Financial Data and Key Metrics Changes - The company reported a consolidated revenue of $78.8 million for the third quarter, down 2% from $80.5 million in the prior year period [19][21] - Adjusted net income for the third quarter was $19.3 million, or adjusted net income of $0.36 per basic share, compared to a net loss of $18.1 million in the prior year [25] - Adjusted EBITDA was $33.5 million in the third quarter, up 9% from $30.8 million in the prior year period, with an adjusted EBITDA margin of 42% [26] Business Line Data and Key Metrics Changes - North America system-wide sales were $432.2 million, up 10% year-over-year, primarily driven by growth from net new studio openings [17] - Same-store sales were down 0.8% for the quarter but up 5.4% on a two-year stacked basis [17] - North America run-rate average unit volumes climbed to $668,000 in the third quarter, up 2% from $654,000 in the prior year period [19] Market Data and Key Metrics Changes - The global boutique fitness market is expected to reach $60 billion by 2030, driven by increasing demand for specialized fitness experiences [6] - The company ended the quarter with 3,066 global open studios, having opened 78 new studios and closed 32 studios [16] Company Strategy and Development Direction - The company is focusing on enhancing marketing, operations support, unit growth, innovation, and cost efficiencies to drive growth and financial returns [10][11] - Following recent divestitures, the company has streamlined its brand portfolio, which is expected to improve franchisee support and operational efficiency [10][12] - The company plans to implement a national brand campaign for Club Pilates to enhance brand awareness and drive organic growth [12][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in lead flow and member conversion, particularly in the context of enhanced privacy safeguards [18] - The company is taking a conservative approach to North American system-wide sales projections due to current business conditions [29] - The outlook for 2025 includes projected North America system-wide sales ranging from $1.73 billion to $1.75 billion, representing a 12% increase at the midpoint [29] Other Important Information - The company expects to see marketing fund spend exceed marketing fund revenue by approximately $5 million in the fourth quarter due to the nationwide branding campaign [31] - The company recorded a net loss of $6.7 million in the third quarter, compared to a net loss of $18.1 million in the prior year [25] Q&A Session Summary Question: Update on Club Pilates comps - In Q3, Club Pilates comps came into the low single digit or about 1%, reflecting the maturity of the studio base [34] Question: Balancing higher prices with member retention - The company is conducting a pricing analysis to ensure a thoughtful approach to pricing and packages while maximizing studio usage [38] Question: Private equity involvement in franchisee base - The company is exploring opportunities to bring in larger-scale operators and private equity into the franchisee base, particularly for Club Pilates [41] Question: National ad campaign purpose - The national ad campaign aims to test new marketing channels and understand their effectiveness, which could benefit other brands in the future [48]

Financial Data and Key Metrics Changes - The company reported net sales of $339 million, a 5% increase from Q1 2024, and a 7% increase on a like-for-like basis [13][14] - Gross margin expanded by 120 basis points to 63.7% due to favorable brand and channel mix [14] - Operating income was $75 million, a 10% increase from the prior year, resulting in an operating margin of 22% [14][15] - Net income attributable to U.S. operations was $9 million, slightly below the $10 million from the prior year [18] Business Line Data and Key Metrics Changes - European operations saw net sales rise by 7% or 9% excluding foreign exchange impact, with net income growing by 7% to $48 million [16] - U.S. operations experienced a 3% increase in net sales on a like-for-like basis, but reported a 1% decline due to the discontinuation of the Dunhill license [17] Market Data and Key Metrics Changes - The fragrance market remains strong, with the company noting a slight decline in sales for some brands but overall resilience in the fragrance segment compared to other beauty categories [4][28] - The U.S. market showed a slight decline of 2% for the quarter, but March and February were slightly up compared to the prior year [25][28] Company Strategy and Development Direction - The company is refining its brand portfolio to focus on high-potential brands and plans to exit some underperforming licenses [7] - New product launches are planned, including a new brand called Solferino and the acquisition of Annick Goutale [8] - The company is enhancing its omnichannel capabilities and transitioning to third-party logistics to reduce overhead costs [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the global fragrance market's strength and reaffirmed full-year guidance of $1.51 billion in net sales and EPS of $5.35 [21] - The company is actively planning to mitigate potential tariff impacts through supply chain adjustments and price increases [10][12] Other Important Information - The company has a strong balance sheet with $172 million in cash and cash equivalents [18] - A quarterly cash dividend of $0.80 per share is scheduled for payment on June 30, 2025 [20] Q&A Session Summary Question: Insights on U.S. business and destocking - Management noted that destocking issues from last year have largely abated, and the U.S. business was strong despite a tight market [24][25] Question: Global consumer fragrance trends - The first quarter was positive, but Europe faced challenges, particularly in France and Germany, while Asia showed mixed results [27][28] Question: Tariff exposure and gross margin progression - Estimated tariff impact is about 300 basis points, but interventions could reduce this by two-thirds, with no significant impact expected this year due to high inventory levels [36][37] Question: Luxury market performance and consumer behavior - The luxury segment continues to grow, with consumers seeking distinctive and premium products rather than just lower prices [50][51] Question: Sales guidance and market volatility - Sales guidance remains conservative due to market volatility and uncertainties related to tariffs and foreign exchange [62][65]