YogaWorks, Inc. (NASDAQ:YOGA) (the “Company”), one of the largest
providers of high quality yoga instruction in the U.S., today
announced financial results for the first quarter ended March 31,
2018.
Rosanna McCollough, President and Chief Executive Officer of
YogaWorks, stated, "We started 2018 on a strong note, delivering
first quarter financial results that were at the higher end of our
expectations. We are also excited to have made additional
progress on our acquisition strategy thus far in the second
quarter, as we acquired three studios in the Boston area, bringing
us to 69 locations and increasing our market share in the
region. Looking ahead, we remain focused on continuing to
leverage our robust acquisition pipeline and positioning ourselves
as the acquirer of choice to capitalize on the large and fragmented
yoga industry. In addition, we have a number of initiatives in
place to drive growth in our existing studio base including
optimizing our programming across studios, sharpening our marketing
efforts, adding teacher trainings and expanding the MyYogaWorks.com
network. Taken together, we remain confident that we can
deliver increased long-term value for our shareholders.”
Results for the First Quarter Ended March 31,
2018
|
March 31, 2018 |
March 31, 2017 |
GAAP Results(1) |
|
|
Net revenue |
$15.5 million |
$14.0 million |
Net loss |
$(4.0) million |
$(2.6) million |
|
|
|
Non-GAAP Results(2) |
|
|
Studio Count at quarter end |
66 |
50 |
Adjusted EBITDA |
$(1.1) million |
$841 thousand |
Adjusted free cash flow |
$(810) thousand |
$766 thousand |
Studio-Level free cash flow |
$3.1 million |
$3.1 million |
Studio-Level EBITDA |
$2.8 million |
$3.2 million |
Adjusted net loss |
$(3.5) million |
$(2.0) million |
(1) U.S. generally accepted accounting principles (“GAAP”).
(2) Adjusted EBITDA, Studio-Level EBITDA, Adjusted free cash
flows, Studio-Level free cash flows and Adjusted net loss are
non-GAAP measures. For reconciliations to GAAP net loss, see
"Reconciliations of Non-GAAP Financial Measures" accompanying this
press release.
For the first quarter ended March 31,
2018:
- Net revenue was $15.5 million, an 11.0% increase compared to
$14.0 million in the first quarter of 2017.
- The Company ended the quarter with 66 studios in nine regional
markets.
- Adjusted EBITDA was $(1.1) million compared to adjusted EBITDA
of $841 thousand for the same quarter last year.
- Adjusted net loss was $3.5 million compared to adjusted net
loss of $2.0 million for the same period last year.
For a reconciliation of GAAP net loss to
Adjusted EBITDA, Studio-Level EBITDA, Adjusted free cash flows,
Studio-Level free cash flows and Adjusted net loss, please see
“Reconciliations of Non-GAAP Financial Measures” accompanying this
press release.
Balance Sheet and Cash Flow Highlights
- Cash and cash equivalents were $18.3 million as of March 31,
2018.
- Cash used in operating activities was $2.7 million for the
quarter as compared to cash provided by operating activities of
$783 thousand for the quarter ended March 31, 2017.
Guidance
Guidance for the second quarter and full year
fiscal 2018 excludes potential acquisitions.
For the second quarter of 2018, the Company
expects net revenue between $13.3 million and $13.8 million and
adjusted EBITDA between $(1.6) million and $(1.1) million. This
compares to net revenue of $12.5 million and adjusted EBITDA of
$(551) thousand for the second quarter of 2017.
For fiscal 2018, the Company expects net revenue
between $57.5 million and $59.5 million and adjusted EBITDA between
$(2.95) million and $(3.95) million. This compares to net revenue
of $54.5 million and adjusted EBITDA of $(1.2) million for
2017.
Conference Call to Discuss First Quarter
Results
The Company will host a conference call and
webcast to discuss its financial results for the first quarter
ended March 31, 2018, today, May 14, 2018, beginning at 4:30 p.m.
