Delaware | 001-39037 | 83-4505317 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
414 Union Street Nashville, Tennessee | 37219 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading symbol | Name on each exchange on which registered | ||
Class A common stock, par value $.0001 per share | SDC | The NASDAQ Stock Market LLC |
SMILEDIRECTCLUB, INC. | ||
By: | /s/ Kyle Wailes | |
Name: | Kyle Wailes | |
Title: | Chief Financial Officer |
• | Fourth quarter total revenue increased $68 million, or 53.1%, over the fourth quarter of 2018, to $197 million. |
• | Fourth quarter net loss of $(97) million. |
• | Fourth quarter Adjusted EBITDA of $(60) million. |
• | Fourth quarter diluted EPS of $(0.25). |
• | FY 2019 total revenue increased $327 million, or 77.3%, over FY 2018, to $750 million. |
• | FY 2019 net loss of $(538) million. |
• | FY 2019 Adjusted EBITDA of $(103) million. |
• | FY 2019 diluted EPS of $(1.14). |
• | Fourth quarter 2019 unique aligner shipments of 115,042, compared to 76,372 in the fourth quarter of 2018; full year 2019 unique aligner shipments of 453,053, compared to 258,278 in the full year 2018. |
• | Average aligner gross sales price (“ASP”) of $1,771 for both the fourth quarter and full year 2019, compared to $1,797 and $1,764 in the fourth quarter and full year 2018, respectively. |
• | Revenues are expected to be in the range of $1,000 million to $1,100 million, representing growth of 40% year-over-year at the mid-point of the range. |
• | Adjusted EBITDA for the fiscal year is expected between $(50) million to $(75) million. |
SmileDirectClub Fourth Quarter 2019 Conference Call Details | |
Date: | February 25, 2020 |
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. |
For the Year Ended December 31, | ||||||
2019 | 2018 | |||||
ASSETS | ||||||
Cash | $ | 318,458 | $ | 313,929 | ||
Accounts receivable | 239,413 | 113,934 | ||||
Inventories | 18,431 | 8,781 | ||||
Prepaid and other current assets | 14,186 | 5,782 | ||||
Total current assets | 590,488 | 442,426 | ||||
Accounts receivable, non-current | 106,315 | 60,217 | ||||
Property, plant and equipment, net | 177,543 | 52,551 | ||||
Other assets | 11,299 | — | ||||
Total assets | $ | 885,645 | $ | 555,194 | ||
LIABILITIES, TEMPORARY AND PERMANENT EQUITY (DEFICIT) | ||||||
Accounts payable | $ | 52,706 | $ | 25,250 | ||
Accrued liabilities | 89,824 | 34,939 | ||||
Due to related parties | — | 20,305 | ||||
Deferred revenue | 25,435 | 19,059 | ||||
Current portion of related party debt | — | 16,054 | ||||
Current portion of long-term debt | 35,376 | 1,866 | ||||
Total current liabilities | 203,341 | 117,473 | ||||
Long-term debt, net of current portion | 173,150 | 137,123 | ||||
Long-term related party debt | — | 1,799 | ||||
Other long-term liabilities | 46,617 | 602 | ||||
Total liabilities | 423,108 | 256,997 | ||||
Commitment and contingencies | ||||||
Temporary Equity | ||||||
Preferred Units | — | 388,634 | ||||
Permanent Equity (Deficit) | ||||||
Class A common stock, par value $0.0001 and 103,303,674 shares issued and outstanding at December 31, 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 December 31, 2019 and 0 shares issued and outstanding at December 31, 2018 | 28 | — | ||||
Additional paid-in-capital | 452,119 | 57,677 | ||||
Accumulated other comprehensive income (loss) | (272 | ) | — | |||
Accumulated deficit | (114,513 | ) | (148,429 | ) | ||
Noncontrolling interest | 125,165 | — | ||||
Warrants | — | 315 | ||||
Total permanent equity (deficit) | 462,537 | (90,437 | ) | |||
Total liabilities, temporary and permanent equity (deficit) | $ | 885,645 | $ | 555,194 |
Three months ended December 31, | For the Year Ended December 31, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Revenue, net | $ | 184,000 | $ | 120,103 | $ | 706,529 | $ | 398,127 | ||||
Financing revenue | 12,714 | 8,401 | 43,899 | 25,107 | ||||||||
Total revenues | 196,714 | 128,504 | 750,428 | 423,234 | ||||||||
Cost of revenues | 52,498 | 30,344 | 163,861 | 98,048 | ||||||||
Cost of revenues—related parties | 877 | 7,312 | 14,529 | 35,920 | ||||||||
Total cost of revenues | 53,375 | 37,656 | 178,390 | 133,968 | ||||||||
Gross profit | 143,339 | 90,848 | 572,038 | 289,266 | ||||||||
Marketing and selling expenses | 141,059 | 69,413 | 481,468 | 213,080 | ||||||||
