UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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Registrant’s Telephone Number, Including Area Code: |
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
On March 15, 2022, European Wax Center, Inc. (“the Company”) issued the news release attached hereto as Exhibit 99.1 reporting its financial results for the 13 and 52 weeks ended December 25, 2021.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On March 11, 2022, the Board of Directors of the Company approved a change in fiscal year 2022 from a 52-week year ending on the Saturday closest to the last day of December to a 53-week year ending on December 31, 2022, so that subsequent fiscal years would align to the “4-5-4” National Retail Federation fiscal calendar. The Company expects to make the fiscal year change on a prospective basis and will not adjust operating results for prior periods. The change to the Company’s fiscal year will not impact the Company’s results for the year ended December 25, 2021. The Company believes this change will provide numerous benefits, including ensuring sales comparability between years and aligning its reporting periods to be more consistent with peer companies. The one-week transition period (December 25, 2022 to December 31, 2022) will be included in the Company’s Annual Report on Form 10-K fiscal year ending December 31, 2022.
All of the information included in Items 2.02 and 9.01 of this report and Exhibit 99.1 hereto is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, regardless of any general incorporation language in such filings, unless expressly incorporated by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
Exhibit |
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Description |
99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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European Wax Center, Inc. |
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Date: |
March 15, 2022 |
By: |
/s/ GAVIN M. O'CONNOR |
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Name: Gavin M. O'Connor |
EXHIBIT 99.1
European Wax Center, Inc. Reports Record Fourth Quarter and Fiscal Year 2021 Results
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
Fiscal Year 2021
Plano, TX, March 15, 2022 - 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 $000’s) |
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Q4 2021 |
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Q4 2020 |
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Q4 2019 |
Percent Change 2021 vs 2020 |
Percent Change 2021 vs 2019 |
Total Revenue |
$ |
45,108 |
$ |
29,321 |
$ |
33,410 |
53.8% |
35.0% |
Net Income/(Loss) |
$ |
4,408 |
$ |
(4,539) |
$ |
(33,839) |
197.1% |
113.0% |
Adjusted Net Income/(Loss) |
$ |
8,461 |
$ |
(3,830) |
$ |
(8,386) |
320.9% |
200.9% |
Adjusted EBITDA |
$ |
15,249 |
$ |
5,712 |
$ |
105 |
167.0% |
14,422.9% |
System-Wide Sales |
$ |
201,927 |
$ |
133,581 |
$ |
163,938 |
51.2% |
23.2% |
Annual Results for Fiscal 2021, 2020 and 2019
(Dollars in $000’s) |
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2021 |
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2020 |
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2019 |
Percent Change 2021 vs 2020 |
Percent Change 2021 vs 2019 |
Total Revenue |
$ |
178,678 |
$ |
103,407 |
$ |
154,197 |
72.8% |
15.9% |
Net Income/(Loss) |
$ |
3,967 |
$ |
(21,495) |
$ |
(24,396) |
118.5% |
116.3% |
Adjusted Net Income/(Loss) |
$ |
29,705 |
$ |
(17,857) |
$ |
2,923 |
266.3% |
916.2% |
Adjusted EBITDA |
$ |
64,125 |
$ |
20,001 |
$ |
34,005 |
220.6% |
88.6% |
System-Wide Sales |
$ |
796,507 |
$ |
468,764 |
$ |
687,402 |
69.9% |
15.9% |
Balance Sheet and Cash Flow
The Company ended the fourth quarter with $43.3 million in cash and cash equivalents, $180.0 million in borrowings outstanding under its term loan and no outstanding borrowings under its revolving credit facility. Net cash provided by operating activities totaled $41.3 million in fiscal 2021.
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 $440 million, expected to be comprised of $400 million of senior fixed-rate term notes and $40 million of variable funding notes.
The proceeds of the senior fixed-rate term notes are expected to be used:
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.
2
Fiscal 2022 Outlook
Total Revenue |
$198 million to $208 million |
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Adjusted Net Income |
$35 million to $39 million |
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Adjusted EBITDA |
$69 million to $72 million |
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New Center Openings, Net |
70 to 72 |
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System-Wide Sales |
$870 million to $910 million |
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Same-Store Sales Growth |
High Single Digits* |
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*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,
3
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.
4
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).