Eastern Time. Those interested in participating in the call are
invited to dial 1-877-407-4018 (U.S.) or 1-201-689-8471
(international). A live webcast of the conference call will also be
available online at www.yogaworks.com under the Investor Relations
section and will remain available for 30 days following the live
call. A replay will also be available two hours following the call
through May 28, 2018, via telephone at 1-844-512-2921 (U.S.) and
1-412-317-6671 (international) by entering the replay pin
13679503.
About YogaWorks, Inc.
YogaWorks, Inc. is one of the largest providers
of high quality yoga instruction in the U.S., with 69 studios in
nine markets including Los Angeles, Orange County, Northern
California, New York City, Boston, Baltimore, the Washington, D.C.
area, Houston and Atlanta. YogaWorks strives to make yoga
accessible to everybody and offers a wide range of class styles for
people of all ages and abilities. Through its studios, the Company
offers yoga classes, integrated fitness classes, workshops, teacher
training programs and yoga-related retail merchandise. In addition
to its studio locations, YogaWorks offers online instruction
through its MyYogaWorks web platform, which provides subscribers
with a highly curated catalog of over 1,100 yoga and meditation
classes.
Forward-Looking Statements
This press release may include forward-looking
statements that reflect the Company’s current views about future
events and financial performance. All statements other than
statements of historical facts included in this press release that
address activities, events or developments that the Company
expects, believes or anticipates will or may occur in the future
are forward-looking statements, as that term is defined in the
Private Securities Litigation Reform Act of 1995. Words such as
“estimates,” “expects,” “anticipates,” “projects,” “plans,”
“intends,” “believes,” “forecasts” and other words and terms of
similar meaning in connection with any discussion of the timing or
nature of future operating or financial performance or other events
are forward-looking statements.
These forward-looking statements are expressed
in good faith and the Company believes there is a reasonable basis
for them. However, there can be no assurance that the events,
results or trends identified in these forward-looking statements
will occur or be achieved. Investors should not place undue
reliance on any of the Company’s forward-looking statements because
they are subject to a variety of risks and uncertainties. Factors
that could cause results to differ from those reflected in the
forward-looking statements are set forth in the Company’s prior
press releases and public filings with the Securities and Exchange
Commission, which are available via the Company’s website at
www.yogaworks.com. The forward-looking statements in this press
release speak only as of the date of this release and, except as
required by law, the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which it is made or to reflect the occurrence of
anticipated or unanticipated events or circumstances.
Contacts: Investor Relations: Jean Fontana, ICR,
Inc.646-277-1200IR@yogaworks.com
YogaWorks, Inc.
Condensed Consolidated Balance
Sheets
|
|
As ofMarch 31,
2018 |
|
|
As ofDecember 31,
2017 |
|
Assets |
|
(Unaudited) |
