AirSculpt (AIRS) 11 Aug 232023 Q2 Earnings call transcript

Greetings. Welcome to the AirSculpt Technologies, Inc.

Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. reminder, is a recorded. As Instructions] this being conference [Operator

hand would over Officer. At I to Thank the Financial this time, Chief like call Dean, to you. Dennis

may You begin.

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

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

and statements these Before guidance, that regarding may include call that this we conference expectations all projected the or be our and except law. begin, I found of press results opportunities could currently to may future statements. market investors.elitebodysculpture.com. as in would described actual may These on growth. like release financial our uncertainties differ from our to website results by reports future this results undertake revise statements remind file and will you or to and at cause no include forward-looking obligation Risks and morning's statements information required SEC, which materially we We update can are the forward-looking any with impact

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

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

good everyone call. and the to Thank Dennis, morning you, joining

have Todd details remarks. that the is let our company the demonstrate second today. it and the performance in provide we pleased more say to grown quarter specific strong for about further Our will the me so how AirSculpt. demand for Dennis very place with and I'm their But results were

positioned for XX,XXX value offering countries. significant and believe continued now well shareholder over AirSculpt our long-term history creation. have I We we procedures three in are growth performed in and are

to clinical As have I shared innovation. I previously, and excellence of my time shifted more

On fat in can out of wrinkles, to facial lips. and a volumes more front, rolled that volume resort procedure areas the loss we recently provide eliminate the innovation the Lift, AirSculpt face transfer

you the which billion, filler expands over As already over is TAM market to billion. broader know, $XX $X significant our

new and which Our all offers I significant artificial the as highly a clients' own facial use the It's liquid concentrated acceptance of client's cells. procedure provides gold, fat, increases benefits consistent to We results. actual the stem to refer filler compared as material. and natural, with permanent the the This body's more filler fillers. own

XX reactions, whereas may every may value permanent. Artificial That's by both the X a fillers, up adverse drainage injections clients. are for not resulting must body. our hypersensitivity one filler convenience done, our and be in a driver which, as touched be you is procedure fully lymphatic recently, facial read absorbed and have Artificial months, and issues to it's

as competitive addition the as moat. Lift, of are with well offering line, our broadening Bottom our we AirSculpt

and London, in have doctors. third fleet to rest the of our expand the We train months about we coming of this including the centers, continue we'll out a procedure as rolled to up our it over

date. enhanced more new to that many exciting new later at and innovation working share other procedures a test will We starting on and I are initiatives

our key team growth is areas. performance and delivering our Overall, consistent on executing

openings the our our and business, strategy our brand, further AirSculpt on scale store as and profitability accelerating both internationally. strengthening focus Our to continues domestically enhancing we

to now things me turn over let With Todd. that,

everyone Thank thank you you, Aaron, and the for joining call on us to today.

exponentially. its for has excitement grown months AirSculpt, It's future I been the over joined and six since my and company

team proposition, reasons optimism. from just are opportunity of some significant and differentiated our my incredibly highly of increased Our our the talented runway

quarter second recent by XX% most our with led $XX,XXX. average and which projections. year-over-year, our or revenue growth was procedure highlighted in which growth results, was revenue sequential our year-over-year was to turn now growth about our ahead approximately me rate, This nicely I per case pleased of by case Let XX% of performance. a am uptick

the volume led was de they Our opened and how the that are centers over XX pleased quarter growth I'm performing. for by past months, novo

our Following for our performance, strong half achieve we guidance now end to expect upper revenue range first of the XXXX.

calls, are Similar will morning XXXX. my important that comments my three this areas to focus around be in centered prior

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

strengthening the organization. on First,

complete team are Our executive the additions now. for to

achievement. Our these combination new legacy of with and more and consistent and team powerful tremendous and a entrepreneurial margin revenue now to in I expect changes in executives bring enterprise who scaling executives experiences generation has organizations. experience result building businesses

de revenue opened centers that committed five of beginning have four the year. novo at the of growth, terms of we the In to we

third expected of North original in expect Carolina, the outlook. quarter, in open center, to our Raleigh, We line what the with is the which by fifth end we had

be good our other office, international of dislocation is and flagship as are start. high, our we be Consumer optimistic performing at including centers a de well to or expectations, will London which this location, is novo gateway to a a very as interest that markets. off All above continue very at to

least that we expect happy in locations announce Our we this robust, and are de XXXX. pipeline open to novo at to remains six new morning

call. will We more third these the centers details specifics of provide about quarter our on

de and company well-regarded even has our more guide the that a we decisions future helped analytics real locations. in gives model estate performance of novo confidence location our future Importantly, us with a have to build worked

a fleet. few locations, XXx XXX that I'm real suggests analytics our Our world share estate opportunity over of to and de novo over the quantifying work increase global Canada current is rest opportunity. the included past the work excited months AirSculpt this that also for U.S., around

significant Keeping awareness, celebrity with our brand help us new We in to June greater launched opportunities. biggest of drive our revenue partnership growth one first drivers.

Rollins Jenny out personality her Jenny came her of We parts McCarthy. there AirSculpt to didn't were results to dieted. After months age, proud were included women abdomen or entrepreneur, waist, body how actress her are matter because, she much and the session, like Dr. results a worked many showcase her ago she of few like transformative no and TV one which extraordinary.

she Jenny's in literally fact, into In Rollins Kardashian's, be helped after no procedure, coincidence to We it Jenny offered opportunity is the Dr. Shapewear swimsuit that SKIMS campaign. Kim model. turn did XX-year-old a has

brand an initiative her market, related the our and time McCarthy been we uptick in significant demand to awareness a short in has the Jenny procedure. specifically During already have seen

story Given help the of already help us awareness celebrity whose AirSculpt to drive next results, body continue begun have these we can and brand. searching whose we transform the for can big

I cost Finally, our management am made pleased in very with progress we efforts. the have

the million track exit a $X.X processes. of targets are savings already laid number run we significant that I as to of exceed that we year. for the on feel potentially and is and meet $X rate have acted million confident identified XXXX We a opportunities firmly cost cost on have out, we as improving our areas streamlining in the of we and our structure which

balance very financial commitments and in the the of results on our pleased our of feel Overall, I to investors and with to continue the the our beyond. quarter about good ability am year deliver to

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

through you for financials walk now the Dennis? our outlook the year. will Dennis and

Thanks, Todd.

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

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

the June As of we at second XXXX, XX the versus XX quarter XXXX. centers operated of of XX, end

per quarter of $XX,XXX, X.X% target mix. case approximately was above over of driven first by XXX% the our promotional primarily range XXXX, quarter was Our we a of which and average our revenue over year's strategy. to $XX,XXX, our the optimization for to This $XX,XXX prior the quarter attribute bundling increase procedure procedure continued a decrease

do a price, fluctuations. continue to average quarterly we While $XX,XXX we target $XX,XXX sale to expect

patients spite remained in very uptick for the stable of the in procedures financing XX% has and of been from pay quarter-to-quarter percentage range Our to in using interest rates.

prior same-store the was approximately to our year was Our which in expectations. X% line with period, compared revenue down

COVID, For by perspective, QX demand XXXX high benefited significantly from resulting in the volumes. procedure pent-up created artificially

our in of quarter, the noise With are our comp COVID the completion calculations. mostly we beyond second

by mid-single-digit growth comp continue the the to expect back of XXXX. be seeing, achieve encouraged to demand we and are half We in we

approximately year year. acquisition $X,XXX the And to percentage of revenue was costs $X,XXX period. of the versus case, quarter for the was service period prior a was cost same which XX.X% customer in our last comparable Our as per in XX.X%

X Our our was gross approximate during approximately $X,XXX costs. case times an margin per return reflects quarter, on customer the acquisition which

We in expect expect brand further to the initiatives. and over $X,XXX to our CAC range we for execute low it on the as term, near awareness time we be decrease

For $XX.X to from the quarter, our $XX prior period. compared year million adjusted was EBITDA million the

in As reported This approximately preopening year last million novo the and quarter impact our include $X.X in prior now was quarter. month, our costs million $X.X calculation. current adjusted for in the de EBITDA centers results

as As cash presentation our impact ratios leverage does a credit not our this expected facility. in change or reminder, flow under calculated

versus XX.X%, in the which sequential other increase decline year investments. a margin was margin EBITDA a On growth points prior our points. adjusted basis support-related quarter due to was by adjusted EBITDA expense increased the basis XXX of related XXX clinical and to Our basis,

of expect result effect. as We half cost the XXXX prior of our in the to taking period initiatives management margin second compared further improvements year a

to related million work. to As savings Todd we this in-year $X.X expect approximately of achieve noted,

very be Our strong. continues liquidity position to

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

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

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

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

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

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

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

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

the the Todd on and momentum early As of our and to target achieve half in the part high of range the of revenue third centers in same-store continued our XXXX. half noted, the year-over-year expect growth based of results strong with positive guidance de driving to growth end novo the expectation returning we first of our magnitude back our quarter,

also based and on our EBITDA of year-over-year million confirming $XX of achieve range end our expect we represents are guidance achieving to high growth this adjusted of current which the performance range. $XX around our and We million, confidence XX% cost XXXX initiatives, to to XX%,

