Planet Fitness, Inc. Announces Fourth Quarter and Year-End 2021 Results

HAMPTON, N.H., Feb. 24, 2022 /PRNewswire/ -- Today, Planet Fitness, Inc. (NYSE:PLNT) reported financial results for its fourth quarter ended December 31, 2021.

"We exceeded our expectations for both members and new store growth in 2021, which we believe demonstrates that our message of fitness being essential to both physical and mental health is resonating with consumers," said Chris Rondeau, Chief Executive Officer. "To date in the first quarter of 2022, we ended January with 15.6 million members surpassing our pre-pandemic first quarter 2020 membership peak. We also recently acquired Sunshine Fitness, a high-performing operator of more than 100 Planet Fitness locations, and we completed a successful debt refinancing. We believe there is long-term untapped opportunity for growth as the pandemic underscored the importance of overall fitness, and we offer a welcoming and safe environment for people looking to get off the couch to begin their fitness journey."

Fourth Quarter Fiscal 2021 Highlights

• Total revenue increased from the prior year period by 37.3% to $183.6 million.
• System-wide same store sales increased 12.3%.
• Net income attributable to Planet Fitness, Inc. was $5.7 million, or $0.07 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $8.7 million, or $0.11 per diluted share, in the prior year period.
• Net income was $6.3 million, compared to $9.7 million in the prior year period.
• Adjusted net income⁽¹⁾  increased 49.6% to $22.5 million, or $0.26 per diluted share, compared to $15.1 million, or $0.17 per diluted share, in the prior year period.
• Adjusted EBITDA⁽¹⁾  increased 23.3% to $63.0 million from $51.1 million in the prior year period.
• 62 new Planet Fitness stores were opened system-wide during the period, bringing system-wide total stores to 2,254 as of December 31, 2021.

Fiscal Year 2021 Highlights

• Total revenue increased from the prior year by 44.4% to $587.0 million.
• Net income (loss) attributable to Planet Fitness, Inc. was income of $42.8 million, or $0.51 per diluted share, compared to a loss of $15.0 million, or $(0.19) per diluted share, in the prior year.
• Net income (loss) was income of $46.1 million, compared to a loss of $15.2 million in the prior year.
• Adjusted net income⁽¹⁾  increased to $71.5 million, or $0.82 per diluted share, compared to $3.1 million, or $0.04 per diluted share, in the prior year.
• Adjusted EBITDA⁽¹⁾ increased 86.5% to $224.4 million from $120.4 million in the prior year.
• 132 new Planet Fitness stores were opened system-wide during the year, bringing system-wide total stores to 2,254 as of December 31, 2021.

⁽¹⁾ Adjusted net income, Adjusted EBITDA and Adjusted net income per share, diluted are non-GAAP measures. For reconciliations of Adjusted EBITDA and Adjusted net income to U.S. GAAP ("GAAP") net income and a computation of Adjusted net income per share, diluted, see "Non-GAAP Financial Measures" accompanying this press release.

Operating Results for the Fourth Quarter Ended December 31, 2021

For the fourth quarter of 2021, total revenue increased $49.9 million or 37.3% to $183.6 million from $133.8 million in the prior year period, including system-wide same store sales growth of 12.3%. By segment:

• Franchise segment revenue increased $11.5 million or 17.3% to $78.4 million from $66.9 million in the prior year period. Of the increase, $6.2 million is from new stores and stores that were open in the current year period but temporarily closed in the prior year period due to COVID-19, $5.5 million is attributable to the franchise same store sales increase of 12.4%, $2.3 million is from higher equipment placement revenue, and $2.2 million is from higher franchise and other fees.  These amounts were partially offset by lower National Advertising Fund ("NAF") revenue of $2.9 million and lower annual fee revenue of $1.8 million as a result of catch up billings in the fourth quarter of 2020 as stores reopened from temporary COVID-19 closures;
• Corporate-owned stores segment revenue increased $5.9 million or 15.3% to $44.9 million from $38.9 million in the prior year period. The $5.9 million increase was primarily a result of new stores and stores that were open in the current year period but temporarily closed in the prior year period due to COVID-19 and a same store sales increase of 10.1%, partially offset by lower annual fee revenue as a result of catch up billings in the fourth quarter of 2020 as stores reopened from temporary COVID-19 closures; and
• Equipment segment revenue increased $32.4 million or 115.7% to $60.4 million from $28.0 million in the prior year period, due to higher equipment sales to new and existing franchisee-owned stores. Also contributing to the increase was the 15% discount provided to franchisees on equipment  sales  in  the  prior  year  as  a  result  of  the  COVID-19  pandemic.

