Xponential Fitness secures $10 million in additional loans

Xponential Fitness , Inc. (NYSE:XPOF), a leader in the fitness and wellness sector, has amended its credit agreement, securing an additional $10 million in term loans, as disclosed in a recent SEC 8-K filing. The amendment, effective as of Monday, extends the maturity date of its credit facilities to August 1, 2027. According to InvestingPro data, this financing comes at a crucial time as the company’s short-term obligations currently exceed its liquid assets, though analysts expect net income growth this year.

The Irvine, California-based company, which operates under various fitness brands, entered into the eighth amendment of its financing agreement with Wilmington Trust, National Association, and affiliated lenders, including entities related to MSD Partners. While the company maintains impressive gross profit margins, InvestingPro analysis shows the stock has experienced significant volatility, currently trading near its 52-week low.

The additional funds provided by the Eighth Amendment Incremental Term Loans are earmarked for general corporate purposes. These include bolstering working capital, addressing lease liabilities, and covering legal expenses linked to regulatory matters that the company has previously reported.

According to the terms of the amendment, Xponential Fitness is required to maintain a minimum consolidated EBITDA of $100 million at the end of each fiscal quarter, starting from the date of the amendment. The amendment also imposes a cap on addbacks for non-recurring legal fees and related costs due to regulatory and special committee matters at $30 million in total from January 1, 2024, to March 31, 2025, and at $1 million per month from April 1, 2025, to March 31, 2026.

Additionally, the company has agreed to an upfront fee of 3% on both the current outstanding loan principal and the new incremental term loans, which will be capitalized and added to the loan principal. An exit fee of approximately $7.25 million is also stipulated, payable at the earlier of the final maturity date or when all loans under the credit agreement are repaid or prepaid.

This strategic financial maneuver is designed to strengthen the company’s financial position, ensuring liquidity and operational flexibility. The full details of the amendment will be included in Xponential Fitness’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2025.

Investors and interested parties should note that this report is based on a press release statement and should refer to the forthcoming Form 10-Q for a comprehensive understanding of the terms and implications of the amendment. For deeper insights into XPOF’s financial health and future prospects, InvestingPro subscribers can access 12 additional key insights, detailed financial metrics, and comprehensive analysis through the Pro Research Report, part of the platform’s coverage of over 1,400 US stocks.

In other recent news, Xponential Fitness Inc. reported a significant earnings miss for Q4 2024, with an earnings per share (EPS) of -$0.19, falling short of the projected $0.38. However, the company’s revenue slightly exceeded expectations, reaching $83.2 million compared to the forecast of $81.42 million. The company also reported a net loss of $62.5 million for the quarter. For the full year, Xponential Fitness achieved a modest 1% revenue growth, totaling $320.3 million, and a 16% increase in adjusted EBITDA, amounting to $116.2 million.

Additionally, Piper Sandler, Jefferies, and Stifel have recently revised their ratings and price targets for Xponential Fitness. Piper Sandler adjusted the price target down to $9 while maintaining a Neutral rating, citing challenges in the company’s 2025 outlook. Jefferies lowered its price target to $32 but kept a Buy rating, expressing confidence in the company’s long-term potential despite current market concerns. Meanwhile, Stifel downgraded the stock to Hold and reduced the price target to $12, highlighting operational challenges and financial restatements as key concerns.

These developments indicate a period of restructuring and strategic adjustments for Xponential Fitness, as the company plans to open 200-220 new studios globally in 2025 and focus on franchisee profitability with a target EBITDA margin of 20-25%.

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