Membership Collective Group Inc. (MCG) Q3 2022 Earnings Call Transcript
- Membership Collective Group Inc. (NYSE:MCG ) Q3 2022 Earnings Conference Call November 16, 2022 9:00 AM ET Company Participants Thomas Allen - Chief Financial Officer Nick Jones - Founder Andrew Carnie - President & Incoming Chief Executive Officer Conference Call Participants Shaun Kelley - Bank of America Sharon Zackfia - William Blair Steven Zaccone - Citi Stephen Grambling - Morgan Stanley Operator Hello. My name is Chris and I'll be your conference operator today.
- 11/16/2022
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Membership Collective Group Announces Third Quarter 2022 Results
- LONDON--(BUSINESS WIRE)--Membership Collective Group Inc. (NYSE: MCG) (“MCG,” “Company,” “we” or “our”), a global membership platform that connects a vibrant, diverse, and global group of members, today announced results for the third quarter ended October 2, 2022. Third Quarter 2022 Financial Results Total Members grew to 211,351 from 193,370 in the second quarter 2022 and 46.3% year-over-year Soho House Members grew to 152,165 from 142,250 in the second quarter 2022, and 29.3% year-over-year Soho House Members grew to 152,165 from 142,250 in the second quarter 2022, and 29.3% year-over-year MCG Membership waitlist now sits at an all-time high of ~85,000 and retention rates continue at pre-pandemic levels Total revenues of $266.0 million, 48.2% year-over-year growth Membership revenues of $71.0m increased by 38.8% year-over-year, accounting for 26.7% of Total revenues In-House revenues grew to $108.5 million up 62.3% year-over-year Revenue Per Available Room (“RevPAR”) was 18.2% higher year-over-year on a Like-for-Like basis Revenue Per Available Room (“RevPAR”) was 18.2% higher year-over-year on a Like-for-Like basis Net loss attributable to Membership Collective Group Inc. was ($91.7m) or ($0.46) per share, inclusive of a $53.9 million non-cash foreign exchange charge Adjusted EBITDA of $20.3m, up $11.4m from the third quarter 2021 As part of a leadership succession plan, CEO Nick Jones will transition to Founder, with President Andrew Carnie becoming CEO “The key demand drivers of our business continue to remain strong, with Soho House members growing almost 30% year-on-year to over 152,000, and revenues for the Group up almost 50% in the quarter. Our expectations for strong revenue growth and membership this year remains unchanged. Given the continued appeal in Soho House, we expect to reach 190,000 Soho House members by the end of 2023,” said Nick Jones, Founder of MCG. “However we have lowered our EBITDA guidance to reflect costs and FX. Looking ahead, to reduce pressure on the business and give our members the best experience as we open, we are returning to our original target of 5-7 new Houses a year, reflective of our current signed pipeline until 2025. This includes delaying Mexico City and Bangkok to 2023.” “By prioritizing the business against what our members value and putting initiatives in place to operate more efficiency, we expect to achieve >10% EBITDA margins in 2023.” Summary of Financial Results for the Quarter Ending October 2, 2022 For the 13 Weeks Ended (in thousands, except shares and per share amount unless otherwise noted) October 2, 2022 October 3, 2021 Total revenues $ 266,046 $ 179,559 Membership revenues $ 71,023 $ 51,162 In-House revenues $ 108,488 $ 66,859 Other revenues $ 86,535 $ 61,538 Operating loss $ (70,581 ) $ (53,444 ) House-Level Contribution(1) $ 32,599 $ 23,950 House-Level Contribution margin (%)(1) 19 % 21 % Other Contribution(1) $ 19,753 $ 11,890 Other contribution margin (%)(1) 21 % 18 % Net loss attributable to MCG Inc. $ (91,668 ) $ (77,027 ) Adjusted EBITDA(1) $ 20,260 $ 8,820 Adjusted EBITDA margin (%)(1) 8 % 5 % Net debt(1)(2) $ 462,640 $ 326,226 (1) See “Non-GAAP Financial Measures” on page 6 for reconciliations of Non-GAAP measures to GAAP measures. (2) Net Debt is presented as of October 2, 2022 and October 3, 2021 respectively. Expenses listed below are not added back in Adjusted EBITDA: For the 13 Weeks Ended (in thousands, unless otherwise noted) October 2, 2022 October 3, 2021 Pre-opening expenses 2,555 $ 4,672 Non-cash rent 4,654 1,191 Deferred registration fees, net (489 ) 974 We delivered the following highlights in the third quarter of Fiscal 2022 1. Grow and Enhance Membership Membership continues to reach new highs benefitting from a record waitlist and continued high retention rates Soho House members grew to 152,165 from 142,250 in the second quarter 2022, and 29.3% year-over-year New Soho House openings continue to enhance membership value, with Soho House Balham and Copenhagen opening in the quarter In August 2022 we merged our HOME+ members into Friends members to enhance the value for HOME+ members while increasing our share of wallet We have adjusted focus on digital to align with member interest, re-aligning content and no longer pursuing a separate digital membership 2. Operational Excellence to Drive Profitability We saw continued recovery of In-House revenues growing by 62.3% to $108.5 million in Q3 2022, up from $66.9 million in Q3 2021 Our accommodation performance also continued to be strong, with RevPAR for Q3 2022 18.2% higher than Q3 2021 We achieved third quarter 2022 Adjusted EBITDA of $20.3 million, an increase of $11.4 million compared to the third quarter of 2021 While inflationary pressures persist during 2022, we have been able to offset some through pricing power and continued improvements in our purchasing across F&B For example, food and beverage cost of sales ratios have improved 120bps versus the third quarter 2019 We continue to see inflationary pressures and are recalibrating expenses to better match member behavior and utilization We are re-focusing our general and administrative spending on membership growth and experience, with target reductions on content, digital and other corporate functions without impacting the member experience Membership Summary for the Quarter Ending October 2, 2022 As of October 2, 2022 October 3, 2021 Total Members 211,351 144,503 Soho House 152,165 117,728 Frozen members 2,187 6,752 Soho Friends 52,698 17,898 Soho Works 6,488 4,497 HOME+ — 4,380 SH.APP Active Users 156,769 93,410 As of October 2, 2022 October 3, 2021 (Unaudited) Number of Soho Houses 38 32 North America 13 11 United Kingdom 13 11 Europe/RoW 12 10 Number of Soho House Members 152,165 117,728 North America 57,221 44,067 United Kingdom 58,106 47,341 Europe/RoW 30,374 22,013 All Other 6,464 4,307 Number of Other Members 59,186 26,775 North America 16,200 6,385 United Kingdom 35,969 18,372 Europe/RoW 7,017 2,018 Number of Total Members 211,351 144,503 Number of Active App Users 156,769 93,410 Memberships Total Members in the third quarter 2022 grew to 211,351 from 193,370 in the second quarter 2022 and by 46.3% year-over-year Total Soho House Members grew to 152,165 from 142,250 in the second quarter 2022, as retention rates remained strong, alongside membership intakes in both new and existing Houses Frozen Members declined to 2,187 at the end of the third quarter 2022, a further decrease of 423 since the end of the second quarter 2022. Frozen members as a % of total membership is below pre-pandemic levels Other Memberships including Soho Friends and Soho Works increased to 59,186 members, an increase of 8,066 from the end of second quarter 2022 and +121% increase year-on-year. In August 2022 we merged our HOME+ members into Friends members to enhance the value for HOME+ members while increasing our share of wallet Financing Membership Collective Group Inc. ended the third quarter 2022 with Cash and cash equivalents and Restricted cash of $235 million On November 10, 2022, we amended the existing £75.0 million senior revolving facility to extend the maturity date from January 25, 2024 to July 25, 2026 The Company repurchased 2,362,083 shares for $15 million during the third quarter 2022 Fiscal Guidance We’re updating our fiscal 2022 guidance. Our total Soho House members and revenue targets remains unchanged, but we lower EBITDA targets: FY2022 Guidance Old Range New Range** New Range YoY % Soho House Members 160,000 to 165,000 Unchanged 30% to 34% Total Membership Revenues $265 million to $275 million Unchanged 40% to 45% Total Revenues $910 million to $985 million Unchanged 62% to 76% Adjusted EBITDA* $70 million to $80 million $55 million to $60 million N/A *without adding back pre-opening costs, non cash rent and deferred registration fees of ~$35 million combined for fiscal 2022 as a whole **Assumes EUR/USD at 0.95 and GBP/USD at 1.04 for Q4 2022, to reflect latest bank estimates Conference Call and Webcast: A conference call and live webcast will be hosted to discuss these results on Wednesday, November 16, 2022, at 09:00 ET / 14:00 GMT. A live broadcast and accompanying presentation will be available at MCG’s website www.membershipcollectivegroup.com. To listen to the live conference call, please dial; USA: Participant Toll-Free Dial-In Number: +1 (800) 715-9871 Participant Toll Dial-In Number: +1 (646) 307-1963 UK: Participant UK Toll-Free Dial-In Number: +44 (0) 800 260 6466 Participant UK Toll Dial-In Number: +44 (0) 20 3481 4247 Conference ID: 7633905 A replay of the webcast will be available on the MCG website following the call for up to 90 days. 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 Appendix 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 Quarterly Report on 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.membershipcollectivegroup.com, free of charge, as well as 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 and Share-based compensation expense. 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, or general and administrative expenses. 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. 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 are 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 against purchases of 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. 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. 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, or general and administrative expenses. 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. REVENUE PER AVAILABLE ROOM. The key industry standard for measuring hotel-operating performance is RevPAR, which is calculated by multiplying the percentage of occupied rooms by the average daily room rate realized. 