Planet Fitness, Newington, New Hampshire, reported revenue in the third quarter of $68.8 million, marking an 8.4 percent increase from the third quarter of 2014, according to financial results announced Thursday.
Planet Fitness, which opened 26 new clubs in the third quarter, reported a system-wide same store sales increase of 6.9 percent. Franchise segment revenue in the third quarter increased 25.4 percent to $19.8 million compared to third quarter 2014, and corporate-owned store segment revenue increased 10.8 percent to $25.2 million compared to third quarter 2014.
"We are very pleased with our third quarter results," Planet Fitness CEO Chris Rondeau said in a statement. "Our performance was driven by the continued execution of our strategy: expansion of the Planet Fitness store base coupled with system-wide same store sales growth. Our unique fitness offering and powerful national advertising strategy continue to resonate with a broad consumer audience. Looking ahead, we see a long runway for growth. With our three operating segments – franchise, corporate stores and equipment – we are well positioned to generate strong top-line gains, margin expansion and significant free cash flow over the long-term."
Planet Fitness' equipment segment revenue decreased 4.5 percent to $23.9 million. The decrease was attributed to expected changes in the timing of replacement equipment sales and new store equipment sales.
For 2015, Planet Fitness expects total revenue between $318 million and $321 million and system-wide same store sales growth between 7 percent and 7.5 percent. The company also expects between 192 and 197 new franchised stores and three new corporate stores for the year, according to the release. The franchisor had 7.1 million members at the end of the third quarter, Planet Fitness Chief Financial Officer Dorvin Lively said in Thursday's conference call with investors.
For the nine months ended September 30, total revenue increased 22.3 percent to $40.9 million compared to the same period in 2014. Franchise segment revenue increased 25.1 percent to $63.4 million, corporate-owned stores segment revenue increased 17.3 percent to $73.7 million and equipment segment revenue increased 24.7 percent to $87.6 million, compared to the same nine month period in 2014.
"We see a positive momentum continuing in the fourth quarter," Rondeau told investors, adding he expects the company to double its location footprint over the next seven years and add over 500 locations in the next three years.
Planet Fitness currently has over 1,040 locations. The company increased its footprint by 195 locations since the third quarter of 2014, Lively said.
In October, Planet Fitness marked its second international expansion and opened a 22,000-square-foot club in Santo Domingo, Dominican Republic. The company has two locations open in Canada with five more under construction, and it has one location in Puerto Rico, a U.S. territory.
The new location in the Dominican Republic is "exceeding" expectations, Rondeau said. Rondeau described the Dominican Republic location as a "toe in the water" to gauge potential expansion in Central America and South America, though he said there are no current plans for expansion into additional countries.
Rondeau credited the overall location growth to Planet Fitness franchisees, who he said opened 90 percent of the new locations in the last year. In California, Planet Fitness recently opened two locations and has 12 locations offering pre-grand opening sales, according to the Planet Fitness website.
"The franchisees out there (California) are veteran franchisees, and they're taking advantage of the real estate and growing fast," Rondeau said.
The earnings release did not detail financial results for the $19.99 per-month premium Black Card membership, which compromised 55 percent of total membership in 2014. However, Rondeau told investors that the clubs driving higher Black Card memberships have more of a "spa feel," and he is looking at redesigning some clubs to feature amenities.
"Outside the four walls we are constantly talking to partners (about the Black Card), and the larger partners are slow to make a deal," Rondeau said. "One thing we are looking at is adding local retailers or businesses in some affiliation, and that could be an interesting localized affinity program for members."
Planet Fitness, which debuted on the New York Stock Exchange in August at $14.50 per share, closed at $15.03 per share on Thursday and was up to $16.00 per share in early after hours trading.
Planet Fitness ranked No. 7 on Club Industry's Top 100 Health Clubs of 2015 with revenue of $279.80 million in 2014.