European Wax Center, Inc. Reports Third Quarter Fiscal Year 2024 Results
European Wax Center (NASDAQ: EWCZ) reported Q3 fiscal 2024 results showing mixed performance. The company experienced a 0.5% decrease in same-store sales and total revenue declined 0.5% to $55.4 million. Net income dropped 50.7% to $2.0 million, while Adjusted EBITDA decreased 4.4% to $18.4 million. The company maintains its fiscal 2024 financial outlook but updated its net new center projections to 17-22 openings, down from previous guidance of 27-32. System-wide sales reached $240.2 million, showing a slight decrease of 0.2%. The company ended Q3 with 1,064 centers across 45 states, representing a 3.7% increase year-over-year.
European Wax Center (NASDAQ: EWCZ) ha riportato i risultati del terzo trimestre dell'anno fiscale 2024, mostrando una performance mista. L'azienda ha registrato una riduzione dello 0,5% nelle vendite a parità di negozi e un calo del fatturato totale dello 0,5%, arrivando a 55,4 milioni di dollari. L'utile netto è sceso del 50,7% a 2,0 milioni di dollari, mentre l'EBITDA rettificato è diminuito del 4,4% a 18,4 milioni di dollari. L'azienda mantiene le previsioni finanziarie per l'anno fiscale 2024, ma ha aggiornato le stime per le nuove aperture dei centri a 17-22, rispetto alla previsione precedente di 27-32. Le vendite a livello di sistema hanno raggiunto i 240,2 milioni di dollari, mostrando un lieve decremento dello 0,2%. Alla fine del terzo trimestre, l'azienda contava 1.064 centri in 45 stati, rappresentando un aumento del 3,7% rispetto all'anno precedente.
European Wax Center (NASDAQ: EWCZ) reportó resultados del tercer trimestre del año fiscal 2024 que muestran un rendimiento mixto. La compañía experimentó una disminución del 0,5% en las ventas en tiendas comparables y los ingresos totales cayeron un 0,5% a 55,4 millones de dólares. La utilidad neta disminuyó un 50,7% a 2,0 millones de dólares, mientras que el EBITDA ajustado disminuyó un 4,4% a 18,4 millones de dólares. La empresa mantiene su perspectiva financiera para el año fiscal 2024, pero actualizó sus proyecciones de nuevas aperturas de centros a 17-22, frente a la orientación previa de 27-32. Las ventas en todo el sistema alcanzaron los 240,2 millones de dólares, mostrando una leve disminución del 0,2%. La empresa terminó el tercer trimestre con 1,064 centros en 45 estados, representando un aumento del 3,7% interanual.
European Wax Center (NASDAQ: EWCZ)가 2024 회계연도 3분기 실적을 발표했습니다. 결과는 다소 엇갈렸습니다. 회사는 동일 매장 매출이 0.5% 감소했으며, 총 수익도 0.5% 감소하여 5540만 달러에 달했습니다. 순 이익은 50.7% 감소하여 200만 달러로 줄었고, 조정 EBITDA는 4.4% 감소하여 1840만 달러가 되었습니다. 회사는 2024 회계연도 재정 전망을 유지하였지만 새로운 센터 개설 예측을 이전의 27-32개에서 17-22개로 수정했습니다. 전 시스템 판매는 2억 4020만 달러에 이르렀으며, 이는 0.2%의 소폭 감소를 나타냅니다. 회사는 3분기 말에 45개 주에 걸쳐 1064개의 센터를 운영하고 있으며, 이는 전년 대비 3.7% 증가한 수치입니다.
