AirSculpt (AIRS) 8 Nov 242024 Q3 Earnings call transcript

Greetings, and welcome to AirSculpt Technologies, Inc.

Third Quarter 2024 Earnings Conference Call. [Operator Instructions]As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Ms. Allison Malkin from ICR. you. Thank Ms. begin. may you Malkin,

morning, everyone, discuss of joining to you XXXX. and Technologies' results thank AirSculpt quarter for for us Good the fiscal third

Joining Chief is Financial call Dennis me and Officer, Officer Chief Interim Dean. on the Executive today

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

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

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

an call, of review our share with today's our For Dennis quarter followed will by a financials overview and strategic the of begin an guidance. initiatives, update on and

take call that, our to questions Following I'll over will call to have the the Dennis. for we the open today. turn prepared you us With remarks,

joining everyone, and call. morning, you for today's Good thank

X.X% priorities conversion management. current our volumes $XX.X in perform our on solid our performance with macro quarter, this initiatives: and prior expectations novo improving our to ensuring the the quarter included Revenue of cost totaled down X.X% a believe reported volume of openings declined third Our down revenue year, has XX% decline million The we of related line XX% X significantly the on track million for in cases, as de novo prior case decline in back-to-basics $X or financials of in due X.X% These quarter. priorities. was dynamic on environment. Briefly costs the XX.X% were de versus the million We center this approach highlighting improve mostly revenue progress lead recent into the of focus accounted prior results right $X.X million us Adjusted and decrease, navigate better the are in successful quarter continuing year revenue from to third and second with EBITDA but or of the new year third year-over-year Same-store in the improved from over cases remainder year. to openings. quarter. with the $X.X the prior

centers now reminder, months profitability. me to let to new a approximately in And X the to for turn it X back-to-basics progress priorities. made As takes reach our

to to our attributable historical to for advertising advertising center leads. starting of search lowest improvement our challenges, to in AirSculpt demand our our approach return and quarter paid core are is with macro while converting the engagement relates it to of more We consultations. level leads continued a the we As converting and seasonal year facing are measured customers see still cases in this believe targeted at

a to it aware, to time and is $XX,XXX purchase that experience leads you're longer into takes it In days Historically, case. our a frame to spend considered to $XX,XXX. As XX convert is between a AirSculpt shows average approximately an convert see with lead a cases. common environment, this

of cases, leads the implemented me quarter, response, and initiatives drive For closer have it to to conversions examples. share number third was we let days. In and XX some a to

them database, more over to and to utilizing which our should communicate with customer leads software time. now nurture in offer help reconnect to catered help conversion Salesforce increase a cases with are us experience, and We better

no so which as will cases, do to our in additional cost, they turn cost. convert established these customer leads acquisition Importantly, at help lower

that We way consumers to flexibility payment to believe also give to more an We our revenue eligible finance improve effective schedule procedures. price is have procedures, also this drive allowing us new by higher help which added should options consumers incremental margins.

is our novo productivity priority from second de Our drive to recent locations.

We for performing pleased of X revenue XX of We of performance our that ahead $X.X Similarly, the center our one these stated our more which benefit been of each of recent excellent continue a the months as openings achieving recruiting, seasoned to novo centers year. the center centers objective class, with payback less also performance have sales U.S. de is of should are also these our new centers XXXX the year are be well. and teams, believe opened of than million. result operation

Birmingham, locations, a new quarter. Kansas As Deerfield, and pleased was centers it relates busy are performance. City, Michigan. far, we early, it while with Ohio, And new to so Illinois We Kansas, Columbus, our cohort opened in

Our final XXXX New opening expected weeks. in next White in the York open Plains, is fifth few and for to

XX, the at third XX end XXXX. of As we the operated of quarter of September XXXX, facilities XX versus

and currently to Looking term the expect ahead, operate in XXXX the centers. of a number identified we that next continue few three have increase XXX to for believe medium and to have new in over locations we strong significant have months. we Overall, pipeline opportunity centers

$X savings also $X The half as cost identified the million, higher-return work to will as deliver goal to Turning achieved we back activities year. have we prudently quarter marketing into And case half increase on our growth. leads and an and our savings savings goal we planned the savings saw our we invest to third annualized progress for continue to of and of million basis, continued of on priority. expect

performance Let additional and me into financial guidance. now our share insights

driven volume the quarter As consumer lower mentioned, million, the with to revenue decline by mainly XX%. spending the for and in $XX.X year environment. was was quarter lead down revenue same-store X.X% decline challenging versus prior a quarter case revenue The this due

leads in revenue $XX,XXX which other average $XX,XXX ability our patients showed our attribute our quarter lower, this of was to driven third leads quarters. to improvement, quarter, while financing by to a $XX,XXX to it while more for last using to return of year's more addition, was consultation which on our with case treated any Notably, per we unusually marketing quarter. percentage having areas than high and compares consistent the are some convert side procedures patients In is to to high, efficient range, recent was pay XX%, which spend. The $XX,XXX

with of percentage service finance and all over As prior the was of a XX.X% received as vendors. upfront, procedures we versus to year their recourse no third-party revenue reminder, Cost a procedures full of related payment have patients we XX.X% period. who

