HAMPTON, N.H., May 6, 2021
/PRNewswire/ -- Today, Planet Fitness, Inc. (NYSE:PLNT)
reported financial results for its first quarter ended March 31, 2021.
"We are very encouraged by the clear and steady improvement in
overall sentiment we witnessed in America during the first quarter
and the corresponding impact it had on our business. We're pleased
to announce that we experienced sequential net member growth in
each month of the quarter, ending March with 14.1 million members,"
said Chris Rondeau, Chief Executive
Officer. "We believe that the positive headline news on COVID-19
vaccine availability drove a seasonality shift in our membership
trends as March membership growth exceeded March 2019, reinforcing our belief that people
are eager to get back into our gyms. While we anticipate the
operating environment to remain volatile in the near term, the
membership and usage trends that we are experiencing, along with
the strengthened partnership that we announced today with iFIT
Health & Fitness Inc., a leading global health and fitness
technology company, enhance my optimism for our long-term growth.
As we look to the future, we believe our purpose of enhancing
people's lives and creating a healthier world sets us, and our
franchisees, up for long-term success."
First Quarter Fiscal 2021 results
- Total revenue decreased from the prior year period by 12.1% to
$111.9 million.
- System wide same store sales decreased 14.9%.
- Net income attributable to Planet Fitness, Inc. was
$5.6 million, or $0.07 per diluted share, compared to $8.6 million, or $0.11 per diluted share in the prior year
period.
- Net income decreased 40.4% to $6.2
million, compared to net income of $10.4 million in the prior year period.
- Adjusted net income(1) decreased 36.9% to
$9.1 million, or $0.10 per diluted share, compared to $14.4 million, or $0.16 per diluted share in the prior year
period.
- Adjusted EBITDA(1) decreased 6.1% to $43.7 million from $46.5
million in the prior year period.
- 22 new Planet Fitness stores were opened during the period,
bringing system-wide total stores to 2,146 as of March 31, 2021.
- Cash of $503.9 million as of
March 31, 2021, which includes cash
and cash equivalents of $445.6
million and restricted cash of $58.3
million.
(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.
Operating Results for the First Quarter Ended March 31, 2021
For the first quarter 2021, total revenue decreased $15.4 million or 12.1% to $111.9 million from $127.2
million in the prior year period which included a system
wide same store sales decline of 14.9%. By segment:
- Franchise segment revenue increased $5.5
million or 9.5% to $64.1
million from $58.5 million in
the prior year period. The increase in franchise segment revenue
for the first quarter 2021 is primarily as a result of lower
royalty and national advertising fund collections in the three
months ended March 31, 2021 primarily
due to lower membership levels as a result of COVID-19, offset by a
deferral of $14.1 million of royalty
revenue and $4.6 million of national
advertising fund revenue in the three months ended March 31, 2020 that was collected but not
recognized because of temporary store closures as a result of
COVID-19;
- Corporate-owned stores segment revenue decreased $2.6 million or 6.5% to $37.9 million from $40.5
million in the prior year period. The $2.6 million decrease was primarily due to
reduced membership levels and temporary store closures related to
COVID-19, partially offset by the opening of five new
corporate-owned stores since January 1,
2020 and $5.9 million of
deferred revenue that was collected but not recognized in the three
months ended March 31, 2020 as a
result of COVID-19 store closures; and
- Equipment segment revenue decreased $18.2 million or 64.7% to $9.9 million from $28.2
million in the prior year period, due to lower equipment
sales to new and existing franchisee-owned stores in the three
months ended March 31, 2021 compared
to the three months ended March 31,
2020, primarily as a result of providing all franchisees
with a 12-month extension for all new store development obligations
and an 18-month extension on re-equipment obligations, both as a
result of COVID-19.
For the first quarter of 2021, net income attributable to Planet
Fitness, Inc. was $5.6 million, or
$0.07 per diluted share, compared to
$8.6 million, or $0.11 per diluted share in the prior year period.
Net income was $6.2 million in the
first quarter of 2021 compared to $10.4
million in the prior year period. Adjusted net income
decreased 36.9% to $9.1 million, or
$0.10 per diluted share, from
$14.4 million, or $0.16 per diluted share in the prior year period.
