SkinHealth Systems Inc.

And welcome to the Beauty Health First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your questions, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Eduardo Rodriguez, the Senior Director of M&A and Investor Relations. Please go ahead.

Good afternoon, everyone. Thank you for joining the Beauty Health Company's conference call to discuss the company's first quarter 2022 financial results, which we released this afternoon and can be found on our website at beautyhealth.com. Also available on our website is an investor presentation that will be referenced during this call. With me on the call today is Andrew Stanwyck, President and Chief Executive Officer, and Lian Wu, Chief Financial Officer of the Beauty Health Company. Before we get started, I would like to remind you of the company's safe harbor language. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties, that could cause actual results to differ materially. For a further discussion of risks related to our business, see our filings with the SEC. This call will contain non-GAAP financial measures, such as adjusted gross margin, adjusted EBITDA, and adjusted EBITDA margin. Reconciliation of these non-GAAP measures to the most comparable GAAP measures are included in the earnings release furnished to the SEC and available on our website. I will now turn the call over to Andrew Stanczyk, President and CEO of the Beauty Health Company.

Thank you, Eduardo. Good afternoon, everyone, and thank you for joining our first quarter earnings call. I'm excited to walk you through our outstanding performance in the first quarter and update you on the progress we are making on the strategic master plan that I presented last quarter. Before turning to those topics, I want to begin by thanking the Global Beauty Health team and community for their hard work, passion, and commitment. As I enter my fourth month as CEO, I've had the privilege of meeting many of our talented employees and providers throughout the world. You have extended such a warm welcome to me and you all make Beauty Health the incredible company and community it is. With your dedication and support, we saw strong growth in the first quarter and continue to deliver against our strategic initiatives. Having partnered closely with Brent these past few months, we are very proud of the team's achievements and remain as confident as ever about the future as we carry this momentum forward. I'll now turn to slide five to discuss the quarter's highlights. I am pleased to report net sales for the quarter grew nearly 59% year-over-year. Growth was driven by increasing our new door count in the U.S. and overseas during January and February, combined with the deliberate and planned strategic promotions we unveiled in connection with the U.S. launch of Cindeo in mid-March. Cindea is the digitally connected next generation delivery system we co-created with our community. This revolutionary system offers significant improvements and a personal experience for providers and consumers. I am thrilled by the strong early feedback we are receiving from the field, which validates our experience-led approach to innovation and product development. Our Cindea launch plan consists of three phases, which I will detail for you shortly. Our sales team did an amazing job executing on the first phase of the planned rollout, driving strong trade-up volume along continued new system sales. Early adoption trends have far exceeded our expectations, with trade-ups surpassing our forecast nearly threefold. I would liken it within our industry to the same form of hype from consumers that typically surrounds a major new phone launch. Providers were scrambling to buy delivery systems. As a result of the early success of Sundare and the higher than anticipated demand for system trade-ups, I am pleased to raise our full year net sales outlook to a range of 330 to 340 million, up from our previous guidance of 320 to 330 million. I would also like to reaffirm the commitment that we made last quarter to delivering 50 million EBITDA in 2022. Turning to slide six, we are confident in our ability to perform in the current macroeconomic climate as we continue to execute on our master plan. This plan is built on five key strategic growth pillars, which support our mission as a true category creator, reinventing consumers' relationships with their skin, bodies, and self-confidence. I'd like to now spend a few moments on each of those pillars. As we discussed last quarter, Sindeo is key to driving innovation and connected experiences for our community. Sindeo leverages data and personalization, supplying our providers with insights to better understand and meet consumer needs. Sindeo's data transforms the experience of both consumers and providers and will drive increased engagement throughout the beauty health community. As I mentioned, Sindeo is rolling out in three phases. As you know, we intentionally kept Cindea under wraps from our sales force. And to kick off phase one, we delighted our team during our global sales meeting in Orlando with the unveiling of Cindea. Our sales force was ecstatic and immediately engaged their accounts with clear enthusiasm, driving excitement and buzz within the community. To help drive this excitement, we ran an intentional 20-day Cindea trade-up promotion in March to reward our loyal providers and convert them into champions of our new system. The attractive yet profitable offer was targeted to our providers who most recently purchased an elite system. As we have stated previously, our aim is to have our entire install base on the Sendero platform. The promotion was an incredible success in progressing towards that goal and drove far greater demand than we expected. We are delighted to