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]

Core Insights - Coca-Cola and McDonald's are two iconic consumer goods companies with a long history, but their future positioning and investment potential differ significantly [1] Coca-Cola - Coca-Cola offers a diverse range of beverages, including sodas, water, sports drinks, and plant-based options, catering to changing consumer preferences [3] - The company has a strong global presence, making it difficult for competitors to match its brand recognition and distribution capabilities [3] - In the first quarter, Coca-Cola's revenue dropped 2% due to foreign currency exchange, but adjusted revenue grew by 6% when excluding this factor [4] - Adjusted operating income increased by 10%, driven by price changes and product mix, contributing five percentage points to revenue growth, with higher volume adding one percentage point [4] - Coca-Cola anticipates manageable cost increases from tariffs and projects a revenue growth of 5% to 6% for the year [5] - Over the past year, Coca-Cola's stock gained 11.4%, or 15.2% including dividends, outperforming the S&P 500's return of 14.3% [11] - The company's shares have a price-to-earnings (P/E) ratio of 28, which is lower than the S&P 500's P/E of 30, indicating a relatively reasonable valuation [12] McDonald's - McDonald's operates primarily through franchising, with 95% of its restaurants franchised, generating about 60% of its annual revenue [6][7] - The company collects royalty fees based on sales percentages and rent from franchisees, making it less capital-intensive [7] - In the first quarter, same-store sales dropped 1%, with a 3.6% decline in U.S. locations, primarily due to lower customer traffic [8] - Despite a 16.9% stock gain over the past year, concerns remain about McDonald's sales challenges and the impact of price increases on customer loyalty [10] - Adjusted operating income for McDonald's fell by 1%, indicating struggles in maintaining revenue growth amid economic pressures [8][9]

Summary of SBC Medical Group Holdings Conference Call Company Overview - SBC Medical Group Holdings operates primarily in the aesthetic medicine sector, providing comprehensive management support services to franchise clinics, generating income through franchise fees [4][5] - The company achieved a significant milestone by listing on the Nasdaq stock exchange in September 2023, reflecting strong financial performance and growth potential [4] Market Position and Growth - SBC Medical serves over 6 million patients annually, making it the largest provider in Japan's aesthetic medicine market [6] - The company has maintained strong growth despite increasing competition by implementing strategic pricing models and expanding its clinic network [5] - The Japanese aesthetic medicine market has a penetration rate of around 10%, indicating substantial growth opportunities, particularly among middle-aged women and male customers [14] Financial Performance - The company underwent business restructuring in early 2024, leading to a 14% year-over-year decrease in revenue; however, excluding these effects, a 5% growth was achieved [8] - SBC Medical maintains an EBITDA margin of approximately 52% and an annualized ROE of 41%, indicating strong profitability [8] - The company has a healthy cash position and minimal debt obligations, providing flexibility for strategic growth opportunities [9] Strategic Initiatives - A major overhaul of pricing was implemented in March 2025 to streamline pricing structures and improve cost efficiency [10][11] - The franchise fee structure was revised to support long-term growth and sustainability of franchise clinics, easing initial cost pressures [12] - Future growth strategies include expanding service offerings, enhancing international presence, and focusing on high-demand areas such as orthopedics and ophthalmology [13][16] International Expansion - SBC Medical is focusing on the US and Asia for international expansion, with plans to establish a presence in the rapidly growing US med spa market [17] - The acquisition of a leading provider in Singapore marks a key milestone in the company's expansion strategy across Asia [18] Capital Allocation and Shareholder Value - The company is considering measures to improve stock liquidity, including a share repurchase program of 5 million shares, reflecting confidence in the company's fundamentals [19][20] - The share buyback aims to enhance market liquidity and provide an exit mechanism for large shareholders [27][28] - Concerns about share dilution from new share issuance are acknowledged, but the company aims to implement growth-oriented capital policies [29][30] Future Outlook - Key growth drivers include franchise expansion, dermatology services, and overseas market penetration [24][25] - The company plans to continue enhancing its multi-brand strategy to meet diverse customer needs and improve accessibility [23] Conclusion - SBC Medical Group Holdings is well-positioned for sustainable growth through strategic initiatives, strong financial performance, and a focus on expanding both domestically and internationally [20][32]

