AirSculpt (AIRS) 12 May 232023 Q1 Earnings call transcript

Good morning, and welcome to AirSculpt Technologies First Quarter 2023 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 1 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, sir.

begin. may You

and Technologies everyone, joining to us Good for thanks the AirSculpt results first 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.

we and that conference you and guidance, These may market call to expectations future growth. statements. this include forward-looking opportunities I our like include regarding Before begin, statements remind would may financial our results

with from results by currently file undertake on these impact no of results law. information any statements could can We our to may revise differ this to be or or that update future the materially found will all SEC, in and uncertainties obligation and described Risks forward-looking investors.elitebodysculpture.com. required release the website projected as we cause at are and statements press which except actual morning's reports

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

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

revenue which in double-digit the I'm increase very today. per included case. us case pleased a call Good first and on for our quarter you revenue morning, results, joining thank growth average with sequential in and

final consistent planned. what also that timing to we County in our in great center off very yesterday approval start with to is flagship open are Orange This center new excited had Our to London. announce we a we received is and California

to have training June. starting full cases cases week perform us the physicians enabling starting of and in staff paid We next to center, a complement

in launch. be like will Orange strong a Austin, is positioned opening for which next Our County

to us month May. shortly receive occupancy of to final our open We in permit enabling expect the

Our full. to pipeline de continues novo remain

beyond. new We've continue committed later lead solutions are new We will includes in which available innovative we this our to engagement, confident an be pipeline, year. been for XXXX patient our which be innovation that will company and incremental to and location opportunities to

as to from making management into and domestically scale growth future. our internationally. us profitability and initiatives, Todd, hear our you and innovation Finally, progress and strengthen fuel Overall, will brand AirSculpt in are will de both good focused and the we about team which continuing novo business, cost enthusiastic remains our help our the

the quarter talk to turn over for Todd? about year. to call Todd more focus the the me of Let and rest our the

year-over-year, you, XX% was everyone the This was Aaron, with the average ahead approximately thank growth $XX,XXX. us or by first our of in nicely and today. call revenue uptick projections. which am highlighted growth year-over-year and our XX% led revenue on case to about rate, which by of I quarter case procedure you pleased sequential as was growth our a joining results for per Thank

variability some on to quarter-to-quarter range. but procedure it $XX,XXX and activities, consistently shared we mix a be promotion average $XX,XXX have expect the due previously, will to our in basis, As rate to we

good performance centers and I am portion very was by months. novo with XX quarter to de our over continue of led our on forward. about feel novo significant a first board pipeline Importantly, past going our growth de came the pleased that their

XXXX. be last call, areas On on I that in three focused our the highlighted I will

more expansion up rightsizing capabilities strengthening additional revenue much our were bigger support reminder, bringing and to our organization improving and a by robust de finally, and cost and a includes As strengthening talent they program; fleet novo structure which growth, of centers. our on processes; our the ramping in focusing

management cost our on update an provide efforts. first me Let

an us As and committed in $X of guide efficient XXXX. areas firm of and to we identifying million brought to several -- we our cost. as on savings help in where more can partner team a million exit consulting we XXXX be We a for reminder, rate run external $X.X cost to and with process

While early of will set. our pleased that we the this am track the half are to effort, margins are year. reflected I of still share back targets the in in the we we meet on in firmly This stages to be

in us to awareness improvements, brand these de as structure Importantly, as and cost reinvest our openings, novo continue processes allow drive activities. will to well

and positive. quarter influencer perspective, For in first the extremely we in the social were investment a made media results small a

ways Our consumer. goal AirSculpt target to us this to drive help order to in continue of like our amongst find is to initiatives fund awareness

relates team. it we've to to new excited resources strengthening share As well I'm as executive talent, leader as human added a technology leader, our a new to information that our

three my focus of is, expansion areas final The novo plans. our de

relates it particular, As novos, footprint London we now Dr. this in a an our Rollins that time fact the the to for have truly exciting international noted, given Center. with AirSculpt, will of de as opening is

ability with financial remains new investors confidence the a we that expand our This and work balance on will I has in that opportunity help capabilities well I the added expansion more commitments centers our us of continue on our have beyond. to the across the about the given U.S. me internationally. continue significant our AirSculpt as good am amount as and continue novo of sites pleased identify extremely of results of tools have time spending robust to de Overall, and to and been to the program, deliver year robust. to feel for runway new where quarter

