AirSculpt (AIRS) 10 Mar 232022 Q4 Earnings call transcript

Good morning, and welcome to AirSculpt Technologies Fourth Quarter 2022 Earnings Conference Call. Currently, all participants are in a listen-only mode.

As a reminder, today's call is being recorded and we have allocated one-hour for prepared remarks and Q&A.

At this time, I'd like to turn the conference over to Dennis Dean, Chief Financial Officer at AirSculpt Technologies. Thank you.

begin. may You

and Technologies everyone, joining to us Good for thanks the AirSculpt results fourth discuss morning, for quarter.

Officer, Rollins Joining me and Chief Aaron Founder the is Executive and on the Executive call Chairman, today Todd Magazine. company's Dr.

Risks results we impact and that to conference are you and guidance, be actual These may market call to expectations these future SEC, growth. materially statements. this from morning's statements release investors.elitebodysculpture.com. results cause include and which forward-looking opportunities reports found the I our differ like currently projected website and include at file regarding described press can Before may could our all begin, statements of remind uncertainties with this in on would we that and may the financial will our results

undertake required We except information update obligation or revise no statements any or forward-looking to by law. as

reconciliation certain non-GAAP financial During we true also will measures. accurately represent and also reference our business. operational our of our morning most of and XX-K our measures which found in can financial A some the on performance our use today, underlying filed earnings call in discussions our of they recent filed, in more when results non-GAAP We this be be available release will as believe we these website. as measures

Dr. Aaron? over Rollins. With to that, call turn I'll the

thank for the you today. joining and morning, on Good us call

by bounce contributions we healthy revenues third experienced back, quarter, novo procedure in During a de centers. from and strong to fourth led compared our the quarter our volume the

London very for is off our of includes which and the Our Philadelphia, upcoming to and we new launch most start recent centers, of location. Toronto cohort a excited good are Boston, flagship

meet AirSculpt pleased patients. incredibly that and around the additional Smooth, needs AirSculpt be we and Plus all of of to innovative enthusiasm forward solutions look our the introducing our offerings, including to continue patient We with

XX% efforts the as also increased XX%. our will considerable four cash pipeline, operations company's grew XXXX will we positioning our generate and novo XXXX. We We openings early for and XX% that be of case interest year. of from accelerating volumes influencer five partnerships our million. well. We in Our built with recent international this year. nearly which opening performance in our Revenue a to X% PR The voice in savings. in lot debt, Toronto accomplished aggressively $XX through coming generated de share added am we and media cost less team started model increased generated our us centers excited incredible our we new I driven months. earned by than the a we was This from share as to refinanced

details more progress opportunity on exciting as this the share will we area We year. throughout of

very a chain of we over retail experience XX-years at the and Blink created of of decade beginning announce Magazine Fitness, CEO including Officer. over executives our Chief Executive the Todd were XXX Todd to of well domestically operations, the is year, he a team in building as both tenure. industry. appointment four excellent national Blink the fitness of helps joined luxury and At locations as as an to excited the the Equinox, by scale Todd fitness AirSculpt addition when our has growth next and internationally. during strong in brings he over to qualities leader moves scaling phase from leadership He his its brand

on and financial work with remaining discussions have with And Board will Todd I in Chairman transitioned I announced, the be to focus on active as Directors. of my technological previously vision strategy, As innovation. well. team excellence the leadership and Executive clinical community attention the and to of plan

With he about joined near-term and AirSculpt focus. why that, more his discuss to let me introduce Todd

us today. and forward months. joining thank you and of to in Aaron, coming with many talking you, Thank I everyone you weeks call look for to the the on

Let me was why know an the I decided incredible I through opportunity. my company, did it AirSculpt. I due Well join to lots comments sharing that of by diligence, start quickly learned

a was procedure learned appearance. trying I industry who overnight, incredibly change virtually and it's people's that years of given rate transforms fitness that boggling time to which mind seeing the failure appearance high revolutionary First, spent in to the my me their people,

which company discovered AirSculpt some the to recruit one. of technology in AirSculpt plastic No Second, can truly world. that do in surgeons or best a of category very do, I enables what can the is us

very a opportunities get of that and tremendous opportunity. the on not strong domestically this, broadly invested that that our a to I Third, to I the are exist learned of finally, is with capital. defined is profitability that very learned runway are first economics also be novo internationally. their the and brand de strong I with all our in category And aesthetics tailwinds Despite our within needs locations provide and year surface return that just scratching unit where of significant the all still it awareness footprint learned

the to expect, goals. top As help focus team deliver is bottom-line my over coming and you months our the would on

will I three on focused critical also be strategic However, areas.

