AirSculpt (AIRS) 27 Feb 242023 Q4 Earnings call transcript

Greetings, and welcome to the AirSculpt Technologies Fourth Quarter and Full Year 2020 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dennis Dean, Chief Financial Officer.

You may begin.

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

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

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

we that described these to reports statements uncertainties from currently file in materially and differ morning's will projected could release cause and SEC. Risks are the and may impact results this press results actual with future the

obligation All required our of statements which website at can as revise be law. by found investors.elitebodysculpture.com. on We or undertake to except forward-looking any update or information no

reference non-GAAP will During our we call financial certain today, also measures.

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

with as margins Good EBITDA. and growth business. call. and joining We everyone, foundation morning remain I'm drive of prudent as making revenue and operating Dennis. that growth reestablishing and investments quarter upon our improving both our in fourth focused the thank solid well on long-term trajectory for build very our you same-store overall success you, Thank achievement to of double-digit pleased our results the consistent adjusted

service drove the in cash company. down a by We centers, the invested procedure. activities history our accomplishments. several facial fat brand AirSculpt building we expanded brand that EBITDA, growth openings adjusted us in opened X the to We transfer awareness, number of product pay offerings In We XX% included adding debt. and addition of to and in Lift, the allowed revenue highest generated free strong which increasing noteworthy new marking flow, our year

each TAM We I billion opening expanded well level. of the executive our the as am delivered than of our $X strong for teams them results at XX,XXX globally. we quantified AirSculpt for of of proud thank in personally our want particularly dedication am also our proud that of XXXX. contributions their as procedures. one safely many our centers opportunity having record track to talent, the more completed I and hundreds very of And in finally, potential strong

throughout that our our well-being ensured positive and is outcomes safety we have of priority, our The and and policies top history. procedures patients have

directly achieve ability these professionalism outcomes Our our positive is to of related staff. to the

are members, Our are our field patients their to in and the achieving their with of are best team and clinical interest. surgeons other care together our that committed deeply respected results in

brand to continues our scale business and our look and strategy store the value. strengthening we shareholder both ahead, as AirSculpt we enhancing further openings As internationally accelerating our on further focus increase to our domestically profitability

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

the good P Aaron, morning to you, and call. on Thank everyone

compared growth XX% in highlighted XX% EBITDA year. growth strong remained business by the to and Our adjusted QX, prior revenue

objectives. Our robust ramp to opened centers novo favorably by be continues the to top over very de driven compared X XXXX continuing with line to their our performance our years locations last budgeted that

previous de In benefit COVID. pronounced shared fact, company in the average highest excluding in in was history, revenue as X calls, level novos, of the a which, had these their XXXX first centers months our from

the was revenue was same-store overall expectations our performance quarter. Our below X.X%, which minus for

briefly recent our performance perspective, difference the per in revenue our comment I'd and month. represents to location our between put performance. this actual procedure one expectations to about Just same-store per like on

carried exited we as softness into slight some January. see did XXXX We which

robust season. are seeing and However, fully we we what with as progressed, a encouraged the quarter expect are has

that our through we later. outlook Importantly, our press morning that the will earlier this release performance in issued QX and go into in XXXX is Dennis built

Our adjusted improved was driven XX.X%, by year-over-year on margin by which points our to basis XXX cost for quarter management. the EBITDA increased focus

margin expectations the but media building investments the brand of With additional quarter revenue decided awareness guidance, growth in substantial, even versus we XX% million. we Importantly, initiative objective our our to $XXX to which prior make would more late been and to driving represents brand as expansion continues its have awareness this XXXX respect year. achieve recognition. met of

increased which fell least full Our at our adjusted below year, guidance million. $XX.X EBITDA prior $XX of of year updated XX.X% the million versus

