WW Announces Second Quarter 2021 Results

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  • Q2 2021 End of Period Subscribers of 4.9 million
  • Q2 2021 End of Period Digital Subscribers up 6% year-over-year to an all-time Q2-end high
  • Q2 2021 Revenues of $311 million
  • Q2 2021 Gross Margin of 60%; excluding one-time charges, Q2 2021 adjusted gross margin increased 100 basis points year-over-year to 61%
  • FY 2021 Guidance: Revenues approaching $1.3 billion and GAAP EPS in the range of $1.10 to $1.25, which incorporates an approximately $0.53 aggregate negative impact from the early extinguishment of debt and estimated restructuring charges in 2021

NEW YORK, Aug. 10, 2021 (GLOBE NEWSWIRE) — WW International, Inc. (NASDAQ: WW) today announced its results for the second quarter of fiscal 2021.

“We ended the quarter with 4.9 million subscribers, including 4.1 million Digital subscribers — an all-time second quarter-end high and up 6% year-over-year, but below our expectations. The strong Digital year-over-year growth momentum in Q1 slowed in the second quarter as we cycled against strong Digital performance in 2020,” said Mindy Grossman, the Company’s President and CEO. “We continue to see strong member retention trends, momentum in Digital 360, and expansion of adjusted gross margins. We have a comprehensive plan to optimize performance in the second half of the year and position us well for growth in 2022. We are excited to launch our new food program innovation later this year, making weight loss and wellness even more simple, livable, efficacious and sustainable, which we are confident will drive year-over-year growth in member recruitment.”

Amy O’Keefe, the Company’s CFO, said, “Subscriber trends in Q2 followed a more typical seasonal pattern than we expected, and our guidance reflects this trend. Our gross margin performance remains strong and reflective of the ongoing benefits of our flexible, subscription-based digital model. Looking ahead, we have a comprehensive plan to optimize financial performance in the second half of the year and deliver growth and value creation over the long-term.”

Q2 2021 Consolidated Results

             

 

 

% Change

  % Change
Adjusted for
Constant
Currency(1)
  Three Months Ended    
  July 3, 
2021
    June 27,
 2020
   
(in millions except percentages and per share amounts)                
Subscription Revenues, net $272.9     $293.0   (6.9 %)   (10.4 %)
Product Sales and Other, net   38.5       40.6   (5.2 %)   (8.9 %)
Revenues, net $311.4     $333.6   (6.7 %)   (10.2 %)
Gross Profit $186.0     $194.7   (4.4 %)   (8.7 %)
Adjustments                
2021 Plan Restructuring Charges   5.6              
2020 Plan Restructuring Charges (0.6) (5)     6.5        
Adjusted Gross Profit(1) $191.0     $201.2   (5.1 %)   (9.2 %)
Operating Income $59.7     $51.0   17.0 %   8.9 %
Adjustments                
Winfrey Stock Compensation Expense         32.7        
2021 Plan Restructuring Charges   6.0              
2020 Plan Restructuring Charges (0.8) (5)      11.2        
Adjusted Operating Income(1) $64.9     $94.9   (31.6 %)   (36.0 %)
Net Income* $8.9     $14.0   (36.7 %)   (57.9 %)
EPS $0.12     $0.20   (37.9 %)   (58.7 %)

Total Paid Weeks

  64.3       63.9   0.7 %   N/A
Digital(2) Paid Weeks   54.5       48.3   13.0 %   N/A
Workshops + Digital(3) Paid Weeks   9.8       15.6   (37.4 %)   N/A
                       
End of Period Subscribers(4)   4.9       5.0   (1.9 %)   N/A
Digital Subscribers   4.1       3.9   5.6 %   N/A
Workshops + Digital Subscribers   0.7       1.1   (29.6 %)   N/A



__________________
Note: Totals may not sum due to rounding.
(1) See “Reconciliation of Non-GAAP Financial Measures” attached to this release for further detail on adjustments to GAAP financial measures.
(2) “Digital” refers to providing subscriptions to the Company’s digital product offerings, including Digital 360 and Personal Coaching + Digital.
(3) “Workshops + Digital” (formerly known as “Studio + Digital”) refers to providing unlimited access to the Company’s workshops combined with the Company’s digital subscription product offerings to commitment plan subscribers. It also includes the provision of access to workshops for members who do not subscribe to commitment plans, including the Company’s “pay-as-you-go” members.
(4) “Subscribers” refers to Digital subscribers and Workshops + Digital subscribers who participate in recur bill programs in Company-owned operations.
(5) The reversal of charges associated with the Company’s previously disclosed 2020 organizational restructuring plan.
*Except in the case of the financials attached to this release, “Net Income” refers to Net Income attributable to WW International, Inc.

