F45 Training Holdings, Inc. Q4 and Fiscal 2021 Earnings

March 14, 2022

by Chief Executive Officer Adam Gilchrist and Chief Financial Officer Chris Payne.

Officer, Adam Gilchrist, and Chief Financial Officer, Chris Payne.

Adam Gilchrist: 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.

Before we get started I want to remind everyone that management's remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095 that are based on current management's expectations. These may include without limitations predictions expectations targets or <unk>.

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 could cause actual results to differ materially from those expressed in or implied by such.

Adam Gilchrist: 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.

Statements.

Adam Gilchrist: 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. You should not place undue reliance on these four.

These factors and uncertainties among others discussed in our filings with the SEC and we encourage you to review these filings for a 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 31 2021.

You should not place undue reliance on these forward looking statements speak only as of today and we undertake no obligation to update or revise them for any new information.

Adam Gilchrist: We speak only as of today and we undertake no obligation to update or advise them for any new information.

Adam Gilchrist: 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

This call will also contain certain non-GAAP financial measures, which we believe are useful supplemental measures that assists 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 our peer companies.

<unk> 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.

Speaker Change: Thank you, Bruce. I was asked two trivia questions about F-45 recently. Strangely, I didn't know the answer to either, and I anecdotally thought I would share this with you folks.

Thank you Bruce I was asked to trivia questions about 45 recently strangely I didn't know the answer to Eva.

Totally thought I would share this with you folks to two questions to ask how long did it take Mcdonald's to get to the franchise size, we took aes to get to.

Speaker Change: 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?

Speaker Change: The answer? It took McDonald's 15 years to get to the same size it took F45 which was 8 years.

And so it took mcdonald 15 years to get to the same size.

<unk> 45, which was ies.

Speaker Change: 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 second question, which I also didn't know the attitude was how long does it take Starbucks to reach the same number of units that are 45 has.

Speaker Change: The answer? It took Starbucks 27 years to get to the same unit size it took F45, which again has been 8 years.

The anthem.

It took Starbucks 27 years to get to the same unit size. It took 45, which again has been eight years.

Being the fastest growing franchise in history is a proud metric for myself and our staff. However.

Speaker Change: 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.

Heiko this point at the end of this presentation.

<unk> is just the beginning.

Speaker Change: 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.

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 <unk> to become the fastest growing fitness franchise in the world as well as the number one ranked boutique fitness brand. According.

Entrepreneur magazine.

Speaker Change: During the fourth quarter, we continued to demonstrate strong franchise sales, including additional multi-unit deals and continued strength in new studio openings and equipment-packed deliveries.

During the fourth quarter, we continued to demonstrate strong franchise styles, including additional multi unit deals and continued strength in new studio openings and manpack deliveries.

Speaker Change: 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.

In the fourth quarter, we sold 290 net new franchises and ended the quarter with 3301 total franchises sold a.

47% increase compared to the prior year.

Speaker Change: We also opened 131 net new studios globally and ended the quarter with 1,749 total studios. A 22% increase versus the prior.

We also opened 131 net new studios globally and ended the quarter with 1749 total studios.

A 22% increase versus the prior year period.

Speaker Change: During the fourth quarter, we continued to experience strong performance across our studio network.

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.

Speaker Change: same store sales increased 6% globally and 53% in the United States during the quarter.

Speaker Change: For the full year, same store sales increased 12% globally and 42% in the United States.

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.

Speaker Change: System-wide sales increased 27% to $114 million during the quarter and 36% to 410 million for the full year.

Speaker Change: 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.

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.

Speaker Change: Global system-wide visits increased 7% to approximately 7 million during the quarter and 31% to approximately 27 million for the full year.

Speaker Change: in the United States, system-wide visits increased 50 percent to approximately 3 million and 103 to approximately 11 million for the fourth quarter and full year respectively.

In the United States Systemwide 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 opened globally.

Speaker Change: We ended the quarter with 92% of our studios open globally and 97% of our studios open in the U.S.

97% of our studios opened in the U S.

Speaker Change: And as of today, 96% of our studios are open globally, and nearly 100% of our studios are open in the U.S.

And as of today, 96% of our studios are doing globally, and nearly 100% of our studios opened in the U S.

Speaker Change: 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.

We are very encouraged by the continued sequential improvements in student performance with our key performance indicators exceeding pre pandemic levels in the U S, which is our most significant growth market, representing one third of our long term global Tam.

Regarding our business outside the U S. I am pleased to report the studios in Australia and rest of World have experienced a similar strong recovery as government mandated restrictions are slowly being lifted empathy.

Speaker Change: 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.

In particular as government mandated restrictions in Australia have eased over the last several weeks, we've seen rapid uplift in Australia and studio performances with <unk> quickly returning to pre pandemic levels.

Speaker Change: For the full year, we delivered strong results despite the continued challenges from COVID and supply chain disruptions.

For the full year, we delivered strong results. Despite the continued challenges from Covid and supply chain disruptions.

Speaker Change: During the year, we successfully managed through these challenges by doing what was best for our Francis' and our members, which is continuing to deliver the world's best workout and changing people's lives by training in our unique communities.

During the year, we successfully manage 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.

Unique communities.

Over the course of 2021, we sold 1057 net franchises supported by strong demand from multi unit franchises and we worked with our franchisees to open 312 New studios.

Speaker Change: 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.

Speaker Change: This execution allowed for us to generate revenue growth of 63% compared to the prior period and deliver strong adjusted EBITDA margins of 39%.

This execution allowed for us to generate revenue growth of 63% compared to the prior period and delivered strong adjusted EBITDA margins of 39%.

Speaker Change: We ended the quarter with a robust balance sheet consisting of a strong cash position, zero funded debt and an undrawn revolver.

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 that DNI.

Speaker Change: 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.

Innovation motivation and of course results.

Speaker Change: This unique approach to fitness continues to drive interest in our business from both franchise partners and of course,

This unique approach to fitness continues to drive interest in our business from both franchise partners.

And of course, new members.

Speaker Change: During the second half of the year, we introduced six new pieces of equipment and over 500 new exercises.

During the second half of the year, we introduced six new pieces of equipment and over 500 new exercises.

Speaker Change: looking ahead. We have plans to introduce thousands of additional working apps over the next several years.

Looking ahead, we have plans to introduce thousands of additional working out over the next several years.

Speaker Change: 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.

