10-Q
2052-03-31P1Y--12-310001856236false2027-03-31Q30001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2021-06-272021-09-250001856236srt:SubsidiariesMember2022-09-240001856236ewcz:MarketingMembersrt:SubsidiariesMember2022-06-262022-09-240001856236us-gaap:ParentMembersrt:SubsidiariesMember2021-06-272021-09-250001856236ewcz:MarketingMembersrt:SubsidiariesMember2020-12-272021-09-250001856236us-gaap:RoyaltyMembersrt:SubsidiariesMember2021-06-272021-09-250001856236ewcz:ClassBUnitsMember2022-06-262022-09-240001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2022-03-272022-06-250001856236ewcz:ClassAUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-260001856236us-gaap:DesignatedAsHedgingInstrumentMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2020-12-272021-09-250001856236ewcz:TimeBasedUnitsMember2022-09-240001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateCapMemberus-gaap:CashFlowHedgingMembersrt:SubsidiariesMember2021-12-250001856236srt:SubsidiariesMemberus-gaap:FranchiseMember2022-09-240001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2021-06-272021-09-250001856236srt:SubsidiariesMemberus-gaap:FairValueInputsLevel3Member2022-09-240001856236ewcz:ClassA2NotesMember2022-04-060001856236us-gaap:CommonClassBMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2021-06-272021-09-250001856236us-gaap:OtherNoncurrentAssetsMemberewcz:VariableFundingNotesMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:FranchiseMember2021-12-250001856236ewcz:ClassBUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-260001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2021-03-270001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMemberus-gaap:CommonClassAMember2022-03-272022-06-250001856236us-gaap:RestrictedStockUnitsRSUMemberewcz:ClassAUnitsMember2022-06-262022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassAFoundersUnitsMember2021-03-270001856236us-gaap:RoyaltyMembersrt:SubsidiariesMember2021-12-262022-09-240001856236ewcz:ClassBUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2020-12-260001856236srt:SubsidiariesMember2022-03-272022-06-250001856236us-gaap:ServiceMembersrt:SubsidiariesMember2022-09-240001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2021-06-260001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassDUnitsMember2021-06-260001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2021-09-250001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2022-03-260001856236ewcz:MarketingMembersrt:SubsidiariesMember2021-06-272021-09-250001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMemberewcz:ClassCUnitsMember2021-06-272021-09-250001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2021-09-250001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassDUnitsMember2021-03-2700018562362022-06-250001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2021-06-272021-09-250001856236ewcz:VariableFundingNotesMember2022-04-0600018562362021-09-250001856236srt:SubsidiariesMemberus-gaap:CommonClassBMember2021-12-250001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2020-12-272021-09-250001856236us-gaap:DesignatedAsHedgingInstrumentMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2021-12-262022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassAFoundersUnitsMember2020-12-272021-03-270001856236srt:SubsidiariesMemberus-gaap:CommonClassBMember2022-06-262022-09-240001856236us-gaap:ParentMembersrt:SubsidiariesMember2020-12-272021-09-250001856236srt:SubsidiariesMember2021-12-2500018562362020-12-262021-09-250001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMemberewcz:ClassCUnitsMember2020-12-260001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2022-03-260001856236us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2021-12-262022-09-240001856236us-gaap:RestrictedStockUnitsRSUMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2020-12-272021-09-250001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMember2020-12-272021-03-270001856236us-gaap:FairValueInputsLevel2Membersrt:SubsidiariesMember2021-12-250001856236srt:SubsidiariesMember2021-06-2600018562362021-12-250001856236srt:SubsidiariesMemberewcz:ShareBasedPaymentArrangementOptionMember2021-08-042021-09-250001856236us-gaap:EmployeeStockMemberus-gaap:CommonClassAMember2021-08-042021-09-250001856236us-gaap:InterestRateCapMember2021-12-262022-09-240001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMemberewcz:ClassCUnitsMember2021-03-270001856236us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:CommercialPaperMember2022-04-062022-04-060001856236ewcz:ClassAUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2020-12-272021-03-270001856236srt:SubsidiariesMember2021-03-270001856236srt:ScenarioPreviouslyReportedMembersrt:SubsidiariesMember2021-06-272021-09-250001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassAFoundersUnitsMember2021-03-282021-06-260001856236us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2022-06-262022-09-240001856236us-gaap:CommonClassAMember2021-12-262022-09-240001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-260001856236us-gaap:CommonClassBMember2022-05-242022-05-240001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMemberus-gaap:CommonClassAMember2022-03-272022-06-2500018562362022-04-110001856236ewcz:TimeBasedUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-12-262022-09-240001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-03-282021-06-260001856236us-gaap:DesignatedAsHedgingInstrumentMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2022-06-262022-09-240001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2021-12-262022-03-260001856236us-gaap:AccountingStandardsUpdate201602Member2021-12-260001856236srt:SubsidiariesMemberus-gaap:ProductMember2020-12-272021-09-250001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2021-12-250001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2022-06-250001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2021-06-272021-09-250001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2021-12-262022-03-260001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2020-12-2600018562362021-08-042021-09-250001856236srt:SubsidiariesMember2020-12-2600018562362021-06-272021-09-250001856236ewcz:ClassA2NotesMembersrt:SubsidiariesMember2021-12-250001856236us-gaap:ParentMember2022-09-240001856236ewcz:ClassBUnitsMember2021-12-262022-09-240001856236srt:SubsidiariesMemberus-gaap:FairValueInputsLevel3Member2021-12-250001856236srt:MaximumMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonClassBMember2022-06-250001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2021-12-262022-03-260001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassDUnitsMember2021-06-272021-09-2500018562362022-09-240001856236srt:SubsidiariesMemberewcz:OtherRevenueMember2021-12-262022-09-240001856236ewcz:ClassBUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-03-270001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2021-09-250001856236srt:SubsidiariesMember2021-08-042021-08-040001856236srt:SubsidiariesMemberus-gaap:CommonClassBMember2022-09-240001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:ProductMember2021-12-262022-09-240001856236srt:SubsidiariesMember2018-12-310001856236srt:SubsidiariesMemberewcz:OtherRevenueMember2020-12-272021-09-250001856236srt:ScenarioPreviouslyReportedMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-272021-09-250001856236us-gaap:CommonClassAMember2022-11-020001856236us-gaap:FairValueInputsLevel1Membersrt:SubsidiariesMember2022-09-240001856236ewcz:TwoThousandTwentySixTermLoanMembersrt:SubsidiariesMember2022-09-240001856236ewcz:ClassA2NotesMemberewcz:LegalMaturityMember2021-12-262022-09-240001856236srt:SubsidiariesMemberewcz:ShareBasedPaymentArrangementOptionMember2021-12-262022-09-240001856236ewcz:ClassA2NotesMember2022-04-062022-04-060001856236us-gaap:FairValueInputsLevel1Membersrt:SubsidiariesMember2021-12-250001856236ewcz:ClassASharesMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-09-250001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2021-12-262022-03-260001856236us-gaap:CommonClassBMember2022-11-010001856236srt:SubsidiariesMemberus-gaap:CommonClassBMember2021-12-262022-03-260001856236srt:SubsidiariesMemberewcz:ClassBSharesMemberus-gaap:MemberUnitsMember2021-06-272021-09-250001856236srt:SubsidiariesMemberewcz:OtherRevenueMember2022-06-262022-09-240001856236srt:SubsidiariesMemberewcz:OtherRevenueMember2021-06-272021-09-250001