Quarterly Report
Q4 2024
“The Alturas Business Fund experienced one of the most exciting quarters…”
TSAOB Acquisition
Arizona
Closed on December 5th
Approved by the accrediting agency and under final review by Dept. of Ed.
Current owners are helping to transition through Q2 of 2025
Focused on driving enrollments and improving the student experience
Elevating the current management team and supporting with Alturas Ventures resources
Stated returns are average annualized investor returns. Individual investor returns may vary based on the unit pricing at the time of investment. Realized net income includes realized gains and losses and excludes unrealized gains and losses recorded during the period. Financial information herein related to the quarters ended in 2024 are unaudited as of the date of this report.
Realized Returns
*Distributions since inception includes Q3 2024 distributions paid on 09/30/2024.
Stated returns are average annualized investor returns. Individual investor returns may vary based on the unit pricing at the time of investment. Realized net income includes realized gains and losses and excludes unrealized gains and losses recorded during the period. Financial information herein related to the quarters ended in 2024 are unaudited as of the date of this report.
Realized Returns
The Studio Academy of Beauty
Introduction
The Alturas Business Fund acquired The Studio Academy of Beauty on December 5th, 2024. While there were only 26 days of operations under new ownership, there was a significant amount of work to ensure that the acquisition went smoothly and that integration got off on the right footing.
Accrediting agency and Dept. of Education
• A significant portion of the initial few weeks of ownership saw the team working to complete required actions by our accrediting agency and the Department of Education. In particular, the Same Day Balance Sheet audit and Gainful Employment report required significant attention but were successfully submitted.
Elevation of staff and building out the leadership team
• As we did with Idaho Fitness Factory, we are elevating the existing operational team and providing support in finance and accounting, marketing, and expansion. The teams are meshing well and the collaboration is off to a strong start. We are working together to build out the operating system and leadership team.
Q1 Priorities
• As we head into the new year, we are prioritizing the team and ensuring a smooth transition.
• We also are hyper focused on generating leads and enrolling new students to set the company up for success for 2025.
• While the three current locations are working, we also engaged with brokers in the Phoenix area to look for potential replacement locations and new locations with an eye for the future.
Conclusion
The acquisition went smoothly and integration is off to a strong start. However, the financial performance in Q4 of 2024 has a negative impact on overall performance and returns. This is due to two main factors.
From the time we purchased the school on Dec. 5th, to the end of December, students were only in class for 12 days. Unlike the gym, where revenue is collected monthly regardless of holidays, the school earns revenue on a student clock-hour basis. This means that only when a student actually clocks in and attends class does the school recognize the revenue for their tuition on an hourly basis. Given the holiday season, this revenue was low compared to the rest of the year but in line with historical performance.
Additionally, there are new accounting standards in place that require the full expense of deal costs at the time of acquisition. This deal required unique outside consulting to complete the same day balance sheet audit. We also consulted with several law firms that are well versed in the industry to ensure we complied with the complex regulatory environment. Expensing these items in 2024 during our 26 days of ownership had an outside impact on financial performance.
However, the school performed as expected from a revenue and operating expense perspective and 2025 is already off to a strong start.
$5.62M
Annual Rent
Idaho Fitness Factory
Introduction
The fourth quarter was an exciting period for IFF as we implemented new pricing, standardized grandfathered pricing, and opened our tenth location. These investments set up 2025 to be the best year yet for Idaho Fitness Factory and sets the company up for long term success.
Opened Victory and Eagle
• In November IFF opened its 10th location. With 1,000 presale members and 2,100 members by mid-January, the club is already breakeven and on track to out perform our projections. As the largest club in an underserved area of Boise, the club is poised to reach north of 3,500 members.
New pricing and standardization
• After our investment in 5 legacy clubs in Q3, we introduced new pricing, and standardized all of our current members to our two-tier membership types at $25 and $35. Our attrition was about 5% of members and this change increased our revenue by about $650 thousand.
Conclusion
In Q4 IFF confirmed its value proposition as a simple, affordable, and clean neighborhood gym. The low attrition after the price standardization and increase coupled with the tenth location performing above expectations bodes well for our continued growth in 2025.
Realized Returns
Member Growth Analysis
Home Club and Unlimited memberships continue to grow while Grandfathered slowly decrease. The Home Club and Unlimited membership growth continues to outpace the Grandfathered decrease which is positive.
All projections are hypothetical and predicated upon various assumptions that may or may not be identified as such. The future operating and financial performance information contained herein is for illustrative purposes and is not intended to portray any sort of targeted or anticipated returns. There can be no assurance that the Fund will achieve its investment objectives and actual performance may vary significantly.
Alturas Capital Partners, LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice.