HAMPTON, N.H., Nov. 7, 2019 /PRNewswire/ -- Today, Planet
Fitness, Inc. (NYSE: PLNT) reported financial results for its
third quarter ended September 30,
2019.
Third Quarter Fiscal 2019 Highlights
- Total revenue increased from the prior year period by 22.1% to
$166.8 million.
- System-wide same store sales increased 7.9%.
- Net income attributable to Planet Fitness, Inc. was
$25.8 million, or $0.31 per diluted share, compared to net income
attributable to Planet Fitness, Inc. of $17.5 million, or $0.20 per diluted share in the prior year
period.
- Net income increased 45.0% to $29.7
million, compared to net income of $20.5 million in the prior year period.
- Adjusted net income(1) increased 19.5% to
$33.1 million, or $0.36 per diluted share, compared to $27.7 million, or $0.28 per diluted share in the prior year
period.
- Adjusted EBITDA(1) increased 22.2% to $65.7 million from $53.8
million in the prior year period.
- 41 new Planet Fitness stores were opened during the period,
bringing system-wide total stores to 1,899 as of September 30, 2019.
(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.
"We delivered another quarter of very solid results," stated
Chris Rondeau, Chief Executive
Officer. "High-single digit system-wide same store sales, combined
with accelerated new store openings and our franchisees' continued
commitment to re-equip their existing clubs with new equipment,
fueled a 22% increase in total revenue. The third quarter was
also highlighted by our highest-attended franchisee conference to
date with over 1,500 attendees from across the system coming
together to share ideas on how to strengthen the Planet Fitness
brand, enhance the member experience and drive new member sign
ups. Based on several factors including our experienced
franchisees and their ability to execute, the significant amount of
projected store expansion still ahead, and our increasing marketing
spend, I am confident that the business is well positioned to drive
continued growth and increased profitability."
Operating Results for the Third Quarter Ended September 30, 2019
For the third quarter 2019, total revenue increased $30.2 million or 22.1% to $166.8 million from $136.7
million in the prior year period which included system-wide
same store sales growth of 7.9%. By segment:
- Franchise segment revenue increased $11.9 million or 21.7% to $66.7 million from $54.8
million in the prior year period, driven primarily by higher
royalty revenue as a result of new stores opened since July 1, 2018, an 8.1% increase in same store
sales, and a higher average royalty rate;
- Corporate-owned stores segment revenue increased $5.3 million or 15.1% to $40.7 million from $35.4
million in the prior year period, $2.7 million of which is from corporate-owned
stores opened or acquired since July 1,
2018, and another $1.4 million
of which is from corporate-owned same store sales growth of 4.9%,
and higher annual fee revenue of $1.1
million; and
- Equipment segment revenue increased $12.9 million or 27.9% to $59.4 million from $46.4
million in the prior year period, driven by an increase in
replacement equipment sales to existing franchisee-owned
stores.
For the third quarter of 2019, net income attributable to Planet
Fitness, Inc. was $25.8 million, or
$0.31 per diluted share, compared to
net income attributable to Planet Fitness, Inc. of $17.5 million, or $0.20 per diluted share in the prior year period.
Net income was $29.7 million in the
third quarter of 2019 compared to $20.5
million in the prior year period. Adjusted net income
increased 19.5% to $33.1 million, or
$0.36 per diluted share, from
$27.7 million, or $0.28 per diluted share in the prior year period.
Adjusted net income has been adjusted to reflect a normalized
federal income tax rate of 26.6% for the current year period and
26.3% 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 22.2% to $65.7 million from $53.8
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 $7.3
million or 19.6% to $44.3
million driven by royalties from franchised stores opened
since July 1, 2018, a higher average
royalty rate and higher same store sales of 8.1%;
- Corporate-owned stores segment EBITDA increased $1.5 million or 9.9% to $16.8 million driven primarily by an increase in
corporate-owned same store sales of 4.9%, higher annual fee revenue
and from additional clubs opened or acquired since July 1, 2018; and
- Equipment segment EBITDA increased by $4.1 million or 42.3% to $13.7 million driven by an increase in
replacement equipment sales to existing franchisee-owned
stores.
