WW International Inc.

02/26/2019 | Press release | Archived content

Fourth Quarter 2018 Earnings Release

Company Release - 2/26/20194:05 PMET

Provides Full Year 2019 Guidance

  • End of Period Subscribers up 22% year-over-year to 3.9 million
  • Total Paid Weeks in Q4 2018 up 23% year-over-year; Total Paid Weeks in FY 2018 up 26% year-over-year
  • Revenues in Q4 2018 of $330 million, up 6%, or 7% on a constant currency basis, year-over-year; FY 2018 Revenues of $1.5 billion, up 16%, or 15% on a constant currency basis, year-over-year
  • FY 2019 guidance: Revenues of approximately $1.4 billion and EPS range of $1.25 to $1.50

NEW YORK, Feb. 26, 2019 (GLOBE NEWSWIRE) -- Weight Watchers International, Inc. (NASDAQ: WTW) ("WW") today announced its results for the fourth quarter and full year fiscal 2018 and provided its full year fiscal 2019 guidance.

"2018 was a significant year for WW. We launched WW FreestyleTM, built an expanded technology ecosystem, rebranded to WW and reinforced our mission to become the world's partner in wellness," said Mindy Grossman, the Company's President and CEO. "While we are proud of our accomplishments in 2018, we had a soft start to 2019 versus last year's strong performance with the launch of WW Freestyle. Given our Winter Campaign did not recruit as expected, we have been focused on improving member recruitment trends. We quickly moved to course correct, including introducing new creative with a stronger call-to-action and further optimizing our media mix."

Grossman continued, "While we are disappointed with our start to 2019, we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support long-term sustainable growth. Looking ahead, I'm happy to say that Oprah Winfrey will play a central role in our upcoming TV and digital marketing campaign for Spring, bringing to life a clear message on how WW is the program that works. Together with Oprah, we are also working on an initiative to galvanize and bring together communities through a series of digital and live experiences and events to accelerate WW's impact and allow us to reach new and diverse audiences. We will announce more details in the coming months, but anticipate the initiative will kick off later in 2019."

"2018 was an exceptional year, with strong member recruitment, revenue growth and margin expansion," said Nick Hotchkin, the Company's CFO. "However, due to the soft start to the key Winter Season, we expect member recruitment for 2019 to be below 2018 levels, resulting in lower revenue and earnings for the year. We are focused on driving member recruitment and exercising strict cost discipline, while continuing to invest in the areas that will drive future growth."

Q4 2018 Consolidated Results

% Change
 		% Change
Adjusted for
Constant
Currency(1)
Three Months Ended
December 29,
 		December 30,
2018 2017
(in millions except percentages and per share amounts)
Service Revenues, net $288.8 $264.0 9.4% 10.9%
Product Sales and Other, net 41.6 48.5 (14.3%) (13.1%)
Revenues, net $330.4 $312.5 5.7% 7.2%
Operating Income $80.3 $49.5 62.4% 65.0%
Adjustments
Goodwill Impairment − 13.3
Adjusted Operating Income(1) $80.3 $62.8 27.9% 30.0%
Net Income* $43.8 $63.0 (30.5%) (29.0%)
EPS $0.63 $0.91 (31.5%) (30.1%)
Total Paid Weeks 53.8 43.8 22.8% N/A
Digital(2) Paid Weeks 34.7 25.7 34.6% N/A
Studio + Digital(3) Paid Weeks 19.2 18.1 6.0% N/A
End of Period Subscribers(4) 3.9 3.2 22.4% N/A
Digital Subscribers 2.6 2.0 32.1% N/A
Studio + Digital Subscribers 1.3 1.3 7.1% 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 the Personal Coaching + Digital product.
(3) "Studio + Digital" refers to providing access to the Company's weekly in-person workshops combined with the Company's digital subscription product offerings to commitment plan subscribers. The "Studio + Digital" business 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 Studio + Digital subscribers who participate in recur bill programs in Company-owned operations.

*Except in the case of the financials attached to this release, "Net Income" refers to Net Income attributable to Weight Watchers International, Inc.