Adjusted net income has been adjusted to reflect a normalized
federal income tax rate of 26.6% and 26.8% for the current year
period and comparable prior year period, respectively, 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"), decreased 6.1% to $43.7 million from $46.5
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 $4.4
million or 12.1% to $41.2
million. The increase in franchise segment EBITDA for the
first quarter 2021 is primarily as a result of lower royalty and
national advertising fund collections in the three months ended
March 31, 2021 primarily due to lower
membership levels as a result of COVID-19, offset by a deferral of
$14.1 million of royalty revenue and
$4.6 million of national advertising
fund revenue in the three months ended March
31, 2020 that was collected but not recognized because of
temporary store closures as a result of COVID-19. Offsetting the
revenue increase was $3.8 million of
higher local marketing spend primarily to support our California re-openings, partially offset by
$2.4 million of lower national
advertising fund expense in the current year period;
- Corporate-owned stores segment EBITDA decreased $1.3 million or 11.0% to $10.7 million. The decrease in corporate-owned
stores segment EBITDA for the first quarter 2021 was primarily a
result of reduced membership levels and temporary store closures
related to COVID-19, partially offset by the opening of five new
corporate-owned stores since January 1,
2020 and $5.9 million of
deferred revenue that was collected but not recognized in the three
months ended March 31, 2020 as a
result of COVID-19 store closures; and
- Equipment segment EBITDA decreased by $4.5 million or 71.3% to $1.8 million driven by lower equipment sales to
new and existing franchisee-owned stores in the three months ended
March 31, 2021 compared to the three
months ended March 31, 2020 primarily
as a result of providing all franchisees with a 12-month extension
for all new store development obligations and an 18-month extension
on re-equipment obligations, both as a result of COVID-19.
2021 Outlook
As a result of the uncertainty surrounding the COVID-19
pandemic, the Company is not providing a 2021 full year outlook at
this time.
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.
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. For the
three months ending March 31, 2021,
we have provided same store sales comparisons for the stores that
had monthly membership billings in all three months.
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 ending December 31, 2021. 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 ending
December 31, 2021.
Investor Conference Call
The Company will hold a conference call at 4:30 pm (ET) on May 6, 2021 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 March 31, 2021,
Planet Fitness had more than 14.1 million members and 2,146 stores
in 50 states, the District of
Columbia, Puerto Rico,
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 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 "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 "2021 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 continue to 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, 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, the Company's
quarterly reports on Form 10-Q, and 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 Condensed Consolidated Statements
of Operations (Unaudited) (Amounts in thousands,
except per share amounts)
|
|
|
|
For the three
months ended
March
31,
|
|
|
2021
|
|
2020
|
Revenue:
|
|
|
|
|
Franchise
|
|
$
|
52,180
|
|
|
$
|
48,910
|
|
Commission
income
|
|
272
|
|
|
390
|
|
National advertising
fund revenue
|
|
11,609
|
|
|
9,229
|
|
Corporate-owned
stores
|
|
37,877
|
|
|
40,516
|
|
Equipment
|
|
9,939
|
|
|
28,186
|
|
Total
revenue
|
|
111,877
|
|
|
127,231
|
|
Operating costs and
expenses:
|
|
|
|
|
Cost of
revenue
|
|
7,985
|
|
|
21,846
|
|
Store
operations
|
|
25,907
|
|
|
26,157
|
|
Selling, general and
administrative
|
|
22,490
|
|
|
16,953
|
|
National advertising
fund expense
|
|
12,753
|
|
|
15,205
|
|
Depreciation and
amortization
|
|
15,474
|
|
|
12,792
|
|
Other (gain)
loss
|
|
(2,138)
|
|
|
11
|
|
Total operating costs
and expenses
|
|
82,471
|
|
|
92,964
|
|
Income from
operations
|
|
29,406
|
|
|
34,267
|
|
Other expense,
net:
|
|
|
|
|
Interest
income
|
|
217
|
|
|
1,927
|
|
Interest
expense
|
|
(20,244)
|
|
|
(20,240)
|
|
Other income
(expense)
|
|
165
|
|
|
(687)
|
|
Total other expense,
net
|
|
(19,862)
|
|
|
(19,000)
|
|
Income before income
taxes
|
|
9,544
|
|
|
15,267
|
|
Provision for income
taxes
|
|
3,354
|
|
|
4,884
|
|
Net income
|
|
6,190
|
|
|
10,383
|
|
Less net income
attributable to non-controlling interests
|
|
609
|
|
|
1,776
|
|
Net income
attributable to Planet Fitness, Inc.
|
|
$
|
5,581
|
|
|
$
|
8,607
|
|
Net income per share
of Class A common stock:
|
|
|
|
|
Basic
|
|
$
|
0.07
|
|
|
$
|
0.11
|
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
0.11
|
|
Weighted-average
shares of Class A common stock outstanding:
|
|
|
|
|
Basic
|
|
83,084
|
|
|
79,098
|
|
Diluted
|
|
83,707
|
|
|
79,723
|
|
Planet Fitness,
Inc. and subsidiaries
Condensed
Consolidated Balance Sheets
(Unaudited)
(Amounts in
thousands, except per share amounts)
|
|
|
|
March 31,
2021
|
|
December 31,
2020
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
445,606
|
|
|
$
|
439,478
|
|
Restricted
cash
|
|
58,327
|
|
|
76,322
|
|
Accounts receivable,
net of allowance for bad debts of $6 and $7 at March 31, 2021 and
December 31, 2020, respectively
|
|
7,024
|
|
|
16,447
|
|
Inventory
|
|
468
|
|
|
473
|
|
Deferred expenses ā
national advertising fund
|
|
13,721
|
|
|
ā
|
|
Prepaid
expenses
|
|
12,804
|
|
|
11,881
|
|
Other
receivables
|
|
13,053
|
|
|
16,754
|
|
Income tax
receivables
|
|
5,191
|
|
|
5,461
|
|
Total current
assets
|
|
556,194
|
|
|
566,816
|
|
Property and
equipment, net of accumulated depreciation of $117,871 and $107,720
at March 31, 2021 and December 31, 2020, respectively
|
|
161,731
|
|
|
160,677
|
|
Investments
|
|
25,000
|
|
|
ā
|
|
Right of use assets,
net
|
|
161,574
|
|
|
164,252
|
|
Intangible assets,
net
|
|
212,916
|
|
|
217,075
|
|
Goodwill
|
|
227,821
|
|
|
227,821
|
|
Deferred income
taxes
|
|
517,867
|
|
|
511,200
|
|
Other assets,
net
|
|
1,881
|
|
|
1,896
|
|
Total
assets
|
|
$
|
1,864,984
|
|
|
$
|
1,849,737
|
|
Liabilities and
stockholders' deficit
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current maturities of
long-term debt
|
|
$
|
17,500
|
|
|
$
|
17,500
|
|
Accounts
payable
|
|
14,561
|
|
|
19,388
|
|
Accrued
expenses
|
|
25,145
|
|
|
22,042
|
|
Equipment
deposits
|
|
174
|
|
|
795
|
|
Deferred revenue,
current
|
|
35,909
|
|
|
26,691
|
|
Other current
liabilities
|
|
21,900
|
|
|
25,479
|
|
Total current
liabilities
|
|
115,189
|
|
|
111,895
|
|
Long-term debt, net
of current maturities
|
|
1,673,622
|
|
|
1,676,426
|
|
Borrowings under
Variable Funding Notes
|
|
75,000
|
|
|
75,000
|
|
Lease liabilities,
net of current portion
|
|
166,350
|
|
|
167,910
|
|
Deferred revenue, net
of current portion
|
|
32,203
|
|
|
32,587
|
|
Deferred tax
liabilities
|
|
821
|
|
|
881
|
|
Payable pursuant to
tax benefit arrangements, net of current portion
|
|
496,143
|
|
|
488,200
|
|
Other
liabilities
|
|
2,334
|
|
|
2,511
|
|
Total noncurrent
liabilities
|
|
2,446,473
|
|
|
2,443,515
|
|
Stockholders' equity
(deficit):
|
|
|
|
|
Class A common stock,
$.0001 par value - 300,000 authorized, 83,202 and 82,821 shares
issued and outstanding as of March 31, 2021 and December 31, 2020,
respectively
|
|
8
|
|
|
8
|
|
Class B common stock,
$.0001 par value - 100,000 authorized, 3,363 and 3,722 shares
issued and outstanding as of March 31, 2021 and December 31, 2020,
respectively
|
|
1
|
|
|
1
|
|
Accumulated other
comprehensive income
|
|
38
|
|
|
27
|
|
Additional paid in
capital
|
|
48,275
|
|
|
45,673
|
|
Accumulated
deficit
|
|
(745,997)
|
|
|
(751,578)
|
|
Total stockholders'
deficit attributable to Planet Fitness, Inc.
|
|
(697,675)
|
|
|
(705,869)
|
|
Non-controlling
interests
|
|
997
|
|
|
196
|
|
Total stockholders'
deficit
|
|
(696,678)
|
|
|
(705,673)
|
|
Total liabilities and
stockholders' deficit
|
|
$
|
1,864,984
|
|
|
$
|
1,849,737
|
|
Planet Fitness,
Inc. and subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in
thousands, except per share amounts)
|
|
|
|
For the three
months ended March 31,
|
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
|
$
|
6,190
|
|
|
$
|
10,383
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
15,474
|
|
|
12,792
|
|
Amortization of
deferred financing costs
|
|
1,571
|
|
|
1,587
|
|
Amortization of asset
retirement obligations
|
|
(21)
|
|
|
7
|
|
Deferred tax
expense
|
|
2,737
|
|
|
4,126
|
|
Gain on re-measurement
of tax benefit arrangement
|
|
(348)
|
|
|
(502)
|
|
Provision for bad
debts
|
|
ā
|
|
|
(33)
|
|
Equity-based
compensation
|
|
1,439
|
|
|
947
|
|
Other
|
|
11
|
|
|
993
|
|
Changes in operating
assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
Accounts
receivable
|
|
9,428
|
|
|
21,409
|
|
Inventory
|
|
6
|
|
|
(1,943)
|
|
Other assets and other
current assets
|
|
3,708
|
|
|
(250)
|
|
National advertising
fund
|
|
(13,721)
|
|
|
(10,363)
|
|
Accounts payable and
accrued expenses
|
|
(7,677)
|
|
|
6,381
|
|
Other liabilities and
other current liabilities
|
|
(3,876)
|
|
|
(249)
|
|
Income
taxes
|
|
295
|
|
|
(1,315)
|
|
Equipment
deposits
|
|
(621)
|
|
|
2,386
|
|
Deferred
revenue
|
|
8,802
|
|
|
25,992
|
|
Leases and deferred
rent
|
|
126
|
|
|
774
|
|
Net cash provided by
operating activities
|
|
23,523
|
|
|
73,122
|
|
Cash flows from
investing activities:
|
|
|
|
|
Additions to property
and equipment
|
|
(6,359)
|
|
|
(9,110)
|
|
Proceeds from sale of
property and equipment
|
|
ā
|
|
|
135
|
|
Investments
|
|
(25,000)
|
|
|
ā
|
|
Net cash used in
investing activities
|
|
(31,359)
|
|
|
(8,975)
|
|
Cash flows from
financing activities:
|
|
|
|
|
Principal payments on
capital lease obligations
|
|
(53)
|
|
|
(41)
|
|
Proceeds from
borrowings under Variable Funding Notes
|
|
ā
|
|
|
75,000
|
|
Repayment of long-term
debt
|
|
(4,375)
|
|
|
(4,375)
|
|
Proceeds from issuance
of Class A common stock
|
|
344
|
|
|
491
|
|
Dividend equivalent
payments
|
|
ā
|
|
|
(57)
|
|
Distributions to
Continuing LLC Members
|
|
ā
|
|
|
(1,600)
|
|
Net cash (used in)
provided by financing activities
|
|
(4,084)
|
|
|
69,418
|
|
Effects of exchange
rate changes on cash and cash equivalents
|
|
53
|
|
|
(1,640)
|
|
Net (decrease)
increase in cash, cash equivalents and restricted cash
|
|
(11,867)
|
|
|
131,925
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
|
515,800
|
|
|
478,795
|
|
Cash, cash equivalents
and restricted cash, end of period
|
|
$
|
503,933
|
|
|
$
|
610,720
|
|
Supplemental cash
flow information:
|
|
|
|
|
Net cash paid for
income taxes
|
|
$
|
322
|
|
|
$
|
2,071
|
|
Cash paid for
interest
|
|
$
|
18,794
|
|
|
$
|
18,768
|
|
Non-cash investing
activities:
|
|
|
|
|
Non-cash additions to
property and equipment
|
|
$
|
7,419
|
|
|
$
|
2,319
|
|
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
March 31,
|
|
|
2021
|
|
2020
|
(in
thousands)
|
|
|
|
|
Net income
|
|
$
|
6,190
|
|
|
$
|
10,383
|
|
Interest
income
|
|
(217)
|
|
|
(1,927)
|
|
Interest
expense
|
|
20,244
|
|
|
20,240
|
|
Provision for income
taxes
|
|
3,354
|
|
|
4,884
|
|
Depreciation and
amortization
|
|
15,474
|
|
|
12,792
|
|
EBITDA
|
|
$
|
45,045
|
|
|
$
|
46,372
|
|
Purchase accounting
adjustments-revenue(1)
|
|
69
|
|
|
68
|
|
Purchase accounting
adjustments-rent(2)
|
|
117
|
|
|
141
|
|
Pre-opening
costs(3)
|
|
365
|
|
|
361
|
|
Insurance
recovery(4)
|
|
(2,175)
|
|
|
ā
|
|
Tax benefit
arrangement remeasurement(5)
|
|
(348)
|
|
|
(502)
|
|
Other(6)
|
|
635
|
|
|
93
|
|
Adjusted
EBITDA
|
|
$
|
43,708
|
|
|
$
|
46,533
|
|
|
|
(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 ADA fees, deferred franchise fees, and deferred enrollment
fees that the Company billed and collected upfront but recognizes
for U.S. 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 $49 and $41 in the three months ended March 31,
2021 and 2020, respectively, reflect the difference between the
higher rent expense recorded in accordance with U.S. GAAP since the
acquisition and the rent expense that would have been recorded had
the 2012 Acquisition not occurred. Adjustments of $68 and $100 in
the three months ended March 31, 2021 and 2020, respectively, are
due to the amortization of favorable and unfavorable leases. 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 costs
associated with new corporate-owned stores incurred prior to the
store opening, including payroll-related costs, rent and occupancy
expenses, marketing and other store operating supply
expenses.
|
(4)
|
Represents a probable
insurance recovery of previously recognized expenses related to the
settlement of legal claims.
|
(5)
|
Represents gains
related to the adjustment of our tax benefit arrangements primarily
due to changes in our effective tax rate.
|
(6)
|
Represents certain
other charges and gains that we do not believe reflect our
underlying business performance.
|
A reconciliation of Segment EBITDA to Total Segment EBITDA is
set forth below.
|
|
Three months ended
March 31,
|
(in
thousands)
|
|
2021
|
|
2020
|
Segment
EBITDA
|
|
|
|
|
Franchise
|
|
$
|
41,180
|
|
|
$
|
36,746
|
|
Corporate-owned
stores
|
|
10,691
|
|
|
12,007
|
|
Equipment
|
|
1,830
|
|
|
6,367
|
|
Corporate and
other
|
|
(8,656)
|
|
|
(8,748)
|
|
Total Segment
EBITDA(1)
|
|
$
|
45,045
|
|
|
$
|
46,372
|
|
|
(1) Total Segment
EBITDA is equal to EBITDA.
|
Adjusted Net Income and Adjusted Net Income per Diluted
Share
Our presentation of 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
March 31,
|
(in thousands,
except per share amounts)
|
|
2021
|
|
2020
|
Net income
|
|
$
|
6,190
|
|
|
$
|
10,383
|
|
Provision for income
taxes, as reported
|
|
3,354
|
|
|
4,884
|
|
Purchase accounting
adjustments-revenue(1)
|
|
69
|
|
|
68
|
|
Purchase accounting
adjustments-rent(2)
|
|
117
|
|
|
141
|
|
Pre-opening
costs(3)
|
|
365
|
|
|
361
|
|
Insurance
recovery(4)
|
|
(2,175)
|
|
|
ā
|
|
Tax benefit
arrangement remeasurement(5)
|
|
(348)
|
|
|
(502)
|
|
Other(6)
|
|
635
|
|
|
93
|
|
Purchase accounting
amortization(7)
|
|
4,159
|
|
|
4,213
|
|
Adjusted income
before income taxes
|
|
$
|
12,366
|
|
|
$
|
19,641
|
|
Adjusted income
taxes(8)
|
|
3,289
|
|
|
5,264
|
|
Adjusted net
income
|
|
$
|
9,077
|
|
|
$
|
14,377
|
|
|
|
|
|
|
Adjusted net income
per share, diluted
|
|
$
|
0.10
|
|
|
$
|
0.16
|
|
|
|
|
|
|
Adjusted
weighted-average shares outstanding(9)
|
|
87,179
|
|
|
87,501
|
|
|
|
(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 ADA fees, deferred franchise fees, and deferred enrollment
fees that the Company billed and collected upfront but recognizes
for U.S. 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 $49 and $41 in the three months ended March 31,
2021 and 2020, respectively, reflect the difference between the
higher rent expense recorded in accordance with U.S. GAAP since the
acquisition and the rent expense that would have been recorded had
the 2012 Acquisition not occurred. Adjustments of $68 and $100 in
the three months ended March 31, 2021 and 2020, respectively, are
due to the amortization of favorable and unfavorable leases. 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 costs
associated with new corporate-owned stores incurred prior to the
store opening, including payroll-related costs, rent and occupancy
expenses, marketing and other store operating supply
expenses.
|
(4)
|
Represents a probable
insurance recovery of previously recognized expenses related to the
settlement of legal claims.
|
(5)
|
Represents gains and
losses related to the adjustment of our tax benefit arrangements
primarily due to changes in our effective tax rate.
|
(6)
|
Represents certain
other charges and gains that we do not believe reflect our
underlying business performance.
|
(7)
|
Includes $3,096 and
$3,096 of amortization of intangible assets, for the three months
ended March 31, 2021 and 2020, recorded in connection with the 2012
Acquisition, and $1,063 and $1,117 of amortization of intangible
assets for the three months ended March 31, 2021 and 2020,
respectively, recorded in connection with historical acquisitions
of franchisee-owned stores. The adjustment represents the amount of
actual non-cash amortization expense recorded, in accordance with
U.S. GAAP, in each period.
|
(8)
|
Represents corporate
income taxes at an assumed effective tax rate of 26.6% and 26.8% in
the three months ended March 31, 2021 and 2020, respectively,
applied to adjusted income before income taxes.
|
(9)
|
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
months ended March 31, 2021 and
2020:
|
|
For the three
months ended
March 31,
2021
|
|
For the three
months ended
March 31,
2020
|
(in thousands,
except per share amounts)
|
|
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)
|
|
$
|
5,581
|
|
|
83,707
|
|
|
$
|
0.07
|
|
|
$
|
8,607
|
|
|
79,723
|
|
|
$
|
0.11
|
|
Assumed exchange of
shares(2)
|
|
609
|
|
|
3,472
|
|
|
|
|
1,776
|
|
|
7,778
|
|
|
|
Net income
|
|
6,190
|
|
|
|
|
|
|
10,383
|
|
|
|
|
|
Adjustments to arrive
at adjusted income
before
income taxes(3)
|
|
6,176
|
|
|
|
|
|
|
9,258
|
|
|
|
|
|
Adjusted income before
income taxes
|
|
12,366
|
|
|
|
|
|
|
19,641
|
|
|
|
|
|
Adjusted income tax
expense(4)
|
|
3,289
|
|
|
|
|
|
|
5,264
|
|
|
|
|
|
Adjusted net
income
|
|
$
|
9,077
|
|
|
87,179
|
|
|
$
|
0.10
|
|
|
$
|
14,377
|
|
|
87,501
|
|
|
$
|
0.16
|
|
|
|
(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 26.6% and 26.8%
for the three months ended March 31, 2021 and 2020,
respectively, applied to adjusted income before income
taxes.
|
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SOURCE Planet Fitness, Inc.