Xponential Fitness(XPOF) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - North America system-wide sales reached $465 million, up 21% year over year [10] - North America quarterly run rate average unit volumes increased to$ 668,000, up 9% year over year [40] - Total members at quarter end stood at 813,000, up 15% year over year [10] - Adjusted EBITDA for 2024 was $116.2 million, up 16% compared to the prior year [58] - Net loss for the fourth quarter was$ 62.5 million, compared to a net loss of $12.3 million in the prior year [55] Business Line Data and Key Metrics Changes - Franchise revenue for the quarter was$ 45.3 million, up 17% year over year [43] - Equipment revenue declined by 22% year over year to $12.7 million [44] - Merchandise revenue was down 34% year over year to$ 6.1 million [45] - Franchise marketing fund revenue increased by 23% year over year to $9.2 million [46] Market Data and Key Metrics Changes - System-wide sales for 2024 increased approximately 23% to$ 1.7 billion from $1.4 billion in 2023 [40] - Same-store sales for the full year were 7% [40] - The volume of licenses sold was lower due to a pause in sales while updating franchise disclosure documents [39] Company Strategy and Development Direction - The company is focused on building a senior management team to scale operations profitably [13] - Plans to expand international footprint, particularly for Club Pilates, with leadership in Europe and Asia [21] - Emphasis on innovation and data-driven decision-making to enhance member experience and operational efficiency [24][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the business, including operational issues and a need for structural changes [26][29] - 2025 is viewed as a year for foundation building, with expectations for growth to reaccelerate in subsequent years [30] - The company aims to improve franchisee profitability and is reviewing its brand portfolio for better capital allocation [31][112] Other Important Information - The company restated 2023 financial statements due to accounting errors related to inventory and compliance [33][34] - Total long-term debt increased to$ 352.4 million as of December 31, 2024, from $328.5 million the previous year [68] Q&A Session Summary Question: Can you help us understand the comp performance that is embedded in the 2025 system sales guidance? - The guidance assumes mid single-digit comp growth, with Club Pilates historically performing better [79] Question: Can you provide an update on the franchise recruiting process? - A new Chief Development Officer has been hired, and functions are now unified under one leadership [81] Question: What is your assessment of StretchLab in terms of negative comps? - Management is actively reviewing StretchLab's model and exploring ways to improve franchisee communication and marketing [91][95] Question: Can you clarify thoughts around studio closures? - The company is taking a conservative approach to underperforming studios, aiming for a healthier system [103] Question: What are the expectations for international expansion? - The company plans to have on-the-ground leadership in Europe and Asia to support franchise operations [99]