European Wax Center Inc (EWCZ) Q2 2024 Earnings Call Highlights: Navigating Growth Amidst ...

GuruFocus.com10-10

System-wide Sales: Increased 2.3% to $260 million. Total Revenue: Just under $60 million, a 1.3% increase. Same-Store Sales: Increased 1.6%. Net New Centers: Opened 8 net new centers in the quarter. ...

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adjusted net income grew 4% to $7.3 million.Cash Position: Ended Q2 with $55.7 million in cash.Share Repurchase: Deployed $10 million to repurchase Class A shares.Revised 2024 Guidance: System-wide sales of $930 million to $950 million; same-store sales down 1.5% to up 0.5%; total revenue of $216 million to $221 million.Adjusted EBITDA Guidance: $70 million to $74 million.Adjusted Net Income Guidance: $19 million to $22 million.GuruFocus has detected 4 Warning Signs with EWCZ.European Wax Center Inc  reported a 2.3% increase in system","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"EWCZ":"European Wax Center, Inc."},"translate_title":"欧洲蜡中心公司(EWCZ)2024年第二季度收益看涨期权亮点：在……中引领增长。","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"EWCZ":1},"content_text":"System-wide Sales: Increased 2.3% to $260 million.\nTotal Revenue: Just under $60 million, a 1.3% increase.\nSame-Store Sales: Increased 1.6%.\nNet New Centers: Opened 8 net new centers in the quarter.\nAdjusted EBITDA: $20.6 million with a margin of 34.5%.\nGross Margin: Improved 180 basis points to 73.2%.\nSG&A Expenses: Decreased 8.7% to $12.9 million, improving 230 basis points to 21.6% of revenue.\nAdvertising Spend: Increased by $2.9 million, contributing to a decrease in adjusted EBITDA.\nNet Income: GAAP net income increased 7.3% to $6 million; adjusted net income grew 4% to $7.3 million.\nCash Position: Ended Q2 with $55.7 million in cash.\nShare Repurchase: Deployed $10 million to repurchase Class A shares.\nNet Leverage: 4.3 times adjusted EBITDA.\nRevised 2024 Guidance: System-wide sales of $930 million to $950 million; same-store sales down 1.5% to up 0.5%; total revenue of $216 million to $221 million.\nAdjusted EBITDA Guidance: $70 million to $74 million.\nInterest Expense: Full-year outlook of $26.5 million.\nAdjusted Net Income Guidance: $19 million to $22 million.\n\n\nWarning! GuruFocus has detected 4 Warning Signs with EWCZ.\n\nRelease Date: August 14, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nEuropean Wax Center Inc (NASDAQ:EWCZ) reported a 2.3% increase in system-wide sales, reaching $260 million.\nThe company achieved an adjusted EBITDA of $20.6 million with a margin of 34.5%, demonstrating effective bottom-line management.\nGross margin improved by 180 basis points to 73.2%, primarily due to product cost savings.\nThe company has a robust pipeline of over 370 locations, indicating strong long-term growth potential.\nEuropean Wax Center Inc (NASDAQ:EWCZ) continues to generate strong free cash flow, even in a challenging macroeconomic environment.\n\n Negative Points \n\nTop-line revenue was modestly below expectations, with total revenue just under $60 million.\nThe company is facing a challenging macroeconomic environment, affecting consumer spending and new guest growth.\nEuropean Wax Center Inc (NASDAQ:EWCZ) has reduced its outlook for the second half of 2024 due to softer transaction volumes.\nThe company has lowered its unit growth outlook for 2024, delaying new center openings to address near-term challenges.\nCertain geographies, particularly the West Coast, are facing increased rent and labor costs, impacting four-wall profitability.\n\n Q & A Highlights \nQ: Can you clarify if the cost savings mentioned in the revised guidance are temporary or permanent? A: Stacie Shirley, CFO: The cost savings are expected to continue, with gross margin improvements anticipated to remain around 73% for the full year. We aim to leverage the top line and maintain a high-margin structure as we grow.\nQ: What are the top priorities for European Wax Center moving forward? A: David Berg, CEO: The main focus is on driving new guests to the brand and increasing transaction volumes. These priorities are crucial for accelerating center ramping and improving four-wall EBITDA, which will enable franchisees to reinvest in the brand.\nQ: With new center openings down significantly for 2024, when do you expect to return to a normal pace? A: David Berg, CEO: This is a temporary reset to focus on driving new guests and transactions. We expect to return to normal growth rates for new center openings once these initiatives are back on track.\nQ: Are there any specific regions where four-wall productivity has declined more significantly? A: Stacie Shirley, CFO: The West Coast, particularly California, has been more impacted due to higher rents and labor costs, which have pressured cash flow and four-wall profitability.\nQ: How are you addressing the challenges of higher rents and potential center closures? A: David Berg, CEO: We are working with franchisees to mitigate these challenges, including facilitating transfers to stronger operators in affected areas. We continue to support franchisees in managing rent renegotiations and labor costs.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2474078659"}