Our continually growing exercised database, which consists of over 8000 unique movements of course, our fitness modality serves as the backbone of the best in class fitness programming and supports our mission to offer the worlds best workout.

Coupled with our highly scalable franchise model, we have a truly portable concept that thrives globally.

Speaker Change: Coupled with our highly scalable franchise model, we have a truly portable concept that thrives globally.

Speaker Change: As we look forward to 2022, we could not be more excited about the opportunities ahead of us.

As we look forward to 2022, we could not be more excited about the opportunities ahead of us.

Speaker Change: We are seeing that as COVID-19 restrictions have been lifted, people are as excited as ever to experience in-person fitness.

We are seeing that as COVID-19 restrictions have been lifted people are as excited as ever to experience in person fitness without returning to the local studios are experiencing in person fitness for the very first time.

Speaker Change: without returning to their local studio or experiencing in-person fitness for the very first time.

Speaker Change: 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.

This is evidenced by our customer engagement metrics, which continue to strengthen with average visits per week, increasing to above pre pandemic visits of two 7% to now over three visits per week.

Speaker Change: In addition, we continue to be encouraged by the strong franchise pipeline of over 1,500 sold franchises as at 12-31-2021, but not yet open.

In addition, we continue to be encouraged by the strong franchise pipeline.

1500 solid franchises.

At 12, 31, 2021, but not yet open.

As I've said before a significant portion of the sold but on open studios are comprised a very experienced and well capitalized multiunit franchisees, which I'll talk about further.

Speaker Change: 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.

Speaker Change: As we've discussed in the past, we have taken and will continue to take strategic, proactive measures with respect to our supply chain.

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.

Speaker Change: We recently announced that we have secured 1,200 equipment packs for delivery in 2022.

We recently announced that we have secured 1200 equipment packs for delivery in 2022.

As a result, we remain confident in our ability to satisfy the robust demand from franchisees for new F 45 Studios.

Speaker Change: As a result, we remain confident in our ability to satisfy the robust demand from franchisees for new F-45 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.

Speaker Change: 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.

Chris Payne: Thanks Adam and thank you all for taking the time to speak with us today. I'm thrilled by our fantastic fourth quarter and fiscal year results and I could not be more excited about the opportunities going forward for F45.

Thanks, Adam and thank you all for taking the time to speak with us today.

Thrilled by our fantastic fourth quarter and fiscal year results and I could not be more excited about the opportunities going forward.

I'll start off by reiterating the attractiveness of that business model and then I'll walk you through our fourth quarter and fiscal year results.

Chris Payne: I'll start off by reiterating the attractiveness of our business model and then I'll walk you through our fourth quarter and fiscal year results. I will then provide our fiscal year 2022 guidance and then turn it back over to Adam.

I will then provide our fiscal year 2022, and then turn it back over to Adam.

Starting with the attractiveness of our business model, we believe that the highly visible and recurring nature of that revenue stream is an invaluable asset to our business model.

Chris Payne: Starting with the attractiveness of our business model, we believe that the highly visible and reoccurring nature of our revenue stream is an invaluable asset to our business model. These reoccurring contracted revenue streams are driven by our existing global franchise footprint and increase with every additional franchise sale we make.

As rig carrying contracted revenue stream driven by our existing global franchise footprint and increase with every additional franchise we might react.

Chris Payne: The reoccurring revenue paired with our asset light business model results in strong profitability and cash flow generation.

Our reoccurring revenue paired with our asset light business model resulted in strong profitability and cash flow generation.

Chris Payne: As I've said before, the majority of F45's revenue is derived from contractual agreements with our franchisees that dictates our monthly franchise fee and sale of equipment to our franchisees.

As I said before the mid.

You already have that 40 <unk> revenue is derived from contractual agreements with our franchisee that peak title monthly franchise fee and style of equipment to our franchisees.

In the case of our monthly franchise.

Chris Payne: In the case of our monthly franchise fees, our agreements typically ensure we receive a minimum fee with a variable component that allows us to capture upside from well-performing units.

Typically ensure we receive a minimum fee with a variable component that allows us to capture upside from well performing units.

Chris Payne: As a result, we are pleased that the global AUVs continue to accelerate, and in the US, trailing four-week AUVs are above pre-pandemic levels.

As a result, we are pleased that the globalization continue to accelerate and in the U S trailing or wait.

Above pre pandemic level.

Chris Payne: As AUVs continue to increase, we will continue to drive strong reoccurring revenue by capturing royalty upside.

As <unk> continuing trade will continue to drive strong recurring revenue by capturing royalty upside.

Chris Payne: It in turn will result in stronger profitability and cash flow generation.

And in turn will result in stronger profitability and cash flow generation.

Speaker Change: Following up on a point Adam raised, I would like to highlight that we've recently increased our purchases of equipment packs to secure the delivery of approximately 1,200 world packs, which we believe will provide us sufficient stock to achieve our target.

Following up on a point Adam right I would like to highlight that we recently increased our purchases of equipment path to secure the delivery of approximately 12, well pad, which we believe will provide sufficient stock to achieve that target.

Speaker Change: Additionally, bulk purchases of equipment enable us to save or mitigate cost increases on manufacturing and logistics, which in particular is important given the inflationary environment.

Additionally, bulk purchases of equipment and I'd look to save will mitigate cost increases on manufacturing and logistics, which in particular is important given the inflationary environment.

Speaker Change: The acceleration of WorldPAC purchases reflects the strong continued demand from new franchisees and our expectations around the future opening pace of our sold but not yet open franchises.

This acceleration of well.

This reflects the strong continued demand from new franchisees.

Patients around the future opening pace without solid, but not yet opened franchisee.

Speaker Change: as well as our ability to leverage our strong balance sheet and manufacturing relationships to secure inventories despite ongoing supply chain challenges across industries.

As well as our ability to leverage our strong balance sheet and manufacturing relationships to secure inventory.

<unk> ongoing supply chain challenges across the industry.

As a reminder, we recognize revenue from equipment sales upon delivery, which is generally between six and eight months from the execution of our franchise agreements.

Speaker Change: As a reminder, we recognise revenue from equipment sales upon delivery, which is generally between six and eight months from the execution of our franchise agreement. Now, turning to our fourth point.

Now turning to our fourth quarter and full year results.

Speaker Change: North border total revenues increased 243% to $62 million, which was principally driven by a significant increase in Worldpack deliveries as our franchisees prepared to open new studios in 2022.

Fourth quarter total revenue increased 243% to $62 million, which was principally driven by a significant increase in <unk> deliveries.

