Please note this event is being recorded. I would now like to turn the conference over to Stacy Turnof, Investor Relations at Edelman Smithfield. Please go ahead. Thank you for joining Purple Innovation's third quarter 2024 earnings call. A copy of our earnings press release is available on the Investor Relations section of Purple's website at www.purple.com. Before we begin, I'd like to remind you that certain statements made in this presentation are forward-looking statements. These statements reflect Purple Innovation's judgment and analysis as of today and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. You should not place undue reliance on these forward-looking statements. For more information, please refer to the risk factors outlined in our filings with the SEC. Additionally, today's presentation will reference non-GAAP financial measures such as EBITDA, adjusted EBITDA, and adjusted earnings per share. A reconciliation of these measures to their most comparable GAAP measures can be found in the earnings release available on our website. With that, I'll turn the call over to Rob DeMartini, Purple Innovation's Chief Executive Officer. Thank you, Stacy. Good afternoon, everyone, and thank you for joining us. I'm joined today by our CFO, Todd Vogensen. While the third quarter was difficult from a revenue growth perspective, we are encouraged that volume was approximately flat on a quarter-over-quarter basis. This performance is evidence that we're maintaining strength despite ongoing softness as the housing market continues to struggle, and we are encouraged that our year-to-date results have modestly outperformed the broader industry. Earlier this quarter, we took proactive steps to achieve significant operational efficiencies and position ourselves to capitalize on tailwinds when the industry improves, with both a consolidation of our manufacturing facilities and a corporate restructure. These steps, along with our disciplined approach to pricing, cost-savings initiatives, and selective promotional strategies, drove meaningful savings in the quarter, with adjusted gross margin improving by 340 basis points year-over-year to 40.5%, which continues to exceed our 40% year-end target for the second consecutive period. In addition, we're highly encouraged by the progress we've made with the restructuring, which is continuing in line with our expectations. The restructure of our corporate organization is complete, and the consolidation of our manufacturing operations is more than halfway through. It's clear that we're delivering significant margin improvement from these efforts. To date, we've completed the realignment of our distribution network, fully transitioned our e-commerce operations, and have transitioned 75% of our wholesale orders to ship out of our Georgia facility. We expect to be fully operational in Georgia manufacturing facility by the end of the year. The supply chain consolidation and corporate restructure is expected to yield annual EBITDA savings of $15-$20 million starting in 2025, and we plan to have positive cash flow and adjusted EBITDA next year, supported by our leaner corporate structure and right-sized manufacturing operations. These savings will allow us to continue investing in innovation and marketing, further supporting our Path to Premium Sleep strategy. Turning to our revenue performance, Q3 sales were down 15% year-over-year, primarily driven by softness in consumer demand, optimization of our advertising spend, and a tough comparison to our third quarter last year when we launched our Path to Premium Sleep strategy. Within DTC, showrooms continue to have solid performance and were flat year-over-year, driven primarily by an increase in average selling prices as we continue to upsell customers to higher-priced models through our Path to Premium Sleep strategy, despite soft unit demand in the category. Our e-commerce business was down 16% year-over-year, primarily due to 36% lower advertising spend than third quarter last year when we invested heavily to support our new product and brand launch. This year, we've optimized our advertising to be more efficient and profitable. The year-over-year decrease in ad spend, coupled with fewer days on promotion, significantly improved the profitability of the channel. Our wholesale channel was down 20% year-over-year as we lapped the launch of our new products into the majority of our partners. However, we are encouraged by the feedback we're receiving from many retailers about the strength of Purple's performance compared to other brands on their floor. Turning to progress of the five strategic initiatives. As a reminder, the initiatives are driving gross margin improvement, improving productivity of existing showroom and wholesale doors, driving e-commerce conversion, improving our marketing effectiveness, and bringing new products and innovation to market. Our first initiative is driving gross margin improvement. We continue to drive cost savings through supplier diversification, plant efficiency