— Grew Q1 2022 revenue 73% and North America
system-wide sales 70%, compared to Q1 2021
— Sold 260 franchise licenses and opened 99 new
studios in Q1 2022
— Sold 4,684 total franchise licenses and
operates 2,229 total studios as of Q1 2022
— Reaffirms full year 2022 outlook of 81%
growth in new studio openings, 41% growth in North America
system-wide sales, 33% growth in revenue and 153% growth in
Adjusted EBITDA at the midpoint of guidance ranges
Xponential Fitness, Inc. (NYSE: XPOF) (“Xponential” or the
“Company”), the largest global franchisor of boutique fitness
brands, today reported financial results for the first quarter
ended March 31, 2022. All financial figures included in this
release refer to global numbers, unless otherwise noted.
Definitions for the non-GAAP measures and a reconciliation to the
corresponding GAAP measurements are included in the tables that
accompany this release.
Financial Highlights: Q1 2022 Compared to Q1 2021
- Grew revenue 73% to $50.4 million.
- Increased North America system-wide sales1 by 70% to $224.5
million.
- Reported North America same store sales2 growth of 47%,
compared to a decline of 24%.
- Reported North America quarterly run-rate average unit volume
(AUV)3 of $450,000, compared to $303,000.
- Posted net loss of $15.2 million, or a loss of $1.51 per share,
on a share count of 22.7 million shares of Class A Common Stock,
compared to a net loss of $4.8 million.4
- Posted Adjusted Net Loss of $5.3 million, or $0.19 per share,
compared to an Adjusted Net Loss of $4.6 million.4
- Reported Adjusted EBITDA5 of $14.5 million, compared to $3.6
million.
“On the heels of a very strong fourth quarter, Xponential
Fitness entered 2022 with great momentum. In the first quarter, we
opened 99 new studios, bringing our total studio count to 2,229
studios worldwide. In addition, our North America actively paying
members and visitation rates each grew 17% in the first quarter of
2022 versus the fourth quarter of 2021,” said Anthony Geisler, CEO
of Xponential Fitness, Inc. “Importantly, performance during the
first quarter continued to strengthen month over month. We reached
a significant milestone in March when our monthly run-rate North
America AUVs equaled $477,000, rebounding to peak pre-COVID-19
quarterly run-rate AUVs. Thus far in the second quarter, this
growth has continued, and even as the U.S economy experiences
unprecedented inflation and macroeconomic pressures, our member
counts, both overall and at the individual studio level, are
increasing.”
Mr. Geisler continued, “Our differentiated portfolio of
complementary brands and modalities, together with the many
benefits we experience from our scale and shared services platform,
contributed to our financial and operational performance in the
quarter. Adjusted EBITDA margins of 29% in the first quarter of
2022 nearly doubled on a sequential basis. With a solid start to
the new year, we continue to solidify our position as the largest
and most differentiated global franchisor in the boutique fitness
industry. We remain on track to meet our guidance for 2022,
including expectations for Adjusted EBITDA margins to be in the low
30% range, strengthened by the growth and maturation of our
business.”
For the first quarter 2022, total revenue increased $21.3
million, or 73%, to $50.4 million, up from $29.1 million in the
prior-year period. This increase included a corresponding North
America same store sales increase of 47%.
Net loss totaled $15.2 million, or a loss of $1.51 per share,
compared to a loss of $4.8 million in the prior-year period. The
increase was the result of $14.0 million of higher overall
profitability, offset by a $9.4 million increase in non-cash
contingent consideration primarily related to the Rumble
acquisition, and a $15.0 million increase in non-cash equity-based
compensation expense. Please see the table at the back of the
release for a calculation of the basic and diluted loss per share
for the quarter ended March 31, 2022.
