Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May ~~2, 2022,~~8, 2023, the registrant had ~~37,038,465~~50,373,648 and ~~26,403,097~~12,379,791 shares of Class A and Class B common stock, respectively, $0.00001 par value per share, outstanding.

(Amounts in thousands, except ~~share/unit~~share and per ~~share/unit~~share amounts)


	March 26, 2022			December 25, 2021			April 1, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	44,204		$	43,301		$	45,912		$	44,219
Restricted cash								6,568			6,575
Accounts receivable, net		7,479			6,656			7,300			6,932
Inventory		21,007			19,423			25,247			23,017
Prepaid expenses and other current assets		6,765			5,927			7,454			5,574
Total current assets		79,455			75,307			92,481			86,317
Property and equipment, net		3,841			3,863			2,878			2,747
Operating lease right-of-use assets		6,274			0			4,920			4,899
Intangible assets, net		197,247			201,995			178,290			183,030
Goodwill		328,551			328,551			328,551			328,551
Deferred income taxes								138,890			106,187
Other non-current assets		3,911			3,723			4,036			4,301
Total assets	$	619,279		$	613,439		$	750,046		$	716,032
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	17,474		$	23,155		$	17,469		$	18,547
Long-term debt, current portion		5,625			5,625			4,000			4,000
Tax receivable agreement liability, current portion								4,615			4,867
Deferred revenue, current portion		2,991			3,004			4,017			4,084
Operating lease liabilities, current portion		1,866			0			1,314			1,312
Other current liabilities		0			182
Total current liabilities		27,956			31,966			31,415			32,810
Long-term debt, net		171,581			172,607			371,166			370,935
Tax receivable agreement liability		60,299			59,167
Tax receivable agreement liability, net of current portion								203,029			167,293
Deferred revenue, net of current portion		6,701			6,787			6,898			6,901
Operating lease liabilities, net of current portion		5,188			0			4,255			4,227
Other long-term liabilities		1,526			1,671			2,022			3,562
Total liabilities		273,251			272,198			618,785			585,728
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock ($0.00001 par value, 100,000,000 shares authorized, NaN issued and outstanding as of March 26, 2022 and December 25, 2021.)		0			0
Class A common stock ($0.00001 par value, 600,000,000 shares authorized, 37,038,465 and 36,932,423 shares issued and outstanding as of March 26, 2022 and December 25, 2021, respectively)		0			0
Class B common stock ($0.00001 par value, 60,000,000 shares authorized, 26,433,636 and 26,700,477 shares issued and outstanding as of March 26, 2022 and December 25, 2021, respectively)		0			0
Preferred stock ($0.00001 par value, 100,000,000 shares authorized, none issued and outstanding as of April 1, 2023 and December 31, 2022.)								—			—
Class A common stock ($0.00001 par value, 600,000,000 shares authorized, 50,433,514 and 45,277,325 shares issued and 49,717,874 and 44,561,685 shares outstanding as of April 1, 2023 and December 31, 2022, respectively)								—			—
Class B common stock ($0.00001 par value, 60,000,000 shares authorized, 13,046,301 and 18,175,652 shares issued and outstanding as of April 1, 2023 and December 31, 2022, respectively)								—			—
Treasury stock, at cost 715,640 shares of Class A common stock as of April 1, 2023 and December 31, 2022								(10,080	)		(10,080	)
Additional paid-in capital		184,758			182,919			222,460			207,517
Accumulated deficit		(1,602	)		(3,487	)		(118,945	)		(118,437	)
Accumulated other comprehensive loss		—			(45	)
Total stockholders' equity attributable to European Wax Center, Inc.		183,156			179,387
Total stockholders’ equity attributable to European Wax Center, Inc.								93,435			79,000
Noncontrolling interests		162,872			161,854			37,826			51,304
Total stockholders' equity		346,028			341,241
Total liabilities and stockholders' equity	$	619,279		$	613,439
Total stockholders’ equity								131,261			130,304
Total liabilities and stockholders’ equity							$	750,046		$	716,032

The accompanying notes are an integral part of these condensed consolidated financial statements

(1) EWC Ventures, our financial reporting predecessor, is not subject to income taxes. As such, there was no income tax expense recorded during the 13 weeks ended March 27, 2021. See Note 12 for more information.
(2) Basic and diluted net income per share of Class A common stock is applicable only for the 13 weeks ended March 26, 2022. See Note 14 for the calculation of the numbers of shares used in computation of net income per share of Class A common stock and the basis for computation of net income per share.

The accompanying notes are an integral part of these condensed consolidated financial statements.

CONDENSED Consolidated Statements of ~~Mezzanine Equity and STOCKHOLDERS'/Members’~~STOCKHOLDERS’ Equity

The accompanying notes are an integral part of these condensed consolidated financial statements.

The Company operates on a fiscal calendar which, in a given year, consists of a 52 or 53 week period ending on the Saturday closest to December 31st. The quarters ended April 1, 2023 and March 26, 2022 ~~and March 27, 2021~~ both consisted of 13 weeks.

5. Long-term debt

Long-term debt consists of the following:


	April 1, 2023			December 31, 2022
Class A-2 Notes	$	397,000		$	398,000
Less: current portion		(4,000	)		(4,000	)
Total long-term debt		393,000			394,000
Less: unamortized debt discount and deferred financing costs		(21,834	)		(23,065	)
Total long-term debt, net	$	371,166		$	370,935

On April 6, 2022 (the “Closing Date”), EWC Master Issuer LLC, a limited-purpose, bankruptcy remote, indirect subsidiary of the Company (the “Master Issuer”), completed a securitization transaction pursuant to which it issued $400,000 in aggregate principal amount of Series 2022-1 5.50% Fixed Rate Senior Secured Notes, Class A-2 (the “Class A-2 Notes”).

In connection with the ~~market approach,~~issuance of the ~~income approach and/~~Class A-2 Notes, the Master Issuer also entered into (i) a revolving financing facility that allows for the issuance of up to $40,000 in Variable Funding Notes (”Variable Funding Notes”), and certain letters of credit and (2) an advance funding facility with Bank of America, N.A. (“BofA”), whereby BofA and any other advance funding provider thereunder would, in certain specified circumstances, make certain debt service advances and collateral protection advances (not to exceed $5,000 in the aggregate). The Variable Funding Notes were undrawn at closing and as of April 1, 2023.

The Class A-2 Notes and the Variable Funding Notes are referred to collectively as the “Notes.” The Notes were issued in a securitization transaction pursuant to which substantially all of the Company’s revenue-generating assets in the United States are held by the Master Issuer and certain other limited-purpose, bankruptcy remote, wholly-owned direct and indirect subsidiaries of EWC Holding Guarantor (including the Master Issuer) (collectively, the “Securitization Entities”) that have pledged substantially all of their assets to secure the Notes and, with respect to the Securitization Entities other than the Master Issuer, act as guarantors of the Notes.

While the Class A-2 Notes are outstanding, payments of principal and interest are required to be made on the Class A-2 Notes on a quarterly basis. The quarterly payments of principal on the Class A-2 Notes may be suspended in the event that the leverage ratio for the Company and its subsidiaries, including the securitization entities, is, in each case, less than or equal to 5.00x.

The legal final maturity date of the Class A-2 Notes is in March of 2052, but it is anticipated that, unless earlier prepaid to the extent permitted under the Base Indenture, dated April 6, 2022 (the “Indenture”), the Class A-2 Notes will be repaid in March of 2027 (the “Anticipated Repayment Date”). If the Master Issuer has not repaid or refinanced the Class A-2 Notes prior to their Anticipated Repayment Date, additional interest will accrue on the Class A-2 Notes equal to the greater of (A) 5.00% per annum and (B) a per annum interest rate equal to the excess, if any, by which the sum of (i) the yield to maturity (adjusted to a quarterly bond equivalent basis) on such anticipated repayment date of the United States Treasury Security having a term closest to ten (10) years plus (ii) 5.00%, plus (iii) 3.87%, exceeds the original interest rate. The Class A-2 Notes rank pari passu with the Variable Funding Notes.

Interest on the Variable Funding Notes will be payable at per annum rates based on term SOFR (plus a credit adjustment spread) or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to their present value onlenders’ commercial paper funding rate plus 212.5 basis points. There is a ~~discounted basis. The cost approach is based~~commitment fee on the ~~amount~~unused portion of the Variable Funding Notes facility, equal to 50 basis points per annum. It is anticipated that ~~currently would~~the principal and interest on the Variable Funding Notes will be repaid in full on or prior to March 2025, subject to two additional one-year extensions at the option of the Company. Following the anticipated date of repayment (and any extensions thereof), additional interest will accrue on the Variable Funding Notes equal to 5.00% per annum.

The Notes are secured by a security interest in substantially all of the assets of the Securitization Entities. The assets of the Securitization Entities include substantially all of the Company’s revenue-generating assets in the United States, which principally consist of franchise-related agreements, certain supply, distribution and logistics services agreements, intellectual property and license agreements for the use of intellectual property.

The Notes are subject to a series of financial and non-financial covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Notes, (ii) provisions relating to ~~replace~~optional and mandatory prepayments and the ~~service capacity~~related payment of ~~an asset (replacement costs). Valuation techniques should be consistently applied. Inputs~~specified amounts, including specified make-whole payments in the case of the Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the Notes are in stated ways defective or ineffective and (iv) covenants relating to ~~valuation techniques refer~~recordkeeping, access to ~~the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect~~information and similar matters. The Notes are also subject to customary rapid

amortization events provided for in the ~~assumptions market participants would use~~Indenture, including events tied to failure to maintain a stated debt service coverage ratio, the sum of system-wide sales being below certain levels on certain measurement dates, certain manager termination events (including in ~~pricing~~certain cases a change of control of EWC Ventures), an event of default and the ~~asset~~failure to repay or ~~liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect~~refinance the ~~reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based~~Notes on the ~~best information available in the circumstances. These two types~~applicable anticipated repayment date. The Notes are also subject to certain customary events of ~~inputs create a three-tier fair value hierarchy that gives the highest priority~~default, including events relating to ~~quoted prices in active markets for identical assets~~non-payment of required interest, principal or ~~liabilities and the lowest priority to unobservable inputs.~~

~~GAAP categorizes inputs used in fair value measurements into three broad levels as follows:~~

•

~~(Level 1) Quoted prices in active markets for identical assets~~other amounts due on or ~~liabilities.~~

•

(Level 2) Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data.

•

~~(Level 3) Unobservable inputs that are supported by little or no market activity and that are significant~~with respect to the ~~fair value~~Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of ~~the assets or liabilities. This includes valuation techniques that involve significant unobservable inputs.~~

specified representations and warranties, failure of security interests to be effective and certain judgments.

The Company previously used an interest rate cap to manage its interest rate exposure. However, the Company terminated its interest rate cap in March 2022. These interest rate caps were recorded at fair value. Changes in fair value of our interest rate caps were previously recognized as a component of accumulated other comprehensive loss on the condensed consolidated balance sheets. However, upon termination of the interest rate cap the balance of our accumulated other comprehensive loss was reclassified to the condensed consolidated statement of operations as a component of interest expense . Refer to Note 7—~~Derivative instruments and hedging activity~~ ~~for additional discussion.~~

~~Fair value measurements are summarized below:~~

Fair
Market
Value

Quoted prices
in active
markets for
identical assets
(Level 1)

Significant
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

Interest rate cap

March 26, 2022

$
0

$
0

$
0

$
0

December 25, 2021

$
(242
)

$
0

$
(242
)

$
0

The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. ~~Debt under our term loan (the "2026 Term Loan") approximated~~Our outstanding Class A-2 Notes had an approximate fair value ~~at March 26, 2022 as it has a variable rate and incorporates a measure of our credit risk.~~

~~4. Prepaid expenses and other current assets~~

~~Prepaid expenses and other current assets consisted of the following:~~

March 26, 2022

December 25, 2021

Prepaid insurance

$
1,225

$
2,308

Prepaid technology fees

2,327

1,500

Prepaid other & other current assets

3,213

2,119

Total

$
6,765

$
5,927

~~The prepaid other & other current assets amounts are primarily composed of prepaid marketing, prepaid commissions and sales taxes.~~

~~5. Accounts payable and accrued liabilities~~

~~Accounts payable and accrued liabilities consisted of the following:~~

March 26,
2022

December 25,
2021

Accounts payable

$
6,380

$
7,684

Accrued inventory

2,151

2,665

Accrued compensation

1,749

5,401

Accrued taxes and penalties

1,453

1,432

Accrued lease termination costs

0

588

Accrued technology and subscription fees

237

196

Accrued interest

1,471

1,477

Accrued professional fees

1,018

2,090

Accrued marketing fees

1,064

489

Other accrued liabilities

1,951

1,133

Total Accounts payable and accrued liabilities

$
17,474

$
23,155

~~6. Long-term debt~~

~~Long-term debt consists of the following:~~

March 26, 2022

December 25, 2021

2026 Term Loan

$
178,875

$
180,000

Less: current portion

(5,625
)

(5,625
)
Total long-term debt

173,250

174,375

Less: unamortized debt discount and deferred financing costs

(1,669
)

(1,768
)
Total long-term debt, net

$
171,581

$
172,607

On August 9, 2021, EW Intermediate Holdco, LLC, a Delaware limited liability company (“Holdings”), EW Holdco, LLC, a Delaware limited liability company (the “Borrower”), as borrower (each indirect subsidiaries of the Company), entered into a credit agreement (the "2026 Credit Agreement") with the lenders party thereto, Bank of America, N.A., as administrative agent (the “Administrative Agent”), and the other parties party thereto. The 2026 Credit Agreement is comprised of the 2026 revolving credit facility and the 2026 term loan. The 2026 Credit Agreement will mature on ~~August 9, 2026~~.

Obligations under the 2026 Credit Agreement are guaranteed by Holdings and the direct and indirect wholly-owned material domestic subsidiaries of the Borrower, subject to certain exceptions. The obligations are secured by a pledge of the Borrower’s capital stock directly held by Holdings and a security interest in substantially all of the assets of Holdings, the Borrower and its subsidiaries, subject to certain exceptions.

Borrowings under the 2026 Credit Agreement bear interest at a rate equal to, at the Borrower’s option, either (a) a LIBOR rate determined by reference to the cost of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs or (b) a base rate determined by reference to the highest of (i) the federal funds rate plus ~~0.50%, (ii) the prime rate of Bank of America, N.A. and (iii) the one month adjusted LIBOR plus~~ ~~1.00%, in each case plus an applicable margin. In addition, the Credit Agreement requires the Borrower to pay a commitment fee in respect of unused revolving credit facility commitments ranging between~~ ~~0.30% and~~ ~~0.45% per annum (determined based on the Borrower’s total net leverage ratio) in respect of the unused commitments under the Credit Agreement.~~

~~Borrowings under the 2026 Term Loan bear interest at an index rate as defined above plus an applicable margin of~~ ~~3.0% (3.2~~% at March 26, 2022). The 2026 Term Loan requires principal payments payable in quarterly installments with the final scheduled principal payment on the outstanding 2026 Term Loan borrowings due on August 9, 2026. The 2026 revolving credit facility has a maximum borrowing capacity of $~~40,000~~365,359 ~~and~~ as of ~~March 26, 2022 there were~~ 0 ~~outstanding borrowings.~~

The 2026 Credit Agreement contains certain customary events of default, including in the event of a change of control, and certain covenants and restrictions that limit the Borrower’s and its subsidiaries’ ability to, among other things, incur additional debt; create liens on certain assets; pay dividends on or make distributions in respect of their capital stock or make other restricted payments; consolidate, merge, sell, or otherwise dispose of all or substantially all of their assets; and enter into certain transactions with their affiliates.

The Company is also subject to certain financial maintenance covenants under the 2026 Credit Agreement, which require the Company and its subsidiaries to (i) not exceed certain specified total net leverage ratios and (ii) not fall below a certain fixed charge coverage ratio, in each case, at the end of each fiscal quarter.

In April 2022, the Company completed its previously announced securitization transaction pursuant to which we repaid all outstanding borrowings under the 2026 Term Loan using a portion of the proceeds from issuance of $~~400,000~~ ~~in aggregate principal amount of Series 2022-1~~ ~~5.50~~% Fixed Rate Senior Secured Notes, Class A-2 (the "Class A-2 Notes"). Refer to Note 15 for more information on the securitization transaction. The 2026 Credit Agreement was terminated following the securitization transaction.1, 2023.

~~7. Derivative instruments and hedging activities~~

In December 2018, the Company entered into an interest rate cap derivative instrument which was designated as a cash flow hedge. The Company’s objective was to mitigate the impact of interest expense fluctuations on the Company’s profitability resulting from interest rate changes by capping the LIBOR component of the interest rate at ~~4.5% on $175,000~~ ~~of principal outstanding under its long-term debt arrangement, as the interest rate cap provided for payments from the counterparty when LIBOR rises above~~ ~~4.5%. The interest rate cap was terminated in March 2022.~~

Changes in the fair value of the interest rate cap were recognized in other comprehensive loss and was reclassified out of accumulated other comprehensive loss and into interest expense upon termination of the interest rate cap. Cash flows related to derivatives qualifying as hedges are included in the same section of the condensed consolidated statements of cash flows as the underlying assets and liabilities being hedged. Refer to Note 3—~~Fair value measurements~~ ~~for information on the fair value of the Company’s interest rate cap derivative instrument.~~

~~Our cash flow hedge position related to the interest rate cap derivative instrument is as follows:~~

Balance Sheet
Classification

March 26, 2022

December 25, 2021

Derivatives designated as hedging instruments:

Interest rate cap, current portion

Other current liabilities

$
0

$
(182
)
Interest rate cap, non-current portion

Other long-term liabilities

0

(60
)
Total derivative liabilities designated as
hedging instruments

$
0

$
(242
)

~~The table below presents the net unrealized gain recognized in other comprehensive income (“OCI”) resulting from fair value adjustments of hedging instruments:~~

Net Unrealized Gain
Recognized in OCI

Thirteen Weeks
Ended
March 26, 2022

Thirteen Weeks
Ended
March 27, 2021

Derivatives designated as hedging instruments:

Interest rate cap

$
0

$
159

Total

$
0

$
159

~~As a result of the termination of the interest rate cap, we recognized a gain of approximately $138~~ ~~as a component of interest expense on the condensed consolidated statement of operations for the 13 weeks ended March 26, 2022. Of this gain, $196~~ ~~related to fair value adjustments which was partially offset by $~~58 ~~related to cash paid to terminate the interest rate cap.~~

~~8. Leases~~

The Company leases various corporate-owned centers and office space to support ongoing business operations under non-cancellable lease agreements with terms expiring through 2032. These lease agreements typically have a lease term ranging from ~~one~~ to 10 years. Many of our leases contain renewal options which are exercisable at our discretion. These renewal options allow us to extend certain leases for an additional five to 10 years. Most lease arrangements contain tenant improvement allowances, rent holidays and/or rent escalation clauses. In addition to base rent, certain leases require the Company to pay a portion of real estate taxes, utilities, building

operating expenses, insurance and other charges in addition to rent. Certain of our leases are subject to variable lease payments that are determined on a basis other than an index or a rate. As such, they are generally excluded from the calculation of lease liabilities and right-of-use assets and are expensed as incurred. We currently have two sublease agreements in which we sublease real estate no longer used by the Company to other entities with terms expiring through 2023. Neither of these sublease agreements provides for any renewal options and expire on the same dates as their respective head leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have no related party leases.

We determine if an arrangement is a lease at the inception of the arrangement. A contract is or contains a lease if it conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Lease liabilities are recognized based on the present value of lease payments over the lease term at the arrangement’s commencement date. Right-of-use assets are recognized based on the amount of the measurement of the lease liability adjusted for any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and any initial direct costs incurred. Renewal options are included in the calculation of our right-of-use assets and lease liabilities when it is determined that they are reasonably certain of exercise based on an analysis of the relevant facts and circumstances. As the implicit rate of return of our lease agreements is usually not readily determinable, we generally use our incremental borrowing rate in determining the present value of lease payments. We determine our incremental borrowing rate based on information available to us at the lease commencement date. Information we consider in the determination of our incremental borrowing rate includes factors such as our credit ratings, credit spreads, the term of the lease agreement and the impact of collateral. Certain of our lease arrangements contain lease and non-lease components. We have elected to account for non-lease components related to real estate leases as a part of the related lease components. As such, all fixed payments included in a real estate lease agreement are included in the measurement of the lease liabilities and the corresponding right-of-use assets and variable payments are presented and disclosed as variable lease cost. For all other leases we account lease and non-lease components separately. Leases with an initial term of 12 months or less are not recognized on our balance sheet. We recognize the expense for these leases on a straight-line basis over the lease term.

~~Total lease costs consisted of the following:~~

13 Weeks Ended
March 26, 2022

Operating lease costs

$
597

Variable lease costs

188

Sublease income

(183
)

Total lease costs

$
602

~~Rent expense for the 13 weeks ended March 27, 2021 was $614~~. Lease costs for the 13 weeks ended March 26, 2022 and March 27, 2021, respectively, were included in selling, general and administrative expense on the condensed consolidated statements of operations.

~~Future maturities of operating lease liabilities as of March 26, 2022 were as follows:~~

Fiscal Years Ending

2022 (from March 27, 2022)

$
1,716

2023

1,524

2024

1,346

2025

1,232

2026

880

Thereafter

1,152

Total lease payments

7,850

Less: amount representing interest

(796
)

Present value of lease liabilities

7,054

Less: current portion

(1,866
)

Operating lease liabilities, net of current portion

$
5,188

~~Future minimum rental payments as of December 25, 2021 were as follows:~~

Fiscal Years Ending

2022

$
2,098

2023

1,524

2024

1,346

2025

1,232

2026

880

Thereafter

1,152

Total

$
8,232

~~The weighted average lease term and discount rate of our operating leases as of March 26, 2022 were as follows:~~



~~Weighted average remaining lease term (years)~~	~~4.8~~
~~Weighted average discount rate~~	~~4.3~~	%

~~Cash paid for amounts included in the measurement of lease liabilities was as follows:~~

13 Weeks Ended
March 26, 2022

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

$
651

9.6. Equity Based Compensation

Restricted Stock Units

During the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, we granted ~~40,500~~270,055 restricted stock units (“RSUs”) to certain employees under the 2021 Omnibus Incentive Plan (the “2021 Incentive Plan”) that will vest in three equal installments of 33.33% on each of the first three anniversaries of the date of grant, subject in all cases to continued employment on the applicable vesting date. The total grant date fair value of the RSUs will be recognized as equity-based compensation expense over the vesting period. The weighted average grant date fair value of the RSUs granted during the 13 weeks ended April 1, 2023 was $~~26.23~~16.27 and was ~~determined based on~~equal to the ~~fair value~~closing price of the underlying Class A common stock on the date of grant.

WeClass A Common Stock Options

During the 13 weeks ended April 1, 2023 we granted 267,640 options with a weighted average exercise price of $19.60 per share to certain employees under the 2021 Incentive Plan. The stock options granted have a ten-year contractual term and will cliff vest on the third anniversary of the date of grant, subject in all cases to continued employment on the applicable vesting date. The weighted average grant date fair value of the stock options was $9.81. The total grant date fair value of the stock options will be recognized $~~3,335~~ ~~in equity based~~as equity-based compensation expense over the vesting period. The Company previously used the Black Scholes model to estimate the fair value of stock option grants. However, as these options were granted with exercise prices 20% higher than the closing price, it was determined that the options contained an implicit market condition. As such, the Company estimated the fair value of the options using a ~~component~~binomial lattice model. The following table presents the weighted average assumptions used in the lattice model to determine the fair value of ~~selling, general and administrative expense on~~ the ~~condensed consolidated statement of operations~~stock options granted during the 13 weeks ended ~~March 26, 2022. Of this expense, approximately $~~April 1, 2023: ~~1,248~~

~~related~~



Expected dividend yield		0.0	%
Expected volatility		62.3	%
Risk-free rate		3.6	%
Suboptimal exercise factor	2.5x

A description of each of the inputs to the ~~acceleration~~lattice model is as follows:

•

Expected dividend yield - The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future. An increase in the expected dividend yield would decrease compensation expense.

•

Expected volatility - This is a measure of the amount by which the price of the equity instrument has fluctuated or is expected to fluctuate. The expected volatility was based on the historical volatility of the Company as well as that of a group of guideline companies. An increase in expected volatility would increase compensation expense.

•

Risk-free interest rate - This is the U.S. Treasury rate as of the measurement date having a term approximating the contractual term of the award. An increase in the risk-free interest rate would increase compensation expense.

•

Suboptimal exercise factor - The multiple of the exercise price at which an option exercise would be expected to occur. An increase in the suboptimal exercise factor would increase compensation expense.