Financial Data and Key Metrics Changes - North American system-wide sales reached $467 million, an 18% increase year over year [6][17] - Quarterly run rate average unit volumes in North America increased by 8% year over year to $659,000 [7][17] - Total members at the end of the quarter stood at 865,000, up 12% year over year, with same-store sales increasing by 4% [8][17] - Consolidated revenue for the quarter was $76.9 million, down 4% from $79.7 million in the prior year [17] - Adjusted EBITDA for the quarter was $27.3 million, down 9% compared to $29.9 million in the prior year [27] Business Line Data and Key Metrics Changes - Franchise revenue for the quarter was $43.9 million, up 5% year over year, driven by increased royalty revenue [18] - Equipment revenue declined by 20% year over year to $11.1 million, primarily due to a 22% decrease in North American installations [19] - Merchandise revenue decreased by 25% year over year to $6.3 million, attributed to lower sales volumes and price discounts [19] - Franchise marketing fund revenue increased by 18% year over year to $9.3 million, supported by growth in system-wide sales [20] Market Data and Key Metrics Changes - The company opened 116 new studios globally during Q1, with 93 in North America and 23 internationally [14] - The total number of global open studios reached 3,298, with an annualized closure rate of 6% [14] - The company sold 21 licenses during Q1, all internationally, primarily in Club Pilates [15] Company Strategy and Development Direction - The company is focusing on optimizing operations and franchisee health while preparing for long-term success [6][12] - A new field operations function is being launched, with plans to have 12 field managers in place across North America by quarter end [10][11] - The company is actively selling in the majority of the 14 registration states under FDD registration or exemption [11] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2025 will be a year of stabilization, with no degradation in the overall financial health of the business [38][39] - The company is lowering guidance on global net new studio openings while reiterating guidance for system-wide sales and total revenue [29][30] - Management expressed confidence in the health of the franchisee and the execution of operational improvements [39] Other Important Information - The company is undergoing a transformation from an aggressive sales focus to building a foundation of efficiency and effectiveness [35] - Legal judgments and settlements have increased SG&A expenses significantly, with an additional accrual of $15 million recorded [22][23] Q&A Session Summary Question: What are the overarching themes for the next few months? - Management emphasized the transformation towards efficiency and effectiveness, focusing on franchisee support and operational audits [35][36] Question: What is the outlook for studio openings? - Club Pilates is expected to account for over half of the new openings this year, with strong performance anticipated in Yoga Six and Pure Barre [40][44] Question: What is driving the increase in closure rates? - Closures are primarily concentrated in Cycle Bar and StretchLab, with expectations for similar distribution throughout the year [48] Question: How will the new field operations team impact the business? - The field ops team will focus on supporting struggling franchisees and ensuring adherence to operational standards [55][100] Question: What is the impact of tariffs on the business? - The direct impact of tariffs is minimal, affecting only 20% of revenue, with ongoing efforts to mitigate costs [85][86] Question: What changes were made in the franchise disclosure documents? - The company has made adjustments to build-out costs, which have been positively received by franchisees [94][95]

Financial Data and Key Metrics Changes - The company ended Q1 2025 with 20.6 million members, an increase of approximately 900,000 from the end of 2024 [5] - System-wide same club sales grew by 6.1%, with franchisee same club sales increasing by 6.2% and corporate same club sales increasing by 5.1% [20] - Revenue for Q1 was $276.7 million, an increase of 11.5% from $248 million in the previous year [21] - Adjusted EBITDA was $117 million, reflecting a 10.1% year-over-year increase, with an adjusted EBITDA margin of 42.3% [25] Business Line Data and Key Metrics Changes - Franchise segment revenue increased by 10.7%, driven by higher royalty revenue from increased same club sales and new clubs [21] - Corporate-owned club segment revenue increased by 9.2%, primarily due to increased same club sales and sales from new clubs [22] - Equipment segment revenue increased by 28.7%, driven by higher revenue from replacement equipment