Good day, ladies and gentlemen. And thank you for standing by. Welcome to the European Wax Center's Fourth Quarter of Fiscal Year 2021 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. In order to facilitate as many participants as possible, we ask that you please limit yourself to one question and one follow-up during the Q&A. If you have additional questions, you may rejoin the queue. At this time, I would like to turn the conference over to Amir Yeganehjoo, Senior Vice President of Financial Planning and Investor Relations. Sir, you may begin.

Thank you. And welcome to European Wax Center's Fourth Quarter and Fiscal Year '21 Earnings Call. With me today are David Berg, Chief Executive Officer, David Willis, Chief Financial and Chief Operating Officer. For today's call, David Berg will begin with a brief review of our fourth quarter and full-year performance, highlight our fiscal '21 accomplishments, and discuss the priorities we are focused on as we begin fiscal '22. Then David Willis will provide additional details regarding our financial performance, our capital allocation priorities, including the recapitalization announced today, and our guidance. Following our prepared remarks, David Berg, David Willis, and I will be available to take questions you have for us today. Before we start, I would like to remind you of our legal disclaimer. We will make certain statements today, which are forward-looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our earnings release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filings, as well as our earnings release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we take no obligation to revise or publicly release the results of any revision to our forward-looking statements in light of new information or future events. Also, during this call, we will discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in our earnings release. A live broadcast of this call is also available at the Investor Relations section of our website at investors.waxcenter.com. I will now turn the call over to David Berg.