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2021-12-250001856236srt:SubsidiariesMember2020-12-272021-09-250001856236us-gaap:ParentMembersrt:SubsidiariesMember2021-12-262022-09-240001856236ewcz:ClassA2NotesMembersrt:SubsidiariesMember2022-09-240001856236ewcz:ClassAUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-272021-09-250001856236ewcz:VariableFundingNotesMembersrt:ScenarioForecastMember2025-03-012025-03-310001856236srt:SubsidiariesMemberewcz:ClassAFoundersUnitsMemberus-gaap:CommonStockMember2021-06-272021-09-250001856236srt:SubsidiariesMembersrt:ScenarioPreviouslyReportedMemberewcz:ClassAFoundersUnitsMemberus-gaap:CommonStockMember2021-06-272021-09-2500018562362021-12-262022-09-240001856236ewcz:AdvanceFundingFacilityMember2022-09-240001856236us-gaap:CommonClassBMember2021-12-262022-09-2400018562362022-03-260001856236srt:SubsidiariesMember2021-06-272021-09-250001856236srt:SubsidiariesMemberus-gaap:CommonClassBMember2022-03-272022-06-250001856236srt:SubsidiariesMemberus-gaap:CommonClassBMember2022-03-260001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2021-12-262022-09-240001856236ewcz:ClassBUnitsMember2021-08-042021-09-250001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:ScenarioPreviouslyReportedMembersrt:SubsidiariesMember2021-06-272021-09-250001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2022-03-260001856236us-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMember2018-12-310001856236srt:SubsidiariesMemberus-gaap:ProductMember2022-06-262022-09-240001856236ewcz:ClassA2NotesAndVariableFundingNotesMember2022-09-240001856236us-gaap:RestrictedStockUnitsRSUMemberewcz:ClassAUnitsMember2021-08-042021-09-250001856236us-gaap:ParentMembersrt:SubsidiariesMember2022-06-262022-09-240001856236us-gaap:FairValueInputsLevel2Membersrt:SubsidiariesMember2022-09-240001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2020-12-272021-03-270001856236us-gaap:NoncontrollingInterestMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2022-06-262022-09-240001856236us-gaap:CommonClassAMember2022-04-112022-04-110001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2022-06-262022-09-240001856236ewcz:ClassA2NotesMember2022-09-240001856236ewcz:ClassA2NotesMember2021-12-262022-09-240001856236ewcz:ClassASharesMemberewcz:SecondaryPublicOfferingMember2022-05-240001856236srt:SubsidiariesMemberewcz:ClassAFoundersUnitsMemberus-gaap:CommonStockMember2020-12-260001856236srt:SubsidiariesMemberewcz:ClassBSharesMemberus-gaap:MemberUnitsMember2021-09-250001856236us-gaap:EmployeeStockMemberus-gaap:CommonClassAMember2022-06-262022-09-240001856236ewcz:SecondaryPublicOfferingMemberus-gaap:CommonClassAMember2022-05-240001856236us-gaap:ShareBasedPaymentArrangementEmployeeMemberewcz:The2021IncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2021-12-262022-09-240001856236srt:SubsidiariesMember2021-12-262022-09-240001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2022-03-272022-06-250001856236ewcz:SecondaryPublicOfferingMemberus-gaap:CommonClassAMember2022-05-242022-05-240001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2021-12-2500018562362020-12-272021-09-250001856236ewcz:ClassBUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-272021-09-250001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2021-06-272021-09-250001856236us-gaap:RestrictedStockUnitsRSUMemberus-gaap:CommonClassAMember2021-08-042021-09-250001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2022-09-240001856236srt:SubsidiariesMemberewcz:ClassAUnitsMember2021-08-042021-09-250001856236us-gaap:RestrictedStockUnitsRSUMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2021-06-272021-09-250001856236ewcz:VariableFundingNotesMember2022-09-240001856236ewcz:ClassAUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-03-270001856236ewcz:TwoThousandTwentySixTermLoanMembersrt:SubsidiariesMember2021-12-250001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2021-12-262022-03-260001856236srt:MinimumMember2022-09-240001856236us-gaap:RestrictedStockUnitsRSUMemberewcz:ClassAUnitsMember2021-12-262022-09-240001856236ewcz:IndentureMemberewcz:ClassA2NotesMember2021-12-262022-09-240001856236srt:SubsidiariesMemberewcz:ShareBasedPaymentArrangementOptionMember2022-06-262022-09-240001