Q4 2022 Xponential Fitness Inc Earnings Call
Speaker 1: The I Su.
Speaker 2: Greetings and welcome to the Exponential Fitness Inc. 4th Quarter and Fiscal Year 2022 R-Incs Conference Call.
Speaker 2: At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.
Speaker 2: If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad.
Speaker 2: As a reminder, this conference is being recorded.
Speaker 2: It is now my pleasure to introduce to you host, Kimberly Esterkin from Investor Relations.
Speaker 2: Thank you, and you may begin.
Speaker 3: Thank you, operator. Good afternoon and thank you all for joining our conference call to discuss exponential fitnesses fourth quarter and full year 2022 financial results. I am joined by Anthony Geisler, Chief Executive Officer, Sarah Luna, President and John Malone, Chief Financial Officer.
Speaker 3: A recording of this call will be posted on the investors section of our website at www.investor.exponential.com.
Speaker 3: We remind you that during this conference call, we will make certain forward-looking statements including discussions of our business outlook and financial projections.
Speaker 3: These forward-looking statements are based on management's current expectations and involve risks and uncertainties that could cause their actual results to differ materially from such expectations.
Speaker 3: For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC. We assume no obligation to update the information provided on today's call.
Speaker 3: In addition, we will be discussing certain non-GAAP financial measures in this conference call.
Speaker 3: 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 the GAAP measures that we provide.
Speaker 3: 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.
Speaker 3: Please also note that all numbers reported in today's prepared remarks refer to global figures unless otherwise noted.
Speaker 3: I will now turn the call over to Anthony Geisler, Chief Executive Officer of X Financial Kit.
Speaker 4: Thanks Kimberly and good afternoon everyone. We appreciate you joining our 4th quarter earnings conference call. I'll begin today's discussion with an overview of our quarterly performance and operational highlights.
Speaker 4: Sarah will then speak further about our progress against our core growth strategies.
Speaker 4: John will conclude with a review of our fourth quarter financials and provide our 2023 outlook.
Speaker 4: As will be evident from the results we discussed today, 2022 was another successful year for Exponential.
Speaker 4: For the year we achieved double digit growth across North America memberships, same store sales, and AUVs, all of which are representative of the fact that boutique fitness is considered a must-have, not discretionary spend by studio members.
Speaker 4: The demand for our offerings is demonstrated by our North American studios generating over $1 billion in system-wide sales in 2022.
Speaker 4: We are especially encouraged by the fact that our mature studio cohorts still exhibit strong store sales growth and have a profile that is similar to our younger studios.
Speaker 4: For the full year, North American Studios, over 3 years old, comped at 25%, same store sales growth. And more recently, in the fourth quarter of 2022, North American Studios, over 3 years old, comped at 18%, same store sales growth.
Speaker 4: While we do expect this percentage to come down over time as growth profiles normalize, we are encouraged to see this level of performance.
Speaker 4: It is clear from these numbers that each year, Exponential continues to raise the bar on its operational performance and deliver on its financial results, and 2022 was no exception.
Speaker 4: Together, we have built a resilient business, and I want to thank every one of our franchisees and employees. All your hard work has enabled Exponential to reach record annual results and to continue to deliver on its mission to make boutique fitness accessible to everyone.
Speaker 4: I had the opportunity to meet with a large number of our franchisees this past December at our annual franchise convention in Las Vegas.
Speaker 4: Over 2,000 enthusiastic attendees gathered to share best practices and discuss innovative ways to promote the growth of our brands.
Speaker 4: We are seeing this excitement reinforced in the momentum we are already experiencing in early 2023.
Speaker 4: As the largest boutique fitness franchisor globally, with franchisees operating over 2,600 studios, we have grown our studio footprint by 24% year over year.
Speaker 4: We now have a combination of franchise, master franchise, and international license agreements in place in 16 countries and will continue to grow our footprint globally.
Speaker 4: Turning to our membership performance, total members across North America increased by approximately 32% year over year in 2022 to a total of 590,000. This momentum in membership growth has carried into 2023. In the month of January , we officially surpassed 600,000 North Americans.
Speaker 4: North American Studio visits for the 12-month ending in December 2022 increased by 32% year-over-year, reaching a total of $39.2 million.
Speaker 4: Increased utilization at studios resulted in record North American system-wide sales.
Speaker 4: North American systemwide sales increased 46% in 2022 and surpassed 1 billion annual sales for the first time in Exponential's history.
Speaker 4: We believe that our studio's quarterly run rate average unit volumes, or quarterly AUVs, ultimately offer the most direct measure of the health of our franchise system.
Speaker 4: We ended 2022 with 4th quarter run rate North American AUVs of 522,000 up from 446,000 in Q4 of 2021. This represents the 10th straight quarter of AUV growth.
Speaker 4: While we don't know maximum AUV potential, we know that our studio is at plenty of capacity to add more members and classes.
Speaker 4: The strong same store sales exhibited by even our more mature cohorts that I discussed earlier make us confident in our studios growth prospects.
Speaker 4: Turning to revenue.
Speaker 4: For the year, we posted net revenue of approximately $245 million, an increase of 58% year-over-year.
Speaker 4: Adjusted EBITDA for 2022 totaled $74.3 million or 30.3% of revenue, an increase of 172% from $27.3 million or 17.6% of revenue in the prior year period. With that as a background, let's turn to our strategic growth areas.
Speaker 4: I'll discuss the first three levers of our growth plan and then turn the call over to Sarah to discuss the fourth.
Speaker 4: Let's begin with increasing our franchise studio base. We ended Q4 with 2,641 global open studios, opening 156 net new studios in the fourth quarter alone.
Speaker 4: For the full year, we opened 511 Net News Studios globally, or a new studio opening approximately every 17 hours.
Speaker 4: We also experienced strong demand for our franchise licenses, selling 257 licenses globally in Q4, bringing total sold licenses to 5,450.
Speaker 4: In North America, we have almost 2,000 licenses sold and contractually obligated to open, offering us multi-year visibility into our growth.
Speaker 4: Keep in mind that over time as we continue to sell through prime geographic territories in each of our existing brands, we would eventually need to acquire another brand to maintain this elevated run rate of license sales.
Speaker 4: Turning to our second growth driver, expanding internationally. On the international front, we have over 1,000 studios obligated to be opened.
