HAMPTON, N.H., Aug. 9, 2017 /PRNewswire/ -- Planet Fitness,
Inc. (NYSE: PLNT) today reported financial results for its second
quarter ended June 30, 2017.
Second Quarter Fiscal 2017 Highlights
- Total revenue increased from the prior year period by 17.3% to
$107.3 million.
- System-wide same store sales increased 9.0%.
- Net income attributable to Planet Fitness, Inc. was
$12.4 million, or $0.16 per diluted share, compared to net income
attributable to Planet Fitness Inc. of $4.1
million, or $0.11 per diluted
share in the prior year period.
- Net income was $18.0 million,
compared to net income of $18.1
million in the prior year period.
- Adjusted net income(1) increased 28.9% to
$21.7 million, or $0.22 per diluted share, compared to $16.8 million, or $0.17 per diluted share in the prior year
period.
- Adjusted EBITDA(1) increased 30.3% to $47.9 million from $36.8
million in the prior year period.
- 37 new Planet Fitness franchise stores were opened during the
period, bringing system-wide total stores to 1,403 at June 30, 2017.
(1) Adjusted net income and adjusted EBITDA are
non-GAAP measures. For reconciliations of Adjusted EBITDA and
Adjusted net income to U.S. GAAP ("GAAP") net income see "Non-GAAP
Financial Measures" accompanying this press release.
Christopher Rondeau, Chief
Executive Officer, commented, "We had a great second quarter driven
by our relentless commitment to reaching more and more casual and
first time gym users with our welcoming, non-intimidating fitness
offering. Total revenue increased 17% driven by strong growth in
all three of our business segments while system-wide same store
sales rose 9%, marking our 42nd consecutive quarter of
positive same store sales growth. Through our franchisees' new
store openings along with over $100
million spent annually on national and local advertising
programs, we continue to build on our leadership position by
capturing additional market share as well as bringing new consumers
into the fitness industry. Importantly, we've been able to
expand Planet Fitness in a highly profitable manner evidenced by
the 30% increase in second quarter adjusted EBITDA thanks to our
asset-light business model that includes our fast-growing,
high-margin Franchise segment. I am confident that our compelling
concept and powerful brand recognition combined with unmatched
system-wide leadership and resources will allow us to capitalize on
opportunities that drive long-term value for our shareholders."
Operating Results for the Second Quarter Ended June 30, 2017
For the second quarter 2017, total revenue increased
$15.8 million or 17.3% to
$107.3 million from $91.5 million in the prior year period. By
segment:
- Franchise segment revenue, which includes commission income,
increased $8.3 million or 28.2% to
$37.8 million from $29.5 million in the prior year period;
- Corporate-owned stores segment revenue increased $1.9 million or 7.2% to $28.3 million from $26.4
million in the prior year period; and
- Equipment segment revenue increased $5.6
million or 15.8% to $41.2
million from $35.6 million.
This increase was driven by an increase in replacement equipment
sales to existing franchisee-owned stores and equipment sales
related to new store openings.
System-wide same store sales increased 9.0%. By segment,
franchisee-owned same store sales increased 9.3% and
corporate-owned same store sales increased 4.3%.
For the second quarter of 2017, net income was $18.0 million, or $0.16 per diluted share, compared to net income
of $18.1 million, or $0.11 per diluted share, in the prior year
period. Adjusted net income increased 28.9% to $21.7 million, or $0.22 per diluted share, from $16.8 million, in the prior year period. Adjusted
net income has been adjusted to reflect a normalized federal income
tax rate of 39.5% for the current year period and the comparable
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 30.3% to $47.9 million from $36.8
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 $7.8
million or 31.6% to $32.5
million driven by royalties from new franchised stores
opened since June 30, 2016 as well as
higher same store sales and overall margin expansion;
- Corporate-owned stores segment EBITDA increased $3.3 million or 34.5% to $12.8 million driven primarily by higher monthly
and annual revenue, including an increase in same store sales, and
improved operating margin; and
- Equipment segment EBITDA increased by $2.0 million or 24.8% to $9.8 million driven by an increase in replacement
equipment sales to existing franchisee-owned stores and equipment
sales related to new store openings.
Secondary Offering
In May 2017, the Company completed
a secondary offering of 16,085,510 shares of its Class A common
stock at a price of $20.28 per share.
All of the shares sold in the offering were offered by certain
existing holders of limited liability company units of Pla-Fit
Holdings, LLC and certain holders of Class A common stock
affiliated with Consumer Partners, LLC, together referred to as the
"Selling Stockholders." The Company did not receive any proceeds
from the sale of shares of Class A common stock offered by the
Selling Stockholders.
Debt Refinancing
In May 2017, the Company amended
its credit facility to reduce the interest rate margin for term
loan borrowings by 50 basis points, with an additional 25 basis
point reduction in rate in the future if the Total Net Leverage
Ratio (as defined in the credit agreement) is less than 3.50 to
1.00. The amendment also reduced the interest rate margin for
revolving credit line borrowings by 25 basis points.