Modification of 3.0x Units

During the 13 weeks ended April 1, 2023 we modified the vesting onconditions of ~~75,000~~533,707 ~~time-based~~ incentive units (the “3.0x Units”) granted under the Management Holdco, LLC Equity Incentive Plan ~~in accordance with~~to nine employees. Under their original terms, the ~~separation agreement between~~3.0x Units would have vested under the following conditions: (i) the achievement of a 3.0x multiple on invested capital (”MOIC”), (ii) the achievement of a 2.0x MOIC at such time as General Atlantic’s investment in the Company ~~and~~is no less than 35% of the fully diluted units of the Company or

(iii) the first of December 31, 2022, March 31, 2023, June 30, 2023, September 30, 2023 or December 31, 2023 on which a specific volume weighted average trading price (”VWAP”) of our ~~previous chief financial officer. We recognized $~~Class A common stock is achieved.~~298~~

~~in equity based compensation expense~~

Our board of directors modified the award to adjust the specified VWAP target described above. The Company’s VWAP exceeded the modified target as ~~a component~~ of ~~selling, general and administrative expense~~March 31, 2023. As such, all of the 3.0x Units vested on ~~the condensed consolidated statement of operations during~~that date. During the 13 weeks ended ~~March 27, 2021.~~April 1, 2023 we recognized $5,931 in equity-based compensation expense. Of this amount, $3,888 was incremental equity-based compensation expense related to the modification of the 3.0x Units. The incremental expense recognized in connection with the modification of the 3.0x Units was calculated as the difference between the fair value of the modified award and the fair value of the original award on the modification date. The fair value of the modified award was equal to the closing price of the underlying Class A common stock on the modification date. The Company used a Monte Carlo simulation to determine the fair value of the original award on the modification date. The following table presents the weighted average assumptions used in the simulation to determine the fair value of the original award on the modification date:



Expected dividend yield	0.0	%
Expected volatility	50.0	%
Risk-free rate	4.7	%

A description of each of the inputs to the simulation model is as follows:

•

Expected volatility - This is a measure of the amount by which the price of the equity instrument has fluctuated or is expected to fluctuate. The expected volatility was based on the historical volatility of the Company. An increase in expected volatility would increase compensation expense.

•

Risk-free interest rate - This is the U.S. Treasury rate as of the measurement date having a term approximating the measurement period of the award. An increase in the risk-free interest rate would increase compensation expense.

~~10.~~7. Commitments and contingencies

Litigation

The Company is exposed to various asserted and unasserted potential claims encountered in the normal course of business. Although the outcomes of potential legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these occasional legal proceedings to have a material effect on its financial position, results of operations, or cash flow.

~~11.~~8. Revenue from contracts with customers

Contract liabilities consist of deferred revenue resulting from franchise fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement. Also included are service revenues from corporate-owned centers, including customer prepayments in connection with the Wax Pass program. Contract liabilities are classified as deferred revenue on the condensed consolidated balance sheets.

Deferred franchise fees are reduced as fees are recognized in revenue over the term of the franchise license for the respective center. Deferred service revenues are recognized over time as the services are performed. The following table reflects the change in contract liabilities for the periods indicated:


	Contract liabilities			Contract liabilities
Balance at December 25, 2021	$	9,791
Balance at December 31, 2022				$	10,985
Revenue recognized that was included in the contract liability at the beginning of the year		(743	)		(950	)
Increase, excluding amounts recognized as revenue during the period		644			880
Balance at March 26, 2022	$	9,692
Balance at April 1, 2023				$	10,915

The weighted average remaining amortization period for deferred revenue is ~~4.1~~3.6 years.

The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of ~~March 26, 2022.~~April 1, 2023. The Company has elected to exclude short term contracts, sales-based royalties and any other variable consideration recognized on an “as invoiced” basis.


Contract liabilities to be recognized in:	Amount		Amount
2022 (from March 27, 2022)	$	2,711
2023		1,103
2023 (from April 2, 2023)			$	3,703
2024		1,040		1,234
2025		970		1,164
2026		860		1,054
2027				991
Thereafter		3,008		2,769
Total	$	9,692	$	10,915

The summary set forth below represents the balances in deferred revenue as of ~~March 26, 2022~~April 1, 2023 and December ~~25, 2021:~~31, 2022:


	March 26, 2022		December 25, 2021		April 1, 2023		December 31, 2022
Franchise fees	$	7,829	$	7,911	$	8,182	$	8,167
Service revenue		1,863		1,880		2,733		2,818
Total deferred revenue		9,692		9,791		10,915		10,985
Long-term portion of deferred revenue		6,701		6,787		6,898		6,901
Current portion of deferred revenue	$	2,991	$	3,004	$	4,017	$	4,084

As of ~~March 26, 2022,~~April 1, 2023, future payments under the Tax Receivable Agreement (“TRA”) are expected to be $~~115,813~~207,644. Payments made under the TRA represent payments that otherwise would have been made to taxing authorities in the absence of attributes obtained by us as a result of exchanges by our pre-IPO members. Such amounts will be paid only when a cash tax savings is realized as a result of attributes subject to the TRA. That is, payments under the TRA are only expected to be made in periods following the filing of a tax return in which we are able to utilize certain tax benefits to reduce our cash taxes paid to a taxing authority. The impact of any changes in the projected obligations under the TRA as a result of changes in the geographic mix of the Company’s earnings, changes in tax legislation and tax rates or other factors that may impact the Company’s tax savings will be reflected in other expense on the condensed consolidated statement of operations in the period in which the change occurs. ~~As of March 26, 2022, the TRA liability recorded was $60,299~~ ~~based on current projections of future taxable income taking into consideration the Company’s full valuation allowance against its net deferred tax asset.~~

~~14.~~11. Net income (loss) per share

Basic net income (loss) per share of Class A common stock is computed by dividing net income (loss) attributable to Class A common shareholders for the period by the weighted average number of shares of Class A common stock outstanding for the same period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period in which the shares were outstanding. Diluted net income (loss) per share of Class A common stock is computed by dividing net income (loss) attributable to Class A common shareholders by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities using the more dilutive of either the treasury stock method or the if-converted method.

Prior to the Reorganization Transactions, the EWC Ventures capital structure included Class A, Class B, Class C, and Class D Units. We determined that the presentation of net income per unit for the period prior to the Reorganization Transactions would not be meaningful to the users of these unaudited condensed consolidated financial statements due to the significant nature of the Reorganization Transactions on the capital structure. Therefore, net income per unit information has not been presented for the 13 weeks ended March 27, 2021.

The following table sets forth the computation of basic net income (loss) per share of Class A common stock for the 13 weeks ended April 1, 2023 and March 26, 2022:


	13 Weeks Ended		13 Weeks Ended			13 Weeks Ended
	March 26, 2022		April 1, 2023			March 26, 2022
(in thousands, except for share and per share amounts)
Net income	$	4,026
Less: net income attributable to noncontrolling interests		1,940
Net income applicable to Class A common shareholders	$	2,086
Net income (loss)			$	(1,053	)	$	4,026
Less: net income (loss) attributable to noncontrolling interests				(322	)		1,940
Net income (loss) applicable to Class A common shareholders			$	(731	)	$	2,086
Basic weighted average outstanding shares
Class A Common Stock		36,953,534		47,988,681			36,953,534
Basic net income per share applicable to common shareholders:
Basic net income (loss) per share applicable to common shareholders:
Class A Common Stock	$	0.06	$	(0.02	)	$	0.06

The following table sets forth the computation of diluted net income (loss) per share of Class A common stock for the 13 weeks ended April 1, 2023 and March 26, 2022:


	13 Weeks Ended		13 Weeks Ended			13 Weeks Ended
	March 26, 2022		April 1, 2023			March 26, 2022
(in thousands, except for share and per share amounts)
Net income	$	4,026
Less: net income attributable to noncontrolling interests		2,040
Net income applicable to Class A common shareholders	$	1,986
Net income (loss)			$	(1,053	)	$	4,026
Less: net income (loss) attributable to noncontrolling interests				—			2,040
Net income (loss) applicable to Class A common shareholders			$	(1,053	)	$	1,986
Diluted weighted average outstanding shares
Basic weighted average outstanding shares - Class A Common Stock		36,953,534		47,988,681			36,953,534
Effect of dilutive securities:
Class B Common Stock				14,629,907			—
RSUs		186,039		65,136			186,039
Options		28,944		—			28,944
Diluted weighted average outstanding shares - Class A Common Stock		37,168,517		62,683,724			37,168,517
Diluted net income per share applicable to common shareholders:
Diluted net income (loss) per share applicable to common shareholders:
Class A Common Stock	$	0.05	$	(0.02	)	$	0.05

Shares of Class B common stock do not share in the earnings or losses attributable to the Company and are therefore not participating securities. As such, separate presentation of basic and diluted net income (loss) per share of Class B common stock under the two-class method has not been presented. Shares of Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related EWC Ventures Units, are exchangeable into shares of Class A common stock on a one-for-one basis. ~~The~~There were 26,433,636 shares of Class B common stock outstanding as of March 26, 2022 which were determined to be antidilutive and have therefore been excluded from the computation of diluted net income per share of Class A common ~~stock.~~stock for the 13 weeks ended March 26, 2022. In addition, 480,818 options and 270,055 RSUs were excluded from the computation of diluted net loss per share of Class A common stock for the 13 weeks ended April 1, 2023 as they were determined to be antidilutive.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our historical performance, financial condition and future prospects in conjunction with the management’s discussion and analysis of financial conditions and results of operations and the audited consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended December ~~25, 2021.~~31, 2022. The following discussion and analysis should also be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this quarterly report on Form 10-Q. This discussion contains forward-looking statements that are based on the views and beliefs of our management, as well as assumptions and estimates made by our management. Actual results could differ materially from such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. For further information on items that could impact our future operating performance or financial condition, see Part I, “Item 1A. Risk Factors” included in our annual report on Form 10-K for the fiscal year ended December ~~25, 2021.~~31, 2022.

We conduct substantially all of our activities through our subsidiary, EWC Ventures, LLC and its subsidiaries. We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday closest to December 31. Our fiscal quarters are composed of 13 weeks each, except for 53-week fiscal years for which the fourth quarter will be composed of 14 weeks.

We are the largest and fastest-growing franchisor and operator of out-of-home ~~(“OOH”~~("OOH") waxing services in the United States by number of centers and system-wide sales. We delivered over 22 million waxing services in 2022 and over 20 million waxing services in 2021 ~~and over 13 million waxing services in 2020~~ generating ~~$797~~$899 million and ~~$469~~$797 million of system-wide sales, respectively, across our highly-franchised network. We have a leading portfolio of centers operating in ~~874~~978 locations across 4445 states as of ~~March 26, 2022.~~April 1, 2023. Of these locations, ~~868~~972 are franchised centers operated by franchisees and six are corporate-owned centers.

The European Wax Center brand is trusted, efficacious and accessible. Our culture is obsessed with our guest experience and we deliver a superior guest experience relative to smaller chains and independent salons. We offer guests high-quality, hygienic waxing services administered by our licensed, EWC-trained estheticians (our “wax specialists”), at our accessible and welcoming locations (our “centers”). Our technology-enabled guest interface simplifies and streamlines the guest experience with automated appointment scheduling and remote check-in capabilities, ensuring guest visits are convenient, hassle-free, and consistent across our network of centers. Our well-known, pre-paid Wax Pass program makes payment easy and convenient, fostering loyalty and return visits. Guests view us as a non-discretionary part of their personal-care and beauty regimens, providing us with a highly predictable and growing recurring revenue model.

Our asset-light franchise platform delivers capital-efficient growth, significant cash flow generation, and resilience through economic cycles. Our centers are 99% owned and operated by our franchisees who benefit from superior unit-level economics, with mature centers generating annual cash-on-cash returns in excess of 60%.

In partnership with our franchisees, we fiercely protect our points of differentiation that attract new guests, build meaningful relationships and promote lasting retention. ~~Our net promoter score (“NPS”) demonstrates our guests’ devotion to our brand.~~ We are so confident in our ability to delight that we have always offered all of our guests their first wax free.

Hair removal solutions are consistently in demand, given the recurring nature of hair growth. The OOH waxing market is the fastest-growing hair removal solution in the United States, defined by a total addressable market of $18 billion with annualized growth that is more than double other hair removal alternatives. European Wax Center has become the category-defining brand within this rapidly growing market and became so by professionalizing a highly fragmented sector where service consistency, hygiene, and customer trust were not historically offered. We are approximately six times larger than the next largest waxing-focused competitor by center count and approximately 1311 times larger by system-wide sales. Our unmatched scale enables us to drive broader brand awareness, ensures our licensed wax specialists are universally trained at the highest standards and drive consistent financial performance across each center.

Under the stewardship of our CEO, David Berg, and the other management team members, we have prioritized building a culture of performance, success, and inclusivity. Additionally, we have intensified our focus on enhancing the guest experience and have invested significantly in our corporate infrastructure and marketing capabilities to continue our track record of sustainable growth. The foundation for our next chapter of growth is firmly in place.

We plan to grow our business primarily by opening new franchised centers and then additionally increasing our ~~same-store~~system-wide sales and leveraging our corporate infrastructure to expand our profit margins and generate robust free cash flow.

We believe our franchisees’ track record of successfully opening new centers and consistently generating attractive unit-level economics validates our strategy to expand our footprint and grow our capacity to serve more guests. ~~We aspire to grow between 7% to 10% of our center count each year.~~ Our center count grew 7%11% and 6%7% during fiscal year ~~2021~~2022 and fiscal year ~~2020,~~2021, respectively, and has grown each year since 2010. Our thoughtful approach to growth ensures each center is appropriately staffed with the high-quality team and licensed, highly-trained wax specialists that our brand has been known for since our initial opening. We believe that none of our existing markets are fully penetrated, and that we have a significant whitespace opportunity of more than 3,000 locations for our standard center format across the United States. Our centers have a long track record of sustained growth delivering ~~ten consecutive years of~~consistent positive same-store sales growth ~~through 2019~~ with resilient performance through economic cycles.

Our straightforward, asset-light franchise platform and our proven track record of increasing profitability ~~will~~is expected to continue to drive EBITDA margin accretion and free cash flow generation as we expand our national footprint. We have invested in building our scalable support infrastructure, and we currently have the capabilities and systems in place to drive revenue growth and profitability across our existing and planned franchise centers.

We track the following key business metrics to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. Accordingly, we believe that these key business metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. These key business metrics are presented for supplemental information purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled metrics or measures presented by other companies.

Number of Centers. Number of centers reflects the number of franchised and corporate-owned centers open at the end of the reporting period. We review the number of new center openings, the number of closed centers and the number of relocations of centers to assess net new center growth, and drivers of trends in system-wide sales, royalty and franchise fee revenue and corporate-owned center sales.

System-Wide Sales. System-wide sales represent sales from same day services, retail sales and cash collected from wax passes for all centers in our network, including both franchisee-owned and corporate-owned centers. While we do not record franchised center sales as revenue, our royalty revenue is calculated based on a percentage of franchised center sales, which are 6.0% of sales, net of retail product sales, as defined in the franchise agreement. This measure allows us to better assess changes in our royalty revenue, our overall center performance, the health of our brand and the strength of our market position relative to competitors. Our system-wide sales growth is driven by net new center openings as well as increases in same-store sales.

Same-Store Sales. Same-store sales reflect the change in year-over-year sales from services performed and retail sales for the same-store base. We define the same-store base to include those centers open for at least 52 full weeks. If a center is closed for greater than six consecutive days, the center is deemed a closed center and is excluded from the calculation of same-store sales until it has been reopened for a continuous 52 full weeks. This measure highlights the performance of existing centers, while excluding the impact of new center openings and closures. We review same-store sales for corporate-owned centers as well as franchisee-owned centers. Same-store sales growth is driven by increases in the number of transactions and average transaction size.

New Center Openings. The number of new center openings reflects centers opened during a particular reporting period for both franchisee-owned and corporate-owned centers, less centers closed during the same period. Opening new centers is an integral part of our growth strategy, and we expect the majority of our future new centers to be franchisee-owned. Before we obtain the certificate of occupancy or report any revenue from new corporate-owned centers, we incur pre-opening costs, such as rent expense, labor expense and other operating expenses. Some of our centers open with an initial start-up period of higher-than-normal marketing and operating expenses, particularly as a percentage of monthly revenue.

Average Unit Volume (“AUV”). AUV consists of the average annual system-wide sales of all centers that have been open for a trailing 52-week period or longer. This measure is calculated by dividing system-wide sales during the applicable period for all centers being measured by the number of centers being measured. AUV allows management to assess our franchisee-owned and corporate-owned center economics. Our AUV growth is primarily driven by increases in services and retail product sales as centers fill their books of reservations, which we refer to as maturation of centers.

Wax Pass Utilization. We define Wax Pass utilization as the adoption of our Wax Pass program by guests, measured as a percentage of total transactions conducted using a Wax Pass. Wax Pass utilization allows management to better assess the recurring nature of our business model because it is an indication of the magnitude of transactions by guests who have made a longer-term commitment to our brand by purchasing a Wax Pass.

(1) Same-store sales increase for the 13 weeks ended March 27, 2021 is calculated in comparison to the 13 weeks ended March 30, 2019 due to the significant decline in our sales in 2020 due to COVID-19. We believe this presents a more meaningful comparison of same-store sales. As described below, we typically remove stores from our calculation of same-store sales if they are closed for more than six consecutive days.

The table below presents changes in the number of system-wide centers for the periods indicated:

On April 6, 2022, certain subsidiaries of the Company completed a refinancing transaction, replacing its previous senior secured credit facility with a new securitized financing facility comprised of $400.0 million principal amount of senior fixed-rate term notes and $40.0 million principal amount of variable funding notes.

On April 11, 2022, the Board of Directors of the Company declared a special cash dividend of $3.30 per share payable on May 6, 2022 to its Class A common stock holders of record as of 5:00 p.m. Eastern time on April 22, 2022. The dividend, which together with other equivalent payments (including payments of $3.30 per unit to unit-holders of EWC Ventures, LLC other than the Company) represents an aggregate payment of approximately $209.4 million, will be funded through existing cash and proceeds from the new securitized financing facility.

~~For additional information regarding these transactions, see Note 15—Subsequent Events in the condensed consolidated financial statements included in this quarterly report on Form 10-Q.~~

There is a significant amount of uncertainty about the duration and severity of the consequences caused by the COVID-19 pandemic. While governmental and non-governmental organizations are engaging in efforts to combat the spread and severity of the COVID-19 pandemic and related public health issues, the full extent to which outbreaks of COVID-19 could impact our business, results of operations and financial condition is still unknown and will depend on future developments, including new variants of the virus and spikes in cases in the areas where we operate, which are highly uncertain and cannot be predicted. However, such effects may be material. Our financial statements reflect judgments and estimates that could change in the future as a result of the COVID-19 pandemic.

We believe there are several important factors that have impacted, and that we expect will continue to impact, our business and results of operations. These factors include:

New Center Openings. We expect that new centers will be a key driver of growth in our future revenue and operating profit results. Opening new centers is an important part of our growth strategy, and we expect the majority of our future new centers will be franchisee-owned. Our results of operations have been and will continue to be materially affected by the timing and number of new center openings each period. As centers mature, center revenue and profitability increase significantly. The performance of new centers may vary depending on various factors such as the effective management and cooperation of our franchisee partners, whether the franchise is part of a multi-unit development agreement, the center opening date, the time of year of a particular opening, the number of licensed wax specialists recruited, and the location of the new center, including whether it is located in a new or existing market. Our planned center expansion will place increased demands on our operational, managerial, administrative, financial, and other resources.

~~Same-Store~~System-Wide Sales Growth. ~~Same-store~~System-wide sales growth is a key driver of our business. Various factors affect ~~same-store~~system-wide sales, including:

Overall Economic Trends. Macroeconomic factors that may affect guest spending patterns, and thereby our results of operations, include employment rates, the rate of inflation, business conditions, changes in the housing market, the availability of credit, interest rates, tax rates and fuel and energy costs. However, we believe that our guests see our services as largely non-discretionary in nature.

Therefore, we believe that overall economic trends and related changes in consumer behavior have less of an impact on our business than they may have for other industries subject to fluctuations in discretionary consumer ~~spending~~spending.

Guest Preferences and Demands. Our ability to maintain our appeal to existing guests and attract new guests depends on our ability to develop and offer a compelling assortment of services responsive to guest preferences and trends. ~~We estimate that more than two-thirds of OOH waxing consumers start waxing by age 29 or earlier.~~ We also believe that OOH waxing is a recurring need that brings guests back for services on a highly recurring basis which is reflected in the predictability of our financial performance over time. Our guests’ routine personal-care need for OOH waxing is further demonstrated by the top 20% of guests who visit us, on average, approximately every four to five weeks.

Our Ability to Source and Distribute Products Effectively. Our revenue and operating income are affected by our ability to purchase our products and supplies in sufficient quantities at competitive prices. While we believe our vendors have adequate capacity to meet our current and anticipated demand, our level of revenue could be adversely affected in the event we face constraints in our supply chain, including the inability of our vendors to produce sufficient quantities of some products or supplies in a manner that matches market demand from our guests, leading to lost revenue. We depend on two key suppliers to source our Comfort Wax and one key supplier to source our branded retail products and we are thus exposed to concentration of supplier risk.

Our Ability to Recruit and Retain Qualified Licensed Wax Specialists for our Centers. Our ability to operate our centers is largely dependent upon our ability to attract and retain qualified, licensed wax specialists. Our unmatched scale enables us to ensure that we universally train our wax specialists at the highest standards, ensuring that our guests experience consistent level of quality, regardless of the specific center they visit. The combination of consistent service delivery, across our trained base of wax specialists, along with the payment ease and convenience of our well-known, pre-paid Wax Pass program fosters loyalty and return visits across our guest base. Over time, our ability to build and maintain a strong pipeline of licensed wax specialists is important to preserving our current brand position.

Seasonality. Our results are subject to seasonality fluctuations in that services are typically in higher demand in periods leading up to holidays and the summer season. The resulting demand trend ~~yields~~has historically yielded higher system-wide sales in the second and fourth quarter of our fiscal year. In addition, our quarterly results may fluctuate significantly, because of several factors, including the timing of center openings, price increases and promotions, and general economic conditions.

Product Sales: Product sales consist of revenue earned from sales of ~~proprietary wax,~~Comfort Wax, other products consumed in administering our wax services and retail merchandise to franchisees, as well as retail merchandise sold in corporate-owned centers. Revenue on product

sales is recognized upon transfer of control. Our product sales revenue comprised ~~54.5%~~55.8% and ~~56.2%~~54.5% of our total revenue for the 13 weeks ended April 1, 2023 and March 26, 2022, ~~and March 27, 2021,~~ respectively.

Royalty Fees: Royalty fees are earned based on a percentage of the franchisees’ gross sales, net of retail product sales, as defined in the applicable franchise agreement, and recognized in the period the franchisees’ sales occur. The royalty fee is 6.0% of the franchisees’ gross sales for such period and is paid weekly. Our royalty fees revenue comprised ~~25.1%~~24.8% and ~~24.1%~~25.1% of our total revenue for the 13 weeks ended April 1, 2023 and March 26, 2022, ~~and March 27, 2021,~~ respectively.

Marketing Fees: Marketing fees are earned based on 3.0% of the franchisees’ gross sales, net of retail product sales, as defined in the applicable franchise agreement, and recognized in the period the franchisees’ sales occur. Additionally, the Company charges a fixed monthly fee to franchisees for search engine optimization and search engine marketing services, which is due on a monthly basis and recognized in the period when services are provided. Our marketing fees revenue comprised ~~14.2%~~13.8% and ~~13.5%~~14.2% of our total revenue for the 13 weeks ended April 1, 2023 and March 26, 2022, ~~and March 27, 2021,~~ respectively.

Other Revenue: Other revenue primarily consists of service revenues from our corporate-owned centers and franchise fees, as well as technology fees, annual brand conference revenues and training, which together represent ~~6.2%~~5.6% and 6.2% of our total revenue for the 13 weeks ended April 1, 2023 and March 26, 2022, ~~and March 27, 2021,~~ respectively. Service revenues from our corporate-owned centers are recognized at the time services are provided. Amounts collected in advance of the period in which service is rendered are recorded as deferred revenue. Franchise fees are paid upon commencement of the franchise agreement and are deferred and recognized on a straight-line basis commencing at contract inception through the end of the franchise license term. Franchise agreements generally have terms of 10 years beginning on the date the center is opened and the initial franchise fees are amortized over a period approximating the term of the agreement. Deferred franchise fees expected to be recognized in periods greater than 12 months from the reporting date are classified as long-term on the condensed consolidated balance sheets. Technology fees, annual brand conference revenues and training are recognized as the related services are delivered and are not material to the overall business.