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 loss to Adjusted EBITDA for the 13 weeks ending October 2, 2022 and October 3, 2021 is set forth below: For the 13 Weeks Ended Percent Change October 2, 2022 October 3, 2021 Actuals Constant Currency(1) Actuals (Unaudited, dollar amounts in thousands, except share and per share amounts or unless otherwise noted) Net loss $ (91,373 ) $ (76,221 ) (20 )% (41 )% Depreciation and amortization 26,971 21,500 25 % 47 % Interest expense, net 18,453 20,827 (11 )% 4 % Income tax expense 3,013 2,868 5 % 23 % EBITDA (42,936 ) (31,026 ) (38 )% (62 )% Loss on sale of property and other, net 12 31 (61 )% (54 )% Share of profit of equity method investments (686 ) (949 ) 28 % 15 % Foreign exchange⁽²⁾ 53,910 14,599 n/m n/m Share of equity method investments adjusted EBITDA 1,978 1,848 7 % 26 % Adjusted share-based compensation expense⁽²⁾⁽³⁾ 3,980 15,281 (74 )% (69 )% Operational reorganization and severance expense⁽⁴⁾ 4,046 — n/m n/m Membership credits (rebate) expense⁽⁵⁾ (44 ) 898 n/m n/m COVID-19 related rebate⁽⁶⁾ — (376 ) n/m n/m Corporate financing and restructuring costs⁽⁷⁾ — 8,514 n/m n/m Adjusted EBITDA $ 20,260 $ 8,820 n/m n/m A Reconciliation of Operating loss to House-Level Contribution & Other Contribution for the 13 weeks ending October 2, 2022 and October 3, 2021 is set forth below: For the 13 Weeks Ended October 2, 2022 October 3, 2021 Change % October 3, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (70,581 ) $ (53,444 ) (32 )% $ (45,561 ) (55 )% General and administrative 30,807 24,369 26 % 20,775 48 % Pre-opening expenses 2,555 4,672 (45 )% 3,983 (36 )% Depreciation and amortization 26,971 21,500 25 % 18,329 47 % Share-based compensation 7,778 15,281 (49 )% 13,027 (40 )% Foreign exchange loss, net 53,910 14,599 n/m 12,446 n/m Other 912 8,863 (90 )% 7,556 (88 )% Non-House membership revenues (7,700 ) (4,731 ) (63 )% (4,033 ) (91 )% Other revenues (86,535 ) (61,538 ) (41 )% (52,461 ) (65 )% Other operating expenses 74,482 54,379 37 % 46,358 61 % House-Level Contribution $ 32,599 $ 23,950 36 % $ 20,417 60 % House-Level Contribution Margin 19 % 21 % 21 % For the 13 Weeks Ended October 2, 2022 October 3, 2021 Change % October 3, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (70,581 ) $ (53,444 ) (32 )% $ (45,561 ) (55 )% General and administrative 30,807 24,369 26 % 20,775 48 % Pre-opening expenses 2,555 4,672 (45 )% 3,983 (36 )% Depreciation and amortization 26,971 21,500 25 % 18,329 47 % Share-based compensation 7,778 15,281 (49 )% 13,027 (40 )% Foreign exchange loss, net 53,910 14,599 n/m 12,446 n/m Other 912 8,863 (90 )% 7,556 (88 )% House membership revenues (63,323 ) (46,431 ) (36 )% (39,582 ) (60 )% In-House revenues (108,488 ) (66,859 ) (62 )% (56,997 ) (90 )% In-House operating expenses 139,212 89,340 56 % 76,162 83 % Total Other Contribution $ 19,753 $ 11,890 66 % $ 10,136 95 % Other Contribution Margin 21 % 18 % 18 % A reconciliation of Net Debt as of October 2, 2022 and October 3, 2021 is set forth below: As of Percentage change October 2, 2022 October 3, 2021 Actuals Constant Currency Current portion of debt, net of debt issuance costs $ 897 $ 3,903 (77 )% (72 )% Debt, net of current portion and debt issuance costs 559,169 454,633 23 % 48 % Property mortgage loans, net of debt issuance costs 116,012 114,947 1 % 22 % Current portion of related party loans 21,663 21,565 0 % 21 % Related party loans, net of current portion and imputed interest — — n/m n/m Total debt 697,741 595,048 17 % 42 % Less: Cash and cash equivalents 227,896 259,341 (12 )% 6 % Less: Restricted cash 7,205 9,481 (24 )% (8 )% Net debt $ 462,640 $ 326,226 42 % 71 % 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: 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. 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, Soho Friends and SOHO HOME+ and are key to our growth strategy and enhancing our Soho House member experience. 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. 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. SH.APP ACTIVE USERS. SH.APP Active App Users is defined as unique users who have logged into our membership App within the last three months. 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 the fourth quarter of fiscal 2022, 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 2, 2022 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 Membership Collective Group: The Membership Collective Group (MCG) is a global membership platform of physical and digital spaces that connects a vibrant, diverse and global group of members. These members use the MCG 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 MCG through our global collection, as at October 2, 2022, of 38 Soho Houses, 9 Soho Works, The Ned in London and New York, Scorpios Beach Club in Mykonos, Soho Home – our interiors and lifestyle retail brand – and our digital channels. The LINE and Saguaro hotels in North America also form part of MCG’s wider portfolio. For more information, please visit www.membershipcollectivegroup.com. Source: Membership Collective Group (MCG)
- 11/16/2022
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Soho House's Parent Is Undervalued - I'm Buying Membership Collective Group
- Membership Collective Group is growing revenues quickly on the back of a global expansion of its network of private members' clubs. Nearly triple-digit revenue growth for its last reported quarter came as the price of its commons collapsed.
- 09/25/2022
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Membership Collective Group Inc. (MCG) CEO Nick Jones on Q2 2022 Results - Earnings Call Transcript
- Membership Collective Group Inc. (NYSE:MCG ) Q2 2022 Results Earnings Conference Call August 17, 2022 9:00 AM ET Company Participants Thomas Allen - Chief Financial Officer Nick Jones - Founder and Chief Executive Officer Andrew Carnie - President Conference Call Participants Steven Zaccone - Citigroup Shaun Kelley - Bank of America Ali Naqvi - HSBC Operator Good morning. My name is Rob and I'll be your conference operator today.
- 08/17/2022
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Membership Collective Group (MCG) Reports Q2 Loss, Tops Revenue Estimates
- Membership Collective (MCG) delivered earnings and revenue surprises of -127.78% and 3.25%, respectively, for the quarter ended June 2022. Do the numbers hold clues to what lies ahead for the stock?
- 08/17/2022
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Membership Collective Group Announces Second Quarter 2022 Results
- LONDON--(BUSINESS WIRE)--Membership Collective Group Inc. (NYSE: MCG) (“MCG,” “Company,” “we” or “our”), a global membership platform of physical and digital spaces that connects a vibrant, diverse, and global group of members, today announced results for the second quarter ended July 3, 2022. Second Quarter 2022 Financial Results Total Members grew to 193,370 from 171,927 in the first quarter 2022 and 51.3% year-over-year Soho House Members grew to 142,250 from 130,919 in the first quarter 2022, and 27.1% year-over-year Soho House Members grew to 142,250 from 130,919 in the first quarter 2022, and 27.1% year-over-year MCG Membership waitlist now sits at an all-time high of >81,500 and retention rates continue at pre-pandemic levels Total revenues of $243.8 million, 96.5% year-over-year growth Membership revenues of $65.9m increased by 46.9% year-over-year, accounting for 27.0% of Total revenues In-House revenues grew to $109.7 million up 139.5% year-over-year Revenue Per Available Room (“RevPAR”) was 39.6% higher year-over-year on a Like-for-Like basis. Revenue Per Available Room (“RevPAR”) was 39.6% higher year-over-year on a Like-for-Like basis. Net loss attributable to Membership Collective Group Inc. was ($82.0m) or ($0.41) per share Adjusted EBITDA of $15.4m, up $27.9m from the second quarter 2021 “We had a good second quarter, welcoming more than 21,000 new MCG members and successfully opening a new Soho House in Los Angeles and The Ned NoMad in New York City. We have since opened two more Soho Houses, in Balham (South London) and Copenhagen, in July. We were able to grow revenue almost 100% year-over-year, driven by continued strong membership growth, as well as recovery of our In-House and Other revenues. This growth was despite significant FX headwinds and some continued COVID impact, most noticeably in Hong Kong,” said Nick Jones, Founder and CEO of MCG. “We continue to increase our EBITDA and remain confident in our membership targets. We are on track to meet our target of nine new Soho House openings this year, as well as two new Ned sites in New York and Doha, and a new The LINE in San Francisco. We update our fiscal 2022 guidance primarily to reflect the impact of FX and Hong Kong on our reported numbers.” Summary of Financial Results for the Quarter Ending July 3, 2022 For the 13 Weeks Ended (in thousands, except shares and per share amount unless otherwise noted) July 3, 2022 July 4, 2021 Total revenues $ 243,770 $ 124,079 Membership revenues $ 65,889 $ 44,863 In-House revenues $ 109,685 $ 45,793 Other revenues $ 68,196 $ 33,423 Operating loss $ (65,488 ) $ (46,860 ) House-Level Contribution(1) $ 36,632 $ 16,743 House-Level Contribution margin (%)(1) 22 % 19 % Other Contribution(1) $ 12,707 $ (3,779 ) Other contribution margin (%)(1) 17 % (10 )% Net loss attributable to MCG Inc. $ (81,959 ) $ (55,987 ) Adjusted EBITDA(1) $ 15,385 $ (12,556 ) Adjusted EBITDA margin (%)(1) 6 % (10 )% Net debt(1)(2) $ 443,766 $ 631,276 Weighted average Class A and Class B Shares outstanding 201,203,671 151,449,262 Basic and diluted loss per share $ (0.41 ) $ (0.43 ) (1) See “Non-GAAP Financial Measures” on page 6 for reconciliations of Non-GAAP measures to GAAP measures. (2) Net Debt is presented as of July 3, 2022 and July 4, 2021 respectively. Expenses listed below are not added back in Adjusted EBITDA: For the 13 Weeks Ended (in thousands, unless otherwise noted) July 3, 2022 July 4, 2021 Pre-opening expenses $ 3,741 $ 6,493 Non-cash rent(1) (2,413 ) (4,716 ) Deferred registration fees, net (507 ) 10 (1) Non-cash rent for the 13 weeks ended July 3, 2022 includes an out of period operating lease liability adjustment of $6,185. If this was excluded, Non-cash rent would have been $3,772. We delivered the following highlights across our strategic priorities in the second quarter of Fiscal 2022 1. Global Expansion of Soho Houses Five Soho Houses have opened year-to-date, and we remain on track for nine Soho House openings this fiscal year The total number of Soho Houses increased to 36 by the end of the second quarter. We have now opened 20 new Houses since the beginning of 2018 including the two new openings in July Cities Without Houses (CWH) launched in 10 new cities in the second quarter 2. Enhance Membership Value New Soho House openings continue to enhance membership value Our members' event, Soho Desert House, at Coachella drove 1.6 billion impressions. Members enjoyed performances by Billie Eilish and