European Wax Center, Inc. Reports Record Fourth Quarter and Fiscal Year 2021 Results
European Wax Center (NASDAQ: EWCZ) announced its financial results for Q4 and fiscal year 2021, reporting significant growth metrics. Q4 system-wide sales reached $201.9 million, a 51.2% increase from 2020, with total revenue at $45.1 million, up 53.8%. Fiscal 2021 total revenue hit $178.7 million, marking a 72.8% jump from last year. The company plans to launch a whole business securitization to refinance existing debts and fund a special dividend. Fiscal 2022 outlook anticipates revenues between $198-$208 million and same-store sales growth in the high single digits.
- Q4 total revenue increased 53.8% year-over-year to $45.1 million.
- Fiscal 2021 total revenue rose 72.8% to $178.7 million.
- System-wide sales in Q4 saw a 51.2% increase, totaling $201.9 million.
- Same-store sales grew 13.6% compared to Q4 2019, indicating strong recovery.
- The company plans 70-72 new center openings in fiscal 2022.
- Potential risks associated with the successful completion of the $440 million securitization.
- There is no assurance of refinancing transactions occurring on the desired terms.
Announces intent to launch whole business securitization and refinancing of existing senior secured credit facilities, with portion of proceeds expected to fund one-time special dividend
Issues fiscal 2022 outlook, including total revenue growth in excess of long-term framework
Fourth Quarter 2021
- System-wide sales of
$201.9 million increased51.2% from Q4 2020 and23.2% from Q4 2019 - Total revenue of
$45.1 million increased53.8% from Q4 2020 and35.0% from Q4 2019 - Same-store sales increased
13.6% from Q4 2019 and accelerated 300 basis points sequentially - GAAP net income of
$4.4 million improved$8.9 million from Q4 2020 and$38.2 million from Q4 2019 - Adjusted EBITDA of
$15.2 million increased$9.5 million from Q4 2020 and$15.1 million from Q4 2019
Fiscal Year 2021
- System-wide sales of
$796.5 million increased69.9% from fiscal 2020 and15.9% from fiscal 2019 - Total revenue of
$178.7 million increased72.8% from fiscal 2020 and15.9% from fiscal 2019 - Same-store sales increased
6.7% from fiscal 2019, with sequential acceleration each quarter of the year - GAAP net income of
$4.0 million improved$25.5 million from fiscal 2020 and$28.4 million from fiscal 2019 - Adjusted EBITDA of
$64.1 million increased$44.1 million from fiscal 2020 and$30.1 million from fiscal 2019
PLANO, Texas, March 15, 2022 (GLOBE NEWSWIRE) -- Today, European Wax Center, Inc. (NASDAQ: EWCZ), the largest and fastest-growing franchisor and operator of out-of-home waxing services in the United States, reports financial results for the 13 and 52 weeks ended December 25, 2021 compared to December 26, 2020. Due the impact of COVID-19 on fiscal 2020, results are also compared to the 13 and 52 weeks ended December 28, 2019.
David Berg, Chief Executive Officer of European Wax Center, Inc., stated: “The favorable momentum in our business continued in the fourth quarter, capping an excellent year of growth for European Wax Center with total revenue and profit that exceeded full year guidance even with labor-related headwinds as the Omicron variant surged. As the leader in out-of-home waxing, we attribute our ongoing strength to the power of our business model, the recurring nature of our services, and the agility of our network in successfully executing our strategy. The fourth quarter saw new center expansion, same-store sales acceleration, significant new guest acquisition and strong Wax Pass sales, all of which drove outperformance for the quarter and the year. We launched our new loyalty program, EWC Rewards, during the quarter and are pleased with its performance to date and potential to be a meaningful basket driver over time. We ended the year with our deepest new center pipeline in history, and I would like to thank all of our team members, franchisees and business partners for their dedication and contributions to our record performance.”
“We begin fiscal 2022 with continued momentum and are very pleased with our quarter to date trends. With the network’s continued rebound from a COVID-constrained early 2021, we expect first quarter same-store sales growth in the low 20s,” Mr. Berg continued. “Our priorities are focused on new center growth, capitalizing on our enhanced marketing and loyalty programs, increasing our pipeline of wax specialists and leveraging our industry-leading scale. In addition, we intend to optimize our capital structure for the benefit of all European Wax Center stakeholders. Overall, we remain excited about our business outlook and expect another year of strong growth and achievements toward our long-term goals.”
Results for the Fourth Quarter of Fiscal 2021, 2020 and 2019
| (Dollars in | Q4 2021 | Q4 2020 | Q4 2019 | Percent Change 2021 vs 2020 | Percent Change 2021 vs 2019 | |||
| Total Revenue | $ | 45,108 | $ | 29,321 | $ | 33,410 | ||
| Net Income/(Loss) | $ | 4,408 | $ | (4,539) | $ | (33,839) | ||
| Adjusted Net Income/(Loss) | $ | 8,461 | $ | (3,830) | $ | (8,386) | ||
| Adjusted EBITDA | $ | 15,249 | $ | 5,712 | $ | 105 | 14, | |
| System-Wide Sales | $ | 201,927 | $ | 133,581 | $ | 163,938 |
- The Company opened 20 net new centers during the quarter and ended fiscal 2021 with 853 centers, representing an increase of
7.2% since fiscal 2020 and13.7% since fiscal 2019. - System-wide sales growth of
23.2% versus fiscal 2019 was primarily driven by increased spend by guests at existing centers and 103 net new center openings during the two-year period. - Same-store sales increased
40.7% and13.6% versus the fourth quarters of fiscal 2020 and 2019, respectively.
Annual Results for Fiscal 2021, 2020 and 2019
| (Dollars in | 2021 | 2020 | 2019 | Percent Change 2021 vs 2020 | Percent Change 2021 vs 2019 | |||
| Total Revenue | $ | 178,678 | $ | 103,407 | $ | 154,197 | ||
| Net Income/(Loss) | $ | 3,967 | $ | (21,495) | $ | (24,396) | ||
| Adjusted Net Income/(Loss) | $ | 29,705 | $ | (17,857) | $ | 2,923 | ||
| Adjusted EBITDA | $ | 64,125 | $ | 20,001 | $ | 34,005 | ||
| System-Wide Sales | $ | 796,507 | $ | 468,764 | $ | 687,402 |
- The Company opened 57 net new centers during fiscal 2021.
- System-wide sales growth of
15.9% versus fiscal 2019 was primarily driven by 103 net new center openings and increased spend by guests at existing centers. - Same-store sales increased
63.0% versus fiscal 2020 and6.7% versus fiscal 2019.
Balance Sheet and Cash Flow
The Company ended the fourth quarter with
Whole Business Securitization
On March 15, 2022, the Company announced that certain of its subsidiaries intend to complete a refinancing of existing senior secured credit facilities with a new securitized financing facility of approximately
The proceeds of the senior fixed-rate term notes are expected to be used:
- to repay all of the existing indebtedness under the senior secured credit facilities. As of December 25, 2021, the Company had an outstanding principal amount of term loans under its senior secured credit facilities of
$180.0 million ; - to pay the transaction costs associated with the securitized financing facility;
- and to fund a one-time special dividend to stockholders.
The consummation of the offering is subject to market and other conditions and is anticipated to close in the second fiscal quarter of 2022. However, there can be no assurance that the Company will be able to successfully complete the refinancing transaction on the terms described or at all. This announcement does not constitute an offer to sell or the solicitation of an offer to buy the Notes or any other security. The Notes to be offered have not been, and will not be, registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act of 1933.
Fiscal 2022 Outlook
| Total Revenue | ||
| Adjusted Net Income | ||
| Adjusted EBITDA | ||
| New Center Openings, Net | 70 to 72 | |
| System-Wide Sales | ||
| Same-Store Sales Growth | High Single Digits* |
*As a result of COVID-19-related center closures during Q1 fiscal 2021, the Company expects Q1 fiscal 2022 same-store sales growth of low 20’s. Further, the Company expects fiscal 2022 year-over-year same-store sales growth to be at the high end of its long-term target of high single digits growth.
