Planet Fitness Reports Record 2015 Revenue, Projects 2016 Revenue of Up to $365 Million

Planet Fitness has 1000 new locations committed to opening in the next seven years with more than 500 set to open in the next three years CEO Chris Rondeau said Photo courtesy Planet Fitness via US Securities and Exchange Commission filing
<p>Planet Fitness has 1,000 new locations committed to opening in the next seven years, with more than 500 set to open in the next three years, CEO Chris <span data-scayt-lang="en_US" data-scayt-word="Rondeau">Rondeau</span> said. (Photo courtesy Planet Fitness via U.S. Securities and Exchange Commission filing.)</p>

Planet Fitness, Newington, New Hampshire, reported record revenue of $330.5 million for 2015, and the company estimates it will record between $355 million and $365 million in 2016 revenue as it anticipates adding 210 to 220 franchised stores this year, according to financials released Thursday.

The $330.5 million in 2015 revenue was an increase of 18 percent over 2014 revenue for the company. Planet Fitness also reported fourth quarter 2015 revenue of $105.8 million, a year-over-year increase of 10.2 percent.

Planet Fitness CEO Chris Rondeau said the fourth quarter performance "exceeded expectations" and capped "a terrific 2015" for the company. He noted an increase in system-wide same store sales of 7.7 percent and the addition of 209 new clubs in 2015, including its first international franchise locations (Canada and the Dominican Republic).

"These achievements are the direct result of our affordable, non-intimidating fitness offering and powerful national advertising strategy—both significant competitive advantagescombined with our group of well capitalized franchisees, which we are leveraging to rapidly expand our consumer reach," Rondeau said in a statement. "The current year is off to an exciting start as our lead sponsorship of the Times Square New Year's Eve Celebration has helped fuel great momentum early on. We are very confident that our differentiated, asset light business model has our company well positioned to deliver profitable growth and increased shareholder returns over the long term."

Franchise segment revenue in 2015, which includes commission income, increased 22.7 percent over 2014 to $88.1 million. Corporate-owned stores segment revenue increased to $98.4 million, and equipment segment revenue increased to $144.1 million in 2015.

Planet Fitness opened 209 clubs in 2015 with 84 of those opening during the fourth quarter, according to the earnings release.  Planet Fitness opened its 1,000th overall club in June 2015 and finished the year with 1,124 total clubs in operation, Rondeau noted in Thursday's call with financial analysts.

The company has 1,000 new locations committed to opening in the next seven years, with more than 500 set to open in the next three years, Rondeau said.  Of the 210 to 220 new locations expected to open in 2016, 15 are expected in Canada. He was "encouraged" by the 2015 opening of its first club in the Dominican Republic.

"The strength our concept has enjoyed in Puerto Rico since launching there in 2011, combined with our initial reception in the Dominican bodes well for the expansion into other Latin American markets down the road," Rondeau told analysts. "At the same time, our group of well-capitalized franchisees are rapidly increasing the accessibility of our unique fitness offering in new and existing markets throughout the U.S. This is further strengthening our position in the industry and allowing us to reach a greater percentage of the casual and first-time gym user that wants to improve their life through health and wellness."

Planet Fitness anticipates system-wide same store sales growth in the mid-single digit range for 2016.

Planet Fitness had approximately 7.3 million members at the end of 2015 compared to 6.1 million at the end of 2014, Planet Fitness Chief Financial Officer Dorvin Lively told analysts. The company's average membership per club dropped from 6,600 at the end of 2014 to 6,500 at the end of 2014, which Lively said was due to a change in billing practices.

Many Planet Fitness clubs did not systemically remove non-paying members in 2014 and did not filter those members out until the migration to a new point of sale system in the first half of 2015. With the numbers adjusted, Lively said membership per store grew 2 percent from December 2014 to December 2015 and noted the timing of store openings can also affect that statistic.

One analyst asked Rondeau if he sees an opportunity in the future to test a higher membership price point in selective markets.

"I think as long as we continue to add more members per store and drive rate, that $10 a month is pretty compelling," Rondeau said. "And because of our national advertising – and we're able to advertise one price nationwide, which is extremely powerful – so I'm a little hesitant to start breaking the rate structure separately throughout the country."

Planet Fitness (NYSE:PLNT) was trading up 2.6 percent at $15.20 per share in early after-hours trading Thursday.


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