Business Wire | Nov 11, 2021 04:05PM EST

Xponential Fitness, Inc. Announces Third Quarter 2021 Financial Results

Nov. 11, 2021

IRVINE, Calif.--(BUSINESS WIRE)--Nov. 11, 2021--Xponential Fitness, Inc. (NYSE: XPOF) ("Xponential" or the "Company"), a curator of leading boutique fitness brands, today reported financial results for its third quarter ended September 30, 2021. All financial figures included in this release refer to global numbers unless otherwise noted.

Financial Highlights: Q3 2021 Compared to Q3 2020

* Grew revenue 60% year-over-year to $40.9 million. * Increased North American system-wide sales1 by 93% year-over-year to $192.4 million. * Reported North American same store sales2 growth of 65% from the prior-year period. * Posted net loss of $8.9 million, or $0.38 per share, compared to a net loss of $1.9 million in the prior-year period. * Posted Adjusted Net Loss of $5.8 million, or $0.31 per share on a share count of 22.1 million shares, compared to an Adjusted Net Loss of $7.0 million in the prior-year period.3 * Reported Adjusted EBITDA4 of $6.8 million, compared to $1.5 million in the third quarter of 2020.

Q3 2021 Operating Highlights

* Opened 68 new studios, increasing total studio count to 1,907 at the end of the third quarter of 2021. * Sold 248 franchise licenses, compared to 50 in the third quarter of 2020. * Reported fifth consecutive quarter of sequential North American system-wide sales improvement, representing consistent system recovery since the second quarter of 2020. * Nearly 90% North American run-rate average unit volume (AUV)5 recovery compared to January 31, 2020.

"Xponential achieved strong results for the third quarter 2021, including net revenues of $40.9 million, an increase of 60% year-over-year and up 14% sequentially," said Anthony Geisler, Chief Executive Officer of Xponential Fitness, Inc. "We are thrilled with the continued momentum of our business, with third quarter actively paying members and visitation rates increasing by approximately 60% and 70%, respectively, year-over-year. Brick-and-mortar gyms are back, and boutique fitness customers are excited to return to in-person fitness across our growing franchised studio base."

"Our strong financial performance, combined with our operational excellence, have paved the way for continued momentum in the fourth quarter. We were thrilled to welcome our 10th brand, BFT, in early October. BFT has transformed our global growth trajectory, adding over 130 new international locations, and bringing a new modality, functional training, to our family of brands. In addition, we recently announced a strategic partnership with LA Fitness, providing our franchisees with even greater opportunities to expand within their protected geographic territories by opening studios within over 500 LA Fitness and City Sports Club locations. I'd like to thank the entire Xponential Fitness team and all of our franchisees for their hard work and dedication to our business," Mr. Geisler concluded.

Results for the Third Quarter Ended September 30, 2021

Please note that all information discussed herein does not include contributions from acquisitions or partnerships made subsequent to the third quarter, including the Company's newest brand BFT, which was acquired in October 2021, and its partnership with Fitness International, for which studio build out will not begin until Q1 2022.

For the third quarter 2021, total revenue increased $15.3 million, or 60%, to $40.9 million, up from $25.6 million in the prior-year period. This increase in revenue included a corresponding North American same store sales increase of 65% year-over-year.

Net loss totaled $8.9 million, or a loss of $0.38 per share, compared to a loss of $1.9 million in the prior-year period. The increase in net loss year-over-year was the result of $4.1 million of higher overall profitability, offset by a $3.1 million increase in non-cash equity-based compensation expense and an $8.0 million increase in non-cash contingent consideration related to Xponential's acquisitions.

Adjusted Net Loss for the third quarter 2021, which excludes the $2.9 million non-cash contingent consideration and $0.2 million related to tax receivable agreement (TRA) remeasurement, was $5.8 million, or $0.31 per share on a share count of 22.1 million shares.

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for equity-based compensation, acquisition & transaction expenses, management fees, integration and related expenses, litigation expenses, and TRA remeasurement, increased to $6.8 million, up from $1.5 million in the prior-year period.

