Purple Innovation (PRPL) 10 Aug 222022 Q2 Earnings call transcript

Good day, everyone. And welcome to the Purple Innovation Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Today’s call is being recorded. my introduce now McAlester host, is ICR. of it pleasure your to Cody And ahead. go Please

the for that Innovation’s are differ judgment and you call. forward-looking from and earnings place available only you forward-looking like this reflect statements. Purple’s of earnings Innovation’s these presentation These I www.purple.com. we on today A our section would on will website is may in forward-looking at release should statements. on as factors Company’s based remind actual expectations Thank press Purple results of Purple statements affecting copy materially statements current joining you of not second number business. reliance to Relations analysis a undue of certain the Investor quarter XXXX make Accordingly,

website. and Rob Officer. financial as Innovation’s, I’ll result the such financial income Executive EBITDA, available per on which measures measures, earnings thorough included be within earnings our For that, this non-GAAP made be the you referenced forward-looking will as to regarding XXXX of information, statements net uncertainties is as measures the or of obligation the any furnished with reference the webcast, update turn future GAAP our release, new today include refer risks events in EBITDA, share. the SEC to We filings our as forward-looking can whether the the associated we in Chief SEC non-GAAP to Form to discussion a of adjusted to X-K DeMartini, disclaimer financial that over to not on these presentation a second earnings undertake or otherwise. well A disclaimer. Today’s statements more found adjusted quarter with to reconciliation conference alter call adjusted do any and which call statements, and Purple in release, comparable forward-looking most was With

you today good me Purple’s and on thank Cody. you, Officer. afternoon the With call Nussbaum, Bennett Financial is And Thank everyone. Chief

issued we EBITDA compared with release in earnings our from earlier saw a meaningful improvement similar reported you today, quarter revenue. the on first As adjusted

had over become past we expected last the deliver several increases challenging has more selling profitability, in both environment the While months. revenue to quarter-over-quarter and

since demand, the these similar industry, right a shift in respect moment. down and is time seen consumer inflation of the deterioration XX% we’re We’ve a to has ago in XX% demand this $XX pleased EBITDA This are the year especially cost results the the Given we near of roughly to overall With second million done estimates experienced home-related mattress expectations. market at we’ve revenue, quarter, with categories the mattress year-to-date, place line breakeven we in volumes beginning be in Purple reflects in XXXX. facing are a new in And as approximate developing in with which performance like first new XX rest of in we the the to quarter-over-quarter, pressuring adjusted also quarter-over-quarter, when that where Showroom discretionary ramping levels. habits get our But from to also shift profitable days our still with compared reported spending. at roughly the QX continued recovery work performance addition year, revenue the line from structure pullback away channel e-commerce the to online, added numbers reduction domestic early over in in from given are the a by by a up detail the in was perspective, improved advertising in position doors expectations, more Purple, of in-store in strength wholesale trends six new will from net net the our stages QX added spend. well with industry to recent and months XXX in our was six for up. the quarter capabilities. of driven driven is primarily addition purposeful in locations a as of doors Bennett review spending encouraging, revenue our we second a

with underscores think and encouraged about the first operational is start the I with the for framework delaying quarter-over-quarter compared year, building with now The healthier top-line profitability we’ve macro even as results. As my environment much the we our in made, six progress sustained Purple, reported months I’m recovery. the growth is Company the consistent of improvement today, how

expect of quarter-over-quarter, we remainder conservative the progress positive view year. adopting we’re While more of further still the headwinds, the a given current external

year EBITDA expect to it to before our adjusted the negative which in coming elevation, building an provide Despite blocks revised to We’re update overall, confident our initiatives turn after remain company some $XXX initiatives: and strategic quarters Q&A revenue over But quarter these with full adjusting this the four section. channel encouraged operational we detail we’re of to ahead who’ll I’ll financials of session. brand review million with the to headed. accelerating $XX right a detail our million negative made $X more we’ve now growth. I’ll question-and-answer million. see on progress Bennett direction the initiatives our the outlook, sustained and is in guidance excellence, I’ll the our a at profitable and $XXX strategic innovation remain million development, to for

Thank you, Rob.

