XPOF Xponential Fitness Inc

• Grew Q4 2023 revenue 27% and North America system-wide sales1 31%, compared to Q4 2022
• Grew full year 2023 revenue 30% and North America system-wide sales 36%, compared to full year 2022, exceeding the high end of the guidance range
• Sold 805 franchise licenses and opened 557 new studios in 2023
• For full year 2024, Company expects 550 new studio openings, 22% growth in system-wide sales, 8% growth in revenue and 31% growth in Adjusted EBITDA4

Xponential Fitness, Inc. (NYSE: XPOF) (“Xponential” or the “Company”), the largest global franchisor of health and wellness brands, today reported financial results for the fourth quarter and full year ended December 31, 2023. 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 measures are included in the tables that accompany this release.

Financial Highlights: Q4 2023 Compared to Q4 2022

• Grew revenue 27% to $90.2 million.
• Increased North America system-wide sales1 by 31% to $384.6 million.
• Reported North America same store sales2 growth of 14%, compared to growth of 17%.
• Reported North America quarterly run-rate average unit volume (AUV)3 of $590,000, compared to $522,000.
• Posted net loss of $9.1 million, or earnings of $0.10 per basic share, on a share count of 30.9 million shares of Class A Common Stock, compared to a net loss of $0.4 million, or a loss of $1.13 per basic share, on a share count of 26.8 million shares of Class A Common Stock.
• Posted adjusted net income of $4.2 million, or earnings of $0.05 per basic share, compared to adjusted net income of $6.8 million, or earnings of $0.07 per basic share.
• Reported Adjusted EBITDA4 of $30.7 million, an increase of 38%, compared to $22.2 million.

Financial Highlights: FY 2023 Compared to FY 2022

• Grew revenue 30% to $318.7 million.
• Increased North America system-wide sales by 36% to $1.40 billion.
• Reported North America same store sales growth of 16%, compared to growth of 25%.
• Posted net loss of $1.7 million, or earnings of $1.18 per basic share, on a share count of 31.7 million shares of Class A Common Stock, compared to net income of $2.9 million, or a loss of $0.87 per basic share, on a share count of 25.3 million shares of Class A Common Stock.
• Posted adjusted net income of $15.7 million, or earnings of $0.17 per basic share, compared to adjusted net income of $9.5 million, or a loss of $0.07 per basic share.
• Reported Adjusted EBITDA of $105.3 million, an increase of 42%, compared to $74.3 million.

“In 2023, we experienced substantial growth on both the top and bottom lines as members continued to demonstrate that they prioritize their health and wellness routines. We further streamlined our business and are operating from a position of strength as we leverage our operations,” said Anthony Geisler, CEO of Xponential. “We see this momentum carrying into 2024, and are confident that our optimized portfolio of global brands will deliver considerable margin expansion and operational cash flows.”

Results for the Fourth Quarter Ended December 31, 2023

For the fourth quarter of 2023, total revenue increased $18.9 million, or 27%, to $90.2 million, up from $71.3 million in the prior year period. This increase included a corresponding North America same store sales increase of 14%.

Net loss totaled $9.1 million, or earnings of $0.10 per basic share, compared to net loss of $0.4 million, or a loss of $1.13 per basic share, in the prior year period. The higher net loss was the result of an $8.8 million increase in restructuring costs from our company-owned transition studios, $6.6 million of lower overall profitability, and a $4.9 million increase in impairment of goodwill and other assets; offset by an $8.8 million decrease in non-cash contingent consideration primarily related to the Rumble acquisition, and a $2.8 million decrease in non-cash equity-based compensation expense. Please see the table at the end of this press release for a calculation of the basic earnings per share and diluted loss per share for the quarter ended December 31, 2023.

Adjusted net income for the fourth quarter of 2023, which excludes the $0.5 million non-cash contingent consideration gain related primarily to the Rumble acquisition, $0.1 million related to the re-measurement of the Company’s tax receivable agreement, $4.9 million related to the impairment of goodwill and other assets, and $8.8 million related to restructuring and related charges, was $4.2 million, or earnings of $0.05 per basic share, on a share count of 30.9 million shares of Class A Common Stock.