2017 Outlook
For the year ending December 31, 2017, the Company now
expects:
- Total revenue between $409 million and
$415 million;
- System-wide same store sales growth in the 8% to 9% range;
and
- Adjusted net income of $75 million to
$77 million, or $0.76 to $0.78
per diluted share.
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 and Adjusted net
income 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 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 and Adjusted net
income per share, diluted. The Company's presentation of Adjusted
EBITDA, Adjusted net income and Adjusted net income 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, and Adjusted net income
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 and net income 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 or net income per share,
diluted, determined in accordance with GAAP or a reconciliation of
guidance for Adjusted net income and Adjusted net income 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 and net
income per share, diluted, for the year ended December 31, 2017. These items are uncertain,
depend on many factors and could have a material impact on our net
income and net income per share, diluted, for the year ended
December 31, 2017.
Investor Conference Call
The Company will hold a conference call at 4:30 pm (ET) on August 9,
2017 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, N.H.,
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 June 30, 2017,
Planet Fitness had approximately 10.4 million members and 1,403
stores in 48 states, the District of
Columbia, Puerto Rico,
Canada and the Dominican Republic. 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 ZoneĀ®. More than 95% of Planet Fitness
stores are owned and operated by independent business men and
women.
Forward-Looking Statements
This press release contains certain statements, approximations,
estimates and projections with respect to our anticipated future
performance, especially those under the heading "2017 Outlook,"
("forward-looking statements"). Forward-looking statements are
neither historical facts nor 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 competition in the fitness industry, the Company's and
franchisees' ability to attract and retain new members, changes in
consumer demand, changes in equipment costs, the Company's ability
to expand into new markets, operating costs for the Company and
franchisees generally, availability and cost of capital for
franchisees, acquisition activity, developments and changes in laws
and regulations, our substantial indebtedness, our corporate
structure and tax receivable agreements, general economic
conditions and the other factors described in the Company's annual
report on Form 10-K for the year ended December 31, 2016, and the Company's other
filings with the Securities and Exchange Commission. 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 press release, whether as a result of new information, future
developments or otherwise.
Planet Fitness,
Inc. and subsidiaries
|
Condensed
consolidated statements of operations
|
(Unaudited)
|
(Amounts in
thousands, except per share amounts)
|
|
|
For the three
months ended
June 30,
|
|
|
For the six months
ended
June 30,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
|
$
|
32,791
|
|
|
$
|
25,506
|
|
|
$
|
63,072
|
|
|
$
|
46,997
|
|
Commission
income
|
|
5,003
|
|
|
|
3,973
|
|
|
|
11,519
|
|
|
|
10,159
|
|
Corporate-owned
stores
|
|
28,285
|
|
|
|
26,383
|
|
|
|
55,326
|
|
|
|
52,080
|
|
Equipment
|
|
41,237
|
|
|
|
35,610
|
|
|
|
68,501
|
|
|
|
65,579
|
|
Total
revenue
|
|
107,316
|
|
|
|
91,472
|
|
|
|
198,418
|
|
|
|
174,815
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
31,452
|
|
|
|
27,801
|
|
|
|
52,576
|
|
|
|
51,440
|
|
Store
operations
|
|
14,604
|
|
|
|
15,760
|
|
|
|
29,788
|
|
|
|
30,492
|
|
Selling, general and
administrative
|
|
14,768
|
|
|
|
12,381
|
|
|
|
28,588
|
|
|
|
24,226
|
|
Depreciation and
amortization
|
|
7,894
|
|
|
|
7,678
|
|
|
|
15,845
|
|
|
|
15,382
|
|
Other loss
(gain)
|
|
348
|
|
|
|
21
|
|
|
|
316
|
|
|
|
(165)
|
|
Total operating costs
and expenses
|
|
69,066
|
|
|
|
63,641
|
|
|
|
127,113
|
|
|
|
121,375
|
|
Income from
operations
|
|
38,250
|
|
|
|
27,831
|
|
|
|
71,305
|
|
|
|
53,440
|
|
Other expense,
net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(9,028)
|
|
|
|
(6,161)
|
|
|
|
(17,791)
|
|
|
|
(12,528)
|
|
Other (expense)
income
|
|
(933)
|
|
|
|
(160)
|
|
|
|
(251)
|
|
|
|
234
|
|
Total other expense,
net
|
|
(9,961)
|
|
|
|
(6,321)
|
|
|
|
(18,042)
|
|
|
|
(12,294)
|
|
Income before income
taxes
|
|
28,289
|
|
|
|
21,510
|
|
|
|
53,263
|
|
|
|
41,146
|
|
Provision for income
taxes
|
|
10,285
|
|
|
|
3,419
|
|
|
|
17,393
|
|
|
|
6,709
|
|
Net income
|
|
18,004
|
|
|
|
18,091
|
|
|
|
35,870
|
|
|
|
34,437
|
|
Less net income
attributable to non-controlling interests
|
|
5,592
|
|
|
|
13,959
|
|
|
|
14,616
|
|
|
|
26,936
|
|
Net income
attributable to Planet Fitness, Inc.