Fiscal 2022 guidance includes a 53rd week in the fourth quarter. The Company estimates its contribution to the top and bottom line will be worth approximately one half of an average fourth quarter week.
The Company's outlook assumes no meaningful change from today in consumer behavior driven by renewed concerns about the COVID-19 pandemic, no further impacts from incremental tightening in the labor market beyond what we see today, and no financial impact of the proposed whole business securitization.
See “Disclosure Regarding Non-GAAP Financial Measures” and the reconciliation tables that accompany this release for a discussion and reconciliation of certain non-GAAP financial measures included in this release.
Webcast and Conference Call Information
European Wax Center, Inc. will host a conference call to discuss fourth quarter and fiscal year 2021 results today, March 15, 2022, at 5:00 p.m. ET/4:00 p.m. CT. Investors and analysts interested in participating in the conference call may dial (844) 644-2466. International callers may dial (918) 922-6900. A live webcast of the conference call will be available online at https://investors.waxcenter.com. A replay of the webcast will remain available on the website for 90 days. A replay of the conference call will be available until 8:00pm ET on March 22, 2022 and can be accessed by dialing (855) 859-2056 and entering conference ID number 2038129.
About European Wax Center, Inc.
European Wax Center, Inc. (NASDAQ: EWCZ) is the largest and fastest-growing franchisor and operator of out-of-home waxing services in the United States providing guests with an unparalleled, professional personal care experience administered by highly trained wax specialists within the privacy of clean, individual waxing suites. European Wax Center, Inc. continues to revolutionize the waxing industry with their innovative Comfort Wax® formulated with the highest quality ingredients to make waxing a more efficient and relatively painless experience. Delivering a 360-degree guest experience, they also offer a collection of proprietary products to help enhance and extend waxing results. Founded in 2004, European Wax Center, Inc. is headquartered in Plano, Texas. Its network includes 853 centers in 44 states as of December 25, 2021. For more information, including how to receive your first wax free, please visit: https://waxcenter.com.
Forward-Looking Statements
This press release includes “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include but are not limited to European Wax Center, Inc.'s strategy, outlook and growth prospects, its operational and financial outlook for fiscal 2022 and its long-term targets and algorithm, including but not limited to statements under the heading “Fiscal 2022 Outlook” and statements by European Wax Center’s executives, and statements regarding the planned whole business securitization, including the size and timing thereof, and expected proceeds therefrom, and regarding the planned one-time special dividend to stockholders, which is subject to the Board’s determination as well as contractual and legal restrictions. Words including “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” or “would,” or, in each case, the negative thereof or other variations thereon or comparable terminology are intended to identify forward-looking statements. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking.
These forward-looking statements are based on management's current expectations and beliefs. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause the Company’s actual results, performance or achievements to be materially different results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: potential future impacts of the COVID-19 pandemic, including from variants thereof; the operational and financial results of its franchisees; the ability of its franchisees to enter new markets, select appropriate sites for new centers or open new centers; the effectiveness of the Company’s marketing and advertising programs and the active participation of franchisees in enhancing the value of its brand; the failure of its franchisees to participate in and comply with its agreements, business model and policies; the Company’s and its franchisees’ ability to attract and retain guests; the effect of social media on the Company’s reputation; the Company’s ability to compete with other industry participants and respond to market trends and changes in consumer preferences; the effect of the Company’s planned growth on its managements, employees, information systems and internal controls; a significant failure, interruptions or security breach of the Company’s computer systems or information technology; the Company and its franchisees’ ability to attract, train, and retain talented wax specialists and managers; changes in the availability or cost of labor; the Company’s ability to retain its franchisees and to maintain the quality of existing franchisees; failure of the Company’s franchisees to implement business development plans; the ability of the Company’s limited key suppliers, including international suppliers, and distribution centers to deliver its products; changes in supply costs and decreases in the Company’s product sourcing revenue; the Company’s ability to adequately protect its intellectual property; the impact of paying some of the Company’s pre-IPO owners for certain tax benefits it may claim; changes in general economic and business conditions; the Company’s and its franchisees’ ability to comply with existing and future health, employment and other governmental regulations; complaints or litigation that may adversely affect the Company’s business and reputation; the seasonality of the Company’s business resulting in fluctuations in its results of operations; the impact of global crises, such as the COVID-19 pandemic on the Company’s operations and financial performance; the impact of rising interest rates on the Company’s business; the Company’s access to sources of liquidity and capital to finance its continued operations, growth strategy and the planned one-time special dividend to stockholders, and the other important factors discussed under the caption “Risk Factors” in the Company’s Registration Statement filed on Form S-1 filed with the Securities and Exchange Commission (the “SEC”), as such factors may be updated from time to time in its other filings with the SEC, accessible on the SEC’s website at www.sec.gov and Investors Relations section of the Company’s website at www.waxcenter.com, including when available the Company’s Annual Report on Form 10-K for the year ended December 25, 2021.
