Full Year 2024 MEDIROM Healthcare Technologies Inc Earnings Call
Operator: Ladies and gentlemen, thank you for standing by.
Ladies and gentlemen, thank you for standing by good morning, and welcome to the meta room here end of 'twenty 'twenty four financial results and corporate update conference call. At this time, all participants are in a listen only mode.
Operator: Good morning and welcome to the Mirorom Year-End 2024 Financial Results and Corporate Update conference call. At this time, all participants are in a listen-only Participants on this call are advised that the audio of this conference is being broadcast live over the internet and is also being recorded for playback purposes.
On this call are advised that the audio of this conference is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available beginning at 11 30 Eastern time today through June 4th 20, <unk> 25 for.
Operator: A webcast replay of the call will be available beginning at 1130 Eastern Time today through June 4, 2025.
Scott Powell: For dial-in numbers and access codes to this replay, please refer to the company's webcast announcement of May 19th or its earnings announcement of May I would now like to turn the call over to Scott Powell, President of Skyline Corporate Communications. which is Metirom's and Bester's release. Please go ahead.
We're dialing numbers and access code to this replay.
Please refer to the company's webcast announcement of May 19th fourth earnings announcement of May 20th.
Scott Powell: I'd now like to turn the call over to Scott Powell President of Skylake Corporate Communications group, which has met her arms Investor Relations firm. Please go ahead.
Okay.
Scott Powell: Good morning, and thank you for participating in today's conference call.
Scott Powell: Good morning, and thank you for participating in today's conference call.
Scott Powell: Joining me from Mirirom's leadership team are Koji Eguchi, Founder, President and CEO, and Fumitoshi Fujiwara, Director and Chief Financial Officer. During this call, Mirirom Management will be making forward-looking statements. including statements that address Medirom's expectations for future performance or operational results. forward-looking statements involve risks and other factors that may cause actual results to differ materially from these statements.
Speaker Change: Joining me from better arms leadership team are.
Speaker Change: Cogent is a good thing founder President and CEO.
Speaker Change: And so much Archie Fujiwara director and Chief Financial Officer.
Speaker Change: During this call better on management will be making forward looking statements.
Speaker Change: <unk> statements that address <unk> expectations for future performance or operational results.
Speaker Change: Forward looking statements involve risks and other factors that may cause actual results to differ materially from these statements.
Scott Powell: For more information about these risks, please refer to the risk factors described in Mirom's most recently filed periodic reports on Form 20-F, filed with the Securities and Exchange Commission on April 29th, 2025, and Mirom's press release that accompanies this call, particularly the cautionary statements in it.
For more information about these risks please.
Speaker Change: Please refer to the risk factors described in <unk>. Most recently filed periodic reports on form 20-F filed with the Securities and Exchange Commission on April 29 2025.
Speaker Change: <unk> press release that accompanies this call, particularly the cautionary statements in it.
Scott Powell: The content of this call contains time-sensitive information that is accurate only as of today. May 21st, 2025.
Speaker Change: The content of this call contains time sensitive information that is accurate only as of today.
Speaker Change: May 21 2025.
Scott Powell: Except as required by law, Miroram disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.
Speaker Change: Except as required by law <unk> disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
Scott Powell: The discussion today may also include certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the earnings presentation available on Mirom's website in their investor relations section. non-GAAP financial measures should be considered, in addition to, not as a substitute for GAAP measures.
Speaker Change: The discussion today May also include certain non-GAAP financial measure or measures reconcile.
Speaker Change: Reconciliations to the most directly comparable GAAP financial measures are provided in the earnings presentation available on <unk> website.
Speaker Change: In their Investor Relations section non-GAAP financial measures should be considered in addition to not as a substitute for GAAP measures.
Fumitoshi Fujiwara: It is now my pleasure to turn the call over to Fumitoshi Fujiwara, Director and CFO. Thanks, guys, and good morning to everyone on the call. I'd like to start off by providing a brief overview of our business achievements in 2024, followed by a brief summary of our progress to date in 2025. and an overview of our growth strategy.
Speaker Change: It is now my pleasure to turn the call over to Soma, Toshi Fujiwara director and CFO.
Speaker Change: Yeah.
Speaker Change: Thanks Jos.