have all of these providers utilizing our latest technology and providing connected superior consumer experience. We kicked off phase two at the start of the second quarter, focused on engaging the entire sales force to accelerate new system placements. We see a huge untapped opportunity to expand our network, both through new locations and second system placements. The reception we've seen in Q1 and into the start of Q2 serves as a strong proof point for the continued market demand for our products and services. Finally, in phase three, we will focus on launching in international markets where we see an incredible opportunity to expand the hydrafacial brand. We expect this phase to kick off towards the end of 2022 or early next year. Next, slide eight will give you a flavor of how we continue to invest in our providers in the quarter. This pillar is critical to our growth because when we invest in our providers, we see double-digit growth in their consumable purchase and second system sales happen 50% faster. As part of our efforts to support our providers, in Q1, we opened our ninth and tenth hydrafacial experience centers in New York and London, respectively. These centers serve as a critical part of our educational platform for estheticians, providing a space to host brand-building events where we showcase our products in a beautiful, interactive setting. At these events, new users typically make up 85% of the total attendees. At the end of March, we showcased a hydrofacial installation at the Aesthetics and Anti-Aging Medicine World Congress in Monaco, one of the world's largest aesthetic events with 12,000 attendees from over 120 countries. At the event, Dr. Paul Nassif, a renowned plastic surgeon and high-sterofacial booster serum partner, met with key opinion leaders, doctors, and providers to discuss the merits of the hydrofacial delivery system. This is just one of the many events we've participated in around the world as we look to expand our provider network. We also continue to undertake initiatives to accelerate brand awareness amongst consumers. To that end, I am thrilled to announce a partnership with the iconic Jennifer Lopez and her J.Lo Beauty brand, bringing a hydrafacial by J.Lo Booster serum to the market. We expect a broad rollout of this booster in the fall, along with consumer activation events to support the launch. With her confident swagger, mass appeal, and dedication to skincare that works, J-Lo is an ideal partner to help us accelerate and broaden our awareness with consumers. We could not be more excited to partner with such an influential icon. We constantly seek to validate the effectiveness of our investments in brand awareness by measuring key data points, and I am very encouraged by the level of consumer interest in Hydrafacial, as measured by Google search trends. As you can see on slide 10, search volume for our brand is at an all-time high. Additionally, our latest Net Promoter Score data measured in Q1 illustrates that we increased to 44 from 40, demonstrating continued consumer affinity. Survey data shows we are increasingly gaining traction with a younger and more diverse consumer base. Interest for our product is robust and growing, and we have a strong conviction that consumers will continue to value treatments that empower them with the confidence to face life, face first. Next, we remain focused on building out our global infrastructure, with a few highlights to support our growth ambitions demonstrated on page 11. We are creating efficiencies within our supply chain and logistics process. This includes setting up a third-party logistics center in Frankfurt for the EMEA region, and such efforts will continue in Q2 as we seek to optimize the business through value engineering projects. We also continue to build our bench this quarter with targeted hiring to support our expansion plans at home and abroad, including key talent in technology, marketing, communications, and the strategic China market. These investments will create operating leverage as we scale, accelerating our path to increased profitability in future periods. And lastly, M&A remains a facet of our overall strategy. We maintain a very prudent and disciplined approach to acquisitions. As discussed last quarter, we will continue to examine opportunities in a highly strategic and targeted manner. In doing so, there are three key criteria we are focused on that will allow us to capture the white space between beauty, aesthetics, and wellness. It needs to be truly differentiated product or service with a high net promoter score. Second, it should be complementary to our platform and community, leveraging that existing core point with the esthetician to drive synergies with existing costs and infrastructure. And third, we are focused on financially accretive opportunities, ideally both the top and bottom lines. In summary, the team is making outstanding progress in fulfilling our master plan. and I am excited to further advance these initiatives throughout the rest of the year. I am incredibly proud of what we accomplished in the first quarter, and I am thrilled with the positive momentum we are seeing across the business. Cindea's U.S. launch has been an overwhelming success. Our investment in our providers are paying dividends. Consumer interest in our product has never been stronger, and we're proud of the bench strength we've built. This momentum will be further fueled by upsides such as the reemergence of cities locked down in China. Once these cities reopen, we are confident we will see a rapid acceleration in our business, similar to what we've seen in other markets reopening around the world. With that, I will now turn the call over to Lian for a more detailed discussion of our first quarter performance.