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01/11 03:37
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows a mix of positives and negatives. Gross margin increased and adjusted net income rose by 5.6%, but SG&A expenses and net interest expenses also increased. The Q&A highlighted cautious optimism, with potential for growth and challenges in unit expansion and closures. Management's conservative guidance and lack of specifics on new unit maturity and closure pace add uncertainty. The lack of a market cap and specific partnership announcements further supports a neutral sentiment, indicating a likely stock price movement between -2% and 2% over the next two weeks.
System-wide sales $257.6 million, a decrease of 1% year-over-year. This was driven by a decrease in same-day services and retail sales, partially offset by an increase in cash collected from Wax Pass sales.
Same-store sales 30 basis points growth year-over-year. This reflects early traction from strategic initiatives aimed at improving guest engagement.
Adjusted EBITDA $21.6 million, an increase of 4.7% year-over-year. This was due to disciplined execution, cost discipline, and operational efficiency.
Gross margin 74.6%, a modest increase year-over-year. This was attributed to a higher mix of royalty, marketing fees, and product margin improvements.
SG&A expenses $14.5 million, an increase of $1.6 million year-over-year. This was driven by higher payroll and benefits, professional fees, and stock-based compensation.
Advertising expense Decreased by $3.4 million year-over-year due to the timing of spend within the fiscal year.
Net interest expense $6.6 million, an increase from $6.4 million in the prior year.
Income tax expense $2.1 million, an increase from $1.7 million in the prior year.
Adjusted net income $11.8 million, an increase of 5.6% year-over-year. This reflects strong profitability and operational efficiency.
Champion ad test: Launched over 100 creative variations, identifying 4 top-performing assets now running in high visibility channels.
Unit growth: Goal to return to net unit growth by the end of 2026. Opened 7 centers in 2025, with 5 more under construction.
Operational tools: Introduced tools for tracking, accountability, and transparency, now fully operational across the system.
Franchisee engagement: Delivered over 2,000 touch points, including 400 field visits and 450 local marketing campaigns.
Leadership changes: Added Angela Jaskolski as COO and Kurt Smith as Chief Development Officer to enhance operations and development.
Marketing strategy: Refined media strategy, achieving a 40% improvement in cost per acquisition since the beginning of the year.
Macroeconomic Environment: The company is operating in a rapidly shifting macroeconomic environment, which could impact its ability to execute strategies effectively.
New Guest Acquisition: The pace of new guest acquisition has not accelerated as expected, which could delay revenue growth and impact long-term performance.
Franchisee Closures: The company anticipates 40 to 60 center closures in 2025, which could negatively impact system-wide sales and brand presence.
Revenue Mix Shift: A shift in revenue mix, with lower contributions from wholesale product and retail revenue, could affect overall profitability.
Tariff Impacts: Potential impacts from tariffs on suppliers could increase costs and affect supply chain efficiency.
Operational Transformation: The company is in the early stages of a turnaround, requiring significant operational changes and investments, which may take time to yield results.
Marketing Efficiency: While marketing efficiency has improved, the slower-than-expected impact on new customer acquisition could hinder growth.
Franchisee Engagement: The success of operational improvements depends on franchisee engagement, which varies across the network.
Debt Levels: The company has a net leverage ratio of 4.2x, which could limit financial flexibility in addressing unforeseen challenges.
System-wide sales: Expected to be between $940 million and $950 million for 2025.
Same-store sales: Expected to be flat to up 1% for the full year 2025.
Adjusted EBITDA: Guidance remains unchanged at $69 million to $71 million for 2025.
Revenue: Expected to be between $205 million and $209 million for 2025, reflecting a modest shift in revenue mix.
Unit expectations: 10 to 12 gross openings and 40 to 60 center closures, resulting in 28 to 50 net center closures for 2025.
Advertising expenses: Planned to be slightly above 3% of system-wide sales in fiscal 2025, spread more evenly across the year.
Adjusted net income: Expected to be between $31 million and $33 million, net of an approximately 23% effective tax rate before discrete items.
New customer acquisition: Expected to show stronger impact in the back half of 2025 and into 2026.
Unit growth: Goal to return to net unit growth by the end of 2026.
Dividend Program: No specific mention of a dividend program or related metrics in the transcript.
Share Buyback Program: The company executed $31.6 million in stock buybacks over the trailing 12 months, including $0.4 million in excise tax related to 2024 buybacks. As of the quarter end, $8.8 million remained under the current $50 million share repurchase authorization.
The earnings call presents a mixed picture: while adjusted EBITDA and net income show growth, total revenue and unit closures raise concerns. The Q&A session reveals stable consumer behavior and regional performance, but management's reluctance to provide specific metrics and defer guidance introduces uncertainty. The company’s confidence in future growth and improved franchisee partnerships is positive, yet the lack of clear guidance and continued unit closures balance this optimism. Given the absence of a market cap, the overall sentiment remains neutral.
The earnings call shows a mix of positives and negatives. Gross margin increased and adjusted net income rose by 5.6%, but SG&A expenses and net interest expenses also increased. The Q&A highlighted cautious optimism, with potential for growth and challenges in unit expansion and closures. Management's conservative guidance and lack of specifics on new unit maturity and closure pace add uncertainty. The lack of a market cap and specific partnership announcements further supports a neutral sentiment, indicating a likely stock price movement between -2% and 2% over the next two weeks.
The earnings call presents a mixed picture. Financial performance shows some positives, like increased adjusted EBITDA and gross margin, but also negatives, such as a slight revenue decline and increased SG&A expenses. The guidance remains stable, but the high number of expected center closures and lack of clear strategy for underperforming stores are concerns. Share repurchases are a positive, but not enough to offset other issues. The Q&A reveals uncertainties, particularly in dealing with franchisee challenges and cost pressures, which leads to a neutral sentiment.
The earnings call reveals several concerns: underperforming centers, rising costs due to tariffs, and economic uncertainties. Despite some positive financial metrics like gross margin improvement and adjusted net income growth, the guidance remains weak with expected closures and flat same-store sales. The Q&A section highlights management's avoidance of specifics on key issues, and a lack of clear strategy on tariffs. Although stock buybacks are positive, the overall outlook appears cautious, leading to a negative sentiment rating.
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