sales [23] Market Data and Key Metrics Changes - Black Card penetration reached approximately 65%, a nearly 300 basis point increase from the previous year [9][21] - Members visited clubs an average of 6.7 times per month, the highest utilization in five years [10] Company Strategy and Development Direction - The company is focused on four strategic imperatives: redefining brand promise, enhancing member experience, refining product offerings, and accelerating new club growth [7] - The company plans to open between 160 and 170 new clubs in 2025, with a focus on unit economics and franchisee sentiment [27] - The company is exploring new markets for international expansion, with positive performance noted in Spain and Australia [108] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to navigate macroeconomic volatility, citing historical performance during economic downturns [6][41] - The company reiterated its growth targets for 2025, expecting continued strong performance despite potential tariff impacts [16][27] Other Important Information - The company is rolling out a "click to cancel" feature to enhance member experience, with over 50% of clubs already enabled [19] - The company is testing various promotional strategies, including a successful Black Card first month free promotion [9][33] Q&A Session Summary Question: Regarding Black Card penetration and pricing impact - Management noted that the increase in Black Card penetration is a result of a narrowed price gap and successful promotions [33][34] Question: Impact of macroeconomic conditions on business - Management indicated that the business remains resilient, with strong member growth and revenue despite macroeconomic challenges [41][45] Question: Future pricing strategies for Black Card - Management stated that pricing decisions for the Black Card will be evaluated after the Classic Card price increase anniversary [48][112] Question: Churn rates and click to cancel impact - Management confirmed that churn rates are in line with expectations and that the click to cancel feature may improve join conversions [82][56] Question: International development and franchisee sentiment - Management highlighted strong performance in international markets and positive franchisee sentiment regarding new openings [108][64]

Financial Data and Key Metrics Changes - In Q4, system-wide sales increased by 1.1% to $229.3 million, while same-store sales rose by 0.8% [38] - Total revenue decreased by 4.6% to $49.7 million, impacted by softer retail product sales and the removal of a COVID-related surcharge [39] - Q4 gross margin improved by 190 basis points to 74.3%, primarily due to cost savings [40] - Adjusted EBITDA for Q4 decreased by 1.6% to $19 million, with an adjusted EBITDA margin increasing by 390 basis points to 38.1% [41] - Full-year adjusted net income increased by 15.2% to $25.6 million, driven by higher operating income and lower state income taxes [46] Business Line Data and Key Metrics Changes - Franchisees opened three net new centers in Q4, resulting in 2.2% net unit growth to 1,067 centers across 45 states for the full year [42] - The company expects 10 to 12 gross new centers to open in fiscal 2025, with an estimated 40 to 60 closures [49] Market Data and Key Metrics Changes - System-wide sales for fiscal 2025 are expected to be between $940 million and $960 million, representing flat year-over-year growth at the midpoint [50] - Same-store sales are projected to be flat to positive 2% [51] Company Strategy and Development Direction - The company aims to develop a robust data-rich marketing engine, cultivate a more effective service-based infrastructure, and implement a sophisticated development approach [21][28] - The focus is on thoughtful and profitable expansion, with an emphasis on franchisee success and operational excellence [27][29] - The company is committed to providing regular updates on progress and strategy [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by a declining transaction volume and profitability among franchisees, attributing it to a tougher macro environment [17] - The company views 2025 as a transitional year to solidify the foundation for sustainable growth, with expectations to reignite unit growth by the end of 2026 [33][58] Other Important Information - The company has appointed new executives, including a new CFO and Chief Commercial Officer, to strengthen its leadership team [30][31] - The company has a solid cash position with $49.7 million in cash and a fully undrawn $40 million revolver [47] Q&A Session Summary Question: Store closure guidance for 2025 and performance in California - Management is comfortable with the range of 40 to 60 closures and believes that executing on priorities will lead to growth in 2026 [65][66] - California is experiencing more inflationary pressure, impacting franchisee profitability [71][74] Question: Four-wall economics and tax impact on SG&A - Mature units