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]

Financial Performance - System-wide sales reached $474 million, a 12% year-over-year increase[15] - Run-Rate Average Unit Volume (AUV) was $659,000, up 3% year-over-year[15] - Total revenue was $76 million, a 1% year-over-year decrease[21] - Adjusted EBITDA was $28 million, a 14% year-over-year increase, with a 37% margin[21, 32] - Adjusted net earnings per share were $026[29] Studio and License Growth - The company has 3,327 global studios, a 7% year-over-year increase[26] - The company has 6,344 global licenses, a 4% year-over-year increase[26] Strategic Initiatives - The company completed the divestitures of Rumble and CycleBar brands[14] - The company entered into a Fit Commerce agreement, guaranteeing a minimum of $50 million in commissions over a 5-year contract[10, 24] Full Year 2025 Guidance - The company expects between 170 and 190 net new studio openings globally[34] - The company expects system-wide sales to be between $178 billion and $18 billion[34] - The company expects revenue to be between $300 million and $310 million[34] - The company expects Adjusted EBITDA to be between $106 million and $111 million[34]

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 - North American system-wide sales reached $467 million, an 18% increase year over year [6][17] - Quarterly run rate average unit volumes increased to $659,000, up 8% year over year [6][17] - Total members increased to 865,000, a 12% rise year over year, with same-store sales up 4% [7][17] - Consolidated revenue for the quarter was $76.9 million, down 4% from $79.7 million in the prior year [17] - Adjusted net loss for the quarter was $7.7 million, translating to a loss of $0.20 per basic share [28] Business Line Data and Key Metrics Changes - Franchise revenue increased to $43.9 million, up 5% year over year, driven by higher royalty revenue [19] - Equipment revenue declined by 20% year over year to $11.1 million, primarily due to a 22% decrease in North American installations [20] - Merchandise revenue fell 25% year over year to $6.3 million, attributed to lower sales volumes and price discounts [20] - Franchise marketing fund revenue rose 18% year over year to $9.3 million, reflecting growth in system-wide sales [21] 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 a closure rate of approximately 1.5% [14] - The company anticipates global net new studio openings to range from 160 to 180, a 29% decrease at the midpoint from the prior year [31] Company Strategy and Development Direction - The company is focusing on transforming its operations to enhance efficiency and effectiveness, particularly in franchisee support [36][39] - A new field operations function is being launched, with plans to have 12 field managers in place across North America [10] - The company is actively working to support its master franchisee base internationally, with a focus on markets like Spain, Portugal, France, Japan, and Australia [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need for stabilization in 2025, with expectations for flat revenue and EBITDA compared to 2024 [39] - The company is confident in its operational health and believes that improvements will lead to growth in the future [40] - Management is closely monitoring consumer behavior and has not seen any significant shifts, maintaining expectations for same-store sales growth in the mid-single digits [92][95] Other Important Information - The company has entered into lease settlement agreements totaling approximately $30.7 million, with most liabilities expected to be settled in 2025 [24] - The anticipated interest expense for 2025 is approximately $49 million, with a tax rate expected to be in the mid to high single digits [33] Q&A Session Summary Question: What are the overarching themes for the next few months? - The company is undergoing a transformation to build a foundation of efficiency and effectiveness, focusing on franchisee support and operational audits [36][38] Question: How many of the new openings will be from Club Pilates? - Club Pilates will account for over half of the new openings and license sales this year [46] Question: What is the expected closure rate for the year? - The company expects a closure rate of 6% to 8%, primarily from Cycle Bar and StretchLab [50] Question: How will the field operations team impact the business? - The field operations team will focus on supporting struggling franchisees and ensuring adherence to operational standards [58][60] Question: What is the company's approach to marketing for StretchLab? - The company has doubled local marketing spend for StretchLab and is considering additional investments to drive leads [69] Question: What factors are impacting the revised unit outlook for the year? - The lack of license sales in Q4 and Q1 has created a bottleneck, along with higher closures than anticipated [76][77]

Financial Data and Key Metrics Changes - North America system-wide sales reached $465 million, up 21% year-over-year [6][26] - Total members increased to 813,000, a 15% year-over-year growth [7] - Adjusted EBITDA for 2024 was $116.2 million, a 16% increase from $100.3 million in the prior year [35] - The company reported a net loss of $62.5 million in Q4, compared to a net loss of $12.3 million in the prior year [34] Business Line Data and Key Metrics Changes - Franchise revenue for Q4 was $45.3 million, up 17% year-over-year, driven by increased royalty revenue [27] - Equipment revenue declined by 22% year-over-year to $12.7 million due to lower installation volumes [28] - Merchandise revenue decreased by 34% year-over-year to $6.1 million, attributed to lower sales volumes and price discounts [28] Market Data and Key Metrics Changes - North America run rate average unit volumes (AUVs) increased by 9% to $668,000 [26] - Same store sales growth for 2024 was 7%, with Club Pilates leading at 12% [26][39] - The company ended the year with 3,233 global open studios, having opened 120 new studios in Q4 [24] Company Strategy and Development Direction - The company is focused on building a senior management team to scale operations profitably and improve franchisee support [8] - Plans to enhance international presence, particularly for Club Pilates, with leadership in Europe and Asia [12] - Emphasis on innovation and data analytics to improve operational efficiency and member experience [14][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged operational challenges and the need for foundational improvements in 2025 to support long-term growth [18] - The company aims to reduce global studio closures to low to mid-single digits as a percentage of total open studios [42] - Management expressed a commitment to transparency and addressing legacy operational issues [16][86] Other Important Information - The company restated 2023 financial statements due to material accounting errors, but believes overall financial health remains intact [21][22] - Legal expenses increased significantly due to regulatory inquiries and potential franchise legal settlements [30] - The company anticipates a capital expenditure of approximately $10 million to $12 million for 2025, focusing on technology investments [44] Q&A Session Summary Question: Can you help us understand the comp performance embedded in the 2025 system sales guidance? - The expectation is for mid-single digits comp growth, with Club Pilates historically outperforming [48] Question: Can you provide an update on the franchise recruiting process? - A new Chief Development Officer has been hired, consolidating franchise sales, real estate, and construction under one unit to improve efficiency [50] Question: What is the assessment of StretchLab regarding negative comps? - Management is actively reviewing StretchLab's model, focusing on improving labor qualification and local marketing efforts [56] Question: Can you clarify thoughts around studio closures? - The company is taking a conservative approach to underperforming studios, aiming for a healthier system overall [66] Question: What are the specific hurdle rates for assessing other brands? - Franchisee profitability is the primary focus, with a target of 20% to 25% EBITDA margin at the studio level [73]