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 a leading U.S. OOH waxing brand position.

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

• Q3 results met expectations, with a focus on operational improvements, new guest acquisition, and improving underperforming centers.

• The company paused its laser hair removal pilot to focus on core waxing services and reallocated resources accordingly.

• Organizational restructuring included direct CEO oversight of development and operations, new partnerships to enhance marketing and technology, and executive departures.

Financial highlights

• Q3 revenue was $55.4 million, down 0.5% year-over-year; system-wide sales were flat at $240.2 million; same-store sales declined 0.5%.

• Adjusted EBITDA for Q3 was $18.4 million (margin 33.2%), down 4.4%; adjusted net income was $5.5 million.

• GAAP net income for Q3 was $1.5 million, down 48.7% year-over-year.

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

• Cash and cash equivalents at quarter end were $48 million; $20.1 million deployed for share repurchases.

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 gross openings in 2025, potentially resulting in net negative unit growth.

• Management expects continued EBITDA margin accretion and free cash flow generation as the company expands.