Soho House & Co Inc. (NYSE: SHCO) (“SHCO,” “Company,” “we” or “our”), a global membership platform that connects a vibrant, diverse, and global group of members, today announced results for the fourth quarter and fiscal year ended December 31, 2023.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240315448030/en/
Soho House Portland, opened March 5th, 2024. The first House in the Pacific North West. Credit: Christopher_Sturman
Fourth Quarter 2023 Highlights
-
Total Members in the fourth quarter 2023 grew to 259,884 from 255,252 in third quarter 2023 and by 14.6% year-over-year
- Soho House Members grew to 193,865 from 184,542 in third quarter 2023, and 19.7% year-over-year
- SHCO Membership waitlist now sits at approximately 99,000, an all-time high
- Total revenues of $290.8 million, 7.5% year-over-year growth
- Membership revenues of $95.8 million increased by 24.2% year-over-year, accounting for 32.9% of Total revenues
-
In-House revenues grew to $125.2 million up 3.8% year-over-year
- Revenue Per Available Room (“RevPAR”) grew 4% year-over-year on a like-for-like basis
- Net loss attributable to Soho House & Co Inc. was $57.0 million or $0.29 per share, inclusive of a $47 million impairment charge predominantly related to Soho Works North America
- Adjusted EBITDA was $36.6 million, up $13.4 million from fourth quarter 2022
- Recently opened Soho House Portland, expect to open Soho House Sao Paulo soon
- Effective November 1, 2023, Tom Collins, former Managing Director - UK Europe & Asia, was appointed as Chief Operating Officer of the Company
Fiscal Year 2023 Financial Results
- Fiscal Year 2023 Total revenues increased 16.8% year-over-year to $1,135.9 million
- Membership revenues of $361.5m increased 32.5% year-over-year, accounting for 31.8% of Total revenues
-
In-House revenues grew to $482.1 million up 13% year-over-year
- Revenue Per Available Room (“RevPAR”) was 11% higher year-over-year on a Like-for-Like basis
- Net loss attributable to Soho House & Co Inc. was $118.0 million or $0.60 per share, inclusive of the same impairment charge outlined above
- Adjusted EBITDA was $128.0 million, up from $60.7 million in fiscal year 2022
- Successfully opened two new Houses: Bangkok (February 2023) and Mexico City (September 2023)
"The strong results we delivered in 2023 demonstrate our continued focus on driving a better member experience and significant progress on improving profitability. We grew Soho House membership approximately 20%, including the benefit of maturing Houses and entering into South East Asia and Latin America for the first time. We more than doubled Adjusted EBITDA, reflecting 11% margins up from 6% in 2022," said Andrew Carnie, CEO of Soho House & Co.
“We are excited for the year-ahead. I would like to thank our teams globally for their commitment and hard work, and our members for their enduring loyalty over nearly 30 years."
Summary of Unaudited Financial Results for the Periods Ended December 31, 2023
|
For the 13 Weeks Ended |
|
|
For the Fiscal Year Ended |
|
||||||||||
(in thousands, except shares and per share amount unless otherwise noted) |
December 31, 2023 |
|
|
January 1, 2023 |
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
||||
|
(Unaudited) |
|
|||||||||||||
Total revenues |
$ |
290,790 |
|
|
$ |
270,390 |
|
|
$ |
1,135,879 |
|
|
$ |
972,214 |
|
Membership revenues |
$ |
95,767 |
|
|
$ |
77,124 |
|
|
$ |
361,487 |
|
|
$ |
272,809 |
|
In-House revenues |
$ |
125,220 |
|
|
$ |
120,674 |
|
|
$ |
482,066 |
|
|
$ |
426,602 |
|
Other revenues |
$ |
69,803 |
|
|
$ |
72,592 |
|
|
$ |
292,326 |
|
|
$ |
272,803 |
|
Operating gain (loss) |
$ |
(23,156 |
) |
|
$ |
36,010 |
|
|
$ |
(23,003 |
) |
|
$ |
(147,481 |
) |
House-Level Contribution(1) |
$ |
65,304 |
|
|
$ |
45,448 |
|
|
$ |
218,037 |
|
|
$ |
144,425 |
|
House-Level Contribution margin (%)(1) |
|
31 |
% |
|
|
24 |
% |
|
|
27 |
% |
|
|
22 |
% |
Other Contribution(1) |
$ |
16,767 |
|
|
$ |
15,430 |
|
|
$ |
70,002 |
|
|
$ |
52,524 |
|
Other contribution margin (%)(1) |
|
21 |
% |
|
|
19 |
% |
|
|
21 |
% |
|
|
17 |
% |
Net income (loss) attributable to SHCO Inc. |
$ |
(56,995 |
) |
|
$ |
13,526 |
|
|
$ |
(117,953 |
) |
|
$ |
(220,580 |
) |
Adjusted EBITDA(1) |
$ |
36,631 |
|
|
$ |
23,197 |
|
|
$ |
128,000 |
|
|
$ |
60,741 |
|
Adjusted EBITDA margin (%)(1) |
|
13 |
% |
|
|
9 |
% |
|
|
11 |
% |
|
|
6 |
% |
Net debt(1)(2) |
$ |
638,358 |
|
|
$ |
531,665 |
|
|
$ |
638,358 |
|
|
$ |
531,665 |
|
Weighted average Class A and Class B Shares outstanding (basic) |
|
195,126,343 |
|
|
|
196,878,523 |
|
|
|
195,589,859 |
|
|
|
199,985,264 |
|
Basic and diluted income (loss) per share |
$ |
(0.29 |
) |
|
$ |
0.07 |
|
|
$ |
(0.60 |
) |
|
$ |
(1.10 |
) |
(1) See “Non-GAAP Financial Measures” for reconciliations of Non-GAAP measures to GAAP measures.