Anderson.Paak, as well as benefits from our event partners including Moet, Bacardi and Hugo Boss The results of our efforts are reflected in record absolute membership growth in the quarter, a record waitlist, and continued high retention rates Soho House members grew to 142,250 from 130,919 in the first quarter 2022, and 27.1% year-over-year 3. House Foundations After publishing our ESG report earlier this year, we have made good progress towards our 2030 goals We increased the number of Houses separating food waste by 20%, meeting our 2022 goal early Soho Mentorship and Soho Fellowship – programs that help provide access and support in the creative industries – launched in four new locations: Brighton, Istanbul, Los Angeles and Balham (South London) We have grown the number of mentees and fellows ~70% since YE 2021 4. Operational Excellence While Delivering Growth We saw continued recovery of In-House revenue, driven by members coming back to the Houses and new offerings. Overall In-House revenues grew by 139.5% to $109.7 million in Q2 2022, up from $45.8 million in Q2 2021 Our accommodation performance continued to be strong, with RevPAR for Q2 2022 39.6% higher than Q2 2021 While inflationary pressures persist during 2022, to date, we have been able to offset most through pricing power and continued improvements in our purchasing across F&B and our retail business For example, food and beverage cost of sales ratios have improved 230bps versus the second quarter 2019 House-level contribution margin increased 260bps year-over-year We achieved second quarter 2022 Adjusted EBITDA of $15.4 million, an increase of $27.9 million compared to the second quarter of 2021 5. Launch & Grow New Membership Brands Soho Friends, Soho Works and HOME+ memberships continued to increase, adding 10,112 members during the second quarter to reach 51,120 members. We have already welcomed ~700 new members to the newly opened The Ned NoMad in New York, and look forward to opening The Ned Doha later this year Soho Works continued to benefit from the trend towards flexible working, with memberships growing 106% vs the second quarter of 2021 New Soho Home collections resonated well - revenues in Q2 2022 increased by 105% YoY. Members continue to account for a significant proportion of revenues 6. Drive Digital Experience We now have 150k active app users 86% of our members now use the Member app (SH.APP), logging in 19 times on average across the quarter. We saw approximately 75% of all bookings through the SH.APP The Soho Connect product has been introduced to House members, with a view to optimize it in preparation for launching of digital membership Sohohouse.com unique users increased 12% quarter-over-quarter and 69% year-over-year Membership Summary for the Quarter Ending July 3, 2022 As of July 3, 2022 July 4, 2021 Total Members 193,370 127,840 Total Soho House members 142,250 111,910 Frozen members 2,610 10,800 Soho Friends 37,839 9,340 Soho Works 6,442 3,155 HOME+ 6,839 3,435 SH.APP Active Users 150,259 94,678 As of July 3, 2022 July 4, 2021 (Unaudited) Number of Soho Houses 36 30 North America 13 11 United Kingdom 12 11 Europe/ROW 11 8 Number of Soho House Members 142,250 111,910 North America 53,879 42,296 United Kingdom 54,764 45,277 Europe/ROW 27,755 19,750 All Other 5,852 4,587 Number of Other Members 51,120 15,930 North America 13,421 3,268 United Kingdom 32,013 12,012 Europe/ROW 5,686 650 Number of Active App Users 150,259 94,678 Memberships Total Members in the second quarter 2022 grew to 193,370 from 171,927 in the first quarter 2022 and by 51.3% year-over-year Total Soho House Members grew to 142,250 from 130,919 in the first quarter 2022, as retention rates remained strong, alongside membership intakes in both new and existing Houses Frozen Members totaled 2,610 at the end of the second quarter 2022, a further decrease of 909 since the end of the first quarter 2022. Frozen as a % of total membership is below pre-pandemic levels. Membership reactivations occurred across all regions Other Memberships including Soho Friends, Soho Works and HOME+ increased to 51,120 members, an increase of 10,112 from the end of the first quarter 2022 and +221% increase year-on-year Financing Membership Collective Group Inc. ended the second quarter 2022 with Cash and cash equivalents and Restricted cash of $266 million The Company has repurchased 2,254,505 shares for $17 million during the second quarter 2022 We’re updating our fiscal 2022 guidance. Our total Soho House members targets remains unchanged, but we lower revenue and EBITDA targets mostly reflecting headwinds from FX and Hong Kong: FY2022 Guidance Old Range New Range** New Range YoY % Soho House Members 160,000 to 165,000 Unchanged 30% to 34% Total Membership Revenues $270 million to $280 million $265 million to $275 million 40% to 45% Total Revenues $950 million to $1,025 million $910 million to $985 million 62% to 76% Adjusted EBITDA* $80 million to $90 million $70 million to $80 million N/A *without adding back pre-opening costs, non-cash rent and deferred registration fees which we currently estimate to be a total of ~$40 million combined for fiscal 2022 as a whole **Assumes EUR/USD at 1.02 and GBP/USD at 1.21 for H2 2022, to reflect prevailing rates Conference Call and Webcast: A conference call and live webcast will be hosted to discuss these results on Wednesday, August 17, 2022, at 09:00 EDT / 14:00 BST. A live broadcast and accompanying presentation will be available at MCG’s website www.membershipcollectivegroup.com. To listen to the live conference call, please dial; USA: Participant Toll-Free Dial-In Number: +1 (800) 715-9871 Participant Toll Dial-In Number: +1 (646) 307-19631 UK: Participant UK Toll-Free Dial-In Number: +44 (0) 800 260 6466 Participant UK Toll Dial-In Number: +44 (0) 20 3481 4247 Conference ID: 7633905 A replay of the webcast will be available on the MCG website following the call for up to 90 days. 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 Appendix 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 Quarterly Report on 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.membershipcollectivegroup.com, free of charge, as well as 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 and Share-based compensation expense. 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, or general and administrative expenses. 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. 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 are 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 against purchases of 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. 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. 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, or general and administrative expenses. 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. REVENUE PER AVAILABLE ROOM. The key industry standard for measuring hotel-operating performance is RevPAR, which is calculated by multiplying the percentage of occupied rooms by the average daily room rate realized. 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 loss to Adjusted EBITDA for the 13 weeks ending July 3, 2022 and July 4, 2021 is set forth below: For the 13 Weeks Ended Percent Change July 3, 2022 July 4, 2021 Actuals Constant Currency(1) Actuals (Unaudited, dollar amounts in thousands, except share and per share amounts or unless otherwise noted) Net loss $ (83,555 ) $ (57,108 ) (46 )% (64 )% Depreciation and amortization 22,688 21,905 4 % 16 % Interest expense, net 18,778 17,018 10 % 24 % Income tax expense 509 3 n/m n/m EBITDA (41,580 ) (18,182 ) n/m n/m Loss (gain) on sale of property and other, net 122 (6,903 ) n/m n/m Share of (profit) loss of equity method investments (1,342 ) 130 n/m n/m Foreign exchange(2) 57,176 1,055 n/m n/m Share of equity method investments adjusted EBITDA 2,365 1,456 62 % 83 % Share-based compensation expense(2) 4,274 2,548 68 % 89 % Membership credits expense(3) 555 1,404 (60 )% (56 )% COVID-19 related rebate(4) — (272 ) n/m n/m Corporate financing and restructuring costs(5) — 6,208 n/m n/m Out of period operating lease liability adjustment(6) (6,185 ) — n/m n/m Adjusted EBITDA $ 15,385 $ (12,556 ) n/m n/m See “Non-GAAP Financial Measures” for an explanation of our constant currency results. See “Comparison of the 13 Weeks Ended July 3, 2022 and July 4, 2021 - Other Expenses” for information regarding the increase in foreign exchange and share-based compensation period-on-period. 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. Represent items of additional expense incurred in order to comply with health and safety protocols while keeping certain Houses open during the pandemic. In 2021, we received a government grant related to business rates in the UK which reduced our COVID-19 related expenses. Our Corporate financing and restructuring costs vary significantly each year and period presented based on financing and restructuring being undertaken. Such costs do not relate to normal, recurring, cash operating expenses. In the second quarter of 2021, these costs consisted of IPO-related costs of $6 million. Represents an out-of-period adjustment correcting an error with respect to the estimation of the operating lease liability identified during the 13 week period ended July 3, 2022 but relating to the 13 week period ended April 3, 2022 and fiscal years 2022, 2020 and 2019. There is no material impact from the correction of this error to previously reported periods. A Reconciliation of Operating loss to House-Level Contribution & Other Contribution for the 13 weeks ending July 3, 2022 and July 4, 2021 is set forth below: For the 13 Weeks Ended July 3, 2022 July 4, 2021 Change % April 4, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (65,488 ) $ (46,860 ) (40 )% $ (41,694 ) (57 )% General and administrative 26,647 19,500 37 % 17,350 54 % Pre-opening expenses 3,741 6,493 (42 )% 5,777 (35 )% Depreciation and amortization 22,688 21,905 4 % 19,490 16 % Share-based compensation 4,274 2,548 68 % 2,267 89 % Foreign exchange loss, net 57,176 1,055 n/m 939 n/m Other 301 8,323 (96 )% 7,405 (96 )% Non-House membership revenues (7,269 ) (3,483 ) n/m (3,099 ) n/m Other revenues (68,196 ) (33,423 ) n/m (29,738 ) n/m Other operating expenses 62,758 40,685 54 % 36,200 73 % House-Level Contribution $ 36,632 $ 16,743 n/m $ 14,897 n/m Operating loss margin (27 )% (38 )% (38 )% House-Level Contribution Margin 22 % 19 % 19 % For the 13 Weeks Ended July 3, 2022 July 4, 2021 Change % April 4, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (65,488 ) $ (46,860 ) (40 )% $ (41,694 ) (57 )% General and administrative 26,647 19,500 37 % 17,350 54 % Pre-opening expenses 3,741 6,493 (42 )% 5,777 (35 )% Depreciation and amortization 22,688 21,905 4 % 19,490 16 % Share-based compensation 4,274 2,548 68 % 2,267 89 % Foreign exchange loss, net 57,176 1,055 n/m 939 n/m Other 301 8,323 (96 )% 7,405 (96 )% House membership revenues (58,620 ) (41,380 ) (42 )% (36,818 ) (59 )% In-House revenues (109,685 ) (45,793 ) n/m (40,745 ) n/m In-House operating expenses 131,673 70,430 87 % 62,666 n/m Total Other Contribution $ 12,707 $ (3,779 ) n/m $ (3,362 ) n/m Operating loss margin (27 )% (38 )% (38 )% Other Contribution Margin 17 % (10 )% (10 )% A reconciliation of Net Debt as of July 3, 2022 and July 4, 2021 is set forth below: As of Percentage change July 3, 2022 July 4, 2021 Actuals Constant Currency Current portion of debt, net of debt issuance costs $ 11,133 $ 96,678 (88 )% (87 )% Debt, net of current portion and debt issuance costs 559,631 457,169 22 % 40 % Property mortgage loans, net of debt issuance costs 115,845 114,773 1 % 15 % Current portion of related party loans 423 592 (29 )% (18 )% Related party loans, net of current portion and imputed interest 23,060 19,011 21 % 38 % Total debt 710,092 688,223 3 % 18 % Cash and cash equivalents (259,065 ) (48,980 ) n/m n/m Restricted cash (7,261 ) (7,967 ) 9 % (4 )% Net Debt $ 443,766 $ 631,276 (30 )% (20 )% 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: 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. 