2019 Outlook
For the year ending December 31,
2019, the Company now expects:
- Total revenue to increase approximately 19% as compared to the
year ended December 31, 2018, up from
prior guidance of approximately 18%;
- Total new store equipment sales in the high end of the range of
250 to 260;
- System-wide same store sales of approximately 8.6%, up from
prior guidance of approximately 8%;
- Adjusted net income to increase approximately 21% as compared
to the year ended December 31, 2018,
up from prior guidance of approximately 20%; and
- Adjusted net income per diluted share to increase approximately
28% to $1.56 as compared to the year
ended December 31, 2018, up from
prior guidance of approximately 26%.
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.
Same store sales refers to year-over-year sales comparisons for
the same store sales base of both corporate-owned and
franchisee-owned stores. 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.
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, 2019. 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, 2019.
Investor Conference Call
The Company will hold a conference call at 4:30 pm (ET) on November
7, 2019 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 United States by number of members and
locations. As of September 30, 2019,
Planet Fitness had more than 14.1 million members and 1,899 stores
in 50 states, the District of
Columbia, Puerto Rico,
Canada, the Dominican Republic, Panama and Mexico. 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 ZoneĀ®. More than 95% 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
"2019 Outlook," those attributed to the Company's Chief Executive
Officer in this press release and other statements, estimates and
projections that do not relate solely to historical facts.
Forward-looking statements can be identified by words such as
"believe," "expect," "goal," "plan," "will," "prospects," "future,"
"ahead," "projected," "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 risks and
uncertainties associated with competition in the fitness industry,
the Company's and franchisees' ability to attract and retain new
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, 2018, and 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)
|
(Amounts in
thousands, except per share amounts)
|
|
|
|
For the three
months ended
September 30,
|
|
For the nine
months ended
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
|
|
|
|
Franchise
|
|
$
|
53,443
|
|
|
$
|
41,997
|
|
|
$
|
164,624
|
|
|
$
|
129,575
|
|
Commission
income
|
|
614
|
|
|
1,448
|
|
|
2,673
|
|
|
5,012
|
|
National advertising
fund revenue
|
|
12,652
|
|
|
11,377
|
|
|
36,986
|
|
|
32,997
|
|
Corporate-owned
stores
|
|
40,742
|
|
|
35,406
|
|
|
118,481
|
|
|
102,365
|
|
Equipment
|
|
59,364
|
|
|
46,428
|
|
|
174,528
|
|
|
128,589
|
|
Total
revenue
|
|
166,815
|
|
|
136,656
|
|
|
497,292
|
|
|
398,538
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
46,194
|
|
|
36,871
|
|
|
135,071
|
|
|
100,114
|
|
Store
operations
|
|
22,295
|
|
|
18,751
|
|
|
63,363
|
|
|
55,154
|
|
Selling, general and
administrative
|
|
20,928
|
|
|
17,233
|
|
|
57,944
|
|
|
52,066
|
|
National advertising
fund expense
|
|
12,652
|
|
|
11,377
|
|
|
36,986
|
|
|
32,997
|
|
Depreciation and
amortization
|
|
11,832
|
|
|
8,863
|
|
|
32,316
|
|
|
25,947
|
|
Other (gain)
loss
|
|
(147)
|
|
|
(12)
|
|
|
99
|
|
|
958
|
|
Total operating costs
and expenses
|
|
113,754
|
|
|
93,083
|
|
|
325,779
|
|
|
267,236
|
|
Income from
operations
|
|
53,061
|
|
|
43,573
|
|
|
171,513
|
|
|
131,302
|
|
Other expense,
net:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
1,808
|
|
|
2,025
|
|
|
5,585
|
|
|
2,480
|
|
Interest
expense
|
|
(14,807)
|
|
|
(17,909)
|
|
|
(44,192)
|
|
|
(35,725)
|
|
Other
expense
|
|
(61)
|
|
|
(27)
|
|
|
(4,824)
|
|
|
(338)
|
|
Total other expense,
net
|
|
(13,060)
|
|
|
(15,911)
|
|
|
(43,431)
|
|
|
(33,583)
|
|
Income before income
taxes
|
|
40,001
|
|
|
27,662
|
|
|
128,082
|
|
|
97,719
|
|
Provision for income
taxes
|
|
10,309
|
|
|
7,190
|
|
|
26,924
|
|
|
23,335
|
|
Net income
|
|
29,692
|
|
|
20,472
|
|
|
101,158
|
|
|
74,384
|
|
Less net income
attributable to non-controlling interests
|
|
3,915
|
|
|
3,001
|
|
|
13,128
|
|
|
11,158
|
|
Net income
attributable to Planet Fitness, Inc.
