Planet Fitness, Newington, New Hampshire, reported third quarter revenue of $87 million, a 26.4 percent increase from the same period last year, according to financials released Wednesday. Same-store sales also increased 10 percent from the third quarter of 2015.
This report shows a slight downturn from Planet Fitness’ second quarter earnings of $91.5 million. However, company executives are still projecting a raised annual outlook of $373 million to $378 million for 2016. In the first quarter, the company was anticipating a maximum of $370 million for the year.
“Our business continues to get stronger,” Planet Fitness CEO Christopher Rondeau said in the earnings report. “Third quarter system-wide same store sales increased 10 percent as a growing number of casual and first-time gym users are joining Planet Fitness. The combination of our affordable, non-intimidating fitness offering and increased national and local advertising spend, which continues to increase with each incremental new join, is fueling greater brand awareness in all markets and membership growth across the store base.
“At the same time, our business model has consistently generated double digit earnings growth and strong free cash flow, providing the company a great foundation for driving significant long-term shareholder value.”
During the quarter, 37 Planet Fitness franchise clubs opened, bumping the total number of locations to 1,242 as of Sept. 30. This is an increase of 19 percent compared to the same date last year, Rondeau said in the report. As of Sept. 30, the company reported 8.7 million members across 47 states, the District of Columbia, Puerto Rico, Canada and the Dominican Republic, an increase from the June 30 report by Planet Fitness of 8.6 million members. (Membership numbers were not provided in the company's third quarter report in 2015.)
The company’s franchise segment revenue for the quarter was $27.2 million, an increase of 37.5 percent or $7.4 million from last year. Corporate-owned stores accounted for $25.2 million in revenue, a 6.1 percent or $1.5 million increase. Equipment revenue jumped to $23.9 million, growing 38.7 percent or $9.2 million since 2015.
In an earnings call with analysts on Wednesday, Rondeau alluded to the company’s intention to refinance its existing debt as the result of recent and projected financial growth.
“Our board of directors and management team are constantly evaluating the most prudent use of our strong balance sheet and free cash flow, and believe increasing our leverage with potential to use the proceeds to fund a special dividend is a great way to maximize our shareholder value,” he said.
Planet Fitness ranked seventh on Club Industry's Top 100 Health Clubs of 2016, with a 2015 reported revenue of $330.5 million. This was an 18 percent uptick from 2014.