AirSculpt (AIRS) 10 May 242024 Q1 Earnings call transcript

Hello, and welcome to the AirSculpt Technologies, Inc.

First Quarter 2024 Earnings Call.

[Operator Instructions]

As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Dennis Dean, Chief Financial Officer. ahead. go Please

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.

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

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

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

internal the opened call. Thanks, metrics. and our in versus you which approximately year centers delivered We continue the de revenue driven Dennis. novo X% from everyone, to in primarily joining XXXX. the centers morning, quarter prior Good for by was growth the thank outperform These contributions

with which base a to and highlighted same-store to retail by in The aesthetic high-end our more that temporary price consumer we are portion softness others of However, macroeconomic we experience some customer consistent centers. experiencing which are did was challenges sensitive. those spaces. be the tends our related affected headwinds, in

quarter. XXXX, As the which we we exiting softness some saw first carried call, noted last into isolated on our

Our pattern, not have in our of XX% revenue quarter. picked typical seasonal level increase revenues result up drove years. prior has we same-store seen a overall been the degree of the the during seasonal but approximately down to up This as the have

which period. Our from QX decline million, $X.X EBITDA prior year a the is was adjusted

we increased last the recent was building. investment spending result due as our higher revenue call, As increases our costs SG&A on declined higher competitive higher of mentioned well as both anticipated as spending. awareness EBITDA search as spend we due in trends to The customer to mostly paid SG&A well in a

season, of height now which are part the tracking projections. the we in of is still QX, behind early internal As our we our are revenue

at result, because guidance year-over-year will our the improve optimizations a in investment XXXX we time. we've de confidence of expect our somewhat marketing; outperformance This the de our half below not quarter and flat year. making Despite optimistic are latter the we to changes the or season, for to our revenues cautiously are recent As slightly we trends, part our be That's that prior we this our made in customer performance three, media continued our two, four, class year. into of to changes optimism made five, and; of in to, the related one, significant the our novos. acquisition mix; novo is to marketing; second XXXX trends

and Let me novo marketing double-click on our efforts. de

our improvements volume. starting search. compared to cost in actual But to are some search of in is organic of now toward a actual given higher time procedure mix. our it promising intent the improvements some and have driving seen to lead length that These changes impact leads media as are to we of very This made an generation have We leads a traffic. takes result high these to paid lower convert percentage procedure, only

consistent more also have celebrity We evolved to relevant a our earned approach media impressions. stream provide of partnership

we Rules. contributed X Vanderpump impressions AirSculpt, of to Valley did Bravo Kristen recently, growth organic in shows, which and stomach hit with to podcast Most website. year-on-year and the star media billion a Kristen and earned and traffic direct Doute, entrepreneur, drove our host, worked over X.X

have to to garnering leads, addition be existing convert reengage lever In new to celebrity strong leads. also testimonials proven and a

work de done As Kansas about last for year. projected de our City, first open highly novos on optimistic remain We improved in X to QX, XXXX which X these novos, given on we the with Kansas. is the in remain openings we track analytics have the locations locations of

the continue achieve run further to even we a savings million efficiencies. year cost on and in Finally, heavily $X focus have management greater exited rate with We identified to efforts. cost our opportunities

lanes We investing in year. this and outlook. customer will to further focused are our summary, the on remainder longer-term the the and strategies success support savings of continue of overall have prudently to In the we for business these remain use

enhance We are to new our closely and monitoring the our we'll performance open AirSculpt centers, and build profitability. brand, continue

to to Dennis like further quarter. Dennis? I'd provide the to call back on the turn Now details

Thanks, Todd.

