Planet Fitness, Inc. Announces Third Quarter 2024 Results

Increases 2024 revenue and Adjusted EBITDA outlook

Initiated new $500 million share repurchase program upon $280 million share repurchase completion

Appointed Jay Stasz as Chief Financial Officer, effective November 15, 2024

HAMPTON, N.H., Nov. 7, 2024 /PRNewswire/ -- Today, Planet Fitness, Inc. (NYSE:PLNT) reported financial results for its third quarter ended September 30, 2024.

"We delivered solid results in the quarter, including more than 5 percent revenue growth, approximately 3 percent net income growth and approximately 10 percent Adjusted EBITDA growth, and are raising our outlook for certain key financial targets," said Colleen Keating, Chief Executive Officer. "During the quarter, I had the opportunity to address franchisees, club employees, and our team members at our franchisee conference. This was an important opportunity to reinforce our strategic priorities of redefining our brand, enhancing member experience, refining our product, and accelerating club openings, which we expect will drive our next phase of growth. The enthusiasm the franchisees showed was highly encouraging. We also achieved a significant milestone by raising the price of our Classic Card membership to $15 for new members, marking the first increase in over 25 years, underscoring the tremendous value that we continue to offer our members. I am energized by our purpose of enhancing people's lives and creating a healthier world and believe it sets us, our franchisees, and our shareholders up for long-term success."

Third Quarter Fiscal 2024 Highlights 

Total revenue increased from the prior year period by 5.3% to $292.2 million.

System-wide same club sales (which was historically referred to as "same store sales") increased 4.3%.

System-wide sales increased to $1.2 billion from $1.1 billion in the prior year period.

Net income attributable to Planet Fitness, Inc. was $42.0 million, or $0.50 per diluted share, compared to $39.1 million, or $0.46 per diluted share, in the prior year period.

Net income increased $1.1 million to $42.4 million, compared to $41.3 million in the prior year period.

Adjusted net income(1) increased $2.9 million to $54.7 million, or $0.64 per diluted share(1), compared to $51.8 million, or $0.59 per diluted share, in the prior year period.

Adjusted EBITDA(1) increased $11.2 million to $123.1 million from $111.9 million in the prior year period.

21 new Planet Fitness clubs were opened system-wide during the period, which included 12 franchisee-owned and 9 corporate-owned clubs, bringing system-wide total clubs to 2,637 as of September 30, 2024.

Cash and marketable securities of $530.7 million, which includes cash and cash equivalents of $298.8 million, restricted cash of $67.8 million and marketable securities of $164.2 million as of September 30, 2024.

(1) Adjusted net income, Adjusted EBITDA and Adjusted net income per share, diluted are non-GAAP measures. For reconciliations of Adjusted EBITDA and Adjusted net income to U.S. GAAP ("GAAP") net income and a computation of Adjusted net income per share, diluted, see "Non-GAAP Financial Measures" accompanying this press release.

Operating Results for the Third Quarter Ended September 30, 2024

For the third quarter of 2024, total revenue increased $14.7 million or 5.3% to $292.2 million from $277.6 million in the prior year period, including system-wide same club sales growth of 4.3%. By segment:

Franchise segment revenue increased $4.3 million or 4.3% to $102.4 million from $98.2 million in the prior year period. Of the increase, $6.0 million was due to higher royalty revenue, of which $3.2 million was attributable to a franchise same club sales increase of 4.5%, $1.6 million was attributable to new clubs opened since July 1, 2023 and $1.2 million was from higher royalties on annual fees. The increase was partially offset by a $1.5 million decrease in franchise and other fees, a $1.4 million decrease in placement revenue primarily driven by lower equipment placements, and a $0.9 million decrease in revenue associated with the sale of HVAC units to franchisees. Franchise segment revenue also includes $2.0 million of higher National Advertising Fund ("NAF") revenue;

Corporate-owned clubs (which was historically referred to as corporate-owned stores) segment revenue increased $14.9 million or 13.1% to $128.1 million from $113.2 million in the prior year period. Of the increase, $9.6 million was attributable to corporate-owned clubs included in the same club sales base, of which $4.6 million was attributable to a same club sales increase of 3.4%, $1.1 million was attributable to higher annual fee revenue and $3.9 million was attributable to other fees. Additionally, $5.3 million was from new clubs opened since July 1, 2023; and

Equipment segment revenue decreased $4.4 million or 6.7% to $61.7 million from $66.1 million in the prior year period. This decrease was primarily attributable to lower revenue from equipment sales to new franchisee-owned clubs. In the third quarter of 2024, we had equipment sales to 15 new franchisee-owned clubs compared to 22 in the prior year period.

For the third quarter of 2024, net income attributable to Planet Fitness, Inc. was $42.0 million, or $0.50 per diluted share, compared to $39.1 million, or $0.46 per diluted share, in the prior year period. Net income was $42.4 million in the third quarter of 2024 compared to $41.3 million in the prior year period. Adjusted net income increased 5.7% to $54.7 million, or $0.64 per diluted share, from $51.8 million, or $0.59 per diluted share, in the prior year period. Adjusted net income has been adjusted to reflect a normalized income tax rate of 25.8% and 25.9% for the third quarter of 2024 and 2023, respectively, and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures").