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

[Operator Nephron Research. from the line of Josh Raskin questions with Instructions] first come Our

start Just with the wanted growth. to same-store

to we half. are know an talked guys look And up what of easier like? one, XXXX, about real I bit to even guys last of there's case maybe sort think as issue. what zero and move had think the the little now like of sort same-store a comp a growth expectations ramp I But second you it previously, as is in you seems Or supposed about forward? quarter,

it's Dennis. Josh,

exasperated we out a that being that was last standpoint. a yet. volume seasonality we things obviously, impacting that call we seeing, on same-store do noise, outlook the bit mid-single-digit out and from it remarks was decline the it probably QX of year-end us that pent-up year-over-year. in a low Again, range XXXX to the a bit did call. we're we do quarter back digits, think expected one yes, Obviously, COVID as We'll with little we believe of not have that of number, of we're half this kind So for what did year, largest just towards the is a we our year. range. getting of to quite again, the the of get But suitable was be the -- We we're we mid-single giving think

you Todd about number since And up. year, of ramping expecting of costs talked next about why then, EBITDA? higher six are terms to talked of Perfect. started, he we up the rationale centers. should has now curious know And but level get ramping in this then start-up you're comfortable? I'd be I included centers, for a be in that feeling the

Josh, it's Todd.

about good very feel we six. the So,

One up. been have of of noted my it's pathway remarks, And and a we locations. the I a want that open operate and things we're big this, of operational of kind towards But I've that in the to we we talked make the mine, make about, is ramp we as now can part is think, sure obviously, a sure focus it's increase. -- also significant I to to those really other important have capability

a de that. building We're So team. novo we're process of in building the small

six. ramp that. with of goal time. very we good significant of stated, I over go as where And opportunity. And our up to kind But map very of have a So continue comfortable I that to obviously, and we now about to future is feel feel runway

So, to go in we're that, out continue will years. optimistic the up number that

Got been just It's -- -- me. just something there? last do I'm you one have quick Dennis, for real sorry, you. And then a

pre-opening I cost just to Well, your follow going was too. of question, on your up part

you. Yes, thank

Obviously, we year. did five this

of on London, year. obviously, go those the going which six through you an went not next year, we little out I specifics of forecasting increased year. was bit a mean, again, international we're five from moves math can that. work of to again, going One But into this into the kind laying standpoint. we're next But locations

So we significantly relates it adding don't to as expect anything more. different one

Got you.

GLP-X see that any potential if see a patience. a around lot of that. they that just do is companion attention. and Okay. Just in alternative? be there's as my AirSculpt? your prescriptions then And think you're last impacts is question you seeing an been to media just a curious spike I'm obvious to that And Or how curious trends

Aaron they're get I weight great AirSculpt who this a see in any can is because it very now, not drugs. are Glad call about to you way. asked. is Ozempic so are they're many And body us and permission. think talk symbiotic, inhibitors, contouring. It's Rollins. We for been a competitive Ozempic see AirSculpt -- loss We other and and lot, important question it's And what's GLP-X because on themselves see and internally it it's often. actually so we tailwind We give we (ph), they [AirOzempic] people getting now

you, XX, come XX bother your chins even and If it to your you pounds, you lose arms off and just evenly. melt When body likely still weight, doesn't in. more you're lose

it really tailwind creates So for a us. actually great

who Ozempic we people on of We too. and also to step journey, their kind see having in go AirSculpt that, another love take after

a see it we're fan, the opening So big and we market. actually

Piper Sandler. comes -- is Wolfmeyer question with Korinne next line Our from the of

Congrats really on a quarter. good

kind to existing really that the earlier, can better how trend going for within growth that trying same-store and number each volume term? is over So, case I'd center? of of what the expect pricing same-store expansion to to the unit we And to question opportunity understand coming as go growth first, to like from longer the back we like kind then volume look versus is And keep center and really cases? forward,

think range think variability we from been the But that's of historically, we comfortable for kind mid-single-digit a years what future, those pretty from COVID want we're a we Clearly, the the things. us into quarter-to-quarter just there's a so from of healthy see, same-store with. forward as Korinne, and sorts that much we we is look again, kind perspective. of place be to low to

through -- that, larger, of expectations. being small healthy get larger we're our but and continue kind fleet will mean, single-digit I of revenue gets part single portion same-store growth we going of de see our novos substantial to low a as a obviously to a up growth, As drive very