For the fourth quarter of 2021, net income attributable to Planet Fitness, Inc. was $5.7 million, or $0.07 per diluted share, compared to $8.7 million, or $0.11 per diluted share, in the prior year period. Net income was $6.3 million in the fourth quarter of 2021 compared to $9.7 million in the prior year period. Both of the above amounts in 2021 include $17.5 million of credit loss expense related to the establishment of an allowance for credit losses on a held-to-maturity investment based upon facts and circumstances that existed as of December 31, 2021 related to the investee's performance and overall financial condition. Adjusted net income increased 49.6% to $22.5 million, or $0.26 per diluted share, from $15.1 million, or $0.17 per diluted share, in the prior year period. Adjusted net income has been adjusted to reflect a normalized income tax rate of 27.0% for the fourth quarter of 2021 and 26.6% for the prior year period and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures").

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures"), increased 23.3% to $63.0 million from $51.1 million in the prior year period.

Segment EBITDA represents our Total Segment EBITDA broken down by the Company's reportable segments. Total Segment EBITDA is equal to EBITDA, which is defined as net income before interest, taxes, depreciation and amortization (see "Non-GAAP Financial Measures").

• Franchise segment EBITDA increased $5.7 million or 13.2% to $49.3 million. The increase is primarily a result of higher revenue of $11.5 million as described above, partially offset by higher franchise-related payroll and operational expenses and higher NAF expenses in the current year period;
• Corporate-owned stores segment EBITDA increased $1.7 million or 14.1% to $14.0 million. The increase is primarily due to higher corporate-owned store revenue as described above, partially offset by higher operating expenses as a result of COVID-19 related closures in the prior year period and the opening of nine new corporate-owned stores since October 1, 2020; and
• Equipment segment EBITDA increased by $11.2 million or 354.9% to $14.3 million, due to higher equipment sales to new and existing franchisee-owned stores. Also contributing to the increase was the 15% discount provided to franchisees on equipment  sales  in  the  prior  year  as  a  result  of  the  COVID-19  pandemic.

Operating Results for the Fiscal Year Ended December 31, 2021

For the fiscal year ended December 31, 2021, total revenue increased $180.4 million or 44.4% to $587.0 million from $406.6 million in the prior year. By segment:  

• Franchise segment revenue increased $84.6 million or 41.0% to $290.7 million from $206.2 million in the prior year primarily from higher royalty revenue and NAF revenue as a result of temporary store closures related to COVID-19 beginning in March 2020, as well as higher equipment placement revenue;
• Corporate-owned stores segment revenue increased $50.1 million or 42.7% to $167.2 million from $117.1 million in the prior year, primarily as a result of temporary store closures related to COVID-19 beginning in March 2020, as well as the opening of 12 new corporate-owned stores since January 1, 2020; and
• Equipment segment revenue increased $45.8 million or 54.9% to $129.1 million from $83.3 million in the prior year, driven by higher equipment sales to new and existing franchisee-owned stores. Also contributing to the increase was the 15% discount provided to franchisees on equipment  sales  in  the  prior  year  as  a  result  of  the  COVID-19 pandemic. 

For the year ended December 31, 2021, net income (loss) attributable to Planet Fitness, Inc. was income of $42.8 million, or $0.51 per diluted share, compared to a loss of $15.0 million, or $(0.19) per diluted share, in the prior year. Net income (loss) was income of $46.1 million in 2021 compared to a loss of $15.2 million in the prior year. Both of the above amounts in 2021 include $17.5 million of credit loss expense related to the establishment of an allowance for credit losses on a held-to-maturity investment based upon facts and circumstances that existed as of December 31, 2021 related to the investee's performance and overall financial condition. Adjusted net income increased to $71.5 million, or $0.82 per diluted share, from $3.1 million, or $0.04 per diluted share, in the prior year period. Adjusted net income has been adjusted to reflect a normalized income tax rate of 27.0% for the year ended December 31, 2021 and 26.6% for the prior year period and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures").

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures"), increased 86.5% to $224.4 million from $120.4 million in the prior year period.

Segment EBITDA represents our Total Segment EBITDA broken down by the Company's reportable segments. Total Segment EBITDA is equal to EBITDA, which is defined as net income before interest, taxes, depreciation and amortization (see "Non-GAAP Financial Measures").

• Franchise segment EBITDA increased $79.3 million or 69.0% to $194.3 million primarily due to temporary store closures related to COVID-19 beginning in March 2020, higher NAF revenue and lower NAF expense, partially offset by higher franchise-related payroll and operational expenses;
• Corporate-owned stores segment EBITDA increased $25.5 million or 107.8% to $49.2 million, primarily due to temporary store closures related to COVID-19 beginning in March 2020, as well as the opening of 12 new corporate-owned stores since January 1, 2020; and
• Equipment segment EBITDA increased by $16.6 million or 126.6% to $29.7 million driven by higher equipment sales to new and existing franchisee-owned stores and the 15% discount offered to franchisees on equipment sales in the prior year as a result of the COVID-19 pandemic.

