UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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 |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
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Emerging growth company |
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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
As of August 4, 2023, the registrant had
Table of Contents
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Page |
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PART I. |
1 |
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Item 1. |
1 |
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Condensed Consolidated Balance Sheets as of July 1, 2023 and December 31, 2022 |
1 |
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2 |
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3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 |
Item 3. |
27 |
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Item 4. |
28 |
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PART II. |
29 |
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Item 1. |
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Item 1A. |
29 |
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Item 2. |
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Item 3. |
29 |
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Item 4. |
29 |
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Item 5. |
29 |
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Item 6. |
30 |
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31 |
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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)
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July 1, 2023 |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Goodwill |
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Deferred income taxes |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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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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$ |
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$ |
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Long-term debt, current portion |
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Tax receivable agreement liability, current portion |
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Deferred revenue, current portion |
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Operating lease liabilities, current portion |
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Total current liabilities |
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Long-term debt, net |
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Tax receivable agreement liability, net of current portion |
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Deferred revenue, net of current portion |
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Operating lease liabilities, net of current portion |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock ($ |
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Class A common stock ($ |
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Class B common stock ($ |
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Treasury stock, at cost |
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( |
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( |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity attributable to European Wax Center, Inc. |
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Noncontrolling interests |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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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)
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For the Thirteen Weeks Ended |
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For the Twenty-Six Weeks Ended |
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July 1, 2023 |
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June 25, 2022 |
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July 1, 2023 |
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June 25, 2022 |
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REVENUE |
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Product sales |
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$ |
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$ |
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$ |
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$ |
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Royalty fees |
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Marketing fees |
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Other revenue |
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Total revenue |
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OPERATING EXPENSES |
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Cost of revenue |
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Selling, general and administrative |
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Advertising |
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Depreciation and amortization |
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Total operating expenses |
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Income from operations |
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Interest expense |
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Other expense (income) |
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( |
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( |
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Income before income taxes |
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Income tax expense |
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NET INCOME |
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$ |
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$ |
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$ |
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$ |
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Less: net income attributable to noncontrolling interests |
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NET INCOME ATTRIBUTABLE TO EUROPEAN WAX CENTER, INC. |
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$ |
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$ |
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$ |
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$ |
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Net income per share |
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Basic - Class A Common Stock |
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$ |
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$ |
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$ |
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$ |
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Diluted - Class A Common Stock |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares outstanding |
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Basic - Class A Common Stock |
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Diluted - Class A Common Stock |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
EUROPEAN WAX CENTER, INC. and Subsidiaries
CONDENSED Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
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For the Twenty-Six Weeks Ended |
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July 1, 2023 |
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June 25, 2022 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by |
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Depreciation and amortization |
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Amortization of deferred financing costs |
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Gain on interest rate cap |
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( |
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Provision for inventory obsolescence |
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( |
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( |
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Loss on debt extinguishment |
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Provision for bad debts |
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Deferred income taxes |
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Remeasurement of tax receivable agreement liability |
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( |
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Equity compensation |
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Changes in assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Inventory |
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( |
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( |
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Prepaid expenses and other assets |
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( |
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Accounts payable and accrued liabilities |
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( |
) |
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( |
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Deferred revenue |
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Other long-term liabilities |
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( |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Deferred loan costs |
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( |
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Proceeds from long-term debt |
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Principal payments on long-term debt |
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( |
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( |
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Payments of debt extinguishment costs |
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( |
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Distributions to EWC Ventures LLC members |
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( |
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( |
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Payment of Class A common stock offering costs |
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( |
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Repurchase of Class A common stock |
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( |
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Taxes on vested restricted stock units paid by withholding shares |
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( |
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Dividends to holders of Class A common stock |
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( |
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Dividend equivalents to holders of EWC Ventures units |
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( |
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( |
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Payments pursuant to tax receivable agreement |
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( |
) |
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Net cash used in financing activities |
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( |
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( |
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Net increase in cash |
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( |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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$ |
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Supplemental cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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$ |
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$ |
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Non-cash investing activities: |
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Property purchases included in accounts payable and accrued liabilities |
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$ |
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$ |
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Right-of-use assets obtained in exchange for operating lease obligations |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
EUROPEAN WAX CENTER, INC. and Subsidiaries
CONDENSED Consolidated Statements of STOCKHOLDERS’ Equity
(Amounts in thousands, except share and per share amounts)
(Unaudited)
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Additional |
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Class A Common Stock |
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Class B Common Stock |
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paid-in |
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Accumulated |
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Treasury |
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Noncontrolling |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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capital |
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deficit |
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Stock |
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interest |
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equity |
Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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$( |
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$( |
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$ |
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$ |
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Exchange of Class B Common Stock and EWC Ventures Units for Class A Common Stock |
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— |
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( |
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— |
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— |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares withheld for taxes on vested restricted stock units |
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( |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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( |
Equity compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Distributions to members of EWC Ventures |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
Tax receivable liability and deferred taxes arising from share exchanges |
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— |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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( |
Allocation of equity to noncontrolling interests |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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( |
Balance at April 1, 2023 |
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$ |
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$ |
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$ |
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$( |
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$( |
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$ |
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$ |
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Exchange of Class B Common Stock and EWC Ventures Units for Class A Common Stock |
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— |
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( |
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— |
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— |
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— |
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— |
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— |
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— |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Forfeiture of unvested incentive units |
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— |
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— |
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( |
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— |
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— |
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— |
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— |
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— |
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— |
Shares withheld for taxes on vested restricted stock units |
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( |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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( |
Equity compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Repurchase of Class A common stock |
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( |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
Distributions to members of EWC Ventures |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
Forfeiture of dividend equivalents payable to holders of EWC Ventures Units |
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— |
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— |
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— |
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— |
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