we First, and by bringing will additional the improving processes. in our organization strengthen talent

expansion to which our we growth, cost bigger structure and up capabilities much Second, more a fleet third, ramping right support focus includes our our And will novo robust of we program. will on size centers. strengthen and revenue de

the leader space. company, joined global an to contouring the AirSculpt undisputed body I because in I this saw make opportunity

of and leveraging and Now confident help talented Dr. grow objective I'm at team to building that Rollins my I of value. stakeholder well reach. businesses part is this team, the the that forward AirSculpt within our scaling I even am brands, experiences more look to

walk well like things through few will as high-level fourth results, to comments. our but for I'd our a before Dennis as minute, guidance XXXX, a share over you quarter In him, turn to I

This performance was the given experienced was we versus fact demonstrates year. anomaly, our last QX and our our that guidance we momentum year. into with carry QX Our an have prior significant QX of the fourth quarter revenue that our softness fourth and particularly in quarter seen a this from quarter line in improvement

that meet to expectations. we on are quarter our happy report In fact, to track first revenue I'm

to QX financials. impacted infrastructure. enough made these of profitability, investments the got and on impact our our not Objectively, bit make of to XXXX we its Turning company keys did the were proper ahead fast investments by bolster to year a we adjustments the end in

of As top I will stated mine. structure a previously, rightsizing be our cost priority

throughout more share the as this we will We year. on progress details area

cost delivering we growth driven initiative. year both Looking committed back half forward, are bottom expansion the management our top in the and strong on very margin the line of with year-over-year to by

over and financials walk you through the to outlook our year. for the turn now to me call Dennis our Let Dennis?

Todd. Thank you,

the Our an million, revenue was year prior for quarter the over increase $XX.X X.X% quarter.

in volumes, which increase of the due base. XX% four approximately by led was year addition was de novo centers to prior growth case primarily versus Our the

of versus XXXX, the As operated end XXXX. XX centers we XX at XX, of December

of average was procedure for of the of promotional range $XX,XXX and an revenue activities, target per revenue to $XX,XXX in we the Our quarter but year's far we're per some our at $XX,XXX, case driven Thus within case decrease by still X% average the range. a projected both midpoint $XX,XXX quarter our XXXX, to seeing are $XX,XXX. prior first over mix quarter the

of which the percentage service the growth, clinical is acquisition increase in Our revenue primarily as staff The was approximately addition to versus a XX.X% cost year. the of in related $X,XXX. costs XX.X% and support remarks, Todd was same to our last our for his of customer of spoke period quarter

primarily was to progress XX.X%, was our which infrastructure and of on lower the some adjusted For of rightsizing a decline to due related margin per EBITDA million the quarter, $X our a was our revenue our costs. projected and expectations, year case quarter end than prior of our adjusted and range versus the EBITDA lack being lower our

our XXXX position position of million strong, continues $X remains liquidity $X.X to undrawn. Our our very be million revolver XX, as was December and cash

gross $XX ratio of and agreement our X.XX million times. is the at quarter Our debt was under was the credit end our calculated outstanding leverage

EBITDA was an million, ratio from of Cash which the XX%. $X.X for operations quarter represents flow adjusted conversion

financing We million of due tax invested vesting related equity-based $X.X $X.X For to compensation. the our when to primarily ratio from related opening was million he a primarily certain conversion centers new to cash of activities full-year related XXXX, payments and of had use approximately XX%.

measure release earnings provided earnings morning, our this we non-GAAP adjusted per reflecting share a In diluted.

this For the selected useful presents a the provided quarter of in We interactions $X.XX our used items earnings measurement share presentation of highlighting of shareholders with per the for as full-year. adjusted EBITDA. calculating investors $X.XX and by impact to this result believe information and our to

cash with in We generation due EBITDA focus on another adjusted flow year our healthy conversion of improved expect ratio margin expansion. free to XXXX

novo de to be for uses innovations. as cash investments We adding technology centers such expect will primary the of and our fund business growth driving flow

paydowns rest We of sheet continue strengthen dividends. us consider our to buybacks, balance the the positioning year also debt and to to expect throughout stock

This morning, XXXX. of we increase to revenue representing XX% XXXX over guidance XX% $XXX million to our $XXX introduced range million,

from de revenue expect the We growth. our of the centers to novo contributions drive magnitude year-over-year

Austin in on flagship open to location open expect and and later locations track our to Irvine We month are this we May. London our in

open five new de in which San total the two are us novos, of expected quarter, XXXX. to third centers in final will Jose late Raleigh give Our and a added

our the both expectation and of represents approximately to back of patterns the Our back that continue half the revenue be growth of is expect second guidance that in our of adjusted of seasonal be of Underpinning the XX% EBITDA margins $XX million XXXX quarter to quarter, half to EBITDA guidance $XX year-over-year which we strongest similar and will million, at to the guidance. is XX% the XX% XXXX. while midpoint to

quarter, EBITDA almost approximately providing the quarter of approximately first revenue million also first are $XX months and million. of X.X outlook we adjusted are into As $XX a outlook we

to questions. that, call like turn for over operator I'd to the Operator? With some the

of Thank first with question. Morgan Please line with you. Simeon proceed from the your [Operator Gutman question Instructions] Our Stanley. comes

spread the first everyone. between on case new is At volume than relationship volumes meaning case the morning. and were question greater running Thanks, greater new the one My Good the or centers point, new facilities. openings. of was number center

is new think narrow flipped. are centers granted that time? not productivity? should over should that we two metrics these that how But it's Now about relationship, be opening that XXX% My at question something

thanks the for Simeon. question, Hey,

opened also the centers de that outlook, case that up. are from we've of up same-store from centers One “in majority coming facilities. those in those quarter, still continuing from still our that two the increases are novo ramp but to our from are So a metric” volume

our would And actually volume in X.X% So prior we're quarter, the X.X% up. off of Simeon back third the also the when year. of about our look those. at seeing was But we're I same-store quarter, majority volume increases the from to fourth you point

de novos, it healthy of also existing bounce So I not had in in kind the our think but a just that we adding back, just centers. shows

And guess, guess promotional you growth items? hurt as then items about quick just to that were follow-up. mentioned tightened of up. initiatives Todd sharpen You some continues? less that the be the economics revenue, mentioned I I expense expense a can business about some Can margin. the up this story so Anything else talk there

are revenue team is really going just Hi, is growth. Todd let the rate growing Simeon. mean, faster have really our that I quickly. of me a This than really How to you at be our take me areas doing? the focus for those real P&L Yes, that been Magazine. and

that are taking opening So exit try expansion. we're progress terms get a that's going top of to a some than those little ahead hard margin make growth. in my particularly line look said I those really some at as at area, bit year there, growing in got areas and we go ourselves hard of our investments. those we of focus some we're the And to to as comments, And faster our

that's right now. So really our focus

and Okay. week. see everyone Thanks. Good next luck

Hey, thanks, Simeon.

you. Thank

Thanks.

you. Thank

with comes Josh line Raskin proceed Nephron Our with the Research. next question from question. Please of your

morning. new that centers of sort discounting that what Good then wondering, of, new curious procedure, relative a heard little activities, of, the seen different? same-store, about in was speak to sort metric? if impacting sense then is the lastly, rate? sort that it is or And And the same bit And past? I promotional rate you in variation if you've is that quarter? could little that just you are in bit geographic thanks. Hi, a pricing any are activity there I a exists, I'm of, promotional more the change a have or traditional

projected, the in things. case for that's that, and through Hey, there's who types of perspective, obviously, the Josh. know, reasons really some in And did and couple from but a a had Yes, bring there the did of quarters, you fourth in look our in be of down our on sort that. walks to thanks, what variability touch of, of had those promotional a rate take control projected we of forecasted. rate, then types We bounces the see of as if sort you our range procedures, from that with it door. $XX,XXX $XX,XXX Obviously, we it. component of of from sort quarter of to a see acuity came the you'll quarter-to-quarter, high-end We kind you activities low-end the rate the can't lot of of we mix as that

