Planet Fitness’ System-Wide Comps Decline 11 Percent In Q4

Planet Fitness Inc. reported revenues declined 30.1 percent in the fourth quarter ended December 31 with system-wide same-store sales decreasing 10.6 percent.

“With our members’ health, safety and best interests at the forefront of our decisions, combined with the strong foundation we’ve built with our franchisees over nearly two decades, Planet Fitness has been able to successfully weather the ongoing challenges created by COVID-19 thus far,” said Chris Rondeau, CEO. “We are encouraged with our start to 2021, as we have seen net member growth and improved usage, which we believe is a testament to our messaging and marketing efforts. While we anticipate the operating environment to remain volatile and unit growth to be modest in the near-term, we are increasingly optimistic about our growth opportunities as the vaccine continues to rollout and consumers increasingly return to daily activities, such as bricks and mortar fitness. This includes capitalizing on industry consolidation and more favorable real estate trends which we believe will emerge over the next several years to expand our store footprint, evolving our technological capabilities to enhance our digital engagement, and most importantly, providing our welcoming and accessible fitness offering to more people around the world.”

Fourth Quarter Fiscal 2020 Highlights

• Total revenue decreased from the prior-year period by 30.1 percent to $133.8 million.
• System-wide same-store sales decreased 10.6 percent.
• Net income attributable to Planet Fitness, Inc. was $8.7 million, or $0.11 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $29.7 million, or $0.36 per diluted share, in the prior-year period.
• Net income was $9.7 million, compared to net income of $34.3 million in the prior-year period.
• Adjusted net income(1) decreased 61.6 percent to $15.1 million, or $0.17 per diluted share, compared to $39.2 million, or $0.44 per diluted share, in the prior-year period.
• Adjusted EBITDA(1) decreased 33.3 percent to $51.1 million from $76.6 million in the prior-year period.
  41 new Planet Fitness stores were opened system-wide during the period, bringing system-wide total stores to 2,124 as of December 31, 2020.

Fiscal Year 2020 Highlights

• Total revenue decreased from the prior year by 41.0 percent to $406.6 million.
• Net income (loss) attributable to Planet Fitness, Inc. was a loss of $15.0 million, or $0.19 per diluted share, compared to income of $117.7 million, or $1.41 per diluted share, in the prior year.
• Net income (loss) was a loss of $15.2 million, compared to income of $135.4 million in the prior year.
• Adjusted net income decreased 97.9 percent to $3.1 million, or $0.04 per diluted share, compared to $146.7 million, or $1.59 per diluted share, in the prior year.
• Adjusted EBITDA decreased 57.3 percent to $120.4 million from $282.2 million in the prior year.
  130 new Planet Fitness stores were opened system-wide during the year, bringing system-wide total stores to 2,124 as of December 31, 2020.

Operating Results for the Fourth Quarter Ended December 31, 2020
For the fourth quarter of 2020, total revenue decreased $57.7 million or 30.1 percent to $133.8 million from $191.5 million in the prior-year period. By segment:

• Franchise segment revenue decreased $6.4 million or 8.8 percent to $66.9 million from $73.3 million in the prior-year period. The decrease in franchise segment revenue for the fourth quarter of 2020 is primarily a result of temporary store closures related to COVID-19, as well as reduced membership levels, and lower equipment placement revenue partially offset by higher royalties on annual fees as a result of catch-up annual fee billings from periods when stores were closed, as they reopen;
• Corporate-owned stores segment revenue decreased $2.3 million or 5.6 percent to $38.9 million from $41.2 million in the prior-year period. The $2.3 million decrease was primarily a result of temporary store closures related to COVID-19, as well as reduced membership levels, partially offset by revenue as a result of the acquisition of 12 franchisee-owned stores in December 2019 and the opening of nine new corporate-owned stores since October 1, 2019; and
• Equipment segment revenue decreased $49.0 million or 63.7 percent to $28.0 million from $77.0 million in the prior-year period, due to lower equipment sales to new and existing franchisee-owned stores primarily as a result of COVID-19, and the 12-month and 18-month extensions we gave to franchisees for all new store development and re-equipment investment obligations, respectively.
• System-wide same-store sales decreased 10.6 percent. By segment, franchisee-owned same-store sales decreased 10.6 percent and corporate-owned same-store sales decreased 11.7 percent.

