WW INTERNATIONAL, INC. [WW] Filings

10-Q 1 ww-20230701.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 1, 2023


☐	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: 001-16769

WW INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Virginia

11-6040273

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

675 Avenue of the Americas, 6th Floor, New York, New York 10010

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 589-2700

(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
Common Stock, no par value	WW	The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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 27, 2023 was 78,966,060.

WW INTERNATIONAL, INC.

TABLE OF CONTENTS


		Page No.

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Unaudited Consolidated Balance Sheets at July 1, 2023 and December 31, 2022	2

	Unaudited Consolidated Statements of Operations for the three and six months ended July 1, 2023 and July 2, 2022	3

	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended July 1, 2023 and July 2, 2022	4

	Unaudited Consolidated Statements of Changes in Total Deficit for the three and six months ended July 1, 2023 and July 2, 2022	5

	Unaudited Consolidated Statements of Cash Flows for the six months ended July 1, 2023 and July 2, 2022	6

	Notes to Unaudited Consolidated Financial Statements	7

Cautionary Notice Regarding Forward-Looking Statements		29

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55

Item 4.	Controls and Procedures	55

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	57

Item 1A.	Risk Factors	57

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	62

Item 3.	Defaults Upon Senior Securities	62

Item 4.	Mine Safety Disclosures	62

Item 5.	Other Information	62

Item 6.	Exhibits	64

Signatures		65

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WW INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS AT

(IN THOUSANDS)


	July 1,			December 31,
	2023			2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	91,446		$	178,326
Receivables (net of allowances: July 1, 2023 - $907 and December 31, 2022 - $976)		25,813			24,273
Inventories		10,834			20,528
Derivative receivable		10,546			11,748
Prepaid income taxes		17,173			19,447
Prepaid expenses and other current assets		22,110			27,009
TOTAL CURRENT ASSETS		177,922			281,331
Property and equipment, net		23,569			28,229
Operating lease assets		58,019			75,696
Franchise rights acquired		386,555			386,745
Goodwill		246,208			155,998
Other intangible assets, net		71,091			63,306
Deferred income taxes		22,403			22,246
Other noncurrent assets		15,716			14,879
TOTAL ASSETS	$	1,001,483		$	1,028,430
LIABILITIES AND TOTAL DEFICIT
CURRENT LIABILITIES
Portion of operating lease liabilities due within one year	$	9,949		$	17,955
Accounts payable		21,998			18,890
Salaries and wages payable		55,198			72,577
Accrued marketing and advertising		12,290			17,927
Accrued interest		5,333			5,289
Other accrued liabilities		53,739			30,118
Income taxes payable		7,198			1,646
Deferred revenue		35,705			32,156
TOTAL CURRENT LIABILITIES		201,410			196,558
Long-term debt, net		1,424,374			1,422,284
Long-term operating lease liabilities		58,867			68,099
Deferred income taxes		18,184			23,119
Other		14,910			2,185
TOTAL LIABILITIES		1,717,745			1,712,245
TOTAL DEFICIT
Common stock, $0 par value; 1,000,000 shares authorized; 130,048 shares issued at July 1, 2023 and 122,052 shares issued at December 31, 2022		0			0
Treasury stock, at cost, 51,146 shares at July 1, 2023 and 51,496 shares at December 31, 2022		(3,079,073	)		(3,097,304	)
Retained earnings		2,370,340			2,418,959
Accumulated other comprehensive loss		(7,529	)		(5,470	)
TOTAL DEFICIT		(716,262	)		(683,815	)
TOTAL LIABILITIES AND TOTAL DEFICIT	$	1,001,483		$	1,028,430

The accompanying notes are an integral part of the consolidated financial statements.

WW INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


	Three Months Ended						Six Months Ended
	July 1,			July 2,			July 1,			July 2,
	2023			2022			2023			2022
Subscription revenues, net	$	212,140		$	240,391		$	423,172		$	497,376
Product sales and other, net		14,690			29,063			45,552			69,838
Revenues, net		226,830			269,454			468,724			567,214
Cost of subscription revenues		71,378			84,129			166,275			170,170
Cost of product sales and other		12,272			22,363			39,758			53,985
Cost of revenues		83,650			106,492			206,033			224,155
Gross profit		143,180			162,962			262,691			343,059
Marketing expenses		51,119			51,857			139,353			159,427
Selling, general and administrative expenses		65,744			71,319			125,604			134,877
Franchise rights acquired and goodwill impairments		—			26,420			—			26,420
Operating income (loss)		26,317			13,366			(2,266	)		22,335
Interest expense		24,075			19,255			46,921			37,926
Other (income) expense, net		(520	)		1,613			(851	)		1,956
Income (loss) before income taxes		2,762			(7,502	)		(48,336	)		(17,547	)
(Benefit from) provision for income taxes		(48,066	)		(2,879	)		19,515			(4,681	)
Net income (loss)	$	50,828		$	(4,623	)	$	(67,851	)	$	(12,866	)
Earnings (net loss) per share
Basic	$	0.65		$	(0.07	)	$	(0.91	)	$	(0.18	)
Diluted	$	0.65		$	(0.07	)	$	(0.91	)	$	(0.18	)
Weighted average common shares outstanding
Basic		78,007			70,305			74,302			70,195
Diluted		78,591			70,305			74,302			70,195

