SmileDirectClub, Inc.

Greetings and welcome to the SmileDirectClub second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Mr. Jonathan Fleetwood, Director of Investor Relations. Thank you, Mr. Fleetwood. 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 Smile 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 Q2 2023 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 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 Katzmann 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 begin my comments by congratulating the entire SDC team for delivering on both of our two key 2023 strategic initiatives by expanding the launch of our mobile scanning SmileMaker platform from Australia to now include the U.S. market and leveraging our growing SmileShop footprint to drive upsells for our Care Plus offerings. Our innovative technology driven solutions combined with disciplined cost management allowed us to deliver solid results despite the continuing challenging economic backdrop impacting our core customer. Our Q2 revenue of 102 million decreased 24 million from the prior year period. However, adjusted EBITDA improved by 10 million and free cash flow by 8 million compared to the prior year. This marks the fourth straight quarter of year over year adjusted EBITDA improvement and fifth straight quarter of year-over-year free cash flow improvement. Let me provide more insights regarding our two key transformative initiatives that have started to show how they can drive meaningful efficiencies and growth. First, I'll start with our smile maker platform, or SMP. SMP is our mobile 3D scanning technology that allows customers to begin their teeth-straightening journey by digitally capturing 2D images of their existing smiles on a mobile device and submitting the images to our enhanced artificial intelligence engine to develop an automated 3D draft treatment plan. After our pilot launch of SMP in Australia at the end of November, we made a number of enhancements and modifications and launched our latest updated version in the U.S. on a limited basis for the first time in late May on the iOS platform. Android is still being worked on, but we expect a fast follow later this month. Since the U.S. launch, the app has consistently been in the top 10 in the Apple Store medical category. We will continue to get learnings from different uses for SMP as we test different marketing channels and customer demographics. An exciting enhancement that we have now developed to be used with SMP is the launch of our new AI capability that creates photorealistic after-renderings showing the new alignment of the teeth in the consumer's mouth. This provides customers with a more enhanced visualization of what the final result will look like in their mouth. Additionally, our draft custom smile plans are sent via text to SMP users, which promotes viral sharing of the customer's potential new smiles, providing the opportunity for consumers to drive additional SMP referrals. Leveraging all the benefits of SMP together drives improved financial performance on top of our core business. S&P is showing signs of driving stronger marketing efficiencies through tangible benefits by reducing our cost per lead. Turning to our second growth initiative, we are excited about developments with our premium service, Care Plus, priced at $3,900. This elevated service model allows both dentists and orthodontists, and specifically the under-penetrated general practitioners market, to utilize SDC aligners and our robust telehealth platform to meet the demands of the more traditional orthodontic customers. higher-income households and parents of teens who desire added access to in-person dental professionals, but also want the convenience of telehealth for follow-up care. We believe that this offering will position SDC to capture a larger piece of the higher-income consumer and teen market, as well as provide a premium option for existing customers who want the option of both virtual and in-person care, along with other Care Plus-only benefits. From our pilot launch learnings in the US, we identified and have implemented a go-to-market strategy that leverages our growing SmileShop footprint to expand the Care Plus offering to consumers. In our pilot SmileShops, we have seen a meaningful take rate by our existing customers who opt into Care Plus with the added benefits, despite the higher price point. By the end of August, our team members at all US SmileShop locations will have the ability to provide our customers with a dual journey and their appointment educating consumers and driving awareness and insights for both our traditional care offerings as well as our premium Care Plus offering. This provides an upsell opportunity to consumers for our Care Plus solution from our trained SmileShop team members who can then refer customers to a nearby partner network location for their Care Plus journey. Feedback has been positive from dental practitioners as this provides a steady referral of Care Plus customers to drive additional revenue streams to the practice, but with the bulk of the sales process being completed by SmileShop team members. We also plan on piloting CarePlus in the UK in the back half of the year. As we scale our CarePlus offering from our pilot launch, we also continue to make progress in growing our partner network programs, the exclusive channel through which our customers will be able to receive our CarePlus offering. We ended the quarter with 1,156 active locations compared to 1,095 locations last quarter. continuing to build our coverage for a foundational presence in all key markets to support our Care Plus solutions by providing the customer with a short commute for an in-person visit. This is a strong value proposition for our partner network by leveraging the sales efforts of SmileShops to drive Care Plus consumers to their practices and benefit from the full sales and marketing firepower of SDC. We continue to manage our business with our commitment to rigorous financial discipline with the benefits of the discipline paying off. Although the second quarter top line results followed our typical seasonal downward Q1 to Q2 revenue trends, we were able to deliver stronger bottom line and improved cash flow results based on our continued focus on our underlying cost structure. As I mentioned in my opening remarks, this marks the fourth straight quarter of year-over-year adjusted EBITDA improvements and fifth straight quarter of year-over-year free cash flow improvements. We continue to have discussions with interested parties to improve our liquidity position by expanding our ABL facility, backed by our successful SmilePay collateral, as well as other interested investors who see the value in SDC as the leader in affordable T-straining, especially with the successful launch of our two key initiatives. I want to thank all of our team members who have worked long hours to bring these two important initiatives to the market. It's been a long road, but with the sacrifices, SMP and Care Plus begin to pay off. Every single one of you is responsible for bringing over 2 million new smiles to customers and saving them collectively over $6 billion. While we continue to face a difficult and unpredictable macroeconomic environment for our core business, our dedication to maintaining financial discipline through our cost controls and cash deployments and the addition and initial success of our new initiatives will enable us to manage our business throughout 2023. We have the solutions, technology platforms, team members, business strategies, and financial discipline to achieve our operational and financial targets. And now I'll turn the call over to Troy, who will provide more detail on our Q2 results. Troy? Thank you, David.