gains, and optimized freight scheduling. As part of this initiative, during the quarter, we've begun producing all pillows in-house, further improving profitability. We're also changing vendors that produce certain components of our mattresses, which is now delivering double-digit savings on these items. As a result of our cost savings program, our mattress production is becoming notably more efficient, with a 25% decrease in hours per mattress produced compared to last year. Our showrooms remain a clear driver in our premium brand experience. We continue to generate healthy sales trends and improved profitability across our retail locations through two main strategies. First, we're focusing on pillows as a significant traffic driver, with year-to-date pillow sales up approximately 30%, and most pillows are now carry-out items. Second, we're focusing on the growth of our luxury line, Rejuvenate, to increase both average selling prices and profit. We're seeing the strength of this product, which is supported by our new financing offers, accounting for nearly 30% of mattress revenue in showrooms. On the wholesale side, our partnerships remain solid, and we continue to see growth across the higher price point Restore and Rejuvenate collections, which has increased the average selling price for the channel. Our top-selling mattress in the wholesale channel is now our Restore Premier, the highest end of our premium collection. We also continue to expand our co-branded advertising relationships, which has led to notable improvement in sales across several major retailers. Next, our third initiative is driving e-commerce conversion, focusing on improving sales and profitability. We recently refreshed our promotional strategy for the Purple Flex, an e-commerce-only mattress focusing on competitive price points and promotional bundles. This unique product, engineered at $9.99 for a queen, has performed well and has already been selling through at a high rate. We've also made enhancements to our website, focusing on personalization and improving the customer journey from research to purchase. Turning to our strategic initiative, improving marketing effectiveness. In the third quarter, we continue to focus on driving efficiency by investing in profitable advertising. We're also implementing new tools to optimize media spend and drive more orders per dollar spent. This includes better ways to identify individuals coming to our website across various devices and tailoring web experiences to better match specific customer preferences. Finally, let's turn to innovation. Over the past year, we've launched our most innovative product line in history, with nine mattresses across three tiers, including our luxury collection. These differentiated product offerings, powered by our proprietary GelFlex Grid technology, continue to deliver strong satisfaction and engagement from customers. Looking ahead, we plan to roll out new innovation in early 2025 across two-thirds of our product line, which will further enhance our premium positioning. We expect to launch new grid technology and improved aesthetics across our Rejuvenate collection and a new Essentials line with improved durability and refreshed aesthetics. In addition to mattress innovation, we'll be introducing under-bed and top-of-bed products along with new channel distribution. While we're pleased with our improved profitability, we expect continued pressure on the top line due to industry-wide demand declines. We anticipate finishing the year at the lower end of our guidance for revenue and Adjusted EBITDA. However, we remain confident that our restructuring efforts will strengthen our business model over the long term. We believe our Path to Premium Sleep strategy will continue to move the company towards sustained, profitable growth at an accelerated pace and will help build the category in the process. Now I'll turn the call over to Todd to discuss our financial performance in more detail. Thank you, Rob, and good afternoon, everyone. As Rob mentioned, the macro environment continues to be challenging, and we saw this reflected in our third quarter financial performance. Let me walk you through the key financial metrics for the quarter, and I will highlight the areas where we saw both headwinds and progress. Starting with the top line, net revenue for the three months ended September 30, 2024, came in at $118.6 million, which was down 15.3% versus $140 million in the prior year. Direct consumer net revenue for the quarter was $70.8 million, down 11.7% versus last year, with a decline of 15.7% in e-commerce and with showrooms relatively flat, and wholesale net revenue was $47.8 million, down 20.1% from last year's third quarter. As Rob mentioned, net revenue for each channel was impacted by a reduction of 36% in our Q3 advertising spend as we decreased investment and less profitable spend compared to the last year. This shift resulted in much more profitable revenues but also clearly had an impact on our total volumes. In addition, for