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
18,315,308 |
|
|
$ |
22,095,216 |
|
Inventories |
|
|
1,245,279 |
|
|
|
1,212,608 |
|
Prepaid
expenses and other current assets |
|
|
1,224,276 |
|
|
|
1,145,067 |
|
Total current
assets |
|
|
20,784,863 |
|
|
|
24,452,891 |
|
Property and equipment,
net |
|
|
9,969,836 |
|
|
|
10,418,203 |
|
Intangible assets,
net |
|
|
20,637,786 |
|
|
|
22,142,275 |
|
Goodwill |
|
|
12,768,773 |
|
|
|
12,768,773 |
|
Other non-current
assets |
|
|
1,288,142 |
|
|
|
1,224,179 |
|
Total assets |
|
$ |
65,449,400 |
|
|
$ |
71,006,321 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses |
|
$ |
2,456,796 |
|
|
$ |
3,794,569 |
|
Accrued
compensation |
|
|
1,105,325 |
|
|
|
1,947,134 |
|
Deferred
revenue |
|
|
7,382,888 |
|
|
|
7,187,948 |
|
Current
portion of deferred rent |
|
|
123,147 |
|
|
|
122,607 |
|
Total current
liabilities |
|
|
11,068,156 |
|
|
|
13,052,258 |
|
Deferred rent, net of
current portion |
|
|
3,413,675 |
|
|
|
3,418,886 |
|
Deferred tax
liability |
|
|
14,748 |
|
|
|
— |
|
Total liabilities |
|
|
14,496,579 |
|
|
|
16,471,144 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity |
|
|
|
|
|
|
|
|
Common
stock $0.001 par value; 50,000,000 shares authorized and
16,491,856 issued and 16,362,955 outstanding at March 31,
2018 and 16,435,505 issued and 16,332,510 outstanding at
December 31, 2017 |
|
|
16,363 |
|
|
|
16,333 |
|
Additional paid-in capital |
|
|
112,028,925 |
|
|
|
111,650,415 |
|
Accumulated deficit |
|
|
(61,092,467 |
) |
|
|
(57,131,571 |
) |
Total stockholders’
equity |
|
|
50,952,821 |
|
|
|
54,535,177 |
|
Total liabilities and
stockholders’ equity |
|
$ |
65,449,400 |
|
|
$ |
71,006,321 |
|
YogaWorks, Inc.
Condensed Consolidated Statements of
Operations (Unaudited)
|
Three Months Ended March 31, |
|
|
2018 |
|
|
2017 |
|
Net
revenues |
$ |
15,529,813 |
|
|
$ |
13,990,094 |
|
Cost of revenues and operating expenses |
|
|
|
|
|
|
|
Cost of revenues |
|
5,923,849 |
|
|
|
5,128,753 |
|
Center operations |
|
6,771,916 |
|
|
|
5,686,637 |
|
General and administrative expenses |
|
4,404,933 |
|
|
|
3,010,386 |
|
Depreciation and amortization |
|
2,378,757 |
|
|
|
2,201,585 |
|
Total cost of revenues and
operating expenses |
|
19,479,455 |
|
|
|
16,027,361 |
|
Loss from operations |
|
(3,949,642 |
) |
|
|
(2,037,267 |
) |
Interest
(income) expense, net |
|
(6,130 |
) |
|
|
561,631 |
|
Net
loss before income taxes |
|
(3,943,512 |
) |
|
|
(2,598,898 |
) |
|
|
|
|
|
|
|
|
Provision for income taxes |
|
17,384 |
|
|
|
17,900 |
|
Net
loss |
$ |
(3,960,896 |
) |
|
$ |
(2,616,798 |
) |
YogaWorks, Inc.
Condensed Consolidated Statements of Cash
Flows (Unaudited)
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(3,960,896 |
) |
|
$ |
(2,616,798 |
) |
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2,378,757 |
|
|
|
2,201,585 |
|
Deferred
tax |
|
|
14,748 |
|
|
|
16,725 |
|
Paid-in-kind interest expense capitalized to convertible note |
|
|
— |
|
|
|
193,917 |
|
Beneficial conversion feature |
|
|
— |
|
|
|
147,987 |
|
Amortization of debt issuance cost |
|
|
— |
|
|
|
27,806 |
|
Stock-based compensation expense |
|
|
452,176 |
|
|
|
538,872 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Inventories |
|
|
(32,671 |
) |
|
|
146,856 |
|
Prepaid
expenses and other current assets |
|
|
(79,209 |
) |
|
|
1,053,988 |
|
Other
non-current assets |
