F45 Training, Austin, Texas, has formed a special committee of independent directors to review strategic alternatives for the company’s business, the company announced as it released its third quarter 2022 financials on Nov. 14.
The company, which went public in July 2021 at $16 per share and has seen its stock value dip to as low as 79 cents per share during the past year, received in October an unsolicited take-private bid for $385 million 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. That bid was for a price per share equal to $4 in cash. As part of the process, the special committee will review and evaluate alternatives to the KLIM proposal. No timetable has been set for completion of the evaluation.
This past July, the company revised downward its 2022 financial guidance, laid off 100 corporate employees and named Ben Coates as its interim CEO after founder Adam Gilchrist stepped down.
The news of a special committee was announced as part of F45 Training's release of its third quarter 2022 financials. The company had third quarter revenue of $29.3 million, an 8 percent increase over the same period last year with a net loss of $60 million.
Adjusted EBITDA was $6.1 million, compared to $10.1 million in the prior year period. Net loss was $60 million, compared to net loss of $130.2 million in the prior year period.
Franchise revenue increased $0.1 million or one percent to $18.6 million.
Equipment and merchandise revenue increased $2.1 million or 24 percent to $10.8 million. The increase in equipment and merchandise revenue was driven by the delivery of approximately 97 World Packs during the quarter.
Same-store sales increased 16 percent globally and 11 percent in the United States. System-wide sales increased 31 percent globally to $130.6 million and 32 percent in the United States to $61.1 million.
System-wide visits increased 19 percent globally to 7.6 million and 10 percent in the United States to 3.3 million.
Net initial studio openings totaled 84, bringing total studio count to 2,042, but net franchises sold totaled -152 because sales were impacted by terminations due to the unavailability of previously announced franchise financing facilities.
Coates said he was pleased with the performance of the F45 studios.
“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,” he said. “I am pleased to share that these changes were implemented during the third quarter and are beginning to demonstrate positive results.”
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 percent represented a decrease from 73 percent 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.
Full-Year 2022 Outlook
The company reaffirmed its 2022 financial outlook, previously noted in July, assuming 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 revenue is anticipated between $120 million and $130 million while adjusted EBITDA is expected between $25 million and $30 million.
Net new franchises sold should be between 350 and 450 for the year while net initial studio openings are expected between 350 and 450.