F45 Training Holdings Inc. (NYSE:FXLV) (“F45” or the “Company”)
today reported financial results for the fiscal third quarter ended
September 30, 2022 and announced the formation of a Special
Committee and the engagement of advisors.
“During the third quarter, we delivered total revenue of $29.3
million and Adjusted EBITDA of $6.1 million. In addition, we had 84
Net Initial Studio Openings for the quarter, bringing our global
Total Studio count to 2,042. I am pleased with the performance of
our studios, which generated same store sales growth of 16% as well
as record system-wide sales of $130.6 million, representing
year-over-year growth of 31%,” said Ben Coates, interim CEO of
F45.
He continued, “Last quarter, we announced several key
organizational changes and a cost reduction plan designed to
position the Company more closely with macroeconomic conditions and
current business trends. I am pleased to share that these changes
were implemented during the third quarter and are beginning to
demonstrate positive results.”
Third Quarter Fiscal 2022 Highlights Compared to Third
Quarter Fiscal 2021
- Total revenue increased from the prior year period by 8% to
$29.3 million.
- Same-store sales increased 16% globally and 11% in the United
States.
- System-wide sales increased 31% globally to $130.6 million, and
32% in the United States to $61.1 million.
- System-wide visits increased 19% globally to 7.6 million, and
10% in the United States to 3.3 million.
- Net Franchises Sold totaled (152), which was impacted by
terminations due to the unavailability of previously announced
franchise financing facilities.
- Net Initial Studio Openings totaled 84.
- Reported net loss of $60.0 million.
- Adjusted EBITDA of $6.1 million.(1)
(1) Please refer to the
explanation of non-GAAP financial measures for Adjusted EBITDA.
Operating Results for the Third Quarter Ended September 30,
2022
Total revenue increased $2.1 million, or 8%, to $29.3
million from $27.2 million as compared to the prior year
period.
- Franchise revenue increased $0.1 million, or 1%, to $18.6
million from $18.5 million in the prior year period.
- Equipment and merchandise revenue increased $2.1 million, or
24%, to $10.8 million from $8.7 million in the prior year period.
The increase in equipment and merchandise revenue was driven by the
delivery of approximately 97 World Packs during the quarter.
Gross profit of $19.9 million remained unchanged as
compared to the $19.9 million from the prior year period. Gross
profit margin of 68% represented a decrease from 73% during the
prior year period.
Selling, general and administrative (“SG&A”) expenses
were $53.9 million, compared to $110.5 million in the third quarter
last year. SG&A expense was primarily driven by significant
one-time expenses including restructuring costs, legal settlements,
relocation expenses, stock-based compensation, and COVID-19
concessions. After adjusting for non-recurring and non-cash items,
SG&A equaled approximately $19.5 million, which represented a
decline from the prior quarter period, due to the recently
implemented cost reduction plan.
Net loss was $60.0 million, compared to net loss of
$130.2 million in the prior year period.
Adjusted EBITDA was $6.1 million, compared to $10.1
million in the prior year period.
Financial Outlook
The Company is reaffirming the following financial guidance for
the year ending December 31, 2022 as described in the strategic
outlook announcement on July 26, 2022.
The guidance assumes that the $250 million of growth capital
provided by two previously announced franchise financing
facilities, which F45 had arranged for franchisees to open
additional studios, will not be available despite strong demand
from franchisees.
- Full-year net New Franchises Sold between 350 and 450.
- Full-year net Initial Studio Openings between 350 and 450.
- Full-year revenue between $120 million and $130 million.
- Full-year Adjusted EBITDA between $25 million and $30
million.
Formation of Special Committee and Engagement of
Advisors
The Company’s Board of Directors has formed a Special Committee
of independent directors to review and evaluate strategic
alternatives including the previously announced unsolicited,
preliminary and non-binding proposal the Company received on
September 30, 2022 from Kennedy Lewis Investment Management LP
(“KLIM”) to acquire all of the outstanding shares of common stock
of the Company not already beneficially owned by KLIM or other
stockholders participating in the proposed transaction at a price
per share equal to $4.00 in cash (the “KLIM Proposal”). As part of
the comprehensive process, the Special Committee will review and
evaluate alternatives to the KLIM Proposal.
