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Planet Fitness, Inc. Announces Second Quarter 2024 Results

August 6, 2024

Reiterates 2024 outlook
Consummated $800 million refinancing transaction
Executed $280 million Accelerated Share Repurchase in second quarter

HAMPTON, N.H., Aug. 6, 2024 /PRNewswire/ --  Today, Planet Fitness, Inc. (NYSE: PLNT) reported financial results for its second quarter ended June 30, 2024.

"Since I stepped into the CEO role in June, I have become even more confident and excited about my decision to join such an iconic brand, supported by a strong foundation and team, a solid base of approximately 100 franchisees, and approximately 19.7 million members," said Colleen Keating, Chief Executive Officer. "During the quarter, we continued to demonstrate the unique strength of our asset-light, highly franchised business model by refinancing a portion of our debt and entering a $280 million accelerated share repurchase program as we strive to deliver enhanced shareholder value."

Ms. Keating continued, "As we enter our next chapter, we are committed to further defining our growth ambition and capitalizing on the meaningful opportunities across the industry both in the U.S. and internationally. This includes maintaining a steadfast focus on delivering an unparalleled member experience, evolving our brand messaging and operating under the principle that when our franchisees win, we win. By doing so, I'm confident in our potential for long-term sustainable growth of stores and members, and our ability to deliver significant value for shareholders." 

Second Quarter Fiscal 2024 Highlights

  • Total revenue increased from the prior year period by 5.1% to $300.9 million.
  • System-wide same store sales increased 4.2%.
  • System-wide sales increased to $1.2 billion from $1.1 billion in the prior year period.
  • Net income attributable to Planet Fitness, Inc. was $48.6 million, or $0.56 per diluted share, compared to $41.1 million, or $0.48 per diluted share, in the prior year period.
  • Net income increased $5.1 million to $49.3 million, compared to $44.2 million in the prior year period.
  • Adjusted net income(1) increased $4.5 million to $62.2 million, or $0.71 per diluted share(1), compared to $57.7 million, or $0.65 per diluted share, in the prior year period.
  • Adjusted EBITDA(1) increased $8.6 million to $127.5 million from $118.9 million in the prior year period.
  • 18 new Planet Fitness stores were opened system-wide during the period, which included 17 franchisee-owned and 1 corporate-owned stores, bringing system-wide total stores to 2,617 as of June 30, 2024.
  • Cash and marketable securities of $447.7 million, which includes cash and cash equivalents of $247.0 million, restricted cash of $47.8 million and marketable securities of $152.9 million as of June 30, 2024.

(1) Adjusted net income, Adjusted EBITDA and Adjusted net income per share, diluted are non-GAAP measures. For reconciliations of Adjusted EBITDA and Adjusted net income to U.S. GAAP ("GAAP") net income and a computation of Adjusted net income per share, diluted, see "Non-GAAP Financial Measures" accompanying this press release.

Operating Results for the Second Quarter Ended June 30, 2024

For the second quarter of 2024, total revenue increased $14.5 million or 5.1% to $300.9 million from $286.5 million in the prior year period, including system-wide same store sales growth of 4.2%. By segment:

  • Franchise segment revenue increased $8.9 million or 9.1% to $107.8 million from $98.8 million in the prior year period. Of the increase, $6.3 million was due to higher royalty revenue, of which $3.1 million was attributable to a franchise same store sales increase of 4.3%, $1.8 million was attributable to new stores opened since April 1, 2023 and $1.3 million was from higher royalties on annual fees. Franchise segment revenue also includes $2.1 million of higher National Advertising Fund ("NAF") revenue;
  • Corporate-owned stores segment revenue increased $11.7 million or 10.3% to $125.5 million from $113.8 million in the prior year period. Of the increase, $6.6 million was attributable to corporate-owned stores included in the same store sales base, of which $1.9 million was attributable to a same store sales increase of 4.0%, $1.9 million was attributable to higher annual fee revenue and $2.9 million was attributable to other fees. Additionally, $5.1 million was from new stores opened and acquired since April 1, 2023; and
  • Equipment segment revenue decreased $6.2 million or 8.4% to $67.7 million from $73.9 million in the prior year period. Of the decrease, $4.7 million was due to lower revenue from equipment sales to new franchisee-owned stores and $1.5 million was due to lower revenue from equipment sales to existing franchisee-owned stores. In the second quarter of 2024, we had equipment sales to 18 new franchisee-owned stores compared to 26 in the prior year period.