These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any forward-looking statement that the Company makes in this press release speaks only as of the date of such statement. Except as required by law, the Company does not have any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise.
Disclosure Regarding Non-GAAP Financial Measures
In addition to the financial measures presented in this release in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company has included certain non-GAAP financial measures in this release, including Adjusted EBITDA and Adjusted net income. Management believes these non-GAAP financial measures are useful because they enable management, investors, and others to assess the operating performance of the Company.
We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our business.
We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of our core operations. These items include exit costs related to leases of abandoned space, IPO-related costs, non-cash equity-based compensation expense, corporate headquarters office relocation, and other one-time expenses.
We define Adjusted net income (loss) as net income (loss) adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of our core operations. These items include exit costs related to leases of abandoned space, IPO-related costs, non-cash equity-based compensation expense, corporate headquarters office relocation, debt extinguishment costs and other one-time expenses. Please refer to the reconciliations of non-GAAP financial measures to their GAAP equivalents located at the end of this release.
This release includes forward-looking guidance for certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted net income. These measures will differ from net income (loss), determined in accordance with GAAP, in ways similar to those described in the reconciliations at the end of this release. We are not able to provide, without unreasonable effort, guidance for net income (loss), determined in accordance with GAAP, or a reconciliation of guidance for Adjusted EBITDA and Adjusted net income (loss) to the most directly comparable GAAP measure because the Company is not able to predict with reasonable certainty the amount or nature of all items that will be included in net income (loss).
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share/unit and per share/unit amounts)
| December 25, 2021 | December 26, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 43,301 | $ | 36,720 | ||||
| Accounts receivable, net | 6,656 | 5,070 | ||||||
| Inventory, net | 19,423 | 10,280 | ||||||
| Prepaid expenses and other current assets | 5,927 | 4,574 | ||||||
| Advances to related parties | — | 689 | ||||||
| Total current assets | 75,307 | 57,333 | ||||||
| Property and equipment, net | 3,863 | 5,039 | ||||||
| Intangible assets, net | 201,995 | 213,267 | ||||||
| Goodwill | 328,551 | 328,551 | ||||||
| Other non-current assets | 3,723 | 2,710 | ||||||
| Total assets | $ | 613,439 | $ | 606,900 | ||||
| LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS'/MEMBERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 23,155 | $ | 13,489 | ||||
| Long-term debt, current portion | 5,625 | 2,428 | ||||||
| Deferred revenue, current portion | 3,004 | 2,351 | ||||||
| Other current liabilities | 182 | 181 | ||||||
| Total current liabilities | 31,966 | 18,449 | ||||||
| Long-term debt, net | 172,607 | 262,975 | ||||||
| Tax receivable agreement liability | 59,167 | — | ||||||