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

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

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

down Our same-store revenue quarter. in was the X.X%

related performance particularly Todd retail price more consumer softness aesthetics customers the As landscape, are attributed broader across we weaker-than-expected mentioned, to the that sensitive. to and

improvement the seasonal XXXX. of in we While to we second into as second expect our and trends months see some half similar through we seeing move the are later quarter,

approximately is prior quarter revenue our the of XX%, pay And a was to XX,XXX, average over for with per case increase patients which procedures using consistent quarters. financing Our X% percentage year's recent quarter. the for was

have full vendors. recourse who their procedures not procedures As upfront finance do all payment received with reminder, related of any we third-party patients to and we a

the our of Our us. to improvement for versus result which period a management XX.X% cost initiatives, was revenue service percentage continue be was as a year. last the This of of cost XX.X% same focus in

XXXX. savings an XXXX, in XXXX half our for we see of total includes and in increase As of savings a opportunities additional a savings our million, achieve current of $X of to able and actual outlook reminder, we the further to million $X.X were million $X.X second increment

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

stay our initiatives. at elevated CAC as the expect these We level in to expand an second quarter we

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

XX.X%, in associated This brand with adjusted acquisition compared customer the margin quarter awareness EBITDA in was investment initiatives. quarter. prior was and primarily XX.X% decrease new the Our year to during our

was net per diluted adjusted $X.XX. the income Our share quarter for

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

outstanding the our the Our gross Cash our is agreement quarter debt the calculated prior quarter. operations center and under leverage now EBITDA. quarter, from due in related is flow which to was ratio for of in X.XXx. compared $X.X to decline $X.X to that decrease the quarter was Also openings. during the as credit new the was mostly The $XX.X year million primarily at million, million adjusted $X.X we invested end million

the in XX%, for conversion operations quarter. adjusted expectation EBITDA with our was line to For cash the from our which ratio was quarter, flow

quarter is similar first As was Todd quarter comments, seeing our trends. and the in his second we softer mentioned expected, than

and to year. seeing in fleet we de that half lead in recent novo in see we new centers strong online However, will positive of the recent expect of and signs volumes our overperformance from come the marketing are the openings continue second centers initiatives. Furthermore,

operator $XX With As and a result, some for we million. adjusted of of call EBITDA year the are approximately that, $XXX outlook approximately to full the like million our maintaining turn Operator? revenues to questions. of over I'd

be now question-and-answer conducting We'll session. a

[Operator Instructions]

today Our first is Josh coming Research. Raskin from question from Nephron

So seasonally is XQ I understand lower.

guidance. through, that over you And right, does just are to the last you are year XQ we've guess, guidance, of pressures. if EBITDA where hear EBITDA sort assuming guess of of it rate X historically, if if in But And XX%. I I assuming first optimism the look then optimism I sort only the You quarter guess at full like softness of talked full and XQ? quarters? about cautious look some is why optimism procedures guidance you what been cautious the we doesn't come has in year. XX% I if implies closer seen run cautious

Thanks it's Dennis. Josh,

hinges again, in we're it -- So yes, of we're at really while what really, It's that looking volumes a aspects seeing endeavors marketing uptick we've result. quarter. as leads the on optimistic cases. one takes fairly to of And sizable lead a our the during the for implementing been convert a

one us optimism. gives that portion of So

novos are significantly perform. to we Our XXXX outperforming them had expected de where

about we're So that. excited very

basically using the we're online. are deals plan coming XXXX for similar that very And a

de our implementing accelerating to sort or probably novos. we remember that's kind and ago, believe than quick a remember, I we had up year we ramp you or these call perform what expected. from originally a of started If better And things open what's so of

XXXX in growth from things, of half to obviously all the going what mean, in years. drive X that's I those class the we've on So differences seen the previous coming year, second

what guess, in for XQ, that, assumptions just growth are your but full for I starting Dennis, in embedded year? the And case same-store even maybe

Sure.

the case to towards So what the high we're start improving in looking then the quarter. the mid-single fourth we close where second aspect kind single-digit the somewhat We is quarter, to getting seeing standpoint third getting quarter. and for that in digits decline, see finished a to of similar first that consistent at from quarter, flat

of had things, hit couple recall, the -- last the in that a hiccup large One of we in if last the of fourth pretty you centers year, quarter a process.

done we've improving. done things some things those so there, some recruiting And are and

have be not we'll able that think we So issue. to

So standpoint. year think last comp relatively for a QX from of low is

it's a lower comp. So

promotion just just -- then is at more holding the better. discounting Are point And about aggressive specifically thinking the up where maybe or you Okay. price last because you're on one.