For the second quarter of 2024, net income attributable to Planet Fitness, Inc. was $48.6 million, or $0.56 per diluted share, compared to $41.1 million, or $0.48 per diluted share, in the prior year period. Net income was $49.3 million in the second quarter of 2024 compared to $44.2 million in the prior year period. Adjusted net income increased 7.8% to $62.2 million, or $0.71 per diluted share, from $57.7 million, or $0.65 per diluted share, in the prior year period. Adjusted net income has been adjusted to reflect a normalized income tax rate of 25.8% and 25.9% for the second quarter of 2024 and 2023, respectively, 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 7.2% to $127.5 million from $118.9 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 $11.3 million or 17.1% to $77.4 million. The increase is primarily the result of a $8.9 million increase in franchise segment revenue as described above, as well as a $3.1 million legal reserve that negatively impacted the second quarter of 2023 and $1.5 million of lower selling, general and administrative expense in the second quarter of 2024, partially offset by $2.2 million of higher NAF expense;
  • Corporate-owned stores segment EBITDA increased $0.6 million or 1.2% to $49.3 million. The increase was primarily attributable to $0.8 million from the corporate-owned same store sales increase of 4.0%.
  • Equipment segment EBITDA increased $1.4 million or 8.4% to $18.6 million. The increase was primarily driven by higher margin equipment sales related to an updated equipment mix as a result of the adoption of the new growth model.

Share Repurchase Program

On June 12, 2024, we entered into a $280 million accelerated share repurchase agreement (the "ASR Agreement") with Citibank, N.A. (the "Bank"). On June 14, 2024, we paid the Bank $280 million in cash and received approximately 3.1 million shares of our Class A common stock, which were retired.

At final settlement, the Bank may be required to deliver additional shares of our Class A common stock to us, which will be retired upon delivery, or, under certain circumstances, we may be required to deliver shares of our Class A common stock or may elect to make a cash payment to the Bank. The final number of shares to be repurchased will be determined based on the volume-weighted average stock price of our Class A common stock during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreement. Final settlement of the ASR Agreement will be completed during the third quarter of 2024. The ASR Agreement contains provisions customary for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances generally under which the ASR Agreement may be accelerated, extended or terminated early by the Bank and various acknowledgments, representations and warranties made by the parties to one another. As of June 30, 2024, there is approximately $75.0 million remaining under the Company's 2022 share repurchase program.

On June 13, 2024, the Company's board of directors approved a share repurchase program of up to $500 million, contingent upon, and effective at, the completion of the ASR Agreement, to replace the Company's 2022 share repurchase program.

2024 Outlook

For the year ending December 31, 2024, the Company is reiterating the following expectations:

  • New equipment placements of approximately 120 to 130 in franchisee-owned locations
  • System-wide new store openings of approximately 140 to 150 locations

The Company is also reiterating the following growth expectations over its 2023 results:

  • System-wide same store sales in the 3% to 5% percentage range
  • Revenue to increase in the 4% to 6% range
  • Adjusted EBITDA to increase in the 7% to 9% range
  • Adjusted net income to increase in the 4% to 6% range
  • Adjusted net income per share, diluted to increase in the 7% to 9% range, based on adjusted diluted weighted-average shares outstanding of approximately 86.5 million, inclusive of the shares expected to be repurchased as part of the ASR Agreement.

The Company continues to expect 2024 net interest expense to be approximately $75.0 million (excluding the write-off of deferred financing costs associated with our debt refinancing transaction). It also expects capital expenditures to increase approximately 25% driven by additional stores in our corporate-owned portfolio and depreciation and amortization to increase in the 11% to 12% range.

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 ending December 31, 2024. 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 ending December 31, 2024, and therefore cannot be made available without unreasonable effort.

Same store sales refers to year-over-year sales comparisons for the same store sales base of both corporate-owned and franchisee-owned stores, which is calculated for a given period by including only sales from stores that had sales in the comparable months of both years. We define the same store sales base to include those stores that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same store sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned stores.

Investor Conference Call

The Company will hold a conference call at 8:00AM (ET) on August 6, 2024 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, NH, Planet Fitness is one of the largest and fastest-growing franchisors and operators of fitness centers in the world by number of members and locations. As of June 30, 2024, Planet Fitness had approximately 19.7 million members and 2,617 stores in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia. 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.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include the Company's statements with respect to expected future performance presented under the heading "2024 Outlook," those attributed to the Company's Chief Executive Officer in this press release, the Company's expected membership growth and store growth, share repurchases and the timing thereof, ability to deliver future shareholder value, and other statements, estimates and projections that do not relate solely to historical facts. Forward-looking statements can be identified by words such as "anticipate," "believe," "envision," "estimate," "expect," "intend," "may," "goal," "plan," "prospect," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue," "ongoing," "contemplate," "future," "strategy" and similar references to future periods, although not all forward-looking statements include these identifying words. Forward-looking statements are not 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 competition in the fitness industry, the Company's and franchisees' ability to attract and retain members, the Company's and franchisees' ability to identify and secure suitable sites for new franchise stores, changes in consumer demand, changes in equipment costs, the Company's ability to expand into new markets domestically and internationally, 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 increased indebtedness as a result of our refinancing and securitization transactions and our ability to incur additional indebtedness or refinance that indebtedness in the future, our future financial performance and our ability to pay principal and interest on our indebtedness, our corporate structure and tax receivable agreements, failures, interruptions or security breaches of the Company's information systems or technology, general economic conditions and the other factors described in the Company's annual report on Form 10-K for the year ended December 31, 2023 and, once available, the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2024, as well as the Company's other filings with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in forward-looking statements, investors should not place undue reliance on forward-looking statements, which reflect the Company's views only as of the date of this press release. 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 release, whether as a result of new information, future developments or otherwise.

 

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Statements of Operations 
(Unaudited)




Three Months Ended June 30,


Six Months Ended June 30,

(in thousands, except per share amounts)


2024


2023


2024


2023

Revenue:









Franchise


$        87,676


$        80,846


$      171,910


$      156,726

National advertising fund revenue


20,114


17,996


39,900


34,800

Franchise segment


107,790


98,842


211,810


191,526

Corporate-owned stores


125,466


113,759


247,844


219,640

Equipment


67,685


73,862


89,304


97,523

Total revenue


300,941


286,463


548,958


508,689

Operating costs and expenses:









Cost of revenue


51,934


59,457


70,927


78,810

Store operations


70,152


58,876


144,505


124,891

Selling, general and administrative


31,613


32,646


60,806


60,415

National advertising fund expense


20,112


17,890


39,904


34,878

Depreciation and amortization


39,817


36,767


79,197


72,777

Other (gains) losses, net


(66)


3,825


418


7,761

Total operating costs and expenses


213,562


209,461


395,757


379,532

Income from operations


87,379


77,002


153,201


129,157

Other income (expense), net:









Interest income


5,616


4,163


11,077


8,094

Interest expense


(24,533)


(21,468)


(45,966)


(43,067)

Other income, net


1,043


370


1,690


483

Total other expense, net


(17,874)


(16,935)


(33,199)


(34,490)

Income before income taxes


69,505


60,067


120,002


94,667

Provision for income taxes


18,977


15,814


33,301


25,381

Losses from equity-method investments, net of tax


(1,216)


(73)


(2,416)


(338)

Net income


49,312


44,180


84,285


68,948

Less: net income attributable to non-controlling interests


672


3,045


1,336


5,109

Net income attributable to Planet Fitness, Inc.


$        48,640


$        41,135


$        82,949


$        63,839

Net income per share of Class A common stock:









Basic


$             0.56


$             0.49


$             0.95


$             0.76

Diluted


$             0.56


$             0.48


$             0.95


$             0.75

Weighted-average shares of Class A common stock
outstanding:









Basic


86,809


84,618


86,859


84,532

Diluted


86,955


84,908


87,083


84,850

 

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Balance Sheets 
(Unaudited)


(in thousands, except per share amounts)


June 30, 2024


December 31, 2023

Assets





Current assets:





Cash and cash equivalents


$               246,961


$               275,842

Restricted cash


47,800


46,279

Short-term marketable securities


103,197


74,901

Accounts receivable, net of allowances for uncollectible amounts of $0 and $0 as of June 30,
     2024 and December 31, 2023, respectively


41,334


41,890

Inventory


5,200


4,677

Restricted assets - national advertising fund


12,268


Prepaid expenses


15,910


13,842

Other receivables


15,390


11,072

Income tax receivable and prepayments


5,790


3,314

Total current assets


493,850


471,817

Long-term marketable securities


49,718


50,886

Investments, net of allowance for expected credit losses of $18,246 and $17,689 as of June 30,
     2024 and December 31, 2023, respectively


