European Wax Center, Inc. Reports Second Quarter Fiscal Year 2024 Results
European Wax Center, Inc. (NASDAQ: EWCZ) reported its Q2 fiscal 2024 results, showing mixed performance. The company experienced 2.3% growth in system-wide sales to $260.2 million and a 1.3% increase in total revenue to $59.9 million. Same-store sales rose by 1.6%, while net new centers increased by 5.6% to 1,059 total centers across 45 states. GAAP net income grew by 7.3% to $6.0 million, and adjusted net income increased by 4.0% to $7.3 million. However, adjusted EBITDA decreased by 2.6% to $20.6 million.
The company also announced the appointment of David Berg as CEO and updated its fiscal 2024 outlook, reducing expectations for new center openings and financial performance due to macroeconomic pressures affecting consumer spending and new guest acquisition.
European Wax Center, Inc. (NASDAQ: EWCZ) ha riportato i risultati del secondo trimestre fiscale 2024, mostrando una performance mista. L'azienda ha registrato una crescita del 2,3% nelle vendite complessive fino a $260,2 milioni e un aumento dell'1,3% nel fatturato totale a $59,9 milioni. Le vendite nelle stesse sedi sono aumentate del 1,6%, mentre il numero di nuovi centri è aumentato del 5,6% arrivando a un totale di 1.059 centri in 45 stati. Il reddito netto GAAP è cresciuto del 7,3% a $6,0 milioni e il reddito netto rettificato è aumentato del 4,0% a $7,3 milioni. Tuttavia, l'EBITDA rettificato è diminuito del 2,6% a $20,6 milioni.
L'azienda ha anche annunciato la nomina di David Berg come CEO e ha aggiornato le previsioni fiscali per il 2024, riducendo le aspettative per l'apertura di nuovi centri e per la performance finanziaria a causa delle pressioni macroeconomiche che influenzano la spesa dei consumatori e l'acquisizione di nuovi clienti.
European Wax Center, Inc. (NASDAQ: EWCZ) reportó sus resultados del segundo trimestre fiscal 2024, mostrando un desempeño mixto. La compañía experimentó un crecimiento del 2,3% en las ventas a nivel de sistema alcanzando los $260,2 millones y un aumento del 1,3% en los ingresos totales a $59,9 millones. Las ventas en las mismas tiendas crecieron un 1,6%, mientras que el número de nuevos centros aumentó en un 5,6% hasta un total de 1.059 centros en 45 estados. El ingreso neto GAAP creció un 7,3% llegando a $6,0 millones, y el ingreso neto ajustado aumentó un 4,0% a $7,3 millones. Sin embargo, el EBITDA ajustado disminuyó un 2,6% a $20,6 millones.
La compañía también anunció el nombramiento de David Berg como CEO y actualizó sus perspectivas fiscales para 2024, reduciendo las expectativas de apertura de nuevos centros y el desempeño financiero debido a las presiones macroeconómicas que afectan el gasto de los consumidores y la adquisición de nuevos clientes.
유럽왁스센터(European Wax Center, Inc.) (NASDAQ: EWCZ)가 2024 회계연도 2분기 실적을 발표하며 혼합된 성과를 보였습니다. 회사는 시스템 전체 판매에서 2.3% 성장하여 2억 6천 2백만 달러에 도달했고 총 수익에서는 1.3% 증가하여 5천 9백 9십만 달러를 기록했습니다. 동일 매장 매출은 1.6% 상승했으며, 신규 센터 수는 5.6% 증가하여 총 1,059개의 센터가 45개 주에 분포해 있습니다. GAAP 순이익은 7.3% 증가하여 600만 달러, 조정된 순이익은 4.0% 증가하여 730만 달러로 증가했습니다. 그러나 조정된 EBITDA는 2.6% 감소하여 2천 60만 달러에 이르렀습니다.
회사는 또한 David Berg를 CEO로 임명하고 2024 회계연도 전망을 업데이트하며 경제적 압박으로 인해 소비자 지출 및 신규 고객 유치에 영향을 미쳐 신규 센터 개설 및 재무 성과에 대한 기대치를 낮췄습니다.
