WW International Inc.

08/04/2020 | Press release | Archived content

Second Quarter 2020 Earnings Release

  • Q2 2020 End of Period Subscribers up 9% year-over-year to 5.0 million, an all-time Q2-end high
  • Q2 2020 End of Period Digital Subscribers at all-time high and up 23% year-over-year
  • Q2 2020 Revenues of $334 million, down 10%, or 9% on a constant currency basis, year-over-year due to studio closures
  • Q2 2020 Gross Margin of 58%; excluding one-time charges, Q2 2020 adjusted gross margin of 60%, the highest level in 8 years

NEW YORK, Aug. 04, 2020 (GLOBE NEWSWIRE) -- WW International, Inc. (NASDAQ: WW) today announced its results for the second quarter of fiscal 2020.

"We ended the quarter with our highest-ever Q2 subscriber base of 5.0 million, driven by a record level of digital subscribers, which were up 23% year-over-year. These milestones combined with the strength in digital revenues and our high margins are all testament to the work of our teams and talent around the world," said Mindy Grossman, the Company's President and CEO. "The impact of our accelerated digital transformation is evident in our second quarter results and will continue to be a key driver of our future growth and profitability. Creating exciting new coaching experiences, adding new digital features and producing creative content that is insightful, interactive and engaging will greatly increase our ability to attract new members to WW, retain them longer, help them achieve their weight loss and wellness goals, and deliver on our mission to democratize wellness for all."

"Our second quarter results demonstrate the benefits of our digital focus with strength in digital revenues, ecommerce, and gross margin," said Nick Hotchkin, the Company's CFO, Operating Officer, North America and President, Emerging Markets. "While our Q2 2020 GAAP EPS was $0.20, excluding one-time charges in the quarter, adjusted EPS was $0.67, demonstrating strong performance despite the COVID-19 environment. We are nimbly managing our studio cost structure and are on-track to deliver on our $100 million cost-savings initiative, while maintaining strong liquidity and financial flexibility."

Q2 2020 Consolidated Results



% Change 		% Change
Adjusted for
Constant
Currency(1)
Three Months Ended
June 27, June 29,
2020 2019
(in millions except percentages and per share amounts)
Service Revenues, net $ 293.0 $ 313.8 (6.6 %) (5.7 %)
Product Sales and Other, net 40.6 55.3 (26.5 %) (25.7 %)
Revenues, net $ 333.6 $ 369.0 (9.6 %) (8.7 %)
Gross Profit 194.7 215.8 (9.8 %) (8.8 %)
Adjustments
2020 Restructuring Charges $ 6.5 --
Adjusted Gross Profit(1) $ 201.2 $ 215.8 (6.8 %) (5.8 %)
Operating Income $ 51.0 $ 105.5 (51.7 %) (50.4 %)
Adjustments
Winfrey Stock Compensation Expense $ 32.7 --
2020 Restructuring Charges $ 11.2 --
Adjusted Operating Income(1) $ 94.9 $ 105.5 (10.0 %) (8.7 %)
Net Income* $ 14.0 $ 53.8 (74.0 %) (72.1 %)
EPS $ 0.20 $ 0.78 (74.2 %) (72.4 %)


Total Paid Weeks 		63.9 60.8 5.1 % N/A
Digital(2) Paid Weeks 48.3 41.3 16.8 % N/A
Studio + Digital(3) Paid Weeks 15.6 19.5 (19.7 %) N/A
End of Period Subscribers(4) 5.0 4.6 8.6 % N/A
Digital Subscribers 3.9 3.2 23.2 % N/A
Studio + Digital Subscribers 1.1 1.4 (24.2 %) 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 WW International, Inc.

