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Planet Fitness, Inc. Announces Third Quarter 2017 Results

Posted: November 7, 2017 in Chains

Planet FitnessPlanet Fitness

HAMPTON, N.H. – Planet Fitness, Inc. (NYSE: PLNT) reported financial results for its third quarter ended September 30, 2017.

Third Quarter Fiscal 2017 Highlights

  • Total revenue increased from the prior year period by 12.1% to $97.5 million.
  • System-wide same store sales increased 9.3%.
  • Net income attributable to Planet Fitness, Inc. was $15.3 million, or $0.18 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $3.4 million, or $0.08 per diluted share in the prior year period.
  • Net income was $18.9 million, compared to net income of $14.9 million in the prior year period.
  • Adjusted net income(1) increased 17.9% to $18.7 million, or $0.19 per diluted share, compared to $15.9 million, or $0.16 per diluted share in the prior year period.
  • Adjusted EBITDA(1) increased 22.4% to $43.4 million from $35.4 million in the prior year period.
  • 31 new Planet Fitness franchise stores were opened during the period, bringing system-wide total stores to 1,432 as of September 30, 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.

“The strong top and bottom line momentum we generated during the first half of the year carried into the third quarter highlighted by a 9.3% increase in system-wide same store sales and earnings per share that exceeded expectations,” commented Christopher Rondeau, Chief Executive Officer. “With the increased brand awareness and reach of our welcoming, non-intimidating fitness offering combined with our asset-light business model that includes our fast-growing, high-margin franchise segment, we continue to expand market share and generate significant profitability and cash flow. While this year marks Planet Fitness’ 25th anniversary, I believe we are just beginning to scratch the surface of the Company’s full potential. My optimism is fueled by the long runway for store growth, the financial and operational strength of our franchisees, our growing national advertising fund and ability to continue to attract casual and first time gym users to our unique fitness experience, and the growing consumer shift towards health and wellness. I am confident that we are well positioned to capitalize on the many opportunities that lie ahead, deliver a strong finish to the year, and increase shareholder value over the long-term.”

Operating Results for the Third Quarter Ended September 30, 2017

For the third quarter 2017, total revenue increased $10.5 million or 12.1% to $97.5 million from $87.0 million in the prior year period. By segment:

  • Franchise segment revenue, which includes commission income, increased $8.3 million or 30.6% to $35.6 million from $27.2 million in the prior year period;
  • Corporate-owned stores segment revenue increased $1.9 million or 7.1% to $28.6 million from $26.7 million in the prior year period; and
  • Equipment segment revenue increased $0.3 million or 0.8% to $33.4 million from $33.1 million in the prior year period.

System-wide same store sales increased 9.3%. By segment, franchisee-owned same store sales increased 9.6% and corporate-owned same store sales increased 5.1%.

For the third quarter of 2017, net income was $18.9 million, or $0.18 per diluted share, compared to net income of $14.9 million, or $0.08 per diluted share, in the prior year period. Adjusted net income increased 17.9% to $18.7 million, or $0.19 per diluted share, from $15.9 million, or $0.16 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 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 22.4% to $43.4 million from $35.4 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”).

  • Franchise segment EBITDA increased $7.1 million or 31.2% to $29.9 million driven by royalties from new franchised stores opened since September 30, 2016, increased royalty rate and higher same store sales;
  • Corporate-owned stores segment EBITDA increased $1.5 million or 14.2% to $12.0 million driven primarily by higher monthly and annual revenue, including an increase in same store sales, and improved operating margin; and
  • Equipment segment EBITDA increased by $0.5 million or 7.4% to $7.7 million driven by an increase in replacement equipment sales to existing franchisee-owned stores.

2017 Outlook

For the year ending December 31, 2017, the Company now expects:

  • Total revenue between $425 million and $430 million;
  • System-wide same store sales growth in the 9.5% to 10% range; and
  • Adjusted net income of $79 million to $81 million, or $0.80 to $0.82 per diluted share.

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