PFSweb, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss PFS Web's Q2 2022 results. Joining us today are PFS Web's CEO, Mike Willoughby, the COO and president of PFS, Zach Thelman, the company's CFO, Tom Madden, and the company's outside investor relations advisor, Jackie Keschner, with Gateway Group. Following the remarks will open the call for your questions. I would now like to turn the call over to Ms. Keschner for some introductory comments.

Thank you. Before we go further, I would like to make the following remarks concerning forward-looking statements. All statements in this conference call, other than historical facts, are forward-looking statements. The words anticipate, believe, estimate, expect, intend, will, guidance, confidence, target, project, and other similar expressions typically are used to identify forward-looking statements. The full disclaimer relating to forward-looking statements, as well as certain non-GAAP metrics used in our filings in this presentation, can be found in the company's 10-K and investor section of the PFS Lab website under Safe Harbor Statement. I would like to remind everyone that this call will be available for replay through August 22, 2022, starting today at 9 o'clock p.m. Eastern Time. A webcast replay will also be available via the link provided in today's press release, as well as available on the company's website at pfscommerce.com. Any redistribution, retransmission, or rebroadcast of this call in any way without the express written consent of PFS Web is strictly prohibited. Now, I would like to turn the call over to the Chief Executive Officer of PFS Web, Mr. Mike Willoughby. Mike?

Thank you, Jackie, and good afternoon, everyone. During the second quarter, we continued to support our momentum as an order fulfillment oriented business. We grew PFS operation service fee equivalent revenue by 13% year over year, driven by strong fulfillment demand from both new and existing clients. Though we continue to face service fee gross margin pressure from wage inflation, we began implementing price adjustments in certain client contracts in an effort to help mitigate these impacts and operate with improving profitability in the second half of the year. We believe our work to focus our attention and resources on taking advantage of continued e-commerce fulfillment tailwinds to grow our order fulfillment service offering has positioned us to drive value for our clients and our shareholders. Over the past two years and through the first half of 2022, Consumer demand and buying behavior have rapidly evolved. While retailers of all sizes saw rapid e-commerce growth during the initial years of the pandemic, many major big box and e-commerce retailers are now facing challenges. With inflation and other recessionary impacts affecting the broader economy, several large retailers have recently experienced a slowdown in consumer discretionary spending as prices rise and supply chain costs remain elevated. In contrast to these trends, consumer demand has remained robust across our core verticals, particularly among branded manufacturers and luxury brands. Despite macroeconomic recessionary pressures, many luxury brand customers have maintained or even increased their spending habits. According to U.S. debit and credit card data aggregated by Bank of America, U.S. luxury spending was up 14% through the end of April, with higher income consumers benefiting from reopening trends and the return of in-person special occasion events such as weddings and galas. branded manufacturers have continued to leverage increased consumer interest in luxury wellness and home products, indicating continued demand strength across various categories of high-end goods. While these broad consumer trends have benefited our clients, we believe our high-touch branded services and multi-node fulfillment strategy strengthen our positioning even further for current clients and prospective clients in our robust sales pipeline. While luxury brands have so far weathered broader macroeconomic headwinds, brands offering customized, convenient, and efficient commerce experience have maximum flexibility to navigate future changes and retain direct consumer relationships. From the onset of the pandemic, our PFS team has proven our ability to quickly adapt and deploy our capabilities to accommodate our clients' changing needs and provide highly tailored fulfillment solutions. Our proven agility offers resiliency to our growing client base as e-commerce conditions evolve. We remain encouraged by the service fee revenue growth we are experiencing from new and current clients and the strength of our sales pipeline. And we are reiterating our previous guidance of 5% to 10% annual growth in service fee equivalent revenue. We remain optimistic that we will perform at the upper end of that SFE revenue annual growth range. While we continue to experience gross margin pressures in the business, primarily from wage inflation, we also continue to target 2022 estimated PFS standalone adjusted EBITDA percentage of service fee equivalent revenue within the range of 8% to 10%. As I mentioned before, we have taken several steps to mitigate the impacts of today's inflationary wage environment. And starting in Q2, we have implemented price adjustments in certain client arrangements alongside the productivity enhancements we began putting into place at the end of Q1. We've also continued to work on reallocating client support activities towards more cost-effective operations and further optimizing our overall cost structure. We expect these changes to benefit our pricing and profitability throughout the rest of the year, while we remain vigilant to potential further inflationary cost pressures and will be prepared to make further adjustments, especially as we head into the rapidly approaching 2022 holiday period. From a broader strategic standpoint, completing our strategic alternatives process for the PFS business is still our top priority. We continue to work with Raymond James to review a full range of strategic priorities for the business. While we do not have a specific completion timeline to disclose at the present, we will continue strengthening PFS as an attractive platform for potential strategic opportunities. At this time, we continue to believe that completing a second transaction represents the most efficient way to drive shareholder value and return the significant amount of capital we hold to our shareholders. With that, I'll turn it over to Tom to discuss our second quarter financials in further detail. Tom?