Me
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of common stock outstanding as of July 25, 2024 was
WW INTERNATIONAL, INC.
TABLE OF CONTENTS
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Page No. |
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Item 1. |
2 |
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Unaudited Consolidated Balance Sheets at June 29, 2024 and December 30, 2023 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
48 |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
50 |
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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WW INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS AT
(IN THOUSANDS)
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June 29, |
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December 30, |
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2024 |
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2023 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables (net of allowances: June 29, 2024 - $ |
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Prepaid income taxes |
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Prepaid marketing and advertising |
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Prepaid expenses and other current assets |
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TOTAL CURRENT ASSETS |
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Property and equipment, net |
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Operating lease assets |
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Franchise rights acquired |
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Goodwill |
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Other intangible assets, net |
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Deferred income taxes |
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Other noncurrent assets |
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TOTAL ASSETS |
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$ |
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$ |
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LIABILITIES AND TOTAL DEFICIT |
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CURRENT LIABILITIES |
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Portion of operating lease liabilities due within one year |
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$ |
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$ |
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Accounts payable |
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Salaries and wages payable |
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Accrued marketing and advertising |
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Accrued interest |
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Deferred acquisition payable |
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Other accrued liabilities |
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Income taxes payable |
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Deferred revenue |
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TOTAL CURRENT LIABILITIES |
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Long-term debt, net |
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Long-term operating lease liabilities |
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Deferred income taxes |
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Other |
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TOTAL LIABILITIES |
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TOTAL DEFICIT |
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Common stock, $ |
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Treasury stock, at cost, |
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Retained earnings |
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Accumulated other comprehensive loss |
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TOTAL DEFICIT |
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TOTAL LIABILITIES AND TOTAL DEFICIT |
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$ |
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$ |
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The accompanying notes are an integral part of the consolidated financial statements.
2
WW INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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Three Months Ended |
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Six Months Ended |
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June 29, |
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July 1, |
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June 29, |
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July 1, |
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2024 |
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2023 |
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2024 |
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2023 |
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Subscription revenues, net |
$ |
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$ |
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$ |
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$ |
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Other revenues, net |
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Revenues, net |
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Cost of subscription revenues |
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Cost of other revenues |
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Cost of revenues |
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Gross profit |
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Marketing expenses |
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Selling, general and administrative expenses |
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Franchise rights acquired impairments |
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— |
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— |
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— |
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Operating income (loss) |
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Interest expense |
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Other income, net |
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( |
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Income (loss) before income taxes |
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(Benefit from) provision for income taxes |
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Net income (loss) |
$ |
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$ |
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$ |
( |
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$ |
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Earnings (net loss) per share |
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Basic |
$ |
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$ |
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$ |
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Diluted |
$ |
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$ |
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$ |
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Weighted average common shares outstanding |
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Basic |
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Diluted |
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The accompanying notes are an integral part of the consolidated financial statements.
3
WW INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)
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Three Months Ended |
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Six Months Ended |
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June 29, |
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July 1, |
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June 29, |
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July 1, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) |
$ |
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$ |
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$ |
( |
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$ |
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Other comprehensive (loss) gain: |
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Foreign currency translation (loss) gain |
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Income tax benefit (expense) on foreign currency translation (loss) gain |
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Foreign currency translation (loss) gain, net of taxes |
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Loss on derivatives |
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Income tax benefit on loss on derivatives |
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Loss on derivatives, net of taxes |
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( |
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( |
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Total other comprehensive (loss) gain |
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( |
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( |
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( |
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Comprehensive income (loss) |
$ |
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$ |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of the consolidated financial statements.
4
WW INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED Consolidated Statements of Changes in Total Deficit
(IN THOUSANDS)
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Three Months Ended June 29, 2024 |
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Accumulated |
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Other |
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Common Stock |
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Treasury Stock |
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Comprehensive |
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Retained |
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Shares |
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Amount |
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Shares |
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Amount |
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Loss |
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Earnings |
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Total |
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Balance at March 30, 2024 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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Comprehensive income (loss) |
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— |
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— |
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— |
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— |
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( |
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Issuance of treasury stock under stock plans |
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— |
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— |
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( |
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— |
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( |
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( |
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Compensation expense on share-based awards |
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— |
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— |
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— |
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— |
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— |
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Balance at June 29, 2024 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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Six Months Ended June 29, 2024 |
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Accumulated |
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Other |
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Common Stock |
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Treasury Stock |
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Comprehensive |
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Retained |
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Shares |
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Amount |
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Shares |
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Amount |
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Loss |
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Earnings |
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Total |
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Balance at December 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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Comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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( |
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Issuance of treasury stock under stock plans |
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— |
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— |
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( |
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— |
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( |
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( |
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Compensation expense on share-based awards |
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— |
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— |
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— |
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— |
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— |
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Balance at June 29, 2024 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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Three Months Ended July 1, 2023 |
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Accumulated |
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Other |
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Common Stock |
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Treasury Stock |
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Comprehensive |
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Retained |
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Shares |
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Amount |
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Shares |
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Amount |
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Loss |
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Earnings |
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Total |
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Balance at April 1, 2023 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Comprehensive income |
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— |
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— |
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— |
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— |
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Issuance of treasury stock under stock plans |
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— |
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— |
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( |
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— |
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( |
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( |
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Compensation expense on share-based awards |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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Balance at July 1, 2023 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Six Months Ended July 1, 2023 |
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Accumulated |
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Other |
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Common Stock |
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Treasury Stock |
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Comprehensive |
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Retained |
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Shares |
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Amount |
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Shares |
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Amount |
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Loss |
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Earnings |
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
( |
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Comprehensive loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
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( |
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Issuance of treasury stock under stock plans |
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— |
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— |
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( |
) |
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— |
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( |
) |
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( |
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Compensation expense on share-based awards |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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|
|
|
|
|
|||
Balance at July 1, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||
The accompanying notes are an integral part of the consolidated financial statements.
5
WW INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
|
|
Six Months Ended |
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|||||
|
|
June 29, |
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|
July 1, |
|
||
|
|
2024 |
|
|
2023 |
|
||
Operating activities: |
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|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to cash used for operating activities: |
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|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of deferred financing costs and debt discount |
|
|
|
|
|
|
||
Impairment of franchise rights acquired |
|
|
|
|
|
— |
|
|
Impairment of intangible and long-lived assets |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Deferred tax benefit |
|
|
( |
) |
|
|
( |
) |
Allowance for doubtful accounts |
|
|
|
|
|
( |
) |
|
Reserve for inventory obsolescence |
|
|
|
|
|
|
||
Foreign currency exchange rate gain |
|
|
( |
) |
|
|
( |
) |
Changes in cash due to: |
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|
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|
||
Receivables |
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|
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|
||
Inventories |
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|
|
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|
||
Prepaid expenses |
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|
|
|
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|
||
Accounts payable |
|
|
|
|
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|
||
Accrued liabilities |
|
|
( |
) |
|
|
( |
) |
Deferred revenue |
|
|
|
|
|
|
||
Other long term assets and liabilities, net |
|
|
( |
) |
|
|
( |
) |
Income taxes |
|
|
|
|
|
|
||
Cash used for operating activities |
|
|
( |
) |
|
|
( |
) |
Investing activities: |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Capitalized software and website development expenditures |
|
|
( |
) |
|
|
( |
) |
Cash paid for acquisitions, net of cash acquired |
|
|
— |
|
|
|
( |
) |
Other items, net |
|
|
( |
) |
|
|
( |
) |
Cash used for investing activities |
|
|
( |
) |
|
|
( |
) |
Financing activities: |
|
|
|
|
|
|
||
Taxes paid related to net share settlement of equity awards |
|
|
( |
) |
|
|
( |
) |
Proceeds from stock options exercised |
|
|
— |
|
|
|
|
|
Cash paid for acquisitions |
|
|
( |
) |
|
|
( |
) |
Other items, net |
|
|
( |
) |
|
|
( |
) |
Cash used for financing activities |
|
|
( |
) |
|
|
( |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Net decrease in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of the consolidated financial statements.
6
WW INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)
The accompanying consolidated financial statements include the accounts of WW International, Inc., all of its subsidiaries and the variable interest entities of which WW International, Inc. is the primary beneficiary. The terms “Company” and “WW” as used throughout these notes are used to indicate WW International, Inc. and all of its operations consolidated for purposes of its financial statements. The Company’s “Digital” business refers to providing subscriptions to the Company’s digital product offerings. The Company’s “Workshops + Digital” business refers to providing subscriptions for unlimited access to the Company’s workshops combined with the Company’s digital subscription product offerings. The Company’s “Clinical” business refers to providing subscriptions to the Company’s clinical product offerings provided by WeightWatchers Clinic (formerly referred to as Sequence).
As previously disclosed, effective the first day of fiscal 2024 (i.e., December 31, 2023), as a result of the continued evolution of the Company’s centralized organizational structure in fiscal 2023, and management’s 2024 strategic planning process, the Company’s reportable segments changed to one segment for the purpose of making operational and resource decisions and assessing financial performance. Since the Company operates in
In the second quarter of fiscal 2024, the Company identified and recorded an out-of-period adjustment related to an income tax error. The impact of correcting this error, which was immaterial to all current and prior period financial statements and corrected in the second quarter of fiscal 2024, resulted in an income tax expense of approximately $
These consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for fiscal 2023 filed on February 28, 2024, which includes additional information about the Company, its results of operations, its financial position and its cash flows.
There were no new accounting standards adopted during the six months ended June 29, 2024.
7
WW INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT AMOUNTS)
At June 29, 2024 and December 30, 2023, the Company’s lease assets and lease liabilities, primarily for its studios and corporate offices, were as follows:
|
|
June 29, 2024 |
|
|
December 30, 2023 |
|
||
Assets: |
|
|
|
|
|
|
||
Operating leases |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
Total lease assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Liabilities: |
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
||
Operating leases |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
Noncurrent |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
Finance leases |
|
|
— |
|
|
|
— |
|
Total lease liabilities |
|
$ |
|
|
||||