Xponential Fitness(US:XPOF)2025-05-09 21:28Studio Operations and Growth - As of March 31, 2025, the company had 3,298 studios operating globally, an increase from 3,079 studios as of March 31, 2024, representing a growth of approximately 7.1%[163] - The number of North America franchisee-owned studios increased from 2,646 in Q1 2024 to 2,805 in Q1 2025, reflecting a growth of 6%[178] - The company has 1,509 additional studios contractually committed to open under existing franchise agreements in North America as of March 31, 2025[163] - New studio openings in North America totaled 93 in Q1 2025, compared to 85 in Q1 2024, reflecting a growth strategy focus[178] - The total number of operating studios globally increased to 3,298 in Q1 2025 from 3,079 in Q1 2024, marking a growth of 7.1%[179] Financial Performance - System-wide sales for the three months ended March 31, 2025, reached $466.8 million, compared to $396.4 million for the same period in 2024, reflecting a year-over-year increase of approximately 17.7%[173] - Total revenue for Q1 2025 was $76.883 million, a decrease of 3.5% compared to $79.693 million in Q1 2024[188] - Operating income for Q1 2025 was $9.679 million, representing an increase of 21% from $7.994 million in Q1 2024[188] - The company reported a net loss of $2.659 million for Q1 2025, an improvement from a net loss of $3.750 million in Q1 2024[188] - For the three months ended March 31, 2025, the adjusted EBITDA was $27.3 million, a decrease of 8.8% from $29.9 million in the same period of 2024[212] Revenue Breakdown - Franchise revenue increased to $43.9 million, up $2.1 million, or 5%, driven by higher same store sales and an increase in operating studios[2] - Equipment revenue decreased by $2.8 million, or 20%, to $11.1 million, primarily due to a decline in global equipment installations[3] - Merchandise revenue fell to $6.3 million, down $2.1 million, or 25%, attributed to lower demand from studios[4] - Franchise marketing fund revenue rose to $9.3 million, an increase of $1.4 million, or 18%, due to higher same store sales in North America[5] Restructuring and Costs - The company recognized total restructuring charges of $2.4 million for the three months ended March 31, 2025, compared to $6.8 million for the same period in 2024, showing a reduction of approximately 64.7%[167] - The company expects to incur additional restructuring charges throughout 2025, estimated between $5.2 million to $9.0 million, related to lease terminations and other restructuring costs[168] - Total operating costs and expenses decreased by $4.5 million, or 6.3%, to $67.2 million, with significant reductions in costs of product revenue and franchise service revenue[6] - Selling, general and administrative expenses increased by $8.9 million, or 24%, to $45.5 million, primarily due to higher legal expenses and salaries[7] Cash Flow and Financing - Cash provided by operating activities increased to $5.8 million for the three months ended March 31, 2025, compared to $2.7 million in the same period of 2024, reflecting a $3.1 million increase[221] - Cash used in investing activities decreased significantly to $1.0 million in the three months ended March 31, 2025, from $9.2 million in the same period of 2024, primarily due to lower acquisition costs[222] - Cash provided by financing activities was $5.0 million for the three months ended March 31, 2025, compared to cash used of $3.4 million in the same period of 2024, marking an $8.4 million change[223] - The total principal amount outstanding on the Term Loans, including exit fee, was $379.1 million as of March 31, 2025[218] - The company entered into an eighth amendment to the Credit Agreement, extending the final maturity date to August 1, 2027, and providing for additional term loans of $10.0 million[217] Market Challenges and Future Outlook - Same store sales growth for the three months ended March 31, 2025, was 4%, down from 9% in the same period of 2024[173] - The company paused offering or selling franchises in California and Maryland due to compliance investigations, which may adversely affect anticipated royalty or franchise revenue[165] - The company sold 21 new franchise licenses globally during the three months ended March 31, 2025, compared to 173 in the same period of 2024, indicating a significant decline in new franchise sales[173] - The number of licenses contractually obligated to open internationally indicates potential future studio openings, although one third of global license obligations are over 12 months behind schedule[181][182]