Planet Fitness, Hampton, New Hampshire, reported first quarter 2023 revenue of $222.2 million, an increase of 19 percent over first quarter 2022.
The quarter ended with membership of 18.1 million, the highest quarterly net member growth since first quarter 2020. The company opened 36 new locations during the quarter, bringing system-wide total stores to 2,446 as of March 31. In addition, the company completed on April 16 an acquisition of four franchise stores operating in Florida for approximately $26.3 million using cash on hand.
"Our business continues to rebound from the impact of COVID-19 shutdowns with more than 50 percent of our U.S. stores opened prior to 2019 back to or above pre-pandemic membership levels, with member growth driving our 9.9 percent increase in system-wide same stores sales," Planet Fitness CEO Chris Rondeau said in a media release. "Our brand's resiliency despite inflation and other macroeconomic factors was apparent in our first quarter member trends.”
Full-Year Outlook
Planet Fitness reiterated its full-year 2023 outlook that revenue will increase in the 13 percent to 14 percent range, that adjusted EBITDA will increase in the 17 percent to 18 percent range, that adjusted net income will increase in the 30 percent to 33 percent range, that adjusted earnings per share will increase in the 33 percent to 36 percent range, and that system-wide same store sales will be in the high single-digit percentage range.
The company continues to expect 2023 net interest expense to be approximately $75 million. It also expects capital expenditures to increase to the mid-30 percent range driven by additional stores in its corporate-owned portfolio and depreciation and amortization to increase to the mid-10 percent range driven by the increase in capital expenditures and a full-year of depreciation and amortization of the assets acquired in the Sunshine Acquisition in our results over 2022.
Planet Fitness also reiterated that new equipment placements for the year will be approximately 160 in franchisee-owned locations.
First Quarter 2023
All generational groups are back to pre-pandemic population penetration levels, and the company continues to experience an overall lower cancellation rate, he said.
“We believe we are financially well-positioned to invest in growth areas, such as technology and a small dedicated international team, while also returning cash to shareholders, including the $50 million in shares repurchased year-to-date," Rondeau said.
System-wide same store sales increased by 9.9 percent.
System-wide sales increased $147 million to $1.108 billion from $961 million in the prior year period.
Net income attributable to Planet Fitness, Inc. was $22.7 million, or $0.27 per diluted share, compared to $16.5 million, or $0.19 per diluted share, in the prior year period.
Net income increased $6.4 million to $24.8 million, compared to $18.4 million in the prior year period.
Adjusted net income increased $7.8 million to $36.4 million, or $0.41 per diluted share, compared to $28.5 million, or $0.32 per diluted share, in the prior year period.
Adjusted EBITDA increased $13.5 million to $90.2 million from $76.7 million in the prior year period.
Cash of $523.0 million, which includes cash and cash equivalents of $460.4 million and restricted cash of $62.6 million.
Segment Revenue, EBITDA
Franchise segment revenue increased $12.6 million or 15.7 percent to $92.7 million from $80.1 million in the prior year period. The increase in franchise segment revenue was primarily due to an $8 million increase in franchise royalty revenue, a $2.8 million increase in national advertising fund (NAF) revenue, and a $2.6 million increase in franchise and other fees, partially offset by a $0.7 million decrease in equipment placement revenue, according to the company. Of the $8 million increase in franchise royalty revenue, $4.9 million was attributable to a franchisee-owned same store sales increase of 9.7 percent, $2.4 million was from higher royalties on annual fees and $1.9 million was attributable to new stores opened since Jan. 1, 2022. Partially offsetting the royalty revenue increases was a decrease of approximately $0.9 million primarily as a result of the 114 clubs acquired from franchisee Sunshine Fitness Growth Holdings, LLC in first quarter 2022 becoming corporate-owned stores beginning Feb. 10, 2022.
Franchise segment EBITDA increased $4.6 million to $64.7 million.
Corporate-owned stores segment revenue increased $29.7 million or 39 percent to $105.9 million from $76.2 million in first quarter 2022. Of the increase, $23.5 million was attributable to the Feb. 10, 2022, acquisition the Sunshine locations, $3.2 million was from the corporate-owned store same store sales increase of 12.1 percent, and $3 million was from new stores opened since Jan. 1, 2022
Corporate-owned stores segment EBITDA increased $10.2 million to $33.5 million.
Equipment segment revenue decreased $6.8 million or 22.3 percent to $23.7 million from $30.4 million in the prior year period, driven by $8.5 million of lower equipment sales to 18 new franchisee-owned stores in the quarter compared to 33 new franchisee-owned stores in first quarter 2022, which was partially offset by an increase of $1.8 million in sales to existing franchisee-owned stores in the three months ended March 31.
Equipment segment EBITDA decreased by $3.1 million to $5.6 million.
During the second quarter of 2023, the company repurchased 310,823 shares of Class A common stock for a total cost of approximately $25 million.