Xponential believes that certain non-GAAP financial measures such as Adjusted Net Income or Loss and Adjusted EBITDA, and Adjusted Net Income or Loss per share, when considered along with other performance measures, better reflect the underlying operating results of the Company and provide an enhanced overall understanding of current and future financial performance. For a reconciliation of non-GAAP to GAAP measures discussed in this release, please see the tables at the end of this press release.

Liquidity and Capital Resources

As of September 30, 2021, the Company had approximately $25.5 million of cash and cash equivalents and $94.0 million in total debt. Net cash provided by operating activities was $3.9 million for the nine months ended September 30, 2021.

2021 Outlook

Based on current business conditions, the BFT acquisition, and future expectations as of the date of this release, the Company is increasing its outlook for the fiscal year ending December 31, 2021. Please note that such outlook is subject to risks and uncertainties, including the risk of further restrictions imposed as a result of the COVID-19 pandemic, such as government mandated studio closures, which could have a material adverse effect on the Company's business and financial performance. Full year 2021 guidance is as follows:

* New studio openings in the range of 230 to 250; this compares to previous guidance of 215 to 235 studio openings; * North America system-wide sales in the range of $690.0 million to $700.0 million, or an increase of 57% at the midpoint as compared to full year 2020; * Revenue in the range of $147.0 million to $148.5 million, or an increase of 39% at the midpoint as compared to full year 2020; this compares to previous guidance of $135.5 million to $137.0 million; and * Adjusted EBITDA in the range of $25.0 million to $26.0 million, or an increase of 160% at the midpoint as compared to full year 2020; this compares to previous guidance of $22.0 million to $23.0 million.

Additional key assumptions for full year 2021 include:

* Tax rate of approximately 5%; * Share count of 22.1 million shares of Class A common stock. Please note that this share count does not include potential shares vested by Rumble through the contingent consideration entered into on March 24, 2021. For more information on the Rumble non-cash charge, please see the Company's Quarterly Report on Form 10-Q filed with the SEC; and * $3.25 million in quarterly dividends paid related to the $200 million Preferred Convertible note.

Third Quarter 2021 Conference Call

The Company will host a conference call today at 1:30 p.m. Pacific Time / 4:30 p.m. Eastern Time to discuss its third quarter 2021 financial results. Participants may join the conference call by dialing 1-877-407-9716 (United States) or 1-201-493-6779 (International).

A live webcast of the conference call will also be available on the Company's Investor Relations site at https://investor.xponential.com/. For those unable to participate in the conference call, a telephonic replay of the call will be available shortly after the completion of the call, until 11:59 p.m. ET on Thursday, November 25, 2021, by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (International) and entering the replay pin number: 13723447.

About Xponential Fitness, Inc.

Founded in 2017 and headquartered in Irvine, California, Xponential Fitness, Inc. (NYSE: XPOF) is a curator of leading boutique fitness brands across multiple verticals. Through its mission to make boutique fitness accessible to everyone, the Company has built and curated a diversified platform of ten boutique fitness brands spanning across verticals including Pilates, indoor cycling, barre, stretching, rowing, dancing, boxing, running, functional training and yoga. In partnership with its franchisees, Xponential Fitness offers energetic, accessible, and personalized workout experiences led by highly-qualified instructors in studio locations across 48 U.S. states and Canada, and through master franchise or international expansion agreements in 10 additional countries. Xponential Fitness' portfolio of brands includes Club Pilates, the nation's largest Pilates brand; CycleBar, the nation's largest indoor cycling brand; StretchLab, a concept offering one-on-one and group stretching services; Row House, a high-energy, low-impact indoor rowing workout; AKT, a dance-based cardio workout combining toning, interval and circuit training; YogaSix, the largest franchised yoga brand; Pure Barre, a total body workout that uses the ballet barre to perform small isometric movements; STRIDE, a treadmill-based cardio and strength training concept; Rumble, a boxing-inspired full-body workout; and BFT, a functional training and strength-based program. For more information, please visit the Company's website at xponential.com.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe non-GAAP measures are useful in evaluating our operating performance. We use certain non-GAAP financial information, such as EBITDA, Adjusted EBITDA, Adjusted Net Income or Loss, and Adjusted Net Income or Loss per share, which adjust for acquisition-related expenses, certain non-cash charges, and other unusual non-operating or non-recurring items that we believe are not representative of our core business or future operating performance, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively with comparable GAAP financial measures, is helpful to investors because it provides consistency and comparability with past financial performance, and provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations or outlook. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measure as tools for comparison. We seek to compensate such limitations by providing a detailed reconciliation for the non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate our business.