I patients deliver other to and to the clinical Dennis, tirelessly thank passionate at Before work of Both AirSculpt. the about our over like you aesthetics. unlike team call professionals incredibly in would and the experience to and I are to company an turn business help any our world say our

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

Thank Todd. you,

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

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

we XXXX, the at quarter XX, the operated of March of centers XXXX. versus first XX X end of As

term. Our over for $XXX X.X% to to quarter a average revenue fourth year's our a $XX,XXX quarter, for driven this expect was prior the near target range increase was approximately quarter by $XX,XXX, we mix. and over increase the within sustain range the per case of This the $XX,XXX and primarily procedure

related Our growth for clinical-related cost period the last quarter costs cost to of of acquisition addition the in XX.X% was is XX.X% our $X,XXX percentage same customer case. revenue was a The increase versus as services to of primarily our and per support the year.

our XXX margin on For the prior and adjusted points was quarter, basis, which sequential discussed. decline due margin million have of our our by EBITDA quarter, year previously increased adjusted XXX to XX.X%, the we in And versus adjusted a basis EBITDA increase expense a was that EBITDA $XX.X points. growth was basis

liquidity strong. very position Our be to continues

$XX.X Our of and XX, undrawn. revolver XXXX remains million $X was cash as our million position March

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

XX%. and for represents we new cash And an conversion primarily activities of approximately Cash the $X.X million which XX% quarter of a EBITDA million, the $X.X ratio ratio from EBITDA approximately conversion adjusted year. flow related adjusted expect to centers was had We for of opening an full we $XXX,XXX. use operations continue financing to invested from of

measure measure with useful of We share quarter fourth the earnings information consistent $X.XX. Additionally, net non-GAAP share of release, in diluted EBITDA. of represents per earnings provided items the we this income believe our the quarter a investors reflecting per highlighting to used calculating by adjusted selected adjusted for impact

We healthy remain on cash flow free track in XXXX. for generation

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

sheet throughout expect to to positioning We the rest shareholder the year, our increase continue us strengthen of to also value. balance

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

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

next this cases at Orange previously cases month past scheduled Austin performing County Center our begin As location started to at week. our we and we discussed, are performing

London that cases in in open we begin paid starting Rollins to will As Dr. to scheduling center and and we pleased report are Todd June. mentioned, approved is our

Our and remaining are total scheduled will us give five center open which quarter, San third Raleigh Jose centers locations, a the two added to new late of in XXXX. for

and EBITDA EBITDA guidance. which XX% We both $XX are adjusted confirming approximately midpoint growth to XXXX of to XX% of margins million guidance also at range our and XX% represents revenue of of $XX year-over-year million, the

to patterns the the will expect in We quarter expect we similar of that XXXX. half strongest XXXX the our the quarter, to back while be seasonal back of half of second be

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

[Operator with Morgan conducting from this will Please Gutman session. At we time, the comes you. Instructions] question Our be Thank question-and-answer question. Simeon line first your of a with proceed Stanley.

Hey. that of of think the expectations relative Good appropriate think level was business? case case was number, question My to the and talk same-store I Can should what the morning, same-center the is as the growth X.X%, for growth. everyone. or growth how or on sustainable about X.X% about kind the first we you your this

of in right Yeah. what kind with same-store That's growth. It's a to we're now, And kind kind we we’d what Dennis. of X% same-store fairly are Hey. expected. flat Thanks, this from comfortable From forecasting sort basis, kind standpoint. go-forward that line of in Simeon. perspective, of of out we're

center the carrying level? is center openings same that regard And little from to follow-up growth or better that that momentum then, then bit should get a the new you're with maybe that

holding lot we're there potentially do seeing some as again, that of a momentum is well comfortable opportunity rate of to kind our existing But center Well, we're growth there some there. believe that. momentum at is same-store. case business those well flat of things, the as per positive on out new look we're there's momentum some expand relatively types with really the up the seeing seeing as we and we're on I and

luck. Okay. Take Thanks. care. Thank Good you.

