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Pre-pandemic metrics are ‘totally outstripped’ as consumers return to gyms: F45 Training CEO

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F45 Training CEO Adam Gilchrist reveals customer traffic of his gyms have almost returned to pre-pandemic numbers, with average consumer visitations of F45 gyms have increased.

Video Transcript

- The global fitness center operator F45 Training posted third quarter revenue that grew 24% to reach $27.2 million, though the company did swing to a net loss for the period. For all this and more, we're welcoming in Adam Gilchrist, F45 Training CEO. Adam, thank you so much for joining us. You're a global fitness company with locations in over 60 countries currently and more than 1,500 studios. Can you talk to us a little bit about what you've been seeing in terms of the return to in-person fitness and training at the global scale?

ADAM GILCHRIST: Yeah. Well, firstly, thanks for having me on the show. It's obviously a very exciting period when we're doing these announcements. We're seeing our return to be greater than pre-pandemic levels. And that's exciting for us because what it's suggesting is the fact that people want to get back into communities. They want to continue to share each other's companies and more importantly, they want to do it in what we believe to be the world's best workout.

I do have to pull you up. We're in 68 countries, not just 60. And recently we signed up with the Marine Corps so we're the only third party gym business in the world that's training soldiers ready for combat. And in addition to that, we've signed up some more colleges, so we can boast that we're the only third party gym that's now operating our HIIT training system in incredible institutions like Stanford, UT, USC.

Recently, we went out on a maiden voyage. So we're looking forward to scaling our business in both cruise liners. But what we're seeing is a return from this challenging period with the pandemic, to people wanting to not just train in gyms together, but obviously return to restaurants, have normality back at their various schools. So we're seeing the pre-pandemic levels now being totally outstripped in a few metrics.

For us one of the most important metrics is visitation. So as we sit here today, we have the average member of an F45 turning up 2.7% times per week, which is greater than our pre-pandemic numbers. Last quarter we had the opportunity to burst through visitation in the US where we had three million visits in a quarter. So what that says is it's just an incredibly exciting time to welcome people back to gyms and normality.

BRIAN SOZZI: Adam, the quarter looks fine to me. Is there anything you can put your finger on why the stock would be reacting like this?

ADAM GILCHRIST: Yeah, well, it's probably two parts. One is we've never been more excited with where we sit. We just reaffirmed guidance for the year. We have currently, over 1,400 franchises that are sold that haven't opened. Out of that number we have 600 that are private equity folks or family offices, which really underscores the fact that we have an extremely capable backlog to open up in 2022.

We have had supply chain challenges. As we sit here today there wouldn't be many you third party logistics companies that would say that it's been a smooth ride for the last eight weeks. But what we're looking at is obviously trying to continue A, our incredible sales growth. Last quarter we sold over 200 franchises. Next year we're seeing obviously the market become more buoyant. And like I said, we're excited about opening up our 4,800 studios that have sold, that have bought a franchise that we've sold to but haven't opened up yet. And we're working with CBRE to assist us in accelerating that backlog with regard to opening.

So we're feeling really comfortable about this quarter. We felt great about last quarter, given the challenges that we've seen with respect to a lot of our network is based in Australia where we gave some fee relief. If we hadn't have done that, then we would have cruised through expectations with analysts. However, in the future we won't be providing any additional fee relief. We may be just deferring it.

So to answer the second part of your question, I'll let the very talented folks decide what the share price should be. But personally, I'm excited about getting next year underway and really crushing it with our 1,400 franchises that we're going to try to open up as soon as possible.

- And Adam, really quickly, I know you just announced a new partnership with One Spa World as well as Celebrity Cruises. How do you see that channel factoring into your growth strategy?

ADAM GILCHRIST: Well, again, it's early days. I would look at that opportunity be extremely large. They went out and had an exhaustive process where they looked at all of our peers. And a lot of our peers are incredible operators, but they chose F45. In a similar way to all of these colleges that have selected ourselves because they do believe that our technology enabled workout is the world's best workout.

We aren't providing any real guidance on how we see the revenues unfolding with the 30 million folks that typically have enjoyed getting on a cruise liner pre-pandemic. But what we do know is that's an enormous number to continue to assist us in driving brand awareness and obviously our top line. So it's an exciting partnership. It's very early days and it's very similar to our military base in Miramar that we now operate in, where we're speaking to over 12 new military bases to open up F45s across all of the armed forces. So exciting period for us and great contract to have, which is rolling out smoothly.

BRIAN SOZZI: All right, we'll leave it there. Adam Gilchrist, F45 Training CEO. Good to see you. Have a great weekend.