UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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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 9, 2023, European Wax Center, Inc. issued the press release attached hereto as Exhibit 99.1 reporting its financial results for the year ended 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 9, 2023, the Company announced the appointment of Stacie Shirley, age 54, as Chief Financial Officer (“CFO”) of the Company effective March 27, 2023. In addition, the Company announced the promotion of David Willis as President of the Company, effective March 27, 2023. Mr. Willis will also retain his role as Chief Operating Officer. The Company’s board of directors (the “Board of Directors”) approved such actions on March 6, 2023.
Most recently, Ms. Shirley was the Chief Financial Officer of Keller Williams, where she led the finance, accounting, treasury, budgeting and forecasting, internal audit and M&A functions. From January 2016 through May 2021, she served as the Executive Vice President, Chief Financial Officer and Treasurer of Tuesday Morning Corporation. Ms. Shirley held various roles at the Neiman Marcus Group from 2002 to 2015, including Senior Vice President, Finance and Treasurer and Vice President, Finance. She received her B.B.A. in Accounting from Stephen F. Austin State University and is a certified public accountant.
The Board of Directors approved the grant of an equity award to Ms. Shirley in connection with her appointment as CFO, with a grant date fair value of $600,000. The award will be comprised of restricted stock units (“RSUs”) and non-qualified stock options under the Company’s 2021 Omnibus Incentive Plan. The grant of RSUs and options will be made on Ms. Shirley’s start date, March 27, 2023. The RSUs will vest in equal installments on each of the first three anniversaries beginning on the date of grant, and the options will be exercisable on the third anniversary beginning on the date of grant, with an expiration date of the tenth anniversary from the date of grant.
Ms. Shirley does not have any family relationships with any director, officer or person nominated or chosen by the Company to become a director or executive officer of the Company. There is no arrangement or understanding between Ms. Shirley and any other person pursuant to which she was appointed CFO of the Company. There are no transactions involving Ms. Shirley requiring disclosure under Item 404(a) of Regulation S-K.
Mr. Willis has been serving as the Company’s Chief Operating Officer since September 2019 and CFO since January 2022. He also served as the Company’s CFO from July 2016 until December 2020.
Mr. Willis does not have any family relationships with any director, officer or person nominated or chosen by the Company to become a director or executive officer of the Company. There is no arrangement or understanding between Mr. Willis and any other person pursuant to which he was appointed President of the Company. There are no transactions involving Mr. Willis requiring disclosure under Item 404(a) of Regulation S-K.
Item 7.01 Regulation FD.
The Company issued a press release in connection with the announcement of the leadership updates described above, a copy of which is furnished herewith as Exhibit 99.2.
All of the information included in this Item 7.01 the accompanying exhibit 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 Number |
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Description |
99.1 |
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99.2 |
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Press release announcing leadership updates issued by European Wax Center, Inc. on March 9, 2023. |
104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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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 9, 2023 |
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By: |
/s/ GAVIN M. O'CONNOR |
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Name: Gavin M. O'Connor |
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Title: Chief Legal Officer, Chief Human Resources Officer and Corporate Secretary |
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EXHIBIT 99.1
European Wax Center, Inc. Reports Record Fourth Quarter and Fiscal Year 2022 Results
Issues fiscal 2023 outlook, including 10% unit growth
Fiscal Year 2022 versus 2021
Plano, TX, March 9, 2023 - 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 14 and 53 weeks ended December 31, 2022.
David Berg, Chief Executive Officer of European Wax Center, Inc. stated: “We delivered record full year results in line with the guidance we provided at the beginning of 2022, demonstrating the stability of the European Wax Center model in a dynamic environment. We grew net new centers by over 10% and ended the year with our deepest pipeline ever, showcasing that our attractive unit economics generate sustained franchisee demand. In addition, we continue to drive strong Wax Pass sales to guests, which underscore the commitment that our guests have to their waxing routines, engender brand loyalty and generate predictable visit frequency to our centers. Our strong fourth quarter and full year results continue to validate European Wax Center’s position as the leader in out-of-home waxing.
Mr. Berg continued, “Looking ahead to fiscal 2023, we are well-positioned to deliver another year of growth, driven by new center openings and in-center sales. Quarter-to-date transaction trends remain consistent with the past two quarters, and our 2023 top line outlook assumes continued stability supported by the unwavering loyalty of our recurring Wax Pass guests. We look forward to extending our leadership position as the category killer and creator as we continue taking share in this growing, highly fragmented category.”
Results for the Fourth Quarter of Fiscal 2022 versus Fiscal 2021
Annual Results for Fiscal 2022 versus Fiscal 2021
Balance Sheet and Cash Flow
The Company ended the year with $44.2 million in cash and cash equivalents, $6.6 million in restricted cash, $398.0 million in borrowings outstanding under its senior secured notes and no outstanding borrowings under its revolving credit facility. Net cash provided by operating activities totaled $44.4 million in fiscal 2022.
Fiscal 2023 Outlook(1)
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Fiscal 2023 Outlook |
New Center Openings, Net |
95 to 100 |
System-Wide Sales |
$965 million to $990 million |
Total Revenue |
$222 million to $229 million |
Same-Store Sales |
Mid-Single Digits |
Adjusted Net Income(2) |
$22 million to $24.5 million |
Adjusted EBITDA |
$77 million to $80 million |
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(1) Fiscal 2022 and Fiscal 2023 each include a 53rd week in the fourth quarter. The Company estimates the 53rd week contribution to the top and bottom line is worth approximately one half of an average fourth quarter week. The Company's outlook assumes no meaningful change in consumer behavior driven by inflationary pressures or the COVID-19 pandemic and no further impacts from incremental tightening in the labor market beyond what we see today.
(2) Adjusted net income outlook assumes an 18% effective tax rate for fiscal 2023.
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 fiscal 2022 results today, March 9, 2023, at 8:00 a.m. ET/7:00 a.m. CT. To access the conference call dial-in information, analysts should click here to register online at least 15 minutes before the start of the call. All other participants are asked to access the earnings webcast via https://investors.waxcenter.com. A replay of the webcast will be available two hours after the call and archived on the same web page for one year.
About European Wax Center, Inc.
European Wax Center, Inc. (NASDAQ: EWCZ) is the largest and fastest-growing franchisor and operator of out-of-home waxing services in the United States. European Wax Center locations perform more than 22 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
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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. In 2022 its network of 944 centers in 45 states generated sales of nearly $900 million. 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 2023 and its long-term targets and algorithm, including but not limited to statements under the heading “Fiscal 2023 Outlook” and statements by European Wax Center’s executive. 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 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: 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, such as the COVID-19 pandemic 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 December 25, 2021 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 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.
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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, non-cash gains and losses on remeasurement of our tax receivable agreement liability, transaction costs 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, non-cash gains and losses on remeasurement of our tax receivable agreement liability, transaction costs and other one-time expenses. Please refer to the reconciliations of non-GAAP financial measures to their GAAP equivalents located at the end of this release.
This release includes forward-looking guidance for certain non-GAAP financial measures, including Adjusted EBITDA and Adjusted net income. These measures will differ from net income (loss), determined in accordance with GAAP, in ways similar to those described in the reconciliations at the end of this release. We are not able to provide, without unreasonable effort, guidance for net income (loss), determined in accordance with GAAP, or a reconciliation of guidance for Adjusted EBITDA and Adjusted net income (loss) to the most directly comparable GAAP measure because the Company is not able to predict with reasonable certainty the amount or nature of all items that will be included in net income (loss).
Glossary of Terms for Our Key Business Metrics
System-Wide Sales. System-wide sales represent sales from same day services, retail sales and cash collected from wax passes for all centers in our network, including both franchisee-owned and corporate-owned centers. While we do not record franchised center sales as revenue, our royalty revenue is calculated based on a percentage of franchised center sales, which are 6.0% of sales, net of retail product sales, as defined in the franchise agreement. This measure allows us to better assess changes in our royalty revenue, our overall center performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales growth is driven by net new center openings as well as increases in same-store sales.
