The Lovesac Company

A question and answer session will follow the formal presentation. 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. I will now turn the call over to your host, Caitlin Churchill, Investor Relations for Lovesac. Thank you. You may begin.

Thank you. Good morning, everyone. With me on the call is Sean Nelson, Chief Executive Officer, Mary Fox, President and Chief Operating Officer, and Keith Signer, Chief Financial Officer. Before we get started, I would like to remind you that some of the information discussed will include forward-looking statements regarding future events and our future financial performance. These include statements about our future expectations, financial projections, and our plans and prospects. Actual results may differ materially from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the company's filings with the SEC, which includes today's press release. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them except as required by applicable law. Our discussion today will include non-GAAP financial measures, including EBITDA and adjusted EBITDA. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of the most directly comparable GAAP financial measure to such non-GAAP financial measure has been provided as supplemental financial information in our press release. Now, I'd like to turn the call over to Shawn Nelson, Chief Executive Officer of the Lutsak Company.

Thank you, Caitlin. Good morning, everyone, and thank you for joining us today. What a year it has been. In our 25th year in business, in true LoveSec fashion, we made meaningful strides across a number of areas as we strengthen our omnichannel infinity flywheel, reinforce our design-for-life product platform, and make the strategic investments necessary to profitably scale our brand and business for years and years to come. We crossed $700 million in revenue for the fiscal year, reflecting high single-digit growth for the year and tripled the revenues of just four years ago. That is against a category that was down mid-teens for the year and approximately flat now over the past four years. Despite industry headwinds, we delivered material gross profit dollar expansion with gross margins up into the high 50s. This more than covered the essential investments in product and capabilities to support sustained profitable growth. While net income was down versus last year on a reported basis, Excluding the non-recurring expenses related to the restatement that we've discussed previously, we are pleased to deliver net income growth for the year. We ended the year with $87 million in cash and zero borrowings on our credit facility, a very healthy balance sheet. These results include a solid fourth quarter performance in which we delivered year-over-year growth in revenues, gross profits, and net incomes. While a mid-quarter lull meant we fell just shy of our guidance for net sales, we managed costs well and were within the ranges for gross margin, adjusted EBITDA, net income, and diluted EPS, all of which Keith will review in detail later. The outperformance we have delivered compared to the industry over the past four years is underpinned by our focus on the customer, our advantage products, and our unique omnichannel business model with an infinity flywheel unlike any other. We compete in a large addressable market of over 46 billion. We continue to take market share every year, and yet we've barely scratched the surface of this huge and fragmented category. We approach this TAM and everything we do through what has always been a sustainability lens rooted in our very unique designed for life philosophy. We make things that are built to last a lifetime and designed to evolve. This approach in doing business delivers unmatched product longevity, which when paired with the services we intend to launch, should continue to drive long-term relationships with customers who love us. This is how we build a brand unlike any other. Our brand health is stronger than ever, gaining against our category with innovation that is changing the landscape of the home as seen in response to our new angled side and stealth tech product. We have best-in-class touchpoint economics. We estimate they are second only to Apple and Tiffany's, with incredible payback periods of about one year and 4x the sales-per-square-foot productivity compared to most of our competitors. Our advantage supply chain delivers orders to our customers in a matter of days, backed with evergreen inventory. And to the investments we've made, we've driven further supply chain efficiencies of late, enabling us to reduce inventory at fiscal year end by almost 20% without compromising delivery times or customer experience. In addition to strengthening our supply chain and distribution capabilities, our investments over the past few years have been focused on expanding our showroom footprint, building technology capabilities, elevating end-to-end customer experience, and ensuring our innovation engine is cranking. As we enter fiscal 25, We've made many of the key foundational investments and are now focused on driving our next phase of growth. We are actively developing many new products to meaningfully expand our total addressable market in the comfort seating category and new categories as well. The actions we are taking today will position us to capitalize disproportionately when the category returns to growth, which it will. We're continually refining our marketing strategies and tactics to draw new customers into our brand fold, deepen the relationship once in the brand fold, and enhance the overall lifetime value of customers. For fiscal 2025, our outlook begins with a conservative macro backdrop. It's the prudent thing to do. We're estimating another year of category declines, including a full year decline of approximately 10% with a modestly better back half than first. It's important to appreciate that our unique business model enables us to plan this way without giving up the upside. If the macro does better, we can ride the demand curve in near real time, a capability that very few of our competitors have. With that as a foundation, we expect to deliver net sales growth of approximately flat to up 10%, representing continued market share gains. Please note that we expect EBITDA to grow faster than sales over the long term, even while we continue to reinvest into SG&A and truly exciting future sales drivers. Lovesac is an outlier. We've achieved category-beating high growth rates for years. We're profitable, cash flow positive, have net cash, and an active product development pipeline that spans products and categories. Lovesac is in a position of strength with a truly massive opportunity ahead of us. We're primed to over-participate in a category rebound through continued market share gains on existing products. Then we'll compound that growth by expanding our brand and business even further. As powerful as our product platforms, innovation pipeline, and marketing prowess are, we would be nothing without our amazing people. A huge shout out to each and every one of our core hashtag Love SAC family. You make the magic happen. Speaking of amazing people, I will now hand the call over to Mary Fox, our President and Chief Operating Officer, to discuss the key operational highlights of fiscal 2024 and priority areas for the upcoming year, after which Keith will go over our financial results and guide in some more detail.