Forward-Looking Statements

This press release contains forward-looking statements that are based on current expectations, estimates, forecasts and projections of future performance based on management's judgment, beliefs, current trends, and anticipated product performance. These forward-looking statements include, without limitation, statements relating to expansion of market share; the benefit of the BFT acquisition and partnership agreement with Fitness International; projected financial and performance information such as studio opening, system-wide sales; annual revenue, Adjusted EBITDA and other statements under the section "2021 Outlook"; and ability to execute our business strategies. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These factors include, but are not limited to, the impact of COVID-19 pandemic on our business and franchisees; our relationships with master franchisees and franchisees; difficulties and challenges in opening studios by franchisees; the ability of franchisees to generate sufficient revenues; risks relating to expansion into international market; loss or reputation and brand awareness; material weakness in our internal control over financial reporting; and other risks as described in our SEC filings, including our Quarterly Report on Form 10-Q for the three months ended September 30, 2021 to be filed by Xponential with the SEC and other periodic reports filed with the SEC. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and Xponential undertakes no duty to update such information, except as required under applicable law.

Xponential Fitness, Inc.Condensed Consolidated Balance Sheets(Unaudited)(in thousands, except share and per share amounts) September December 31, 30, 2021 2020

AssetsCurrent Assets:Cash, cash equivalents and restricted cash $ 25,544 $ 11,299

Accounts receivable, net 7,001 5,196

Inventories 5,087 6,161

Prepaid expenses and other current assets 10,480 5,480

Deferred costs, current portion 3,809 3,281

Notes receivable from franchisees, net 1,833 1,288

Total current assets 53,754 32,705

Property and equipment, net 12,375 13,694

Goodwill 147,863 139,680

Intangible assets, net 106,502 98,124

Deferred costs, net of current portion 39,608 35,445

Notes receivable from franchisees, net of current 2,399 2,576 portionOther assets 584 614

Total assets $ 363,085 $ 322,838

Liabilities and Equity (Deficit)Current Liabilities:Accounts payable $ 14,880 $ 18,339

Accrued expenses 14,985 13,764

Deferred revenue, current portion 21,567 14,247

Notes payable 958 970

Current portion of long-term debt 2,120 5,795

Other current liabilities 2,259 1,804

Total current liabilities 56,769 54,919

Deferred revenue, net of current portion 89,231 74,361

Contingent consideration from acquisitions 26,620 8,399

Long-term debt, net of current portion, discount 91,857 176,002 and issuance costsOther liabilities 4,460 4,408

Total liabilities 268,937 318,089

Commitments and contingenciesRedeemable convertible preferred stock, $0.0001 parvalue, 400,000 shares authorized, 200,000 shares 200,000 - issued and outstanding as of September 30, 2021, noshares authorized, issued and outstanding as ofDecember 31, 2020Redeemable noncontrolling interest 291,404 -

Member's/Stockholders' equity (deficit):Undesignated preferred stock, $0.0001 par value,4,600,000 shares authorized, none issued and - - outstanding as of September 30, 2021, no sharesauthorized, issued and outstanding as of December31, 2020Class A common stock, $0.0001 par value,500,000,000 shares authorized, 23,898,042 shares 2 - issued and outstanding as of September 30, 2021, noshares authorized, issued and outstanding as ofDecember 31, 2020Class B common stock, $0.0001 par value,500,000,000 shares authorized, 22,963,246 shares 2 - issued and outstanding as of September 30, 2021, noshares authorized, issued and outstanding as ofDecember 31, 2020Additional paid-in capital - -

Member's contribution - 113,697

Receivable from Member/shareholder (Note 9) (10,600 ) (1,456 )

Accumulated deficit (386,660 ) (107,492 )

Total stockholders'/member's equity (deficit) (397,256 ) 4,749

Total liabilities and equity (deficit) $ 363,085 $ 322,838

Xponential Fitness, Inc.Condensed Consolidated Statements of Operations(Unaudited)(in thousands, except share and per share amounts)Three Months Ended September 30,Nine Months Ended September 30,2021