|
|
$
|
25,777
|
|
|
$
|
17,471
|
|
|
$
|
88,030
|
|
|
$
|
63,226
|
|
Net income per share
of Class A common stock:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.31
|
|
|
$
|
0.20
|
|
|
$
|
1.05
|
|
|
$
|
0.72
|
|
Diluted
|
|
$
|
0.31
|
|
|
$
|
0.20
|
|
|
$
|
1.04
|
|
|
$
|
0.72
|
|
Weighted-average
shares of Class A common stock outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
83,157
|
|
|
88,047
|
|
|
83,700
|
|
|
87,727
|
|
Diluted
|
|
83,807
|
|
|
88,458
|
|
|
84,354
|
|
|
88,064
|
|
Planet Fitness,
Inc. and subsidiaries
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(Amounts in
thousands, except per share amounts)
|
|
|
|
September 30,
2019
|
|
December 31,
2018
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
219,752
|
|
|
$
|
289,431
|
|
Restricted
cash
|
|
30,499
|
|
|
30,708
|
|
Accounts receivable,
net of allowance for bad debts of $37 and $84 at September 30, 2019
and
December 31, 2018, respectively
|
|
29,398
|
|
|
38,960
|
|
Inventory
|
|
2,612
|
|
|
5,122
|
|
Restricted assets ā
national advertising fund
|
|
657
|
|
|
ā
|
|
Prepaid
expenses
|
|
8,649
|
|
|
4,947
|
|
Other
receivables
|
|
9,232
|
|
|
12,548
|
|
Other current
assets
|
|
5,471
|
|
|
6,824
|
|
Total current
assets
|
|
306,270
|
|
|
388,540
|
|
Property and
equipment, net of accumulated depreciation of $70,083 as of
September 30, 2019
and $53,086 as of December 31, 2018
|
|
131,454
|
|
|
114,367
|
|
Right of use assets,
net
|
|
127,746
|
|
|
ā
|
|
Intangible assets,
net
|
|
227,575
|
|
|
234,330
|
|
Goodwill
|
|
206,752
|
|
|
199,513
|
|
Deferred income
taxes
|
|
418,745
|
|
|
414,841
|
|
Other assets,
net
|
|
1,690
|
|
|
1,825
|
|
Total
assets
|
|
$
|
1,420,232
|
|
|
$
|
1,353,416
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
|
12,000
|
|
|
$
|
12,000
|
|
Accounts
payable
|
|
23,037
|
|
|
30,428
|
|
Accrued
expenses
|
|
25,737
|
|
|
32,384
|
|
Equipment
deposits
|
|
8,566
|
|
|
7,908
|
|
Restricted liabilities
ā national advertising fund
|
|
657
|
|
|
ā
|
|
Deferred revenue,
current
|
|
24,638
|
|
|
23,488
|
|
Payable pursuant to tax
benefit arrangements, current
|
|
25,506
|
|
|
24,765
|
|
Other current
liabilities
|
|
15,780
|
|
|
430
|
|
Total current
liabilities
|
|
135,921
|
|
|
131,403
|
|
Long-term debt, net
of current maturities
|
|
1,155,049
|
|
|
1,160,127
|
|
Deferred rent, net of
current portion
|
|
ā
|
|
|
10,083
|
|
Lease liabilities,
net of current portion
|
|
127,646
|
|
|
ā
|
|
Deferred revenue, net
of current portion
|
|
31,532
|
|
|
26,374
|
|
Deferred tax
liabilities
|
|
2,067
|
|
|
2,303
|
|
Payable pursuant to
tax benefit arrangements, net of current portion
|
|
407,884
|
|
|
404,468
|
|
Other
liabilities
|
|
2,250
|
|
|
1,447
|
|
Total noncurrent
liabilities
|
|
1,726,428
|
|
|
1,604,802
|
|
Stockholders' equity
(deficit):
|
|
|
|
|
Class A common stock,
$.0001 par value - 300,000 authorized, 81,773 and 83,584 shares
issued and outstanding as of September 30, 2019 and December 31,
2018, respectively
|
|
8
|
|
|
9
|
|
Class B common stock,
$.0001 par value - 100,000 authorized, 8,562 and 9,448 shares
issued
and outstanding as of September 30, 2019 and December 31, 2018,
respectively
|
|
1
|
|
|
1
|
|
Accumulated other
comprehensive income
|
|
189
|
|
|
94
|
|
Additional paid in
capital
|
|
27,240
|
|
|
19,732
|
|
Accumulated
deficit
|
|
(466,032)
|
|
|
(394,410)
|
|
Total stockholders'
deficit attributable to Planet Fitness, Inc.
