JYNT - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to The Joint Corporation's Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. [Operator Instructions]. And as a reminder, this conference is being recorded. to conference like to now I'd turn over the Ms. And with LHA. Herrick Becky

Becky Herrick

Thank is everyone. LHA, afternoon, you, Good James. This Investor Becky Relations. of Herrick

September quarterly the call will The its On XXXX. CFO, provide and of XX, the call today, market and Peter Joint quarter Today will will the financial open after vision the close CEO, then Peter issued John questions. results the review provide Meloun, ended company financial for for details Corp. Holt, highlights, the

today's If be Investor copy and website some statements considered cause it that our of forward-looking might discussion, relating you predictions, to affect present advised today. have risks this of that forward-looking actual statements. including statements to estimates, The materially we a company's statements, be to expectations, do not factors that uncertainties found be will business already and subject today's from press important release, could forward-looking information the discussion at these differ the we may Relations make can results www.thejoint.com. Please also the includes in forward-looking. are section other Throughout

we result, these statements review against the price risks other would our results placing caution undue affect future forward-looking a to the of reliance or our market these encourage on you SEC with and factors you and filings our for a of As discussion that stock. may

turn or results events. the revise to Peter publicly in to to Finally, any now our of forward-looking or Officer. Chief light Executive to it's over my With we're future ourselves obligating Peter? Holt, information not statements these call release that, pleasure new updates

Peter Holt

last strong today. our and joining share convention long-term for you successful of quarter an thank progress, vision our to review continued and Becky, excited We're company. another all franchise We've our our us month, growth. had improving you, Thank of

improve the our adjustments the network fully we purpose doctors get our for The last quality by of chiropractic providing to patients million details, you routine our XXX of XXX affordable today, who provide and nearly chiropractic than for of at are do it Joint performed new X.X more year. clinics we listeners through is life utilizing care. those into We Before who licensed

provide pain wellness promote a on relief patient care doctors lifestyle. Our focused ongoing to and healthy

model, is Our revenue dual company-owned predictable provides because stream uniquely light model. strategy managed which and business capital is and a franchise of or clinics us reflective box powerful retail small it

billion us pain is community declared recommends first organization five spinal and Physicians and billion growing to drugs that the College as crisis as solution lower wellness, specialty $XX health Organization the XX members XXX,XXX As move effective medical largest quote. with when back that than more are we $XXX care. Americans largest dynamic United now American the with acknowledging in of emergency. non-drug treatment, are over last Internus for we our a is billion and National XX.X fact, management, last States in such chiropractic in patients most grappling which of focus therapies second physician nation pain quote, only spend group look medical has of And back Increasingly back been a with the recently a at the million This necessarily public nation the not and that is the a prescription line pain serve the months. on I annually. spent in we years, for pain manipulation Today, the in care chiropractic the with ongoing than the opioid relief year If cost to and main stream, Americans chiropractor market. especially $XX in million is XX more of continues as an notable pain,

highlights, we our helping quarterly our reinvigorated deliver commitment I continue on franchisees As to to results. demonstrate reflect

fact In improvement. financial our of is seventh quarter consecutive QX XXXX

As QX XX%. grew for those retail XX%, by for our clinics sales increased sales had XX or comp system-wide at XXXX revenue months least compared full to been open

demonstrates the year, sales the XX% than of growth strong experienced Houston, in of Florida, half Hurricanes the the a lower to first we've presence. had significant same-store due this where had, the in that is this Coast East impact and While we

EBITDA that XX% hold. being the for was Our our the public improvement net This of reaching million means and positive $XXX,XXX loss profitability improved the $X.X sustainable towards and $X from second drive history from time taking is quarter XXXX, quarter in adjusted by demonstrating EBITDA improves first almost million. XXXX, adjusted third

-- franchised did new franchise franchise QX, is XX% realization franchises was growing our six aggressive total expectations leading a portfolio strong. franchises fastest all the at XXXX to clinic not impacted QX brought respectively XX% managed the Year-to-date also XXXX. of slowdown September of opening or sold by and QX by territories. franchised Nonetheless, opened as our in of XX, total the XXX, The September the already Hurricanes quarter compared licenses portfolio company-owned XXXX. XXX remain our our a This to in of was units. the any During to close new At end, for new to than and XX, XXXX. little and were that XX, did we've XX% in we we growth XX% clinics and we more and XX% of was year-to-date indicators some

license XXXX. months the open developers regional it's to of said developers to can for zero signing bodes purchase compared clinics, eight take well XXXX. doubled in important new remember to we've that it to number regional which All XX that from Additionally, six

can with celebrate of events community and our national support. franchise most Health I'd hold, it's month to Last coincided offer Month successors Chiropractic the our important one convention. that discuss ongoing to franchise together on, National the came which Moving like franchise the

Excitingly the performance than a sales, million new sales the do $X clinics clinics to deliver time annual in from our in patients. robust XXXX, important, sales more XXX,XXX of break-even was XXXX. gross attract, Notably expanding level We used producer improved our to XX convert, retain, set broke gross performance a for for The almost better of XX XXXX. for And in to XX to clinics track achieved their theme equally pool, on achieving high convention to franchisees. our in success, for up even to achieved vehicle top powerful recognized we in gross are that referring that annual same addition clinic Our were clinics. road our XXXX. steadily a as new tools a

because to anyone It understand Joint to Franchising their are has patients that employees speaker on that competitive advisors also investment, trusted franchisee they best relieved in free the companies We lifestyle. very for keynote resonate that the a our shouldn't pain a convention a say selling looking who and doctors of our concepts pain can when create The that and franchisees feedback, excel leg on by to-date. its have strongest are to guidance was that, up our a our surprise spoke a attracts most to emotional from personally and who maintain and Based with advantage benefits and leg on our noble that brought be to them I purpose. nature franchisees engagement.

to businesses in active engaged or top of franchise growth. franchise approval box customers. a that to that about in importance brand accelerate have for an in point can retail us franchisees and we we've surveyed Joint XXX our the regional detailed The ability small Studies unit unique believe reached results patients franchisors more. our convention scale. a national developers is We every the closed event. XX% recognition We drive XX% environment accelerated XX% tipping and is the that already rate overwhelming that units our have X,XXX survey of show places third-party because and driving for Our critical and achieve of which information one a further

States. extrapolate a team regional United determine dissects the have which very specifically developer implemented we plus prop usage why to X,XXX it clinic distribution. we franchisors the But exactly that model future and analytics, faster when is analytics is Our patient believe out of scale that the also points use best in Based call achieve, on a easier opportunity the and strategy. the data and we

schedule regional and and franchisees in potential open at in Northern of our to minimum For in RD clinics defined of the collected ongoing assist six the counties a a number in clinic the reviewing quarter Maryland qualify In share develop a had And territory, assistance, ongoing the developer they developer to in part New Two opening, clinics royalties. three of territory each new minimum we progress for State turn providing clarification, franchise XX and with years. new the a and development regions, in training, new rights sold sell of that during help a minimum we this us regional we identify Jersey the open DC agreements. us field support. XX and fee national

The St. schedules our already third minimum in and XX clinics region development has agreement were Minneapolis for years. seven XX Paul clinics

as decades, teams development Envy, that territories experience eight Central John bring license require with The military, a our in to bringing expert, and well next RDs chiropractor All for sold has years like opening every as case part developers least schedules State, These the Washington clinics Philadelphia, as years. of are XX. of minimum and several team I'd in Joint structured developer The experience. and and in regional combined these RDs to review XX with the just a that, new of at clinics Florida. been Corp. Year-to-date, of we've it total Ohio, territories running and wealth business Baseball with course financial new operating McDonald's, Major And results. in The a of for an a to regional the colonel Massage over a insurance including over turn franchisees League to mentioned the Chicago, of XXX to Joint player,

John Meloun

Thank Peter. you,

and few our the on of performance to for detail be XX. quarter of I segments, segment moments we'll our file operating corporate overhead. financial which provided quarter XXXX. franchise have unallocated now two will available the a broken our will compared in discuss This some We well Monday, XXXX clinics the by down the third XX-Q as as of November take operations on highlights to corporate data third

As the our are system-wide overall business important of two of health a reminder, growth revenue most comp sales. measures concept for the and retail

XX% by of year. increased sales over As quarter system-wide the in third Peter the last comp period same XXXX mentioned

XX on up we which segment, were refer clinics our from to XX mature franchisees which by most that continue XX further quarter A X% clinics prior comp of their clinic growth the the Our year sale were business. more of of as the as reflecting over XX we to clarification buyback bought strong corporate months ground refer the clinics operated our and have or those the of for from clinic point existing increasing built Greenfield.