Q2 2020 Business and Financial Highlights

  • End of Period Subscribers in Q2 2020 were up 8.6% versus the prior year period, driven by Digital subscriber growth across all major geographic markets. Q2 2020 End of Period Digital Subscribers were up 23.2% and End of Period Studio + Digital Subscribers were down 24.2% versus the prior year period.
  • Total Paid Weeks in Q2 2020 were up 5.1% versus the prior year period, driven by Digital growth across all major geographic markets. Q2 2020 Digital Paid Weeks increased 16.8% and Studio + Digital Paid Weeks decreased 19.7% versus the prior year period.
  • Revenues in Q2 2020 were $333.6 million. On a constant currency basis, Q2 2020 revenues decreased 8.7% versus the prior year period.
    • Service Revenues in Q2 2020 were $293.0 million. On a constant currency basis, these revenues decreased 5.7% versus the prior year period, primarily driven by declines in Studio + Digital Fees as a result of the closure of our studios due to COVID-19.
    • Product Sales and Other in Q2 2020 were $40.6 million. On a constant currency basis, these revenues decreased 25.7% versus the prior year period, primarily due to lower in-studio product sales as a result of the closure of our studios due to COVID-19.
  • Gross Profit in Q2 2020 was $194.7 million. Adjusted gross profit in Q2 2020 was $201.2 million, which excluded $6.5 million in charges associated with the Company's previously disclosed 2020 organizational restructuring plan. On a constant currency basis, adjusted gross profit would have decreased 5.8% versus the prior year period.
    • Gross Margin in Q2 2020 was 58.3% and adjusted gross margin was 60.3%. This compares to a gross margin of 58.5% in the prior year period.
  • Operating Income in Q2 2020 was $51.0 million. Adjusted operating income in Q2 2020 was $94.9 million, which excluded 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 the $11.2 million in charges associated with the Company's previously disclosed 2020 organizational restructuring plan. On a constant currency basis, adjusted operating income would have decreased 8.7% versus the prior year period. This decrease was due to lower revenues related to the Company's Studio + Digital business.
    • Operating Income Margin for Q2 2020 was 15.3% and adjusted operating income margin was 28.4%. This compares to an operating income margin of 28.6% in the prior year period.
  • Effective Tax Rate in Q2 2020 was 28.6%, versus 23.6% in the prior year period.
  • Net Income in Q2 2020 was $14.0 million compared to $53.8 million in the prior year period.
  • Earnings per fully diluted share (EPS) in Q2 2020 was $0.20 compared to $0.78 in the prior year period.
    • Certain items affect year-over-year comparability. The following items in the aggregate negatively impacted Q2 2020 fully diluted EPS by $0.47:
      • $0.35 per fully diluted share impact from the one-time stock compensation expense associated with the previously disclosed option granted to Ms. Winfrey in connection with the Company extending its partnership with Ms. Winfrey.
      • $0.12 per fully diluted share impact from charges associated with the Company's previously disclosed 2020 organizational restructuring plan.

Other Items

  • Cash balance as of June 27, 2020 was $150.4 million. On June 5, 2020, WW fully repaid the borrowings outstanding under its revolving credit facility, which it previously drew down in Q1 2020 as a precautionary measure in light of the COVID-19 outbreak.

Second Quarter 2020 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, Operating Officer, North America & President, Emerging Markets, will discuss the second quarter of fiscal 2020 results and answer questions from the investment community.

The live webcast of the conference call will be available on the Company's corporate website, corporate.ww.com, in the Investors section under Presentations and Events. Supplemental investor materials will also be available in the same location prior to the start of the webcast. 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 and today's scheduled conference call:

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. Gross profit, gross profit margin, operating income, operating income margin, and earnings per fully diluted share are discussed both as reported (on a GAAP basis) and, with respect to the second quarter of fiscal 2020, as adjusted (on a non-GAAP basis), to exclude the impact of the one-time stock compensation expense associated with the previously disclosed option granted to Ms. Winfrey in connection with the Company extending its partnership with Ms. Winfrey and charges associated with the Company's previously disclosed 2020 organizational restructuring plan, as applicable. 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"), earnings before interest, taxes, depreciation, amortization, stock-based compensation, 2020 restructuring charges and goodwill impairment ("Adjusted EBITDAS"), net debt, and a net debt to Adjusted EBITDAS ratio. 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. 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 WW International, Inc.
WW - Weight Watchers reimagined - is a global wellness company powered by the world's leading commercial weight management program. We inspire millions of people to adopt healthy habits for real life. Through our engaging tech-enabled experience and face-to-face group workshops, members follow our livable and sustainable program of healthy eating, physical activity, and a helpful mindset. Leveraging more than five decades of experience in building inspired communities and our deep expertise in behavioral science, we aim to democratize wellness and 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 and the impact of the COVID-19 virus. The Company generally uses the words "may," "will," "could," "expect," "anticipate," "believe," "estimate," "plan," "intend," "aim" 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: the impact of the global outbreak of the COVID-19 virus on the Company's business and liquidity and on the business environment and markets in which the Company operates; 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, including the Company's strategic digital transformation; 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, debt service obligations and debt covenants, and the Company's exposure to variable rate indebtedness; the ability 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 data security breaches or privacy concerns, including the costs of compliance with evolving privacy laws and regulations; 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, social, intellectual property 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; the impact that the sale of substantial amounts of the Company's common stock by existing large shareholders, or the perception that such sales could occur, could have on the market price 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).

