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01/11 03:36
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with an 8% revenue growth and improved margins. Membership revenue grew significantly, and retention rates are high. Despite some challenges in F&B spend, membership growth remains robust. The Q&A indicates optimism in EBITDA margin improvements and expansion plans, albeit at a slower pace due to external factors. The focus on profitability, wellness, and Soho Home expansion is positive. While management avoided some strategic questions, overall sentiment is positive, especially for a small-cap stock, suggesting a likely 2% to 8% stock price increase.
Total Revenues Q4 2023 $291 million, up 8% year-on-year.
Membership Revenues Q4 2023 $96 million, a 24% increase year-on-year.
Adjusted EBITDA Q4 2023 $37 million, up approximately 60% year-on-year.
Adjusted EBITDA Margin Q4 2023 13%, compared to 9% in Q4 2022.
Net Cash Flow from Operations Q4 2023 $19 million, compared to a $15 million loss in Q4 2022.
Total Revenues FY 2023 $600 million, up 17% year-on-year.
Adjusted EBITDA FY 2023 $128 million, up approximately 110% year-on-year.
Adjusted EBITDA Margin FY 2023 11.3%, compared to 6% in 2022.
Net Cash Flow from Operations FY 2023 $50 million, up from $15 million in 2022.
Membership Growth FY 2023 194,000 members, a 20% increase year-on-year.
Annual Retention Rate FY 2023 91.5%, in line with expectations.
House Level Contribution Margin FY 2023 27%, with mature houses averaging 40%.
Net Debt to Adjusted EBITDA FY 2023 5 times, improved from 9 times in 2022.
CapEx as a Percentage of Revenue FY 2023 8%, down from 10% in 2022.
RevPAR FY 2023 Up 11% year-on-year and 32% higher than 2019.
New Food Concepts: Opened Pen Yen, a Japanese restaurant at Ludlow House in New York, and will open Berenjak, a Persian restaurant at Soho Farmhouse in spring.
Wellness Initiatives: Expanded gym facilities at White City in Chicago and opened a new wellness barn at Farmhouse.
Membership Growth: Welcomed over 30,000 net new members, a 20% increase year-on-year, reaching 194,000 members globally.
Expansion in Latin America: Opened Soho House in Mexico City with over 2,000 members and plans to open Soho House San Paulo soon.
New House Openings: Opened Soho House Portland and plans to open houses in Sao Paulo, Manchester, and London Mews House.
Operational Efficiency: Adjusted EBITDA more than doubled to $128 million, with margins increasing from 6% to 11.3%.
Cost Management: Wages as a percentage of revenues improved by approximately 200 basis points year-over-year.
Strategic Focus: Prioritized enhancing membership experience and operational excellence to drive profitability.
Future Growth Strategy: Guiding to over 210,000 members by year-end 2024, focusing on membership and profit growth over house growth.
Forward-looking statements: The company acknowledges that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations.
Regulatory and accounting practices: The company engaged a forensic accounting firm to review its accounting practices, which revealed no material issues, but highlights the risk of potential misstatements.
Development market challenges: The company faces challenges in the development market, including delays from developers, which could impact future openings and cash flow.
Economic factors: The company anticipates macro challenges and soft restaurant trends affecting revenue growth in 2024.
Membership growth and retention: While membership growth is strong, the company expects a slight decrease in new member growth in 2024, which could impact revenue.
Operational costs: The company is managing persistent cost headwinds, which may affect profitability despite efforts to improve operational efficiency.
Potential strategic transactions: The formation of a special committee to evaluate strategic transactions raises uncertainty regarding the company's future as a public entity.
Membership Growth: Welcomed more than 30,000 net new Soho House members, an increase of 20% year-on-year, reaching 194,000 members globally.
New House Openings: Plans to open Soho House San Paulo and Manchester, with a strong pipeline of more than 20 houses.
Operational Excellence Initiatives: Streamlined processes and systems to enhance member experience and improve profitability.
Investment in Member Experience: Investing in talent, refurbishing existing spaces, and introducing new dining options.
2024 Membership Guidance: Guiding to over 210,000 Soho House members at year-end 2024, an increase of more than 8% year-on-year.
2024 Revenue Guidance: Expecting total revenues of $1.2 billion to $1.25 billion, up 6% to 10% year-on-year.
2024 Adjusted EBITDA Guidance: Guiding adjusted EBITDA to grow 21% to 29% year-on-year to $155 million to $165 million.
2024 CapEx Guidance: Expecting CapEx in the range of $90 million to $100 million, approximately 8% of revenue.
Adjusted EBITDA: Adjusted EBITDA for 2023 was $128 million, up approximately 110% year-on-year.
Net Cash Flow from Operations: Net cash flow from operations more than tripled year-on-year to $50 million, from $15 million in 2022.
Cash and Liquidity Position: Ended the year with a strong liquidity position of approximately $250 million, including $164 million of cash and cash equivalents.
2024 Guidance for Membership Revenue: Guiding to $405 million to $415 million in membership revenue for 2024, up 12% to 15% year-on-year.
Adjusted EBITDA Guidance for 2024: Guiding to adjusted EBITDA of $155 million to $165 million for 2024, representing a 21% to 29% year-over-year growth.
CapEx for 2024: Expected CapEx for 2024 is in the $90 million to $100 million range, remaining at approximately 8% of revenue.
The earnings call showed strong financial performance with 20% revenue growth and 15% net income increase. Despite some risks, the company maintains healthy margins and has a positive revenue outlook. The Q&A highlighted optimism about growth drivers and proactive supply chain management. However, lack of specific guidance on new product launches and customer satisfaction metrics tempers enthusiasm. Given the company's market cap, the positive financial results and guidance are likely to result in a stock price increase of 2% to 8% over the next two weeks.
The earnings call highlighted strong membership growth, improved financial metrics, and a new share repurchase plan, suggesting positive sentiment. Despite some operational challenges and competitive pressures, the company raised its membership and revenue guidance, indicating confidence in future performance. The Q&A session revealed consistent member retention and positive trends across regions, further supporting a positive outlook. Given the company's small market cap, these factors are likely to result in a positive stock price movement of 2% to 8% over the next two weeks.
The earnings call reveals strong financial performance with an 8% revenue growth and improved margins. Membership revenue grew significantly, and retention rates are high. Despite some challenges in F&B spend, membership growth remains robust. The Q&A indicates optimism in EBITDA margin improvements and expansion plans, albeit at a slower pace due to external factors. The focus on profitability, wellness, and Soho Home expansion is positive. While management avoided some strategic questions, overall sentiment is positive, especially for a small-cap stock, suggesting a likely 2% to 8% stock price increase.
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