General and administrative expenses | 94,524 | 44,193 | 580,843 | 121,743 | ||||||||
Loss from operations | (92,244 | ) | (22,758 | ) | (490,273 | ) | (45,557 | ) | ||||
Interest expense | 4,052 | 3,249 | 15,659 | 12,532 | ||||||||
Interest expense—related parties | — | (73 | ) | 75 | 1,173 | |||||||
Loss on extinguishment of debt | — | — | 29,672 | — | ||||||||
Other expense | (642 | ) | 13 | (142 | ) | 15,148 | ||||||
Net loss before provision for income tax expense | (95,654 | ) | (25,947 | ) | (535,537 | ) | (74,410 | ) | ||||
Provision for income tax expense | 1,672 | 67 | 2,268 | 361 | ||||||||
Net loss | (97,326 | ) | (26,014 | ) | (537,805 | ) | (74,771 | ) | ||||
Net loss attributable to noncontrolling interest | (71,109 | ) | — | (423,292 | ) | — | ||||||
Net loss attributable to SmileDirectClub, Inc. | $ | (26,217 | ) | $ | (26,014 | ) | $ | (114,513 | ) | $ | (74,771 | ) |
Earnings per share of Class A common stock: | ||||||||||||
Basic | $ | (0.25 | ) | N/A | $ | (1.12 | ) | N/A | ||||
Diluted | $ | (0.25 | ) | N/A | $ | (1.14 | ) | N/A | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 103,043,244 | N/A | 102,442,525 | N/A | ||||||||
Diluted | 382,517,729 | N/A | 381,917,030 | N/A |
For the Year Ended December 31, | ||||||
2019 | 2018 | |||||
Operating Activities | ||||||
Net loss | $ | (537,805 | ) | $ | (74,771 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation and amortization | 27,336 | 8,861 | ||||
Deferred loan cost amortization | 3,969 | 4,319 | ||||
Accrued interest to related parties | — | 1,152 | ||||
Fair value adjustment of warrant derivative | — | 14,500 | ||||
Equity-based compensation | 350,122 | 19,839 | ||||
Loss on extinguishment of debt | 17,693 | — | ||||
Other non-cash operating activities | 1,783 | 646 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | (171,577 | ) | (128,811 | ) | ||
Inventories | (9,650 | ) | (6,058 | ) | ||
Prepaid and other current assets | (13,059 | ) | (4,612 | ) | ||
Accounts payable | (1,182 | ) | 24,449 | |||
Accrued liabilities | 13,107 | 13,494 | ||||
Due to related parties | (20,305 | ) | 5,584 | |||
Deferred revenue | 6,376 | 6,622 | ||||
Net cash used in operating activities | (333,192 | ) | (114,786 | ) | ||
Investing Activities | ||||||
Purchases of property and equipment—related party | — | (15,135 | ) | |||
Purchases of property, equipment, and intangible assets | (106,361 | ) | (26,706 | ) | ||
Net cash used in investing activities | (106,361 | ) | (41,841 | ) | ||
Financing Activities | ||||||
IPO proceeds, net of discount and related fees | 1,277,010 | — | ||||
Repurchase of Class A shares and LLC Units | (696,489 | ) | — | |||
Repurchase of Class A shares to cover employee tax withholdings | (85,684 | ) | — | |||
Settlement of canceled awards | (2,000 | ) | — | |||
Issuance of Class A common stock | 6 | — | ||||
Proceeds from sale of Preferred Units, net | — | 388,634 | ||||
Member tax distributions | — | (86 | ) | |||
Borrowings on long-term debt | 176,000 | 117,375 | ||||
Payments of issuance costs | (6,127 | ) | (3,514 | ) | ||
Principal payments on long-term debt | (193,516 | ) | — | |||
Principal payments on related party debt | (22,352 | ) | (35,532 | ) | ||
Other | (2,766 | ) | (392 | ) | ||
Net cash provided by financing activities | 444,082 | 466,485 | ||||
Increase (Decrease) in cash | 4,529 | 309,858 | ||||
Cash at beginning of period | 313,929 | 4,071 | ||||
Cash at end of period | $ | 318,458 | $ | 313,929 |
Three months ended December 31, | Years ended December 31, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
(unaudited) | ||||||||||||
Net loss | $ | (97,326 | ) | $ | (26,014 | ) | $ | (537,805 | ) | $ | (74,771 | ) |
Depreciation and amortization | 11,099 | 3,894 | 27,336 | 8,861 | ||||||||
Total interest expense | 4,052 | 3,176 | 15,734 | 13,705 | ||||||||
Income tax expense | 1,672 | 67 | 2,268 | 361 | ||||||||
Loss on disposal of property, plant and equipment | — | — | — | 617 | ||||||||
Fair value adjustment of warrant derivative | — | — | — | 14,500 | ||||||||
Loss on extinguishment of debt | — | — | 29,672 | — | ||||||||
Equity-based compensation | 17,363 | 6,213 | 350,122 | 19,839 | ||||||||
IPO related costs | 3,746 | — | 9,892 | — | ||||||||
Other | (644 | ) | 13 | (142 | ) | 31 | ||||||
Adjusted EBITDA | $ | (60,038 | ) | $ | (12,651 | ) | $ | (102,923 | ) | $ | (16,857 | ) |