|
$
|
12,412
|
|
|
$
|
4,132
|
|
|
$
|
21,254
|
|
|
$
|
7,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
of Class A common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.16
|
|
|
$
|
0.11
|
|
|
$
|
0.30
|
|
|
$
|
0.20
|
|
Diluted
|
$
|
0.16
|
|
|
$
|
0.11
|
|
|
$
|
0.30
|
|
|
$
|
0.20
|
|
Weighted-average
shares of Class A common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
79,154
|
|
|
|
36,771
|
|
|
|
71,679
|
|
|
|
36,685
|
|
Diluted
|
|
79,193
|
|
|
|
36,773
|
|
|
|
71,713
|
|
|
|
36,686
|
|
Planet Fitness,
Inc. and subsidiaries
|
Condensed
consolidated balance sheets
|
(Unaudited)
|
(Amounts in
thousands, except per share amounts)
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
78,521
|
|
|
$
|
40,393
|
|
Accounts receivable,
net of allowance for bad debts of $79 and $687
at June 30, 2017 and
December 31, 2016, respectively
|
|
|
15,721
|
|
|
|
26,873
|
|
Due from related
parties
|
|
|
2,925
|
|
|
|
2,864
|
|
Inventory
|
|
|
1,447
|
|
|
|
1,802
|
|
Restricted assets ā
national advertising fund
|
|
|
859
|
|
|
|
3,074
|
|
Other
receivables
|
|
|
10,550
|
|
|
|
7,935
|
|
Other current
assets
|
|
|
7,330
|
|
|
|
8,284
|
|
Total current
assets
|
|
|
117,353
|
|
|
|
91,225
|
|
Property and
equipment, net of accumulated depreciation of $32,700 as
of June 30, 2017 and
$30,987 as of December 31, 2016
|
|
|
67,564
|
|
|
|
61,238
|
|
Intangible assets,
net
|
|
|
244,437
|
|
|
|
253,862
|
|
Goodwill
|
|
|
176,981
|
|
|
|
176,981
|
|
Deferred income
taxes
|
|
|
737,953
|
|
|
|
410,407
|
|
Other assets,
net
|
|
|
10,353
|
|
|
|
7,729
|
|
Total
assets
|
|
$
|
1,354,641
|
|
|
$
|
1,001,442
|
|
Liabilities and
stockholders' equity (deficit)
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
|
7,185
|
|
|
$
|
7,185
|
|
Accounts
payable
|
|
|
18,532
|
|
|
|
28,507
|
|
Accrued
expenses
|
|
|
12,215
|
|
|
|
19,190
|
|
Equipment
deposits
|
|
|
7,560
|
|
|
|
2,170
|
|
Deferred revenue,
current
|
|
|
20,271
|
|
|
|
17,780
|
|
Payable to related
parties pursuant to tax benefit arrangements, current
|
|
|
24,487
|
|
|
|
8,072
|
|
Other current
liabilities
|
|
|
565
|
|
|
|
369
|
|
Total current
liabilities
|
|
|
90,815
|
|
|
|
83,273
|
|
Long-term debt, net
of current maturities
|
|
|
699,175
|
|
|
|
702,003
|
|
Deferred rent, net of
current portion
|
|
|
5,166
|
|
|
|
5,108
|
|
Deferred revenue, net
of current portion
|
|
|
7,746
|
|
|
|
8,351
|
|
Deferred tax
liabilities
|
|
|
1,142
|
|
|
|
1,238
|
|
Payable to related
parties pursuant to tax benefit arrangements, net of current
portion
|
|
|
702,566
|
|
|
|
410,999
|
|
Other
liabilities
|
|
|
4,786
|
|
|
|
5,225
|
|
Total noncurrent
liabilities
|
|
|
1,420,581
|
|
|
|
1,132,924
|
|
Commitments and
contingencies (note 11)
|
|
|
|
|
|
|
|
|
Stockholders' equity
(deficit):
|
|
|
|
|
|
|
|
|
Class A common stock,
$.0001 par value - 300,000 shares authorized, 85,649 and
61,314 shares issued and
outstanding as of June 30, 2017 and December 31, 2016,
respectively
|
|
|
9
|
|
|
|
6
|
|
Class B common stock,
$.0001 par value - 100,000 shares authorized, 12,701 and
37,185 shares issued and
outstanding as of June 30, 2017 and December 31, 2016,
respectively
|
|
|
1
|
|
|
|
4
|
|
Accumulated other
comprehensive loss
|
|
|
(1,332)
|
|
|
|
(1,174)
|
|
Additional paid in
capital
|
|
|
10,629
|
|
|
|
34,467
|
|
Accumulated
deficit
|
|
|
(142,864)
|
|
|
|
(164,062)
|
|
Total stockholders'
deficit attributable to Planet Fitness Inc.