European Wax Center, Inc. (NASDAQ: EWCZ) a annoncé ses résultats du deuxième trimestre fiscal 2024, montrant une performance mitigée. L'entreprise a enregistré une croissance de 2,3% des ventes système atteignant 260,2 millions de dollars et une augmentation de 1,3% du chiffre d'affaires total à 59,9 millions de dollars. Les ventes dans les mêmes magasins ont augmenté de 1,6%, tandis que le nombre de nouveaux centres a augmenté de 5,6% pour atteindre un total de 1 059 centres dans 45 états. Le bénéfice net GAAP a crû de 7,3% pour atteindre 6 millions de dollars, et le bénéfice net ajusté a augmenté de 4,0% pour s'établir à 7,3 millions de dollars. Cependant, l'EBITDA ajusté a diminué de 2,6% pour s'élever à 20,6 millions de dollars.
L'entreprise a également annoncé la nomination de David Berg en tant que PDG et a mis à jour ses prévisions fiscales pour 2024, en réduisant les attentes concernant l'ouverture de nouveaux centres et la performance financière en raison des pressions macroéconomiques affectant la consommation et l'acquisition de nouveaux clients.
European Wax Center, Inc. (NASDAQ: EWCZ) hat seine Ergebnisse für das zweite Quartal des Geschäftsjahres 2024 veröffentlicht, die eine gemischte Leistung zeigen. Das Unternehmen verzeichnete ein Wachstum der systemweiten Umsätze um 2,3% auf 260,2 Millionen USD und einen Anstieg des Gesamtumsatzes um 1,3% auf 59,9 Millionen USD. Die Umsätze in bestehenden Filialen stiegen um 1,6%, während die Anzahl neuer Zentren um 5,6% auf insgesamt 1.059 Zentren in 45 Bundesstaaten zunahm. Der GAAP-Nettoertrag wuchs um 7,3% auf 6 Millionen USD, und der bereinigte Nettoertrag stieg um 4,0% auf 7,3 Millionen USD. Allerdings sank das bereinigte EBITDA um 2,6% auf 20,6 Millionen USD.
Das Unternehmen gab zudem die Ernennung von David Berg zum CEO bekannt und aktualisierte die Prognose für das Geschäftsjahr 2024, indem es die Erwartungen an die Eröffnung neuer Zentren und die finanzielle Leistung aufgrund makroökonomischer Druckfaktoren senkte, die die Konsumausgaben und die Gewinnung neuer Gäste beeinflussen.
- System-wide sales increased 2.3% to $260.2 million
- Total revenue grew 1.3% to $59.9 million
- Same-store sales increased 1.6%
- GAAP net income rose 7.3% to $6.0 million
- Adjusted net income increased 4.0% to $7.3 million
- Net new centers increased 5.6% to 1,059 total centers
- Adjusted EBITDA decreased 2.6% to $20.6 million
- Reduced fiscal 2024 outlook for new center openings from 75-80 to 27-32
- Lowered system-wide sales guidance from $1,000-$1,025 million to $930-$950 million
- Decreased total revenue forecast from $225-$232 million to $216-$221 million
- Revised same-store sales outlook from 2-5% growth to (1.5)%-0.5%
- Reduced Adjusted EBITDA guidance from $75-$80 million to $70-$74 million
Insights
European Wax Center's Q2 2024 results show mixed performance. While the company reported growth in system-wide sales (+2.3% to
The company's Adjusted EBITDA decreased by 2.6% to
Investors should monitor the company's ability to execute its action plan to reinvigorate growth and improve center performance, as these factors will be important for long-term value creation.
The Q2 results reveal challenges in European Wax Center's market position. The company's struggle to attract and retain new guests in the current macroeconomic environment is a red flag. This difficulty, combined with the need to reevaluate development plans, suggests potential market saturation or increased competition in the out-of-home waxing services sector.
The 1.6% increase in same-store sales indicates some resilience in the core customer base. However, the reduced guidance for system-wide sales (
The company's focus on improving center performance to drive unit development is crucial. Success in this area could reignite growth, but failure may lead to further market share erosion. The waxing industry's sensitivity to economic pressures and changing consumer behaviors will be key factors to watch in the coming quarters.