you and if I'm down the demand guys taking volume? about the of and and just increases case price curious, curve that So are supply sort thinking seeing

kind don't we're I would to and those, e-mail cetera. want offers, and and kind go and very But price reductions. We devalue Josh, we're this broad very text in is retargeting selectively brand with doing selectively the very through obviously of targeted. cetera, out et it et say and using of specifically Todd.

doing buying that's we've So the beneficial been mean, -- and kind more, more, we relied know, that. heavily save very us. I for of you are as on we've

think sense just we too I don't devalue think start which lot But want of don't we the makes and to don't we kind down I types want a -- brand of don't other us. bumping ultimately, into go really for to competitors, much. we of

to think I very in want we So continue those selective price discounting. be to

Thank you.

coming today Korinne from Wolfmeyer Sandler. from question Piper is Next

bit you're spend. more? this really you was CAC little that -- color point customer high little I'd this like generation some to seeing bit all getting At touch and marketing sense. will on And leads your CAC on The coming these the this quarter. from marketing the what can a from us then early down lead start heightened provide increased a you're

bit to the course the Just confidence will the to once of maybe over improve. half marketing back give you volume the of that that we are us strategy case get the little how year, shifting And of year? a

Korinne, it's Hey Todd.

would the So heavily long say which what we're we is, gen. investing believe in why business in obviously, is lead I term,

that A to are Our giving -- a due early optimism. made is of us the which cost lot promising, very, seem is we've But what be basis that there's activity. just changes signs has to few competitive definitely very gone that up. really the is

our kind -- We're kind of solely. heavily been Number to way that away of historically, very lead kind relied one, we've gen of efforts. diversify starting It's from of paid on the majority we've search.

search, been we're And is what And In obviously very retargeting. media with promising which seeing us. some actually we've some so display and radio experimenting is TV, done organic connected more outdoor. we've for markets,

ultimately So of ultimately, us kind people if to come to those and us leads, to will. more you buy go seeing out you're opposed as

it. we're and So of encouraging, that's part very seeing that

existing The what initiative, doubling new kind down a initiative on aged or -- which what of second we is our our an is call leads.

so against obviously databases not the those We people has lot converted. interested fresh been in, or but first last have are of kind kind people a our have coming A of over put of that are in effort leads. our lot that of year

have We after can these try go all to we convert. and leads that

able there. promising to them So selectively, now with a very we're to some little bit we're some analytics of tools, and get improvement seeing more our

people. right and optimization just search. paid for a kind I always that we're it right it's to the remain more get optimize We're ZIP make key lever and and efficient of then of but the And to targeted. trying spending us, the sure will getting to mean doing messages with the things people, lastly, right our codes, more

of just lot and indicator. leads to convert of a changes procedures. the the have there's signs, then Obviously, those to early Dennis as that kind we've really So to out, ultimately leading made. again, And are eventually pointed sales

improving, just them So a coming which which the tend to are indication the which be seeing, search, early we're of also it's on that but are leads, the lot leads from are quality of higher-intent consumers. organic

kind is the the headline, high. going on would to question CAC CAC. So of that's related say In our short term, remain your to I

efficient as our organic But going to is pedal over drive get keeping on to search to changes making the ultimately general, revenue. more be search, spending. our going foot down are of that In you're in be We time, to all much enable we're that that more much more paid these should if efficient. us opposed to

of kind doing media diversifying enable CAC to us down organic that the obviously, start of that's that to will more this over And time ultimately goal. over driving of will be a take our So we're time. our lot gen lead in

Korinne, would we're than our reinvesting that initiatives kind One just of thing I back add that is cost of to, marketing. EBITDA the level, those rather at into keeping kind

that the do similar excess through to marketing cost these good just expect, as done, this year and resources to to initiatives initiatives said, So a put back continue is we we we've use the we a the likely that's, process. a hey, into opportunity And from standpoint, will identify efforts. again,

helpful. GLP-X to the then touch just on Very issue. And

as you an people -- driver there? more any awareness view there We for AirSculpt? better for demand Do versus more GLP-Xs. are taker of change offerings get that seeing Or is still or in more accessibility thinking to

been AirSculpt our very, to seemed us patients loss for powerful. but well. are as -- of all this The of we've are weight -- marketing a loss they Look, that of tailwind research lot of to lot would interested GLP-Xs a say a be in We're and who and ultimately come us. medication combination either seeing doing on weight medication very

there's there are weight because us to come maybe to to to discovered medications. and started some they went have a investigate of they weight people lot also So loss possibly, and medications would that they coming us people us, loss

something far, is very symbiotic as what so as risk. at And that is And we're very a tailwind to major so ultimately, opportunity seeing relationship. opposed an a much it's looking and we're it a -- as

ultimately as continue to So at something to going look we it that's help us.

