Greetings and welcome to the iMedia Brands Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note this conference is being recorded. At this time I will turn the conference over to Michael Porter. Mr. Porter, you may now begin.

Good morning and thank you for joining us. With me on today's call is our CEO, Tim Peterman. We issued our earnings release earlier this morning. If you do not have a copy, you may access it through the News section of our IR website. The earnings release is also in exhibit to our Form 8-K which was filed this morning and can be accessed through our website at imediabrands.com. Some of the statements that we make during this call are considered forward-looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance and speak only as of today's date. We undertake no obligation to update or revise these forward-looking statements for any reason. We believe the expectations reflected in our forward-looking statements are reasonable but give no assurance such expectations or any of our forward-looking statements will prove to be correct. For additional information, please refer to the Safe Harbor statement in today's earnings release and our SEC filings. Finally, we make references to non-GAAP measures on this call such as adjusted EBITDA. The information required to be disclosed about these measures, including reconciliations to the most comparable GAAP measures, are included within our earnings release. Now I would like to turn the call over to Tim.

Thank you Michael and good morning everyone. I am proud to say we posted a solid second quarter that exceeded guidance we provided in May. If you think about it from our standing start on May 2nd the task of arresting a nine month long $33 million adjusted EBITDA decline year-over-year wasn’t going to be an easy thing to do. We had to successfully do the following; streamline the organization by reducing our non-variable workforce by 20%, rebrand our flagship television network to ShopHQ including adding six new hosts, redesigning eight sets, improving our website, and creating compelling new loyalty program that is launching in November. We had to create innovative new programming events like It's The Dubrow Show with Consult Beaute which is a new reality based weekly live show from the Dubrow's home and Dr. Terry Dubrow's doctor's office in California. We had to deliver compelling new televisions events like our live broadcast from the NFL Hall of Fame in Canton, Ohio where we launched Invicta's officially licensed NFL Luxury Watch collections. We had to partner with our key existing vendors to collectively improve their trust in us and our ability to plan and perform together. Important brands like ISOMERS, Waterford, Victoria Wieck, Serious Skin Care, Joyce Giraud, MacKenzie-Childs, Gems en Vogue, and Samsung. We have defined innovative new products and brands to offer to our customers examples like [indiscernible] the world renowned artist who will offer his limited edition artworks and other products on ShopHQ. Our watch collaboration with the U.S. Army and Invicta the first of its kind, several new luxury eyewear brands like Fendi, Gucci, Prada, and Michael Kors and the new timepiece brand Bulava [ph]. We needed to begin to optimize the merchandizing mix by shifting more time into our strong categories of Beauty and Wellness and jewelry and watches, and out of our still fledgingly categories fashion and home. We had to establish a passionate entrepreneurial culture which is nimble and focused on the same single goal and most importantly we had to define a new growth enterprise strategy that will help our team create sustainable, consistent shareholder value growth. In May I explained our David & Goliath strategy to use our own existing strengths in niche, oriented shopping entertainment to profitably scale our business rather than try to beat larger entrenched competitors who offer broad based general shopping entertainment featuring all product categories for all viewers. Our plan includes utilizing multiple monetization models TV retailing, e-commerce, advertising, and service fees. For example using an advertising e-commerce business model we are on pace to launch in November the first male oriented shopping entertainment service called Bulldog Shopping Network. We will sell and advertise men's merchandise and services and the aspirational lifestyle associated with its brand and personalities. Bulldog will be produced in Minnesota at our corporate headquarters alongside our flagship ShopHQ network. Our advantage in building this new men's network is threefold, our existing vendor strengths in electronics and watches, our ability to produce compelling live remote television from interesting relevant places, and our understanding of our existing male customers on ShopHQ. In addition we are on pace to launch LaVenta, a Spanish language shopping entertainment television network celebrating the Latin American culture. Our planned launch is March 2020 and it will be produced from studios in Miami. Again, our advantage in launching this new television network is three fold; our vendor strength in the beauty and jewelry categories which are the most popular categories in the Latin American community, our strong management team and connections in Miami, and our strong relationships with MSOs, ISPs, and broadcasters to secure distribution for this new service. Also included in our new plan is the growth of our iMedia Web Services which today is our third party logistics business that provides three peel services to G3 Apparel for some of its key direct to consumer brands. In the future we will introduce additional complimentary services. Therefore in July as a result of these strategic initiatives we changed our corporate company name to iMedia Brands and launched a new corporate website at imediabrands.com. I want to thank everyone for their time this morning and remind our shareholders that I was part of the Invicta Investment Group that bought shares priced at $0.75 in early May which was a price that was approximately twice the market price at that time. We did that both Eyal Lalo and myself because we both knew this business well and understood the significant value creation opportunity here in the hands of the right kind of long-term operators. We also knew there was a lot of smart work needed to be done quickly to reestablish profitability and introduce a new culture with an entrepreneurial attitude and edge. We did that so that part is complete, however, we know there is still a lot of hard work required to complete this turnaround which includes reigniting revenue growth at our flagship network ShopHQ, the launch of two new television networks Bulldog and LaVenta and the continued growth of our iMedia web services. I look forward to leading this passionate team of employees and vendors on this next stage of our journey. With that I will turn it back over to Michael Porter who will go into a bit more detail on the second quarter. Michael.