Cost of Revenue: Cost of revenue primarily consists of the direct costs associated with wholesale product and retail merchandise sold, including distribution and outbound freight costs and inventory obsolescence charges, as well as the cost of materials and labor for services rendered in our corporate-owned centers.

Selling, General and Administrative Expenses: Selling, general and administrative expenses primarily consist of wages, benefits and other compensation-related costs, rent, software, and other administrative expenses incurred to support our existing franchise and corporate-owned centers, as well as expenses attributable to growth and development activities. Also included in selling, general and administrative expenses are accounting, legal, marketing, operations, and other professional fees.

Advertising Expenses: Advertising expenses consist of advertising, public relations, and administrative expenses incurred to increase sales and further enhance the public reputation of the European Wax Center brand.

Depreciation and Amortization: Depreciation and amortization includes depreciation of property and equipment and capitalized leasehold improvements, as well as amortization of intangible assets, including franchisee relationships and reacquired area representative rights. Area representative rights represent an agreement with area representatives to sell franchise licenses and provide support to franchisees in a geographic region. From time to time, the Company enters into agreements to reacquire certain area representative rights.

Interest Expense: Interest expense consists of interest on our long-term debt, including amounts outstanding under our revolving credit facility, amortization of debt discount and deferred financing costs and gain and losses on debt extinguishment.

Other Expense:Other expense consists of non-cash gains and losses related to the remeasurement of our tax receivable agreement liability.

Income Tax Expense: We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of EWC Ventures and are taxed at the prevailing corporate tax rates. Income tax expense includes both current and deferred income tax expense.

Noncontrolling Interest: We are the sole managing member of EWC Ventures. Because we manage and operate the business and control the strategic decisions and day-to-day operations of EWC Ventures and also have a substantial financial interest in EWC Ventures, we consolidate the financial results of EWC Ventures, and a portion of our net income (loss) is allocated to the ~~non-controlling~~noncontrolling interest to

reflect the entitlement of the ~~members of~~ EWC Ventures ~~after our initial public offering (the “EWC Ventures~~ Post-IPO ~~Members”)~~Members to a portion of EWC Ventures’ net income (loss).

The following tables presents our condensed consolidated statements of operations for each of the periods indicated (amounts in thousands, except percentages):


	For the Thirteen Weeks Ended										For the Thirteen Weeks Ended
	March 26, 2022		March 27, 2021		$ Change			% Change			April 1, 2023			March 26, 2022		$ Change			% Change
Revenue:
Product sales	$	24,778	$	20,617	$	4,161			20.2	%	$	27,842		$	24,778	$	3,064			12.4	%
Royalty fees		11,385		8,850		2,535			28.6	%		12,351			11,385		966			8.5	%
Marketing fees		6,450		4,934		1,516			30.7	%		6,902			6,450		452			7.0	%
Other revenue		2,813		2,256		557			24.7	%		2,797			2,813		(16	)		(0.6	)%
Total revenue		45,426		36,657		8,769			23.9	%		49,892			45,426		4,466			9.8	%
Operating expenses:
Cost of revenue		11,991		9,931		2,060			20.7	%		14,457			11,991		2,466			20.6	%
Selling, general and administrative		15,474		11,066		4,408			39.8	%		17,263			15,474		1,789			11.6	%
Advertising		6,556		4,884		1,672			34.2	%		7,809			6,556		1,253			19.1	%
Depreciation and amortization		5,060		5,138		(78	)		(1.5	)%		5,063			5,060		3			0.1	%
Total operating expenses		39,081		31,019		8,062			26.0	%		44,592			39,081		5,511			14.1	%
Income from operations		6,345		5,638		707			12.5	%		5,300			6,345		(1,045	)		(16.5	)%
Interest expense		1,507		4,536		(3,029	)		(66.8	)%		6,862			1,507		5,355			355.3	%
Other Expense		785		—		785			—
Income before income taxes		4,053		1,102		2,951			267.8	%
Income tax expense		27		—		27			—
Net income	$	4,026	$	1,102	$	2,924			265.3	%
Less: net income attributable to EWC Ventures, LLC prior to the Reorganization Transactions		—		1,102		(1,102	)		(100.0	)%
Less: net income attributable to noncontrolling interests		2,141		—		2,141			—
Net income attributable to European Wax Center, Inc.	$	1,885	$	—	$	1,885		$	—
Other expense												—			785		(785	)		(100.0	)%
Income (loss) before income taxes												(1,562	)		4,053		(5,615	)		(138.5	)%
Income tax expense (benefit)												(509	)		27		(536	)		(1,985.2	)%
Net income (loss)											$	(1,053	)	$	4,026	$	(5,079	)		(126.2	)%
Less: net income (loss) attributable to noncontrolling interests												(545	)		2,141		(2,686	)		(125.5	)%
Net income (loss) attributable to European Wax Center, Inc.											$	(508	)	$	1,885	$	(2,393	)		(126.9	)%

The following table presents the components of our condensed consolidated statements of operations for each of the periods indicated, as a percentage of revenue:


	For the Thirteen Weeks Ended						For the Thirteen Weeks Ended
	March 26, 2022			March 27, 2021			April 1, 2023			March 26, 2022
Revenue:
Product sales		54.5	%		56.2	%		55.8	%		54.5	%
Royalty fees		25.1	%		24.1	%		24.8	%		25.1	%
Marketing fees		14.2	%		13.5	%		13.8	%		14.2	%
Other revenue		6.2	%		6.2	%		5.6	%		6.2	%
Total revenue		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Cost of revenue		26.4	%		27.1	%		29.0	%		26.4	%
Selling, general and administrative		34.1	%		30.2	%		34.6	%		34.1	%
Advertising		14.5	%		13.3	%		15.7	%		14.5	%
Depreciation and amortization		11.1	%		14.0	%		10.1	%		11.1	%
Total operating expenses		86.1	%		84.6	%		89.4	%		86.1	%
Income from operations		13.9	%		15.4	%		10.6	%		13.9	%
Interest expense		3.3	%		12.4	%		13.7	%		3.3	%
Other expense		1.7	%		—			—			1.7	%
Income before income taxes		8.9	%		3.0	%
Income tax expense		0.1	%		—
Net income		8.8	%		3.0	%
Less: net income attributable to EWC Ventures, LLC prior to the Reorganization Transactions		—			3.0	%
Less: net income attributable to noncontrolling interests		4.7	%		—
Net income attributable to European Wax Center, Inc.		4.1	%		—
Income (loss) before income taxes								(3.1	)%		8.9	%
Income tax expense (benefit)								(1.0	)%		0.1	%
Net income (loss)								(2.1	)%		8.8	%
Less: net income (loss) attributable to noncontrolling interests								(1.1	)%		4.7	%
Net income (loss) attributable to European Wax Center, Inc.								(1.0	)%		4.1	%

Comparison of the Thirteen Weeks Ended April 1, 2023 and March 26, 2022 ~~and March 27, 2021~~

Total revenue increased ~~$8.8~~$4.5 million, or ~~23.9%~~9.8%, to ~~$45.4~~$49.9 million during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, compared to ~~$36.7~~$45.4 million for the 13 weeks ended March ~~27, 2021.~~26, 2022. The increase in total revenue was largely due to 66104 new center openings which became operational during the period from March ~~28, 2021~~27, 2022 through ~~March 26, 2022.~~April 1, 2023. In addition, total revenue increased due to a 4.5% increase in same-store sales ~~increased 29%~~ in the 13 weeks ended April 1, 2023 compared to the 13 weeks ended March 26, 2022 ~~compared~~and an additional offering of medical products to ~~the 13 weeks ended March 27, 2021 largely due to total revenue~~our centers for ~~the first 13 weeks of 2021 being negatively impacted by lingering COVID-19 restrictions affecting many of our centers.~~use in administering wax services.

Product sales increased ~~$4.2~~$3.0 million, or ~~20.2%~~12.4%, to ~~$24.8~~$27.8 million during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, compared to ~~$20.6~~$24.8 million for the 13 weeks ended March ~~27, 2021.~~26, 2022. The increase in product sales was primarily due to new center openings which became operational during the period from March ~~28, 2021~~27, 2022 to ~~March 26, 2022 as well as~~April 1, 2023. In addition, product sales increased due to the increase in same-store sales in the ~~first~~ 13 weeks ~~of 2022~~ended April 1, 2023 compared to the ~~same period~~13 weeks ended March 26, 2022 and an additional offering of medical products to our centers for use in ~~2021.~~administering wax services.

Royalty fees increased ~~$2.5~~$1.0 million, or ~~28.6%~~8.5%, to ~~$11.4~~$12.4 million during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, compared to ~~$8.9~~$11.4 million for the 13 weeks ended March ~~27, 2021.~~26, 2022. The increase in royalty fees during the 13 weeks ended ~~March 26, 2022~~April 1, 2023 was the result of the increase in system-wide sales driven by new center openings which became operational during the period from March ~~28, 2021~~27, 2022 to ~~March 26, 2022~~April 1, 2023 as well as the increase in same-store sales in the ~~first~~ 13 weeks ~~of 2022~~ended April 1, 2023 compared to the ~~same period in 2021.~~13 weeks ended March 26, 2022

Marketing fees increased ~~$1.5~~$0.4 million, or ~~30.7%~~7.0%, to ~~$6.5~~$6.9 million during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, compared to ~~$4.9~~$6.5 million for the 13 weeks ended March ~~27, 2021.~~26, 2022. Marketing fees increased as a result of the increase in system-wide sales driven by new center openings which became operational during the period from March ~~28, 2021~~27, 2022 to ~~March 26, 2022~~April 1, 2023 as well as the increase in same-store sales in the ~~first~~ 13 weeks ~~of 2022~~ended April 1, 2023 compared to the ~~same period in 2021.~~13 weeks ended March 26, 2022.

Other revenue ~~increased $0.6 million or 24.7%, to $2.8 million during~~for the 13 weeks ended April 1, 2023 was consistent with the 13 weeks ended March 26, 2022, ~~compared~~decreasing $16 thousand, or 0.6%, to ~~$2.3~~$2.8 million for the 13 weeks ended March 27, 2021. The increase in other revenue during the 13 weeks ended March 26, 2022 was primarily due to increases in franchise fee revenues driven by new center openings which became operational during the period from March 28, 2021 to March 26, 2022 as well as an increase in corporate center revenues.April 1, 2023.

Cost of revenue increased ~~$2.1~~$2.5 million, or ~~20.7%~~20.6%, to ~~$12.0~~$14.5 million during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, compared to ~~$9.9~~$12.0 million for the 13 weeks ended March ~~27, 2021.~~26, 2022. The increase in cost of revenue was primarily due to higher product sales in the current year period driven by new center openings which became operational during the period from March ~~28, 2021~~27, 2022 to ~~March 26, 2022 as well as~~April 1, 2023. In addition, cost of revenue increased due to the increase in same-store sales in the ~~first~~ 13 weeks ~~of 2022~~ended April 1, 2023 compared to the same period in ~~2021.~~2022 and an additional offering of medical products to our centers for use in administering wax services.

Selling, general and administrative expenses increased ~~$4.4~~$1.8 million, or ~~39.8%~~11.6%, to ~~$15.5~~$17.3 million during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, compared to ~~$11.1~~$15.5 million for the 13 weeks ended March ~~27, 2021.~~26, 2022. The increase in selling, general and administrative expenses was primarily due to ~~increased~~increases in payroll and benefits and ~~insurance~~slightly offset by a decrease in professional fee expenses. The increase in payroll and benefits expense ~~resulted from increased equity based compensation~~was largely due to additional expense incurred during the 13 weeks ended April 1, 2023 resulting from the modification of certain ~~pre-IPO~~ equity awards ~~and~~during the ~~issuance of new equity awards, and increased headcount at our corporate office due to the increased requirements of being a public company.~~period. The ~~increase in insurance expense was primarily attributable to the purchase of additional lines of coverage due to becoming a public company. These increases were partially offset by a decline~~decrease in professional fees ~~in the first 13 weeks of 2022. In the first 13 weeks of 2021 we incurred professional fees related~~was attributable to ~~preparations for our initial public offering which were not~~costs incurred in the ~~current year.~~prior year period relating to being a newly public company.

Advertising expenses increased ~~$1.7~~$1.2 million, or ~~34.2%~~19.1%, to ~~$6.6~~$7.8 million during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, compared to ~~$4.9~~$6.6 million for the 13 weeks ended March ~~27, 2021.~~26, 2022. The increase in advertising expense was ~~commensurate with our~~attributable to the increase in marketing fee revenues ~~driven by~~as well as the timing of expenses associated with new ~~center openings and an increase in same store sales..~~marketing campaigns.

