| Conference Call Information |
|---|
| SmileDirectClub Third Quarter 2019 Conference Call Details |
| Date: Tuesday, November 12, 2019 |
| Time: 4:30 p.m. ET (1:30 p.m. PT) |
| Dial-In: 1-877-407-9208 (domestic) or 1-201-493-6784 (international) |
| Webcast: Visit Events and Presentations section of the company s IR page at http:// investors.smiledirectclub.com. |
| A replay of the call may be accessed from 7:30 p.m. ET on Tuesday, November 12, 2019 until 11:59 p.m ET on Tuesday, November 26, 2019 by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the replay PIN: 136904923. An archived |
| September 30, 2019 | December 31, 2018 | |
|---|---|---|
| ASSETS | ||
| Cash | $ 547,563 | $ 313,929 |
| Accounts receivable | 224,360 | 113,934 |
| Inventories | 14,633 | 8,781 |
| Prepaid and other current assets | 11,987 | 5,782 |
| Total current assets | 798,543 | 442,426 |
| Accounts receivable, non-current | 87,299 | 60,217 |
| Property, plant and equipment, net | 119,130 | 52,551 |
| Other assets | 6,269 | |
| Total assets | $ 1,011,241 | $ 555,194 |
| LIABILITIES, TEMPORARY AND PERMANENT EQUITY (DEFICIT) | ||
| Accounts payable | $ 40,561 | $ 25,250 |
| Accrued liabilities | 129,434 | 34,939 |
| Due to related parties | 1,128 | 20,305 |
| Deferred revenue | 24,893 | 19,059 |
| Current portion of related party debt | 16,054 | |
| Current portion of long-term debt | 29,737 | 1,866 |
| Total current liabilities | 225,753 | 117,473 |
| Long-term debt, net of current portion | 189,648 | 137,123 |
| Long-term related party debt | 1,799 | |
| Other long-term liabilities | 45,230 | 602 |
| Total liabilities | 460,631 | 256,997 |
| Commitment and contingencies | ||
| Temporary Equity | ||
| Redeemable Series A Preferred Units | 388,634 | |
| Permanent Equity (Deficit) | ||
| Class A common stock, par value $0.0001 and 102,807,291 shares issued and outstanding at September 30, 2019 and 0 shares issued and outstanding at December 31, 2018 | 10 | |
| Class B common stock, par value $0.0001 and 279,474,505 shares issued and outstanding at September 30, 2019 and 0 shares issued and outstanding at December 31, 2018 | 28 | |
| Additional paid-in-capital | 441,855 | 57,497 |
| Accumulated deficit | (88,296) | (148,249) |
| Noncontrolling interest | 197,013 | |
| Warrants | 315 | |
| Total permanent equity (deficit) | 550,610 | (90,437) |
| Total liabilities, temporary and permanent equity (deficit) | $ 1,011,241 | $ 555,194 |
| Item | Three months ended September 30, 2019 | Three months ended September 30, 2018 | Nine months ended September 30, 2019 | Nine months ended September 30, 2018 |
|---|---|---|---|---|
| Revenue, net | $ 168,663 | $ 112,508 | $ 522,529 | $ 278,024 |
| Financing revenue | 11,522 | 7,158 | 31,185 | 16,706 |
| Total revenues | 180,185 | 119,666 | 553,714 | 294,730 |
| Cost of revenues | 39,125 | 25,837 | 111,363 | 67,704 |
| Cost of revenues related parties | 2,310 | 10,098 | 13,652 | 28,608 |
| Total cost of revenues | 41,435 | 35,935 | 125,015 | 96,312 |
| Gross profit | 138,750 | 83,731 | 428,699 | 198,418 |
| Marketing and selling expenses | 131,263 | 57,210 | 340,409 | 143,667 |
| General and administrative expenses | 389,828 | 30,249 | 486,319 | 77,550 |
| Loss from operations | (382,341) | (3,728) | (398,029) | (22,799) |
| Interest expense | 4,291 | 4,352 | 11,607 | 9,283 |
| Interest expense related parties | 293 | 75 | 1,246 | |
| Loss on extinguishment of debt | 32 | 29,672 | ||
| Other expense | 421 | 6,493 | 500 | 15,135 |