The following selected items listed below are not added back in Adjusted EBITDA:
|
For the 13 Weeks Ended |
|
|
For the Fiscal Year Ended |
|
||||||||||
(in thousands) |
December 31, 2023 |
|
|
January 1, 2023 |
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
||||
|
(Unaudited) |
|
|||||||||||||
Pre-opening expenses |
$ |
4,311 |
|
|
$ |
3,753 |
|
|
$ |
18,604 |
|
|
$ |
14,081 |
|
Non-cash rent |
|
1,423 |
|
|
|
2,233 |
|
|
|
7,621 |
|
|
|
7,877 |
|
Deferred registration fees, net |
|
(464 |
) |
|
|
(469 |
) |
|
|
(1,855 |
) |
|
|
924 |
|
We delivered the following highlights against our strategic priorities in the fourth quarter
1. Grow and Enhance Membership
- Membership continues to reach new highs benefiting from a record waitlist and continued high retention rates
- Soho House members grew to 193,865 from 184,542 in third quarter 2023, and 19.7% YoY
- Focused rollout of initiatives continues to improve member experience
- Opened Soho House Mexico City in September 2023 and Soho House Portland in March 2024. Expect to open Soho House Sao Paulo soon
2. Operational Excellence to Drive Profitability
- We achieved fourth quarter 2023 Adjusted EBITDA of $36.6 million, an increase of $13.4 million compared to fourth quarter 2022
- In-House revenues grew to $125.2 million in fourth quarter 2023, up from $120.7 million in fourth quarter 2022
- Like-for-like F&B margins at our Houses rose ~200bps vs. fourth quarter 2019
- Focus on driving accommodations performance resulted in 4% RevPAR growth in fourth quarter 2023 vs. fourth quarter 2022 on a like-for-like basis
Membership Summary for the Quarter Ended December 31, 2023
|
As of |
|
|||||
|
December 31, 2023 |
|
|
January 1, 2023 |
|
||
|
(Unaudited) |
|
|||||
Total Members |
|
259,884 |
|
|
|
226,830 |
|
Soho House |
|
193,865 |
|
|
|
161,975 |
|
Frozen members |
|
7,512 |
|
|
|
2,256 |
|
Soho Friends |
|
59,971 |
|
|
|
58,222 |
|
Soho Works |
|
6,048 |
|
|
|
6,633 |
|
Active App Users |
|
201,211 |
|
|
|
168,641 |
|
|
|
As of |
|
|||||||||
|
|
December 31,
|
|
|
January 1,
|
|
|
January 2,
|
|
|||
|
|
(Unaudited) |
|
|||||||||
Number of Soho Houses |
|
|
42 |
|
|
|
40 |
|
|
|
33 |
|
North America |
|
|
15 |
|
|
|
14 |
|
|
|
11 |
|
United Kingdom |
|
|
13 |
|
|
|
13 |
|
|
|
11 |
|
Europe/RoW |
|
|
14 |
|
|
|
13 |
|
|
|
11 |
|
Number of Soho House Members |
|
|
193,865 |
|
|
|
161,975 |
|
|
|
122,807 |
|
North America |
|
|
70,284 |
|
|
|
60,439 |
|
|
|
45,733 |
|
United Kingdom |
|
|
70,865 |
|
|
|
60,909 |
|
|
|
48,575 |
|
Europe/RoW |
|
|
42,094 |
|
|
|
33,827 |
|
|
|
23,847 |
|
All Other |
|
|
10,622 |
|
|
|
6,800 |
|
|
|
4,652 |
|
Number of Other Members |
|
|
66,019 |
|
|
|
64,855 |
|
|
|
33,029 |
|
North America |
|
|
17,615 |
|
|
|
17,864 |
|
|
|
7,944 |
|
United Kingdom |
|
|
40,024 |
|
|
|
39,325 |
|
|
|
22,131 |
|
Europe/RoW |
|
|
8,380 |
|
|
|
7,666 |
|
|
|
2,954 |
|
Number of Total Members |
|
|
259,884 |
|
|
|
226,830 |
|
|
|
155,836 |
|
Number of Active App Users |
|
|
201,211 |
|
|
|
168,641 |
|
|
|
119,677 |
|
Memberships
- Total Members grew to 259,884 from 255,252 in third quarter 2023 and by 14.6% year-over-year
- Total Soho House Members grew to 193,865 from 184,542 in third quarter 2023, driven by continued high retention rates, alongside membership intakes in both new and existing Houses
- Frozen Members was 7,512 at the end of fourth quarter 2023
- Other Memberships including Soho Friends and Soho Works was 66,019 members, a decrease of 4,691 from the end of the third quarter 2023 but a 2% increase year-over-year
Financing
- SHCO ended fourth quarter 2023 with Cash and cash equivalents and Restricted cash of $164 million
Updated Fiscal 2024 Guidance
The following forward-looking statements reflect our current expectations as of today, March 15, 2024:
|
|
|
|
|
|
Fiscal 2023 Results Actuals |
Fiscal 2024 Guidance |
Total Soho House Members |
|
193,865 |
>210,000 |
Membership revenues |
|
$361.5m |
$405m – $415m |
Total revenues* |
|
$1,136m |
$1,200m – $1,250m |
Adjusted EBITDA** |
|
$128.0m |
$155m – $165m |
*Assumes no material FX impact, reflecting bank estimates
**Without adding back pre-opening costs, non-cash rent and deferred registration fees of ~$25-30m combined for fiscal 2024 as a whole
Conference Call and Webcast:
A conference call and live webcast will be hosted to discuss these results on Friday, March 15, 2024 at 9am EST / 1pm GMT.
A live broadcast and accompanying presentation will be available at www.sohohouseco.com.
To listen to the live conference call via telephone, please dial:
USA
New York (646) 307 1963
USA & Canada Toll-Free (800) 715 9871
UK
London +44 (0)20 3481 4247
UK Toll-Free +44 (0)800 260 6466
Conference ID 3174102
A replay of the webcast will be available on our website following the call for up to 90 days.
Contacts:
Investor Relations: ir@sohohouseco.com
Press: press@sohohouseco.com
Non-GAAP Financial Measures
This presentation contains certain financial measures, including Adjusted EBITDA, House-Level Contribution and Margin, Other Contribution and Margin, Net Debt and certain financial measures presented on a Constant Currency basis that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (‘GAAP’). We refer to these measures as ‘non-GAAP financial measures.’ We use these non-GAAP financial measures when planning, monitoring and evaluating our performance. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues or net income (loss), in each case as recognized in accordance with GAAP. In addition, other companies may calculate one or more of these measures differently, which reduces the usefulness of any such measure as a comparative measure. See below for a definition of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures.
We provide earnings guidance using both GAAP and non-GAAP financial measures. A reconciliation of the Company’s Adjusted EBITDA guidance to the most directly comparable GAAP financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that are made for future changes in foreign exchange and the other adjustments reflected in our reconciliation of historical non-GAAP financial measures, the amounts of which, could be material.
The information in this presentation should be read in conjunction with our Annual and Quarterly Reports on Form 10-K and Form 10-Q and other information that we file with the SEC. The reconciliations of non-GAAP financial measures are an integral part of the information presented herein. You can access these documents on our website, www.sohohouseco.com, free of charge, as well as any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information contained on our website is not incorporated by reference into, and should not be considered a part of, this presentation.
In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC at www.sec.gov.
The non-GAAP financial measures we use herein are defined by us as follows:
ADJUSTED EBITDA. Adjusted EBITDA is a supplemental measure of our performance. Adjusted EBITDA is defined as Net income (loss) before Depreciation and amortization, Interest expense, net, Income tax (expense) benefit, adjusted to take account of the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These other items include, but are not limited to, Gain (loss) on sale of property and other, net, Share of loss (profit) from equity method investments, Foreign exchange, Share of equity method investments adjusted EBITDA, Share-based compensation expense and other applicable items. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses (income) that do not relate to ongoing business performance.
HOUSE-LEVEL CONTRIBUTION AND MARGIN. House-Level Contribution is defined as House Revenues less In-House operating expenses, which includes expense items such as food and beverage costs, labor costs, variable overheads and fixed costs, such as rent. It does not reflect the impact of depreciation, amortization, impairment, gain or loss on sale of property, general and administrative expenses or other applicable items. House-Level Contribution Margin is defined as House-Level Contribution as a percentage of our House Revenues and is a key determinant of our performance and profitability and our return on the investment we make in each of our Houses. Given that all costs associated with providing our members with the Soho House experience, including the costs associated with maintaining our Houses and providing services to members while in the Houses, are included in In-House operating expenses, we use House Revenues (inclusive of House Membership Revenues) in calculating House-Level Contribution and House-Level Contribution Margin to assess the overall profitability of our Houses. Accordingly, our management considers House-Level Contribution and House-Level Contribution Margin to be an important management measure to evaluate the performance of each House, and growth in aggregate House-Level Contribution allows us to leverage our general and administrative costs and improve overall profitability.
OTHER CONTRIBUTION AND MARGIN. Other Contribution is defined as Other revenues plus Non-House Membership Revenues less Other operating expenses, which includes expense items not related to the operation of Houses, such as labor costs, variable overheads and fixed costs, such as rent. It does not reflect the impact of depreciation, amortization, impairment, gain or loss on sale of property, general and administrative expenses, pre-opening expenses, foreign exchange gain/loss, Share-based compensation expense and other applicable items. Other Contribution Margin defined as Other Contribution as a percentage of our Other revenues and is a key determinant of our performance and profitability and our return on the investment in our non-House business. Our management considers Other Contribution and Contribution Margin to be an important management measure.
NET DEBT. Net Debt reflects the total debt, comprising long-term debt, property mortgage loans and related party loans, less cash, cash equivalents and restricted cash. Net Debt is an important measure to monitor leverage and evaluate the balance sheet. A limitation associated with using Net Debt is that it subtracts Cash and cash equivalents and Restricted cash and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. Management believes that investors may find it useful to monitor leverage and evaluate the balance sheet.
CONSTANT CURRENCY. Some of our financial and operational data that we disclose in this release is presented on a ‘constant currency’ basis to isolate the effect of currency changes during the period. Where we refer to a measure being calculated in ‘constant currency,’ we are calculating the dollar change and the percentage change as if the exchange rate that is being used in the current period was in effect for all prior periods presented. We believe that this calculation provides a more meaningful indication of actual year over year performance and eliminates any fluctuations from currency exchange rates.
While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues or net income (loss), in each case as recognized in accordance with GAAP. In addition, other companies may calculate one or more of these measures differently, which reduces the usefulness of any such measure as a comparative measure.
A reconciliation of Net income (loss) to Adjusted EBITDA for the 13 weeks ending December 31, 2023 and January 1, 2023 is set forth below:
|
|
For the 13 Weeks Ended |
|
|
Percent Change |
|
||||||||||
|
|
December 31,
|
|
|
January 1,
|
|
|
Actuals |
|
|
Constant
|
|
||||
|
|
(Unaudited, dollar amounts in thousands) |
|
|||||||||||||
Net income (loss) |
|
$ |
(57,335 |
) |
|
$ |
15,774 |
|
|
n/m |
|
|
n/m |
|
||
Depreciation and amortization |
|
|
37,174 |
|
|
|
27,440 |
|
|
|
35 |
% |
|
|
29 |
% |
Interest expense, net |
|
|
24,609 |
|
|
|
18,551 |
|
|
|
33 |
% |
|
|
27 |
% |
Income tax expense |
|
|
5,425 |
|
|
|
2,061 |
|
|
n/m |
|
|
n/m |
|
||
EBITDA |
|
|
9,873 |
|
|
|
63,826 |
|
|
|
(85 |
)% |
|
|
(85 |
)% |
Loss on sale of property and other, net |
|
|
1,634 |
|
|
|
1,139 |
|
|
|
43 |
% |
|
|
37 |
% |
Share of (income) loss of equity method investments |
|
|
2,511 |
|
|
|
(1,515 |
) |
|
n/m |
|
|
n/m |
|
||
Foreign exchange gain, net(2) |
|
|
(32,297 |
) |
|
|
(58,560 |
) |
|
|
45 |
% |
|
|
47 |
% |
Share of equity method investments EBITDA |
|
|
2,054 |
|
|
|
1,895 |
|
|
|
8 |
% |
|
|
4 |
% |
Adjusted share-based compensation expense(3) |
|
|
4,044 |
|
|
|
9,044 |
|
|
|
(55 |
)% |
|
|
(57 |
)% |
Operational reorganization and severance expense(4) |
|
|
— |
|
|
|
5,293 |
|
|
n/m |
|
|
n/m |
|
||
Membership credits (rebate) expense(5) |
|
|
— |
|
|
|
(15 |
) |
|
n/m |
|
|
n/m |
|
||
Out of period operating lease liability adjustment(6) |
|
|
(5,776 |
) |
|
|
1,177 |
|
|
n/m |
|
|
n/m |
|
||
Out of period capital expenditure adjustment(7) |
|
|
2,562 |
|
|
|
— |
|
|
n/m |
|
|
n/m |
|
||
Employment related settlement expense(8) |
|
|
— |
|
|
|
913 |
|
|
n/m |
|
|
n/m |
|
||
Brand license inventory provision(9) |
|
|
4,571 |
|
|
|
— |
|
|
n/m |
|
|
n/m |
|
||
Impairment relating to long lived assets(10) |
|
|
47,455 |
|
|
|
— |
|
|
n/m |
|
|
n/m |
|
||
Adjusted EBITDA |
|
$ |
36,631 |
|
|
$ |
23,197 |
|
|
|
58 |
% |
|
|
51 |
% |
- See “Non-GAAP Financial Measures” for an explanation of our constant currency results.
- Primarily driven by foreign exchange volatility impacting our non-USD debt and working capital.
- For 13 Weeks Ended January 1, 2023 this excludes a $1 million non-cash expense, which is included within Share-based compensation expense in the Consolidated Statements of Operations and includes an expense of $3 million, which is excluded from Share-based compensation expense in the Consolidated Statements of Operations, in respect of a non-recurring cash payment in connection with the Growth Shares.
- In the 13 weeks ended January 1, 2023 this includes a non-cash share-based compensation expense of $1 million and $4 million with respect to a strategic reorganization of the Company's operations and support team.
- Beginning on March 14, 2020, due to the COVID-19 pandemic, we issued membership credits to active members of our closed Houses to be redeemed for certain Soho Home products and services. Membership credits were a one-time goodwill gesture, issued as a marketing offer to active members. The expense represents our best estimate of the cost in fulfilling the membership credits.
- Represents an out-of-period adjustments correcting errors with respect to the estimation of the operating lease liability identified during the 13 week period ended December 31, 2023 and January 1, 2023 but relating prior financial periods. There is no material impact from the correction of this error to previously reported periods.
- Represents an out-of-period adjustment correcting an error with respect to the capitalization of certain expenses in connection to new House openings identified during the 13 week period ended December 31, 2023 but relating prior financial periods. There is no material impact from the correction of this error to previously reported periods.
- Represents expenses incurred in the 13 weeks ended January 1, 2023 with respect to a historic settlement of an employment related legal claim. The Company has remediated its operating processes to mitigate a similar issue from recurring.
- In November 2023, the Company entered into a 10-year licensing agreement with a third party to manufacture and distribute the Company’s Cowshed brand, commencing January 1, 2024. This agreement has restricted the Company’s ability to sell certain inventories it acquired prior to entering into the agreement. As such, the Company has provided in full for the inventory it is unable to recover as a result of the entering into the agreement.
- Following the Company's impairment review in the 13 weeks ended December 31, 2023, the Company recognized $47 million of impairment losses on long-lived assets (comprised of $33 million in respect of Operating lease assets and $14 million of Property and equipment, net), of which $37 million is in respect of Soho Works North America.
