Fitness International LLC

Overview Key strengths Key risks Good geographic diversity within the U.S. and Canada High fixed cost structure, which could hurt margins during an economic downturn. Clustering club count in existing markets. Minimal headroom under its fixed-charge coverage covenant in 2023. Historical financial policy of using cash flow base to fund club development and debt repayment. Elevated leverage and the risk that leverage could remain above 6x. Our base-case macroeconomic outlook continues to expect an economic slowdown in the second half of the year. This could cause membership growth trends to slow down as people cut down on expenses and members trade down to value options to save money. However, the U.S. job market remains robust, as evidenced by still-strong employment

...We expect modest revenue growth for Fitness International LLC in fiscal 2023 despite worsening macroeconomic conditions. Our base-case macroeconomic outlook continues to expect an economic slowdown in the second half of the year. This could cause membership growth trends to slow down as people cut down on expenses and members trade down to value options to save money. However, the U.S. job market remains robust, as evidenced by still- strong employment numbers in June, and global unemployment remains low. There is an ongoing shift toward consumer spending on experiences and in-person fitness options. In...

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