European Wax Center (NASDAQ: EWCZ) a publié ses résultats du troisième trimestre de l'exercice fiscal 2024, montrant une performance mitigée. L'entreprise a connu une baisse de 0,5% des ventes à magasins comparables et les revenus totaux ont diminué de 0,5% pour atteindre 55,4 millions de dollars. Le bénéfice net a chuté de 50,7% pour s'établir à 2,0 millions de dollars, tandis que l'EBITDA ajusté a diminué de 4,4% pour atteindre 18,4 millions de dollars. L'entreprise maintient ses prévisions financières pour l'année fiscale 2024, mais a mis à jour ses prévisions d'ouvertures de nouveaux centres à 17-22, contre une orientation précédente de 27-32. Les ventes au système ont atteint 240,2 millions de dollars, montrant une légère baisse de 0,2%. L'entreprise a terminé le troisième trimestre avec 1 064 centres répartis dans 45 États, représentant une augmentation de 3,7% par rapport à l'année précédente.
European Wax Center (NASDAQ: EWCZ) hat die Ergebnisse des dritten Quartals des Geschäftsjahres 2024 veröffentlicht, die eine gemischte Leistung zeigen. Das Unternehmen erlebte einen Rückgang der Same-Store-Verkäufe um 0,5% und die Gesamteinnahmen fielen um 0,5% auf 55,4 Millionen Dollar. Der Nettogewinn sank um 50,7% auf 2,0 Millionen Dollar, während das bereinigte EBITDA um 4,4% auf 18,4 Millionen Dollar zurückging. Das Unternehmen hält an seinen finanziellen Ausblick für das Geschäftsjahr 2024 fest, hat jedoch die Prognosen für die Neueröffnungen der Zentren auf 17-22 gesenkt, nachdem die vorherige Guidance von 27-32 kam. Die systemweiten Verkäufe erreichten 240,2 Millionen Dollar, was einem leichten Rückgang von 0,2% entspricht. Am Ende des dritten Quartals hatte das Unternehmen 1064 Zentren in 45 Bundesstaaten, was einem Anstieg von 3,7% im Jahresvergleich entspricht.
- Network expansion with 3.7% increase in total centers to 1,064
- Strong cash position with $48.0 million in cash and cash equivalents
- Year-to-date system-wide sales increased 1.2% to $721.7 million
- Year-to-date net income increased 36.4% to $11.6 million
- Same-store sales decreased 0.5%
- Q3 net income declined 50.7% to $2.0 million
- Adjusted EBITDA decreased 4.4% to $18.4 million
- SG&A expenses increased 21.6% to $17.5 million
- Reduced guidance for net new center openings from 27-32 to 17-22
Insights
The Q3 results reveal concerning trends for EWCZ. Same-store sales declined -0.5% while net income dropped significantly by -50.7% to
Most concerning is the increased closure rate, with 16 centers already closed in fiscal 2024 and 5-10 more expected. The revised guidance for net new center openings (17-22 vs. previous 27-32) suggests mounting challenges in unit economics. The
While the company maintains its broader financial outlook, the deteriorating metrics in unit growth and profitability raise questions about long-term growth sustainability. The
Reiterates fiscal 2024 financial outlook
Updates fiscal 2024 outlook for net new centers
Third Quarter Fiscal 2024 versus 2023
- Net new centers increased
3.7% to 1,064 total centers in 45 states - System-wide sales of
$240.2 million decreased0.2% - Total revenue of
$55.4 million decreased0.5% - Same-store sales decreased
0.5% - GAAP net income of
$2.0 million decreased50.7% - Adjusted net income of
$5.5 million decreased8.2% - Adjusted EBITDA of
$18.4 million decreased4.4%
PLANO, Texas, Nov. 14, 2024 (GLOBE NEWSWIRE) -- Today, European Wax Center, Inc. (NASDAQ: EWCZ), the leading franchisor and operator of out-of-home waxing services in the United States, reports financial results for the 13 and 39 weeks ended October 5, 2024.
David Berg, Executive Chairman and CEO of European Wax Center, Inc. stated, “We are pleased that our third quarter results were in line with the revised expectations we provided in August. Over the past three months, I’ve been immersing myself in the business, refining our key focus areas and developing a robust action plan focused on driving new guests and ticket growth. Over time, we believe our efforts will enhance unit economics and financial returns for our franchise partners, enable thoughtful growth for European Wax Center, and deliver long-term value to our stakeholders.”
