Snap One Holdings Corp.

Good afternoon and welcome to SNAP-1 Holdings Corp's Fiscal Second Quarter 2022 Earnings Conference Call. At this time, all participants are on a listen-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. Good afternoon and welcome to SNAP-1's Fiscal Second 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 Carlette, 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 31, 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, August 11, 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. I will now turn the call over to our CEO, John Heyman. John?

Eric, thank you. And welcome, everyone, and we appreciate you spending time with us this afternoon. To start today's discussion, I'm going to review our recent highlights, and then I'll turn the call over to Mike Carlett, our CFO who will discuss our financial results for the quarter, as well as provide our outlook for the second half of 2022. We'll then share some closing remarks and open the call for questions. As background, SNAP One provides a smart living platform that empowers professional integrators to deliver joy, connectivity, and security to discerning end customers on a global scale. As a leading distributor to these integrators, 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 integrator partners with our proprietary software platforms and workflow solutions to allow them to successfully serve their residential and commercial customers across the project lifecycle. Here at SNAP One, we believe it is inarguable that all homes and businesses will become smarter over the next decade, and we're positioning our integrators and our company to capitalize on the tremendous and durable growth opportunity in front of us. Our competitive differentiation and the demand for smart living experiences continues to propel our business forward. Just over a year ago, we became a public company. It's been a challenging yet extremely rewarding year. Since our IPO, our team has successfully navigated through the ongoing impacts of the global pandemic, supply chain and logistics challenges, and a continued uncertain economic backdrop complicated by inflation, the war in Ukraine, and rising interest rates. All the while, we have continued to deliver for our integrator partners and on our financial commitments. I'm extremely proud of our team for their strong execution and accomplishments this past year. Despite any short-term economic uncertainty, our integrator partners remain busy and carry healthy backlogs of work, sustaining demand for our solutions. A very small percentage of these integrators carry any meaningful inventory, so backlog for them means future revenues for SNAP-1. Smart living solutions such as robust Wi-Fi networking, surveillance and security are must haves for home and business owners. Further, employees continue to come back to the office, helping drive outsized growth for commercial applications. Other metrics related to housing permits, starts, and remodeling, even if down modestly on a sequential basis, remain favorable relative to historical averages and drive sufficient demand to occupy the capacity of our integration partners. Furthermore, home equity values and the health of the high-end consumer remain constructive and in better shape relative to past cycles. Specific to our company, Unlike some competitors in certain categories, SNAP One has inventory to deliver on a timely basis to our integration partners. And regardless of the environment, we believe our unprecedented product innovation and investments in our growing local branch footprint will enable us to gain market share. Given our strategic execution and the secular trends I just covered, we remain highly confident in a favorable long-term growth outlook. Let me take a few minutes to reflect on this past quarter. Financially, we continue to build on our consistent results of the past year. In Q2, we generated net sales of 296.9 million, an increase of 17% from the comparable year-ago period. We also delivered adjusted EBITDA of 31.7 million, an increase of 8% from the prior year on an as-reported basis. We have achieved this financial performance despite the many inefficiencies we are absorbing due to supply chain and logistics issues we have cited. Moving to operational accomplishments, we were proud to be recognized for an industry best 48 brand leader awards in the recently announced CE Pro 100 brand analysis. These awards span our portfolio of products, platforms, and services and further establish our place as a leading innovator in the market. Thank you to our integration partners for their vote of confidence in SNAP-1. Of course, we are never content with the awards and recognition we receive, and we continue to raise the bar for the products we deliver. Here are a few of the major enhancements we made in the past quarter to our platform and product suite. First, we released an important update to the Control4 operating system, which includes time-saving shortcuts for efficient installs, enhanced user interface controls, improvements to lighting control, and faster connection speeds. This release is providing a more enjoyable experience for end users and an easier installation process for our integrators. We also released Oversea Connect, this new app strengthens control of overseas systems for both commercial and residential end users, and provides integrators with simplified workflow solutions, saving them time while they continue to face their own labor challenges. In a major evolution of our product set, we recently announced the release of the next generation core series of Control4 controllers. These controllers are the on-premise brains that power smart living experiences, and they set the foundation for exciting future product releases on the Control4 platform for many years to come. And yes, these controllers are in stock and available today. Finally, to bolster our entertainment product offering, we launched the Triad PDX Speaker Series, which pairs Triad's premium audio performance with a simplified installation experience. We also launched the new Sunbright Veranda 3 line of full shade outdoor LED TVs, bringing the full quality and features of smart indoor TVs to the outdoors. In the second quarter, we also executed across a range of strategic initiatives, including the following key accomplishments. First, we continued our commitment to growth in adjacent markets with the hiring of a leader focused specifically on the commercial and security markets. Our Control4 Multi-Display Manager functionality was also recently voted an AV Technology Best of InfoComm 22 award winner. The Multi-Display Manager enables efficient audio-video deployments in commercial settings like sports bars, restaurants, hotels, and demonstrates our continued progress and recognition in the commercial space. Second, we continue to build our omnichannel presence with the opening of a new local branch in Orlando, Florida to serve the central Florida metro area, bringing our domestic footprint to 32 local branches at quarter end. Our local branches strengthen existing integrator relationships, 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. Third, we appointed Tom Hendrickson to the board of directors and as chair of the company's audit and risk management committee. Tom is an accomplished executive and financial expert with more than 30 years of experience leading high growth consumer focused public companies And we're thrilled to welcome him to the team. Fourth, subsequent to the end of the second quarter, we completed the acquisition of Clare Controls. Clare's hybrid automation and security solution addresses the attractive market opportunity between commonly available security systems and luxury level whole home control systems. We've been the distributor for the Clare product line since 2019. and are excited about the opportunity that Clare provides and to convert a third-party brand to a higher-margin proprietary product. Fifth, as part of our Best Place to Work tenant, we announced and we paid a one-time stipend to a number of our employees and raised our minimum wage to help a segment of vital team members combat the inflationary forces they see in their own lives. At SnapOne, we believe investment in our team drives returns for our integrator partners and our shareholders. As it relates to our future growth strategy, our success in Q2 continues to reflect the strong execution against our proven playbook to drive sustainable long-term growth. As a reminder, our growth strategy remains rooted in five key pillars. 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 fifth, execute strategic M&A, such as STAB, electronics, and clear controls. We continue to make progress on all these fronts, as we look to the remainder of 2022 and beyond. I'm now going to comment briefly on our outlook, and then I'll turn the call over to Mike. We're proud of our performance in our first year as a public company. We've been working hard to build credibility through strong operational and financial execution, despite a volatile market backdrop. To address the supply chain and inflationary cost pressures that we foresee for the remainder of the year, We successfully implemented a pricing adjustment in June. Our pricing adjustment and continued execution give us confidence in protecting the profitability of our business and that of our integrators. Still, while we maintain our optimism around the near and long-term growth in the smart living adoption category, we do have to consider the current economic environment in our planning. And while we have line of sight into supply chain issues easing, they are not yet behind us. As such, we're prudently managing our costs, including moderating our pace of investment and hiring, coupled with a continued focus on cash flow and balancing inventory investment. That said, we remain confident in the resiliency of our integrators and our own business, have high conviction in our long-term growth strategy, and look forward to expanding our share of a rapidly growing market. So with that, I'm going to turn the call over to Mike Carlett, our CFO, who will discuss our second quarter financial results and updated 2022 outlook in greater detail. Mike.