Depreciation and amortization for the 13 weeks ended ~~March 26, 2022~~April 1, 2023 was largely consistent with the 13 weeks ended March ~~27, 2021, decreasing $0.1~~26, 2022, increasing $3 thousand, or 0.1%, to $5.1 million for the 13 weeks ended April 1, 2023.

Interest expense increased $5.4 million, or ~~1.5%~~355.3%, to ~~$ 5.0~~$6.9 million during the 13 weeks ended April 1, 2023, compared to $1.5 million for the 13 weeks ended March 26, ~~2022, compared~~2022. The increase in interest expense was attributable to ~~$5.1 million for~~ the ~~13 weeks ended March 27, 2021.~~

~~Interest expense decreased $3.0 million, or 66.8%, to $1.5 million~~effect of higher average principal balances and interest rates on outstanding debt during the 13 weeks ended March 26, 2022, compared to $4.5 million for the 13 weeks ended March 27, 2021. The decrease in interest expense was primarily due to lower interest expense on the 2026 Term Loan due to the reduced principal balance and interest rate from our previous credit facility, which was repaid in connection with our initial public offering in August 2021.

Other expense for the 13 weeks ended March 26, 2022 was $0.8 million attributable to remeasurement of our tax receivable agreement liability. There was no expense related to the tax receivable agreement liability for the 13 weeks ended March 27, 2021 as we entered into the TRA concurrent with the Reorganization Transactions in August 2021.April 1, 2023.

We recorded $0.5 million in income tax benefit for the 13 weeks ended April 1, 2023, compared to $27 thousand in income tax expense for the 13thirteen weeks ended March 26, ~~2022 primarily due to state~~2022. The income ~~taxes. This~~tax benefit recognized in the first 13 weeks of 2023 differs from the federal statutory income tax rate primarily as a result of non-taxable income attributable to noncontrolling interest, state taxes and the ~~impact~~tax effects of stock compensation. Income tax expense recognized in the first 13 weeks of 2022 differs the federal statutory income tax rate primarily as a result of the ~~Company’s~~ full valuation allowance against its net federal and state deferred ~~taxes. Other drivers~~taxes during that period. The valuation allowance was fully released as of ~~the effective tax rate include non-taxable income attributable to non-controlling interest, and the tax effects of stock compensation.~~December 31, 2022.

~~EWC Ventures, our financial reporting predecessor, was a pass-through entity and not subject to income tax. As such, there was no income tax expense for the 13 weeks ended March 27, 2021.~~ We estimate that in future annual periods, our blended statutory tax rate ~~prior to valuation allowance consideration,~~ will be approximately ~~15%~~20% of EWC Ventures income or loss before income taxes. This estimated blended statutory tax rate is based on the current capital structure, excludes discrete or other rate impacting adjustments

which may impact the company’s income tax provision in the future and is based on our blended federal and state statutory tax rates reduced to exclude our non-taxable noncontrolling interest percentage. We expect this estimated blended statutory tax rate to increase as EWC Ventures Units and the corresponding shares of Class B common stock are exchanged for shares of Class A common stock because our nontaxable noncontrolling interest earnings will decrease.

In addition to our GAAP financial results, we believe the non-GAAP financial measures EBITDA and Adjusted EBITDA are useful in evaluating our performance. Our non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are presented for supplemental information purposes only and may be different from similarly titled metrics or measures presented by other companies. A reconciliation of the

non-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP and a further discussion of how we use non-GAAP financial measures is provided below.

EBITDA and Adjusted EBITDA. We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our business. We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of our core operations. These items include exit costs related to leases of abandoned space, IPO-related costs, non-cash equity-based compensation expense, corporate headquarters office relocation, non-cash gains and losses on remeasurement of our tax receivable agreement liability, transaction costs and other one-time expenses. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period. EBITDA and Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in methods of calculation.

A reconciliation of net income to EBITDA and Adjusted EBITDA is set forth below for the periods indicated:

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, contractual obligations and debt service with cash flows from operations and other sources of funding. Our primary sources of liquidity and capital resources are cash provided from operating activities, cash and cash equivalents on hand, proceeds from our ~~secured term loan~~Class A-2 Notes and ~~revolving credit facility~~Variable Funding Notes and proceeds from the issuance of equity to our members. We had cash and cash equivalents of ~~$44.2~~$45.9 million as of ~~March 26, 2022.~~April 1, 2023.

Future payments under the TRA with respect to the purchase of EWC Ventures Units which occurred as part of the IPO and through ~~March 26, 2022~~April 1, 2023 are currently expected to be ~~$115.8~~$207.6 million. Such amounts will be paid when such deferred tax assets are realized as a reduction to income taxes due or payable. That is, payments under the TRA are only expected to be made in periods following the filing of a tax return in which we are able to utilize certain tax benefits to reduce our cash taxes paid to a taxing authority. The impact of any changes in the projected obligations under the TRA as a result of changes in the geographic mix of the Company’s earnings, changes in tax legislation and tax rates or other factors that may impact the Company’s tax savings will be reflected in ~~income (loss) before income taxes~~other expense on the ~~Consolidated Statements~~condensed consolidated statements of ~~Operations~~operations in the period in which the change occurs. ~~We recorded a liability of $60.3 million based on current projections of future taxable income taking into consideration the Company’s full valuation allowance against its net deferred tax asset.~~ During the 13 weeks ended ~~March 26, 2022~~April 1, 2023 there were no ~~other~~ material changes in our contractual obligations from those described in our annual report on Form 10-K for the fiscal year ended December ~~25, 2021.~~31, 2022.

We believe that our sources of liquidity and capital will be sufficient to finance our continued operations and growth strategy for at least the next twelve months. Our primary requirements for liquidity and capital are working capital, capital expenditures to grow our network

of centers, debt servicing costs, and general corporate needs. We have in the past, and may in the future, refinance our existing indebtedness with new debt arrangements and utilize a portion of borrowings to return capital to our stockholders.

Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties. Our actual results and our future capital requirements could vary because of many factors, including our growth rate, the timing and extent of spending to acquire new centers and expand into new markets, and the expansion of sales and marketing activities. We may, in the future, enter into arrangements to acquire or invest in complementary businesses, services and technologies. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, or if we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, results of operations and financial condition would be adversely affected.

~~Our 2026 Credit Agreement consists~~On April 6, 2022, the Master Issuer completed a securitization transaction pursuant to which it issued $400.0 million in aggregate principal amount of Class A-2 Notes. The net proceeds from the issuance of the Class A-2 Notes were used to repay the 2026 Term Loan, fund certain reserve amounts under the securitized financing facility, pay the transaction costs associated with the securitized financing facility, and fund a one-time special dividend to stockholders.

In connection with the issuance of the Class A-2 Notes, the Master Issuer also entered into (i) a revolving financing facility that allows for the issuance of up to $40.0 million in Variable Funding Notes, and certain letters of credit and (2) an advance funding facility with BofA, whereby BofA and any other advance funding provider thereunder will, in certain specified circumstances, make certain debt service advances and collateral protection advances. The Variable Funding Notes were undrawn at closing and as of April 1, 2023. The Class A-2 Notes and the ~~2026 Revolving Credit Facility. Borrowings under~~Variable Funding Notes are referred to collectively as the 2026 Term Loan bear interest at an index rate as defined in the credit agreement plus an applicable margin of 3.0% (3.2% at March 26, 2022). The 2026 Term Loan requires principal payments payable in quarterly installments with the final scheduled principal payment on the outstanding 2026 Term Loan borrowings due on August 9, 2026. There were no outstanding borrowings under the 2026 Revolving Credit Facility as of March 26, 2022.“Notes.”

The ~~2026 Credit Agreement contains~~Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The Notes are also subject to customary rapid amortization events provided for in the Base Indenture, dated April 6, 2022 (the “Indenture”), including events tied to failure to maintain a stated debt service coverage ratio, the sum of system-wide sales being below certain levels on certain measurement dates, certain manager termination events (including in certain cases a change of control of EWC Ventures, LLC), an event of default and the failure to repay or refinance the Notes on the applicable anticipated repayment date. The Notes are also subject to certain customary events of default, including inevents relating to non-payment of required interest, principal or other amounts due on or with respect to the ~~event~~Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of ~~a change~~specified representations and warranties, failure of ~~control,~~security interests to be effective and certain covenants and restrictions that limit the Borrower’s and its subsidiaries’ ability to, among other things, incur additional debt; create liens on certain assets; pay dividends on or make distributions in respect of their capital stock or make other restricted payments; consolidate, merge, sell, or otherwise dispose of all or substantially all of their assets; and enter into certain transactions with their affiliates.judgments.

If the Company fails to perform its obligations under these and other covenants, or should any event of default occur, the term loan and revolving credit facility commitments under the 2026 Credit Agreement may be terminated and any outstanding borrowings, together with accrued interest, under the 2026 Credit Agreement could be declared immediately due and payable. For additional information regarding our long-term debt activity, see the notes to the condensed consolidated financial statements (Note 6—5—Long-term debt) contained elsewhere in this quarterly report on Form 10-Q.

Generally, we are required under the TRA, which is described more fully in Part 1 “Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December ~~25, 2021~~31, 2022 in the section entitled “Risks Related to Our Organization and Structure—We are required to pay the EWC ~~Ventures'~~Ventures’ pre-IPO members for certain tax benefits we may claim, and the amounts we may pay could be significant” to make payments to the EWC Ventures pre-IPO members that are generally equal to 85% of the applicable cash tax savings, if any, that we actually realize (or are deemed to realize, calculated using certain assumptions) as a result of (i) increases in our allocable share of certain existing tax basis of the tangible and intangible assets of the Company and adjustments to the tax basis of the tangible and intangible assets of the Company, in each case as a result of (a) the purchases of EWC Ventures Units (along with the corresponding shares of our Class B common stock) from certain of the EWC Ventures Post-IPO Members using a portion of the net proceeds from

the initial and secondary public offerings or in any future offering or (b) Share Exchanges and Cash Exchanges by the EWC Ventures pre-IPO members (or their transferees or other assignees) in connection with or after the initial public offering, (ii) our utilization of certain tax attributes of ~~the Blocker Companies~~certain affiliates of General Atlantic (the “Blocker Companies”) (including the Blocker ~~Companies'~~Companies’ allocable share of certain existing tax basis of EWC ~~Ventures'~~Ventures’ assets) and (iii) certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA.

Subject to the discussion in the following paragraph below, payments under the TRA will occur only after we have filed our U.S. federal and state income tax returns and realized the cash tax savings from the favorable tax attributes. ~~The first payment would be due after the filing of our tax return for the year ended December 25, 2021, which is due October 15, 2022.~~ Future payments under the TRA in respect of future purchases of EWC Ventures Units, Share Exchanges and Cash Exchanges would be in addition to these amounts. Payments under the TRA are computed by reference to realized tax benefits from attributes subject to the TRA and are expected to be funded by tax distributions made to us by our subsidiaries similar to how cash taxes would be funded to the extent these attributes did not exist. To the extent we are unable to make payments under the TRA for any reason (including because ~~our credit agreement~~the Company’s securitized financing facility restricts the ability of our subsidiaries to make distributions to us), under the terms of the TRA such payments will be deferred and accrue interest until paid. If we are unable to make payments due to insufficient funds, such payments may be deferred indefinitely while accruing interest until paid, which could negatively impact our results of operations and could also affect our liquidity in future periods in which such deferred payments are made.

Under the TRA, as a result of certain types of transactions and other factors, including a transaction resulting in a change of control, we may also be required to make payments to the EWC Ventures pre-IPO members in amounts equal to the present value of future payments we are obligated to make under the TRA. If the payments under the TRA are accelerated, we may be required to raise additional debt or equity to fund such payments. To the extent that we are unable to make payments under the TRA for any reason (including because ~~our credit agreement~~the Company’s securitized financing facility restricts the ability of our subsidiaries to make distributions to us), under the terms of the TRA Agreement such payments will be deferred and will accrue interest until paid. If we are unable to make payments due to insufficient funds to make such payments, such payments may be deferred indefinitely while accruing interest until paid, which could negatively impact our results of operations and could also affect our liquidity in future periods in which such deferred payments are made.

The following table sets forth the major components of our condensed consolidated statements of cash flows for the periods presented (amounts in thousands):

During the 13 weeks ended April 1, 2023 and March 26, 2022, net cash provided by operating activities was $4.2 million and $5.5 million, ~~compared to net cash used in operating activities~~respectively, a decrease of ~~$2.0 million for the 13 weeks ended March 27, 2021, an increase of $7.5~~$1.3 million. This ~~improvement~~decrease was largely attributable to ~~our improved operating results~~the increase in cash interest paid resulting from higher average principal balances and interest rates on outstanding debt in the first 13 weeks of ~~2022~~2023 compared to the first 13 weeks of ~~2021. In addition,~~2022. However, the ~~increase~~decrease in ~~working capital requirements in the first 13 weeks of 2022~~cash flows from operations was ~~less than the~~partially offset by a lower working capital increase in the ~~first 13 weeks of 2021.~~current year compared to the prior year as well as an improvement in cash flows generated by our operations.

The increase in working capital in ~~2022~~2023 was primarily attributable to an increase of $2.2 million in inventory and $1.4 million in prepaid expenses and other assets and a ~~$4.5~~decrease of $2.3 million in accounts payable and accrued liabilities. The increase in inventory was primarily due to increased purchases from suppliers to support increased system-wide sales and new center openings. The increase in prepaid expenses and other assets was largely driven by the timing of vendor payments. The decrease in accounts payable and accrued liabilities ~~primarily due to~~was largely driven by the payment of accrued bonuses and a decrease in accounts payable driven by the timing of vendor invoices. In addition, increases of $1.3 million and $1.5 million in accounts receivable and inventory, respectively, were due to our improved performance in 2022.bonuses.

During the 13 weeks ended April 1, 2023 and March 26, 2022, ~~and March 27, 2021,~~ we used ~~$0.3~~$0.4 million and ~~$0.2~~$0.3 million of cash ~~respectively,~~ for capital ~~expenditures. In the first 13 weeks of 2021 we used $4.3 million in cash for the reacquisition of area representative rights.~~

Cash used in financing activities was ~~$4.3~~$2.1 million and ~~$1.5~~$4.3 million during the 13 weeks ended April 1, 2023 and March 26, 2022, respectively. Financing activities during the first 13 weeks of 2023 were the result of a $1.0 million repayment on the Class A-2 Notes, $0.7 million in dividend equivalents paid, $0.3 million in tax distribution payments to EWC Ventures members, and ~~March 27, 2021, respectively.~~$0.1 million in taxes on vested RSUs paid by withholding shares. In the first 13 weeks of 2022 we made $2.3 million in net tax distribution payments

to EWC Ventures members other than the Company, repaid $1.1 million in principal on ~~the 2026 Term Loan~~our previous term loan and paid the remaining $0.9 million in costs relating to our secondary offering of Class A common stock which occurred in November 2021. In the first 13 weeks of 2021 cash used in financing activities primarily consisted of $0.9 million in repurchases of the previously outstanding EWC Ventures Class A units and a $0.6 million principal payment on our previous term loan.

Our financial statements are prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. There have been no changes to our critical accounting policies and use of estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December ~~25, 2021.~~31, 2022.

The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of reduced reporting requirements that are otherwise applicable to public companies. Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards. We have elected to use the extended transition period for complying with new or revised accounting standards. This may make it difficult to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

See Note 2 to the condensed consolidated financial statements included in this quarterly report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption and our assessment, to the extent we have made one, of the potential impact of the pronouncements on our financial condition and results of operations and cash flows.

We are exposed to market risk related to changes in interest rates. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our ~~term loan and revolving credit facility~~Variable Funding Notes bear interest at a variable rate.

Our ~~term loan~~Class A-2 Notes bear interest at a fixed rate of 5.50%, and ~~revolving credit facility~~therefore our interest expense related to these notes would not be affected by an increase in market interest rates. Our Variable Funding Notes bear interest at a variable index rate plus an applicable ~~margin, as defined in the credit agreement.~~margin. Accordingly, increases in the variable index rate could increase our interest payments under the ~~term loan and revolving credit facility. An~~Variable Funding Notes. However, as the Variable Funding Notes were undrawn as of April 1, 2023 an increase ~~of 100 basis points~~ in the variable index rate would not ~~have a material~~ impact on our financial position or results of operations.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

We are exposed to market risk related to changes in commodity prices. Our primary exposure to commodity price risk is the pricing of our ~~proprietary~~ wax purchased from our significant suppliers, which may be adjusted upwards or downwards based on changes in prices of certain raw materials used in the production process. ~~To date, there have been no price adjustments due to changes in raw material prices.~~

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this quarterly report on Form 10-Q.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Based on that evaluation, our CEO and CFO concluded that as of ~~March 26, 2022,~~April 1, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting that occurred during the 13 weeks ended ~~March 26, 2022,~~April 1, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We may be the defendant from time to time in litigation arising during the ordinary course of business, including, without limitation, employment-related claims, claims based on theories of joint employer liability, data privacy claims, claims involving anti-poaching allegations and claims made by former or existing franchisees or the government. In the ordinary course of business, we are also subject to regulatory and governmental examinations, information requests and subpoenas, inquiries, investigations, and threatened legal actions and proceedings. Although the outcomes of potential legal proceedings are inherently difficult to predict, the Company does not expect the resolution of these occasional legal proceedings to have a material effect on its financial position, results of operations, or cash flow.

There have been no material changes in our risk factors from those disclosed in Part I, ~~"Item~~“Item 1A. Risk ~~Factors"~~Factors“ in our annual report on Form 10-K for the year ended December ~~25, 2021, except as set forth below.~~31, 2022. You should carefully consider the risk factors set forth ~~below and~~ in our 10-K and the other information set forth in this quarterly report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and/or operating results.

~~Substantially all of the assets of certain of our subsidiaries are security under the terms of the securitization transaction that was completed on April 6, 2022.~~

On April 6, 2022, EWC Master Issuer LLC (the “Master Issuer”), our limited-purpose, bankruptcy-remote, indirect subsidiary, entered into a base indenture (the “Base Indenture”) and a related supplemental indenture (collectively, the “Indenture”) under which the Master Issuer issued $400 million in aggregate principal amount of Series 2022-1 5.50% Fixed Rate Senior Secured Notes, Class A-2 (the “2022 Class A-2 Notes”) in an offering exempt from registration under the Securities Act of 1933, as amended. In connection with the issuance of the 2022 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility that allows for the issuance of up to $40 million in Series 2022-1 Variable Funding Senior Notes, Class A-1 (the “2022 Variable Funding Notes,” and together with the 2022 Class A-2 Notes, the “Securitized Senior Notes”), and certain letters of credit.

The Securitized Senior Notes were issued in a securitization transaction pursuant to which substantially all of our revenue-generating assets in the United States are held by the Master Issuer and certain other limited-purpose, bankruptcy remote, wholly-owned direct and indirect subsidiaries of the Master Issuer that act as guarantors of the Securitized Senior Notes and that have pledged substantially all of their assets to secure the Securitized Senior Notes.

The Securitized Senior Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Securitized Senior Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments under certain circumstances, (iii) certain indemnification payments in the event, among other things, the transfers of the assets pledged as collateral for the Securitized Senior Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The Senior Securitized Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain a stated debt service coverage ratio, the sum of system-wide sales being below certain levels on certain measurement dates, certain manager termination events (including in certain cases a change of control of EWC Ventures), an event of default and the failure to repay or refinance the Securitized Senior Notes on the applicable anticipated repayment date. The Securitized Senior Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the Securitized Senior Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective and certain judgments.

In the event that a rapid amortization event occurs under the Indenture (including, without limitation, upon an event of default under the Indenture or the failure to repay the securitized debt at the end of the applicable term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business. If our subsidiaries are not able to generate sufficient cash flow to service their debt obligations, they may need to refinance or restructure debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If our subsidiaries are unable to implement one or more of these alternatives, they may not be able to meet debt payment and other obligations.

~~The securitization imposes certain restrictions on our activities or the activities of our subsidiaries.~~

The Indenture and the management agreement entered into among certain of our subsidiaries and the Indenture trustee (the “Management Agreement”) contain various covenants that limit our and its subsidiaries’ ability to engage in specified types of transactions. For example, the Indenture and the Management Agreement contain covenants that, among other things, restrict, subject to certain exceptions, the ability of certain subsidiaries to:

** European Wax Center, Inc. is furnishing, but not filing, the written statement pursuant to Title 18 United States

Code 1350, as added by Section 906 of the Sarbanes Oxley Act of 2002, of David P. Berg, our Chief Executive Officer and ~~David L. Willis,~~Stacie Shirley, our Chief Financial Officer.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Delaware	86-3150064
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5830 Granite Parkway, 3rd Floor Plano, Texas	75024
(Address of principal executive offices)	(Zip Code)


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of ~~March 26, 2022~~April 1, 2023 and December ~~25, 2021~~31, 2022	1
	Condensed Consolidated Statements of Operations for the 13 weeks ended April 1, 2023, and March 26, 2022 ~~and March 27, 2021~~	2
	~~Condensed Consolidated Statements of Comprehensive Income for the 13 weeks ended March 26, 2022 and March 27, 2021~~	3
	Condensed Consolidated Statements of Cash Flows for the 13 weeks ended April 1, 2023, and March 26, 2022 ~~and March 27, 2021~~	43
	Condensed Consolidated Statements of ~~Mezzanine Equity and~~ Stockholders'~~/Members’~~ Equity for the 13 weeks ended April 1, 2023, and March 26, 2022 ~~and March 27, 2021~~	54
	Notes to Unaudited Condensed Consolidated Financial Statements	65

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1713
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2823
Item 4.	Controls and Procedures	2924

PART II.	OTHER INFORMATION	3025

Item 1.	Legal Proceedings	3025
Item 1A.	Risk Factors	3025
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3125
Item 3.	Defaults Upon Senior Securities	3125
Item 4.	Mine Safety Disclosures	3125
Item 5.	Other Information	3125
Item 6.	Exhibits	3226
Signatures		3327


	For the Thirteen Weeks Ended
	March 26, 2022			March 27, 2021
Cash flows from operating activities:
Net income	$	4,026		$	1,102
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		5,060			5,138
Amortization of deferred financing costs		120			334
Gain on interest rate cap		(196	)		0
Provision for inventory obsolescence		(39	)		0
Provision for bad debts		0			104
Remeasurement of tax receivable agreement liability		785			0
Equity compensation		3,335			298
Changes in assets and liabilities:
Accounts receivable		(1,273	)		(8,206	)
Inventory		(1,546	)		(4,374	)
Prepaid expenses and other assets		(76	)		(3,479	)
Accounts payable and accrued liabilities		(4,508	)		6,962
Deferred revenue		(100	)		210
Other long-term liabilities		(115	)		(76	)
Net cash provided by (used in) operating activities		5,473			(1,987	)
Cash flows from investing activities:
Purchases of property and equipment		(303	)		(224	)
Reacquisition of area representative rights		0			(4,275	)
Net cash used in investing activities		(303	)		(4,499	)
Cash flows from financing activities:
Principal payments on long-term debt		(1,125	)		(607	)
Distributions to EWC Ventures LLC members		(2,272	)		0
Contributions from EWC Ventures LLC members		0			2
Payment of Class A common stock offering costs		(870	)		0
Repurchase of Class A Units		0			(942	)
Net cash used in financing activities		(4,267	)		(1,547	)
Net increase (decrease) in cash		903			(8,033	)
Cash, beginning of period		43,301			36,720
Cash, end of period	$	44,204		$	28,687
Supplemental cash flow information:
Cash paid for interest	$	1,481		$	4,187
Cash paid for income taxes	$	7		$	0
Non-cash investing activities:
Property purchases included in accounts payable and accrued liabilities	$	75		$	0
Reacquired rights purchased included in accounts payable and accrued liabilities	$	0		$	3,381


	For the Thirteen Weeks Ended
	April 1, 2023			March 26, 2022
Cash flows from operating activities:
Net income (loss)	$	(1,053	)	$	4,026
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		5,063			5,060
Amortization of deferred financing costs		1,318			120
Gain on interest rate cap		—			(196	)
Provision for inventory obsolescence		—			(39	)
Provision for bad debts		19			—
Deferred income taxes		(486	)		—
Remeasurement of tax receivable agreement liability		—			785
Equity compensation		5,931			3,335
Changes in assets and liabilities:
Accounts receivable		(639	)		(1,273	)
Inventory		(2,230	)		(1,546	)
Prepaid expenses and other assets		(1,391	)		(76	)
Accounts payable and accrued liabilities		(2,267	)		(4,508	)
Deferred revenue		(70	)		(100	)
Other long-term liabilities		(14	)		(115	)
Net cash provided by operating activities		4,181			5,473
Cash flows from investing activities:
Purchases of property and equipment		(358	)		(303	)
Net cash used in investing activities		(358	)		(303	)
Cash flows from financing activities:
Principal payments on long-term debt		(1,000	)		(1,125	)
Distributions to EWC Ventures LLC members		(276	)		(2,272	)
Payment of Class A common stock offering costs		—			(870	)
Taxes on vested restricted stock units paid by withholding shares		(126	)		—
Dividend equivalents to holders of EWC Ventures units		(735	)		—
Net cash used in financing activities		(2,137	)		(4,267	)
Net increase in cash		1,686			903
Cash, cash equivalents and restricted cash, beginning of period		50,794			43,301
Cash, cash equivalents and restricted cash, end of period	$	52,480		$	44,204
Supplemental cash flow information:
Cash paid for interest	$	5,560		$	1,481
Cash paid for income taxes	$	245		$	7
Non-cash investing activities:
Property purchases included in accounts payable and accrued liabilities	$	122		$	75
Right-of-use assets obtained in exchange for operating lease obligations	$	368		$	—


	April 1, 2023		December 31, 2022
Prepaid insurance	$	997	$	1,966
Prepaid rent		194		192
Prepaid technology		2,721		1,656
Prepaid marketing		2,401		844
Prepaid commissions		403		410
Prepaid other & other current assets		738		506
Total	$	7,454	$	5,574


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐
~~Non-accelerated filer~~	☒	Smaller reporting company	☐
Emerging growth company	☒


							Accumulated
					Additional		other
	Class A Common Stock		Class B Common Stock		paid-in	Accumulated	comprehensive	Noncontrolling	Total
	Shares	Amount	Shares	Amount	capital	deficit	loss	interest	equity
Balance at December 25, 2021	36,932,423	$0	26,700,477	$0	$182,919	$(3,487)	$(45)	$161,854	$341,241
Exchange of Class B Common Stock and EWC Ventures Units for Class A Common Stock	100,000	—	(100,000)	—	—	—	—	—	—
Vesting of restricted stock units	6,042	—	—	—	—	—	—	—	—
Forfeiture of unvested incentive units	—	—	(166,841)	—	—	—	—	—	—
Equity compensation	—	—	—	—	3,335	—	—	—	3,335
Distributions to members of EWC Ventures	—	—	—	—	—	—	—	(2,272)	(2,272)
Establish tax receivable agreement liability	—	—	—	—	(347)	—	—	—	(347)
Reclassification of loss on cash flow hedge to earnings	—	—	—	—	—	—	45	—	45
Allocation of equity to noncontrolling interests	—	—	—	—	(1,149)	—	—	1,149	—
Net income	—	—	—	—	—	1,885	—	2,141	4,026
Balance at March 26, 2022	37,038,465	$0	26,433,636	$0	$184,758	$(1,602)	$0	$162,872	$346,028


																													Accumulated
	MEZZANINE EQUITY								MEMBERS’ EQUITY														Additional						other			Total
	Class A Founders’ Units				Class D Units				Class A Units						Class B Units				Class C Units				paid-in			Accumulated			comprehensive			members’
	Units		Amount		Units		Amount		Units			Amount			Units		Amount		Units		Amount		capital			deficit			loss			equity
Balance at December 26, 2020		8,309,193	$	89,240		2,500,000	$	24,909		26,401,089		$	265,791			1	$	—		1,000	$	—	$	83		$	(61,473	)	$	(527	)	$	203,874
Equity compensation		—		—		—		—		—			—			—		—		—		—		298			—			—			298
Repurchase of Class A Units		—		—		—		—		(89,919	)		(942	)		—		—		—		—		—			—			—			(942	)
Contributions		—		—		—		—		—			—			—		—		—		—		2			—			—			2
Unrealized gain on cash flow hedge		—		—		—		—		—			—			—		—		—		—		—			—			159			159
Accretion of Class A Founders’ Units to redemption value				31,991																				(383	)		(31,608	)					(31,991	)
Net income		—		—		—		—		—			—			—		—		—		—		—			1,102			—			1,102
Balance at March 27, 2021		8,309,193		121,231		2,500,000		24,909		26,311,170			264,849			1		—		1,000		—		—			(91,979	)		(368	)		172,502


	April 1, 2023		December 31, 2022
Accounts payable	$	6,099	$	5,874
Accrued inventory		2,344		2,259
Accrued compensation		2,123		4,283
Accrued taxes and penalties		1,129		1,181
Accrued technology and subscription fees		193		26
Accrued interest		992		933
Accrued professional fees		448		890
Accrued marketing fees		601		310
Accrued dividend equivalents		2,876		1,777
Other accrued liabilities		664		1,014
Total accounts payable and accrued liabilities	$	17,469	$	18,547


	Fair Market Value			Quoted prices in active markets for identical assets (Level 1)		Significant observable inputs (Level 2)			Significant unobservable inputs (Level 3)
Interest rate cap
March 26, 2022	$	0		$	0	$	0		$	0
December 25, 2021	$	(242	)	$	0	$	(242	)	$	0


	March 26, 2022			December 25, 2021
2026 Term Loan	$	178,875		$	180,000
Less: current portion		(5,625	)		(5,625	)
Total long-term debt		173,250			174,375
Less: unamortized debt discount and deferred financing costs		(1,669	)		(1,768	)
Total long-term debt, net	$	171,581		$	172,607


	Balance Sheet Classification	March 26, 2022		December 25, 2021
Derivatives designated as hedging instruments:
Interest rate cap, current portion	Other current liabilities	$	0	$	(182	)
Interest rate cap, non-current portion	Other long-term liabilities		0		(60	)
Total derivative liabilities designated as hedging instruments		$	0	$	(242	)


	Net Unrealized Gain Recognized in OCI
	Thirteen Weeks Ended March 26, 2022		Thirteen Weeks Ended March 27, 2021
Derivatives designated as hedging instruments:
Interest rate cap	$	0	$	159
Total	$	0	$	159


	13 Weeks Ended March 26, 2022
Operating lease costs	$	597
Variable lease costs		188
Sublease income		(183	)
Total lease costs	$	602


Fiscal Years Ending
2022 (from March 27, 2022)	$	1,716
2023		1,524
2024		1,346
2025		1,232
2026		880
Thereafter		1,152
Total lease payments		7,850
Less: amount representing interest		(796	)
Present value of lease liabilities		7,054
Less: current portion		(1,866	)
Operating lease liabilities, net of current portion	$	5,188


Fiscal Years Ending
2022	$	2,098
2023		1,524
2024		1,346
2025		1,232
2026		880
Thereafter		1,152
Total	$	8,232


	13 Weeks Ended March 26, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	651


	March 26, 2022					April 1, 2023
	Units Owned		Ownership Percentage			Units Owned		Ownership Percentage
European Wax Center, Inc.		37,038,465		59.7	%		49,717,874		79.7	%
Noncontrolling interest		25,052,821		40.3	%		12,700,376		20.3	%
Total		62,091,286		100.0	%		62,418,250		100.0	%


	13 Weeks Ended April 1, 2023			13 Weeks Ended March 26, 2022
Net income (loss) attributable to European Wax Center, Inc.	$	(508	)	$	1,885
Transfers from noncontrolling interests:
Increase (decrease) in additional-paid-in-capital as a result of equity allocations to the noncontrolling interest		12,657			(1,149	)
Net increase in equity of European Wax Center, Inc. due to equity interest transactions with noncontrolling interests	$	12,149		$	736


	For the Thirteen Weeks Ended
(in thousands, except operating data and percentages)	April 1, 2023			March 26, 2022
Number of system-wide centers (at period end)		978			874
System-wide sales	$	218,441		$	206,969
Same-store sales		4.5	%		29.0	%
New center openings		34			21


	Thirteen Weeks Ended				For the Thirteen Weeks Ended
	March 26, 2022		March 27, 2021		April 1, 2023			March 26, 2022
(in thousands)
Net income	$	4,026	$	1,102
Net income (loss)					$	(1,053	)	$	4,026
Interest expense		1,507		4,536		6,862			1,507
Income tax expense		27		—
Income tax expense (benefit)						(509	)		27
Depreciation and amortization		5,060		5,138		5,063			5,060
EBITDA	$	10,620	$	10,776	$	10,363		$	10,620
Share-based compensation(1)		3,335		298		5,931			3,335
IPO-related costs(2)		—		1,123
Other compensation-related costs(3)		—		337
Remeasurement of tax receivable agreement liability (4)		785		—
Other (5)		417		—
Remeasurement of tax receivable agreement liability (2)						—			785
Other (3)						—			417
Adjusted EBITDA	$	15,157	$	12,534	$	16,294		$	15,157


Exhibit Number		Description
~~1.1~~3.1		~~Series 2022-1 Class A-2 Note Purchase Agreement, dated March 28, 2022, among EWC Master Issuer LLC, as Master Issuer, EWC Holding Guarantor LLC, EWC Franchisor LLC~~Second Amended and EWC Distributor LLC, each as Guarantor, EWC Ventures, LLC, as Manager, the Company, EW Holdco, LLC, EWC P&T, LLC, EWC Franchise, LLC, EWC Franchise Distribution, LLC and Guggenheim Securities, LLC, as representativeRestated By-Laws of ~~the several initial purchasers~~European Wax Center, Inc. (incorporated by reference to Exhibit ~~1.1~~3.1 to the Registrant’s Current Report on Form 8-K filed on ~~March 29, 2022)~~February 24, 2023).
~~4.1~~10.1+		~~Base Indenture, dated April 6, 2022, among EWC Master Issuer LLC, as Master Issuer,~~European Wax Center, Inc. Change in Control and ~~Citibank, N.A., as Trustee and Securities Intermediary (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on April 6, 2022).~~
~~4.2~~		Series 2022-1 Supplement, dated April 6, 2022, between EWC Master Issuer LLC, as Master Issuer of the Series 2022-1 fixed rate senior secured notes, Class A-2, and Series 2022-1 variable funding senior notes, Class A-1, and Citibank, N.A., as Trustee and Series 2022-1 Securities Intermediary (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on April 6, 2022).
~~4.3~~		Guarantee and Collateral Agreement, dated April 6, 2022, made by EWC Holding Guarantor LLC, EWC Franchisor LLC and EWC Distributor LLC, each as a Guarantor, in favor of Citibank, N.A., as Trustee (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on April 6, 2022).
~~10.1~~		~~First Amendment to Fifth Amended and Restated Limited Liability Company Agreement of EWC Ventures, LLC, dated April 11, 2022~~Severance Plan (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on ~~April 12, 2022)~~February 24, 2023).
~~10.2~~10.2+		~~Advance Funding Facility~~European Wax Center, Inc. Form of Severance Waiver and Employment Agreement dated April 6, 2022, among Bank of America, N.A., as advance funding administrative agent, EWC Master Issuer LLC, EWC Holding Guarantor LLC, EWC Franchisor LLC, EWC Distributor LLC, EWC Ventures, LLC and each other advance funding provider party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 6, 2022).
~~10.3~~		Class A-1 VFN Note Purchase Agreement, dated April 6, 2022, among EWC Master Issuer LLC, as Master Issuer, EWC Holding Guarantor LLC, EWC Franchisor LLC and EWC Distributor LLC, each as Guarantor, EWC Ventures, LLC, as Manager, certain conduit investors and financial institutions and funding agents, and Bank of America, N.A., as provider of letters of credit, as administrative agentAmendment (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on ~~April 6, 2022)~~February 24, 2023).
~~10.4~~10.3*+		~~Management Agreement,~~Offer Letter by and between EWC Corporate, LLC and Stacie Shirley, dated ~~April 6, 2022, among EWC Master Issuer LLC, EWC Holding Guarantor LLC, certain subsidiaries~~as of EWC Master Issuer LLC party thereto, EWC Ventures, LLC, as Manager, and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on April 6, 2022).March 3, 2023.
~~10.5~~10.4*+		~~Parent Company Support~~Severance Plan Agreement by and between the Registrant and Stacie Shirley, dated ~~April 6, 2022, between European Wax Center, Inc. and Citibank, N.A.,~~ as ~~Trustee (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on April 6, 2022).~~of March 3, 2023.
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


	European Wax Center, Inc.

Date: May ~~4, 2022~~10, 2023	By:	/s/ DAVID P. BERG
		David P. Berg
		Chief Executive Officer (Principal Executive Officer)

Date: May ~~4, 2022~~10, 2023	By:	/s/ ~~DAVID L. WILLIS~~STACIE SHIRLEY
		~~David L. Willis~~Stacie Shirley
		Chief Financial Officer ~~and Chief Operating Officer~~
		(Principal Financial Officer)