wholesale, net revenue was impacted by our decision to exit our relationship with certain customers. The net door count reduction during the quarter was 200 doors to approximately 3,300 doors at the end of the quarter. Importantly, we have opportunities with a number of potential wholesale accounts that we're actively pursuing, and we also have new business development projects that are near completion. So we expect our door count to grow again over the next few quarters. Now, despite the revenue shortfalls, we made notable progress in improving our total profitability in the third quarter. In terms of gross margin performance, we should note that we had a number of items that we've included in cost of goods sold for restructuring and related charges, mostly from our overall restructuring plan. These items include accelerated depreciation, one-time severance costs, and non-cash inventory write-offs. So excluding these restructuring and related charges during the quarter, as well as our one-time launch costs in the prior year period, our adjusted gross margin was 40.5%, which grew 340 basis points versus the adjusted gross margin last year, with the improvement reflecting favorable direct material savings, operating efficiency improvements, and freight cost reductions. This represents our second quarter with adjusted gross margin of over 40% as we continue to implement programs to not only sustain but to structurally grow our gross margin over time. Operating expenses for the third quarter were $82 million, up 2.6% from $79.9 million in the third quarter of 2023. This increase was driven by $19.8 million in restructuring-related charges as part of the consolidation of our manufacturing operations to achieve significant operational efficiencies. Excluding all restructuring-related charges this year and the loss on impairment of goodwill last year, operating expenses were down $10.9 million, mostly due to the $9.1 million reduction in advertising spend. Our adjusted net loss for the quarter was $8.4 million compared to an adjusted net loss of $19.4 million last year. Adjusted EBITDA for the third quarter was negative $6.4 million, an improvement from negative $16.3 million last year, driven primarily by our ongoing improvements in gross margin and a refocus of our advertising towards more profitable spend. Third-quarter adjusted loss per share was $0.08 compared to an adjusted loss per share of $0.18 in the third quarter last year. Now turning to the balance sheet. At the end of September, we had cash and cash equivalents of $23.4 million compared with $26.9 million on December 31, 2023. Net inventories on September 30 were $59.9 million, down 16.9% compared to September 30 of 2023 and down 10.5% compared to December 31 of 2023, as we continue to manage our inventories more efficiently. Now, as we head into the final quarter of the year, we expect to continue focusing on cost management and operational efficiencies. We are carefully managing our restructuring initiatives to ensure long-term profitability while maintaining our focus on delivering innovative products and enhancing our premium positioning in the market. As Rob discussed in his remarks for the full year, we expect to be at the lower end of our guidance range for revenue of $490-$510 million and also at the lower end of our guidance range for adjusted EBITDA of negative $20-negative $10 million. Despite the macroeconomic pressures, we remain confident in our ability to execute our Path to Premium Sleep strategy over the longer term and deliver sustained profitability over time. With that, I'll turn the call back over to the operator for Q&A. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Brad Thomas with KeyBanc Capital Markets. Please go ahead. Hi, good afternoon. Thanks for taking the question. You know, Rob, still clearly a challenging environment out there for your industry. As I look to revenues for the fourth quarter, I think what's implied if you were to come in at the low end of the full year guidance is that perhaps the pace of sales would accelerate a little bit as we go into 4Q. I'm just curious if you could share any more about what you've been seeing of late and any maybe unique factors might be helping to see some degree of acceleration from 3Q. Thanks, Brad. Certainly, post-Labor Day, the business has been soft, but we go into Black Friday promotion, I think starting tomorrow, and they're pretty competitive across all channels. That November and December period does require a pickup in the pacing so far, and we've got good reason to expect that that should happen. That's great. And then, Todd, if I could ask just a question as we think about cash moving forward. I know that there are some cash costs associated with the Utah restructuring. Could you maybe help us think about cash outputs and takes over the next couple of quarters just as we're trying to bridge our cash flow statement? Sure. So a few things to just keep in mind. First, we have shown good, consistent progress on inventory through the year. The team's done a nice job of managing inventory and leveraging some new systems we have. We expect to continue to see opportunity to bring our overall inventory levels down. Also, at the end of Q3, just because of the timing of some payments, we ended up at a low point in our accounts payable that you'll notice. We should get back to a more normalized level at the end of Q4. So both of those will be a source of cash on the overall cash flow statement. And then beyond that, we continue to manage expenses and CapEx very tightly. So we ended the quarter with $23 million in cash. We actually had a slight positive on our operating cash flow this quarter and feel like we're positioned well as we go into the fourth quarter. That's great. Well, I know we're all eagerly awaiting a turn for this industry. Thanks so much, and I'll turn it over to others. Thank you, Brad. The next question comes from Seth Basham with Wedbush. Please go ahead. Hi, this is Matt McCartney, on for Seth. Just, I'd like to understand how you're so confident in turning profitable next year. How can we think about the drivers to that? And is there an underlying demand assumption being built into that or some plan to turn profitable irrespective of where the market is? Yeah, good question, Matt. I mean, we haven't obviously released any guidance yet on next year, but we are assuming a continued difficult category and not building any kind of volume-driven tailwind into that plan. I think the reason we are confident is the progress we're making on gross margin. We said we'd end the year north of 40%. We'll now have put two quarters in, at least on an adjusted basis, once we're through the restructure to be north of that. And we still have both purchasing benefits to get and the full benefits of the supply chain restructure. So that is where that confidence is coming from. Gotcha. Okay. Just switching gears then, just looking at Labor Day, curious how you perform, especially in the context of being more selective on promotions and pulling back a bit on advertising. Do you think you outperformed the industry during that period? As you know, Matt, in this industry, it's quite hard for us to see it perfectly clearly, but we're down less than 2% this year, year to date. The shape of the volume is a little bit different from last year because we're comping the launches last year. But that feels like it's outperforming the category to me. I think you've seen another public company report sales this year down 10% in the total year. So as best I can tell, we welcome the help that you can give us, but we do think we're modestly taking a little bit of market share. Hey, Rob, it's Seth here. I just have one more follow-up. In terms of the operational manufacturing consolidation, can you just talk through exactly what's left to do and whether you see any disruptions to the business associated with that? Yeah, Seth, glad to. So Eric Hayner is overseeing this, and he's probably going to kick me when I tell him this, but he's more than halfway through it. We've had little bumps in the road, but nothing that is meaningfully concerning. What's left to do, we're using a little bit of manufacturing in the West to balance customer needs as our inventory consolidates. And then we've got to open the distribution center in Salt Lake City. We've got a line on that that should be in place by the end of January. So there's still a lot of work to be done, and these transitions are always difficult, but we're more than halfway through. As I said in the script, we've got all of our e-commerce transitioned, most of our wholesale transitioned, and we're still supplying the industry at, near as I can tell, kind of best level of service to the customer. So we're so far, so good, feeling like we'll get through it as we planned. Thank you, guys, and good luck. Thanks, Seth. The next question. Thank you, Matt. The next question comes from Matt Koranda with Roth Capital. Please go ahead. Hey, guys. Good afternoon. So maybe just wanted to hear a little bit more from you, Rob, about. You sound confident that maybe we will see a pickup around the Black Friday, Cyber Monday sort of period. Kind of what goes into the confidence that we see a little bit more acceleration in demand for your products? What do we have in the way of either promotions or ad campaigns that help inform that outlook? Yeah, thank you, Matt. Probably three things. I'd put them in order. First of all, the promotional periods, the tier one holidays, have been behaving better than non-holiday, and we're pretty much in tier one almost the rest of the year. I think there's one week that isn't, but otherwise, you've got every week in tier one. Number two, Q3, where we saw this year-on-year deceleration, had the majority of that $9 million ad cut. That's not there in Q4. We're actually going to be up modestly, but up modestly versus a year ago. And then historically, the consumer has come to these holidays ready to shop, and my hope is getting past the election and seeing some certainty in