TSS, Inc.

Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the TSS first quarter 2023 earnings conference call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you, and I will now turn the conference over to John Penver, Chief Financial Officer. You may begin.

Thank you, Abby. Good afternoon, everyone. Thank you for joining us on our conference call to discuss the first quarter 2023 financial results. I'm John Penver, the Chief Financial Officer for TSS, and joining me today on the call is Daryl Dewan, the President and Chief Executive Officer for TSS. As we begin the call, I'd like to remind everyone to take note of the cautionary language regarding forward-looking statements contained in the press release that we issued today. That same language applies to comments and statements made on today's conference call. This call will contain time-sensitive information as well as forward-looking statements, which are only accurate as of today, May 15th, 2023. TSS expressly disclaims any obligation to update, amend, supplement or otherwise review any information or forward-looking statements made on this conference call to reflect events or circumstances that may arise after the date indicated, except as otherwise required by applicable law. For a list of the risk and uncertainties which may affect future performance, please refer to the company's periodic filings with the Securities and Exchange Commission. In addition, we will be referring to non-GAAP financial measures. And a reconciliation of the differences between these measures with the most directly comparable financial measures that are calculated in accordance with GAAP is included in today's press release. Darryl will kick off today's call with an overview. I'll provide some detail on our first quarter 2023 results. And then I'll turn the call over to Darryl to discuss our strategy and our direction going forward. Darryl?

Hey, John. Thank you very much. Hello, everybody. Earlier today, we released a press release announcing our financial results for the first quarter of 2023. A copy of that release will be made available on our website at www.tssiusa.com. Overall, we made great strides on our plan in Q1. Our plan can be summed up as number one, operationally restructure our systems integration business. where we were in a loss-making position in the latter part of 2022, and we were not able to demonstrate to our key customer our ability to scale that business. We talked about that in our Q4 earnings call, and we're going to continue to focus on that as we go forward. Number two, build out a high-level team. This will support our own ability to drive demand for our existing services. We rely heavily on a single large OEM customer and we must be selling directly to end customers and in many cases alongside our OEM partner. Number three, develop capabilities to build our core strengths and open up new markets to drive significant long-term growth. Our first quarter results were largely in line with, although they were directly impacted by the slippage of two large reseller transactions representing almost $600,000 in combined profit. We have or expect to close those transactions in the second quarter. While not in common with larger deals, we need to develop more pipeline and cover for these types of situations, something we commented on in our Q4 earnings call and something that we continue to focus on. During Q1, we made significant progress to lower the run rate of our labor costs and to improve overall efficiency in our systems integration business in particular. We've reduced our total headcount, including contract labor, in this business by 25% since December 31st, 22. And you will see the impact of this in our second quarter and beyond. Todd Murat, Senior Vice President of Operations, has done a lot to improve the efficiency of our factory and to return his business to profitability. Compared to the first quarter of 22, revenues in this business were up 90% as our rack and stack and our fulfillment activities both increased from higher customer demand. We have also made planned investments during this quarter. We hired an experienced sales leader to drive revenue growth and business growth in both our facilities management and our systems integration business. We are looking to expand our customer base and generate more leads for our services and we expect over the next several quarters you will see the benefits of these investments. We anticipate that our second quarter results will show a substantial increase in revenues and that we will return profitability. I'll dive into this further, but let me first turn it back to John to provide some financial detail.