|
|
(438,594)
|
|
|
(374,574)
|
|
Non-controlling
interests
|
|
(3,523)
|
|
|
(8,215)
|
|
Total stockholders'
deficit
|
|
(442,117)
|
|
|
(382,789)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,420,232
|
|
|
$
|
1,353,416
|
|
Planet Fitness,
Inc. and subsidiaries
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
(Amounts in
thousands, except per share amounts)
|
|
|
|
For the nine
months ended September 30,
|
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$
|
101,158
|
|
|
$
|
74,384
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
32,316
|
|
|
25,947
|
|
Amortization of
deferred financing costs
|
|
4,014
|
|
|
2,041
|
|
Amortization of
favorable leases
|
|
ā
|
|
|
280
|
|
Amortization of asset
retirement obligations
|
|
178
|
|
|
ā
|
|
Amortization of
interest rate caps
|
|
ā
|
|
|
1,170
|
|
Deferred tax
expense
|
|
15,666
|
|
|
19,654
|
|
Loss on
extinguishment of debt
|
|
ā
|
|
|
4,570
|
|
Loss (gain) on
re-measurement of tax benefit arrangement
|
|
4,638
|
|
|
(354)
|
|
Provision for bad
debts
|
|
13
|
|
|
8
|
|
Loss on reacquired
franchise rights
|
|
ā
|
|
|
360
|
|
(Gain) loss on
disposal of property and equipment
|
|
(84)
|
|
|
542
|
|
Equity-based
compensation
|
|
3,565
|
|
|
4,137
|
|
Changes in operating
assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
Accounts
receivable
|
|
12,779
|
|
|
10,922
|
|
Due to and due from
related parties
|
|
(344)
|
|
|
3,174
|
|
Inventory
|
|
2,509
|
|
|
(3,450)
|
|
Other assets and
other current assets
|
|
(4,628)
|
|
|
4,972
|
|
Accounts payable and
accrued expenses
|
|
(12,939)
|
|
|
2,426
|
|
Other liabilities and
other current liabilities
|
|
1,510
|
|
|
(2,869)
|
|
Income
taxes
|
|
3,047
|
|
|
1,028
|
|
Payable pursuant to
tax benefit arrangements
|
|
(17,476)
|
|
|
(21,706)
|
|
Equipment
deposits
|
|
658
|
|
|
4,950
|
|
Deferred
revenue
|
|
6,103
|
|
|
7,544
|
|
Leases and deferred
rent
|
|
54
|
|
|
4,156
|
|
Net cash provided by
operating activities
|
|
152,737
|
|
|
143,886
|
|
Cash flows from
investing activities:
|
|
|
|
|
Additions to property
and equipment
|
|
(37,138)
|
|
|
(18,601)
|
|
Acquisition of
franchises
|
|
(14,801)
|
|
|
(45,752)
|
|
Proceeds from sale of
property and equipment
|
|
84
|
|
|
196
|
|
Purchase of
intellectual property
|
|
(300)
|
|
|
ā
|
|
Net cash used in
investing activities
|
|
(52,155)
|
|
|
(64,157)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Principal payments on
capital lease obligations
|
|
(59)
|
|
|
(35)
|
|
Proceeds from
issuance of long-term debt
|
|
ā
|
|
|
1,200,000
|
|
Repayment of
long-term debt
|
|
(9,000)
|
|
|
(709,469)
|
|
Payment of deferred
financing and other debt-related costs
|
|
ā
|
|
|
(27,191)
|
|
Exercise of stock
options and ESPP proceeds
|
|
1,892
|
|
|
1,106
|
|
Repurchase and
retirement of Class A common stock
|
|
(157,945)
|
|
|
(42,090)
|
|
Dividend equivalent
payments
|
|
(229)
|
|
|
(881)
|
|
Distributions to
Continuing LLC Members
|
|
(5,499)
|
|
|
(5,369)
|
|
Net cash (used in)
provided by financing activities
|
|
(170,840)
|
|
|
416,071
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
|
370
|
|
|
(234)
|
|
Net (decrease)
increase in cash, cash equivalents and restricted cash
|
|
(69,888)
|
|
|
495,566
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
320,139
|
|
|
113,080
|
|
Cash, cash
equivalents and restricted cash, end of period