WW INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
UNAUDITED
June 27, December 28,
2020 2019
ASSETS
Cash and cash equivalents $ 150,409 $ 182,736
Other current assets 127,229 112,654
TOTAL CURRENT ASSETS 277,638 295,390
Property and equipment, net 60,924 54,066
Operating lease assets 140,723 151,983
Goodwill, franchise rights and other intangible assets, net 961,454 970,392
Other assets 28,801 26,483
TOTAL ASSETS $ 1,469,540 $ 1,498,314
LIABILITIES AND TOTAL DEFICIT
Portion of long-term debt due within one year $ 96,250 $ 96,250
Portion of operating lease liabilities due within one year 37,829 33,236
Other current liabilities 237,306 264,584
TOTAL CURRENT LIABILITIES 371,385 394,070
Long-term debt 1,444,360 1,479,920
Long-term operating lease liabilities 117,254 128,464
Deferred income taxes, other 182,085 177,681
TOTAL LIABILITIES $ 2,115,084 $ 2,180,135
Redeemable noncontrolling interest 3,609 3,722
Shareholders' deficit (649,153 ) (685,543 )
TOTAL LIABILITIES AND TOTAL DEFICIT $ 1,469,540 $ 1,498,314
WW INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Three Months Ended
June 27, June 29,
2020 2019
Service revenues, net (1) $ 292,997 $ 313,768
Product sales and other, net (2) 40,640 55,255
Revenues, net 333,637 369,023
Cost of services (3) 108,006 122,121
Cost of product sales and other 30,960 31,088
Cost of revenues 138,966 153,209
Gross profit 194,671 215,814
Marketing expenses 41,894 49,967
Selling, general and administrative expenses 101,792 60,374
Operating income 50,985 105,473
Interest expense 30,995 34,732
Other expense, net 416 438
Income before income taxes 19,574 70,303
Provision for income taxes 5,592 16,586
Net income 13,982 53,717
Net loss attributable to the noncontrolling interest 24 117
Net income attributable to WW International, Inc. $ 14,006 $ 53,834
Earnings Per Share attributable to WW International, Inc.
Basic $ 0.21 $ 0.80
Diluted $ 0.20 $ 0.78
Weighted average common shares outstanding:
Basic 67,641 67,124
Diluted 69,799 69,141
Note: Totals may not sum due to rounding.
(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 studios, via e-commerce, and through several trusted retail partners, 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 royalties.
(3) Consists of cost of revenues and operating expenses for the Company's Digital and Studio + Digital services.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Six Months Ended
June 27, June 29,
2020 2019
Service revenues, net (1) $ 617,654 $ 620,494
Product sales and other, net (2) 116,344 111,694
Revenues, net 733,998 732,188
Cost of services (3) 243,572 251,078
Cost of product sales and other 84,764 64,347
Cost of revenues 328,336 315,425
Gross profit 405,662 416,763
Marketing expenses 159,828 164,216
Selling, general and administrative expenses 166,318 125,176
Goodwill impairment 3,665 -
Operating income 75,851 127,371
Interest expense 62,546 69,927
Other expense, net 438 741
Income before income taxes 12,867 56,703
Provision for income taxes 4,942 13,711
Net income 7,925 42,992
Net loss attributable to the noncontrolling interest 18 156
Net income attributable to WW International, Inc. $ 7,943 $ 43,148
Earnings Per Share attributable to WW International, Inc.
Basic $ 0.12 $ 0.64
Diluted $ 0.11 $ 0.62
Weighted average common shares outstanding:
Basic 67,538 67,044
Diluted 69,898 69,268
Note: Totals may not sum due to rounding.