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMember2020-12-260001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2021-03-282021-06-260001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-272021-09-250001856236us-gaap:CommonClassAMember2022-11-010001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMemberewcz:ClassCUnitsMember2021-06-2600018562362020-12-260001856236srt:SubsidiariesMember2021-09-250001856236us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMember2022-09-240001856236us-gaap:ServiceMembersrt:SubsidiariesMember2021-12-250001856236ewcz:TwoThousandTwentySixTermLoanMember2021-12-262022-09-240001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2022-09-240001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2022-06-262022-09-240001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2022-06-250001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2022-03-272022-06-250001856236srt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-03-270001856236srt:SubsidiariesMember2021-03-282021-06-260001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2020-12-272021-09-250001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2021-12-2500018562362022-06-262022-09-240001856236ewcz:TimeBasedUnitsMemberus-gaap:SellingGeneralAndAdministrativeExpensesMember2022-06-262022-09-240001856236srt:SubsidiariesMemberus-gaap:ProductMember2021-06-272021-09-250001856236srt:SubsidiariesMember2022-06-262022-09-240001856236ewcz:EWCVenturesLLCAndSubsidiariesMember2021-12-262022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassDUnitsMember2020-12-260001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2021-09-250001856236us-gaap:LondonInterbankOfferedRateLIBORMembersrt:SubsidiariesMemberus-gaap:InterestRateFloorMember2018-12-310001856236ewcz:ClassA2NotesMemberewcz:AnticipatedRepaymentMember2021-12-262022-09-240001856236us-gaap:AdditionalPaidInCapitalMembersrt:SubsidiariesMember2022-06-250001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2021-12-250001856236us-gaap:DesignatedAsHedgingInstrumentMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2021-06-272021-09-250001856236srt:SubsidiariesMemberewcz:ClassAUnitsMember2022-06-262022-09-240001856236us-gaap:CommonClassBMember2021-09-250001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2022-03-260001856236ewcz:ClassASharesMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2021-06-272021-09-250001856236us-gaap:RoyaltyMembersrt:SubsidiariesMember2022-06-262022-09-240001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2021-12-262022-09-240001856236srt:SubsidiariesMemberewcz:ClassAUnitsMember2021-12-262022-09-240001856236us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMember2021-12-250001856236us-gaap:AccumulatedOtherComprehensiveIncomeMembersrt:SubsidiariesMember2022-06-250001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMemberus-gaap:OtherComprehensiveIncomeMember2022-06-262022-09-240001856236us-gaap:RoyaltyMembersrt:SubsidiariesMember2020-12-272021-09-2500018562362022-04-112022-04-110001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2022-03-260001856236ewcz:ClassAUnitsMembersrt:SubsidiariesMemberus-gaap:MemberUnitsMember2020-12-260001856236ewcz:MarketingMembersrt:SubsidiariesMember2021-12-262022-09-240001856236srt:SubsidiariesMember2020-12-272021-03-270001856236srt:SubsidiariesMemberus-gaap:NoncontrollingInterestMember2022-06-262022-09-240001856236srt:SubsidiariesMember2021-12-262022-03-260001856236srt:SubsidiariesMember2022-09-252022-09-240001856236srt:SubsidiariesMemberus-gaap:CommonClassAMember2022-06-250001856236us-gaap:RetainedEarningsMembersrt:SubsidiariesMember2022-03-272022-06-250001856236srt:SubsidiariesMemberus-gaap:CommonStockMemberewcz:ClassAFoundersUnitsMember2021-06-260001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateCapMembersrt:SubsidiariesMemberus-gaap:OtherCurrentLiabilitiesMember2022-09-240001856236us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:InterestRateCapMemberus-gaap:CashFlowHedgingMembersrt:SubsidiariesMemberus-gaap:OtherCurrentLiabilitiesMember2021-12-25iso4217:USDxbrli:sharesxbrli:purexbrli:sharesewcz:OperatingSegmentiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 24, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-40714

 

EUROPEAN WAX CENTER, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

86-3150064

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

5830 Granite Parkway, 3rd Floor

Plano, Texas

75024

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (469) 264-8123

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.00001 per share

 

EWCZ

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of November 1, 2022, the registrant had 45,265,461 and 18,286,587 shares of Class A and Class B common stock, respectively, $0.00001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

 

 

 

Condensed Consolidated Balance Sheets as of September 24, 2022 and December 25, 2021

1

 

Condensed Consolidated Statements of Operations for the 13 and 39 weeks ended September 24, 2022, and September 25, 2021

2

 

Condensed Consolidated Statements of Comprehensive Income for the 13 and 39 weeks ended September 24, 2022 and September 25, 2021

3

 

Condensed Consolidated Statements of Cash Flows for the 39 weeks ended September 24, 2022, and September 25, 2021

4

 

Condensed Consolidated Statements of Mezzanine Equity and Stockholders'/Members’ Equity for the 13 and 39 weeks ended September 24, 2022, and September 25, 2021

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.

Controls and Procedures

34

 

 

 

PART II.

OTHER INFORMATION

36

 

 

 

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

38

Signatures

39

 

i


 

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements

EUROPEAN WAX CENTER, INC. and Subsidiaries

Condensed Consolidated Balance Sheets

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

 

September 24,
2022

 

 

December 25,
2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

41,593

 

 

$

43,301

 

Restricted cash

 

 

6,557

 

 

 

 

Accounts receivable, net

 

 

6,305

 

 

 

6,656

 

Inventory

 

 

23,087

 

 

 

19,423

 

Prepaid expenses and other current assets

 

 

6,867

 

 

 

5,927

 

Total current assets

 

 

84,409

 

 

 

75,307

 

Property and equipment, net

 

 

2,970

 

 

 

3,863

 

Operating lease right-of-use assets

 

 

5,258

 

 

 

 

Intangible assets, net

 

 

187,769

 

 

 

201,995

 

Goodwill

 

 

328,551

 

 

 

328,551

 

Other non-current assets

 

 

4,793

 

 

 

3,723

 

Total assets

 

$

613,750

 

 

$

613,439

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

15,993

 

 

$

23,155

 

Long-term debt, current portion

 

 

4,000

 

 

 

5,625

 

Tax receivable agreement liability, current portion

 

 

885

 

 

 

 

Deferred revenue, current portion

 

 

3,381

 

 

 

3,004

 

Operating lease liabilities, current portion

 

 

1,399

 

 

 

 

Other current liabilities

 

 

 

 

 

182

 

Total current liabilities

 

 

25,658

 

 

 

31,966

 

Long-term debt, net

 

 

370,657

 

 

 

172,607

 

Tax receivable agreement liability

 

 

65,384

 

 

 

59,167

 

Deferred revenue, net of current portion

 

 

6,699

 

 

 

6,787

 

Operating lease liabilities, net of current portion

 

 

4,524

 

 

 

 

Other long-term liabilities

 

 

4,707

 

 

 

1,671

 

Total liabilities

 

 

477,629

 

 

 

272,198

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock ($0.00001 par value, 100,000,000 shares authorized, none issued and outstanding as of September 24, 2022 and December 25, 2021.)

 

 

 

 

 

 

Class A common stock ($0.00001 par value, 600,000,000 shares authorized, 41,040,835 and 36,932,423 shares issued and outstanding as of September 24, 2022 and December 25, 2021, respectively)

 

 

 

 

 

 

Class B common stock ($0.00001 par value, 60,000,000 shares authorized, 22,486,587 and 26,700,477 shares issued and outstanding as of September 24, 2022 and December 25, 2021, respectively)

 

 

 

 

 

 

Additional paid-in capital

 

 

189,909

 

 

 

182,919

 

Accumulated deficit

 

 

(119,339

)

 

 

(3,487

)

Accumulated other comprehensive loss

 

 

 

 

 

(45

)

       Total stockholders' equity attributable to European Wax Center, Inc.

 

 

70,570

 

 

 

179,387

 

Noncontrolling interests

 

 

65,551

 

 

 

161,854

 

Total stockholders' equity

 

 

136,121

 

 

 

341,241

 

Total liabilities and stockholders' equity

 

$

613,750

 

 

$

613,439

 

The accompanying notes are an integral part of these condensed consolidated financial statements

1


 

EUROPEAN WAX CENTER, INC. and Subsidiaries

CoNDENSED Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

 

September 24, 2022

 

 

September 25, 2021

 

 

September 24, 2022

 

 

September 25, 2021

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

31,565

 

 

$

27,611

 

 

$

86,844

 

 

$

74,752

 

Royalty fees

 

 

13,086

 

 

 

11,941

 

 

 

37,240

 

 

 

32,821

 

Marketing fees

 

 

7,339

 

 

 

6,760

 

 

 

20,964

 

 

 

18,326

 

Other revenue

 

 

3,054

 

 

 

2,699

 

 

 

8,780

 

 

 