|
|
$
|
250,251
|
|
|
$
|
608,646
|
|
Supplemental cash
flow information:
|
|
|
|
|
Net cash paid for
income taxes
|
|
$
|
9,061
|
|
|
$
|
3,777
|
|
Cash paid for
interest
|
|
$
|
40,335
|
|
|
$
|
20,015
|
|
Non-cash investing
activities:
|
|
|
|
|
Non-cash additions to
property and equipment
|
|
$
|
4,837
|
|
|
$
|
2,217
|
|
Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)
To supplement its 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
provide useful information 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
net income before interest, taxes, depreciation and amortization,
adjusted for the impact of certain additional non-cash and other
items that we do not consider in our evaluation of ongoing
performance of the Company's core operations. These items include
certain purchase accounting adjustments, stock offering-related
costs, and certain other charges and gains. 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 in comparing the core performance of our
business from period to period.
A reconciliation of Adjusted EBITDA to net income, the most
directly comparable GAAP measure, is set forth below.
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
29,692
|
|
|
$
|
20,472
|
|
|
$
|
101,158
|
|
|
$
|
74,384
|
|
Interest
income
|
|
(1,808)
|
|
|
(2,025)
|
|
|
(5,585)
|
|
|
(2,480)
|
|
Interest
expense
|
|
14,807
|
|
|
17,909
|
|
|
44,192
|
|
|
35,725
|
|
Provision for income
taxes
|
|
10,309
|
|
|
7,190
|
|
|
26,924
|
|
|
23,335
|
|
Depreciation and
amortization
|
|
11,832
|
|
|
8,863
|
|
|
32,316
|
|
|
25,947
|
|
EBITDA
|
|
$
|
64,832
|
|
|
$
|
52,409
|
|
|
$
|
199,005
|
|
|
$
|
156,911
|
|
Purchase accounting
adjustments-revenue(1)
|
|
275
|
|
|
527
|
|
|
524
|
|
|
941
|
|
Purchase accounting
adjustments-rent(2)
|
|
108
|
|
|
198
|
|
|
348
|
|
|
548
|
|
Loss on reacquired
franchise rights(3)
|
|
ā
|
|
|
10
|
|
|
ā
|
|
|
360
|
|
Transaction
fees(4)
|
|
ā
|
|
|
254
|
|
|
ā
|
|
|
290
|
|
Severance
costs(5)
|
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
352
|
|
Pre-opening
costs(6)
|
|
826
|
|
|
370
|
|
|
1,021
|
|
|
853
|
|
Tax benefit
arrangement remeasurement(7)
|
|
(214)
|
|
|
ā
|
|
|
4,638
|
|
|
(354)
|
|
Other(8)
|
|
(104)
|
|
|
19
|
|
|
55
|
|
|
1,039
|
|
Adjusted
EBITDA
|
|
$
|
65,723
|
|
|
$
|
53,787
|
|
|
$
|
205,591
|
|
|
$
|
160,940
|
|
|
|
(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 ADA fees, deferred franchise fees, and deferred enrollment
fees that the Company billed and collected upfront but recognizes
for U.S. 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 805āBusiness 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 in
these periods 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 ā 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 recorded
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. Adjustments of $44, $105, $173 and $272 in the three and nine
months ended September 30, 2019 and 2018, respectively,
reflect the difference between the higher rent expense recorded in
accordance with U.S. GAAP since the acquisition and the rent
expense that would have been recorded had the 2012 Acquisition not
occurred. Adjustments of $64, $93, $216 and $276 in the three and
nine months ended September 30, 2019 and 2018, respectively,
are due to the amortization of favorable and unfavorable leases.