The Special Committee has retained J.P. Morgan Securities LLC as
financial advisor, and King & Spalding LLP as legal counsel, to
assist the Special Committee in its review and evaluation.
The Special Committee has the full power and authority of the
Board of Directors to take any and all actions on behalf of the
Board of Directors as it deems necessary to evaluate and negotiate
the KLIM Proposal and alternatives to the KLIM Proposal. The
Special Committee’s grant of authority provides that the KLIM
Proposal and alternatives to the KLIM Proposal will not be
consummated without the prior approval of the Special
Committee.
The Special Committee has not set a definitive timetable for
completion of its evaluation, and there can be no assurances that
the process will result in any transaction being announced or
completed. The Company does not undertake any obligation to provide
any updates with respect to this or any other transaction, except
as required under applicable law.
Conference Call
A conference call to discuss the Company’s first quarter results
is scheduled for November 14, 2022, at 4:30 P.M ET. To participate,
please dial 844-200-6205 or 929-526-1599 for international callers,
and use the passcode 348873. The call is also accessible via
webcast at https://ir.f45training.com/. A recording will be
available shortly after the conclusion of the call. To access the
replay, please dial 866-813-9403 or +44 204-525-0658, for
international callers, and use the passcode 750057. An archive of
the webcast will be available on F45 Training Holdings’ investor
relations website.
About F45
F45 offers consumers functional 45-minute workouts that are
effective, fun and community-driven. F45 utilizes proprietary
technologies including a fitness programming algorithm and a
digitally enabled delivery platform that leverages a rich content
database of thousands of unique functional training movements to
offer new workouts each day and provide a standardized experience
across F45’s global franchise.
For more information, please visit www.f45training.com.
Non-GAAP Financial Measures
In addition to reporting our financial results in accordance
with U.S. generally accepted accounting principles (“GAAP”), this
press release presents certain other supplemental financial
measures, including Adjusted EBITDA and free cash flow, which is a
measurement that is not calculated in accordance with GAAP.
Management believes that Adjusted EBITDA and free cash flow is
useful to management as it allows investors to evaluate the
effectiveness of our business strategies, make budgeting and
capital allocation decisions, and compare our performance against
that of other peer companies using similar measures. Adjusted
EBITDA is defined as net income before interest, taxes,
depreciation and amortization and adjusted to exclude the impact of
sales tax liability, transaction expenses, certain legal costs and
settlements, COVID-19 concessions, growth and new market
development expense as well as certain other items identified as
affecting comparability, when applicable. Adjusted EBITDA
eliminates non-cash depreciation and amortization expense that
results from our capital investments and intangible assets, as well
as income taxes, which may not be comparable with other companies
based on our tax structure. Free cash flow is defined as cash flows
from operating activities less capital expenditures. Adjusted
EBITDA and free cash flow should be considered in addition to, and
not as a substitute for, net income in accordance with GAAP as a
measure of performance. Other companies may define Adjusted EBITDA
differently and, as a result the Company’s measures of Adjusted
EBITDA, it may not be directly comparable to those of other
companies. A reconciliation of non-GAAP financial measures used in
this press release to their nearest comparable GAAP financial
measures is included at the end of this press release.
Financial Metrics and Other Data
This press release includes several key financial metrics and
other data used by the Company management in assessing the
Company’s results of operations:
“Initial Studio Openings” means the number of studios that were
determined to be first opened during such period. Prior to October
1, 2021, we classify an Initial Studio Opening to occur in the
first month in which the studio first generates monthly revenue of
at least $4,500. Starting on October 1, 2021, we classify an
Initial Studio Opening to occur in the month in which we record the
initial studio opening in our internal systems. Any studios that do
not have an Initial Studio Opening under the prior definition are
included as of October 1, 2021. Initial Studio Openings are not
adjusted downward for studios that were temporarily closed due to
the COVID-19 pandemic or otherwise.
“New Franchises Sold” means, for any specific period, the number
of franchises sold during such period using the methodology set
forth below for “Total Franchises Sold.”
“Open Studios” means the number of studios that were open for
business as of a certain date. A studio may be classified as an
Open Studio regardless of whether or not it generated minimum
monthly revenue of $4,500. During the COVID-19 pandemic, a
significant portion of our network was forced to temporarily close,
which reduced the number of Open Studios. As studios re-open in
accordance with state and local regulations, they are reflected in
the Open Studios figures.
“Same store sales” means, for any reporting period, studio-level
revenue generated by a comparable base of franchise studios, which
we define as open studios that have been operating for more than 16
months.
“System-wide sales” are defined as all payments made to our
studios and includes payment for classes, apparel and other sales
for a given period. We track System-wide Sales as an indication of
the strength of our franchisee network.
“System-wide visits” means the number of registered individual
workouts for any specified period. A workout is registered when the
consumer checks into a class.
“Total Franchises Sold” represents, as of any specified date,
(i) the total number of signed franchise agreements in place as of
such date for which an establishment fee has been paid and (ii) the
total number of franchises committed in a multi-studio agreement in
place as of such date for which an upfront payment has been made,
in each case that have not been terminated. Each new franchise is
included in the number of total franchises sold from the date on
which such franchise first satisfies the condition in clause (i) or
(ii) above, as applicable. total franchises sold includes franchise
arrangements in all stages of development after signing a franchise
agreement, and includes franchises with open studios. Franchises
are removed from total franchises sold upon termination of the
franchise agreement.
“Total Studios” as of any specified date, means the total
cumulative Initial Studio Openings as of that date less cumulative
permanent studio closures as of that date. Total Studios are not
adjusted downward for studios that were temporarily closed due to
the COVID-19 pandemic or otherwise.
Forward-Looking Statements
F45’s financial outlook and other statements in this press
release that refer to future plans and expectations, including
those relating to F45’s long-term growth expectations, are
forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that involve a number
of risks and uncertainties. Words such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “could,” “intends,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,”
“potential,” or “continue” “or negatives of these words and
variations of such words and similar expressions are intended to
identify such forward-looking statements. Statements that refer to
or are based on estimates, forecasts, projections, uncertain events
or assumptions, including statements relating to F45’s strategy,
total addressable market and market opportunity, financial outlook,
business plans, future macroeconomic conditions, future impacts of
the COVID-19 pandemic, and future products and services, also
identify forward-looking statements. All forward-looking statements
included in this press release are based on management’s
expectations as of the date of this press release and, except as
required by law, F45 disclaims any obligation to update these
forward- looking statements to reflect future events or
circumstances.
