SmileDirectClub, Inc.

Greetings. Welcome to the SmileDirect Club first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. 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. Please note this conference is being recorded. I'll now turn the conference over to your host, Jonathan Fleetwood, Director of Investor Relations. You may begin.

Thank you, Operator. Good morning. Before we begin, let me remind you that this conference call includes forward-looking statements. For additional information on Smart Direct Club, please refer to the company's SEC filings, including the risk factors described therein. 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. I refer you to our Q1 2022 earnings presentation for description of certain forward-looking statements. We undertake no obligation to update such information except as required by applicable law. In this conference call, we will also have a discussion of certain non-GAAP financial measures, including adjusted EBITDA and free cash flow. Information required by Regulation G of the Exchange Act with respect to such non-GAAP financial measures is included in the presentation slides for this call, which can be obtained on our website. We also refer you to this presentation for reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. I'm joined on the call today by Chief Executive Officer and Chairman David Katzman, Interim Chief Financial Officer Troy Crawford, and Global Head of FP&A and Investor Relations Jesse Weaver. Let me now turn the call over to David.

Thanks, Jonathan, and good morning, everyone. Thank you for joining us today. I want to start by thanking our team members for their tireless focus and commitment to our mission of democratizing access to care, while delivering quarter-over-quarter revenue growth of more than 20% and shipment growth of more than 15%. Q1 financials performed according to plan, and we made considerable progress in strengthening our liquidity position with our $255 million secure debt facility. While we have sufficient cash on the balance sheet to hit our target of generating positive cash flow by 2024, This facility, which is secure against our accounts receivable, cash, and certain IP, gives us financial flexibility to continue making investments in key strategic growth areas of our business, like partner network, going after the higher income consumer, small shop expansion, and advancing our oral care products. With the launch of our fast-dissolving whitening strips, we successfully ended the quarter with our oral care products available in more than 16,000 retail locations. which is up from 12,900 stores at the end of Q4. We also continued our track record of oral care innovation with the introduction of our patented wireless premium whitening kit. We expect continued success in this category for years to come as our brand, product offering, and retail partnerships gain momentum. We are also pleased with the progress we've made on profitably expanding our smile shops. At the beginning of the pandemic, stay-at-home mandates and social distancing prompted us to reevaluate our small shop footprint, focus on kits where possible. Over the past two years, we have continued to reassess our small shop approach and ensure our shops are driving incrementality to the business. We've also developed sophisticated models that enable us to better predict the most profitable channel, shops or impression kits, for driving incremental demand in a market that may not currently have a shop location. In Q1, we opened seven net new shops in the U.S., and the early results on this strategy are promising. In the coming quarters, we will continue to monitor progress and update you on further shop and event expansion into the markets we see the most promise, driving incremental demand with scans. We've also made progress in the partner network. During the quarter, we continued to focus on growing Smile Direct Club's awareness and credibility with GPs while making operational improvements to our model that are paying off and improve practice productivity. Throughout Q1, we saw improvements in both submissions per practice and increases in total practices in our network. As Troy mentioned during our last call, the focus has been on tightening the model to maximize engagement and productivity through submissions within active practices. Before we scale the sales force to drive further practice growth, practice productivity is an important metric which ensures we are balancing the growth of our pipeline with our organizational focus on being the best possible partner to our GP network. and at the same time driving the highest possible returns and generating near-term profitable growth. Our commitment to partner network is as strong as ever. This initiative is expected to be a growth engine for the company that not only provides us with an incremental source of revenue from our core customer demographic through GP submissions of their existing patients, but also creates a critical entry point into our business for the higher household income demographic. As you know, our current core customer has a median household income of $68,000. In many cases, our safe, effective teeth straightening option was the only one that they could afford. We are extremely proud that our award-winning telehealth platform has enabled us to democratize access to care for these 1.7 million customers and county. With their support, we've been able to expand the category while building this incredible brand with 60% aided awareness, becoming the number two player in clear aligners worldwide, and growing revenue at a compound annual growth rate of approximately 45% since 2017. But as we've mentioned, since our Q2 call last year, the core customer is highly sensitive to the impact inflation is having on discretionary spending. In Q1 of this year, the acceleration continued with non-discretionary inflation increasing for our core demographic to roughly 9% versus 7.8% in Q4. While we have taken steps to mitigate inflation within our business through price increases, we've also been able to support our customers through our vertically integrated financing program by not raising their small pay monthly payments. This strain on our core customer's ability to spend on discretionary high ticket items has had a meaningful impact on our ability to grow this segment. And it's taken us from a record revenue quarter just one year ago in Q1 of 2021 to where we are today. While we believe strongly in our mission to democratize access to care and in our ability to achieve our long-term growth targets with this demographic, We also believe that the quality of our product, the convenience of our telehealth offering, and the awareness of our brand provides the right to win by taking share from traditional wires and brackets, as well as other more expensive clear liner therapies. We know traditional orthodontic customers come from higher income households. They expect the same level of quality treatment and similarly rely on dental professionals, friends, and online reviews to make their decisions about orthodontic care. But they also have different needs and wants from those of our customers today. While we continue to market to the higher-income customer by building credibility through our Challenger campaign, we recognize that higher-income households need more from us than education and awareness of our brand. They need to start their journey with a general practitioner, which for our business means they would start their journey in either a small shop within a dental practice or through our partner network, which again underscores the importance of our investment and focus on growing our partner network channel. We know that this channel serves a dual purpose in being both an incremental revenue stream for us with our existing customers today, as well as an access point for our higher income customers by allowing them to start their journey the way they seem to prefer, which is through a neighborhood GP office supplemented with our convenient telehealth platform and our advanced connected tools. The research we've done on the higher income demographic also highlights other areas in our offering that we can modestly adjust in our service model at a higher price point to greatly improve our offerings appeal. These insights also build on the value proposition we can bring to our partner network model for the GP. While we are not ready to share the specific details of this premium offering, the team is working diligently to get a test in market as soon as possible and begin rolling out in late 2022 or early 2023. As you may recall, in early Q1, we announced that in light of the current macro environment, we were reevaluating our international footprint for near-term profitability, right-sizing our operating structure, and allocating capital to core growth initiatives that can produce the highest return on investment. Our team members have demonstrated an incredible amount of grit and dedication as we've navigated this transition together. While I'm pleased with how we've operated during this time, as with any transition of this magnitude, there have been challenges. After the transition took place in February, we began to experience some operational challenges within our customer care team that have unfortunately impacted our customer experience and latest Net Promoter Score. The team acted quickly and built a remediation plan to bring us back to our target service levels in the coming weeks. Our customers are a top priority, and we always aim to deliver a best-in-class experience. In April, we spoke directly to our customers to acknowledge that we were not currently delivering against the high expectations we have set for ourselves and what they have come to expect from SBC. These operational challenges are temporary in nature. We have made significant progress already that will be reflected in our NPS in future quarters. To close, I just want to reiterate my appreciation to the team. As I mentioned, the transition was a very difficult decision for me and the leadership team, and in spite of the short-term challenges we've been facing operationally, I firmly believe in our direction and focus. This is not a story of retrenchment, but rather a story of highly focused investment in our game-changing platform. A few days ago, we announced that we won the MedTech Breakthrough Award for Best Telehealth Platform. MedTech Breakthrough is an independent market intelligence organization that recognizes breakthrough people, platforms, and products in the health, fitness, and medical technology industries today. Nearly 4,000 nominations were considered for the 2022 program. And as the winner of Best Telehealth Platform, we are the only company recognized in the clear aligner space in 2022. And we joined an impressive list of top companies in the larger digital health industry. While we recognize the need to deliver results against our financially strained core customer, this award underscores the importance of our breakthrough innovations. It also demonstrates the importance of the work we're doing to expand the reach of this amazing brand that we've spent the last seven years growing to the number one largest direct-to-consumer orthodontics brand and number two largest liner brand in the world. In a short period of time, this revolutionary platform has helped more than 1.7 million people get a smile they love while saving them over $5 billion collectively over traditional braces. And now I'll turn the call over to Troy, who will provide more detail on our Q1 financial results and full year outlook. Troy. Thank you, David.