(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 studios, via e-commerce, and through several trusted retail partners, 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 (including revenues from the WW Presents: Oprah's 2020 Vision tour), and franchise fees with respect to commitment plans and royalties.
(3) Consists of cost of revenues and operating expenses for the Company's Digital and Studio + Digital services.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Three Months Ended
June 27, June 29, Variance
2020 2019
Digital Paid Weeks(1)
North America 30,439 26,027 17.0 %
CE 13,941 11,992 16.3 %
UK 3,010 2,536 18.7 %
Other (2) 893 774 15.4 %
Total Digital Paid Weeks 48,282 41,329 16.8 %
Studio + Digital Paid Weeks(1)
North America 10,670 13,134 (18.8 %)
CE 2,568 3,094 (17.0 %)
UK 1,970 2,672 (26.3 %)
Other (2) 434 572 (24.2 %)
Total Studio + Digital Paid Weeks 15,642 19,473 (19.7 %)
Total Paid Weeks (1)
North America 41,109 39,161 5.0 %
CE 16,509 15,086 9.4 %
UK 4,979 5,208 (4.4 %)
Other (2) 1,327 1,346 (1.4 %)
Total Paid Weeks 63,924 60,802 5.1 %
End of Period Digital Subscribers(3)
North America 2,475 1,996 24.0 %
CE 1,105 914 20.8 %
UK 250 195 28.1 %
Other (2) 70 59 17.4 %
Total End of Period Digital Subscribers 3,900 3,165 23.2 %
End of Period Studio + Digital Subscribers(3)
North America 734 945 (22.3 %)
CE 168 223 (24.8 %)
UK 134 192 (30.3 %)
Other (2) 28 43 (35.8 %)
Total End of Period Studio + Digital Subscribers 1,063 1,403 (24.2 %)
Total End of Period Subscribers(3)
North America 3,209 2,941 9.1 %
CE 1,273 1,138 11.9 %
UK 384 387 (0.9 %)
Other (2) 98 103 (5.0 %)
Total End of Period Subscribers 4,963 4,568 8.6 %
Note: Totals may not sum due to rounding.
(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.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Six Months Ended
June 27, June 29, Variance
2020 2019
Digital Paid Weeks(1)
North America 59,859 50,635 18.2 %
CE 26,901 23,146 16.2 %
UK 5,891 4,972 18.5 %
Other (2) 1,836 1,566 17.3 %
Total Digital Paid Weeks 94,487 80,318 17.6 %
Studio + Digital Paid Weeks(1)
North America 23,634 26,378 (10.4 %)
CE 5,584 6,219 (10.2 %)
UK 4,584 5,388 (14.9 %)
Other (2) 1,027 1,205 (14.8 %)
Total Studio + Digital Paid Weeks 34,829 39,190 (11.1 %)
Total Paid Weeks (1)
North America 83,493 77,013 8.4 %
CE 32,485 29,365 10.6 %
UK 10,475 10,360 1.1 %
Other (2) 2,863 2,770 3.3 %
Total Paid Weeks 129,316 119,508 8.2 %
End of Period Digital Subscribers(3)
North America 2,475 1,996 24.0 %
CE 1,105 914 20.8 %
UK 250 195 28.1 %
Other (2) 70 60 17.4 %
Total End of Period Digital Subscribers 3,900 3,165 23.2 %
End of Period Studio + Digital Subscribers(3)
North America 734 945 (22.3 %)
CE 168 223 (24.8 %)
UK 134 192 (30.3 %)
Other (2) 28 43 (35.8 %)
Total End of Period Studio + Digital Subscribers 1,063 1,403 (24.2 %)
Total End of Period Subscribers(3)
North America 3,209 2,941 9.1 %
CE 1,273 1,138 11.9 %
UK 384 387 (0.9 %)
Other (2) 98 103 (5.0 %)
Total End of Period Subscribers 4,963 4,568 8.6 %
Note: Totals may not sum due to rounding.
(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.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Q2 2020 Variance
2020
Constant
Q2 2020 Q2 2019 2020 Currency
Currency Constant vs vs
GAAP Adjustment Currency GAAP 2019 2019
Selected Financial Data
Consolidated Company Revenues $ 333,637 $ 3,405 $ 337,043 $ 369,023 (9.6 %) (8.7 %)
Consolidated Digital Subscription Revenues (1) $ 177,921 $ 1,813 $ 179,734 $ 156,969 13.3 % 14.5 %