75,599


77,507

Property and equipment, net of accumulated depreciation of $374,324 and $322,958, as of
     June 30, 2024 and December 31, 2023, respectively


400,239


390,405

Right-of-use assets, net


393,564


381,010

Intangible assets, net


346,993


372,507

Goodwill


719,063


717,502

Deferred income taxes


490,912


504,188

Other assets, net


4,102


3,871

Total assets


$            2,974,040


$            2,969,693

Liabilities and stockholders' deficit





Current liabilities:





Current maturities of long-term debt


$                 20,500


$                 20,750

Accounts payable


29,728


23,788

Accrued expenses


56,898


66,299

Equipment deposits


5,138


4,506

Deferred revenue, current


76,052


59,591

Payable pursuant to tax benefit arrangements, current


49,181


41,294

Other current liabilities


34,629


35,101

Total current liabilities


272,126


251,329

Long-term debt, net of current maturities


2,156,551


1,962,874

Lease liabilities, net of current portion


401,405


381,589

Deferred revenue, net of current portion


34,114


32,047

Deferred tax liabilities


1,599


1,644

Payable pursuant to tax benefit arrangements, net of current portion


424,107


454,368

Other liabilities


3,968


4,833

Total noncurrent liabilities


3,021,744


2,837,355

Stockholders' equity (deficit):





Class A common stock, $0.0001 par value, 300,000 shares authorized, 84,496 and 86,760 shares
     issued and outstanding as of June 30, 2024 and December 31, 2023, respectively


9


9

Class B common stock, $0.0001 par value, 100,000 shares authorized, 650 and 1,397 shares
      issued and outstanding as of June 30, 2024 and December 31, 2023, respectively



Accumulated other comprehensive (loss) income


(1,096)


172

Additional paid in capital


594,049


575,631

Accumulated deficit


(910,626)


(691,461)

Total stockholders' deficit attributable to Planet Fitness, Inc.


(317,664)


(115,649)

Non-controlling interests


(2,166)


(3,342)

Total stockholders' deficit


(319,830)


(118,991)

Total liabilities and stockholders' deficit


$            2,974,040


$            2,969,693

 

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)




Six Months Ended June 30,

(in thousands)


2024


2023

Cash flows from operating activities:





Net income


$               84,285


$              68,948

Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization


79,197


72,777

Amortization of deferred financing costs


2,634


2,731

Loss on extinguishment of debt


2,285


Accretion of marketable securities discount


(1,879)


(944)

Losses from equity-method investments, net of tax


2,416


338

Dividends accrued on held-to-maturity investment


(1,065)


(979)

Credit loss on held-to-maturity investment


557


95

Deferred tax expense


26,761


21,575

Gain on re-measurement of tax benefit arrangement liability


(1,349)


Loss on disposal of property and equipment


903


Loss on reacquired franchise rights



110

Equity-based compensation expense


2,847


4,793

Other


397


(51)

Changes in operating assets and liabilities, net of acquisitions:





Accounts receivable


380


(781)

Inventory


(544)


(1,580)

Other assets and other current assets


(6,313)


4,431

Restricted assets - national advertising fund


(12,268)


(9,918)

Accounts payable and accrued expenses


(3,302)


(13,427)

Other liabilities and other current liabilities


(699)


8,312

Income taxes


(2,632)


1,368

Payments pursuant to tax benefit arrangements


(28,786)


(21,780)

Equipment deposits


632


3,654

Deferred revenue


18,653


17,313

Leases


4,838


345

Net cash provided by operating activities


167,948


157,330

Cash flows from investing activities:





Additions to property and equipment


(64,345)


(45,143)

Acquisition of franchisees, net of cash acquired



(26,264)

Purchases of marketable securities


(73,930)


(119,614)

Maturities of marketable securities


47,839


Other investments



(10,000)

Net cash used in investing activities


(90,436)


(201,021)

Cash flows from financing activities:





Proceeds from issuance of long-term debt


800,000


Proceeds from issuance of Class A common stock


9,808


8,372

Principal payments on capital lease obligations


(72)


(107)

Repayment of long-term debt


(599,437)


(10,375)