2022 Outlook

For the year ending December 31, 2022, the Company expects the following, which includes the impact from the Sunshine Fitness acquisition and assumes there is no significant worsening of the COVID-19 pandemic that seriously impacts performance, including prolonged store closures or other mandated operational restrictions:

• New equipment placements of approximately 170 in franchisee-owned locations
• System-wide same store sales in the low double-digit percentage range

The following are 2022 growth expectations over the Company's 2021 results:

• Revenue to increase in the mid-50 percent range
• Adjusted EBITDA to increase in the high-50 percent range
• Adjusted Net Income to increase in the low-90 percent range
• Adjusted earnings per share to increase in the mid-80 percent range, based on Adjusted diluted shares outstanding of approximately 91.1 million, inclusive of the issuance of equity as part of the Sunshine Fitness acquisition

The Company also expects 2022 net interest expense to be approximately $89 million as a result of its recent debt refinancing and upsizing.

Presentation of Financial Measures

Planet Fitness, Inc. (the "Company") was formed in March 2015 for the purpose of facilitating the initial public offering (the "IPO") and related recapitalization transactions that occurred in August 2015, and in order to carry on the business of Pla-Fit Holdings, LLC ("Pla-Fit Holdings") and its subsidiaries. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings' financial results and reports a non-controlling interest related to the portion of Pla-Fit Holdings not owned by the Company.

The financial information presented in this press release includes non-GAAP financial measures such as EBITDA, Segment EBITDA, Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share, diluted, to provide measures that we believe are useful to investors in evaluating the Company's performance. These non-GAAP financial measures are supplemental measures of the Company's performance that are neither required by, nor presented in accordance with GAAP. These financial measures should not be considered in isolation or as substitutes for GAAP financial measures such as net income (loss) or any other performance measures derived in accordance with GAAP. In addition, in the future, the Company may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share, diluted. The Company's presentation of Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share, diluted, should not be construed as an inference that the Company's future results will be unaffected by similar amounts or other unusual or nonrecurring items. See the tables at the end of this press release for a reconciliation of EBITDA, Adjusted EBITDA, Total Segment EBITDA, Adjusted net income (loss), and Adjusted net income (loss) per share, diluted, to their most directly comparable GAAP financial measure.

The non-GAAP financial measures used in our full-year outlook will differ from net income (loss) and net income (loss) per share, diluted, determined in accordance with GAAP in ways similar to those described in the reconciliations at the end of this press release. We do not provide guidance for net income (loss) or net income (loss) per share, diluted, determined in accordance with GAAP or a reconciliation of guidance for Adjusted net income (loss) and Adjusted net income (loss) per share, diluted, to the most directly comparable GAAP measure because we are not able to predict with reasonable certainty the amount or nature of all items that will be included in our net income (loss) and net income (loss) per share, diluted, for the year ending December 31, 2022. These items are uncertain, depend on many factors and could have a material impact on our net income (loss) and net income (loss) per share, diluted, for the year ending December 31, 2022, and therefore cannot be made available without unreasonable effort.

Same store sales refers to year-over-year sales comparisons for the same store sales base of both corporate-owned and franchisee-owned stores, which is calculated for a given period by including only sales from stores that had sales in the comparable months of both years. We define the same store sales base to include those stores that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same store sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned stores. Because less than 50% of our stores in the same store sales base had membership billings in all of the months included in the year ended December 31, 2020, we are not providing same store sales comparisons for that period. For the three months ending December 31, 2021, we have provided same store sales comparisons for the stores that had monthly membership billings in all three months of both years.

Investor Conference Call

The Company will hold a conference call at 8:00AM (ET) on February 24, 2022 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.planetfitness.com via the "Investor Relations" link. The webcast will be archived on the website for one year.