7,671

 

Total revenue

 

 

55,044

 

 

 

49,011

 

 

 

153,828

 

 

 

133,570

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

16,313

 

 

 

12,825

 

 

 

43,168

 

 

 

34,296

 

Selling, general and administrative

 

 

13,662

 

 

 

22,725

 

 

 

44,364

 

 

 

46,003

 

Advertising

 

 

8,398

 

 

 

8,368

 

 

 

23,003

 

 

 

19,767

 

Depreciation and amortization

 

 

5,059

 

 

 

4,850

 

 

 

15,173

 

 

 

15,259

 

Total operating expenses

 

 

43,432

 

 

 

48,768

 

 

 

125,708

 

 

 

115,325

 

Income from operations

 

 

11,612

 

 

 

243

 

 

 

28,120

 

 

 

18,245

 

Interest expense

 

 

6,804

 

 

 

9,515

 

 

 

16,391

 

 

 

18,686

 

Other expense

 

 

(516

)

 

 

 

 

 

302

 

 

 

 

Income (loss) before income taxes

 

 

5,324

 

 

 

(9,272

)

 

 

11,427

 

 

 

(441

)

Income tax expense(1)

 

 

37

 

 

 

 

 

 

83

 

 

 

 

NET INCOME (LOSS)

 

$

5,287

 

 

$

(9,272

)

 

$

11,344

 

 

$

(441

)

Less: net income attributable to EWC Ventures, LLC prior to the Reorganization Transactions

 

 

 

 

 

1,496

 

 

 

 

 

 

10,327

 

Less: net income (loss) attributable to noncontrolling interests

 

 

1,765

 

 

 

(5,237

)

 

 

4,969

 

 

 

(5,237

)

NET INCOME (LOSS) ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC.

 

$

3,522

 

 

$

(5,531

)

 

$

6,375

 

 

$

(5,531

)

Net income (loss) per share (2)

 

 

 

 

 

 

 

 

 

 

 

 

Basic - Class A Common Stock

 

$

0.09

 

 

$

(0.18

)

 

$

0.17

 

 

$

(0.18

)

Diluted - Class A Common Stock

 

$

0.08

 

 

$

(0.18

)

 

$

0.17

 

 

$

(0.18

)

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic - Class A Common Stock

 

 

39,849,170

 

 

 

31,370,186

 

 

 

38,238,114

 

 

 

31,370,186

 

Diluted - Class A Common Stock

 

 

62,849,257

 

 

 

31,370,186

 

 

 

38,426,968

 

 

 

31,370,186

 

(1) Income tax expense for the period of August 4, 2021 through September 25, 2021, which is the period following the IPO and the related Reorganization Transactions is zero as we incurred a pre-tax loss for the period and we have recorded a full valuation allowance against our deferred tax assets. See Note 12 for more information.
(2) Basic and diluted net loss per share of Class A common stock for fiscal year 2021 is for the period of August 4, 2021 through September 25, 2021, the period after the Reorganization Transactions. See Note 14 for the calculation of the numbers of shares used in computation of net income (loss) per share of Class A common stock and the basis for computation of net income (loss) per share.

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

EUROPEAN WAX CENTER, INC. and Subsidiaries

CoNDENSED Consolidated Statements of Comprehensive Income (LOSS)

(Amounts in thousands)

(Unaudited)

 

 

 

 

For the Thirteen Weeks Ended

 

 

For the Thirty-Nine Weeks Ended

 

 

 

September 24, 2022

 

 

September 25, 2021

 

 

September 24, 2022

 

 

September 25, 2021

 

NET INCOME (LOSS)

 

$

5,287

 

 

$

(9,272

)

 

$

11,344

 

 

$

(441

)

Items included in other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on cash flow hedge

 

 

 

 

 

(128

)

 

 

 

 

 

111

 

TOTAL COMPREHENSIVE INCOME (LOSS)

 

$

5,287

 

 

$

(9,400

)

 

$

11,344

 

 

$

(330

)

Less: total comprehensive income attributable to EWC Ventures, LLC prior to the Reorganization Transactions

 

 

 

 

 

1,339

 

 

 

 

 

 

10,409

 

Less: total comprehensive loss attributable to non-controlling interests

 

 

1,765

 

 

 

(5,223

)

 

 

4,969

 

 

 

(5,223

)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC.