Consistent with previous periods, the Rumble acquisition
non-cash contingent consideration earn-out liability is being
marked-to-market based on Xponential’s share price. With the
trading price of our shares increasing nearly 15% between December
2021 and March 2022, a corresponding increased earn-out liability
was recorded. As part of this adjustment, Xponential’s total share
count does not increase until the shares vest, which occurs at a
weighted average share price of $61.90.
Adjusted Net Loss for the first quarter 2022, which excludes the
$9.5 million non-cash contingent consideration related primarily to
the Rumble acquisition and $0.3 million related to the
remeasurement of the Company’s tax receivable agreement, was $5.3
million, or ($0.19) per share, which is based on 22.7 million
shares of Class A common stock.
Adjusted EBITDA, which is defined as net income before interest,
taxes, depreciation and amortization, adjusted for equity-based
compensation, acquisition & transaction expenses, management
fees, litigation expenses, employee retention credit, secondary
public offering expenses and tax receivable agreement
remeasurement, increased to $14.5 million, up from $3.6 million in
the prior-year period.
Liquidity and Capital Resources
As of March 31, 2022, the Company had approximately $15.8
million of cash and cash equivalents and $130.3 million in total
long-term debt. Net cash provided by operating activities was $2.9
million for the quarter ended March 31, 2022.
2022 Outlook
The Company is reiterating its full-year 2022 outlook is as
follows:
- New studio openings in the range of 500 to 520, or an increase
of 81% at the midpoint as compared to full year 2021;
- North America system-wide sales in the range of $995.0 million
to $1.005 billion, or an increase of 41% at the midpoint as
compared to full year 2021;
- Revenue in the range of $201.0 million to $211.0 million, or an
increase of 33% at the midpoint as compared to full year 2021;
and
- Adjusted EBITDA in the range of $67.0 million to $71.0 million,
or an increase of 153% at the midpoint as compared to full year
2021.
Additional key assumptions for full year 2022 include:
- Tax rate in mid-to-high single digits;
- Share count of approximately 25.1 million shares of Class A
Common Stock for the GAAP EPS and Adjusted EPS calculations. A full
explanation of the Company’s share count calculation and associated
EPS and Adjusted EPS calculations can be found in the tables at the
back of this release; and
- $3.25 million in quarterly cash dividends paid related to the
$200 million Convertible Preferred Stock issued in connection with
the IPO.
First Quarter 2022 Conference Call
The Company will host a conference call today at 1:30 p.m.
Pacific Time / 4:30 p.m. Eastern Time to discuss its first quarter
2022 financial results. Participants may join the conference call
by dialing 1-877-407-9716 (United States) or 1-201-493-6779
(International).
A live webcast of the conference call will also be available on
the Company’s Investor Relations site at
https://investor.xponential.com/. For those unable to participate
in the conference call, a telephonic replay of the call will be
available shortly after the completion of the call, until 11:59
p.m. ET on Thursday, May 26, 2022, by dialing 1-844-512-2921
(United States) or 1-412-317-6671 (International) and entering the
replay pin number: 13727991.
About Xponential Fitness, Inc.
Xponential Fitness, Inc. (NYSE: XPOF) is the largest global
franchisor of boutique fitness brands. Through its mission to make
boutique fitness accessible to everyone, the Company operates a
diversified platform of ten brands spanning across verticals
including Pilates, indoor cycling, barre, stretching, rowing,
dancing, boxing, running, functional training and yoga. In
partnership with its franchisees, Xponential Fitness offers
energetic, accessible, and personalized workout experiences led by
highly qualified instructors in studio locations across 48 U.S.