Speaker Change: Morning, everyone on the call.
Speaker Change: Paul.
Speaker Change: I'd like to start off by providing a brief overview, although business achievements.
Speaker Change: Sure.
Speaker Change: Worldwide, the summary of our progress to date in 2002.
Speaker Change: 35.
Speaker Change: And then above you although growth strategies.
Fumitoshi Fujiwara: Please follow along with the earnings presentation available on Medirom's website and the investor relations section at ir.medirom.co.jp A URL to the presentation is also shown in the company's website, the announcement of May 19, and its earnings announcement of May 20. The company's financial results state the U.S. dollars have been translated from Japanese yen for convenience at the rate of 157.37 yen to one dollar. as described in our next presentation.
Speaker Change: Please follow along with the earnings presentation available on <unk> website in the Investor Mitchell station I.
Speaker Change: I R.
Speaker Change: C O J D.
Speaker Change: Are you a rail to the presentation is also shown in the company's website.
Speaker Change: On May 19, and Leitz earnings announcement on May 20.
Speaker Change: The company NASA was up.
Speaker Change: U S dollar have been updated from Japanese Inc. Bulk convenience is 150 7137, yeah Q1.
Speaker Change: As described in our earnings presentation.
Fumitoshi Fujiwara: Please let me now direct your attention to the consolidated financial highlights on slide 3 and 4 of our earnings presentation. Total revenue by the company increased by 21.5% to $52.7 million. due to the increased sales of salons under the sales and outsourced business model and store operations outsourcing revenues subsequent to the sales of salons. Customer revenue increased by 15.1%. due to the increased number of salons purchase transactions in which we purchase salons from investors to whom we previously sold the salons. However, The cost of revenue ratio to revenue was down from 77% in 2023 to 72.9% in 2024.
Speaker Change: Please let me now direct your attention to the company highlights.
Speaker Change: Slides three and four of our earnings presentation.
Speaker Change: But the revenue by the company.
Speaker Change: So at any 1.5% to 50 to one 7 million.
Speaker Change: Due to the greatest outflows along on a film and outsourced business model and store operations outsourcing revenues close subsequent to the south of the law.
Speaker Change: Cost of revenue increased by 15, 1%.
Speaker Change: Due to the increased number of the long budgets that transaction, which we budget the long from investors.
Speaker Change: We estimate.
Speaker Change: Yeah.
Speaker Change: However.
Speaker Change: The cost of revenue ratio to revenue was down from 77% in 2023% to 72.9% 822 anymore.
Fumitoshi Fujiwara: SG&A increased by 14.3%, primarily due to increase in professional fees, allowance for debt-to-accounts, amortization of store operating rights, director's salaries, and recruiting expenses. Impairment loss of 0.1 million was recorded in fiscal year 2024 due to the expected close closure of the salons in 2025 compared with no such loss in 2023. Net income increased 20.1% to $0.9 million in 2024, primarily due to the gain from sales of loans recorded under other income and the release of evaluation allowance deferred taxes. Test roll from operating activities was negative 8.5 million, mainly due to decrease in acute expense caused by payments of taxes or social security expenses for the previous year.
Speaker Change: SG&A increased by 14, 3%.
Speaker Change: Primarily due to increased professional fees are one or two accounts amortization.
Speaker Change: Amortization of a store already right.
Speaker Change: Correct.
Speaker Change: And the <unk> expenses.
Speaker Change: The impairment loss.
Speaker Change: One millennium once recorded in fiscal <unk>.
Speaker Change: Sure.
Speaker Change: You didn't expect.
Because of this alone in 235.
Speaker Change: With no such law.
Speaker Change: Sweet.
Speaker Change: Net income increased 21, 1% Europe.
Speaker Change: <unk> 9 million in 2024.
Speaker Change: Primarily due to the gain from itself belongs recorded under other income and the release of evaluation allowance deferred tax asset.
Speaker Change: Yes broker operating up is.
Speaker Change: One being at a one 8.5 million.
Mainly due to decrease in <unk> of.
Speaker Change: His jaw expense caused by payments of taxes or social security expenses for the previous year.
Fumitoshi Fujiwara: and re-classification of the PCs from self-subsidized to net cash provided by Investment.com. Cash flow from investing activities was positive 2.3 million. mainly attributable to the proceeds collected from the sales of salons during 2024. Cash Flow Financial Analyzing Activities was positive 7.6 mil. primarily due to the proceeds from the issuance of common stock in a public offering proceeds from issuance of preferred stock in major models of series A financing rounds. and an increase of both short-term and long-term loans from that. Adjusted EBITDA and adjusted EBITDA margins in the country improved to the positive 2.7 mil and positive 5%.
Speaker Change: And request vacation, please see strong south along with net cash provided by investment.
Speaker Change: Cash flow from investing activities.
Speaker Change: One two points to a museum.
Speaker Change: Mainly attributable to the receipt.
Speaker Change: Correct from the sales of the loans during 2024.
Speaker Change: Gastro financial no I think.
Speaker Change: One seven.
Speaker Change: 7.6 now.
Speaker Change: Primarily due to the proceeds from the issuance of common stock in a public offering proceeds from Easter.
Speaker Change: The first step in my model.
Speaker Change: In financing round.
Speaker Change: And that increase of both short and long term loans from banks.
Speaker Change: Adjusted EBITDA and adjusted EBITDA margin.
Speaker Change: G improve Judy pumped include once that mill and positive but first half.
Fumitoshi Fujiwara: respectively compared with 1.9 million and 4.5 percent respectively in the prior year.
Speaker Change: Respectively.
Speaker Change: With one point and Emilio.
Speaker Change: One 5%.
Speaker Change: We expect to eat in the prior year.
Fumitoshi Fujiwara: Please now look at the consolidated cash flow statement on slide 12 of our runnings presently. Net cash and cash equivalents increased by 1.4 million in fiscal 2024.
Speaker Change: So, let's now look at the consolidated cash flow statement on slide 12.
Speaker Change: Sure.
Speaker Change: Station.
Speaker Change: Net cash and cash equivalents decreased by one point, while Mayo in Pittsburgh.
Speaker Change: Sure.
Fumitoshi Fujiwara: This is the end of the financial results overview.
Speaker Change: This is at the end of the NASA Reserve overview.
Fumitoshi Fujiwara: We'll now move on to our corporate title. during the year ended December 31st, 2034. Our average revenue per customer grew by 3.9%. So the customer serve was 945,395 in 2024.
Speaker Change: We'll now move on the corporate side.
Speaker Change: During the year ended December 31st win a bidding war.
Speaker Change: Our average revenue per customer grew by <unk>, 9%.
Speaker Change: So the customers the one 945395 in 2024.
Fumitoshi Fujiwara: The total number of salon locations for which we saw operating rights was 60 in the year ended December 31st, 2024, as compared to 38 locations during the year ended December 31st, 2023. in our digital preventive health care segment. We participated in the Specific Health Guidance Program promoted by the Ministry of Health, Labor and Welfare of Japan. which utilizes our upgraded LAB application supporting this program.
Speaker Change: The total number of as the long locations, which we saw operating one was 60 and year ended December 31st 2034.
Speaker Change: They are 238 locations during the year ended December 31st.
Speaker Change: <unk>.
Speaker Change: In our digital breadbasket enhanced scale segments.
Speaker Change: We participate in the domestic health guidance draw them promulgated by the Ministry of health Labor and well well sales in Japan.
Which utilized our upgraded L. A b application supporting this problem.
Fumitoshi Fujiwara: We also developed and distributed what we believe is currently the only self-charging wearable activity device, the Mother of Bread.
Speaker Change: We also developed and that's really what we believe is currently the only self charging wherever FTE by the mother breathless.
Fumitoshi Fujiwara: Thus far in 2025. Mirirom has continued the momentum we established in 2024. This January, our subsidiary, Major Mother Love, began providing its remote health monitoring system named ReMonit. as well as its mother breast. to the Electronic Division of Tokbang Holdings, Inc., which drives on the Tokyo subway.
Speaker Change: Thus for in 'twenty, two and five.
Speaker Change: Medium has continued the momentum we established in slide 24.
Speaker Change: This January our subsidiary made your mother law began providing its remote health monitoring system named real money.
Speaker Change: As well as its mother breathless to the <unk> Division of a top down holding Inc, which drive on until it gets updates James.
