F45 Training Holdings Inc.

Hello and welcome to the F45 Training Holdings Inc fourth quarter in fiscal 2021 earnings call. My name is Lauren and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I will now hand you over to your host, Bruce Williams, Managing Director of Investor Relations to begin. Bruce, please go ahead.

Good morning, everyone, and thank you for joining the call to discuss F45 Training's fourth quarter results, which we released this morning and can be found on the investor relations section of our website at F45Training.com. Today's call will be hosted by Chief Executive Officer Adam Gilchrist and Chief Financial Officer Chris Payne. Before we get started, I want to remind everyone that the management's remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on the current management's expectations. These may include, without limitations, predictions, expectations, targets, or estimates, including regarding our anticipated financial performance, and the actual results could differ materially from those mentioned. Those forward-looking statements also involve substantial risks and uncertainties Some of which may be outside of our control that can cause actual results to differ materially from those expressed in or implied by such statements. These factors and uncertainties, among others, are discussed in our filings with the SEC. We encourage you to review these filings for discussion of these factors, including in our earnings release and in our soon to be filed annual report on Form 10-K for the year ended December 31st, 2021. We should not place undue reliance on these forward-looking statements. We speak only as of today, and we undertake no obligation to update or revise them for any new information. This call will also contain certain non-GAAP financial measures, which we believe are useful supplemental measures that assist in evaluating our ability to generate earnings, provide consistency and comparability with our past performance, and facilitate period-to-period comparisons of our core operating results and the results of peer companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures and definitions of these indicators are included in our earnings release. Now, I would like to turn the call over to Adam.

Thank you, Bruce. I was asked two trivia questions about F45 recently. Strangely, I didn't know the answer to either, and I anecdotally thought I would share this with you folks. The two questions asked were, how long did it take McDonald's to get to the franchise size we took eight years to get to? The answer, it took McDonald's 15 years to get to the same size it took F45, which was eight years. The second question, which I also didn't know the answer to, was how long did it take Starbucks to reach the same number of units that F45 has? The answer, It took Starbucks 27 years to get to the same unit size it took F45, which again has been eight years. Being the fastest growing franchise in history is a proud metric for myself and our staff. However, I echo this point at the end of this presentation. This business is just the beginning. Moving on to the fourth quarter results. For both the fourth quarter, and the full year we continue to execute on our business and growth strategies that have enabled F45 to become the fastest growing fitness franchisor in the world, as well as the number one ranked boutique fitness brand, according to Entrepreneur Magazine. During the fourth quarter, we continue to demonstrate strong franchise sales, including additional multi-unit deals and continued strength in new studio openings and equipment pack deliveries. In the fourth quarter, we sold 290 net new franchises and ended the quarter with 3,301 total franchises sold, a 47% increase compared to the prior year. We also opened 131 net new studios globally and ended the quarter with 1,749 total studios. a 22% increase versus the prior year period. During the fourth quarter, we continued to experience strong performance across our studio network. Same store sales increased 6% globally and 53% in the United States during the quarter. For the full year, same store sales increased 12% globally and 42% in the United States. System-wide sales increased 27% to $114 million during the quarter and 36% to $410 million for the full year. In the United States, system-wide sales increased 95% to $50 million and 96% to $167 million for the fourth quarter and full year, respectively. Global system-wide visits increased 7% to approximately $7 million during the quarter. and 31% to approximately 27 million for the full year. In the United States, system-wide visits increased 50% to approximately 3 million and 103% to approximately 11 million for the fourth quarter and full year respectively. We ended the quarter with 92% of our studios open globally and 97% of our studios open in the US. And as of today, 96% of our studios are open globally and nearly 100% of our studios are open in the US. We are very encouraged by the continued sequential improvements in studio performance with our key performance indicators exceeding pre-pandemic levels in the US, which is our most significant growth market, representing one third of our long-term global TAM. Regarding our business outside the US, I am pleased to report that studios in Australia and rest of the world have experienced a similar strong recovery as government mandated restrictions are slowly being lifted. In particular, as government mandated restrictions in Australia have eased over the last several weeks, we have seen rapid uplift in our Australian studio performances with AUVs quickly returning to pre-pandemic levels. For the full year, We delivered strong results despite the continued challenges from COVID and supply chain disruptions. During the year, we successfully managed through these challenges by doing what was best for our franchisees and our members, which is continuing to deliver the world's best workout and changing people's lives by training in our unique communities. Over the course of 2021, we sold 1,057 net franchises supported by strong demand from multi-unit franchises, and we worked with our franchisees to open 312 new studios. This execution allowed for us to generate revenue growth of 63% compared to the prior period and deliver strong adjusted EBITDA margins of 39%. We ended the quarter with a robust balance sheet consisting of a strong cash position, zero funded debt, and an undrawn revolver. As you know, we have a differentiated approach to fitness firmly rooted in the three pillars of our DNA, innovation, motivation, and of course, results. This unique approach to fitness continues to drive interest in our business from both franchise partners and of course, new members. During the second half of the year, we introduced six new pieces of equipment and over 500 new exercises. Looking ahead, we have plans to introduce thousands of additional workouts over the next several years. Our continually growing exercise database, which consists of over 8,000 unique movements across our fitness modality, serves as the backbone of the best in class fitness programming and supports our mission to offer the world's best workouts. Coupled with our highly scalable franchise model, we have a truly portable concept that thrives globally. As we look forward to 2022, we could not be more excited about the opportunities ahead of us. We are seeing that as COVID-19 restrictions have been lifted, people are as excited as ever to experience in-person fitness, whether they are returning to their local studio or experiencing in-person fitness for the very first time. This is evidenced by our customer engagement metrics, which continue to strengthen with average visits per week, increasing to above pre pandemic visits of 2.7 to now over three visits per week. In addition, we continue to be encouraged by the strong franchise pipeline of over 1500 sold franchises as at 12 31, 2021, but not yet open. As I've said before, a significant portion of these sold but unopened studios are comprised of very experienced and well-capitalized multi-unit franchisees, which I'll talk about further. As we've discussed in the past, we have taken and will continue to take strategic proactive measures with respect to our supply chain. To that end, we recently announced that we have secured 1,200 equipment packs for delivery in 2022. As a result, we remain confident in our ability to satisfy the robust demand from franchisees for new F45 studios. With that, I'll turn it over to Chris to go over our financial results, and then I'll provide an update on our growth strategy.