Thank you, Amir. And good afternoon, everyone. Thank you for joining us today. The positive momentum in our business exiting in the fourth quarter marked a strong finish to an outstanding year of growth for European Wax Center. Even with the uptick in COVID cases beginning in late November that temporarily constrained labor in certain centers, we exceeded key financial objectives for the past year and advanced our growth initiatives, in turn driving record total revenue and profitability. As the leader in out-of-home waxing, we attribute our ongoing strength to the power of our business model, the recurring nature of our services, and the agility of our network in successfully executing our strategy. I would like to thank all of our associates across the organization, as well as our franchise partners for their contributions to our success in fiscal 2021, and for their steadfast commitment to living our values every day. Given 2021's strength and the momentum we've already seen in 2022, we remain confident in our ability to deliver robust top and bottom-line growth, including low 20% same-store sales growth in Q1. More and more consumers nationwide know and trust European Wax Center to consistently provide excellent service in a clean environment at accessible price points. The nondiscretionary nature of our category also provides a clear path to capitalize on the substantial market share opportunity we have in growing the $18 billion hair removal market here in the United States. We're proud of our accomplishments, yet equally focused on delivering on our long-term growth objectives and continuing to generate significant cash flow from our high-margin asset-light business model. Beginning with the highlights of our fiscal year versus fiscal year 2019, system-wide sales and total revenue each increased nearly 16% to $796.5 million and $178.7 million respectively. Same-store sales increased 6.7%, reflecting sequential acceleration each quarter and adjusted EBITDA of $64.1 million, increased $30.1 million. Looking back on the fourth quarter and the full year, we saw tremendous progress advancing our key strategic priorities to deliver on our two growth vectors. First, opening new centers. And second, driving same-store sales growth. In terms of center development, we opened 20 net new centers in the fourth quarter and 57 during fiscal 2021. Bringing our total to 853 centers and achieving our new center opening target, which we increased when we reported third quarter 2021 results. We are incredibly pleased that nearly all new centers in fiscal 2021 were opened by our existing franchisees. Even more exciting is that we ended the year with more than 330 signed new center licenses, which is our deepest pipeline to date and gives us confidence in delivering our target of high single-digit center growth over the next several years. As it relates to same-store sales growth versus 2019, our 13.6% fourth quarter increase had a sequential acceleration of 300 basis points from Q3. As expected, all cohorts, including mature centers, comp positively for Q4 and 2021, excluding California, where we've been addressing concentrated labor tightness. Excluding California, Q4 same-store sales growth would have been 18.1%. As I mentioned on our Q3 call, we have implemented several actions to support our recruitment efforts. We saw continued improvement in California staffing during Q4, which has accelerated further in 2022, as we help our California franchisees achieve optimal staffing levels. The drivers of our Q4 same-store sales growth included strong retention of existing guests, as well as significant new guest acquisition. In fact, for the full year, new guest acquisition was up nearly 30% versus 2019. Guest surveys demonstrate that we are not only attracting first-time waxers but also capturing market share from independent salons. We believe that our strong performance with both existing and new guests is proof of our highly effective marketing strategy, combined with excellent service and operational execution. Consistent with Q3, fourth quarter Wax Pass sales were approximately 20% higher versus 2019. We believe this is a great leading indicator of future performance, given that Wax Passes are included in same-store sales only when redeemed. Over half of our transactions include Wax Pass redemptions, which is encouraging, given that Wax Pass customers visit more frequently, spend more, and have a higher retention rate than non-Wax Pass guests. Service mix also contributed to same-store sales growth as we continue to see a shift towards higher-priced body services. Over time, we continue to believe that sideline customers will add facial services back into their routines as guests feel more comfortable without masks. Overall, our compelling fourth quarter performance leaves us well-positioned to continue our favorable momentum in fiscal 2022. Moving to our 2022 priorities, they are centered around the following: 1. Expanding our footprint through new centers, 2. Capitalizing on our enhanced marketing and loyalty programs, 3. Increasing the pipeline of wax specialists, 4. Leveraging our scale to benefit our supply chain, and finally, optimizing our capital structure. First, regarding new center expansion. The investments we have made in our development team in the last 18 months have given us a strong platform for delivering long-term unit growth. Due to our demonstrated track record of growth and profitability, our existing franchisees are making commitments through multi-unit development agreements to strategically densify markets. Private equity firms and family offices are also quickly seeing the value potential of our consistent center performance and attractive margin profile. In fact, both self-funded and private equity-backed unit operators represented over half of our fiscal 2021 openings. Over time, we expect to develop a balanced mix of franchises in the network. Approximately one-third of the centers owned by small independent groups, one-third owned by self-funded regional operators, and one-third owned and operated by private equity-backed operators. Turning to our second priority, our marketing and loyalty programs. The success of our brand with both new and existing guests in fiscal 2021 demonstrates that our comprehensive marketing approach and media mix are driving great results. In fiscal 2022, we will focus on continued optimization and expanding media partners to reach key opportunity segments, especially men and guests with coarse or textured hair during