Forward-looking statements are subject to certain risks,
uncertainties and assumptions relating to factors that could cause
actual results to differ materially from those anticipated in such
statements, including, without limitation, the following: our
dependence on the operational and financial results of, and our
relationships with, our franchisees and the success of their new
and existing studios; our ability to protect our brand and
reputation; our ability to identify, recruit and contract with a
sufficient number of qualified franchisees; our ability to execute
our growth strategy, including through development of new studios
by new and existing franchisees; our ability to manage our growth
and the associated strain on our resources; our ability to
successfully integrate any acquisitions, or realize their
anticipated benefits; the high level of competition in the health
and fitness industry; economic, political and other risks
associated with our international operations; changes to the
industry in which we operate; our reliance on information systems
and our and our franchisees’ ability to properly maintain the
confidentiality and integrity of our data; the occurrence of cyber
incidents or a deficiency in our cybersecurity protocols; our and
our franchisees’ ability to attract and retain members; our and our
franchisees’ ability to identify and secure suitable sites for new
franchise studios; risks related to franchisees generally; our
ability to obtain third-party licenses for the use of music to
supplement our workouts; certain health and safety risks to members
that arise while at our studios; our ability to adequately protect
our intellectual property; risks associated with the use of social
media platforms in our marketing; our ability to obtain and retain
high-profile strategic partnership arrangements; our ability to
comply with existing or future franchise laws and regulations; our
ability to anticipate and satisfy consumer preferences and shifting
views of health and fitness; our business model being susceptible
to litigation; the increased expenses associated with being a
public company; and additional factors discussed in our filings
with the Securities and Exchange Commission (the “SEC”). These
risks also include the impact of the announcement of the formation
of the Special Committee and review of the KLIM Proposal and
alternatives to the KLIM Proposal on the Company’s business and its
ability to effectuate any such potential transaction. Further, many
of these factors are, and may continue to be, amplified by the
COVID-19 pandemic. Detailed information regarding these and other
factors that could affect F45’s business and results is included in
F45’s SEC filings, including in the section titled “Risk Factors”
in F45’s Annual Report on Form 10-K and other SEC filings.
F45 Training Holdings
Inc.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
amounts and share data)
(unaudited)
September 30, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
16,676
$
42,004
Restricted cash
66
—
Accounts receivable, net
33,937
27,788
Due from related parties
1,058
2,442
Inventories
53,745
12,300
Deferred costs
1,861
1,887
Prepaid expenses
9,620
12,706
Other current assets
18,348
9,515
Total current assets
135,311
108,642
Property and equipment, net
10,546
5,645
Deferred tax assets, net
10,145
22,716
Goodwill
4,405
4,614
Intangible assets, net
28,342
28,446
Deferred costs, net of current
10,946
11,871
Other long-term assets
26,330
21,960
Total assets
$
226,025
$
203,894
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses
$
60,188
$
36,594
Deferred revenue
6,828
7,137
Interest payable
382
276
Current portion of long-term debt
37
—
Income taxes payable
16,712
9,624
Total current liabilities
84,147
53,631
Deferred revenue, net of current
1,908
7,385
Long-term debt
88,351
—
Other long-term liabilities
9,191
12,605
Total liabilities
183,597
73,621
Commitments and contingencies (Note
17)
Stockholders’ equity
Common stock, $0.00005 par value;
97,315,803 and 95,806,063 shares issued and outstanding as of
