AirSculpt Technologies, Inc.

Hello and welcome to the AirScope Technologies Inc. first quarter 2024 earnings call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question two at any time by pressing star one on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Dennis Dean, Chief Financial Officer. Please go ahead.

Good morning, everyone, and thanks for joining us to discuss AirSculpt Technologies' results for the first quarter. Joining me on the call today is the company's founder and executive chairman, Dr. Aaron Rollins, and chief executive officer, Todd Magazine. Before we begin, I would like to remind you that this conference call may include forward-looking statements. These statements may include our future expectations regarding financial results and guidance, market opportunities, and our growth. Risk and uncertainties that may impact these statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we will file with the SEC, all of which can be found on our website at investors.elitebodysculpture.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial measures. We use non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent 10-Q, which will also be available on our website. With that, I'll turn the call over to Todd.

Thanks, Dennis. Good morning, everyone, and thank you for joining the call. We delivered approximately 4% revenue growth in the quarter versus the prior year, which was driven primarily by contributions from the DeNovo Centers opened in 2023. These centers continue to outperform our internal metrics. However, we did experience some softness in our same-store centers, which was related to temporary macroeconomic headwinds, which affected a portion of our customer base that tends to be more price-sensitive. The challenges we are experiencing are consistent with those highlighted by others in the aesthetic and high-end consumer retail spaces. As we noted on our last call, we saw some isolated softness exiting 2023, which carried into the first quarter. Our revenues have picked up as a result of our typical seasonal pattern, but the degree of the seasonal increase has not been up to the level we have seen in prior years. This drove overall same-store revenue down approximately 10% during the quarter. Our Q1 adjusted EBITDA was $7.3 million, which is a decline from the prior year period. As we mentioned on our last call, we anticipated the EBITDA decline both due to recent revenue trends as well as higher SG&A spending. The higher SG&A spending was a result of increases in paid search costs, mostly due to increased competitive spend, as well as our higher investment in customer awareness building. As we are now in the early part of Q2, which is the height of our season, we are still tracking behind our internal revenue projections. As a result, we expect our year-over-year revenues for the quarter to be somewhat flat or slightly below prior year. Despite our recent trends, we are not making changes to our guidance at this time. That's because we are cautiously optimistic that the trends will improve in the latter part of our season and into the second half of the year. This optimism is related to, one, our significant investment in customer acquisition marketing, two, changes we've made to our media mix, three, optimizations we've made to performance marketing, four, continued outperformance of our 2023 de novo class, and five, our confidence in the 2024 de novos. Let me double-click on our marketing and de novo efforts. We have seen some very promising improvements to our lead generation as a result of some changes we made to our media mix. This is driving a higher percentage of organic search traffic. These leads have higher intent and are lower in cost compared to paid search. But given the length of time that it takes to convert leads to an actual procedure, these improvements are only now starting to impact our actual procedure volume. We have also evolved our celebrity partnership approach to provide a more consistent stream of relevant earned media impressions. Most recently, we worked with Kristen Dowdy, a podcast host, entrepreneur, and star of two Bravo hit shows, The Valley and Vanderpump Rules. Kristen did Stomach Airsculpt, which drove over 3.4 billion earned media impressions and contributed to year-on-year growth in direct, and organic traffic to our website. In addition to garnering new leads, celebrity testimonials have also proven to be a strong lever to re-engage and convert existing leads. As for our 2024 DeNovos, we remain on track to open six locations with four openings projected in Q3, the first of which is Kansas City, Kansas. We remain highly optimistic about these locations given the improved analytics work we have done on DeNovos in the last year. Finally, we continue to focus heavily on our cost management efforts. We exited the year with a $5 million run rate in cost savings and have identified further opportunities to achieve even greater efficiencies. We have and will continue to use these savings to further support our customer awareness strategies for the remainder of the year. In summary, we remain focused on the longer-term success of the overall business and are prudently investing in this outlook. We are closely monitoring our performance and will continue to build the Airscope brand, open new centers, and enhance our profitability. Now I'd like to turn the call back to Dennis to provide further details on the quarter. Dennis?