Snap One Holdings Corp.

Good afternoon. Welcome to SNAP-1 Holdings Corp Fiscal First Quarter 2022 Earnings Conference Call. At this time, all participants are in only mode. After the speaker's presentation, there will be a question and answer session. I would now like to turn the call over to SNAP-1 Senior Vice President of Finance, Eric Steele. Sir, please proceed.

Great. Thank you, Operator. Good afternoon and welcome to SNAP-1's Fiscal First Quarter 2022 Earnings Conference Call. As a reminder, this call is being recorded. Joining us today from SNAP-1 are John Heyman, CEO, and Mike Carlett, CFO. Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions, including but not limited to statements of expectations, future events, or future financial performance. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Actual events or results could differ materially. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the risk factors section of our annual report on Form 10-K for the annual period ended December 31st, 2021, filed with the SEC. All non-GAAP financial measures referenced in today's call are reconciled in our earnings press release to the most directly comparable GAAP measure. This call also contains time-sensitive information that is accurate only as of the time and date of this broadcast, May 12, 2022. Finally, I would like to remind everyone that this conference call is being webcast, and a recording will be made available for replay on our Investor Relations website at investors.snap1.com. In addition to the webcast, we have posted a supplemental earnings presentation accompanying these results, which can also be found on our investor relations website. With that, I'll now turn the call over to our CEO, John Heyman. John?