Updates fiscal 2024 outlook including expected net new center openings
Second Quarter Fiscal 2024 versus 2023
- Net new centers increased
5.6% to 1,059 total centers in 45 states - System-wide sales of
$260.2 million increased2.3% - Total revenue of
$59.9 million increased1.3% - Same-store sales increased
1.6% - GAAP net income of
$6.0 million increased7.3% - Adjusted net income of
$7.3 million increased4.0% - Adjusted EBITDA of
$20.6 million decreased2.6%
PLANO, Texas, Aug. 14, 2024 (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 26 weeks ended July 6, 2024.
In a separate release today, European Wax Center announced that its Board of Directors has appointed David Berg as Chief Executive Officer (“CEO”), effective August 12, 2024. Mr. Berg succeeds David Willis, who served as CEO and previously held various positions including President, Chief Operating Officer and Chief Financial Officer.
David Berg, Executive Chairman and CEO of European Wax Center, Inc. stated, “I’m excited to be back as CEO at European Wax Center during an important time for our business. While the second quarter marked a period of top line growth, anchored by the consistency and stability of our core guests, the ongoing macroeconomic environment continues to pressure consumer spending and our ability to attract and retain new guests to our brand. We have also worked with our franchise partners to reevaluate near-term development plans and extend the timeline of new center openings to allow more capacity and resources to improve overall performance. As a result, we are updating our full year financial guidance, including our outlook for new center openings.”
Mr. Berg continued, “As I transition back into the day-to-day CEO role, I am working with the executive team, franchise partners, associates and our Board to put an action plan in place to reinvigorate new guest growth and retention and drive transactions even in a tough macroeconomic environment. Our financial performance and our new center productivity are inextricably linked, and we believe that improving center performance will feed the flywheel for unit development and expansion. By narrowing our focus on key priorities, I believe that our “says” will match our “dos” going forward, and we will continue to deliver value for all stakeholders while positioning European Wax Center to generate meaningful top-line, bottom-line and unit growth over the long-term.”
Results for the Second Quarter of Fiscal 2024 versus Fiscal 2023
- Franchisees opened 8 net new centers, and we ended the quarter with 1,059 centers, representing a
5.6% increase versus 1,003 centers in prior year period. - System-wide sales of
$260.2 million increased2.3% from$254.2 million in the prior year period driven by net new centers opened over the past twelve months and increased spend by guests at existing centers. - Total revenue of
$59.9 million increased1.3% from$59.1 million in the prior year period. - Same-store sales increased
1.6% . - Selling, general and administrative expenses (“SG&A”) of
$12.9 million decreased8.7% from$14.1 million in the prior year period. SG&A as a percent of total revenue improved 230 basis points to21.6% from23.9% , primarily due to lower incentive compensation expense and the receipt of proceeds from a legal judgment, partially offset by increased technology expenses. - Interest expense of
$6.4 million decreased from$6.8 million in the prior year period, primarily due to an increase in interest income from the Company’s short-term investments. - Income tax expense was
$1.7 million compared to$2.8 million , and the effective tax rate was22.5% compared to33.1% in the prior year period. - Net income of
$6.0 million increased7.3% from$5.6 million , and Adjusted net income of$7.3 million increased4.0% from$7.1 million in the prior year period. - Adjusted EBITDA of
$20.6 million decreased2.6% from$21.2 million in the prior year period. As a percent of total revenue, Adjusted EBITDA margin decreased 140 basis points to34.5% from35.9% . - The Company repurchased
$10.0 million of its Class A Common Stock during the period.
Year-to-Date Results through the Second Quarter of Fiscal 2024 versus Fiscal 2023
- Franchisees opened 15 net new centers in the first half of fiscal 2024.
