Planet Fitness, Inc. Q3 FY2024 earnings call

• Same club sales grew 4.3%, revenue up 5.3%, adjusted EBITDA up 10%. Ended Q3 with ~19.6 million members.
• Announced price increase of Classic Card membership for new members to $15, expecting existing clubs to see low to mid single-digit top line increase after a year.
• Held franchisee conference, visited over 50 clubs, emphasized redefining brand strategy, enhancing member experience, refining product, and accelerating new club growth.
• Rolled out uniform member feedback system, updated corporate headquarters to Club Support Center, and modernized club format with more strength equipment and optimized floor space.

In the third quarter, system-wide same club sales grew by 4.3%. Total revenue was $292.2 million, up from $277.6 million. Franchise segment revenue increased 4.3% primarily due to higher royalties, new clubs, and national ad fund revenue, with an average royalty rate of 6.7% (up from 6.6%). Corporate-Owned Club segment revenue rose 13.1% driven by same club sales growth, fees, and new clubs. Equipment Segment revenue decreased 6.7% due to lower equipment sales to new franchisee-owned clubs and a shift to more strength equipment versus cardio.

• Tightened same club sales growth range to 4%-5% from 3%-5%.
• Revised revenue to grow in 8%-9% range (up from 4%-6%), adjusted EBITDA in 8%-9% range (previously 7%-9%), adjusted net income in 8%-9% range (up from 4%-6%), and adjusted EPS in 11%-12% range (up from 7%-9%).
• Expect CapEx up ~20% and D&A up ~10%.

• Market closures could impact real estate availability for new club openings.
• FTC regulations on click-to-cancel may affect churn rates.
• Economic factors could impact franchisee economics and member growth.

Q: Any color on percentage of gross ads from reactivated members and response to higher Classic Card price?

A: Typically about a third of joins are returning members, past quarter was 38%. Response to price increase has been supportive, with existing clubs seeing low to mid single-digit top line increase after a year and favorable for new clubs.

Q: How are you taking advantage of retail store closures for repurposing into Planet Fitness gyms?

A: Real estate team is engaged with brokers to identify available space, and Planet Fitness's resilience during COVID makes it attractive to landlords, providing potential tailwind for new club openings.