Xponential Fitness, Inc. — Form 8-K Summary
Business Context and Reporting Period
Filed February 7, 2023 under Items 2.02 and 9.01. The filing disclosed preliminary, unaudited estimates for the year ended December 31, 2022, in connection with a proposed offering of Class A common stock. The estimates are subject to change as the Company finalizes its financial statements and have not been audited, reviewed, or compiled by its independent registered public accounting firm.
Key Financial and Operating Metrics
| Metric | 2022 Preliminary Estimate | Year-over-Year Change or Margin |
|---|---|---|
| Revenue | $241.4 million–$243.2 million | Up 56%–57% |
| Net income (loss) | $(3.0) million to $0.5 million | Net margin of (1.2)% to 0.2% |
| Adjusted EBITDA | $71.3 million–$74.0 million | Up 161%–171%; margin of 29.5%–30.4% |
| System-wide sales | $1.0 billion | Up 46% from $709.7 million |
| Global open studios | 2,641 | Up 24% from 2,130 |
| Global franchise licenses sold | 5,450 | Up 23% from 4,424 |
Estimated EBITDA was $24.3 million–$27.7 million. Adjusted EBITDA included add-backs for equity-based compensation, acquisition and transaction expenses, litigation expenses, secondary offering expenses, TRA remeasurement, and brand-asset impairment, partially offset by a $2.6 million employee retention credit.
The filing does not provide clear figures for cash flow, cash balances, debt balances, liquidity, working capital, or capital expenditures.
Material Changes Versus the Prior Comparable Period
- Revenue increased an estimated 56%–57% year over year.
- Adjusted EBITDA increased an estimated 161%–171%, with an estimated margin of approximately 29.5%–30.4%.
- Global studios increased by 511, including 375 North American and 136 international openings.
- New franchise license sales increased to 1,026 in 2022 from 955 in 2021.
- System-wide sales exceeded $1.0 billion, compared with $709.7 million in 2021.
- Remaining studios obligated to open internationally under master franchise agreements increased to 1,094 from 956, while licenses already sold by master franchisees increased to 236 from 184.
Outlook, Risks, Contingencies, and Unusual Items
The Company announced its expectation to file a preliminary prospectus supplement for a proposed Class A common stock offering. No offering size, pricing, timing, or use of proceeds is provided in this filing.
Management characterized the results as preliminary estimates that may differ materially from final GAAP results. The filing cautions that these estimates are not a substitute for audited financial statements and are not necessarily indicative of future performance.
Unusual or potentially non-recurring items affecting adjusted EBITDA included $10.3 million of litigation expenses, $29.2 million of equity-based compensation, $3.7 million of brand-asset impairment, $4.5 million–$5.1 million of acquisition and transaction expenses, $0.5 million–$0.6 million of TRA remeasurement expense, $0.7 million of secondary offering expenses, and a $2.6 million employee retention credit.
Investor Verification Items
- Verify final audited 2022 revenue, net income, adjusted EBITDA, margins, and any revisions to the preliminary ranges.
- Review the final prospectus supplement for offering size, dilution, pricing, use of proceeds, and selling-stockholder details.
- Reconcile adjusted EBITDA to GAAP results and assess the recurring nature of the excluded expenses and credits.
- Review final cash flow, debt, liquidity, covenant, and working-capital disclosures, which are not included here.
- Evaluate litigation exposure and the effect of the disclosed litigation expenses on future results.
- Confirm studio openings, franchise-license counts, international obligations, terminations, and system-wide sales in the final annual filing.