A reconciliation of Operating income (loss) to House-Level Contribution & Other Contribution for the 13 weeks ending December 31, 2023 and January 1, 2023 is set forth below:
|
For the 13 Weeks Ended |
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31,
|
|
|
January 1,
|
|
|
Change % |
|
|
January 1, 2023
|
|
|
Constant Currency
|
|
|||||
|
Actuals |
|
|
|
|
|
|
|
|||||||||||
|
(Unaudited, dollar amounts in thousands) |
|
|||||||||||||||||
Operating income (loss) |
$ |
(23,156 |
) |
|
$ |
36,010 |
|
|
n/m |
|
|
$ |
37,674 |
|
|
n/m |
|
||
General and administrative |
|
40,202 |
|
|
|
36,695 |
|
|
|
10 |
% |
|
|
38,391 |
|
|
|
5 |
% |
Pre-opening expenses |
|
4,311 |
|
|
|
3,753 |
|
|
|
15 |
% |
|
|
3,926 |
|
|
|
10 |
% |
Depreciation and amortization |
|
37,174 |
|
|
|
27,440 |
|
|
|
35 |
% |
|
|
28,708 |
|
|
|
29 |
% |
Share-based compensation |
|
4,044 |
|
|
|
7,826 |
|
|
|
(48 |
)% |
|
|
8,188 |
|
|
|
(51 |
)% |
Foreign exchange gain, net |
|
(32,297 |
) |
|
|
(58,560 |
) |
|
|
45 |
% |
|
|
(61,267 |
) |
|
|
47 |
% |
Other, net |
|
4,338 |
|
|
|
7,714 |
|
|
|
(44 |
)% |
|
|
8,071 |
|
|
|
(46 |
)% |
Loss on impairment of long-lived assets |
|
47,455 |
|
|
|
— |
|
|
n/m |
|
|
|
— |
|
|
n/m |
|
||
Non-House membership revenues |
|
(9,131 |
) |
|
|
(8,301 |
) |
|
|
(10 |
)% |
|
|
(8,685 |
) |
|
|
(5 |
)% |
Other revenues |
|
(69,803 |
) |
|
|
(72,592 |
) |
|
|
4 |
% |
|
|
(75,947 |
) |
|
|
8 |
% |
Other operating expenses |
|
62,167 |
|
|
|
65,463 |
|
|
|
(5 |
)% |
|
|
68,489 |
|
|
|
(9 |
)% |
House-Level Contribution |
$ |
65,304 |
|
|
$ |
45,448 |
|
|
|
44 |
% |
|
$ |
47,549 |
|
|
|
37 |
% |
Operating Gain (Loss) Margin |
|
(2 |
)% |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|||
House-Level Contribution Margin |
|
31 |
% |
|
|
24 |
% |
|
|
|
|
|
24 |
% |
|
|
|
||
|
For the 13 Weeks Ended |
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31,
|
|
|
January 1,
|
|
|
Change % |
|
|
January 1, 2023
|
|
|
Constant Currency
|
|
|||||
|
Actuals |
|
|
|
|
|
|
|
|||||||||||
|
(Unaudited, dollar amounts in thousands) |
|
|||||||||||||||||
Operating income (loss) |
$ |
(23,156 |
) |
|
$ |
36,010 |
|
|
n/m |
|
|
$ |
37,674 |
|
|
n/m |
|
||
General and administrative |
|
40,202 |
|
|
|
36,695 |
|
|
|
10 |
% |
|
|
38,391 |
|
|
|
5 |
% |
Pre-opening expenses |
|
4,311 |
|
|
|
3,753 |
|
|
|
15 |
% |
|
|
3,926 |
|
|
|
10 |
% |
Depreciation and amortization |
|
37,174 |
|
|
|
27,440 |
|
|
|
35 |
% |
|
|
28,708 |
|
|
|
29 |
% |
Share-based compensation |
|
4,044 |
|
|
|
7,826 |
|
|
|
(48 |
)% |
|
|
8,188 |
|
|
|
(51 |
)% |
Foreign exchange gain, net |
|
(32,297 |
) |
|
|
(58,560 |
) |
|
|
45 |
% |
|
|
(61,267 |
) |
|
|
47 |
% |
Other, net |
|
4,338 |
|
|
|
7,714 |
|
|
|
(44 |
)% |
|
|
8,071 |
|
|
|
(46 |
)% |
Loss on impairment of long-lived assets |
|
47,455 |
|
|
|
— |
|
|
n/m |
|
|
|
— |
|
|
n/m |
|
||
House membership revenues |
|
(86,636 |
) |
|
|
(68,823 |
) |
|
|
(26 |
)% |
|
|
(72,004 |
) |
|
|
(20 |
)% |
In-House revenues |
|
(125,220 |
) |
|
|
(120,674 |
) |
|
|
(4 |
)% |
|
|
(126,252 |
) |
|
|
1 |
% |
In-House operating expenses |
|
146,552 |
|
|
|
144,049 |
|
|
|
2 |
% |
|
|
150,707 |
|
|
|
(3 |
)% |
Total Other Contribution |
$ |
16,767 |
|
|
$ |
15,430 |
|
|
|
9 |
% |
|
$ |
16,143 |
|
|
|
4 |
% |
Operating Gain (Loss) Margin |
|
(2 |
)% |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|||
Other Contribution Margin |
|
21 |
% |
|
|
19 |
% |
|
|
|
|
|
19 |
% |
|
|
|
||
A reconciliation of Net loss to Adjusted EBITDA for the Fiscal Years ending December 31, 2023 and January 1, 2023 is set forth below:
|
|
For the Fiscal Year Ended |
|
|
Percent Change |
|
||||||||||
|
|
December 31,
|
|
|
January 1,
|
|
|
Actuals |
|
|
Constant
|
|
||||
|
|
(Unaudited, dollar amounts in thousands) |
|
|||||||||||||
Net loss |
|
$ |
(117,088 |
) |
|
$ |
(219,780 |
) |
|
|
47 |
% |
|
|
47 |
% |
Depreciation and amortization |
|
|
111,403 |
|
|
|
99,930 |
|
|
|
11 |
% |
|
|
11 |
% |
Interest expense, net |
|
|
84,136 |
|
|
|
71,499 |
|
|
|
18 |
% |
|
|
17 |
% |
Income tax expense |
|
|
10,811 |
|
|
|
5,131 |
|
|
n/m |
|
|
n/m |
|
||
EBITDA |
|
|
89,262 |
|
|
|
(43,220 |
) |
|
n/m |
|
|
n/m |
|
||
Gain (loss) on sale of property and other, net |
|
|
1,038 |
|
|
|
(390 |
) |
|
n/m |
|
|
n/m |
|
||
Share of (income) loss of equity method investments |
|
|
(1,900 |
) |
|
|
(3,941 |
) |
|
|
52 |
% |
|
|
52 |
% |
Foreign exchange loss, net(2) |
|
|
(36,196 |
) |
|
|
69,600 |
|
|
n/m |
|
|
n/m |
|
||
Share of equity method investments EBITDA |
|
|
9,319 |
|
|
|
7,577 |
|
|
|
23 |
% |
|
|
22 |
% |
Adjusted share-based compensation expense(3) |
|
|
20,230 |
|
|
|
25,101 |
|
|
|
(19 |
)% |
|
|
(20 |
)% |
Operational reorganization and severance expense(4) |
|
|
— |
|
|
|
9,339 |
|
|
n/m |
|
|
n/m |
|
||
Membership credits expense(5) |
|
|
— |
|
|
|
1,201 |
|
|
n/m |
|
|
n/m |
|
||
Out of period operating lease liability adjustment(6) |
|
|
(5,779 |
) |
|
|
(5,439 |
) |
|
|
(6 |
)% |
|
|
(5 |
)% |
Employment related settlement expense(7) |
|
|
— |
|
|
|
913 |
|
|
n/m |
|
|
n/m |
|
||
Brand license inventory provision(8) |
|
|
4,571 |
|
|
|
— |
|
|
n/m |
|
|
n/m |
|
||
Impairment relating to long lived assets(9) |
|
|
47,455 |
|
|
|
— |
|
|
n/m |
|
|
n/m |
|
||
Adjusted EBITDA |
|
$ |
128,000 |
|
|
$ |
60,741 |
|
|
n/m |
|
|
n/m |
|
||
- See “Non-GAAP Financial Measures” for an explanation of our constant currency results.
- Primarily driven by foreign exchange volatility impacting our non-USD debt and working capital.
- For 52 Weeks Ended January 1, 2023 this excludes a $5 million non-cash expense, which is included within Share-based compensation expense in the Consolidated Statements of Operations, separately presented within Operational reorganization and severance expense below. It also includes an expense of $3 million, which is excluded from Share-based compensation expense in the Consolidated Statements of Operations, in respect of a non-recurring cash payment in connection with the Growth Shares.
- For 52 Weeks Ended January 1, 2023 this represents $4m of expenses incurred with respect to a strategic reorganization program of the Company's operations and support teams. This also includes a non-cash share-based compensation expense of $5 million. The non-cash share-based compensation expense is reported within Share-based compensation expense.
- Beginning on March 14, 2020, due to the COVID-19 pandemic, we issued membership credits to active members of our closed Houses to be redeemed for certain Soho Home products and services. Membership credits were a one-time goodwill gesture, issued as a marketing offer to active members. The expense represents our best estimate of the cost in fulfilling the membership credits.