Fumitoshi Fujiwara: Also in January, we completed our offering of $2,860,000 ADS raising proceeds of approximately $5,000,000.
Speaker Change: Also in January we complete completed our offering.
Speaker Change: 2.860 million a D S raising gross proceeds of approximately $5 million.
Fumitoshi Fujiwara: be marred. The Chief Business Officer of Mirirom Mother Love, Mr. Yasuhiro Hayami, made an investment in Mirirom Mother Love Series A financing at a pre-money valuation of about $60 million. Also in March, Mirirom obtained an unsecured short-term bank loan around 2.4 million, which is being used in part for further development and marketing of the mother. Looking forward to the rest of 2025, we plan to pursue several initiatives aimed at further growing our revenue and profitability. We intend to increase our number of direct-to-heating ovens and front-edge refrigeration salons, in particular, salons located at spa facilities. which requires substantially lower capital expenditure compared to standalone salons and salons located in commercial properties.
Speaker Change: In March the Chief business Officer of medium Mazda law Mr. Yasuhiro.
Speaker Change: We made an investment in major Lula medium mother love a financing at the pre money valuation of about $60 million.
Speaker Change: Also in March medium obtained an unsecured short term bank loan around two four mill, which is being used in part for further development and marketing of the mother breath.
Speaker Change: Looking forward to the rest of 2025, we plan to pursue several initiatives aimed at Florida Wyoming.
Speaker Change: Our revenue and profitability.
Speaker Change: First.
Speaker Change: We intend to increase our number of delegating alum and granted reputations along in particular <unk> spa facilities.
Speaker Change: Which requires substantially lower capex expenditure compared to some of the allowance along and its alone located in commercial policies.
Fumitoshi Fujiwara: Rated 2D4, we are continuing our search to acquire our domestic salon brands that have at least 10 stores. Second, we plan to grow our digital preventive health segment and produce a higher margin for that measure. Simultaneously, we intend to increase the number of our LAD application users accessing the specific health guidance program I referred to earlier. and we expect to expand the billing user base for this. Third, we plan to accelerate the production of our mother breast. for large orders from corporate buyers. Fourth, although we have thus far focused our business activities within the Japanese market, We plan to consider global expansion opportunities, especially franchising or cross-national options for our recreational salon business, as well as B2B2C distribution model for our mother's lab.
Speaker Change: <unk>, we are continuing of what search to acquire.
Speaker Change: Our domestic along plan doesn't have at least 10 stores.
Speaker Change: Nick.
Speaker Change: We plan to grow our digital preventive health segments and produce a higher margin for that business.
Speaker Change: Simultaneously, we intend to increase the number of L. A b application users assessing deals that take health guidance.
Speaker Change: Referred to earlier.
Speaker Change: We expect to expand the billing user beds for this.
Speaker Change: Third.
Speaker Change: We plan to accelerate the production of a month of Restless.
Speaker Change: Thus older from corporate clients.
Speaker Change: Fourth.
Speaker Change: Although we have thus far forecast our business.
Speaker Change: Was in the Japanese markets.
Speaker Change: We plan to consider global expansion opportunities, especially franchising or whatnot options or our reputation alarm business as well.
Speaker Change: <unk> distribution model for our model.
Fumitoshi Fujiwara: Good. We plan to cut expenses at our DSD-operated salons by reducing the number of higher-earnings fixed-salary therapists. and increasing the number of lower-earnings commission-based services. We believe this restructuring will result in the improving overall profitability of this salon. Sixth, we remain in negotiations to finance our planned acquisition of 70% of the equity of Japan Z Medical Corporation. a prenatal testing company. although in other countries, including the U.S. For now, genetic testing services have proliferated in Japan. Such services have not been common. We, therefore, believe this admission would be highly positive for me. Lastly, going forward, we intend to expand customer benefits available through our various loyalty marketing programs. This strategy, we believe, can include such customers to visits that would belong more frequently.
Speaker Change: Fifth we plan to cut expenses <unk> operating in the long by reducing the non mobile high ear earnings fixed sadly surface.
Speaker Change: And increasing the number of lower earnings Commission based.
Speaker Change: We believe this restructuring will result in improving upward broker loyalty updates of law.
Speaker Change: Six.