| Deferred revenue, net of current portion | 6,787 | 6,528 | ||||||
| Other long-term liabilities | 1,671 | 925 | ||||||
| Total liabilities | 272,198 | 288,877 | ||||||
| Commitments and contingencies | ||||||||
| Mezzanine equity: | ||||||||
| Class A Founders’ Units (none and 8,309,193 Class A Founders’ Units authorized, issued and outstanding as of December 25, 2021 and December 26, 2020, respectively) | — | 89,240 | ||||||
| Class D Units (none and 2,500,000 Class D Units authorized, issued and outstanding as of December 25, 2021 and December 26, 2020, respectively; aggregate liquidation preference of | — | 24,909 | ||||||
| Members’ equity: | ||||||||
| Class A Units (none and 26,401,089 Class A Units authorized, issued and outstanding as of December 25, 2021 and December 26, 2020, respectively) | — | 265,791 | ||||||
| Class B Unit (none and 1 Class B Unit authorized, issued and outstanding as of December 25, 2021 and December 26, 2020, respectively) | — | — | ||||||
| Class C Units (none and 1,000 Class C Units authorized, issued and outstanding as of December 25, 2021 and December 26, 2020, respectively) | — | — | ||||||
| Members’ deficit: | — | (61,390 | ) | |||||
| Stockholders’ equity: | ||||||||
| Preferred stock ( | — | — | ||||||
| Class A common stock ( | 0 | — | ||||||
| Class B common stock ( | 0 | — | ||||||
| Additional paid-in capital | 182,919 | — | ||||||
| Accumulated deficit | (3,487 | ) | — | |||||
| Accumulated other comprehensive loss | (45 | ) | (527 | ) | ||||
| Total stockholders' equity attributable to European Wax Center, Inc. | 179,387 | — | ||||||
| Noncontrolling interests | 161,854 | — | ||||||
| Total stockholders' equity/member's equity | 341,241 | 318,023 | ||||||
| Total liabilities, mezzanine equity and stockholders'/member's equity | $ | 613,439 | $ | 606,900 | ||||
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except unit and per unit amounts)
| For the Thirteen Weeks Ended | For the Years Ended | |||||||||||||||||||||||
| December 25, 2021 | December 26, 2020 | December 28, 2019 | December 25, 2021 | December 26, 2020 | December 28, 2019 | |||||||||||||||||||
| REVENUE | ||||||||||||||||||||||||
| Product sales | $ | 24,988 | $ | 14,712 | $ | 18,337 | $ | 99,740 | $ | 56,977 | $ | 83,620 | ||||||||||||
| Royalty fees | 10,827 | 7,536 | 7,427 | 43,648 | 25,674 | 36,737 | ||||||||||||||||||
| Marketing fees | 6,284 | 4,317 | 5,280 | 24,610 | 13,465 | 21,972 | ||||||||||||||||||
| Other revenue | 3,009 | 2,756 | 2,366 | 10,680 | 7,291 | 11,868 | ||||||||||||||||||
| Total revenue | 45,108 | 29,321 | 33,410 | 178,678 | 103,407 | 154,197 | ||||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||||||
| Cost of revenue | 12,545 | 7,691 | 8,898 | 46,841 | 35,508 | 40,898 | ||||||||||||||||||
| Selling, general and administrative | 16,144 | 12,981 | 21,943 | 61,812 | 38,997 | 64,967 | ||||||||||||||||||
| Advertising | 5,223 | 2,602 | 5,283 | 24,990 | 11,495 | 21,132 | ||||||||||||||||||
| Depreciation and amortization | 5,074 | 4,570 | 4,257 | 20,333 | 19,582 | 15,534 | ||||||||||||||||||
| Loss on disposal of assets and non-cancellable contracts | — | 1,044 | 4,451 | 335 | 1,044 | 4,451 | ||||||||||||||||||
| Impairment of internally developed software | — | — | 18,183 | — | — | 18,183 | ||||||||||||||||||
| Gain on sale of centers | — | — | — | — | — | (2,120 | ) | |||||||||||||||||
| Total operating expenses | 38,986 | 28,888 | 63,015 | 154,311 | 106,626 | 163,045 | ||||||||||||||||||
| Income (loss) from operations | 6,122 | 433 | (29,605 | ) | 24,367 | (3,219 | ) | (8,848 | ) | |||||||||||||||