- Represents out-of-period adjustments correcting errors with respect to the estimation of the operating lease liability identified during fiscal 2023 and 2022 but relating to fiscal years 2022, 2021, 2020 & 2019 and 2021, 2020 & 2019 respectively. There is no material impact from the correction of this error to previously reported periods.
- Represents expenses incurred with respect to a historic settlement of an employment related legal claim. The Company has remediated its operating processes to mitigate a similar issue from recurring.
- In November 2023, the Company entered into a licensing agreement with a third party for the Company’s Cowshed brand. This has restricted the Company’s ability to sell certain inventories it acquired prior to entering into the agreement. As such, the Company has provided in full for inventory it is unable to recover as a result of the entering into the agreement.
- Following the Company's impairment review in fiscal 2023, the Company recognized $47 million of impairment losses on long-lived assets (comprised of $33 million in respect of Operating lease assets and $14 million of Property and equipment, net), of which $37 million is in respect of Soho Works North America.
A Reconciliation of Operating loss to House-Level Contribution & Other Contribution for the Fiscal Year ending December 31, 2023 and January 1, 2023 is set forth below:
|
|
For the Fiscal Year Ended |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
December 31,
|
|
|
January 1,
|
|
|
Change % |
|
|
January 1, 2023
|
|
|
Constant Currency
|
|
|||||
|
|
Actuals |
|
|
|
|
|
|
|
|||||||||||
|
|
(Unaudited, dollar amounts in thousands) |
|
|||||||||||||||||
Operating loss |
|
$ |
(23,003 |
) |
|
$ |
(147,481 |
) |
|
|
84 |
% |
|
$ |
(152,137 |
) |
|
|
85 |
% |
General and administrative |
|
|
143,583 |
|
|
|
123,435 |
|
|
|
16 |
% |
|
|
124,506 |
|
|
|
15 |
% |
Pre-opening expenses |
|
|
18,604 |
|
|
|
14,081 |
|
|
|
32 |
% |
|
|
14,203 |
|
|
|
31 |
% |
Depreciation and amortization |
|
|
111,403 |
|
|
|
99,930 |
|
|
|
11 |
% |
|
|
100,797 |
|
|
|
11 |
% |
Share-based compensation |
|
|
20,230 |
|
|
|
27,681 |
|
|
|
(27 |
)% |
|
|
27,921 |
|
|
|
(28 |
)% |
Foreign exchange (gain) loss, net |
|
|
(36,196 |
) |
|
|
69,600 |
|
|
n/m |
|
|
|
70,204 |
|
|
n/m |
|
||
Other, net |
|
|
5,963 |
|
|
|
9,703 |
|
|
|
(39 |
)% |
|
|
9,787 |
|
|
|
(39 |
)% |
Loss on impairment of long-lived assets |
|
|
47,455 |
|
|
|
— |
|
|
n/m |
|
|
|
— |
|
|
n/m |
|
||
Non-House membership revenues |
|
|
(36,159 |
) |
|
|
(30,057 |
) |
|
|
(20 |
)% |
|
|
(30,318 |
) |
|
|
(19 |
)% |
Other revenues |
|
|
(292,326 |
) |
|
|
(272,803 |
) |
|
|
(7 |
)% |
|
|
(274,606 |
) |
|
|
(6 |
)% |
Other operating expenses |
|
|
258,483 |
|
|
|
250,336 |
|
|
|
3 |
% |
|
|
252,508 |
|
|
|
2 |
% |
House-Level Contribution |
|
$ |
218,037 |
|
|
$ |
144,425 |
|
|
|
51 |
% |
|
$ |
142,865 |
|
|
|
53 |
% |
Operating Loss margin |
|
|
(2 |
)% |
|
|
(15 |
)% |
|
|
|
|
|
(15 |
)% |
|
|
|
||
House-Level Contribution Margin |
|
|
27 |
% |
|
|
22 |
% |
|
|
|
|
|
22 |
% |
|
|
|
||
|
|
For the Fiscal Year Ended |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
December 31,
|
|
|
January 1,
|
|
|
Change % |
|
|
January 1, 2023
|
|
|
Constant Currency
|
|
|||||
|
|
Actuals |
|
|
|
|
|
|
|
|||||||||||
|
|
(Unaudited, dollar amounts in thousands) |
|
|||||||||||||||||
Operating loss |
|
$ |
(23,003 |
) |
|
$ |
(147,481 |
) |
|
|
84 |
% |
|
$ |
(152,137 |
) |
|
|
85 |
% |
General and administrative |
|
|
143,583 |
|
|
|
123,435 |
|
|
|
16 |
% |
|
|
124,506 |
|
|
|
15 |
% |
Pre-opening expenses |
|
|
18,604 |
|
|
|
14,081 |
|
|
|
32 |
% |
|
|
14,203 |
|
|
|
31 |
% |
Depreciation and amortization |
|
|
111,403 |
|
|
|
99,930 |
|
|
|
11 |
% |
|
|
100,797 |
|
|
|
11 |
% |
Share-based compensation |
|
|
20,230 |
|
|
|
27,681 |
|
|
|
(27 |
)% |
|
|
27,921 |
|
|
|
(28 |
)% |
Foreign exchange (gain) loss, net |
|
|
(36,196 |
) |
|
|
69,600 |
|
|
n/m |
|
|
|
70,204 |
|
|
n/m |
|
||
Other, net |
|
|
5,963 |
|
|
|
9,703 |
|
|
|
(39 |
)% |
|
|
9,787 |
|
|
|
(39 |
)% |
Loss on impairment of long-lived assets |
|
|
47,455 |
|
|
|
— |
|
|
n/m |
|
|
|
— |
|
|
n/m |
|
||
House membership revenues |
|
|
(325,328 |
) |
|
|
(242,752 |
) |
|
|
(34 |
)% |
|
|
(243,696 |
) |
|
|
(33 |
)% |
In-House revenues |
|
|
(482,066 |
) |
|
|
(426,602 |
) |
|
|
(13 |
)% |
|
|
(428,653 |
) |
|
|
(12 |
)% |
In-House operating expenses |
|
|
589,357 |
|
|
|
524,929 |
|
|
|
12 |
% |
|
|
529,484 |
|
|
|
11 |
% |
Total Other Contribution |
|
$ |
70,002 |
|
|
$ |
52,524 |
|
|
|
33 |
% |
|
$ |
52,416 |
|
|
|
34 |
% |
Operating Loss margin |
|
|
(2 |
)% |
|
|
(15 |
)% |
|
|
|
|
|
(15 |
)% |
|
|
|
||
Other Contribution Margin |
|
|
21 |
% |
|
|
17 |
% |
|
|
|
|
|
17 |
% |
|
|
|
||
A reconciliation of Net Debt as of December 31, 2023 and January 1, 2023 is set forth below:
|
As of |
|
|
Percentage change |
|
||||||||||
|
December 31, 2023 |
|
|
January 1, 2023 |
|
|
Actuals |
|
|
Constant Currency |
|
||||
|
(Unaudited) |
|
|||||||||||||
Current portion of debt, net of debt issuance costs |
$ |
29,290 |
|
|
$ |
25,617 |
|
|
|
14 |
% |
|
|
13 |
% |
Debt, net of current portion and debt issuance costs |
|
635,576 |
|
|
|
579,904 |
|
|
|
10 |
% |
|
|
9 |
% |
Property mortgage loans, net of debt issuance costs |
|
137,099 |
|
|
|
116,187 |
|
|
|
18 |
% |
|
|
17 |
% |
Total debt |
|
801,965 |
|
|
|
721,708 |
|
|
|
11 |
% |
|
|
10 |
% |
Less: Cash and cash equivalents |
|
161,656 |
|
|
|
182,115 |
|
|
|
(11 |
)% |
|
|
(12 |
)% |
Less: Restricted cash |
|
1,951 |
|
|
|
7,928 |
|
|
|
(75 |
)% |
|
|
(76 |
)% |
Net debt |
$ |
638,358 |
|
|
$ |
531,665 |
|
|
|
20 |
% |
|
|
19 |
% |
Unaudited Consolidated Statements of Operations for fiscal years 2023 and 2022 and 13 weeks ended December 31, 2023 and January 1, 2023:
|
For the 13 Weeks Ended |
|
|
