WW - WW Announces Fourth Quarter and Full Year 2019 Results and Provides Full Year 2020 Guidance

• FY 2019 End of Period Subscribers up 8% year-over-year to 4.2 million, an all-time year-end high

• Q4 2019 Revenues of $333 million; FY 2019 Revenues of $1.4 billion
   
• Q4 2019 EPS of $0.42; FY 2019 EPS of $1.72
   
• FY 2020 guidance: Revenues approaching $1.6 billion and EPS range of $2.15 to $2.40

NEW YORK, Feb. 25, 2020 (GLOBE NEWSWIRE) --  WW International, Inc. (NASDAQ: WW) today announced its results for the fourth quarter and full year fiscal 2019 and provided its full year fiscal 2020 guidance.

“2020 is off to a terrific start. The global launch of the new myWW program is resonating in every market, the WW Presents: Oprah’s 2020 Vision tour in the U.S. has been engaging sold-out crowds to lead healthier lives and is reinforcing WW’s new positioning in wellness and weight loss, and great marketing execution by the teams around the world has driven strong performance in member signups year-over-year,” said Mindy Grossman, the Company’s President and CEO.  “Right now, we have more than 5 million members globally – a new all-time record for WW.”

“We ended 2019 with 4.2 million subscribers, a record level for a year-end and up 8% from the end of 2018, with subscriber growth in all of our major geographic markets,” said Nick Hotchkin, the Company’s CFO, Operating Officer, North America and President, Emerging Markets. “Subscriber growth trends improved each quarter throughout the year, a testament to our global team’s focus and efforts to improve marketing execution. Member recruitment so far in 2020 has been well above the prior year, as expected, and is reflected in revenue and earnings growth guidance for full year 2020.”

Q4 2019 Consolidated Results   

Q4 2019 Business and Financial Highlights

• End of Period Subscribers in Q4 2019 were up 8.0% versus the prior year period, driven by growth in all major geographic markets. Q4 2019 End of Period Digital Subscribers were up 15.1% and End of Period Studio + Digital Subscribers were down 5.8% versus the prior year period.
   
• Total Paid Weeks in Q4 2019 were up 5.7% versus the prior year period, driven by growth in all major geographic markets. Q4 2019 Digital Paid Weeks increased 13.4% and Studio + Digital Paid Weeks decreased 8.2% versus the prior year period. 
   
• Revenues in Q4 2019 were $332.6 million. On a constant currency basis, Q4 2019 revenues increased 1.5% versus the prior year period.
   
  • Service Revenues in Q4 2019 were $288.7 million. On a constant currency basis, these revenues increased 0.8% versus the prior year period, primarily driven by an increase in Digital subscribers.
     
  • Product Sales and Other in Q4 2019 were $43.9 million. On a constant currency basis, these revenues increased 6.4% versus the prior year period, primarily due to an increase in product sales.
     
• Operating Income in Q4 2019 was $65.9 million compared to $80.3 million in the prior year period. This decrease in operating income was primarily driven by operating deleverage on lower revenue from Studio + Digital Fees and higher marketing spend in the quarter versus the prior year period. 
   
• Effective Tax Rate in Q4 2019 was 13.7% compared to 2.0% in the prior year period.
   
• Net Income in Q4 2019 was $29.4 million compared to $43.8 million in the prior year period.
   
• Earnings per fully diluted share (EPS) in Q4 2019 was $0.42 compared to $0.63 in the prior year period.
  • Certain items in Q4 2018 affect year-over-year comparability. The following items in the aggregate positively impacted Q4 2018 EPS by $0.17 per fully diluted share:
    • $0.12 per fully diluted share tax benefit due to the reversal of a valuation allowance on foreign tax credits that have been fully utilized.
    • $0.05 per fully diluted share tax benefit due to the reversal of a valuation allowance related to certain net operating losses are now expected to be realized.

Full Year 2019 Consolidated Results

Full Year 2019 Business and Financial Highlights

• Total Paid Weeks in fiscal 2019 were up 3.1% versus the prior year, driven by growth in all major geographic markets. Fiscal 2019 Digital Paid Weeks increased 10.6% and Studio + Digital Paid Weeks decreased 9.8% versus the prior year. 
   
• Revenues in fiscal 2019 were $1,413.3 million. On a constant currency basis, fiscal 2019 revenues decreased 5.0% versus the prior year.
   
  • Service Revenues in fiscal 2019 were $1,207.3 million. On a constant currency basis, these revenues decreased 3.5% versus the prior year, primarily driven by a decrease in Studio + Digital subscribers.
     
  • Product Sales and Other in fiscal 2019 were $206.1 million. On a constant currency basis, these revenues decreased 12.8% versus the prior year, primarily due to a decrease in product sales.
     
• Operating Income in fiscal 2019 was $288.0 million compared to $389.0 million in the prior year. This decrease in operating income was primarily driven by operating deleverage on lower revenue from Studio + Digital fees versus the prior year. 
   
• Effective Tax Rate in fiscal 2019 was 20.9% compared to 8.4% in the prior year.
   
• Net Income in fiscal 2019 was $119.6 million compared to $223.7 million in the prior year.
   
• Earnings per fully diluted share (EPS) in fiscal 2019 was $1.72 compared to $3.19 in the prior year.
  • Certain items affect year-over-year comparability.
    • Fiscal 2019 EPS was negatively impacted by $0.07 per fully diluted share from expenses related to the Company’s previously disclosed organizational realignment.
    • Fiscal 2018 EPS was positively impacted by $0.48 per fully diluted share in the aggregate due to the following items:
      • $0.25 per fully diluted share tax benefit from Ms. Oprah Winfrey’s exercise of a portion of her stock options, as previously disclosed in March 2018.
      • $0.12 per fully diluted share tax benefit due to the reversal of a valuation allowance on foreign tax credits that have been fully utilized.
      • $0.06 per fully diluted share tax benefit related to favorable tax return adjustments.
      • $0.05 per fully diluted share tax benefit due to the reversal of a valuation allowance related to certain net operating losses that are now expected to be realized.

Other Items

• Cash balance as of December 28, 2019 was $182.7 million. On that same date, the Company had no outstanding borrowings under its $150.0 million revolving credit facility.  
• Debt Prepayments: As previously disclosed, during fiscal 2019, the Company voluntarily prepaid $100.0 million in aggregate principal amount of term loans outstanding under its credit agreement.             

Full Year Fiscal 2020 Guidance

The Company is providing its full year fiscal 2020 revenue guidance of approaching $1.6 billion and earnings guidance of between $2.15 and $2.40 per fully diluted share.

Fiscal 2020 includes a 53^rd week, which bridges the last week of December 2020 and the first week of January 2021 (ending on January 2, 2021). The Company’s full year EPS guidance incorporates an expected $0.06 per fully diluted share negative impact from seasonally high marketing activity in the 53^rd week.

Fourth Quarter and Full Year 2019 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 fourth quarter and full year fiscal 2019 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. The Company presents in the attachments to this release the non-GAAP financial measures earnings before interest, taxes, depreciation, amortization and stock-based compensation (“EBITDAS”), net debt and a net debt to 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. 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. A reconciliation of the forward-looking full year EBITDAS outlook to net income cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusting items necessary for such reconciliation that have not yet occurred, are out of the Company’s control, or cannot be reasonably predicted. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.

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. 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, including, among other things: 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; 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).

For more information, contact:
Investors:
Corey Kinger
VP Investor Relations
212.601.7569
corey.kinger@ww.com

Media:
Nicole Penn
VP Corporate Communications
212.817.4341
nicole.penn@ww.com