This which I mostly additional building, shortfall was due to investment in just awareness referenced. the

cost some we would anticipating into acceleration have XXXX, of I at accelerate to people's the timing also XXXX this in-year did but on my not million even $X.X QX more to recently us Having were for above we anniversary savings AirSculpt, X-year impact our in which celebrated happen. XXXX appreciate come have However, put have lives. savings

with excess hit exercise loss fat have certain who the medications. among that end as a well even had be improve Specifically, diet, have ability their a by weight to as battle addressed people self-esteem or regarding areas lifelong of people body who dead can't

AirSculpt I scratched extremely better that and the fat about huge places be is have we continue And transferring it. That's surface future. removing There nothing optimistic to TAM, that to the on planet the billion for Earth why where opportunity our only exists. people $X with than stubborn want of

our I'd like XXXX, did for year, I reflect and to learning which as share Just my with latest you areas thinking. our last focus

to drive revenue priority double-digit to is first Our growth. continue

same-store our will have we our the an we de focus track also drive Like fleet. had on successful on always, have where will to productivity area across that opportunities but a knowing very we novo focus increase growth, openings, record we

continue organizational will strengthen we to Second, capabilities. our

an on offices investments fleet necessary with management margins. will continue right of broader expanding on And larger focus objective and and of in to savings more across ensure locations tools into while team EBITDA a we redeploying our centers. regional growth robust increased our to focus have support structure the employees lastly, We and of the talent to cost have we our

go of a on deeper each with starting little revenue me bit growth. these priorities, Let

that helped that our to runway is of number As the previously to for the That third-party AirSculpt have the the continue work increase capability confidence open we determine locations annual need company to real also which make to more estate bandwidth said, shared, year. with sure us locations each hundreds, openings. analytics a gives us we in has organizational and

way. will and we in such, As thoughtful program expand de a our novo measured

York in we have also we City, XXXX. open openings de Columbus, Ohio. announced Kansas. will to Michigan; previously I'm share As New previously, in White Illinois We and that X Deerfield, our locations Birmingham, announced happy to increased novo Kansas and Plains,

announced of de be date. It's in location important on novo at guidance a these second will half based our of later note to the XXXX. opening sixth all centers that Our is

of timing by we is the The with a analytics company. additional last which work estate did third-party driven year real

these were markets as our location have growth particularly opportunity leverage are tremendous in these I'm strategy these new locations, Chicago excited with about not all markets, of represents per metro step something a approach to give centers us do X one states, we market. in an York about we of land our able in will excited New Expanding evolutionary previous our to existing been and in scale which While locations.

Sticking to building the expect these with and benefits advantage operational take the will awareness revenue. opportunities multisite efficiency of We provide. fully markets

performance. me same-store turn now Let to

be particularly the will the As maturity key on key same-store for A size given our a fleet. this of earlier, growth focus company, aspect will noted patient acquisition area of efforts. and be our

return search the in on investment. We working our order to have to maximize paid been related efforts on new approaches

console We are already improvement leads, starting case and rate. to in our an our total see to quality lead conversion our

now of me strengthening to Let my capabilities. second turn priority organizational

to CRM will take relevant very processes the implementation, shared very our and to we transitioning of completely level. been from our an Salesforce As enterprise-wide processes sales previously, and challenging. which KPIs manual been has are throes tracking a new legacy our have Historically, in systems marketing

balance to us growth. Salesforce which XXXX will data and experience, of the take marketing of as more our will and implementation sales drive provide patient analyze allow help all to will to us complete. better this as anticipate well We our performance real-time

addition to are improving talent we Salesforce, In acquisition on talent and focusing development.

the staff. highly field as With retention employee seasoned increasing the of level well goal as increasing percentage of

well by in-house We for will building do acquisition learning as development. capabilities and as talent for this

me our on management thoughts Finally, some cost share priority. let

a of delivering good objective XXXX previously in million need in-year Our to $X job organization in area, did this for shared our reiterating XXXX, and more. push savings are know of we we for we but

CAC, areas over of in be our as noted on acquisition One focus the the program, outcomes see continue increase we by made our year. or from brand costs, we good helped previously, has awareness which our to important most celebrity investments customer XX% prior of will

in or investment as mail, to marketing, which to as few. local of a couple as phase the include to next with referred this direct initiatives The over-the-top program a top-of-funnel celebrity as is name well could effort media radio, billboards also OTT just such media