states and Canada, and through master franchise or international
expansion agreements in 12 additional countries. Xponential
Fitness' portfolio of brands includes Club Pilates, the largest
Pilates brand in the United States; CycleBar, the largest indoor
cycling brand in the United States; StretchLab, a concept offering
one-on-one and group stretching services; Row House, the largest
franchised indoor rowing brand in the United States; AKT, a
dance-based cardio workout combining toning, interval and circuit
training; YogaSix, the largest franchised yoga brand in the United
States; Pure Barre, a total body workout that uses the ballet barre
to perform small isometric movements, and the largest Barre brand
in the United States; STRIDE, a treadmill-based cardio and strength
training concept; Rumble, a boxing-inspired full-body workout; and
BFT, a functional training and strength-based program. For more
information, please visit the Company’s website at
xponential.com.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP,
we believe non-GAAP measures are useful in evaluating our operating
performance. We use certain non-GAAP financial information, such as
EBITDA, Adjusted EBITDA, Adjusted Net Income or Loss, and Adjusted
Net Income or Loss per share, which exclude certain non-operating
or non-recurring items, including but not limited to, equity-based
compensation expenses, acquisition and transaction related
expenses, litigation expenses, and secondary public offering
expenses, that we believe are not representative of our core
business or future operating performance, to evaluate our ongoing
operations and for internal planning and forecasting purposes. We
believe that non-GAAP financial information, when taken
collectively with comparable GAAP financial measures, is helpful to
investors because it provides consistency and comparability with
past financial performance, and provides meaningful supplemental
information regarding our performance by excluding certain items
that may not be indicative of our business, results of operations
or outlook. However, non-GAAP financial information is presented
for supplemental informational purposes only, has limitations as an
analytical tool, and should not be considered in isolation or as a
substitute for financial information presented in accordance with
GAAP. In addition, other companies, including companies in our
industry, may calculate similarly titled non-GAAP measures
differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of our
non-GAAP financial measure as tools for comparison. We seek to
compensate such limitations by providing a detailed reconciliation
for the non-GAAP financial measures to the most directly comparable
financial measures stated in accordance with GAAP. Investors are
encouraged to review the related GAAP financial measures and the
reconciliation of the non-GAAP financial measures to their most
directly comparable GAAP financial measures and not rely on any
single financial measure to evaluate our business. For a
reconciliation of non-GAAP to GAAP measures discussed in this
release, please see the tables at the end of this press
release.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on current expectations, estimates, forecasts and projections
of future performance based on management's judgment, beliefs,
current trends, and anticipated product performance. These
forward-looking statements include, without limitation, statements
relating to expansion of market share; projected number of new
studio openings; anticipated industry trends; projected financial
and performance information such as system-wide sales; annual
revenue, Adjusted EBITDA and other statements under the section
“2022 Outlook”; our competitive position in the boutique fitness
industry; and ability to execute our business strategies.
Forward-looking statements involve risks and uncertainties that may
cause actual results to differ materially from those contained in
the forward-looking statements. These factors include, but are not
limited to, the impact of the COVID-19 pandemic on our business and
franchisees; our relationships with master franchisees and
franchisees; difficulties and challenges in opening studios by
franchisees; the ability of franchisees to generate sufficient
revenues; risks relating to expansion into international markets;
loss of reputation and brand awareness; material weakness in our
internal control over financial reporting; and other risks as
described in our SEC filings, including our Annual Report on Form
10-K for the full year ended December 31, 2021 filed by Xponential
with the SEC and other periodic reports filed with the SEC. Other
unknown or unpredictable factors or underlying assumptions
subsequently proving to be incorrect could cause actual results to
differ materially from those in the forward-looking statements.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance, or achievements.
You should not place undue reliance on these forward-looking
statements. All information provided in this press release is as of
today's date, unless otherwise stated, and Xponential undertakes no
duty to update such information, except as required under
applicable law.