Speaker 4: Turning to our second growth driver, expanding internationally. On the international front, we have over 1,000 studios obligated to be opened. And we continue to gain traction.
Speaker 4: In November , we announced a master franchise agreement in Portugal to license club Palotti studios.
Speaker 4: Then, in December , we announced a master franchise agreement in Japan for our Rumble and AKT to open a minimum of 100 new studios across both brands.
Speaker 4: As a reminder, our MFAs are structured to provide exponential with high margin flowthrough given that we require minimal incremental sGNA to support MFA growth.
Speaker 4: Our third key growth driver is to expand margins and drive free cash flow conversion.
Speaker 4: As our business continues to grow, we are increasingly reaping the benefits of our AssetLite Scalable Operating Model, providing us with consistent and growing margin performance.
Speaker 4: We are especially pleased with where our adjusted EBITDA margins ended for the year. We continue to expect our adjusted EBITDA margins to expand into the 35% to 39% range in 2023, and we remain on track to achieve our adjusted EBITDA margin target of 40% in 2024. For more information, visit www.fema.gov
Speaker 4: Our boutique in-studio offerings are exactly what consumers post-pandemic are gravitating toward.
Speaker 4: Consumers have shifted their interest towards smaller classes that offer community and entertainment in a safe, healthy environment.
Speaker 4: Our members come to our studios not only to work out but also to socialize with one another and studio staff. It's this sense of community that makes our studio membership so sticky and why the thought of giving up one studio membership equates with also giving up a community and a lifestyle.
Speaker 4: People are just not willing to make that trade-off.
Speaker 4: Furthermore, as our brands and community continue to grow, we are increasingly capitalizing on opportunities to engage with consumers far beyond just the physical studio space.
Speaker 4: As Sarah will discuss shortly, our B2B, X-Plus, and XPass offerings are great examples of how we are increasingly engaging with our consumers in a more holistic, omnichannel way.
Speaker 4: With that, I'll pass the call on to Sarah to discuss our fourth and final growth driver, increasing our same-store sales and AUVs. Thank you, Anthony. In the fourth quarter, not only did we continue to drive strong in-studio performance, but, as Anthony just mentioned, we also further established Exponential's Omni-Channel fitness offering.
Speaker 3: Throughout the year, we welcome numerous B2B partners while also enhancing our XPASS and Xplus offerings.
Speaker 3: The success of our Omni Channel Fitness experience, which is helping drive more customers into our studios, is apparent in our growing visits. For the full year, North America visitation rates grew 32% over 2021. This momentum, as Anthony noted, has continued into the new year with our North America membership base now exceeding 600,000 in January .
Speaker 3: So let's discuss how we continue to connect with our members, increase retention and reduce churn, all of which are essential to growing our same store sales and AUVs. I'll begin with our XPass offering, which provides our members frictionless access to all 10 of our brands on a single recurring monthly membership platform. XPass serves as a lead generator for our franchisees to drive in-studio memberships.
Speaker 3: in 2023.
Speaker 3: We are also connecting with our members virtually through X+. Our fitness on-demand digital offering. 2022 marked the first full year of X+. And at the end of the year we had over 117,000 subscribers. Importantly, of these subscribers, many also hold in studio memberships.
Speaker 3: X-plus drives retention and engagement by providing subscribers the ability to work out anytime, anywhere.
Speaker 3: With 72% of fitness club owners, according to club Intel offering on-demand and livestream workouts, we understand the need to continue to invest in our X-Plus platform. We are constantly developing new content for X-Plus platform and are offering on Lululemon Studio.
Speaker 3: we're excited to see this digital channel translate into increased awareness for our brands and studio offerings.
Speaker 3: Speaking of partnerships, the third leg of our omni-channel offering is our B2B partnerships, which enable our brands to reach an even broader demographic. As I noted previously, we welcome numerous B2B partners in 2022, ranging from Lululemon Studio and Optum Health, a division of UnitedHealth, to Active Solutions and Princess Cruises.
Speaker 3: The International Health, Racket, and Sports Club Association, or IRSA, reports that there are 15 million American adults who are currently inactive. So finding unique ways to connect our brands to these individuals remains one of our core areas of focus. Our growth in B2B partnerships has continued in 2023 with LG.
Speaker 3: Territory Foods, and One Brands, now all on board. We are particularly excited about Xplus's new partnership with LG, announced at the Consumer Electronics Show in Las Vegas this January .
Speaker 3: Under the partnership, LG Televisions will feature an application providing access to our full X-Plus library, helping us reach millions of consumers globally. Xfidential's partnership with LG is another example of our holistic approach to fitness, engaging with our consumers and raising awareness for our brands far beyond the physical studio locations. Overall, each of our B2B partnerships aligns with our long-term strategic goal of joining forces to improve our health and wellness.
Speaker 3: our fourth quarter results in 2023 Outlook.
Speaker 4: Thanks, Sarah. It's great to speak with everyone to discuss Exponential's fourth quarter 2022 results.
Speaker 4: Fourth quarter North America system-wide sales of $294.1 million were up 38% year-over-year. The growth in North American system-wide sales was largely driven by our existing base of open studios that continued to acquire new members, complemented by 375 net new North American studios that opened in 2008.
Speaker 4: million, up 40% year over year. This growth was primarily driven by an increase in royalty revenue as member visits and associated system-wide sales are at all-time highs. And amortized revenue from franchise license sales continue to increase as we open more studios domestically and sell more franchise licenses internationally.
Speaker 4: Equipment revenue was 11.5 million up 64% year over year. This increase in equipment revenue continues to be driven primarily by higher volumes of global equipment installs.
Speaker 4: Merchandise revenue was $8 million, up 22% year-over-year. The increase during the quarter was primarily driven by the higher number of studios operating and increased foot traffic when compared to the prior year.
Speaker 4: Franchise marketing fund revenue of $5.8 million was up 42% year over year, primarily due to strong system-wide sales and average unit volume growth.
Speaker 4: Lastly, the other service revenue was $13.8 million, up 57% from the prior year period, primarily due to rebates driven from processing of CIDEO-level system-wide sales, vendor sponsorships for our annual franchise conference, revenue from our B2B partnerships, and revenue from
Speaker 4: and revenue generated by temporarily owned transition studios. Turning to our operating expenses, cost of product revenue or $12.3 million up 32% year over year.
Speaker 4: The increase was driven by higher equipment installations for new studio openings and merchandise revenues in the period.
Speaker 4: Cost of franchise and service revenue were $4.9 million, up 18% year over year.
Speaker 4: The increase continued to be driven by Amortized Commission associated with Franchise License Sales at a higher base of open studios.
Speaker 4: Selling, general, and administrative expenses of $34.7 million were up 6% year-over-year. As a percentage of revenue, SG&A expenses were 49% of revenue in the fourth quarter, down from 66% in the prior year period.
Speaker 4: As projected on our third quarter 2022 call, our annual franchise convention added approximately $4.5 million in sequential SG&A expenses, which were largely offset by sponsorship revenues from the event that brought the net expense down to $0.9 million for the fourth quarter. In addition, as I noted on prior calls, the
Speaker 4: Costs related to temporarily owned transition studios are included in our SG&A for the fourth quarter. We continue to optimize operating costs for these studios and to find new owners for them as we've done in the past.
Speaker 4: Depreciation and amortization expense was $4.1 million, an increase of 23% from the prior year period.
Speaker 4: Marketing fund expenses were $4.6 million, up 23% year over year, driven by increased national marketing spend afforded by higher marketing fund revenues because of higher system-wide sales.
Speaker 4: Acquisition and transaction expenses were $8.2 million, primarily related to the non-cash contingent consideration as part of our acquisition of RUMBLE. As I noted on prior earnings calls, the RUMBLE contingent consideration is driven by our share price. We mark to market each quarter and accrue for the earn-out.
Speaker 4: We recorded net loss of $0.4 million in the fourth quarter compared to a net loss of $29.8 million in the prior year period.
Speaker 4: The increase was the result of $14.9 million of higher overall profitability, a $14.2 million decrease in non-cash contingent consideration primarily related to the RUMBLE acquisition, and a $0.4 million decrease in non-cash equity-based compensation expense.
Speaker 4: We continue to believe that adjusted net income is a more useful way to measure the performance of our business.
Speaker 4: A reconciliation of net income to adjust the net income is provided in our earnings press release.
Speaker 4: A jump-to-net income for the fourth quarter was $6.8 million, which excludes $8.2 million change in fair value of non-cash contingent consideration and a $1.1 million liability decrease related to the fourth quarter remeasurement of the company's tax-receivable agreement liability.
Speaker 4: Adjusted EBITDA was $22.2 million in the fourth quarter compared to $8.6 million in the prior year period. Adjusted EBITDA margin grew to 31% in the fourth quarter compared to 17% in the prior year period.
Speaker 4: As a reminder, our 2023 outlook anticipates adjusted EBITDA margins reaching the 35-39% range and we expect this number to grow to 40% in 2024.
Speaker 4: Turning to the balance sheet, as of December 31, 2022, cash, cash equivalents, and restricted cash were $37.4 million, up from the $21.3 million as of December 31, 2021. The long-term debt was $137.7 million as of December 31, 2022.
Speaker 4: 40 shares of convertible preferred stock at a price of $22.07 per share, which prior to the repurchase would have been convertible into 5.9 million shares of Class A common stock.
Speaker 4: In addition, we recently completed a secondary offering of 5 million shares which closed on February 10, 2023, followed by a green shoe execution for an additional .75 million shares.
Speaker 4: The selling shareholders included staff dragging capital partners, which is controlled by Mark Krabowski, the chairman of our board and our CEO , Anthony Geisler.
Speaker 4: Exponential fitness did not receive any proceeds from this sale, and our CEO remains expansion's largest individual shareholder.
Speaker 4: Let's now discuss our outlook for 2023. Based on current business conditions and our expectations as of the date of this call, we are initiating guidance for the current year as follows. We expect 2023 GlobalNet new studio openings to be in the range of 540 to 560.
Speaker 4: This range represents the highest number of studio openings in our company's history and an 8% increase at the midpoint over 2022.
Speaker 4: We project North America system-wide sales to range from $1.34 billion to $1.35 billion, or a 30% increase at the midpoint from the prior year and the highest North America system-wide sales in our history.
Speaker 4: Total 2023 revenue is expected to be between $285 million to $295 million, an 18% year-over-year increase at the midpoint of our guided range.
Speaker 4: Adjusted EBITDA is expected to range from $101 million to $105 million, a 39% year-over-year increase at the midpoint of our guided range. This range translates into roughly a 35.5% adjusted EBITDA margin at the midpoint.
Speaker 4: In terms of capital expenditures, we anticipate approximately $10 million to $12 million for the year, or 4% of revenue at the midpoint.
Speaker 4: Going forward, capital expenditures will be primarily focused on the BFT integration, XPath and Xplus new features.
Speaker 4: maintenance on other technology investments to support our digital offerings.
Speaker 4: For the full year, our tax rate is expected to be mid to high single digits, share count for purposes of Earnings Per Share calculation to be $32.3 million, and $1.9 million in quarterly dividends to be paid related to our Convertible Preferred Stock.
Speaker 4: A full explanation of our share count calculation and associated pro forma EPS and adjusted EPS calculations can be found in the tables at the back of our earnings press release, as well as our corporate structure and capitalization FAQ on our investor website. Thank you again for your time today and your support of Exponential. We look forward to speaking with you on our next earnings call. We will now open the call for questions. Operator? Bennett.
Speaker 2: Thank you. We will now be conducting a question and answer session.
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Speaker 2: One moment please while we poll for questions. We will take our first question from the line up. Randy Connick with Jefferies, please go ahead.
Speaker 5: Yeah, thanks a lot and good afternoon guys. How are you? Good, thank you. I'm doing ranny.
Speaker 5: I guess I have a number of questions. I just want to first attack your international prospects because you gave us some perspective. You talked about I think a thousand units on tap to open over time in the international market.
Speaker 5: Seems like franchisee demand is off the charts there. Maybe give us a reminder of education around where was international, let's say a couple years ago. We know it's in 16 countries today. You gave us great color on the master franchise agreement approach. Reframe out where we were a couple years ago.
Speaker 5: And then, you know, where you think we might be with international, let's say about five years from now in terms of potentially number of countries and kind of the TAM you kind of see for that, you know, the rest of world because it looks pretty powerful from here.