have strong unit economics with average unit volumes over $1 million and cash-on-cash returns around 40% [80] - An adjustment to SG&A related to franchise taxes was largely offset by state taxes, resulting in a net impact of around $60,000 [85] Question: Successful franchisee characteristics and potential for European Wax to buy stores - Successful franchisees are committed to service and detail-oriented, with a strong partnership with the franchisor needed for success [92][96] - The company is open to buying stores in the future but is currently focused on other priorities [99] Question: Pipeline of unopened units and consumer behavior - The pipeline remains unchanged with 10 to 12 new unit openings expected, and management does not see a significant shift in consumer behavior or competitive landscape [114][113] Question: Promotional strategy and pricing - The company is improving its marketing approach and data pipeline to evaluate promotional effectiveness, with a focus on smarter pricing strategies [128][129] Question: Core guest behavior and cost savings - Core guests remain stable in spending and frequency, with opportunities to re-engage lapsed guests [135] - Cost savings have been achieved through negotiations on product costs, with expectations for modest gross margin improvement in 2025 [134]

Financial Data and Key Metrics Changes - In Q4 2024, system-wide sales increased by 1.1% to $229.3 million, while same-store sales rose by 0.8% [38] - Total revenue decreased by 4.6% to $49.7 million, impacted by softer retail product sales and the removal of a COVID-related surcharge [39] - Q4 gross margin improved by 190 basis points to 74.3%, primarily due to cost savings [40] - Adjusted EBITDA for Q4 decreased by 1.6% to $19 million, but adjusted EBITDA margin increased by 390 basis points to 38.1% [41] - Full-year adjusted net income increased by 15.2% to $25.6 million, driven by higher operating income and lower state income taxes [46] Business Line Data and Key Metrics Changes - Franchisees opened three net new centers in Q4, resulting in 2.2% net unit growth to 1,067 centers across 45 states for the full year [42] - The company expects 10 to 12 gross new centers to open in fiscal 2025, with an estimated 40 to 60 closures [18][49] Market Data and Key Metrics Changes - System-wide sales for fiscal 2025 are expected to be between $940 million and $960 million, indicating flat year-over-year growth [50] - Same-store sales are projected to be flat to positive 2% [51] Company Strategy and Development Direction - The company aims to develop a robust data-rich marketing engine, enhance service-based infrastructure, and implement a sophisticated development approach for profitable expansion [21][28] - The focus is on improving franchisee support and operational excellence to drive sustainable growth [27][29] - The company is committed to transparent communication and regular updates on progress [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by a declining transaction volume and profitability among franchisees due to a tougher macro environment [17] - The company believes it can adapt to these challenges and has identified opportunities to reignite growth [18][20] - Management expects 2025 to be a transitional year, with a focus on solidifying the foundation for sustainable growth [49][58] Other Important Information - The company has appointed new executives, including a new CFO and Chief Commercial Officer, to strengthen its leadership team [30][31] - The company has a solid cash position with $49.7 million in cash and a fully undrawn $40 million revolver [47] Q&A Session Summary Question: Store closure guidance for 2025 and performance in California - Management is comfortable with the range of 40 to 60 closures and believes that thoughtful execution of priorities will lead to growth in 2026 [65][66] - California is experiencing more inflationary pressure, impacting franchisee profitability [71][74] Question: Four-wall economics and tax impact on SG&A - Mature units still have strong unit economics with average unit volumes over $1 million and cash-on-cash returns around 40% [80] - Adjustments to SG&A related to franchise taxes were largely offset by state taxes, resulting in a net impact of around $60,000 [85] Question: Characteristics of successful franchisees and potential for European Wax to buy stores - Successful franchisees are committed to service and detail-oriented, with a strong partnership needed for growth [92][96] - The company is open to acquiring stores in the future but is currently focused on supporting franchisees [99][100] Question: Pipeline of unopened units and consumer behavior - The pipeline remains intact with 10 to 12 new unit openings planned, and management does not see a significant shift in consumer behavior or competitive landscape [114][112] - The company is taking a top-down approach to real estate site selection to ensure successful growth [120]