Reiterates 2024 outlook Consummated $800 million refinancing transaction Executed $280 million Accelerated Share Repurchase in second quarter HAMPTON, N.H. , Aug.
6, 2024 /PRNewswire/ -- Today, Planet Fitness, Inc. (NYSE: PLNT ) reported financial results for its second quarter ended June 30, 2024. "Since I stepped into the CEO role in June, I have become even more confident and excited about my decision to join such an iconic brand, supported by a strong foundation and team, a solid base of approximately 100 franchisees, and approximately 19.
7 million members," said Colleen Keating , Chief Executive Officer. "During the quarter, we continued to demonstrate the unique strength of our asset-light, highly franchised business model by refinancing a portion of our debt and entering a $280 million accelerated share repurchase program as we strive to deliver enhanced shareholder value." Ms.
Keating continued, "As we enter our next chapter, we are committed to further defining our growth ambition and capitalizing on the meaningful opportunities across the industry both in the U.S. and internationally.
This includes maintaining a steadfast focus on delivering an unparalleled member experience, evolving our brand messaging and operating under the principle that when our franchisees win, we win. By doing so, I'm confident in our potential for long-term sustainable growth of stores and members, and our ability to deliver significant value for shareholders." Second Quarter Fiscal 2024 Highlights Total revenue increased from the prior year period by 5.
1% to $300.9 million . System-wide same store sales increased 4.
2%. 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 $48.
6 million , or $0.56 per diluted share, compared to $41.1 million , or $0.
48 per diluted share, in the prior year period. Net income increased $5.1 million to $49.
3 million , compared to $44.2 million in the prior year period. Adjusted net income (1) increased $4.
5 million to $62.2 million , or $0.71 per diluted share (1) , compared to $57.
7 million , or $0.65 per diluted share, in the prior year period. Adjusted EBITDA (1) increased $8.
6 million to $127.5 million from $118.9 million in the prior year period.
18 new Planet Fitness stores were opened system-wide during the period, which included 17 franchisee-owned and 1 corporate-owned stores, bringing system-wide total stores to 2,617 as of June 30, 2024 . Cash and marketable securities of $447.7 million , which includes cash and cash equivalents of $247.
0 million , restricted cash of $47.8 million and marketable securities of $152.9 million as of June 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 Second Quarter Ended June 30, 2024 For the second quarter of 2024, total revenue increased $14.5 million or 5.
1% to $300.9 million from $286.5 million in the prior year period, including system-wide same store sales growth of 4.
2%. By segment: Franchise segment revenue increased $8.9 million or 9.
1% to $107.8 million from $98.8 million in the prior year period.
Of the increase, $6.3 million was due to higher royalty revenue, of which $3.1 million was attributable to a franchise same store sales increase of 4.
3%, $1.8 million was attributable to new stores opened since April 1, 2023 and $1.3 million was from higher royalties on annual fees.
Franchise segment revenue also includes $2.1 million of higher National Advertising Fund ("NAF") revenue; Corporate-owned stores segment revenue increased $11.7 million or 10.
3% to $125.5 million from $113.8 million in the prior year period.
Of the increase, $6.6 million was attributable to corporate-owned stores included in the same store sales base, of which $1.9 million was attributable to a same store sales increase of 4.
0%, $1.9 million was attributable to higher annual fee revenue and $2.9 million was attributable to other fees.
Additionally, $5.1 million was from new stores opened and acquired since April 1, 2023 ; and Equipment segment revenue decreased $6.2 million or 8.
4% to $67.7 million from $73.9 million in the prior year period.
Of the decrease, $4.7 million was due to lower revenue from equipment sales to new franchisee-owned stores and $1.5 million was due to lower revenue from equipment sales to existing franchisee-owned stores.
In the second quarter of 2024, we had equipment sales to 18 new franchisee-owned stores compared to 26 in the prior year period. For the second quarter of 2024, net income attributable to Planet Fitness, Inc. was $48.
6 million , or $0.56 per diluted share, compared to $41.1 million , or $0.
48 per diluted share, in the prior year period. Net income was $49.3 million in the second quarter of 2024 compared to $44.
2 million in the prior year period. Adjusted net income increased 7.8% to $62.
2 million , or $0.71 per diluted share, from $57.7 million , or $0.
65 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 second 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 7.2% to $127.
5 million from $118.9 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 $11.3 million or 17.
1% to $77.4 million . The increase is primarily the result of a $8.
9 million increase in franchise segment revenue as described above, as well as a $3.1 million legal reserve that negatively impacted the second quarter of 2023 and $1.5 million of lower selling, general and administrative expense in the second quarter of 2024, partially offset by $2.