About Planet Fitness

Founded in 1992 in Dover, NH, Planet Fitness is one of the largest and fastest-growing franchisors and operators of fitness centers in the United States by number of members and locations. As of December 31, 2021, Planet Fitness had approximately 15.2 million members and 2,254 stores in 50 states, the District of Columbia, Canada, Panama, Mexico and Australia. The Company's mission is to enhance people's lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone®. More than 95% of Planet Fitness stores are owned and operated by independent business men and women.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the federal securities laws, which involve risks and uncertainties.  Forward-looking statements include the Company's statements with respect to expected future performance presented under the heading "2022 Outlook," those attributed to the Company's Chief Executive Officer in this press release, and other statements, estimates and projections that do not relate solely to historical facts. Forward-looking statements can be identified by words such as "believe," "expect," "goal," plan," "will," "prospects," "future," "strategy" and similar references to future periods, although not all forward-looking statements include these identifying words.  Forward-looking statements are not assurances of future performance. Instead, they are based only on the Company's current beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company's control. Actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results to differ materially include risks and uncertainties associated with the duration and impact of COVID-19, which has resulted and may again result in store closures and a decrease in our net membership base and may give rise to or heighten one or more of the other risks and uncertainties described herein, competition in the fitness industry, the Company's and franchisees' ability to attract and retain members, the Company's and franchisees' ability to identify and secure suitable sites for new franchise stores, changes in consumer demand, changes in equipment costs, the Company's ability to expand into new markets domestically and internationally, operating costs for the Company and franchisees generally, availability and cost of capital for franchisees, acquisition activity, developments and changes in laws and regulations, risks related to our ability to achieve the benefits from the Sunshine Fitness acquisition, our substantial increased indebtedness as a result of our refinancing and securitization transactions and our ability to incur additional indebtedness or refinance that indebtedness in the future, our future financial performance and our ability to pay principal and interest on our indebtedness, our corporate structure and tax receivable agreements, failures, interruptions or security breaches of the Company's information systems or technology, general economic conditions and the other factors described in the Company's annual report on Form 10-K for the year ended December 31, 2020 and, once available, the Company's annual report on Form 10-K for the year ended December 31, 2021, as well as the Company's other filings with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in forward-looking statements, investors should not place undue reliance on forward-looking statements, which reflect the Company's views only as of the date of this press release. Except as required by law, neither the Company nor any of its affiliates or representatives undertake any obligation to provide additional information or to correct or update any information set forth in this release, whether as a result of new information, future developments or otherwise.

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: EBITDA, Total Segment EBITDA, Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share, diluted (collectively, the "non-GAAP financial measures"). The Company believes that these non-GAAP financial measures, when used in conjunction with GAAP financial measures, are useful to investors in evaluating our operating performance. These non-GAAP financial measures presented in this release are supplemental measures of the Company's performance that are neither required by, nor presented in accordance with GAAP. These financial measures should not be considered in isolation or as substitutes for GAAP financial measures such as net income (loss) or any other performance measures derived in accordance with GAAP. In addition, in the future, the Company may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share, diluted. The Company's presentation of Adjusted EBITDA, Adjusted net income (loss), and Adjusted net income (loss) per share, diluted, should not be construed as an inference that the Company's future results will be unaffected by unusual or nonrecurring items.

EBITDA, Segment EBITDA and Adjusted EBITDA

We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our operating performance and we believe these measures provide useful information to investors in evaluating our performance. We have also disclosed Segment EBITDA as an important financial metric utilized by the Company to evaluate performance and allocate resources to segments in accordance with ASC 280, Segment Reporting. We define EBITDA as net income (loss) before interest, taxes, depreciation and amortization. Segment EBITDA sums to Total Segment EBITDA which is equal to the Non-GAAP financial metric EBITDA. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our segments as well as the business as a whole. Our board of directors also uses EBITDA as a key metric to assess the performance of management. We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company's core operations. These items include certain purchase accounting adjustments, stock offering-related costs, and certain other charges and gains. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.

A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, is set forth below.

A reconciliation of Segment EBITDA to Total Segment EBITDA is set forth below.

Adjusted Net Income (loss) and Adjusted Net Income (loss) per Diluted Share

Our presentation of Adjusted net income (loss) assumes that all net income (loss) is attributable to Planet Fitness, Inc., which assumes the full exchange of all outstanding Holdings Units for shares of Class A common stock of Planet Fitness, Inc., adjusted for certain non-recurring items that we do not believe directly reflect our core operations. Adjusted net income (loss) per share, diluted, is calculated by dividing Adjusted net income (loss) by the total shares of Class A common stock outstanding plus any dilutive options and restricted stock units as calculated in accordance with GAAP and assuming the full exchange of all outstanding Holdings Units and corresponding Class B common stock as of the beginning of each period presented. Adjusted net income (loss) and Adjusted net income (loss) per share, diluted, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net income and earnings per share, as calculated in accordance with GAAP. We believe Adjusted net income (loss) and Adjusted net income (loss) per share, diluted, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of Adjusted net income (loss) to net income (loss), the most directly comparable GAAP measure, and the computation of Adjusted net income (loss) per share, diluted, are set forth below.

A reconciliation of net income per share, diluted, to Adjusted net income per share, diluted is set forth below for the three months and years ended December 31, 2021 and 2020:

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SOURCE Planet Fitness, Inc.