Speaker 4: Thanks, Randy. Appreciate it. Yeah, I mean, prior to, you know, call it pre-COVID for an easy time frame prior to the BFT acquisition, you know, international was obviously not what it was for us today. Thus, a big portion of that BFT acquisition was to
Speaker 4: get a bigger international footprint that we could spring from. And then also of course with BFT not having a lot of locations in the US, it gave us full opportunity to scale the domestic market, but also expand the international market. That's why that deal was a double...
Speaker 4: great deal for what we were trying to do. And so from there we've been springing forward. Also in 2019 we had planted a lot of seeds in the ground internationally but didn't have a lot of openings. And of course with COVID we kind of took a couple years off as everybody was...
Speaker 4: figuring everything out globally. So you're kind of seeing a couple things happening. One, you know, the acquisition of BFT and its expansion in primarily APAC, but also UK and other regions. And then you're seeing the seeds that we planted pre-COVID that should have come out in, you know, 2021-22 or even 2021-22.
Speaker 6: You're seeing those start to happen in 22 and 23. So, where our openings, you know, in 2021 used to be 90-10 domestic, they were 75-25 in 2022. We expect that to be pretty close to the same in 2023.
Speaker 6: as we get into you know 24 and 25 and later years we think it'll probably grow to an overall kind of 70-30 split ultimately. So you know and of course as we reiterated before or discussed before the international footprint for us given that we get
Speaker 6: you know, 30, 40, sometimes 50% of the revenues and none of the SG&A and the cash that comes over gets treated as cash without any amortization over time like we would have in the US. It is truly incremental to EBITDA margin as well.
Speaker 5: Very helpful. So if we have a global growth kind of story I think one thing we always get from investors they're looking for stories with you know pricing power in a world where pricing power seems to be eroding for many consumer discretionary business models. So can you give us some perspective around your thoughts on the different levers you have at your disposal from let's say class pricing.
Speaker 5: royalty rate, fees, etc. Maybe give some perspective there on the different levers you have at your disposal to kind of continue to kind of have that pricing power in your toolkit beyond just the nice member growth that you're seeing and traffic and utilization growth.
Speaker 4: as brands get to larger scales as AUVs continue to climb, it gives us the ability on future openings to consider maybe you know moving from a 7% to an 8% royalty. So we have a little bit of pricing power there. When you talk about other scale items things like our tech fee you know those become opportunistic in the sense that they become what profit centers.
Speaker 4: for you know discounts based off of volume commitments and we've done that with Club Pilates, we've done that with Cycle Bar, you know Stress Lab is another opportunity as we continue to open up high volumes there we could we could look at. What do you think about some of our other vendors too? Given our scale the B2B opportunity has been really great for us because we do have so many distribution points across the U.S.
Speaker 4: It's what do you layer on top of this massive network that we have on a domestic footprint. And eventually, we can consider that on the international in countries like Australia where they have a considerable number of units. But we've done a good job so far of creating partnerships with the Lululemon's of the world, the C4 beverage companies of the world where we can now start putting them into our...
Speaker 4: into our studios to drive higher margins. So we've looked at all areas of the supply chain. We continue to look at that. We announced a number of new partnerships related to like LG on this call where that's another opportunity for us to use our scale and our ability to drive volume to generate higher margins.
Speaker 5: Very helpful.
Speaker 7: We take our next question from the line of Brian Harper with Morgan Stanley . Please go ahead. Yeah, good afternoon. Thank you guys. You know, John , you had said just on the 2023 outlook it's......
Speaker 4: about a 35.5% EBITDA margin at the midpoint but then I think there was also a comment you know could get to 35 to 39 in 2023 I guess the question is just you know what what could drive some upside to that what would enable you to perhaps do better than that on EBITDA margins? Yeah the largest contribution to the margin expansion that we'll realize is royalties right we had really strong AUV growth in 20...
Speaker 4: on same-store sales in our models given the macro and not having a crystal ball to see what it looks like in the second half of this year. But if studios continue to perform in a similar fashion as they did in 2022, that 100% royalty margin flows right to the bottom line. So.
Speaker 4: Again, taking a watch and see approach, providing the best outlook we have with the information we have right now for 2023. But top line growth driven by royalties, some B2B opportunities could be helpful for us too in 2023 as we start to find more deals on that front, which carry typically very high margins.
Speaker 4: international business continuing to grow ahead of expectations, you know, as Anthony just talked about, those are all really strong high margin pass through top line line items that, you know, can float to the bottom line to push revenues into the, you know, the high 30s. And the same, the same comments apply for 2024s when you think about how do you get to 40 plus margin. Again, it's just growing that install base.
Speaker 4: and continuing to add more studios, both domestically and internationally. Okay, great. Thank you. Sarah, anything more you could say about just the X pass at this point in terms of the audio problem you face.
Speaker 7: You know, out of that member count, how many of those are XPass members? How much do you think that's benefiting at this point on revenue and EBITDA perspective? Yeah, what we're continuing to see on the XPass is that it is driving great awareness across the broader ecosystem. TAC was down, we're driving incremental leads into the system, acquiring brand new customers.
Speaker 3: a huge revenue driver into the system.
Speaker 2: Thank you. Thank you. We'll take the next question from the line of Alex Perry with Bank of America. Please go ahead.
Speaker 8: Hi, thanks for taking my questions and congrats on another strong quarter. I guess just first, so the system-wide sales guidance at plus 30, total rev guide at 18%, I guess that would sort of imply that maybe franchise revenue growth should be higher than equipment revenue as your sort of new studio opening cadence is higher than the new studio opening cadence.
Speaker 8: brands and then just as a follow up to the last question that was asked the high teens same source sales growth you know sort of quarter to date what's been the key driver there is that you know mostly very strong January member growth versus last year thanks.
Speaker 4: Yeah, thanks Alex, I'll take this one. When you look at 2022 equipment revenue is roughly about 18% of the total revenue we derived, kind of moving into 2023. We'll still be in a very high heavy growth phase so you'll see a lot of equipment installs which we recognize that revenue at the time we do the installation which is only a couple of weeks.
Speaker 4: slightly higher in 2023, the royalties as a percent of the total franchise revenue. So you'll continue to see equipment revenue be a large portion of the total revenue as a percent for the coming years because we're in this high growth phase of a lot of new installations and new openings happening.
Speaker 4: And then in regards to your comments around same store sales or system wide sales, 95% of the growth in system wide sales is coming from new members. You remember when a member signs up at a studio, they in essence lock in their monthly rate unless they cancel and come back most likely because we're constantly taking price.
Speaker 4: So we have opportunity to continue to take price as we raise it in the studios which you do every day, but the majority of the growth is coming from the fact that we are acquiring more and more members in our studios.
Speaker 8: That's incredibly helpful. And then I guess just my second question is what is the right SG&A run rate to be using? I think it was running a bit higher last year due to more corporate run transition studios. Are you going to sort of downsize that? Like is the right SG&A run rate to be using?
Speaker 4: be using it as low 30 million or where should we be there? Thanks. Yeah, so in 2022, at Randreffly, excluding stock-based expense or equity-based compensation expense, at Randreffly, about 41% of revenue. In 2023, the objective is to obviously get SGNA.
Speaker 4: closer to being more efficient in line because we won't have as many costs related to some of the transfer studios. So I would assume around you know 35-36 percent is the optimal point for us in 2023 that we'll drive down to. My expectation is Q1 and Q2 will slightly be above that 36 percent and it'll drive into the lower 30s.
Speaker 4: as we get into Q3 and Q4. So you'll see kind of a ramp down. The average year will be about 35 to 30 percent, 6 percent on average, excluding stock base cup.
Speaker 2: That's incredibly helpful. Best of luck going forward. Thanks Alex. Thank you. Take an X-Quest Trin from the line up, John Heinbuckle with Google 9 Partners. Please go ahead.
Speaker 9: Hey, can you guys talk to – just remind us, right, when you think about members per studio, and particularly how they open up, what are the outliers, right, in terms of which brands will typically start with more members.
Speaker 9: versus less and then I think you know if I look at your pipeline for 23 I mean it's fairly broad base But is is there any big difference in terms of 23 openings by brand versus 22? You know will be seeing you know more stretch labs.
Speaker 9: which is a pretty big pipeline.
Speaker 6: Yeah, I think you'll you'll see stretch lab. You'll see clubplotties still you'll see rumble and BFT Obviously rumble and BFT coming from the most recent sales of those brands because they're the newest brands They're the most white space so we start to sell those we start selling rumble before BFT So we'll start opening more rumble before we start opening more BFT
Speaker 9: Okay, maybe as a follow-up of that, right? You talked about capacity. So if you think about maybe you look at across brands, and I know they're different in terms of capacity, but when you look at the highest AUV studios, because of the potentials and resources involved in something like a 360ur niños shooting at all, are those familiar with data?
Speaker 9: And you think about where you can add capacity, right? Because in some cases you can't add capacity to those classes. So you'd have to add additional classes, but you don't want to add during the middle of the day. Right? So when you think about where you can pick up capacity, where would that be, do you think?
Speaker 2: I'm sorry, but this is the operator. We seem to have lost the line of the management. Kindly stay connected ladies and gentlemen. We will reconnect management. Thank you.
Speaker 9: Yeah, no, no, just it was a follow-up to the the prior one which was when you think about adding capacity
Speaker 9: When you look at your highest AUV studios, where do you think the opportunity is to add capacity, right? Is it? Because I don't think it's difficult to add capacity to individual classes. So you're thinking about adding additional classes adjacent to what your schedule looks like today. Is that fair?
Yeah, done. Did you get to hear my answer to the first question on the openings?
I got a part of it but I made maybe half of it.
All right, so I think in a nutshell, I was saying that in 2023, you will see, you know, Stretch Lab Club Flotty is rubble and BFT. Yep. And, you know, when you look at...
When you look at those brands across obviously, Rubble and BFT will be opening because we sold Rubble to BFTs previously. And then Stretch Lab, we have about a 500 store backlog. CP, we've got a few hundred store backlogs. And we're pushing on them, the CP brand to make sure that we handle the determinations quickly, so that we make sure we're staying on.
schedule with those but then I think you had a follow-up question of that as well as far as 2022 and what we saw did you get did you get the answer to that one no no okay so at 2022 was as a year was our best cohort of opening and studios ramping when you look at the ramp curves
we're actually seeing quarter over quarter it gets better and better and better, you know, all the way through this this last queue.
quarter over quarter it gets better and better and better you know all the way through this this last Q. Okay thank you.
All right, and then John , did you want to answer the follow-up questions? Well, you had talked about members. Typically, the way we model the kind of the AS design curve is the expectation is that we have somewhere between like 275 to 300 members in the first year in Bechrose, so like 375 to 400 by year too.
when you look at the system as a whole given how young it is and the number of cities we just open, I think you're asking a question of like how will we continue to see growth there? What is the expectation? There is still a fair amount of capacity left in the assault base rest to continue to add.
new members and grow AUVs. We still have the opportunity to take price as we add new members as well. There's plenty of opportunity for margin expansion based off of us continuing to add more numbers per studio, which we continue to set record every quarter. Okay, thank you guys.
grow AUVs, we still have the opportunity to take price as we add new members as well. There's plenty of opportunity for margin expansion based off of us continuing to add more numbers per studio, which we continue to set record every quarter. Okay, thank you guys. Thank you.
I take an next question from the line up Warren Chang with Evercore ISI. Please go ahead. Hey guys, very impressive result here in a really tough environment. I had a question on the new studio opening guidance. So obviously really strong momentum there based on your guidance.
But I was curious the extent to which macro headwinds like inflation or these longer construction timelines or higher interest rates are affecting your franchisees and their open plans here and whether some of that's embedded in that 540 to 560 number and what are the biggest factors that could cause you to swing across that low end to the high end of that range.
Yeah, so the only headwind that we really have, obviously there's macro headwinds, there's construction, there's all those kind of things, and even faced with those headwinds, the company is raising guidance on its openings year over year into those headwinds. Financing is not an issue for us, so that hasn't been a...
more, but then you run into the risk of putting them in, you know, worst locations or having franchisees, putting harms way by signing worst leases. And so, you know, we don't have the, you know, some of the macro headwind like air conditioning units or these massive buildouts of 20, 30, 40,000 square feet. You got to remember we're building.