Payment of deferred financing and other debt-related costs


(12,055)


Repurchase and retirement of Class A common stock


(300,205)


(125,030)

Distributions paid to members of Pla-Fit Holdings


(1,732)


(3,736)

Net cash used in financing activities


(103,693)


(130,876)

Effects of exchange rate changes on cash and cash equivalents


(1,179)


728

Net decrease in cash, cash equivalents and restricted cash


(27,360)


(173,839)

Cash, cash equivalents and restricted cash, beginning of period


322,121


472,499

Cash, cash equivalents and restricted cash, end of period


$             294,761


$            298,660

Supplemental cash flow information:





Cash paid for interest


$               40,814


$              40,693

Net cash paid for income taxes


$                9,168


$                2,763

Non-cash investing activities:





Non-cash additions to property and equipment included in accounts payable and accrued expenses


$               18,645


$              15,058

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)

To supplement its condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: EBITDA, Total Segment EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted (collectively, the "non-GAAP financial measures"). The Company believes that these non-GAAP financial measures, when used in conjunction with GAAP financial measures, are useful to investors in evaluating our operating 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 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 unusual or nonrecurring items.

EBITDA, Segment EBITDA and Adjusted EBITDA

We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our operating performance and we believe these measures are useful to investors in evaluating our performance. We have also disclosed Segment EBITDA as an important financial metric utilized by the Company to evaluate performance and allocate resources to segments in accordance with ASC 280, Segment Reporting. We define EBITDA as net income before interest, taxes, depreciation and amortization. Segment EBITDA sums to Total Segment EBITDA which is equal to the Non-GAAP financial metric EBITDA. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our segments as well as the business as a whole. Our Board of Directors also uses EBITDA as a key metric to assess the performance of management. We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company's core operations. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors.

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)


A reconciliation of net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA is set forth below.



Three Months Ended June 30,


Six Months Ended June 30,

(in thousands)

2024


2023


2024


2023

Net income

$           49,312


$           44,180


$           84,285


$           68,948

Interest income

(5,616)


(4,163)


(11,077)


(8,094)

Interest expense

24,533


21,468


45,966


43,067

Provision for income taxes

18,977


15,814


33,301


25,381

Depreciation and amortization

39,817


36,767


79,197


72,777

EBITDA

127,023


114,066


231,672


202,079

Purchase accounting adjustments-revenue(1)

42


247


62


333

Purchase accounting adjustments-rent(2)

171


184


342


288

Loss on reacquired franchise rights(3)


110



110

Transaction fees and acquisition-related costs(4)




394

Severance costs(5)


1,220


1,602


1,220

Executive transition costs(6)

1,348



1,631


Legal matters(7)


2,950



6,250

Loss (gain) on adjustment of allowance for credit losses
on held-to-maturity investment(8)

82


(160)


557


95

Dividend income on held-to-maturity investment(9)

(537)


(496)


(1,065)


(979)

Tax benefit arrangement remeasurement(10)

(987)



(1,349)


Amortization of basis difference of equity-method
investments(11)

240



469


Other(12)

121


818


(107)


(640)

Adjusted EBITDA

$         127,503


$         118,939


$         233,814


$         209,150


(1) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred area development agreement fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected up front but recognizes for GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.

(2) Represents the impact of rent related purchase accounting adjustments. In accordance with guidance in ASC 805—Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. The rent related purchase accounting adjustments are adjustments to rent expense recorded in store operations on our condensed consolidated statements of operations, which reflect the difference between the higher rent expense recorded in accordance with GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred as well as the amortization of favorable and unfavorable lease intangible assets.

(3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned stores. The loss recorded under U.S. GAAP represents the difference between the fair value and the contractual terms of the reacquired franchise rights and is included in other (gains) losses, net on our condensed consolidated statement of operations.

(4) Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned stores.

(5) Represents severance related expenses recorded in connection with a reduction in force during the six months ended June 30, 2024 and the elimination of the President and Chief Operating Officer position during the three and six months ended June 30, 2023.

(6) Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for and stock based compensation associated with certain equity awards granted to the Company's new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

(7) Represents costs associated with legal matters in which the Company was a defendant. In 2023, this represents an increase in the legal reserve related to preliminary terms of a settlement agreement (the "Preliminary Settlement Agreement"). The legal reserve liability was subsequently paid in 2023.

