YogaWorks, Inc. Reports Third Quarter 2018 Financial Results
Results for the third quarter ended September 30, 2018
|September 30, 2018||September 30, 2017|
|Net revenue||$15.2 million||$13.5 million|
|Net income / (loss)||$(13.9) million||$(4.6) million|
|Studio Count at quarter end||70||53|
|Adjusted EBITDA||$(1.8) million||$(432) thousand|
|Adjusted free cash flow||$(2.9) million||$(443) thousand|
|Studio-Level free cash flow||$733 thousand||$2.6 million|
|Studio-Level EBITDA||$1.8 million||$2.6 million|
|Adjusted net income/(loss)||$(3.6) million||$(3.1) 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 third quarter ended
- Net revenue was
$15.2 million, a 12% increase compared to $13.5 millionin the third quarter of 2017.
- The Company ended the quarter with 70 studios in nine regional markets.
- Adjusted EBITDA was
$(1.8) millioncompared to adjusted EBITDA of $(432) thousandfor the same quarter last year.
- Adjusted net loss was
$3.6 millioncompared to adjusted net loss of $3.1 millionfor 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
$13.2 millionas of September 30, 2018.
- Cash used in operating activities was
$1.8 millionfor the third quarter ended September 30, 2018, as compared to cash provided by operating activities of $2.5 millionfor the third quarter ended September 30, 2017.
For fiscal year 2018, the Company continues to expect net revenue between
Conference Call to Discuss Third Quarter Results
The Company will host a conference call and webcast to discuss its financial results for the third quarter ended
This press release may include forward-looking statements that reflect the Company’s current views about future events and financial performance. All statements other than statements of historical facts included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events are forward-looking statements.
These forward-looking statements are expressed in good faith and the Company believes there is a reasonable basis for them. However, there can be no assurance that the events, results or trends identified in these forward-looking statements will occur or be achieved. Investors should not place undue reliance on any of the Company’s forward-looking statements because they are subject to a variety of risks and uncertainties. Factors that could cause results to differ from those reflected in the forward-looking statements are set forth in the Company’s prior press releases and public filings with the
|Condensed Consolidated Balance Sheets (Unaudited)|
September 30, 2018
December 31, 2017
|Cash and cash equivalents||$||13,179,294||$||22,095,216|
|Prepaid expenses and other current assets||947,460||1,145,067|
|Total current assets||15,338,858||24,452,891|
|Property and equipment, net||9,150,733||10,418,203|
|Intangible assets, net||14,408,349||22,142,275|
|Other non-current assets||1,262,530||1,224,179|
|Liabilities and Stockholders’ Equity|
|Accounts payable and accrued expenses||$||3,123,797||$||3,794,569|
|Current portion of deferred rent||120,010||122,607|
|Total current liabilities||10,834,923||13,052,258|
|Deferred rent, net of current portion||3,540,956||3,418,886|
|Deferred tax liability||2,402||—|
|Commitments and Contingencies (Note 14)|
|Common stock $0.001 par value; 50,000,000 shares authorized,
16,620,284 issued and 16,477,675 outstanding at September 30, 2018
and 50,000,000 shares authorized, 16,435,505 issued and
16,332,510 outstanding at December 31, 2017
|Additional paid in capital||112,837,218||111,650,415|
|Total stockholders’ equity||31,211,252||54,535,177|
|Total liabilities and stockholders’ equity||$||45,589,533||$||71,006,321|
|Condensed Consolidated Statements of Operations (Unaudited)|
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Cost of revenues and operating expenses|
|Cost of revenues||6,212,640||5,153,324||17,892,463||15,087,713|
|General and administrative expenses||4,158,868||4,556,887||12,617,813||11,661,716|
|Depreciation and amortization||1,874,008||2,161,126||6,471,036||6,530,589|
|Total cost of revenues and operating
|Loss from operations||(13,943,250||)||(4,085,818||)||(24,587,179||)||(10,280,843||)|
|Interest (income) expense, net||(46,613||)||532,939||(96,886||)||1,343,445|
|Net loss before provision
for income taxes
|Provision for (benefit from) income taxes||2,667||(27,933||)||20,580||31,074|
|Less preferred rights dividend on redeemable
|Net loss attributable to common
|Condensed Consolidated Statements of Cash Flows (Unaudited)|
|Nine Months Ended September 30,|
|Cash flows from operating activities|
|Adjustments to reconcile net loss to net cash used in
|Depreciation and amortization||6,471,036||6,530,589|
|Paid-in-kind interest expense capitalized to convertible note||—||291,585|
|Beneficial conversion feature||—||147,877|
|Amortization of debt issuance cost||—||69,164|
|Debt issuance cost written-off||—||318,016|