- System-wide sales of
$481.5 million increased1.9% from$472.6 million in the prior year-to-date period driven by net new centers opened over the past twelve months and increased spend by guests at existing centers. - Total revenue of
$111.7 million increased2.5% from$109.0 million in the prior year-to-date period. - Same-store sales increased
0.3% . - SG&A of
$26.4 million decreased16.0% from$31.4 million in the prior year-to-date period. SG&A as a percent of total revenue improved 520 basis points to23.6% from28.8% , primarily due to lower incentive and share-based compensation expense and the receipt of proceeds from a legal judgment, partially offset by increased technology expenses. - Interest expense of
$12.7 million decreased from$13.6 million in the prior year-to-date period, primarily due to increased interest income. - Income tax expense was
$3.0 million compared to$2.3 million , and the effective tax rate was23.4% compared to33.2% in the prior year-to-date period. - Net income of
$9.7 million increased114.2% from$4.5 million , and Adjusted net income of$12.2 million increased16.1% from$10.5 million in the prior year-to-date period. - Adjusted EBITDA of
$38.1 million increased1.7% from$37.5 million in the prior year-to-date period. As a percent of total revenue, Adjusted EBITDA margin decreased 30 basis points to34.1% from34.4% .
Balance Sheet and Cash Flow
The Company ended the quarter with
Fiscal 2024 Outlook(1)
The Company updates its previous outlook for fiscal year 2024 as follows:
| Fiscal 2024 Outlook (Current) | Fiscal 2024 Outlook (Previous) | |
| New Center Openings, Net | 27 to 32 | 75 to 80 |
| System-Wide Sales | ||
| Total Revenue | ||
| Same-Store Sales | (1.5)% to | |
| Adjusted Net Income(2) | ||
| Adjusted EBITDA | ||
______________________
(1) Fiscal 2022 and Fiscal 2023 each included a 53rd week in the fourth quarter. The Company estimates the 53rd week contribution to the top and bottom line is approximately equal to the contribution from an average fourth quarter week. The Company’s current outlook assumes no meaningful change in consumer behavior driven by inflationary pressures and no further impacts from incremental tightening in the labor market beyond what we see today.
(2) Adjusted net income outlook assumes an effective tax rate of approximately
(3) Adjusted EBITDA outlook includes approximately
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 second quarter fiscal 2024 results today, August 14, 2024, at 8:00 a.m. ET/7:00 a.m. CT. To access the conference call dial-in information, analysts should click here to register online at least 15 minutes before the start of the call. All other participants are asked to access the earnings webcast via https://investors.waxcenter.com. A replay of the webcast will be available two hours after the call and archived on the same web page for one year.
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. European Wax Center locations perform more than 23 million services per year, providing guests with an unparalleled, professional personal care experience administered by highly trained wax specialists within the privacy of clean, individual waxing suites. The Company continues to revolutionize the waxing industry with its innovative Comfort Wax® formulated with the highest quality ingredients to make waxing a more efficient and relatively painless experience, along with its collection of proprietary products to help enhance and extend waxing results. By leading with its values – We Care About Each Other, We Do the Right Thing, We Delight Our Guests, and We Have Fun While Being Awesome – the Company is proud to be Certified™ by Great Place to Work®. European Wax Center, Inc. was founded in 2004 and is headquartered in Plano, Texas. Its network, which now includes more than 1,000 centers in 45 states, generated sales of
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 2024, its capital allocation strategy and its long-term targets and algorithm, including but not limited to statements under the heading “Fiscal 2024 Outlook” and statements by European Wax Center’s chief executive officer. 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 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: 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 management, employees, information systems and internal controls; the Company’s ability to retain of effectively respond to a loss of key executives; 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 Company’s substantial indebtedness; 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 on the Company’s operations and financial performance; the impact of inflation and rising interest rates on the Company’s business; the Company’s access to sources of liquidity and capital to finance its continued operations and growth strategy and the other important factors discussed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended January 6, 2024 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.
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, Adjusted EBITDA margin 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 non-cash equity-based compensation expense, non-cash gains and losses on remeasurement of our tax receivable agreement liability, contractual cash interest on our tax receivable agreement liability, transaction costs and other one-time expenses.
We define Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue.
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 non-cash equity-based compensation expense, debt extinguishment costs, non-cash gains and losses on remeasurement of our tax receivable agreement liability, contractual cash interest on our tax receivable agreement liability, transaction 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).
Glossary of Terms for Our Key Business Metrics
System-Wide Sales. System-wide sales represent sales from same day services, retail sales and cash collected from wax passes for all centers in our network, including both franchisee-owned and corporate-owned centers. While we do not record franchised system-wide sales as revenue, our royalty revenue is calculated based on a percentage of franchised system-wide sales, which are
Same-Store Sales. Same-store sales reflect the change in year-over-year sales from services performed and retail sales for the same-store base. We define the same-store base to include those centers open for at least 52 full weeks. If a center is closed for greater than six consecutive days, the center is deemed a closed center and is excluded from the calculation of same-store sales until it has been reopened for a continuous 52 full weeks. This measure highlights the performance of existing centers, while excluding the impact of new center openings and closures. We review same-store sales for corporate-owned centers as well as franchisee-owned centers. Same-store sales growth is driven by increases in the number of transactions and average transaction size.
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
| July 6, 2024 | January 6, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 55,684 | $ | 52,735 | ||||
| Restricted cash | 6,465 | 6,493 | ||||||
| Accounts receivable, net | 10,086 | 9,250 | ||||||
| Inventory, net | 22,062 | 20,767 | ||||||
| Prepaid expenses and other current assets | 6,276 | 6,252 | ||||||
| Total current assets | 100,573 | 95,497 | ||||||
| Property and equipment, net | 1,732 | 2,284 | ||||||
| Operating lease right-of-use assets | 3,866 | 4,012 | ||||||
| Intangible assets, net | 154,595 | 164,073 | ||||||
| Goodwill | 328,551 | 328,551 | ||||||
| Deferred income taxes | 136,088 | 138,215 | ||||||
| Other non-current assets | 2,504 | 3,094 | ||||||
| Total assets | $ | 727,909 | $ | 735,726 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 16,385 | $ | 17,966 | ||||
| Long-term debt, current portion | 4,000 | 4,000 | ||||||
| Tax receivable agreement liability, current portion | 2,873 | 9,363 | ||||||
| Deferred revenue, current portion | 4,315 | 5,261 | ||||||
| Operating lease liabilities, current portion | 1,274 | 1,232 | ||||||
| Total current liabilities | 28,847 | 37,822 | ||||||
| Long-term debt, net | 372,599 | 372,000 | ||||||
| Tax receivable agreement liability, net of current portion | 197,908 | 197,273 | ||||||
| Deferred revenue, net of current portion | 6,330 | 6,615 | ||||||
| Operating lease liabilities, net of current portion | 2,926 | 3,158 | ||||||
| Other long-term liabilities | 2,264 | 2,246 | ||||||
| Total liabilities | 610,874 | 619,114 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock ( | — | — | ||||||
| Class A common stock ( | — | — | ||||||
| Class B common stock ( | — | — | ||||||
| Treasury stock, at cost 3,703,571 and 2,784,020 shares of Class A common stock as of July 6, 2024 and January 6, 2024, respectively | (50,001 | ) | (40,000 | ) | ||||
| Additional paid-in capital | 237,218 | 232,848 | ||||||
| Accumulated deficit | (102,379 | ) | (109,506 | ) | ||||
| Total stockholders’ equity attributable to European Wax Center, Inc. | 84,838 | 83,342 | ||||||
| Noncontrolling interests | 32,197 | 33,270 | ||||||
| Total stockholders’ equity | 117,035 | 116,612 | ||||||
| Total liabilities and stockholders’ equity | $ | 727,909 | $ | 735,726 | ||||
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands)
(Unaudited)
| For the Thirteen Weeks Ended | For the Twenty-Six Weeks Ended | |||||||||||||||
| July 6, 2024 | July 1, 2023 | July 6, 2024 | July 1, 2023 | |||||||||||||