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, Soho Friends and SOHO HOME+ and are key to our growth strategy and enhancing our Soho House member experience. 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. 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. NON-HOUSE MEMBERSHIP REVENUES. Non-House Membership Revenues are comprised of Soho Works membership revenues, Soho Friends membership revenues and SOHO HOME+ membership revenues. SH.APP ACTIVE USERS. SH.APP Active App Users is defined as unique users who have logged into our membership App within the last three months. 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 the second half of fiscal 2022, 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 2, 2022 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 Membership Collective Group: The Membership Collective Group (MCG) is a global membership platform of physical and digital spaces that connects a vibrant, diverse and global group of members. These members use the MCG 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 MCG through our global collection, as at July 3, 2022, of 36 Soho Houses, 9 Soho Works, The Ned in London and New York, Scorpios Beach Club in Mykonos, Soho Home – our interiors and lifestyle retail brand – and our digital channels. The LINE and Saguaro hotels in North America also form part of MCG’s wider portfolio. For more information, please visit www.membershipcollectivegroup.com.
- 08/17/2022
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5 High-Performing Stocks Ron Baron and Daniel Loeb Both Own
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Membership Collective Group Inc. (MCG) CEO Nick Jones on Q1 2022 Results - Earnings Call Transcript
- Membership Collective Group Inc. (NYSE:MCG ) Q1 2022 Earnings Conference Call May 18, 2022 8:30 AM ET Company Participants Greg Feehely - Director, Investor Relations Nick Jones - Founder and Chief Executive Officer Andrew Carnie - President Humera Afzal - Chief Financial Officer Conference Call Participants Steven Zaccone - Citi Stephen Grambling - Goldman Sachs Joseph Greff - JP Morgan Operator Good morning. My name is Rob, and I'll be your conference operator today.
- 05/18/2022
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Membership Collective Group Announces First Quarter 2022 Results; Introduces Fiscal 2022 Guidance
- LONDON--(BUSINESS WIRE)--Membership Collective Group Inc. (NYSE: MCG) (“MCG,” “Company,” “we” or “our”), a global membership platform of physical and digital spaces that connects a vibrant, diverse, and global group of members, today announced results for the first quarter ended April 3, 2022. First Quarter 2022 Financial Results Total Members in the first quarter 2022 grew to 171,927 from 155,836 in the fourth quarter 2021 and by 44.3% year-over-year Soho House Members grew to 130,919 from 122,807 in the fourth quarter 2021, and 17.6% year-over-year Soho House Members grew to 130,919 from 122,807 in the fourth quarter 2021, and 17.6% year-over-year MCG Membership waitlist now sits at an all-time high of > 79,000 with pre-pandemic retention rates First quarter 2022 Total revenue of $192.0 million, 165.2% growth compared to the first quarter 2021 First quarter 2022 Membership revenues increased by 45.1% year-over-year, accounting for 30.6% of Total revenues In-House revenues grew to $87.8 million in the first quarter, up from $16.3 million compared to the first quarter 2021 Revenue Per Available Room (“RevPAR”) for the first quarter was 112.0% higher than the first quarter 2021 Revenue Per Available Room (“RevPAR”) for the first quarter was 112.0% higher than the first quarter 2021 First quarter 2022 Net loss attributable to Membership Collective Group Inc. was ($60.5m) or ($0.30) per share First quarter 2022 Adjusted EBITDA of $2.3m up $25.1m from the first quarter 2021 We’re introducing fiscal 2022 guidance on the back of first quarter performance and current trading to date “We’ve had a good start to the year, welcoming more than 16,000 new MCG members and successfully opening two new Soho Houses. Our promising revenue growth in the quarter was led by rising membership numbers and increased demand at our existing Houses, which accelerated in February and March and grew in-house revenues by over 400% vs. the same period in 2021”, said Nick Jones, Founder and CEO of MCG. “Given the current performance across all business areas, today we are introducing fiscal 2022 guidance including full-year member, revenue and Adjusted EBITDA targets. While the current consumer outlook is challenging, we’re confident in our ability to deliver on these goals through the operational improvements we continue to make every day. Our third House of the year, Holloway House in Los Angeles, opened in May and we remain on track to meet our target of nine new openings in fiscal 2022, as well as two new Ned sites in New York and Doha.” Summary of Financial Results for the Quarter Ending April 3, 2022 For the 13 Weeks Ended (in thousands, unless otherwise noted) April 3, 2022 April 4, 2021 Total revenues $ 192,008 $ 72,401 Membership revenues 58,773 40,493 In-House revenues 87,755 16,259 Other revenues 45,480 15,649 Operating loss (47,422 ) (63,560 ) House-Level Contribution(1) 29,746 10,123 House-Level Contribution margin (%)(1) 21 % 18 % Other Contribution(1) 4,634 (11,724 ) Other contribution margin (%)(1) 9 % (71 )% Net loss attributable to MCG Inc. (60,479 ) (90,479 ) Adjusted EBITDA(1) 2,330 (22,792 ) Adjusted EBITDA margin (%)(1) 1 % (31 )% Net debt(1)(2) 423,517 598,432 (1) See “Non-GAAP Financial Measures” on page 6 for reconciliations of Non-GAAP measures to GAAP measures. (2) Net Debt is presented as of April 3, 2022 and April 4, 2021 respectively. Expenses listed below are not added back in Adjusted EBITDA: For the 13 Weeks Ended (in thousands, unless otherwise noted) April 3, 2022 April 4, 2021 Pre-opening expenses $ 4,032 $ 4,825 Non-cash rent 3,403 10,423 Deferred registration fees, net 2,389 (399 ) We delivered the following highlights across our strategic priorities in the first quarter of Fiscal 2022 1. Global Expansion of Soho Houses Two Soho House openings during the first quarter 2022, we remain on track for nine Soho House openings in total for this fiscal year. Total number of Soho Houses increased to 35 by the end of the first quarter. We have now opened 18 new Houses since the beginning of 2018 including the launch of Holloway House in Los Angeles in the second quarter of 2022. Soho House Members grew to 130,919 from 122,807 in the fourth quarter 2021, and 17.6% year-over-year. MCG Membership waitlist now sits at an all-time high of >79,000 with pre-pandemic retention rates. 2. Enhance Membership Value For the first time since the onset of COVID-19, we hosted a full calendar of member events during the first quarter across our UK and North America houses, driving footfall into our Houses. For example, we offered several days of varied programming including musical acts such as George Clinton, Sister Sledge, Japanese Breakfast Club INTL and many more at our Austin Soho House. Our members loved these events because their House became a hub for internationally known talent, and great experiences, spanning genres and generations. For example, we offered several days of varied programming including musical acts such as George Clinton, Sister Sledge, Japanese Breakfast Club INTL and many more at our Austin Soho House. Our members loved these events because their House became a hub for internationally known talent, and great experiences, spanning genres and generations. 3. Launch & Grow New Membership Brands Soho Friends, Soho Works and Home+ memberships continued to increase adding 7,979 members during the first quarter to reach 41,008 members. Soho Works continued to benefit from the trend towards flexible working, with memberships growing 401% vs the first quarter of 2021. Across all our Soho Works sites, approximately 30% of our space is offices for rent, with global office occupancy approximating 100% at the end of the first quarter. New Soho Home collections resonated well - revenues and margins continued to grow rapidly in the first quarter of 2022. Revenues in Q1 2022 increased by 150% YoY. Members continue to account for 74% of revenues. 4. Drive Digital Experience 81% of our members now use the Member app (SH.APP) on average 2-3 times per week. We saw approximately 775k bookings through the SH.APP, accounting for 75% of all bookings, representing a 500bps increase. We have made further enhancements to our connect features, increasing member engagement by 600 bps compared to the fourth quarter 2021. 37% of our members now connect digitally. We are currently Beta testing our Soho Connect app, which will provide the next level of digital connectivity to our members. The new product is on track to introduce to House members this summer. 5. Operational Excellence while Delivering Growth We saw continued recovery of In-House revenue despite the impact of Omicron. Overall In-House revenues grew by 440% to $87.8 million in Q1 2022, up from $16.3 million in Q1 2021. Our accommodation performance improved markedly in February and March with RevPAR for Q1 2022 112% higher than Q1 2021. While inflationary pressures persist during 2022, to date, we have been able to offset most through pricing power and continued improvements in our purchasing across F&B and our retail business. For example, food and beverage cost of sales ratios have actually improved 260 bps versus the first quarter 2019 We achieved first quarter 2022 Adjusted EBITDA of $2.3 million, an increase of $25.1 million compared to the first quarter of 2021. 