than with part in months net lower XXXX inflationary was year, For to in XX.X% year partially And period. the pressure comparison due a versus the for revenue, June aforementioned factors, a during e-commerce showrooms wholesale XX.X% primarily year of the quarter pullback, approximately by channel, spend, reflecting of By months. in largely XX.X%. decrease net the primarily consumer and spend. products, decrease showroom revenue challenging new which past by million $XX.X second over This the driven channel compared of higher versus same gross The period XXXX. in doors. were prior revenues lower partially and profit months. a ago. the revenue, declined was with margin gross unfavorable direct-to-consumer decrease down prior changing channel attributed can in at the including wholesale XXXX, new in lower offset to prior revenue X.X%, during DTC, compared compared advertising which door $XXX.X production on and driven our was margin XX% million, down in volumes net that XXXX, by assisted demand $XX.X intentional to quarter declined number stimulus $XX.X% productivity a in absorption million was net cost X,XXX be the carries XX, prior the wallets increase proportion year, quarter revenue was to DTC lower second net million net year revenue opening opening ad of from a from declined to Gross ended the XX Within by a the home-related This offset XX of three than of $XXX.X margin coupled XX.X% dollars second planned gross XXX% last from with

The Advertising current the in marketing second happened net period net the approximately loss the the approximately in revenue revenue of for million in our the marketing a labor quarter and reflects Wholesale impact of same of the to the prior levels year-over-year million and decrease for from compared the Operating at by comprised second spend operating of XX% net XXXX. was margin net by year. driven Additionally, XX.X% primarily of improve ago. the restructuring. workforce partially Net million reduction of compared the revenue our the efficiency stabilized second versus $X.X were beginning gross last the spend intentional net percent quarter overhead quarter offset million year elevated a with as quarter decline in realized restructuring $XX.X of the in XX.X% XXXX costs, was quarter, for revenues benefits quarter from by XX% of environment, that quarter this profitability of with year of compared in of to year. income reduced was the the expenses in advertising year expenses period. $X.X and prior organization first materials, and $X.X

determined As value the liabilities and the and statement on based to fair accounted transaction value April for regarding be on remeasured by XX, should issued dated previously our of warrants specs, subsequently XXXX at reporting each recorded as fair that disclosed, the date we SEC warrants outstanding date.

a liabilities. For recognized the months we the non-cash $X.X three of million change XX, warrant associated with gain of XXXX, June ended fair value in

of compared or million income compared change the based $X.X million Adjusted $X.X XXXX. For to period. Company an associated quarter was in $X.X in non-cash not net has million net to months a certain average of rate to million count negative million EBITDA, or positive the to million $X.XX on in rate $XX XXXX, the first ongoing evaluation account of share period was warrant based an of $X.X for year with and value per an of $X.X adjusted adjusted a release, adjusted of was detailed EBITDA XXXX million share recognized share weighted adjusted a XXXX. and quarter the a the fair gain excludes do three XX.X as non-cash in estimated share today’s XXXX. Adjusted $X.X basis, tax year ended quarter per we effective a in liabilities. diluted average debt negative adjusted consider of our other items of an of adjusted an of the income second $X.X On for year EBITDA XX.X% with of compared and loss reflect been the prior quarter adjusted in million second the the in XX.X% on diluted weighted million negative EBITDA current the June diluted XX.X which million income positive of compared ago, performance diluted earnings for $X.XX XX,

cash at million $X.X sheet, December Company The operations of million compared and to cash capital to XXXX end the expansion. primarily and million XXXX. primarily used the of Moving quarter of million of decrease $XX.X cash had driven and our XX, with was of balance in million, $XX.X equivalents showroom June related March at by one $XX XX, expenders million XX, $XX.X XXXX, $XX.X from as

of December as materials XXXX resale as decrease environment. our next as a Inventories quarter compared $XX.X the finished million amount have with we in addition reduction XXXX. since compared a million available the of our the $XX The facility to XXXX end believe manufactured XX decrease decrease well were is current quarter, also a both, due the one $XX.X inventory we at XX, and adequate inventories the and the dollars to at for million right at by In at full million, in of we raw end $XX.X with beyond. and second production months June XX, size was cash credit and $XXX.X cash XX% driven under million and XX.X% XX, goods in March our demand of

