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F45 Training Holdings Inc. (FXLV)·Q1 2022 Earnings Summary

Executive Summary

  • Q1 2022 revenue was $50.0M (+175% YoY), net income $2.5M, Adjusted EBITDA $17.7M with 35% margin; management said results were above expectations .
  • Franchise momentum accelerated: 706 net franchises sold (record), 117 net studio openings, and backlog of 2,200+ sold-but-not-open studios; global same-store sales +6% (U.S. +40%) .
  • Guidance: FY2022 revenue $255–$275M and Adjusted EBITDA $90–$100M reaffirmed; net new franchises sold raised to ~1,500; openings maintained at ~1,000, back-half weighted; FCF introduced at $50–$60M .
  • Strategic catalysts: two off-balance sheet franchise financing facilities ($150M Fortress with potential to expand to $300M; $100M AFTER program JV for veterans), standardized equipment margins, shared services platform launch, and DB45 (David Beckham) workout marketing push .

What Went Well and What Went Wrong

What Went Well

  • Record franchise sales and backlog: “sold 706 net new franchises… total sold-but-not-open studios to over 2,200,” enabling pathway to ~1,000 openings in 2022 .
  • Off-balance sheet financing secured ($150M Fortress, potential to $300M; $100M AFTER JV), compressing opening timelines and supporting backlog conversion .
  • Operational execution: ~240 equipment “World Packs” delivered; equipment margin improved via bulk logistics and supplier arrangements; standardized pricing globally .
  • Quote: “We delivered total revenue of over $50 million and Adjusted EBITDA of nearly $18 million… above expectations” .

What Went Wrong

  • Australia headwinds: system-wide sales -17%; visits -29% due to Omicron closures—improving in Q2 as restrictions lifted .
  • Elevated Accounts Receivable: AR climbed with modified payment terms for multi-unit partners purchasing world packs (3–6 month runway), contributing to cash flow pressure in the quarter .
  • Back-half weighting persists: permitting, construction labor constraints, and franchise financing timelines mean openings skew to H2; Q2 openings expected ~200–250 .

Financial Results

Core P&L vs prior quarters and margins

MetricQ3 2021Q4 2021Q1 2022
Revenue ($USD Millions)$27.2 $61.8 $50.0
Net Income ($USD Millions)$(130.2) $14.8 $2.5
EPS (Basic/Diluted, $)$(1.52) —$0.03
Gross Profit Margin %72.8% 72% 76%
Adjusted EBITDA ($USD Millions)$10.1 $25.9 $17.7
Adjusted EBITDA Margin %37.2% 42% 35%

Notes:

  • Non-GAAP reconciliation drivers in Q1 included legal costs ($2.3M), stock-based comp ($2.6M), relocation ($0.7M), COVID concessions ($0.9M), development costs ($1.7M) .

Segment breakdown (Q1 2022)

GeographyFranchise Revenue ($M)Equip & Merch Revenue ($M)Total Revenue ($M)Total Cost of Revenue ($M)Gross Profit ($M)
United States$12.401 $22.848 $35.249 $8.769 $26.480
Australia$3.448 $2.130 $5.578 $1.852 $3.726
Rest of World$4.011 $5.170 $9.181 $1.553 $7.628
Consolidated$19.860 $30.148 $50.008 $12.174 $37.834

KPIs across quarters

KPIQ3 2021Q4 2021Q1 2022
System-wide Sales ($M)$99.4 $113.9 $117.4
System-wide Visits (Millions)6.4 6.7 7.2
Same-store Sales Growth (Global)+6% +6% +6.2%
Same-store Sales Growth (U.S.)+67% +53% +40%
Net Franchises Sold210 290 706
Net Initial Studio Openings63 131 117
Total Franchises Sold (EOP)3,011 3,301 4,007
Total Studios (EOP)1,618 1,749 1,866