peak seasons. With a significant increase in new guests in 2021, we will be particularly focused on retention this year through our CRM efforts. We continue to see increasing guest engagement, as well as higher revenue per guest and increasing frequency among our best guests. We expect that the October 2021 launch of our new loyalty program, EWC Rewards, will enable us to further grow these metrics. While EWC Rewards is still in the early stages, we are already seeing encouraging data about its potential to be a meaningful basket driver over time. First, EWC Rewards has higher guest awareness compared to our previous loyalty program. Guests are also telling us that it's easier to earn and redeem points through EWC Rewards, which should lead to higher program engagement. Finally, guests who have redeemed rewards in the program's first few months are spending more, particularly on our proprietary retail products to enhance and extend the life of their services. We are still in the program's early innings, but we will analyze and adapt as we gain a deeper understanding of guest behavior this year. Moving onto our third priority, increasing the pipeline of wax specialists. In California, where the government mandated shutdowns and delays in issuing cosmetology and aesthetician licenses have had the biggest impact on our network, we are starting to see license issuance accelerate. Our recent brand-level initiatives in California are attracting more wax specialists as well. We have partnered with recruitment platforms to provide franchisees with resources, educational content, and savings on their recruitment efforts. Our brand remains the number one employer based on engagement for both the aesthetician and cosmetologist roles in California on indeed.com. We also launched a direct email campaign to students and industry professionals, which generated exceptional engagement well above industry standards. Finally, we recently completed the pilot phase of our beauty school partnership program, which had more than 500 participants at the end of January. Given this success, we are launching the program nationally to grow our database and reach more potential associates. As a result of these efforts, wax specialist staffing in California has improved 30% since the end of Q3, and we expect to see continued improvement. We believe we've developed a playbook that can be rolled out nationally to drive interest in our franchise centers as the employer of choice. Our fourth priority is to continue leveraging our scale to enhance the efficiency of operations and support infrastructure. As the category leader and the largest provider of out-of-home waxing services, European Wax Center's scale is a competitive advantage compared to the independent players that comprise the majority of our industry. We are always looking for opportunities to better leverage that scale to benefit our franchisees. For example, earlier this year, we began buying wax-related supplies such as latex gloves and wax applicators. Previously, we negotiated rates on behalf of our network, but the ordering process and financial transaction occurred directly between franchisees and a third-party supplier. Our new program has optimized the procurement process by enabling a seamless platform for franchisees to order supplies as well as EWC's Wax and Retail products. This program helps ensure the critical supplies remain in stock, and makes the order process more efficient for franchisees, giving them more time to focus on generating revenue and providing a best-in-class guest experience. Also on the supply chain front, we believe we are well-positioned to navigate current disruption and inflationary pressures. We are proud of our great relationship with our suppliers and have invested in additional supply of our wax. While we are not immune to cost pressures, we are able to pass along higher costs to our network if needed. As the category leader, we also have the ability to recommend periodic service price increases, enabling our franchisees to protect their profitability. Lastly, our fifth priority for fiscal 2022 is to optimize our capital structure. We are extremely proud of European Wax Center's asset-light business model that delivers strong free cash flow with less operating risk. Given our relatively modest capital expenditures and high cash flow generation, we believe that we can sustain higher leverage than other business models while lowering our overall cost of capital. Therefore, we are pursuing a recapitalization of our balance sheet through a whole business securitization. This structure is uniquely best-in-class for high-quality franchise orders and provides us significant capital allocation flexibility as we grow the business. After repaying our existing term loan, we plan to use the net proceeds from the new senior notes to return value to our shareholders through a one-time special dividend. We believe that this whole business securitization will be a component of our long-term shareholder value creation for years to come. As our business grows, we look forward to growing our securitization with it. Before I turn the call over to David Willis, I'd like to briefly touch on our guidance for fiscal 2022. We expect to deliver another year of strong top-line growth, including 70 to 72 net new center openings and same-store sales growth in line with our high single-digit long-term targets. We expect fiscal 2022 system-wide sales consistent with and total revenue growth above our low double-digit long-term targets. Keep in mind that fiscal 2022 is our first full year as a public company. Therefore, adjusted EBITDA will include a full year of public company costs on a pro forma basis. Assuming we were a public company for all of fiscal 2021, we expect fiscal year 2022 adjusted EBITDA growth of 13% to 18% in line with our long-term growth target of low to mid-teens growth. In summary, we are excited about our business prospects in both the near and long-term. As we begin 2022, our positive momentum has continued, which is reflected in our Q1 same-store sales outlook of low 20s growth versus 2021. This underlying business performance coupled with our robust new center pipeline has poised us to deliver on another year of strong financial growth and significant accomplishments toward our long-term goals. And now I'd like to turn the call over to David to review our fourth quarter and full-year performance, provide more detail on our outlook, and give color on the refinancing we announced earlier today.