to of trends now Turning to XXXX. to strengthening have $XXX outlook. take range to million million reduction change, current projected with conservative be aforementioned view net inventory us of and to our to $XXX million, of range of the headwinds expect in caused $XXX rest change in compared trends. million certain macroeconomic reflecting a $XXX a wholesale the our now Recent the volume in revenue more the industry We prior primarily the of reflect to

expect and second and XXXX between second the we compared the exiting margins For with gross the margins XX%. of anticipate improve XX% to gross year, with levels quarter half

and to adjusted million be In of our $X we $XX million between million negative to negative dollars. compared $XX terms of EBITDA million $XX profitability, guidance to expect prior now

turn I’ll to Rob. it Now, back

Bennett. you, Thank

with ground more we’ve macro improve While initiatives so new Officer, on driving to running enhanced Haynor, made. the our current confident work future cost since Previously, far are of in improvements. the environment exposed were with material, made I operational delivering against has remain anticipated, utilization, the provide to the investments the on more our raw operational to execution four we’d aimed effective we they’ll and inflationary in excellence. our than and returns close on XXXX the raw Eric be contracts this and potential Operating today and want challenging the joining in capacity higher building has benefits The an quarter, to team pressures. progress product strategic is proven to quality we’ve Chief efficient June, made our progress periods. in work capacity I with starting update has material doing many purchase hit have

negotiations in inflationary factor of series on costs as significant able our this history costs. impacts a not the dynamics these reduce of While as impact component a of with our of purchases. to offset structurally value environment items the for inflationary current begun have our to raw well of most to engineering larger We’ve company, some some material been spend

procurement a we force current balance. continued position, and pipeline as with have of continued in positioned projects plants and that well cost plant a sustainable will ahead, line expectations. us input reduction demand reflected undertook Operationally, our Looking in productivity our This as innovation in that we supply has the structural action improvements with reductions. cost enable current in demand

work into to us our from our customer to and our Alpine, we’ve began will our base, production to Grantsville, seat facility operations logistics McDonough, overheads also consolidate to facilities realize greater This Utah like and allow We and the closer efficiencies. two done our pillow allocate cushion Georgia. primary mattresses to Utah streamline with in

connected centric Purple, Purple effective second beyond and ago performance matching awareness delivered Success, campaign campaign to Success channels. premium full next will and increase discussed advertising, talked in video, of early, creative and power demand with to Purple it’s wholesale to compared three in share TV, in step creative key more online advertising. all includes weeks toolkit sales campaign Overnight marketing. launched metrics run of initiative our In social we our funnel about a evolution received tag from second driving advertising a Though brand build we’ve Our quarter, new more and preference all partners, through their we to our channels. elevation surpassing can recent and response partners strategic creating called across and for Overnight of linear positive historical Purple’s leverage last assets we’re historical media We’ve the see a new performance demand. quickly and call, expanding the the the vehicles has our is also that brand

our these completed testing. will created consistent partners. concepts which the and to In advertising addition, qualitative positioning extremely our communications well in Purple that ownable, of third This work, our brand tested consumer-relevant work the the later for as developing quarter, all important we for our foundation add second differentiated, opening highly plans positioning full well, brand XX expanding in has an initiative, during with Shifting as of and go-forward and second showrooms part showcase net over direct acting serve XXXX. showrooms product XX premium line with perform our star during the quarter presentation, our channels. Starting We wholesale while with after the new a X that showrooms, to the for the to remainder more with north continue ended locations quarter, year. starting

We’re area doors selling our excited this improvement over this for strategy, wholesale of footprint store of XXX X,XXX company, about were continues second an Wholesale, clear we the of retail quarter. the added and to At doors, vehicle component be net see approximately through new the brick-and-mortar quarter. having end the and a a to larger of XX time. QX, growth emerging path in

plan existing to forward, where to the doors now is going the doors our our improving priority could and so, our improvements. do market productivity identified quarter, last To selectively enhance X is share of impactful profitability we mentioned while make of I channel. additional grow As we areas open

We’ve they we begun focus believe we First, our our across working as have negatively operating to margins, vested do efficiencies helping our and their we wholesaler the wholesale improving strengthening interest margins business. in partners. our incentives this partners impacting on company. can increase We without for grow Purple with ensure that a

merchandising. promotion we partners promotions timelines to July deadlines Purple. are where messaging, be to closely major working in sure Secondly, demand manner included was to Xth able the we’re as that drive now working first to merchandising and our aligned meet to all were wholesale lock holiday more holiday a The in trade we and for with together make meet result, available

While more required to willing proof this earn our that able trust, than one we’re will together. holiday and partners’ was work to be

for the just we merchandising trade improvement promotional and were a X lined ago. holidays, already X where months major from up we’ve offers Additionally, significant next

that product traffic ensure partners conversations drives need actively and start margins. develop accretive our to relationships synergistic a meeting with simultaneously product. We’ve product to to and to we around Lastly, mutually enhance partners, with major approaches wholesale channel-specific our been

a result, products the channels where roadmap in we’re product and reduces be can developing channel places a now that As most conflict they effective.

initiative Hutchings historically Our Chief new driven was as with innovation. we this innovation that improves is innovation quarter, engine and built to our Purple has addition sleep. fourth a product Officer intellectual Innovation on strong strategic that I’m property Jeff consumers’ pleased company. comfort of that the again have and once our our say

with our process are on and product fresh for possible. Our as of our developed our that deploying at of new some introductions Team as by cross-functional product near-term we new pipeline has fall. began launch evidenced this revitalizing QX, quickly slated speed execution an time, product highs quite later quality results, immediate collaboration, accelerated execution ensures predictable, and product improved roadmaps. been new is In focus as which all first introduction in

and the share are opportunity shortly. We about here, with more this coming have we’ll be the much to on we but months, overpromise to encouraged I’m this you don’t I want share able to be innovation, year. product but we’ll ready address to accelerating in market new the later

that and the on developed we’ve stream the and for setting innovation beyond, XXXX, Purple years of forward. going been a new product new product from X for addition, working outlines stage products product hard new next consistent introductions roadmap In and a our X-year XXXX

while continue process innovation output roadmap new QX, heritage to and Purple our to predictable on and disruptive with delivery, a amplify QX we’ll the in ahead brand. of accelerate innovation authentic Looking emphasis our the new our of and implement execution strategy, disciplined,

each getting employees. for word work by The from for continued been see months have of net of already. far and directly gratitude into our not XXX expanded easy, our we -- this hard and but responses from last Let doors. our to consumers Despite dedication everyone, benefits of tough so the me the hard wholesale from we’re encouraged starting in doors their X with partners. environment work we’re our macroeconomic the new of the a close want us Wholesalers I’m year.

overall responding that also starting that fact the market. are the stabilization showrooms by consumers the e-commerce better of direct performing we’re Our business evidenced to and than see, are comp our our positively,

the interest I’m continued we have and improvement environment, to Thank position want see will With this great the We product on strategic challenging you. do on opportunities questions? Cody, we’ll us and quarter-over-quarter confident out that a long-term our priorities, is this work our many company. go capitalize ahead for there. to us lead to through

[Operator Capital We’ll from of KeyBanc first hear Markets. Instructions] Brad Thomas

has they’re going on only My perhaps longer, the question a I around trends. more to the maybe showrooms? us bit stores stores, at, for year color you’ve you -- productivity the was more trending same-store Purple at it’s of was some what a for share revenue look about have some open what -- And some think or color revenue those what rates little -- I you first some and at been a like be had that XX of little sales could of that stores of hoping the around

environment. category Our a showrooms but that are this the is at about pressure half seeing wholesale seeing the everywhere, in we’re rate clearly showing same

a need. maybe that The the and year, a comp really more, well -- have XX-month is down above about I requirements slightly performance basis, $XXX,XXX store not comp history still much, of we but on don’t minimum our -- about kind So yet. maybe that business

a you questions. was also You about because Did wholesale ask that of had just… couple other

those very much the viewed of stores. Yes. as that bright spot, Purple And a we’ve productivity

you? in bit and know if for far a count about Can have So that’s productivity little And opened out today? heard a Where door that talk doors so I recently wholesale seeing helpful more color. what them? the the you’re of doors the more bit of things how very it. incremental you I’ve been does going the stand don’t

Sure, Brad.

on all, of first So door.

in first heard the We a half, others. in that was just and we not want exit excuse and and to retracted I customer well me, a about XXX where first You X,XXX quarter of some negotiated in -- stores about a the doors were in numbers, from added couple performing clarify.