Speaker Change: We remain in negotiations to finance.
Brian the fruition of 70% of the equity of Japan, The Medical Corporation.
Speaker Change: Our prenatal testing company.
Speaker Change: Although in other countries, including the U S.
Speaker Change: Prenatal genetic testing service have full life Lady in Japan, such services has not being com.
Speaker Change: We therefore believe this acquisition will be highly informative.
Speaker Change: Lastly, going forward, we intend to extend customer benefits available through our various loyalty marketing program.
Speaker Change: This strategy, we believe will count include such customers.
Speaker Change: It's a lot more frequently.
Fumitoshi Fujiwara: This completes my former comments for this conference.
Speaker Change: This completes my former commence full discount brands.
Operator: I will now pass the call back to the operator to begin the question and answer session. Operator, please go ahead. Thank you. Ladies and gentlemen, if you wish to ask a question on today's call, please press star, then the number one on your telephone. If your question has been answered and you wish to withdraw your request, you may do so by pressing the pound key. If you are using a speakerphone, please pick up your handset before entering your request you on the call. One moment, please, for the first question.
Speaker Change: We will now pass the call back to the operator to begin the question and answer session. Operator. Please go ahead. Thank you.
Speaker Change: Ladies and gentlemen, if you wish to ask a question on todays call. Please press Star then the number one on your telephone.
Speaker Change: If your question has been answered and they wish to withdraw.
Speaker Change: You may do so by pressing the pound key.
Speaker Change: If you are using a speakerphone. Please pick up your handset before entering your request and speaking on the call.
Speaker Change: One moment please for the first question.
Speaker Change:
Speaker Change: So it was curriculum.
Speaker Change: Okay.
Operator: 今、45人くらい。 Now, about 45 people. Thank you very much.
Speaker Change: Hello <unk>.
Speaker Change: Cadence.
Speaker Change: Okay.
Speaker Change: Total hydrocarbons.
Speaker Change: Okay.
Operator: At this time, there appears to be no further questions.
Speaker Change: At this time there appears to be no further questions I will now pass the call back to Mr. Fujiwara for closing thoughts.
Fumitoshi Fujiwara: I will now pass the call back to Mr. Fujiwara for closing thoughts. Thank you for watching. Okay, no questions? All right.
Speaker Change: Yes.
Speaker Change: Mhm.
Speaker Change: No question.
Speaker Change: Okay No question.
Speaker Change: Alright, okay.
Fumitoshi Fujiwara: and I'm certainly delighted to have got through to you. Any other questions? Yes, go ahead. So, any more of these? Yeah, this is a great opportunity for us to elaborate on a certain topic. So if you do have questions, you know, convenient in Japanese or English, you know, please do not hesitate. We will wait. United States. Thank you. Thank you for the opportunity.
Speaker Change: So in some ways.
Speaker Change: And competition.
Speaker Change: Okay.
Speaker Change: So painful.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: From a cost of about $1.
Speaker Change: Yeah. This is a great opportunity he wants to elaborate on the second topic did you have question.
Speaker Change: What is happening right now.
Speaker Change: All right.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Please go ahead.
Speaker Change: Okay.
Speaker Change: Yeah.
Fumitoshi Fujiwara: We'll talk to you soon again. It's a bit difficult to explain. I don't know how to use it.
Speaker Change: Okay.
Speaker Change: Alright.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Awesome.
Speaker Change: Hi, everybody.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Yes.
Fumitoshi Fujiwara: We were more likely to rape towards the end of the season, when we were running 4rd. Okay, guys.
Hello, Myles I assume.
Speaker Change: Right.
Speaker Change: Good morning.
Speaker Change: Uh huh.
Speaker Change: Okay, guys I want to thank all of you for participating on today's call and for your interest in <unk>, We look forward to sharing our progress with you in a future updates.
Fumitoshi Fujiwara: I want to thank all of you for participating on today's call and for your interest in Mirirom. We look forward to sharing our progress with you in a future update.
Fumitoshi Fujiwara: Thanks, and have a good day. Thank you.
Speaker Change: And have a good day. Thank you.
Operator: This concludes today's conference call. You may now disconnect.
Speaker Change: This concludes today's conference call you may now disconnect.
Speaker Change: [laughter].