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.
4
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
(Unaudited)
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December 31, 2022 |
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December 25, 2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
44,219 |
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$ |
43,301 |
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Restricted cash |
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6,575 |
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— |
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Accounts receivable, net |
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6,932 |
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6,656 |
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Inventory, net |
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23,017 |
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19,423 |
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Prepaid expenses and other current assets |
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5,574 |
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5,927 |
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Total current assets |
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86,317 |
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75,307 |
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Property and equipment, net |
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2,747 |
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3,863 |
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Operating lease right-of-use assets |
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4,899 |
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— |
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Intangible assets, net |
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183,030 |
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201,995 |
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Goodwill |
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328,551 |
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328,551 |
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Deferred income taxes |
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106,187 |
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— |
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Other non-current assets |
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4,301 |
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3,723 |
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Total assets |
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$ |
716,032 |
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$ |
613,439 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable and accrued liabilities |
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$ |
18,547 |
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$ |
23,155 |
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Long-term debt, current portion |
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4,000 |
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5,625 |
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Tax receivable agreement liability, current portion |
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4,867 |
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— |
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Deferred revenue, current portion |
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4,084 |
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3,004 |
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Operating lease liabilities, current portion |
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1,312 |
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— |
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Other current liabilities |
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— |
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182 |
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Total current liabilities |
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32,810 |
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31,966 |
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Long-term debt, net |
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370,935 |
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172,607 |
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Tax receivable agreement liability |
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167,293 |
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59,167 |
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Deferred revenue, net of current portion |
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6,901 |
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6,787 |
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Operating lease liabilities, net of current portion |
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4,227 |
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— |
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Other long-term liabilities |
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3,562 |
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1,671 |
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Total liabilities |
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585,728 |
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272,198 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Preferred stock ($0.00001 par value, 100,000,000 shares authorized, none issued and outstanding as of December 31, 2022 and 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, 45,277,325 shares issued and 44,561,685 outstanding as of December 31, 2022, 36,932,423 shares issued and outstanding as of December 25, 2021) |
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— |
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— |
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Class B common stock ($0.00001 par value, 60,000,000 shares authorized, 18,175,652 and 26,700,477 shares issued and outstanding as of December 31, 2022 and December 25, 2021) |
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— |
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— |
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Treasury stock, at cost, 715,640 shares of Class A common stock as of December 31, 2022, none as of December 25, 2021 |
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(10,080 |
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— |
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Additional paid-in capital |
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207,517 |
