Xponential Fitness(US:XPOF)2023-05-05 17:32Studio Expansion - As of March 31, 2023, Xponential Fitness LLC had 2,411 studios open in North America and 345 studios open internationally, with franchisees committed to opening an additional 1,968 and 1,078 studios, respectively[146]. - The number of new studio openings globally for the three months ended March 31, 2023, was 115, compared to 99 in the same period of 2022, reflecting a 16.2% increase[151]. - The total number of franchise licenses sold globally as of March 31, 2023, was 5,638, an increase from 4,684 in the prior year, marking a growth of 20.4%[152]. Financial Performance - System-wide sales for the three months ended March 31, 2023, reached $317,752, a 41.5% increase from $224,545 in the same period of 2022[151]. - Total revenue for the three months ended March 31, 2023, was $70.7 million, an increase of $20.3 million or 40.4% compared to $50.4 million in the same period of 2022[163]. - Franchise revenue increased to $33.0 million, up $7.5 million or 29.3% from $25.5 million in the prior year, driven by a 20% increase in same store sales and 527 new studio openings[164]. - Equipment revenue rose to $13.1 million, an increase of $5.3 million or 68.3% compared to $7.8 million in the previous year, attributed to 141 global equipment installations[165]. - Other service revenue increased by $4.7 million or 71.4% to $11.3 million, primarily due to higher preferred vendor commission revenue and increased package and memberships revenue[168]. - Adjusted EBITDA for the three months ended March 31, 2023, was $22,872, compared to $14,453 in the same period of 2022, representing a growth of 58.5%[151]. Operating Costs and Expenses - Total operating costs and expenses were $77.9 million, an increase of $12.8 million or 19.6% from $65.1 million in the prior year[169]. - Selling, general and administrative expenses increased to $34.9 million, up $1.0 million or 2.8% from $33.9 million, primarily due to increased salaries and wages[171]. - Acquisition and transaction expenses rose to $15.7 million, an increase of $6.2 million, reflecting non-cash changes in contingent consideration related to past acquisitions[174]. - Interest expense surged to $8.0 million, an increase of $5.1 million or 178.8% compared to $2.9 million in the same period last year, due to higher average debt balances and interest rates[176]. Net Loss and Cash Flow - Net loss for the three months ended March 31, 2023, was $15.0 million, a slight improvement from a net loss of $15.2 million in the same period of 2022[178]. - Cash provided by operating activities increased to $11.35 million in Q1 2023, up from $2.89 million in Q1 2022, marking an increase of $8.46 million[200]. - The company reported a net decrease in cash, cash equivalents, and restricted cash of $9.24 million for the three months ended March 31, 2023[199]. Debt and Financing - The total principal amount outstanding on the Term Loans was $266.7 million as of March 31, 2023[196]. - Cash used in financing activities increased to $18.2 million in Q1 2023, compared to $6.25 million in Q1 2022, primarily due to tax payments and the repurchase of convertible preferred stock[202]. - The company entered into a fourth amendment to the Credit Agreement on January 9, 2023, which included additional Term Loans of $130 million[195]. - The company is required to make quarterly principal payments of $1.1 million on the Term Loan beginning June 30, 2023[196]. Strategic Focus - The company plans to continue investing in its brands and integrated services to support franchisees and enhance consumer experiences[149]. - Xponential Fitness LLC is focused on expanding its international presence and developing relationships with master franchisees to drive growth[149]. - The company is in the process of reselling company-owned transition studios to franchisees, which may impact financial results if not successfully transitioned[148]. Accounting and Risk Disclosures - There have been no significant changes to the company's critical accounting policies and estimates since the last Form 10-K for the year ended December 31, 2022[205]. - The company reported that there are no applicable quantitative and qualitative disclosures about market risk[206]. - As of March 31, 2023, no accrual has been recorded for potential obligations under the guaranty arrangement related to the standby letter of credit[204].