<unk> prepared to open new studios in 2022.

Additionally, most of our network was able to operate without disruption with months COVID-19 restrictions relaxing towards the end of 2021.

Speaker Change: Additionally, most of our network was able to operate without disruptions, with most COVID-19 restrictions relaxing towards the end of 2021, despite the increase of cases globally.

In case of cases globally.

Speaker Change: The full year, total revenues increased 63% to a record $134 million.

The full year total revenues increased 63% to a record $134 million.

Speaker Change: Fourth quarter franchise revenues increased 68% to $21.5 million. The increase was driven by an increase in our global studio base, which increased by $1,057 to $2,244 as of 31 December 2020, to $3,301 as of December 31, 2021.

Fourth quarter franchise revenues increased 68% to.

The $21 5 billion the increase was driven by an increase in our global CDI bite, which increased by 1057 to 2244.

He wanted to say about 2020 to 3301.

The 31 2021.

Speaker Change: In addition, the increase in franchise revenues was supported by strong positive same-store sales, in particular in the United States, and fewer COVID-19 related fee credits provided to our customers. For the full year, franchise revenues increased 40% to $73.7 million.

In addition, the increase in franchise revenues was supported by strong positive signs door styles in particular in the United States and fewer targeted non AG related fee credits provided to our customers.

Full year franchise revenues increased 40% to $73 7 million.

Speaker Change: As Adam noted, global systemized sales increased 27% to $114 million in the fourth quarter, with global same-store sales increasing 6% for the same period.

As Adam noted global Systemwide sales increased 27% to $114 million in the fourth quarter.

Global same store sales, increasing 6% for the same period.

We are pleased that the U S same store sales increased 42% during the quarter as the U S market, which is our largest and fastest growing market continues to recover from the pandemic phase.

Speaker Change: We're pleased that the U.S. same-sore sales increased 42% during the quarter as the U.S. market, which is our largest and fastest growing market, continues to recover from the pandemic.

As a result.

Speaker Change: partially offset by the results in Australia and ROW, which were partially impacted by COVID-related restrictions during the quarter.

Partially offset by the results in Australia, and our W, which were partially impacted by COVID-19 related restrictions during the quarter.

Speaker Change: For the full year, global same-store sales increased 12% and system-wide sales increased 36% to $410 million, driven by a 96% growth in the US.

For the full year global same store sales increased 12% and systemwide sales increased 36% to $410 million driven by a 96% growth in the U S.

Speaker Change: In the fourth quarter, global system-wide visits increased 7 percent, driven by a 50 percent growth in U.S. visits.

In the fourth quarter global Systemwide visits increased 7% driven by a 50% growth in U S visits low visitation in Australia, partially offset the global systemwide visits in the fourth quarter again. This was driven by increased private mining restrictions in Australia as well as select RW market.

Speaker Change: Lower visitation in Australia partially offset the global system-wide visits in the fourth quarter. Again, this was driven by increased COVID-19 restrictions in Australia, as well as select ROW markets such as Canada and the UK, where studio traffic was challenged due to COVID restrictions.

Such as Canada, and the UK.

Video traffic was challenged due to COVID-19 restrictions.

Speaker Change: In the full year, system-wide visits increased 31%, led by a 103% growth in the U.S. visits.

For the full year systemwide visits increased 31% led by 103% growth in the U S visits.

Fourth quarter equipment revenue increased 667% to $40 4 million from the prior year period.

Speaker Change: Fourth quarter equivalent revenues increased 667% to $40.4 million from the prior year period and increased 99% from the fourth quarter of 2019.

<unk> increased 99% from the fourth quarter of 2019.

The increase was primarily driven by the delivery of either 300 <unk> during the quarter for the full year equivalent revenue increased to 140% to $60 3 million.

Speaker Change: The increase was primarily driven by the delivery of over 300 well packs during the quarter. For the full year, equipment revenue increased 103% to $60.3 million.

Speaker Change: Geographically, fourth-quarter US revenues increased 291% to $47.1 million, driven by strong World Pack deliveries and modest contribution from accelerating AUVs, resulting in higher Royalties.

Geographically fourth quarter U S revenues increased 291% to $47 1 million driven by strong loan product delivery and modest contribution from accelerating value base, resulting in higher royalties.

Speaker Change: Australia revenues increased 426 percent to $3.8 million.

Australia revenues increased 426% to $3 8 million.

Speaker Change: due to greater percentage of studios not subject to COVID-19 restrictions and an increase in equipment deliveries to studios compared to the prior period.

It's a greater percentage of CDI is not subject to COVID-19 restrictions and an increase in equipment delivery studios compared to the prior period.

Speaker Change: Rest of world revenues increased 107% to $10.9 million accelerated by studio openings as well as an increase in equipment deliveries to studios compared to the prior period.

Rest of World revenues increased 107% to $10 9 million accelerated by studio openings as well as an increase in equipment deliveries to studios compared to the prior period.

During the quarter Bloodily, we sold 290 franchise and opened 131 on a <unk>.

Speaker Change: During the quarter, globally we sold 290 franchises and opened 131 studios on a net base.

But for.

Speaker Change: For the full year, globally, we sold 1,057 net franchises and opened 312 new studios for a total of 1,749 studios globally.

For the full year globally, we saw at 1057 net franchisee and I have been 312, New studios for a total of 700 849 studios globally.

Speaker Change: As of December 31, 2021, we had 1,552 franchises sold but not yet opened.

As of December 31, 2021, we had 1552 franchise installed but not yet opened with.

Speaker Change: with the highest concentration with over a thousand in the US market. The majority of these sold but not yet open studios are attributed to our well-capitalized multi-unit franchise partners.

With the highest concentration with over 1000 in the U S market. The majority of base solid, but not yet open studios are attributed to our well capitalized Multiunit franchise partners.

Speaker Change: Traditional context, the global average net franchises sold per month increased to 88, well ahead of the 2020 average of 29 per month. In the US, the average net franchises sold per month increased to 65, ahead of the 2020 average of 10 per month.

For additional context, the global average net franchise is solid per month increase to IDI well ahead of the 2020 average of 29 four months in the U S. The average net franchise itself them up in price with 65 ahead of the 2020 average obtained came up.

Speaker Change: In addition, approximately 65% of our franchises sold were owned by multi-unit franchisees, up from approximately 52% as of December 31, 2020, and 40% as of December 31, 2019, which highlights the strong market demand for multi-unit franchise opportunities.