Thanks, David. And good afternoon, everyone. While I have met many of you over the past year, it's nice to speak with you today in my joint role as CFO and COO. On today's call, I will compare certain fourth quarter and fiscal 2021 results to both fiscal year 2020, which was significantly impacted by temporary pandemic-related closures, and fiscal 2019, which represented a more normalized year of operations for us. My remarks will also focus on our adjusted results, which exclude costs related to our initial public offering and other one-time costs. Finally, I will introduce our fiscal 2022 outlook before opening the call for Q&A. You can find reconciliation tables for the most comparable GAAP figures in our press release and 8-K filed with the SEC today. Fiscal 2021 was a remarkable year of significant growth in margin expansion, powered by our compelling asset-like business model and the talent, dedication, and discipline of our teams. In terms of our record fourth quarter results, we are pleased to report strong performance highlighted by significant growth in revenue and adjusted EBITDA compared to both fiscal 2020 and 2019. Q4 system-wide sales were $201.9 million, increasing 51.2% from 2020, and 23.2% from 2019. Our unit expansion, including 20 net new centers during the fourth quarter, coupled with a strong 13.6% same-store sales increase, drove the revenue growth. Relative to 2019, we acquired a significant number of new guests and generated higher average tickets as our guests continued to favor higher-priced body services versus facial services. As David mentioned in his remarks, our California centers continue to steadily recover. In the fourth quarter of 2021, California same-store sales improved 20 basis points from Q3 to be a 450-basis point drag on network same-store sales performance. Excluding California, our same-store sales were up 18.1% versus Q4 2019. All cohorts, including mature centers, comp positively. We're encouraged by the recent uptick we have seen in California staffing, and we continue to focus on initiatives to improve the supply of wax specialists as David discussed. Total revenue in the fourth quarter rose 53.8% from 2020 and 35% from 2019 to $45.1 million, driven once again by robust product sales to our network, including both our unique Comfort Wax and retail products, royalty and marketing fees, all of which benefited from our net new center growth over the past year. Adjusted EBITDA, which excludes the impact of non-cash items, one-time charges, and other costs such as share-based compensation expense, increased by $9.5 million year-over-year to $15.2 million in Q4. Consistent with Q3 2021, our fourth quarter adjusted EBITDA margin was 33.8%, up significantly from 2020 and 2019. Fourth quarter adjusted net income increased to $8.5 million from adjusted net losses of $3.8 million in 2020 and $8.4 million in 2019. Q4 income tax expense was $100,000. For the full year, we are incredibly pleased with the growth we achieved versus a more normalized fiscal 2019. System-wide sales and total revenue each increased 15.9% from 2019 to $796.5 million and $178.7 million respectively. Same-store sales increased 6.7% versus 2019, accelerating each quarter during the year. Adjusted net income increased nearly $27 million to $29.7 million. Finally, adjusted EBITDA increased by more than $30 million to $64.1 million, with a full-year adjusted EBITDA margin of 35.9%. Turning to the balance sheet, at the end of fiscal '21, we had cash and cash equivalents of $43.3 million compared to $36.7 million at the end of fiscal '20, $180 million in borrowings outstanding under our term loan, and no amounts outstanding under our revolver. Now on to our outlook for fiscal 2022 and a comment on the first quarter. We are planning to open 70 to 72 net new centers for the year versus 57 in fiscal 2021, representing an acceleration from our 2021 unit count of more than 8%. As David mentioned earlier, we have the deepest new center pipeline in our history; more than 330 licenses reflect both the confidence our franchisees have in the model and several years of growth at a high single-digit rate. We expect more incremental openings year-over-year in the first half of 2022 versus 2021 as we put more rigor and discipline into our development process. Approximately two-thirds of our expected fiscal 2022 openings are already open or under construction, giving us tremendous confidence in delivering on our full-year plans. We expect the network to generate system-wide sales between $870 million and $910 million. Although we are encouraged by our recent progress, our guidance does not assume a full recovery of the ongoing labor constraints in California. Despite this headwind, our expectation for same-store sales growth versus fiscal 2021 is at the upper end of our high single-digit long-term target. We are also planning for total revenues of $198 million to $208 million in fiscal 2022, representing a 13.5% growth rate year-over-year at the midpoint of the range and exceeding our long-term revenue growth target of low double-digit growth. Total revenue growth continues to be driven by new center growth and the strong ramp of new and existing cohorts, including significant new guest acquisition and retention. Earlier this month, we implemented a small price increase on our wax sold to franchisees to offset the supplier-led cost pressures. To help protect four-wall profitability in light of this increase and other cost inflation, in January, our franchisees implemented an average 5% price increase on body services, which represent a majority of services performed in our centers. As a