Planet Fitness Inc. reported a loss in the third quarter ended September 30 as sales dropped 36.8 percent.

“Today over 95 percent of our locations are open with our team members working hard to deliver a safe and healthy in-store environment for our members,” said Chris Rondeau, CEO. “While our membership levels have been under some pressure, primarily, we believe, from pent up cancellations in reopened clubs following the resumption of billing, we saw positive momentum in membership joins and usage rates as a result of kick-starting our national marketing efforts in September. The results were very encouraging and therefore we are increasing our level of national marketing spend for the remainder of the year. We are also continuing to build out the features and functionality of our Planet Fitness app, further accelerating our digital efforts and improving the outstanding value proposition we offer.

In the near-term, we do expect the operating environment to remain volatile as a result of the virus, and we are proceeding appropriately with the safety of our members and staff as our number one priority. Long-term, we continue to be very confident in Planet Fitness’s growth prospects as the business is well-positioned to capitalize on the increased focus on health & wellness and industry consolidation that we believe will emerge over the next several years.”

Operating Results for the Third Quarter Ended September 30, 2020

  • For the third quarter 2020, total revenue decreased $61.4 million or 36.8 percent to $105.4 million from $166.8 million in the prior-year period which included a system-wide same-store sales decline of 5.6 percent.

By segment:

  • Franchise segment revenue decreased $7.0 million, or 10.4 percent, to $59.8 million from $66.7 million in the prior-year period. The decrease in franchise segment revenue for the third quarter 2020 is primarily a result of temporary store closures related to COVID-19 as well as reduced membership levels partially offset by higher royalties on annual fees, as a result of catch-up annual fee billings, from periods when stores were closed and as they reopen;
  • Corporate-owned stores segment revenue decreased $12.5 million, or 30.6 percent to $28.3 million, from $40.7 million in the prior-year period. The $12.5 million decrease was primarily a result of temporary store closures related to COVID-19 as well as reduced membership levels.
  • Equipment segment revenue decreased $42.0 million, or 70.8 percent, to $17.3 million from $59.4 million in the prior-year period due to lower equipment sales to new and existing franchisee-owned stores in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 primarily as a result of COVID-19, and the 12-month extension it gave to franchisees for new store development and re-equipment investment obligations;
  • For the third quarter of 2020, net loss attributable to Planet Fitness, Inc. was $3.1 million, or $0.04 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $25.8 million, or $0.31 per diluted share in the prior-year period. Net loss was $3.3 million in the third quarter of 2020 compared to net income of $29.7 million in the prior-year period. Adjusted net income decreased 95.1 percent to $1.6 million, or $0.02 per diluted share, from $33.1 million, or $0.36 per diluted share in the prior-year period. Adjusted net income has been adjusted to reflect a normalized federal income tax rate of 26.8 percent for the current year period and 26.6 percent for the comparable prior-year period and excludes certain non-cash and other items that it does not consider in the evaluation of ongoing operational performance;
  • Adjusted EBITDA, defined as net (loss) income before interest, taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that it does not consider in the evaluation of ongoing operational performance (see “Non-GAAP Financial Measures”), decreased 51.3 percent to $32.0 million from $65.7 million in the prior-year period;
  • Segment EBITDA represents its Total Segment EBITDA broken down by the company’s reportable segments. Total Segment EBITDA is equal to EBITDA which is defined as net (loss) income before interest, taxes, depreciation, and amortization (see “Non-GAAP Financial Measures”);
  • Franchise segment EBITDA decreased $13.2 million, or 29.8 percent to $31.1 million. The decrease in franchise segment EBITDA for the third quarter of 2020 is primarily as a result of temporary store closures related to COVID-19 as well as reduced membership levels; and
  • Corporate-owned stores segment EBITDA decreased $11.1 million, or 66.0 percent, to $5.7 million. The decrease in corporate-owned stores segment EBITDA for the third quarter 2020 is primarily a result of temporary store closures related to COVID-19, as well as reduced membership levels; and
  • Equipment segment EBITDA decreased by $11.5 million, or 83.5 percent, to $2.3 million driven by lower equipment sales to new and existing franchisee-owned stores in the three months ended September 30, 2020 compared to the three months ended September 30, 2019 as a result of COVID-19 and the 12-month extension it gave to franchisees for new store development and re-equipment investment obligations.

2020 Outlook
For the year ending December 31, 2020, the company previously withdrew guidance as a result of uncertainty due to COVID-19. The company is not providing an update at this time.

Photo courtesy Planet Fitness