F45 Training Holdings Inc., Austin, Texas, reported first quarter 2022 revenue of $50 million, a 175 percent increase from the $18.2 million it reported in first quarter 2021, the company announced on May 16.
Adjusted EBITDA for the quarter was $17.7 million compared to $5.3 million in the same period last year.
For the full year, F45 anticipates revenue between $255 million and $275 million with adjusted EBITDA between $90 million and $100 million. It also anticipates full-year net new franchises sold of approximately 1,500, compared to the prior guidance of 1,000, as well as full-year net initial studio openings of approximately 1,000, which is expected to be weighted toward the back half of the year.
To help with that anticipated growth, F45 launched two new programs in May to help provide funding for potential franchisees.
One is a $150 million strategic financing program with affiliates of Fortress Credit Corporation. It will allow F45 to immediately start offering eligible F45 franchisees access to growth capital to support the development of new F45 studios across the United States, and this deal has the potential to increase to $300 million over time.
The other is F45 Armed Forces to Entrepreneur (F45 AFTER) program, which will offer U.S. military personnel exclusive financing to become F45 franchisees and the resources to support their success as entrepreneurs. F45 AFTER will provide eligible candidates with exclusive access to $100 million in debt financing to support the development of new F45 studios. F45 is the first fitness company in the world authorized by the Department of Defense to work with active-duty service professionals. Even before the program was marketed, F45 had received more than 2,500 inquiries from interested eligible prospects.
First Quarter Highlights
In addition to the 175 percent increase in total revenue, F45 Training reported gross profit increased $24 million, or 174 percent, to $37.8 million from $13.8 million as compared to the prior year period. Gross profit margin of 76 percent, which was in line with the same period last year.
First quarter franchise revenue increased $6.7 million, or 51 percent, to $19.9 million from $13.2 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, according to the company.
Equipment and merchandise revenue increased $25.1 million, or 499 percent, to $30.1 million from $5 million in the prior year period. The increase in equipment and merchandise revenue was driven by the delivery of approximately 240 World Packs during the quarter, the company said.
F45 reported net income of $2.5 million compared to net loss of $36.8 million in first quarter 2021.
Its same-store sales increased 6 percent globally and 40 percent in the United States.
System-wide sales increased 25 percent globally to $117.4 million and 73 percent in the United States to $52.7 million.
System-wide visits increased 6 percent globally to 7.2 million, and 37 percent in the United States to 3.1 million.
The company sold 706 new full fee-paying franchises during the quarter, which will provide a bridge to 1,500 new franchises sold for the full year (up from 1,000). Net initial studio openings totaled 117 for the quarter.
F45 currently has approximately 1,155 franchisees that have a contractual obligation to pay for and receive equipment packs by the end of 2022, as well as nearly 900 contracted franchises that are in the advance process of securing financing and/or finalizing a lease so they can commence their opening process, according to the company.
F45 has started the process of raising additional off-balance sheet franchise financing capital in Australia to fund expansion around the world for 2023.
More on Funding Programs
Coming out of the pandemic, access to attractive growth capital has become more challenging for small- and medium-sized businesses, especially in the boutique fitness space, according to F45 Training President, CEO and Chairman Adam Gilchrist.
For that reason, the company established a new bespoke financing solution tailored to the specific needs of its franchisees to help them with their growth ambitions while creating greater visibility in its own business. Because the facility will be off-balance sheet from F45's perspective, the company is able to maintain its attractive economic model predicated on capital efficiency, Gilchrist said.
Current and prospective F45 franchisees will have the opportunity to apply for loan financing under this program to develop new F45 franchises in the United States beginning in the second quarter of 2022.
“Innovation is one of the three core pillars of F45, and this first-of-its-kind financing structure is a prime example of how we continue to drive innovation in the health and wellness and broader franchise industries,” Gilchrist said.
The facility will help streamline the process for franchisees to source capital and accelerate new studio openings nationwide, he added.
The F45 AFTER program is a new chapter in the relationship that F45 has established with the U.S. military, offering an opportunity for the 200,000 service members who leave the U.S. military each year to pursue an entrepreneurial opportunity that may otherwise not be possible.
Other existing F45 military programs include F45 SkillBridge Internship Training Program, F45 General Management Training Program, and the Veterans Impact Program. Through these programs, F45 works with active service members, reserve, guard, veterans, and military spouses to assist with their entry into the fitness industry.
In June 2021, F45 opened a studio on Marine Corps Air Station Miramar, becoming the first third-party fitness franchise to open a studio on a U.S. military installation. The studio has since grown to serve more than 2,300 participants. Offerings include complimentary fitness classes for active-duty service members as well as proprietary tailored programming focused on Combat Readiness and Transitional Readiness.
F45 is in ongoing discussions with the Department of Defense to expand the network to additional military installations.
“F45 is proud to be the first fitness company in the world authorized by the U.S. Department of Defense to work with active-duty service members,” said Michael Nichols, general manager–military of F45. “Through F45 AFTER, we are thrilled to bring on board some of the best trained, most loyal and hardest working people — our military men and women — to become studio owners and operators.”