September 30, 2022 and December 31, 2021, respectively
6
5
Additional paid-in capital
672,898
662,946
Accumulated other comprehensive (loss)
income
(4,772
)
603
Accumulated deficit
(450,985
)
(358,561
)
Less: Treasury stock
(174,720
)
(174,720
)
Total stockholders' equity
42,427
130,273
Total liabilities and stockholders'
equity
$
226,024
$
203,894
F45 Training Holdings,
Inc.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except share
amounts and share data)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Revenues:
Franchise (Related party: $2,188 and
$2,724 for the three months ended September 30, 2022 and 2021,
respectively, and $7,164 and $3,329 for the nine months ended
September 30, 2022 and 2021, respectively)
$
18,565
$
18,513
$
57,534
$
52,250
Equipment and merchandise (Related party:
$4,020 and $0 for the three months ended September 30, 2022 and
2021, respectively, and $14,652 and $0 for the nine months ended
September 30, 2022 and 2021, respectively)
10,762
8,664
51,834
19,950
Total revenues
29,327
27,177
109,368
72,200
Costs and operating expenses:
Cost of franchise revenue
1,469
1,486
4,390
4,162
Cost of equipment and merchandise (Related
party: $4,607 and $1,561 for the three months ended September 30,
2022 and 2021, respectively, and $8,932 and $3,678 for the nine
months ended September 30, 2022 and 2021, respectively)
7,950
5,752
27,572
12,672
Selling, general and administrative
expenses
53,913
110,492
138,831
145,882
Total costs and operating expenses
63,332
117,730
170,793
162,716
Loss from operations
(34,005
)
(90,553
)
(61,425
)
(90,516
)
Loss on derivative liabilities, net
—
—
—
48,603
Change in fair value - warrant
liabilities
(3,192
)
$
—
(4,457
)
—
Interest expense, net
12,620
41,897
13,442
59,165
Other expense (income), net
2,567
(2,035
)
1,953
(1,415
)
Loss before income taxes
(46,000
)
(130,415
)
(72,363
)
(196,869
)
Provision (benefit) for income taxes
14,010
(222
)
20,061
693
Net loss
$
(60,010
)
$
(130,193
)
$
(92,424
)
$
(197,562
)
Other comprehensive income (loss)
Unrealized (loss) gain on interest rate
swap, net of tax
—
(7
)
—
196
Reclassification to interest expense from
interest rate swaps
—
464
—
464
Foreign currency translation adjustment,
net of tax
(2,736
)
(509
)
(5,375
)
(616
)
Comprehensive loss
$
(62,746
)
$
(130,245
)
$
(97,799
)
$
(197,518
)
Per share data:
Net loss per share
Basic and diluted
$
(0.62
)
$
(1.52
)
$
(0.96
)
$
(4.10
)
Shares used in computing net loss per
share
Basic and diluted
97,100,453
85,463,755
96,245,149
48,214,724
F45 Training Holdings
Inc.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September
30,
2022
2021
Cash flows from operating
activities
Net loss
$
(92,424
)
$
(197,562
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation
912
195
Amortization of intangible assets
2,895
1,968
Amortization of deferred costs
3,032
1,330
Accretion and write-off of debt
discount
—
31,585
Amortization of debt offering costs
263
—
Bad debt expense
11,308
5,417
Stock-based compensation
11,504
85,745
Deferred income taxes
11,672
—
Loss (gain) on disposal of property and
equipment
565
(6
)
Change in fair value - warrant
liabilities
(4,457
)
—
Prepayment penalty included in interest
expense
—
13,034
PPP loan forgiveness
—
(2,063
)
Loss on termination of Fortress financing
facility
14,046
—
Loss on derivative liabilities, net
—
48,603
Provision for inventories
—
147
Paid-in-kind interest accrual
—
12,851
Unrealized foreign currency transaction
(losses) gains
(1,461
)
333
Impairment expense
131
—
Other
(41
)
—
Changes in operating assets and
liabilities:
Due from related parties
(626
)
178
Accounts receivable, net
(16,359
)
(11,361
)
Inventories
(41,793
)
(7,120
)
Prepaid expenses
2,886
(7,863
)
Other current assets
(12,907
)
(2,742
)
Deferred costs
(2,620
)
(2,534
)
Other long-term assets
(6,460
)
(9,274
)
Accounts payable and accrued expenses
24,545
5,432
Deferred revenue
(1,042
)
989
Interest payable
—
(107
)
Income taxes payable
7,891
(1,766
)
Other long-term liabilities
(437
)
(167
)
Net cash used in operating
activities
(88,977
)
(34,758
)
Cash flows from investing