Consolidated Studio + Digital Fees (2) $ 115,076 $ 1,158 $ 116,234 $ 156,799 (26.6 %) (25.9 %)
Consolidated Service Revenues (3) $ 292,997 $ 2,971 $ 295,968 $ 313,768 (6.6 %) (5.7 %)
Consolidated Product Sales and Other (4) $ 40,640 $ 434 $ 41,074 $ 55,255 (26.5 %) (25.7 %)
North America
Digital Subscription Revenues (1) $ 115,922 $ 303 $ 116,225 $ 102,851 12.7 % 13.0 %
Studio + Digital Fees (2) $ 86,131 $ 194 $ 86,325 $ 116,958 (26.4 %) (26.2 %)
Service Revenues (3) $ 202,053 $ 496 $ 202,549 $ 219,809 (8.1 %) (7.9 %)
Product Sales and Other (4) $ 25,472 $ 49 $ 25,521 $ 35,835 (28.9 %) (28.7 %)
Total Revenues $ 227,525 $ 544 $ 228,069 $ 255,644 (11.0 %) (10.8 %)
CE
Digital Subscription Revenues (1) $ 50,704 $ 913 $ 51,617 $ 43,586 16.3 % 18.4 %
Studio + Digital Fees (2) $ 17,858 $ 346 $ 18,204 $ 23,681 (24.6 %) (23.1 %)
Service Revenues (3) $ 68,562 $ 1,259 $ 69,821 $ 67,267 1.9 % 3.8 %
Product Sales and Other (4) $ 9,257 $ 186 $ 9,443 $ 10,062 (8.0 %) (6.2 %)
Total Revenues $ 77,819 $ 1,445 $ 79,264 $ 77,329 0.6 % 2.5 %
UK
Digital Subscription Revenues (1) $ 7,571 $ 259 $ 7,830 $ 6,993 8.3 % 12.0 %
Studio + Digital Fees (2) $ 8,001 $ 283 $ 8,284 $ 11,498 (30.4 %) (28.0 %)
Service Revenues (3) $ 15,572 $ 541 $ 16,113 $ 18,491 (15.8 %) (12.9 %)
Product Sales and Other (4) $ 4,165 $ 141 $ 4,306 $ 6,034 (31.0 %) (28.6 %)
Total Revenues $ 19,737 $ 682 $ 20,419 $ 24,525 (19.5 %) (16.7 %)
Other (5)
Digital Subscription Revenues (1) $ 3,724 $ 338 $ 4,062 $ 3,539 5.2 % 14.8 %
Studio + Digital Fees (2) $ 3,086 $ 336 $ 3,422 $ 4,662 (33.8 %) (26.6 %)
Service Revenues (3) $ 6,810 $ 674 $ 7,484 $ 8,201 (17.0 %) (8.7 %)
Product Sales and Other (4) $ 1,746 $ 60 $ 1,806 $ 3,324 (47.5 %) (45.7 %)
Total Revenues $ 8,556 $ 735 $ 9,291 $ 11,525 (25.8 %) (19.4 %)
Note: Totals may not sum due to rounding.
(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 studios, via e-commerce, and through several trusted retail partners, 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 royalties.
(5) Represents Australia, New Zealand, emerging markets and franchise revenues.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
First Half 2020 Variance
2020
Constant
First Half 2020 First Half 2019 2020 Currency
Currency Constant vs vs
GAAP Adjustment Currency GAAP 2019 2019
Selected Financial Data
Consolidated Company Revenues $ 733,998 $ 7,093 $ 741,092 $ 732,188 0.2 % 1.2 %
Consolidated Digital Subscription Revenues (1) $ 352,467 $ 3,731 $ 356,198 $ 305,824 15.3 % 16.5 %
Consolidated Studio + Digital Fees (2) $ 265,188 $ 2,422 $ 267,610 $ 314,670 (15.7 %) (15.0 %)
Consolidated Service Revenues (3) $ 617,654 $ 6,153 $ 623,808 $ 620,494 (0.5 %) 0.5 %
Consolidated Product Sales and Other (4) $ 116,344 $ 940 $ 117,284 $ 111,694 4.2 % 5.0 %
North America
Digital Subscription Revenues (1) $ 232,272 $ 365 $ 232,637 $ 201,611 15.2 % 15.4 %
Studio + Digital Fees (2) $ 198,974 $ 248 $ 199,222 $ 234,557 (15.2 %) (15.1 %)
Service Revenues (3) $ 431,246 $ 614 $ 431,860 $ 436,169 (1.1 %) (1.0 %)
Product Sales and Other (4) $ 79,986 $ 48 $ 80,034 $ 69,488 15.1 % 15.2 %
Total Revenues $ 511,232 $ 661 $ 511,893 $ 505,656 1.1 % 1.2 %
CE
Digital Subscription Revenues (1) $ 97,341 $ 2,281 $ 99,622 $ 83,769 16.2 % 18.9 %
Studio + Digital Fees (2) $ 39,377 $ 949 $ 40,326 $ 47,630 (17.3 %) (15.3 %)
Service Revenues (3) $ 136,718 $ 3,231 $ 139,949 $ 131,399 4.0 % 6.5 %
Product Sales and Other (4) $ 21,091 $ 530 $ 21,621 $ 22,087 (4.5 %) (2.1 %)