Q4 2018 Business and Financial Highlights

  • End of Period Subscribers in Q4 2018 were up 22.4% versus the prior year period, driven by growth in all major geographic markets. Q4 2018 End of Period Digital Subscribers were up 32.1% and End of Period Studio + Digital Subscribers were up 7.1% versus the prior year period.
  • Total Paid Weeks in Q4 2018 were up 22.8% versus the prior year period, driven by growth in all major geographic markets. Q4 2018 Digital Paid Weeks increased 34.6% and Studio + Digital Paid Weeks increased 6.0% versus the prior year period.
  • Revenues in Q4 2018 were $330.4 million. On a constant currency basis, Q4 2018 revenues increased 7.2% versus the prior year period.
    • Service Revenues in Q4 2018 were $288.8 million. On a constant currency basis, these revenues increased 10.9% versus the prior year period. This increase was primarily driven by growth in the North America and Continental Europe markets.
    • Product Sales and Other in Q4 2018 were $41.6 million. On a constant currency basis, these revenues decreased 13.1% versus the prior year period.
  • Operating Income in Q4 2018 was $80.3 million compared to $49.5 million in the prior year period. After adjusting Q4 2017 operating income to exclude the $13.3 million goodwill impairment charge related to the Company's Brazil operations, adjusted operating income in Q4 2018 of $80.3 million increased 30.0% on a constant currency basis versus the prior year period. This increase in adjusted operating income was primarily driven by an increased mix shift toward Digital revenues and operating leverage on higher revenues in the quarter versus the prior year period.
  • Income Tax in Q4 2018 was an expense of $0.9 million compared to a benefit of $54.7 million in the prior year period.
  • Net Income in Q4 2018 was $43.8 million compared to $63.0 million in the prior year period.
  • Earnings per fully diluted share (EPS) in Q4 2018 was $0.63 compared to $0.91 in the prior year period.
    • Certain items affect year-over-year comparability.
      • The following items in the aggregate positively impacted Q4 2018 EPS by $0.17:
        • $0.12 per fully diluted share tax benefit due to the reversal of a valuation allowance related to foreign tax credits that have been fully utilized.
        • $0.05 per fully diluted share tax benefit due to the reversal of a valuation allowance related to certain net operating losses that are now expected to be realized.
      • The following items in the aggregate positively impacted Q4 2017 EPS by $0.54:
        • $0.82 per fully diluted share arising from the one-time net tax benefit principally due to a remeasurement of net deferred tax liabilities under the new U.S. tax law.
        • ($0.19) per fully diluted share arising from the goodwill impairment charge related to the Company's Brazil operations.
        • ($0.09) per fully diluted share arising from the negative net impact associated with the Company's Q4 2017 refinancing of $1.9 billion of debt.

Full Year 2018 Consolidated Results

% Change
 		% Change
Adjusted for
Constant
Currency(1)
Twelve Months Ended
December 29,
 		December 30,
2018 2017
(in millions except percentages and per share amounts)
Service Revenues, net $1,273.2 $1,081.7 17.7% 16.7%
Product Sales and Other, net 240.9 225.2 7.0% 5.3%
Revenues, net $1,514.1 $1,306.9 15.9% 14.7%
Operating Income $389.0 $267.3 45.5% 44.2%
Adjustments
Goodwill Impairment − 13.3
Adjusted Operating Income(1) $389.0 $280.6 38.6% 37.3%
Net Income* $223.7 $163.5 36.8% 35.4%
EPS $3.19 $2.40 33.2% 31.8%
Total Paid Weeks 227.9 181.5 25.5% N/A
Digital(2) Paid Weeks 144.6 105.2 37.5% N/A
Studio + Digital(3) Paid Weeks 83.3 76.4 9.1% N/A
End of Period Subscribers(4) 3.9 3.2 22.4% N/A
Digital Subscribers 2.6 2.0 32.1% N/A
Studio + Digital Subscribers 1.3 1.3 7.1% 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 the Personal Coaching + Digital product.
(3) "Studio + Digital" refers to providing access to the Company's weekly in-person workshops combined with the Company's digital subscription product offerings to commitment plan subscribers. The "Studio + Digital" business 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 Studio + Digital subscribers who participate in recur bill programs in Company-owned operations.

*Except in the case of the financials attached to this release, "Net Income" refers to Net Income attributable to Weight Watchers International, Inc.

