Related Quotes
	Soho House & CO Inc Class A	5	0.15	2.91%
	Enter Symbols:

Soho House & Co Inc. Announces Fourth Quarter and Fiscal Year 2023 Results

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240315448030/en/

Soho House Portland, opened March 5th, 2024. The first House in the Pacific North West. Credit: Christopher_Sturman

• Total Members in the fourth quarter 2023 grew to 259,884 from 255,252 in third quarter 2023 and by 14.6% year-over-year
  • Soho House Members grew to 193,865 from 184,542 in third quarter 2023, and 19.7% year-over-year
  • SHCO Membership waitlist now sits at approximately 99,000, an all-time high
  • Total revenues of $290.8 million, 7.5% year-over-year growth
• Membership revenues of $95.8 million increased by 24.2% year-over-year, accounting for 32.9% of Total revenues
• In-House revenues grew to $125.2 million up 3.8% year-over-year
  • Revenue Per Available Room ("RevPAR") grew 4% year-over-year on a like-for-like basis
• Net loss attributable to Soho House & Co Inc. was $57.0 million or $0.29 per share, inclusive of a $47 million impairment charge predominantly related to Soho Works North America
• Adjusted EBITDA was $36.6 million, up $13.4 million from fourth quarter 2022
• Recently opened Soho House Portland, expect to open Soho House Sao Paulo soon
• Effective November 1, 2023, Tom Collins, former Managing Director - UK Europe & Asia, was appointed as Chief Operating Officer of the Company

Fiscal Year 2023 Financial Results

• Fiscal Year 2023 Total revenues increased 16.8% year-over-year to $1,135.9 million
• Membership revenues of $361.5m increased 32.5% year-over-year, accounting for 31.8% of Total revenues
• In-House revenues grew to $482.1 million up 13% year-over-year
  • Revenue Per Available Room ("RevPAR") was 11% higher year-over-year on a Like-for-Like basis
• Net loss attributable to Soho House & Co Inc. was $118.0 million or $0.60 per share, inclusive of the same impairment charge outlined above
• Adjusted EBITDA was $128.0 million, up from $60.7 million in fiscal year 2022
• Successfully opened two new Houses: Bangkok (February 2023) and Mexico City (September 2023)

"The strong results we delivered in 2023 demonstrate our continued focus on driving a better member experience and significant progress on improving profitability. We grew Soho House membership approximately 20%, including the benefit of maturing Houses and entering into South East Asia and Latin America for the first time. We more than doubled Adjusted EBITDA, reflecting 11% margins up from 6% in 2022," said Andrew Carnie, CEO of Soho House & Co.

"We are excited for the year-ahead. I would like to thank our teams globally for their commitment and hard work, and our members for their enduring loyalty over nearly 30 years."

Summary of Unaudited Financial Results for the Periods Ended December 31, 2023

(1) See "Non-GAAP Financial Measures" for reconciliations of Non-GAAP measures to GAAP measures.

The following selected items listed below are not added back in Adjusted EBITDA:

We delivered the following highlights against our strategic priorities in the fourth quarter

1. Grow and Enhance Membership

• Membership continues to reach new highs benefiting from a record waitlist and continued high retention rates
• Soho House members grew to 193,865 from 184,542 in third quarter 2023, and 19.7% YoY
• Focused rollout of initiatives continues to improve member experience
• Opened Soho House Mexico City in September 2023 and Soho House Portland in March 2024. Expect to open Soho House Sao Paulo soon

2. Operational Excellence to Drive Profitability

• We achieved fourth quarter 2023 Adjusted EBITDA of $36.6 million, an increase of $13.4 million compared to fourth quarter 2022
• In-House revenues grew to $125.2 million in fourth quarter 2023, up from $120.7 million in fourth quarter 2022
• Like-for-like F&B margins at our Houses rose ~200bps vs. fourth quarter 2019
• Focus on driving accommodations performance resulted in 4% RevPAR growth in fourth quarter 2023 vs. fourth quarter 2022 on a like-for-like basis

Membership Summary for the Quarter Ended December 31, 2023

Memberships

• Total Members grew to 259,884 from 255,252 in third quarter 2023 and by 14.6% year-over-year
• Total Soho House Members grew to 193,865 from 184,542 in third quarter 2023, driven by continued high retention rates, alongside membership intakes in both new and existing Houses
• Frozen Members was 7,512 at the end of fourth quarter 2023
• Other Memberships including Soho Friends and Soho Works was 66,019 members, a decrease of 4,691 from the end of the third quarter 2023 but a 2% increase year-over-year

Financing

• SHCO ended fourth quarter 2023 with Cash and cash equivalents and Restricted cash of $164 million

Updated Fiscal 2024 Guidance

The following forward-looking statements reflect our current expectations as of today, March 15, 2024:

*Assumes no material FX impact, reflecting bank estimates

**Without adding back pre-opening costs, non-cash rent and deferred registration fees of ~$25-30m combined for fiscal 2024 as a whole

Conference Call and Webcast:

A conference call and live webcast will be hosted to discuss these results on Friday, March 15, 2024 at 9am EST / 1pm GMT.