Total Revenues $ 157,809 $ 3,760 $ 161,569 $ 153,486 2.8 % 5.3 %
UK
Digital Subscription Revenues (1) $ 15,147 $ 395 $ 15,542 $ 13,411 12.9 % 15.9 %
Studio + Digital Fees (2) $ 19,130 $ 472 $ 19,602 $ 22,761 (16.0 %) (13.9 %)
Service Revenues (3) $ 34,277 $ 866 $ 35,143 $ 36,172 (5.2 %) (2.8 %)
Product Sales and Other (4) $ 10,488 $ 213 $ 10,701 $ 12,964 (19.1 %) (17.5 %)
Total Revenues $ 44,765 $ 1,079 $ 45,844 $ 49,136 (8.9 %) (6.7 %)
Other (5)
Digital Subscription Revenues (1) $ 7,706 $ 691 $ 8,397 $ 7,033 9.6 % 19.4 %
Studio + Digital Fees (2) $ 7,707 $ 753 $ 8,460 $ 9,722 (20.7 %) (13.0 %)
Service Revenues (3) $ 15,413 $ 1,443 $ 16,856 $ 16,755 (8.0 %) 0.6 %
Product Sales and Other (4) $ 4,779 $ 151 $ 4,930 $ 7,155 (33.2 %) (31.1 %)
Total Revenues $ 20,192 $ 1,594 $ 21,786 $ 23,910 (15.5 %) (8.9 %)
Note: Totals may not sum due to rounding.
(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 studios, via e-commerce, and through several trusted retail partners, 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 (including revenues from the WW Presents: Oprah's 2020 Vision tour), and, in the case of the consolidated financial results and Other reportable segment, includes franchise fees with respect to commitment plans and royalties.
(5) Represents Australia, New Zealand, emerging markets and franchise revenues.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
Q2 2020 Variance
2020 Constant Currency
Q2 2020 Q2 2019 2020 2020
Adjusted 2020 Adjusted 2020 Adjusted
Currency Constant Constant vs vs vs vs
GAAP Adjustment Adjusted Adjustment Currency Currency GAAP 2019 2019 2019 2019
Selected Financial Data
Gross Profit $ 194,671 $ 6,503 (1) $ 201,174 $ 2,212 $ 196,883 $ 203,386 $ 215,814 (9.8 %) (6.8 %) (8.8 %) (5.8 %)
Gross Margin 58.3% 60.3% 58.4% 60.3% 58.5%
Selling, General and Administrative Expenses $ 101,792 $ (37,392 ) (2) $ 64,400 $ 518 $ 102,310 $ 64,918 $ 60,374 68.6 % 6.7 % 69.5 % 7.5 %
Operating Income $ 50,985 $ 43,895 (3) $ 94,879 $ 1,372 $ 52,357 $ 96,251 $ 105,473 (51.7 %) (10.0 %) (50.4 %) (8.7 %)
Operating Income Margin 15.3% 28.4% 15.5% 28.6% 28.6%
Note: Totals may not sum due to rounding.
(1) Excludes $6,503 of charges associated with the Company's previously disclosed 2020 organizational restructuring plan.
(2) Excludes the one-time stock compensation expense of $32,686 associated with the previously disclosed option granted to Ms. Oprah Winfrey in connection with the Company extending its partnership with Ms. Winfrey and $4,706 of charges associated with the Company's previously disclosed 2020 organizational restructuring plan.
(3) Excludes the one-time stock compensation expense of $32,686 associated with the previously disclosed option granted to Ms. Oprah Winfrey in connection with the Company extending its partnership with Ms. Winfrey and the $6,503 and $4,706 of charges associated with the Company's previously disclosed 2020 organizational restructuring plan recorded to cost of services and selling, general and administrative expenses, respectively.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT PERCENTAGES)
UNAUDITED
First Half 2020 Variance
2020 Constant Currency
First Half 2020 First Half 2019 2020 2020
Adjusted 2020 Adjusted 2020 Adjusted
Currency Constant Constant vs vs vs vs
GAAP Adjustment Adjusted Adjustment Currency Currency GAAP 2019 2019 2019 2019
Selected Financial Data
Gross Profit $ 405,662 $ 6,503 (1) $ 412,165 $ 4,417 $ 410,079 $ 416,582 $ 416,763 (2.7 %) (1.1 %) (1.6 %) (0.0 %)