We don't have as certain specific air conditioning spec that we need. So we're not facing the headwinds that some others are unfortunately in the fitness industry, because it's top of something you don't control. But financing has been an issue, finding great locations obviously has been an issue, but also as well, there's not a lot of retailers that I've heard of that are opening 500 plus.
locations. So we also are doing an amazing job last year at 511 and doing way better than we even would have done this last year. So their small box pieces are not...
massive build outs, there's not major construction that we do. It's really kind of modifying the previous use that was there into our use. And in some brands like Stretch Lab or Club Pilates, it really is just a rectangular box with no walls and a single bathroom in the back. So it's not major construction, so the construction part is low cost. So the last but not least section, which is for an electric vehicle,
That's really useful color. And then my follow-up I wanted to ask about the BDB partnerships. So you've done a pretty wide range here in the last year and it seems like the pace of partnerships is picking up a little bit. Are there certain channels that are the most fruitful for customer acquisition? And also has there been in thought about migrating some of these partnerships into some kind of...
whatever the term is that people would like to use. You know, at the end of the day, we're teaming up and partnering with other great companies to really exploit the exponential name and its brands to deliver what I like to call negative CAC, which is where, you know, brands actually pay us to deliver customers into our studios. So you see that with Lululemon and Princess and LG and, you know, all the different deals that we're doing is really to...
start to make Exponential a lifestyle health and wellness brand on its own with the 10 brands underneath it and also allow us to leverage the other assets. I like to tell the team that what do we do for a living? What's our day job? We open gyms for a living. That's our day job. But then what do you do on evenings and weekends? What else can we do with the assets here? When we have something like X Plus, it's great. And we can operate X Plus and try to operate in the digital space like everybody else and try and fight everybody for customers and drive CAC north.
Or we can go into deals like we did with Rue 11 where we get paid for them or do deals like we do with Princess where we get paid for them. Then our X plus ends up on the mirror and ends up playing on the mirror inside Rue 11 stores or Nordstrom stores or people's homes and then there are 23,000 state rooms when they're on a Princess cruise. They go to turn on their LG TV when they get home and it's there too. So.
The idea is to really meet the customer in multiple places wherever we can. It would be our goal by the time someone parks a Starbucks to get a coffee in the morning and they see a pier bar sign next door that they're sick of seeing that brand everywhere. Because they've seen it on a cruise, they've seen it on a mirror, they've seen it on a legal emin store. They've seen it from one of their insureds sending them advertisements or territory foods or whoever it might be. And so we want to make sure that we're getting a lot of those touch points out there.
to drive customer acquisition costs down, not just be smarter than everybody else and not just sit out and compete and bang it out for the most expensive paper click we can, but find other ways that we can actually get paid. And our franchisees can receive lead flow really free of cost. Thanks, Anthony. Thanks, John . Great job. Good luck. Great. Thank you.
Thank you. We take our next question from the line of Jeff Vence-Sindhuan with B Riley. Please go ahead. Yes, hi everyone. Let me add my congratulations. For 2023, did you say what's baked in your guidance or what you're targeting for sales and new franchise licenses? And then I guess how is the evolving macroeconomic backdrop factored into that?
or white space that's out there. So as we continue to do that, you'll naturally see a decline in license sales. Brands like BFT and Rumble are still, we're still still falling through those brands given that they're relatively new, but the inventory is diminishing. So when you look at 2023, could you expect to see somewhere between, you know,
six, seven, eight hundred license sales. Yeah, I think that's a realistic target for us to keep, you know, pushing forward. International is still a huge opportunity. There's still a lot of white space international. So as we continue to identify new MFA's and the MFA's that we have put in place for them to sell through their, their white space internationally. You know, that'll continue, you know, to help, you know, keep us at the high elevated level of the license sales.
Is that answer your question? And in consideration to feel the macro too, I should answer like, we haven't really seen a slowdown on macro causing people not to want to buy licenses. That hasn't been one of the reasons we've seen. It's really more about matching a franchisee in a territory where it's available.
Okay, that's helpful. And then just sort of as a follow up to that, I think this dovetails a little bit. Can you give us your latest thoughts on how you're approaching potential acquisitions for 2023, maybe how you're evaluating them, what you're more willing to go after than not.
what you're seeing out there in general. Is there any shift in multiples that sellers are willing to consider things of that nature? Yeah, I don't know that there's any massive shift in multiples that are out there. As far as acquisition goes, and like John said, we have a decent still amount of inventory.
you know, selling 250 franchises a quarter, I don't know too many people that are out doing that. So even if we were selling 150 to 200 a quarter, that's still outstanding compared to, you know, what else is happening out there globally. So, you know, the only real reason for us to buy the 11th brand at this point is if...
We're capturing a major deal, right? And getting some great deals, great opportunity in the market. Or if we want to pick up that franchise sales number back up to 1000, we could do that with an 11th brand, not a problem. I'm always in talks with four, five, or six different potential targets.
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Thank you. Thank you. We take an next question from the Light Up Jonathan Combe with Baird. Please go ahead.
Yeah, hi, good afternoon. John , I want to ask just to follow up on the adjusted EBITDA guidance. The highest I can get to is a 37% margin with the ranges you gave, so I'm just wondering, did you misspeak on the 39% or are you signaling there could be upside? And then,
When I look at the dollar growth for adjusted EBITDA compared to the dollar growth of revenue, it looks like an implied flow-through rate for the year above 60%. I'm just wondering, is there anything unique this year? Is that sort of the flow-through rate we should think about going forward?
Yeah, I mean the flow is coming from royalties. You know the fact that we opened 500 city of last year, you know those are relatively lower AUVs as they ramped to their first you know kind of you know 300 and 80s 300 or 400 thousand kind of range for that first year.
as designed. So when those start really kind of generating higher levels of royalties as they get more mature, that margin is, you know, it's a hundred percent margin it flows right to the bottom line. So that's the biggest area of growth you'll see in our revenue line is on the royalty of component, equivalent revenues, those carry, you know, closer to a 30 percent margin. Those will be a little bit of a drag to the P&L as we continue to open more and more studios.
that they don't generate north of 35% to 40% margins on equipment and merchandise. But royalties are the key driver there. The B2B as well, your other service revenue line, that's very high margin flow through. So you typically see our other service revenue at 90% plus margin. So as we continue to do B2B deals, system-wide sales grow, we get rebates on...
processing our system-wide sales. So that will be a key contributor to the business as well. When you talk about margin and the highest you think you can get to, again, we do take a conservative approach to our guidance. We want to make sure that we guide to a level that we know we can achieve. And as we continue to deliver outside, then we could...
know what you guys know how we adjust our guidance from there but at this point you know that's we're providing that outlook based off of today given you know uncertainty of any macro that hasn't hit us but if there is a yet moment that we we don't over commit on larger level.