2020

2021

2020

Revenue, net:Franchise revenue$

19,985

$

11,920

$

51,504

$

35,751

Equipment revenue6,750

4,845

15,571

16,739

Merchandise revenue4,879

3,606

13,620

12,222

Franchise marketing fund revenue3,706

1,790

9,503

5,224

Other service revenue5,547

3,411

15,509

8,885

Total revenue, net40,867

25,572

105,707

78,821

Operating costs and expenses:Costs of product revenue7,641

5,406

19,259

20,285

Costs of franchise and service revenue3,169

2,369

8,615

6,499

Selling, general and administrative expenses24,262

16,629

62,066

43,939

Depreciation and amortization2,376

1,956

6,838

5,653

Marketing fund expense3,828

1,621

9,304

5,027

Acquisition and transaction expenses (income)2,880

(5,131

)

3,527

(10,940

)

Total operating costs and expenses44,156

22,850

109,609

70,463

Operating income (loss)(3,289

)

2,722

(3,902

)

8,358

Other (income) expense:Interest income(343

)

(83

)

(796

)

(260

)

Interest expense5,855

4,558

21,869

16,910

Gain on debt extinguishment-

-

(3,707

)

-

Total other expense5,512

4,475

17,366

16,650

Loss before income taxes(8,801

)

(1,753

)

(21,268

)

(8,292

)

Income taxes103

130

387

292

Net loss(8,904

)

(1,883

)

(21,655

)

(8,584

)

Less: Net loss attributable to redeemable noncontrolling interests(4,848

)

-

(17,599

)

-

Net loss attributable to Xponential Fitness, Inc.$

(4,056

)

$

(1,883

)

$

(4,056

)

$

(8,584

)

Earnings (loss) per share of Class A common stock:Basic$

(0.38

)

N/A

$

(0.38

)

N/A

Diluted$

(0.38

)

N/A

$

(0.38

)

N/A

Weighted average shares of Class A common stock outstanding:Basic22,146,011

N/A

22,146,011

N/A

Diluted22,146,011

N/A

22,146,011

N/A

Xponential Fitness, Inc.Condensed Consolidated Statements of Operations(Unaudited)(in thousands, except share and per share amounts) Three Months Ended Nine Months Ended September September 30, 30, 2021 2020 2021 2020

Revenue, net:Franchise revenue $ 19,985 $ 11,920 $ 51,504 $ 35,751

Equipment revenue 6,750 4,845 15,571 16,739

Merchandise revenue 4,879 3,606 13,620 12,222

Franchise marketing 3,706 1,790 9,503 5,224 fund revenueOther service 5,547 3,411 15,509 8,885 revenueTotal revenue, net 40,867 25,572 105,707 78,821

Operating costs andexpenses:Costs of product 7,641 5,406 19,259 20,285 revenueCosts of franchise 3,169 2,369 8,615 6,499 and service revenueSelling, general 24,262 16,629 62,066 43,939 and administrativeexpensesDepreciation and 2,376 1,956 6,838 5,653 amortizationMarketing fund 3,828 1,621 9,304 5,027 expenseAcquisition and 2,880 (5,131 ) 3,527 (10,940 )transactionexpenses (income)Total operating 44,156 22,850 109,609 70,463 costs and expensesOperating income (3,289 ) 2,722 (3,902 ) 8,358 (loss)Other (income)expense:Interest income (343 ) (83 ) (796 ) (260 )

Interest expense 5,855 4,558 21,869 16,910

Gain on debt - - (3,707 ) - extinguishmentTotal other expense 5,512 4,475 17,366 16,650

Loss before income (8,801 ) (1,753 ) (21,268 ) (8,292 )taxesIncome taxes 103 130 387 292

Net loss (8,904 ) (1,883 ) (21,655 ) (8,584 )

Less: Net lossattributable to (4,848 ) - (17,599 ) - redeemablenoncontrollinginterestsNet lossattributable to $ (4,056 ) $ (1,883 ) $ (4,056 ) $ (8,584 )Xponential Fitness,Inc. Earnings (loss) pershare of Class Acommon stock:Basic $ (0.38 ) N/A $ (0.38 ) N/A

Diluted $ (0.38 ) N/A $ (0.38 ) N/A

Weighted averageshares of Class A common stockoutstanding:Basic 22,146,011 N/A 22,146,011 N/A

Diluted 22,146,011 N/A 22,146,011 N/A

Xponential Fitness, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited)(amounts in thousands)Nine Months Ended September 30,2021

2020

Cash flows from operating activities:Net loss$

(21,655

)

$

(8,584

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization6,838

5,653

Amortization and write off of debt issuance cost5,722

2,790

Amortization and write off of discount on long-term debt2,553

-

Change in contingent consideration from acquisitions3,220

(10,940

)

Bad debt expense165

2,547

Adjustment for recognition of TRA and deferred tax liability(24

)

-

Equity-based compensation4,201

1,327

Non-cash interest765

1,019

Gain on debt extinguishment(3,707

)

-

Loss from disposal of assets362

66

Impairment of long-lived assets781

-

Changes in assets and liabilities:Accounts receivable(1,913

)

3,228

Inventories1,074

(316

)

Prepaid expenses and other current assets(9,429

)

(4,308

)

Deferred costs(4,811

)

(1,114

)

Notes receivable, net148

56

Accounts payable(2,702

)

(2,124

)

Accrued expenses(559

)

4,532

Related party payable(1

)

(21

)

Other current liabilities455

(1,041

)

Deferred revenue22,372

3,282

Other assets18

(76

)

Other liabilities52

101

Net cash provided by (used in) operating activities3,925

(3,923

)

Cash flows from investing activities:Purchases of property and equipment(2,604

)

(1,577

)

Purchase of studios(390

)

(876

)

Proceeds from sale of assets318

58

Purchase of intangible assets(868

)

(729

)

Notes receivable issued(1,000

)

(273

)

Notes receivable payment received563

-

Net cash used in investing activities(3,981

)

(3,397

)

Cash flows from financing activities:Borrowings from line of credit-

10,000

Payments on line of credit-

(18,000

)

Borrowings from long-term debt218,360

188,665

Payments on long-term debt(309,860

)

(148,294

)

Debt issuance costs(904

)

(5,158

)

Proceeds from the issuance of Class A common stock in, net of underwriting costs122,016

-

Payments of costs related to IPO(3,221

)

-

Payments to purchase 750,000 LLC units/Class B Shares(9,000

)

-

Proceeds from issuance of redeemable convertible preferred stock, net of offering costs198,396

-

Payment to purchase all of the shares of LCAT from LCAT shareholders(144,485

)

-

Payment of H&W Cash Merger Consideration(11,720

)

-

Payments to acquire the Preferred Units and LLC Units(20,493

)

-

Exchange of LLC units for Class B shares2

-

Payment of preferred stock dividend and deemed dividend(4,117

)

-

Payment of contingent consideration(12,006

)

(2,563

)

Payments on loans from related party (Note 9)(85

)

(111

)

Member contributions562

27,286

Distributions to Member(10,600

)

(73,203

)

Receipts from Member, net (Note 9)1,456

30,279

Net cash provided by financing activities14,301

8,901

Increase in cash, cash equivalents and restricted cash14,245

1,581

Cash, cash equivalents and restricted cash, beginning of period11,299

9,339

Cash, cash equivalents and restricted cash, end of period$

25,544

$

10,920

Xponential Fitness, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited)(amounts in thousands) Nine Months Ended September 30, 2021 2020

Cash flows from operating activities:Net loss $ (21,655 ) $ (8,584 )

Adjustments to reconcile net loss to net cashprovided by (used in) operating activities:Depreciation and amortization 6,838 5,653

Amortization and write off of debt issuance cost 5,722 2,790

Amortization and write off of discount on long-term 2,553 - debtChange in contingent consideration from 3,220 (10,940 )acquisitionsBad debt expense 165 2,547

Adjustment for recognition of TRA and deferred tax (24 ) - liabilityEquity-based compensation 4,201 1,327

Non-cash interest 765 1,019

Gain on debt extinguishment (3,707 ) -

Loss from disposal of assets 362 66

Impairment of long-lived assets 781 -

Changes in assets and liabilities:Accounts receivable (1,913 ) 3,228

Inventories 1,074 (316 )