Adjusted EBITDA, which is defined as net income (loss) before interest, taxes, depreciation and amortization, adjusted for equity-based compensation and related employer payroll taxes, acquisition and transaction expenses (income), employee retention credit, litigation expenses (outside of the ordinary course of business), financial transaction fees and related expenses, tax receivable agreement remeasurement, impairment of goodwill and other assets, and restructuring and related charges, increased to $30.7 million, up 38% from $22.2 million in the prior year period.

Results for the Full Year Ended December 31, 2023

For the full year 2023, total revenue increased $73.7 million, or 30%, to $318.7 million, up from $245.0 million in 2022. This increase in revenue included a corresponding North America same store sales increase of 16% year-over-year.

Net loss totaled $1.7 million, or earnings of $1.18 per basic share, compared to net income of $2.9 million, or a loss of $0.87 per basic share. The higher net loss was the result of a $15.5 million increase in restructuring and related costs from our company-owned transition studios, $7.5 million of lower overall profitability, and a $13.0 million increase in impairment of goodwill and other assets; offset by a $20.4 million decrease in non-cash contingent consideration primarily related to the Rumble acquisition, and a $11.0 million decrease in non-cash equity-based compensation expense.

Adjusted net income for the full year 2023, which excludes the $18.0 million non-cash contingent consideration gain related primarily to the Rumble acquisition, $3.2 million related to the re-measurement of the Company’s tax receivable agreement, $16.7 million related to the impairment of goodwill and other assets, and $15.5 million related to restructuring and related charges, was $15.7 million, or earnings of $0.17 per basic share, on a share count of 31.7 million shares of Class A Common Stock.

Adjusted EBITDA as defined above increased to $105.3 million, up 42% from $74.3 million in the prior year.

Liquidity and Capital Resources

As of December 31, 2023, the Company had approximately $37.1 million of cash, cash equivalents and restricted cash and $328.5 million in total long-term debt. Net cash provided by operating activities was $35.4 million for the full year ended December 31, 2023.

2024 Outlook

The Company is initiating full-year 2024 outlook, which compares to 2023 results as follows:

• Gross new studio openings in the range of 540 to 560;
• North America system-wide sales in the range of $1.705 billion to $1.715 billion, or an increase of 22% at the midpoint;
• Revenue in the range of $340.0 million to $350.0 million, or an increase of 8% at the midpoint; and
• Adjusted EBITDA in the range of $136.0 million to $140.0 million, or an increase of 31% at the midpoint.

Additional key assumptions for full year 2024 include:

• Tax rate in the mid-to-high single digits;
• Share count of 31.5 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 end of this press release; and
• $1.9 million in quarterly dividends paid related to the Company’s Convertible Preferred Stock.

We are not able to provide a quantitative reconciliation of the estimated full-year Adjusted EBITDA for fiscal year ending December 31, 2024 without unreasonable efforts to the most directly comparable GAAP financial measure due to the high variability, complexity and low visibility with respect to certain items such as taxes, TRA remeasurements, and income and expense from changes in fair value of contingent consideration from acquisitions. We expect the variability of these items to have a potentially unpredictable and potentially significant impact on future GAAP financial results, and, as such, we also believe that any reconciliations provided would imply a degree of precision that would be confusing or misleading to investors.

Fourth Quarter and Full Year 2023 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 fourth quarter and full year 2023 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 March, 14, 2024, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13743169.

About Xponential Fitness, Inc.