Q2 2021 Business and Financial Highlights

  • End of Period Subscribers in Q2 2021 were down 1.9% versus the prior year period, driven by declines in End of Period Workshops + Digital subscribers, partially offset by increases in End of Period Digital Subscribers in all major geographic markets. Q2 2021 End of Period Digital Subscribers were up 5.6% and End of Period Workshops + Digital Subscribers were down 29.6% versus the prior year period.
  • Total Paid Weeks in Q2 2021 were up 0.7% versus the prior year period, driven by increases in Digital Paid Weeks in all major geographic markets, partially offset by declines in Workshops + Digital Paid Weeks. Q2 2021 Digital Paid Weeks increased 13.0% and Workshops + Digital Paid Weeks decreased 37.4% versus the prior year period.
  • Revenues in Q2 2021 were $311.4 million. On a constant currency basis, Q2 2021 revenues decreased 10.2% versus the prior year period.
    • Subscription Revenues in Q2 2021 were $272.9 million. On a constant currency basis, these revenues decreased 10.4% versus the prior year period, primarily driven by declines in Workshops + Digital Fees as a result of the closure of studios and reduced operations related to COVID-19.
    • Product Sales and Other in Q2 2021 were $38.5 million. On a constant currency basis, these revenues decreased 8.9% versus the prior year period, primarily due to lower e-commerce sales in the quarter.
  • Gross Profit in Q2 2021 was $186.0 million. Adjusted gross profit in Q2 2021 was $191.0 million, which excluded the net impact of $5.0 million of restructuring charges. Gross profit in Q2 2020 was $194.7 million. Adjusted gross profit in Q2 2020, which excluded the impact of $6.5 million of restructuring charges, was $201.2 million.
    • Gross Margin in Q2 2021 was 59.7%. Adjusted gross margin was 61.3%, up from 60.3% in the prior year period driven primarily by a mix shift to the Company’s higher margin Digital business, offset in part by a contraction of margins in the Workshops + Digital business.
  • Operating Income in Q2 2021 was $59.7 million. Adjusted operating income in Q2 2021, which excluded the net impact of $5.2 million of restructuring charges, was $64.9 million. Operating income in Q2 2020 was $51.0 million. Adjusted operating income in Q2 2020, which excluded the impact of the $32.7 million one-time stock compensation expense associated with the previously disclosed option granted to Ms. Oprah Winfrey in connection with the Company extending its partnership with Ms. Winfrey and $11.2 million of restructuring charges, was $94.9 million.
  • Effective Tax Rate in Q2 2021 was 9.9%, compared to 28.6% in the prior year period.
  • Net Income in Q2 2021 was $8.9 million compared to $14.0 million in the prior year period.
  • Earnings per fully diluted share (EPS) in Q2 2021 was $0.12 compared to $0.20 in the prior year period.
    • Certain items affect year-over-year comparability.
      • Q2 2021 EPS was negatively impacted by $0.36 in the aggregate due to the following items:
        • $0.31 per fully diluted share impact from early extinguishment of debt charges associated with the Company’s previously announced April 2021 debt refinancing.
        • $0.05 per fully diluted share net impact of restructuring charges.
      • Q2 2020 EPS was negatively impacted by $0.47 in the aggregate due to the following items:
        • $0.35 per fully diluted share impact from the one-time stock compensation expense associated with the option granted to Ms. Winfrey in connection with the Company extending its partnership with Ms. Winfrey.
        • $0.12 per fully diluted share impact of restructuring charges.

Other Items

  • Cash balance as of July 3, 2021 was $125.6 million. On that same date, the Company had no outstanding borrowings under its $175.0 million revolving credit facility.
  • Debt Refinancing: In Q2 2021, the Company recorded a $29.2 million one-time charge associated with the early extinguishment of debt from the April 2021 $1.5 billion refinancing…

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