2 million of higher NAF expense; Corporate-owned stores segment EBITDA increased $0.6 million or 1.2% to $49.
3 million . The increase was primarily attributable to $0.8 million from the corporate-owned same store sales increase of 4.
0%. Equipment segment EBITDA increased $1.4 million or 8.
4% to $18.6 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.
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. At final settlement, the Bank may be required to deliver additional shares of our Class A common stock to us, which will be retired upon delivery, or, under certain circumstances, we may be required to deliver shares of our Class A common stock or may elect to make a cash payment to the Bank.
The final number of shares to be repurchased will be determined based on the volume-weighted average stock price of our Class A common stock during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreement. Final settlement of the ASR Agreement will be completed during the third quarter of 2024. The ASR Agreement contains provisions customary for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances generally under which the ASR Agreement may be accelerated, extended or terminated early by the Bank and various acknowledgments, representations and warranties made by the parties to one another.
As of June 30, 2024, there is approximately $75.0 million remaining under the Company's 2022 share repurchase program. On June 13, 2024 , the Company's board of directors approved a share repurchase program of up to $500 million , contingent upon, and effective at, the completion of the ASR Agreement, to replace the Company's 2022 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 store openings of approximately 140 to 150 locations The Company is also reiterating the following growth expectations over its 2023 results: System-wide same store sales in the 3% to 5% percentage range Revenue to increase in the 4% to 6% range Adjusted EBITDA to increase in the 7% to 9% range Adjusted net income to increase in the 4% to 6% range Adjusted net income per share, diluted to increase in the 7% to 9% range, based on adjusted diluted weighted-average shares outstanding of approximately 86.5 million, inclusive of the shares expected to be 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 25% driven by additional stores in our corporate-owned portfolio and depreciation and amortization to increase in the 11% to 12% range. 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 store sales refers to year-over-year sales comparisons for the same store sales base of both corporate-owned and franchisee-owned stores, which is calculated for a given period by including only sales from stores that had sales in the comparable months of both years. We define the same store sales base to include those stores that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same store sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned stores.
Investor Conference Call The Company will hold a conference call at 8:00AM (ET) on August 6, 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 centers in the world by number of members and locations.
As of June 30, 2024 , Planet Fitness had approximately 19.7 million members and 2,617 stores in all 50 states, the District of Columbia , Puerto Rico , Canada , Panama , Mexico and Australia . 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 stores are owned and operated by independent business men and women. Forward-Looking Statements This 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 store growth, share repurchases and the timing thereof, 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 stores, 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 June 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 subsidiaries Non-GAAP Financial Measures (Unaudited) To supplement its condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: EBITDA, Total Segment EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted (collectively, the "non-GAAP financial measures"). The Company believes that these non-GAAP financial measures, when used in conjunction with GAAP financial measures, are useful to investors in evaluating our operating performance. These non-GAAP financial measures presented in this release 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 unusual or nonrecurring items.
EBITDA, Segment EBITDA and Adjusted EBITDA We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our operating performance and we believe these measures are useful to investors in evaluating our performance. We have also disclosed Segment EBITDA as an important financial metric utilized by the Company to evaluate performance and allocate resources to segments in accordance with ASC 280, Segment Reporting . We define EBITDA as net income before interest, taxes, depreciation and amortization.
Segment EBITDA sums to Total Segment EBITDA which is equal to the Non-GAAP financial metric EBITDA. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our segments as well as the business as a whole. Our Board of Directors also uses EBITDA as a key metric to assess the performance of management.
We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company's core operations. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors. Adjusted Net Income and Adjusted Net Income per Diluted Share Our presentation of Adjusted net income assumes that all net income is attributable to Planet Fitness, Inc.
, which assumes the full exchange of all outstanding Holdings Units for shares of Class A common stock of Planet Fitness, Inc., adjusted for certain non-cash and other items that we do not believe directly reflect our core operations. Adjusted net income per share, diluted, is calculated by dividing Adjusted net income by the total weighted-average shares of Class A common stock outstanding plus any dilutive options and restricted stock units as calculated in accordance with GAAP and assuming the full exchange of all outstanding Holdings Units and corresponding Class B common stock as of the beginning of each period presented.
Adjusted net income and Adjusted net income per share, diluted, are supplemental measures of operating performance that do not represent and should not be considered alternatives to net income and earnings per share, as calculated in accordance with GAAP. We believe Adjusted net income and Adjusted net income per share, diluted, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of net income, the most directly comparable GAAP measure, to Adjusted net income, and the computation of Adjusted net income per share, diluted, are set forth below.
SOURCE Planet Fitness, Inc..
