Planet Fitness, Hampton, New Hampshire, reported revenue of $244.4 million in third quarter 2022, an increase of 58 percent compared to third quarter 2021. Same store sales increased by 8.2 percent.
The company also increased its revenue, adjusted EBITDA and adjusted net income growth expectations for 2022.
System-wide sales increased $98 million to $968 million, which is up from the $870 million reported in the prior year period.
In addition to the revenue growth, Planet Fitness ended the quarter with more than 16.6 million members, an all-time record high, and new joins returned to pre-pandemic seasonality.
The company is focused on continuing to increase its penetration of all generations with an emphasis on the Gen Z demographic by converting teen participants from its recent High School Summer Pass Program, and their parents and guardians, into paying members.
Members visiting the gym came more frequently, and cancels were lower compared to 2019, which may signal that members are generally more committed to fitness, the company said.
Planet Fitness opened 29 clubs during the quarter, bringing system-wide total clubs to 2,353 as of Sept. 30.
2022 Outlook
For 2022, Planet Fitness upped its revenue outlook to the high-50 percent range rather than the previously anticipated mid-50 percent range. It expects adjusted EBITDA to increase approximately 60 percent, up from the previously expected growth in the high-50 percent range.
Adjusted net income is expected to increase in the low-100 percent range compared to the previously expected growth in the low-90 percent range.
The company also expects adjusted earnings per share to increase in the mid-90 percent range, rather than the previously expected growth in the mid-80 percent range.
For the year, new equipment placements are anticipated to be down to approximately 150 to 160 in franchisee-owned locations rather than the previously expected 170 placements due to a worsening of the HVAC supply chain.
However, Planet Fitness continues to expect system-wide same store sales growth in the low double-digit percentage range.
Third Quarter Revenue Details
Planet Fitness broke down third quarter 2022 revenue from its three revenue sources: franchise segment revenue, corporate revenue and equipment revenue.
Franchise segment revenue increased $5.4 million or 7.1 percent to $80.7 million from $75.4 million in the prior year period. The increase in franchise segment revenue for the third quarter of 2022 was primarily due to a $2.8 million increase in franchise royalty revenue, a $1.7 million increase in equipment placement revenue, and a $0.7 million increase in National Advertising Fund (NAF) revenue. Of the $2.8 million increase in franchise royalty revenue, $3.7 million was attributable to a same store sales increase of 8.1 percent in franchisee-owned stores and $1.7 million was attributable to new stores opened since July 1, 2021. Partially offsetting the royalty revenue increases was a decrease of approximately $2.6 million primarily as a result of the stores acquired in the acquisition of Sunshine Fitness Growth Holdings, LLC in first quarter 2022 becoming corporate-owned stores. The $1.7 million increase in placement revenue was primarily driven by higher replacement equipment placements in the quarter compared to the same quarter last year.
Corporate-owned stores segment revenue increased $57.4 million or 130.8 percent to $101.3 million from $43.9 million in the prior year period. Of the increase, $50.4 million was attributable to the acquisition of 114 stores in the Sunshine Acquisition, $3.5 million was from the corporate-owned store same store sales increase of 9.7 percent, $3.4 million was from new stores opened since July 1, 2021.
Equipment segment revenue increased $27.3 million or 78.2 percent to $62.3 million from $35 million in the prior year period, driven by $27.7 million of higher equipment sales to existing franchisee-owned stores in the quarter compared to third quarter 2021. In both third quarter 2022 and third quarter 2021, Planet Fitness had equipment sales to 28 new franchisee-owned stores.
Net income attributable to Planet Fitness, Inc. was $26.9 million, or $0.32 per diluted share, compared to $17.4 million, or $0.21 per diluted share, in the prior year period.
Net income increased $12 million to $30.7 million, compared to $18.6 million in the prior year period.
Adjusted net income increased $16.6 million to $38.2 million, or $0.42 per diluted share, compared to $21.7 million, or $0.25 per diluted share, in the prior year period.
Adjusted EBITDA increased $32.2 million to $93.9 million from $61.7 million in the prior year period.
Franchise segment EBITDA increased $1.4 million to $53.5 million. The increase in franchise segment EBITDA for third quarter 2022 was primarily due to franchise revenue increases, partially offset by higher NAF expenses of $1.4 million, higher franchise segment selling general and administrative expense of $1.4 million, and higher equipment placement expense of $1.1 million in the quarter compared to third quarter 2021.
Corporate-owned stores segment EBITDA increased $26.3 million to $40.4 million. Of the increase, $24.9 million was attributable to the corporate-owned stores acquired in the Sunshine Acquisition, $2.6 million was attributable to the same store sales increase of 9.7 percent, and $1.3 million was attributable to the gain on sale of corporate-owned stores. Partially offsetting these increases was higher selling general and administrative expense of $2.2 million, primarily as a result of the Sunshine Acquisition.
Equipment segment EBITDA increased by $7.9 million to $15.8 million primarily driven by higher equipment sales to existing franchisee-owned stores in the quarter.
Share Repurchase Program
On Nov. 4th, the company's board of directors authorized a new $500 million share repurchase program to replace the existing share repurchase program, which was authorized in 2019 and had approximately $106 million remaining.