WTW
$37.68
Weight Watchers International
$.10
.27%
Earnings Details
1st Quarter March 2017
Tuesday, May 02, 2017 4:15:00 PM
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Summary

Weight Watchers International Beats

Weight Watchers International (WTW) reported a 1st Quarter March 2017 loss of $0.01 per share on revenue of $329.1 million. The consensus estimate was a loss of $0.05 per share on revenue of $322.8 million. The Earnings Whisper number was for a loss of $0.03 per share. Revenue grew 7.2% on a year-over-year basis.

The company said it expects 2017 earnings of $1.40 to $1.50 per share. The company's previous guidance was earnings of $1.15 to $1.25 per share and the current consensus earnings estimate is $1.25 per share for the year ending December 31, 2017.

Weight Watchers International Inc is a provider of weight management services. The Company operates through a network of Company-owned and franchise operations. The Company' products include Weight Watchers Online and Weight Watchers eTools.

Results
Reported Earnings
($0.01)
Earnings Whisper
($0.03)
Consensus Estimate
($0.05)
Reported Revenue
$329.1 Mil
Revenue Estimate
$322.8 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Weight Watchers Announces First Quarter 2017 Results And Raises Full Year 2017 Guidance

Weight Watchers International, Inc. (WTW) today announced its results for the first quarter of fiscal 2017 and raised its full year fiscal 2017 earnings guidance.

"In the first quarter, we delivered strong revenue growth and achieved a 16% increase in end of period subscribers versus the prior year period," said Nick Hotchkin, the Company’s CFO and Member, Interim Office of the CEO. "With a strong start to the year, we are raising our full year 2017 earnings guidance to a range of $1.40 to $1.50 per fully diluted share."

"Weight Watchers has delivered a very successful winter season, solidifying the Company’s return to growth," said Ray Debbane, Chairman of the Weight Watchers Board of Directors. "As the Company previously announced, I look forward to Mindy Grossman joining the Weight Watchers team and our Board of Directors in July. She is the right CEO to empower the brand and unlock its full potential."

Q1 2017 Consolidated Results

% Change
% Change
Adjusted for
Constant
Currency
Three Months Ended
April 1,
April 2,
2017
2016
(in millions except percentages and per share amounts)
Service Revenues, net
$261.5
$243.8
7.3%
8.5%
Product Sales and Other, net
67.6
63.1
7.0%
9.3%
Revenues, net
$329.1
$306.9
7.2%
8.7%
Operating Income
$30.2
$13.6
123.0%
127.9%
Net Income (Loss)*
$10.7
$(10.8)
199.1%
202.9%
EPS
$0.16
$(0.17)
194.6%
198.3%
Total Paid Weeks
44.2
39.2
12.8%
N/A
Meeting(1) Paid Weeks
19.0
17.7
7.7%
N/A
Online(2) Paid Weeks
25.2
21.5
17.0%
N/A
End of Period Subscribers(3)
3.6
3.1
16.0%
N/A
Meeting Subscribers
1.5
1.3
10.7%
N/A
Online Subscribers
2.1
1.8
20.1%
N/A
Note: Totals may not sum due to rounding.
See "Reconciliation of Non-GAAP Financial Measures" attached to this release for further detail on adjustments to GAAP financial measures.
(1) "Meetings" refers to monthly commitment plan subscribers, "pay-as-you-go" members, Total Access subscribers and other meetings members.
(2) "Online" refers to Weight Watchers Online, Weight Watchers OnlinePlus, Personal Coaching and other digital subscription products.
(3) "Subscribers" refers to meetings members and Online subscribers who participate in recurring billing programs, such as the Company’s monthly commitment plans for its meetings business.
*Except in the case of the financials attached to this release, "Net Income (Loss)" refers to Net Income (Loss) attributable to Weight Watchers International, Inc.

Q1 2017 Business and Financial Highlights

End of Period Subscribers in Q1 2017 were up 16.0% versus the prior year period, driven by growth in all major geographic markets. Q1 2017 End of Period Meeting Subscribers were up 10.7% and End of Period Online Subscribers were up 20.1% versus the prior year period.