Thanks Tim. I'll start with an overview of our second quarter financial performance then provide expectations for Q3 and Q4. Our results in the second quarter reflect a concerted effort to break the negative trends of the last three quarters where we posted significant adjusted EBITDA losses. We were able to accomplish this by slowing our revenue declines, improving our gross profit rates, and significantly reducing our run rate expenses with the elimination of $15 million annually in overhead. This all resulted in positive adjusted EBITDA and an $8.7 million improvement compared to the first quarter. Consolidated net sales for the first quarter were $131.5 million which was a decrease of 12.8% when compared to the second quarter of last year. This compares to a 16% decline in the first quarter and a 15.7% decline over the previous three quarters combined. Over the last three years net sales in the second quarter have been approximately 5% less than net sales in the preceding first quarter. However, the second quarter we achieved flat sales compared to the first quarter and we believe that this improvement is a strong signal that our revenue performance appears to have stabilized as we are reestablishing our operating fundamentals. Our return rate was 19.8% in the quarter which was an increase of 110 basis points year-over-year. This increase was driven by rate increases in both our fashion and accessories and beauty and wellness categories. Our return rate was 40 basis points better than the 20.2% rate reported in the first quarter. Our average selling price in the quarter was $68, a 24% increase year-over-year. This was primarily attributable to higher ASP's in the jewelry, watches, home and beauty categories combined with the sales mix shift into the higher ASP categories of jewelry and watches. Our gross margin rate in the first quarter was 36.3% which was 790 basis points better than the 28.4% rate recorded in the first quarter and still 330 basis points better after adjusting for the $6 million inventory impairment that was recorded in the first quarter. The improvement compared to the first quarter was driven by rate improvements within fashion and accessories, beauty and wellness, and home and consumer electronic categories. Our second quarter operating expenses totaled $57 million, this includes $5.2 million in restructuring expenses related to the 20% reduction in non-variable workforce that occurred within the quarter. Our distribution and selling and general and administrative operating expenses combined to decrease 8.7% or 4.7 million compared to the first quarter. This meaningful improvement reflects the restructuring that enabled us to create a flatter and more nimble organization. Variable expenses as a percent of net sales were 9.5% for the quarter compared to 9.8% in the first quarter. As a reminder variable cost include our primary operational functions, our customer solutions group, our fulfillment and logistics center, and our credit and payments group. The improvement in rate compared to the first quarter when we had the same sales volume was primarily driven by sales mix shift into the higher ASP categories of jewelry and watches which by design reduces our variable expense rate. Moving on to the balance sheet we closed the second quarter with cash of $21.6 million, an additional $5.7 million of unused availability on our revolving credit facility. Our net debt was $48.5 million. These balances reflect the $11 million in additional working capital secured at the end of the first quarter related to the Invicta Watch Group investment transaction. This transaction included a $6 million sale of stock at $0.75 per share and a $5 million increase in our vendor line of credit with the Invicta Watch Group family of brands. Our inventory balance at the end of the second quarter was $62.4 million compared to $65.4 million at the end of the second quarter of 2018. This year-over-year decrease reflects the $6.1 million inventory impairment in our home and fashion categories that was recognized in the first quarter. Regarding capital expenditures during the quarter, we spent approximately $1.7 million on capital projects primarily reflecting investments and upgrades to our website and IT infrastructure. We now expect capital expenditures to be between $7 million and $8 million in fiscal 2019. From a tax perspective we have approximately $338 million in federal NOLs that are available to us to offset future taxable income. In terms of our outlook we expect continued revenue declines in the third and fourth quarters but at a decreasing year-over-year rate as we demonstrated in the second quarter compared to the first quarter. Similarly we expect continued adjusted EBITDA increases in the third and fourth quarters but at an increasing year-over-year rate. Like Tim I am pleased with our second quarter performance. This quarter was about setting the foundation to execute on our new interactive media growth strategy and we believe we are in a much better position now than we were three months ago. We look forward to speaking with investors in the coming months and sharing our strategy as we continue to work to unlock value in this company. With that Tim and I are happy to take your questions.

[Operator Instructions]. The first question is from the line of Alex Fuhrman with Craig-Hallum. Please proceed with your questions.

