Planet Fitness, Inc. slightly raised its outlook for earnings and sales for the year as system-wide same-store sales in the third quarter ended September 30 increased 8.2 percent.

Chris Rondeau, CEO, said, “We continue our steady recovery from the pandemic, and ended the quarter with more than 16.6 million members, an all-time record high for Planet Fitness. Member trends remained strong in the quarter with joins back to historical pre-pandemic seasonality. Also, members who are visiting the gym continue to visit more frequently, and cancels are lower compared to 2019, which we believe are signs that members are generally more committed to fitness. We are focused on our efforts to continue to increase our penetration of all generations with a strong emphasis on the Gen Z demographic by converting teen participants from our recent High School Summer Pass Program, and their parents and guardians, to paying members.”

Third Quarter Fiscal 2022 Results

  • Total revenue increased from the prior year period by 58.4 percent to $244.4 million.
  • System-wide same-store sales increased 8.2 percent.
  • System-wide sales increased $98 million to $968 million, from $870 million in the prior year period.
  • Net income attributable to Planet Fitness, Inc. was $26.9 million, or $0.32 per diluted share, compared to $17.4 million, or $0.21 per diluted share, in the prior year period.
  • Net income increased $12.0 million to $30.7 million, compared to $18.6 million in the prior year period.
  • Adjusted net income increased $16.6 million to $38.2 million, or $0.42 per diluted share, compared to $21.7 million, or $0.25 per diluted share, in the prior year period.
  • Adjusted EBITDA increased $32.2 million to $93.9 million from $61.7 million in the prior year period.
  • 29 new Planet Fitness stores were opened during the period, bringing the system-wide total stores to 2,353 as of September 30, 2022.
  • Repurchased and retired approximately 831,029 shares of Class A common stock using $50 million of cash on hand.
  • Cash of $467.2 million, which includes cash and cash equivalents of $404.5 million and restricted cash of $62.7 million.

Operating Results For Third Quarter Ended September 30, 2022
For the third quarter 2022, total revenue increased $90.1 million or 58.4 percent to $244.4 million from $154.3 million in the prior year period, which included system-wide same-store sales growth of 8.2 percent. By segment:

  • Franchise segment revenue increased $5.4 million or 7.1 percent to $80.7 million from $75.4 million in the prior year period. The increase in franchise segment revenue for the third quarter of 2022 was primarily due to a $2.8 million increase in franchise royalty revenue a $1.7 million increase in equipment placement revenue, and a $0.7 million increase in National Advertising Fund (“NAF”) revenue. Of the $2.8 million increase in franchise royalty revenue, $3.7 million was attributable to a same-store sales increase of 8.1 percent in franchisee-owned stores and $1.7 million was attributable to new stores opened since July 1, 2021. Partially offsetting the royalty revenue increases was a decrease of approximately $2.6 million primarily as a result of the stores acquired in the acquisition of Sunshine Fitness Growth Holdings, LLC in the first quarter of 2022 (the “Sunshine Acquisition”) becoming corporate-owned stores. The $1.7 million increase in placement revenue was primarily driven by higher replacement equipment placements in the three months ended September 30, 2022 compared to the three months ended September 30, 2021;
  • Corporate-owned stores segment revenue increased $57.4 million or 130.8 percent to $101.3 million from $43.9 million in the prior year period. Of the increase, $50.4 million was attributable to the acquisition of 114 stores in the Sunshine Acquisition, $3.5 million was from the corporate-owned store same-store sales increase of 9.7 percent, $3.4 million was from new stores opened since July 1, 2021; and
  • Equipment segment revenue increased $27.3 million or 78.2 percent to $62.3 million from $35.0 million in the prior year period, driven by $27.7 million of higher equipment sales to existing franchisee-owned stores in the three months ended September 30, 2022 compared to the three months ended September 30, 2021. In both the three months ended September 30, 2022 and September 30, 2021, we had equipment sales to 28 new franchisee-owned stores.

For the third quarter of 2022, net income attributable to Planet Fitness, Inc. was $26.9 million, or $0.32 per diluted share, compared to $17.4 million, or $0.21 per diluted share, in the prior year period. Net income was $30.7 million in the third quarter of 2022 compared to $18.6 million in the prior year period. Adjusted net income increased $16.6 million to $38.2 million, or $0.42 per diluted share, from $21.7 million, or $0.25 per diluted share, in the prior year period. Adjusted net income has been adjusted to reflect a normalized federal income tax rate of 25.9 percent and 26.6 percent for the current and prior year period, respectively, 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, increased $32.2 million to $93.9 million from $61.7 million in the prior year period.

  • Franchise segment EBITDA increased $1.4 million to $53.5 million. The increase in franchise segment EBITDA for the third quarter of 2022 was primarily due to the franchise revenue increases as described above, partially offset by higher NAF expenses of $1.4 million, higher franchise segment SG&A expenses of $1.4 million, and higher equipment placement expense of $1.1 million in the three months ended September 30, 2022 than in the prior year period;
  • Corporate-owned stores segment EBITDA increased $26.3 million to $40.4 million. Of the increase, $24.9 million was attributable to the corporate-owned stores acquired in the Sunshine Acquisition, $2.6 million was attributable to the same-store sales increase of 9.7 percent, and $1.3 million was attributable to the gain on sale of corporate-owned stores. Partially offsetting these increases was higher selling general and administrative expense of $2.2 million, primarily as a result of the Sunshine Acquisition; and
  • Equipment segment EBITDA increased by $7.9 million to $15.8 million primarily driven by higher equipment sales to existing franchisee-owned stores in the three months ended September 30, 2022 compared to the three months ended September 30, 2021, as described above.

Share Repurchase Program
On November 4, the company’s board of directors authorized a new $500 million share repurchase program to replace the existing share repurchase program, which was authorized in 2019 and had approximately $106 million remaining.

2022 Outlook
For the year ending December 31, 2022, the company is reiterating and updating the following expectations, which include the impact of the Sunshine Acquisition and assumes there is no significant worsening of the pandemic that seriously impacts performance, including prolonged store closures or other mandated operational restrictions:

  • New equipment placements of approximately 150-to-160 in franchisee-owned locations, previously it expected approximately 170 placements, reflecting a worsening of the HVAC supply chain issue; and
  • Continues to expect system-wide same-store sales growth in the low double-digit percentage range.

The company updated the following 2022 growth expectations over its 2021 results:

  • Revenue to increase in the high-50 percent range, previously expected growth in the mid-50 percent range;
  • Adjusted EBITDA to increase approximately 60 percent, previously expected growth in the high-50 percent range;
  • Adjusted net income to increase in the low-100 percent range, previously expected growth in the low-90 percent range; and
  • Adjusted earnings per share to increase in the mid-90 percent range, based on adjusted diluted shares outstanding of approximately 90.5 million, inclusive of the issuance of equity as part of the Sunshine Acquisition and share repurchases through the third quarter. Previously the company expected growth in the mid-80 percent range.

The company continues to expect 2022 net interest expense to be approximately $86 million which reflects its first quarter debt refinancing and upsizing.

Photo courtesy Planet Fitness