JOANN, Inc.

Welcome to the fiscal year 2022 second quarter earnings call. My name is Darrell and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then one on your touchtone phone. Please note that this conference is being recorded. I will now turn the call over to A.J. Chain. A.J., you may begin.

Thank you, Daryl, and good afternoon. I would like to remind everyone that comments made today may include forward-looking statements, which are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from management's current expectations. These statements speak as of today, and the company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events, new information, or future circumstances. Please review the cautionary statements and risk factors contained in the company's earnings press release and recent filings with the SEC. During the call today, management may refer to certain non-GAAP financial measures. A reconciliation between the GAAP and non-GAAP financial measures can be found in the company's earnings press release, which was filed with the SEC today and posted to the investor relations section of Joanne's website at investors.joanne.com. On the call today from Joanne are Wade Michelon, President and Chief Executive Officer, and Matt Suess, Chief Financial Officer. I will now turn the call over to Wade.

Thank you, AJ. Good afternoon and thanks to everyone on the call today for your interest in Joanne. This is an especially exciting time in our organization as we continue to roll out a wide range of new growth initiatives as the nation's leading sewing and crafts retailer. Our second quarter results reflect the combined efforts and dedication of all our team members. Some of the factors underpinning our continued momentum include our excellent merchandising and store operations execution and our robust omnichannel capabilities, resulting in record net promoter scores. Through the strength of our brand, our unique product offerings, and truly one-of-a-kind omnichannel shopping experience, we are driving significant growth in customer engagement from our most loyal customers and also from our newest Joann sewers and crafters. Matt will cover our financials in more detail, but I also wanted to take the opportunity to highlight the continued strength of our financial performance. Our adjusted EBITDA for Q2 was $23.5 million, an increase of $27.8 million compared to the second quarter of fiscal 2020. Joanne also reported the highest gross margin percentages in our company's operating history during the latest quarter, reflecting a 460 basis point improvement on a two-year stack. As a result, we reported a 17.8% increase in gross profit dollar growth on a two-year stack during Q2, which is an acceleration from our 13.5% growth in the first quarter of this fiscal year. Joanne remains ahead of our internal plan for adjusted EBITDA for the first half of operating results, and financial performance, which positions us well to deliver on our planned earnings for the full year. In Q2, we took meaningful steps to further strengthen our balance sheet with a new term loan that offers extended debt maturity and improved pricing terms. We also completed a sale-lease pack of our distribution center in Opelika, Alabama. The net proceeds from this transaction were used to pay down our existing bank debt. These measures and the strength of our business will allow us to continue to invest in our growth initiatives and also support our new dividend policy which we recently announced. We are especially excited by the initial results from the launch of our international e-commerce platform, through which in a matter of weeks we were already shipping to 29 countries and across every major product category. Though we are very early stages of expanding our geographic presence, increased global reach will provide Joanne with margin enhancement and growth opportunities going forward. We expect to ship to additional countries later this fall with the next phase of our international e-commerce rollout. Outside of the U.S., there is simply no other company that offers what Joanne can in terms of breadth of assortment and our related value proposition, in particular across the stowing space, and we intend to leverage our offerings accordingly. Historically, the second quarter is Joanne's lowest quarter in terms of sales and earnings contribution due to the inherent seasonality of our business. For perspective, Q2 typically represents 10% or less of our annual adjusted EBITDA. Last year was, of course, an exception as we had an unprecedented sales growth due to peak levels of spending on PPE by consumers, as well as a temporary closure by one of our major competitors across all of their store locations. As a result, our total comparable sales increased by 54% in Q2 of last year. While Q2 was by far our most anomalous quarter last year, we don't expect year-over-year comparisons to fully normalize into the beginning of the fiscal year ending January 2023. For the balance of the current fiscal year, we continue to believe that the two-year comparisons are the most appropriate framework from which to evaluate our performance. We've had some large selling categories negatively impacted by the COVID Delta variant. We continue to see solid overall sales trends on a two-year basis. We reported 8.1% total comparable sales growth versus the second quarter of fiscal year 2020. While this was below our expectations, the revenue shortfall was largely offset by our stronger than planned margin performance. Customers also continue to respond favorably to our omnichannel capabilities. Omnichannel sales grew by 115% on a two-year stack and reached $53.5 million in the second quarter, representing 11% of our sales in Q2 compared to 5% over the same period in fiscal 2020. Our bogus penetration now accounts for around a third of our total omnichannel revenue, and our curbside pickup is now ranked as a best-in-class service. Importantly, in Q2, customer retention and acquisition metrics ran ahead of pre-COVID levels. From our top 3 million and newly acquired customers, our sales trends were up double digits on a two-year basis, at or above our expectations. On a sequential basis, we experienced a sharp increase in the number of new customers, doubling their growth from the first quarter. Also during Q2, we did experience a pullback with non-core customers, who tend to be more seasonal in nature in their shopping habits. Our data indicates that these non-core customers were more engaged in other leisure time interests and services during the quarter, such as outdoor activities and summer travel, given the post-vaccination reopening environment. As I mentioned earlier, I'm especially proud of the continued progress in customer satisfaction at Joann. Our net promoter scores have consistently improved in each consecutive month throughout this year and achieved record highs within the quarter. I would like to acknowledge these results, especially in light of all of our team members' efforts in following appropriate COVID protocols with the goal of keeping our customers safe. We are also pleased with the sales and financial returns to date from our recent store remodels, which are exceeding their pro forma targets and are transforming the sewing, arts, and crafts customer experience. While we're still in the very early stages of our multi-year store refresh initiative, our net promoter scores at newly refreshed stores are meaningfully outperforming our store fleet overall. Looking forward, we will continue to carefully monitor and identify ways to mitigate inflation. To date, we have been effective in managing overall inflationary pressure despite the well-documented pressures on feedstocks, labor, and logistics. In that vein, the most critical shorter-term issue we are currently facing is the overall highly stressed supply chain, at the epicenter of which is ocean freight availability and related costs. For perspective, we are currently required to pay as much as 10 times our historic average container rate to secure overseas shipments. Nevertheless, we have done what is required to ensure that we will be in a strong in-stock position for the all-important back half of our year. While we face these issues in the short term, we're managing through it by striking the right balance between driving top-line growth and gross margin improvements. Ultimately, we expect these near-term supply chain headwinds will prove to be transient and they'll ultimately become tailwinds. Until then, we'll continue to drive smart enterprise choices that keep our customers engaged and also create value for Joann. Finally, I'd like to express our concern for all Joann team members and others who have been impacted by Hurricane Ida. Please know that you are in our thoughts and we continue to be ready to help you in any way that we can. With that, I'd like to turn the call over to Matt to discuss our second quarter financial results in more detail.