Great, thank you very much for taking my question and certainly nice to see the results coming in ahead of your prior guidance here in the second quarter. I'd love to ask, I know this is subsequent to the quarter but last week changing the name of the TV network back to ShopHQ, is there been enough time to see any immediate trend, is it fair to assume that sometimes when brands like yours change the name of the network is with the expectation that you're going to be taking a step back to take two steps forward in the future or is it possible that it's because your customers remember the ShopHQ name from not too long ago that perhaps there hasn't been as much impact, just trying to figure out what you've seen here in the past week with the name change?

Alex hello, thanks for the question. Nice to talk to you this morning. So on the name change we tried to -- this network has changed its name a couple times. We tried to learn from the past and we started with this name change about six weeks ago. It was teasing it on air with e-mail campaigns. We actually sent a postcard signed by me to our top customers letting them know about it. So we wanted to bring them along on the journey. We had contests on air where they talked about our new logo and so when we made that final turn which was last week it was no big thing in terms of impact, in terms of customer, in terms of the website penetration all those different things that we did see an impact on in 2015 we didn't see any kind of impact that lasted more than a couple days as we shifted over on everything. So we're very pleased with our pre-promotional efforts to make sure that the customer knew about this change. And you're right, since we moved back the name we were before there was certainly some muscle memory there.

Well that's certainly good to hear and it certainly sounds like you have a number of exciting irons in the fire here. Curious with the upcoming launch of the loyalty program in November, is that something that's really going to be targeted towards getting your best customers to spend more, is there any anticipated negative impact to gross margin in Q4 associated with that?

You know that's a great thing about this program. So in terms of design and intent it is really to engage both our heaviest and most frequent buyers as well as attract and engage new customers. Certainly around the proposition of when they join our loyalty product program, getting refunds for their shipping charges is something that we think will be very engaging for them. So it is a program that we're familiar with. We've been talking to these folks for a long time and so we look forward to rolling it out. And it would not and will not be a drag on gross profit if that's the question. It's not designed to cost us additional monies for that.

Okay, thank you for that. And then I thought that it was certainly interesting the launch of LaVenta upcoming in March and it sounds like that's going to be broadcast out of Miami. Can you tell us where you're going to be broadcasting from and are you expecting to have a meaningful CAPEX this year or early next year related to set construction, cameras, things like that?

So we will be having -- we are building out a studio in the Invicta headquarters in Miami. So that will be in terms of additional cost and capital outlay it won't be material because we're taking advantage of an existing facility already in the market with existing relationships. So that of capital spend and an ease of transition is one of the important reasons why we moved in this direction with LaVenta. So, I think we're set on that as well as set on the launch with Bulldog. We have plenty of equipment here in Minnesota that we will be using, some of it will be moved down to Minnesota, some of it will be used for the additional airtime reporting that we will be doing for Bulldog. But it's not a material amount of capital, that's the great thing about this model that's been replicated in general entertainment as well where you have a major network call it HDTV that launches a fine living or something like that. We have the infrastructure, the talent, the producers, the vendors, and the relationships and the important relationships with the distributors to put up these new networks with relatively little incremental cost compared to the moat around what anybody else would have to do to get into this business. So it's something that we feel good about and we are on track with.

Okay, thank you for that color Tim. And then lastly if I could just ask gross margin obviously that was under a lot of pressure in the fourth quarter and the first quarter. Much better here in the second quarter, a little bit better than we had been looking for. Can you talk about what's driving that because it sounds like your return rates were still up year-over-year, so is that the mix, is that in some other factor, do you feel like that improvement on gross margin can be sustained or do you need an improvement in the return rates to drive things further?

Well, let's take a step back. So, 90 days -- we've been here 90 days and there's a lot of fixing to do on the revenue side as we talked about and on the gross margin. And that means when we talk about gross margin we mean merchandize margin and we mean shipping margin. They all work together and so other than providing any kind of color in terms of guidance on gross margin I just can tell you that the main focus of what we're doing is building plans that have a line of sight that moved out more than 30 days which is what the company historically used as a line of sight and how it built this business. So, with a longer run rate on how we plan together with our vendors and how we build the product assortment over 90 day, six month period will in our view naturally translate to stronger gross margin, stronger coordination on shipping promotion, strong coordination on the prices -- that we think will engage the airtime that we're providing. Those are the kind of things of how we're taking care of gross margin and why we think long-term we will have a strong gross profit percent more so than we've had in the past. But other than that it's just too early to give you any kind of forecast.

Okay, appreciate that color. Thank you very much and wish you the best of luck here in the third quarter.

Thanks Alex.

Thank you. We have reached the end of our question-and-answer session. I will now turn the call over to Tim Peterman for closing remarks.

I want to thank everybody for joining us today and we look forward to talking to everybody again next quarter as we continue this journey. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.