Xponential Fitness, Inc.

Good afternoon, ladies and gentlemen, and welcome to Exponential Fitness, Inc. First Quarter 2025 Earnings Call. At this time, note that all lines are in the listen-only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for an operator. Also note that this call is being recorded on Thursday, May 8, 2025. And I would like to turn the conference over to Patricia Neer, From Addo Investor Relations, please go ahead.

Thank you, Operator. Good afternoon, and thank you all for joining our conference call to discuss Exponential Fitness' first quarter 2025 financial results. I am joined by Mark King, Chief Executive Officer, and John Malone, Chief Financial Officer. A recording of this call will be posted on the Investor section of our website at investor.exponential.com. We remind you that during this conference call, we will make certain forward-looking statements, including discussions of our business outlook and financial projections. These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligations to update the information provided on today's call. In addition, we will be discussing certain non-GAAP financial measures in this conference call. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors in conjunction with GAAP measures that we provide. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release that was issued earlier today prior to this call. Please also note that all numbers reported in today's prepared remarks refer to global figures unless otherwise noted. As a reminder, in order to ensure period-over-period comparability and consistent with our reporting methods since IPO, we present all KPIs on a fully pro forma basis, meaning for full KPI history presented, we only include brands that are under our ownership as of the current reporting period. For the period ended March 31st, 2025, this includes BFT, Club Pilates, Cycle Bar, Lindora, Pure Bar, Rumble, Stretch Lab, and Yoga 6. I will now turn the call over to Mark King, CEO of Exponential Fitness.

Thanks, Patricia, and good afternoon to everyone. The business performed as expected this quarter. We demonstrated solid KPIs. completed our updated financing agreement, and filed our franchise disclosure documents, all while continuing to focus on optimizing operations, franchisee health, and setting up the company for long-term success. In the first quarter, North American system-wide sales of $467 million were up 18% year over year. North America quarterly run rate Average unit volumes of $659,000 were up 8% year-over-year. Total members stood at 865,000 at quarter end, up 12% year-over-year. And same-store sales were up 4%. Our core focus remains optimizing our operations. As part of this effort, last month we welcomed our new Chief Marketing Officer, Luis Ocasian. Louise brings 25 years of experience in marketing and business operations, having previously served as president, North America, and global CMO for Instant Brands, where she led and executed marketing commercialization strategies. Prior to that, she held leadership roles in the toy and entertainment industries at companies such as Warner Brothers, Spin Master, and Mattel. At Exponential, Luis hit the ground running. One of the first areas she is focusing on is a review of media strategies to ensure marketing funds are managed efficiently. We have also brought on Fabian Lopez. Fabian has been supporting us as interim chief human resource officer since earlier this year, and we are thrilled to welcome her into the role full time. The CHRO function is at the heart of reorganizing the company. Fabian brings 25 years of leadership experience across multiple industries and organizations, from startups to Fortune 100 companies. With exposure to public company environments and franchising, she has a proven track record in organizational transformation, strategic human resources, talent strategy, and scaling HR infrastructure to support rapid growth. In addition to these two senior management appointments, we have undertaken a comprehensive reorganization of our resources and remain highly focused on strengthening our operations so that we can more effectively serve our franchisees. Notably, we are launching a new field operations function with plans to have 12 field managers in place across North America by quarter end. This is the first for the company, marking a significant development in operational support. These individuals will work closely with our franchisees to drive best practices across studios and support new studios in launching successfully. These field roles are reallocated rather than new hires, meaning that for every employee in the field, we are eliminating a headcount at HQ. Turning to franchise sales and new studio openings, we are making good progress on the Franchise Disclosure Documents, or FDDs. We filed all FDDs except Lindora at the end of the first quarter, and we have had them available in all 36 states that don't require registration. We are also actively selling in the majority of the 14 registration states under FDD registration or exemption. On the international front, we are continuing to support our established and growing master franchisee base. We now have boots on the ground in London with plans to have physical presence in Asia later this year. Some of the international markets where we're seeing particular success include Spain, Portugal, France, Japan, and Australia. Exponential is very focused on providing a high level of support to master franchisees and ensuring that we have the right relationships in place for long-term international success. In summary, we are making significant efforts to optimize operations, and we are executing with urgency to better support and serve franchisees. While we acknowledge there's more work ahead, We're confident that we have the right strategy, team, and infrastructure in place to adequately support our franchisees and drive long-term sustainable growth. We look forward to sharing more about our key initiatives and operational enhancements at our upcoming Analyst and Investor Day on May 29th. With that, I'll turn it over to John.