the market will not hurt consumer confidence from here. Okay. That's helpful. And then just on the restructuring plan, maybe the $15-$20 million in EBITDA savings, any split there, Todd, between sort of the benefits on the gross profit side versus OpEx lines? It sounds mostly like it's going to be a gross profit margin type deal given the move in facilities, but maybe just put a finer point on that for us. And then I think you mentioned that means positive adjusted EBITDA and free cash flow for 2025. How should we think about seasonality there for the year? Are we starting off negative, flipping to positive, kind of similar to what we had expected for this year? Just any color on sort of cadence and how we should be thinking about filtering that in. Sure. So I'll start with the overall restructuring and where we're expecting to see the benefits. Most of those benefits will start to flow in earnest when we get into 2025. In terms of the balance between cost of sales and operating expenses, there is a healthy amount of savings in both. It's slightly more weighted towards cost of sales, but we did some fairly significant work on operating expenses, and we'll see sizable benefits there as well. In terms of seasonality, yeah, we're probably early to get into too much detail on 2025 guidance at this point, but fair to say this is a business that, as I've looked back on history, has tended to do a little bit better from an EBITDA perspective, from a cash perspective as we got into the back half. So it would probably be fair to assume similar next year. When we get to next quarter's call, we'll have more detail around the actual guidance, and we'll be able to probably give you a little bit more context around what that might mean in terms of the flow of the year. Okay. Appreciate it. I'll leave it there, guys. Thanks. All right. Thank you. Thanks, Matt. The next question comes from Bobby Griffin with Raymond James. Please go ahead. Good afternoon, buddy. Thanks for taking my questions. One just quick follow-up just on the restructuring. Do you get the full $15 million-$20 million all in next year, or does it start to bleed in partly so we shouldn't model the full impact until sometime in 2026? It actually should flow mostly through 2025. We'll actually start seeing a modest amount of benefits as we go into Q4, part of why we're confident that we will be EBITDA positive and cash flow positive in Q4 as well. So by the time we get into next year, yeah, we should be ramping up and seeing the full benefit of that in our P&L. Okay. And is there a real estate component where you're going to sell off some of the closed facilities, or were they leased, and there's a sub-lease component as well that it's dependent on, or is all that locked up and already done? Yeah. So we are assuming that we're going to be able to sub-lease the facilities that we have currently in Salt Lake. There's two of them. We are already getting going in some of those leasing activities and seeing encouraging early signs, but we took some conservative assumptions around our ability to sub-lease and the timing. And so all that is built into the net savings. Very good. That's helpful, and then I guess, Rob, maybe just on the decision to exit certain doors, can you just talk a little bit about that, and as you look out kind of where your footprint is now of who you're serving with this new manufacturing setup that you have, is there certain areas of the country where you feel underpenetrated in that you need more wholesale doors or less, or just kind of how do you think about that kind of on what I'll call Purple 2.0 from the manufacturing side of things? Bobby, I don't think that, certainly from a reach standpoint, we're not going to make a customer choice to serve or not serve based on geography. When the Salt Lake distribution center is open, we'll have the same reach we have today. There's about a $2.5 million freight hurt in those numbers, but that's all been netted out in the savings. The reference to doors and customers, and in fairness to our customers, we started as a bed-in-the-box brand, and for players that have us just in what we now call essentials, it's just not built for wholesale. It doesn't work for them, and it certainly didn't work for us. And so in fairness to those customers, we've sat down and said, "If you don't either buy into the path, the premium strategy, or you don't think you're ready for it, then this is not going to make sense for either of us." And that has netted us out. The net number is about 200 total doors. We're down to 3,300 doors. I think we ended last quarter at just about 3,500. And so those are not customers we're closing the door on forever, and hopefully they're not closing the door on us forever. But what we are saying is if you're just doing business in essentials, this isn't going to work for us. And so we own that. We've taken that business back and that netted the store count down a little bit. Okay. That makes sense. And I guess lastly for me, I think you, Rob, you might have