| Interest expense | 1,600 | 4,972 | 4,234 | 20,286 | 18,276 | 15,548 | ||||||||||||||||||
| Income (loss) before income taxes | 4,522 | (4,539 | ) | (33,839 | ) | 4,081 | (21,495 | ) | (24,396 | ) | ||||||||||||||
| Income tax expense | 114 | — | — | 114 | — | — | ||||||||||||||||||
| NET INCOME (LOSS) | $ | 4,408 | $ | (4,539 | ) | $ | (33,839 | ) | $ | 3,967 | $ | (21,495 | ) | $ | (24,396 | ) | ||||||||
| Less: net income (loss) attributable to EWC Ventures, LLC prior to the Reorganization Transactions | — | (4,539 | ) | (33,839 | ) | 10,327 | (21,495 | ) | (24,396 | ) | ||||||||||||||
| Less: net income (loss) attributable to noncontrolling interests | 2,292 | — | — | (2,945 | ) | — | — | |||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC. | $ | 2,116 | $ | — | $ | — | $ | (3,415 | ) | $ | — | $ | — | |||||||||||
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| For the Years Ended | ||||||||||||
| December 25, 2021 | December 26, 2020 | December 28, 2019 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | 3,967 | $ | (21,495 | ) | $ | (24,396 | ) | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 20,333 | 19,582 | 15,534 | |||||||||
| Amortization of deferred financing costs | 1,044 | 1,284 | 1,138 | |||||||||
| Loss on debt extinguishment | 6,313 | — | — | |||||||||
| Loss on noncancellable contracts | — | 1,085 | 2,532 | |||||||||
| Impairment of internally developed software | — | — | 18,183 | |||||||||
| Loss on write-down of obsolete inventory | 317 | 6,656 | 552 | |||||||||
| Provision for bad debts | 616 | — | — | |||||||||
| Loss (gain) on disposal of property and equipment | 335 | (41 | ) | 1,920 | ||||||||
| Gain on sale of centers | — | — | (2,120 | ) | ||||||||
| Remeasurement of tax receivable agreement liability | 195 | — | — | |||||||||
| Equity compensation | 11,135 | 2,052 | 1,570 | |||||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivable | (2,185 | ) | 1,721 | 1,096 | ||||||||
| Inventory | (9,460 | ) | 5,101 | (5,355 | ) | |||||||
| Prepaid expenses and other assets | (1,916 | ) | (2,124 | ) | (435 | ) | ||||||
| Accounts payable and accrued liabilities | 8,707 | (10,499 | ) | 2,076 | ||||||||
| Deferred revenue | 912 | (666 | ) | 1,250 | ||||||||
| Other long-term liabilities | 1,033 | (1,259 | ) | 1,156 | ||||||||
| Net cash provided by operating activities | 41,346 | 1,397 | 14,701 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | (559 | ) | (2,158 | ) | (9,343 | ) | ||||||
| Reacquisition of area representative rights | (7,644 | ) | (34,685 | ) | (33,189 | ) | ||||||
| Cash received for sale of centers | — | — | 1,838 | |||||||||
| Net cash used in investing activities | (8,203 | ) | (36,843 | ) | (40,694 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds on line of credit | — | 27,000 | — | |||||||||
| Payments on line of credit | (30,000 | ) | — | (3,500 | ) | |||||||
| Proceeds on long-term debt | 179,370 | 15,000 | 40,000 | |||||||||
| Principal payments on long-term debt | (240,553 | ) | (2,397 | ) | (2,050 | ) | ||||||
| Deferred loan costs | (1,294 | ) | (763 | ) | (638 | ) | ||||||
| Payments of debt extinguishment costs | (2,446 | ) | — | — | ||||||||
| Distributions to EWC Ventures LLC members | (5,270 | ) | (1,847 | ) | (5,194 | ) | ||||||
| Contributions from EWC Ventures LLC members | — | 24,909 | — | |||||||||
| Proceeds from public offerings of Class A common stock, net of underwriting discounts and offering expenses | 212,941 | — | — | |||||||||
