AirSculpt Technologies(AIRS) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2023 was $46.8 million, representing a 20.3% increase year-over-year, driven by a 19% increase in case volumes [15][6] - Adjusted EBITDA for the quarter was $9.1 million, up 12.2% from $8.1 million in the prior year [18] - Adjusted EBITDA margin decreased to 19.4% from 20.8% in the prior year, impacted by brand initiative investments and executive team costs [19][12] Business Line Data and Key Metrics Changes - Same-store revenue growth was 5.3%, indicating a return to normal levels post-COVID [15][6] - Average revenue per case increased to $13,658, a 1.1% rise year-over-year [16] - The company opened five new de novo centers in 2023, with all performing at or above expectations [8][9] Market Data and Key Metrics Changes - The broader filler market is valued at over $4 billion, expanding the total addressable market (TAM) for AirSculpt to over $11 billion with the introduction of AirSculpt Lift [4][5] - The company anticipates a meaningful impact from AirSculpt Lift in 2024 as it rolls out in more centers [5][4] Company Strategy and Development Direction - The company is focused on strengthening the AirSculpt brand, accelerating store openings, and enhancing profitability [5][6] - Plans to open at least six new centers in 2024, including locations in Detroit and Kansas City, are in place [9][8] - Investments in brand awareness initiatives are expected to drive long-term growth, despite short-term cost increases [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for services, indicating no adverse impact from broader economic concerns [10][26] - The company expects to achieve mid-single digit same-store growth in Q4 2023 [15] - Future cash flow generation is projected to remain healthy, with a conversion ratio of cash flow from operations to adjusted EBITDA expected to be around 65% for the full year [21] Other Important Information - The company has increased its full-year revenue guidance to $196 million, reflecting a 16% growth rate for 2023 [22][7] - Cash position as of September 30, 2023, was $8.7 million, with a leverage ratio of 1.6 times [20][19] Q&A Session Summary Question: Pricing and Add-on Services - The percentage of consumers adding additional services remains consistent at about 20%, primarily driven by fat transfer additions [25] - Demand remains strong, with consumers willing to pay higher price points for multiple procedures [26] Question: Future Center Openings - There is significant opportunity for opening centers with comparable average unit volumes (AUV) to historical levels, with exploration of lower AUV markets planned for the future [28][29] Question: AirSculpt Lift Expectations - Most patients are expected to be candidates for AirSculpt Lift, priced attractively at $1,500 per area, with significant marketing efforts underway [34][33] Question: SG&A and Customer Acquisition Costs - Recent brand awareness initiatives impacted SG&A and customer acquisition costs, which are expected to fluctuate with seasonality and volume [36][37] - The company anticipates improved leverage in operating expenses as revenue grows, with recent executive team costs now becoming fixed [38]