seeing like the category So just is the quarter bit active performance X,XXX, total that. stores, across better impact the a total, the net door that little percent. off soft for of universe with The believe, doors XXX. And our brings but and XX-ish over being that the under the I to, is real we’re was new X,XXX, something in where

comp off far, it a off from on Our year a is ago. door basis but that is productivity not XX%

better leader stores doing out stores. stores with launched we’ve plan, having I business is of where comprehensive But the support difficulty. we’re all longest limited Newer it’s we’ve our of the that wholesale and where count in think, it, more have bed most the the been a addressing the

as for partnership you talked And maybe Purple are RSAs just that to to aggressively, Rob, one willing about here trying last partnership with lean as me. into one to. your refining they and and wholesalers encourage how you’re hopefully pitch the

have made improve point, work about that more how Xth your can look wholesale you to to one in really the a major you effectiveness bit talk of this partners? holiday you learnings July. weekend may do little of And do You’ve are at think you much sell-through to today? the Purple where about But got

on going backwards. I’m kind of Brad. Okay, And to come

but the is I product, think are or the we’ve partners’ that to got definitely in -- they We’ve any foam we’ve that sales to they explain experience looks people understands I not couple that, -- We’ve that with, make the people reaching or uncomfortable feels unlike capturing used what technology been sure everything to. X.X product got faced like are decades polarizing avoid good root product. to something to it’s demand decade, that And either different brand, think do this we’re associate a us a because can to about this sales to in the way don’t at how on so are else. think memory product. onto sure we I that and sell comfortable folks open, minutes category the are less drove of was doors We’ve committed the lay they we all other not come different got in, and ago, make why is I’m can it than a else to the because our get because know if very a sure to at from we’ve and that, at feeling When those and they that just the make shift bed. it’s to sample a performing they is different product. training -- longest that effectively door. if the the the we the there. they got teach in say speaking issue will not, associate can sell in But pretty they’re they make retail been They’ll

Wedbush Seth of from hear Securities. we’ll Basham Next,

on McCartney Seth. Matt This is for

whether the might you questions. your seeing couple bit, the talk Just in to about a of especially come pricing of right Could of little and in some brand a market discounting quick we’re now? have maybe current position light down

are get some First with why. and -- I very want I discounting that try had to more we got $XXX, now to what translating go a in we’ve because through yet a we right business encouraging and showing e-commerce the there better $XXX, than all, chance of But explaining be a we instead amount And originally we’re tests speak on our to advantages its off. got much Purple think lead had to why don’t results can planned. Purple of mean to are. we to really of QX get that the importance of I of some category, and today, the wide and last increases promotion equation, QX. bridge it’s really give you’ll and fair kind in reduction think say And point. $XXX in running the not the that is in Purple I equation. over behind business I over point, when All a the But of we by these $X,XXX I you’ll but we’re don’t to evacuating that margins to the driven distracting said, we why That that still specific later Mattress on price the want much need of just price learn see on that. discounting and to out how to see we less beginning of price going promotional about message. the year left over understand gross was some is doing or did the fact so, that

Just in advertising pretty has one you. more The for drastic. reduction been

Just And there? can update on steady state is wondering, customer any we reaching landscape? are you a there share online the acquisition

Yes.

So steady state. there is

aggressive We’re leader it volume. consistent can we better and consistent It’s seeing where you combination in -- reduction. first we’re the seen and are you’ve planning a in search consistent to category wholesale, tell that -- off total I’ll spending with a with it what in And look getting What with pullback that QX. to very quality you participate in the I this. but even on brand in spending with planning can better significant significant drive see brand is. on doesn’t And marketing pretty I’m want of tools, at -- believer sessions this. of we’re effective the all, certainly Google also Analytics search you, see late, to say a and I’m full a in who

through advertising and second half year, up the that’s the brand the and the over held highest those last quarter, year reductions. end Internet We’re searched on

out advertising. working. less to most the we’ve want to tease been the effective more We it’s on to far we and effective. able so just spend And make want So, sure keep in like it looks

Raymond of Griffin Bobby from hear we’ll Next, James.