|
|
|
(133,557)
|
|
|
|
(130,759)
|
|
Non-controlling
interests
|
|
|
(23,198)
|
|
|
|
(83,996)
|
|
Total stockholders'
deficit
|
|
|
(156,755)
|
|
|
|
(214,755)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,354,641
|
|
|
$
|
1,001,442
|
|
Planet Fitness,
Inc. and subsidiaries
|
Condensed
consolidated statements of cash flows
|
(Unaudited)
|
(Amounts in
thousands)
|
|
|
|
For the six months
ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
35,870
|
|
|
$
|
34,437
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
15,845
|
|
|
|
15,382
|
|
Amortization of
deferred financing costs
|
|
|
942
|
|
|
|
741
|
|
Amortization of
favorable leases and asset retirement obligations
|
|
|
184
|
|
|
|
198
|
|
Amortization of
interest rate caps
|
|
|
954
|
|
|
|
221
|
|
Deferred tax
expense
|
|
|
14,589
|
|
|
|
6,703
|
|
Loss on extinguishment
of debt
|
|
|
79
|
|
|
|
ā
|
|
Third party debt
refinancing expense
|
|
|
1,021
|
|
|
|
ā
|
|
Gain on re-measurement
of tax benefit arrangement
|
|
|
(541)
|
|
|
|
ā
|
|
Provision for bad
debts
|
|
|
28
|
|
|
|
13
|
|
Gain on disposal of
property and equipment
|
|
|
(323)
|
|
|
|
(165)
|
|
Equity-based
compensation
|
|
|
1,012
|
|
|
|
960
|
|
Changes in operating
assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
11,542
|
|
|
|
7,785
|
|
Due to and due from
related parties
|
|
|
(289)
|
|
|
|
7,531
|
|
Inventory
|
|
|
355
|
|
|
|
3,664
|
|
Other assets and other
current assets
|
|
|
(3,239)
|
|
|
|
(3,074)
|
|
Accounts payable and
accrued expenses
|
|
|
(14,144)
|
|
|
|
(13,931)
|
|
Other liabilities and
other current liabilities
|
|
|
(33)
|
|
|
|
4
|
|
Income
taxes
|
|
|
(406)
|
|
|
|
(5,822)
|
|
Payable to related
parties pursuant to tax benefit arrangements
|
|
|
(7,909)
|
|
|
|
(6,007)
|
|
Equipment
deposits
|
|
|
5,390
|
|
|
|
(1,068)
|
|
Deferred
revenue
|
|
|
1,826
|
|
|
|
2,232
|
|
Deferred
rent
|
|
|
245
|
|
|
|
282
|
|
Net cash provided by
operating activities
|
|
|
62,998
|
|
|
|
50,086
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Additions to property
and equipment
|
|
|
(14,127)
|
|
|
|
(4,487)
|
|
Proceeds from sale of
property and equipment
|
|
|
ā
|
|
|
|
142
|
|
Net cash used in
investing activities
|
|
|
(14,127)
|
|
|
|
(4,345)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Principal payments on
capital lease obligations
|
|
|
ā
|
|
|
|
(25)
|
|
Repayment of long-term
debt
|
|
|
(3,592)
|
|
|
|
(2,550)
|
|
Payment of deferred
financing and other debt-related costs
|
|
|
(1,278)
|
|
|
|
ā
|
|
Premiums paid for
interest rate caps
|
|
|
(366)
|
|
|
|
ā
|
|
Proceeds from issuance
of Class A common stock
|
|
|
26
|
|
|
|
ā
|
|
Repurchase and
retirement of Class B common stock
|
|
|
ā
|
|
|
|
(1,583)
|
|
Dividend equivalent
payments
|
|
|
(139)
|
|
|
|
ā
|
|
Distributions to
Continuing LLC Members
|
|
|
(5,592)
|
|
|
|
(17,472)
|
|
Net cash used in
financing activities
|
|
|
(10,941)
|
|
|
|
(21,630)
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
|
|
198
|
|
|
|
123
|
|
Net increase in cash
and cash equivalents
|
|
|
38,128
|
|
|
|
24,234
|
|
Cash and cash
equivalents, beginning of period
|
|
|
40,393
|
|
|
|
31,430
|
|
Cash and cash
equivalents, end of period
|
|
$
|
78,521
|
|
|
$
|
55,664
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
|
|
|
|
|
Net cash paid for
income taxes
|
|
$
|
2,914
|
|
|
$
|
5,971
|
|
Cash paid for
interest
|
|
$
|
15,890
|
|
|
$
|
11,479
|
|
Non-cash investing
activities:
|
|
|
|
|
|
|
|
|
Non-cash additions to
property and equipment
|
|
$
|
988
|
|
|
$
|
226
|
|
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 and Adjusted net
income 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 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
and Adjusted net income per share, diluted. The Company's
presentation of Adjusted EBITDA, Adjusted net income, and Adjusted
net income 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 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 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.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Planet Fitness, Inc.
