Planet Fitness Announces Second Quarter 2015 Results – Second Quarter Total Revenue Increased 26% to $79.0 Million

Posted: September 3, 2015 in Chains

Planet Fitness

NEWINGTON, N.H. – Planet Fitness, Inc. (NYSE: PLNT) reported financial results for its second quarter ended June 30, 2015.

Second Quarter Fiscal 2015 Highlights

Total revenue increased from the prior year period by 25.9% to $79.0 million.
System-wide same store sales increased 7.3%.
Net income was $11.5 million compared to $8.8 million in the prior year period.
Pro forma adjusted net income(1) increased 28.9% to $12.9 million, or $0.13 per diluted share, compared to $10.0 million, or $0.10 per diluted share in the prior year period.
Adjusted EBITDA(1) increased 27.5% to $31.0 million from $24.3 million in the prior year period.
38 new Planet Fitness stores added system-wide during the period.

1) Pro forma adjusted net income and adjusted EBITDA are non-GAAP measures. For reconciliations of adjusted EBITDA and pro forma adjusted net income to GAAP net income see “Non-GAAP Financial Measures” accompanying this release.

Christopher Rondeau, Chief Executive Officer, commented, “We are very pleased with our second quarter performance, which was highlighted by solid sales growth, strong margins and the opening of our 1,000th store. Our recent results demonstrate the strength of our unique business model and we are confident that our focus on providing a high-quality fitness experience at an exceptional price point will continue to resonate with a broader consumer audience. With our strong group of well-capitalized and experienced franchisees, we believe we have a sound plan in place to expand our store footprint and drive significant growth and shareholder value over the long-term.”

Rondeau continued, “Having been with Planet Fitness for over 20 years, it was incredibly rewarding to reach another major milestone with the recent completion of our initial public offering. I’m very excited to begin the next chapter in the company’s history.”

Operating Results for the Second Quarter Ended June 30, 2015

For the second quarter 2015, total revenue increased 25.9% to $79.0 million from $62.7 million in the prior year period. By segment:

Franchise segment revenue, which includes commission income, increased 18.7% to $21.9 million from $18.4 million in the prior year period;
Corporate-owned stores segment revenue increased 11.4% to $25.0 million from $22.4 million in the prior year period; and,
Equipment segment revenue increased 47.0% to $32.1 million from $21.8 million.

System-wide same store sales increased 7.3%. By segment, franchisee-owned same store sales increased 7.8% and corporate-owned same store sales increased 0.9%.

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 27.5% to $31.0 million from $24.3 million in the prior year period. By segment:

Franchise segment EBITDA increased 21.4% to $17.7 million, including the negative impact of $0.4 million of non-recurring expenses related to a recent transition of the company’s point-of-sale billing and processing (POS) system;
Corporate-owned stores segment EBITDA increased 11.3% to $9.3 million; and,
Equipment segment EBITDA increased 62.3% to $7.2 million.

Net income for the second quarter of fiscal 2015 increased by 30.1% to $11.5 million from $8.8 million in the prior year period. Pro forma adjusted net income (see “Non-GAAP Financial Measures”) increased 28.9% to $12.9 million, or $0.13 per diluted share, from $10.0 million, or $0.10 per diluted share, in the prior year period.

During the second quarter of 2015, we added 38 new Planet Fitness stores, bringing the system-wide total stores to 1,014 at June 30, 2015.

Operating Results for the Six Months Ended June 30, 2015

For the six months ended June 30, 2015, total revenue increased 29.6% to $155.9 million from $120.3 million in the prior year period. By segment:

Franchise segment revenue, which includes commission income, increased 24.9% to $43.6 million from $34.9 million in the prior year period;
Corporate-owned stores segment revenue increased 20.9% to $48.5 million from $40.1 million in the prior year period; and,
Equipment segment revenue increased 40.9% to $63.7 million from $45.2 million.

System-wide same store sales increased 9.0%. By segment, franchisee-owned same store sales increased 9.6% and corporate-owned same store sales increased 2.5%.

Adjusted EBITDA (see “Non-GAAP Financial Measures”) increased 27.8% to $59.5 million in the six month period from $46.5 million in the prior year period. By segment:

Franchise segment EBITDA increased 14.0% to $31.3 million, including the negative impact of $4.0 million of non-recurring expenses related to a recent transition of the company’s point-of-sale billing and processing (POS) system;
Corporate-owned stores segment EBITDA increased 15.6% to $17.1 million; and,
Equipment segment EBITDA increased 47.7% to $14.0 million.

Net income increased by 33.8% to $19.9 million from $14.9 million in the prior year period. Pro forma adjusted net income (see “Non-GAAP Financial Measures”) increased 37.6% to $25.3 million, or $0.26 per diluted share, from $18.4 million, or $0.19 per diluted share, in the prior year period.

Initial Public Offering

On August 11, 2015, Planet Fitness successfully completed its initial public offering (“IPO”) at $16.00 per share. A total of 15,525,000 shares of common stock were sold to the underwriters, including 2,025,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional shares.

Outlook

For the year ending December 31, 2015, the Company currently expects:

Total revenue between $314 million and $316 million;
System-wide same store sales growth between 7.0% and 7.5%;/li>
Between 187 and 191 new franchised stores and 3 new corporate stores; and,/li>
Pro forma adjusted net income of $46.5 million to $47.5 million, or $0.47 to $0.48 per diluted share./li>

Presentation of Financial Measures

This press release presents historical results, for the periods presented, of Pla-Fit Holdings, LLC, the predecessor to Planet Fitness, Inc. for financial reporting purposes (together with Planet Fitness, Inc., referred to as “Planet Fitness” or the “Company”). The financial results of Planet Fitness, Inc. have not been included in this press release as it is a recently incorporated entity and had no material assets or liabilities and no material business transactions or activities during the periods presented. Accordingly, these historical results do not purport to reflect what the results of operations of Planet Fitness, Inc. or Pla-Fit Holdings, LLC 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, adjusted EBITDA, pro forma adjusted net income and pro forma adjusted net income per diluted share 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, pro forma adjusted net income and pro forma adjusted net income per diluted share. The Company’s presentation of adjusted EBITDA, pro forma adjusted net income, and pro forma net income per diluted share 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 adjusted EBITDA and pro forma adjusted net income to their nearest GAAP financial measure.

The non-GAAP financial measures used in our full-year outlook will differ from U.S. GAAP net income and net income per share in ways similar to those described in the reconciliations at the end of this press release.

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