Planet Fitness, Inc. Announces First Quarter 2017 Results
Posted: May 2, 2017 in Chains
NEWINGTON, N.H. – Planet Fitness, Inc. (NYSE: PLNT) 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.