Financial Data and Key Metrics Changes - North American system-wide sales reached $474 million, up 12% year over year [11][28] - North American quarterly run rate average unit volumes increased by 3% to 659,000 [11][28] - Total members at quarter end stood at 863,000, reflecting an 8% year-over-year increase [11] - Same store sales increased by 1% [11][28] - Consolidated revenue for the quarter was $76.2 million, down 1% from the prior year [28] - Adjusted net income for the second quarter was $14.5 million, or $0.26 per basic share [37] - Adjusted EBITDA was $28.1 million, up 14% compared to the prior year period [37] Business Line Data and Key Metrics Changes - Franchise revenue for the quarter was $45.4 million, up 5% year over year, driven by an 8% increase in actively paying memberships [29] - Equipment revenue declined by 26% year over year to $9.5 million, primarily due to a 39% decrease in global installations [29] - Merchandise revenue was down 8% year over year to $5.6 million [30] - Franchise marketing fund revenue increased by 13% year over year to $9.5 million [31] Market Data and Key Metrics Changes - Club Pilates reached record high utilization, with plans to enhance monetization strategies [17] - Pure Barre is planning major marketing campaigns for its 25th anniversary, anticipating further growth [18] - Yoga Six continues to perform well with new teacher training programs and innovative class offerings [19] - StretchLab is exploring solutions to support franchisees and improve average unit volumes [20] Company Strategy and Development Direction - The company is focusing on strengthening its core brands, including Club Pilates, Pure Barre, Yoga Six, and StretchLab, while divesting from underperforming brands like Cycle Bar and Rumble [12][10] - A new retail partnership with Fit Commerce aims to enhance service and reduce costs, with expected benefits starting in 2026 [14][30] - The company is committed to increasing marketing spend, particularly for Club Pilates and StretchLab, to drive growth [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term potential of the company and the fitness industry, highlighting the momentum in boutique fitness [8][9] - The company anticipates a more conservative revenue outlook due to recent brand divestitures and macroeconomic headwinds [39] - Management expects to see improvements in overall portfolio health and a reduction in closure rates with a more focused brand strategy [12] Other Important Information - The company ended the quarter with 3,327 global open studios, with 86 new openings during Q2 [25] - There were 57 global studio closures in the second quarter, with nearly half attributed to Cycle Bar and Rumble [25] - The company has over 1,400 studios in North America and over 1,000 international master franchise obligations [27] Q&A Session Summary Question: What drove the change in same store sales trend? - Management noted that same store sales decreased from 4% in Q1 to 1% in Q2, primarily due to performance in Club Pilates and StretchLab [47][48] Question: What is the status of the 40% backlog behind schedule? - The backlog includes brands like Rumble and Cycle Bar, with some contributions from Club Pilates, StretchLab, and Yoga Six [49][50] Question: What are the plans for pricing at Club Pilates? - Management confirmed intentions to implement pricing and monetization strategies to drive same store sales growth [51] Question: When should we expect the closure rate to stabilize? - Management anticipates the closure rate to trend down to around 5% by the end of 2025, with improvements expected in 2026 [52][53] Question: Can you elaborate on the four items impacting profitability in 2025? - Management discussed the impact of brand divestitures, system-wide sales adjustments, increased marketing spend, and the new CEO's strategic alignment [56][60] Question: What is the outlook for the FDD renewal process? - Management expects to resume license sales in the second half of the year following necessary amendments due to the CEO transition [64][66] Question: What is the strategy for non-core brands like Lindora and BFT? - Management confirmed ongoing evaluation of Lindora while expressing confidence in BFT's international growth [68][69] Question: What is the expected impact of the FitCommerce partnership? - The partnership is expected to provide significant cost savings and cash flow benefits starting in 2026 [95][96]