MiniLuxe Holding Corp. (TSXV: MNLX) today announced its financial
results for the 53 weeks ended January 1, 2023 (“FY2022”). The
fiscal year of MiniLuxe is a 52-week reporting cycle ending on the
Sunday closest to December 31, which periodically necessitates a
fiscal year of 53 weeks. FY2022 consisted of a 53-week period while
all other fiscal years referred to in this release consist of
52-week periods. Unless otherwise specified, all amounts are
reported in U.S. dollars.
MiniLuxe is pleased to announce robust
double-digit growth on a same studio basis from the core MiniLuxe
studios. The company demonstrated continued momentum towards its
vision of transforming the nail care and waxing industry through
clean and sustainable practices, proprietary products and by
empowering beauty professionals to book and manage services through
its digital platform. In the year of 2022, MiniLuxe added over 250
licensed and MiniLuxe certified beauty professionals to its
digitally-driven talent empowerment platform, setting records in
staffing, and further enabling an expanded set of revenue channels
for MiniLuxe-certified nail and waxing professionals to perform
their services. MiniLuxe also achieved an important milestone in
2022 with the acquisition of the Paintbox brand, which is actively
in post-merger integration. Paintbox is a leader in premium nail
art and design, with a nail art studio located in New York City and
proprietary IP related to its iconic nail art looks, which have
been showcased across the fashion industry and in major brand
partnerships. MiniLuxe believes there is significant untapped value
in the Paintbox brand and that the MiniLuxe infrastructure will
provide further opportunities for fixed cost leverage as we
integrate.
MiniLuxe’s business model consists of 1) Talent
services revenue generated from nail care and waxing/esthetic, and
2) Revenue generated from the Company’s premium, proprietary nail
and self-care Product portfolio. The Company’s services revenue is
delivered across an ecosystem of 20 fully-owned and operated
MiniLuxe / Paintbox fleet of studios (and 1 training center) as
well as “off-premises” delivery (at residential, offices, and
hospitality venues and events) through its MiniLuxe Anywhere
offering. In addition to services, MiniLuxe is building and selling
a line of proprietary nails, waxing, and skin / body care products.
MiniLuxe differentiates its product offerings by committing to
clean, sustainable and better-for-you products that have been time-
and client-tested across 3+ million services performed. MiniLuxe
and Paintbox products are sold through MiniLuxe team members who
are all product ambassadors, wholesale channels, and most important
online DTC (direct-to-consumer) e-commerce.
The Company achieved strong year-over-year
growth as FY2022 revenue increased nearly 30% versus FY2021 at
$21.5M (all figures in US dollars) with gross profit of $9.4M, an
increase of 15% year-over-year (“YoY”). Organic growth from this
same MiniLuxe studio fleet made up 96% of 2022 total revenue,
through the operational excellence and optimization of units. To
provide further context, MiniLuxe same studio sales in 2022 were
13% higher than 2019 (pre-pandemic) comps. Considering lingering
impacts of the pandemic (e.g., Delta variant in Q1 2022) along with
the labor and inflation issues peaking in Q2 and Q3 2022), the
studios still operated with some limitations on operating hours and
reduced capacity, providing further confidence in the brand’s
resiliency, the quality and stickiness of the Company’s Loyal
Clients (those who visit MiniLuxe on at least a monthly basis), and
management’s ability to be agile against volatile times.
Focus remains on increasing the number of
certified nail designers and waxing professionals who are active on
the MiniLuxe platform, which has been key to creating a competitive
moat and marketplace between the “supply side” of certified beauty
professionals with the “demand side” of the Company’s client
members.
During 2022, MiniLuxe continued to extend its
engagement with a larger and diversified customer base as evidenced
by servicing over 280K appointment hours, +23% from FY2021 with Q4
2022 MiniLuxe same studio appointment hours coming in 9% higher
than 2019 (pre-pandemic) levels. The Company is also
seeing record levels of Loyal Clients and an increasing share of
high margin premium services as a percentage of all services.
MiniLuxe continues to take a data-driven approach towards how best
to optimize and match supply and demand. The focus on growing and
aggregating supply-side talent has led to a 30%+ growth in staffed
hours YoY, with a particular focus on peak days (Thursday-Sunday),
as such days tend to have the highest demand.
MiniLuxe has set a goal of achieving positive
free cash flow generation in 2024 with existing capital on hand.