All of the rent related purchase accounting adjustments are
adjustments to rent expense which is included in store operations
on our consolidated statements of operations.
|
(3)
|
Represents the impact
of a non-cash loss recorded in accordance with ASC 805 - Business
Combinations related to our acquisition of six franchisee-owned
stores on January 1, 2018. The loss recorded under GAAP represents
the difference between the fair value of the reacquired franchise
rights and the contractual terms of the reacquired franchise rights
and is included in other (gain) loss on our consolidated statements
of operations.
|
(4)
|
Represents
transaction fees and expenses that could not be capitalized related
to the issuance of our Series 2018-1 Senior Notes in the three and
nine months ended September 30, 2018.
|
(5)
|
Represents severance
expense recorded in connection with an equity award
modification.
|
(6)
|
Represents costs
associated with new corporate-owned stores incurred prior to the
store opening, including payroll-related costs, rent and occupancy
expenses, marketing and other store operating supply
expenses.
|
(7)
|
Represents gains and
losses related to the adjustment of our tax benefit arrangements
primarily due to changes in our effective tax rate.
|
(8)
|
Represents certain
other charges and gains that we do not believe reflect our
underlying business performance. In the nine months ended September
30, 2018, this amount includes expense of $590 related to the write
off of certain assets that were being tested for potential use
across the system.
|
A reconciliation of Segment EBITDA to Total Segment EBITDA is
set forth below.
|
|
Three months ended
September
30,
|
|
Nine months ended
September
30,
|
(in
thousands)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Segment
EBITDA
|
|
|
|
|
|
|
|
|
Franchise
|
|
$
|
44,328
|
|
|
$
|
37,075
|
|
|
$
|
141,548
|
|
|
$
|
113,793
|
|
Corporate-owned
stores
|
|
16,799
|
|
|
15,279
|
|
|
50,505
|
|
|
42,115
|
|
Equipment
|
|
13,741
|
|
|
9,654
|
|
|
40,920
|
|
|
28,579
|
|
Corporate and
other
|
|
(10,036)
|
|
|
(9,599)
|
|
|
(33,968)
|
|
|
(27,576)
|
|
Total Segment
EBITDA(1)
|
|
$
|
64,832
|
|
|
$
|
52,409
|
|
|
$
|
199,005
|
|
|
$
|
156,911
|
|
|
|
(1)
|
Total Segment EBITDA
is equal to EBITDA.
|
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-recurring 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 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 Adjusted net income to net income, the most
directly comparable GAAP measure, and the computation of Adjusted
net income per share, diluted, are set forth below.
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
(in thousands,
except per share amounts)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
|
$
|
29,692
|
|
|
$
|
20,472
|
|
|
$
|
101,158
|
|
|
$
|
74,384
|
|
Provision for income
taxes, as reported
|
|
10,309
|
|
|
7,190
|
|
|
26,924
|
|
|
23,335
|
|
Purchase accounting
adjustments-revenue(1)
|
|
275
|
|
|
527
|
|
|
524
|
|
|
941
|
|
Purchase accounting
adjustments-rent(2)
|
|
108
|
|
|
198
|
|
|
348
|
|
|
548
|
|
Loss on reacquired
franchise rights(3)
|
|
ā
|
|
|
10
|
|
|
ā
|
|
|
360
|
|
Transaction
fees(4)
|
|
ā
|
|
|
254
|
|
|
ā
|
|
|
290
|
|
Loss on extinguishment
of debt(5)
|
|
ā
|
|
|
4,570
|
|
|
ā
|
|
|
4,570
|
|
Severance
costs(6)
|
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
352
|
|
Pre-opening
costs(7)
|
|
826
|
|
|
370
|
|
|
1,021
|
|
|
853
|
|
Tax benefit
arrangement remeasurement(8)
|
|
(214)
|
|
|
ā
|
|
|
4,638
|
|
|
(354)
|
|
Other(9)
|
|
(104)
|
|
|
19
|
|
|
55
|
|
|
1,039
|
|
Purchase accounting
amortization(10)
|
|
4,146
|
|
|
3,934
|
|
|
12,429
|
|
|
11,776
|
|
Adjusted income
before income taxes
|
|
$
|
45,038
|
|
|
$
|
37,544
|
|
|
$
|
147,097
|
|
|
$
|
118,094
|
|
Adjusted income
taxes(11)
|
|
11,980
|
|
|
9,874
|
|
|
39,128
|
|
|
31,059
|
|
Adjusted net
income
|
|
$
|
33,058
|
|
|
$
|
27,670
|
|
|
$
|
107,969
|
|
|
$
|
87,035
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
per share, diluted
|
|
$
|
0.36
|
|
|
$
|
0.28
|
|
|
$
|
1.16
|
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
|
|
Adjusted
weighted-average shares outstanding(12)
|
|
92,386
|
|
|
98,462
|
|
|
93,153
|
|
|
98,615
|
|
|
|
(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 ADA fees, deferred franchise fees, and deferred enrollment
fees that the Company billed and collected upfront but recognizes
for U.S. 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 805āBusiness 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 in
these periods 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 ā 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 recorded
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. Adjustments of $44, $105, $173 and $272 in the three and nine
months ended September 30, 2019 and 2018, respectively,
reflect the difference between the higher rent expense recorded in
accordance with U.S. GAAP since the acquisition and the rent
expense that would have been recorded had the 2012 Acquisition not
occurred. Adjustments of $64, $93, $216 and $276 in the three and
nine months ended September 30, 2019 and 2018, respectively,
are due to the amortization of favorable and unfavorable leases.
All of the rent related purchase accounting adjustments are
adjustments to rent expense which is included in store operations
on our consolidated statements of operations.
|
(3)
|
Represents the impact
of a non-cash loss recorded in accordance with ASC 805 - Business
Combinations related to our acquisition of six franchisee-owned
stores on January 1, 2018. The loss recorded under GAAP represents
the difference between the fair value of the reacquired franchise
rights and the contractual terms of the reacquired franchise rights
and is included in other (gain) loss on our consolidated statements
of operations.
|
(4)
|
Represents
transaction fees and expenses that could not be capitalized related
to the issuance of our Series 2018-1 Senior Notes in the three and
nine months ended September 30, 2018.
|
(5)
|
Represents a loss on
extinguishment of debt related to the write-off of deferred
financing costs associated with the Term Loan B that the Company
repaid in August 2018.
|
(6)
|
Represents severance
expense recorded in connection with an equity award
modification.
|
(7)
|
Represents costs
associated with new corporate-owned stores incurred prior to the
store opening, including payroll-related costs, rent and occupancy
expenses, marketing and other store operating supply
expenses.
|
(8)
|
Represents gains and
losses related to the adjustment of our tax benefit arrangements
primarily due to changes in our effective tax rate.
|
(9)
|
Represents certain
other charges and gains that we do not believe reflect our
underlying business performance. In the nine months ended September
30, 2018, this amount includes expense of $590 related to the write
off of certain assets that were being tested for potential use
across the system.
|
(10)
|
Includes $3,096,
$3,096, $9,288 and $9,288 of amortization of intangible assets,
other than favorable leases, for the three and nine months ended
September 30, 2019 and 2018, respectively, recorded in
connection with the 2012 Acquisition, and $1,052, $838, $2,867 and
$2,488 of amortization of intangible assets for the three months
ended September 30, 2019 and 2018, respectively, recorded in
connection with historical acquisitions of franchisee-owned stores.