Xponential Fitness, Inc. (NYSE: XPOF) is the largest global franchisor of health and wellness brands. Through its mission to make health and wellness accessible to everyone, the Company operates a diversified platform of ten brands spanning across verticals including Pilates, indoor cycling, barre, stretching, rowing, dancing, boxing, strength training, metabolic health, and yoga. In partnership with its franchisees, Xponential offers energetic, accessible, and personalized workout experiences led by highly qualified instructors in studio locations throughout the U.S. and internationally, with franchise, master franchise and international expansion agreements in 49 U.S. states and 22 additional countries. Xponential’s 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, the largest assisted stretching brand in the United States 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 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; Rumble, a boxing-inspired full-body workout; BFT, a functional training and strength-based program; and Lindora, a leading provider of medically guided wellness and metabolic health solutions. 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 financial measures are useful in evaluating our operating performance. We use certain non-GAAP financial information, such as EBITDA, Adjusted EBITDA, adjusted net income (loss), and adjusted net earnings (loss) per share, which exclude certain non-operating or non-recurring items, including but not limited to, equity-based compensation expenses, acquisition and transaction expenses (income), litigation expenses, employee retention credit, financial transaction fees and related expenses, tax receivable agreement remeasurement, impairment of goodwill and other assets, and charges incurred in connection with our restructuring plan 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 measures 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 financial performance. These forward-looking statements include, without limitation, statements relating to expected growth of our business; projected number of new studio openings; profitability; the expected impact of our movement away from company-owned transition studios; anticipated industry trends; projected financial and performance information such as system-wide sales; and other statements under the section “2024 Outlook”; our competitive position in the boutique fitness and broader health and wellness industry; and ability to execute our business strategies and our strategic growth drivers. 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, our relationships with master franchisees, franchisees and international partners; 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; general economic conditions and industry trends; and other risks as described in our SEC filings, including our Annual Report on Form 10-K for the full year ended December 31, 2023, to be 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.

Consolidated Balance Sheets

(in thousands, except per share amounts)

 

 

December 31,

 

2023

 

2022

Assets Current Assets: Cash, cash equivalents and restricted cash

$

37,094

 

$

37,370

 

Accounts receivable, net

 

32,751

 

 

25,555

 

Inventories

 

14,724

 

 

10,864

 

Prepaid expenses and other current assets

 

5,856

 

 

6,294

 

Deferred costs, current portion

 

6,620

 

 

4,131

 

Notes receivable from franchisees, net

 

203

 

 

1,520

 

Total current assets

 

97,248

 

 

85,734

 

Property and equipment, net

 

19,502

 

 

18,524

 

Right-of-use assets

 

71,413

 

 

30,079

 

Goodwill

 

171,601

 

 

165,697

 

Intangible assets, net

 

120,149

 

 

137,175

 

Deferred costs, net of current portion

 

46,541

 

 

43,620

 

Notes receivable from franchisees, net of current portion

 

802

 

 

1,067

 

Other assets

 

1,442

 

 

795

 

Total assets

$

528,698

 

$

482,691

 

Liabilities, redeemable convertible preferred stock and equity (deficit) Current Liabilities: Accounts payable

$

19,119

 

$

16,185

 

Accrued expenses

 

14,088

 

 

12,295

 

Deferred revenue, current portion

 

34,674

 

 

31,996

 

Current portion of long-term debt

 

4,760

 

 

3,035

 

Other current liabilities

 

19,666

 

 

9,265

 

Total current liabilities

 

92,307

 

 

72,776

 

  Deferred revenue, net of current portion

 

117,305

 

 

109,465

 

Contingent consideration from acquisitions

 

8,666

 

 

28,182

 

Long-term debt, net of current portion, discount and issuance costs

 

319,261

 

 

133,039

 

Lease liability

 

70,141

 

 

30,583

 

Other liabilities

 

9,152

 

 

8,633

 

Total liabilities

 

616,832

 

 

382,678

 

Commitments and contingencies Redeemable convertible preferred stock, $0.0001 par value, 400 shares authorized, 115 and 200 shares issued and outstanding as of December 31, 2023 and 2022, respectively

 

114,660

 

 

308,075

 

Stockholders' equity (deficit): Undesignated preferred stock, $0.0001 par value, 4,600 shares authorized, none issued and outstanding as of December 31, 2023 and 2022

 

—

 

 

—

 

Class A common stock, $0.0001 par value, 500,000 shares authorized, 30,897 and 27,571 shares issued and outstanding as of December 31, 2023 and 2022, respectively

 

3

 

 

3

 

Class B common stock, $0.0001 par value, 500,000 shares authorized, 16,566 and 21,647 shares issued, and 16,491 and 21,572 shares outstanding as of December 31, 2023 and 2022, respectively

 

2

 

 

2

 

Additional paid-in capital

 

521,998

 

 

505,186

 

Receivable from shareholder

 

(15,426

)

 

(16,369

)

Accumulated deficit

 

(630,127

)

 

(641,903

)

Treasury stock, at cost, 75 shares outstanding as of December 31, 2023 and 2022

 

(1,697

)

 

(1,697

)

Total stockholders' deficit attributable to Xponential Fitness, Inc.