(8) Represents a loss (gain) on the adjustment of the allowance for credit losses on the Company's held-to-maturity investment.

(9) Represents dividend income recognized on a held-to-maturity investment.

(10) Represents gains related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.

(11) Represents the amortization expense of the Company's pro-rata portion of the basis difference in its equity method investees, which is included within losses from equity-method investments, net of tax on our condensed consolidated statements of operations.

(12) Represents certain other gains and charges that we do not believe reflect our underlying business performance.

 

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)


A reconciliation of Segment EBITDA to Total Segment EBITDA is set forth below.



Three Months Ended June 30,


Six Months Ended June 30,

(in thousands)

2024


2023


2024


2023

Segment EBITDA








Franchise segment

$          77,409


$          66,101


$         153,720


$         130,835

Corporate-owned stores segment

49,296


48,705


91,400


82,235

Equipment segment

18,575


17,129


23,335


22,700

Corporate and other(1)

(18,257)


(17,869)


(36,783)


(33,691)

Total Segment EBITDA(2)

$        127,023


$        114,066


$         231,672


$         202,079


(1) "Corporate and other" primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services that are not directly attributable to any individual segment.

(2) Total Segment EBITDA is equal to EBITDA, which is a metric that is not presented in accordance with GAAP. Refer to "—Non-GAAP Financial Measures" for a definition of EBITDA and a reconciliation to net income, the most directly comparable GAAP measure.

Adjusted Net Income and Adjusted Net Income per Diluted Share 

Our presentation of Adjusted net income assumes that all net income is attributable to Planet Fitness, Inc., which assumes the full exchange of all outstanding Holdings Units for shares of Class A common stock of Planet Fitness, Inc., adjusted for certain non-cash and other items that we do not believe directly reflect our core operations. Adjusted net income per share, diluted, is calculated by dividing Adjusted net income by the total  weighted-average shares of Class A common stock outstanding plus any dilutive options and restricted stock units as calculated in accordance with GAAP and assuming the full exchange of all outstanding Holdings Units and corresponding Class B common stock as of the beginning of each period presented. Adjusted net income and Adjusted net income per share, diluted, are supplemental measures of operating performance that do not represent and should not be considered alternatives to net income and earnings per share, as calculated in accordance with GAAP. We believe Adjusted net income and Adjusted net income per share, diluted, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period.

A reconciliation of net income, the most directly comparable GAAP measure, to Adjusted net income, and the computation of Adjusted net income per share, diluted, are set forth below.

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)

 



Three Months Ended June 30,


Six Months Ended June 30,

(in thousands, except per share amounts)

2024


2023


2024


2023

Net income

$           49,312


$           44,180


$           84,285


$           68,948

Provision for income taxes

18,977


15,814


33,301


25,381

Purchase accounting adjustments-revenue(1)

42


247


62


333

Purchase accounting adjustments-rent(2)

171


184


342


288

Loss on reacquired franchise rights(3)


110



110

Transaction fees and acquisition-related costs(4)




394

Severance costs(5)


1,220


1,602


1,220

Executive transition costs(6)

1,348



1,631


Legal matters(7)


2,950



6,250

Loss (gain) on adjustment of allowance for credit losses
     on held-to-maturity investment(8)

82


(160)


557


95

Dividend income on held-to-maturity investment(9)

(537)


(496)


(1,065)


(979)

Tax benefit arrangement remeasurement(10)

(987)



(1,349)


Amortization of basis difference of equity-method
investments(11)

240



469


Loss on extinguishment of debt(12)

2,285



2,285


Other(13)

121


818


(107)


(640)

Purchase accounting amortization(14)

12,758


12,954


25,515


25,531

Adjusted income before income taxes

83,812


77,821


147,528


126,931

Adjusted income taxes(15)

21,645


20,156


38,101


32,875

Adjusted net income

$           62,167


$           57,665


$         109,427


$           94,056

Adjusted net income per share, diluted

$               0.71


$                0.65


$               1.24


$               1.05

Adjusted weighted-average shares outstanding,
diluted(16)

87,685


89,092


88,036


89,444


(1) Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred area development agreement fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected up front but recognizes for GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.

(2) Represents the impact of rent related purchase accounting adjustments. In accordance with guidance in ASC 805—Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. The rent related purchase accounting adjustments are adjustments to rent expense recorded in store operations on our condensed consolidated statements of operations, which reflect the difference between the higher rent expense recorded in accordance with GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred as well as the amortization of favorable and unfavorable lease intangible assets.