Eric, thank you. Welcome, everyone, and again, thanks for joining us this afternoon. To start today's discussion, I will review recent highlights and updates, and then I'll turn the call over to our CFO, Mike Carlett, who will discuss our financial results for the quarter, as well as provide an update on our outlook for the remainder of 2022. After that, I'll share some closing remarks and then we'll open the call up for questions. As a brief reminder to everyone listening here at SNAP One, we provide a smart living platform that empowers professional integrators to deliver joy, connectivity, and security to end consumers on a global scale. As a leading distributor to this industry, we work with our growing network of approximately 20,000 professional do it for me integrators to distribute our proprietary and third party products through our e-commerce portal and local branches. We further support our integration partners with our proprietary software platforms and digital workflow solutions to allow them to successfully serve their residential and commercial customers across the project lifecycle. The smart living opportunity is large and mostly untapped. With our entrenched and growing integrator network, we believe we're strategically positioned to power the smart living revolution. As demand for smart living solutions continues to rise, we anticipate an increasing number of end consumers We'll rely on professionals to get the job done. In turn, we're positioning our integrators and our company to capitalize on the tremendous and durable growth opportunity in front of us. It's within this robust secular demand environment for smart living experiences that we see our business continuing to propel forward. Clearly, there's uncertainty that exists in the markets. including inflation, the war in Ukraine, supply chain constraints, and rising interest rates. However, we believe we are still operating in a favorable macro and micro backdrop. Despite the economic uncertainty, our integrator partners remain busy and demand remains strong. Macro indicators such as housing starts, building permits, housing completions, and residential construction backlogs even if down modestly on a sequential basis, are robust and positioned favorably relative to historical averages. Additionally, repair and remodel spend is expected to expand, and the backdrop for housing at the higher end of the market remains more insulated than the broader market. Specifically, the demand for luxury single-family homes remains strong. Inventory remains below traditional levels. and that provides a sustainable runway of homebuyers seeking luxury properties in which our solutions are frequently installed. The secular trends surrounding population movements, housing shortages, and the proliferation of smart living gives us confidence and a favorable long-term growth outlook. Furthermore, commercial business continues to rebound post-COVID, and our integrators have shown the ability over time to successfully pivot their project types in different market environments. With this backdrop, we aim to help these integrators enhance their capacity and to grow profitable businesses. We do this through investing in our business platform, which provides needed infrastructure and otherwise makes life easy for the small businesses we serve. Further, we complement this business platform with a product platform, that supports easier installations, higher profits, improved reliability, and enhanced end consumer satisfaction. We believe that no one is investing in these types of platforms that will drive the future success of this industry like Snap One. Let me now take a minute and reflect on the past quarter. These are indeed unprecedented times, but our unwavering commitment to our integration partners has remained stalwart. Our objective every day is to ensure that our integrator partners have the products they need to be successful as they meet the continued robust demand for smart living solutions. Coming off of Banner 2021, we continue to capitalize on the growth opportunities in front of us this past quarter. Beginning with the top line, we generated over $277 million in net sales during the quarter, an increase of 25.8% from the comparable year-ago period. Our efforts to meet demand have resulted in additional costs to the business, primarily from inflationary pressures and supply chain constraints. However, our skilled execution allowed us to deliver adjusted EBITDA of $23.6 million an increase of just over 1% from the prior year on an as-reported basis. This included approximately $2 million in public company-related expenses that we did not incur in the prior year. Excluding those expenses, adjusted EBITDA increased 10% year over year. We also successfully executed across a range of strategic initiatives, including the following key accomplishments. First, in January, we announced the acquisition of Staub Electronics. As our longtime distribution partner in Canada, the acquisition was a natural way for us to deliver more product choice, faster fulfillment, and superior support for professional integrators across Canada. This strategic acquisition accelerates our penetration of the Canadian market, and it positions us for long-term growth in this important geography. Second, effective January 31st, we launched our all-new partner rewards program, which unifies the previous SNAP-1, Control-4, and local distribution loyalty programs under a single program. We believe the industry's most rewarding program just got even better as SNAP-1 integrators now earn rewards on every purchase. Additionally, the unified points-based program is a critical step forward in enabling us to deploy digitally enabled strategies to expose our integrators to new products and drive wallet share growth. Third, we were humbled to earn 17 awards across 22 categories in the CE Pro 2022 Quest for Quality Awards announced in March. Snap won 17 honors, were more than twice as many as the next most awarded competitor and reflect the outstanding service we deliver. Thank you to our partners for your vote of confidence in SNAP-1 and to our team members for your exceptional service. Fourth, we continue to build our omnichannel presence with the opening of a new local branch to serve the Washington, D.C. metro area, bringing our domestic footprint to 31 local branches. Our local branches strengthen our existing integration relationships They add incremental purchase opportunities and expand our integrator network in the local community. We intend to continue investing in the expansion of our local branch network. Fifth, we bolstered our senior leadership team through the appointment of our new chief information officer, Manit Singh. Manit will focus on the strategic design and implementation of business infrastructure to enable scalable and efficient growth. We're thrilled to welcome Mindy to our team. Our success in Q1 continues to reflect the strong execution against our proven playbook to drive sustainable long-term growth. As a reminder, this growth strategy remains rooted in five key pillars. Number one, increase our wallet share with existing integrators. Two, expand our global integrator network. Three, innovate with new products software and tech enabled workflow solutions four develop new software services and revenue models and five execute on strategic m a we continue to make progress on all these fronts as we look to 23 and beyond let me uh now comment briefly on our outlook for the rest of the year and then i'll turn the call over to mike as i spoke to earlier While supply chain challenges persist, we've strategically deployed our balance sheet and executed well to circumvent these near-term hurdles. Our team has been hard at work optimizing our approaches to component resourcing, inbound logistics, and air freight. Our engineering teams have worked tirelessly to re-engineer products based on component availability. Our sales and support teams work diligently to find available products to quickly and efficiently meet our integrators project needs. Thanks to their efforts and sustained demand from our integrators, we've continued to drive strong performance, positioning us firmly to meet our objectives for the year. Notwithstanding the efforts of these teams, these challenges come with added costs as have been well publicized in the general economy. Fortunately, we've utilized an evolving pricing strategy in a balanced manner as we assess rising costs, competitive forces, and the affordability of solutions the industry offers. Earlier this week, we announced a price adjustment on our proprietary product portfolio to address rising supply chain and inflationary cost pressures and to support our investments to further strengthen our leading supply chain capabilities. The approximate 8% blended price adjustment has an effective date of June 6th and is in line with recent competitive moves. We implemented this price adjustment in a way that protects our partners, including by providing advance notice and by making corresponding adjustments to MSRP. Most importantly, demand for our products and services remains high, and we've entered 2022 with strong momentum. Due to continued healthy trends in smart living adoption and durable residential and commercial uptake, our integrators remain extremely busy, with many booked out months in advance. We remain confident in the resiliency of our integrators and our own business, and we look forward to expanding our share of a rapidly growing market while remaining prudently conservative with our expectations. With that, I will turn the call over to Mike Carlett, our CFO. to discuss our first quarter results and updated 2022 outlook in greater detail. Mike?