|Stock-based compensation expense||1,284,099||2,119,252|
|Changes to operating assets and liabilities, net of effects from acquisitions:|
|Tenant improvement allowances received||47,530||—|
|Prepaid expenses and other current assets||197,607||656,902|
|Other non-current assets||(919||)||(76,689||)|
|Accounts payable and accrued expenses||(186,078||)||2,707,751|
|Deferred rent and other non-current liabilities||71,943||94,085|
|Net cash (used in) provided by operating activities||(6,373,604||)||1,655,896|
|Cash flows from investing activities|
|Purchases of property, equipment, and intangible assets||(1,079,543||)||(958,602||)|
|Acquisition earnout and holdback payments||(643,694||)||(445,400||)|
|Cash paid for acquisitions, net of earnouts||(721,930||)||—|
|Net cash used in investing activities||(2,445,167||)||(1,404,002||)|
|Cash flows from financing activities|
|Repurchase of shares to satisfy tax withholding||(97,151||)||—|
|Principal payment on term loans||—||(6,956,250||)|
|Principal payment on convertible note||—||(3,300,403||)|
|Principal payment on subordinated notes||—||(200,000||)|
|Proceeds from issuance of convertible note||—||35,083,288|
|Proceeds from issuance of common stock||—||3,200,000|
|Net cash (used in) provided by financing activities||(97,151||)||27,826,635|
|Increase (decrease) in cash and cash equivalents||(8,915,922||)||28,078,529|
|Cash and cash equivalents, beginning of period||22,095,216||1,912,421|
|Cash and cash equivalents, end of period||$||13,179,294||$||29,990,950|
|Supplemental disclosure of cash flow information|
|Cash paid during the period for:|
|Supplemental disclosure of non-cash activities|
|Purchase consideration liabilities related to acquisitions||$||159,000||$||—|
|Dividends on preferred redeemable stock accrued||—||995,743|
|Paid-in-kind interest expense capitalized convertible note||—||291,585|
|Purchase consideration liabilities related to acquisitions||—||120,031|
|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 September 30,||Nine Months Ended September 30,|
|Interest (income) expense, net||(47||)||533||(97||)||1,343|
|Provision for (benefit from) income taxes||3||(28||)||21||31|
|Depreciation and amortization||1,874||2,161||6,471||6,531|
|Stock based compensation(b)||334||1,294||1,284||2,119|
|Great Hill Partners expense reimbursement fees(g)||—||25||—||75|
|Studio closure expenses (h)||17||—||17||—|
|Change in deferred revenue(i)||(1,111||)||(11||)||(1,036||)||531|
|Adjusted free cash flow||(2,864||)||(443||)||(5,236||)||390|
|Other general and administrative expenses(j)||3,597||3,059||10,967||8,147|
|Studio-Level free cash flow||733||2,616||5,731||8,537|
|Change in deferred revenue(i)||1,111||11||1,036||(531||)|
(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) Legal settlement expenses incurred in the period to settle claims.
(d) Severance expenses incurred in the period related to the termination of studio and non-studio employees.
(e) Executive recruiting expenses incurred in connection with the recruitment and hiring of members of our executive management team.
(f) Professional fees related to certain accounting, tax and consulting services that were expensed in connection with our acquisitions.
(g) Represents expense reimbursement fees incurred in connection with our Expense Reimbursement Agreement with affiliates of
(h) Represents closure expenses of one
(i) Represents change in deferred revenue that is reflected in the consolidated statements of operations, excluding the change in gift card liabilities and deferred revenue from acquisitions.
(j) 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
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 September 30,||Nine Months Ended September 30,|
|Stock based compensation(a)||334||1,294||1,284||2,119|
|Great Hill Partners expense reimbursement fees(f)||—||25||—||75|
|Studio closure expenses (g)||17||—||17||—|
|Adjusted net loss||$||(3,619||)||$||(3,092||)||$||(10,667||)||$||(8,140||)|
(a) Non-cash charges related to equity-based compensation programs, which vary from period to period depending on timing of awards and forfeitures.
(b) Legal settlement expenses incurred in the period to settle claims.
(c) Severance expenses incurred in the period related to the termination of studio and non-studio employees.
(d) Executive recruiting expenses incurred in connection with the recruitment and hiring of members of our executive management team.
(e) Professional fees related to certain accounting, tax and consulting services that were expensed in connection with our acquisitions.
(f) Represents expense reimbursement fees incurred in connection with our Expense Reimbursement Agreement with Great Hill Partners, which was terminated upon completion of our IPO.
(g) Represents closure expenses of one Boston area studio that closed in the third quarter of 2018.
Source: YogaWorks, Inc.