Planet Fitness, Inc. Announces Third Quarter 2024 Results

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Statements of Operations 
(Unaudited)

Three Months Ended September
30,

Nine Months Ended September
30,

(in thousands, except per share amounts)

2024

2023

2024

2023

Revenue:

Franchise

$        82,873

$        80,587

$      254,783

$      237,313

National advertising fund revenue

19,542

17,578

59,442

52,378

Franchise segment

102,415

98,165

314,225

289,691

Corporate-owned clubs

128,132

113,245

375,976

332,885

Equipment

61,699

66,141

151,003

163,664

Total revenue

292,246

277,551

841,204

786,240

Operating costs and expenses:

Cost of revenue

45,701

53,751

116,628

132,561

Club operations

71,614

63,120

216,119

188,011

Selling, general and administrative

32,647

33,290

93,453

93,705

National advertising fund expense

19,720

17,618

59,624

52,496

Depreciation and amortization

41,033

37,477

120,230

110,254

Other losses (gains), net

280

(56)

698

7,705

Total operating costs and expenses

210,995

205,200

606,752

584,732

Income from operations

81,251

72,351

234,452

201,508

Other income (expense), net:

Interest income

5,610

4,245

16,687

12,339

Interest expense

(26,603)

(21,704)

(72,569)

(64,771)

Other (expense) income, net

(558)

148

1,132

631

Total other expense, net

(21,551)

(17,311)

(54,750)

(51,801)

Income before income taxes

59,700

55,040

179,702

149,707

Provision for income taxes

16,523

13,474

49,824

38,855

Losses from equity-method investments, net of tax

(782)

(242)

(3,198)

(580)

Net income

42,395

41,324

126,680

110,272

Less: net income attributable to non-controlling interests

386

2,190

1,722

7,299

Net income attributable to Planet Fitness, Inc.

$        42,009

$        39,134

$      124,958

$      102,973

Net income per share of Class A common stock:

Basic

$             0.50

$             0.46

$             1.45

$             1.22

Diluted

$             0.50

$             0.46

$             1.45

$             1.21

Weighted-average shares of Class A common stock outstanding:

Basic

84,570

84,610

86,090

84,558

Diluted

84,728

84,886

86,289

84,870

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Balance Sheets 
(Unaudited)

(in thousands, except per share amounts)

September 30, 2024

December 31, 2023

Assets

Current assets:

Cash and cash equivalents

$               298,783

$               275,842

Restricted cash

67,766

46,279

Short-term marketable securities

108,629

74,901

Accounts receivable, net of allowances for uncollectible amounts of $0 and $0 as of
      September 30, 2024 and December 31, 2023, respectively

48,958

41,890

Inventory

4,858

4,677

Restricted assets - national advertising fund

363

—

Prepaid expenses

14,432

13,842

Other receivables

7,882

11,072

Income tax receivable and prepayments

4,773

3,314

Total current assets

556,444

471,817

Long-term marketable securities

55,535

50,886

Investments, net of allowance for expected credit losses of $18,538 and $17,689 as of
      September 30, 2024 and December 31, 2023, respectively

75,078

77,507

Property and equipment, net of accumulated depreciation of $347,586 and $322,958, as of
      September 30, 2024 and December 31, 2023, respectively

421,633

390,405

Right-of-use assets, net

400,246

381,010

Intangible assets, net

334,236

372,507

Goodwill

719,127

717,502

Deferred income taxes

481,456

504,188

Other assets, net

4,426

3,871

Total assets

$            3,048,181

$            2,969,693

Liabilities and stockholders' deficit

Current liabilities:

Current maturities of long-term debt

$                 22,500

$                 20,750

Accounts payable

31,844

23,788

Accrued expenses

66,530

66,299

Equipment deposits

10,345

4,506

Deferred revenue, current

67,517

59,591

Payable pursuant to tax benefit arrangements, current

48,553

41,294

Other current liabilities

39,001

35,101

Total current liabilities

286,290

251,329

Long-term debt, net of current maturities

2,152,276

1,962,874

Lease liabilities, net of current portion

408,588

381,589

Deferred revenue, net of current portion

33,578

32,047

Deferred tax liabilities

1,566

1,644

Payable pursuant to tax benefit arrangements, net of current portion

428,858

454,368

Other liabilities

4,139

4,833

Total noncurrent liabilities

3,029,005

2,837,355

Stockholders' equity (deficit):

Class A common stock, $0.0001 par value, 300,000 shares authorized, 84,104 and 86,760 shares
      issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

9

9

Class B common stock, $0.0001 par value, 100,000 shares authorized, 488 and 1,397 shares
      issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

—

—

Accumulated other comprehensive (loss) income

220

172

Additional paid in capital

602,948

575,631

Accumulated deficit

(869,309)

(691,461)

Total stockholders' deficit attributable to Planet Fitness, Inc.

