F45 Training Holdings Inc. reported sales grew 242 percent in the fourth quarter and 63 percent in the fiscal year ended December 31.

“I am delighted with our terrific Q4 and full-year results. We completed the year with record revenues and Adjusted EBITDA, we set a record sales pace of over 1,000 franchise sales for the full year, and we opened over 300 franchises globally during the year. We demonstrated our ability to execute on our growth strategies and have shown that both we and our franchisees can achieve great successes despite lingering impacts of the COVID-19 pandemic,” said Adam J. Gilchrist, president, CEO and Chairman of F45.

He continued, “Looking towards the remainder of 2022, I am confident that we have the right strategies in place to continue to drive our success. We continue to invest in and develop our new health and wellness concepts around the world, we have developed an incredible relationship with real estate partners that will optimize our real estate strategy to drive new studio openings and reduce the time from sale to opening, we are working on innovative franchisee financing solutions to help drive our sales pace and accelerate our new studio openings, and we have ordered approximately 1,200 equipment world packs to ensure we can meet our targets in 2022. As I have said before, our goal is to be the world’s fastest-growing franchisor, and I believe our ability to achieve this goal has never been stronger.”

Fourth Quarter Fiscal 2021 Highlights Compared to Fourth Quarter 2020

  • Total revenue increased from the prior-year period by 242 percent to $61.8 million;
  • Same-store sales increased 6 percent globally and 53 percent in the United States;
  • System-wide sales increased 27 percent globally to $113.9 million, and 95 percent in the United States to $49.9 million;
  • System-wide visits increased 7 percent globally to 6.7 million, and 50 percent in the United States to 2.6 million;
  • Net franchises sold totaled 290 compared to 30 in the prior-year period;
  • Net initial studio openings totaled 131 compared to 61 in the prior-year period;
  • Reported net income of $14.8 million; and
  • Adjusted EBITDA increased from the prior-year period by 376 percent to $25.9 million.

Fiscal Year 2021 Highlights Compared To Fiscal Year 2020

  • Total revenue increased from the prior-year period by 63 percent to $134.0 million;
  • Same-store sales increased 12 percent globally and 42 percent in the United States;
  • System-wide sales increased 36 percent globally to $410.3 million, and 96 percent in the United States to $167.0 million;
  • System-wide visits increased 31 percent globally to 26.8 million, and 103 percent in the United States to 10.8 million;
  • Net franchises sold totaled 1,057, resulting in system-wide total franchises sold of 3,301;
  • Net initial studio openings totaled 312, resulting in system-wide total studios of 1,749;
  • Reported net loss of $182.7 million; and
  • Adjusted EBITDA increased from the prior-year period by 104 percent to $52.0 million.

Operating Results for the Fourth Quarter Ended December 31, 2021

  • Total revenue increased $43.8 million, or 242 percent, to $61.8 million from $18.1 million as compared to the prior-year period.
    • Franchise revenue increased $8.7 million, or 68 percent, to $21.5 million from $12.8 million in the prior-year period. The increase in franchise revenue was driven by the increase in establishment, monthly franchise fees and other franchise-related fees.
    • Equipment and merchandise revenue increased $35.1 million, or 667 percent, to $40.4 million from $5.3 million in the prior-year period. The increase in equipment and merchandise revenue was driven by the delivery of approximately 300 World Packs during the quarter.
  • Gross profit increased $35.4 million, or 376 percent, to $44.8 million from $9.4 million as compared to the prior-year period. Gross profit margin of 72 percent compared to 52 percent in the same period last year. The increase was primarily due to a higher mix of franchise revenue as well as higher equipment margins.
  • Selling, General and Administrative (SG&A) expenses were $36.8 million, compared to $26.1 million in the fourth quarter last year. The increase in SG&A expense was primarily due to significant one-time expenses including legal settlements, relocation expenses, stock-based compensation, and COVID-19 concessions.
  • Net income was $14.8 million, compared to net loss of $32.8 million in the fourth quarter last year.
  • Adjusted EBITDA was $25.9 million, compared to $5.5 million in the prior-year period. Adjusted EBITDA margin of 42 percent represented an increase of 1200 basis points from the same period last year.

Operating Results for the Full Year Ended December 31, 2021

  • Total revenue increased $51.7 million, or 63 percent, to $134.0 million from $82.3 million as compared to the prior year.
    • Franchise revenue increased $21.2 million, or 40 percent, to $73.7 million from $52.6 million in the prior-year period. The increase in franchise revenue was driven by the increase in establishment, monthly franchise fees and other franchise-related fees partially offset by covid-related concessions.
    • Equipment and merchandise revenue increased $30.6 million, or 103 percent, to $60.3 million from $29.8 million in the prior-year period. The increase in equipment and merchandise revenue was driven by the increase in equipment and merchandise deliveries.
  • Gross profit increased $47.5 million, or 90 percent, to $100.1 million from $52.7 million in the prior-year period. Gross profit margin of 75 percent compared to 64 percent in the same period last year. The increase was primarily due to higher equipment margins and increased franchise margins due to the lower contribution of marketing membership expenses because of the COVID-19 pandemic.
  • Selling, General and Administrative (SG&A) expenses were $182.7 million, compared to $57.8 million in the prior-year period. The increase in SG&A expense was primarily due to higher brand and marketing expenses, increased personnel expenses to support our growth as well as one-time expenses primarily due to higher stock compensation expenses.
  • Net loss was $182.7 million, compared to a net loss of $25.3 million in the prior-year period.
  • Adjusted EBITDA was $52.0 million, compared to $25.5 million in the prior year. Adjusted EBITDA margin of 39 percent represented an increase of 800 basis points from the prior year.

Balance Sheet and Liquidity Overview
As of December 31, 2021, the company had approximately $42 million of cash and cash equivalents, and no debt outstanding. This compares to $29 million of cash and equivalents and $242 million of total debt outstanding, in the prior-year period. As of December 31, 2021, the company had approximately $89 million of capacity under its revolving credit facility.

Financial Outlook
The company is providing the following financial guidance for the year ending December 31, 2022, which assumes no significant worsening of the pandemic that materially impacts performance, such as prolonged studio closures or other mandated operational restrictions.

  • Full-year net new franchises sold of approximately 1,000;
  • Full-year net initial studio openings of approximately 1,000, which is expected to be weighted towards the back half of the year;
  • Full-year revenue between $255 million and $275 million; and
  • Full-year Adjusted EBITDA between $90 million and $100 million.

Photo courtesy F-45