months or were through company-owned clinic increased the positive on of Our QX September XXXX. are portfolio sales in at since Greenfield have by average a XXXX. month average XX% XX% continued versus adjusted is EBITDA have to acquired XXXX September reflecting a up clinical XX% QX towards as be XXXX age XXXX when age managed an clinics Gross XX as versus buybacks prior QX months level. profitability. XXXX of sales September average are progress continue sales up QX these Their Buyback of of and XXXX. they XX in as to

to XX% the to of period both to the the increasing revenues from the added in portfolio sales clinics was $X.X third X% territories. XXXX. decreased clinic in time, end regional of million due Revenue quarter the higher is this to of over held the was same to profitable that in of progress same in Conference from has to well. to last in by XXXX the of quarter year our QX our the third and compared base last to smaller by clinics the and from been significant year, reflects grew due of profitable made corporate XXXX now third million year. we of versus corporate $X.X period in This also clinic the timing the quarter and first a clinics last the to operating as growth corporate first marketing buyback National of time. over increase in first from since million quarter $X.X compared third our QX period The quarter same due total performance. sales clinics The period franchised XX segment General Revenue it patients franchise six continuing from XX last While for reflects clinics million steady fewer higher XX% period. year, have primarily expected growth is same due net the increase, clinic corporate being XXXX again portfolio in the segment our contributed $X and in of of XXXX comp in increased the administrative primarily XXX clinics end million Cost XXXX. Of a cost occupancy increase, of acquired due improvement year earlier as $X.X third to franchise by to in fewer and franchise the $X.X are to that they of since increasing and was and million to were driven to corporate experience and sales XXXX. Selling compared XX% regional the the XX% clinics operating in third expenses decreased the mature. clinics sales the the our year due The is quarter operations XX%. distinct corporate to both clinic payroll lower revenues revenue growth quarter the segment royalties developer expenses the XX and corporate developer XXXX attributed clinic in segment clinics existing

EBITDA from decreased third to In impacted fewer million improved negatively clinics development. expenses addition, Loss loss in from and XXXX was of related $XXX,XXX of expenses third the unallocated adjusted contributed million the million halting XXXX in also to operations the the million. amortization million, $X.X $X.X the $X due compared of XXXX same last of quarter year. the Depreciation of period the the the or by overhead operations improvement per quarter was in million a XX loss or Total Greenfield $X.XX XXXX aforementioned clinics EBITDA year. $X contributed and loss million clinic quarter third Net year. corporate operations was improving million, this quarter of to the XXXX. of adjusted in from corporate same the of $X.X in million income in quarter million per $X.XX in quarter $X.X loss third last compared $X.X contributed a share corporate franchise Of $X.X $X.X of share third $XXX,XXX net $X.X to

operating clinics time both For and first the adjusted segments, QX were positive. operations for corporate EBITDA franchise

the $X of during of unused equivalents the its September sheet. credit As Pursuant agreement, cash cash part required $X.X and which the compared our million XXXX to terms and cash at XX, first XXXX. the balance company were million December XXXX, XX, remains of as line of $X borrowed to a on quarter on credit million cash equivalents

between a loss $XX we to $X.X from $XX million, million to expenses, to Now EBITDA be turning a adjusted million, $XX EBITDA than and higher and and due $X.X are to to million loss loss XXXX and corporate increasing an through revenue a expect now of our clinics and anticipated of $XX from $X.X income million improving now million. expectations. operations up million, from be range adjusted a guidance to $X.X of to expect franchise we the reduced We million revenue of revenue operating between of

as XX to reduce plan time, an it's based the QX with the this we time. from Thanks indicated, on back openings think now to XXXX operations, we And XX I'll franchise call conference our to call. aggressive prudent prior XXXX to our XX. pipeline. for XX Peter. over everyone on Peter to to At communicate Regarding XXXX expected We guidance turn started your

Peter Holt

John. Thanks

progress It routine for providing of thank five, be I'd hard be regional one, at our of to organizational be two, the again them of and and and repeat possible the structure; our IT and to plans; our each care patients six, of corporate the efforts we execute one build work our four, franchise life footprints three, everybody I affordable want world-class faster on a the the for world is continue robust wellness see a our path chiropractor and in by career developer build would as a like chiropractors; the platform. health choice for and maintain without commitment franchise community; class our our of premier to every We improve long-term which strategies; and community to to care. to vision quality to chiropractor and not continue employees. provider accelerate was their pleasure convention

open City City. be up Craig-Hallum, the will in Utah that week, two note Corporate Angeles, to LD Micro Healthy we Select next Investor I at Before New to next Conferences the Invitational, ROTH Los like Event Park over months: Q&A, Alpha Annual in following I'd York Active & Access Annual and Lifestyle

out would have please Q&A. LHA a meeting you reach Investor or James, like Relations. If any I'm questions to ready to take

