The Beauty Health pany(SKIN) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net sales of $117.5 million for Q2 2023, representing a 13% year-over-year growth, and adjusted EBITDA of $17.8 million, reflecting a 22% increase [16][34] - Excluding the impact of trade-ups from the previous year, total year-over-year net sales growth for Q2 2023 was 32% [16][34] - Adjusted EBITDA margin was 15.1%, with 7.1% adjusted operating expense leverage, offset by 6.1% adjusted gross margin headwinds [17][39] Business Line Data and Key Metrics Changes - Delivery system net sales were $65.6 million, roughly flat year-over-year, but grew 30% when excluding trade-ups, driven by a 56% increase in volume [35] - Consumables net sales reached $51.9 million, up 34% year-over-year, indicating strong growth in volume across the globe [23][39] Market Data and Key Metrics Changes - In the Americas, total net sales were $63.6 million, a decline of 16% year-over-year, but grew 18% when excluding trade-ups [37] - The APAC region saw a remarkable 143% year-over-year growth, with net sales of $25.2 million, while EMEA experienced a 61% growth rate, delivering total net sales of $28.6 million [38] Company Strategy and Development Direction - The company aims to enhance its financial strategy and reporting capabilities under the new CFO, focusing on long-term profitable growth [20][21] - A commitment to customer service was emphasized, with proactive measures taken to address issues with the Syndeo devices, reflecting a focus on long-term relationships with providers [19][75] - The company is refining its focus on key direct markets and plans to concentrate resources on executing in these areas [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the company, citing a large underpenetrated market and strong competitive advantages [31] - The company reaffirmed its fiscal 2023 net sales guidance of $460 million to $480 million and adjusted EBITDA margin target of 18% to 19% [44][46] - Management acknowledged temporary gross margin headwinds but expects to return to historic levels by mid-next year [76][78] Other Important Information - The company ended Q2 2023 with approximately $550 million in cash and cash equivalents, indicating a strong balance sheet [42] - The HydraFacial brand continues to generate significant consumer interest, with a 10% increase in Google searches in Q2 [51] Q&A Session Summary Question: Thoughts on teething issues and guidance implications - Management acknowledged teething issues with Syndeo, primarily software-related, and emphasized the importance of customer support during this period [72][75] Question: Confidence in Q4 EBITDA margin ramp - Management expressed confidence in achieving guidance due to expected growth in China and the launch of new systems [82][84] Question: Financing challenges for small estheticians - Management noted that small estheticians face challenges with financing due to high interest rates, leading to a shift towards lower-priced devices [103][110]