Xponential Fitness,
Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
(in thousands, except share
and per share amounts)
March 31,
December 31,
2022
2021
Assets Current Assets: Cash, cash equivalents and restricted
cash
$
15,750
$
21,320
Accounts receivable, net
15,865
11,702
Inventories
9,217
6,928
Prepaid expenses and other current assets
7,389
5,271
Deferred costs, current portion
4,071
3,712
Notes receivable from franchisees, net
2,531
2,293
Total current assets
54,823
51,226
Property and equipment, net
13,910
12,773
Right-of-use assets
16,179
—
Goodwill
169,073
169,073
Intangible assets, net
134,532
136,863
Deferred costs, net of current portion
42,474
42,015
Notes receivable from franchisees, net of current portion
3,095
3,041
Other assets
558
553
Total assets
$
434,644
$
415,544
Liabilities, redeemable convertible preferred stock and
deficit Current Liabilities: Accounts payable
$
12,359
$
14,905
Accrued expenses
15,818
21,045
Deferred revenue, current portion
25,664
22,747
Notes payable
—
983
Current portion of long-term debt
2,960
2,960
Other current liabilities
5,175
3,253
Total current liabilities
61,976
65,893
Deferred revenue, net of current portion
98,698
95,691
Contingent consideration from acquisitions
63,968
54,881
Long-term debt, net of current portion, discount and issuance costs
127,382
127,983
Lease liability
18,472
—
Other liabilities
1,529
4,675
Total liabilities
372,025
349,123
Commitments and contingencies Redeemable convertible preferred
stock, $0.0001 par value, 400,000 shares authorized, 200,000shares
issued and outstanding as of March 31, 2022 and December 31, 2021
327,821
276,890
Stockholders' equity (deficit): Undesignated preferred stock,
$0.0001 par value, 4,600,000 shares authorized, none issuedand
outstanding as of March 31, 2022 and December 31, 2021
—
—
Class A common stock, $0.0001 par value, 500,000,000 shares
authorized, 24,249,205 and23,898,042 shares issued and outstanding
as of March 31, 2022 and December 31, 2021,respectively
2
2
Class B common stock, $0.0001 par value, 500,000,000 shares
authorized, 24,564,155 and22,968,674 shares issued and outstanding
as of March 31, 2022 and December 31, 2021,respectively
2
2
Additional paid-in capital
465,525
—
Receivable from shareholder
(10,600
)
(10,600
)
Accumulated deficit
(651,352
)
(643,833
)
Total stockholders' deficit attributable to Xponential Fitness,
Inc.
(196,423
)
(654,429
)
Noncontrolling interests
(68,779
)
443,960
Total stockholders' deficit
(265,202
)
(210,469
)
Total liabilities, redeemable convertible preferred stock and
deficit
$
434,644
$
415,544
Xponential Fitness,
Inc.
Condensed Consolidated
Statements of Operations
(Unaudited)
(in thousands, except share
and per share amounts)
Three Months Ended March
31,
2022
2021
Revenue, net: Franchise revenue
$
25,500
$
13,755
Equipment revenue
7,779
4,066
Merchandise revenue
6,083
4,232
Franchise marketing fund revenue
4,435
2,483
Other service revenue
6,565
4,529
Total revenue, net
50,362
29,065
Operating costs and expenses: Costs of product revenue
9,592
5,344
Costs of franchise and service revenue
4,234
2,319
Selling, general and administrative expenses
33,919
16,602
Depreciation and amortization
3,492
2,055
Marketing fund expense
4,355
2,616
Acquisition and transaction expenses
9,544
350
Total operating costs and expenses
65,136
29,286
Operating loss
(14,774
)
(221
)
Other (income) expense: Interest income
(389
)
(95
)
Interest expense
2,861
4,423
Total other expense
2,472
4,328
Loss before income taxes
(17,246
)
(4,549
)
Income taxes
(2,067
)
201
Net loss
(15,179
)
(4,750
)
Less: Net loss attributable to noncontrolling interests
(7,660
)
—
Net loss attributable to Xponential Fitness, Inc.
$
(7,519
)
$
(4,750
)
Net loss per share of Class A common stock: Basic
$
(1.51
)
N/A
Diluted
$
(1.51
)
N/A
Weighted average shares of Class A common stock outstanding: Basic
22,736,946
N/A
Diluted
22,736,946
N/A
Xponential Fitness,
Inc.