| REVENUE | ||||||||||||||||
| Product sales | $ | 33,923 | $ | 33,725 | $ | 63,421 | $ | 61,567 | ||||||||
| Royalty fees | 14,465 | 14,147 | 26,901 | 26,498 | ||||||||||||
| Marketing fees | 8,142 | 7,915 | 15,238 | 14,817 | ||||||||||||
| Other revenue | 3,341 | 3,303 | 6,185 | 6,100 | ||||||||||||
| Total revenue | 59,871 | 59,090 | 111,745 | 108,982 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Cost of revenue | 16,024 | 16,900 | 29,548 | 31,357 | ||||||||||||
| Selling, general and administrative | 12,911 | 14,134 | 26,377 | 31,397 | ||||||||||||
| Advertising | 11,576 | 8,684 | 20,264 | 16,493 | ||||||||||||
| Depreciation and amortization | 4,985 | 5,045 | 9,985 | 10,108 | ||||||||||||
| Gain on sale of center | — | — | (81 | ) | — | |||||||||||
| Total operating expenses | 45,496 | 44,763 | 86,093 | 89,355 | ||||||||||||
| Income from operations | 14,375 | 14,327 | 25,652 | 19,627 | ||||||||||||
| Interest expense, net | 6,367 | 6,762 | 12,703 | 13,624 | ||||||||||||
| Other expense (income) | 269 | (792 | ) | 249 | (792 | ) | ||||||||||
| Income before income taxes | 7,739 | 8,357 | 12,700 | 6,795 | ||||||||||||
| Income tax expense | 1,739 | 2,763 | 2,971 | 2,254 | ||||||||||||
| NET INCOME | $ | 6,000 | $ | 5,594 | $ | 9,729 | $ | 4,541 | ||||||||
| Less: net income attributable to noncontrolling interests | 1,694 | 1,582 | 2,602 | 1,037 | ||||||||||||
| NET INCOME ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC. | $ | 4,306 | $ | 4,012 | $ | 7,127 | $ | 3,504 | ||||||||
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| For the Twenty-Six Weeks Ended | ||||||||
| July 6, 2024 | July 1, 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 9,729 | $ | 4,541 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 9,985 | 10,108 | ||||||
| Amortization of deferred financing costs | 2,773 | 2,639 | ||||||
| Provision for inventory obsolescence | (70 | ) | (11 | ) | ||||
| Provision for bad debts | 113 | 80 | ||||||
| Deferred income taxes | 2,789 | 2,164 | ||||||
| Remeasurement of tax receivable agreement liability | 249 | (792 | ) | |||||
| Gain on sale of center | (81 | ) | — | |||||
| Loss on disposal of property and equipment | 3 | — | ||||||
| Equity compensation | 3,323 | 7,757 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (964 | ) | (2,452 | ) | ||||
| Inventory, net | (1,246 | ) | (506 | ) | ||||
| Prepaid expenses and other assets | 948 | (1,110 | ) | |||||
| Accounts payable and accrued liabilities | (835 | ) | (1,464 | ) | ||||
| Deferred revenue | (1,044 | ) | 529 | |||||
| Other long-term liabilities | (541 | ) | (263 | ) | ||||
| Net cash provided by operating activities | 25,131 | 21,220 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (215 | ) | (623 | ) | ||||
| Cash received for sale of center | 135 | — | ||||||
| Net cash used in investing activities | (80 | ) | (623 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Principal payments on long-term debt | (2,000 | ) | (2,000 | ) | ||||
| Distributions to EWC Ventures LLC members | (2,515 | ) | (1,214 | ) | ||||
| Repurchase of Class A common stock | (10,001 | ) | (819 | ) | ||||
| Taxes on vested restricted stock units paid by withholding shares | (393 | ) | (146 | ) | ||||
| Dividend equivalents to holders of EWC Ventures units | (725 | ) | (2,615 | ) | ||||
| Payments pursuant to tax receivable agreement | (6,496 | ) | (3,209 | ) | ||||
| Net cash used in financing activities | (22,130 | ) | (10,003 | ) | ||||
| Net increase in cash, cash equivalents and restricted cash | 2,921 | 10,594 | ||||||
| Cash, cash equivalents and restricted cash, beginning of period | 59,228 | 50,794 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 62,149 | $ | 61,388 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | 10,976 | $ | 11,097 | ||||
