Xponential Fitness(US:XPOF)2021-11-12 00:49Financial Data and Key Metrics Changes - For Q3 2021, Xponential Fitness reported net revenues of $40.9 million, a 60% increase year-over-year [11] - Adjusted EBITDA was $6.8 million, representing 17% of revenue, compared to $1.5 million or 6% in the prior year [11][67] - North American system-wide sales reached $192.4 million, up 93% from $99.6 million in Q3 2020, marking the highest system-wide sales quarter ever [46] Business Line Data and Key Metrics Changes - Franchise revenue was $20 million, up 68% from $11.9 million in Q3 2020, driven by higher royalties as system-wide sales grew [49] - Equipment revenue increased to $6.8 million, a 39% rise from $4.8 million in the prior year, attributed to a higher concentration of installs within equipment-intensive brands [50] - Merchandise revenue reached $4.9 million, up 35% from $3.6 million, primarily due to increased foot traffic in studios [51] Market Data and Key Metrics Changes - Actively paying members and visitation increased by approximately 60% and 70% year-over-year, respectively [12][45] - North American same-store sales rose 65% from the prior year, reflecting improved membership as pandemic restrictions eased [48] Company Strategy and Development Direction - The company aims to expand its franchise system, with over 1,600 licenses contractually obligated to open in North America, potentially doubling the studio count [24] - A disciplined M&A strategy is in place, with the recent acquisition of BFT, adding over 130 franchise studios across multiple countries [26][29] - A partnership with LA Fitness allows for the exclusive right to expand Xponential Fitness brand studios, with a commitment to develop a minimum of 350 franchise locations over five years [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the fitness industry, noting that the past quarter was akin to a grand reopening [12] - The company expects to see continued growth in the fourth quarter, driven by the acquisition of BFT and the partnership with LA Fitness [13][39] - Management anticipates that adjusted EBITDA will range from $25 million to $26 million for the full year, representing a 160% year-over-year increase at the midpoint of guidance [73] Other Important Information - The company is committed to refranchising or shutting down non-strategic corporate-owned studios by year-end, aiming to hold only a small number of strategic transition studios [54] - Cash and equivalents as of September 30, 2021, were $25.5 million, up from $11.3 million at the end of 2020 [69] Q&A Session Summary Question: Perspective on the future of in-person boutique fitness versus at-home fitness - Management believes that in-person fitness will remain strong as people enjoy communal workouts, and the company is prepared for an omni-channel approach [80][82] Question: Expansion strategy with LA Fitness and potential for other gym partnerships - The exclusive partnership with LA Fitness is seen as a significant opportunity, and while other brands may follow suit, LA Fitness's scale makes it a unique collaboration [85][86] Question: Impact of BFT acquisition on domestic growth and competition - The acquisition of BFT is expected to enhance growth, with management noting that BFT has performed well in a competitive market [96][97] Question: Guidance for studio openings and revenue expectations - The company raised its guidance for studio openings and revenue, with expectations for continued growth driven by existing brands and new partnerships [110][112] Question: Competitive landscape and potential for closures in the industry - Management remains optimistic about their competitive advantages and does not foresee significant closures among competitors, emphasizing their unique offerings [131][132]