you. Thank

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

line Cost of elevated morning. percentage a little we've than as Good Thanks. in revenues a seen Hi. more past. remains of the service

out. spoken -- just in to or if other areas there's inflationary point you've is that mostly there talked, are investments that I curious new know So out? anything just and quality you've I'm the items in any the

as a margins, de of number us a novos but focus to of that well on bit. online. impact has that we've Dennis. us where the is There's about significant making. and talked really year definitely at above a quality this there, time. nothing a we been were It Josh. got last it's are to kind that or clinical this impacted to a investments of for we've us -- continue work expand also Josh, little kind investments lot It's our And We've coming

you early As on those. know, on,

don't You from we think But have just there's we But much about opportunities to We we'll expand feel as ramp up. there. to those improvement as mature, begin they expansion. see where there margin as good are.

rate Got it's best just case simply insights you. And then is into how are the I of Is growth? we monitor? financing, side? metrics sort always that that, just it that on economic pressures. curious, business? just Are concern, guys necessarily the I'm measuring, metrics like what Is economy more the to that are you don't you it the see impacting there know things a give

and into is we expected. rate. strong is that procedure the QX and things I two that we and essentially And demand seeing Todd. really, in would obviously, rate middle Yeah. This procedure the saw a carrying Hey, seeing obviously the what very say, of right we're demand what range we're our at in QX, we then we're look Josh.

issues our in really perspective, from broader our we're seeing economic not So any business.

And clearly for rates demand to are be to and the business. that there's strong. ultimately believe continues product this are our Demand pay we people for a willing appropriate

really that. us haven't on are about at That percent this we in in financing relying a all change of seen us, of good really people hasn't for quarter. that financing. terms So feel a And changed we really

for market, which this are at at from any there's really the headwinds encouraging broader really, indication us. is point no economic us that So there's that coming

I'll quick one Yeah. one just in. sneak more

quarter, heard seasonally any I did sort is strongest more not last you which but guidance, reason quarter? specific of XQ what Just consistent,

last numbers of Josh, report producing first until we part as you of didn't know, the timing March. quarter,

had we So almost quarter complete. entire the

confidence -- a much had level. we So level heavier much

was year. And gave We're reason the so full that we reiterating that.

numbers. the in confidence have We

that As standpoint. quarter strongest for and call where well. a early kind in said, the there quarter. Momentum was very so from Things we that's again, again, you been strong guidance are said, QX very is our first was going year-end reason why But the second the we like are and has is the of very, It's after assistance positive. that quarter. to

Thanks. sense. Make

you. Thank

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

morning. Good for Hey. the Thanks congrats and questions the taking on quarter.

Did off those then you. baking we I talk some rest at as for that had the promotional recall, environment macro kind think outlook piggybacking like volatile mean, if questions, QX. into previous this are in So of heavier still promotional looks have year, with continue the the kind QX? promotional what activity expectations, quarter of especially past the the Thank backdrop? in you I in I some of just can to of you need And think all you how about like? about (ph) And

Todd. It's Yeah. the Thanks, Thanks Korinne. for question.

I promotionally part was what do we and provide think say kind So QX get not to that drive with to historically. plan more promotion the try necessarily you I and but last call, value was people we've if to what discount, consistent add And our on value discount mentioned of bulk as very would actually parts by will. of to giving a bundling done people body to

strategy quarter reasons XX.X% the consistently And up the we've that our very rate one throughout with we done ended used that of so the historically. And what in range. that's promotional

changing So that the very very to And year. one was tools did really promotion what of It the -- the feel business see use obviously and about is don't about in the we we nothing good drive that unique that. I really quarter. throughout we

seeing one levers just other business. drive of again, goal kind worked really And us. and is adding discount to not major use the necessarily, like, value our to items the for get AirSculpt we that create experience really but of effectively are body we're help promotions, changes to any that's not think opportunity to people through give parts, there. But the other an and I

and about approach feel for really we our that's the balance good So year. the it of

bit a Thank the improve just get isn't can And both the Can bit you. little and throughout is detail going there? little to going really provide Thank a that then then maybe change then to of just from this and year progress levers about gross on pulling much, margin, it margin to we'll like of bit marketing into you that you ad 'XX? that on some you're but helpful. 'XX come or a If improvement, we Very little talk more what and specific margin on trajectory. spend you. as

It's Yeah, Korinne. Todd again.