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182,919 |
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Accumulated deficit |
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(118,437 |
) |
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(3,487 |
) |
Accumulated other comprehensive loss |
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— |
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(45 |
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Total stockholders' equity attributable to European Wax Center, Inc. |
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79,000 |
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179,387 |
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Noncontrolling interests |
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51,304 |
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161,854 |
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Total stockholders' equity |
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130,304 |
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341,241 |
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Total liabilities and stockholders' equity |
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$ |
716,032 |
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$ |
613,439 |
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5
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands)
(Unaudited)
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For the 14 Weeks Ended |
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For the 13 Weeks Ended |
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For the Years Ended |
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December 31, 2022 |
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December 25, 2021 |
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December 31, 2022 |
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December 25, 2021 |
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REVENUE |
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Product sales |
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$ |
30,900 |
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$ |
24,988 |
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$ |
117,745 |
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$ |
99,740 |
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Royalty fees |
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12,493 |
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10,827 |
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49,733 |
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43,648 |
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Marketing fees |
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7,077 |
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6,284 |
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28,041 |
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24,610 |
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Other revenue |
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3,053 |
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3,009 |
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11,832 |
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10,680 |
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Total revenue |
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53,523 |
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45,108 |
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207,351 |
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178,678 |
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OPERATING EXPENSES |
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Cost of revenue |
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16,059 |
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12,545 |
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59,227 |
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46,841 |
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Selling, general and administrative |
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14,593 |
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15,949 |
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58,951 |
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61,617 |
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Advertising |
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5,656 |
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5,223 |
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28,659 |
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24,990 |
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Depreciation and amortization |
|
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5,057 |
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5,074 |
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20,231 |
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20,333 |
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Loss on disposal of assets and non-cancellable contracts |
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2 |
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— |
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7 |
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|
335 |
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Total operating expenses |
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41,367 |
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38,791 |
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167,075 |
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154,116 |
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Income from operations |
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12,156 |
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6,317 |
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40,276 |
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24,562 |
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Interest expense |
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7,235 |
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|
1,600 |
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23,626 |
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20,286 |
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Other expense |
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55,926 |
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|
195 |
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56,228 |
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|
|
195 |
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Income (loss) before income taxes |
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(51,005 |
) |
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4,522 |