For the fourth quarter of 2020, net income attributable to Planet Fitness, Inc. was $8.7 million, or $0.11 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $29.7 million, or $0.36 per diluted share, in the prior-year period. Net income was $9.7 million in the fourth quarter of 2020 compared to $34.3 million in the prior-year period. Adjusted net income decreased 61.6 percent to $15.1 million, or $0.17 per diluted share, from $39.2 million, or $0.44 per diluted share, in the prior-year period. Adjusted net income has been adjusted to reflect a normalized income tax rate of 26.6 percent for the fourth quarter of 2020 and 26.8 percent for the prior-year period and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance.

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, decreased 33.3 percent to $51.1 million from $76.6 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.

Franchise segment EBITDA decreased $7.2 million or 14.1 percent to $43.6 million. The decrease is primarily a result of temporary store closures related to COVID-19, as well as reduced membership levels;
Corporate-owned stores segment EBITDA decreased $2.8 million or 18.6 percent to $12.3 million. The decrease is primarily a result of temporary store closures related to COVID-19, as well as reduced membership levels, partially offset by a loss on reacquired franchise rights of $1.8 million in the prior-year quarter; and
Equipment segment EBITDA decreased by $15.5 million or 83.2 percent to $3.1 million, due to lower equipment sales to new and existing franchisee-owned stores primarily as a result of COVID-19, and the 12-month and 18-month extensions we gave to franchisees for all new store development and re-equipment investment obligations, respectively.

Operating Results For Fiscal Year Ended December 31, 2020
For the fiscal year ended December 31, 2020, total revenue decreased $282.2 million or 41.0 percent to $406.6 million from $688.8 million in the prior year. By segment:

• Franchise segment revenue decreased $71.4 million or 25.7 percent to $206.2 million from $277.6 million in the prior year primarily as a result of temporary store closures related to COVID-19 beginning in March 2020, as well as reduced membership levels, and lower equipment placement revenue;
• Corporate-owned stores segment revenue decreased $42.6 million or 26.6 percent to $117.1 million from $159.7 million in the prior year, primarily as a result of temporary store closures related to COVID-19 beginning in March 2020, as well as reduced membership levels, partially offset by revenue as a result of the acquisition of 16 franchisee-owned stores and the opening of 11 new corporate-owned stores since January 1, 2019.; and
• Equipment segment revenue decreased $168.2 million or 66.9 percent to $83.3 million from $251.5 million in the prior year, driven by lower equipment sales to new and existing franchisee-owned stores primarily as a result of COVID-19 related closures beginning in March 2020, and the 12-month and 18-month extensions we gave to franchisees for all new store development and re-equipment investment obligations, respectively.

For the year ended December 31, 2020, net income (loss) attributable to Planet Fitness, Inc. was a loss of $15.0 million, or $0.19 per diluted share, compared to income of $117.7 million, or $1.41 per diluted share, in the prior year. Net income (loss) was a loss of $15.2 million in 2020 compared to income of $135.4 million in the prior year. Adjusted net income decreased 97.9 percent to $3.1 million, or $0.04 per diluted share, from $146.7 million, or $1.59 per diluted share, in the prior-year period. Adjusted net income has been adjusted to reflect a normalized income tax rate of 26.6 percent for the year ended December 31, 2020 and 26.8 percent for the prior-year period and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance.

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, decreased 57.3 percent to $120.4 million from $282.2 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.

• Franchise segment EBITDA decreased $77.3 million or 40.2 percent to $115.0 million driven by COVID-19- related store closures beginning in March 2020, reduced membership levels, and higher national advertising fund expense, partially offset by lower franchise-related payroll and operational expenses;
• Corporate-owned stores segment EBITDA decreased $41.9 million or 63.9 percent to $23.7 million, driven primarily by COVID-19-related store closures beginning in March 2020, as well as reduced membership levels; and
• Equipment segment EBITDA decreased by $46.5 million or 78.0 percent to $13.1 million driven by lower equipment sales to new and existing franchisee-owned stores primarily as a result of COVID-19-related closures beginning in March 2020, and the 12-month and 18-month extensions we gave to franchisees for all new store development and re-equipment investment obligations, respectively.
  2021

Outlook
As a result of the uncertainty surrounding the COVID-19 pandemic, the company is not providing a 2021 full-year outlook at this time.

Logo courtesy Planet Fitness