reminder, periodic service price increases were always contemplated in our long-term growth algorithm. Historically, we have not seen a material impact on transactions when taking price. As David mentioned earlier on the call, total revenue in 2022 will also include an incremental opportunity to leverage our scale to buy supplies using our services on behalf of franchisees. At a corporate level, this move will generate incremental revenue and gross profit dollars, but at a significantly lower gross margin rate than our Comfort Wax and proprietary retail products. Including this mix shift, we expect full-year gross margin in the range of 71% to 71.5%. From a profit standpoint, we expect fiscal 2022 adjusted EBITDA of $69 million to $72 million, representing a 10% annual growth at the midpoint. As a reminder, fiscal 2022 is our first year fully burdened with public company costs, which constrains our one-year growth rate. Assuming we were public for all of fiscal '21, our fiscal '22 adjusted EBITDA guidance of $69 million to $72 million would represent 13% to 18% annual growth, in line with our long-term target of low-to-mid-teens growth. Given our asset-like model, we expect approximately $2.5 million in capital expenditures as we continue to invest in our technological capabilities and only a slight uptick in annual depreciation and amortization from fiscal 2021. Finally, we expect adjusted net income of $35 million to $39 million, up almost 25% from 2021 adjusted net income at the midpoint of the range. Our guidance assumes a 15% effective tax rate for fiscal 2022, but does not contemplate the impact of our expected refinancing, which I will discuss shortly. Our guidance includes a 53rd week in the fourth quarter of fiscal 2022. However, due to its timing between Christmas and New Year's, we estimate its contribution to both top and bottom line will only be worth about half of an average fourth-quarter week. We don't expect to give quarterly guidance on an ongoing basis, but keep in mind we had COVID-related center closures impacting both 2020 and early 2021. So fiscal 2022 seasonality will look different from prior years. Therefore, we would like to provide some quarterly context on this call. From a volume standpoint, Q1 is typically our lowest volume quarter and should account for approximately 21% of fiscal '22 total revenue. Q2 and Q3 typically generate the largest volume, and we expect each to comprise about 26.5% of annual revenue this year. Due to center closures in early 2021, particularly in California, we expect that Q1 sales growth will be the highest of the year with same-store sales growth in the low twenties. On the bottom line, we expect Q1 adjusted EBITDA margin of approximately 31%, with Q2 through Q4 expanding to the mid-30s as a higher volume generates more fixed cost leverage. As David noted earlier, we plan to lean in during our peak summer season to target core audiences. As a result, we expect advertising expenses to be the heaviest in Q2 and Q3. From a long-term standpoint, we remain confident in our previously communicated growth algorithm over the next three to five years, with compounding annual growth in high single digits for new centers, high single digits for same-store sales, low double digits for total revenue, and low to mid-teens for adjusted EBITDA. Finally, I'd like to close with a few words about the debt refinancing we announced this afternoon. Since the IPO, we have acknowledged an opportunity to optimize our capital structure to give us the flexibility to create long-term shareholder value. We ended fiscal 2021 with a net debt to adjusted EBITDA ratio of 2.1 times. But we believe our business has the capacity to support additional leverage due to its recurring revenue model, asset-light nature, and ability to generate significant free cash flow. We believe that a whole business securitization, which is best in class among our high-quality peers, is the most optimal capital structure for us. We intend to replace our existing debt with $400 million of fixed-rate term notes and $40 million of variable funding notes. While the transaction will be adjusted EBITDA neutral in fiscal '22, we do expect incremental interest expense in the second through fourth quarters due to the higher level of debt our model can maintain. As David mentioned, we've evaluated our near-term opportunities and expect to use the proceeds from the senior notes along with excess existing cash to pay off our current term loan, fund the transaction expenses, and issue a one-time special dividend to shareholders. More importantly, putting this structure in place establishes the foundation from which we can raise funds in the future for strategic investments or capital returns to shareholders. The closing of this transaction, which we anticipate will be in a few weeks, is subject to market and other conditions. Since we have not yet finalized the offering size and pricing terms, we plan to issue updated adjusted net income guidance upon closing. We look forward to the next stage of our growth, and we view the whole business securitization as a first step in a multiyear journey of generating significant long-term shareholder value. In summary, we're pleased with our momentum to start 2022 and excited about the profitable growth opportunity ahead of us. We look forward to continuing to provide a nondiscretionary recurring service to our loyal guests that deliver strong and consistent results in a variety of environments. And we remain focused on extending our leadership position in this large and growing addressable market. I will now turn the call back over to the Operator for questions.