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(39,578 |
) |
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4,081 |
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Income tax expense (benefit) |
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(53,274 |
) |
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|
114 |
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(53,191 |
) |
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|
114 |
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NET INCOME |
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$ |
2,269 |
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$ |
4,408 |
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$ |
13,613 |
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$ |
3,967 |
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Less: net income attributable to EWC Ventures, LLC prior to the Reorganization Transactions |
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— |
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— |
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— |
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10,327 |
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Less: net income (loss) attributable to noncontrolling interests |
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1,367 |
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|
2,292 |
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|
6,336 |
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(2,945 |
) |
NET INCOME (LOSS) ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC. |
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$ |
902 |
|
|
$ |
2,116 |
|
|
$ |
7,277 |
|
|
$ |
(3,415 |
) |
6
EUROPEAN WAX CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
|
|
For the Years Ended |
|
|||||
|
|
December 31, 2022 |
|
|
December 25, 2021 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
13,613 |
|
|
$ |
3,967 |
|
Adjustments to reconcile net income (loss) to net cash provided by |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
20,231 |
|
|
|
20,333 |
|
Amortization of deferred financing costs |
|
|
3,852 |
|
|
|
1,044 |
|
Gain on interest rate cap |
|
|
(196 |
) |
|
|
— |
|
Loss on debt extinguishment |
|
|
1,957 |
|
|
|
6,313 |
|
Loss on noncancellable contracts |
|
|
— |
|
|
|
— |
|
Loss on write-down of obsolete inventory |
|
|
(66 |
) |
|
|
317 |
|
Provision for bad debts |
|
|
76 |
|
|
|
616 |
|
Loss (gain) on disposal of property and equipment |
|
|
7 |
|
|
|
335 |
|
Deferred income taxes |
|
|
(53,714 |
) |
|
|
— |
|
Remeasurement of tax receivable agreement liability |
|
|
56,228 |
|
|
|
195 |
|
Equity compensation |
|
|
9,033 |
|
|
|
11,135 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
(802 |
) |
|
|
(2,185 |
) |
Inventory |
|
|
(3,528 |
) |
|
|
(9,460 |
) |
Prepaid expenses and other assets |
|
|
3,186 |
|
|
|
(1,916 |
) |
Accounts payable and accrued liabilities |
|
|
(5,694 |
) |
|
|
8,707 |
|
Deferred revenue |
|
|
1,194 |
|
|
|
912 |
|
Other long-term liabilities |
|
|
(1,022 |
) |
|
|
1,033 |
|
Net cash provided by operating activities |
|
|
44,355 |
|
|
|
41,346 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(245 |
) |
|
|
(559 |
) |
Reacquisition of area representative rights |
|
|
— |
|
|
|
(7,644 |
) |
Net cash used in investing activities |
|
|
(245 |
) |
|
|
(8,203 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds on line of credit |
|
|
— |
|
|
|
— |
|
Payments on line of credit |
|
|
— |
|
|
|
(30,000 |
) |
Proceeds on long-term debt |
|
|
384,328 |
|
|
|
179,370 |
|
Principal payments on long-term debt |
|
|
(182,000 |
) |
|
|
(240,553 |
) |
Deferred loan costs |
|
|
(12,419 |
) |
|
|
(1,294 |
) |
Payments of debt extinguishment costs |
|
|
(77 |
) |
|
|
(2,446 |
) |
Distributions to EWC Ventures LLC members |
|
|
(8,697 |
) |
|
|
(5,270 |
) |
Contributions from EWC Ventures LLC members |
|
|
— |
|
|
|
— |
|
Proceeds from public offerings of Class A common stock, net of underwriting discounts and offering expenses |
|
|
— |
|
|
|
212,941 |
|
Payment of Class A common stock offering costs |
|
|
(870 |
) |
|
|
— |
|
Repurchase of Class A Units |
|
|
— |
|
|
|
(942 |
) |
Repurchase of Class A common stock |
|
|
(10,080 |
) |
|
|
— |
|
Repurchase of Class B common stock and EWC Ventures common units |
|
|
— |
|
|
|
(138,368 |
) |
Taxes on vested restricted stock units paid by withholding shares |
|
|
(643 |
) |
|
|
— |
|
Dividends to holders of Class A common stock |
|
|
(122,227 |
) |
|
|
— |
|
Dividend equivalents to holders of EWC Ventures units |
|
|
(83,020 |
) |
|
|
— |
|
Payments pursuant to tax receivable agreement |
|
|
(912 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(36,617 |
) |
|
|
(26,562 |
) |
Net increase in cash, cash equivalents and restricted cash |
|
|
7,493 |
|
|
|
6,581 |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
43,301 |
|
|
|
36,720 |
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
50,794 |
|
|
$ |
43,301 |
|
Supplemental cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
18,460 |
|
|
$ |
11,763 |
|
Cash paid for income taxes |
|
$ |
169 |
|
|
$ |
10 |
|
Non-cash investing activities: |
|
|
|
|
|
|
||
Property purchases included in accounts payable and accrued liabilities |
|
$ |
37 |
|
|
$ |
89 |
|
Non-cash financing activities: |
|
|
|
|
|
|
||
Non-cash equity distributions |
|
$ |
— |
|
|
$ |
689 |
|
Public offering expenses in accounts payable and accrued liabilities |
|
$ |
— |
|
|
$ |
870 |
|
7
Reconciliation of GAAP net income to Adjusted net income:
|
|
|||||||||||||||
|
|
For the 14 Weeks Ended |
|
|
For the 13 Weeks Ended |
|
|
For the Years Ended |
|
|||||||
|
|
December 31, 2022 |
|
|
December 25, 2021 |
|
|
December 31, 2022 |
|
|
December 25, 2021 |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
2,269 |
|
|
$ |
4,408 |
|
|
$ |
13,613 |
|
|
$ |
3,967 |
|
Share-based compensation(1) |
|
|
1,580 |
|
|
|
3,183 |
|
|
|
9,033 |
|
|
|
11,135 |
|
IPO-related costs(2) |
|
|
— |
|
|
|
274 |
|
|
|
— |
|
|
|
4,971 |
|
IPO-related compensation expense(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,343 |
|
Other compensation-related costs(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
380 |
|
Remeasurement of tax receivable agreement liability(5) |
|
|
55,926 |
|
|
|
195 |
|
|
|
56,228 |
|
|
|
195 |
|
Transaction costs(6) |
|
|
— |
|
|
|
— |
|
|
|
1,405 |
|
|
|
— |
|
Other (7) |
|
|
406 |
|
|
|
401 |
|
|
|
666 |
|
|
|
401 |
|
Debt extinguishment costs (8) |
|
|
— |
|
|
|
— |
|
|
|
1,957 |
|
|
|
6,313 |
|
Tax-effect of adjustments to net income (9) |
|
|
(11,451 |
) |
|
|
— |
|
|
|
(11,451 |
) |
|
|
— |
|
Adjusted net income |
|
|
48,730 |
|
|
|
8,461 |
|
|
|
71,451 |
|
|
|
29,705 |
|
(1) Represents non-cash equity-based compensation expense.