activities
Purchases of property and equipment
(6,079
)
(1,465
)
Acquisition of Flywheel
—
(25,033
)
Purchases of intangible assets
(2,995
)
(872
)
Net cash used in investing
activities
(9,074
)
(27,370
)
Cash flows from financing
activities
Borrowings under revolving facility
87,946
—
Proceeds from issuance of common stock,
net of offering costs
—
277,753
Repayment of revolving facility
—
(7,000
)
Repayment of 1st lien loan
—
(33,688
)
Repayment of 2nd lien loan
—
(137,443
)
Prepayment premium on 2nd lien loan
—
(13,034
)
Taxes paid related to net share settlement
of equity awards
(11,423
)
—
Deferred financing costs
(3,176
)
(1,012
)
Net cash provided by financing
activities
$
73,347
$
85,576
Effect of exchange rate changes on
cash, cash equivalents, and restricted cash
(558
)
203
Net change in cash, cash equivalents,
and restricted cash
(25,262
)
23,651
Cash and cash equivalents at beginning of
period
42,004
28,967
Restricted cash at beginning of period
—
—
Cash, cash equivalents, and restricted
cash at beginning of period
42,004
28,967
Cash and cash equivalents at end of
period
16,676
52,618
Restricted cash at end of period
66
—
Cash, cash equivalents, and restricted
cash at end of period
$
16,742
$
52,618
Supplemental disclosures of cash flow
information:
Income taxes paid
$
674
$
1,771
Interest paid
1,457
14,143
Supplemental disclosures of noncash
financing and investing activities:
Conversion of convertible debt and
derivative liability into common stock
$
—
$
191,519
Conversion of convertible preferred stock
into common stock
—
98,544
Property and equipment included in
accounts payable and accrued expenses
592
—
Deferred financing costs incurred pursuant
to issuance of liability warrants
8,917
—
Reduction in liability warrant related to
exercise of put option via net share settlement
4,460
—
Deferred financing costs included in
accounts payable and accrued expenses
2,224
—
Assumption of note payable in exchange for
intangible and other current assets
405
—
F45 Training Holdings
Inc.
SEGMENTS INFORMATION
(in thousands)
(unaudited)
For the Three Months
Ended
September 30,
2022
For the Three Months
Ended
September 30,
2021
Revenue
Cost of revenue
Gross profit
Revenue
Cost of revenue
Gross profit
United States:
Franchise
$
11,722
$
1,158
$
10,564
$
11,856
$
1,047
$
10,809
Equipment and merchandise
4,805
3,796
1,009
4,162
2,239
1,923
$
16,527
$
4,954
$
11,573
$
16,018
$
3,286
$
12,732
Australia:
Franchise
$
3,302
$
168
$
3,134
$
3,328
$
158
$
3,170
Equipment and merchandise
664
606
58
2,234
$
1,992
242
$
3,966
$
774
$
3,192
$
5,562
$
2,150
$
3,412
Rest of World:
Franchise
$
3,541
$
143
$
3,398
$
3,329
$
281
$
3,048
Equipment and merchandise
5,293
3,548
1,745
2,268
1,521
747
$
8,834
$
3,691
$
5,143
$
5,597
$
1,802
$
3,795
Consolidated:
Franchise
$
18,565
$
1,469
$
17,096
$
18,513
$
1,486
$
17,027
Equipment and merchandise
10,762
7,950
2,812
8,664
5,752
2,912
$
29,327
$
9,419
$
19,908
$
27,177
$
7,238
$
19,939
For the Nine Months
Ended
September 30, 2022
For the Nine Months
Ended
September 30, 2021
Revenue
Cost of revenue
Gross profit
Revenue
Cost of revenue
Gross profit
United States:
Franchise
$
36,268
$
3,565
$
32,703
$
31,823
$
3,377
$
28,446
Equipment and merchandise
34,206
16,794
17,412
11,166
6,154
5,012
$
70,474
$
20,359
$
50,115
$
42,989
$
9,531
$
33,458
Australia:
Franchise
$
10,242
$
473
$
9,769
$
9,319
$
430
$
8,889
Equipment and merchandise
3,893
$
3,394
499
3,762
3,313
449
$
14,135
$
3,867
$
10,268
$
13,081
$
3,743
$
9,338
Rest of World:
Franchise
$
11,024
$
352
$
10,672
$
11,108
$
355
$
10,753
Equipment and merchandise
13,735
7,384
6,351
5,022
3,205
1,817
$
24,759
$
7,736
$
17,023
$
16,130
$
3,560
$
12,570
Consolidated:
Franchise
$
57,534
$
4,390
$
53,144
$
52,250
$
4,162
$
48,088
Equipment and merchandise
51,834
27,572
24,262
19,950
12,672
7,278
$
109,368
$
31,962
$
77,406
$
72,200
$
16,834
$
55,366
(1) Revenues for the three and
nine months ended September 30, 2021 have been recast by management
to reflect changes in inter-segment profit in order to conform to
current year presentation.