Total Paid Weeks in Q1 2017 were up 12.8% versus the prior year period, driven by growth in all major geographic markets. Q1 2017 Meeting Paid Weeks increased 7.7% and Online Paid Weeks increased 17.0% versus the prior year period.

Revenues in Q1 2017 were $329.1 million. On a constant currency basis, Q1 2017 revenues increased 8.7% versus the prior year period.

Service Revenues in Q1 2017 were $261.5 million. On a constant currency basis, these revenues increased 8.5% versus the prior year period. This increase was primarily driven by revenue growth in North America and Continental Europe, which was partially offset by revenue declines in the United Kingdom.

Product Sales and Other in Q1 2017 were $67.6 million. On a constant currency basis, these revenues increased 9.3% versus the prior year period, primarily reflecting revenue gains in North America.

Operating Income in Q1 2017 was $30.2 million compared to $13.6 million in the prior year period. This increase was primarily driven by higher member volumes in the quarter versus the prior year period.

Income Tax in Q1 2017 was a benefit of $9.1 million, which reflected a one-time $11.9 million tax benefit related to the previously announced cessation of operations of the Company’s Spanish subsidiary.

Net Income in Q1 2017 was $10.7 million compared to a net loss of $10.8 million in the prior year period.

Earnings per fully diluted share (EPS) in Q1 2017 was $0.16 compared to a loss of $0.17 in the prior year period.

Certain Items Affecting Year-Over-Year Comparability

Q1 2017 results include a tax benefit of $0.18 per fully diluted share that was offset by $0.01 per fully diluted share of expense, both related to the previously announced cessation of operations of the Company’s Spanish subsidiary.

Full Year Fiscal 2017 Earnings Guidance

The Company is raising its full year fiscal 2017 earnings guidance to between $1.40 and $1.50 per fully diluted share.

First Quarter 2017 Conference Call and Webcast

The Company has scheduled a conference call today at 5:00 p.m. ET. During the conference call, the members of the Interim Office of the Chief Executive Officer will discuss the first quarter fiscal 2017 results and answer questions from the investment community. Live audio of the conference call will be simultaneously webcast over the Internet on the Company’s corporate website, www.weightwatchersinternational.com. 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:

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. The Company presents in the attachments to this release the non-GAAP financial measure earnings before interest, taxes, depreciation, amortization and stock-based compensation (EBITDAS). 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. In this release and any attachments, 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 Weight Watchers International, Inc.

Weight Watchers International, Inc. is one of the most recognized and trusted brand names among weight-conscious consumers. Weight Watchers provides commercial weight management services through a global network of Company-owned and franchise operations and offers innovative, digital weight management products through its websites, mobile sites and apps. These services and products are built on the Company’s weight management program, which helps millions of people around the world lose weight through sensible and sustainable food plans, activity, behavior modification and group support. Weight Watchers has an unparalleled network of service providers to assist members on their journey and also offers a wide range of products, publications and programs for those interested in weight loss and healthier living.

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, earnings guidance and any statements about the Company’s plans, strategies and prospects. The Company generally uses the words "may," "will," "could," "expect," "anticipate," "believe," "estimate," "plan," "intend" 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, including, among other things: competition from other weight management 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 and products 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; the effectiveness of the Company’s advertising and marketing programs, including the strength of its social media presence; the impact on the Weight Watchers brand of actions taken by the Company’s franchisees, licensees, suppliers and other partners; the inability to refinance the Company’s debt obligations on favorable terms or at all; the impact of the Company’s debt service obligations and restrictive debt covenants; uncertainties regarding the satisfactory operation of the Company’s information technology or systems; the impact of security breaches or privacy concerns; 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 Company’s chief executive officer transition, and its ability to appoint a new chief executive officer with the required level of experience and expertise in a timely manner; 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 and social risks 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., who effectively controls the Company, will conflict with other holders 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 Securities and Exchange Commission (which are available from the SEC’s EDGAR database at www.sec.gov, at various SEC reference facilities in the United States and via the Company’s website at www.weightwatchersinternational.com).