coming from Raymond Your James. next Ransom question is from John

the kind this is your talking quarter years? are usually big back-end Just lag of couple second like-for-like loaded? a Do of about you start you say, quarter, last this historically. the off see quarter a the of slower to start Or as versus,

Yes.

year, season the So Last manage. or when of more mean starts I John, is started a start. -- timing quarter to delayed in of difficult the on it This is year, that March. it always

of a a so a perspective. And that's bit little difference timing from

in that the we've seen is about, later bit the it's we there, little the we're season as lead typical past. talked the in so and seeing And impact a that gen flow

further to of season the of that maybe will that moves kind summer. into a kind So allude

don't Right would than just season if now, season the suggest the case. know, would of for is be the -- that's we months that number one but

channel And mirror, so would that to in then and about Have But been celebrity Okay. comments from something now awareness how a the should been of endorsements. you're years that been transition? pivoting your hasn't appreciate me about just marketing, maybe own have what the far? on I in looking rearview critique terms performance all And done you're of brand you let hearing couple secondly Instagram we've how making for the more that. done

that our on a have heavily be time. have over Yes. to question. generally, these heavily, is good been would search say, are historically reliant made paid We Look, changes I it's driver.

that saw know, started it to celebrities you were do awareness get we would of back marketing, then is saw, bigger We as As some to building. last which celebrity in what kind these Well, definite year, some would using some we we come of definitely spike improvements helped. and down. particularly we

of now, this in big is pearl. a we're kind partnerships over this the And year. couple or as some of a of that rather celebrity we changes a string of as of kind kind of I my making do relationships do doing more mentioned of remarks, prepared How than

So smaller frequent. but these social maybe of actually we're some with celebrities. been more finding smaller have And celebrities, very a to huge And beneficial that's also They following. us.

think it's I So an evolution. been

anticipated anybody the think the have of I direction. we've right moving been changes in kind market would happened. don't it that think have I

But were the So we direction. the that, generally, been in think has I moving factor. biggest right think, I

and kind we're proving media. the our that's be well. now as of think optimization think to continuing I very diversify in beneficial we're And I to

could but So continue the direction, make moving and it these drive are happen will changes, right need. I absolutely these to not think to changes we'll that the that growth in and as evaluate we we overnight, we're hopefully, continue

foresee Just we're locations the down. there lastly, your still numbers. or pretty are any now unprofitable? same-store locations calculating that any I even is closures Do mean, you some volume Are all if profitable

Yes.

still All locations, a are our generating of profit. John,

nothing ramp from we continue through standpoint. slower So a London is market. standpoint would to learn that from that I center the say as

degree a from of rest up It's not we ramping the take XXXX But to profitability to all not be the profitable. that have, it's continue cohorts. typical as like up ramping the centers those center the standpoint same are. a So

consider And so at to all closing any. no reasons

there's curve. particularly mean -- in comment markets, London. only I The look, Europe, definitely I mean, learning definitely it's I'd make international on a

bit little us. to do, we longer But of a but that a it very the definitely to us might out. is learned, that about figured once going be for center optimistic incredibly we've strong think things I to It lot all market. of we a get be we think continue take there's just kind

editorial my company mean a good of health the the alone -- comment, lot side comment. your been be trail that years a of services has London editorial an been have in in to a I not market. might for care you're on that that outcome next it's peers

turn the like to end management session. floor We closing or comments. reached our over further the of I'd question-and-answer back any to for

everybody. Thanks,

few to weekend. great and have will a in a We you talk months

conclude Thank today's you. does That teleconference.

You thank time, day. a at today. lines wonderful this your We may participation and you your for have disconnect