In addition, approximately 65% of our franchise with Salt were unbuttoned Multiunit franchisees up from approximately 52%.

At December 31, 2020, and 40% as of December 31, 2019, which highlights the strong market demand for multi unit franchise opportunities.

Speaker Change: Moving on to gross profit, gross profit increased $44.8 million compared to $9.4 million in the fourth quarter last year. Gross profit margin was 72.4% compared to 52.1% from the fourth quarter.

Moving on to gross profit gross profit increased $44 8 million compared to $9 4 million in the fourth quarter last year gross profit margin was 72, 4% compared to 52, 1%.

On the fourth quarter of last year.

Speaker Change: Improvements in the gross margins reflect a greater mix of higher margin franchise segment revenues in the quarter, as well as year-over-year improvements in equipment margins.

Improvements in the gross margins reflect a greater mix of higher margin franchise segment revenues in the quarter as well as year over year improvement in equipment margin.

Speaker Change: The increase in equipment margins was primarily driven by a volume based rebate from one of our suppliers in the fourth quarter, but related to the full year equipment delivery volume.

The increase in equipment margins was primarily driven by a volume based rebate from one about supply in the fourth quarter, but related to the full year equipment delivery volume.

Speaker Change: For the full year, gross profit was $100.1 million compared to $52.7 million in 2020. And gross profit margin was 74.7% compared to 64% in the prior year.

For the full year gross profit was $100 1 million compared to $52 seven.

$7 million in 2020.

Gross profit margin was 74, 7% compared to 64% in the prior year.

Speaker Change: SG&A for the quarter was $36.8 million compared to $26.1 million a year ago. The increase in SG&A expense was primarily due to the one-time expenses including stock-based compensation, relocation expenses related to the corporate headquarter move to Austin, Texas, as well as transaction and legal fees.

SG&A for the quarter was $36 8 million compared to $26 1 million a year ago. The increase in SG&A expense was primarily due to one time expenses, including stock based compensation relocation expenses related to the corporate headquarter move to Austin, Texas as well as transact.

<unk> and legal fees.

Speaker Change: Splitting one-time costs, SG&A increased due to investment in personnel infrastructure to support our growth and increase marketing investment.

One time cost S.

SG&A increased due to investment in personnel infrastructure to support our growth and increased marketing investment.

Speaker Change: For the full year, SG&A expenses increased over 200%, reflecting one-time public company costs, increased marketing costs, and other strategic growth investments.

For the full year SG&A expenses increased over 200%, reflecting one time public company costs increased marketing costs and other strategic investments.

Speaker Change: Additionally, I would add that during the height of the pandemic during 2020, F45 had taken significant cost reduction measures which impacts a year-over-year comparison.

Additionally, I would add that during the height of the pandemic during 2020 at 45% taken significant cost reduction measures.

Which impacts our year over year comparison.

Adjusted EBITDA increased 376% to $25 9 million from $5 $5 million in Q4 of 2020.

Speaker Change: Adjusted EBITDA increased 376% to $25.9 million from $5.5 million in Q4 2020. Adjusted EBITDA margin was 42% in the fourth quarter versus 30.2% in the prior year period. This increase in adjusted EBITDA margin reflects the gross margin improvement mentioned earlier.

Adjusted EBITDA margin was 42% in the fourth quarter.

33% in the prior year period.

This increase in adjusted EBITDA margin reflects the gross margin in pregnant mentioned earlier.

Speaker Change: For the full year, adjusted EBITDA increased over 100% to $52 million, compared to $25.4 million for 2020.

For the full year, adjusted EBITDA increased over 100% to $52 million compared to $25 4 million for 2020.

Adjusted EBITDA margins increased almost 800 basis points to 38.

Speaker Change: Adjusted EBITDA margins increased almost 800 basis points to 38.8% compared to 30.9% in the prior year.

8% compared with 39% in the prior year.

Speaker Change: That interest expense was $188,000 compared to $8.1 million in the fourth quarter last year, reflecting the significant debt pay down that occurred concurrent with our IPO in July 2021.

Net interest expense was 198000 compared to $8 1 million in the fourth quarter last year, reflecting the significant debt paydown.

Concurrent with our IPO in July of 'twenty one.

Speaker Change: For the full year, net interest expense was $59.3 million compared to $9.4 million in 2020. This increase was primarily related to the write-off to get discounts and penalties we discussed last quarter.

For the full year net interest expense was $59 3 million compared to $9 4 million. In 2020. This increase was primarily related to the write off to get it done and penalty we discussed last quarter.

Speaker Change: Turning to the balance sheet, we ended the year with approximately $42 million of cash and cash equivalents and no debt outstanding. As of today, we have partially drawn on our revolver as part of the bulk purchase of equipment I discussed earlier.

Turning to the balance sheet, we ended the year with approximately $40 billion of cash and cash equivalents and no debt outstanding.

As of today, we have partially drawn on our revolver as part of the bulk purchase of equipment I discussed earlier.

Our capital structure remains strong and we believe this provides a strategic flexibility to fund our growth priority. We may invest in several strategic initiatives and as a result, we are comfortable with our current liquidity and revolver capacity.

Speaker Change: Our capital structure remains strong, and we believe this provides us strategic flexibility to fund our growth priorities. We may invest in several strategic initiatives, and as a result, we are comfortable with our current liquidity and revolver capacity. Our credit facility provides for $90 million commitment, with an additional $35 million accordion, of which $54 million is available as of today.

Our credit facility provides for $90 million commitment with an additional $35 million accordion of which 54 million available as of today.

To that end, we'll continue to invest in growth.

Speaker Change: To that end, we'll continue to invest in growth of our modalities such as FSA, Malibu Crew and Avalon House and our acquired brand Vive Active.

<unk> modality, such as FSIC, Malibu, and Avalon half and now acquired brand buyback.

Speaker Change: In addition to SG&A expenditures necessary to make these modalities as successful as F45, which is reflected in our financial targets and guidance, we will invest in capital to open a limited number of company-owned stores, primarily in the US, to these modalities. These company-owned stores will be critical to demonstrating proof of concept and driving the overall growth of these modalities.

In addition to SG&A expenditures necessary to my face My Delhi as successful as <unk> 45, which is reflected in our financial targets and guidance, we will invest in capital to open a limited number of company owned stores, primarily in the U S. For these modalities based company owned stores will be critical.

Demonstrating proof of concept and driving the overall growth of those modalities.

Speaker Change: Finally, we'll look opportunistically to acquire a limited number of existing F45 studios. We believe that establishing a small company-owned portfolio of studios across modalities will be of strategic importance and drive strong returns on invested capital.

Finally, we will look opportunistically to acquire a limited number of existing F 45 Studios wave.

We believe that establishing a small company owned portfolio studios across modality will be of strategic importance and drive strong returns on invested capital.

Speaker Change: Now moving on to guidance. Assuming no significant worsening of the pandemic or increased risk related to geopolitical uncertainties that materially impacts performance, we expect

Now moving onto guidance, assuming no significant worsening of the pandemic or increased risks related to geopolitical uncertainties that materially impacts performance.

Thanks.

Speaker Change: Full-year net franchises sold of approximately 1,000. Full-year net initial studio openings of approximately 1,000. We expect the cadence of those openings to be weighted towards the back half of the year.

Full year net franchise is solid with approximately 1000.

Full year net initial studio opening.

1000 <unk>.

We expect the tightened advisor I think weighted towards the back half of the year.

Speaker Change: four-year revenue between $255 million and $275 million.

Full year revenue between $255 million and $275 million.

And full year, adjusted EBITDA between $90 million and $100 million.

Speaker Change: and full-year adjusted EBITDA between $90 million and $100 million.

As a reminder, a reconciliation of non-GAAP measures to the most comparable GAAP measure and definitions of these indicators are included in our quarterly report from our 10-K and in our earnings release I'll now turn the call back over to Adam.

Speaker Change: As a reminder, a reconciliation of non-GAAP measures to the most comparable GAAP measure and definitions of these indicators are included in our quarterly report from our 10K and in our earnings release. I'll now turn the call back over to Adam.

Great. Thank you, Chris first I am excited to share some color regarding various initiatives and appointments we executed upon during the first quarter.

Adam Gilchrist: Great. Thank you, Chris. First, I'm excited to share some colour regarding various initiatives and appointments we executed upon during the first quarter.

Adam Gilchrist: Last month, we announced the appointment of Gunnar Pedersen as Chief of Athletics. Having built a career around training champion athletes and Hollywood stars such as Tom Brady, Kevin Love and the Kardashians, Gunnar is a true legend in the professional sports and fitness industry and someone we have long admired.

Last month, we announced the appointment of Peterson as chief of Athletics, having built a career around training champion athletes and Hollywood stars such as Tom Brady, Kevin Love and the Kardashians.

It is a true legend in the professional sports and fitness industry and someone we have long admired.

Adam Gilchrist: He's going to be an invaluable asset to our business and I couldn't be more excited to have him on board.

So he is going to be an invaluable asset to our business and I couldnt be more excited to have him on board.

Adam Gilchrist: Now I'd like to take some time to discuss our long-term opportunity and growth outlook.

Now I'd like to take some time to discuss our long term opportunity and growth outlook.

Starting with the white space in the U S. We continue to believe the very significant long term opportunity to meaningfully expand our franchise studio footprint.

Adam Gilchrist: Starting with the white space in the US, we continue to believe that there is significant long-term opportunity to meaningfully expand our franchise studio footprint. As Chris already mentioned, as of December 31, 2021, we had 1,170 franchises sold, with 654 total studios in the United States.

As Chris already mentioned as of December 31, 2021, we had 1170 franchises sold with 654 total studios in the United States.

Adam Gilchrist: Based on our white space analysis and our internal estimates, we continue to believe there is long-term studio potential for there to be over 7,000 F-45 studios in the U.S.

Based on a white space analysis, and our internal estimates we continue to believe there is long term studio potential for there to be over 7045 studios in the U S.

Adam Gilchrist: What gives us additional confidence to achieve our long-term goals is the real estate opportunities that have emerged over the course of the pandemic.

What gives us additional confidence to achieve our long term goals is the real estate opportunities that have emerged over the course of the pandemic.

Since the onset of the pandemic.

Adam Gilchrist: IHRSA estimates that 25% of all fitness facilities are closed in the U.S.

<unk> estimates that 25% of all fitness facilities are closed in the U S. A.

Adam Gilchrist: availing us opportunities to secure highly attractive real estate locations for all of our new franchisees.

<unk>.

Communities to secure highly attractive real estate locations for all of our new franchisees.

Adam Gilchrist: Importantly, the 7,000 studio TAM figure does not include the meaningful long-term whitespace potential related to our other F45 channels, including military and colleges.

Importantly, the 7000 studio Tam figure does not include the meaningful long term white space potential related to our other F 45 channels, including military oncologists.

Adam Gilchrist: Outside our core markets of the US and Australia, we have firmly demonstrated the portability of our brand and franchise model with over 788 franchises sold and over 442 total studios in almost 70 countries.

As on our core markets of the U S and Australia, we have firmly demonstrated the portability of our brand and franchise model with over 788 franchises sold.

I have a 442 total studios in almost 70 countries.

Since day, one our franchise model was purpose built around scalability.

Adam Gilchrist: Since day one, our franchise model was purpose-built around scalability.

Adam Gilchrist: What exactly does this mean? Well, it's very simple. We make our studios simple to open and simple to operate.

What exactly does this may vary.

Very simple, we make house studios simple to open and simple to operate.

This allows franchisees to spend more of their time growing their business by opening potentially more studios.

Adam Gilchrist: This allows franchisees to spend more of their time growing their business by opening potentially more studios.

Adam Gilchrist: Looking ahead, we intend to continue to grow our footprint with existing as well as new franchises in both developed and emerging markets.

Looking ahead, we intend to continue to grow our footprint with existing as well as new franchisees in both developed and emerging markets.

Adam Gilchrist: Turning to demands for new franchises, we continue to see strong market demand from both existing and new multi-unit franchisees.

Turning to demand for new franchises, we continue to see strong market demand from both existing and new Multiunit franchisees.

Adam Gilchrist: Our multi-unit franchise partners range from existing franchisees who are looking to expand their studio footprint to well-capitalized institutional partners seeking to build studio footprints of scale.

A multi unit franchise partners range from existing franchisees.

Well I'm looking to expand our studio footprint to well capitalized institutional partners seeking to be able to see their footprints of scale.

Adam Gilchrist: During the fourth quarter, we added 160 multi-unit owner-operator franchises across three multi-unit franchise groups.

During the fourth quarter, we added 160 multi unit operator franchises across three multi unit franchise groups.