 

$

3,522

 

 

$

(5,516

)

 

$

6,375

 

 

$

(5,516

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


 

EUROPEAN WAX CENTER, INC. and Subsidiaries

CONDENSED Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

 

 

 

For the Thirty-Nine Weeks Ended

 

 

 

September 24, 2022

 

 

September 25, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

11,344

 

 

$

(441

)

Adjustments to reconcile net income (loss) to net cash provided by
   operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

15,173

 

 

 

15,259

 

Amortization of deferred financing costs

 

 

2,483

 

 

 

924

 

Gain on interest rate cap

 

 

(196

)

 

 

 

Provision for inventory obsolescence

 

 

(26

)

 

 

 

Loss on debt extinguishment

 

 

1,957

 

 

 

6,313

 

Provision for bad debts

 

 

38

 

 

 

616

 

Remeasurement of tax receivable agreement liability

 

 

302

 

 

 

 

Loss on disposal of property and equipment

 

 

5

 

 

 

335

 

Equity compensation

 

 

7,452

 

 

 

7,952

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(137

)

 

 

(3,578

)

Inventory

 

 

(3,638

)

 

 

(8,665

)

Prepaid expenses and other assets

 

 

1,101

 

 

 

(2,121

)

Accounts payable and accrued liabilities

 

 

(7,623

)

 

 

4,665

 

Deferred revenue

 

 

289

 

 

 

542

 

Other long-term liabilities

 

 

(575

)

 

 

428

 

Net cash provided by operating activities

 

 

27,949

 

 

 

22,229

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(143

)

 

 

(364

)

Reacquisition of area representative rights

 

 

 

 

 

(7,644

)

Net cash used in investing activities

 

 

(143

)

 

 

(8,008

)

Cash flows from financing activities:

 

 

 

 

 

 

Deferred loan costs

 

 

(12,419

)

 

 

(1,294

)

Payments on line of credit

 

 

 

 

 

(30,000

)

Proceeds from long-term debt

 

 

384,328

 

 

 

179,370

 

Principal payments on long-term debt

 

 

(181,000

)

 

 

(240,553

)

Payments of debt extinguishment costs

 

 

(77

)

 

 

(2,446

)

Distributions to EWC Ventures LLC members

 

 

(7,280

)

 

 

(5,198

)

Proceeds from initial public offering of Class A common stock, net of underwriting discounts and offering expenses

 

 

 

 

 

145,953

 

Payment of Class A common stock offering costs

 

 

(870

)

 

 

 

Repurchase of Class A Units

 

 

 

 

 

(942

)

Repurchase of Class B common stock and EWC Ventures common units

 

 

 

 

 

(70,465

)

Taxes on vested restricted stock units paid by withholding shares

 

 

(525

)

 

 

 

Dividends to holders of Class A common stock

 

 

(122,227

)

 

 

 

Dividend equivalents to holders of EWC Ventures units

 

 

(82,887

)

 

 

 

Net cash used in financing activities

 

 

(22,957

)

 

 

(25,575

)

Net increase (decrease) in cash

 

 

4,849

 

 

 

(11,354

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

43,301

 

 

 

36,720

 

Cash, cash equivalents and restricted cash, end of period

 

$

48,150

 

 

$

25,366

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

12,886

 

 

$

11,763

 

Cash paid for income taxes

 

$

96

 

 

$

 

Non-cash investing activities:

 

 

 

 

 

 

Property purchases included in accounts payable and accrued liabilities

 

$

5

 

 

$

96

 

Non-cash financing activities:

 

 

 

 

 

 

Non-cash equity distributions

 

$

 

 

$

689

 

Initial public offering expenses in accounts payable and accrued liabilities

 

$

 

 

$

483

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

EUROPEAN WAX CENTER, INC. and Subsidiaries

CONDENSED Consolidated Statements of Mezzanine Equity and STOCKHOLDERS'/Members’ Equity

(Amounts in thousands, except share/unit and per share/unit amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

other

 

 

 

 

 

 

Class A Common Stock

 

Class B Common Stock

 

paid-in

 

Accumulated