Full Year 2018 Business and Financial Highlights

  • Total Paid Weeks in fiscal 2018 were up 25.5% versus the prior year, driven by growth in all major geographic markets. Fiscal 2018 Digital Paid Weeks increased 37.5% and Studio + Digital Paid Weeks increased 9.1% versus the prior year.
  • Revenues in fiscal 2018 were $1,514.1 million. On a constant currency basis, fiscal 2018 revenues increased 14.7% versus the prior year.
    • Service Revenues in fiscal 2018 were $1,273.2 million. On a constant currency basis, these revenues increased 16.7% versus the prior year. This increase was driven by growth in all major geographic markets.
    • Product Sales and Other in fiscal 2018 were $240.9 million. On a constant currency basis, these revenues increased 5.3% versus the prior year.
  • Operating Income in fiscal 2018 was $389.0 million compared to $267.3 million in the prior year. After adjusting fiscal 2017 operating income to exclude the $13.3 million goodwill impairment charge related to the Company's Brazil operations, adjusted operating income in fiscal 2018 of $389.0 million increased 37.3% on a constant currency basis versus the prior year. This increase in adjusted operating income was primarily driven by operating leverage on higher revenues in the year versus the prior year.
  • Income Tax in fiscal 2018 was an expense of $20.5 million. Income tax in fiscal 2017 was a benefit of $18.2 million.
  • Net Income in fiscal 2018 was $223.7 million compared to $163.5 million in the prior year.
  • EPS in fiscal 2018 was $3.19 compared to $2.40 in the prior year.
    • Certain items affect year-over-year comparability.
      • The following items in the aggregate positively impacted full year fiscal 2018 EPS by $0.48:
        • $0.25 per fully diluted share tax benefit from Ms. Winfrey's exercise of a portion of her stock options, as previously disclosed in March 2018.
        • $0.12 per fully diluted share tax benefit due to the reversal of a valuation allowance related to foreign tax credits that have been fully utilized.
        • $0.06 per fully diluted share tax benefit related to favorable tax return adjustments.
        • $0.05 per fully diluted share tax benefit due to the reversal of a valuation allowance related to certain net operating losses that are now expected to be realized.
      • The following items in the aggregate positively impacted full year fiscal 2017 EPS by $0.75:
        • $0.83 per fully diluted share arising from the one-time net tax benefit principally due to a remeasurement of net deferred tax liabilities under the new U.S. tax law.
        • $0.18 per fully diluted share tax benefit that was offset by $0.01 per fully diluted share of expense, both related to the previously announced cessation of operations of the Company's Spanish subsidiary.
        • $0.03 per fully diluted share arising from the positive impact of the reversal of certain tax reserves.
        • ($0.20) per fully diluted share arising from the goodwill impairment charge related to the Company's Brazil operations.
        • ($0.08) per fully diluted share arising from the negative net impact associated with the Company's $1.9 billion refinancing of debt in Q4 2017 and the Company's debt prepayment in Q2 2017.

Other Items

  • Cash balance as of December 29, 2018 was $237.0 million. On that same date, the Company had no outstanding borrowings under its $150 million revolving credit facility.
  • Ticker Symbol: To further align with its global brand, the Company intends to change its ticker symbol on The Nasdaq Global Select Market to "WW" later this year. Until further details are announced, the Company will continue to trade under the symbol "WTW".


Full Year Fiscal 2019 Guidance

The Company is providing its full year fiscal 2019 revenue guidance of approximately $1.4 billion and earnings guidance of between $1.25 and $1.50 per fully diluted share.

Fourth Quarter and Full Year 2018 Conference Call and Webcast

The Company has scheduled a conference call today at 5:00 p.m. ET. During the conference call, Mindy Grossman, President and Chief Executive Officer, and Nicholas Hotchkin, Chief Financial Officer, will discuss the fourth quarter and full year fiscal 2018 results and answer questions from the investment community. Live audio of the conference call will be simultaneously webcast on the Company's corporate website, corporate.ww.com, in the Investors section under Presentations and Events. A replay of the webcast will be available on this site for approximately 90 days.

Statement regarding Non-GAAP Financial Measures
The following provides information regarding non-GAAP financial measures used in this earnings release:

To supplement the Company's consolidated results presented in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company has disclosed non-GAAP financial measures of operating results that exclude or adjust certain items. Operating income and operating income margin are discussed in this release both as reported (on a GAAP basis) and, with respect to the fourth quarter and full year fiscal 2017, as adjusted (on a non-GAAP basis), to exclude the impairment charge for the Company's goodwill related to its Brazil operations. The Company also presents in the attachments to this release the non-GAAP financial measures earnings before interest, taxes, depreciation, amortization and stock-based compensation ("EBITDAS") and earnings before interest, taxes, depreciation, amortization, stock-based compensation and goodwill impairment ("Adjusted EBITDAS"). In addition, the Company presents certain of its financial results on a constant currency basis in addition to GAAP results. Constant currency information compares results between periods as if exchange rates had remained constant period-over-period. In this release and any attachments, the Company calculates constant currency by calculating current-year results using prior-year foreign currency exchange rates.

Management believes these non-GAAP financial measures provide useful supplemental information for its and investors' evaluation of the Company's business performance and are useful for period-over-period comparisons of the performance of the Company's business. While management believes that these non-GAAP financial measures are useful in evaluating the Company's business, this information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly entitled measures reported by other companies. See "Reconciliation of Non-GAAP Financial Measures" attached to this release and reconciliations, if any, included elsewhere in this release for a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.

About Weight Watchers International, Inc.
WW - the new Weight Watchers - is a global wellness company and the world's leading commercial weight management program. We inspire millions of people to adopt healthy habits for real life. Through our engaging digital experience and face-to-face group workshops, members follow our livable and sustainable program that encompasses healthy eating, physical activity, and a helpful mindset. With more than five decades of experience in building communities and our deep expertise in behavioral science, we aim to deliver wellness for all. To learn more about the WW approach to healthy living, please visit ww.com. For more information about our global business, visit our corporate website at corporate.ww.com.

