Xponential Fitness files with US authorities for initial public offering

Xponential Fitness, owner of multiple exercise brands including Club Pilates, CycleBar and Pure Barre, has filed a form with the United States Securities and Exchange Commission for an initial public offering.

As advised in a media release earlier this week, the California-based business, which operates in 48 states and 10 international markets, filed to trade under the symbol XPOF on the New York Stock Exchange (NYSE).

However, Xponential indicated on the form that it will sell shares of its Class A common stock, seeking US$100 million through the IPO. The form did not state how many shares it will offer or the price point for those shares.

It does state that will anticipates selling US$200 million of convertible preferred stock to MSD Partners, which is an affiliate of Dell Technologies founder Michael Dell, who has a net worth of US$50.7 billion, which, according to Forbes, makes him the 30th richest person in the world.

The owner of nine franchised brands - AKT, Club Pilates, CycleBar, Pure Barre, Row House, Rumble, StretchLab, STRIDE and YogaSix - the group has 1,775 locations and 1,400 franchisees serving 850,000 consumers as of March this year.

Revenue from the public offering will go to repay debt.

2020 revenue for Xponential was US$106.6 million, a 17.5% decrease from 2019. The company had system-wide sales of US$560 million and US$442 million in 2019 and 2020, respectively, and US$160 million and $132 million for the three months ended 31st March 2020 and 2021, respectively. The company generated average quarterly same store sales growth of 7% over the nine quarters ended 31st March 2020 and experienced a decline of 14% over the nine quarters ended 31st March 2021.

The filing notes that Xponential’s models are designed to generate, on average, and average unit volume of “$500,000 in year two of operations and studio-level operating margins ranging between 25 percent and 30%, resulting in an unlevered cash-on-cash return of approximately 40%” for franchisees.

As of 31st March 2021, franchisees were contractually committed to open an additional 1,391 studios in North America and an additional 693 studios in nine other countries. The company estimates it could have about 6,900 studios in the United States.

Xponential is headed by Anthony Geisler, who previously owned LA Boxing before selling it to UFC Gyms in late 2012. He then purchased Club Pilates in 2015, building it from 80 franchise territories to 475 before selling it to private equity firm TPG in 2017.

Geisler later came back to Club Pilates with Mark Grabowski, who had been a TPG partner, to buy out TPG’s stake in Club Pilates in order to start Xponential.

Image  courtesy of Club Pilates.