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended March
31,
2022
2021
Cash flows from operating activities: Net loss
$
(15,179
)
$
(4,750
)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: Depreciation and amortization
3,492
2,055
Amortization of debt issuance cost
33
311
Amortization of discount on long-term debt
151
—
Change in contingent consideration from acquisitions
9,546
120
Bad debt expense (recovery)
(617
)
(105
)
Equity-based compensation
15,248
222
Non-cash interest
(208
)
226
Gain on disposal of assets
(43
)
—
Changes in assets and liabilities: Accounts receivable
(3,300
)
(1,173
)
Inventories
(2,289
)
430
Prepaid expenses and other current assets
(2,117
)
(985
)
Operating lease right-of-use assets and operating lease liabilities
(20
)
—
Deferred costs
(818
)
(533
)
Notes receivable, net
5
168
Accounts payable
(2,758
)
(1,797
)
Accrued expenses
(3,650
)
491
Notes payable
(983
)
—
Other current liabilities
20
65
Deferred revenue
5,924
5,033
Other assets
(10
)
(1
)
Other liabilities
461
23
Net cash provided by (used in) operating activities
2,888
(200
)
Cash flows from investing activities: Purchases of property and
equipment
(1,798
)
(1,125
)
Purchase of studios
—
(245
)
Proceeds from sale of assets
65
—
Purchase of intangible assets
(316
)
(288
)
Notes receivable issued
(585
)
—
Notes receivable payment received
426
9
Net cash used in investing activities
(2,208
)
(1,649
)
Cash flows from financing activities: Borrowings from long-term
debt
—
10,600
Payments on long-term debt
(740
)
(925
)
Debt issuance costs
(46
)
(212
)
Payment of preferred stock dividend and deemed dividend
(4,875
)
—
Payment of contingent consideration
(589
)
(964
)
Distributions to Member
—
(10,600
)
Receipts from Member, net
—
1
Net cash used in financing activities
(6,250
)
(2,100
)
Decrease in cash, cash equivalents and restricted cash
(5,570
)
(3,949
)
Cash, cash equivalents and restricted cash, beginning of period
21,320
11,299
Cash, cash equivalents and restricted cash, end of period
$
15,750
$
7,350
Xponential Fitness,
Inc.
Net Loss to GAAP EPS Per
Share
(in thousands, except share
and per share amounts)
Three Months Ended March
31,
2022
2021
(in thousands, except share
and per share amounts)
Net loss
$
(15,179
)
$
(4,750
)
Less: net loss attributable to non-controlling interests
35,003
—
Less: dividends on preferred shares
(3,250
)
—
Less: deemed dividends
(50,931
)
—
Net loss attributable to Xponential Fitness, Inc.
$
(34,357
)
$
(4,750
)
Denominator:
N/A
Weighted-average shares of Class A common stock outstanding
22,736,946
N/A
Net loss per share
$
(1.51
)
N/A
Xponential Fitness,
Inc.
Reconciliations of GAAP to
Non-GAAP Measures
(in thousands, except share
and per share amounts)
Three Months Ended March
31,
2022
2021
(in thousands) Net loss
$
(15,179
)
$
(4,750
)
Interest expense, net
2,472
4,328
Income taxes
(2,067
)
201
Depreciation and amortization
3,492
2,055
EBITDA
(11,282
)
1,834
Acquisition and transaction expenses
9,544
350
Management fees and expenses
—
192
Litigation expenses
2,740
959
Employee retention credit
(2,597
)
—
Secondary public offering expenses
487
—
TRA remeasurement
313
—
Adjusted EBITDA
$
14,453
$
3,557
Three Months Ended March
31,
2022
2021
(in thousands, except share and per share amounts) Net loss
$
(15,179
)
$
(4,750
)
Change in fair value of contingent consideration
9,546
120
TRA remeasurement
313
—
Adjusted net loss
$
(5,320
)
$
(4,630
)
Adjusted net loss attributable to noncontrolling interest
$
(2,685
)
N/A
Adjusted net loss attributable to Xponential Fitness, Inc.
