SmileDirectClub, Inc.

Greetings and welcome to the SmileDirectClub third 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. As a reminder, this conference is being recorded. I would now like to turn the call over to Jonathan Fleetworth, Operator and Director of Investor Relations. Thank you. 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 Small 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 Q3 2022 earnings presentation for a 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 a reconciliation of certain non-GAAP financial measures to the appropriate GAAP measures. I'm joining the call today by Chief Executive Officer and Chairman David Katzman and Chief Financial Officer Troy Crawford. 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 off by congratulating the entire SDC team for staying focused and delivering on both our key strategic initiatives as well as financial results, which are in line with the updated full-year outlook that we provided on last quarter's call. In spite of the macroeconomic challenges that we are all facing, our team has remained tirelessly focused on delivering on our mission and notched several wins throughout the quarter that further our progress toward democratizing access to a smile each and every person loves by making it affordable and convenient for everyone. In line with our overarching theme of delivering transformative innovations to market through rigorous financial discipline, I am pleased to report that our cost-cutting initiatives from Q1 have paid off during the last quarter, and we were able to improve year-over-year adjusted EBITDA by $24 million and free cash flow by $29 million, in spite of a $31 million drop in revenue from Q3 of last year. Troy will go into the details on how we were able to achieve these results during the quarter, but I do want to thank the team again for their tireless efforts during the past three quarters to further optimize our business operations. With the leverage in our operating model, these results reflect a much more efficient organization that is better positioned to achieve profitability with modest top-line growth. During the quarter, the team has also made significant progress on our future growth initiatives, and I'm pleased to announce that we are on track for our fourth quarter test market launch of our innovative patented SmileMaker platform featuring our mobile 3D scanning technology. This exciting solution combines many technology developments, including the functionality to digitally capture images with a mobile device and submit to our enhanced AI engine in order to develop an automated draft treatment plan. This will allow our customers to buy their aligners immediately after seeing both their new smile and how long it will take to straighten their teeth. As we discussed in our last call, this will shorten the buying cycle from days or weeks to minutes and provide our customers with a great experience. A small change of only 25 basis points increase in website sales conversions from our historical 50 basis points site conversion rate could drive an incremental $200 million in revenue and up to $160 million in EBITDA. Many developments and initial learnings from the SmileMaker platform launch will factor into our SDC Plus offerings which is our elevated service model that we have now officially branded as SmileDirectClub Care+. Our team's current focus is on a successful SmileMaker platform launch and to leverage our learnings in our Care Plus launch into four test markets that are now targeted for early Q1 2023. We are extremely excited for this pilot and the increased interest we've seen from professionals in the quarter builds an even stronger foundation for a successful Care Plus launch in the first quarter of next year. The breadth of our developments in this quarter is not limited to just the SmileMaker platform and our Care Plus solutions. We also rolled out our Gen 2 retainer manufacturing technology that improves both retainer comfort and drives manufacturing and cost efficiencies. With Gen 2 retainer manufacturing, we can now produce twice as many retainers with approximately the same headcount. As a refresher, our Gen 2 aligner manufacturing produces twice as many aligners with approximately one-third the headcount that was needed in Gen 1. Our retail offerings are also gaining greater share of the consumer's bathroom countertop. We released our new countertop flosser, which offers another premium, convenient smile solution for customers available both from our online store and leading retail locations nationwide. As we work to continuously expand our reach, it is imperative that we continue to win the hearts and minds of the dental community. And during the quarter, we were able to further solidify our credibility within the dental industry through membership in the Dental Trade Alliance. This builds upon our existing memberships, partnerships, and affiliations within the dental community, including influential organizations such as the American Academy of Clear Aligners, the American Association of Dental Boards, the National Dental Association, and Women in DSO. I also want to recognize our customer care team for the relentless efforts to provide our customers with the level of service and support they've come to expect from our brand. As we have discussed in our previous calls, our contact center team was able to overcome some temporary challenges in the first quarter of 2022 and quickly get back to industry-leading service levels, which are reflected in our updated third quarter NPS scores. Our third-party NPS score increased four points to 41 in our third quarter, providing further evidence that we are making progress towards becoming the aligner brand of choice and delivering a superior customer experience. Finally, I'm pleased to welcome Asmat Ali to the team as Vice President of Product. Asmat brings a wealth of experience to us from his roles at Lyft, Logitech, and HP, where he led product marketing innovation and incubation initiatives, which will be instrumental in executing our strategies to bring innovative solutions