8-K
Planet Fitness, Inc. (PLNT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
May 6, 2021
Date of Report (Date of earliest event reported)
Planet Fitness, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-37534 | 38-3942097 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
4 Liberty Lane West
Hampton, NH 03842
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (603) 750-0001
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Exchange act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Class A common stock, $0.0001 Par Value | PLNT | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On May 6, 2021, Planet Fitness, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2021. A copy of this press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.02.
| Item 7.01 | Regulation FD Disclosure. |
|---|
Beginning on May 6, 2021, the Company intends to use the presentation furnished herewith, or portions thereof, in one or more meetings with investors and analysts. The presentation will also be available online at https://investor.planetfitness.com, beginning May 6, 2021. Information appearing on https://investor.planetfitness.com is not a part of, and is not incorporated by reference in, this Current Report on Form 8-K. A copy of the presentation is furnished as Exhibit 99.2 and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits |
| --- | --- |
| Exhibit No. | Description |
| --- | --- |
| 99.1 | Press Release dated May 6, 2021 |
| 99.2 | Planet Fitness Inc. Fiscal Year 2020 Investor Presentation |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PLANET FITNESS, INC. | |
|---|---|
| By: | /s/ Thomas Fitzgerald |
| Name:<br>Title: | Thomas Fitzgerald<br>Chief Financial Officer |
Dated: May 6, 2021
Document
Exhibit 99.1
Planet Fitness, Inc. Announces First Quarter 2021 Results
Adds 600,000 net new members since end of fiscal 2020 marking its third consecutive month of net member growth
Ends first quarter with total membership of 14.1 million
Nearly 100% of stores open during first quarter
Hampton, NH, May 6, 2021 - 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 Zone®. More than 95% of Planet Fitness stores are owned and operated by independent business men and women.
Investor Contact:
Stacey Caravella
investor@planetfitness.com
603-750-4674
Media Contacts:
McCall Gosselin, Planet Fitness
mccall.gosselin@pfhq.com
603-957-4650
Julia Young, ICR
julia.young@icrinc.com
646-277-1280
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<br>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 – national advertising fund | 13,721 | — | ||
| 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 | — | ||
| 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 | — | (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 | — | 135 | ||
| Investments | (25,000) | — | ||
| 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 | — | 75,000 | ||
| Repayment of long-term debt | (4,375) | (4,375) | ||
| Proceeds from issuance of Class A common stock | 344 | 491 | ||
| Dividend equivalent payments | — | (57) | ||
| Distributions to Continuing LLC Members | — | (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.
Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)
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) | — | ||
| 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 805—Business 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 – 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.
Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)
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) | — | ||
| 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 805—Business 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
Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)
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 – 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.
Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)
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<br>March 31, 2021 | For the three months ended<br>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<br><br>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.
ex992investorpresentatio
1 Investor Presentation Fiscal Year 2020
22 Disclaimers Forward-looking statements This presentation contains certain forward-looking statements within the meaning of the federal securities laws, which involve risks and uncertainties. Forward- looking statements include the Company’s expected store openings, growth potential, future earnings, revenue growth related to future equipment sales, and other statements, approximations, estimates and projections that do not relate solely to historical facts. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. 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 our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, in light of the significant risks and uncertainties inherent in forward-looking statements, you should not place undue reliance on any of these forward- looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, risks and uncertainties associated with the duration and impact of COVID-19, which has resulted in store closures and may give rise to or heighten one or more of the other risks and uncertainties described herein, competition in the fitness industry, our and our franchisees’ ability to attract and retain new members, our and our franchisees’ ability to identify and secure suitable sites for new franchise stores, changes in consumer demand, changes in equipment costs, our ability to expand into new markets domestically and internationally, operating costs for us and our franchisees generally, availability and cost of capital for our 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 our information systems or technology, general economic conditions and the other factors described in the Company’s Annual Report on 10-K for the year ended December 31, 2020, and the Company’s other filings with the Securities and Exchange Commission. The information contained in this presentation is as of the date set forth herein, except as required by law, and neither we nor any of our affiliates or representatives (i) make any representation or warranty as to the accuracy or completeness of such information, or (ii) undertake any duty or obligation to provide additional information or correct or update any information set forth in this presentation, whether as a result of new information, future developments or otherwise. The financial performance information contained in this presentation (i) provides historical results of Planet Fitness facilities principally in the United States, with no assurance that facilities outside the United States will have the same or similar results; and (ii) does not guarantee, suggest or imply any success or results for the operation of Planet Fitness facilities in the United States or elsewhere. Non-GAAP financial measures This presentation includes unaudited non-GAAP financial measures. We present non-GAAP measures when our management believes that the additional information provides useful information about our operating performance. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. For a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures, see the Appendix to this presentation.
3 Enhance people’s lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone® Our Mission
44 COVID-10 Update Trends for stores reopened since May/June 2020: Earliest reopen cohort shows best performance with usage indexing to nearly 90% of Q1’19 Keeping our commitment to clean PF team members required to wear masks in club Cleaning high-touch areas every 20-mins Extra sanitization stations for members COVID-19 health check, touchless check-in & Crowd Meter on PF app Social Fitnessing™: additional distance between equipment
55 One of the Largest and Fastest-Growing Fitness Centers in the U.S. Mission: Democratize fitness by breaking down barriers of intimidation and affordability Home of The Judgement Free Zone Highly-recognized national brand Exceptional value for members with standard membership of $10/month High-quality fitness experience Broad demographic appeal catering to 80%1 of the population that does not belong to a gym Approximately 40% of new joins have indicated they are first-time gym goers in Q1 ‘21 13.5 million members at year end ’20; 14.3 million as of April ‘21 2,124 stores with long-term potential for 4,000+ U.S stores and up to 300 stores in Canada 2020 System-wide sales of $2.4 billion 53 consecutive quarters of positive system-wide same store sales through Q1 2020 Planet Fitness accounted for more than 100% of industry net member growth in 2018 by adding ~1.8 million net new members while the industry grew by ~1.6 million2 95% franchise model drives strong operating margins and free cash flow Note: All figures as of 12/31/2020, unless noted otherwise 1 Approximately 80% of the U.S. and Canadian populations over age 14 2 IHRSA
66 Powerful business model drives significant opportunity for long-term growth ◼ $2.0mm average unit volume1 ◼ 40% royalty-adjusted four-wall EBITDA margin1 ◼ 25%+ cash-on-cash returns2 ◼ Scalable model with significant growth potential ◼ New openings driven by existing franchisees ◼ Comprehensive pre-opening and ongoing franchisee support ◼ Judgement Free Zone ◼ High-quality fitness experience ◼ Appeals to first-time gym users ◼ $10/mo. standard membership ◼ Highly recognized brand ◼ ~$1 billion spent on national marketing since 2011 ◼Mostly funded by franchisees 1 Based on corporate-owned store results for the year ended 12/31/2019 (before the impact of COVID-19). Based on a historical survey of franchisees and management estimates, we believe that, on average, our franchise stores achieve four-wall EBITDA margins in line with these corporate-owned store four-wall EBITDA margins. 2 Based on survey data and management analysis, franchisees have historically earned, and we believe can continue to earn, in their second year of operations, on average, a cash-on-cash return on unlevered (i.e., not debt-financed) initial investment greater than 25% after royalties and advertising, which is in line with our corporate-owned stores
77 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
88 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
99 We revolutionized the fitness industry First Planet Fitness was founded in Dover, NH 3rd store opens and introduced Lunk Alarm and Judgement Free Zone Refocus on core competencies - aerobics and child daycare removed The first Planet Fitness franchise is sold and seven stores now open Branded equipment is introduced OUR FIRST FRANCHISE 400th store National advertisement: “I lift things up and put them down” 2.3mm members 100th store 500,000 members “Lunkhead” appears on The Today Show 900th store 1st international store 6.1mm+ members 500th and 600th stores Planet Fitness partners with TSG Consumer Partners Completes its Initial Public Offering, Adds its 1,000th store, 7.3mm members, First year as primary sponsor of NYE celebration 1,500th store 10 mm+ members 1st store in Hawaii marking presence in all 50 states 1st store in Panama STORE GROWTH | 1,700th store 12.5 mm+ members 1st store in Mexico 2,000th store 14.4 mm members Launched Teen Summer Challenge Nationally BRAND EVOLUTION | Comprehensive COVID-19 protocols Partnered with iFit to deliver premium streaming workouts
1010 Differentiated concept & broad demographic appeal Judgement Free Zone ✓ All fitness levels feel welcome ✓ “No gymtimidation” ✓ “You belong” – we make it fun (monthly Pizza Mondays and Bagel Tuesdays)1 Distinct Store Experience ✓ Bright, clean, large stores maximized for essential fitness equipment ✓ High-quality PF-branded cardio and weight-training equipment ✓ Streamlined experience leaves little room for customer disappointment Exceptional Value ✓ No pushy sales tactics ✓ Standard membership of $10/mo. ✓ Black Card membership of $22.99/mo. provides access to all locations 26% have incomes <$50K >50% are female Source: Civis Analytics survey data/EDW data Ages 13+ are welcome members Member Stats 47% are under 35 years old 17% are over 55 years old High & low income households find PF a value Males & females enjoy the unique fitness experience 21% have incomes >$100K “All This for Only That” 1 Programs paused in 2020 due to COVID-19
1111 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