(266,132)

(115,649)

Non-controlling interests

(982)

(3,342)

Total stockholders' deficit

(267,114)

(118,991)

Total liabilities and stockholders' deficit

$            3,048,181

$            2,969,693

Planet Fitness, Inc. and subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended September 30,

(in thousands)

2024

2023

Cash flows from operating activities:

Net income

$             126,680

$            110,272

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

120,230

110,254

Amortization of deferred financing costs

3,984

4,114

Loss on extinguishment of debt

2,285

—

Accretion of marketable securities discount

(2,658)

(2,224)

Losses from equity-method investments, net of tax

3,198

580

Dividends accrued on held-to-maturity investment

(1,618)

(1,490)

Credit loss (gain) on held-to-maturity investment

849

(6)

Deferred tax expense

40,077

34,884

Gain on re-measurement of tax benefit arrangement liability

(774)

—

Loss on disposal of property and equipment

400

158

Loss on reacquired franchise rights

—

110

Equity-based compensation expense

5,965

6,326

Other

138

(25)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(7,443)

10,086

Inventory

(201)

(2,270)

Other assets and other current assets

1,735

(1,722)

Restricted assets - national advertising fund

(368)

805

Accounts payable and accrued expenses

8,818

(7,488)

Other liabilities and other current liabilities

(741)

6,855

Income taxes

(1,553)

(104)

Payments pursuant to tax benefit arrangements

(28,786)

(21,780)

Equipment deposits

5,835

5,495

Deferred revenue

9,552

9,428

Leases

9,138

4,662

Net cash provided by operating activities

294,742

266,920

Cash flows from investing activities:

Additions to property and equipment

(112,968)

(84,636)

Acquisition of franchisees, net of cash acquired

—

(26,264)

Proceeds from sale of property and equipment

568

2

Purchases of marketable securities

(116,833)

(155,007)

Maturities of marketable securities

80,922

37,990

Other investments

—

(20,000)

Net cash used in investing activities

(148,311)

(247,915)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

800,000

—

Proceeds from issuance of Class A common stock

17,221

8,575

Principal payments on capital lease obligations

(100)

(152)

Repayment of long-term debt

(603,063)

(15,563)

Payment of deferred financing and other debt-related costs

(12,055)

—

Repurchase and retirement of Class A common stock

(300,205)

(125,030)

Distributions paid to members of Pla-Fit Holdings

(3,345)

(4,216)

Net cash used in financing activities

(101,547)

(136,386)

Effects of exchange rate changes on cash and cash equivalents

(456)

233

Net increase (decrease) in cash, cash equivalents and restricted cash

44,428

(117,148)

Cash, cash equivalents and restricted cash, beginning of period

322,121

472,499

Cash, cash equivalents and restricted cash, end of period

$             366,549

$            355,351

Supplemental cash flow information:

Cash paid for interest

$               53,718

$              60,964

Net cash paid for income taxes

$               11,248

$                4,394

Non-cash investing activities:

Non-cash additions to property and equipment included in accounts payable and accrued expenses

$               18,446

$              20,590

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)

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

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2024

2023

2024

2023

Net income

$           42,395

$           41,324

$         126,680

$         110,272

Interest income

(5,610)

(4,245)

(16,687)

(12,339)

Interest expense

26,603

21,704

72,569

64,771

Provision for income taxes

16,523

13,474

49,824

38,855

Depreciation and amortization

41,033

37,477

120,230

110,254

EBITDA

120,944

109,734

352,616

311,813

Purchase accounting adjustments-revenue⁽¹⁾

29

45

91

378

Purchase accounting adjustments-rent⁽²⁾

170

173

512

461

Loss on reacquired franchise rights⁽³⁾

—

—

—

110

Transaction fees and acquisition-related costs⁽⁴⁾

—

—

—

394

Severance costs⁽⁵⁾

—

—

1,602

1,220

Executive transition costs⁽⁶⁾

1,342

2,502

2,973

2,502

Legal matters⁽⁷⁾

—

—

—

6,250

Loss (gain) on adjustment of allowance for credit losses
on held-to-maturity investment⁽⁸⁾

292

(101)

849

(6)

Dividend income on held-to-maturity investment⁽⁹⁾

(553)

(511)

(1,618)

(1,490)

Loss (gain) on remeasurement of tax benefit
arrangement⁽¹⁰⁾

575

—

(774)

—

Amortization of basis difference of equity-method
investments⁽¹¹⁾

240

—

709

—

Other⁽¹²⁾

32

50

(75)

(590)

Adjusted EBITDA

$         123,071

$         111,892

$         356,885

$         321,042

⁽¹⁾ Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred area development agreement fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected up front but recognizes for GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 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 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 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. The rent related purchase accounting adjustments are adjustments to rent expense recorded in club operations on our condensed consolidated statements of operations, which 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, as well as the amortization of favorable and unfavorable lease intangible assets.