| Net loss before provision for income tax expense | (387,085) | (14,866) | (439,883) | (48,463) |
| Provision for income tax expense | 479 | 85 | 596 | 294 |
| Net loss | (387,564) | (14,951) | (440,479) | (48,757) |
| Net loss attributable to noncontrolling interest | (299,268) | (352,183) | ||
| Net loss attributable to SDC Inc. | $ (88,296) | $ (14,951) | $ (88,296) | $ (48,757) |
| Earnings per share of Class A common stock: | ||||
| Basic | $ (0.89) | N/A | $ (0.89) | N/A |
| Diluted | $ (0.89) | N/A | $ (0.89) | N/A |
| Weighted Average Shares Outstanding: | ||||
| Basic | 99,533,877 | N/A | 99,533,877 | N/A |
| Diluted | 379,008,382 | N/A | 379,008,382 | N/A |
| SmileDirectClub, Inc. | ||
|---|---|---|
| Consolidated Statements of Cash Flows | ||
| (in thousands) | ||
| Nine months ended September 30, | ||
| Item | 2019 | 2018 |
| Operating Activities | ||
| Net loss | $ (440,479) | $ (48,757) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and amortization | 16,237 | 4,966 |
| Deferred loan cost amortization | 1,496 | 461 |
| Accrued interest to related parties | 884 | |
| Fair value adjustment of warrant derivative | 14,500 | |
| Equity-based compensation | 332,759 | 13,626 |
| Loss on extinguishment of debt | 17,693 | |
| Other non-cash operating activities | 1,783 | 3,305 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (137,509) | (97,005) |
| Inventories | (5,852) | (3,963) |
| Prepaid and other current assets | (6,205) | (2,233) |
| Accounts payable | (4,475) | 11,935 |
| Accrued liabilities | 45,880 | 9,926 |
| Due to related parties | (19,177) | 306 |
| Deferred revenue | 5,834 | 8,869 |
| Net cash used in operating activities | (192,015) | (83,180) |
| Investing Activities | ||
| Purchases of property and equipment related party | (4,722) | |
| Purchases of property, equipment, and intangible assets | (66,355) | (15,231) |
| Net cash used in investing activities | (66,355) | (19,953) |
| Financing Activities | ||
| IPO proceeds, net of discount and related fees | 1,285,759 | |
| Repurchase of Class A shares and LLC Units | (696,489) | |
| Repurchase of Class A shares to cover employee tax withholdings | (81,603) | |
| Settlement of canceled awards | (2,000) | |
| Issuance of Class A common stock | 6 | |
| Proceeds from sale of Preferred Units, net | 298,549 | |
| Borrowings on long-term debt | 176,000 | 117,375 |
| Payments of issuance costs | (6,127) | (3,174) |
| Principal payments on long-term debt | (159,047) | |
| Principal payments on related party debt | (24,581) | (34,376) |
| Other | 86 | |
| Net cash provided by financing activities | 492,004 | 378,374 |
| Increase in cash | 233,634 | 275,241 |
| Cash at beginning of period | 313,929 | 4,071 |
| Cash at end of period | $ 547,563 | $ 279,312 |
| Item | Three months ended September 30, 2019 | Three months ended September 30, 2018 | Nine months ended September 30, 2019 | Nine months ended September 30, 2018 |
|---|---|---|---|---|
| (in thousands) | (unaudited) | |||
| Net loss | $ (387,564) | $ (14,951) | $ (440,479) | $ (48,757) |
| Depreciation and amortization | 6,514 | 2,232 | 16,237 | 4,966 |
| Total interest expense | 4,291 | 4,645 | 11,682 | 10,529 |
| Income tax expense | 479 | 85 | 596 | 294 |
| Fair value adjustment of warrant derivative | 5,876 | 14,500 | ||
| Loss on extinguishment of debt | 32 | 29,672 | ||
| Equity-based compensation | 324,497 | 5,754 | 332,759 | 13,626 |
| IPO related costs | 6,146 | 6,146 | ||
| Other | 421 | 617 | 502 | 635 |
| Adjusted EBITDA | $ (45,184) | $ 4,258 | $ (42,885) | $ (4,207) |