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United States securities and exchange commission logo
June 3, 2021
David P. Berg
Chief Executive Officer
European Wax Center, Inc.
5830 Granite Parkway, 3 rd Floor
Plano, Texas 75024
Re: European Wax
Center, Inc.
Draft Registration
Statement on Form S-1
Submitted May 7,
2021
CIK No. 0001856236
Dear Mr. Berg:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1
Committed Franchisees Achieving Attractive and Predictable Unit-Level
Economics, page 4
1. Please revise this
section or add a new section to clarify how you generate revenue from
your franchisees. In
this regard, we note that you appear to generate a majority of your
revenues from product
sales and royalty and marketing fees. To the extent possible,
please also quantify
the relative percentages by category for the most recent fiscal year so
investors can
appreciate your respective revenue streams.
Our Growth Strategies, page 6
2. You disclose that your
2019 Adjusted EBITDA would have increased from $34 million to
$39 million and your
2020 Adjusted EBITDA would have increased from $20 million to
David P. Berg
FirstName LastNameDavid
European Wax Center, Inc. P. Berg
Comapany
June 3, 2021NameEuropean Wax Center, Inc.
June 3,
Page 2 2021 Page 2
FirstName LastName
$57 million assuming each of your open but not mature centers were
able to attain the
average mature center financial performance. Please tell us whether
you consider this
non-GAAP information to be pro forma financial information, a
forecast, or other and
your basis for disclosing it.
3. As a related matter, refer to the last sentence of the second
paragraph under the title
"Grow Our National Footprint Across New and Existing Markets." Please
expand your
disclosure to include a more robust explanation of why management
believes these
measures provide useful information to investors. In this regard,
provide additional
context for investors and clarify what is considered a mature center,
what is the average
financial performance of a mature center and how many of your centers
have not yet
reached maturity.
Risk Factors
Our level of indebtedness could have a material adverse effect on our ability
to generate
sufficient cash, page 28
4. Please revise to disclose your current debt service obligations.
Our operations and financial performance has been affected by, and is expected
to continue to be
affected by, the COVID-19 pandemic, page 31
5. Please revise, to the extent possible, to quantify the negative impact
COVID-19 has had
on the company's business and operations. Please include enough detail
so that
shareholders can appreciate the discussed risk.
Risks Relating to our Suppliers and Distributors
We depend on a limited number of key suppliers, including international
suppliers..., page 38
6. We note your disclosure here that you "depend on two key suppliers"
and on page 8 that
you "depend on three key suppliers." Revise to ensure consistency
throughout your filing.
Please also identify here or elsewhere in your filing, the name of
your suppliers, consistent
with Item 101(h)(4)(v) of Regulation S-K.
Our amended and restated certificate of incorporation will provide that certain
courts..., page 52
7. Your risk factor disclosure states that "[t]he exclusive forum
provision provides that it will
not apply to claims arising under the Securities Act, the Exchange Act
or other federal
securities laws for which there is exclusive federal or concurrent
federal and state
jurisdiction." We note that this disclosure appears to be inconsistent
with the last sentence
of the first paragraph, which states that "the federal district courts
of the United States of
America shall be the exclusive forum for the resolution of any
complaint asserting a cause
of action arising under the Securities Act." Please revise to
reconcile the inconsistencies.
David P. Berg
FirstName LastNameDavid
European Wax Center, Inc. P. Berg
Comapany
June 3, 2021NameEuropean Wax Center, Inc.
June 3,
Page 3 2021 Page 3
FirstName LastName
Use of Proceeds, page 61
8. Please revise the second paragraph to more specifically identify and
quantify the principal
intended uses of the net proceeds. Refer to Item 504 of Regulation
S-K.
Management's Discussion & Analysis of Financial Condition and Results of
Operations, page 71
9. Please briefly define the term "attachment rate" referenced here and
in your Business
section.
Growth Strategy and Outlook, page 72
10. We note your disclosure that "[you] aspire to grow between 7% to 10%
of [y]our center
count each year." To provide additional context for investors, please
quantify the growth
percentage of your center count for prior periods.
Non-GAAP Financial Measures, page 73
11. Please revise to present non-GAAP financial measures after discussion
and analysis of
your results on a GAAP basis so as to avoid giving undue prominence to
the non-GAAP
measures. Refer to non-GAAP C&DI 102.10.
Our Growth Market Opportunity, page 89
12. Please define and disclose any material assumptions and limitations
associated with your
estimate of your total addressable market.
Business
Committed Franchisees Achieving Attractive and Predictable Unit-Level
Economics, page 91
13. Please revise your table on page 92 to include 2019. In this regard,
we note that you have
limited the AVG performance by center cohort to the 2012-2018
financial period.
Franchise Unit-Level Economics, page 101
14. We note that the table titled "Average Franchise Returns" shows that
25% of all centers
earn cash-to-cash returns of over 115%. Please revise to put into
context your 115% return
and also disclose cash-on-cash returns for centers in the bottom (25%)
and half
(50%) quartiles.
Management, page 105
15. Please revise your disclosure to more specifically describe your
officers' and directors'
principal occupations and employment during the past five years. For
example, we note
gaps in the dates of employment for your Chief Executive Officer and
Chief Financial
Officer. Please refer to Item 401(e) of Regulation S-K.
David P. Berg
European Wax Center, Inc.
June 3, 2021
Page 4
Principal Stockholders, page 119
16. Please revise to disclose the natural person or persons who have
voting or investment
power with respect to the Class A common stock held by the entities
listed in the
table. Refer to Item 403 of Regulation S-K.
General
17. Please provide us with supplemental copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
have presented or expect to present to potential investors in reliance
on Section 5(d) of the
Securities Act, whether or not you retained, or intend to retain,
copies of those
communications. Please contact the staff member associated with the
review of this filing
to discuss how to submit the materials, if any, to us for our review.
18. We note your disclosure throughout the registration statement that
"[t]he highly consistent
and recurring demand for [y]our services and the competitive
advantages provided by
[y]our scale have resulted in nine consecutive years of same-store
sales growth through
2019. [You] believe [you] can nearly quadruple [y]our center count to
over 3,000
locations in the United States." Please discuss the expected time
frame for your plan to
quadruple your center count. Also consider providing a breakdown of
same-store sales
growth by year to address comparability among financial periods.
You may contact Tatanisha Meadows at 202-551-3322 or Lyn Shenk at
202-551-3380 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Donald Field at 202-551-3680 or Jennifer Lopez-Molina at 202-551-3792
with any other
questions.
FirstName LastNameDavid P. Berg Sincerely,
Comapany NameEuropean Wax Center, Inc.
Division of
Corporation Finance
June 3, 2021 Page 4 Office of Trade
& Services
FirstName LastName