Xponential Fitness(XPOF) - 2024 Q3 - Quarterly Results

Financial Performance - System-wide sales reached $431.2 million in Q3 2024, an increase of 21% year-over-year[1] - The company reported a net loss of $18.0 million, or a loss of $0.29 per basic share, compared to a net loss of $5.2 million in the prior year[3] - Adjusted net loss for Q3 2024 was $0.2 million, or a loss of $0.04 per basic share, compared to adjusted net income of $6.0 million in the prior year[6] - Adjusted EBITDA for Q3 2024 was $31.0 million, up 17% from $26.5 million in the prior year[7] - Total revenue for the three months ended September 30, 2024, was $80,491,000, slightly up from $80,435,000 in the same period last year, representing a 0.07% increase[19] - Franchise revenue increased to $44,458,000 for the three months ended September 30, 2024, compared to $36,425,000 in the prior year, marking a 22.8% growth[19] - Net income for the three months ended September 30, 2024, was $(17,970) million, compared to $(5,183) million for the same period in 2023, indicating a significant decline[23] - Adjusted net income for the nine months ended September 30, 2024, was $9,670 million, down from $11,546 million in the same period of 2023, reflecting a decrease of approximately 16.2%[23] Guidance and Future Plans - The company is reiterating 2024 guidance for North America system-wide sales in the range of $1.705 billion to $1.715 billion, reflecting a 22% increase at the midpoint compared to 2023[9] - Revenue guidance for 2024 is set between $310.0 million and $320.0 million, indicating a decrease of 1% at the midpoint compared to 2023[9] - The company plans to open between 490 to 510 new studios in 2024, a decrease of 10% at the midpoint compared to 2023[9] Cash and Debt Management - As of September 30, 2024, the company had approximately $37.8 million in cash and $353.8 million in total long-term debt[8] - Total current assets decreased to $95,576,000 as of September 30, 2024, down from $97,248,000 at the end of 2023, reflecting a 1.73% decline[18] - Total liabilities decreased to $595,513,000 as of September 30, 2024, compared to $616,832,000 at the end of 2023, indicating a 3.45% reduction[18] - Cash and cash equivalents increased to $37,774,000 as of September 30, 2024, from $37,094,000 at the end of 2023, showing a 1.83% increase[18] - Long-term debt, net of current portion, increased to $342,038,000 as of September 30, 2024, from $319,261,000 at the end of 2023, reflecting a 7.13% increase[18] - The company’s accumulated deficit increased to $(654,095,000) as of September 30, 2024, compared to $(630,127,000) at the end of 2023, indicating a worsening of 3.8%[18] Operating Costs and Expenses - Operating costs and expenses for the three months ended September 30, 2024, totaled $86,917,000, up from $72,957,000 in the prior year, representing a 19.1% increase[19] - The company reported an impairment of goodwill and other assets of $4,502,000 for the three months ended September 30, 2024, compared to $4,671,000 in the same period last year[19] - The company incurred litigation expenses of $10,435 thousand for the three months ended September 30, 2024, compared to $1,511 thousand in the same period of 2023, representing a significant increase[22] Shareholder Information - The weighted average shares of Class A common stock outstanding for the three months ended September 30, 2024, was 32,177 thousand, compared to 32,260 thousand in the same period of 2023[21] - The weighted average shares of Class A common stock outstanding (diluted) for the three months ended September 30, 2024, was 32,177, compared to 56,811 in the prior year, indicating a significant reduction in share count[23] Sales and Performance Metrics - Quarterly average unit volume (AUV) was $631,000, growing 8% year-over-year, with total members increasing by 16% to 827,000[1] - System-wide sales growth is driven by new studio openings and increases in same store sales, with management reviewing these metrics weekly to assess performance[24] - Same store sales are measured for studios that have generated at least 13 months of consecutive positive sales, highlighting the performance of existing studios[26] - The company receives approximately 7% and 2% of franchisee sales as royalty and marketing fund revenue, respectively, which are critical for evaluating overall performance[24] Other Financial Activities - Total cash used in investing activities for the nine months ended September 30, 2024, was $13,934 thousand, compared to $8,595 thousand in the same period of 2023, indicating an increase of 62.5%[20] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $10,915 thousand, down from $38,194 thousand in the prior year, representing a decrease of approximately 71.4%[20] - Depreciation and amortization expenses for the nine months ended September 30, 2024, totaled $13,179 thousand, up from $12,701 thousand in the prior year, an increase of approximately 3.8%[20] - The company reported a bad debt expense of $2,270 thousand for the nine months ended September 30, 2024, compared to $850 thousand in the same period of 2023, indicating a rise of 167.1%[20] - Acquisition and transaction expenses for the three months ended September 30, 2024, were $3,664 million, compared to $(1,923) million in the prior year, showing a substantial increase in costs[23]