to the market. Asmat's role is critical to our strategic direction of expanding our reach through our focused portfolio of transformative innovations. While the platform we have built was initially tailored to the needs of the DTC channel, We recognize that fully unlocking the value of our business and truly expanding our reach requires looking at how the strategic assets we have built can be leveraged across the industry to serve more customers globally. We have built a robust manufacturing and innovative treatment planning infrastructure utilizing next generation technologies. We recognize the potential value these assets have for outside parties who have approached us to discuss partnership opportunities for wholesale and or white label aligner products. We're proud to be the largest USA-based aligner manufacturer with our headquarters here in Tennessee and with one of the largest 3D printing fleets in North America. We believe unlocking the potential for these partnerships is strong and added to our current focus on building the future of technology-driven orthodontia. Combining our innovative solutions and available production capacity along with our growing credibility in the dental market places us in a great position with additional options to further monetize our collection of business assets. And we'll share more on this progress in the coming months. In addition to the introduction of our patented SmileMaker platform, expanding the reach of our solutions, we have continued to make progress in our Care Plus pilot, which allows us to effectively compete in the broader addressable market, both in terms of teens and higher income demographics. Our $3,900 Care Plus solution that provides additional in-person doctor access in addition to our robust virtual platform We'll leverage our growing partner network to meet the demands of the more traditional orthodontic customers, higher income households and parents of teens that desire added access to in-person dental professionals for their treatment journey. We recently held an event at our ADL facilities in Nashville with some influential dental professionals and received overwhelming positive feedback on the Care Plus solution, including strong interest in the compelling value proposition offered to our partner network doctors. The incremental $1,850 from our standard offering provides additional economics for the added level of service and share time offered by the partner practice. In addition to the economics of the Care Plus solution, dental leaders have also expressed enthusiasm for the unique turnkey orthodontics as a service nature of the solution, which requires no incremental investment for equipment, minimal product training, and zero liabilities. From an operations perspective, doctors appreciate the ability to supplement our telehealth platform and the customer's overall clear aligner treatment experience, while also adding a teeth straightening solution at a competitive price across their customer base. As I mentioned earlier, the launch of this pilot is on track for early Q1. Alongside Care Plus is the continued investment we're making in our partner network program, which is currently the primary channel through which our customers will be able to receive our Care Plus offering. As we continue to optimize and scale our partner network program, our Care Plus offering will be available to a broader audience, both in terms of geographies and demographics. We ended the quarter with 950 active locations, which is a meaningful increase of 260 locations from the second quarter footprint. While our team is focused on productivity within our existing partners, this increase in locations illustrates that the seasoning of our sales force and announcement of our Care Plus solution has generated strong interest in our partner network. We have a growing pipeline from practitioners that we anticipate will continue to drive growth of our network and increased breadth of our Care Plus offering across an expanded addressable market. Our team has worked hard over the last eight years to bring our innovative technologies to the market, allowing customers to begin their journey to a healthy smile through multiple channels that have evolved from our historical direct-to-consumer model. Our smile shops resonate with customers that want to start with an in-person retail location, with the next step allowing customers to begin their smile journey from their own handheld device through our SmileMaker platform. In addition, customers that wish to begin and have access to an in-person doctor can leverage our Care Plus offering through our partner network locations. All these channels are supported by our telehealth platform that provides 24-7 access to dental professionals, ensuring results and maintaining access to a high quality of care. We have built an integrated pure play clear liner business that participates in all areas of the value chain in the growing market of consumers searching for teeth straightening solutions. We are fully invested and committed to seeing SBC reach its full potential. With over 500 million globally that need and can afford our clear liner solutions, we have a tremendous opportunity to grow our business. To date, we've been able to help more than 1.8 million customers get the smile they love while saving them over $5 billion. The investments that we have made to develop our product portfolio and build strong brand awareness puts us in a great position to capitalize on this large market opportunity. We recently added an entire innovation section on our investor relations website that provides additional details regarding our innovation strategy and product portfolio, including a five-minute video presented by just a few of our incredible team members that are bringing our innovations to the market. I encourage you to review these new materials on our website for more information regarding our strategic pillars and how we are driving our company forward. And now I'll turn the call over to Troy, who will provide more detail on our Q3 financial results and full year outlook. Troy.