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
UNAUDITED
April 1,
December 31,
2017
2016
ASSETS
Current assets
$
266.7
$
235.2
Property and equipment, net
47.7
49.6
Goodwill, franchise rights and other intangible assets, net 972.6
973.4
Other assets
14.0
12.8
TOTAL ASSETS
$
1,301.0
$
1,271.0
LIABILITIES AND TOTAL DEFICIT
Current liabilities
$
299.9
$
292.4
Long-term debt
1,977.5
1,981.3
Deferred income taxes, other
208.9
200.2
TOTAL LIABILITIES
$
2,486.3
$
2,473.9
Redeemable noncontrolling interest
4.7
4.7
Shareholders’ deficit
(1,190.0)
(1,207.6)
TOTAL LIABILITIES AND TOTAL DEFICIT
$
1,301.0
$
1,271.0
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
UNAUDITED
Three Months Ended
April 1,
April 2,
2017
2016
Service revenues, net (1)
$
261.5
$
243.8
Product sales and other, net (2)
67.6
63.1
Revenues, net
329.1
306.9
Cost of services (3)
124.9
124.7
Cost of product sales and other (4)
40.1
32.6
Cost of revenues
165.0
157.2
Gross profit
164.1
149.7
Marketing expenses
86.4
86.5
Selling, general and administrative expenses
47.4
49.6
Operating income
30.2
13.6
Interest expense
28.1
30.0
Other expense (income), net
0.6
(0.1)
Income (loss) before income taxes
1.5
(16.4)
Benefit from income taxes
(9.1)
(5.6)
Net income (loss)
10.6
(10.8)
Net loss attributable to the noncontrolling interest
0.1
0.0
Net income (loss) attributable to Weight Watchers International, Inc.
$
10.7
$
(10.8)
Earnings (Net loss) Per Share attributable to Weight Watchers International, Inc.
Basic
$
0.17
$
(0.17)
Diluted
$
0.16
$
(0.17)
Weighted average common shares outstanding:
Basic
64.0
63.5
Diluted
66.5
63.5
_____
Note: Totals may not sum due to rounding.
(1)
Consists of net "Meeting Fees" and net "Online Subscription Revenues". "Meeting Fees" consist of the fees associated with the Company’s monthly commitment plans for unlimited access to meetings and other payment arrangements for access to meetings, including the Company’s "pay-as-you-go" payment arrangement and fees associated with the Company’s Total Access product. "Online Subscription Revenues" consist of the fees associated with subscriptions for the Company’s Online subscription products, including the Company’s Personal Coaching product.
(2)
Consists of sales of products to members in meetings and online, revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications, payments from the sale of third-party online advertising and By Mail, other revenues, and franchise fees with respect to commitment plans and commissions.
(3)
Consists of meeting operating expense and online cost of revenues excluding online advertising costs.
(4)
Consists of meetings cost of product, online advertising costs, non-meeting cost of products and other.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
OPERATIONAL STATISTICS
(IN MILLIONS, EXCEPT PERCENTAGES)
UNAUDITED
Three Months Ended
April 1,
April 2,
Variance
2017
2016
Meeting Paid Weeks (1)
North America
12.8
11.4
12.3%
UK
2.6
2.7
(3.2%)
CE
2.9
2.9
(0.7%)
Other (2)
0.7
0.6
11.2%
Total Meeting Paid Weeks
19.0
17.7
7.7%
Online Paid Weeks (1)
North America
16.3
14.1
16.1%
UK
1.7
1.5
11.8%
