Spok Holdings, Inc.

Greetings, and welcome to Spoke Holdings' second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lisa Fortuna. Thank you. You may begin.

Hello, everyone, and welcome to Spoke Holdings' second quarter 2022 earnings call. I am joined by Vince Kelly, President and Chief Executive Officer, as well as Mike Wallace, Chief Financial Officer and Chief Operating Officer. I want to remind everyone that today's conference call may include forward-looking statements that are subject to risks and uncertainties relating to folks' future financial and business performance. Such statements may include estimates of revenue, expenses, and income, as well as other predictive statements or plans, which are dependent on future events or conditions. These statements represent the company's estimates only on the date of this conference call and are not intended to give any assurance as to actual future results. Folks' actual results could differ materially from those anticipated in these forward-looking statements. Although these statements are based upon assumptions that the company believes to be reasonable, they are subject to risks and uncertainties. Please review this factor section relating to our operations and the business environment, which are contained in our second quarter 2022 form 10Q and related documents with the Securities and Exchange Commission. Please note that SPOKE assumes no obligation to update any forward-looking statements from past or present filings and conference calls. With that, I'll turn the call over to Vince.

Thank you and good morning, everyone. And thank you for joining us this morning for our second quarter 2022 earnings call. Today, we will share with you an update on how our strategic business plan is progressing, as well as our financial results for the quarter. I'll start by reviewing the agenda for today's call. The order will be as follows. We will begin by providing an update on our strategic business plan. Next, we will provide an overview of our second quarter and year-to-date 2022 results, as well as our year-to-date pro forma results. We'll cover our updated guidance for 2022, as well as one-time restructuring costs related to our strategic business shift. And finally, we'll wrap up and take your questions. Since the implementation of our strategic business plan five months ago, we've been operating a cash flow business model featuring our wireless service line and our CareConnect Suite software solution offerings with the goal of returning capital to shareholders. I'm happy to announce today that our strategic business plan is tracking well ahead of schedule. The streamlining of management and employee headcount that we had previously announced on February 17 is now substantially complete. Our 60-day Warrant Act notification period ended in mid-April, so we had at least two months in the second quarter in our new operating posture. Our operating expenses and capital expenditures are coming in favorable to our plan, and we're confident they will continue to do so in the second half. We've delivered on our strategic objectives of driving revenue from our two service lines and investing in a targeted and limited manner such that we can return capital to shareholders. We expect to continue to do so. With our renewed focus on our CareConnect suite of software solutions, we've been able to increase year-to-date software bookings by 23% year-over-year with 32 of these deals worth over six figures each. Most of this positive variance came in the second quarter as our software sales force was focused 100% on our CareConnect suite solutions with no other distractions. Additionally, our customers have reacted very positively to our plans for investing in and enhancing our contact center, alerting, and mobile solutions that they already use, know, and love. They've welcomed this news with open arms and, importantly, with sales orders. Additionally, our sales representatives have been able to visit many more sites in person this past quarter relative to the last two years, and that is having a positive effect. In short, our focus has resulted in our second quarter software bookings increasing by 51% over the same period a year ago. And there's plenty more in the pipeline. And while it takes time for these bookings to complete implementation and show up in revenue, We believe this is a good leading indicator for the health of the business. And as you'll hear the details from Mike in a couple of minutes, our wireless business continues to achieve plan with a record low unit decline. Plus, we've rolled out our new encrypted oppo numeric pager we have named the Gen A. Our goal here is to rejuvenate interest and reduce resistance to pagers. And while we're in the early stages, so far, so good. We have approximately 2,400 units in service and growing. They're commanding a much higher RPO in the market due to their increased feature set that includes improved screen resolution, battery life, and multiple other features, functions, and benefits. Our wireless sales team is excited about this offering, and our customers are too. We expect to report further progress on this initiative as the year progresses. You'll also hear from Mike with respect to our year-to-date pro forma results, but the high-level answer is, we would have generated well over $10 million in adjusted EBITDA, which is defined in the earnings release tables. This is our non-gap calculation of cash flow generated by the company before networking capital items in the first half of the year, assuming we had implemented the plan on January 1st. Our expectation, reflected in our guidance, is to achieve plan this year and continue making progress on cash flow generation and revenue stabilization into 2023 and beyond. This will take time, but we've gotten off to a great start. We expect to generate more cash this year than we anticipated when we announced the plan in the first quarter. And we continue to make progress building our partnership relationships and opportunities. Subsequent to the end of the second quarter, we signed a distribution agreement within technology, a leading value-added IT distributor driving technologies into the Pacific Asia IT channel. InTechnology's distribution ability to provide pre- and post-sale support implementation services in a 24x7 support desk made the company a perfect distribution partner for Spoke. We believe that InTechnology and its partner network will enhance Spoke's ability to provide meaningful outcomes for our clients in the Asia-Pacific region. Now, as you know, we announced our strategic business plan in February. We increased our quarterly dividend payment by 150%. from 12.5 cents per share to 31.25 cents per share. We are returning $1.25 per share this year in dividends to our shareholders, and we're already halfway there. Since the implementation of the plan in February, $12.7 million in cumulative capital has now been returned to spoke shareholders. This return of capital includes distributing our annual cash flow, which will continue to fund the majority of our dividend distribution going forward, supplemented by cash on our balance sheet. As always, the declaration and payment of future dividends is subject to the Board's discretion and will depend on financial and legal requirements and other considerations. At this time, the company has not repurchased any shares using the Board-authorized share repurchase program of up to $10 million of the company's common stock. Along with our advisors, we will continue to evaluate our capital allocation strategy as SPOKE continues its transition through our strategic pivot this year and beyond. Fiscal year 2022 continues to remain a transition year for SPOKE, given the implementation time required to execute and operationalize our strategic shift to a cash flow focused model. Again, the good news is we've gotten off to a great start. As we've previously mentioned, we continue to anticipate that this transition will be completed by the end of 2022, with the majority of our rightsizing already behind us. We expect the company to be adjusted EBITDA positive going forward and will cover a significant portion of the third and fourth quarter dividends through cash flow. We will reach our full cash flow run rate by the end of 2022 as we head into 2023. As we move through this transition, we will continue to update shareholders on our progress. Spoke has an excellent track record of driving revenue from our business lines and enjoys the market leadership position and hospital call center software solutions in narrowband personal communication wireless services. We have over 2,200 healthcare organizations as customers, representing the who's who of hospitals in the United States. We've built our solutions over many years and have longstanding, valuable customer relationships. We honor and respect our customer service in providing world-class healthcare. We value our place in their communications ecosystem. The overwhelming majority, or over 80% of our revenue, is recurring in nature. We are a company with no debt, which provides us significant flexibility. We continue to remain focused on investing and enhancing our integrated CareConnect ecosystem in order to continue our longstanding relationships with the nation's leading healthcare providers. We believe these attributes, combined with our dedicated and committed employee base, are what allows us to generate significant cash flow into the future and return capital to our shareholders. And with that, I'll now turn the call over to Mike Wallace, our Chief Financial Officer and Chief Operating Officer, who will review our second quarter financial results. Mike?