The adjustment represents the amount of actual non-cash
amortization expense recorded, in accordance with U.S. GAAP, in
each period.
|
(11)
|
Represents corporate
income taxes at an assumed effective tax rate of 26.6% and 26.3%
for the three and nine months ended September 30, 2019 and
2018, respectively, applied to adjusted income before income
taxes.
|
(12)
|
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.
|
A reconciliation of net income per share, diluted, to Adjusted
net income per share, diluted is set forth below for the three and
nine months ended September 30, 2019 and 2018:
|
|
For the three
months ended
September 30, 2019
|
|
For the three
months ended
September 30, 2018
|
(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)
|
|
$
|
25,777
|
|
|
83,807
|
|
|
$
|
0.31
|
|
|
$
|
17,471
|
|
|
88,458
|
|
|
$
|
0.20
|
|
Assumed exchange of
shares(2)
|
|
3,915
|
|
|
8,579
|
|
|
|
|
3,001
|
|
|
10,004
|
|
|
|
Net Income
|
|
29,692
|
|
|
|
|
|
|
20,472
|
|
|
|
|
|
Adjustments to arrive
at adjusted income
before income
taxes(3)
|
|
15,346
|
|
|
|
|
|
|
17,072
|
|
|
|
|
|
Adjusted income
before income taxes
|
|
45,038
|
|
|
|
|
|
|
37,544
|
|
|
|
|
|
Adjusted income
taxes(4)
|
|
11,980
|
|
|
|
|
|
|
9,874
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
33,058
|
|
|
92,386
|
|
|
$
|
0.36
|
|
|
$
|
27,670
|
|
|
98,462
|
|
|
$
|
0.28
|
|
|
|
(1)
|
Represents net income
attributable to Planet Fitness, Inc. and the associated weighted
average shares, diluted of Class A common stock
outstanding.
|
(2)
|
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. Also assumes the addition of net income
attributable to non-controlling interests corresponding with the
assumed exchange of Holdings Units and Class B common shares for
shares of Class A common stock.
|
(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 26.6% and 26.3%
for the three months ended September 30, 2019 and 2018,
respectively, applied to adjusted income before income
taxes.
|
|
|
For the nine
months ended
September 30, 2019
|
|
For the nine
months ended
September 30, 2018
|
(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)
|
|
$
|
88,030
|
|
|
84,354
|
|
|
$
|
1.04
|
|
|
$
|
63,226
|
|
|
88,064
|
|
|
$
|
0.72
|
|
Assumed exchange of
shares(2)
|
|
13,128
|
|
|
8,799
|
|
|
|
|
11,158
|
|
|
10,551
|
|
|
|
Net Income
|
|
101,158
|
|
|
|
|
|
|
74,384
|
|
|
|
|
|
Adjustments to arrive
at adjusted income
before income taxes(3)
|
|
45,939
|
|
|
|
|
|
|
43,710
|
|
|
|
|
|
Adjusted income
before income taxes
|
|
147,097
|
|
|
|
|
|
|
118,094
|
|
|
|
|
|
Adjusted income
taxes(4)
|
|
39,128
|
|
|
|
|
|
|
31,059
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
107,969
|
|
|
93,153
|
|
|
$
|
1.16
|
|
|
$
|
87,035
|
|
|
98,615
|
|
|
$
|
0.88
|
|
|
|
(1)
|
Represents net income
attributable to Planet Fitness, Inc. and the associated weighted
average shares, diluted of Class A common stock
outstanding.
|
(2)
|
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. Also assumes the addition of net income
attributable to non-controlling interests corresponding with the
assumed exchange of Holdings Units and Class B common shares for
shares of Class A common stock.
|
(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 26.6% and 26.3%
for the nine months ended September 30, 2019 and
2018, respectively, applied to adjusted income before income
taxes.
|
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SOURCE Planet Fitness, Inc.