 

(125,247

)

 

(154,778

)

Noncontrolling interests

 

(77,547

)

 

(53,284

)

Total stockholders' deficit

 

(202,794

)

 

(208,062

)

Total liabilities, redeemable convertible preferred stock and stockholders' deficit

$

528,698

 

$

482,691

 

Xponential Fitness, Inc.

Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

2023

 

2022

 

2023

 

2022

Revenue, net: Franchise revenue

$

39,091

 

$

32,158

 

$

143,615

 

$

115,286

 

Equipment revenue

 

16,368

 

 

11,531

 

 

56,454

 

 

43,461

 

Merchandise revenue

 

10,125

 

 

7,973

 

 

34,146

 

 

27,073

 

Franchise marketing fund revenue

 

7,516

 

 

5,840

 

 

27,292

 

 

20,384

 

Other service revenue

 

17,095

 

 

13,767

 

 

57,153

 

 

38,750

 

Total revenue, net

 

90,195

 

 

71,269

 

 

318,660

 

 

244,954

 

Operating costs and expenses: Costs of product revenue

 

17,012

 

 

12,269

 

 

57,979

 

 

47,220

 

Costs of franchise and service revenue

 

4,606

 

 

4,858

 

 

15,911

 

 

18,447

 

Selling, general and administrative expenses

 

50,825

 

 

34,661

 

 

166,828

 

 

125,452

 

Impairment of goodwill and other assets

 

4,758

 

 

—

 

 

16,667

 

 

3,656

 

Depreciation and amortization

 

4,182

 

 

4,090

 

 

16,883

 

 

15,315

 

Marketing fund expense

 

6,394

 

 

4,594

 

 

22,683

 

 

17,290

 

Acquisition and transaction expenses (income)

 

(531

)

 

8,231

 

 

(17,964

)

 

2,438

 

Total operating costs and expenses

 

87,246

 

 

68,703

 

 

278,987

 

 

229,818

 

Operating income (loss)

 

2,949

 

 

2,566

 

 

39,673

 

 

15,136

 

Other (income) expense: Interest income

 

(422

)

 

(596

)

 

(1,611

)

 

(1,805

)

Interest expense

 

11,491

 

 

3,957

 

 

38,733

 

 

13,017

 

Other expense

 

96

 

 

(1,112

)

 

3,193

 

 

523

 

Total other expense

 

11,165

 

 

2,249

 

 

40,315

 

 

11,735

 

Income (loss) before income taxes

 

(8,216

)

 

317

 

 

(642

)

 

3,401

 

Income taxes

 

859

 

 

684

 

 

1,071

 

 

526

 

Net income (loss)

 

(9,075

)

 

(367

)

 

(1,713

)

 

2,875

 

Less: Net income (loss) attributable to noncontrolling interests

 

(3,158

)

 

(120

)

 

(810

)

 

945

 

Net income (loss) attributable to Xponential Fitness, Inc.

$

(5,917

)

$

(247

)

$

(903

)

$

1,930

 

  Net income (loss) per share of Class A common stock: Basic

$

0.10

 

$

(1.13

)

$

1.18

 

$

(0.87

)

Diluted

$

(0.28

)

$

(1.13

)

$

(0.44

)

$

(0.87

)

Weighted average shares of Class A common stock outstanding: Basic

 

30,900

 

 

26,819

 

 

31,742

 

 

25,295

 

Diluted

 

38,863

 

 

26,819

 

 

39,705

 

 

25,295

 

Xponential Fitness, Inc.