| Repurchase of Class A Units | (942 | ) | — | — | ||||||||
| Repurchase of Class B common stock and EWC Ventures common units | (138,368 | ) | — | — | ||||||||
| Advances to related parties, net | — | — | (811 | ) | ||||||||
| Net cash (used in) provided by financing activities | (26,562 | ) | 61,902 | 27,807 | ||||||||
| Net increase in cash | 6,581 | 26,456 | 1,814 | |||||||||
| Cash, beginning of period | 36,720 | 10,264 | 8,450 | |||||||||
| Cash, end of period | $ | 43,301 | $ | 36,720 | $ | 10,264 | ||||||
| Supplemental cash flow information: | ||||||||||||
| Cash paid for interest | $ | 11,763 | $ | 16,469 | $ | 17,342 | ||||||
| Cash paid for income taxes | $ | 10 | $ | — | $ | — | ||||||
| Non-cash investing activities: | ||||||||||||
| Property purchases included in accounts payable and accrued liabilities | $ | 89 | $ | 33 | $ | 148 | ||||||
| Reacquired rights purchased included in accounts payable and accrued liabilities | $ | — | $ | — | $ | 2,183 | ||||||
| Non-cash financing activities: | ||||||||||||
| Non-cash equity distributions | $ | 689 | $ | 122 | $ | — | ||||||
| Public offering expenses in accounts payable and accrued liabilities | $ | 870 | $ | — | $ | — | ||||||
Reconciliation of GAAP net income (loss) to Adjusted net income (loss):
| For the Thirteen Weeks Ended | For the Years Ended | |||||||||||||||||||||||
| December 25, 2021 | December 26, 2020 | December 28, 2019 | December 25, 2021 | December 26, 2020 | December 28, 2019 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Net income (loss) | $ | 4,408 | $ | (4,539 | ) | $ | (33,839 | ) | $ | 3,967 | $ | (21,495 | ) | $ | (24,396 | ) | ||||||||
| Impairment of internally developed software(1) | — | — | 18,183 | — | — | 18,183 | ||||||||||||||||||
| Exit costs - lease abandonment(2) | — | — | 778 | — | 159 | 778 | ||||||||||||||||||
| Corporate headquarter relocation(3) | — | — | 4,835 | — | 671 | 6,097 | ||||||||||||||||||
| Share-based compensation(4) | 3,183 | 403 | 966 | 11,135 | 2,052 | 1,570 | ||||||||||||||||||
| IPO-related costs(5) | 274 | 79 | — | 4,971 | 179 | — | ||||||||||||||||||
| IPO-related compensation expense(6) | — | 227 | — | 2,343 | — | — | ||||||||||||||||||
| Other compensation-related costs(7) | — | — | 691 | 380 | 577 | 691 | ||||||||||||||||||
| Other(8) | 596 | — | — | 596 | — | — | ||||||||||||||||||
| Debt extinguishment costs(9) | — | — | — | 6,313 | — | — | ||||||||||||||||||
| Adjusted net income (loss) | $ | 8,461 | $ | (3,830 | ) | $ | (8,386 | ) | $ | 29,705 | $ | (17,857 | ) | $ | 2,923 | |||||||||
(1) Represents costs related to the Company’s abandonment of an internally developed point-of-sale software system.
(2) Represents exit costs related to abandoned leases resulting from our corporate headquarters relocation.
(3) Represents costs related to employee relocation, severance and moving fees resulting from our corporate headquarter relocation.
(4) Represents non-cash equity-based compensation expense.
(5) Represents legal, accounting and other costs incurred in preparation for initial public offering.
(6) Represents cash-based compensation expense recorded in connection with the initial public offering.
(7) Represents costs related to reorganization driven by COVID-19 and buildup of executive leadership team.
(8) Represents non-core operating expenses identified by management. For fourth quarter and fiscal year 2021, these costs relate to the settlement of a legal matter and remeasurement of our tax receivable agreement liability.
