Soho House & Co (SHCO) 10 May 242024 Q1 Earnings call transcript

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Soho House & Co Inc.

First Quarter 2024 Results Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Thomas Allen, Chief Financial Officer. ahead. go Please

that contains Andrew risks joining or Co's for Thomas involve to expectations Soho here our discuss I'm Thank discussion Quarter us materially statements. that uncertainties could Financial events. & Today's with I'm Officer. First results represent Chief forward-looking from to forward-looking future differ All beliefs is our Results. statements forward-looking House statements and CEO. the you Financial about today Carnie, cause My actual Allen, the name

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have & found presentation, posted which Additionally, on QX be section site. Events can our we News the in our

the not most During be available to Reconciliations our the refer addition results. financial measures non-GAAP GAAP press for in considered measures certain and These GAAP to non-GAAP in a an measures. today's isolation should substitute for or from we are earnings release. comparable as call, also

Now Andrew. hand let me it over to

hello, our Thomas to to performance, balance sheet progress made over our against we've through moving and start guidance by priorities. then on update then an before on talking talk going hand give Thomas, everyone. Thanks, to on the highlights, our I'm an through and the Q&A. update provide quarter's to I'll financial strategic

continue We deliver and XXXX quarter, than with members welcomed against to in House revenues start our solid as growth which year-on-year we've since a the members vast priorities. quarter Soho to XX%, houses XXXX. in XXX,XXX been on growth growing that X,XXX the more our strategic year meet full membership to we of of track increase opened majority XX the came target. well leaves from The us to year-on-year the a overall, It's in

increase up, Total strong Soho growing the membership recurring and through waitlist our revenues, up Soho and the fourth at globally. to continuing appeal continued year-on-year first year-on-year. were by also and in demonstrating X% XX% growth grow, the for revenues which $XXX mark House a our grew the in quarter the XX,XXX our million, And year-on-year up year-on-year. That's was XXX,XXX. House up ending XX% & of quarter-on-quarter. from Total quarter to X% XX% continued supported Co membership pushing time membership XXX,XXX

the macro QX revenues was in overall our line we lower gave guidance on earnings. in-house revenue solid, were in you given with quarter commentary While conditions the and and

ahead. that we market and our However, of adjusted year stronger throughout April, at sequentially expectations the saw QX trend in in-house quarter, ahead the performance, has continued strengthening confidence million. was EBITDA $XX.X into revenue

As we the high to expect year-over-year move more for of be into our EBITDA remainder seasonally stronger year. quarters, the we

we heart we of focus to experience and free we excellence drive value profitability to operational progress significant quarter, areas, member the of flow, raised and guidance made for We cash control our our of membership the so at and in continue these will reiterated is and guidance growing strategic and of costs the EBITDA continue adjusted enhancing two priorities delivering all metrics. against ensuring and the the on I've what the deliver do. the first best for to midpoint well, year We've

quarter-over-quarter. member our service seeing We houses, scores impact positive increasing are satisfaction improving a and we're in with

bookings drive member quarter. higher data, on which X% initiatives our We member using event to in recently We personalized. experience execute on that our app make more launched recommendations helped the continue event reliable

New We out including refreshes London, and houses at L.A. York. carrying houses, existing in our to are continuing invest in

pools. Soho rooftops House is known and our for

months warmer same well why in the the and all spend about Soho Angeles we at of recently menus, the Los we're City House to there, love received. been introduce to new We've have Dumbo facilities to pop-ups rooftop House, wellness restaurants, and do that members relaunched which and York. in New continued Holloway White is Our House very

We towards a in this recently gym House London within announced XXX that later working we're year. opening

new are to from Our openings strength going strength.

than Soho Without and on I'm our years X,XXX in strong Houses House adding a city Portland membership through X since opened has by we Cities start the March, had in capitalized already we've excited for America performance more America. upcoming South and house high strong opening we've demand the of Latin in seen about the our Sao other Paulo follows first of really in in also membership house where our members.

City, Mexico last House, which September. opened Soho

our to priority, strategic Turning second operational excellence.

key our and beverage operating know, made further operate progress Both despite areas: three insight activities. having in-house margins as from second, leveraging cash is first, expanding to cost discipline margins; here and We've you member we and strategy the scale third, continued on positive inflation. and in-house food centered again improved grow. operational achieving flow efficiently; year-over-year, quarter, data As over

full even conducting we in range, Over set area future. the review stronger in go further profitability the quarter, which expect ourselves we beverage a above this to by to deliver

of out managers whilst allow their members more hours. better HR time spend part also and a improving service best-in-class becoming This to teams with more will As manage launched and system allow globally. in we U.K. our roll them the efficient, that to new their will

house Given margins the our continue improve strength membership of in quarter. to the revenue, level our

detail the over pass to give me Thomas you guidance. updated to and on let our more numbers Now