|
|
$
|
12,412
|
|
|
$
|
4,132
|
|
|
$
|
21,254
|
|
|
$
|
7,501
|
|
Net income
attributable to non-controlling interests
|
|
|
5,592
|
|
|
|
13,959
|
|
|
|
14,616
|
|
|
|
26,936
|
|
Net income
|
|
$
|
18,004
|
|
|
$
|
18,091
|
|
|
$
|
35,870
|
|
|
$
|
34,437
|
|
Interest expense,
net
|
|
|
9,028
|
|
|
|
6,161
|
|
|
|
17,791
|
|
|
|
12,528
|
|
Provision for income
taxes
|
|
|
10,285
|
|
|
|
3,419
|
|
|
|
17,393
|
|
|
|
6,709
|
|
Depreciation and
amortization
|
|
|
7,894
|
|
|
|
7,678
|
|
|
|
15,845
|
|
|
|
15,382
|
|
EBITDA
|
|
|
45,211
|
|
|
|
35,349
|
|
|
|
86,899
|
|
|
|
69,056
|
|
Purchase accounting
adjustments-revenue(1)
|
|
|
444
|
|
|
|
8
|
|
|
|
780
|
|
|
|
8
|
|
Purchase accounting
adjustments-rent(2)
|
|
|
191
|
|
|
|
280
|
|
|
|
387
|
|
|
|
462
|
|
Transaction
fees(3)
|
|
|
1,021
|
|
|
|
-
|
|
|
|
1,021
|
|
|
|
-
|
|
Stock offering-related
costs(4)
|
|
|
329
|
|
|
|
1,027
|
|
|
|
937
|
|
|
|
1,027
|
|
Severance
costs(5)
|
|
|
-
|
|
|
|
43
|
|
|
|
-
|
|
|
|
423
|
|
Early lease
termination costs(6)
|
|
|
719
|
|
|
|
-
|
|
|
|
719
|
|
|
|
-
|
|
Other(7)
|
|
|
-
|
|
|
|
72
|
|
|
|
(573)
|
|
|
|
72
|
|
Adjusted
EBITDA
|
|
$
|
47,915
|
|
|
$
|
36,779
|
|
|
$
|
90,170
|
|
|
$
|
71,048
|
|
|
|
(1)
|
Represents the impact
of revenue-related purchase accounting adjustments associated with
the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the
"2012 Acquisition"). At the time of the 2012 Acquisition, the
Company maintained a deferred revenue account, which consisted of
deferred area development agreement fees, deferred franchise fees,
and deferred enrollment fees that the Company billed and collected
up front but recognizes for GAAP purposes at a later date. In
connection with the 2012 Acquisition, it was determined that the
carrying amount of deferred revenue was greater than the fair value
assessed in accordance with ASC 805āBusiness Combinations, which
resulted in a write-down of the carrying value of the deferred
revenue balance upon application of acquisition push-down
accounting under ASC 805. These amounts represent the additional
revenue that would have been recognized in these periods if the
write-down to deferred revenue had not occurred in connection with
the application of acquisition pushdown accounting.
|
(2)
|
Represents the impact
of rent related purchase accounting adjustments. In accordance with
guidance in ASC 805 ā Business Combinations, in connection with the
2012 Acquisition, the Company's deferred rent liability was
required to be written off as of the acquisition date and rent was
recorded on a straight-line basis from the acquisition date through
the end of the lease term. This resulted in higher overall recorded
rent expense each period than would have otherwise been recorded
had the deferred rent liability not been written off as a result of
the acquisition push down accounting applied in accordance with ASC
805. Adjustments of $104, $183, $207, and $268 in the three and six
months ended June 30, 2017 and 2016, respectively, reflect the
difference between the higher rent expense recorded in accordance
with GAAP since the acquisition and the rent expense that would
have been recorded had the 2012 Acquisition not occurred.