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures"), increased 10.0% to $123.1 million from $111.9 million in the prior year period.

Segment EBITDA represents our Total Segment EBITDA broken down by the Company's reportable segments. Total Segment EBITDA is equal to EBITDA, which is defined as net income before interest, taxes, depreciation and amortization (see "Non-GAAP Financial Measures").

Franchise segment EBITDA increased $5.2 million or 7.7% to $72.8 million. The increase is primarily the result of a $4.3 million increase in franchise segment revenue as described above, $1.6 million of lower selling, general and administrative expense, and $1.4 million of lower cost of revenue primarily from lower cost of HVAC units sold to franchisees, partially offset by $2.1 million of higher NAF expense;

Corporate-owned clubs segment EBITDA increased $5.8 million or 13.2% to $50.1 million. The increase was primarily attributable to $7.0 million from corporate-owned clubs included in the same club sales base, partially offset by lower EBITDA of $0.6 million from new clubs opened since July 1, 2023 and $0.6 million of higher selling, general and administrative expense.

Equipment segment EBITDA increased $2.1 million or 12.5% to $18.5 million. The increase was primarily driven by higher margin equipment sales related to an updated equipment mix as a result of the adoption of the new growth model, partially offset by lower equipment sales to new franchisee-owned clubs, as described above.

Share Repurchase Program

On June 12, 2024, we entered into a $280 million accelerated share repurchase agreement (the "ASR Agreement") with Citibank, N.A. (the "Bank"). On June 14, 2024, we paid the Bank $280 million in cash and received approximately 3.1 million shares of our Class A common stock, which were retired.

Final settlement of the ASR Agreement occurred on September 16, 2024. At final settlement, the Bank delivered 0.7 million additional shares of the Company's Class A common stock, which were retired. The final number of shares repurchased was determined based on the volume-weighted average stock price of the Company's Class A common stock of $76.88 during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreement.

On June 13, 2024, the Company's board of directors approved a share repurchase program of up to $500 million to replace the 2022 share repurchase program, which became effective on September 16, 2024 upon the completion of the ASR Agreement. As of September 30, 2024, there is $500 million remaining under the 2024 share repurchase program.

2024 Outlook

For the year ending December 31, 2024, the Company is reiterating the following expectations:

New equipment placements of approximately 120 to 130 in franchisee-owned locations

System-wide new club openings of approximately 140 to 150 locations

The following are the Company's growth expectations over its 2023 results:

System-wide same club sales in the 4% to 5% percentage range (previously 3% to 5%)

Revenue to increase in the 8% to 9% range (previously 4% to 6%)

Adjusted EBITDA to increase in the 8% to 9% range (previously 7% to 9%)

Adjusted net income to increase in the 8% to 9% range (previously 4% to 6%)

Adjusted net income per share, diluted to increase in the 11% to 12% range (previously 7% to 9%), based on adjusted diluted weighted-average shares outstanding of approximately 86.5 million, inclusive of the shares repurchased as part of the ASR Agreement.

The Company continues to expect 2024 net interest expense to be approximately $75.0 million (excluding the write-off of deferred financing costs associated with our debt refinancing transaction). It also expects capital expenditures to increase approximately 20% (previously 25%) driven by additional clubs in our corporate-owned portfolio and depreciation and amortization to increase approximately 10% (previously 11% to 12%).

Presentation of Financial Measures

Planet Fitness, Inc. (the "Company") was formed in March 2015 for the purpose of facilitating the initial public offering (the "IPO") and related recapitalization transactions that occurred in August 2015, and in order to carry on the business of Pla-Fit Holdings, LLC ("Pla-Fit Holdings") and its subsidiaries. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings' financial results and reports a non-controlling interest related to the portion of Pla-Fit Holdings not owned by the Company.

The financial information presented in this press release includes non-GAAP financial measures such as EBITDA, Segment EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted, to provide measures that we believe are useful to investors in evaluating the Company's performance. These non-GAAP financial measures are supplemental measures of the Company's performance that are neither required by, nor presented in accordance with GAAP. These financial measures should not be considered in isolation or as substitutes for GAAP financial measures such as net income or any other performance measures derived in accordance with GAAP. In addition, in the future, the Company may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted. The Company's presentation of Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted, should not be construed as an inference that the Company's future results will be unaffected by similar amounts or other unusual or nonrecurring items. See the tables at the end of this press release for a reconciliation of EBITDA, Adjusted EBITDA, Total Segment EBITDA, Adjusted net income, and Adjusted net income per share, diluted, to their most directly comparable GAAP financial measure.

The non-GAAP financial measures used in our full-year outlook will differ from net income and net income per share, diluted, determined in accordance with GAAP in ways similar to those described in the reconciliations at the end of this press release. We do not provide guidance for net income or net income per share, diluted, determined in accordance with GAAP or a reconciliation of guidance for Adjusted net income and Adjusted net income per share, diluted, to the most directly comparable GAAP measure because we are not able to predict with reasonable certainty the amount or nature of all items that will be included in our net income and net income per share, diluted, for the year ending December 31, 2024. These items are uncertain, depend on many factors and could have a material impact on our net income and net income per share, diluted, for the year ending December 31, 2024, and therefore cannot be made available without unreasonable effort.