standpoint bit for a conversion obviously know from metrics did EBITDA And within give rate as a from that little so rate bit us perspective our of you shortfall that us revenue well. sure. of impact high EBITDA are little did an And

that's promotion know that do bit because we're promote but higher bundling the did worked. drove volume. the giving ways And quarter for going point. What such fourth it to ASP definitely data to and it this is do working of little and on showed different it's a I we you more lot also we Josh, as Rollins. to value, a drive did let we're a year to patient it, in want case price actually different Aaron

shouldn't like maybe Okay. guidance the then there's base more variable so got in of in margin XXXX. you. the why that, we revenue for But on flat to question expansion of, cost compression fixed can into revisit the margin second relative versus EBITDA, expansion? Got maybe little sounds overall you, expect growth margin and just be we the translate first-half. a just I sort in EBITDA cost And second-half, heard

Sure.

at component Just first. variable costs an -- you I'll, it When kind are about look our EBITDA of, the variable. standpoint, XX% from hit of

physicians a year. taking be Josh on such previously is than in well opportunity our So a because very profile But we more of you component. We we our $XX,XXX our range how the at profitability to rate out that as finished we really looked number Obviously, rates. have our took XXXX. not a little have us related we the as giving in ones spoke it, numbers. obviously us $XX,XXX is expansion us of measured next a little for of going bit as more it’s response and which clearly high the as we profitable expect. I measured is in But think of kind supplies I EBITDA aspect took in into lower the question, it's some Again, revenue where approach is a we a advertising think would to expansion variable still there, there and much of and of margin as would probably midpoint, the

assessing get board, at why the of in the talked about whenever And, cost across management of things the you couple year of potentially a looking a structure Todd we're of obviously of that. for half run sort and think a we deep so in the start And know, we probably million, we're you think really million looking the $X to so year that, impact that's rate and into we're deep, we'll a it dive lot there. a while basis takes on taking close that back the

you. Thank Okay.

you. Thank

Sandler. line of question. proceed your with Our from the next Korinne Piper Wolfmeyer Please question with comes

down we and to bouncing question, question talk first what question. of Todd, the you. a going margins gross Or forward? bit taking the pretty finally be off did I Could there? expecting that take guess kind to expand for expansion little just what of in we seen going Is Thanks all. run could we at of should of, should margin morning, forward? it step ’XX? good looking rate Hey, it's kind mean, you that a proper for great on kind I heavy

Thanks, Korinne.

and ahead a ourselves a as he on this a We or that focused we've Clearly, be are maybe Todd that year, this extremely significant We and that in we've comments, how of invested range invested has business as about past amount, got margin. again, little well in considerably believe talked above there. his XX% think, range. that bit I should

So again, focused current that on. look margins from at But is something that the reasonable again, margin XX% we to And in our extremely obviously think long-term a it's it year. range perspective. impacted definitely we're

chat Yes, for Korinne, Thanks this is the Todd. Nice you. question. with to

Just to add on to what we're hard Dennis pushing said, on this.

on As to could basis number calendar rate Dennis year accomplish that, $X year, we million that we think page a on turn but million. annualize think said, the a the of we something should of end run we couple at probably closer this the to as the

aggressively, expansion my business margin and that would in And investments couldn't cost our I no some focus also so tell time to reason be to short obviously after very really there's focused on to And that here looked go our this continue margin. XX%-plus right really to have structure. I've top line we're obviously drive at the is relatively you these this for sized but of need

and that there to I a focused of very after time in we months we're some little feel get about over think that the quarters. bank need we going So the good and coming just and

London U.S. these those into different do a Thank traditional operate. that's or along the you. of One, more little for new what you centers baked a also, new very And That's in and it. openings. these just productivity talk into new you're some of Can terms just and of expectations on of how than what volume lines, have about kind year? seeing potential would of, ramp these helpful. maybe this visibility kind center case of of Got you what's kind And really then some centers center bit then

hi. this is Yes, Aaron Rollins,

thing opening doctors de are done this State, four question are So that our we to year months actually Actually year doing already gives prices of our in novo free we're that able that the And in in in ramp limited by existing States accelerate up actually year. cetera, volumes, real to doing is is, us we that novos so three something of et at et that for cetera. that. one, foray actually train the before your instead we the opportunity we're novos attempt into haven't this in. to and first this that this center to cases de can do be of of case our day and cases real de two having four training, doing But our

is tell for in after story. this tour, to around London calls our we've press off de London like I'll you say before. today, XX interviews we've press a I'd different most and Obviously, is marketing I'm seen and that I robust novo completely never Sunday have ever had. London on a the this interest

the have wonderful pinch another a We excited U.K., U.S. about. signed the and our we'll Dr. just there. one from really doctor, also licensed wonderful We even in we're And is who DelVecchio. doctor sometimes, of doctors pipeline hitting there be

I So I'm in long all tell this de a is been haven't and good you can expecting time novo from London. excited things that about really I the

ramp, of no terms I what say that's look London really can there's like. way the In to going

Thanks Awesome. next forward week. That's to great hear. much to and looking so

too. Me Thanks.

Thank you.

Our next of question. with proceed the Raymond Snure Please your question with line Parker James. comes from

Parker Hey, on Ransom. this thanks for the is question. for Yes, John

productivity new to or up just just there, they're trying guess to I'm I on around of is new just Or new? back to want and up just is cohort get to ramp existing of the de brand centered kind novos kind same-store the this go the the you trying the when activities, promotional so in is out ramp cohort? So this around weakening some I centered demand are of, trying facilities?

about, ability on that talking promotional back just you you're in kind then previously a now bit kind some of future, potentially going you're talking the have believe hey, the And but to price that, I raise little maybe kind of down and doing activities. of

price ability the to and seeing your think are just kind about pricing what of or So forward? raise you in dynamics your Thanks. going consumer

question. for Thanks the take that. I'll

they an it of First specific. And that the saw procedure, perhaps delayed their have didn't that so a the increase they And it great. be want We effective data fourth to XX% for been we been people see showed the or it fourth because very promotional volume it’s it, it not would get in a office all, impetus quarter. case board, we've tool that across to quarter, over the it. activity not used been did has wanted was in but it the hasn't they

a our your can that say drive we done, butter, good how However, I you ASP want the higher actually Because patient a if in we patients ramp more other value, you on if think our for something order and more it's price bread too. tummy give promote we're let's and by which point. areas is value, for going is forward have ASP up but to bit giving And everyone. little working

tell not is this any seeing we're macroeconomic kind Parker, in that. you; to on jump of just challenges. would I'll Todd. I related headwinds of any indication

historically As first in where our volumes really case have nicely. growing before the rate we we and very quarter line said back is been of right our here, in

there's any and no there's very we prospect indication ahead. here that good speaking broadly feel headwinds the about So

right in feel now spot of we balance good the pretty about year. and we're excited a the So, we're

range. for right of now right the at our quarter the midpoint also We're first

to terms we want So where ASP, in we're right be. of

And And guys anything up ancillary is kind of tracking offerings that like cellulite. out just there? know been that skin kind you the Okay. have you How then selling mentioned you I on in some rolling cross-selling customers? also can of tightening and or note just

asked. I'm glad you

to driver. Something AirSculpt meant understand that Smooth that's case Plus is and important a about as it's actually AirSculpt

a help body in be seen quarters of with get we we've driver, number want finding we're that we been offer what can't go skin you. told or now technological to all, really one. have absolute really to that would more that have the is case want loose tummy patients we it's a of But whereas experience best tuck it with on the that's edge contouring exists, innovation. First of treatment We

new before them. never cellulite for that on Now doing treated AirSculpt we seeing patients can. also and also we're have we would We're

to The their only that's whole Instead fat. but typical thing about doing turning patient patients areas we're of with their not loose over body. let's They skin we say let's treat our is has some typically away, -- don't arms of it like them a understand really body. all them, lot and can these have say

a as it's And been fourth see, drive it case So trend driver, continue quarter. the seeing that great. the you and in quarter in cases we're first that did as really

Thanks right. so All much.

you. Thank

gentlemen, Thank Rollins session. you. Ladies turn any that our for I'll concludes question-and-answer and the final floor Dr. back to comments.

Thank with you and really next speaking interest for has We're your in for listening forward AirSculpt. looking I and weekend. quarter, everyone you a to hope good

This concludes you. conference call. Thank today's

your this you You time. Thank may participation. at disconnect your for lines