(2) Represents legal, accounting and other costs incurred in preparation for initial public offering in fiscal year 2021.
(3) Represents cash-based compensation expense recorded in connection with the initial public offering in fiscal year 2021.
(4) Represents costs related to reorganization driven by COVID-19 and buildup of executive leadership team in fiscal year 2021.
(5) Represents non-cash expense related to the remeasurement of our tax receivable agreement liability.
(6) Represents costs related to our secondary offering of Class A common stock by selling stockholders and certain costs incurred in connection with our securitization transaction.
(7) Represents non-core operating expenses identified by management. For fiscal year 2022 these costs relate to executive severance.
(8) Represents costs related to the extinguishment of long-term debt.
(9) Represents the income tax impact of non-GAAP adjustments computed by applying our estimated blended statutory tax rate to our share of the identified items and incorporating the effect of nondeductible and other rate impacting adjustments.
Reconciliation of GAAP net income to EBITDA and Adjusted EBITDA:
|
|
For the 14 Weeks Ended |
|
|
For the 13 Weeks Ended |
|
|
For the Years Ended |
|
|||||||
|
|
December 31, 2022 |
|
|
December 25, 2021 |
|
|
December 31, 2022 |
|
|
December 25, 2021 |
|
||||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
2,269 |
|
|
$ |
4,408 |
|
|
$ |
13,613 |
|
|
$ |
3,967 |
|
Interest expense |
|
|
7,235 |
|
|
|
1,600 |
|
|
|
23,626 |
|
|
|
20,286 |
|
Income tax expense (benefit) |
|
|
(53,274 |
) |
|
|
114 |
|
|
|
(53,191 |
) |
|
|
114 |
|
Depreciation and amortization |
|
|
5,057 |
|
|
|
5,074 |
|
|
|
20,231 |
|
|
|
20,333 |
|
EBITDA |
|
$ |
(38,713 |
) |
|
$ |
11,196 |
|
|
$ |
4,279 |
|
|
$ |
44,700 |
|
Share-based compensation(1) |
|
|
1,580 |
|
|
|
3,183 |
|
|
|
9,033 |
|
|
|
11,135 |
|
IPO-related costs(2) |
|
|
— |
|
|
|
274 |
|
|
|
— |
|
|
|
4,971 |
|
IPO-related compensation expense(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,343 |
|
Other compensation-related costs(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
380 |
|
Remeasurement of tax receivable agreement liability(5) |
|
|
55,926 |
|
|
|
195 |
|
|
|
56,228 |
|
|
|
195 |
|
Transaction costs(6) |
|
|
— |
|
|
|
— |
|
|
|
1,405 |
|
|
|
— |
|
Other (7) |
|
|
406 |
|
|
|
401 |
|
|
|
666 |
|
|
|
401 |
|
Adjusted EBITDA |
|
$ |
19,199 |
|
|
$ |
15,249 |
|
|
$ |
71,611 |
|
|
$ |
64,125 |
|
Adjusted EBITDA margin |
|
|
35.9 |
% |
|
|
33.8 |
% |
|
|
34.5 |
% |
|
|
35.9 |
% |
(1) Represents non-cash equity-based compensation expense.
(2) Represents legal, accounting and other costs incurred in preparation for initial public offering in fiscal year 2021.
(3) Represents cash-based compensation expense recorded in connection with the initial public offering in fiscal year 2021.
(4) Represents costs related to reorganization driven by COVID-19 and buildup of executive leadership team in fiscal year 2021.
(5) Represents non-cash expense related to the remeasurement of our tax receivable agreement liability.
(6) Represents costs related to our secondary offering of Class A common stock by selling stockholders and certain costs incurred in connection with our securitization transaction.
(7) Represents non-core operating expenses identified by management. For fiscal year 2022 these costs relate to executive severance.
