WW - WW Announces Third Quarter 2019 Results and Raises Full Year 2019 EPS Guidance

• End of Period Subscribers in Q3 2019 of 4.4 million
   
• Revenues in Q3 2019 of $349 million
   
• Q3 2019 EPS of $0.68
   
• Raising FY 2019 EPS guidance to a range of $1.63 to $1.75

NEW YORK, Nov. 05, 2019 (GLOBE NEWSWIRE) -- WW International, Inc. (NASDAQ: WW) today announced its results for the third quarter of fiscal 2019 and raised its full year fiscal 2019 EPS guidance.

“As our strong marketing execution successfully recruited new members and retention continued to increase, we outperformed our expectations for subscriber growth, resulting in our highest-ever end of period subscribers in a third quarter,” said Mindy Grossman, the Company’s President and CEO. “Next week, we will be launching our new program – our most customized yet – which we believe will have broad appeal among current, returning, and first-time members.  The new program, paired with our overall marketing strategy and community activations, including WW Presents Oprah’s 2020 Vision: Your Life in Focus tour, will serve as a strong foundation to accelerate subscriber growth in 2020 and deliver value to our members, employees and shareholders.”

“Subscriber growth gained momentum in the third quarter, with end of period subscribers increasing 6% year-over-year to 4.4 million,” said Nick Hotchkin, the Company’s CFO, Operating Officer, North America and President, Emerging Markets. “We are raising our earnings guidance for the full year to a range of $1.63 to $1.75 per fully diluted share, reflecting the continuation of improving trends across the business.”

Q3 2019 Consolidated Results

Q3 2019 Business and Financial Highlights

• End of Period Subscribers in Q3 2019 were up 5.7% versus the prior year period. Q3 2019 End of Period Digital Subscribers were up 12.5% and End of Period Studio + Digital Subscribers were down 7.3% versus the prior year period.
   
• Total Paid Weeks in Q3 2019 were up 3.7% versus the prior year period. Q3 2019 Digital Paid Weeks increased 10.8% and Studio + Digital Paid Weeks decreased 9.1% versus the prior year period. 
   
• Revenues in Q3 2019 were $348.6 million. On a constant currency basis, Q3 2019 revenues decreased 3.3% versus the prior year period.
  
       -     Service Revenues in Q3 2019 were $298.0 million. On a constant currency basis, these revenues decreased 3.0% versus the prior year period, primarily driven by Studio + Digital member recruitment declines.
  
       -     Product Sales and Other in Q3 2019 were $50.5 million. On a constant currency basis, these revenues decreased 4.6% versus the prior year period, primarily due to a decline in product sales.
   
• Operating Income in Q3 2019 was $94.7 million compared to $118.9 million in the prior year period. This decrease in operating income was primarily driven by operating deleverage on lower revenues in the quarter versus the prior year period. 
   
• Effective Tax Rate in Q3 2019 was 21.8% compared to 15.0% in the prior year period.
   
• Net Income in Q3 2019 was $47.1 million compared to $70.1 million in the prior year period.
   
• Earnings per fully diluted share (EPS) in Q3 2019 was $0.68 compared to $1.00 in the prior year period.
       -     Certain items affect year-over-year comparability.
            -     Q3 2018 results benefited from the reversal of certain tax reserves, the impact of which positively impacted EPS by $0.06 per fully diluted share.

Other Items

• Cash balance as of September 28, 2019 was $239.2 million. On that same date, the Company had no outstanding borrowings under its $150 million revolving credit facility.  
• Debt Prepayment: As previously disclosed, subsequent to the end of Q3 2019, the Company voluntarily prepaid $50.0 million in aggregate principal amount of term loans outstanding under its credit agreement. 

             
Full Year Fiscal 2019 Guidance

The Company is reiterating its full year fiscal 2019 revenue guidance of at least $1.4 billion and raising its earnings guidance to between $1.63 and $1.75 per fully diluted share.

Third Quarter 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 third quarter of 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 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. 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 and the world's leading commercial weight management program. We inspire millions of people to adopt healthy habits for real life. Through our engaging digital experience and face-to-face group workshops, members follow our livable and sustainable program that encompasses healthy eating, physical activity, and a helpful mindset. With more than five decades of experience in building communities and our deep expertise in behavioral science, we aim 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” 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 and its debt service obligations and debt covenants; 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 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 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., 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).