mentioned showrooms comp flat year over year with units down but ticket up. Did I hear that correct? And just any comments on how the journey is going on the showroom profitability side? I know that's something you guys have been working on and seeing improvements. So just any update there? Yeah. Scott and his team are making nice progress. We have about a third, not quite a third, but almost doors moved from unprofitable to profitable at the four-wall level. We've comped positive about nine out of the last 12 months. September was soft for sure, but the mix continues to trade up. And again, I think it's a place we're actually gaining a little bit of share. We've got a lot of work left to do, but I'm encouraged with the trend I'm seeing. Very good. I appreciate the details. Best of luck here in fourth quarter. All right, Bobby. Thank you. The next question comes from Michael Lasser with UBS. Please go ahead. Good afternoon. This is Dan Silverstein for Michael. Thank you for taking our question. Just one question relating to the new footprint. What level of capacity utilization is the business running at today on a pro forma basis? And then just given this leaner operating model, what type of additional volume growth from here would the company need to run at to achieve EBITDA profitability next year? Dan, let me break that in a couple of pieces because I think there's some good important questions in there. First of all, I'm going to start backwards. The restructuring has lowered our break-even closer to $45 million a month from the $50-$55 it was at previously. So that's fundamentally in place now. Todd mentioned the corporate restructure that's done. The footprint restructure is well on its way to being done. That lowers our break-even materially. You also asked about capacity. So today I'd put the plant, Atlanta's running at about 70% of theoretical capacity. But when we announced the restructure, and this is in our supply chain plans, our objective is to have about two and a half times our demand capacity available in the footprint, both from a physical space and a machinery basis. And we'll make sure that we pace that carefully well ahead of demand, but I underline carefully. This whole move was designed to right-size production. So today we're running at about 70% of capacity. Okay. Very helpful. The other question you had asked was at what level of capacity do we need to operate at to be EBITDA positive? We really, as we've looked at being EBITDA positive next year, have not assumed any big uplift in volume. So the volume we're seeing today, at that volume, we believe that there's good upside in the business and there's good efficiencies to be gained out of our manufacturing operations that put us in a good position. Thank you both. Thank you, Dan. Again, if you have a question, please press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. The next question comes from Keith Hughes with Truist. Please go ahead. Thank you. I guess two questions. First, the previous comment on $45 million a month break-even, is that EBIT or EBITDA break-even? That is EBITDA break-even, yeah. Okay. Because that gets you to about $540 million of sales and you're doing $490-ish this year. Maybe if you're assuming it's flat, there's a disconnect there in the number somehow. Yeah. I think the big difference is a lot. That is where we're at today. That does not take into account a lot of the efficiencies and savings out of the restructuring that we haven't realized yet. So once we start realizing those savings, that'll bring the break-even point down even further. And we just haven't gotten to the point of kind of. You're not there yet. Yeah. Yeah. Exactly. Yeah. I'm just not there yet. Okay, and then there was a comment earlier in the call. You said volume was flat in the quarter. I assume that's enterprise-wide. If you could talk about volume and your wholesale versus your online channels that get us to flat. Keith, I'm just tracking to the. I think in the script I said, quarter on quarter, we're down versus year ago materially about $20 million. Just. $20 million. I'm not correcting you. I'm just trying to make sure I understand the question. Yeah. Well, I misunderstood what you said. So you're down year over year $20 million in units. Is that correct? No. $20 million in revenue in Q3 driven by lapping last year's launch and category softness and reduced advertising. Okay. Is there any way to look at that on a same-store sale basis where units are when we take launch units, floor samples, and stuff like that out? Is it too early? No, we could get to that. We know it on our own stores. The wholesale takes a little bit more calculation because you got to figure out what happened with inventory and how much of that was floor samples. Okay. All right. That's all. Thank you. Okay. Thank you, Keith. Thank you. This concludes our question and answer session and the Purple Innovation Third Quarter 2024 Earnings Conference Call. Thank you for attending today's presentation. You may now disconnect.