Adam Gilchrist: As of December 31, 2021, approximately 65% of our franchises are sold were owned by multi-unit franchisees, which is up from approximately 40% as of the end of 2019.

As of December 31, 2021.

Approximately 65% of our franchise sold well earned by Multiunit franchisees, which is up from approximately 40% as of the end of 2019.

Going forward, we will continue to drive new franchise sales and <unk> studio openings with larger well capitalized multi unit franchise groups.

Adam Gilchrist: Going forward, we will continue to drive new franchise sales and new studio openings with larger, well-capitalized, multi-unit franchise groups.

On the real estate side, we have leveraged our partnerships with CBRE to establish a new optimized real estate strategy that has created and will continue to create value for us and our franchisees by identifying and negotiating leases in a streamlined manner.

Adam Gilchrist: On the real estate side, we have leveraged our partnerships with CBRE to establish a new optimized real estate strategy that has created and will continue to create value for us and our franchisees by identifying and negotiating leases in a streamlined manner.

Adam Gilchrist: As of today, CBRE has helped identify over 1,500 prospective new locations.

As of today CBRE has helped identify over 1000.

500 prospective new locations.

Which provides significant efficiencies and driving new studio openings and reducing the time. It takes from closing on a franchise agreement to opening.

Adam Gilchrist: which provides significant efficiencies in driving new studio openings and reducing the time a studio takes from closing on a franchise agreement to opening.

Adam Gilchrist: Lastly, we continue to execute on our mission to offer our franchisees an incredible business opportunity and offer our members the world's best workout every single day.

Lastly, we continue to execute on our mission to offer our franchisees an incredible business opportunity and offer our members. The worlds best work out every single day.

Adam Gilchrist: We are only just getting started, and we're looking forward to sharing many more exciting developments with you folks in the future. With that, I would like to open it up.

We are only just getting started and we're looking forward to sharing many more exciting developments with you folks in the future.

With that I.

I'd like to open it up for Q&A.

Okay.

Thank you.

Adam Gilchrist: If you would like to ask a question please press star followed by one on your telephone keypad. If you change your mind please press star followed by two. When preparing to ask your question please ensure your phone is unmuted locally. We will pause for a moment to allow questions to be registered.

If you would like to ask a question. Please press star followed by one on your telephone keypad. If you change your mind. Please press star followed by <unk>.

We're preparing to ask your question. Please ensure you'll find some niches lately.

For follow up questions GPU participant.

Adam Gilchrist: Our first question comes from John Heinbuckle from Guggenheim Park. John , please go ahead.

Our first question comes from John <unk> from Guggenheim Partners. John Please go ahead.

So let me start with one for Adam.

John Heinbuckle: So let me start with one for Adam. Maybe speak to as the, now that we're post-COVID, as the brand awareness has gotten better, how you think about how the studios are performing?

Maybe speak to is the now that we're post Covid is the brand awareness has gotten better.

You think about.

The studios are performing.

Adam Gilchrist: Relative to the ramp, right? So, you know, the path to. You know, let's say, you know, 4 to 450, 400 to 150,000 of annual.

Relative to the <unk>.

Right right so the path too.

Let's say $4 to $4 5400 to 450000 of annual <unk>.

Adam Gilchrist: How are we progressing to that? In what year do you think we get to that level? And then secondly, when you think about price.

How are we progressing to that.

Do you think we get to that level and then secondly, when you think about.

Pricing.

Speaker Change: You know, I think you guys have always felt that you're pricing the service exactly right. You know, is there any room for. A little bit sharper pricing to drive. More member adoption, or you really don't want to go down that path.

I think you guys have always felt that youre pricing the service exactly right.

It.

Is there any room for a little bit.

Sharper pricing to drive.

More member adoption or you really don't want to go down that path.

Yeah, Thanks, John too.

Speaker Change: Yeah, thanks, John . Two really good questions. What we're seeing at the moment with regard to AUV RAM, back to the 450 gross AUV per annum, is that we're moving back to the pre-pandemic zip code of call it three years. So for us...

Good questions.

What we're saying at the moment with regard to our <unk> ramp back to the $4 50, gross or you have a <unk>.

<unk> is that.

We're moving back to the pre pandemic.

Zipcard of call it three years so for us.

We we obviously do everything we can to support our franchisees with regard to membership.

Speaker Change: We obviously do everything we can to support our franchisees with regard to membership sales growth. But as I mentioned just earlier in the call, we still aren't yet back to 100% with regard to Studios Open. We're over 90%. But we are seeing visitation being greater than it was pre-pandemic. And for us, I would argue that that is probably one of the most important metrics.

<unk> growth.

But as I mentioned.

Just earlier in the call we still aren't yet.

Back to 100% with regards to see does that mean, we're over 90%, but we are saying.

Visitation being greater than it was pre pandemic and for us.

Would argue that that is probably one of the most important metrics that we have.

Speaker Change: that we have. So in summary we believe that we'll be back to pre-pandemic levels of a full ramp of call it three years with profitability being achieved within six months.

So in summary, we believe that we will be back to pre pandemic levels.

Full ramp of call it three years with profitability.

<unk> within six months.

The second part to your question, which is should we potentially can sit up.

Speaker Change: The second part to your question, which is, should we potentially consider easing the membership fee to be able to attract...

Easing.

The membership fee to be able to attract.

Speaker Change: to be able to attract a greater volume of members, the answer is absolutely not. We've seen some catastrophic mistakes with some of our peers where they've gone down to $30 or $20 a week. And what that then does is obviously grows your...

To be able to attract great volume of members the answer is absolutely not.

We've seen some catastrophic.

Mistakes with some of our peers, where they've gone down to 30 or $20.

Weak and what that then does is obviously growth.

Speaker Change: It grows your membership base. However, what happens is that you're stuck.

A crazy on membership base.

But what happens.

Is that you are stuck in a situation.

Speaker Change: where you have so many people that are booking in to a class at a certain time, you can't facilitate all those requested training sessions.

Where you have so many people that are booking in to a class at a certain time you cant facilitate all of that is requested.

Training sessions.

Speaker Change: An example of that would be, if we signed a thousand members in a location, Monday morning is our busiest morning. We only have 27 spots available at 6am.

An example of that would be.

If we signed a 1000 members and a location Monday morning is our busiest morning.

We only have 27 spots available at six am so.

It actually becomes.

Speaker Change: are counterproductive because you have membership backlash because they can't book in a time to train. So we've always believed...