Adjustments of $88, $97, $181, and $194 for the three and six
months ended June 30, 2017 and 2016, respectively, are due to
the amortization of favorable and unfavorable lease intangible
assets which were recorded in connection with the 2012 Acquisition
and the acquisition of eight franchisee-owned stores on March 31,
2014. All of the rent related purchase accounting adjustments are
adjustments to rent expense which is included in store operations
on our consolidated statements of operations.
|
(3)
|
Represents
transaction fees and expenses related to the amendment of our
credit facility in the three months ended June 30, 2017.
|
(4)
|
Represents legal,
accounting and other costs incurred in connection with offerings of
the Company's Class A common stock.
|
(5)
|
Represents severance
expense recorded in connection with an equity award
modification.
|
(6)
|
Represents charges
and expenses incurred in connection with the early termination of
the lease for our previous headquarters.
|
(7)
|
Represents certain
other charges and gains that we do not believe reflect our
underlying business performance. In the six months ended June 30,
2017, this amount includes a gain of $541 related to the adjustment
of our tax benefit arrangements primarily due to changes in our
effective tax rate.
|
A reconciliation of Segment EBITDA to Total Segment EBITDA is
set forth below.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Segment
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise
|
|
$
|
32,487
|
|
|
$
|
24,682
|
|
|
$
|
64,519
|
|
|
$
|
48,494
|
|
Corporate-owned
stores
|
|
|
12,840
|
|
|
|
9,547
|
|
|
|
23,533
|
|
|
|
19,709
|
|
Equipment
|
|
|
9,809
|
|
|
|
7,859
|
|
|
|
15,904
|
|
|
|
14,177
|
|
Corporate and
other
|
|
|
(9,925)
|
|
|
|
(6,739)
|
|
|
|
(17,057)
|
|
|
|
(13,324)
|
|
Total Segment
EBITDA(1)
|
|
$
|
45,211
|
|
|
$
|
35,349
|
|
|
$
|
86,899
|
|
|
$
|
69,056
|
|
|
(1) Total
Segment EBITDA is equal to EBITDA.
|
Adjusted Net Income and Adjusted Net Income per Diluted
Share
As a result of the recapitalization transactions that occurred
prior to our IPO, the limited liability company agreement of
Pla-Fit Holdings that was amended and restated (the "New LLC
Agreement") designated Planet Fitness, Inc. as the sole managing
member of Pla-Fit Holdings. As sole managing member, Planet
Fitness, Inc. exclusively operates and controls the business and
affairs of Pla-Fit Holdings, LLC. As a result of the
recapitalization transactions and the New LLC Agreement, Planet
Fitness, Inc. now consolidates Pla-Fit Holdings, and Pla-Fit
Holdings is considered the predecessor to Planet Fitness, Inc. for
accounting purposes. Our presentation of Adjusted net income and
Adjusted net income per share, diluted, gives effect to the
consolidation of Pla-Fit Holdings with Planet Fitness, Inc.
resulting from the recapitalization transactions and the New LLC
Agreement as if they had occurred on January
1, 2016. In addition, Adjusted net income assumes that all
net income 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 per share, diluted, is
calculated by dividing Adjusted net income 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 and Adjusted net income 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 and Adjusted net income
per share, diluted, supplement GAAP measures and enable us to more
effectively evaluate our performance period-over-period. A
reconciliation of Adjusted net income to net income, the most
directly comparable GAAP measure, and the computation of Adjusted
net income per share, diluted, are set forth below.
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Planet Fitness, Inc.
|
|
$
|
12,412
|
|
|
$
|
4,132
|
|
|
$
|
21,254
|
|
|
$
|
7,501
|
|
Net income
attributable to non-controlling interests
|
|
|
5,592
|
|
|
|
13,959
|
|
|
|
14,616
|
|
|
|
26,936
|
|
Net income
|
|
$
|
18,004
|
|
|
$
|
18,091
|
|
|
$
|
35,870
|
|
|
$
|
34,437
|
|
Provision for income
taxes, as reported
|
|
|
10,285
|
|
|
|
3,419
|
|
|
|
17,393
|
|
|
|
6,709
|
|
Purchase accounting
adjustments-revenue(1)
|
|
|
444
|
|
|
|
8
|
|
|
|
780
|
|
|
|
8
|
|
Purchase accounting
adjustments-rent(2)
|
|
|
191
|
|
|
|
280
|
|
|
|
387
|
|
|
|
462
|
|
Transaction
fees(3)
|
|
|
1,021
|
|
|
|
-
|
|
|
|
1,021
|
|
|
|
-
|
|
Stock offering-related
costs(4)
|
|
|
329
|
|
|
|
1,027
|
|
|
|
937
|
|
|
|
1,027
|
|
Severance
costs(5)
|
|
|
-
|
|
|
|
43
|
|
|
|
-
|
|
|
|
423
|
|
Early lease
termination costs(6)
|
|
|
912
|
|
|
|
-
|
|
|
|
1,143
|
|
|
|
-
|
|
Other(7)
|
|
|
-
|
|
|
|
72
|
|
|
|
(573)
|
|
|
|
72
|
|
Purchase accounting
amortization(8)
|
|
|
4,622
|
|
|
|
4,843
|
|
|
|
9,244
|
|
|
|
9,686
|
|
Adjusted income
before income taxes
|
|
$
|
35,808
|
|
|