Certainly. Our first question comes from the line of Randy Konik from Jefferies. Your question, please.

Yes, good evening. Thank you for taking my questions. I want to discuss the recapitalization special dividend you plan to issue, which reflects the strong recurring revenue nature of the business. Could you explain what leverage ratio you are comfortable targeting? Also, considering your role on the Board of Planet Fitness, how do you view the similarities between the special dividend approach taken there and the one for this business? Please compare and contrast how you and the board are thinking about this special dividend in the context of the recapitalization. Thank you.

Hi, Randy. Thanks for the question. Let me address how we're thinking about that at a high level and then ask David Willis to elaborate. As you all know, the asset-light nature of our business model allows us to balance long-term growth with returning capital to shareholders. We have high confidence in the low volatility and risk of the business, and we find the comfortable leverage ratio of 5 to 6 times quite manageable, given our recurring revenue streams. We have evaluated investment opportunities to maximize shareholder returns. Many of the growth initiatives we've discussed are capital light in nature as well. Therefore, we decided that it's appropriate to use the net proceeds for a special one-time dividend to shareholders at this time. It's important to note that while we plan to use these initial proceeds for that special dividend, we believe that the overall business securitization will contribute to our long-term shareholder value creation in the years ahead. I think it’s a beneficial strategy for us to have. David, could you provide a bit more detail?

You bet. So Randy, as you know, right now at the end of the year, at 2.1 times net leverage, we just think the model is under-leveraged relative to our best-in-class peer. As we think about it, this is obviously subject to market conditions and our closing, but we plan to, if we can secure the 400 that we're targeting, we pay back the $180 million term down transaction cost to use and keep a little bit of cash on our balance sheet. But other than that, the goal of this, the objective of this is to use the bulk of the proceeds or the net of the proceeds to fund the one-time special dividend.

I wanted to get more clarity on how you see California's situation evolving. You've mentioned the ongoing impact, which appears to be around 450 to 500 basis points affecting total company comparisons. As you consider the annual comp guidance for 2022, you indicated that you don't expect significant improvement in trends related to California for the first quarter. I want to confirm that perspective and understand the financial implications you foresee as well as how you anticipate improvements in California developing throughout the year and into 2023. It seems like California could potentially become a strong growth area for you, possibly in the second half of 2022 and continuing into 2023 and beyond. Thank you.

Randy, I think you've hit on the head in terms of how we're thinking about it. Our overall guidance just simply, we wanted to call out, does not assume that the California centers are at a full recovery relative to all other states. We are seeing positive trends. We saw these in the fourth quarter in our California centers. We're continuing to see further recovery in the first quarter thus far in 2022. So when you really think about our quarterly comps, it's going to make our comp-set look really good in the first quarter because we're lapping a quarter where the California centers were just starting to reopen last year. I think our highest quarterly comps will be in the first quarter. But overall, I don't want to send signals that we are discouraged. Actually, we are encouraged by where California is trending. We just want to be prudent and not assume a full recovery until that comes into full visibility for us.

Great. Thanks, guys.

Yeah. Thanks, Randy.

Thank you. Our next question comes from the line of John Heinbockel from Guggenheim. Your question, please.

Hey, everyone. First off, there's a chance for new centers to perform better than the store model, right? In the first year and the second year, do you think we'll see that in 2022? And as we experience the network effect, by how much do you think we can surpass the store model and develop more quickly?

We have observed that the 2020 and 2021 cohorts are ramping up more effectively and quickly than what we have seen historically. We want to gather more data before finalizing our guidance; we do not expect every new center to ramp up at the same speed as the most recent cohorts. We would like to receive updates to confirm that they continue to ramp at that pace and ideally surpass the historical maturation benchmark of around one million dollars. While we see potential for centers to ramp up quicker, we have not incorporated that into our guidance, as it is still very early for these newer centers.

Okay. Regarding the supply and demand of wax specialists, how many do you think you need each year with openings at 8%, 9%, or 10%, while considering the right turnover? Additionally, do these partnerships for building schools create the possibility of modestly exceeding the upper limit of the targeted range?

For the average center, which is about 1,500 square feet with six wax suites, we typically have between 8 and 12 wax specialists per center. If you multiply that by the 70 to 80 centers we plan to open in the coming years and consider some attrition rates, you can see why we are actively driving our Wax pipeline. We have an internal industry relations team that collaborates with our franchisees, beauty schools, and online platforms to attract top talent. We are pleased with our efforts in California and how we continue to support our franchisees. Ultimately, while these specialists are employed by our franchisees, we can implement programs to assist franchisees across the country. We are confident in our approach. We have previously discussed the careful and measured growth strategy we are following, ensuring that whenever we open a center, it is staffed with high-quality wax specialists to provide a consistently excellent experience throughout our network.

Okay. Thank you.

All right, John. Thank you.

Thank you. Our next question comes from Simeon Gutman from Morgan Stanley. Please go ahead with your question.

Hey, good afternoon, everyone. Hoped everyone's good. My first question is, the consensus sales number that was printed, at least so far, it looks in line and it looks like EBITDA maybe a little below. I know David Willis talked about public costs existing throughout the year. I just want to clarify. I don't know if you could have seen that in consensus or not. But is there something else about the flow-through that's a little bit at the margin worse or is it this gross margin issue that you were calling out? I just want to reconcile maybe the EBITDA being a little bit lower than the midpoint of the sales range. If that makes sense.

I think Simeon it's primarily the wrap around impact of public company costs and the headcount that we hired last year in support of taking the company public and maintaining public company compliance. I think it's more in the wrap around impact of that and it really is in the margin.

One thing to add, Simeon, is that we talked about the wax supplies vendor we added. The strategic decision to optimize that procurement process impacted sales. EWC revenue and that flow-through were less than what you would expect from our general product line. This also contributes to the reason you see a significant beat on the EWC revenue, but not entirely flowing through to EBITDA.

Okay. I'll ask a follow-up with two parts. Regarding your point about purchasing some supplies on their behalf, it makes sense for you to buy it because of your scale. You're also doing this to alleviate some pressure on the franchisees, which provides them a benefit as well. The other question I wanted to ask, now that the first quarter is over and you know how you performed, can you discuss perhaps the monthly trends, just as a highlight? I believe there was resilience even earlier in the quarter despite some impact from Omicron. Can you share how performance improved throughout the quarter?

Yes, Simeon. You're correct about the supplies. Our goal is to encourage our franchisees to concentrate on pleasing our guests, and this provides them with a streamlined platform to acquire those supplies. That was a significant part of our decision-making. In the last quarter, we noticed the effects of Omicron mainly toward the end of Q4 in November, which affected labor rather than consumer demand, which remained strong as we entered fiscal year 2022. I'm pleased to report that we've seen a steady increase in traffic, and our traffic rates at the end of Q1 are very encouraging.

Thank you. Our next question comes from the line of Jonathan Komp, from Baird. Your question, please.

Hi. Thank you. Can I ask more about the service price increase you took; just any feedback or reception from the results you've seen from that so far? And then what do you think about the same-store sales guidance for the year? Can you just maybe walk through how you're thinking about building the glide path and how we should expect same-store sales to trend going forward here?

Yeah, Jon. This is David. Regarding the service price increase, our main goal was to safeguard the profitability of our franchisees. You might remember that we implemented a small price increase last February, and recently, we did another modest increase specifically for body services in January of this year. We haven't observed any significant loss in ticket sales. For guidance, we thought it prudent to prepare for a slight amount of attrition. However, we still lack sufficient data to assess the impact of the January service price increase. From last year's price adjustment, we do have updated metrics and didn't notice much attrition, which is reassuring. Concerning four-wall profitability, our analysis of the 2021 profit and loss statements shows that the average center was slightly more profitable in 2021 compared to 2019. This indicates the resilience of our four-wall model during these uncertain times. Amir, would you like to discuss same-store sales?

Sure. We discussed Q1 having same-store sales in the low twenties due to guests returning and the volume effects during that period, especially considering that Q1 of '21 had centers ramping up and some were closed. For the full year, we expect to be at the high end of the high single digits, and this impacts our projections for Q2, Q3, and Q4 as we compare to last year's returns. We anticipate achieving the low end of that high single digits target.

Okay. That's very helpful. And then one other separate question just related to the unit outlook. Could you maybe share any of your latest thoughts on some of the tests either around the smaller market model or, I don't know if this is a test, but current thoughts on the opportunity for shop-in-shops or alternative formats? Thank you.

Hey, Jon. It's David. Thanks for the question. Listen, we remain hyper-focused on rolling out our standard box that 1,300 to 1,500 square foot with six wax suites. It's tried and true, it's proven, and that's what we're doing. We've got a couple of experiments with some smaller formats. Really, too early to tell, but the go-forward game plan is to continue to roll out what we've been doing over the years and know how to do very well. We will continue to look at other opportunities, what we call wondering outside the bulls-eye whether that's store-within-a-store or moving our product into some retailers. But right now, given the coming out of the pandemic and getting the momentum that we have, we really want to stay focused on what we know how to execute extremely well.

Okay, great. Thanks again.

All right, Jon. Thank you.

Thank you. Our next question comes from the line of Kelly Crago from Citi. Your question, please?