Same club sales refers to year-over-year sales comparisons for the same club sales base of both corporate-owned and franchisee-owned clubs, which is calculated for a given period by including only sales from clubs that had sales in the comparable months of both years. We define the same club sales base to include those clubs that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same club sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned clubs.

Investor Conference Call

The Company will hold a conference call at 8:00AM (ET) on November 7, 2024 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.planetfitness.com via the "Investor Relations" link. The webcast will be archived on the website for one year.

About Planet Fitness

Founded in 1992 in Dover, NH, Planet Fitness is one of the largest and fastest-growing franchisors and operators of fitness clubs in the world by number of members and locations. As of September 30, 2024, Planet Fitness had approximately 19.6 million members and 2,637 clubs in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico, Australia and Spain. The Company's mission is to enhance people's lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone®. More than 90% of Planet Fitness clubs are owned and operated by independent business men and women.

Forward-Looking StatementsThis press release contains "forward-looking statements" within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include the Company's statements with respect to expected future performance presented under the heading "2024 Outlook," those attributed to the Company's Chief Executive Officer in this press release, the Company's expected membership growth and club growth, ability to deliver future shareholder value, and other statements, estimates and projections that do not relate solely to historical facts. Forward-looking statements can be identified by words such as "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "goal," "plan," "prospect," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "ongoing," "contemplate," "future," "strategy" and similar references to future periods, although not all forward-looking statements include these identifying words. Forward-looking statements are not assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company's control. Actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results to differ materially include competition in the fitness industry, the Company's and franchisees' ability to attract and retain members, the Company's and franchisees' ability to identify and secure suitable sites for new franchise clubs, changes in consumer demand, changes in equipment costs, the Company's ability to expand into new markets domestically and internationally, operating costs for the Company and franchisees generally, availability and cost of capital for franchisees, acquisition activity, developments and changes in laws and regulations, our substantial increased indebtedness as a result of our refinancing and securitization transactions and our ability to incur additional indebtedness or refinance that indebtedness in the future, our future financial performance and our ability to pay principal and interest on our indebtedness, our corporate structure and tax receivable agreements, failures, interruptions or security breaches of the Company's information systems or technology, general economic conditions and the other factors described in the Company's annual report on Form 10-K for the year ended December 31, 2023 and, once available, the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2024, as well as the Company's other filings with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in forward-looking statements, investors should not place undue reliance on forward-looking statements, which reflect the Company's views only as of the date of this press release. Except as required by law, neither the Company nor any of its affiliates or representatives undertake any obligation to provide additional information or to correct or update any information set forth in this release, whether as a result of new information, future developments or otherwise.

Planet Fitness, Inc. and subsidiariesCondensed Consolidated Statements of Operations (Unaudited)

Three Months Ended September30,

Nine Months Ended September30,

(in thousands, except per share amounts)

2024

2023

2024

2023

Revenue:

Franchise

$        82,873

$        80,587

$      254,783

$      237,313

National advertising fund revenue

19,542

17,578

59,442

52,378

Franchise segment

102,415

98,165

314,225

289,691

Corporate-owned clubs

128,132

113,245

375,976

332,885

Equipment

61,699

66,141

151,003

163,664

Total revenue

292,246

277,551

841,204

786,240

Operating costs and expenses:

Cost of revenue

45,701

53,751

116,628

132,561

Club operations

71,614

63,120

216,119

188,011

Selling, general and administrative

32,647

33,290

93,453

93,705

National advertising fund expense

19,720

17,618

59,624

52,496

Depreciation and amortization

41,033

37,477

120,230

110,254

Other losses (gains), net

280

(56)

698

7,705

Total operating costs and expenses

210,995

205,200

606,752

584,732

Income from operations

81,251

72,351

234,452

201,508

Other income (expense), net:

Interest income

5,610

4,245

16,687

12,339

Interest expense

(26,603)

(21,704)

(72,569)

(64,771)

Other (expense) income, net

(558)

148

1,132

631

Total other expense, net

(21,551)

(17,311)

(54,750)

(51,801)

Income before income taxes

59,700

55,040

179,702

149,707

Provision for income taxes

16,523

13,474

49,824

38,855

Losses from equity-method investments, net of tax

(782)

(242)

(3,198)

(580)

Net income

42,395

41,324

126,680

110,272

Less: net income attributable to non-controlling interests

386

2,190

1,722

7,299

Net income attributable to Planet Fitness, Inc.

$        42,009

$        39,134

$      124,958

$      102,973

Net income per share of Class A common stock:

Basic

$             0.50

$             0.46

$             1.45

$             1.22

Diluted

$             0.50

$             0.46

$             1.45

$             1.21

Weighted-average shares of Class A common stock outstanding:

Basic

84,570

84,610

86,090

84,558