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

  • Q1 2017 End of Period Subscribers up 16% year-over-year to 3.6 million
  • Total Paid Weeks in Q1 2017 up 13% year-over-year
  • Revenues in Q1 2017 of $329 million up 7% year-over-year, up 9% on a constant currency basis year-over-year
  • Operating Income in Q1 2017 of $30 million, up from $14 million in Q1 2016
  • FY 2017 EPS guidance raised to a range of $1.40 to $1.50 versus prior guidance of $1.30 to $1.40

NEW YORK - May 2, 2017 // PRNewswire // - Weight Watchers International, Inc. (NYSE: 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).

For full spreadsheet report, please go to: [http://www.prnewswire.com/news-releases/weight-watchers-announces-first-quarter-2017-results-and-raises-full-year-2017-guidance-300449830.html].

Contacts:

Corey Kinger
Investor Relations
Brainerd Communicators, Inc.
(212) 986-6667
kinger@braincomm.com

Jenny Zimmerman
Media Relations
(212) 589-2784
jenny.zimmerman@weightwatchers.com

SOURCE Weight Watchers International, Inc.

###

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