1212 Nationally recognized brand fueled by unmatched advertising spend Approximately $1 billion spent on marketing since 2011 Brand Partnerships 2% of monthly membership dues spent on national advertising 7% of monthly membership dues spent on local advertising Memorable Marketing
1313 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
1414 Easy-to-operate and profitable store model ◼ Automatic, recurring revenue model ◼ Streamlined operations ◼ Minimal required staffing ◼ Minimal working capital needs ◼ No perishable inventory ◼ Highly-attractive return on capital Streamlined, Easy-to-Operate Store Model Illustrative Franchisee Unit Economics Unit Build-Out Cost Range $1.6 mm - $3.7mm1 Average Unit Volume (annual) $2.0mm2 4-Wall EBITDA Margin (before 7% royalty) 47%2 Royalty Adjusted 4-Wall EBITDA Margin (after 7% royalty) 40%2 Unlevered cash-on-cash return 25%+3 Appealing Unit Economics 1 Based on sample set of 46 stores across a wide range of U.S. geographies in 2020. 2 In 2019 (before the impact of COVID-19) our corporate-owned stores had AUVs of $2 million and four-wall EBITDA margins of approximately 47% or approximately 40% after applying the 7% royalty rate. Based on a historical survey of franchisees and management estimates, we believe that, on average, our franchise stores achieve four-wall EBITDA margins in line with these corporate-owned store four-wall EBITDA margins. 3 Based on survey data and management estimates, we believe our franchisees can earn, in their second year of operations, on average, a cash-on-cash return on initial investment greater than 25% after royalties and advertising, which is in line with our corporate-owned stores Over 4,000 long term store potential in the U.S. alone with More than 1,000 in the pipeline
1515 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
1616 One Team, One Planet: Highly-attractive franchise system Franchisee Overview ◼ Highly-disciplined franchisee selection ◼ ~130 franchisee groups ◼ 98% of stores operated by multi-store operators1 ◼ Only 35% of franchisees own >10 stores ◼ Over 90% of unit growth in 2020 from existing franchisees ◼ Significant and ongoing franchisee support ◼ Pre-opening ◼ Operational ◼ Marketing ◼ Brand excellence ◼ Franchise relations Franchisee Support News & Accolades Note: All figures as of 12/31/2020 unless otherwise noted 1 Refers to franchisees that own at least 3 stores 488 606 749 918 1,124 1,300 1,493 1,703 1,943 2,124 U.S. Club Count by Year 2011 2014 2015 2017 20192016 20202012 2013 2018
1717 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
1818 Predictable, recurring revenue streams Recurring ~90% Non- recurring ~10% Historical Franchise Revenues Recurring ~90% Non- recurring ~10% Historical Corporate-Owned Store Revenues ◼ Revenues earned from franchise and corporate-owned stores consist largely of recurring revenue streams: ◼ Royalties ◼ Monthly dues ◼ Annual fees ◼ Vendor commissions ◼ 85% of monthly dues and annual fees are collected through ACH direct debit ◼ Monthly dues and annual fees are collected regardless of member use (monthly membership fees were not collected at closed stores in 2020 due to COVID-19 restrictions) ◼ Equipment and “re-equip” segment are additional predictable revenue stream as the franchise store base grows
1919 Highly-profitable, diversified business segments Note: Segment breakdown based on segment EBITDA, which excludes corporate overhead expenses 1 Based on the average from fiscal years 2018, 2019, and 2020. 2 Excludes negative corporate EBITDA impact 3Certain extensions have been granted such as an 18-month extension in 2020 on equipment replacements due to COVID-19 Franchise ~40% Corporate-owned Stores ~25% Equipment ~35% Franchise ~60% Corporate-owned Stores ~20% Equipment ~20% Historical Revenue Breakdown1 Historical Adjusted EBITDA2 Our Business Segments Franchise Corporate- owned Stores Equipment ◼ Recurring revenues through royalties from franchise stores ◼ Fastest growing, most profitable segment ◼ Historically ~40% of total revenue & ~60% of Adj. EBITDA ◼ ~100 owned stores in U.S. and Canada ◼ Profitable recurring income stream ◼ Historically ~25% of revenue & ~20% of Adj. EBITDA ◼ Franchisees purchase high-quality Planet Fitness branded equipment from us ◼ Replace equipment every 5 to 7 years3 ◼ Historically ~35% of revenue & ~20% of Adj. EBITDA
2020 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
2121 Growth Strategies Grow store base Drive revenue growth and same store sales Expand royalties Grow sales from fitness equipment 1 2 3 4
2222 Grow Store Base 488 606 749 918 1,124 1,300 1,493 1,703 1,943 2,124 2011 2012 2013 2014 2015 2018 U.S. store potential 1 Population data sourced from 2020 U.S. Census data; Population totals are as of 7/1/2017 while store count is as of 12/31/2020 2 Planet Fitness was founded in NH 3 Represents Planet Fitness members as a percentage of total population in the region 361 stores 3.4% of population3 NH2 = 10.2% RI = 9.5% MA = 7.5% 455 stores 3.8% of population3 770 stores 4.5% of population3 464 stores 6.1% of population3 ◼ 2,124 clubs across 50 states and five countries ◼ Potential to more than double our store base in the United States alone ◼ More than 1,000+ committed store openings in the pipeline Proven Track Record and Long Runway Clubs in 50 States and Five Countries1 4,000+ 2017 5 stores Panama U.S. Club Count by Year Mexico 5 stores 2019Puerto Rico 12 stores 2.4% of population 47 stores Canada 2016 2020 Australia 5 stores