Consolidated Statements of Cash Flows

(in thousands)

 

 

Years Ended December 31,

 

2023

 

2022

Cash flows from operating activities: Net income (loss)

$

(1,713

)

$

2,875

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization

 

16,883

 

 

15,315

 

Amortization and write off of debt issuance costs

 

463

 

 

126

 

Amortization and write off of discount on long-term debt

 

2,949

 

 

613

 

Change in contingent consideration from acquisitions

 

(18,933

)

 

2,440

 

Amortization of right-of-use assets

 

13,005

 

 

2,655

 

Bad debt expense (recovery)

 

2,232

 

 

(712

)

Equity-based compensation

 

17,997

 

 

29,044

 

Non-cash interest

 

(1,252

)

 

(1,069

)

Gain from disposal of assets

 

(2,120

)

 

(78

)

Impairment of goodwill and other assets

 

16,667

 

 

3,656

 

Changes in assets and liabilities, net of effect of acquisitions: Accounts receivable

 

(7,738

)

 

(12,720

)

Inventories

 

(3,525

)

 

(3,936

)

Prepaid expenses and other current assets

 

438

 

 

(1,023

)

Operating lease liabilities

 

(9,049

)

 

(2,496

)

Deferred costs

 

(5,440

)

 

(2,024

)

Notes receivable, net

 

(3

)

 

33

 

Accounts payable

 

1,390

 

 

469

 

Accrued expenses

 

1,959

 

 

(5,008

)

Other current liabilities

 

2,896

 

 

2,226

 

Deferred revenue

 

7,287

 

 

18,223

 

Other assets

 

(648

)

 

(240

)

Other liabilities

 

1,677

 

 

3,301

 

Net cash provided by operating activities

 

35,422

 

 

51,670

 

Cash flows from investing activities: Purchases of property and equipment

 

(7,430

)

 

(8,955

)

Purchase of studios

 

(164

)

 

—

 

Proceeds from sale of assets

 

60

 

 

65

 

Purchase of intangible assets

 

(1,783

)

 

(7,177

)

Notes receivable issued

 

(581

)

 

(1,782

)

Notes receivable payments received

 

776

 

 

3,236

 

Acquisition of business

 

(3,467

)

 

—

 

Net cash used in investing activities

 

(12,589

)

 

(14,613

)

Cash flows from financing activities: Borrowings from long-term debt

 

189,150

 

 

7,425

 

Payments on long-term debt

 

(4,203

)

 

(2,978

)

Debt issuance costs

 

(411

)

 

(55

)

Payment of preferred stock dividend and deemed cash dividend

 

(7,092

)

 

(16,250

)

Payment of contingent consideration

 

(1,412

)

 

(2,190

)

Payments for taxes related to net share settlement of restricted share units

 

(8,111

)

 

(1,909

)

Payment for tax receivable agreement

 

(1,163

)

 

—

 

Payments for redemption of preferred stock

 

(130,766

)

 

—

 

Payments for distributions to Pre-IPO LLC Members

 

(12,901

)

 

—

 

Repurchase of Class A common stock

 

(50,378

)

 

—

 

Payment received from shareholder

 

8,062

 

 

—

 

Loan to shareholder

 

(4,400

)

 

(5,050

)

Proceeds from disgorgement of stockholders short-swing profits

 

516

 

 

—

 

Net cash used in financing activities

 

(23,109

)

 

(21,007

)

Increase (decrease) in cash, cash equivalents and restricted cash

 

(276

)

 

16,050

 

Cash, cash equivalents and restricted cash, beginning of year

 

37,370

 

 

21,320

 

Cash, cash equivalents and restricted cash, end of year

$

37,094

 

$

37,370

 

Xponential Fitness, Inc.

Net Income (Loss) to GAAP EPS

(in thousands, except per share amounts)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

2023

 

2022

 

2023

 

2022

Numerator: Net income (loss)

$

(9,075

)

$

(367

)

$

(1,713

)

$

2,875

 

Less: net (income) loss attributable to noncontrolling interests

 

(1,638

)

 

24,343

 

 

(15,765

)

 

19,284

 

Less: dividends on preferred shares

 

(1,863

)

 

(3,250

)

 

(7,652

)

 

(13,000

)

Less: deemed contribution (dividend)

 

15,644

 

 

(50,979

)

 

49,970

 

 

(31,185

)