⁽³⁾ Represents the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned clubs. The loss recorded under U.S. GAAP represents the difference between the fair value and the contractual terms of the reacquired franchise rights and is included in other (gains) losses, net on our condensed consolidated statement of operations.

⁽⁴⁾ Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned clubs.

⁽⁵⁾ Represents severance related expenses recorded in connection with a reduction in force during the nine months ended September 30, 2024 and the elimination of the President and Chief Operating Officer position during the nine months ended September 30, 2023.

⁽⁶⁾ Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for and stock based compensation associated with certain equity awards granted to the Company's new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

⁽⁷⁾ Represents costs associated with legal matters in which the Company was a defendant. In 2023, this represents an increase in the legal reserve related to preliminary terms of a settlement agreement (the "Preliminary Settlement Agreement"). The legal reserve liability was subsequently paid in 2023.

⁽⁸⁾ Represents a loss (gain) on the adjustment of the allowance for credit losses on the Company's held-to-maturity investment.

⁽⁹⁾ Represents dividend income recognized on the Company's held-to-maturity investment.

⁽¹⁰⁾ Represents a loss (gain) related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.

⁽¹¹⁾ Represents the Company's pro-rata portion of the basis difference related to intangible asset amortization expense in its equity method investees, which is included within losses from equity-method investments, net of tax on our condensed consolidated statements of operations.

⁽¹²⁾ Represents certain other gains and charges that we do not believe reflect our underlying business performance.

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)

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

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

2024

2023

2024

2023

Segment EBITDA

Franchise segment

$          72,758

$          67,583

$         226,478

$         198,418

Corporate-owned clubs segment

50,107

44,264

141,507

126,499

Equipment segment

18,487

16,434

41,822

39,134

Corporate and other⁽¹⁾

(20,408)

(18,547)

(57,191)

(52,238)

Total Segment EBITDA⁽²⁾

$        120,944

$        109,734

$         352,616

$         311,813

⁽¹⁾ "Corporate and other" primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services that are not directly attributable to any individual segment.

⁽²⁾ Total Segment EBITDA is equal to EBITDA, which is a metric that is not presented in accordance with GAAP. Refer to "—Non-GAAP Financial Measures" for a definition of EBITDA and a reconciliation to net income, the most directly comparable GAAP measure.

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures 
(Unaudited)

A reconciliation of net income, the most directly comparable GAAP measure, to Adjusted net income, and the computation of

 Adjusted net income per share, diluted, are set forth below.

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share amounts)

2024

2023

2024

2023

Net income

$           42,395

$           41,324

$         126,680

$         110,272

Provision for income taxes

16,523

13,474

49,824

38,855

Purchase accounting adjustments-revenue⁽¹⁾

29

45

91

378

Purchase accounting adjustments-rent⁽²⁾

170

173

512

461

Loss on reacquired franchise rights⁽³⁾

—

—

—

110

Transaction fees and acquisition-related costs⁽⁴⁾

—

—

—

394

Severance costs⁽⁵⁾

—

—

1,602

1,220

Executive transition costs⁽⁶⁾

1,342

2,502

2,973

2,502

Legal matters⁽⁷⁾

—

—

—

6,250

Loss (gain) on adjustment of allowance for credit
      losses on held-to-maturity investment⁽⁸⁾

292

(101)

849

(6)

Dividend income on held-to-maturity investment⁽⁹⁾

(553)

(511)

(1,618)

(1,490)

Loss (gain) on remeasurement of tax benefit
arrangement⁽¹⁰⁾

575

—

(774)

—

Amortization of basis difference of equity-method
investments⁽¹¹⁾

240

—

709

—

Loss on extinguishment of debt⁽¹²⁾

—

—

2,285

—

Other⁽¹³⁾

32

50

(75)

(590)

Purchase accounting amortization⁽¹⁴⁾

12,757

12,954

38,272

38,485

Adjusted income before income taxes

73,802

69,910

221,330

196,841

Adjusted income taxes⁽¹⁵⁾

19,060

18,107

57,161

50,982

Adjusted net income

$           54,742

$           51,803

$         164,169

$         145,859

Adjusted net income per share, diluted

$               0.64

$                0.59

$               1.88

$               1.64

Adjusted weighted-average shares outstanding,
diluted⁽¹⁶⁾

85,260

88,420

87,101

89,107

⁽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. These amounts represent the additional revenue that would have been recognized 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 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. The rent related purchase accounting adjustments are adjustments to rent expense recorded in club operations on our condensed consolidated statements of operations, which 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, as well as the amortization of favorable and unfavorable lease intangible assets.