Todd. it's Korinne,

look also think would I lot right obviously Honestly, on on focused Look, store things. novo expand that. and to comp drive that a hyper to on add on to there's now. to continuing that And through is we're focused opportunity continuing there, it growth. of Just as we're I two at really de

internally, out improving I've some That Dr. processes have in we're definitely which then, terms talked talked increasing the which get to lot going will And roll doing continuing help. are Rollins a awareness brand business to benefit there. As We also we mentioned and more remarks, we comp new of help of things about, going as are that and we our for us. think his really and to much enabling to sophisticated, in the is expanding think procedures, about our effort well. initiatives of, really we're

So, things doing. that new we have a lot we're of

should going can that to So been And story, focus about. definitely time. comp a we've to chew de same and talked we on then to Dennis walk novo growth gum the that help growth us at But that. deliver the we're and continue

we're confident in. really also feel So growth, drive building those we space to to which we're very to white comp our opportunity, and capabilities but very drive confident continue

That's adding here for the centers expand bit then of how environment getting each of the Can novos helpful in on and you know been of that's doors? nurses great. terms I you're surgeons kind color. getting both a about the your as talk on staff you a been all Thanks has hiring there. board, historically, in year. and And and challenge little more -- more de and just

up to trending hiring and units. further you process And so how curious how expand just as the able that's the been you've ramp

question. the Rollins. Aaron It's for Thanks

that in professionals we're levels is and office, broaden our which we've other workforce. nurses As allied have really we health to ends some also that our changes utilizing nursing, actually every our of although made beneficial, been for recently have

depending actually the and have LVNs, on jobs nature. are that LPNs now or medical state for So we a non-nursing of assistants clinical

well. been I company. the for ever that's So since really doctors, it's started going best the gone And it's

we been is surgeons, a those huge surgeons referral Now superb. someone have fee that's a driver. network almost and they we hire that if XX surgeons amongst We give our referral our refer

We have more spots have surgeons to offices many want than fill. that job the who have actually we

in-house I'd is say to that So excellent. And we're team doing our just recruiting like superb. surgeon

people are be a them. just with We have We doing happier couldn't and two wonderful they job.

Awesome. in And then I one quickly, if squeeze could just more.

of of were kind a you that like, talked target of getting to previously back years you've of doing previous think about the XX%, XX% ago. that EBITDA long-term kind I couple like

With assume still we or the new a weaker to EBITDA calculation, that be maybe can bit is term? intact, that's that, little going longer

still purely or Yes, see slow -- it's number. this the getting a that flow that little question, calculation. look slow we any XX% point, changes. EBITDA the that through to process that no going credit push to on it make XX% doesn't that obviously, future. doesn't that, It's to that's to adjustment to Yes, if your longer that's pre-opening, a in the like-for-like, anything Again, impact further a back adjust we change to we great will you had reach cash for like going But absolutely, don't was going Korinne. Yes, impact that the presentation, at to of were operations. hitting ability If number. down

come of line questions from the Parker with Snure Raymond James. next Our

larger the Lift. new price And the This ask add-on have know the for about at happen James. procedure? rollout. be I can you is a procedures done? all deeper. the of just you is on AirSculpt for just How Maybe can uptake? many separate -- Or appointment? procedure like be to to be it to this Generally, dive does Parker something alongside still or was can new point kind that an a then, bit John the in what's hoping What's in it's I Raymond talk setting? that Like, a done more Ransom little this abdomen? down -- same procedure done

Aaron Yes, sure. It's Rollins.

really in can do it with do It matter. could so conjunction could with abdomen, doesn't any you AirSculpt of BBL, procedure, you you arms. all, can So with first it it you a with an do do

can if it -- because requires because fact, you a you're don't we of still few want that harvest AirSculpt fat. fat really enough In tablespoons skinny, only

actually them that do done never So and just before we for to could patient enough just have AirSculpt their a fillers. harvest we would

be really So done it anything in extra. it takes with and minutes about conjunction can XX

but each including temples areas and to pricing, there's said $X,XXX of on cheekbones, from we will lips, and And several to area terms the the be what In haven't do, the exactly $X,XXX. chin face the chin it jawline down nasolabial is, folds, between itself.

it So and done. start, how areas basically their I of on fat want filter they many once we do. depends us face mean, But cost it's their to nothing just

to it. So I'm really, offer really delighted

now, it's terms our out. rolling right In of rollout,

offices do We that we getting say, have we're of half almost we're just training it, have, our I'd now. are module and everybody doing a -- to

about their Our docs it lot had practice. really excited A are done private them of in it.

