Planet Fitness, Inc. Announces First Quarter 2017 Results
- First Quarter System-Wide Same Store Sales Increased 11.1%
- 54 New Planet Fitness Stores Opened System-Wide in First Quarter
- Dorvin Lively Promoted from Chief Financial Officer to President and Chief Financial Officer of Planet Fitness, Inc.
- Company Raises Full Year 2017 Outlook
NEWINGTON, N.H. - May 2, 2017 // PRNewswire // - Planet Fitness, Inc. (NYSE: PLNT) today reported financial results for its first quarter ended March 31, 2017.
First Quarter Fiscal 2017 Highlights
- Total revenue increased from the prior year period by 9.3% to $91.1 million.
- System-wide same store sales increased 11.1%.
- Net income increased 9.3% to $17.9 million, or $0.14 per diluted share, compared to net income of $16.3 million, or $0.09 per diluted share in the prior year period.
- Adjusted net income(1) increased 21.2% to $18.4 million, or $0.19 per diluted share, compared to $15.2 million, or $0.15 per diluted share in the prior year period.
- Adjusted EBITDA(1) increased 23.3% to $42.3 million from $34.3 million in the prior year period.
54 new Planet Fitness stores were opened system-wide compared to 48 in the year ago period, bringing system-wide total stores to 1,367 at March 31, 2017.
(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 press release.
Christopher Rondeau, Chief Executive Officer, commented, "There were several highlights from the first quarter that continue to underscore the growing popularity of our fitness offering and reinforce the strength of our business model. We added over 1.2 million net new members during the first three months of 2017 to surpass 10 million members system-wide. This increase was driven by the expansion efforts of our franchisees over the past year, including 54 new store openings and double digit same store sales growth during the quarter. Strong revenue and net income growth was fueled primarily by our high margin Franchise segment and contributed significantly to the Company's robust cash flow generation. With approximately 1,000 new stores scheduled to open in the next 5 years, combined with our growing national and local advertising spend, we are confident that we'll continue to be successful in attracting more and more first time and casual gym users to Planet Fitness."
Operating Results for the First Quarter Ended March 31, 2017
For the first quarter of 2017, total revenue increased $7.8 million or 9.3% to $91.1 million from $83.3 million in the prior year period. By segment:
- Franchise segment revenue, which includes commission income, increased $9.1 million or 33.0% to $36.8 million from $27.7 million in the prior year period;
- Corporate-owned stores segment revenue increased $1.3 million or 5.2% to $27.0 million from $25.7 million in the prior year period; and
- Equipment segment revenue decreased $2.7 million or 9.0% to $27.3 million from $30.0 million. This decrease was driven by fewer equipment placements in connection with new franchisee-owned store openings versus the prior year period, partially offset by an increase in replacement equipment sales to existing franchisee-owned stores.
System-wide same store sales increased 11.1%. By segment, franchisee-owned same store sales increased 11.5% and corporate-owned same store sales increased 4.5%.
For the first quarter of 2017, net income was $17.9 million, or $0.14 per diluted share, compared to net income of $16.3 million, or $0.09 per diluted share in the prior year period. Adjusted net income (see "Non-GAAP Financial Measures") increased 21.2% to $18.4 million, or $0.19 per diluted share, from $15.2 million, or $0.15 per diluted share, 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 23.3% to $42.3 million from $34.3 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").
Executive Leadership Promotion
The Company announced that Dorvin Lively, currently Chief Financial Officer of Planet Fitness, has been promoted and will now serve as President and Chief Financial Officer effective immediately. In this newly created position, Lively will oversee the brand's technology and real estate and development functions, as well as its corporate stores, in addition to his ongoing oversight of all finance related functions.
Rondeau, commented, "Dorvin has been instrumental in the successful expansion of our brand since joining Planet Fitness in 2013. During his tenure as Chief Financial Officer, we have more than doubled the number of stores system-wide while achieving strong financial returns for our franchisees, and more recently our shareholders. The Board of Directors and I are confident that Dorvin's experience and deep knowledge of our business will prove invaluable as we execute the Company's growth strategies."
Rondeau continued, "My passion for the Planet Fitness brand and my commitment to bringing affordable and non-intimidating health and wellness to millions of people has never been stronger. We have an exciting future ahead, and with Dorvin's well-deserved promotion, I look forward to increasing my focus on brand growth, long-term strategic initiatives, and franchisee and shareholder returns."
- For the year ending December 31, 2017, the Company now expects:
- Total revenue between $405 million and $415 million;
- System-wide same store sales growth in the 7% to 8% range; and
- Adjusted net income of $73 million to $76 million, or $0.74 to $0.77 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 recapitalization transactions that occurred in August 2015, and in order to carry on the business of Pla-Fit Holdings, LLC ("Pla-Fit Holdings") and its subsidiaries. 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 information presented in this press release includes non-GAAP financial measures such as EBITDA, 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 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 in isolation or 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 similar amounts or other 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 most directly comparable GAAP financial measure.
The non-GAAP financial measures used in our full-year outlook will differ from net income and net income per share, diluted, determined in accordance with GAAP in ways similar to those described in the reconciliations at the end of this press release. We do not provide guidance for net income or net income per share, diluted, determined in accordance with GAAP or a reconciliation of guidance for Adjusted net income and Adjusted net income per share, diluted, to the most directly comparable GAAP measure because we are not able to predict with reasonable certainty the amount or nature of all items that will be included in our net income and net income per share, diluted, for the year ended December 31, 2017. These items are uncertain, depend on many factors and could have a material impact on our net income and net income per share, diluted, for the year ended December 31, 2017.
Investor Conference Call
The Company will hold a conference call at 4:30 pm (ET) on May 2, 2017 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 March 31, 2017, Planet Fitness had approximately 10.1 million members and 1,367 stores in 48 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 95% of Planet Fitness stores are owned and operated by independent business men and women.
This press release contains certain statements, approximations, estimates and projections with respect to our anticipated future performance, especially those under the heading "2017 Outlook," ("forward-looking statements"). 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 our actual results to differ materially include 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, 2016, and the Company's other filings with the Securities and Exchange Commission. Except as required by law, 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 press release, whether as a result of new information, future developments or otherwise.
For full spreadsheet report, please go to: [http://investor.planetfitness.com/investors/press-releases/press-release-details/2017/Planet-Fitness-Inc-Announces-First-Quarter-2017-Results/default.aspx].
SOURCE Planet Fitness, Inc.