(9) Represents costs related to the extinguishment of the Company’s previous term loan and revolving credit facility.
Reconciliation of GAAP net income (loss) to EBITDA and Adjusted EBITDA:
| For the Thirteen Weeks Ended | For the Years Ended | |||||||||||||||||||||||
| December 25, 2021 | December 26, 2020 | December 28, 2019 | December 25, 2021 | December 26, 2020 | December 28, 2019 | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Net income (loss) | $ | 4,408 | $ | (4,539 | ) | $ | (33,839 | ) | $ | 3,967 | $ | (21,495 | ) | $ | (24,396 | ) | ||||||||
| Interest expense | 1,600 | 4,972 | 4,234 | 20,286 | 18,276 | 15,548 | ||||||||||||||||||
| Provision for income taxes | 114 | — | — | 114 | — | — | ||||||||||||||||||
| Depreciation | 322 | 444 | 491 | 1,490 | 1,649 | 2,198 | ||||||||||||||||||
| Amortization | 4,752 | 4,126 | 3,766 | 18,843 | 17,933 | 13,336 | ||||||||||||||||||
| EBITDA | $ | 11,196 | $ | 5,003 | $ | (25,348 | ) | $ | 44,700 | $ | 16,363 | $ | 6,686 | |||||||||||
| Impairment of internally developed software(1) | $ | — | $ | — | $ | 18,183 | $ | — | $ | — | $ | 18,183 | ||||||||||||
| Exit costs - lease abandonment(2) | — | — | 778 | — | 159 | 778 | ||||||||||||||||||
| Corporate headquarter relocation(3) | — | — | 4,835 | — | 671 | 6,097 | ||||||||||||||||||
| Share-based compensation(4) | 3,183 | 403 | 966 | 11,135 | 2,052 | 1,570 | ||||||||||||||||||
| IPO-related costs(5) | 274 | 79 | — | 4,971 | 179 | — | ||||||||||||||||||
| IPO-related compensation expense(6) | — | 227 | — | 2,343 | — | — | ||||||||||||||||||
| Other compensation-related costs(7) | — | — | 691 | 380 | 577 | 691 | ||||||||||||||||||
| Other (8) | 596 | — | — | 596 | — | — | ||||||||||||||||||
| Adjusted EBITDA | $ | 15,249 | $ | 5,712 | $ | 105 | $ | 64,125 | $ | 20,001 | $ | 34,005 | ||||||||||||
| Adjusted EBITDA margin | 33.8 | % | 19.5 | % | 0.3 | % | 35.9 | % | 19.3 | % | 22.1 | % | ||||||||||||
(1) Represents costs related to the Company’s abandonment of an internally developed point-of-sale software system.
(2) Represents exit costs related to abandoned leases resulting from our corporate headquarters relocation.
(3) Represents costs related to employee relocation, severance and moving fees resulting from our corporate headquarter relocation.
(4) Represents non-cash equity-based compensation expense.
(5) Represents legal, accounting and other costs incurred in preparation for initial public offering.
(6) Represents cash-based compensation expense recorded in connection with the initial public offering.
(7) Represents costs related to reorganization driven by COVID-19 and buildup of executive leadership team.
(8) Represents non-core operating expenses identified by management. For fourth quarter and fiscal year 2021, these costs relate to the settlement of a legal matter and remeasurement of our tax receivable agreement liability.
Investor Contact
Amir Yeganehjoo
Amir.Yeganehjoo@myewc.com
469-217-7486
Bethany Johns
Bethany.Johns@myewc.com
469-270-6888
Media Contact
Creative Media Marketing
Meredith Needle
Ewc@cmmpr.com
212-979-8884
FAQ
What were European Wax Center's Q4 2021 results?
How much did European Wax Center's system-wide sales increase in Q4 2021?
What is the fiscal 2022 revenue outlook for EWCZ?
What special financial action is European Wax Center planning?
What are the expected same-store sales growth figures for fiscal 2022?