For the Fiscal Year Ended |
|
||||||||||||||
(in thousands except for per share data) |
December 31, 2023 |
|
|
January 1, 2023 |
|
|
December 31, 2023 |
|
|
January 1, 2023 |
|
||||||||
|
(Unaudited) |
|
|||||||||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Membership revenues |
$ |
|
95,767 |
|
|
$ |
|
77,124 |
|
|
$ |
|
361,487 |
|
|
$ |
|
272,809 |
|
In-House revenues |
|
|
125,220 |
|
|
|
|
120,674 |
|
|
|
|
482,066 |
|
|
|
|
426,602 |
|
Other revenues |
|
|
69,803 |
|
|
|
|
72,592 |
|
|
|
|
292,326 |
|
|
|
|
272,803 |
|
Total revenues |
|
|
290,790 |
|
|
|
|
270,390 |
|
|
|
|
1,135,879 |
|
|
|
|
972,214 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
In-House operating expenses |
|
|
(146,552 |
) |
|
|
|
(144,049 |
) |
|
|
|
(589,357 |
) |
|
|
|
(524,929 |
) |
Other operating expenses |
|
|
(62,167 |
) |
|
|
|
(65,463 |
) |
|
|
|
(258,483 |
) |
|
|
|
(250,336 |
) |
General and administrative expenses |
|
|
(40,202 |
) |
|
|
|
(36,695 |
) |
|
|
|
(143,583 |
) |
|
|
|
(123,435 |
) |
Pre-opening expenses |
|
|
(4,311 |
) |
|
|
|
(3,753 |
) |
|
|
|
(18,604 |
) |
|
|
|
(14,081 |
) |
Depreciation and amortization |
|
|
(37,174 |
) |
|
|
|
(27,440 |
) |
|
|
|
(111,403 |
) |
|
|
|
(99,930 |
) |
Share-based compensation |
|
|
(4,044 |
) |
|
|
|
(7,826 |
) |
|
|
|
(20,230 |
) |
|
|
|
(27,681 |
) |
Foreign exchange gain (loss), net |
|
|
32,297 |
|
|
|
|
58,560 |
|
|
|
|
36,196 |
|
|
|
|
(69,600 |
) |
Loss on impairment of long-lived assets |
|
|
(47,455 |
) |
|
|
|
— |
|
|
|
|
(47,455 |
) |
|
|
|
— |
|
Other, net |
|
|
(4,338 |
) |
|
|
|
(7,714 |
) |
|
|
|
(5,963 |
) |
|
|
|
(9,703 |
) |
Total operating expenses |
|
|
(313,946 |
) |
|
|
|
(234,380 |
) |
|
|
|
(1,158,882 |
) |
|
|
|
(1,119,695 |
) |
Operating income (loss) |
|
|
(23,156 |
) |
|
|
|
36,010 |
|
|
|
|
(23,003 |
) |
|
|
|
(147,481 |
) |
Other (expense) income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net |
|
|
(24,609 |
) |
|
|
|
(18,551 |
) |
|
|
|
(84,136 |
) |
|
|
|
(71,499 |
) |
(Loss) gain on sale of property and other, net |
|
|
(1,634 |
) |
|
|
|
(1,139 |
) |
|
|
|
(1,038 |
) |
|
|
|
390 |
|
Share of income (loss) of equity method investments |
|
|
(2,511 |
) |
|
|
|
1,515 |
|
|
|
|
1,900 |
|
|
|
|
3,941 |
|
Total other expense, net |
|
|
(28,754 |
) |
|
|
|
(18,175 |
) |
|
|
|
(83,274 |
) |
|
|
|
(67,168 |
) |
Income (loss) before income taxes |
|
|
(51,910 |
) |
|
|
|
17,835 |
|
|
|
|
(106,277 |
) |
|
|
|
(214,649 |
) |
Income tax (expense) benefit |
|
|
(5,425 |
) |
|
|
|
(2,061 |
) |
|
|
|
(10,811 |
) |
|
|
|
(5,131 |
) |
Net (loss) Income |
|
|
(57,335 |
) |
|
|
|
15,774 |
|
|
|
|
(117,088 |
) |
|
|
|
(219,780 |
) |
Net (income) loss attributable to non-controlling interests |
|
|
340 |
|
|
|
|
(2,248 |
) |
|
|
|
(865 |
) |
|
|
|
(800 |
) |
Net income (loss) attributable to Soho House & Co Inc. |
$ |
|
(56,995 |
) |
|
$ |
|
13,526 |
|
|
$ |
|
(117,953 |
) |
|
$ |
|
(220,580 |
) |
Net income (loss) per share attributable to Class A and Class B common stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted |
$ |
|
(0.29 |
) |
|
$ |
|
0.07 |
|
|
$ |
|
(0.60 |
) |
|
$ |
|
(1.10 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted (Note 17) |
|
|
195,126 |
|
|
|
|
196,879 |
|
|
|
|
195,590 |
|
|
|
|
199,985 |
|
Unaudited Consolidated Statements of Cash flows for the 52 weeks ended December 31, 2023 and January 1, 2023:
|
For the Fiscal Year Ended |
|
|||||
(in thousands) |
December 31, 2023 |
|
|
January 1, 2023 |
|
||
|
(Unaudited) |
|
|||||
Cash flows from operating activities |
|
|
|
|
|
||
Net income (loss) |
$ |
(117,088 |
) |
|
$ |
(219,780 |
) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
||
Depreciation and amortization |
$ |
111,403 |
|
|
$ |
99,930 |
|
Non-cash share-based compensation |
|
18,875 |
|
|
|
26,207 |
|
Deferred tax benefit |
|
(607 |
) |
|
|
237 |
|
Gain on sale of property and other, net |
|
1,038 |
|
|
|
(390 |
) |
Impairment relating to long-lived assets |
|
47,455 |
|
|
|
— |
|
Provision for write-down of inventories |
|
6,827 |
|
|
|
— |
|
Share of (income) loss of equity method investments |
|
(1,900 |
) |
|
|
(3,941 |
) |
Amortization of debt issuance costs |
|
2,808 |
|
|
|
4,315 |
|
Loss on debt extinguishment |
|
3,278 |
|
|
|
— |
|
PIK interest (settled), net of non-cash interest |
|
39,300 |
|
|
|
36,254 |
|
Distributions from equity method investees |
|
368 |
|
|
|
3,281 |
|
Foreign exchange (gain) loss, net |
|
(36,196 |
) |
|
|
69,600 |
|
Changes in assets and liabilities: |
|
|
|
|
|
||
Accounts receivable |
|
(14,228 |
) |
|
|
(24,109 |
) |
Inventories |
|
(9,747 |
) |
|
|
(31,029 |
) |
Operating leases, net |
|
(2,194 |
) |
|
|
25,190 |
|
Other operating assets |
|
(17,952 |
) |
|
|
(38,667 |
) |
Deferred revenue |
|
13,845 |
|
|
|
20,131 |
|
Accounts payable and accrued and other liabilities |
|
4,527 |
|
|
|
47,453 |
|
Net cash provided by operating activities |
|
49,812 |
|
|
|
14,682 |
|
Cash flows from investing activities |
|
|
|
|
|
||
Purchase of property and equipment |
|
(67,763 |
) |
|
|
(73,729 |
) |
Proceeds from sale of assets |
|
1,368 |
|
|
|
926 |
|
Purchase of intangible assets |
|
(17,966 |
) |
|
|
(21,672 |
) |
Property and casualty insurance proceeds received |
|
148 |
|
|
|
338 |
|
Net cash used in investing activities |
|
(84,213 |
) |
|
|
(94,137 |
) |
Cash flows from financing activities |
|
|
|
|
|
||
Repayment of borrowings |
|
(117,790 |
) |
|
|
(736 |
) |
Payment for debt extinguishment costs |
|
(1,686 |
) |
|
|
— |
|
Issuance of related party loans |
|
— |
|
|
|
3,217 |
|
Proceeds from borrowings |
|
140,000 |
|
|
|
105,795 |
|
Payments for debt issuance costs |
|
(2,822 |
) |
|
|
(1,860 |
) |
Principal payments on finance leases |
|
(407 |
) |
|
|
(528 |
) |
Principal payments on financing obligation |
|
— |
|
|
|
(1,578 |
) |
Distributions to non-controlling interests |
|
(390 |
) |
|
|
