Planet Fitness Inc. (NYSE: PLNT) raised its annual guidance October 26, after reporting its same-store up 10 percent in the third quarter ended September 30, boosting revenue up 26.4 percent to $87 million with significant higher profits.
The budget gym’s net income for the quarter came in at $14.9 million, or 8 cents per diluted share, compared to a net income of $700,000, or 4 cents per diluted share, in the prior-year period.
“Our business continues to get stronger,” said Planet Fitness CEO Christopher Rondeau. “The combination of our affordable, non-intimidating fitness offering and increased national and local advertising spend, which continues to increase with each incremental new join, is fueling greater brand awareness in all markets and membership growth across the store base.”
Rondeau continued, “Based on our performance and, more importantly, the long runway for growth ahead of us, we are also announcing that we are seeking to amend our credit facilities to, among other things, increase the size of our term loan. Proceeds from the incremental borrowings, plus cash on our balance sheet, will enable us to consider a special cash dividend to holders of our Class A common stock and other equivalent payments, including payments to unit holders of Pla-Fit Holdings LLC. of up to approximately $280 million.”
By segment, Planet Fitness’ franchise business, which includes commission income, increased sales 37.5 percent to $27.2 million in the third quarter on a 10.3-percent increase in same-store sales. Its corporate-owned stores segment revenue rose 6.1 percent to $26.7 million on a 5.4-percent increase in same-store sales. Equipment segment revenue increased 38.7 percent to $33.1 million from $23.9 million in the prior-year period. The increase was driven by equipment sales to new franchisee-owned stores related to more new equipment sales compared to the prior-year period and an increase in replacement equipment sales to existing franchisee-owned stores.
Looking ahead for the year ending December 31, 2016, the company now expects:
- Total revenue between $373 million and $378 million, versus a pervious projection of between $366 million and $372 million.
- System-wide same-store sales growth in the high-single-digit range, unchanged from its previous estimate.
- Adjusted net income between $65 million to $66 million, or 66 cents to 67 cents per diluted share, versus its previous outlook of adjusted net income between $62 million to $65 million, or 63 cents to 66 cents per diluted share.
Photo courtesy Planet Fitness