$
|
27,783
|
|
|
$
|
66,202
|
|
|
$
|
52,824
|
|
Adjusted income
taxes(9)
|
|
|
14,144
|
|
|
|
10,974
|
|
|
|
26,150
|
|
|
|
20,865
|
|
Adjusted net
income
|
|
$
|
21,664
|
|
|
$
|
16,809
|
|
|
$
|
40,052
|
|
|
$
|
31,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
per share, diluted
|
|
$
|
0.22
|
|
|
$
|
0.17
|
|
|
$
|
0.41
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
weighted-average shares outstanding(10)
|
|
|
98,391
|
|
|
|
98,569
|
|
|
|
98,459
|
|
|
|
98,638
|
|
|
|
(1)
|
Represents the impact
of revenue-related purchase accounting adjustments associated with
the 2012 Acquisition. At the time of the 2012 Acquisition, the
Company maintained a deferred revenue account, which consisted of
deferred area development agreement fees, deferred franchise fees,
and deferred enrollment fees that the Company billed and collected
up front but recognizes for GAAP purposes at a later date. In
connection with the 2012 Acquisition, it was determined that the
carrying amount of deferred revenue was greater than the fair value
assessed in accordance with ASC 805āBusiness Combinations, which
resulted in a write-down of the carrying value of the deferred
revenue balance upon application of acquisition push-down
accounting under ASC 805. These amounts represent the additional
revenue that would have been recognized in these periods if the
write-down to deferred revenue had not occurred in connection with
the application of acquisition pushdown accounting.
|
(2)
|
Represents the impact
of rent related purchase accounting adjustments. In accordance with
guidance in ASC 805 ā Business Combinations, in connection with the
2012 Acquisition, the Company's deferred rent liability was
required to be written off as of the acquisition date and rent was
recorded on a straight-line basis from the acquisition date through
the end of the lease term. This resulted in higher overall recorded
rent expense each period than would have otherwise been recorded
had the deferred rent liability not been written off as a result of
the acquisition push down accounting applied in accordance with ASC
805. Adjustments of $104, $183, $207, and $268 in the three and six
months ended June 30, 2017 and 2016, respectively, reflect the
difference between the higher rent expense recorded in accordance
with GAAP since the acquisition and the rent expense that would
have been recorded had the 2012 Acquisition not occurred.
Adjustments of $88, $97, $181, and $194 for the three and six
months ended June 30, 2017 and 2016, respectively, are due to
the amortization of favorable and unfavorable lease intangible
assets which were recorded in connection with the 2012 Acquisition
and the acquisition of eight franchisee-owned stores on March 31,
2014. All of the rent related purchase accounting adjustments are
adjustments to rent expense which is included in store operations
on our consolidated statements of operations.
|
(3)
|
Represents
transaction fees and expenses related to the amendment of our
credit facility in the three months ended June 30, 2017.
|
(4)
|
Represents legal,
accounting and other costs incurred in connection with offerings of
the Company's Class A common stock.
|
(5)
|
Represents severance
expense recorded in connection with an equity award
modification.
|
(6)
|
Represents charges
and expenses incurred in connection with the early termination of
the lease for our previous headquarters.
|
(7)
|
Represents certain
other charges and gains that we do not believe reflect our
underlying business performance. In the six months ended June 30,
2017, this amount includes a gain of $541 related to the adjustment
of our tax benefit arrangements primarily due to changes in our
effective tax rate.
|
(8)
|
Includes $4,086,
$4,219, $8,172 and $8,438 of amortization of intangible assets,
other than favorable leases, for the three and six months ended
June 30, 2017 and 2016, respectively, recorded in connection
with the 2012 Acquisition, and $536, $624, $1,072 and $1,248 of
amortization of intangible assets for the three and six months
ended June 30, 2017 and 2016, respectively, recorded in
connection with the acquisition of eight franchisee-owned stores on
March 31, 2014. The adjustment represents the amount of actual
non-cash amortization expense recorded, in accordance with GAAP, in
each period.
|
(9)
|
Represents corporate
income taxes at an assumed effective tax rate of 39.5% for the
three and six months ended June 30, 2017 and 2016 applied to
adjusted income before income taxes.
|
(10)
|
Assumes the full
exchange of all outstanding Holdings Units and corresponding shares
of Class B common stock for shares of Class A common stock of
Planet Fitness, Inc.
