European Wax Center, Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to European WAC Center's second quarter fiscal 2023 earnings conference call. At this time, all participants are on the list in the only mode. After the speaker's presentation, there will be a Q&A session. In order to facilitate as many participants as possible, we ask that you please limit yourself to one question and one follow-up during the Q&A session. If you have additional questions, you may rejoin the queue. At this time, I would now like to turn the conference over to Bethany Johns, Director of Investor Relations. Ma'am, you may begin.

Thank you, and welcome to European WAC Center's second quarter fiscal 2023 earnings call. With me today are David Berg, Chief Executive Officer, David Willis, President and Chief Operating Officer, and Stacey Shirley, Chief Financial Officer. For today's call, David Berg and David Willis will provide a brief overview of our second quarter performance and discuss our priorities for fiscal 2023. Then Stacey will provide additional details regarding our second quarter financial performance and our fiscal 2023 outlook. Following the prepared remarks, David, Stacey, and David will be available to take questions. Before we start, I would like to remind you of our legal disclaimer. We will make certain statements today which are forward-looking within the meaning of the federal securities laws. including statements about the outlook of our business and other matters referenced in our earnings release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings as well as our earnings release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call. and we take no obligation to revise or publicly release the results of any revision to our forward-looking statements in light of new information or future events. Also during this call, we will discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in our earnings release. A live broadcast of this call is also available on the investor relations section of our website. at investors.waccenter.com. I will now turn the call over to David Berg.

Thanks, Bethany, and good morning, everyone. Thank you all for joining us today. Before discussing our Q2 results, let me say a few words about this morning's news. As I'm sure most of you have seen by now, we issued a press release earlier today announcing that after nearly five years as CEO of European WAC Center, I am excited to transition to the newly created executive chair role. I couldn't be more thrilled to share that David Willis, our current president and chief operating officer, will become our next CEO, effective September 30th, 2023. David Willis joined European WAC Center seven years ago and has worn many hats, including president, COO, and CFO over his tenure. He has been an integral part of our unit growth and development story and my key partner in designing and executing our strategic roadmap. Most importantly, David embodies the core values that drive European WAC Center's best-in-class culture by ensuring associates have the opportunities and resources to achieve their goals. I could not be more confident in his experience, franchisee relationships, deep knowledge of our business model, and robust leadership skills, all of which make him perfectly suited to become our next CEO. In addition, we announced that Gavin O'Connor, our Chief Legal and Human Resources Officer, will transition to the newly formed leadership position of Chief Administrative Officer. Gavin will assume responsibility for our supply chain and technology functions in addition to his current responsibilities of legal, talent, ESG, and risk management. This transition is the culmination of a thoughtful succession planning process developed by the Board and me over the last year. which has also involved the evolution and strengthening of our full executive leadership team. This team now includes Stacy Shirley, a seasoned retail executive and long-term public company CFO, and Chief Commercial Officer Andrea Wasserman, responsible for driving network sales through our attract more, buy more, and visit more pillars, along with veteran team members Joel Larkin, leading our unit growth initiative as Chief Development Officer, and Julie Hauser-Blanner supporting the field as Chief Franchise Officer. The Board and I are confident we have the right executive team in place for our next phase of growth. Given European WAC Center's strong foundation and our clear and demonstrated growth trajectory, it is the right time for me to complete this transition and I look forward to extending my tenure at EWC through my role as Executive Chairman. It has been an incredible honor to serve as European WAC Center CEO, and I'm so proud of our many accomplishments that have positioned us for continued growth. Our founders envisioned a professional, consistent, hygienic, and efficient experience for guests across the country. Almost 20 years later, and despite navigating a global pandemic and an uncertain macroeconomic environment, we have expanded our presence as the undisputed leader out-of-home waxing since 2018 we have significantly grown both our top and bottom lines and expanded our footprint as the dominant industry player and since our successful IPO exactly two years ago our saves consistently match our dues and we have been able to return over 200 million dollars to shareholders we are well positioned and to take more share in this highly fragmented industry, and I'm confident that under David Willis, the best is yet to come. Most importantly, I am thankful for the best-in-class culture we've created, where our associates live our values, can be their authentic selves, and are able to do their best work. Now, diving into our Q2 results. We are pleased to deliver strong Q2 performance. as continued franchisee demand drove robust new center openings and our strategic initiatives performed in line with our expectations. In the second quarter, we generated $254 million in system-wide sales, $59 million in total revenue, and $21 million in adjusted EBITDA, representing 10%, 11%, and 14% growth, respectively. We delivered 2.6% same-store sales growth and opened 25 net new centers, building on momentum from Q1, during which we set the record for the number of European wax centers opened in a single quarter. We also drove more than 10% growth in wax pass sales during our May-June promo period, which symbolizes a deepened relationship between European wax center and our most valuable guests. While guests can purchase wax passes year round, We run enhanced promotions twice a year to drive outsized sign-ups and renewals. As a reminder, Wax Passes engender brand loyalty and drive repeat visits by rewarding guests with a discount on prepaid body part specific packages. Much like a membership program, the Wax Pass supports predictable guest engagement. Wax Pass holders generate two-thirds of our visits and network sales. Our routine guest cohort behaves similarly and contributes an additional 10% of sales and visits. And we're pleased that both groups remain consistent in their waxing frequency and spend. We continue to focus on driving bigger share of wallet and increased frequency with these loyal guests who together make up over 75% of our recurring revenue stream. As we discussed last quarter, we also deployed several initiatives in Q2 to engage episodic guests, and we are happy to share that we observed some recovery among this group as we exited the quarter. David Willis will touch on guest trends in depth later on. As a result, we are pleased with how the second quarter unfolded, and our saves and dos match once again. We believe our results reinforce the strength and consistency of our business model, anchored by our growth vectors, unit growth and in-center sales growth. The predictable nature of our most loyal guests and the organic unit growth driven by a robust pipeline give us confidence in reiterating our full-year financial expectations for 2023. With that, I'd like to turn the call over to David Willis to discuss our recent trends and growth vectors. David, over to you.