Prepaid expenses and other current assets (9,429 ) (4,308 )

Deferred costs (4,811 ) (1,114 )

Notes receivable, net 148 56

Accounts payable (2,702 ) (2,124 )

Accrued expenses (559 ) 4,532

Related party payable (1 ) (21 )

Other current liabilities 455 (1,041 )

Deferred revenue 22,372 3,282

Other assets 18 (76 )

Other liabilities 52 101

Net cash provided by (used in) operating activities 3,925 (3,923 )

Cash flows from investing activities:Purchases of property and equipment (2,604 ) (1,577 )

Purchase of studios (390 ) (876 )

Proceeds from sale of assets 318 58

Purchase of intangible assets (868 ) (729 )

Notes receivable issued (1,000 ) (273 )

Notes receivable payment received 563 -

Net cash used in investing activities (3,981 ) (3,397 )

Cash flows from financing activities:Borrowings from line of credit - 10,000

Payments on line of credit - (18,000 )

Borrowings from long-term debt 218,360 188,665

Payments on long-term debt (309,860 ) (148,294 )

Debt issuance costs (904 ) (5,158 )

Proceeds from the issuance of Class A common stock 122,016 - in, net of underwriting costsPayments of costs related to IPO (3,221 ) -

Payments to purchase 750,000 LLC units/Class B (9,000 ) - SharesProceeds from issuance of redeemable convertible 198,396 - preferred stock, net of offering costsPayment to purchase all of the shares of LCAT from (144,485 ) - LCAT shareholdersPayment of H&W Cash Merger Consideration (11,720 ) -

Payments to acquire the Preferred Units and LLC (20,493 ) - UnitsExchange of LLC units for Class B shares 2 -

Payment of preferred stock dividend and deemed (4,117 ) - dividendPayment of contingent consideration (12,006 ) (2,563 )

Payments on loans from related party (Note 9) (85 ) (111 )

Member contributions 562 27,286

Distributions to Member (10,600 ) (73,203 )

Receipts from Member, net (Note 9) 1,456 30,279

Net cash provided by financing activities 14,301 8,901

Increase in cash, cash equivalents and restricted 14,245 1,581 cashCash, cash equivalents and restricted cash, 11,299 9,339 beginning of periodCash, cash equivalents and restricted cash, end of $ 25,544 $ 10,920 periodXponential Fitness, Inc.Reconciliations of GAAP to Non-GAAP Measures(in thousands, except share and per share amounts)Three Months Ended September 30,Nine Months Ended September 30,2021

2020

2021

2020

Net loss$

(8,904

)

$

(1,883

)

$

(21,655

)

$

(8,584

)

Interest expense, net5,512

4,475

21,073

16,650

Income taxes103

130

387

292

Depreciation and amortization2,376

1,956

6,838

5,653

EBITDA(913

)

4,678

6,643

14,011

Equity-based compensation3,530

462

4,201

1,327

Acquisition and transaction expenses (income)2,880

(5,131

)

3,527

(10,940

)

Management fees and expenses63

201

462

615

Integration and related expenses-

39

-

246

Litigation expenses1,089

1,246

3,707

1,246

TRA remeasurement180

-

180

-

Adjusted EBITDA$

6,829

$

1,495

$

18,720

$

6,505

Xponential Fitness, Inc.Reconciliations of GAAP to Non-GAAP Measures(in thousands, except share and per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020

Net loss $ (8,904 ) $ (1,883 ) $ (21,655 ) $ (8,584 )

Interest expense, net 5,512 4,475 21,073 16,650

Income taxes 103 130 387 292

Depreciation and amortization 2,376 1,956 6,838 5,653

EBITDA (913 ) 4,678 6,643 14,011

Equity-based compensation 3,530 462 4,201 1,327

Acquisition and transaction 2,880 (5,131 ) 3,527 (10,940 )expenses (income)Management fees and expenses 63 201 462 615

Integration and related - 39 - 246 expensesLitigation expenses 1,089 1,246 3,707 1,246

TRA remeasurement 180 - 180 -

Adjusted EBITDA $ 6,829 $ 1,495 $ 18,720 $ 6,505

Three Months Ended September 30,Nine Months Ended September 30,2021

2020

2021

2020

Net loss$

(8,904

)