(1,206 |
) |
Purchase of treasury stock |
|
(12,000 |
) |
|
|
(50,000 |
) |
Additional IPO costs |
|
— |
|
|
|
(269 |
) |
Net cash provided by financing activities |
|
4,905 |
|
|
|
52,835 |
|
Effect of exchange rate changes on cash and cash equivalents, and restricted cash |
|
3,060 |
|
|
|
(3,999 |
) |
Net (decrease) increase in cash and cash equivalents, and restricted cash |
|
(26,436 |
) |
|
|
(30,619 |
) |
Cash, cash equivalents and restricted cash |
|
|
|
|
|
||
Beginning of period |
|
190,043 |
|
|
|
220,662 |
|
End of period |
$ |
163,607 |
|
|
$ |
190,043 |
|
|
For the Fiscal Year Ended |
|
|||||
(in thousands) |
December 31, 2023 |
|
|
January 1, 2023 |
|
||
|
(Unaudited) |
|
|||||
Cash, cash equivalents and restricted cash are comprised of: |
|
|
|
|
|
||
Cash and cash equivalents |
|
161,656 |
|
|
|
182,115 |
|
Restricted cash |
|
1,951 |
|
|
|
7,928 |
|
Cash, cash equivalents and restricted cash as of December 31, 2023 and January 1, 2023 |
$ |
163,607 |
|
|
$ |
190,043 |
|
Supplemental disclosures: |
|
|
|
|
|
||
Cash paid for interest |
$ |
32,254 |
|
|
$ |
29,893 |
|
Cash paid for income taxes |
|
5,541 |
|
|
|
585 |
|
Supplemental disclosures of non-cash investing and financing activities: |
|
|
|
|
|
||
Operating lease assets obtained in exchange for new operating lease liabilities |
$ |
124,779 |
|
|
$ |
133,743 |
|
Acquisitions of property and equipment under finance leases |
$ |
33 |
|
|
$ |
12,315 |
|
Accrued capital expenditures |
$ |
13,760 |
|
|
$ |
15,257 |
|
Unaudited Consolidated Balance Sheet as of December 31, 2023 and January 1, 2023:
|
As of |
|
|||||
(in thousands, except for par value and share data) |
December 31, 2023 |
|
|
January 1, 2023 |
|
||
|
(Unaudited) |
|
|||||
Assets |
|
|
|
|
|
||
Current assets |
|
|
|
|
|
||
Cash and cash equivalents |
$ |
161,656 |
|
|
$ |
182,115 |
|
Restricted cash |
|
1,951 |
|
|
|
7,928 |
|
Accounts receivable, net |
|
58,158 |
|
|
|
42,215 |
|
Inventories |
|
60,768 |
|
|
|
57,848 |
|
Prepaid expenses and other current assets |
|
112,512 |
|
|
|
91,101 |
|
Total current assets |
|
395,045 |
|
|
|
381,207 |
|
Property and equipment, net |
|
627,035 |
|
|
|
647,001 |
|
Operating lease assets |
|
1,150,165 |
|
|
|
1,085,579 |
|
Goodwill |
|
206,285 |
|
|
|
199,646 |
|
Other intangible assets, net |
|
127,240 |
|
|
|
125,968 |
|
Equity method investments |
|
21,695 |
|
|
|
21,629 |
|
Deferred tax assets |
|
740 |
|
|
|
295 |
|
Other non-current assets |
|
9,597 |
|
|
|
6,571 |
|
Total non-current assets |
|
2,142,757 |
|
|
|
2,086,689 |
|
Total assets |
$ |
2,537,802 |
|
|
$ |
2,467,896 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
||
Accounts payable |
$ |
70,316 |
|
|
$ |
80,741 |
|
Accrued liabilities |
|
84,815 |
|
|
|
84,112 |
|
Current portion of deferred revenue |
|
117,129 |
|
|
|
91,611 |
|
Indirect and employee taxes payable |
|
38,169 |
|
|
|
38,088 |
|
Current portion of debt, net of debt issuance costs |
|
29,290 |
|
|
|
25,617 |
|
Current portion of operating lease liabilities - sites trading less than one year |
|
1,721 |
|
|
|
4,176 |
|
Current portion of operating lease liabilities - sites trading more than one year |
|
49,436 |
|
|
|
35,436 |
|
Other current liabilities |
|
33,633 |
|
|
|
36,019 |
|
Total current liabilities |
|
424,509 |
|
|
|
395,800 |
|
Debt, net of current portion and debt issuance costs |
|
635,576 |
|
|
|
579,904 |
|
Property mortgage loans, net of debt issuance costs |
|
137,099 |
|
|
|
116,187 |
|
Operating lease liabilities, net of current portion - sites trading less than one year |
|
68,762 |
|
|
|
227,158 |
|
Operating lease liabilities, net of current portion - sites trading more than one year |
|
1,234,140 |
|
|
|
982,306 |
|
Finance lease liabilities |
|
78,481 |
|
|
|
76,638 |
|
Financing obligation |
|
76,624 |
|
|
|
76,239 |
|
Deferred revenue, net of current portion |
|
25,787 |
|
|
|
27,118 |
|
Deferred tax liabilities |
|
1,510 |
|
|
|
1,666 |
|
Other non-current liabilities |
|
5,941 |
|
|
|
256 |
|
Total non-current liabilities |
|
2,263,920 |
|
|
|
2,087,472 |
|
Total liabilities |
|
2,688,429 |
|
|
|
2,483,272 |
|
|
As of |
|
|||||
(in thousands, except for par value and share data) |
December 31, 2023 |
|
|
January 1, 2023 |
|
||
|
(Unaudited) |
|
|||||
Shareholders’ equity |
|
|
|
|
|
||
Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 64,208,851 shares issued and 53,741,731 outstanding as of December 31, 2023 and 62,189,717 issued and 53,722,597 outstanding as of January 1, 2023; Class B common stock, $0.01 par value, 500,000,000 shares authorized, 141,500,385 shares issued and outstanding as of December 31, 2023 and January 1, 2023 |
|
2,057 |
|
|
|
2,037 |
|
Additional paid-in capital |
|
1,231,941 |
|
|
|
1,213,086 |
|
Accumulated deficit |
|
(1,360,365 |
) |
|
|
(1,242,412 |
) |
Accumulated other comprehensive income |
|
30,000 |
|
|
|
54,853 |
|
Treasury stock, at cost; 10,467,120 shares as of December 31, 2023 and 8,467,120 shares as of January 1, 2023 |
|
(62,000 |
) |
|
|
(50,000 |
) |
Total shareholders’ deficit attributable to Soho House & Co Inc. |
|
(158,367 |
) |
|
|
(22,436 |
) |
Non-controlling interest |
|
7,740 |
|
|
|
7,060 |
|
Total shareholders’ deficit |
|
(150,627 |
) |
|
|
(15,376 |
) |
Total liabilities and shareholders’ equity |
$ |
2,537,802 |
|
|
$ |
2,467,896 |
|
Key Performance and Operating Metrics Evaluated by Management
In assessing the performance of our business, we consider a variety of operating and financial measures. These key measures include:
HOUSE MEMBERSHIP REVENUES. House Membership Revenues are comprised primarily of annual membership fees and one-time legacy registration fees from Soho House members which are amortized over 20 years. The one-time registration fee is no longer applicable to new members admitted from April 4, 2022, see House Introduction Credits below.