So And it's not a all. exactly what we it's heavy lift at day. do every

So, scaled only there fat we're player the that transfer is.

and transfers DNA. is a not roll we as perspective it part for of XXXX us XXXX out. fat our in meaningful I'd in this So revenue see from becoming

States? then to in globally. many the think -- And the are just novo de openings. markets appreciate drill there's available -- think you just down United Maybe locations the on do on I and how XXX moving comment Okay. you the just

-- the a sophisticated top markets. of how working help know I very mean, a off head, don't dozens look with the of So, dozens at I model us We've third-party my of to and done opportunities. there's runway

about opportunities. XXX globally, XX% U.S. of modeling those about basically actual of A in project. about There our some takes and is those terms the white kind I are infill And and Canada. new current said, space markets, of also numbers, stores of that lot markets. opportunities. in are very, really the very feeling as are optimistic very We're good So, and

in very So opportunity. we the confident feel

portability It $X really is we're roughly model. a geographies. across recall this And that really And of the demonstrates million AUV this business.

of little to still to to down unit bit go we AUV do So very have a locations not only in a we returns. strong also bit and very, able economic general are have number, be but going flexibility that

about to of lots beyond in good markets So very again, And then opportunity internationally. and both into we it's obvious different to going Canada feel enable even and most U.S. get of the that. us the just significant kind

we as a we and into that where the to look attack is XXXX. have exactly starting we So now roadmap, good go. obviously, to news And know we're

next Our from Instructions] questions [Operator Morgan come Gutman of line the with Simeon Stanley.

This is Sussman on Simeon. Jackie for

call Just, is to there on anything competitive? promotional Are becoming the Is profitability you to the this environment? your for there? on year? Anything more out assumptions embedded things can call out

seeing this kind great the is enter been really We're has Jackie, we momentum and Todd. not mean, continues significant look, it third no -- into really as of changes. I quarter,

of As that as a do Obviously, getting value seeing successful in for our recessionary bundle, encouraging. we're We're very continuing any we're consider to a parts seeing very, headwinds. more kind of mentioned standpoint which competitive being or not the giving seeing they is bundling strategy of opening us, from marketplace them remarks, body we're that very any people procedures. and we and to obviously means really Absolutely that in nothing our that.

very Our to strong. business strong, very, and good very is feeling be about continues it. we're Demand very

kind about strong. finishing upward really out and onward really excited obviously So and the we're year and excited of

American of case, maybe to Anything just I one And there in are kind your markets? new out centers most London guess, marquee ramp? on there call to the it. relative Got the North the centers the how trending more.

Yes.

going it Aaron. to then I'm to and start, over So turn let me

start June. Recall meeting So a opened that first expectations. very is off our to we good much of and this London in all, just

of fact, has been But who one This turn In him have of second meeting for early feeling our expectations. numbers in lot quarter to only I'll really for spent it the week very, labor a on, love over we here. there. performance Aaron very we're a of time good, sure.

going color I'm little to more let commentary. him So a give

A to actually bit little have Delighted working surgeons there information that more say four now. on London. Yes. we

is opinion because leader a flying that's to likes key London. One from he London, America of them

And a I've London. every three say, nicest had in, did I surgeons had there of spent I'm to working And So, than to are he it's a I doing And because with have we And standpoint, say competitive one the have show morning seeing the flies in price to place that trends lot British higher. offices, really just more from ASP. -- but because our higher we've we're delighted significantly time. our it's of in I PR just actual it, a the there. market U.S. the we've not locations. an the than that's ASP lot there day. incredible have we're market also be. never is

are at for Todd floor back now this the I to like would turn There comments. questions further to no time. Magazine over closing

about and So thank We're a strong you, year, continued of and business very and balance more our look we us thanks, excited everybody, the results. by for obviously forward the talking to encouraged good joining this We're morning. performance. about reconnecting in few months

months. we'll talk a great summer, to a you have few and in rest So of

Thank you. conclude does teleconference. This today's

at for disconnect of enjoy you You time. rest and your may this your Thank day. participation, lines your the