6. Underpinned by House Foundations We have published our first ESG Report highlighting our key initiatives and goals for 2030 including: We strengthen our commitment to help people from underrepresented or lower-socioeconomic backgrounds get access to the creative industries. By 2030, 5% of our annual Soho House membership intake to be part of one of our creative access programs. To ensure our business does as little harm to the environment as possible, we set environmental goals including to be net zero on carbon emissions by 2030 and reduce waste across all our operations globally by 50%. We strengthen our commitment to help people from underrepresented or lower-socioeconomic backgrounds get access to the creative industries. By 2030, 5% of our annual Soho House membership intake to be part of one of our creative access programs. To ensure our business does as little harm to the environment as possible, we set environmental goals including to be net zero on carbon emissions by 2030 and reduce waste across all our operations globally by 50%. Membership Summary for the Quarter Ending April 3, 2022 As of April 3, 2022 April 4, 2021 Total Members 171,927 119,185 Soho House 130,919 111,311 Frozen members 3,519 16,544 Soho Friends 30,141 4,075 Soho Works 5,581 1,113 HOME+ 5,286 2,686 SH.APP Active Users 123,733 76,308 Memberships Total Members in the first quarter 2022 grew to 171,927 from 155,836 in the fourth quarter 2021 and by 44.3% year-over-year. Soho House Members grew to 130,919 from 122,807 in the fourth quarter 2021, as retention rates remained strong, alongside membership intakes in both new and existing Houses. Frozen Members totaled 3,519 at the end of the first quarter 2022, a further decrease of 935 since the end of the fourth quarter 2021, below pre-pandemic levels. Membership reactivations occurred across all regions. Other Memberships including Soho Friends, Soho Works and HOME+ increased to 41,008 members, an increase of 7,979 from the end of the fourth quarter 2021 and +421% increase year-on-year. Financing Membership Collective Group Inc. ended the first quarter 2022 with Cash and Cash equivalents and Restricted cash of $285 million. As previously noted, on March 9, 2022, we exercised our option under the Goldman Sachs Senior Secured Note Purchase Agreement to issue $100 million of additional notes. The Company repurchased 324,972 shares for $2.6 million during the first quarter 2022. We’re introducing fiscal 2022 guidance on the back of first quarter performance and current trading to date: FY2022 Guidance Range YoY % Soho House Members 160,000 to 165,0000 30% to 34% Total Membership Revenues $270 million to $280 million 30% to 48% Total Revenues $950 million to $1,025 million 69% to 83% Adjusted EBITDA* $80 million to $90 million N/A *without adding back pre-opening costs, non-cash rent and deferred registration fees which we currently estimate to be a total of ~$60 million combined for fiscal 2022 as a whole Conference Call and Webcast: A conference call and live webcast will be hosted to discuss these results on Wednesday, May 18, 2022, at 08:30 EDT / 13:30 BST. A live broadcast and accompanying presentation will be available at MCG’s website www.membershipcollectivegroup.com. To listen to the live conference call, please dial; USA: Participant Toll-Free Dial-In Number: (888) 500-3691 Participant Toll Dial-In Number: (646) 307-1951 UK: Participant UK Toll-Free Dial-In Number: +44.800.524.4258 Participant UK Toll Dial-In Number: +44.20.8610.3526 Conference ID: 7633905 A replay of the webcast will be available on the MCG website following the call for up to 90 days. 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 Appendix for a definition of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures. The information in this presentation should be read in conjunction with our Quarterly Report on 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.membershipcollectivegroup.com, free of charge, as well as 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 and Share-based compensation expense. 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, or general and administrative expenses. 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. HOUSE MEMBERSHIP REVENUES. House Membership Revenues are comprised primarily of annual membership fees and one-time registration fees from Soho House members which are amortized over 20 years. 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. 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, or general and administrative expenses. 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. REVENUE PER AVAILABLE ROOM. The key industry standard for measuring hotel-operating performance is RevPAR, which is calculated by multiplying the percentage of occupied rooms by the average daily room rate realized. 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 loss to Adjusted EBITDA for the 13 weeks ending April 3, 2022 and April 4, 2021 is set forth below: For the 13 Weeks Ended Percent Change April 3, 2022 April 4, 2021 Actuals Constant Currency(1) Actuals (Unaudited, dollar amounts in thousands) Net loss $ (60,626 ) $ (93,037 ) 35 % 32 % Depreciation and amortization 22,831 17,845 28 % 33 % Interest expense, net 15,717 29,604 (47 )% (45 )% Income tax benefit (452 ) (823 ) 45 % 43 % EBITDA (22,530 ) (46,411 ) 51 % 50 % Loss on sale of property and other, net (1,663 ) — n/m n/m Share of loss of equity method investments (398 ) 696 n/m n/m Foreign exchange 17,074 14,867 15 % 19 % Share of equity method investments adjusted EBITDA 1,339 871 54 % 60 % Share-based compensation expense 7,803 2,129 n/m n/m Membership credits expense(2) 705 2,750 (74 )% (73 )% COVID-19 related charges(3) — 31 n/m n/m Corporate financing and restructuring costs(4) — 2,275 n/m n/m Adjusted EBITDA $ 2,330 $ (22,792 ) n/m n/m (1) See “Non-GAAP Financial Measures—Constant Currency” for an explanation of our constant currency results. (2) 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. (3) Represent items of additional expense incurred in order to comply with health and safety protocols while keeping certain Houses open during the pandemic. (4) Our Corporate financing and restructuring costs vary significantly each year and period presented based on financing and restructuring being undertaken. Such costs do not relate to normal, recurring, cash operating expenses. A Reconciliation of Operating loss to House-Level Contribution & Other Contribution for the 13 weeks ending April 3, 2022 and April 4, 2021 is set forth below: For the 13 Weeks Ended April 3, 2022 April 4, 2021 Change % April 4, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (47,422 ) $ (63,560 ) 25 % $ (61,146 ) 22 % General and administrative 29,286 16,505 77 % 15,878 84 % Pre-opening expenses 4,032 4,825 (16 )% 4,642 (13 )% Depreciation and amortization 22,831 17,845 28 % 17,167 33 % Share-based compensation 7,803 2,129 n/m 2,048 n/m Foreign exchange loss, net 17,074 14,867 15 % 14,302 19 % Other 776 5,788 (87 )% 5,568 (86 )% Non-House membership revenues (6,787 ) (820 ) n/m (789 ) n/m Other revenues (45,480 ) (15,649 ) n/m (15,055 ) n/m Other operating expenses 47,633 28,193 69 % 27,122 76 % House-Level Contribution $ 29,746 $ 10,123 n/m $ 9,739 n/m Operating loss margin (25 )% (88 )% (88 )% House-Level Contribution Margin 21 % 18 % 18 % For the 13 Weeks Ended April 3, 2022 April 4, 2021 Change % April 4, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (47,422 ) $ (63,560 ) 25 % $ (61,146 ) 22 % General and administrative 29,286 16,505 77 % 15,878 84 % Pre-opening expenses 4,032 4,825 (16 )% 4,642 (13 )% Depreciation and amortization 22,831 17,845 28 % 17,167 33 % Share-based compensation 7,803 2,129 n/m 2,048 n/m Foreign exchange loss, net 17,074 14,867 15 % 14,302 19 % Other 776 5,788 (87 )% 5,568 (86 )% House membership revenues (51,986 ) (39,673 ) (31 )% (38,166 ) (36 )% In-House revenues (87,755 ) (16,259 ) n/m (15,641 ) n/m In-House operating expenses 109,995 45,809 n/m 44,069 n/m Total Other Contribution $ 4,634 $ (11,724 ) n/m $ (11,279 ) n/m Operating loss margin (25 )% (88 )% (88 )% Other Contribution Margin 9 % (71 )% (71 )% A reconciliation of Net Debt as of April 3, 2022 and April 4, 2021 is set forth below: As of Percentage change April 3, 2022 April 4, 2021 Actuals Constant Currency Current portion of debt, net of debt issuance costs $ 10,775 $ 103,039 (90 )% (89 )% Debt, net of current portion and debt issuance costs 561,129 441,071 27 % 34 % Property mortgage loans, net of debt issuance costs 115,671 114,973 1 % 6 % Current portion of related party loans 450 589 (24 )% (20 )% Related party loans, net of current portion and imputed interest 20,494 17,463 17 % 23 % Total debt 708,519 677,135 5 % 10 % Cash and cash equivalents (277,196 ) (71,674 ) n/m n/m Restricted cash (7,806 ) (7,029 ) (11 )% (17 )% Net Debt $ 423,517 $ 598,432 (29 )% (26 )% 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: 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. 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, Soho Friends and SOHO HOME+ and are key to our growth strategy and enhancing our Soho House member experience. 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. 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. NON-HOUSE MEMBERSHIP REVENUES. Non-House Membership Revenues are comprised of Soho Works membership revenues, Soho Friends membership revenues and SOHO HOME+ membership revenues. SH.APP ACTIVE USERS. SH.APP Active App Users is defined as unique users who have logged into our membership App within the last three months. 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 2022, 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 2, 2022 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 Membership Collective Group: The Membership Collective Group (MCG) is a global membership platform of physical and digital spaces that connects a vibrant, diverse and global group of members. These members use the MCG 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 MCG through our global collection of 35 Soho Houses, 9 Soho Works, The Ned in London, Scorpios Beach Club in Mykonos, Soho Home – our interiors and lifestyle retail brand – and our digital channels. The LINE and Saguaro hotels in North America also form part of MCG’s wider portfolio. For more information, please visit www.membershipcollectivegroup.com.