Add: deemed contribution from redemption of convertible preferred stock

 

-

 

 

-

 

 

12,679

 

 

-

 

Net income (loss) attributable to XPO Inc. - basic

$

3,068

 

$

(30,253

)

$

37,519

 

$

(22,026

)

Add: dividends on preferred shares

 

1,863

 

 

-

 

 

7,652

 

 

-

 

Less: deemed (contribution) dividend

 

(15,644

)

 

-

 

 

(49,970

)

 

-

 

Less: deemed contribution from redemption of convertible preferred stock

 

-

 

 

-

 

 

(12,679

)

 

-

 

Net income (loss) attributable to XPO Inc. - diluted

$

(10,713

)

$

(30,253

)

$

(17,478

)

$

(22,026

)

Denominator: Weighted average shares of Class A common stock outstanding - basic

 

30,900

 

 

26,819

 

 

31,742

 

 

25,295

 

Effect of dilutive securities: Convertible preferred stock

 

7,963

 

 

-

 

 

7,963

 

 

-

 

Weighted average shares of Class A common stock outstanding - diluted

 

38,863

 

 

26,819

 

 

39,705

 

 

25,295

 

  Net earnings (loss) per share attributable to Class A common stock - basic

$

0.10

 

$

(1.13

)

$

1.18

 

$

(0.87

)

Net earnings (loss) per share attributable to Class A common stock - diluted

$

(0.28

)

$

(1.13

)

$

(0.44

)

$

(0.87

)

Anti-dilutive shares excluded from diluted loss per share of Class A common stock: Restricted stock units

 

1,477

 

 

2,102

 

 

1,477

 

 

2,102

 

Convertible preferred stock

 

-

 

 

13,889

 

 

-

 

 

13,889

 

Conversion of Class B common stock to Class A common stock

 

16,491

 

 

21,572

 

 

16,491

 

 

21,572

 

Treasury share options

 

75

 

 

75

 

 

75

 

 

75

 

Rumble contingent shares

 

2,024

 

 

2,024

 

 

2,024

 

 

2,024

 

Profits interests, time vesting

 

1

 

 

14

 

 

1

 

 

14

 

Xponential Fitness, Inc.

Reconciliations of GAAP to Non-GAAP Measures

(in thousands, except per share amounts)

 

 

Three Months Ended December 31,

 

Years Ended December 31,

 

2023

 

2022

 

2023

 

2022

Net income (loss)

$

(9,075

)

$

(367

)

$

(1,713

)

$

2,875

 

Interest expense, net

 

11,069

 

 

3,361

 

 

37,122

 

 

11,212

 

Income taxes

 

859

 

 

684

 

 

1,071

 

 

526

 

Depreciation and amortization

 

4,182

 

 

4,090

 

 

16,883

 

 

15,315

 

EBITDA

 

7,035

 

 

7,768

 

 

53,363

 

 

29,928

 

Equity-based compensation

 

2,350

 

 

5,124

 

 

17,997

 

 

29,044

 

Employer payroll taxes related to equity-based compensation

 

13

 

 

123

 

 

672

 

 

123

 

Acquisition and transaction expenses (income)

 

(531

)

 

8,231

 

 

(17,964

)

 

2,438

 

Litigation expenses

 

984

 

 

1,927

 

 

6,839

 

 

10,301

 

Employee retention credit

 

—

 

 

—

 

 

—

 

 

(2,597

)

Financial transaction fees and related expenses

 

7,067

 

 

99

 

 

9,038

 

 

836

 

TRA remeasurement

 

96

 

 

(1,112

)

 

3,193

 

 

523

 

Impairment of goodwill and other assets

 

4,850

 

 

—

 

 

16,667

 

 

3,656

 

Restructuring and related charges

 

8,817

 

 

—

 

 

15,520

 

 

—

 

Adjusted EBITDA

$

30,681

 

$

22,160

 

$

105,325

 

$

74,252

 

Three Months Ended December 31,

 

Years Ended December 31,

2023

 

2022

 

2023

 

2022

Net income (loss)

$

(9,075

)

$

(367

)

$

(1,713

)

$

2,875

 