the and XXXX. impact, administrative point our increased Our openings reflected $XXX,XXX recent and general due compared fiscal inability de expenses same in certain period fixed flex rent to to remaining XXX was increase a the the and as percentage quarter novo nursing. Selling costs to basis year while such in

this mentioned, contain corporate reduction and in worked achieve cost G&A As to a was quarter to of we able our million the quarter. $X.X

was our offset marketing spend. by However, a increase year-over-year in this

the result advertising as the initiatives. per year. On brand $XXX second in decrease a decreased to awareness our our discontinuing was for prior in quarter cost sequential versus spend basis, of reduce acquisition our $X,XXX a compared customer spending to of sequential the we as working the are case CAC CAC $X.X Our quarter XXXX. efforts by $X,XXX as of in Notably, certain reflected million

million toward compared to As cases, going move was acquisition XX% customer a XXXX sales for forward efforts to of see $X,XXX. Adjusted and diluted of $X.X year to continue costs to million or begin prior our for compared convert reduction and marketing loss XX.X% million $X.XX third goal quarter. $X.X EBITDA quarter approximately further per our the quarter Adjusted $X.X to expect EBITDA in margin fiscal we to share. in was the our the adjusted CAC loss and was

Turning to balance sheet. our

XX, $X $X XXXX, and million, available was As facility. of September revolving we on cash our credit had million

quarter, was outstanding gross the and our $X.X $XX.X year ratio from for million and compared the Cash prior novo quarter invested operations we in million Our to flow facilities. was $X.X quarter is million this de X.Xx. in $X.X debt leverage million,

remainder Let me outlook of now year. to for the the turn our

the XX, $XXX in of August increased million revenue as range issued to range $XXX compared As quarter October in XXXX sales our a noted guidance to results have for on million for $XXX release in the second our to preliminary to of midpoint with million the we revenue $XXX million. issued guidance of

million. We in of are $XX for also adjusted guidance maintaining million our full $XX to the EBITDA year range

to my the up would of wrap within Accounting our I remarks, Philip Chief like to I Bodie announce am an share pleased organization. I to Before promotion Officer. update

partner AirSculpt, and Philip finance of where Philip has served years, joining Senior significant X.X to the valuable Controller and Prior highly industry. with trusted healthcare past been the held Corporate experiences has a at he Vice For in mine. senior roles AirSculpt, President as

to we business benefit his I acumen our improve am looking from to forward as work foundation. financial to continuing

Additionally, the underway. for a CEO search well is permanent

proven interviews We challenged trend. In to improve which backdrop, navigate continue that period back-to-basics on approach revenue and believe to have the like capitalize with hopes conducted this profitability addressable and new we see we finally, in results growth. With consumer I'd model prospects business summary, for Operator? invest proven operating list the candidates working and opening of And and us future over a questions. to total announcing will of we excited enable we AirSculpt to our continue us the coming in support record track as remain narrowing centers our our the call of are will some the to leader significant about that, a operator our opportunity billion to of allow and $XX and dynamic to a cash-generative despite several the to business to and turn our is and weeks. operate market spending

Research [Operator of the comes LLC. Instructions]The question Joshua with Nephron first from Raskin line

count just the in quarter. sort know at quarter. first How I like ramp? looks think quarter the that about on should you I opened XXX of cases fourth that you I guess the end expecting? the right we and the in contributions I we're line. what one, the about you the in case But And new X know X sort said Birmingham, starting think in Deerfield It the was centers. quarter. those on was of of are

Josh, thanks for question the morning. this

line. it said, in as much So we very was

really and Birmingham, anything and month As Deerfield full quarter Columbus not month, I you Kansas the believe, was did was up, opened first out, City full contribute us. of in September. for pointed first hardly August

pointed at probably a well. -- little a mean of are obviously, over you centers you look get I out, was improving didn't Those at as is -- -- I doubling those expect So looking that can would activities. it it full what you think complement amount.

about give performed revenue think million on are As those we centers our year. a opened information, individual up center in for year last performing the our the are that. $X.X we of center expectation full that above current we full range year we performs continue out, centers out of opened basis, around to sort line. is much while don't well. When how that last a very pointed of centers each perform year And a

it, some do expect standpoint so obviously, improvement not quarter the a we that, million, what expect of And we it's in we quarter. over from pretty the $X.X third significant full saw of but

topics. All helpful. switching Maybe right. That's Helpful.

changes you're Just how a tightening if are does you any curious procedure, data GLP-Xs the seeing demand evolve, that. And like on any impact to of I'm seeing on using prior things them more you. procedures, in your don't specific for of views skin patients I know in many had

change what it. from about we've quarters previous in around significant talked no Still Yes.

as to have relates skin considering tightening. leading are the seen it recently strongly contouring We that to are specifically some people procedures, body that suggesting GLP-X publications

as that's I the think need a skin it. be further, that that mean, of around I year, expect area GLP-X, you aspect that's you anyone us I do an a an been you've bit coming that. been needed if that on the is tightening, leaning know, and that's tell into to area to we little In can

my with GLP-Xs what of sort a have to the of again, can people I Just catalyst appearance. do been drawing

that with loss people. has for we And is focus think we aspect that on. can Around there's kicking process so I when assist about skin tightening. talked services area to product AirSculpt well. But to results good to itself, tightening we've really give new product grown products, been the internally. that with that do that, Renuvion want on procedures do obviously, the we a And we an Obviously, new new several sure have the make from obviously, been people Currently, we And out roll to about itself. want of tightening AirSculpt. do think We sure And further as skin around add work skin we we those items, definitely to that a just tightening do. and it's ideas be expect clinically we performing do various they lot weight diligent we enhancing skin well. AirSculpt a make working a from modality

one Makes just sense. Makes last Maybe one. sense.