We this more with in will of reducing XXXX search. leads in be driving different the paid organic testing goal reliance markets our on approach and

will in building learning seeing future we reductions. to XXXX, any cost in drive savings paid our CAC that not related will are the valuable we tests help top-of-funnel CAC provide are believe While given search, we marketing

and bottom very in on top keep drive We'll continue To this beyond. in our initiative as proud to XXXX you our ability of and summarize, I'm bullish to posted progresses. performance be performance and XXXX double-digit line

further provide on turn Now quarter call guidance. details XXXX and to to the Dennis let the our me over

Todd. Thanks,

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

primarily novo addition of prior was growth year the versus due the to centers Our de X base.

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

in increase prior for Our per Average was the X.X% over negative same-store $XX,XXX, revenue revenue quarter. quarter year's was the slightly quarter. case the a

from $XX,XXX. and to can $XX,XXX vary range fluctuations, procedure from our rates quarter-to-quarter, said previously, from have we to As mostly mix we expect rates

our are us a on of core to market. range, end in our rates We consumer the in the volatility which is that socioeconomic the group, our more provide of that insulation which economic the expected fact pleased higher continue high some pace from reflects

the pay during Our consistent using procedures for financing quarter, percentage quarter. was XX% patients the was which of to to prior

full we upfront, As recourse did their of reminder, finance patients third-party all vendors. any we who received to and procedures procedures either have related a payment with

during cost same the Our last that a were year. period versus the of revenue initiatives XX.X% as management implemented services cost improvement This XX.X% result certain quarter. of in percentage of was was a

approximately in $X,XXX his Todd Our was in awareness further customer activities the investments to remarks, quarter increase, originally This acquisition in for $X,XXX what as to is year. we per brand the due case forecasted. prior our cost mentioned as compared above

customer acquisition costs calculation and and salaries spend our For marketing full our and of includes both commissions our the sales clarity, media plus of advertising teams.

the million EBITDA For to million increase $XX.X approximately an $X.X the compared of quarter, period, adjusted was our year from XX.X%. prior

of impact costs novo centers the As you for exclude preopening our EBITDA know, calculation. adjusted results now in our de

This impact quarter. $XXX,XXX approximately the in was

Our will from preopening opening. the that quarter-to-quarter on process are costs fluctuate centers in based the of of number

margin compared initiatives. during Much the our increase quarter. XX.X% the Our cost in year's adjusted XX.X% to prior was was EBITDA management of from quarter this

As incremental Todd of includes total outlook of pointed out, XXXX our the and rate for of $X.X we million achieve run savings in-year a able million $X to were savings million. an $X.X

for remains Our for share From diluted undrawn. was income $X the as standpoint, our year. the full liquidity net and $XX.X a million per adjusted million, XX, revolver XXXX, $X.XX cash position of December was quarter $X.XX our and

operations timing leverage Our from mostly our year for gross new center credit working end during of quarter $X.X deposits prior openings. $X.X and our quarter million, $XX.X $X.X The quarter, agreement related was Also now is the the under on to de capital the payments million at calculated the we to primarily was debt Cash lease was X.Xx. as decrease the invested million compared related outstanding projects. of to flow novo to million, which related in quarter. upcoming ratio

was ratio which our mentioned our primarily de the For operations conversion the on and expectations adjusted lease flow cash quarter, slightly below EBITDA deposits novo previously upcoming to due our to from was XX.X%, centers.