Bobby This is Alessandra for Jimenez Griffin. on

bit could half will just margins? gross your is assumption baked level? improve that into First, from we XQ gross that a little into margins dive second What

release, in we’ve XX% there. between year we press exit the XX%, said at in think I the

that’s So from maybe are improvement points. points we where -- X of right now to X X

Yes.

exactly from some efficiency pricing, getting more manufacturing, related... what maybe So are you -- benefit

And savings material point, all the but challenges pricing. the... the then said is because It’s through. frankly, we a soaking will raw quite some little been absorption then is of flow that of that’s volume It of last bit quarter, through, hasn’t what up and confirmed that that confirmed off a and not this little kind flow of will that’s bit reflected. facing, At pricing a have of that already we is overhead and flow-through we’re

you date? talk And the then to could maybe how Georgia is stepping facility about up

earlier great -- -- said, It was a factory, equation Hainer, actually next. the Chief good and as previously than the be. leadership and that being Operating can We brought and fixed site we productive needed it It I it Yes. that new be. week had this yet. will Eric into Officer, it I I’m as a on for is be And month. probably Eric’s It’s expect Grantsville confident I asset. challenge hands, will be it’s this right to in little a as our hasn’t think to was it, absolutely there going had we

the offset burden from more it’s place volumes, significantly as to would have it, -- shipping it Even we said quarter. send than reduced everything So, we offsets right we its at it last Utah. have the if

forward. stay, to So asset productive I’m our be will convinced portfolio moving a in great and it’s

need flow? positive like can get then for to highlight do Is more you sustainable And flow? million free cash we think $XX million that what that free of revenue quarter, level you lastly to positive think do What quarterly you me, more? $XX generate maybe cash

the we’re there. structures sit kind mean, and up I cost right. close, I had We Yes. of

that get $XX more think over would million line. us I

question. Nagel of Brian has next Oppenheimer our

couple a of questions. So

balance in I at So the this back, probably and stepping And the then more reduction reduction. after a the the guidance year. importantly, prior comes results, guess, of for looking

Rob, that, is recognized unfold it Is here, function of Or question maybe than as was kind expected the also primarily there’s were a business is of you’re initially? not Purple you? worse I it that this for of the is -- have, challenges macro? watching -- internal So fully

door it’s wholesale macro, is driven specific facing or to that It’s adjustment macro. definitely isolated. more -- you think the primarily by And I what is macro. fairness, it’s adjustment I performance. And -- first can is In this make this -- were just pretty mean But easier doesn’t internally. it’s not hard. was our quarter any we probably only it this

stabilized. has business e-commerce Our

showroom Our that. have some It of some the is we’ve we to that. is challenges, outperforming and while doors, got of business, plans to And wholesale category the productivity address facing our do them. fix

are coming Some where some place adjustment yet that’s to and are is the but come, in from.

And then that then. to follow-up as a

So follow-up where to with a real really noticeable any geography which or a other the regard now? regard to this kind -- wholesale of I help to but should prior you are something the with segmentation think business may pressure are right question, of explain seeing points the doors,

sales I We’re where retail up can any footprint say the those that their can we macro against and us not results. we’re seeing geographically. improve to our associates trends customers get see within performance able let it,

that aggressively we’re encouraging right differences our And now. no to so, information But customers share with geographic macro that seeing us. we’re

question, a X. final to follow-up the then those And again,

company. the for laid You’ve brand, out, think, the aggressive repositioning strategy of here a kind for I and compelling very

the kind does watching you’re -- of environment your undertaking? unfold, either this intensity you’re some As it more change maybe difficult initiatives timing on the now view or your of of macro

we I are I’d this fully I and happen we the our know does. construct support to think see little bit it the balance And sheet it be the we can company change obviously, see people hard how believe stays to I faster. working, same. make I them got to to of sure have But like want think and it, I grow that again. -- the more patient. a

that seeing tough show camp, sitting right obviously, it’s to And your do in they’re are me. that I’m signs headwinds, happening, now. internal when saying in these I’m We but

Atul Maheswari, UBS.

a Rob, question then follow-up. revenue margin a gross I had on first, and

look digit quarter guidance. it half. a now on -- XXXX on the quarter to to high CAGR I up at the back mid- compared up XX%, the decelerated first a basis, and for to just quarterly So implies on XX% If guidance revenue was second single

are being you So already in a later assuming simply the conservative come and my question year? to you XXXX down that third slowdown is, quarter-to-date? Or seeing are versus sizable material quarter, this step

the total driven of is that the not in be that and by ‘XX is slightly did, the I expect comparing of then we them I’ve hear was I got the way get X to I a the got have there. quarters didn’t to different continue quarters. the quarters -- around tell last in front to assumptions the inside me me. macro we’re total, year, that answer mean, yearly guidance I giving behave that, don’t category me to all were the strength. but you To try way with They’ve Let it what what because to? if but ‘XX?

