- SmileDirectClub Inc SDC reported preliminary fourth quarter and fiscal year 2022 results and initial 2023 guidance.
- The company expects fourth-quarter revenue of $86-$88 million versus average estimates of $99.18 million.
- FY22 sales are expected between $470 million and $472 million, below the consensus estimate of $483.94 million.
- The company also issued preliminary FY23 sales guidance of $400-$450 million, edging below the consensus of $489.34 million.
- SmileDirectClub expects FY23 adjusted EBITDA loss of $(35)-$(5) million, with positive adjusted EBITDA by Q3 2023.
- The company expects to introduce an additional $120-$140 million in savings in 2023, excluding transition costs, and place SmileDirectClub on a path to positive cash flow in late 2023.
- William Blair writes that with the current projected cash balance for 2022, the company will likely burn through that amount by the end of next year, thus requiring the need to start generating cash or raise additional funds with a sub-$1 stock price and a rising rate environment.
- The analyst expects further revenue shortfall on higher costs, as the business model depends on marketing.
- Noting FY22 sales guidance of $600-$650 million in early May to current guidance of $470-$472 makes it hard to see incremental top-line visibility given the scale of cost cuts.
- At these lower levels, William Blair writes that the stock will remain volatile, with a little going a long way potentially around the sentiment, William Blair writes.
- Price Action: SDC shares are up 10.35% at $0.6566 during on the last check Wednesday.
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