|
|
(63,963 |
) |
|
|
(52,535 |
) |
Accounts
payable and accrued expenses |
|
|
(720,731 |
) |
|
|
(327,352 |
) |
Accrued
compensation |
|
|
(841,809 |
) |
|
|
(463,785 |
) |
Deferred
revenue |
|
|
194,940 |
|
|
|
(114,758 |
) |
Deferred
rent and other non-current liabilities |
|
|
(4,671 |
) |
|
|
30,730 |
|
Net cash (used in)
provided by operating activities |
|
|
(2,663,329 |
) |
|
|
783,238 |
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Purchase
of property, equipment, and intangible assets |
|
|
(425,901 |
) |
|
|
(196,370 |
) |
Acquisition earnout and holdback payments |
|
|
(617,042 |
) |
|
|
— |
|
Net cash used in
investing activities |
|
|
(1,042,943 |
) |
|
|
(196,370 |
) |
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Repurchase of shares to satisfy tax withholding |
|
|
(73,636 |
) |
|
|
— |
|
Principal
payment on term loans |
|
|
— |
|
|
|
(43,750 |
) |
Principal
payment on subordinated notes |
|
|
— |
|
|
|
(200,000 |
) |
Proceeds
from issuance of convertible note |
|
|
— |
|
|
|
3,200,000 |
|
Net cash (used in)
provided by financing activities |
|
|
(73,636 |
) |
|
|
2,956,250 |
|
(Decrease)
increase in cash and cash equivalents |
|
|
(3,779,908 |
) |
|
|
3,543,118 |
|
Cash and cash
equivalents, beginning of period |
|
|
22,095,216 |
|
|
|
1,912,421 |
|
Cash and cash
equivalents, end of period |
|
$ |
18,315,308 |
|
|
$ |
5,455,539 |
|
Supplemental
disclosure of cash flow information |
|
|
|
|
|
|
|
|
Cash paid
during the year for: |
|
|
|
|
|
|
|
|
Interest
paid |
|
$ |
— |
|
|
$ |
138,551 |
|
Supplemental
disclosure of non-cash activities |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Dividends
on preferred redeemable stock accrued |
|
$ |
— |
|
|
$ |
995,743 |
|
Conversion of convertible notes to equity |
|
|
— |
|
|
|
11,825,774 |
|
Conversion of preferred redeemable stock to equity |
|
|
— |
|
|
|
62,388,567 |
|
Reconciliations of Non-GAAP Financial
Measures
This press release contains financial measures called Adjusted
EBITDA, Studio-Level EBITDA, Adjusted free cash flow, Studio-Level
free cash flow and Adjusted net loss which are not calculated in
accordance with GAAP. The Company uses these financial measures to
understand and evaluate its business. Adjusted EBITDA is a
supplemental measure of the operating performance of the core
business operations. Studio-Level EBITDA is a supplemental measure
of the operating performance of the studios. Adjusted free cash
flow is a supplemental measure of the operating performance of the
core business operations excluding deferred revenue. Studio-Level
free cash flow is a supplemental measure of the operating
performance of the studios excluding deferred revenue. Adjusted net
loss is a supplemental measure of operating performance that is
adjusted for certain non-recurring items that we do not believe
directly reflect the core business operations. Accordingly, the
Company believes Adjusted EBITDA, Studio-Level EBITDA, Adjusted
free cash flow, Studio-Level free cash flow and Adjusted net loss
provide useful information to investors and others in understanding
and evaluating the Company’s operating results in the same manner
as management and the Board. Non-GAAP financial measures should not
be considered in isolation from, or as a substitute for, financial
information prepared in accordance with GAAP.
Adjusted EBITDA, Studio-Level EBITDA, Adjusted free cash
flow and Studio-Level free cash flow
The following table presents a reconciliation of Adjusted EBITDA
and Studio-Level EBITDA to Net loss. In addition, Adjusted free
cash flow and Studio-Level free cash flow are presented for each of
the periods indicated:
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
(in
thousands) |
|
(Unaudited) |
|
Net loss |
|
$ |
(3,961 |
) |
|
$ |
(2,617 |
) |
Interest
(income) expense, net |
|
|
(6 |
) |
|
|
562 |
|
Provision
for income taxes |
|
|
17 |
|
|
|
18 |
|
Depreciation and amortization |
|
|
2,379 |
|
|
|
2,201 |
|
Deferred
rent(a) |
|
|
(5 |
) |
|
|
31 |
|
Stock
based compensation(b) |
|
|
452 |
|
|
|
539 |
|
Severance(c) |
|
|
— |
|
|
|
82 |
|
Professional fees(d) |
|
|
55 |
|
|
|
— |
|
Great
Hill Partners expense reimbursement fees(e) |
|
|
— |
|
|
|
25 |
|
Adjusted EBITDA |
|
|
(1,069 |
) |
|
|
841 |
|
Change in
deferred revenue(f) |
|
|
259 |
|
|
|
(75 |
) |
Adjusted free cash
flow |
|
|
(810 |
) |
|
|
766 |
|
Other
general and administrative expenses(g) |
|
|
3,898 |
|
|
|
2,364 |
|
Studio-Level free cash
flow |
|
|
3,088 |
|
|
|
3,130 |
|
Change in
deferred revenue(f) |
|
|
(259 |
) |
|
|
75 |
|
Studio-Level
EBITDA |
|
$ |
2,829 |
|
|
$ |
3,205 |
|
(a) Reflects the extent to which our rent expense for the period
has been above or below our cash rent payments.(b) Non-cash charges
related to equity-based compensation programs, which vary from
period to period depending on timing of awards and forfeitures.(c)
Severance expenses incurred in the period related to the
termination of studio and non-studio employees.(d) Professional
fees related to certain accounting, tax and consulting services
that were expensed in connection with our acquisitions.(e)
Represents expense reimbursement fees incurred in connection with
our Expense Reimbursement Agreement with affiliates of Great Hill
Equity Partners V, L.P. and Great Hill Investors, LLC
(collectively, “Great Hill Partners” or “GHP”), which was
terminated upon completion of our IPO.(f) Represents change in
deferred revenue that is reflected in the consolidated statements
of operations, excluding the change in gift card liabilities.(g)
Represents general and administrative expenses that are corporate
and regional expenses and not incurred by our studios, and which
are primarily comprised of expenses related to (i) wages and
benefits of corporate and regional employees, (ii) non-studio rent,
utilities and maintenance, (iii) corporate and regional marketing
and advertising, and (iv) corporate professional fees. Other
general and administrative expenses exclude any general and
administrative expenses related to deferred rent, stock-based
compensation, legal settlement, severance, executive recruiting,
professional fees, the Great Hill Partners expense reimbursement
fees or any other general and administrative expenses that are
included in the reconciliation of net loss to Adjusted EBITDA.
Adjusted net loss
The following table presents a reconciliation of Adjusted net
loss to Net loss for each of the periods indicated:
|
|
Three Months Ended March 31, |
|
|
|
2018 |
|
|
2017 |
|
(in
thousands) |
|
(Unaudited) |
|
Net loss |
|
$ |
(3,961 |
) |
|
$ |
(2,617 |
) |
Stock
based compensation(a) |
|
|
452 |
|
|
|
539 |
|
Severance(b) |
|
|
— |
|
|
|
82 |
|
Professional fees(c) |
|
|
55 |
|
|
|
— |
|
Great
Hill Partners expense reimbursement fees(d) |
|
|
— |
|
|
|
25 |
|
Adjusted net loss |
|
$ |
(3,454 |
) |
|
$ |
(1,971 |
) |
(a) Non-cash charges related to equity-based compensation
programs, which vary from period to period depending on timing of
awards and forfeitures.(b) Severance expenses incurred in the
period related to the termination of studio and non-studio
employees.(c) Professional fees related to certain accounting, tax
and consulting services that were expensed in connection with our
acquisitions.(d) Represents expense reimbursement fees incurred in
connection with our Expense Reimbursement Agreement with Great Hill
Partners, which was terminated upon completion of our IPO.
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