European Wax Center (EWCZ) Q3 2024 earnings summary

Executive summary

• Ended Q3 with 1,064 centers, 99% franchised, and delivered over 23 million waxing services in 2023, maintaining leadership in the U.S. OOH waxing market.

• Net new centers grew 3.7% in Q3 with 12 openings and 7 closures; system-wide sales were $240.2M, down 0.2% year-over-year.

• Leadership restructured to prioritize core business, pausing laser hair removal pilot and focusing on waxing services.

• Initiatives launched to enhance marketing efficiency and guest engagement, including a partnership with Dolabra Digital.

• Asset-light franchise model supports capital-efficient growth, strong cash flow, and resilience through economic cycles.

Financial highlights

• Q3 revenue was $55.4M, down 0.5% year-over-year; net income attributable to EWC was $1.5M, down 48.7%.

• Adjusted EBITDA for Q3 was $18.4M, down 4.4%; adjusted EBITDA margin was 33.2%.

• Gross margin improved by 110 basis points to 72.9%.

• SG&A expenses rose 21.6% to $17.5M, mainly due to executive severance, return-to-office costs, and a terminated debt offering.

• Cash and cash equivalents at quarter end were $48.0M.

Outlook and guidance

• Fiscal 2024 guidance reiterated: system-wide sales of $930M–$950M, revenue of $216M–$221M, same-store sales of -1.5% to +0.5%.

• Adjusted EBITDA expected at $70M–$74M and adjusted net income at $19M–$22M.

• Net new center openings outlook revised to 17–22 due to higher expected closures.

• Closures may offset unit growth in 2025, with more details to be provided in Q4.

• Liquidity is considered sufficient to support operations and growth for at least the next twelve months.