- 05/18/2022
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Membership Collective Group to Announce First Quarter 2022 Results
- LONDON--(BUSINESS WIRE)--The Membership Collective Group Inc. (“MCG”), (NYSE: MCG) - the global membership platform comprised of Soho House, Soho Home, Soho Works, Scorpios Beach Club, The Ned and The Line and Saguaro Hotels - will release its first quarter 2022 financial results on Wednesday, May 18, 2022. A conference call and live webcast will be hosted to discuss these results on Wednesday, May 18, 2022, at 08:30 EDT / 13:30 GMT. A live broadcast and accompanying presentation will be availa
- 05/04/2022
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Membership Collective Group Inc. (MCG) CEO Nick Jones on Q4 2021 Results - Earnings Call Transcript
- Membership Collective Group Inc. (MCG) CEO Nick Jones on Q4 2021 Results - Earnings Call Transcript
- 03/16/2022
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Membership Collective Group Announces Fiscal Year and Fourth Quarter 2021 Results and Provides Business Update
- LONDON--(BUSINESS WIRE)--Membership Collective Group Inc. (NYSE: MCG) (“MCG,” “Company,” “we” or “our”), a global membership platform of physical and digital spaces that connects a vibrant, diverse, and global group of members, today announced results for the fiscal year and fourth quarter ended January 2, 2022. “It’s been a year of strong growth for MCG, despite what at times have been challenging conditions for our Houses across the world, especially with the emergence of the Omicron COVID variant in December which impacted the business during one of our busiest periods,” said Nick Jones, Founder and CEO of MCG. “This year has started more promisingly, with February revenues in our Soho Houses and restaurants ahead of 2019 levels and our waitlist exceeding 70,000 for the first time. Our proven ability to deliver new Houses and unprecedented demand for our memberships gives us confidence to increase our Soho House openings to nine this year and 8-10 per year thereafter, and the expectation to beat our previous Soho House membership goal by 25% in 2022.” Fiscal Year 2021 Financial Results Fiscal Year 2021 Total revenues increased by 46% year-over-year to $560.6m; member first focus drove strong growth despite pandemic disruption Fiscal Year 2021 Membership revenues increased by 7% year-over-year, accounting for 34% of Total revenues Fiscal Year 2021 Net loss attributable to Membership Collective Group Inc. was ($265.4m) or ($1.88) per share Fiscal Year 2021 Adjusted EBITDA of $(24.0m), a $20.1m improvement compared to the fiscal year 2020 despite inflationary pressures Fourth Quarter 2021 Financial Results Fourth Quarter 2021 Total revenues increased 158% from Q4 2020 to $184.5m, reflecting strong start to the quarter before the impact of the Omicron COVID variant on peak trading in December Fourth Quarter 2021 Membership revenues increased by 24% year-over-year, accounting for 29% of Total revenues Fourth Quarter 2021 Net loss attributable to Membership Collective Group Inc. was ($41.9m) or ($0.21) per share Fourth Quarter 2021 Adjusted EBITDA of $2.6m up $21.7m from the Fourth Quarter 2020 Summary of Financial Results for the Quarter and Fiscal Year Ending January 2, 2022 For the 13 Weeks Ended For the Fiscal Year Ended (in thousands, unless otherwise noted) January 2, 2022 January 3, 2021 January 2, 2022 January 3, 2021 Total revenues $ 184,515 $ 71,641 $ 560,554 $ 384,376 Membership revenues 52,671 42,351 189,189 176,910 In-House revenues 89,023 25,630 217,934 126,774 Other revenues 42,821 3,660 153,431 80,692 Operating loss (24,162 ) (53,738 ) (188,026 ) (154,730 ) House-Level Contribution⁽¹⁾ 32,036 17,120 82,852 81,159 House-Level Contribution Margin (%)⁽¹⁾ 24 % 26 % 21 % 27 % Other Contribution⁽¹⁾ 5,323 (13,903 ) 1,710 (26,070 ) Other Contribution Margin (%)⁽¹⁾ 11 % n/m 1 % (31 )% Net loss attributable to MCG Inc. (41,902 ) (72,450 ) (265,395 ) (228,461 ) Adjusted EBITDA⁽¹⁾ 2,559 (19,124 ) (23,969 ) (44,081 ) Adjusted EBITDA Margin (%)⁽¹⁾ 1 % (27 )% (4 )% (11 )% Net Debt⁽¹⁾⁽²⁾ n/a n/a 382,387 736,416 (1) See “Non-GAAP Financial Measures” on page 6 for reconciliations of Non-GAAP measures to GAAP measures. (2) Net Debt is presented as of January 2, 2022 and January 3, 2021 respectively. Expenses listed below are not added back in Adjusted EBITDA: For the 13 Weeks Ended For the Fiscal Year Ended (in thousands, unless otherwise noted) January 2, 2022 January 3, 2021 January 2, 2022 January 3, 2021 Pre-opening expenses $ 5,304 $ 5,082 $ 21,294 $ 21,058 Non-cash rent 5,753 4,813 12,651 15,627 Deferred registration fees, net 3,878 (193 ) 4,463 1,149 Membership Summary for the Quarter and Fiscal Year Ending January 2, 2022 As of January 2, 2022 January 3, 2021 Total Members 155,836 118,761 Soho House 122,807 113,509 Frozen Members 4,454 15,154 Soho Friends 23,453 2,137 Soho Works 5,016 1,255 HOME+ 4,560 1,860 SH.APP Active Users 119,677 78,139 Memberships Total Members in the fourth quarter 2021 grew to 155,836 from 144,503 in the third quarter 2021 and by 31% year-over-year. COVID restrictions in some locations delayed a number of intakes in December, into the current fiscal year. Soho House Members grew to 122,807 from 117,728 in the third quarter 2021, as retention rates returned to pre-pandemic levels of 95% alongside membership intakes in both new and existing Houses. Frozen Members totaled 4,454 at the end of the fourth quarter 2021, a further decrease of 2,298 since the end of the third quarter 2021, and almost back to pre-pandemic levels. Membership reactivations occurred across all regions. Other Memberships including Soho Friends, Soho Works and SOHOHOME+ increased to 33,029 members, an increase of 6,254 from the end of the third quarter 2021 and +529% increase year-on-year. Soho House Number of Soho Houses increased to 33 in fiscal year 2021 with the opening of Soho House Rome in October 2021. We have now opened 15 new Houses since the beginning of 2018. Continued recovery of In-House Revenue despite Omicron Overall In-House revenues grew to $89.0m in Q4’21, up from $25.6m in Q4’20, and $66.9m in Q3’21 despite the significant impact of Omicron in December, a key trading period for MCG. Our accommodation performance was robust in October and November, and our Average Daily Rate (ADR) on average was 38% higher in Q4’21 than Q4’19 levels which helped offset lower occupancy levels and led to 4% comparable Revenue per Available Room (RevPAR) growth. Efficiency program continued to progress, notwithstanding inflationary pressures that the industry is facing. To combat inflationary pressures further, we implemented a further F&B price increase in our North American Houses during Q4. Overall our food and beverage cost of sales ratios improved 3% versus Q4’19 and 1% versus Q4’20 at our Houses. Member app (SH.APP) 81% of our members now use the SH.APP, a 57% increase during 2021. We saw 1.9m bookings go through our booking engine taking the overall adoption of online bookings to 72% by the end of 2021. The uptake of House Connect continues to increase with 31% of our members now engaging with it. Learnings from this, especially the matching algorithm, are being incorporated into our launch of Soho Connect – our digital-only membership which will launch in 2H 2022. Other Soho Home revenues in Q4’21 increased by 105% YoY, despite well flagged industry inventory supply issues which are now alleviating. Members continue to account for 74% of revenues. We opened an additional Soho.Home.Studio in New York in November, a 5,000 square foot retail space showcasing the latest Soho Home range. Scorpios Beach Club in Mykonos is a seasonal business and was closed for the quarter. The Ned our management fee continued to improve in the quarter, but remains below 2019 levels. Soho Friends Membership added over 5,500 members during the quarter to reach 23,453 members. Soho Works continued to benefit from the trend towards flexible working, with memberships increasing by a further 519 to 5,016 during the quarter. Across all our Soho Works sites, approximately 30% of our space is offices for rent, with global office occupancy at almost 100% at period end. The LINE and Saguaro Hotels performance continued to improve relative to Q3’21 with both occupancy and ADR increasing further. Liquidity Ended the year with Cash and Cash equivalents and Restricted Cash of $221m. We have also extended the maturity of our undrawn £75m ($99m) RCF facility with HSBC until January 25, 2024. Additionally, on March 9, we exercised our option under the Goldman Sachs Senior Secured Note Purchase Agreement to issue $100 million of additional notes. The net proceeds will be used for general corporate purposes. Current Outlook: The following forward-looking statement reflects MCG’s expectations as of March 16, 2022: We remain confident about the overall recovery of our MCG Group revenues given the positive momentum of Q4’21 carrying through into Q1’22. Our February 2022 revenues in our UK and US Houses and Restaurants, performed 15% and 3% above the comparative 