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net New Franchises SoldFY2022~1,000 ~1,500 Raised
Net Initial Studio OpeningsFY2022~1,000 (back-half weighted) ~1,000 (back-half weighted) Maintained
Total RevenueFY2022$255–$275M $255–$275M Maintained
Adjusted EBITDAFY2022$90–$100M $90–$100M Maintained
Free Cash FlowFY2022—$50–$60M Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2021 & Q4 2021)Current Period (Q1 2022)Trend
Franchise FinancingUnder development; no facility announced; backlog strong $150M Fortress facility (potential to $300M) and $100M AFTER JV for veterans; off-balance sheet; limited guarantees/warrants Accelerating; structural tailwind to openings
Supply Chain/World PacksDelivery delays in Q3; preordered ~1,200 packs for 2022 in Q4 ~240 packs delivered in Q1; bulk order logistics improving per-pack costs/margins Improving execution
Construction/PermittingNoted challenges; focused on CBRE partnership Permitting and construction delays persist; CBRE support to compress opening timeline toward ~6 months Persistent headwind but mitigated
Equipment Margins/PricingRebates boosted Q4 margins; standardization underway Standardized world pack margins globally; expect ~50% range going forward Sustained margin discipline
Shared Services PlatformNot highlightedLaunch covering bookkeeping, membership marketing, outbound sales, real estate; cost+10% margin New profit center/support function
College/Military VerticalsPipeline forming ~450 college proposals; 2,500+ military applicants; AFTER financing to accelerate Expanding TAM
Member EngagementPre-pandemic ~2.7 visits/week; >3 by Q4 Near 3 visits/week; inversely correlated with churn Positive engagement momentum

Management Commentary

  • “We delivered total revenue of over $50 million and Adjusted EBITDA of nearly $18 million… above expectations. We sold 706 new full fee-paying franchises… reaffirming guidance for 1,000 openings… introducing guidance for free cash flow… $50–$60 million” .
  • “Successfully established two new off-balance sheet facilities… $250 million in committed capital… pathway to lend to approximately 1,000 of our 2,200 sold-but-not-yet-open backlog” .
  • “We are in front of the supply chain issues… clear visibility to deliver 1,200 equipment world packs and 1,000 openings this year” .
  • “Shared services platform… membership sales, studio bookkeeping, marketing and real estate… expect this to become a meaningful profit center over time” .
  • “DB45 was a huge success” (David Beckham workout) .

Q&A Highlights

  • Franchise sales drivers and cadence: Influencer-driven awareness flywheel; financing expected to compress sale-to-opening to ~6 months; Q2 openings modeled ~200–250 .
  • AR and prepayments: AR elevated due to modified payment terms for multi-unit world pack deliveries; 3–6 month payoff runway anticipated .
  • Capex/FCF: FY2022 Capex ~$10–$12M; free cash flow allocated to revolver repayment .
  • Large vs small franchisees: Average 20 franchises per investor in Q1; most Q1 sales expected to open by end of 2023 .
  • Variable royalty shift: As AUVs recover toward ~$430K, variable rate upside expected to be material by year-end .
  • Guidance vs raised unit sales: Revenue guidance unchanged due to back-half weighting and revenue recognition complexities; reassess in subsequent quarters .
  • Fortress warrants: 2.5% fully diluted above $16 strike; aligns interests; future facilities may avoid warrants on case-by-case basis .
  • Equipment margins: Efficiency from bulk shipping, supplier renegotiations; standardized margins globally; expect ~50% range .

Estimates Context

  • S&P Global Wall Street consensus for FXLV Q1 2022 EPS and revenue was unavailable via the SPGI/Capital IQ mapping at the time of retrieval; therefore explicit compare-versus-consensus cannot be presented. Values would typically be retrieved from S&P Global; in this case, estimates were unavailable via the tool.
  • Management indicated results were “above expectations,” but this refers to internal expectations rather than external consensus .

Key Takeaways for Investors

  • Backlog conversion risk reduced: Off-balance sheet franchise financing and shared services support compress opening timelines and provide visibility to ~1,000 FY2022 openings; franchise sales raised to ~1,500, a leading indicator for 2023 .
  • Margin discipline: Equipment margin improvements from bulk logistics and standardized pricing plus franchise royalty mix support mid-30s Adj. EBITDA margins despite Australia headwinds .
  • H2 skew is the setup: Permitting/labor constraints keep openings back-half weighted; near-term quarters may show uneven revenue recognition; monitor Q2 openings (~200–250 modeled) and backlog conversion pace .
  • Liquidity and capital structure: ~$32M drawn on revolver with ~$55M remaining capacity at Q1; FCF ($50–$60M) earmarked to repay revolver—de-risking balance sheet while scaling .
  • Engagement is strong: Visits per week trending to ~3 with lower churn correlation; supports variable royalty upside as studios reach productivity thresholds .
  • Catalysts: Fortress facility utilization, AFTER JV loan deployment, reinstatement of marketing program in Q3, continued college/military wins, DB45 marketing halo .
  • Watch Australia normalization: Q2-to-date trends improving post-Omicron; if sustained, global system metrics should strengthen further .