Planet Fitness, Inc. Announces Second Quarter 2016 Results
- Second Quarter System-Wide Same Stores Sales Increased 7.6%
- Total Revenue Increased 15.9% to $91.5 Million
- Company Raises Full Year 2016 Outlook
NEWINGTON, N.H - Aug. 11, 2016 // PRNewswire // - Planet Fitness, Inc. (NYSE: PLNT) today reported financial results for its second quarter ended June 30, 2016.
Second Quarter Fiscal 2016 Highlights
- Total revenue increased from the prior year period by 15.9% to $91.5 million.
- System-wide same store sales increased 7.6%
- Net income was $18.1 million, or $0.11 per diluted share, compared to net income of $11.6 million in the prior year period.
- Adjusted net income(1) increased 27.5% to $16.8 million, or $0.17 per diluted share, compared to $13.2 million in the prior year period.
- Adjusted EBITDA(1) increased 18.6% to $36.8 million from $31.0 million in the prior year period.
- 36 new Planet Fitness franchise stores were opened during the period, bringing system-wide total stores to 1,206 at June 30, 2016.
(1) Adjusted net income and adjusted EBITDA are non-GAAP measures. For reconciliations of Adjusted EBITDA and Adjusted net income to U.S. GAAP ("GAAP") net income see "Non-GAAP Financial Measures" accompanying this release.
Christopher Rondeau, Chief Executive Officer, commented, "Following a strong start to the year our business accelerated during the second quarter highlighted by system-wide same store sales growth of 7.6%. We continue to successfully attract new members to our affordable, non-intimidating fitness offering, including a large percentage of first time gym users. Membership growth at our legacy stores as well as our newly opened locations are fueling strong gains in our high margin franchise segment. We believe this trend will continue as our group of well capitalized franchisees is on schedule to open a record number of new stores this year and we continue to leverage the power of our national advertising fund to drive brand awareness. We have never been more excited about the future growth prospects for Planet Fitness or as confident in the potential of our business model to drive significant long-term value for our shareholders."
Operating Results for the Second Quarter Ended June 30, 2016
For the second quarter 2016, total revenue increased $12.5 million or 15.9% to $91.5 million from $79.0 million in the prior year period. By segment:
- Franchise segment revenue, which includes commission income, increased $7.6 million or 34.7% to $29.5 million from $21.9 million in the prior year period;
- Corporate-owned stores segment revenue increased $1.4 million or 5.6% to $26.4 million from $25.0 million in the prior year period; and
- Equipment segment revenue increased $3.5 million or 10.9% to $35.6 million from $32.1 million. This increase was driven by an increase in replacement equipment sales to existing franchisee-owned stores, partially offset by a decrease in equipment sales to new franchisee-owned stores related to fewer stores opened compared to the prior year period.
- System-wide same store sales increased 7.6%. By segment, franchisee-owned same store sales increased 7.8% and corporate-owned same store sales increased 4.7%.
For the second quarter of fiscal 2016, net income was $18.1 million, or $0.11 per diluted share, compared to net income of $11.6 million in the prior year period. Adjusted net income increased 27.5% to $16.8 million, or $0.17 per diluted share, from $13.2 million, in the prior year period. Adjusted net income has been adjusted to reflect a normalized federal income tax rate of 39.5% for the current year period and 39.4% for the comparable prior year period 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 18.6% to $36.8 millionfrom $31.0 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"). Segment EBITDA:
- Franchise segment EBITDA increased $7.0 million or 39.4% to $24.7 million driven by royalties from new franchised stores opened since June 30, 2015 as well as higher same store sales and overall margin expansion;
- Corporate-owned stores segment EBITDA increased $0.2 million or 2.8% to $9.5 million driven primarily by higher revenue related to the increase in same store sales; and
- Equipment segment EBITDA increased by $0.6 million or 8.5% to $7.9 million driven by an increase in replacement equipment sales to existing franchisee-owned stores partially offset by a decrease in equipment sales to new franchisee-owned stores.
In June 2016, the Company completed a secondary offering of 11,500,000 shares of its Class A common stock at a price of $16.50 per share. All of the shares sold in the offering were offered by existing holders of limited liability company units of Pla-Fit Holdings, LLC and certain holders of Class A common stock, together referred to as the "Selling Stockholders." The Company did not receive any proceeds from the sale of shares of Class A common stock offered by the Selling Stockholders.
For the year ending December 31, 2016, the Company now expects:
- Total revenue between $366 million and $372 million;
- System-wide same store sales growth in the high-single digit range;
- Between 210 and 220 new franchised stores; and
- Adjusted net income of $62 million to $65 million, or $0.63 to $0.66 per diluted share.
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 transactions that occurred in August 2015, and in order to carry on the business of Pla-Fit Holdings, LLC and its subsidiaries ("Pla-Fit Holdings"). 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 results in periods prior to the IPO and recapitalization transactions are of Pla-Fit Holdings, as the predecessor to Planet Fitness, Inc. for accounting and reporting purposes. Accordingly, these historical results do not purport to reflect what the results of operations of Planet Fitness, Inc. or Pla-Fit Holdings would have been had the IPO and related recapitalization transactions occurred prior to such periods.
The financial information presented in this release includes non-GAAP financial measures such as EBITDA, Total 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 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 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. 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 nearest GAAP financial measure.
The non-GAAP financial measures used in our full-year outlook will differ from GAAP net income and net income per share in ways similar to those described in the reconciliations at the end of this press release. We do not provide guidance for GAAP-Reported net income per share on a forward-looking basis or a reconciliation for forward-looking Adjusted net income per share to the most directly comparable GAAP measure because we are not able to predict with reasonable certainty the ultimate amount or nature of all items that will be included as adjustments for the remainder of 2016. These items are uncertain, depend on many factors and could have a material impact on our GAAP reported results for the guidance period.
Investor Conference Call
The Company will hold a conference call at 4:30 pm (ET) on August 11, 2016 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, N.H., Planet Fitness is one of the largest and fastest-growing franchisors and operators of fitness centers in the United States by number of members and locations. As of June 30, 2016, Planet Fitness had more than 8.6 million members and 1,206 stores in 47 states, the District of Columbia, Puerto Rico, Canada and the Dominican Republic. 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.
This news release contains certain statements, approximations, estimates and projections with respect to our anticipated future performance ("forward-looking statements"), especially those under the heading "2016 Outlook." Forward-looking statements are neither historical facts nor 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 actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, risks and uncertainties associated with competition in the fitness industry, the Company's and franchisees' ability to attract and retain new members, changes in consumer demand, changes in equipment costs, the Company's ability to expand into new markets, 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 indebtedness, our corporate structure and tax receivable agreements, general economic conditions and the other factors described in the Company's annual report on Form 10-K for the year ended December 31, 2015, and the Company's other filings with the Securities and Exchange Commission. 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.
For full wide spreadsheet report, go to: [http://investor.planetfitness.com/investors/press-releases/press-release-details/2016/Planet-Fitness-Inc-Announces-Second-Quarter-2016-Results/default.aspx].
SOURCE Planet Fitness, Inc.
Media Relations - ICR