Acquisition and transaction expenses (income)

 

(531

)

 

8,231

 

 

(17,964

)

 

2,440

 

TRA remeasurement

 

96

 

 

(1,112

)

 

3,193

 

 

523

 

Impairment of goodwill and other assets

 

4,850

 

 

—

 

 

16,667

 

 

3,656

 

Restructuring and related charges

 

8,817

 

 

—

 

 

15,520

 

 

—

 

Adjusted net income

$

4,157

 

$

6,752

 

$

15,703

 

$

9,494

 

Adjusted net income attributable to noncontrolling interest

 

1,447

 

 

3,016

 

 

5,387

 

 

4,432

 

Adjusted net income attributable to Xponential Fitness, Inc.

 

2,710

 

 

3,736

 

 

10,316

 

 

5,062

 

Dividends on preferred shares

 

(1,215

)

 

(1,798

)

 

(4,974

)

 

(6,931

)

EPS (LPS) numerator - Basic

$

1,495

 

$

1,938

 

$

5,342

 

$

(1,869

)

Add: Adjusted net income (loss) attributable to noncontrolling interest

 

1,447

 

 

3,016

 

 

5,387

 

 

—

 

Add: Dividends on preferred shares

 

1,215

 

 

1,798

 

 

4,974

 

 

—

 

EPS numerator - diluted

$

4,157

 

$

6,752

 

$

15,703

 

$

(1,869

)

  Adjusted net earnings (loss) per share - basic

$

0.05

 

$

0.07

 

$

0.17

 

$

(0.07

)

Weighted average shares of Class A common stock outstanding - basic

 

30,900

 

 

26,819

 

 

31,742

 

 

25,295

 

  Adjusted net earnings (loss) per share - diluted

$

0.08

 

$

0.11

 

$

0.28

 

$

(0.07

)

Effect of dilutive securities: Restricted stock units

 

—

 

 

482

 

 

308

 

 

—

 

Convertible preferred stock

 

7,963

 

 

13,889

 

 

7,963

 

 

—

 

Conversion of Class B common stock to Class A common stock

 

16,491

 

 

21,649

 

 

17,026

 

 

—

 

Weighted average shares of Class A common stock outstanding - diluted

 

55,354

 

 

62,839

 

 

57,039

 

 

25,295

 

  Shares excluded from dilutive earnings per share of Class A common stock Restricted stock units

 

1,477

 

 

—

 

 

—

 

 

2,102

 

Convertible preferred stock

 

—

 

 

—

 

 

—

 

 

13,889

 

Conversion of Class B common stock to Class A common stock

 

—

 

 

—

 

 

—

 

 

21,572

 

Treasury share options

 

75

 

 

—

 

 

—

 

 

75

 

Rumble contingent shares

 

2,024

 

 

2,024

 

 

2,024

 

 

2,024

 

Profits interests, time vesting

 

1

 

 

14

 

 

1

 

 

14

 

Note: The above adjusted net income (loss) per share is computed by dividing the adjusted net income (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 primarily attributable to Rumble.

Footnotes

1. System-wide sales represent gross sales by all North America studios. System-wide sales include 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 weekly, 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. In accordance with industry standard, we define the same store sales base to include studios in North America that are in traditional studio locations and that have generated positive sales for at least 13 consecutive calendar months as of the measurement date. Any transfer of ownership of an existing 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.

3. AUV 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 activity for all North America traditional studio locations that are at least 6 months old at the beginning of the respective quarter, and that have non-zero sales in the period, 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, operate in traditional locations and have nonzero sales. 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.

4. We 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 and related employer payroll taxes, acquisition and transaction expenses (income) (including change in contingent consideration), 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 tax credit for retaining employees throughout the COVID-19 pandemic), fees for financial transactions, such as secondary public offering expenses for which we do not receive proceeds (including bonuses paid to executives related to completion of such transactions) and other contemplated corporate transactions, expense related to the remeasurement of our TRA obligation, expense related to loss on impairment or write down of goodwill and other assets, and restructuring and related charges incurred in connection with our restructuring plan 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/20240228065981/en/

Addo Investor Relations investor@xponential.com (310) 829-5400