$

(1,883

)

$

(21,655

)

$

(8,584

)

Change in fair value of contingent consideration2,880

(5,131

)

3,220

(10,940

)

TRA remeasurement180

-

180

-

Adjusted net loss$

(5,844

)

$

(7,014

)

$

(18,255

)

$

(19,524

)

Adjusted net loss attributable to noncontrolling interest$

(3,281

)

N/A

$

(15,692

)

N/A

Adjusted net loss attributable to Xponential Fitness, Inc.$

(2,563

)

N/A

$

(2,563

)

N/A

Adjusted net loss per share$

(0.31

)

N/A

$

(0.31

)

N/A

Weighted average shares of Class A common stock outstanding22,146,011

N/A

22,146,011

N/A

Adjusted net loss attributable to Xponential Fitness, Inc.$

(2,563

)

N/A

$

(2,563

)

N/A

Dividends on preferred shares(1,216

)

N/A

(1,216

)

N/A

Deemed dividend(3,172

)

N/A

(3,172

)

N/A

EPS numerator$

(6,951

)

N/A

$

(6,951

)

N/A

Note The above Adjusted Net Loss per share is computed by dividing the net loss attributable to holders of Class A common stock by the weighted-average shares of Class A common stock outstanding during the period. Shares of Class B common stock do not participate in the earnings or losses of Xponential Fitness, Inc. As a result, the shares of Class B common stock are not considered participating securities and are not included in the weighted average shares outstanding for purposes of computing pro forma loss per share. As previously noted, total share count does not include potential future shares vested upon achieving certain earn-out thresholds. Net income, however, continues to take into account the non-cash contingent liability due to Rumble.

Footnotes

1System-wide sales represent gross sales by all studios. System-wide sales includes sales by franchisees that are not revenue realized by us in accordance with GAAP. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, this operating metric relates to our revenue because we receive approximately 7% and 2% of the sales by franchisees as royalty revenue and marketing fund revenue, respectively. We believe that this operating measure aids in understanding how we derive our royalty revenue and marketing fund revenue and is important in evaluating our performance. System-wide sales growth is driven by new studio openings and increases in same store sales. Management reviews system-wide sales monthly, which enables us to assess changes in our franchise revenue, overall studio performance, the health of our brands and the strength of our market position relative to competitors.

2 Same store sales refer to period-over-period sales comparisons for the base of studios. We define the same store sales base to include studios in North America that have been open for at least 13 calendar months as of the measurement date. Any transfer of ownership of a studio does not affect this metric. We measure same store sales based solely upon monthly sales as reported by franchisees. This measure highlights the performance of existing studios, while excluding the impact of new studio openings. Management reviews same store sales to assess the health of the franchised studios.

3No comparison of Adjusted Net Loss per share to Q3 2020 is provided as such comparison is not meaningful given the Company's pre-IPO capital structure.

4We define adjusted EBITDA as EBITDA (net income/loss before interest, taxes, depreciation and amortization), adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include equity-based compensation, acquisition and transaction expenses (income) (including change in contingent consideration), management fees and expenses (that were discontinued after July 2021), integration and related expenses, litigation expenses (consisting of legal and related fees for specific proceedings that arise outside of the ordinary course of our business) and TRA remeasurement that we do not believe reflect our underlying business performance and affect comparability. EBITDA and adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that we do not believe reflect our underlying business performance. We believe that adjusted EBITDA, viewed in addition to, and not in lieu of, our reported GAAP results, provides useful information to investors regarding our performance and overall results of operations because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.

5AUV is calculated by dividing sales during the applicable period for all studios being measured by the number of studios being measured. Quarterly run-rate AUV is calculated as the quarterly AUV multiplied by four, for studios that are at least 6 months old at the beginning of the respective quarter. Monthly run-rate AUV is calculated as the monthly AUV multiplied by twelve, for studios that are at least 6 months old at the beginning of the respective month. AUV growth is primarily driven by changes in same store sales and is also influenced by new studio openings. Management reviews AUV to assess studio economics.

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CONTACT: Kimberly Esterkin Addo Investor Relations investor@xponential.com (310) 829-5400