WW Announces Second Quarter 2021 Results

• Q22021 End of Period Subscribers of4.9 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



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 of its credit facilities and senior notes.
• 2021 Restructuring Plan: The Company has revised the estimated cost of its previously disclosed 2021 restructuring plan to approximately $22.0 million in fiscal 2021 from its prior estimate of approximately $11.0 million in fiscal 2021.
  

Full Year Fiscal 2021 Guidance

The Company is resuming its practice of providing financial guidance. The Company is providing the following full year fiscal 2021 guidance:

• Revenue to approach $1.3 billion.
• GAAP EPS in the range of $1.10 to $1.25 per fully diluted share, incorporating an approximately $0.53 aggregate negative impact from the early extinguishment of debt and estimated restructuring charges in fiscal 2021.

Second Quarter 2021 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, Nicholas Hotchkin, Chief Operating Officer, and Amy O’Keefe, Chief Financial Officer, will discuss the second quarter of fiscal 2021 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 selling, general and administrative expenses are discussed both as reported (on a GAAP basis) and as adjusted (on a non-GAAP basis), as applicable, with respect to (i) the second quarter and first six months of fiscal 2021 to exclude the net impact of (x) charges associated with the Company’s previously disclosed 2021 organizational restructuring plan and (y) the reversal of certain of the charges associated with the Company’s previously disclosed 2020 organizational restructuring plan; (ii) the second quarter of fiscal 2020 to exclude the impact of (x) 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 (the “Winfrey Stock Compensation expense”) and (y) charges associated with the Company’s previously disclosed 2020 organizational restructuring plan (the “2020 restructuring charges”); and (iii) the first six months of fiscal 2020 to exclude the impact of (x) the Winfrey Stock Compensation expense, (y) the 2020 restructuring charges and (z) the impairment charge for the Company’s goodwill related to its Brazil reporting unit. We generally refer to such non-GAAP measures as follows: (i) with respect to the adjustments for the second quarter and first six months of fiscal 2021, as excluding or adjusting for the net impact of restructuring charges; and (ii) with respect to the adjustments for the second quarter and first six months of fiscal 2020, as applicable, as excluding or adjusting for the impact of the Winfrey Stock Compensation expense, the restructuring charges and/or the goodwill impairment charge. 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, early extinguishment of debt, restructuring charges (including the net impact where applicable) 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 (formerly Weight Watchers) is a human-centric technology company powered by the world's leading commercial weight management program. As a global wellness company, we inspire millions of people to adopt healthy habits for real life. Through our comprehensive digital app, expert Coaches and engaging experiences, members follow our proven, sustainable, science-based program focused on food, activity, mindset and sleep. Leveraging nearly six decades of expertise in nutritional and behavioral change science, providing real human connection and building inspired communities, our purpose is to democratize and deliver holistic 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, objectives, 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 failure to continue to retain and grow its subscriber base; 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 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 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; 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 failure to maintain effective internal control over financial reporting; 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 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; risks and uncertainties associated with the Company’s international operations, including regulatory, economic, political, social, intellectual property and foreign currency risks; the outcomes of litigation or regulatory actions; the impact of existing and future laws and regulations; 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).

For more information, contact:
Investors:
Corey Kinger
VP Investor Relations
corey.kinger@ww.com

Media:
Joe Quenqua
Chief Communications Officer
joe.quenqua@ww.com

Nicole Penn
VP Corporate Communications
nicole.penn@ww.com