2323 Drive revenue growth and same store sales 1 As of 12/31/20 2016 2020 ◼ Attract, engage, and retain members: ◼ Leverage “Bricks with Clicks” digital platform that appeals to new fitness and wellness seekers ◼ Increase brand awareness as NAF and LAF grow ◼ Targeted digital marketing to efficiently grow members Membership Growth ◼ Enhance value through: ◼ New in-store amenities ◼ Affinity partnerships ◼ Grow number of stores to enhance convenience of unlimited access Increase Black Card Memberships Black Card Penetration1 Total Members (mm)1 60.5% 58.9% 2016 2020 8.9 13.5
2424 Expand royalties Average Monthly Royalty Rate 2016 2020 3.7% 6.3% 63% 37% Franchises with <7% royalty rate Franchises with 7% royalty rate
2525 Grow fitness equipment sales • U.S franchisees required to purchase equipment from Planet Fitness ensuring consistency across all stores • Due to scale, we offer: • Competitive pricing • Stronger warranties and enhanced service levels • Convenient order and placement process Benefits to our franchisees… • Stores required to replace equipment every 5 (cardio) to 7 (strength) years1 • Equipment refreshes maintain consistent, high-quality fitness experience and attract new members …Results in growing equipment revenues 1 Certain extensions have been granted such as an 18-month extension in 2020 on equipment replacements due to COVID-19.
2626 Investment Highlights Differentiated fitness concept and exceptional value proposition that appeals to a broad demographic Strong store-level economics Highly attractive franchise system built for growth Predictable and recurring revenue streams with high cash flow conversion Market leader with a nationally recognized brand and scale advantage 1 2 3 4 5 Significant growth opportunities 6
Appendix
2828 Adjusted EBITDA Reconciliation ($mm) Year Ended December 31, 2020 2019 2018 Net income (loss) (15.2) 135.4 103.2 Interest Income (3.0) (7.1) (4.7) Interest expense, net1 82.1 60.9 50.7 Provision for income taxes 0.7 37.8 28.6 Depreciation and amortization 53.8 44.3 35.3 EBITDA $118.5 $271.3 $213.1 Purchase accounting adjustments – revenue2 0.3 0.8 1.0 Purchase accounting adjustments – rent3 0.5 0.5 0.7 Loss on reacquired franchise rights4 -- 1.8 0.4 Transaction fees5 -- -- 0.3 Severance costs6 1.0 -- 0.4 Pre-opening costs7 1.5 1.8 1.5 Legal matters8 5.8 -- -- Indemnification receivable9 -- -- 0.3 Tax benefit arrangement remeasurement10 (5.9) 6.0 4.8 Other11 (1.3) 0.5 0.7 Adjusted EBITDA $120.4 $282.2 $223.2 (1) Includes $4.6 million of loss on extinguishment of debt in the year ended December 31, 2018. (2) 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 805—Business 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. For the years ended December 31, 2020, 2019, and 2018, these amounts represent the additional revenue that would have been recognized in those years if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. (3) Represents the impact of rent related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as o f the acquisition date and rent is being recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall rent expense each period than would have otherwise been recorded had the deferred rent liability not been wr itten off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $0.1 million, $0.2 million and $0.4 million in the years ending December 31, 2020, 2019, and 2018, 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 $0.4 million, $0.3 million and $0.4 million for the years ending December 31, 2020, 2019, and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (4) Represents the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned stores. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. (5) Represents transaction fees and expenses that could not be capitalized related to the issuance of our 2018 Notes in the year ended December 31, 2018. (6) Represents severance expense recorded in connection with a reduction in force in 2020 and an equity award modification in 2018. (7) 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. (8) Represents costs associated with legal matters in which the Company is a defendant. The 2020 amount includes expense of $3.8 million related to the settlement of legal claims, and a $2.0 million reserve against an indemnification receivable related to a legal matter. (9) Represents a receivable recorded in connection with a contractual obligation of the Company’s co-founders to indemnify the Company with respect to pre-IPO tax liabilities pursuant to the 2012 Acquisition. (10) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. (11) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In 2020, the amount includes $1.4 million gain related to an employee retention payroll tax credit received in connection with the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). In 2018, this amount includes expense of $0.6 million related to the write off of certain assets that were being tested for potential use across the system.