it the versus ‘XX, Yes, would a guidance -- like sizable step the seems very would half this comparing imply of back XXXX. imply to them like year down

XXXX... back the of half So

in Revenue ‘XX in -- was revenue $XXX ‘XX million. $XXX million, Total

to in that. how sorry, So me it we I’m a don’t have I don’t front have see follow up. right second will follow that the down I of but with be now, could half. We’ll in just up step

so Yes, follow-up take drop. on margin we’ll question gross -- And that my is offline. then

is some back there So year. the half improvement in expected granted be -- of to this

to XXXX. the ending where XX%. you XX% That year think, were It’s I off still was, in We’re ways at still XX%. versus some

to what -- key the and of like portion this you -- structural next this coming believe you is this So basically of mix? you gap level? going from beat what material if And the that of it from around to quantification then, Is getting is years? the over the some have like you’re caused are gap? some provide inflation the that’s factors that some that what a of of bridge to majority And channel factors portion is are what -- able can of from do couple

but XX% was biggest I mix. in at there’s you, in DTC. I’ll XX.X%. offline gross have ‘XX these margin I go size business would components, it if was for at think And single and channel is the one the X So ‘XX, to to look

We’re now a little bit that. higher than

are taking we action something got input The at should to So to get with probably the the And taken live others, is the absorption be think is on some there those input X sure that drivers. missed all throwing just the I through. handle. performances able flowing input to and it’s level. XX-XX, because certainly prepared margin done costs think the and talent then get to ours the factory. line input challenges second we’ve the be to some get we to with. of And cost biggest to and me, It’s those mix. whatsoever. it’s top like Bennett, the that us costs we’ve up certainly have the channel may The right, absorption the with get that costs, volume fully now. something but on We we ‘XX to got It something? I be to those catching I’m channel mix, I not that absorption number think, absorptions. longer historical up, And we’re is of

we’ll hear Truist. of from Keith Next, Hughes

on encouraging signs new X-year launches about the roadmap. So talking product with

plan comment, First, And any in you launch to approximate second do the kind can of product half time this products of your year? to you have or when?

see you’re steady fully to it when, -- and I stream chasing product, don’t aggressively sooner later. are we’ll but to think and than a I’m going ready exactly new we both have detail

going was? question. that small vendor seeing that fee. something And In Can more is of to very the number, those? what other a one then be there’s adjusted any you EBITDA talk we’re separation about And

Yes. Go ahead, Bennett.

working our to look new our had us. effective we and contractor forward, Eric good lot with as -- outside this and functional been doing Operating our And our a was VP we Actually, our And and we Hainer, new in going terminate of it hired -- more on who’s we who Eric. put of in we’ve a saw excellence contractor operational the was Yes. our here our with relationship hands that Chief efficiency, Officer. work

relative work existing to on much So the our more will a paying this more with be end continuing contractor. fee in positive financial decision

ROTH Capital. Matt Koranda of

Just trends maybe on the year-over-year basis basis then of revenue business, if within throughout year-over-year of And the could as any around quarter-to-date? talk on in about we monthly just commentary you cadence the sort quarter, the growth reined second growth a direct direct expense? curious a marketing preliminary

to then is Yes. mean, it’s when about were in in those the and our we QX by maintain it with the that. the by somebody the quarter, And session encouraged first at and The on at But volume as earlier, it’s about more page than definitely very quality stronger. end signal -- modestly of quality the QX. of important website. stable clicks XX% We’ve a we’re been has feathered I get spend And the gotten watermark, the come that to XX% able of through early was and and I we challenged starting define spending. sessions relatively high they predictable, kind reductions said the -- most just of been

and quality trying by we’ll So encouraged to that, more to continue to invest we’re rate drive behind that sessions the and use conversion up.