This news release and any attachments include "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, revenue and earnings guidance and any statements about the Company's plans, strategies and prospects. The Company generally uses the words "may," "will," "could," "expect," "anticipate," "believe," "estimate," "plan," "intend" and similar expressions in this news release and any attachments to identify forward-looking statements. The Company bases these forward-looking statements on its current views with respect to future events and financial performance. Actual results could differ materially from those projected in the forward-looking statements. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: competition from other weight management and wellness industry participants or the development of more effective or more favorably perceived weight management methods; the Company's ability to continue to develop new, innovative services and products and enhance its existing services and products or the failure of its services, products or brands to continue to appeal to the market, or the Company's ability to successfully expand into new channels of distribution or respond to consumer trends; the ability to successfully implement new strategic initiatives; the effectiveness of the Company's advertising and marketing programs, including the strength of its social media presence; the impact on the Company's reputation of actions taken by its franchisees, licensees, suppliers and other partners; the impact of the Company's substantial amount of debt and its debt service obligations and debt covenants; the inability to generate sufficient cash to service the Company's debt and satisfy its other liquidity requirements; uncertainties regarding the satisfactory operation of the Company's technology or systems; the impact of security breaches or privacy concerns; the recognition of asset impairment charges; the loss of key personnel, strategic partners or consultants or failure to effectively manage and motivate the Company's workforce; the inability to renew certain of the Company's licenses, or the inability to do so on terms that are favorable to the Company; the expiration or early termination by the Company of leases; risks and uncertainties associated with the Company's international operations, including regulatory, economic, political and social risks and foreign currency risks; uncertainties related to a downturn in general economic conditions or consumer confidence; the Company's ability to successfully make acquisitions or enter into joint ventures, including its ability to successfully integrate, operate or realize the anticipated benefits of such businesses; the seasonal nature of the Company's business; the impact of events that discourage or impede people from gathering with others or accessing resources; the Company's ability to enforce its intellectual property rights both domestically and internationally, as well as the impact of its involvement in any claims related to intellectual property rights; the outcomes of litigation or regulatory actions; the impact of existing and future laws and regulations; the Company's failure to maintain effective internal control over financial reporting; the possibility that the interests of Artal Group S.A., the largest holder of the Company's common stock and a shareholder with significant influence over the Company, will conflict with the Company's interests or the interests of other holders of the Company's common stock; and other risks and uncertainties, including those detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission. You should not put undue reliance on any forward-looking statements. You should understand that many important factors, including those discussed herein, could cause the Company's results to differ materially from those expressed or suggested in any forward-looking statement. Except as required by law, the Company does not undertake any obligation to update or revise these forward-looking statements to reflect new information or events or circumstances that occur after the date of this news release or to reflect the occurrence of unanticipated events or otherwise. Readers are advised to review the Company's filings with the United States Securities and Exchange Commission (which are available on the SEC's EDGAR database at www.sec.gov and via the Company's website at corporate.ww.com).