Mr. Berg continued, “As we look ahead, we are encouraged that our core guests remain committed to this brand, enabling us to reiterate our fiscal 2024 financial outlook. That said, as we navigate current market dynamics and continue to assess near-term development plans, we are updating our fiscal 2024 outlook for net new center openings. We remain confident in the strength of the European Wax Center business model and its ability to generate strong cash flow and sustained top-line, bottom-line and unit growth over the long-term.”
Results for the Third Quarter of Fiscal 2024 versus Fiscal 2023
- Franchisees opened 12 and closed 7 centers. We ended the quarter with 1,064 centers, representing a
3.7% increase versus 1,026 centers in prior year period. - System-wide sales of
$240.2 million decreased0.2% from$240.7 million in the prior year period. - Total revenue of
$55.4 million decreased0.5% from$55.7 million in the prior year period. - Same-store sales decreased
0.5% . - Selling, general and administrative expenses (“SG&A”) of
$17.5 million increased21.6% from$14.4 million in the prior year period. SG&A as a percent of total revenue increased 570 basis points to31.5% from25.8% primarily due to nonroutine expenses related to executive severance, the Company’s return-to-office mandate, and a prospective debt offering the Company decided to terminate during the third quarter of fiscal 2024. - Interest expense of
$6.3 million decreased from$6.5 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
$0.8 million compared to$1.8 million , and the effective tax rate was28.7% compared to30.0% in the prior year period. - Net income of
$2.0 million decreased50.7% from$4.1 million , and Adjusted net income of$5.5 million decreased8.3% from$6.0 million in the prior year period. - Adjusted EBITDA of
$18.4 million decreased4.4% from$19.3 million in the prior year period. As a percent of total revenue, Adjusted EBITDA margin decreased 140 basis points to33.2% from34.6% . - The Company repurchased
$20.1 million of its Class A Common Stock during the period, bringing cumulative repurchases under the Company’s current$50 million authorization to$30.1 million .
Year-to-Date Results through the Third Quarter of Fiscal 2024 versus Fiscal 2023
- Franchisees opened 33 and closed 13 centers in the first three quarters of fiscal 2024.
- System-wide sales of
$721.7 million increased1.2% from$713.3 million in the prior year-to-date period driven by net new centers opened over the past twelve months. - Total revenue of
$167.2 million increased1.5% from$164.7 million in the prior year-to-date period. - Same-store sales were flat.
- SG&A of
$43.9 million decreased4.2% from$45.8 million in the prior year-to-date period. SG&A as a percent of total revenue improved 160 basis points to26.2% from27.8% , primarily due to lower payroll-related expenses and the receipt of proceeds from a legal judgment, partially offset by increased technology expenses and costs related to a prospective debt offering the Company decided to terminate during the third quarter of fiscal 2024. - Interest expense of
$19.0 million decreased from$20.1 million in the prior year-to-date period, primarily due to increased interest income. - Income tax expense was
$3.8 million compared to$4.0 million , and the effective tax rate was24.4% compared to31.9% in the prior year-to-date period. - Net income of
$11.6 million increased36.4% from$8.5 million , and Adjusted net income of$17.5 million increased7.3% from$16.3 million in the prior year-to-date period. - Adjusted EBITDA of
$56.6 million decreased0.4% from$56.7 million in the prior year-to-date period. As a percent of total revenue, Adjusted EBITDA margin decreased 70 basis points to33.8% from34.5% .
Balance Sheet and Cash Flow
The Company ended the quarter with
Fiscal 2024 Financial Outlook(1)
The Company reiterates its previous financial outlook for fiscal year 2024:
| Fiscal 2024 Outlook | |
| System-Wide Sales | |
| Total Revenue | |
| Same-Store Sales | (1.5)% to |
| Adjusted Net Income(2) | |
| Adjusted EBITDA(3) |
___________________________
(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 up to
Fiscal 2024 New Center Outlook(1)
As was embedded in its previous net new center openings outlook, the Company continues to expect 43 gross new center openings in fiscal 2024. The Company continues to manage a dynamic closure environment with franchisees, and as of November 14, 2024, 16 centers have closed during fiscal 2024. The Company expects an additional 5 to 10 closures during the balance of the year, translating to 17 to 22 net new center openings compared to a previous outlook of 27 to 32 net new center openings.