over XX% trends Our noted that and contemplates XXXX in $XXX approximately revenue his the Todd of million increase XXXX represents comments. a guidance

quarter to the revenue in full drive year quarter. of half growth. X our our the slightly revenue fourth We positive the our back third de same-store to growth will novos We magnitude from anticipate de X from to the of expect in the opening centers the novo in year contributions weighted flat sales, while with and be X year-over-year centers

of X.X%. XX.X%. of EBITDA adjusted approximately approximately our XX.X% growth the the $XX de later is for have in novos million, impact Our represents of the XXXX year-over-year margins to which year, de coming margins on a guidance and XXXX negative Due will to novos

de in novo approximately Additionally, outlook costs. in $X over preopening to Operator? included operator With the some like the questions. is I'd turn for our to million that, call

question Research. first Our Josh Nephron Raskin with Instructions] is from [Operator

to start that we I'll response guess the week. to just any saw I report have short with last

short-seller Todd. you information is shareholders filings multiple are than rather accurate things. misleading our doing? to In Josh, public With for said, this report and X and How we let third consult that company. the information, view, contains inaccuracies advise the share the about me company's parties

First, take of our and patients record. and proud we our we're the seriously, safety track well-being safety of

work Second, our outcomes patients in how we teams And our consistently our in of to hard ability to our patients. earn to for trust achieve and and directly strive related transparent of market third, the be professionalism positive to business, is honest surgeons. our our they particular, staff our and the

this any allegations the address to further. intend not do in We report

be we'll that Josh, ahead and taking open on to you to go another If move we'd another Otherwise, question, question. have call.

a then. a cases expected. the -- I know we actual better question quarter, case year-over-year X% bit was lower. on a in that. guess I came in on I up ask appreciate little basis. than the a I'll The little business bit rate the

of sort XQ? Was there XQ quarter? quarters sort of there any change impacted after anything that the curious, is just discounting particularly any just strong So in that, and like seasonality in or

we No, We of Dennis. I were are and from for standpoint. mean, for rates is the XX,XXX year. close comfortable quarter to this kind nothing with Josh, full where pretty that the really our landed. very

impact seasonal relates it that. to really up very held any of rates from There kind as quarter-to-quarter. wasn't So consistent

we Again, that class. that's out a in of a we target consumer higher in kind remarks the still socioeconomic called

think where that keep And so our they of I helped kind us rates were.

be that's of more giving that discount working, we've of to the And the talked Also, push of as X people Josh, end this to lever just bundling about that to up a higher that definitely help they ASP more continues And kind gotten of And strategy think, is use, XX,XXX add ASP. we that of that. clearly it the strategies I do to us that's range. procedures. kind on been, kind in range us and

just one a And sneak just clarification. maybe in more,

about in just know talk came specifics sooner. two, late then full if decision the process you accelerating your you you I'm as a costs the little talked these quarter. of an about one, for that you if us there sort Just was on some towards there could give were something in maybe if quarter tracking to curious had brand costs in could, year be And that guidance awareness. bit ability didn't the I done that and defer or there was that? to

the we When for yes, thanks question.

were reiterated when ultimately in revenue than higher where guidance come even seeing November, So we netted actually we early out. we in

we go additional demand really, gave terms were of so that us desire what investment. strength And the to seeing the of and is make in what ahead

quarter, keep but that investment. some exited the bit that little noted, we we decided softened As we that some and performance a of as demand of to

and very It investment, of us. awareness building which obviously is benefit a was more for important long-term us for really

investment back elsewhere. So to that pulling keep rather we decided than

for savings full there we some us The would to remarks, my thought in the be that actually other and were to had that would $X.X year accelerate. we pull thing tell in that that I committed from going but put was have million QX you that QX didn't to XXXX, into over we able cost

our believe business. components in of get X do we is that, at building, which number decision year, of strategic leave to make for we really the the decision cuts really long-term investment just were whether Atlantis we right those the So the some or was the it the and a end to

is question from Raymond next Ransom John with James. Our

for Dennis. one Just

company bit original is and forecast. kind behind in point in can just -- IPO here, same-store its the particularly view variances growth. revenue other the any But just forecast, versus your a So I'm model you a variance longer-term of out over but the taking model

ago. corporate investments I area out the probably a probably called you did what model same of have the had Same-store Yes. been John, a originally that's call the infrastructure the in say bit softer I of put and would model than in Well, we I around the years -- second we significant bit original awareness. teams, and than is our in area, little And the has come couple higher executive last -- kind think building in store. a IPO made business, think out than little the of area the you brand

a kept as sort to gotten more there, it, it's consistent will. And of how digging think And a -- we've advertising a we've of spend. out into investments, look more if I of brand probably sort kind be I will, we got at awareness of awareness them you of the from percent We relates as kind more probably to more if it'd kind brand spend. if layer looked to were you model, of it higher of and at marketing revenue

would there's the model. of Second the same bit of aspect was lastly from corporate little it. And that be store in a softness the be would then

growth. And these and just me any that Do then through just patients like have secondly, new the of the secondary to first markets. markets growth there's not burn or into I group you strikes you're it population you guess, enough going markets of some concern support or, long-term

opened prepared I last Those all, primary of we're consider above mean first year, in I last expectations. our sure Jose. San Austin Raleigh mean, today. as I Yes. in many my markets not we well in of I I said secondary. remarks, year, performing I'm definition would what mean are

to markets noted, because of that I we're So is kind and any that et any in has very et mass the I'm one ability about. cetera, we're really very we that location brand operationally opening, excited we're and as a critical particularly markets the market very, with locations the awareness building, today about going have market from given the good where And second only feel cetera, in limited.

going in to that But runway of Michigan. us Columbus, to opportunity the share voice that very, give robust are lot that as and it's of I And there's about. bigger And a will and and Birmingham, bigger and many, markets we to have Ohio these mentioned markets. that of very come on awareness more like lot many markets command we think, I lot mean So feel an well. very we a that help. a really, good look good obviously, docket market

So we good as it. novo right now, very very, we strong. very And feel de has about performance before, stated our been

So we team that just now continue the with going all to pump historically. only to hard. has we're we analytics smarter the to fuel have work more done that get that And pair of

how lastly, Promoter And to but the guys couple rates. is short to fact I'd just you complaints there years? trended I'm follow-up. high any And of done you get be over then have get like sure level, not Could Net Okay. Score KPIs the look, going -- a about work curious there. after a the those Maybe have into past around complication I'm tell report, be us

don't like. Look, get offline, detailed short the you'd the questions I report of the and forth. of can take some back kind We if of and want into to kind more

misleading don't more it stated we to inaccuracies at before, credence much airtime. and as information. leave given not So it's of has nature the that. all giving kind any think think just And of just we We the best it the

question is Sandler. Korinne from next with Wolfmeyer Our Piper

Sarah on is Korinne. This for

intermediate on have today to near pricing would one done term those And those is to like? take look then if on willingness discourage work what patients? levels us what start comps potential to for any your in drive to you further the Just pricing,

door person removing or parts our who Pricing take they're bespoke has when you're that that we're a the because and the a doing. nature to number the say for question. the retailer, have you take walks and of different what in that where of of a opportunity transferring you obviously a Thanks the Yes. somewhat of have or proposition fact needs terms you every in and unlike procedure body traditional pricing, complicated is product selling the pricing

of straight in for So point at might of we being retail some do that said, continue on going pricing right might it there -- be kind not uncertainty just pricing given best going the economic us on. everything linear that's us opportunity as the think environment All path to believe marketplace. kind there, that in is the be it's other now, of for and down businesses. we're the We that

But something. who talk discussed we quality something you And is the think the choose of a as the some of opportunity and in of retail we're particularly about. going I there quite that think we linear nature there, after, but And given our probably we again, it would some kind believe may isn't point, procedure business. think, consumer to as at we it's certainly and do

our I measured But being right ASP. now, in how we think we're about think

of we're that's how thinking now. So kind about it right

are further to floor for Thank at There comments. over this hand you. time. closing back the no Todd any I'll questions Magazine

look forward Well, afternoon. future. Have your time thanks, near and Tuesday today, we speaking great everybody, a with in you the to for

This concludes today's conference.

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