enterprise, but that comment wasn’t on the SMB space. So just wondering if you can maybe bifurcate where you are really seeing the competitive environment intensify? And then also kind of moving forward, do you think that gets better? What are the moving pieces to that improving?

Well thanks Adam. So I think the competitive environment is really across all three of our sales subsidiaries, but it's definitely more intense at enterprise and in the federal space. So we have seen large bids driving some hyper competition there. I think that it's leveled out and I think as we drive into 2018 we're going to continue to see the competition show up and be very aggressive. But I also think our solutions capability combined with some of the plans we have in place to be more efficient are going to bode well for us. So I think we're up to a reasonable start for the year, but we still are a little unknown when it comes to predicting whether or not that hyper competitive landscape will level out or even decline a little.

Okay that's fair and I guess maybe on gross margin in 2018, maybe it's a little bit too early to tell, but as you kind of mix up, find the right mix, solutions mix, the competitive environment, some of your competitors are kind of talking about flat to down gross margin. I just wondered if you had any view on how we could think about that line in 2018?

Yes, well thanks, so it’s an interesting question given the history that we had in 2017 also in reports much like Raymond James report, it’s interesting to see our server business really grow. We're seeing growth in advanced technologies and the margin hasn't yet followed the way that we'd like it to. So we also are looking at a flat to slightly down margin environment for 2018.

Okay and that's fair and maybe one last one, what you have done is done a nice job of controlling SG&A. As we think about 2018 do you think you're in a position where gross profit dollars could continue to outpace SG&A because I know you talked about wanting to make some investments there, so just trying to get a sense for if there's operating leverage as we think about 2018? Thanks, Tim.

Yes, there is no doubt. Thanks. We're going to manage that very closely and clearly we need gross profit dollars to increase faster than SG&A, so we're going to keep the range pretty tight there and that is absolutely the plan today.

Thank you.

Thank you.

Thank you. [Operator Instructions] Our next question is from the line of Anthony Lebiedzinski of Sidoti. Your line is open.

Yes, good afternoon and thank you for taking the questions. So just to follow up as far as the different competitive dynamics within each of the segments, so it sounds like the SMB is kind of more insulated I guess from the competitive pressures. So with that said, would you be looking to focus more resources on trying to expand the SMB segment to capture that?

Well, thanks Anthony. So let me hit each segment kind of wanted time for SMB 48% of revenue did come from advanced technology. So we're seeing good success there selling across the solutions stack. So we're optimistic about that and our team has been a great performing team. But in the enterprise space we're also seeing really high growth. We've got a strong pipeline in place and we're making investments there to drive solutions. Because at the end of the day it is our customer and our customers’ requirements that really fuel our need to add investments and to help them solve their business challenges. So we'll continue really across the board increasing our capabilities and what we call advanced technologies and that is also true for public sector. We're very bullish on the higher ad space for the rest of the year and we're optimistic overall in the government space, both SLED and Fed based on some of the tax law changes and some of the infrastructure plans that are in place.

Okay, that's very helpful. So when you look at a different vertical markets that you're in, which ones you think has the most growth potential in 2018 and which ones you think would be the most challenged?

So, I think the most challenge is going to be able to do the sort of reverse order Anthony. The most challenged will be healthcare and that's really based on I think the administration and I think the uncertainty around what's going to happen based on the administration and healthcare. So I think that we see healthcare really leveling off; however, we're seeing significant double-digit growth in both manufacturing and retail. From a manufacturing perspective you've heard it I'm sure you know we really are in the fourth industrial revolution. We're seeing really all facets of manufacturing change and that is really being driven by digital first approach, from the Internet of Things to 3D printing to artificial intelligence, robotics, everything coming together there that space is really rapidly changing and we have to enable that change. So we're excited about that. We're seeing great growth in retail and the technologies enabling retail and retail doing kind of an end-to-end digital approach as well. So both of those verticals are very strong. And then finally trailing that somewhat not quite as strong we think the financial vertical is poised to grow as they are right for upgrade as well. So, I would say manufacturing retail highest growth followed by finance and we kind of include education as a vertical as well, so education and then definitely a slowdown in healthcare.

Got it, okay. All right, well thank you very much.

Thank you.

Thank you. And at this time I'm showing no further questions. I'd like to turn the conference back over to Mr. Tim McGrath for the closing remarks.

Well, thanks. I'd like to thank all of our customers, vendor partners and shareholders for their continued support and our dedicated coworkers for their efforts. I’d also like to thank everyone listening to our call this afternoon. Your time and interest in Connection are appreciated. Have a great evening.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.