Hi there. Curious if you could elaborate on your beauty school partnership program. Seems interesting and seems to be working to help you attract more waxers. So just curious what you're doing now that you weren't doing prior and how quickly you can roll this out nationwide.

We're doing a couple of things in that area. We are sponsoring EWC branded content in some of our beauty schools. Our franchisees have shared some of their wax specialists to teach courses, which is helping us engage more with the beauty schools. We've also seen success with the virtual recruiting fairs we've conducted with franchisees, receiving really good engagement. Additionally, we are conducting direct email outreach to licensed aestheticians and cosmetologists, starting in California, where we received a positive response. This program aims to share with prospective candidates what a day in the life at EWC is like and how they can build a career here. While we focus on beauty schools, we are also implementing other programs to expand the candidate pool for our franchisees.

And just separately, curious if you could talk a little bit more about the P&L impact from optimizing procurement for your franchisees that we're expected to see this year. So like how much of a topline contribution are you expecting, and then will that show up in product sales? Any color on the margin differential between those sales and what your typical products sales margins look like. Thank you.

Sure, Kelly. In response to your question about whether it will impact product sales, the answer is yes. It will be included in our wholesale, which contributes to product sales. We anticipate a decline in overall margin due to this product line having a lower margin compared to our typical wholesale margins, which is about 230-280 basis points. However, we expect some improvement in royalty and marketing funds as our sales increase. This change is a strategic decision for us and will be beneficial in terms of margin dollars, although we are seeing some rate declines. Regarding overall margin, as mentioned by David Willis, our gross margin for the year is anticipated to be between 71% and 71.5%.

The driver for this. So I would say in the scheme of things, this is not a super material thing to our P&L, but it avoided higher costs our franchise would have had to bear had we not made the change. So, the market was going up with some of the other suppliers, so this wasn't just to make ordering a little easier for them, more efficient, which is the case, but it was also a bit of a cost avoidance strategy for our network.

Great. Thanks, guys. Best of luck.

Thanks, Kelly.

Thank you. Our next question comes from the line of Dana Telsey from Telsey Advisory Group. Your question, please.

Good afternoon. I missed the first part of the Q&A session so this is repetitive. As you think about 2022 and the franchises, what are you seeing in terms of the openings of new stores? Are they opening on the time frame that you want given the supply chain headwinds of getting equipment? Then on the employee basis aestheticians, where are you in terms of California or other areas in finding enough aestheticians? Lastly, I thought it was interesting in terms of sales versus other parts of the body in terms of waxing, anything you are doing to try to drive attachment sales that way to increase the average transaction? Thank you.

Dana, hi. This is David. On the new center openings, our guidance is 70-72 net new centers for fiscal 2022. As it relates to supply chain, we have seen costs come down from their peaks. I think we spoke on our last call that lumber is down from where it was in second and third quarter last year. I would say contractor rates are a little all over the board. In some markets, they're still elevated; in other markets, they've been tempered a bit. We've made investments in our development team last year, and we've put in place more rigor around our development process. We also built in more cushion into the overall development timeline because we continue to see, in some markets permitting is getting better in some markets, but it's still unpredictable and slow in other markets. So that's a long-winded way of saying, given what we've done in the overall development process and where we're seeing supply chain and construction costs, we are quite confident in our ability to deliver the guidance that we have provided. We also continue to believe that this kind of thoughtful, prudent approach will enable our franchisees to recruit sufficient staff so they can open and start driving tickets with new guests.

I think, Dana, on your question about services, as we've talked about before that compared to 2019 or 2021 service mix, certainly did skew more towards body services. And we do continue to believe that there are some sideline guests that will return when they get back in their full personal care routines; as restrictions ease, as fears ease, that the face will come back into it. So we still think about faces and hands. You know that those services are typically at a much lower price point. But we do have things in mind in terms of promotions to bundle those body and face services to drive that business back into the centers in the coming months.

Thank you.

Thanks, Dana.

Thank you. This does conclude the question-and-answer session of today's program, I'd like to hand the program back to David Berg for any further remarks.

Well, thank you. Thanks, everybody for joining us today. Obviously, we're incredibly proud of what the team accomplished, and a huge thank you to all of our associates and our franchisee partners. We certainly are excited about the momentum that we have as we enter 2022, and we will look forward to speaking with you all in early May when we announce our Q1 results. Have a great rest of the day, thank you for joining us.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.