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
December 29, December 30,
2018 2017
ASSETS
Cash and cash equivalents $ 236,974 $ 83,054
Other current assets 129,450 125,934
TOTAL CURRENT ASSETS 366,424 208,988
Property and equipment, net 52,202 47,978
Goodwill, franchise rights and other intangible assets, net 960,815 956,857
Other assets 35,100 32,177
TOTAL ASSETS $ 1,414,541 $ 1,246,000
LIABILITIES AND TOTAL DEFICIT
Portion of long-term debt due within one year $ 77,000 $ 82,750
Other current liabilities 264,316 260,277
TOTAL CURRENT LIABILITIES 341,316 343,027
Long-term debt 1,669,708 1,740,612
Deferred income taxes, other 208,547 173,880
TOTAL LIABILITIES $ 2,219,571 $ 2,257,519
Redeemable noncontrolling interest 3,913 4,467
Shareholders' deficit (808,943 ) (1,015,986 )
TOTAL LIABILITIES AND TOTAL DEFICIT 1,414,541 1,246,000
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Three Months Ended
December 29, December 30,
2018 2017
Service revenues, net (1) $ 288,834 $ 263,983
Product sales and other, net (2) 41,552 48,505
Revenues, net 330,386 312,488
Cost of services (3) 118,181 123,010
Cost of product sales and other 26,985 27,027
Cost of revenues 145,166 150,037
Gross profit 185,220 162,451
Marketing expenses 36,464 42,090
Selling, general and administrative expenses 68,409 57,550
Goodwill impairment - 13,323
Operating income 80,347 49,488
Interest expense 35,108 30,557
Other expense, net 600 195
Early extinguishment of debt - 10,524
Income before income taxes 44,639 8,212
Provision for (benefit from) income taxes 912 (54,695 )
Net income 43,727 62,907
Net loss attributable to the noncontrolling interest 58 62
Net income attributable to Weight Watchers International, Inc. $ 43,785 $ 62,969
Earnings Per Share attributable to Weight Watchers International, Inc.
Basic $ 0.65 $ 0.97
Diluted $ 0.63 $ 0.91
Weighted average common shares outstanding:
Basic 66,895 64,607
Diluted 69,942 68,902
(1) Consists of net "Digital Subscription Revenues" and net "Studio + Digital Fees". "Digital Subscription Revenues" consist of the fees associated with subscriptions for the Company's Digital offerings, including the Personal Coaching + Digital product. "Studio + Digital Fees" consist of the fees associated with the Company's subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.
(2) Consists of sales of consumer products in workshops and via e-commerce, revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company's websites and sales from the By Mail product, other revenues, and franchise fees with respect to commitment plans and commissions.
(3) Consists of cost of revenues and operating expenses for the Company's Digital and Studio + Digital services.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Twelve Months Ended
December 29, December 30,
2018 2017
Service revenues, net (1) $ 1,273,196 $ 1,081,679
Product sales and other, net (2) 240,925 225,232
Revenues, net 1,514,121 1,306,911
Cost of services (3) 508,477 486,293
Cost of product sales and other 139,234 127,969
Cost of revenues 647,711 614,262
Gross profit 866,410 692,649
Marketing expenses 226,319 200,797
Selling, general and administrative expenses 251,106 211,224
Goodwill impairment - 13,323
Operating income 388,985 267,305
Interest expense 142,346 112,784
Other expense, net 2,578 472
Early extinguishment of debt, net - 8,969
Income before income taxes 244,061 145,080
Provision for (benefit from) income taxes 20,493 (18,237
Net income 223,568 163,317
Net loss attributable to the noncontrolling interest 181 197
Net income attributable to Weight Watchers International, Inc. $ 223,749 $ 163,514
Earnings Per Share attributable to Weight Watchers International, Inc.
Basic $ 3.38 $ 2.54
Diluted $ 3.19 $ 2.40
Weighted average common shares outstanding:
Basic 66,280 64,329
Diluted 70,115 68,248
(1) Consists of net "Digital Subscription Revenues" and net "Studio + Digital Fees". "Digital Subscription Revenues" consist of the fees associated with subscriptions for the Company's Digital offerings, including the Personal Coaching + Digital product. "Studio + Digital Fees" consist of the fees associated with the Company's subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.
(2) Consists of sales of consumer products in workshops and via e-commerce, revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company's websites and sales from the By Mail product, other revenues, and franchise fees with respect to commitment plans and commissions.
(3) Consists of cost of revenues and operating expenses for the Company's Digital and Studio + Digital services.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Three Months Ended
December 29, December 30, Variance
2018 2017
Digital Paid Weeks (1)
North America 22,174 16,342 35.7 %
CE 9,637 7,025 37.2 %
UK 2,112 1,796 17.6 %
Other (2) 729 575 26.9 %
Total Digital Paid Weeks 34,652 25,738 34.6 %
Studio + Digital Paid Weeks (1)
North America 13,182 12,336 6.9 %
CE 2,878 2,681 7.3 %
UK 2,507 2,438 2.8 %
Other (2) 622 645 (3.6 %)
Total Studio + Digital Paid Weeks 19,189 18,100 6.0 %
Total Paid Weeks (1)
North America 35,356 28,678 23.3 %
CE 12,515 9,706 28.9 %
UK 4,619 4,234 9.1 %
Other (2) 1,351 1,220 10.8 %
Total Paid Weeks 53,841 43,838 22.8 %
End of Period Digital Subscribers (3)
North America 1,648 1,251 31.8 %
CE 730 535 36.6 %
UK 160 134 19.2 %
Other (2) 56 44 24.9 %
Total End of Period Digital Subscribers 2,594 1,964 32.1 %
End of Period Studio + Digital Subscribers (3)
North America 910 866 5.1 %
CE 210 189 11.3 %
UK 174 162 7.3 %
Other (2) 44 33 31.6 %
Total End of Period Studio + Digital Subscribers 1,338 1,250 7.1 %
Total End of Period Subscribers (3)
North America 2,558 2,117 20.9 %
CE 940 724 30.0 %
UK 334 296 12.7 %
Other (2) 100 77 27.8 %
Total End of Period Subscribers 3,932 3,214 22.4 %
(1) The "Paid Weeks" metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) "Digital Paid Weeks" is the total paid subscription weeks for the Company's digital subscription products (including Personal Coaching + Digital); (ii) "Studio + Digital Paid Weeks" is the sum of total paid commitment plan weeks which include workshops and digital offerings and total "pay-as-you-go" weeks; and (iii) "Total Paid Weeks" is the sum of Digital Paid Weeks and Studio + Digital Paid Weeks.
(2) Represents Australia, New Zealand and emerging markets.
(3) The "End of Period Subscribers" metric reports WW subscribers in Company-owned operations at a given period end as follows: (i) "End of Period Digital Subscribers" is the total number of Digital, including Personal Coaching + Digital, subscribers; (ii) "End of Period Studio + Digital Subscribers" is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) "End of Period Subscribers" is the sum of End of Period Digital Subscribers and End of Period Studio + Digital Subscribers.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Twelve Months Ended
December 29, December 30, Variance
2018 2017
Digital Paid Weeks (1)
North America 93,906 67,614 38.9 %
CE 38,845 28,107 38.2 %
UK 8,944 7,199 24.2 %
Other (2) 2,899 2,274 27.5 %
Total Digital Paid Weeks 144,594 105,194 37.5 %
Studio + Digital Paid Weeks (1)
North America 57,305 52,073 10.0 %
CE 12,574 11,266 11.6 %
UK 10,886 10,324 5.4 %
Other (2) 2,521 2,692 (6.4 %)
Total Studio + Digital Paid Weeks 83,286 76,355 9.1 %
Total Paid Weeks (1)
North America 151,211 119,687 26.3 %
CE 51,419 39,373 30.6 %
UK 19,830 17,523 13.2 %
Other (2) 5,420 4,966 9.1 %
Total Paid Weeks 227,880 181,549 25.5 %
End of Period Digital Subscribers (3)
North America 1,648 1,251 31.8 %
CE 730 535 36.6 %
UK 160 134 19.2 %
Other (2) 56 44 24.9 %
Total End of Period Digital Subscribers 2,594 1,964 32.1 %
End of Period Studio + Digital Subscribers (3)
North America 910 866 5.1 %
CE 210 189 11.3 %
UK 174 162 7.3 %
Other (2) 44 33 31.6 %
Total End of Period Studio + Digital Subscribers 1,338 1,250 7.1 %
Total End of Period Subscribers (3)
North America 2,558 2,117 20.9 %
CE 940 724 30.0 %
UK 334 296 12.7 %
Other (2) 100 77 27.8 %
Total End of Period Subscribers 3,932 3,214 22.4 %
(1) The "Paid Weeks" metric reports paid weeks by WW customers in Company-owned operations for a given period as follows: (i) "Digital Paid Weeks" is the total paid subscription weeks for the Company's digital subscription products (including Personal Coaching + Digital); (ii) "Studio + Digital Paid Weeks" is the sum of total paid commitment plan weeks which include workshops and digital offerings and total "pay-as-you-go" weeks; and (iii) "Total Paid Weeks" is the sum of Digital Paid Weeks and Studio + Digital Paid Weeks.
(2) Represents Australia, New Zealand and emerging markets.
(3) The "End of Period Subscribers" metric reports WW subscribers in Company-owned operations at a given period end as follows: (i) "End of Period Digital Subscribers" is the total number of Digital, including Personal Coaching + Digital, subscribers; (ii) "End of Period Studio + Digital Subscribers" is the total number of commitment plan subscribers that have access to combined workshops and digital offerings; and (iii) "End of Period Subscribers" is the sum of End of Period Digital Subscribers and End of Period Studio + Digital Subscribers.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Q4 2018 Variance
2018
Constant
Q4 2018 Q4 2017 2018 Currency
Currency Constant vs vs
GAAP Adjustment Currency GAAP 2017 2017
Selected Financial Data
Consolidated Company Revenues $ 330,386 $ 4,619 $ 335,005 $ 312,488 5.7 % 7.2 %
Consolidated Digital Subscription Revenues (1) $ 134,902 $ 2,077 $ 136,979 $ 104,012 29.7 % 31.7 %
Consolidated Studio + Digital Fees (2) $ 153,932 $ 1,941 $ 155,873 $ 159,971 (3.8 %) (2.6 %)
Consolidated Service Revenues (3) $ 288,834 $ 4,018 $ 292,852 $ 263,983 9.4 % 10.9 %
Consolidated Product Sales and Other (4) $ 41,552 $ 601 $ 42,153 $ 48,505 (14.3 %) (13.1 %)
North America
Digital Subscription Revenues (1) $ 89,675 $ 248 $ 89,923 $ 68,456 31.0 % 31.4 %
Studio + Digital Fees (2) $ 114,173 $ 310 $ 114,483 $ 117,694 (3.0 %) (2.7 %)
Service Revenues (3) $ 203,848 $ 558 $ 204,406 $ 186,150 9.5 % 9.8 %
Product Sales and Other (4) $ 24,410 $ 61 $ 24,471 $ 28,802 (15.2 %) (15.0 %)
Total Revenues $ 228,258 $ 618 $ 228,876 $ 214,952 6.2 % 6.5 %
CE
Digital Subscription Revenues (1) $ 36,140 $ 1,379 $ 37,519 $ 27,050 33.6 % 38.7 %
Studio + Digital Fees (2) $ 23,605 $ 863 $ 24,468 $ 23,547 0.2 % 3.9 %
Service Revenues (3) $ 59,745 $ 2,242 $ 61,987 $ 50,596 18.1 % 22.5 %
Product Sales and Other (4) $ 8,062 $ 293 $ 8,355 $ 9,046 (10.9 %) (7.6 %)
Total Revenues $ 67,807 $ 2,535 $ 70,342 $ 59,643 13.7 % 17.9 %
UK
Digital Subscription Revenues (1) $ 5,756 $ 185 $ 5,941 $ 5,590 3.0 % 6.3 %
Studio + Digital Fees (2) $ 11,124 $ 347 $ 11,471 $ 12,714 (12.5 %) (9.8 %)
Service Revenues (3) $ 16,880 $ 533 $ 17,413 $ 18,304 (7.8 %) (4.9 %)
Product Sales and Other (4) $ 5,340 $ 141 $ 5,481 $ 5,779 (7.6 %) (5.2 %)
Total Revenues $ 22,221 $ 673 $ 22,894 $ 24,083 (7.7 %) (4.9 %)
Other (5)
Digital Subscription Revenues (1) $ 3,331 $ 265 $ 3,596 $ 2,917 14.2 % 23.3 %
Studio + Digital Fees (2) $ 5,030 $ 421 $ 5,451 $ 6,017 (16.4 %) (9.4 %)
Service Revenues (3) $ 8,361 $ 686 $ 9,047 $ 8,934 (6.4 %) 1.3 %
Product Sales and Other (4) $ 3,738 $ 106 $ 3,844 $ 4,871 (23.3 %) (21.1 %)
Total Revenues $ 12,099 $ 793 $ 12,892 $ 13,805 (12.4 %) (6.6 %)
(1) "Digital Subscription Revenues" consist of the fees associated with subscriptions for the Company's Digital offerings, including the Personal Coaching + Digital product.
(2) "Studio + Digital Fees" consist of the fees associated with the Company's subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.
(3) "Service Revenues" equal "Digital Subscription Revenues" plus "Studio + Digital Fees".
(4) "Product Sales" are sales of consumer products in workshops and via e-commerce, and "Other" are revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company's websites and sales from the By Mail product, other revenues, and, in the case of the consolidated financial results and Other reportable segment, includes franchise fees with respect to commitment plans and commissions.
(5) Represents Australia, New Zealand, emerging markets and franchise revenues.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Full Year 2018 Variance
2018
Constant
Full Year 2018 Full Year 2017 2018 Currency
Currency Constant vs vs
GAAP Adjustment Currency GAAP 2017 2017
Selected Financial Data
Consolidated Company Revenues $ 1,514,121 $ (14,866 ) $ 1,499,256 $ 1,306,911 15.9 % 14.7 %
Consolidated Digital Subscription Revenues (1) $ 567,766 $ (5,496 ) $ 562,270 $ 416,722 36.2 % 34.9 %
Consolidated Studio + Digital Fees (2) $ 705,430 $ (5,506 ) $ 699,924 $ 664,957 6.1 % 5.3 %
Consolidated Service Revenues (3) $ 1,273,196 $ (11,002 ) $ 1,262,195 $ 1,081,679 17.7 % 16.7 %
Consolidated Product Sales and Other (4) $ 240,925 $ (3,864 ) $ 237,061 $ 225,232 7.0 % 5.3 %
North America
Digital Subscription Revenues (1) $ 378,678 $ (59 ) $ 378,619 $ 281,432 34.6 % 34.5 %
Studio + Digital Fees (2) $ 522,372 $ (181 ) $ 522,191 $ 493,800 5.8 % 5.7 %
Service Revenues (3) $ 901,050 $ (240 ) $ 900,810 $ 775,231 16.2 % 16.2 %
Product Sales and Other (4) $ 146,201 $ (54 ) $ 146,147 $ 135,117 8.2 % 8.2 %
Total Revenues $ 1,047,252 $ (295 ) $ 1,046,957 $ 910,349 15.0 % 15.0 %
CE
Digital Subscription Revenues (1) $ 149,571 $ (5,000 ) $ 144,571 $ 102,039 46.6 % 41.7 %
Studio + Digital Fees (2) $ 107,528 $ (4,233 ) $ 103,295 $ 93,723 14.7 % 10.2 %
Service Revenues (3) $ 257,099 $ (9,232 ) $ 247,867 $ 195,762 31.3 % 26.6 %
Product Sales and Other (4) $ 47,226 $ (2,619 ) $ 44,607 $ 43,461 8.7 % 2.6 %
Total Revenues $ 304,324 $ (11,850 ) $ 292,474 $ 239,223 27.2 % 22.3 %
UK
Digital Subscription Revenues (1) $ 25,557 $ (926 ) $ 24,631 $ 21,477 19.0 % 14.7 %
Studio + Digital Fees (2) $ 52,676 $ (2,046 ) $ 50,630 $ 52,161 1.0 % (2.9 %)
Service Revenues (3) $ 78,233 $ (2,972 ) $ 75,261 $ 73,639 6.2 % 2.2 %
Product Sales and Other (4) $ 28,839 $ (1,319 ) $ 27,520 $ 26,351 9.4 % 4.4 %
Total Revenues $ 107,071 $ (4,289 ) $ 102,782 $ 99,989 7.1 % 2.8 %
Other (5)
Digital Subscription Revenues (1) $ 13,961 $ 488 $ 14,449 $ 11,774 18.6 % 22.7 %
Studio + Digital Fees (2) $ 22,853 $ 955 $ 23,808 $ 25,273 (9.6 %) (5.8 %)
Service Revenues (3) $ 36,814 $ 1,442 $ 38,256 $ 37,047 (0.6 %) 3.3 %
Product Sales and Other (4) $ 18,643 $ 126 $ 18,769 $ 20,268 (8.0 %) (7.4 %)
Total Revenues $ 55,457 $ 1,569 $ 57,026 $ 57,316 (3.2 %) (0.5 %)
(1) "Digital Subscription Revenues" consist of the fees associated with subscriptions for the Company's Digital offerings, including the Personal Coaching + Digital product.
(2) "Studio + Digital Fees" consist of the fees associated with the Company's subscription plans for combined workshops and digital offerings and other payment arrangements for access to workshops.
(3) "Service Revenues" equal "Digital Subscription Revenues" plus "Studio + Digital Fees".
(4) "Product Sales" are sales of consumer products in workshops and via e-commerce, and "Other" are revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications and on the Company's websites and sales from the By Mail product, other revenues, and, in the case of the consolidated financial results and Other reportable segment, includes franchise fees with respect to commitment plans and commissions.
(5) Represents Australia, New Zealand, emerging markets and franchise revenues.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Q4 2018 Variance
2018 Constant Currency
Q4 2018 Q4 2017 2018 2018
2018 vs 2018 vs
Currency Constant vs 2017 vs 2017
GAAP Adjustment Currency GAAP Adjustment (1) Adjusted 2017 Adjusted 2017 Adjusted
Selected Financial Data
Gross Profit $ 185,220 $ 2,624 $ 187,844 $ 162,451 $ - $ 162,451 14.0 % 14.0 % 15.6 % 15.6 %
Gross Margin 56.1 % 56.1 % 52.0 % 52.0 %
Selling, General and Administrative Expenses $ 68,409 $ 776 $ 69,185 $ 57,550 $ - $ 57,550 18.9 % 18.9 % 20.2 % 20.2 %
Operating Income $ 80,347 $ 1,308 $ 81,655 $ 49,488 $ 13,323 $ 62,811 62.4 % 27.9 % 65.0 % 30.0 %
Operating Income Margin 24.3 % 24.4 % 15.8 % 20.1 %
(1) Excludes the impairment charge of $13,323 for the Company's goodwill related to its Brazil operations.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Full Year 2018 Variance
2018 Constant Currency
Full Year 2018 Full Year 2017 2018 2018
2018 vs 2018 vs
Currency Constant vs 2017 vs 2017
GAAP Adjustment Currency GAAP Adjustment (1) Adjusted 2017 Adjusted 2017 Adjusted
Selected Financial Data
Gross Profit $ 866,410 $ (9,114 ) $ 857,296 $ 692,649 $ - $ 692,649 25.1 % 25.1 % 23.8 % 23.8 %
Gross Margin 57.2 % 57.2 % 53.0 % 53.0 %
Selling, General and Administrative Expenses $ 251,106 $ (687 ) $ 250,419 $ 211,224 $ - $ 211,224 18.9 % 18.9 % 18.6 % 18.6 %
Operating Income $ 388,985 $ (3,590 ) $ 385,395 $ 267,305 $ 13,323 $ 280,628 45.5 % 38.6 % 44.2 % 37.3 %
Operating Income Margin 25.7 % 25.7 % 20.5 % 21.5 %
(1) Excludes the impairment charge of $13,323 for the Company's goodwill related to its Brazil operations.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
UNAUDITED
Three Months Ended Twelve Months Ended
December 29, December 30, December 29, December 30,
2018 2017 2018 2017
Net Income $ 43,785 $ 62,969 $ 223,749 $ 163,514
Interest 35,108 30,557 142,346 112,784
Taxes 912 (54,695 ) 20,493 (18,237 )
Depreciation and Amortization 11,467 12,549 44,061 50,880
Stock-based Compensation 4,842 5,577 20,188 14,949
EBITDAS $ 96,114 $ 56,957 $ 450,837 $ 323,890
Goodwill Impairment (1) - 13,323 - 13,323
Adjusted EBITDAS $ 96,114 $ 70,280 $ 450,837 $ 337,213
(1) Impairment charge of the Company's goodwill related to its Brazil operations.

For more information, contact:
Investors:
Corey Kinger, WW
212.601.7569
[email protected]

Media:
Megan Bishop, Teneo Strategy for WW
917.544.0071
[email protected]

Source: Weight Watchers International Inc