2019 pre-pandemic levels, respectively. Total MCG membership increased by a further 6% in the first two months of the current quarter. Together with our high level of member retention, record waitlist numbers and growth from new Houses, membership continues to be a very valuable recurring revenue stream. We have accelerated our pipeline for site openings in 2022 to nine Soho Houses covering four new Countries. In the first quarter of 2022 we will have opened two new Soho Houses in Nashville and Brighton. This will be followed in April by Holloway House in West Hollywood. From fiscal 2023 onwards, we now aim to open 8-10 new Soho Houses per annum. With the increased Houses in our pipeline combined with the unprecedented demand for our memberships we feel confident in exceeding our membership goals this year. We remain cautious about the emergence of any future COVID-19 variants, along with continued inflationary pressures, particularly in energy supply. However, we have several cost control programs in progress to counter some of these pressures. Notwithstanding these headwinds we expect to deliver sustained margin growth within the short term and beyond. Conference Call and Webcast: The Membership Collective Group will host a conference call and live webcast to discuss these results and business outlook on March 16, 2022 at 08:30 EDT / 12.30 GMT. A live broadcast and accompanying presentation will be available at MCG’s website www.membershipcollectivegroup.com. To listen to the live conference call, please dial: UK +44 (0) 203 059 58 69 or US +1 (760) 294-1674. A replay of the webcast will be available on the MCG website following the call for up to 90 days. Non-GAAP Financial Measures This release 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. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax position, interest, depreciation, and amortization that we believe are not representative of our core business. We use these non-GAAP financial measures as operating metrics for business planning purposes and in measuring our performance. 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 and Share-based compensation expense. 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, or general and administrative expenses. 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. HOUSE MEMBERSHIP REVENUES. House Membership Revenues are comprised primarily of annual membership fees and one-time registration fees from Soho House members which are amortized over 20 years. 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. 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, or general and administrative expenses. 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. REVENUE PER AVAILABLE ROOM. The key industry standard for measuring hotel-operating performance is RevPAR, which is calculated by multiplying the percentage of occupied rooms by the average daily room rate realized. 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 loss to Adjusted EBITDA for the 13 weeks ending January 2, 2022 and January 3, 2021 is set forth below: For the 13 Weeks Ended Percent Change January 2, 2022 January 3, 2021 Actuals Constant Currency⁽¹⁾ Actuals (Unaudited, dollar amounts in thousands) Net loss $ (42,348 ) $ (75,849 ) 44 % 45 % Depreciation and amortization 22,363 22,852 (2 )% (4 )% Interest expense, net 16,933 21,459 (21 )% (22 )% Income tax benefit (1,154 ) (238 ) n/m n/m EBITDA (4,206 ) (31,776 ) 87 % 87 % Loss on sale of property and other, net 35 175 (80 )% (80 )% Share of loss of equity method investments 2,372 715 n/m n/m Foreign exchange (4,980 ) (6,992 ) 29 % 30 % Share of equity method investments adjusted EBITDA 487 949 (49 )% (50 )% Share-based compensation expense 6,702 1,976 n/m n/m Membership credits expense⁽²⁾ 2,871 5,874 (51 )% (52 )% COVID-19 related charges⁽³⁾ (47 ) 282 n/m n/m Corporate financing and restructuring costs⁽⁴⁾ (675 ) 11,160 n/m n/m Abandoned project and site closure costs — (1,487 ) n/m n/m Adjusted EBITDA $ 2,559 $ (19,124 ) n/m n/m See “Non-GAAP Financial Measures—Constant Currency” for an explanation of our constant currency results. 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. Represent items of additional expense incurred in order to comply with health and safety protocols while keeping certain Houses open during the pandemic. Our Corporate financing and restructuring costs vary significantly each year and period presented based on financing and restructuring being undertaken. Such costs do not relate to normal, recurring, cash operating expenses. A Reconciliation of Operating loss to House-Level Contribution & Other Contribution for the 13 weeks ending January 2, 2022 and January 3, 2021 is set forth below: For the 13 Weeks Ended January 2, 2022 January 3, 2021 Change % January 3, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (24,162 ) $ (53,738 ) 55 % $ (54,681 ) 56 % General and administrative 29,009 17,769 63 % 18,081 60 % Pre-opening expenses 5,304 5,082 4 % 5,171 3 % Depreciation and amortization 22,363 22,852 (2 )% 23,253 (4 )% Share-based compensation 6,702 1,976 n/m 2,011 n/m Foreign exchange loss, net (4,980 ) (6,992 ) 29 % (7,115 ) 30 % Other 3,123 16,268 (81 )% 16,553 (81 )% Non-House Membership Revenues (6,397 ) (920 ) n/m (936 ) n/m Other revenues (42,821 ) (3,660 ) n/m (3,724 ) n/m Other operating expenses 43,895 18,483 n/m 18,807 n/m House-Level Contribution $ 32,036 $ 17,120 87 % $ 17,420 84 % Operating loss margin (13 )% (75 )% (75 )% House-Level Contribution Margin 24 % 26 % 26 % For the 13 Weeks Ended January 2, 2022 January 3, 2021 Change % January 3, 2021 Constant Currency Constant Currency Change % Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (24,162 ) $ (53,738 ) 55 % $ (54,681 ) 56 % General and administrative 29,009 17,769 63 % 18,081 60 % Pre-opening expenses 5,304 5,082 4 % 5,171 3 % Depreciation and amortization 22,363 22,852 (2 )% 23,253 (4 )% Share-based compensation 6,702 1,976 n/m 2,011 n/m Foreign exchange loss, net (4,980 ) (6,992 ) 29 % (7,115 ) 30 % Other 3,123 16,268 (81 )% 16,553 (81 )% House Membership Revenues (46,274 ) (41,431 ) (12 )% (42,158 ) (10 )% In-House revenues (89,023 ) (25,630 ) n/m (26,080 ) n/m In-House operating expenses 103,261 49,941 n/m 50,817 n/m Total Other Contribution $ 5,323 $ (13,903 ) n/m $ (14,148 ) n/m Operating loss margin (13 )% (75 )% (75 )% Other Contribution Margin 11 % n/m n/m A reconciliation of Net loss to Adjusted EBITDA for the Fiscal Year ending January 2, 2022 and January 3, 2021 is set forth below: For the Fiscal Year Ended Percent Change January 2, 2022 Actuals January 3, 2021 Actuals Actuals Constant Currency(1) (Unaudited, dollar amounts in thousands) Net loss $ (268,714 ) $ (235,275 ) (14 )% (6 )% Depreciation and amortization 83,613 69,802 20 % 12 % Interest expense, net 84,382 77,792 8 % 1 % Income tax expense (benefit) 894 (776 ) n/m n/m EBITDA (99,825 ) (88,457 ) (13 )% (5 )% Gain on sale of property and other, net (6,837 ) (98 ) n/m n/m Share of loss of equity method investments 2,249 3,627 (38 )% (42 )% Foreign exchange 25,541 (3,354 ) n/m n/m Share of equity method investments adjusted EBITDA 4,662 3,563 31 % 22 % Share-based compensation expense 26,660 2,618 n/m n/m Membership credits expense⁽²⁾ 7,923 12,156 (35 )% (39 )% COVID-19 related charges⁽³⁾ (664 ) 4,606 n/m n/m Corporate financing and restructuring costs⁽⁴⁾ 16,322 14,147 15 % 7 % Abandoned project and site closure costs — 7,111 n/m n/m Adjusted EBITDA $ (23,969 ) $ (44,081 ) 46 % 49 % See “Non-GAAP Financial Measures—Constant Currency” for an explanation of our constant currency results. 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. Represent items of additional expense incurred in order to comply with health and safety protocols while keeping certain Houses open during the pandemic. In 2021, we received a government grant related to business rates in the UK which reduced our COVID related expenses. Our Corporate financing and restructuring costs vary significantly each year and period presented based on financing and restructuring being undertaken. Such costs do not relate to normal, recurring, cash operating expenses. In fiscal 2021, these costs consisted of refinancing fees incurred of $2,534 and a portion of IPO-related costs of $13,788 which were not eligible to be recognized directly in equity. In fiscal 2020, we undertook an internal restructuring to simplify the business in terms of headcount and cost structure, incurring $5,956 as well as $3,323 of losses in respect of contractual arrangements and $2,992 of site restructuring and closure costs, further we began preparations for a refinancing transaction, which we subsequently completed in March 2021, incurring $1,551 as well as including establishing an equity compensation plan, incurring $325. A Reconciliation of Operating loss to House-Level Contribution & Other Contribution for the Fiscal Year ending January 2, 2022 and January 3, 2021 is set forth below: For the Fiscal Year Ended January 2, 2022 January 3, 2021 Change % January 3, 2021 Constant Currency(1) Constant Currency Change %(1) Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (188,026 ) $ (154,730 ) (22 )% $ (166,208 ) (13 )% General and administrative 89,383 74,954 19 % 80,514 11 % Pre-opening expenses 21,294 21,058 1 % 22,620 (6 )% Depreciation and amortization 83,613 69,802 20 % 74,979 12 % Share-based compensation 26,660 2,618 n/m 2,812 n/m Foreign exchange loss (gain), net 25,541 (3,354 ) n/m (3,603 ) n/m Other 26,097 44,741 (42 )% 48,060 (46 )% Non-House Membership Revenues (15,431 ) (2,489 ) n/m (2,674 ) n/m Other revenues (153,431 ) (80,692 ) 90 % (86,677 ) 77 % Other operating expenses 167,152 109,251 53 % 117,355 42 % House-Level Contribution $ 82,852 $ 81,159 2 % $ 87,178 (5 )% Operating loss margin (34 )% (40 )% (40 )% House-Level Contribution Margin 21 % 27 % 27 % For the Fiscal Year Ended January 2, 2022 January 3, 2021 Change % January 3, 2021 Constant Currency(1) Constant Currency Change %(1) Actuals (Unaudited, dollar amounts in thousands) Operating loss $ (188,026 ) $ (154,730 ) (22 )% $ (166,208 ) (13 )% General and administrative 89,383 74,954 19 % 80,514 11 % Pre-opening expenses 21,294 21,058 1 % 22,620 (6 )% Depreciation and amortization 83,613 69,802 20 % 74,979 12 % Share-based compensation 26,660 2,618 n/m 2,812 n/m Foreign exchange loss (gain), net 25,541 (3,354 ) n/m (3,603 ) n/m Other 26,097 44,741 (42 )% 48,060 (46 )% House Membership Revenues (173,758 ) (174,421 ) (0 )% (187,358 ) (7 )% In-House revenues (217,934 ) (126,774 ) 72 % (136,177 ) 60 % In-House operating expenses 308,840 220,036 40 % 236,357 31 % Total Other Contribution $ 1,710 $ (26,070 ) n/m $ (28,004 ) n/m Operating loss margin (34 )% (40 )% (40 )% Other Contribution Margin 1 % (31 )% (31 )% See “Non-GAAP Financial Measures—Constant Currency” in Form 10-K for an explanation of our constant currency results. A reconciliation of Net Debt as of January 2, 2022 and January 3, 2021 is set forth below: As of Percentage change January 2, 2022 January 3, 2021 Actuals Constant Currency Current portion of debt, net of debt issuance costs $ 6,923 $ 88,802 (92 )% (92 )% Debt, net of current portion and debt issuance costs 459,343 574,580 (20 )% (19 )% Property mortgage loans, net of debt issuance costs 115,122 114,798 0 % 1 % Current portion of related party loans 21,661 611 n/m n/m Related party loans, net of current portion and imputed interest — 17,595 n/m n/m Total debt 603,049 796,386 (24 )% (22 )% Cash and cash equivalents (212,833 ) (52,887 ) n/m n/m Restricted cash (7,829 ) (7,083 ) (11 )% (12 )% Net Debt $ 382,387 $ 736,416 (48 )% (46 )% 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: 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. 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, Soho Friends and SOHO HOME+ and are key to our growth strategy and enhancing our Soho House member experience. 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. 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. NON-HOUSE MEMBERSHIP REVENUES. Non-House Membership Revenues are comprised of Soho Works membership revenues, Soho Friends membership revenues and SOHO HOME+ membership revenues. SH.APP ACTIVE USERS. SH.APP Active App Users is defined as unique users who have logged into our membership App within the last three months. 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 the second quarter of 2021, 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 report on form 10-Q for the quarter ended October 3, 2021 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 Membership Collective Group: The Membership Collective Group (MCG) is a global membership platform of physical and digital spaces that connects a vibrant, diverse and global group of members. These members use the MCG 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 MCG through our global collection of 33 Soho Houses, 9 Soho Works, The Ned in London, Scorpios Beach Club in Mykonos, Soho Home – our interiors and lifestyle retail brand – and our digital channels. The LINE and Saguaro hotels in North America also form part of MCG’s wider portfolio. For more information, please visit www.membershipcollectivegroup.com.
- 03/16/2022
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Membership Collective Group to Announce Full Year and Fourth Quarter 2021 Results March 16, 2022
- LONDON--(BUSINESS WIRE)--The Membership Collective Group Inc. (“MCG”), (NYSE: MCG) - the global membership platform comprised of Soho House, Soho Home, Soho Works, Scorpios Beach Club, The Ned and The Line and Saguaro Hotels - will release its full year and fourth-quarter 2021 financial results on Wednesday, March 16, 2022. A conference call and live webcast will be hosted to discuss these results on Wednesday, March 16, 2022, at 08:30 EST / 12:30 GMT. A live broadcast and accompanying presentation will be available at MCG’s website www.membershipcollectivegroup.com To listen to the live conference call, please dial; UK +44 (0) 203 059 58 69 or US +1 (760) 294-1674. A replay of the webcast will be available on the MCG website following the call for up to 90 days. About Membership Collective Group Inc. The Membership Collective Group Inc. (MCG) is a global membership platform of physical and digital spaces that connects a vibrant, diverse and global group of members. These members use the MCG 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 MCG through our global collection of 33 Soho Houses, 9 Soho Works, The Ned in London, Scorpios Beach Club in Mykonos, Soho Home – our interiors and lifestyle retail brand – and our digital channels. The LINE and Saguaro hotels in North America also form part of MCG’s wider portfolio. For more information, please visit www.membershipcollectivegroup.com
- 03/02/2022
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Sign-up form at Soho House asks new members to choose from 41 pronouns
- Soho House -- known for its posh hotels, spas, bars and lounges around the world -- is lately becoming known for its faster-growing collection of pronouns.
- 02/09/2022
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Membership Collective Group Inc. (MCG) CEO Nick Jones on Q3 2021 Results - Earnings Call Transcript
- Membership Collective Group Inc. (MCG) CEO Nick Jones on Q3 2021 Results - Earnings Call Transcript
- 11/17/2021
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Membership Collective Group Inc. to Announce Third Quarter 2021 Results November 17, 2021
- LONDON--(BUSINESS WIRE)---- $MCG #earnings--The Membership Collective Group Inc. (“MCG”), (NYSE: MCG) – the global membership platform comprised of Soho House, Soho Works, The Ned, Scorpios Beach Club, Soho Home, and The Line and Saguaro Hotels – will release its third-quarter 2021 financial results on Wednesday, November 17, 2021. A conference call and live webcast will be hosted to discuss these results on Wednesday, November 17, 2021, at 08:30 EST. To listen to the live conference call, please dial; UK +44 (0)
- 10/28/2021
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Membership Collective Group Inc. to Announce Second Quarter 2021 Results August 26
- LONDON--(BUSINESS WIRE)--The Membership Collective Group Inc. (“MCG”), (NYSE: MCG) - the global membership platform comprised of Soho House, Soho Works, The Ned, Scorpios Beach Club and Soho Home - will release its second quarter 2021 financial results on Thursday, August 26, 2021. A conference call and live webcast will be hosted to discuss these results on Thursday, August 26, 2021, at 08:30 EST. To listen to the live conference call, please dial; UK +44 (0) 203 059 58 69 or US (760) 294-1674
- 08/11/2021
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UK Soho House IPO Falls Short On Market Debut
- The London-based members-only Soho House fell short of its debut on the New York Stock Exchange (NYSE) under the ticker MCG following an initial public offering (IPO) priced at the lower end of the marketed range, Bloomberg reported on Thursday (July 15). Membership Collective Group, the company behind the Soho House, raised $420 million and owns 28 Soho House clubs worldwide.
- 07/15/2021
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From Soho to Wall Street: Membership Collective shares fall in debut
- Shares of Soho House private members club fell 6% in their New York Stock Exchange debut on Thursday, giving the company formally known as Membership Collective Group a market valuation of about $2.6 billion.
- 07/15/2021
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Membership Collective Group INC. Announces Pricing of Initial Public Offering
- LONDON--(BUSINESS WIRE)--Membership Collective Group (“MCG”), a global membership platform comprised of Soho House, Soho Works, The Ned, Scorpios Beach Club and Soho Home, and related digital platforms, today announced the pricing of its initial public offering of 30,000,000 shares of its Class A common stock at a public offering price of $14.00 per share. In addition, MCG has granted the underwriters a 30-day option to purchase up to an additional 4,466,535 shares of its Class A common stock a
- 07/14/2021
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