PFSweb, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss PFS Web Q4 and full year 2022 results. Joining us today are PFS Web CEO Mike Willoughby, the COO and president of PFS, Zach Tolman, the company's CFO, Tom Madden, and the company's outside investor relations advisor, Jackie Keshner, with Gateway Group. Following the remarks, we'll open the call for your questions. I would now like to turn the call over to Ms. Kestner for some introductory comments. Please go ahead.

Thank you, Lisa. 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 web website under Safe Harbor Statement. 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. Our fourth quarter and full year 2022 results highlight the strong operational and financial momentum we continue to sustain in our business. We had a record year for PFS sales bookings and achieved our third straight year of record order fulfillment. Our annual service fee equivalent revenue, or SFE, growth of 7% came within our targeted guidance range. And adjusting for 3.5 million in annual FX SFE revenue impacts, SFE revenue would have increased by approximately 9%. which is at the upper end of our previously communicated targeted guidance range. Our estimated pro forma PFS standalone adjusted EBITDA percentage of SFE revenue of 8% also came within our targeted guidance range. As a reminder, 2022 was a year of transition for our company. On the corporate level, we completed the accounting for our live area transaction and successfully concluded transition services following the sale of Liberia to Merkle. At the same time, we focused on executing our corporate restructuring plan to quickly reduce overhead costs in the business and improve our positioning for the strong opportunities and tailwinds in our core fulfillment business. To cap off this work, we paid a $4.50 per share special dividend on December 15th returning approximately $110 million of capital from the live area divestiture to our shareholders. These measures demonstrated our commitment to streamlining our organization and maximizing shareholder value. While we've entered 2023 with our restructuring work largely complete, we continue to be focused on optimizing the business with the objective to drive down our public company costs as a percentage of SFE revenue, which we are projecting to be approximately 2% of SFE revenue for 2023. Our restructuring initiative and our focus on optimizing our business around our order fulfillment platform positions us to drive greater cost savings and operational efficiency going forward. Right-sizing our corporate SG&A and maintaining a more traditional level of operating liquidity also enables us to provide a clearer, more transparent picture of our financial performance and remain open to additional strategic pathways towards creating shareholder value. Importantly, we can place an even greater emphasis on supporting our growth as a standalone platform and capturing the significant order fulfillment demand opportunities ahead of us. To this end, our core verticals of health and beauty, fashion and apparel, jewelry and collectibles, and consumer packaged goods have remained generally resilient through Q4 of 2022 and into these early months of 2023. Further, Bain and Company's November 2022 Luxury Study projected that the global luxury goods industry is expected to continue expanding this year through 2030, off the heels of a strong sales year for personal luxury goods in 2022. In addition, the international luxury consumer base is expected to grow from 400 million consumers in 22 to 500 million in 2030. This growth is buoyed by increased participation from millennial and Gen Z consumers, as well as particular sales strength among U.S. consumers. From a product perspective, sales across all luxury categories are estimated to have recovered to their pre-pandemic 2019 levels or better, with Bain noting that these categories have stayed largely immune to rising interest rates, a slowing economy, and high inflation. With our focus on premier brands and products, we believe we remain well positioned to continue benefiting benefiting from these tailwinds. Coming off our record annual bookings and order fulfillment performances in 2022, we are seeing strong early demand indication for our order fulfillment platform. Zach will offer some additional perspective on our performance and our outlook later in the call, but I am proud of the momentum we have maintained among new and existing clients. Looking towards 2023, we have enjoyed a very strong start to the year. Based on the first two months of the quarter, we currently expect order fulfillment levels to be up at least 5 to 10% compared to Q1 of 2022, without the significant unmitigated wage pressure we experienced in the year-ago quarter. Based on this strong start, a robust sales pipeline, and continued strong consumer and fulfillment service demand across our core verticals, we are targeting 2023 PFS annual service fee revenue growth in the range of at least 5 to 10%. And we are optimistic that we can achieve service fee revenue growth at the upper end of this targeted range. From a profitability perspective, We continue to expect our 2023 total company consolidated adjusted EBITDA to be substantially more aligned with the current size and focus of our business as compared to 2022. As a percentage of service fee revenue, we thereby are targeting our annual total company consolidated adjusted EBITDA to be within the range of 6% to 8%, inclusive of our remaining public company costs. Excluding the public company costs of approximately 2% of service fee revenue, we are targeting total company adjusted EBITDA as a percentage of service fee revenue to range between 8% to 10% in 2023. We believe returning to a focus on total company adjusted EBITDA as a primary financial metric, in addition to service fee revenue, appropriate for our restructured and optimized business in 2023. We also believe our estimates of total company adjusted EBITDA net of the remaining public company costs will still provide an appropriate comparison to the estimated pro forma PFS standalone adjusted EBITDA margin metric we have been providing over the past two years. Overall, We believe we are entering 2023 from a position of strength. We expect to leverage our more streamlined operational and financial foundation to support ongoing client growth. And we believe this strengthening position will also allow us to continue to evaluate strategic alternatives with Raymond James with a strong priority on maximizing value for our shareholders amidst a admittedly challenging M&A market. We continue to target completing this review process in 2023. Before we provide additional color on our progress and our strategic objectives in the year ahead, I'm going to turn the call over to Tom to discuss our fourth quarter and full year financial results in greater detail. Tom? Thank you, Mike.