Counterproductive, because you have membership backlash because they complicate a time to try and so we've always believed that the right. The right number of members is somewhere between two and 300, depending on the size of your classes because we can stretch our class size from 27 up to 36 grateful.

Speaker Change: that the right number of members is somewhere between two and 300, depending on the size of your classes, because we can stretch a class size from 27 up to 36 people. But more importantly.

But more importantly.

Speaker Change: We're only targeting 200 to 300 people out of a population demographic of 25,000. So we always have believed that there's a lot of science that goes into our mapping tool where we provide exclusive territories. We always believe that there is enough people to be able to service that 200 to 300 membership base.

We're only targeting 200 to 300 people out of it out of a population demographic of 45000. So we always have believed.

There's a lot of science that goes into our mapping tool, where we provide exclusive territories. We always believed that there is enough people to be able to service that two to 300 membership base.

Speaker Change: Number two, we are the Ferrari of training, and we want people to respect that, but more importantly, when you're paying $66 per week, what you find is that these members want to get value out of that particular service and turn up more frequently. If you're paying $2.50 a week, using that as an example, we have Planet, who's a great business.

Number two we are.

The Ferrari of training, everyone paper to respect that but more importantly, when you're paying $66 per week.

What you find is that these members want to get value out of that particular service.

Turn up more frequently.

If you are paying $2 50 awake.

Using that as an example, with planet who is a great business.

Speaker Change: You're not as motivated in comparison to where you're paying $3,000 a year.

Youre not as motivated.

In comparison to where you're paying sort of 3000 a year.

Speaker Change: I suppose that's the second key point, that we enjoy being the Ferrari of training.

I suppose that's the second point that we enjoy bringing the Ferrari of training.

Speaker Change: We believe that people cherish the service. And more importantly, we want people to get results as per our slogan, team training, life changing. We want to change people's lives. And to do that, they do need to turn up more than two and a half, three times per week.

Believe that paper cherish the service and more importantly, we want people to get result, guys correct slogan same training life changing we want to change People's lives and to do that.

To turn up more than 253 times per week, John I hope that answers your question.

Speaker Change: John , I hope that answers your question. Yep. Nope. Nope. That's very good. Uh, and then just secondly, right in terms of the cadence of open.

Very good and then just secondly in terms of the cadence of openings.

Speaker Change: Uh, I mean, I thought my, my view would have been the 1 Q right would be the, the highest number of openings because of all the equipment deliveries in the 4th quarter. Uh, is that not true? Some of those openings going to be pushed back into the 2 Q. Or later in the year, just curious about the cadence.

I mean I thought you.

You would have been <unk> right would be the highest number of openings because of all the equipment deliveries in the fourth quarter.

Is that not true some of those openings is going to be pushed back into the <unk>.

We're later in the year, just curious about the cadence.

Yes, it's a really good question again.

Speaker Change: Yeah, it's a really good question again. Typically, when we deliver an equipment slash weld pack,

Could it clear when we deliver well and equipment slash well pack.

Speaker Change: The opening period is far longer than three months.

Operating period.

Is far longer than three months.

Speaker Change: So what we typically find is a fit out can take anywhere between three and nine months.

What we typically find is a free that can take anywhere between three and nine months. So the simple answer to that question.

Speaker Change: So the simple answer to that question is we anticipate, we'll see that cohort really opening up through Q2, Q3 this year. I'm sure you can appreciate the fact that you don't receive a well pack and open that afternoon. You've got to do a fit out, then the city has to come and approve the site. And then we obviously go out and do all of our checks to make sure that the studio is compliant. So there's quite a number of steps.

We anticipate we'll say that.

That cohort.

Really opening up through Q2 Q3 this year.

I'm sure you can appreciate the fact that you didn't receive a well packing up in that afternoon, you've got to get out and the city has to come and approve the site and then we obviously go out and do all of our checks to make sure that you guys compliant.

Quite a number of steps.

Speaker Change: involved in getting the studio open. And that's one of the areas of focus that we have working with CBRE to obviously compress that backlog period from nine months to six months from the time a franchisee signs an FDD to the time a franchisee opens. But

Involved in getting the studio open.

And Thats one of the areas of focus that we have working with CBRE to obviously compress.

That backlog period from nine months to six months from the time, a franchisee signs in equity.

Time, a franchisee or trends.

But.

Speaker Change: A long-winded answer, so I apologize, John , but the simple answer is it's typically four to five months after they receive a WorldPAC.

A long winded answer I apologize John but at the same clients raise it's typically four to five months after they received well pack.

Okay. Thank you.

Okay.

As a reminder to ask a question please press <unk>.

Speaker Change: As a reminder to ask a question please press star 1 on your telephone keypads and as a reminder please keep your questions to one question and one follow-up question.

Star one on your telephone keypad and has a reminder, please keep your questions to one question and one follow up question.

Speaker Change: Our next question comes from Randy Connick from Jeffreys. Randy, please go ahead.

Our next question comes from Randy clinics from Jefferies. Ramsey. Please go ahead.

Great. Thanks, guys.

Randy Connick: Great, thanks guys. I guess question around what you're seeing around awareness levels and then you know one thing I've noticed being in Northeast part of the United States is there's a number of people that just have not heard of the concepts yet. You know, classes are always packed. So I'm just curious when you look to John's question to follow up there.

I guess question around what youre seeing around awareness levels.

One thing I've noticed being in northeast part of the United States is Theres a number of people that just have not heard of the concept yet.

Classes are always packed so I'm just curious when you look to Johns question a follow up there.

Randy Connick: Have you looked into what AUVs look like relative to when you compare what awareness levels are in a particular region? Because it seems like as there's a massive amount of opportunity to grow those AUVs as you build that awareness beyond just, you know, growing unit bases to increase density in a particular market. So I'm just curious of the, of any work you've done around, you know, analyzing that AUV relative to awareness levels in a particular region of the United States. Thanks guys.

Or do you look into what <unk> look like relative to when you compare what awareness levels are in a particular region because it seems like as theres, a massive amount of opportunity to grow those <unk> as you build that awareness beyond just growing unit basis to increase density in a particular market. So I'm just curious of any work you've done around.

Analyzing that <unk> relative to awareness levels in a particular region of the United States. Thanks, guys.

Okay.

Speaker Change: Yes, it's a great question again, Randy, and I think it sort of goes without saying that as you

Yes.

It's a great question again, Randy Andrew.

I think it sort of goes without saying that as <unk>.

Build brand awareness and top of mind awareness.