(2,635
)
N/A
Dividends on preferred shares
(1,610
)
N/A
EPS numerator
$
(4,245
)
N/A
Adjusted net loss per share
$
(0.19
)
N/A
Weighted average shares of Class A common stock outstanding
22,736,946
N/A
Note: The above Adjusted Net Loss per share is computed
by dividing the net loss attributable to holders of Class A common
stock by the weighted average shares of Class A common stock
outstanding during the period. Total share count does not include
potential future shares vested upon achieving certain earn-out
thresholds. Net income, however, continues to take into account the
non-cash contingent liability due to Rumble.
Footnotes
1System-wide sales represent gross sales by all studios.
System-wide sales includes sales by franchisees that are not
revenue realized by us in accordance with GAAP. While we do not
record sales by franchisees as revenue, and such sales are not
included in our consolidated financial statements, this operating
metric relates to our revenue because we receive approximately 7%
and 2% of the sales by franchisees as royalty revenue and marketing
fund revenue, respectively. We believe that this operating measure
aids in understanding how we derive our royalty revenue and
marketing fund revenue and is important in evaluating our
performance. System-wide sales growth is driven by new studio
openings and increases in same store sales. Management reviews
system-wide sales monthly, which enables us to assess changes in
our franchise revenue, overall studio performance, the health of
our brands and the strength of our market position relative to
competitors.
2 Same store sales refer to period-over-period sales comparisons
for the base of studios. We define the same store sales base to
include studios in North America that have been open for at least
13 calendar months as of the measurement date. Any transfer of
ownership of a studio does not affect this metric. We measure same
store sales based solely upon monthly sales as reported by
franchisees. This measure highlights the performance of existing
studios, while excluding the impact of new studio openings.
Management reviews same store sales to assess the health of the
franchised studios.
3AUV is calculated by dividing sales during the applicable
period for all studios being measured by the number of studios
being measured. Quarterly run-rate AUV consists of average
quarterly sales for all studios that are at least 6 months old at
the beginning of the respective quarter, multiplied by four.
Monthly run-rate AUV is calculated as the monthly AUV multiplied by
twelve, for studios that are at least 6 months old at the beginning
of the respective month. AUV growth is primarily driven by changes
in same store sales and is also influenced by new studio openings.
Management reviews AUV to assess studio economics.
4No comparison of Net Loss per share, and Adjusted Net Loss per
share to Q1 2021 is provided as such comparison is not meaningful
given the Company’s pre-IPO capital structure.
5We define adjusted EBITDA as EBITDA (net income/loss before
interest, taxes, depreciation and amortization), adjusted for the
impact of certain non-cash and other items that we do not consider
in our evaluation of ongoing operating performance. These items
include equity-based compensation, acquisition and transaction
expenses (including change in contingent consideration), management
fees and expenses (that were discontinued after July 2021),
litigation expenses (consisting of legal and related fees for
specific proceedings that arise outside of the ordinary course of
our business), employee retention credit (a credit for retaining
employees throughout the COVID-19 pandemic), secondary public
offering expenses for which we do not receive proceeds and expense
related to the remeasurement of our TRA obligation that we do not
believe reflect our underlying business performance and affect
comparability. EBITDA and adjusted EBITDA are also frequently used
by analysts, investors and other interested parties to evaluate
companies in our industry. We believe that adjusted EBITDA, viewed
in addition to, and not in lieu of, our reported GAAP results,
provides useful information to investors regarding our performance
and overall results of operations because it eliminates the impact
of other items that we believe reduce the comparability of our
underlying core business performance from period to period and is
therefore useful to our investors in comparing the core performance
of our business from period to period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220511006177/en/
Kimberly Esterkin Addo Investor Relations
investor@xponential.com (310) 829-5400
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