HOUSE INTRODUCTION CREDITS. New members admitted from April 4, 2022 have been required to purchase House Introduction Credits as part of their membership, per the House rules. House Introduction Credits are credits of an equivalent value to cash within Houses and are redeemable to purchase food and beverage items, and bedroom stays, at the Houses. House Introduction Credits expire after the first three months from the date of issuance, where legally permitted in the regions we operate, if not utilized or if the Company terminates a member’s House membership. House Introduction Credits are recognized upon issuance as deferred revenue on our consolidated balance sheets. Revenue from House Introduction Credits are recognized as In-House revenues when redeemed by members, and as breakage revenue within Membership revenues upon expiration or in the period that we are able to reliably estimate expected breakage to the extent that they are unredeemed, are recognized.
IN-HOUSE REVENUES. In-House revenues include all revenues realized within our Houses, including food and beverage, accommodation and spa products and treatments.
HOUSE REVENUES. House Revenues is defined as House Membership Revenues plus In-House revenues, less Non-House Membership Revenues. Our management views House Membership Revenues and In-House revenues as interrelated and their aggregation as important in tracking House performance. Although there is no minimum spend for any member on In-House offerings, nevertheless in practice most members consume food and beverage, accommodations and other offerings at our Houses. The pricing of our In-House offerings is reflective of the fact that the significant majority of In-House offerings that generate In-House revenues are consumed by members who also pay a membership fee in relation to that House, with pricing of such In-House offerings being identical for both members and non-members.
NUMBER OF SOHO HOUSES. The number of Soho Houses reflects the total number of Soho Houses in operation in any period, irrespective of whether each House is (i) controlled by us, (ii) operated through a non-controlling interest in a joint venture or (iii) operated through a management contract.
We review the number of members from all Houses to assess new member growth, total House Revenues, and House-Level Contribution.
TOTAL MEMBERS. Total members is defined as Soho House members plus Other members.
NUMBER OF SOHO HOUSE MEMBERS. Our Soho House membership model is an integral part of our business and has a significant impact on our profitability and financial performance. Typically, members hold an Every House membership or a Local House membership. Member count is the primary driver of Membership Revenues and is also a critical factor in In-House Revenues as members utilize the offerings that are provided within the Houses. Soho House members include all active, frozen and non-paying members.
The extent to which we achieve growth in our membership base, retain existing members and periodically increase our membership fee rates will impact our profitability. We have historically enjoyed strong member loyalty, reflected by very high retention rates. Robust demand for our memberships is also evidenced by considerable wait lists for our Houses.
The year-over-year increase in our total number of Soho House members is driven by a combination of increases in membership at existing Houses and members from new Houses.
NUMBER OF OTHER MEMBERS. Other members include members of Soho Works and Soho Friends and are key to our growth strategy and enhancing our Soho House member experience. Prior to August 2022, HOME+ membership, which is now included in Soho Friends, was also included. Like Soho House members, other memberships are an integral part of our business and we believe will have a significant impact on our profitability and financial performance in the future.
SOHO HOUSE MEMBER RETENTION. Soho House Member Retention is defined as the number of Adult Paying Members (being all Soho House members excluding child members and complimentary members) at the beginning of a period less the number of Adult Paying Members who canceled their membership during that same period (without giving any effect to Adult Paying Members who froze their memberships during such period), as a proportion of total Adult Paying Members at the beginning of such period.
FROZEN MEMBERS. Frozen Members refers to Soho House members who have elected to suspend their membership payments on a six, nine- or twelve-month basis during which period the member is not able to gain access to a Soho House site as a member, access our membership Apps, or book bedrooms or Cowshed treatments or products on discounted member rates. Frozen Members are not included in Adult Paying Members, but are included in the total number of Soho House members.
MEMBERSHIP REVENUES. Membership revenues are comprised of House Membership Revenues (as defined below) and Non-House Membership Revenues (as defined below). House Membership Revenues and Non-House Membership Revenues are each comprised primarily of annual membership fees and one-time registration fees which are amortized over 20 years. Membership revenues are a function of the number of members, membership mix, and membership pricing. For GAAP, we report Membership revenues only from Houses and sites in which we own a controlling interest. Our membership pricing varies by geographic segment and membership offering and, as such, our mix of House and Soho Works club openings can affect our revenue growth and profitability over time. Prices are generally higher in North America and the rest of the world compared with the UK and Europe. Membership revenues provide a stable and recurring source of revenues which have few direct costs and, as such, is a reliable and predictable source of cash flow.
HOUSE MEMBERSHIP REVENUES. House Membership Revenues is an important performance indicator and is defined above in the Non-GAAP reconciliation.
IN-HOUSE REVENUES. In-House revenues refer to all revenues realized within our Houses, and primarily includes revenues from food and beverage, accommodation, and spa products and treatments.
HOUSE REVENUES. House Revenues is an important performance indicator and is defined in “Non-GAAP Financial Measures."
OTHER REVENUES. Other revenues are defined as total revenues that are not realized within our Houses, including revenues from Scorpios, Soho Works and our stand-alone restaurants, procurement fees from Soho House Design, Soho Home and Cowshed retail products and other revenues from products and services that we provide outside of our Houses, as well as management fees from The Ned sites and The LINE and Saguaro hotels.
NON-HOUSE MEMBERSHIP REVENUES. Non-House Membership Revenues are comprised of Soho Works membership revenue, Soho Friends membership revenue and SOHO HOME+ membership revenue which was merged into Soho Friends membership at the beginning of August 2022.
ACTIVE APP USERS. Active App Users is defined as unique users who have logged into any of our membership Apps within the last three months.
AVERAGE DAILY RATE. is Average Daily Rate represents the average rental income per paid occupied room.
REVENUE PER AVAILABLE ROOM (RevPAR). The key industry standard for measuring hotel-operating performance is RevPAR, which is calculated by multiplying the percentage of occupied rooms to available rooms by the average daily rate realized. Where this is presented on a like-for like basis, RevPAR is adjusted for new or divested sites, for example Houses that were not open in the comparison period.
Forward Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance for fiscal 2024, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including important factors discussed under the caption “Risk Factors” in our annual report on form 10-K for the fiscal year ended January 1, 2023 and as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. In addition, we operate in rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this release relate only to events or information as of the date on which the statements are made in this release. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
About Soho House & Co:
Soho House & Co (SHCO) is a global membership platform of physical and digital spaces that connects a vibrant, diverse and global group of members. These members use the Soho House & Co platform to work, socialize, connect, create and flourish all over the world. We began with the opening of the first Soho House in 1995 and remain the only company to have scaled a private membership network with a global presence. Members around the world engage with Soho House & Co through our global collection, as at December 31, 2023, of 42 Soho Houses, 9 Soho Works, Scorpios Beach Club in Mykonos, Soho Home – our interiors and lifestyle retail brand – and our digital channels. The Ned in London, New York and Doha, The LINE and Saguaro hotels in North America also form part of Soho House & Co's wider portfolio.
For more information, please visit www.sohohouseco.com.
Source: Soho House & Co (SHCO)
View source version on businesswire.com: https://www.businesswire.com/news/home/20240315448030/en/
Contacts
Investor Relations
ir@sohohouseco.com
Media and Press
press@sohohouseco.com