|
A reconciliation of net income per share, diluted, to Adjusted
net income per share, diluted is set forth below for the three and
six months ended June 30, 2017 and
2016:
|
|
For the Three
Months Ended
June 30, 2017
|
|
|
For the Three
Months Ended
June 30, 2016
|
|
|
|
Net
income
|
|
|
Weighted Average
Shares
|
|
|
Net income per
share, diluted
|
|
|
Net
income
|
|
|
Weighted Average
Shares
|
|
|
Net income per
share, diluted
|
|
Net income
attributable to Planet Fitness Inc.(1)
|
|
$
|
12,412
|
|
|
|
79,193
|
|
|
$
|
0.16
|
|
|
$
|
4,132
|
|
|
|
36,773
|
|
|
$
|
0.11
|
|
Assumed exchange of
shares(2)
|
|
|
5,592
|
|
|
|
19,198
|
|
|
|
|
|
|
|
13,959
|
|
|
|
61,796
|
|
|
|
|
|
Net Income
|
|
|
18,004
|
|
|
|
|
|
|
|
|
|
|
|
18,091
|
|
|
|
|
|
|
|
|
|
Adjustments to arrive
at adjusted income before
income taxes(3)
|
|
|
17,804
|
|
|
|
|
|
|
|
|
|
|
|
9,692
|
|
|
|
|
|
|
|
|
|
Adjusted income before
income taxes
|
|
|
35,808
|
|
|
|
|
|
|
|
|
|
|
|
27,783
|
|
|
|
|
|
|
|
|
|
Adjusted income
taxes(4)
|
|
|
14,144
|
|
|
|
|
|
|
|
|
|
|
|
10,974
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
21,664
|
|
|
|
98,391
|
|
|
$
|
0.22
|
|
|
$
|
16,809
|
|
|
|
98,569
|
|
|
$
|
0.17
|
|
|
|
(1)
|
Represents net income
attributable to Planet Fitness, Inc. and the associated weighted
average shares, diluted of Class A common stock
outstanding.
|
(2)
|
Assumes the full
exchange of all outstanding Holdings Units and corresponding shares
of Class B common stock for shares of Class A common stock of
Planet Fitness, Inc. Also assumes the addition of net income
attributable to non-controlling interests corresponding with the
assumed exchange of Holdings Units and Class B common shares for
shares of Class A common stock.
|
(3)
|
Represents the total
impact of all adjustments identified in the adjusted net income
table above to arrive at adjusted income before income
taxes.
|
(4)
|
Represents corporate
income taxes at an assumed effective tax rate of 39.5% for the
three months ended June 30, 2017 and 2016, applied to adjusted
income before income taxes.
|
|
|
For the Six Months
Ended
June 30, 2017
|
|
|
For the Six Months
Ended
June 30, 2016
|
|
|
|
Net
income
|
|
|
Weighted Average
Shares
|
|
|
Net income per
share, diluted
|
|
|
Net
income
|
|
|
Weighted Average
Shares
|
|
|
Net income per
share, diluted
|
|
Net income
attributable to Planet Fitness Inc.(1)
|
|
$
|
21,254
|
|
|
|
71,713
|
|
|
$
|
0.30
|
|
|
$
|
7,501
|
|
|
|
36,686
|
|
|
$
|
0.20
|
|
Assumed exchange of
shares(2)
|
|
|
14,616
|
|
|
|
26,746
|
|
|
|
|
|
|
|
26,936
|
|
|
|
61,952
|
|
|
|
|
|
Net Income
|
|
|
35,870
|
|
|
|
|
|
|
|
|
|
|
|
34,437
|
|
|
|
|
|
|
|
|
|
Adjustments to arrive
at adjusted income before
income taxes(3)
|
|
|
30,332
|
|
|
|
|
|
|
|
|
|
|
|
18,387
|
|
|
|
|
|
|
|
|
|
Adjusted income before
income taxes
|
|
|
66,202
|
|
|
|
|
|
|
|
|
|
|
|
52,824
|
|
|
|
|
|
|
|
|
|
Adjusted income
taxes(4)
|
|
|
26,150
|
|
|
|
|
|
|
|
|
|
|
|
20,865
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income
|
|
$
|
40,052
|
|
|
|
98,459
|
|
|
$
|
0.41
|
|
|
$
|
31,959
|
|
|
|
98,638
|
|
|
$
|
0.32
|
|
|
|
(1)
|
Represents net income
attributable to Planet Fitness, Inc. and the associated weighted
average shares, diluted of Class A common stock
outstanding.
|
(2)
|
Assumes the full
exchange of all outstanding Holdings Units and corresponding shares
of Class B common stock for shares of Class A common stock of
Planet Fitness, Inc. Also assumes the addition of net income
attributable to non-controlling interests corresponding with the
assumed exchange of Holdings Units and Class B common shares for
shares of Class A common stock.
|
(3)
|
Represents the total
impact of all adjustments identified in the adjusted net income
table above to arrive at adjusted income before income
taxes.
|
(4)
|
Represents corporate
income taxes at an assumed effective tax rate of 39.5% for the six
months ended June 30, 2017 and 2016, applied to adjusted income
before income taxes.
|
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SOURCE Planet Fitness, Inc.