Gross Margin 55.3% 56.2% 55.3% 56.2% 56.9%
Selling, General and Administrative Expenses $ 166,318 $ (37,392 ) (2) $ 128,927 $ 1,017 $ 167,335 $ 129,944 $ 125,176 32.9 % 3.0 % 33.7 % 3.8 %
Operating Income $ 75,851 $ 47,560 (3) $ 123,411 $ 1,167 $ 77,018 $ 125,542 $ 127,371 (40.4 %) (3.1 %) (39.5 %) (1.4 %)
Operating Income Margin 10.3% 16.8% 10.4% 16.9% 17.4%
Note: Totals may not sum due to rounding.
(1) Excludes $6,503 of charges associated with the Company's previously disclosed 2020 organizational restructuring plan.
(2) Excludes the one-time stock compensation expense of $32,686 associated with the previously disclosed option granted to Ms. Oprah Winfrey in connection with the Company extending its partnership with Ms. Winfrey and $4,706 of charges associated with the Company's previously disclosed 2020 organizational restructuring plan.
(3) Excludes the one-time stock compensation expense of $32,686 associated with the previously disclosed option granted to Ms. Oprah Winfrey in connection with the Company extending its partnership with Ms. Winfrey, the $6,503 and $4,706 of charges associated with the Company's previously disclosed 2020 organizational restructuring plan recorded to cost of services and selling, general and administrative expenses, respectively, and the impairment charge of $3,665 for the Company's goodwill related to its Brazil operations.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS)
UNAUDITED
Three Months Ended Six Months Ended
June 27, June 29, June 27, June 29,
2020 2019 2020 2019
Net Income $ 14,006 $ 53,834 $ 7,943 $ 43,148
Interest 30,995 34,732 62,546 69,927
Taxes 5,592 16,586 4,942 13,711
Depreciation and Amortization 12,771 11,288 24,983 22,693
Stock-based Compensation 38,686 4,872 42,651 9,684
EBITDAS $ 102,049 $ 121,312 $ 143,064 $ 159,163
2020 Restructuring Charges (1) 11,209 - 11,209 -
Goodwill Impairment (2) - - 3,665 -
Adjusted EBITDAS $ 113,258 $ 121,312 $ 157,938 $ 159,163
Note: Totals may not sum due to rounding.
(1) Charges associated with the Company's previously disclosed 2020 organizational restructuring plan.
(2) Impairment charge of the Company's goodwill related to its Brazil operations.
WW INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN THOUSANDS, EXCEPT RATIO)
UNAUDITED
Trailing Twelve
Q3 2019 Q4 2019 Q1 2020 Q2 2020 Months
Net Debt to Adjusted EBITDAS
Net Income (Loss) $ 47,086 $ 29,383 $ (6,063 ) $ 14,006 $ 84,412
Interest 33,118 32,222 31,551 30,995 127,886
Taxes 13,123 4,679 (651 ) 5,592 22,743
Depreciation and Amortization 10,850 11,474 12,211 12,771 47,306
Stock-based Compensation 5,243 5,544 3,965 38,686 53,438
EBITDAS $ 109,420 $ 83,302 $ 41,013 $ 102,049 $ 335,785
2020 Restructuring Charges (1) $ - $ - $ - $ 11,209 11,209
Goodwill Impairment (2) $ - $ - $ 3,665 $ - $ 3,665
Adjusted EBITDAS $ 109,420 $ 83,302 $ 44,678 $ 113,258 $ 350,659
Total Debt $ 1,540,610
Less: Cash 150,409
Net Debt $ 1,390,201
Net Debt to Adjusted EBITDAS
 		4 X
Note: Totals may not sum due to rounding.
(1) Charges associated with the Company's previously disclosed 2020 organizational restructuring plan.
(2) Impairment charge of the Company's goodwill related to its Brazil operations.

For more information, contact:

Investors:
Corey Kinger
VP Investor Relations
212.601.7569
[email protected]

Media:
Nicole Penn
VP Corporate Communications
917.734.0802
[email protected]


Source: WW International Inc.