(3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned stores. The loss recorded under U.S. GAAP represents the difference between the fair value and the contractual terms of the reacquired franchise rights and is included in other (gains) losses, net on our condensed consolidated statement of operations.

(4) Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned stores.

(5) Represents severance related expenses recorded in connection with a reduction in force during the six months ended June 30, 2024 and the elimination of the President and Chief Operating Officer position during the three and six months ended June 30, 2023.

(6) Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for and stock based compensation associated with certain equity awards granted to the Company's new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

(7) Represents costs associated with legal matters in which the Company was a defendant. In 2023, this represents an increase in the legal reserve, net of legal fees paid, related to the Preliminary Settlement Agreement. The legal reserve liability was subsequently paid in 2023.

(8) Represents a loss (gain) on the adjustment of the allowance for credit losses on the Company's held-to-maturity investment.

(9) Represents dividend income recognized on a held-to-maturity investment.

(10) Represents gains related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.

(11) Represents the amortization expense of the Company's pro-rata portion of the basis difference in its equity method investees, which is included within losses from equity-method investments, net of tax on our condensed consolidated statements of operations.

(12) Represents the write-off of deferred financing costs associated with the repayment of the 2018-1 Class A-2-II notes prior to the anticipated repayment date.

(13) Represents certain other gains and charges that we do not believe reflect our underlying business performance.

(14) Includes $3.1 million for both the three months ended June 30, 2024 and 2023 and $6.2 million for both the six months ended June 30, 2024 and 2023 of amortization of intangible assets recorded in connection with the 2012 Acquisition, other than favorable leases, and $9.7 million and $9.9 million for the three months ended June 30, 2024 and 2023, respectively, and $19.3 million for both the six months ended June 30, 2024 and 2023, of amortization of intangible assets created in connection with historical acquisitions of franchisee-owned stores. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with GAAP, in each period.

(15) Represents corporate income taxes at an assumed effective tax rate of 25.8% for both the three and six months ended June 30, 2024 and 25.9% for both the three and six months ended June 30, 2023 applied to adjusted income before income taxes.

(16) Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc.

 

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)


A reconciliation of net income per share, diluted, to Adjusted net income per share, diluted is set forth below:



Three Months Ended June 30, 2024


Three Months Ended June 30, 2023

(in thousands, except per share
amounts)

Net income


Weighted
Average Shares


Net income per
share, diluted


Net income


Weighted
Average Shares


Net income
per share, diluted

Net income attributable to Planet
Fitness, Inc.(1)

$       48,640


86,955


$              0.56


$       41,135


84,908


$              0.48

Net income attributable to non-
controlling interests(2)

672


730




3,045


4,184



Net income

49,312






44,180





Adjustments to arrive at adjusted
income before income taxes(3)

34,500






33,641





Adjusted income before income
taxes

83,812






77,821





Adjusted income taxes(4)

21,645






20,156





Adjusted net income

$       62,167


87,685


$              0.71


$       57,665


89,092


$              0.65



Six Months Ended June 30, 2024


Six Months Ended June 30, 2023

(in thousands, except per share
amounts)

Net income


Weighted
Average Shares


Net income per
share, diluted


Net income


Weighted
Average Shares


Net income per
share, diluted

Net income attributable to Planet
Fitness, Inc.(1)

$       82,949


87,083


$              0.95


$       63,839


84,850


$              0.75

Net income attributable to non-
controlling interests(2)

1,336


953




5,109


4,594



Net income

84,285






68,948





Adjustments to arrive at adjusted
income before income taxes(3)

63,243






57,983





Adjusted income before income
taxes

147,528






126,931





Adjusted income taxes(4)

38,101






32,875





Adjusted net income

$     109,427


88,036


$              1.24


$       94,056


89,444


$              1.05


(1) Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares of Class A common stock outstanding.

(2) Represents net income attributable to non-controlling interests and the assumed exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. as of the beginning of the period presented.

(3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes.

(4) Represents corporate income taxes at an assumed effective tax rate of 25.8% for both the three and six months ended June 30, 2024 and 25.9% for both the three and six months ended June 30, 2023 applied to adjusted income before income taxes.

 

Planet Fitness (PRNewsfoto/Planet Fitness, Inc.)

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SOURCE Planet Fitness, Inc.