While macro-economic factors including labor shortages, changes in
credit availability/ terms and inflation remain impactful, MiniLuxe
continues to see growth in market supply and demand. As an example,
relative to examples of other self-care service brands, MiniLuxe
averaged >10% higher annual revenue generated per nail
designer1, implying premium economics as we further optimize
operations. In addition to the expected continued growth of
on-premises studio fleet business, additional growth is expected to
come from high conviction and financially sound, strategic
investments, including the brand’s new growth channels of its
off-premises MiniLuxe Anywhere and product (e-commerce and
wholesale) channels, MiniLuxe is well positioned to achieve its
strategic goals and vision to be the leader in the industry. The
Company’s new growth channels have started to demonstrate positive
green shoots with proof-of-concept tests of the digital MiniLuxe
Anywhere offering.
“The 2022 year was a strong transition year as
the first full year of being a public company and our first nearly
fully reset (nearly fully open) year post-Covid. The Company has a
twin focus on defending and growing the core base business of
on-premises services (i.e. MiniLuxe studio business), which
continues to compound with positive contribution, while playing
offense with several tests and initiatives with our new growth
opportunities with MiniLuxe Anywhere and MiniLuxe/Paintbox
Products.” said Tony Tjan, Executive Chairman and Co-founder of
MiniLuxe.
“MiniLuxe is pleased to report continued double
digit growth for 2022 and taking advantage of the momentum going
into 2023. Covid represented both a challenge and an opportunity.
As we move out of Covid, we are proud of how we optimized and grew
the business in the face of one of history’s most difficult moments
for consumer on-premises services and now with a reset competitive
landscape feel that much stronger about opportunities for new
channels of growth and M&A,” said Zoe Krislock, CEO of
MiniLuxe
FY2022 Financial
Highlights ($USD)
- Total revenue of $21.5M, a YoY
increase of 29%
- Gross profit of $9.4M, a 15%
increase from prior year
- 96% of total revenue growth
generated organically from the same studios that existed at the
beginning of the year, with even more room for further organic
growth and optimization in the future
- FY2022 Fleet Adjusted EBITDA2 at
$1.5M up 49% from FY2022
- Full Company Adjusted EBITDA2 of
($9.4M) compared to ($7.2M) for FY2021; increased loss attributable
to investment in SG&A to fund planned growth initiatives
FY2022
Business Highlights
- FY2022 weekly appointment hours
increased 21% YoY and surpassed highest previous quarterly record
by 5%. FY2022 operating hours were 33% lower than FY2019
(pre-COVID) due to continued impact of the pandemic. However, in Q4
2022 we still saw total appointments increase 10% from Q4 2019,
leading to higher profitability. As previously discussed, MiniLuxe
believes there is substantial additional upside in the current
fleet of studios
- MiniLuxe’s Loyal Client base (as
previously defined) grew quarter over quarter to exceed 2019
pre-pandemic levels, highlighting growing predictable and recurring
revenue base within the Talent segment
- Despite a challenging supply
environment, MiniLuxe’s talent acquisition and retention focus
resulted in record levels of staffed hours and peak day staffing
hours, both reflecting strength on a YoY and QoQ basis. These
metrics are central business KPIs as the Company ramps staffing to
meet demand for the spring and summer season
- After adjusting to changing
consumer purchasing behavior post-COVID, MiniLuxe’s e-commerce
product business achieved QoQ growth of +180% from Q3 to Q4 2022,
and +48% YoY growth by Q4 2022
- Launched a series of MiniLuxe
Anywhere initiatives offering off-site, clean nail-care services.
Early results indicate future success at scale from at-home and
corporate event bookings. Two-sided marketplace booking platform
for nail entrepreneurs has expanded the supply pool of talent
across businesses.
- Completed Paintbox acquisition and
began post-merger integration of New York studio and Paintbox
product line into MiniLuxe
- Subsequent Events: In January of
2023, the Company received a refundable payroll tax credit, the
Employee Retention Credit, under the Coronavirus Aid, Relief, and
Economic Security (CARES) Act in the amount of $3,158,548. The
Employee Retention Credit is a government funded tax credit
established by the United States federal government under the CARES
Act to help eligible employer that presented a decline in business
due to the COVID-19 pandemic and related shutdowns. The
Company will recognize the entirety of the Employee Retention
Credit as other income in Q1 2023
FY
2022 Results
Selected Financial Measures
MiniLuxe notes a change in accounting policy to
more accurately reflect revenue generated from talent and product
revenue streams to more align with how management analyzes the
Company. The change has been retrospectively applied and does not
have any effect on revenue recognition principles utilized or total
overall revenue recognized.
Results of Operations
The following table outlines the consolidated
statements of loss and comprehensive loss for the fiscal quarters
and fiscal periods ended January 1, 2023 and December 26, 2021:
Cash Flows
The following table presents cash and cash
equivalents as at January 1, 2023 and December 26, 2021:
Subsequent to FY2022, in January of 2023, the
Company received a refundable payroll tax credit, the Employee
Retention Credit, under the Coronavirus Aid, Relief, and Economic
Security (CARES) Act in the amount of $3,158,548. The
Employee Retention Credit is a government funded tax credit
established by the United States federal government under the CARES
Act to help eligible employer that presented a decline in business
due to the COVID-19 pandemic and related shutdowns. The
Company will recognize the entirety of the Employee Retention
Credit as other income in Q1 2023.
Non-IFRS Measures and Reconciliation of
Non-IFRS Measures
This press release references certain non-IFRS
measures used by management. These measures are not recognized
measures under International Financial Reporting Standards
(“IFRS”), do not have a standardized meaning prescribed by IFRS,
and are therefore unlikely to be comparable to similar measures
presented by other companies. Rather, these measures are provided
as additional information to complement those IFRS measures by
providing further understanding of the Company’s results of
operations from management’s perspective. Accordingly, these
measures should not be considered in isolation nor as a substitute
for analysis of the Company’s financial information reported under
IFRS. The non-IFRS measures referred to in this press release are
“Adjusted EBITDA” and “Fleet Adjusted EBITDA”.
Adjusted EBITDA
Adjusted EBITDA is used by management as a
supplemental measure to review and assess operating performance.
Management believes Adjusted EBITDA most accurately reflects the
commercial reality of the Company's operations on an ongoing basis
by adding back non-cash expenses. Additionally, the rent-related
adjustments ensure that studio-related expenses align with revenue
generated over the corresponding time periods.
Adjusted EBITDA is calculated by adding back
fixed asset depreciation, right-of-use asset depreciation under
IFRS 16, asset disposal, and share-based compensation expense to
IFRS operating income, then deducting straight-line rent expenses3
net of lease abatements. IFRS operating income is revenue less cost
of sales (gross profit), additionally adjusted for general and
administrative expenses, and depreciation and amortization
expense.
The Company also uses Fleet Adjusted EBITDA to
evaluate its fleet performance. This metric is calculated in a
similar manner, starting with Talent revenue and adjusting for
non-fleet Talent revenue and cost of sales, further adjusted by
fleet SG&A and finally subtracting the same straight line rent
expense used in the full company Adjusted EBITDA (as the fleet
holds all real estate leases). The Company believes that this
metric most closely mirrors how management views the fleet portion
of the business.
The following table reconciles Adjusted EBITDA
to net loss for the periods indicated:
The following table reconciles Fleet Adjusted
EBITDA to net loss for the periods indicated:
About MiniLuxe
MiniLuxe, a Delaware corporation based in
Boston, Massachusetts is a digital-first, socially-responsible
lifestyle brand and talent empowerment platform and marketplace
[let’s consider] for the nail and waxing industry. For over a
decade, MiniLuxe has been setting industry standards for health,
hygiene, high quality services, and fair labor practices in its
efforts to transform the nail care and waxing industry. Underlying
MiniLuxe’s mission and purpose is to become one of the largest
inclusionary educators and employers of diverse self-care
professionals across an omni-channel ecosystem and talent
empowerment platform.
Today, MiniLuxe derives its revenue streams from
nail care and waxing services across an omni-channel ecosystem of
on premise with company-owned studios and partnerships and
off-premise on-demand services. The company also develops and sells
a proprietary retail and e-commerce line of clean nail care and
waxing products that are also used in MiniLuxe services. MiniLuxe
is driven by a fully-integrated digital platform that manages all
client bookings, preferences, and payments and provides designers
with the ability to manage scheduling and client preferences, track
their performance and compensation, and access training content.
Since its inception, MiniLuxe has performed nearly 3 million
services. www.miniluxe.com
For further information
Anthony TjanExecutive Chairman, MiniLuxe Holding
Corp.atjan@miniluxe.com
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
1MiniLuxe nail designers in 2022 averaged $94K in revenue
generation on a full-time equivalent basis), whereas European Wax
Center (NASDAQ: EWCZ) targets $80K per tech in revenue per their
2022 Annual Report (Target Year 5 Revenue $1M with Target 13
Techs/Unit)2Please refer to “Non-IFRS Measures and Reconciliation
of Non-IFRS Measures” sections of this press release.
3Straight-line rent expense for a given payment period is
calculated by dividing the sum of all payments over the life of the
lease (the figure used in the present value calculation of the
right-of-use asset) by the number of payment periods (typically
months). This number is then annualized by adding the rent expenses
calculated for the payment periods that comprise each fiscal year.
For leases signed mid-year, the total straight-line rent expense
calculation applies the new lease terms only to the payment periods
after the signing of the new lease.
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