A live broadcast and accompanying presentation will be available at www.sohohouseco.com.

To listen to the live conference call via telephone, please dial:

USA

New York (646) 307 1963
USA & Canada Toll-Free (800) 715 9871

UK

London +44 (0)20 3481 4247
UK Toll-Free +44 (0)800 260 6466

Conference ID 3174102
A replay of the webcast will be available on our website following the call for up to 90 days.

Contacts:
Investor Relations: ir@sohohouseco.com
Press: press@sohohouseco.com

Non-GAAP Financial Measures

This presentation contains certain financial measures, including Adjusted EBITDA, House-Level Contribution and Margin, Other Contribution and Margin, Net Debt and certain financial measures presented on a Constant Currency basis that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (`GAAP'). We refer to these measures as `non-GAAP financial measures.' We use these non-GAAP financial measures when planning, monitoring and evaluating our performance. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues or net income (loss), in each case as recognized in accordance with GAAP. In addition, other companies may calculate one or more of these measures differently, which reduces the usefulness of any such measure as a comparative measure. See below for a definition of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures.

We provide earnings guidance using both GAAP and non-GAAP financial measures. A reconciliation of the Company's Adjusted EBITDA guidance to the most directly comparable GAAP financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that are made for future changes in foreign exchange and the other adjustments reflected in our reconciliation of historical non-GAAP financial measures, the amounts of which, could be material.

The information in this presentation should be read in conjunction with our Annual and Quarterly Reports on Form 10-K and Form 10-Q and other information that we file with the SEC. The reconciliations of non-GAAP financial measures are an integral part of the information presented herein. You can access these documents on our website, www.sohohouseco.com, free of charge, as well as any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information contained on our website is not incorporated by reference into, and should not be considered a part of, this presentation.

In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC at www.sec.gov.

The non-GAAP financial measures we use herein are defined by us as follows:

ADJUSTED EBITDA. Adjusted EBITDA is a supplemental measure of our performance. Adjusted EBITDA is defined as Net income (loss) before Depreciation and amortization, Interest expense, net, Income tax (expense) benefit, adjusted to take account of the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These other items include, but are not limited to, Gain (loss) on sale of property and other, net, Share of loss (profit) from equity method investments, Foreign exchange, Share of equity method investments adjusted EBITDA, Share-based compensation expense and other applicable items. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses (income) that do not relate to ongoing business performance.

HOUSE-LEVEL CONTRIBUTION AND MARGIN. House-Level Contribution is defined as House Revenues less In-House operating expenses, which includes expense items such as food and beverage costs, labor costs, variable overheads and fixed costs, such as rent. It does not reflect the impact of depreciation, amortization, impairment, gain or loss on sale of property, general and administrative expenses or other applicable items. House-Level Contribution Margin is defined as House-Level Contribution as a percentage of our House Revenues and is a key determinant of our performance and profitability and our return on the investment we make in each of our Houses. Given that all costs associated with providing our members with the Soho House experience, including the costs associated with maintaining our Houses and providing services to members while in the Houses, are included in In-House operating expenses, we use House Revenues (inclusive of House Membership Revenues) in calculating House-Level Contribution and House-Level Contribution Margin to assess the overall profitability of our Houses. Accordingly, our management considers House-Level Contribution and House-Level Contribution Margin to be an important management measure to evaluate the performance of each House, and growth in aggregate House-Level Contribution allows us to leverage our general and administrative costs and improve overall profitability.

OTHER CONTRIBUTION AND MARGIN. Other Contribution is defined as Other revenues plus Non-House Membership Revenues less Other operating expenses, which includes expense items not related to the operation of Houses, such as labor costs, variable overheads and fixed costs, such as rent. It does not reflect the impact of depreciation, amortization, impairment, gain or loss on sale of property, general and administrative expenses, pre-opening expenses, foreign exchange gain/loss, Share-based compensation expense and other applicable items. Other Contribution Margin defined as Other Contribution as a percentage of our Other revenues and is a key determinant of our performance and profitability and our return on the investment in our non-House business. Our management considers Other Contribution and Contribution Margin to be an important management measure.

NET DEBT. Net Debt reflects the total debt, comprising long-term debt, property mortgage loans and related party loans, less cash, cash equivalents and restricted cash. Net Debt is an important measure to monitor leverage and evaluate the balance sheet. A limitation associated with using Net Debt is that it subtracts Cash and cash equivalents and Restricted cash and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. Management believes that investors may find it useful to monitor leverage and evaluate the balance sheet.

CONSTANT CURRENCY. Some of our financial and operational data that we disclose in this release is presented on a `constant currency' basis to isolate the effect of currency changes during the period. Where we refer to a measure being calculated in `constant currency,' we are calculating the dollar change and the percentage change as if the exchange rate that is being used in the current period was in effect for all prior periods presented. We believe that this calculation provides a more meaningful indication of actual year over year performance and eliminates any fluctuations from currency exchange rates.