The accompanying notes are an integral part of the consolidated financial statements.

WW INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(IN THOUSANDS)


	Three Months Ended						Six Months Ended
	July 1,			July 2,			July 1,			July 2,
	2023			2022			2023			2022
Net income (loss)	$	50,828		$	(4,623	)	$	(67,851	)	$	(12,866	)
Other comprehensive gain (loss):
Foreign currency translation gain (loss)		816			(8,325	)		929			(8,466	)
Income tax (expense) benefit on foreign currency translation gain (loss)		(204	)		2,089			(232	)		2,125
Foreign currency translation gain (loss), net of taxes		612			(6,236	)		697			(6,341	)
(Loss) gain on derivatives		(544	)		4,402			(3,674	)		19,158
Income tax benefit (expense) on (loss) gain on derivatives		136			(1,106	)		918			(4,815	)
(Loss) gain on derivatives, net of taxes		(408	)		3,296			(2,756	)		14,343
Total other comprehensive gain (loss)		204			(2,940	)		(2,059	)		8,002
Comprehensive income (loss)	$	51,032		$	(7,563	)	$	(69,910	)	$	(4,864	)

The accompanying notes are an integral part of the consolidated financial statements.

WW INTERNATIONAL, INC. AND SUBSIDIARIES

UNAUDITED Consolidated Statements of Changes in Total Deficit

(IN THOUSANDS)



Three Months Ended July 1, 2023											Accumulated
											Other
	Common Stock				Treasury Stock						Comprehensive			Retained
	Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at April 1, 2023		122,052	$	0		51,418		$	(3,093,237	)	$	(7,733	)	$	2,298,701		$	(802,269	)
Comprehensive income												204			50,828			51,032
Issuance of treasury stock under stock plans						(272	)		14,164						(15,195	)		(1,031	)
Compensation expense on share-based awards															3,063			3,063
Issuance of common stock		7,996													32,943			32,943
Balance at July 1, 2023		130,048	$	0		51,146		$	(3,079,073	)	$	(7,529	)	$	2,370,340		$	(716,262	)



Six Months Ended July 1, 2023											Accumulated
											Other
	Common Stock				Treasury Stock						Comprehensive			Retained
	Shares		Amount		Shares			Amount			Loss			Earnings			Total
Balance at December 31, 2022		122,052	$	0		51,496		$	(3,097,304	)	$	(5,470	)	$	2,418,959		$	(683,815	)
Comprehensive loss												(2,059	)		(67,851	)		(69,910	)
Issuance of treasury stock under stock plans						(350	)		18,231

WW INTERNATIONAL, INC. [WW] Filings
10-Q	[2023-08-03]
10-Q	[2023-05-04]
10-K	[2023-03-06]
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-03-01]
10-Q	[2021-11-04]
10-Q	[2021-08-10]
10-Q	[2021-05-05]
10-K	[2021-02-25]
10-Q	[2020-10-29]
10-Q	[2020-08-04]
10-Q	[2020-04-28]
10-K	[2020-02-25]
10-Q	[2019-11-06]
10-Q	[2019-08-07]
10-Q	[2019-05-03]
10-K	[2019-02-26]
10-Q	[2018-11-02]
10-Q	[2018-08-07]
10-Q	[2018-05-04]
10-K	[2018-02-28]
10-Q	[2017-11-07]
10-Q	[2017-08-08]
10-Q	[2017-05-10]
10-K	[2017-03-01]
10-Q	[2016-11-08]
10-Q	[2016-08-09]
10-Q	[2016-05-10]
10-K	[2016-03-02]
10-Q	[2015-11-10]
10-Q	[2015-08-11]
10-Q	[2015-05-14]
10-K	[2015-03-04]
10-Q	[2014-11-05]
10-Q	[2014-08-07]
10-Q	[2014-05-08]
10-K	[2014-02-26]
10-Q	[2013-11-06]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-02-27]
10-Q	[2012-11-08]
10-Q	[2012-08-09]
10-Q	[2012-05-10]
10-K	[2012-02-28]