⁽³⁾ Represents the impact of a non-cash loss recorded in accordance with ASC 805 – Business Combinations related to our acquisition of franchisee-owned clubs. The loss recorded under U.S. GAAP represents the difference between the fair value and the contractual terms of the reacquired franchise rights and is included in other (gains) losses, net on our condensed consolidated statement of operations.

⁽⁴⁾ Represents transaction fees and acquisition-related costs incurred in connection with our acquisition of franchisee-owned clubs.

⁽⁵⁾ Represents severance related expenses recorded in connection with a reduction in force during the nine months ended September 30, 2024 and the elimination of the President and Chief Operating Officer position during the nine months ended September 30, 2023.

⁽⁶⁾ Represents certain expenses recorded in connection with the departure of the former Chief Executive Officer, including costs associated with the search for and stock based compensation associated with certain equity awards granted to the Company's new Chief Executive Officer and retention payments for certain key employees through the Chief Executive Officer transition.

⁽⁷⁾ Represents costs associated with legal matters in which the Company was a defendant. In 2023, this represents an increase in the legal reserve related to preliminary terms of the Preliminary Settlement Agreement. The legal reserve liability was subsequently paid in 2023.

⁽⁸⁾ Represents a loss (gain) on the adjustment of the allowance for credit losses on the Company's held-to-maturity investment.

⁽⁹⁾ Represents dividend income recognized on the Company's held-to-maturity investment.

⁽¹⁰⁾ Represents a loss (gain) related to the adjustment of our tax benefit arrangements primarily due to changes in our deferred state tax rate.

⁽¹¹⁾ Represents the Company's pro-rata portion of the basis difference related to intangible asset amortization expense in its equity method investees, which is included within losses from equity-method investments, net of tax on our condensed consolidated statements of operations.

⁽¹²⁾ Represents the write-off of deferred financing costs associated with the repayment of the 2018-1 Class A-2-II notes prior to the anticipated repayment date.

⁽¹³⁾ Represents certain other gains and charges that we do not believe reflect our underlying business performance.

⁽¹⁴⁾ Represents the amount of non-cash amortization expense recorded in each period, in accordance with GAAP, which includes $3.1 million for both the three months ended September 30, 2024 and 2023 and $9.3 million for both the nine months ended September 30, 2024 and 2023 of amortization of intangible assets recorded in connection with the 2012 Acquisition, other than favorable leases. This adjustment also includes $9.7 million and $9.9 million for the three months ended September 30, 2024 and 2023, respectively, and $29.0 million and $29.2 million for the nine months ended September 30, 2024 and 2023, respectively, of amortization of intangible assets created in connection with historical acquisitions of franchisee-owned clubs.

⁽¹⁵⁾ Represents corporate income taxes at an assumed effective tax rate of 25.8% for both the three and nine months ended September 30, 2024 and 25.9% for both the three and nine months ended September 30, 2023 applied to adjusted income before income taxes.

⁽¹⁶⁾ 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)

A reconciliation of net income per share, diluted, to Adjusted net income per share, diluted is set forth below:

Three Months Ended September 30, 2024

Three Months Ended September 30, 2023

(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⁾

$       42,009

84,728

$              0.50

$       39,134

84,886

$              0.46

Net income attributable to non-
controlling interests⁽²⁾

386

532

2,190

3,534

Net income

42,395

41,324

Adjustments to arrive at adjusted
income before income taxes⁽³⁾

31,407

28,586

Adjusted income before income
taxes

73,802

69,910

Adjusted income taxes⁽⁴⁾

19,060

18,107

Adjusted net income

$       54,742

85,260

$              0.64

$       51,803

88,420

$              0.59

Nine Months Ended September 30, 2024

Nine Months Ended September 30, 2023

(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⁾

$     124,958

86,289

$              1.45

$     102,973

84,870

$              1.21

Net income attributable to non-
controlling interests⁽²⁾

1,722

812

7,299

4,237

Net income

126,680

110,272

Adjustments to arrive at adjusted
income before income taxes⁽³⁾

94,650

86,569

Adjusted income before income
taxes

221,330

196,841

Adjusted income taxes⁽⁴⁾

57,161

50,982

Adjusted net income

$     164,169

87,101

$              1.88

$     145,859

89,107

$              1.64

⁽¹⁾ Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares of Class A common stock outstanding.

⁽²⁾ Represents net income attributable to non-controlling interests and the assumed 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. as of the beginning of the period presented.

⁽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 25.8% for both the three and nine months ended September 30, 2024 and 25.9% for both the three and nine months ended September 30, 2023 applied to adjusted income before income taxes.