5
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share/unit and per share/unit amounts)
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December 25, |
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December 26, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
43,301 |
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$ |
36,720 |
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Accounts receivable, net |
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6,656 |
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5,070 |
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Inventory, net |
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19,423 |
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10,280 |
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Prepaid expenses and other current assets |
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5,927 |
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4,574 |
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Advances to related parties |
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— |
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689 |
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Total current assets |
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75,307 |
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57,333 |
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Property and equipment, net |
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3,863 |
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5,039 |
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Intangible assets, net |
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201,995 |
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213,267 |
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Goodwill |
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328,551 |
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328,551 |
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Other non-current assets |
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3,723 |
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2,710 |
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Total assets |
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$ |
613,439 |
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$ |
606,900 |
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LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS'/MEMBERS’ EQUITY |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ |
23,155 |
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$ |
13,489 |
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Long-term debt, current portion |
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5,625 |
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2,428 |
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Deferred revenue, current portion |
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3,004 |
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2,351 |
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Other current liabilities |
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182 |
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181 |
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Total current liabilities |
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31,966 |
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18,449 |
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Long-term debt, net |
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172,607 |
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262,975 |
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Tax receivable agreement liability |
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59,167 |
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— |
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Deferred revenue, net of current portion |
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6,787 |
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6,528 |
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Other long-term liabilities |
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1,671 |
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925 |
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Total liabilities |
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272,198 |
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288,877 |
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Commitments and contingencies |
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Mezzanine equity: |
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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) |
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— |
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89,240 |
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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 $26,670 as of December 26, 2020) |
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— |
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24,909 |
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Members’ equity: |
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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) |
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— |
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265,791 |
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Class B Unit (none and 1 Class B Unit authorized, issued and outstanding as of December 25, 2021 and December 26, 2020, respectively) |
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— |
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— |
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Class C Units (none and 1,000 Class C Units authorized, issued and outstanding as of December 25, 2021 and December 26, 2020, respectively) |
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— |
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— |
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Members’ deficit: |
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— |
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(61,390 |
) |
Stockholders’ equity: |
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Preferred stock ($0.00001 par value, 100,000,000 shares authorized, none issued and outstanding as of December 25, 2021.) |
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— |
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— |
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Class A common stock ($0.00001 par value, 600,000,000 shares authorized, 36,932,423 shares issued and outstanding as of December 25, 2021) |
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0 |
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— |
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Class B common stock ($0.00001 par value, 60,000,000 shares authorized, 26,700,477 shares issued and outstanding as of December 25, 2021) |
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0 |
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— |
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Additional paid-in capital |
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182,919 |
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— |
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Accumulated deficit |
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(3,487 |
) |
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— |
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Accumulated other comprehensive loss |
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(45 |
) |
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(527 |
) |
Total stockholders' equity attributable to European Wax Center, Inc. |
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179,387 |
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— |
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Noncontrolling interests |
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161,854 |
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— |
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Total stockholders' equity/member's equity |
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341,241 |
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318,023 |
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Total liabilities, mezzanine equity and stockholders'/member's equity |
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$ |
613,439 |
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$ |
606,900 |
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6
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except unit and per unit amounts)
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For the Thirteen Weeks Ended |
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For the Years Ended |
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December 25, 2021 |
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December 26, 2020 |
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December 28, 2019 |
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December 25, 2021 |
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December 26, 2020 |
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December 28, 2019 |
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REVENUE |
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Product sales |
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$ |
24,988 |
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$ |
14,712 |
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$ |
18,337 |
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$ |
99,740 |
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$ |
56,977 |
|
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$ |
83,620 |
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Royalty fees |
|
|
10,827 |
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|
|
7,536 |
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|
|
7,427 |
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|
|
43,648 |
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25,674 |
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|
|
36,737 |
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Marketing fees |
|
|
6,284 |
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|
|
4,317 |
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|
|
5,280 |
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|
|
24,610 |
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|
|
13,465 |
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|
|
21,972 |
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Other revenue |
|
|
3,009 |
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|
|
2,756 |
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|
|
2,366 |
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|
|
10,680 |
|
|
|
7,291 |
|
|
|
11,868 |
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Total revenue |
|
|
45,108 |
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|
|
29,321 |
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|
|
33,410 |
|
|
|
178,678 |
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|
|
103,407 |
|
|
|
154,197 |
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OPERATING EXPENSES |
|
|
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|
|
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||||||
Cost of revenue |
|
|
12,545 |
|
|
|
7,691 |
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|
|
8,898 |
|
|
|
46,841 |
|
|
|
35,508 |
|
|
|
40,898 |
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Selling, general and administrative |
|
|
16,144 |
|
|
|
12,981 |
|
|
|
21,943 |
|
|
|
61,812 |
|
|
|
38,997 |
|
|
|
64,967 |
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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 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
||||||||||||||||||||
7
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 |
|
|
|
|
|
|
|
|
|
|||
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 |
|
|
$ |
— |
|
|
$ |
— |
|
8
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.
9
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
10