8
Investor Contact
Bethany Johns
Bethany.Johns@myewc.com
469-270-6888
Media Contact
Creative Media Marketing
Carolanne Coviello
Ewc@cmmpr.com
212-979-8884
9
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
European Wax Center, Inc. Announces Leadership Updates
Current Chief Financial Officer and Chief Operating Officer David Willis Promoted to President
Consumer Industry Veteran Stacie Shirley Appointed to Chief Financial Officer
PLANO, Texas, Mar. 9, 2023 – European Wax Center, Inc. (the “Company” or “European Wax Center”) (NASDAQ: EWCZ), the largest and fastest-growing franchisor and operator of out-of-home waxing services in the United States, today announced the appointment of Stacie Shirley to Chief Financial Officer effective March 27, 2023. Stacie Shirley succeeds David Willis who has been promoted to President effective March 27, 2023. Mr. Willis will retain his role as Chief Operating Officer of the Company.
“Today’s announcement reflects our commitment to building a strong bench of leaders that will continue to execute on European Wax Center’s growth story. On behalf of the Board and the entire leadership team, we could not be more thrilled to welcome Stacie as our next Chief Financial Officer. She is a proven leader with over 20 years of consumer industry and franchise expertise and brings a unique understanding of our business and the guests we serve,” said David Berg, Chief Executive Officer of European Wax Center. “Stacie has a track record of executing organizational processes and financial strategy and will be a strong asset to the Company as we drive long-term growth and deliver value to all stakeholders.”
As President and Chief Operating Officer, Mr. Willis will continue to have responsibility for Business Development, Data Insights, and Supply Chain functions. In addition, he will now oversee the Company’s Chief Franchise Officer and related functions, which include franchise business consultants, field trainers, learning and development, guest relations and corporate-owned centers.
Mr. Berg continued, “We are pleased to elevate David to this critical leadership role as we continue to scale our footprint as the category leader in out-of-home waxing. In addition, I want to thank David for his invaluable contributions to the success of our business and the execution of our financial objectives while serving as CFO. He stepped back into the CFO role last year and has done a tremendous job steering European Wax Center through its first year as a public company.”
Most recently, Stacie Shirley was the Chief Financial Officer of Keller Williams, the world’s largest real estate technology franchisor by agent count, where she led the finance, accounting, treasury, budgeting, and forecasting, internal audit, and M&A functions. From 2016 to 2021, she was the Executive Vice President, Chief Financial Officer, and Treasurer of Tuesday Morning, one of the original off-price retailers specializing in name-brand, high-quality products for the home. Prior to Tuesday Morning, Ms. Shirley held various roles at the Neiman Marcus Group from 2002 to 2015 including Senior Vice President, Finance and Treasurer and Vice President, Finance. She received her BBA in Accounting from Stephen F. Austin State University.
David Willis has been serving as European Wax Center’s Chief Operating Officer since September 2019 and Chief Financial Officer since January 2022. He also served as the Company’s Chief Financial Officer from July 2016 until December 2020. Prior to joining the Company, Mr. Willis served as an Operating Partner for Riata Capital Group, LLC from October 2014 to July 2016, during which he provided consulting services to the Company on supply chain, finance, and operations matters.
DOCPROPERTY DOCXDOCID DMS=InterwovenIManage Format=<<NUM>>_<<VER>> PRESERVELOCATION \* MERGEFORMAT 133393234_1
About European Wax Center, Inc.
European Wax Center, Inc. (NASDAQ: EWCZ) is the largest and fastest-growing franchisor and operator of out-of-home waxing services in the United States. European Wax Center locations perform more than 22 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. In 2022 its network of 944 centers in 45 states generated sales of nearly $900 million. For more information, including how to receive your first wax free, please visit: https://waxcenter.com.
Investor Contact
Bethany Johns
Bethany.Johns@myewc.com
469-270-6888
Media Contact
Creative Media Marketing
Carolanne Coviello
Ewc@cmmpr.com
212-979-8884