CE
6.5
5.4
22.0%
Other (2)
0.6
0.6
5.6%
Total Online Paid Weeks
25.2
21.5
17.0%
Total Paid Weeks (1)
North America
29.2
25.5
14.4%
UK
4.3
4.3
2.2%
CE
9.4
8.3
14.0%
Other (2)
1.3
1.2
8.6%
Total Paid Weeks
44.2
39.2
12.8%
End of Period Meeting Subscribers (3)
North America
1.0
0.9
14.7%
UK
0.2
0.2
1.2%
CE
0.2
0.2
3.0%
Other (2)
0.0
0.0
9.3%
Total End of Period Meeting Subscribers
1.5
1.3
10.7%
End of Period Online Subscribers (3)
North America
1.4
1.2
18.8%
UK
0.1
0.1
16.4%
CE
0.5
0.4
26.4%
Other (2)
0.0
0.0
1.1%
Total End of Period Online Subscribers
2.1
1.8
20.1%
Total End of Period Subscribers (3)
North America
2.4
2.0
17.0%
UK
0.3
0.3
7.1%
CE
0.8
0.7
18.5%
Other (2)
0.1
0.1
4.7%
Total End of Period Subscribers
3.6
3.1
16.0%
_____
Note: Totals may not sum due to rounding.
(1)
The "Paid Weeks" metric reports paid weeks by Weight Watchers customers in Company-owned operations for a given period as follows: (i) "Meeting Paid Weeks" is the sum of total paid commitment plan weeks (including Total Access) and total "pay-as-you-go" weeks; (ii) "Online Paid Weeks" is the total paid subscription weeks for the Company’s digital subscription products (including Personal Coaching); and (iii) "Total Paid Weeks" is the sum of Meeting Paid Weeks and Online Paid Weeks.
(2)
Represents Asia Pacific and emerging markets.
(3)
The "End of Period Subscribers" metric reports Weight Watchers subscribers in Company-owned operations at a given period end as follows: (i) "End of Period Meeting Subscribers" is the total
number of Weight Watchers monthly commitment plan subscribers (including Total Access); (ii) "End of Period Online Subscribers" is the total number of Weight Watchers Online, Weight Watchers OnlinePlus and Personal Coaching subscribers; and (iii) "End of Period Subscribers" is the sum of End of Period Meeting Subscribers and End of Period Online Subscribers.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN MILLIONS, EXCEPT PERCENTAGES)
UNAUDITED
Q1 2017 Variance
2017
Constant
Q1 2017
Q1 2016
2017
Currency
Currency
Constant
vs
vs
GAAP
Adjustment
Currency
GAAP
2016
2016
Selected Financial Data
Consolidated Company Revenues
$
329.1
$
4.4
$
333.5
$ 306.9
7.2%
8.7%
Consolidated Meeting Fees (1)
$
164.4
$
1.8
$
166.2
$ 155.7
5.5%
6.7%
Consolidated Online Subscription Revenues (2) $
97.1
$
1.2
$
98.3
$
88.0
10.3%
11.7%
Consolidated Service Revenues (3)
$
261.5
$
3.0
$
264.5
$ 243.8
7.3%
8.5%
Consolidated Product Sales and Other (4)
$
67.6
$
1.4
$
69.0
$
63.1
7.0%
9.3%
North America
Meeting Fees (1)
$
124.0
$
(0.3)
$
123.7
$ 111.7
11.1%
10.8%
Online Subscription Revenues(2)
$
68.1
$
(0.2)
$
68.0
$
62.7
8.6%
8.4%
Service Revenues (3)
$
192.1
$
(0.4)
$
191.7
$ 174.4
10.2%
9.9%
Product Sales and Other(4)
$
40.6
$
(0.1)
$
40.5
$
34.4
17.8%
17.6%
Total Revenues
$
232.7
$
(0.5)
$
232.2
$ 208.8
11.4%
11.2%
UK
Meeting Fees (1)
$
12.1
$
1.9
$
14.0
$
15.4
(21.2%)
(9.0%)
Online Subscription Revenues(2)
$
4.5
$
0.7
$
5.1
$
4.9
(9.6%)
4.4%
Service Revenues (3)
$
16.6
$
2.6
$
19.1
$
20.3
(18.4%)
(5.7%)
Product Sales and Other(4)
$
7.4
$
1.2
$
8.6
$
8.6
(13.8%)
(0.3%)
Total Revenues
$
24.0
$
3.7
$
27.7
$
28.9
(17.0%)
(4.1%)
CE
Meeting Fees (1)
$
22.0
$
0.8
$
22.8
$
23.4
(6.3%)
(2.8%)
Online Subscription Revenues(2)
$
21.5
$
0.8
$
22.4
$
17.8
20.8%
25.5%
Service Revenues (3)
$
43.5
$
1.6
$
45.2
$
41.3
5.4%
9.4%
Product Sales and Other(4)
$
13.9
$
0.5
$
14.4
$
14.4
(3.7%)
(0.2%)
Total Revenues
$
57.4
$
2.2
$
59.6
$
55.7
3.1%
6.9%
Other (5)
Meeting Fees (1)
$
6.3
$
(0.6)
$
5.7
$
5.3
18.9%
7.8%
Online Subscription Revenues(2)
$
3.0
$
(0.2)
$
2.8
$
2.5
17.7%
10.9%
Service Revenues (3)
$
9.3
$
(0.8)
$
8.5
$
7.8
18.5%
8.8%
Product Sales and Other(4)
$
5.7
$
(0.2)
$
5.5
$
5.6
0.4%
(2.7%)
Total Revenues
$
14.9
$
(0.9)
$
14.0
$
13.4
10.9%
4.0%
_____
Note: Totals may not sum due to rounding.
(1)
"Meeting Fees" consist of the fees associated with the Company’s monthly commitment plans for unlimited access to meetings and other payment arrangements for access to meetings, including the Company’s "pay-as-you-go" payment arrangement and fees associated with the Company’s Total Access product.
(2)
"Online Subscription Revenues" consist of the fees associated with subscriptions for the Company’s Online subscription products, including the Company’s Personal Coaching product.
(3)
"Service Revenues" equal "Meeting Fees" plus "Online Subscription Revenues".
(4)
"Product Sales" are sales of products to members in meetings and online, and "Other" are revenues from licensing, magazine subscriptions, publishing and third-party advertising in publications, payments from the sale of third-party online advertising and By Mail, other revenues, and, in the case of the consolidated financial results and Other reportable segment, includes franchise fees with respect to commitment plans and commissions.
(5)
Represents Asia Pacific, emerging markets and franchise revenues.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN MILLIONS, EXCEPT PERCENTAGES)
UNAUDITED
Q1 2017 Variance
2017
Q1 2017
Q1 2016
Constant
2017
Currency
Currency
Constant
vs
vs
GAAP
Adjustment
Currency
GAAP
2016
2016
Selected Financial Data
Gross Profit
$
164.1
$
2.3
$
166.4
$
149.7
9.6%
11.1%
Gross Margin
49.9%
49.9%
48.8%
Selling, General and Administrative Expenses $
47.4
$
0.4
$
47.8
$
49.6
(4.4%)
(3.6%)
Operating Income
$
30.2
$
0.7
$
30.9
$
13.6
123.0%
127.9%
Operating Income Margin
9.2%
9.3%
4.4%
_____
Note: Totals may not sum due to rounding.
WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(IN MILLIONS)
UNAUDITED
Three Months Ended
April 1,
April 2,
2017
2016
Net Income (Loss)
$
10.7
$
(10.8)
Interest
28.1
30.0
Taxes
(9.1)
(5.6)
Depreciation and Amortization
12.9
12.9
Stock-based Compensation
2.3
3.2
EBITDAS
$
44.8
$
29.7
_____
Note: Totals may not sum due to rounding.
Contact Information:
Investors:
Media:
Brainerd Communicators, Inc. Jenny Zimmerman
Corey Kinger
(212) 589-2784
(212) 986-6667
jenny.zimmerman@weightwatchers.com
kinger@braincomm.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/weight-watchers-announces-first-quarter-2017-results-and-raises-full-year-2017-guidance-300449830.html

SOURCE Weight Watchers International, Inc.

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