I that I just financing to mean think payment means consumers. it guys options meant. available. you Are assume you mentioned assume more for you financing? does but taking the on finance more new that risk, that Does -- mean? What aren't I'm financing curious what I

Yes.

a probably correct. traditional extend again, want some open at to Josh, right their for of candidates larger from it are payment XX-month to a standpoint on to working standpoint. of financing vendors like risk again, opportunities we're standpoint. months, that options months to qualified XX extending We're we on to at for And beyond that customers -- an taking that What say, up opportunities, XX program. little area It's we credit. is, of same with of patients to, is and just obviously, XX for that's options. Many nature procedures right a We our do financing on the we're that it kind want revenue based a still vendors that cash So the from qualify payment our or quality to in aren't looking looking like not from do now. based qualify -- as somewhat

patient versus in volume, And facing that period as bring to our particularly so think challenges the we revenue is case relates gives over be it and will some pay that a a for XX-month opportunity able period, the X-year consumer which also additional to to currently. per possibly that the enhance

from the Piper question of [Operator Instructions] Wolfmeyer comes Korinne Sandler. with Next line

it up quarter. on Could cost service driver bit. a did bit little I'd sales, provide you color of like little to a was of touch of on parts and QX Was proper we think then it a the into then XXXX. the as step lower percent going a to run And -- this just anything on? It about that a of of bit was? early little even here what as the else function head volumes of or how rate the

guys, there's tick which pointed third of out, yes, revenue cost for the service I even up quarter, you us our in most quarter a typical from as the And macro consumer Korinne. is the you of the did quarter, challenge third Thanks, out as when is a challenging not quarter in remind the year standpoint there.

So tend standpoint. that the the uptick relates as in an it the in see always decline a bit just to quarter to of little from we revenue third

a you there, in to to of center being do flow preopening as guys probably major the Korinne cash for us only was X have, One it costs new up months to up Not the centers quarter. opening recall, we drivers, X have X profitable. in we related takes also but ramp

we're -- current of the incurring many we're to full how starting costs pleased of level there. at brunt still of volume there, And center with pick those state the the is up of somewhat while so a

so that's basis was And increase. de to of big a causing clip that About activity. pretty just novo really related XXX the percentage points

to those in part ramp fourth that to expect come the quarter. be up to begin down begin as able centers to So further

move to highly the into were improvement fourth expect the something in very we to So we earlier where as similar year. quarter

as de revenue there. highest. some is see historically obviously, those because healthy And back I is we for ought up, where ramp to going think where very a land. that, our from quarter we'll But novos a significant again, quarter, we been improvement Second have us to again, it's

savings Great. helpful. P&L. it then And amount. prioritizing I stepped cost know going still there's the moving That's through on, spend. and And SG&A a good but like you're sounds The customer down marketing some

thinking into be how So heading any around and color QX? that blocks we then SG&A on the building should about

-- on expensive standpoint, very much reach again, a of per marketing basis cost on to more heavily and lead mean optimal marketing trying compared the the it. looking is search Search is to $X quicker we area is search spend. more Yes. little the aspect They're currently for Sequentially, more us. search right #X second intent patients products focus lead buying the a provides a our our million turnaround out of in marketing -- focus in intent. quarter. it those a main over level about sculpting. spend, and I because expensive body of is definitely took also That to doing lot activities But in have a much

in we're just to uptick quarter. making of what in the spend, between there And that the But an so were but very close balance getting that quarter little fourth again, strike marketing in bit focused a the we're right we're right balance something sure our nowhere spending But where right we there. see the on. we it's is to we're the trying striking on may return second

We did million overhead in about current the corporate gave that things quarter. $X.X do us some around benefit

expect Most middle that call We we to staffing that from near term in felt type the without those related what of continue we sort like of on. identifying positions do sort that could we standpoint. and management of were

and And and next quarter so were expect, continue also on again, the we able that year. into cost achieve going to that in fourth to

do some we're that business identifying lot as and the long potentially as sure safety sacrifice on work that areas to of and and do additional of reductions around those we quality in that continuing need things. a don't costs So costs, sorts we making can we

now end Dean the for the reached turn floor over of comments. have we like gentlemen, closing I and Dennis question-and-answer to Ladies would you. to Thank session.

look quarter to going fourth forward Thank report of with and again the you and and I speaking days we you, for when you results, many in we much. you joining related very to upcoming investor to see events. Thank us some today, weeks we're believe,

Thank you. This concludes today's teleconference.

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