Xponential Fitness, Inc. raised its full year 2022 guidance for revenue and adjusted EBITDA after reporting that second-quarter revenue surged 66 percent.
Financial Highlights: Q2 2022 Compared to Q2 2021
- Grew revenue 66 percent to $59.6 million;
- Increased North America system-wide sales by 45 percent to $249.8 million;
- Reported North America same-store sales growth of 25 percent;
- Reported North America quarterly run-rate average unit volume (AUV) of $480,000, compared to $384,000;
- Posted net income of $31.5 million, or earnings of $3.28 per share, on a share count of 25.4 million shares of Class A Common Stock, compared to a net loss of $8.0 million;
- Posted Adjusted Net Income of $0.1 million, or a loss of $0.07 per share, compared to an Adjusted Net Loss of $7.8 million; and
- Reported Adjusted EBITDA of $17.6 million, compared to $8.3 million.
“We experienced a strong year-over-year increase in members and grew our system-wide sales across North America for the eighth consecutive time in the second quarter,” said Anthony Geisler, CEO, Xponential Fitness, Inc. “The dynamic year-over-year growth in North America run-rate AUVs is a solid reminder that despite inflationary pressures to date, the workouts our franchisees provide across our diverse portfolio of ten brands are an integral part of our members’ lives.”
Geisler continued, “For the remainder of the year, we expect the strong growth in the business to continue. Accordingly, we are increasing our fiscal 2022 outlook to reflect 39 percent revenue growth and 156 percent Adjusted EBITDA growth at the midpoint of our outlook ranges compared to 2021.”
For the second quarter 2022, total revenue increased $23.8 million, or 66 percent, to $59.6 million, up from $35.8 million in the prior-year period. Total revenue increased largely due to increasing equipment installations and royalties generated from strong North American system-wide sales.
Net income totaled $31.5 million, or earnings of $3.28 per share, compared to a net loss of $8.0 million in the prior-year period. The increase was the result of $11.6 million of higher overall profitability and $31.8 million of lower non-cash contingent consideration expense primarily related to the Rumble acquisition, offset by a $4.0 million increase in non-cash equity-based compensation expense. Please see the table contained in this press release for a calculation of the basic and diluted earnings per share for the quarter ended June 30, 2022.
Consistent with previous periods, the Rumble acquisition non-cash contingent consideration liability is marked to market based on Xponential’s share price, contributing to a $31.6 million decrease to contingent consideration liability in the second quarter of 2022.
Adjusted net income (loss) for the second quarter of 2022, which excludes the $31.6 million change in fair value of non-cash contingent consideration and $0.2 million expense related to the second quarter remeasurement of the company’s tax receivable agreement liability, was $0.1 million, or ($0.07) per share, which is based on 25.4 million shares of Class A common stock.
Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for equity-based compensation, acquisition and transaction expenses, management fees, litigation expenses, employee retention credit, secondary public offering expenses and tax receivable agreement remeasurement, increased to $17.6 million, up from $8.3 million in the prior-year period.
Liquidity and Capital Resources
As of June 30, 2022, the company had approximately $29.3 million of cash, cash equivalents and restricted cash and $131.7 million in total long-term debt. Net cash provided by operating activities was $26.2 million for the quarter ended June 30, 2022.
Based on the company’s performance in the first six months of 2022 and the current state of the business as of the date of this press release, Xponential is increasing its full-year 2022 guidance for revenue and Adjusted EBITDA and re-affirming guidance for studio openings and system-wide sales in North America as follows:
- New studio openings to remain in the range of 500 to 520, or an increase of 53 percent at the midpoint as compared to the full year 2021;
- North America system-wide sales to remain in the range of $995.0 million to $1.005 billion, or an increase of 41 percent at the midpoint as compared to full year 2021;
- Revenue is now anticipated to be $211.0 million to $221.0 million, or an increase of 39 percent at the midpoint as compared to the full year 2021; this compares to previous guidance of $201.0 million to $211.0 million, or an increase of 33 percent at the midpoint as compared to the full year 2021; and
- Adjusted EBITDA is now anticipated to be $68.0 million to $72.0 million, or an increase of 156 percent at the midpoint compared to the full year 2021; this compares to previous guidance of $67.0 million to $71.0 million, or an increase of 153 percent at the midpoint as compared to the full year 2021.
Additional Key Assumptions For Full Year 2022 Include:
- Tax rate in mid-to-high single-digits;
- Share count of approximately 25.7 million shares of Class A Common Stock for the GAAP EPS and Adjusted EPS calculations; and
- $3.25 million in quarterly cash dividends paid related to the $200 million Convertible Preferred Stock.
Photo courtesy Xponential Fitness/Unsplash