The Beauty Health pany(SKIN) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2022, the company reported net sales of $98.1 million, marking a 26% year-over-year increase and achieving mid-double-digit growth for the eighth consecutive quarter [7][101] - For the full year, net sales reached $365.9 million, up 41% year-over-year, reflecting strong consumer and provider demand despite macroeconomic challenges [7][102] - Adjusted EBITDA for the full year was $47.7 million, a 46% increase year-over-year, demonstrating profitability resilience [8][108] Business Line Data and Key Metrics Changes - Delivery systems revenue for Q4 was $50.7 million, representing a 19% year-over-year growth, while consumables revenue was $47.4 million, growing 35% year-over-year [106] - The company delivered a record 8,492 Hydrafacial systems globally in 2022, including 1,793 trade-up units to Syndeo, a 37% increase from 2021 [21] - The average selling price (ASP) of delivery systems for Q4 was $24,408, with a blended ASP for 2022 at $23,832, reflecting an 8% year-over-year increase [106] Market Data and Key Metrics Changes - The Americas region grew 44% year-over-year, APAC increased by 24%, and EMEA was up 46% for the full year, showcasing strong growth across all operating regions [8][103] - In EMEA, Q4 net sales grew 12% year-over-year, despite a $2 million foreign exchange headwind [104] Company Strategy and Development Direction - The company aims to achieve net sales of $600 million to $700 million and an adjusted EBITDA margin of 25% to 30% by 2025, focusing on profitable growth [17][18] - The launch of Syndeo internationally is planned for Q2 2023, with expectations to leverage learnings from the successful U.S. launch [19][80] - The acquisition of SkinStylus, an FDA-cleared microneedling device, is expected to enhance the product portfolio and create a new revenue stream [113][115] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential, particularly in China as COVID restrictions ease, and anticipates a strong recovery in consumer activity [20][58] - The company remains cautious yet optimistic about the operating environment, particularly in the U.S. medical spa channel, which is experiencing significant growth [41][63] - Management highlighted the importance of maintaining flexibility in marketing spend to protect margins amid potential downturns [44][46] Other Important Information - The company has invested significantly in infrastructure and capabilities over the past two years, setting the stage for future growth [97][131] - Gross margins for Q4 were reported at 66.4%, with expectations for expansion in 2023 as the company moves past its investment phase [124][132] Q&A Session Summary Question: Can you discuss the fourth quarter system ASP? - Management noted that the ASP was down sequentially due to trade-up promotions and the impact of refurbished system sales [35][83] Question: Have you seen a change in competitive pressure in the U.S.? - Management indicated that they have not observed a slowdown and are well-positioned to capture shifts in consumer interest towards scientifically endorsed products [38][41] Question: What are the expectations for revenue contribution from the SkinStylus acquisition? - Management expressed excitement about the acquisition, highlighting its complementarity to Hydrafacial and potential for future revenue growth [135][137] Question: What is the outlook for operating cash flow in 2023? - Management expects to be in a cash flow positive position, factoring in interest and capital expenditures [68][70] Question: How will the company manage marketing spend in a downturn? - Management emphasized the ability to flex marketing expenditures while maintaining a focus on protecting margins [44][46]