By Senad Karaahmetovic
Shares of F45 Training (NYSE:FXLV) are trading sharply lower in premarket Wednesday after the Australian franchisor and operator of fitness centers issued a strategic update.
First, the company announced that Adam Gilchrist has stepped down as president, CEO, and chairman, but will remain on the board. FXLV said that Ben Coates, an independent director, will serve as interim CEO until a permanent CEO is appointed.
Moreover, the company cut its full-year revenue and adjusted EBITDA guidance. F45 now sees full-year revenues between $120 million and $130 million, much lower than the prior $225 million to $275 million. Adjusted EBITDA is seen between $25 million and $30 million, compared to the prior $90 million to $100 million.
“We are taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions,” said Chris Payne, CFO of F45.
“While we expect growth to continue, market dynamics are having a greater than expected impact on the ability of franchisees to obtain capital to develop new F45 locations. In addition, recent share price performance has made it challenging for franchisees to utilize financing facilities announced earlier this year.”
Finally, F45 also announced it will cut operating expenses and streamline corporate functions, which will result in a workforce cut of roughly 110 staff.
In response to yesterday’s announcement, a Macquarie analyst downgraded F45 Training from Outperform to Neutral with a price target of $4.00 (from $17.00).
"While we see how one thing led to another, the unfortunate domino effect and abrupt pivot in outlook will likely haunt shares for a while. The path forward will require steady beats and raises, and solid EBITDA, but growth is now proving slower and more organic than thought. At these levels, there could be lots of value, or there could be more downside surprises ahead – being on the sidelines is best," the analyst told clients in a note.