margin revenues of increase million, revenues, in Giving was year-on-year, which on while absolute were other in detail to Andrew. was revenue. basis. the for both House X% level membership level $X Thanks, year-on-year, with the respectively. contribution X% XX% dropped margins revenue up and year-on-year quarter X%, contribution grew and revenues up to flat XX% Other an and Membership recurring house million. XX%. first up Total Year-on-year the revenues driven by total more on $XXX year-on-year, rose were X% quarter. revenues in-house

the the In-house drove while pricing revenue growth Membership million, million quarter increase million. year-on-year membership for revenues. down $X $XX were $XXX million digits lower market to $X were saw away revenues the in in were and in sales was Like-for-like mid-single per a notably sales outperformed lower visit. year-on-year. other of million footfall, quarter, from This shift most a a revenues alcohol $XX January. down in-house by at but in partially driven terms We

Home X% of in down XX% performance It's and so declined that that in in by period RevPAR Soho same and slightly RevPAR by versus On we our also other year-on-year, quarter, ADR. offset up offset be sales follows and estimated stand-alone Works the restaurants to noting design reduced leisure with RevPAR is Soho X% up and our trend. XXXX. quarter the revenues, quarter our was in occupancy lower worth U.S. approximately the first our fees. saw still growth development townhouses lower

house Our year-over-year. driven by new more expenses, first quarter million, rate than our contribution by partially run slightly higher adjusted Higher offset in recent level growth EBITDA was upcoming lower markets. was $XX.X G&A and

to as seasonally revenue we accelerated, EBITDA move quarters. and again expect has higher into revenue We grow

having a improvement positive of Now fourth million positive our activities and quarter, discussing This of in million operating balance quarter first and We million the quarter was our debt. ended capital. $X million net $XXX working with from again the a XXXX. and flow $XX of had from cash cash sheet. quarter in helped row equivalents by cash We $XXX

to out position cash key $XX fell our million quarter-over-quarter. Two point here. things However,

quarter and is the quarter of higher from expect had this to we First, in next opening given flow Portland we ramp and cash properties. seasonally operations, Sao Scorpios second, our typically would Paulo in CapEx meaningfully recent of lowest terms quarters. And the it upcoming and up in X the

to at the CapEx quarter roughly quarter the We from end of million continue first this XXXX. $XX Xx expect Xx $XXX million debt-to-EBITDA, at to net We approximately down of ended year. the

Moving guidance. to

controls, at million our guidance reiterating a raising in of the them think but guidance we over million. the are into we've in-house low cost $XXX from good weeks run of of reaffirming in roughly $XXX each sequential just April. so to improvement seen our won't metrics. through quarter $XXX end We rest X $XXX of course and last first on the revenue Given million guidance worth now million detail, we I are range the I it's gave the with ago, EBITDA to

Today, measure our where sustainability these the progress key ESG Soho XXXX in recycling Two published a our are shows houses. mention, House areas. is we bed making unique report, paper to we Thanks, linens for which highlights produce Thomas. out-of-use I'd like to

and Soho In remain with terms of profitability We confident creative ever social now on was on our further growth social fellowship, ahead a solid adjusted economic quarter growth strong impact, which Soho to for our members been it's closing, for than business for high operational of in underrepresented more Meanwhile, and and continue for X,XXX in we're as membership market membership remain initiatives through the support excellence membership creators business. revenues. to have in helps opportunities driving the ahead the membership backgrounds. In barriers people programs, move focused access value. lower We delivering and demand proud our and as expectations. EBITDA supported

can all our to now Operator, members please. loyalty. With open that, first take will to like I their up we teams we for our would thank globally questions. continued and and support the question,

or can As phone the questions ask webcast. over a either your them you the reminder, over submit

our from first question Shaun Kelley Bank [Operator Instructions] We'll at take of America.

stocks consumer out of here talk could a earnings this signals lot of obviously, for just meaningful season, throughout feel we've about have lens your details. Thomas, who've a we And own many like more hoping had there. us specific mixed or of covered amount Andrew a market you bit and the I little

here. mentioned a the the but clues through us gave couple It spending improvement times of obviously, you was couple So was you Thomas, sounded footfall but of down, quarter. like a up,

just kind how help weather, you the you of now? you encapsulate And just us kind consumer right dry a break would strip were down of in of further behavior? can to if health out the So of little January that terms plus

you've yes, Shaun, hearing been a seeing what other we're of similar from folks. I so mean, picture

our houses. pleased using is The we're members a our thing see club, membership consistently first we're because to

are than general markets, hearing for that's across why positive us. footfall a our that's trends seeing So you've been better what the real or

to is members dry seen about the little I January. in, we've call, especially little they're want and bit think, what the about What March May. The seeing a don't cautiously. our talk a news less, trend April is throughout can I about come spending that been when last year. get is more better we and definitely all it's the good members. whether into talked have We've just we And on bit do it through with sequentially improving,

that, we news have we're obviously, revenues protected other differently in coming from good than is membership. folks The that

a when confident than you revenue talked more But are we X total why weeks ago. were still So growth to that's we we last can post quarter. the for we about

differences or areas than of the that geographic any there's particularly that obviously, been mean just have I callouts we've been Great. some of a markets But seen you then have And important. kind same. weaker are couple others.

in So in spending -- member American anything European versus London or are or any that traffic notable? differences the the side patterns consumer European just here be either the versus

no. is answer short The

very from substantially seen of We Europe the similar to America U.K., beginning the -- to single we're seeing haven't every at year to it's Asia all getting region better. both across the what and

pretty So consistent, it's Shaun.

we'll ROTH Kelly MKM. Next, to move George at

could from growth quantification helpful. So you maybe I in January. that improvement I looked detail a kind follow-up like in-house could or spending. with don't more in the of was could give April would that the saw you any around curious contrast if if be That just first I you kind question. versus know start if what just of

George, sure.

was So like-for-like was single single our January high digits improved middle say growth April and down quarter, March overall, single down was the in mid-single digits, look, down and low I'd you think February if about have digits. to digits, then down

Okay. That's for then me. question second helpful. And

you've the you're that that there member it's the of your working You done. given referenced anything of some address? surveys I'm control. that surveys these seen, I curious But jumps that to is sort And out know of you've spending in weakness out

it's across We out control I right really. whole now. right, you're globe. I -- Not the question. mean spending is it think Good of

on time on earnings again our the improving referenced plans, member focus which and in calls, to we've on experience time continuing member the are We which improvement is the houses. focusing

saying are positive, very the just we're anything. on generally none improving the experience. So and focused They're member surveys of

Zackfia Blair. next question Sharon take William our at We'll from

Just member satisfaction curious the on scores.

pronounced improvement? a think seeing? is region you're so, that Is Or that what to? there you global them to that improvement I more if improving. attribute you any you're seeing alluded And would

Yes.

with through finishes So with eating a basis the obviously it us we feedback measure member a directly the on weekly app when our drinking globally or us. from --

our measuring food provide. of way that consistent house, especially very beverage performance, on the the a service, that's So atmosphere we in and

America. seen an improvement markedly North in have most We

you about the of if previous we in we improvement months ago, which and earnings changed America. there. leadership initiatives X call, heap a remember, talked Now whole we had in North

We perform But better. importantly, are definitely that are better region lot telling most job. a doing we're us our seeing members a

is Soho should is Friends, membership base is a Soho we then on Friends? think continued the deemphasizing in And there? decline not of else there something about Or just that

you Sharon, question your there. answered own I think

to House to found that have company member, friends a is to used We the opportunity still want it the to attractive the a focus want something a on in. We invest to way while providing run So was Soho studios. core friends. better really de-emphasis with Friends. We on to to but that be who lot Soho support Friends, people we Soho continue used that's

there. that's why seeing so declines natural And the we're

Instructions] We'll Zaccone to Steven at next [Operator Citi. go

ask new well. helpful or houses I opened. sounds of to progressing wanted hear Are some that. you regions opportunity It to through of It to see the you talk Contribution? maturity it's drive there houses still where about would improved be you've House-Level like the

Great question.

continue in Mexico in XX newer with We're or into, think opened some excited Sao pleased progress will to Austin, that they X X maturation We're you Portland, opportunity. really City, to years, So curve, and houses at the Paulo. the continue gone markets at all particular, more the of we've have we've in about particular, Nashville. super if past they

in second your your is new and of question, our them sure. America, of grow North opportunity? more all There's open expectations. And answer to performing, line markets to opportunity there more more houses part So other existing For in with in are in also regions. and to

my then And it. question pricing. was Got just Okay. follow-up on

that's a next think a are how thinking level? made So of a are for this we to years? I year, year taking going are members trend pricing lower Should right, increase over expect down to like pay existing you've price at modification, the you new members existing members. going continue and per forward? price bit probably about couple membership going So probably this slight higher the increases

Yes.

good the I this around really delivering end. where experience. the I before. best feel think We're about on member the back It's opportunity pricing -- is driving the said we I've biggest our at biggest focused find is. efficiencies

the very comfortable our moment. with at we're So pricing

to and there if Okay. curious sound one any Last didn't could update you've considering the strategic squeeze just any was was out. of I possibility comment one, made like last alternatives, just comments Is in. but a letter time, some at put there all here, since there the

is Just there can time? at anything share this you

as of something the fall, Board a to an and transactions. The the there's members so last when announcement committee if special Board you strategic set will of company certain know, independent to George, announce. up make assess

And you does participation. this call. today's thank conclude We conference for your

You disconnect. may now