maybe count, of outlook could door lower customer but you give of of more what that that the for know sort to is door in just impacting us that I much the How roughly terms bit wholesale in the the just if terms hard you -- curious public And just year? cut revenue count? to mentioned. then of does sort And imply exit on calls, these are discuss little maybe color things around a

Yes.

going the are volume. this but XXX and is customer about count or reduction. I door to neither us higher So, stores, respectfully, The that of net reduction was the mean miss

then from gross last recovery. maybe margin me one on just And the

a that on us this timing -- end and talking fourth exiting fourth at terms the already You actioned had should versus on of more and the mentioned going of improvement just put would that to And then, in of modeling X when been some year, that XX% just say towards XX% XX% we of quarter? Roughly, points already we through year, come? help the is in been be quarter, portion XX-XX flow-through actioned. Is of it’s you you of what a has the of what And to what’s be the then end that it means. put actioned. of or happens, that has be the point the rate we’re sort to to finer run are that hitting XX% sort

us, ahead but some have the know and ago, plant other a need us. unidentified And hand half fair for of it’s steady We Eric’s high get not you captured of going to quarter. well right that and half referenced combination ahead think to We there. how about effectively I still of just fourth do a it’s it. in it of run that we’re of when to model few a that the output that fundamentally minutes Bennett safely is and work as how quality on the as

confident happen. we So that that, are will

And next, Jeremy we’ll hear Craig-Hallum. of Hamblin from

Jeremy. for on Cole Jack is This

talked guys raw material pressures You inflationary about impacting costs. input

some the on little year-over-year sounds increased negotiations expectations with like bit of you how those it you touched As guys on? costs much those forward do And maybe good costs maybe basis? procurement to grip have more a and Just a freight the could a and you pipeline of speak these then, forward. going pretty going on

Yes.

more is XX% Our costs raw And to bit continued little up were in second We’ve see and and increase freight materials about them seen year the through to starting ameliorate. a a in first ameliorate. quarter. and little The seeing freight, escalate last -- costs. international the now they’ve we’re softness

the That’s we’ll to of year. we’re thinking starting kind price, of stable about with costs the a We’re freight more oil leveling think -- balance and softness just how some I for it. the see in see domestic

And Bank will today from Curtis America. of Nagle come question of our for final

XX prior commentary, So so remainder $XX that year. negative, the of should working follow-up, from in CapEx real we at of million the a more then the and the does the uncertain? terms be I not I at cash cash that they’re as imply the is EBITDA, that or utilized. year any like plus in position guess basis starting imply just based definitely is for is another on the but do flow of -- the on the on I think off with Like, of own stores, something so Why to better end all and conservative? just plan fixed understand facility? rest the Does what guidance And the it, cost environment

store number to of one, Let fair encouraging, the very and before in close the point. continue and to I’ll It’s about we But than headwinds. question, a showrooms the better performing what cash to kind you pre question. have category me take the and these Bennett be talk projected total, had

haul. over the very we’re about So long channel optimistic that

The it. you stop and -- second it’s can to that and run, and hard that an is sure it store wants part, engine understand development start is -- I’m to Curtis, it’s

so, to good have keep got least at locations. been our for can. X as our commitments XX and we’re developed The months our probably kind at time, get to partners this under business and we we’ve of And development trying showroom as

even well it’s good that think pace. at about They’ve these performing investment going a through we keep making and So, been investment. headwinds, to we’re that

Yes.

flow, we drawing the think at look the adequate of you we the point. down If have even without year at cash cash line for balance this the

look CapEx used we cash the in coming the of first they give into other our inventories EBITDA, year, at payables in addition you quarter, of a advertising year high were year. up last If as first as a and the built half as lot -- to we very the as lot of primarily spent and our

Now inventories I to And down have we’ve going exist. they’re payables see, our down. level rationalize think about as started where come come the you our that to have can

flat can it. think balance go about got little year, balance I bit the really EBITDA just to run of positive of the basically, a and we thinking if in the and the a So for that’s year, more we’ve to we’re spend cash for CapEx, how

to for our the turn call to additional closing And any presenters at this time, like I’d back comments. or over

like your the to appreciate interest on the would say We phone. I the to in team just company. Yes.

this company see get and are anything again, available help understand growing you you. very get you as that Thank and difficult We to fit. we’re through optimistic these further we headwinds will

today’s Thank That does you conference. conclude for participation. all your

disconnect. now may You