Speaker Change: brand awareness and top of mind awareness from that standpoint, your AUVs will grow because you've got more membership inquiry and you typically will convert anywhere between 7 and 8 out of 10 folks that do a two-week trial.

From.

In that standpoint.

Facebook grabbed because you've got more membership inquiry and you typically will convert.

Anywhere between seven to nine out of 10.

Folks that do a two week trial so in aerie.

Speaker Change: So in areas where we have had tremendous amount...

Areas, where we have had tremendous amounts of exposure. The best example, I have is obviously Australia.

Speaker Change: of exposure. The best example I have is obviously Australia. You'll find that when people discuss fitness...

You'll find that when.

When people discuss fitness in the same sentence will abate.

Speaker Change: in the same sentence will be F45. With regard to the size of the US, it goes without saying that with over 330, 340 million folks here, it's a very large population and very large economy and it's a very large task to be able to be a householder.

At 45 with regard to the size of the U S. It goes without saying.

330, 340 million Forex here, it's a very large population and very large economy and it's a very large task.

Debate a household name what we do what we do internally to try to continue to accelerate awareness is partner with great folks.

Speaker Change: What we do internally to try to continue to accelerate awareness is partner with great folks and we talk about the likes of our Warburg effect when we brought Mark on board. We had this huge impact across, and especially speaking in California.

And we talk about lots of at Warburg effect, when we bought Mark on Board, we had this huge impact across and especially speaking in California. We had this huge.

Speaker Change: wave of inquiry for not just members, but also people wanting to inquire about buying a franchise. And what we're doing at the moment is we have more of a micro-cockroach marketing campaign with lots of smaller influencers.

Why every inquiry not just members, but also people wanting to require about buying a franchise.

And what we're doing at the moment as we have more of a micro cockroach marketing campaign with lots of smaller influences.

Speaker Change: So, as we continue to grow our awareness in key markets, Northeast is an excellent example. We do believe that the AUV.

As we continue to grow our awareness NK markets northeast is an excellent example, we do believe that the <unk> will grow however.

Speaker Change: will grow. However, one thing to point out is the fact that there is a ceiling on members. We can't go and sign 7,000 members like a Planet Fitness. We can't sign 10,000 members like a Planet Fitness.

One thing to point out is the fact that there is a ceiling on members.

<unk> signed 7000 members like a planet fitness.

10000 members lack of planet fitness.

Speaker Change: But what we can do and what we've done extremely successfully in the past is support our franchisees in opening up a second territory, a second franchise in their territory. So that's how we see our growth continuing to move forward as awareness grows.

What we can do and what we've done extremely successfully in the past.

His support our franchisees and opening up a second territory, a second franchise in that territory.

That's how we see our growth continuing to move forward as awareness grows.

Speaker Change: We have an extremely sophisticated and well-thought-out marketing plan. I sit back and I think that our marketing to date has probably been on par with great businesses like Nike's of the world, where we're replicating their influence model by trying to build that awareness. And truth be told, I spent the weekend with Beckham, who's opening up his first location, his first F45 in London in two weeks. And the same.

We have an extremely sophisticated and well thought out marketing plan.

I sit back and I think that out marketing for diet has probably been on par with right.

Great businesses like Nokia to the World, where we're replicating the influence of model by trying to build that awareness and truth be told I spent the weekend with Beckham.

Opening up his first location his first day at 45 in London.

Two weeks.

And the simple narrative was.

Speaker Change: Adam, this is the world's best workout and this is coming from a global, this is not just an athlete.

Adam This is the world's best workout and this is coming from our global this is not just in <unk>.

Ashley.

Speaker Change: ambassador who's extremely excited but more importantly putting his money behind the business and opening. So again

And bass at all.

Who is extremely excited but more importantly, putting his money behind the business and operating side.

Again.

Simple answer yes, we do believe that <unk> will grow as awareness grows.

Speaker Change: simple answer. Yes, we do believe AUVs will grow as awareness grows. Secondly, we're doing everything in our power to continue to grow that top-of-mind awareness.

Secondly, we're doing.

In our power to continue to grow that top of mind awareness.

Speaker Change: And lastly, you know, we think that we need to continue to replicate what great organizations like Nike and Adidas have done in the past.

And lastly, we think that we need to continue to replicate what great organizations like Nike and Adidas has done in the past.

Speaker Change: Great, helpful and then Chris, I guess my last question is, did you did you give the cap X number that you anticipate for 2022 and then on the well pack.

Great helpful. And then Chris I guess my last question is did you did you gave the Capex number that you would anticipate for 2022 and then on the well packs.

Chris Payne: The 1200 you secured obviously gives you great line of sight to get the openings you need to get done that you say you're going to get done in 2022. Just curious on how you guys think about next few years, how do you strategically want to think about securing your well packs? Are you going to do the same thing where you buy them well in advance of the openings for the following year? Just kind of curious on how you want to stage.

The <unk> hundred you secured obviously gives you great line of sight to get the openings you need to.

Get done that you say youre going to get done in 2022, just curious on how you guys think about for next few years, how do you strategically want to think about securing your well tax youre going to kind of.

Do the same thing where you buy them.

Well in advance of the openings for the following year, just kind of curious on how you want to stage your well pack.

Chris Payne: your WellPak purchases and so on and so forth going forward into the out years. Thanks, guys.

No purchases and so on and so forth going forward into the out years. Thanks guys.

Speaker Change: Yeah, thanks, Randy. We, we're not actually.

Yes.

Thanks, Randy we were not actually.

Speaker Change: disclosing the CAPEX guidance for the year, but specifically as it relates to WorldPACs, you're quite right. We've gone out and we've secured the entire year's WorldPAC volume, so all 1,200 WorldPACs.

Disclosing the capex guidance for the year, but specifically as it relates to <unk>.

Right right, we've gone out and which secured.

The entire years well pack volume.

<unk> hundred <unk>.

Speaker Change: And, you know, that just gives us a strong level of confidence on, you know, ensuring that we have all of the stock on hand to meet this contracted demand that we have this year. We did tap the revolver to purchase that equipment. So that's all been paid for and ordered and it's all in production. A lot of it's already arrived. There's more on the water. It's, you know, we've secured 2022.

And that just gives us a strong level of confidence on on.

Ensuring that we have all of the stock on hand to meet these contracted demand that we have this year.

We did tap the revolver.

To purchase that equipment.

So that's all being paid for an audit and its all in production a lot of it has already arrived.

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