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 third quarter fiscal 2024 results today, November 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 leading 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 and/or gains.
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 and/or gains.
We define net debt as total long-term debt plus the current portion of long-term debt less cash and cash equivalents.
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) | ||||||||
| October 5, 2024 | January 6, 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 48,017 | $ | 52,735 | ||||
| Restricted cash | 6,487 | 6,493 | ||||||
| Accounts receivable, net | 7,139 | 9,250 | ||||||
| Inventory, net | 20,570 | 20,767 | ||||||
| Prepaid expenses and other current assets | 5,239 | 6,252 | ||||||
| Total current assets | 87,452 | 95,497 | ||||||
| Property and equipment, net | 1,563 | 2,284 | ||||||
| Operating lease right-of-use assets | 3,591 | 4,012 | ||||||
| Intangible assets, net | 436,994 | 451,495 | ||||||
| Goodwill | 39,112 | 39,112 | ||||||
| Deferred income taxes | 137,003 | 138,623 | ||||||
| Other non-current assets | 2,250 | 3,094 | ||||||
| Total assets | $ | 707,965 | $ | 734,117 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 15,545 | $ | 17,966 | ||||
| Long-term debt, current portion | 4,000 | 4,000 | ||||||
| Tax receivable agreement liability, current portion | 2,807 | 9,363 | ||||||
| Deferred revenue, current portion | 3,952 | 5,261 | ||||||
| Operating lease liabilities, current portion | 1,283 | 1,232 | ||||||
| Total current liabilities | 27,587 | 37,822 | ||||||
| Long-term debt, net | 372,913 | 372,000 | ||||||
| Tax receivable agreement liability, net of current portion | 198,461 | 197,273 | ||||||
| Deferred revenue, net of current portion | 6,054 | 6,615 | ||||||
| Operating lease liabilities, net of current portion | 2,606 | 3,158 | ||||||
| Other long-term liabilities | 2,444 | 2,246 | ||||||
| Total liabilities | 610,065 | 619,114 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock ( outstanding as of October 5, 2024 and January 6, 2024, respectively) | — | — | ||||||
| Class A common stock ( 51,508,038 and 51,261,001 shares issued and 44,747,397 and 48,476,981 shares outstanding as of October 5, 2024 and January 6, 2024, respectively) | — | — | ||||||
| Class B common stock ( and 12,278,876 shares issued and outstanding as of October 5, 2024 and January 6, 2024, respectively) | — | — | ||||||
| Treasury stock, at cost 6,760,641 and 2,784,020 shares of Class A common stock as of October 5, 2024 and January 6, 2024, respectively | (70,147 | ) | (40,000 | ) | ||||
| Additional paid-in capital | 241,615 | 232,904 | ||||||
| Accumulated deficit | (102,713 | ) | (110,880 | ) | ||||
| Total stockholders’ equity attributable to European Wax Center, Inc. | 68,755 | 82,024 | ||||||
| Noncontrolling interests | 29,145 | 32,979 | ||||||
| Total stockholders’ equity | 97,900 | 115,003 | ||||||
| Total liabilities and stockholders’ equity | $ | 707,965 | $ | 734,117 | ||||
| EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands) (Unaudited) | ||||||||||||||||
| For the Thirteen Weeks Ended | For the Thirty-Nine Weeks Ended | |||||||||||||||
| October 5, 2024 | September 30, 2023 | October 5, 2024 | September 30, 2023 | |||||||||||||
| REVENUE | ||||||||||||||||
| Product sales | $ | 31,684 | $ | 31,890 | $ | 95,105 | $ | 93,457 | ||||||||
| Royalty fees | 13,413 | 13,345 | 40,314 | 39,843 | ||||||||||||
| Marketing fees | 7,603 | 7,551 | 22,841 | 22,368 | ||||||||||||
| Other revenue | 2,730 | 2,931 | 8,915 | 9,031 | ||||||||||||
