Embattled fitness group F45 said that more than 300 US franchise sales have been cancelled due to the collapse of external financing last month, but it assured investors that financiers remain supportive of its operations as it reported a $US38.5 million ($54.8 million) loss for the June quarter.
Releasing its results after Wall Street closed, the Mark Wahlberg-backed group reported revenue of just over $US30 million for the quarter, with $US19.1 million coming from franchisee fees, but the lack of third-party financing has hit its growth.
Mark Wahlberg with F45 CEO and co-founder Adam Gilchrist at the NYSE float last year.Credit:AP
“In total franchises, sales declined by 175 in the (US) region. The franchises sold in the US will comprise of 132 gross franchise sales, less 307 terminations during the quarter,” said F45’s interim chief executive Ben Coates.
“The terminations were due to the inability of franchisees to access the financing facilities, we announced that the end of (the first quarter).”
F45 said another 300 multi-unit franchise sales are still in the pipeline – comprising 45 per cent of its sales backlog – and said it does not believe this entire block of sales would be “eliminated” by the collapse of financing.
The Australian-founded group which listed on the New York Stock Exchange in July last year has seen its share price collapse more than 90 per cent. This followed a disastrous downgrade last month that forced the departure of its high-profile chief executive Adam Gilchrist (not the cricketer) and half its staff as the company slashed sales and earnings forecasts and warned it might not stay within its debt covenants.
Coates, and chief financial officer Chris Payne, said the group is on track to stem losses and generate free cash flow this year and confirmed it “won’t go anywhere near tripping debt covenants” despite a massive rise in debt levels.
Last month, F45’s share price tumbled as low as $US1.35, more than 90 per cent below the $US16 paid by investors in July last year. Shares are 2 per cent lower at $US1.98 in after-hours trading.
Forecasts for selling 1,500 franchises this year have evaporated. F45 is now targeting as few as 350 franchises.
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