Operator

sir. you, Instructions]. Thank [Operator

with Capital. comes question ROTH first Our David Bain from

Your line open. is

David Bain

Great thank you.

towards company on back First, congratulations repositioning profitability. the strategically

up and per trends. that pay clinics revenue seasonality us are idea outside I any that First if about of did specific I have XQ acclamation continued a went beat or can the you enhancing apologize. those by the done been versus changes through number clinic slides, concept particular XQ owned you've And they four give at an sort quarter-over-quarter the they that, of results you clinics again five hop on X% Maybe of locations.

Peter Holt

no you see when some David if for Joint have we that significant during quarter-to-quarter The there's that even higher it that overall. a concepts is say the month like what's in at it's on see that a interesting month, in congratulations quarter, shipping look interesting much seasonality it's retail we basis in I've pretty my while been revenue the that Thanks And that you slight and us so involved about and by seasonality even. or frozen holidays, lot business, problem a Hey, desserts, all. of have different at and in I

David Bain

Okay.

Peter Holt

is was more sales, QX QX same-store up XX% sales so that I QX we and number And market flooded have was of for think XX% with and were if really seven for was QX drop reflective and of was that in same-store sales. the Houston for XX months, clinics XX example days. at particularly same-store sales, than closed -- quite look our XX% between same-store you a those which And

And Houston well reflection and of but then to up in so Georgia. Florida when a out truly number from the of the XX% QX with we it's just into right clinics a East I come just we of up have because Carolinas not as course think Coast

came added And he took clinics supervision, place so spent three eliminated that control with scope that -- on think the the met board see Armenteros franchisees performance XX% the our and discontinued see last particularly we side. a robust out call So the question the reason why XX% results discussed the you really that and I in we talked our that Operations we more January. he half of why in first that VP think of made of that I another level, much on, operational practices, effort. which best that's -- that as their difference for between to have. much believe managing team He corporate level To the of team, one we're Jorge corporate a one months do is in has, operation the clinics the that answer to a changes smaller over on is deconstructed that that the your literally of it's about were we the the best information, see what way on our I in field, of starting in the is year.

David Bain

the the other EBITDA up of future. you're profitability Great. and that same-store And ownership store. off pace investigating out general number just the of concepts you the faster something out for that proving continues that now and per opportunities there review strategy at increase opportunity period I into model positive articulated mean kind you and are a under proving Then seeing looking kind any at in of to that's quickly time still you the mix as pretty are that

Peter Holt

very no you the our we along think in obviously And now that we're and last and strategically Well, closely we achieving and came get business great corporate this about just we of is both that per working this clinics clinics again recall And goal best dual until our out and year it's expanding with from all way. clinics of way a profit. new to corporate position. said we've are a that portfolio said okay, if that question. as that not overall We've clinic we and moved board and model what believe we as franchise

is the capital the best different working that effective know, very strategy. Greenfields, much You is what's buybacks of it's in have more they closely implications all we're overall just requirement part timing the to way do most our what's a that, board but with that, to determine, that more of

David Bain

Okay and one then just final promise.

any trends openings. You faster you sort store you Can mentioned new numbers share behind that with of anything provide towards for profitability can us?

Peter Holt

I we of try nine look our same-store are we've been the months opened that our But we've -- clinics. it's as months that to that. that as has that about that close getting six what that breakeven to to new and not been measure XX XX to we we've closer would against is our the to breakeven a to to XXXX any in XX that And opened and programs I'm any time our very always XX point Sure. the is corporate to months units at move and to say been goal corporate can't talking is months. clinics historically so I XX the

completely our will program, we So that. see opening to and of we're grand we've new implemented starting process, results restructure the

can breakeven. months to further moving we goal of six talk is closer as As into that more we're specifically we're the to think a nine we this what I get but closer results about saying about and

David Bain

Very guys. nice. Congrats

Peter Holt

Thank you.

John Meloun

Thank you very much.

Operator

you. [Operator Thank Instructions].

Mike question next Our from Craig-Hallum. of comes Malouf

line Your open. is

Eric Des Lauriers

on Mike. for Hey This quarter. the Des Congrats is on Eric great guys. Lauriers

Peter Holt

Eric. Hi,

Peter Holt

Hi, Eric.

Eric Des Lauriers

just could question portfolio. that press the in previous managed little more expanding of bit a I of clinic If

this possibility guidance of of know Does to and coming next be I this does to to for until quarter at any of whether once to the been decide it's openings wait that managed that said this going clinics the provide or quarter. is able the this clinics you for profitable XX Thanks. company I least that kind see XX some goal in include like year? that see still As franchised look to or to be -- would Does does expand just XXX% on it's or not.

John Meloun

clinics said along until No, all XXXX will through be franchised to number that we're a that to corporate that of so not any profitable we we've XX opening clinics. is XX XXX%

Eric Des Lauriers

not going Okay, got of quantify quarter then it. wondering that you're And was impact you're little this more for have wondering kind areas quantify all, guys if hurricane if a that impacted were that able may looking to might be to altogether. just been us have that at pushed I at hurricanes those to without to new into XXXX able if you any bit or how and of many been those out openings the

Peter Holt

want the else it's we're than I we're the I no, anything because really more impact on why great a too said as Right, much to why talk of don't clinics. lowering question about guidance and think hurricane I new the

certainly and as continue and because try clinics all other to recover part the affect premium there's that aggressive in a of the getting they to factors to would are it's tell not the we hurricane hurricane and that now construction little with that is they place to the that has a implications the teams the And to XX the in Florida got XX impacted stuff I country of by they of dam Texas and all I but last the what in doing of just I that have we've that year have number area are you Carolinas. think that the it's XX? clinics been the on XX it's openings too versus our this comes of then lot mean range

And you but open, to by the end quantify hurricane they push oh like put won’t gosh may all will into so some to number number are be think probably able the to total quarter be I'd trying would they I attribute them of it'd something to because him the are to if of open none three a this of to my answer it, happened we're is that five. like so that QX the I

Eric Des Lauriers

to number closed. you sales to any And even attributable that X% maybe of Okay. your seeing clinics Houston strong if continued question, clinics of difference customers guys But been I'm or wondering couple to Florida same-store Thanks. so then strong are that's to in driven be increasing strength extract just and continue are perhaps guys able if just out the given succeeding with the value have customers. final whether the in same more from being you number more of that

Peter Holt

are both, combination I continuing been of been a new that year numbers earlier our it's those think we since to as measuring this think patients, have I increase.

our new more So we we seeing use door seeing patients the are are and patients absolutely existing in this often.

about year, of a that price had we when So last have on for that number seen But is increase, that increase this year the combination in price is increase. so to that I Last so elements. think we of absolutely portion a same-store number driving that it's number two are pure level. was you this a those quarters growth real of that those the elements and XX% two purely -- three attribute far for unit you've last sales the could did everything case

Eric Des Lauriers

Great. Thanks guys.

Operator

you. further [Operator I'm on the Thank phones. questions Instructions]. showing no

would turn over back I Mr. to Holt. the to like conference So

Peter Holt

again aggressive in adopted quality care renewed commitment delivering thank our closed to growth. accelerating X,XXX set improved scale Top our we've ability proven have we're and of franchisees, We're closing, Thanks, and you James. our Already about chiropractic clinics. affordable our target interest we I to approaching to a your assessable, and model, we're want for XXX the XX% clinics developer passion company. of an brands In franchise

of walking veteran to was or telling impact. couldn't our important, Richmond, his by We in nerve his neck, and And Lonnie spurs, life-changing, painful. The pinch who illustrates of that degenerative impact are a and started patients to a few big, to visits him. members. him U.S. although before everything coming The and White Joint in and He the be for reporting free, finish get Forces communities I to changer story in like amazing; and it's have regarding a our as them military would more gain. a We're bone that family his on pain and visiting result Armed to nothing it’s lose Army suffering Thank your Virginia making much to back, offering the their in bend sessions I chiropractic considers never you it's taken even members stretch services program is his noble. to very He our accessible is quarters. our service a was the he Joint, and he of has from was discounted disk had it a of approach military you immediate our for and to it proud through members time care game look states appreciation chiropractic to visits attention. help the forward

Operator

conclude Thank Thank does you. very for your participation. much conference. that today's you Ladies and gentlemen,

You disconnect. a may day. all wonderful Have

The Joint Corp. (JYNT) 11 Nov 172017 Q3 Earnings call transcript