| Total revenue | 55,430 | 55,717 | 167,175 | 164,699 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Cost of revenue | 15,003 | 15,721 | 44,551 | 47,078 | ||||||||||||
| Selling, general and administrative | 17,474 | 14,372 | 43,851 | 45,769 | ||||||||||||
| Advertising | 8,409 | 8,099 | 28,673 | 24,592 | ||||||||||||
| Depreciation and amortization | 5,073 | 5,135 | 15,246 | 15,432 | ||||||||||||
| Gain on sale of center | — | — | (81 | ) | — | |||||||||||
| Gain on disposal of assets and non-cancellable contracts | (2 | ) | — | (2 | ) | — | ||||||||||
| Total operating expenses | 45,957 | 43,327 | 132,238 | 132,871 | ||||||||||||
| Income from operations | 9,473 | 12,390 | 34,937 | 31,828 | ||||||||||||
| Interest expense, net | 6,340 | 6,471 | 19,043 | 20,095 | ||||||||||||
| Other expense (income) | 285 | 36 | 534 | (756 | ) | |||||||||||
| Income before income taxes | 2,848 | 5,883 | 15,360 | 12,489 | ||||||||||||
| Income tax expense | 818 | 1,765 | 3,751 | 3,981 | ||||||||||||
| NET INCOME | $ | 2,030 | $ | 4,118 | $ | 11,609 | $ | 8,508 | ||||||||
| Less: net income attributable to noncontrolling interests | 550 | 1,235 | 3,152 | 2,234 | ||||||||||||
| NET INCOME ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC. | $ | 1,480 | $ | 2,883 | $ | 8,457 | $ | 6,274 | ||||||||
| EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) | ||||||||
| For the Thirty-Nine Weeks Ended | ||||||||
| October 5, 2024 | September 30, 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 11,609 | $ | 8,508 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 15,246 | 15,432 | ||||||
| Amortization of deferred financing costs | 4,171 | 3,964 | ||||||
| Provision for inventory obsolescence | (25 | ) | (4 | ) | ||||
| Provision for bad debts | 393 | 105 | ||||||
| Deferred income taxes | 3,568 | 3,768 | ||||||
| Remeasurement of tax receivable agreement liability | 534 | (756 | ) | |||||
| Gain on sale of center | (81 | ) | — | |||||
| Loss on disposal of property and equipment | 3 | 11 | ||||||
| Equity compensation | 4,205 | 9,489 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 1,702 | (189 | ) | |||||
| Inventory, net | 202 | 1,319 | ||||||
| Prepaid expenses and other assets | 2,426 | (1,300 | ) | |||||
| Accounts payable and accrued liabilities | (1,642 | ) | (1,180 | ) | ||||
| Deferred revenue | (1,683 | ) | 178 | |||||
| Other long-term liabilities | (678 | ) | (489 | ) | ||||
| Net cash provided by operating activities | 39,950 | 38,856 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (276 | ) | (774 | ) | ||||
| Cash received for sale of center | 135 | — | ||||||
| Net cash used in investing activities | (141 | ) | (774 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Principal payments on long-term debt | (3,000 | ) | (3,000 | ) | ||||
| Distributions to EWC Ventures LLC members | (3,584 | ) | (2,492 | ) | ||||
| Repurchase of Class A common stock | (30,147 | ) | (6,369 | ) | ||||
| Taxes on vested restricted stock units paid by withholding shares | (549 | ) | (516 | ) | ||||
| Dividend equivalents to holders of EWC Ventures units | (757 | ) | (2,787 | ) | ||||
| Payments pursuant to tax receivable agreement | (6,496 | ) | (3,209 | ) | ||||
| Net cash used in financing activities | (44,533 | ) | (18,373 | ) | ||||
| Net increase in cash, cash equivalents and restricted cash | (4,724 | ) | 19,709 | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 59,228 | 50,794 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 54,504 | $ | 70,503 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | 16,443 | $ | 16,621 | ||||
| Cash paid for income taxes | $ | 498 | $ | 633 | ||||
| Non-cash investing activities: | ||||||||