Got it. That's helpful. And then just one more on the same store sales you're embedding for the year. Should we think roughly close to your long-term guidance or could you just give any more insight? There's a 30 percent increase in system wide sales relative to kind of a low 20 percent increase in units. What bridges the gap between those two?
Yeah, so we did what 25% say sales in 2022 when you think about 2023, you know, what is the right way to look at in regards to AUVs? You know, based on what we're seeing right now, it's interesting because there's the pre-COVID, we averaged 8% per quarter on average, you know, for the two years prior to COVID.
You look post-COVID, it seems like Cidios are ramping at a very rapid pace still. We did an analysis on Cidios that are 36 plus months in operation and those count at 25% last year. So when you look at it in Q4, those same 36 plus months in operation Cidios were I think 17 to 18%, so very strong comp still.
even in the aged studios. I think a good kind of assumption as regards to how you should look at AUVs and what the same store sales comp for next year, probably looking somewhere in the in the maybe very low double digits.
I think 12% 11, you know, that kind of area seems to be aligned with what we're thinking, you know, but if we continue to see strong performance as we have, then you know, possibly higher than that, but right now I think from an assumption, you know, very low double digits is probably the way to think about it and I said that 10, 11, 12% range. Okay, very helpful. Thank you.
Thank you. So, take an next question from the line of Joe Altabello with Raymond James. Please go ahead. Thanks. Hey guys, good afternoon. I kind of want to talk about the studio growth. He mentioned the 540 to 560. You expect this year and it sounds like that number will have a five in front of it for probably three or four years. And I think you alluded to this earlier, but at one point do you guys think you need to add?
and almost a thousand committed to internationally. So if you looked at it from a global perspective, you're talking about five to six years. If you looked at it domestically, on a 75, 25 split, talking about opening about 400 units domestically against 2000, so about four to five years.
here domestically. So you know that that was our consideration as we look to an 11th brand. We already have you know many years of runway given the macro we wanted to be conservative and not potentially take some operational risk you know, simple limitation infrastructure risk.
and or potential leverage or cash off the balance sheet or whatever it might be to do the acquisitions. Our acquisitions are usually fairly relatively small from a $1 or cash perspective, but we thought, hey, we're selling more franchises than anyone we know. We're opening more stores than anyone we know, and we're executing very well.
Let's just keep our head down and continue to do that into today's macro to make sure that we can deliver the guidance that we set out. And then if it's a quarter, two, three, four, whatever it might be, and we've all kind of seen the pivot point in this macro or we feel like it, isn't really going to get worse or whatever it might be. As we get further into this, we get more and more visibility.
And we want to go buy the 11th brand, that's easy money for us, right? That's not a big deal. You know, we can do acquisitions from, hello, what is your name to? We own you in six weeks. So, you know, given that we've got, you know, four, five, or six current conversations going on, that window could be even shorter. So, you know, for us, it's just, you know, when does opportunity strike? And when do we feel we need to go forward? But even if you look at...
when need be. Okay got it and maybe on AUVs obviously you know continue to make a lot of progress there you know north of 500,000 here in the fourth quarter could you remind us what your highest AUV studios are doing today and is anything unusual about those studios or is it just a matter of time before they sort of get to those levels.
I mean, like the AUVs vary across brands, but the, you know, the RLIs and margins, you know, kind of end up being the same depending on what brand you're in. So something like a stretch lab will have higher AUVs, but it has higher labor costs because it's one on one. Something like a pure bar will have lower AUVs, but it's more of an owner operator model.
So you've got a lot of the owners that are teaching class or working the front desk and so labor's a lot less. And they have something like a club plotty in the middle which will have higher AVs but the majority of those franchisees are semi absentee owners. So they're hiring at the front desk and hiring for the classes as well.
But I mean, when you look at sort of high end capacity of certain things, I mean, there are clubplotties that are, you know, doing 1.2, 1.3 million dollars out of their boxes. So, you know, there is the ability to do that. We've talked about, you know, clubplotties when we bought it was the AVs are about 250,000 and then they're...
They're kind of triple above that now. And so what we like that we're seeing is the newer brands like Rumble and BFT, even to our yoga sixes that are opening, they're kind of opening it twice where clubplaudis started, right? And so we would love to say that those are going to, those are going to triple like clubplaudis as I don't know if that'll necessarily be the case. But what's nice is that we're, we're at an all time company high AUV.
And our new stores that are opening in those new brands are opening at that AUV and higher. While brands like Club Plottis or Stretch Lab, their individual AUVs continue to climb as well, you know, as we copier over a year at double digits. Yeah, that's what I was trying to get at is that you're not approaching a ceiling at all when it looks like AUVs here. So, okay. Yeah, we had nine quarters, a quarter of a quarter prior to COVID.
MKM Capital Partners, please go ahead. Hi everybody, thanks for taking my questions. First one on your royalty rates, curious, I guess two part question. Were there any surprises after you took the rate higher with Club Pilates, anything kind of unexpected that you saw? Part two of the question is read 4 rows.
Do you have plans this year to raise royalty rates to additional brands? So no, no change at 8%. And remember when we do these royalty increases, it's on the openings going forward. And so it's not retroactive. And so the people that are already signed their franchise agreement.
at 7% are locked in at 7%. The franchise agreement to get signed in the area development agreements that are getting signed after that 8%, really it's mostly the stores that are opening after we increase it. Those go to 8%. And you know as far as considerations on
brands going from 7 to 8%. We look at that much like we look at the consumer and supply demand based. And so when you see brands that we're selling a lot of, that we've opened a lot of, we run out of territories, people still are demanding the product, the products performing very well. It allows us to take price right through a royalty increase. But as discussed before, there are other ways to increase.
price to the franchisee other than increasing royalty rate, right? And so if an AUV was 500 and you want a 1% increase, you could institute a tech fee or something that would be $400 or $450 a month and you would virtually get that 1% increase across the system and something like that could be retroactive. But we always want to guard the health of our franchise units.
