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Executives at embattled fitness group F45 said they are comfortable it will survive despite running down its cash reserves and relying on its debt facilities to stay afloat in recent months.
The company’s global expansion plans have taken a further hit, with F45 reporting more than 300 US franchise sales have been cancelled due to the collapse of external financing last month - and another 300 are in doubt. 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.
Mark Wahlberg with F45 CEO and co-founder Adam Gilchrist at the NYSE float last year.Credit:AP
“It’s very important to stress that we believe that we have sufficient liquidity and will generate sufficient cash flow through the remainder of the year to meet our manager obligations and operating needs,” F45 chief financial officer, Chris Payne, told analysts and investors on a conference call on Tuesday morning.
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.
“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 in the pipeline – comprising 45 per cent of its sales backlog – requires access to financing facilities but contends that this entire block of sales would not be “eliminated” by the collapse of financing.
“It’s very important to stress that we believe that we have sufficient liquidity and will generate sufficient cash flow through the remainder of the year to meet our manager obligations and operating needs.”
F45 chief financial officer, Chris Payne
“A number of these franchise partners are working with unaffiliated third party lenders to secure financing to support their development plan. As a result, we do not currently believe that the entire remaining balance of these commitments will be terminated,” Payne said.