| Property purchases included in accounts payable and accrued liabilities | $ | 30 | $ | — | ||||
| 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 Thirty-Nine Weeks Ended | |||||||||||||||
| October 5, 2024 | September 30, 2023 | October 5, 2024 | September 30, 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income | $ | 2,030 | $ | 4,118 | $ | 11,609 | $ | 8,508 | ||||||||
| Share-based compensation(1) | 882 | 1,732 | 4,205 | 9,489 | ||||||||||||
| Remeasurement of tax receivable agreement liability (2) | 285 | 36 | 534 | (756 | ) | |||||||||||
| Gain on sale of center (3) | — | — | (81 | ) | — | |||||||||||
| Gain from legal judgment proceeds (4) | — | — | (739 | ) | — | |||||||||||
| Executive severance(5) | 1,548 | — | 1,548 | — | ||||||||||||
| Reorganization costs(6) | 490 | — | 490 | — | ||||||||||||
| Terminated debt offering costs(7) | 944 | — | 944 | — | ||||||||||||
| Tax effect of adjustments to net income (8) | (687 | ) | 105 | (1,014 | ) | (935 | ) | |||||||||
| Adjusted net income | $ | 5,492 | $ | 5,991 | $ | 17,496 | $ | 16,306 | ||||||||
(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 cash severance paid or payable to our former chief executive and commercial officers.
(6) Represents employee cash severance paid or payable to employees and costs related to the Company's return-to-office mandate such as retention bonuses, relocation assistance and preparation of the Company's corporate office.
(7) Represents costs related to a debt offering the Company was previously evaluating and subsequently decided to terminate.
(8) Represents the income tax impact of non-GAAP adjustments computed by applying our estimated blended statutory tax rate to our share of the identifies 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 Thirty-Nine Weeks Ended | |||||||||||||||
| October 5, 2024 | September 30, 2023 | October 5, 2024 | September 30, 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income | $ | 2,030 | $ | 4,118 | $ | 11,609 | $ | 8,508 | ||||||||
| Interest expense, net | 6,340 | 6,471 | 19,043 | 20,095 | ||||||||||||
| Income tax expense | 818 | 1,765 | 3,751 | 3,981 | ||||||||||||
| Depreciation and amortization | 5,073 | 5,135 | 15,246 | 15,432 | ||||||||||||
| EBITDA | $ | 14,261 | $ | 17,489 | $ | 49,649 | $ | 48,016 | ||||||||
| Share-based compensation(1) | 882 | 1,732 | 4,205 | 9,489 | ||||||||||||
| Remeasurement of tax receivable agreement liability (2) | 285 | 36 | 534 | (756 | ) | |||||||||||
| Gain on sale of center (3) | — | — | (81 | ) | — | |||||||||||
| Gain from legal judgment proceeds (4) | — | — | (739 | ) | — | |||||||||||
| Executive severance(5) | 1,548 | — | 1,548 | — | ||||||||||||
| Reorganization costs(6) | 490 | — | 490 | — | ||||||||||||
| Terminated debt offering costs(7) | 944 | — | 944 | — | ||||||||||||
| Adjusted EBITDA | $ | 18,410 | $ | 19,257 | $ | 56,550 | $ | 56,749 | ||||||||
| Adjusted EBITDA margin | 33.2 | % | 34.6 | % | 33.8 | % | 34.5 | % | ||||||||
(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 cash severance paid or payable to our former chief executive and commercial officers.
(6) Represents employee cash severance paid or payable to employees and costs related to the Company's return-to-office mandate such as retention bonuses, relocation assistance and preparation of the Company's corporate office.
(7) Represents costs related to a debt offering the Company was previously evaluating and subsequently decided to terminate.
Investor Contact
European Wax Center, Inc.
Bethany Johns
Bethany.Johns@myewc.com
469-270-6888
Media Contact
Zeno Group
Shannon Powell
shannon.powell@zenogroup.com
312-752-6851
FAQ
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