KEY POINTS

  • Adam Gilchrist, the company’s founder and CEO, is leaving his position.
  • The firm is letting go of 110 workers.
  • The company also reduced its guidance for the year.

What’s going on with F45 Stock

F45 Training stock took a dive on Wednesday after the fitness club chain announced that its president, CEO, and chairman was stepping down from those positions. It is also reducing staff and drastically lowering its guidance for the year.

Consequently, shares of F45 Training Holdings (NYSE:FXLV) ended the day down 61.7%.

Why we care

According to Entrepreneur, F45 Training, the world’s fastest-growing fitness franchisor, has made several strategic changes in response to decreasing macroeconomic circumstances.

First, founder and CEO Adam Gilchrist resigned. Gilchrist will continue to serve on the board of directors, but the board will choose a new chair. Ben Coates, an independent director, has been named interim CEO until the board finds a permanent one. Gilchrist’s resignation should not come as a surprise given the stock’s dramatic slide since it went public last year.

The company also stated that it will cut 110 workers. Thus, lowering selling, general, and administrative expenses by $15 million to $20 million each quarter, or 40% to 50% from their first-quarter levels. Chief Financial Officer Chris Payne explained:

“We are taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions…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.”

What now

The company also reduced its forecasts. That was due to the fact that franchise financing arrangements totaling $250 million were no longer available. As a result, the firm expects to sell 350 to 450 new franchises this year, down from an initial estimate of 1500. It also slashed income expectations from a range of $255 million to $275 million to a range of $120 million to $130 million. Moreover, F45 reduced its adjusted EBITDA guidance from $90 million to $100 million to $25 million to $30 million.

If F45’s earlier guidance was unrealistic, the firm might be under tremendous strain from the macroeconomic climate, including its own stock price decline. Given that F45’s rapid expansion is slowing and its approach is in chaos, it’s no surprise that F45 stock took a dive on Wednesday.

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