And so we're very careful to make sure we're not instituting fees, whether it's royalty rate increases or any other fees are increasing, and any pricing that is going to put a franchisee in harm's way. Because first and foremost, we want to make sure that we have kind of healthy, happy franchisees out there that are working for us. Okay, that's helpful. And then second question from me on your balance sheet, how comfortable, like how much leverage are you?
generate a lot of liquidity and stack up on the balance sheet. When you look at M&A opportunities, it really depends on the size. Most of the acquisitions we've done historically are very low. They don't carry $20, $30, $50, $100 million. They are a couple million bucks. So we would be able to finance most of the acquisitions off the balance sheet. In regard to leverage ratio, we did complete the reacquisition.
40, roughly 40% of the preferred convert in Q1 of 2023. Right now we're carrying about three and a half times levered, we've always said to the street, three to four times leveraged for us is not a problem at all given how much cash this business generates. So the answer to that question could we easily carry three and a half times which we're at right now? Yeah, it's not an issue.
it to us and obviously a lot of us are shareholders internally within the company so we don't want the pollution nor do our shareholders want it. So we'll continue to look to leverage the cash that we have on the balance sheet and opportunities to retire those shares over time. So it is a focus for us. We have talked about other instruments like something like a securitization which is familiar to plan it and we like to model ourselves after them. So we could use that as an opportunity when a window prevents itself as a way to.
retire the preferred but at this point forward, comfortable with our debt levels, comfortable with the amount of cash that's being generated off the business and we'll continue to look to ways to streamline our capital structure to make it as efficient as possible.
Thank you. We'll take an next question from the line up, Peter Keat with Piper Sandler. Please go ahead. Hi, this is Matt Edgar on For Peter. Thanks for taking our questions and congrats on the good quarter. First off, for most, there's a question on advertising. We're curious the best advertising medium for your banners or maybe what mediums are being utilized.
within the studios as well. I mentioned XPass earlier that that's really helping from the top of the funnel perspective and driving leads into the system. Lastly, we found a good amount of work around LCO and making sure that we're there as customers are starting to look for fitness online and that we're the first to pop up and.
Really meet the customer where they are and the fitness journey, both online and certainking mortargreat. And then, I guess, on fun and a you mentioned, well curious if uh, you're interested in only like boique fitness brands or would you reach out other different typ health and wellness concepts are curious on what well you'll be looking at.
Yeah, I mean, if you look at the business today, no, we've done an amazing job with Stretch Lab, which is clearly not fitness and clearly a wellness product. And so, if you look at the name H&W and Vesco, that was the original name of the company, that was not super clever on health and wellness investment companies. So from day one, we've kind of projected this company to be in the health and fitness space. There are still, you know, a handful of modalities in the fitness space in which we could acquire.
and even more so on the wellness side. And I think we've proven that we can do an amazing job with something like a club of bodies in the fitness space, an amazing job with something like Stretch Lab in the wellness space. And so I don't think you'll find us, at least not today doing anything.
restaurants or services or something like that but I think you know anything that's a 1500 to 2000 square foot franchise retail box in the health and wellness space is something that is right up our alley. Great, thanks. Thank you. We take our next question from the lineup. Max Rockland Co. with TD Colin, please go ahead.
Hey, great. Thanks a lot. First, can you speak to the competitive environment out there? Your AUV suggests that your franchisees are in healthy shape. But how do you think the independence are doing out there, and if the sector is starting to get more promotional and competitive? And then how are you thinking about potentially playing offense if the backdrop were to soften later this year?
From a competitive environment, we continue to take market share. I think when you look at the boutique space and you look at our white space, we see ourselves being able to grow to about roughly 8,000 studios in the US alone. As we continue to distribute more and more of our brands into new markets, we're educating consumers on boutique fitness and expanding.
our total time and driving more member growth. So when it comes to the competitive landscape, boutique fitness is primarily or historically been very fragmented. The fact that we're bringing national brands across things like stretch lab, which really didn't exist in a national scale, and then tying it all together with things like our X-PASS and introducing members in stretch lab or clubplaudity to these new concepts. I think we're growing the boutique fitness market.
If we were a one concept type brand, it's very difficult if a member joins and leaves. They're not typically going to end back up in the brand that they were already in. So we are actually capturing people who are being introduced by members in other concepts and seeing us and moving over. So we've added more members per studio and we have more members in per studio.
Then we've ever had historically, we've seen a significant growth post COVID. I think people are more aware of health and wellness and living a healthier lifestyle, given the pandemic and the learnings from that. So I think that answer the first part. I think it was a second part of your question too. I might have missed. What was the second part? Oh, just how would you explain offense? You know, leading a little bit more or? Yeah, I think that part goes back to what I was talking about before with negative.
providing cash to the business during COVID. And then, you know, in a post COVID world, we start looking at how do we implement, you know, getting more eyeballs in front of our product, right? And delivering what I've always referred to as negative CAQ into our franchise stores, right? And so, you know, that's what you'll continue to see from us.
I just received pictures from Princess Cruises where they're, you know, debuting a new Porsche out at the Porsche Club of America tomorrow. It's got a huge X on the hood for exponential and all the brands around it and X-PASS and X-PLUS and everything plastered all over this car. It'll be at the Porsche Club of America debut with Princess Cruises.
and not just have it be a brick and mortar location that is sitting next to a Starbucks and some grocery anchored center and the only way they're gonna know that that space is there is to go inside or to get a local digital ad or to get a flyer on their doorstep or see it on a newspaper. I mean, it's kind of, I've been in this business for 20 years and we used to put Wall Street Journal ads back in the day because people used to get their stock information from the Wall Street Journal.
sense and you touched on Princess but can you speak to how that partnership is going and if we could see potentially an expansion into more ships over time.
Yeah, I mean, as far as Princess, we'll obviously be expanding into all of Princess's ships as we bring them into port when it's time appropriate to do so and add our brick and mortar capabilities to the ship, our digital capabilities. We're in the middle of training new instructors to put on board.
with them after using X-plots or using our brick and mortar and walk off with retail from us as well. So, I guess that we're trying to find ways and continue to execute on ways that exponential becomes a lifestyle health and wellness platform that we can use in all parts of people's lives. Great, thanks a lot guys, good luck.
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. And I'd like to turn the call back over to Anthony Geizlose, CEO for closing remarks. Over to you, sir. Thank you. And thank you again for joining today's earnings call for your continued support. I'd also like to acknowledge our entire exponential fitness team in franchisees, so they're strong operational execution in the fourth quarter. And we look forward to seeing many of you at the upcoming Raymond James Roth, BVA and city conferences.
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