| Cash paid for income taxes | $ | 444 | $ | 513 | ||||
| Non-cash investing activities: | ||||||||
| Property purchases included in accounts payable and accrued liabilities | $ | 21 | $ | — | ||||
| Right-of-use assets obtained in exchange for operating lease obligations | $ | 592 | $ | 368 | ||||
Reconciliation of GAAP net income to Adjusted net income:
| For the Thirteen Weeks Ended | For the Twenty-Six Weeks Ended | |||||||||||||||
| July 6, 2024 | July 1, 2023 | July 6, 2024 | July 1, 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income (loss) | $ | 6,000 | $ | 5,594 | $ | 9,729 | $ | 4,541 | ||||||||
| Share-based compensation(1) | 1,941 | 1,826 | 3,323 | 7,757 | ||||||||||||
| Remeasurement of tax receivable agreement liability (2) | 269 | (792 | ) | 249 | (792 | ) | ||||||||||
| Gain on sale of center (3) | — | — | (81 | ) | — | |||||||||||
| Gain from legal judgment proceeds (4) | (659 | ) | — | (739 | ) | — | ||||||||||
| Tax effect of adjustments to net income (5) | (209 | ) | 432 | (327 | ) | (1,039 | ) | |||||||||
| Adjusted net income | $ | 7,342 | $ | 7,060 | $ | 12,154 | $ | 10,467 | ||||||||
(1) Represents non-cash equity-based compensation expense.
(2) Represents non-cash adjustments related to the remeasurement of our tax receivable agreement liability.
(3) Represents gain on the sale of a corporate-owned center.
(4) Represents the collection of cash proceeds from a legal judgment.
(5) Represents the income tax impact of non-GAAP adjustments computed by applying our estimated blended statutory tax rate to our share of the identified items and incorporating the effect of nondeductible and other rate impacting adjustments.
Reconciliation of GAAP net income to EBITDA and Adjusted EBITDA:
| For the Thirteen Weeks Ended | For the Twenty-Six Weeks Ended | |||||||||||||||
| July 6, 2024 | July 1, 2023 | July 6, 2024 | July 1, 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income | $ | 6,000 | $ | 5,594 | $ | 9,729 | $ | 4,541 | ||||||||
| Interest expense, net | 6,367 | 6,762 | 12,703 | 13,624 | ||||||||||||
| Income tax expense | 1,739 | 2,763 | 2,971 | 2,254 | ||||||||||||
| Depreciation and amortization | 4,985 | 5,045 | 9,985 | 10,108 | ||||||||||||
| EBITDA | $ | 19,091 | $ | 20,164 | $ | 35,388 | $ | 30,527 | ||||||||
| Share-based compensation(1) | 1,941 | 1,826 | 3,323 | 7,757 | ||||||||||||
| Remeasurement of tax receivable agreement liability (2) | 269 | (792 | ) | 249 | (792 | ) | ||||||||||
| Gain on sale of center (3) | — | — | (81 | ) | — | |||||||||||
| Gain from legal judgment proceeds (4) | (659 | ) | — | (739 | ) | — | ||||||||||
| Adjusted EBITDA | $ | 20,642 | $ | 21,198 | $ | 38,140 | $ | 37,492 | ||||||||
| Adjusted EBITDA margin | 34.5 | % | 35.9 | % | 34.1 | % | 34.4 | % | ||||||||
(1) Represents non-cash equity-based compensation expense.
(2) Represents non-cash adjustments related to the remeasurement of our tax receivable agreement liability.
(3) Represents gain on the sale of a corporate-owned center.
(4) Represents the collection of cash proceeds from a legal judgment.
Investor Contact
European Wax Center, Inc.
Bethany Johns
Bethany.Johns@myewc.com
469-270-6888
Media Contact
Creative Media Marketing
Carolanne Coviello
Ewc@cmmpr.com
212-979-8884 ext 209
FAQ
What was European Wax Center's (EWCZ) system-wide sales growth in Q2 2024?
How many new centers did European Wax Center (EWCZ) open in Q2 2024?
What is European Wax Center's (EWCZ) updated guidance for new center openings in fiscal 2024?
How did European Wax Center's (EWCZ) same-store sales perform in Q2 2024?
Who was appointed as the new CEO of European Wax Center (EWCZ) in August 2024?