of the, me. of one for So focus as I mentioned, three areas

side to really in of One of an management the party them my do of obviously trying and we're up be We're the is things. I and and in to And said early find with this, efficient. ways we're more that. external looking really the stages to on help working down us cost remarks P&L as

able more that to about committed get be into the $X to And is not the I have becoming that going feel as there as of good in efficient, margin the particularly $X.X we that half million of of run we feel cutting, confident the also very opportunity, necessarily year. but we areas we're improvement are back year. we for go range. And kind And rate, said, a million will that the to this

we P&L. and the we of million and we're year. we're And that all on reiterating exit continue get that going $X this said, throughout work we million feel early done looking up margin and as and we've the $X.X think about I And to year the the we're the down to believe have help that opportunities, year. good as So as very -- the we will I

expect there lot past pretty And We costs. structure, we but get year. our this structure then XX%. level be are we a heavily we margin And I should year, that confidence to that is this as a bit mean, Korinne, that getting could have A to now work don't we on focused target. into cost there we invest necessarily be as similar public imagine, XXXX. number corporate And above of able fixed high into did that’s like the you our in company of quite

as there costs. to So those start line, we to due expansion additional fixed drive margin we’ll top achieve to continue

helpful. Very Thank you.

the Our your proceed question from Thank of comes next Parker you. Raymond with question Please [Operator Snure James. line Instructions] with

over dynamics Good that for just Parker and it's Hey. London mean, market expect? with going Ransom. then a you I just do about morning. And popular over talk just patient than there London there? your just on there. the surgery there kind different would you're American to education surgeons. people is your certain I that there economics plastic John This the of Obviously, have of are since to is in And level expectations the mean, much notice maybe kind different Maybe talk different in to get about U.K.? of the pricing, different expectations broadly, market, market. North maybe to just play it a that

Hi. the This Aaron Rollins. question. you much very for is Thank

on very, bullish So London very office. the

fly live I you -- multiple plastic In press gone market we interesting and surgery London. there actual been where interviews really there into next in And for start no is popular And first we've tell week London. I've the can what’s that I competitor. really cases now in our that it's is times fact, wildly to have training for

them. that out doctor we what wide even patients science finding out that like while -- awake was you to (ph) In fact, finding do do the is can fiction

mean the I ads. actually same well due won't in has until pound captive We start we market might market the conversion get a and a we that market have and our competitive and can't such we don't very we But the have for we environment research general, to higher So ASP. know leads shown cases. there booking that --

office. the be excited more London about I couldn't So

your that's is that that's that'sXX% there's we're and to U.K., well, doctors and all, a no question, the first as same do we paying -- answer cool-off something called the And But only one there's there different the is now also in the of change there. thing period. there exactly change

books get So their be they has until weeks. two from time of the someone surgery, it minimum to a

first will seeing can before weeks we be start. consultations it two shortly then cases our will and So be paid

Is we've prepared the new Okay. a at touch very solutions I new in in that bit. just are half And these stuff Aaron, of this then that things? maybe Just That's some hinted kind back year. the you or believe coming on on helpful. the remarks, heard little before of comment

I'm asked. glad you

going be So out we working rolling right overdeliver. and more under to always now are data, going to new and that's -- all to have until say a we're on We procedure, for cetera. et we promise want we're

speaking So you forward that. more I with to about look all of

tracking, Okay. on last and you'll and out one. any metabolic thoughts an how and just I And on in squeeze then, one Maybe give some if be updated have that? when will that that's on just can the us update study data

Great study, now, the so to be in creating scholarly improving question. on margin, and expensive and the for the very value study we've we put pursuing articles. we're Well, our interest shareholder And of found instead, pause.

and that much see cost, we have -- when what However, doing time might would actually might value on depending create that in study we're instead. I more interested that that we do pursue shareholder a another

creates very already in already triglyceride. been significant proven, and we liposuction that -- -- that drop But a has didn't know feel we

replicate well-proven out a that's So any there. study. didn't already see reason to And I

create show that can't. rather that other new and something AirSculpt do can I'd So people things

you so All right. Thank much.

Sure.

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

and appreciate it. to weekend talk joining We everybody for you today. really that's soon. great a we us will Well, Have

today's concludes conference. This you. Thank

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