2929 Pro Forma Adjusted Net Income Reconciliation ($mm) Year ended December 31, 2020 2019 2018 Net income (loss) (15.2) 135.4 103.2 Provision for income taxes, as reported 0.7 37.8 28.6 Purchase accounting adjustments – revenue1 0.3 0.8 1.0 Purchase accounting adjustments – rent2 0.5 0.4 0.7 Loss on reacquired franchise rights3 1.8 1.8 0.4 Transaction fees4 -- -- 0.3 Loss on extinguishment of debt5 -- -- 4.6 Severance costs6 1.0 -- 0.4 Pre-opening costs7 1.5 1.8 1.5 Legal matters8 5.8 -- -- Indemnification receivable9 -- -- 0.3 Tax benefit arrangement remeasurement10 (5.9) 6.0 4.8 Other11 (1.3) 0.5 0.7 Purchase accounting amortization12 16.8 16.3 15.7 Adjusted income before income taxes $4.2 $200.4 $162.2 Adjusted income taxes13 1.1 53.7 42.7 Adjusted net income $3.1 $146.7 $119.5 (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 805—Business 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. For the years ended December 31, 2020, 2019, and 2018, these amounts represent the additional revenue that would have been recognized in those years 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 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as o f the acquisition date and rent is being recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall rent expense each period than would have otherwise been recorded had the deferred rent liability not been wr itten off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $0.1 million, $0.2 million and $0.4 million in the years ending December 31, 2020, 2019, and 2018, 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 $0.4 million, $0.3 million and $0.4 million for the years ending December 31, 2020, 2019, and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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 the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned stores. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. (4) Represents transaction fees and expenses that could not be capitalized related to the issuance of our 2018 Notes in the year ended December 31, 2018. (5) Represents a loss on extinguishment of debt related to the write-off of deferred financing costs associated with the Term Loan B which the Company repaid in August 2018. (6) Represents severance expense recorded in connection with a reduction in force in 2020 and an equity award modification in 2018. (7) 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. (8) Represents costs associated with legal matters in which the Company is a defendant. The 2020 amount includes expense of $3.8 million related to the settlement of legal claims, and a $2.0 million reserve against an indemnification receivable related to a legal matter. (9) Represents a receivable recorded in connection with a contractual obligation of the Company’s co-founders to indemnify the Company with respect to pre-IPO tax liabilities pursuant to the 2012 Acquisition. (10) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. (11) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In 2020, the amount includes $1.4 million gain related to an employee retention payroll tax credit received in connection with the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). In 2018, this amount includes expense of $0.6 million related to the write off of certain assets that were being tested for potential use across the system. (12) Includes $12.4 million of amortization of intangible assets, other than favorable leases, for the years ended December 31, 2020, 2019, and 2018, respectively recorded in connection with the 2012 Acquisition, and $4.5 million, $4.0 million, and $3.3 million of amortization of intangible assets for the years ended December 31, 2020, 2019, and 2018 respectively, created in connection with historical acquisitions of franchisee-owned stores. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with GAAP, in each period. (13) Represents corporate income taxes at an assumed effective tax rate of 26.6%, 26.8% and 26.3% for each of the years ended December 31, 2020, 2019, and 2018, respectively, applied to adjusted income before income taxes.
3030 PLNT