TOTAL FRANCHISES SOLD
(unaudited)
Three Months Ended September
30, 2022
Three Months Ended September
30, 2021
U.S.
Australia
ROW
Total
U.S.
Australia
ROW
Total
Total Franchises Sold, beginning of
period
2,227
803
804
3,834
1,379
785
637
2,801
New Franchises Sold, net(a)
(167
)
(5
)
20
(152
)
87
15
108
210
Total Franchises Sold, end of period
2,060
798
824
3,682
1,466
800
745
3,011
(a) New Franchises Sold are shown
net of franchises that were signed but subsequently terminated
prior to the initial studio opening.
TOTAL STUDIOS
(unaudited)
Three Months Ended September
30, 2022
Three Months Ended September
30, 2021
U.S.
Australia
ROW
Total
U.S.
Australia
ROW
Total
Total Studios, beginning of period
783
674
501
1,958
556
628
371
1,555
Initial Studio Openings, net(a)
61
5
18
84
30
5
28
63
Total Studios, end of period
844
679
519
2,042
586
633
399
1,618
(a) Initial Studio Openings are
shown net of studios that have permanently closed which had a
recorded initial studio opening.
GAAP to Non-GAAP
Reconciliation
(in thousands)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Net loss
$
(60,010
)
$
(130,193
)
$
(92,424
)
$
(197,562
)
Interest expense, net
12,620
41,897
13,442
59,165
Provision (benefit) for income taxes
14,010
(222
)
20,061
693
Depreciation and amortization
1,371
786
3,807
2,163
Amortization of deferred costs
1,350
605
3,032
1,330
EBITDA
$
(30,659
)
$
(87,127
)
$
(52,082
)
$
(134,211
)
Sales tax reserve(a)
429
140
1,489
387
Transaction fees(b)
743
5,485
8,335
8,816
Loss on derivative liabilities(c)
—
—
—
48,603
Certain legal costs and settlements(d)
7,459
1,029
16,329
4,452
Stock-based compensation(e)
8,117
85,745
12,951
85,745
Recruitment(f)
—
17
1,138
70
COVID concessions(g)
3,744
1,590
8,283
5,923
Relocation(h)
219
258
1,658
510
Development costs(i)
1,538
932
3,815
3,720
Charitable donation(j)
—
2,046
—
2,046
Restructuring costs(k)
14,550
—
14,550
—
Adjusted EBITDA
$
6,140
$
10,115
$
16,466
$
26,061
(a) Represents the impact of
one-time sales tax liability arising from a timing change in the
ability to enforce certain contractual terms in arrangements with
franchisees.
(b) Represents transaction costs
incurred as a part of a reorganization, acquisition-related costs
in a business combination, and the issuance of preferred and common
shares, including legal, tax, accounting and other professional
services.
(c) Represents the gain on
derivative liabilities related to the warrants and the loss on
derivative liabilities associated with the convertible note.
(d) Represents certain one-time
legal costs, primarily related to litigation activities and legal
settlements.
(e) Represents stock-based
compensation of our employees, non-employees and directors
associated with our initial public offering.
(f) Represents one-time
recruitment expense of executive leadership and essential
public-company roles.
(g) Represents concessions made
to studios impacted by COVID, including one time COVID-19 related
write-offs.
(h) Represents costs incurred as
a part of the relocation of our corporate headquarters.
(i) Represents one-time
non-recurring costs incurred with launch of new brands.
(j) Represents one-time
charitable donation made in the amount of total PPP loan
forgiveness pursuant to the use of proceeds discussed in our IPO
prospectus.
(k) Represents costs incurred
related to the restructuring performed in July 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221114005956/en/
Investor and Media Relations: Bruce Williams, Managing Director
ICR, Inc. F45IR@icrinc.com 332-242-4303
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