While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues or net income (loss), in each case as recognized in accordance with GAAP. In addition, other companies may calculate one or more of these measures differently, which reduces the usefulness of any such measure as a comparative measure.

A reconciliation of Net income (loss) to Adjusted EBITDA for the 13 weeks ending December 31, 2023 and January 1, 2023 is set forth below:

1. See "Non-GAAP Financial Measures" for an explanation of our constant currency results.
2. Primarily driven by foreign exchange volatility impacting our non-USD debt and working capital.
3. For 13 Weeks Ended January 1, 2023 this excludes a $1 million non-cash expense, which is included within Share-based compensation expense in the Consolidated Statements of Operations and includes an expense of $3 million, which is excluded from Share-based compensation expense in the Consolidated Statements of Operations, in respect of a non-recurring cash payment in connection with the Growth Shares.
4. In the 13 weeks ended January 1, 2023 this includes a non-cash share-based compensation expense of $1 million and $4 million with respect to a strategic reorganization of the Company's operations and support team.
5. 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.
6. Represents an out-of-period adjustments correcting errors with respect to the estimation of the operating lease liability identified during the 13 week period ended December 31, 2023 and January 1, 2023 but relating prior financial periods. There is no material impact from the correction of this error to previously reported periods.
7. Represents an out-of-period adjustment correcting an error with respect to the capitalization of certain expenses in connection to new House openings identified during the 13 week period ended December 31, 2023 but relating prior financial periods. There is no material impact from the correction of this error to previously reported periods.
8. Represents expenses incurred in the 13 weeks ended January 1, 2023 with respect to a historic settlement of an employment related legal claim. The Company has remediated its operating processes to mitigate a similar issue from recurring.
9. In November 2023, the Company entered into a 10-year licensing agreement with a third party to manufacture and distribute the Company's Cowshed brand, commencing January 1, 2024. This agreement has restricted the Company's ability to sell certain inventories it acquired prior to entering into the agreement. As such, the Company has provided in full for the inventory it is unable to recover as a result of the entering into the agreement.
10. Following the Company's impairment review in the 13 weeks ended December 31, 2023, the Company recognized $47 million of impairment losses on long-lived assets (comprised of $33 million in respect of Operating lease assets and $14 million of Property and equipment, net), of which $37 million is in respect of Soho Works North America.

A reconciliation of Operating income (loss) to House-Level Contribution & Other Contribution for the 13 weeks ending December 31, 2023 and January 1, 2023 is set forth below:

A reconciliation of Net loss to Adjusted EBITDA for the Fiscal Years ending December 31, 2023 and January 1, 2023 is set forth below:

1. See "Non-GAAP Financial Measures" for an explanation of our constant currency results.
2. Primarily driven by foreign exchange volatility impacting our non-USD debt and working capital.
3. For 52 Weeks Ended January 1, 2023 this excludes a $5 million non-cash expense, which is included within Share-based compensation expense in the Consolidated Statements of Operations, separately presented within Operational reorganization and severance expense below. It also includes an expense of $3 million, which is excluded from Share-based compensation expense in the Consolidated Statements of Operations, in respect of a non-recurring cash payment in connection with the Growth Shares.
4. For 52 Weeks Ended January 1, 2023 this represents $4m of expenses incurred with respect to a strategic reorganization program of the Company's operations and support teams. This also includes a non-cash share-based compensation expense of $5 million. The non-cash share-based compensation expense is reported within Share-based compensation expense.
5. 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.
6. Represents out-of-period adjustments correcting errors with respect to the estimation of the operating lease liability identified during fiscal 2023 and 2022 but relating to fiscal years 2022, 2021, 2020 & 2019 and 2021, 2020 & 2019 respectively. There is no material impact from the correction of this error to previously reported periods.
7. Represents expenses incurred with respect to a historic settlement of an employment related legal claim. The Company has remediated its operating processes to mitigate a similar issue from recurring.
8. In November 2023, the Company entered into a licensing agreement with a third party for the Company's Cowshed brand. This has restricted the Company's ability to sell certain inventories it acquired prior to entering into the agreement. As such, the Company has provided in full for inventory it is unable to recover as a result of the entering into the agreement.
9. Following the Company's impairment review in fiscal 2023, the Company recognized $47 million of impairment losses on long-lived assets (comprised of $33 million in respect of Operating lease assets and $14 million of Property and equipment, net), of which $37 million is in respect of Soho Works North America.

A Reconciliation of Operating loss to House-Level Contribution & Other Contribution for the Fiscal Year ending December 31, 2023 and January 1, 2023 is set forth below:

A reconciliation of Net Debt as of December 31, 2023 and January 1, 2023 is set forth below:

Unaudited Consolidated Statements of Operations for fiscal years 2023 and 2022 and 13 weeks ended December 31, 2023 and January 1, 2023: