WW INTERNATIONAL, INC. - FORM 8-K - EX-99.1

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EX-99.2 - EX-99.2 - WW INTERNATIONAL, INC.	d86860dex992.htm
EX-3.1 - EX-3.1 - WW INTERNATIONAL, INC.	d86860dex31.htm
8-K - 8-K - WW INTERNATIONAL, INC.	d86860d8k.htm

Exhibit 99.1

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For more information, contact:

Investors:

Corey Kinger

VP Investor Relations

212.601.7569

corey.kinger@ww.com

Media:

Nicole Penn

VP Corporate Communications

917.734.0802

nicole.penn@ww.com

WW Announces Second Quarter 2020 Results with Record Digital Subscribers

•

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 (August 4, 2020) – 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.”

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Q2 2020 Consolidated Results


	Three Months Ended				% Change			% Change Adjusted for Constant Currency⁽¹⁾
(in millions except percentages and per share amounts)	June 27, 2020		June 29, 2019		% Change			% Change Adjusted for Constant Currency⁽¹⁾
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.

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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.

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•

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)

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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,

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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).

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WW INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

UNAUDITED


	June 27, 2020			December 28, 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, 2020		June 29, 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, 2020		June 29, 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)

(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				Variance
	June 27,		June 29,
	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				Variance
	June 27,		June 29,
	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)

(2)	Represents Australia, New Zealand and emerging markets.

(3)

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
	GAAP		Currency Adjustment		Constant Currency		GAAP		vs 2019			vs 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
	GAAP			Adjustment			Adjusted			Currency Adjustment		Constant Currency			Adjusted Constant Currency			GAAP			2020 vs 2019			Adusted vs 2019			2020 vs 2019			Adjusted vs 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)

(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)

(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


	Q3 2019		Q4 2019		Q1 2020			Q2 2020		Trailing Twelve 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.

WW INTERNATIONAL, INC. - FORM 8-K - EX-99.1 - August 4, 2020

Attached files

WW INTERNATIONAL, INC. Reports