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H.S. senior Avg
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New words:
accelerated, ASR, Citibank, creation, discount, disproportionate, distribute, focused, HLBV, hypothetical, hypothetically, indexed, investor, reversal, substantive, unsettled
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joint, September, subsequent
Financial report summary
?Risks
- Our success depends substantially on the value of our brand.
- The high level of competition in the health and fitness industry could materially and adversely affect our business.
- If we are unable to anticipate and satisfy consumer preferences and shifting views of health and fitness, our business may be adversely affected.
- If we fail to obtain and retain high-profile strategic partnership arrangements, or if the reputation of any of our partners is impaired, our business may suffer.
- Our and our franchisees’ stores may be unable to attract and retain members, which would materially and adversely affect our business, results of operations and financial condition.
- Our intellectual property rights, including trademarks, trade names, copyrights and trade dress, may be infringed, misappropriated or challenged by others.
- We and our franchisees rely heavily on information systems, and any material failure, interruption or weakness may prevent us from effectively operating our business and damage our reputation.
- Use of email marketing, mobile application and social media may adversely impact our reputation or subject us to fines or other penalties.
- If we fail to properly maintain the confidentiality and integrity of our data, including member credit card, debit card, bank account information and other personally identifiable information, our reputation and business could be materially and adversely affected.
- The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential information, and/or damage to our employee and business relationships and reputation, all of which could subject us to loss and harm our brand and our business.
- If we fail to successfully implement our growth strategy, which includes new store development by existing and new franchisees, our ability to increase our revenues and operating profits could be adversely affected.
- Our planned growth could place strains on our management, employees, information systems and internal controls, which may adversely impact our business.
- Changes in the industry could place strains on our management, employees, information systems and internal controls, which may adversely impact our business.
- If we cannot retain our key employees and hire additional highly qualified employees, we may not be able to successfully manage our businesses and pursue our strategic objectives.
- Economic, political and other risks associated with our international operations could adversely affect our profitability and international growth prospects.
- Our financial results are affected by the operating and financial results of, and our relationships with, our franchisees.
- Our franchisees could take actions that harm our business.
- We are subject to a variety of additional risks associated with our franchisees.
- We and our franchisees could be subject to claims related to health and safety risks to members that arise while at both our corporate-owned and franchise stores.
- Our business is subject to various laws and regulations and changes in such laws and regulations, or failure to comply with existing or future laws and regulations, could adversely affect our business.
- Regulatory restrictions placed on indoor tanning services and negative opinions about the health effects of indoor tanning services could harm our reputation and our business.
- Environmental, social and governance (ESG) issues may have an adverse effect on our business, financial condition and results of operations and damage our reputation.
- Changes in legislation or requirements related to electronic fund transfer, or our failure to comply with existing or future regulations, may materially and adversely impact our business.
- We are subject to a number of risks related to ACH, credit card, debit card, and digital payment options we accept.
- We are subject to risks associated with leasing property subject to long-term non-cancelable leases.
- If we and our franchisees are unable to identify and secure suitable sites for new franchise stores, our revenue growth rate and profits may be negatively impacted.
- Opening new stores in close proximity may negatively impact our existing stores’ revenues and profitability.
- Our franchisees may incur rising costs related to construction of new stores and maintenance of existing stores, which could adversely affect the attractiveness of our franchise model, and in turn our business, results of operations and financial condition.
- Our dependence on a limited number of suppliers for equipment and certain products and services could result in disruptions to our business and could adversely affect our revenues and gross profit.
- Substantially all of the assets of certain of our subsidiaries are security under the terms of securitization transactions that were completed on August 1, 2018, December 3, 2019 and February 10, 2022.
- We have a significant amount of debt outstanding. Such indebtedness, along with the other contractual commitments of certain of our subsidiaries, could adversely affect our business, financial condition and results of operations, as well as the ability of certain of our subsidiaries to meet their debt payment obligations.
- We will require a significant amount of cash to service our indebtedness. The ability to generate cash or refinance our indebtedness as it becomes due depends on many factors, some of which are beyond our control.
- We will be required to pay certain of our existing and previous owners for certain tax benefits we may claim, and we expect that the payments we will be required to make will be substantial.
- In certain cases, payments under the tax receivable agreements to our TRA Holders may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreements.
- We will not be reimbursed for any payments made to the TRA Holders under the tax receivable agreements in the event that any tax benefits are disallowed.
- Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.
- Our ability to pay taxes and expenses, including payments under the tax receivable agreements, may be limited by our structure.
- In certain circumstances, Pla-Fit Holdings will be required to make distributions to us and the Continuing LLC Owners, and the distributions that Pla-Fit Holdings will be required to make may be substantial.
- Our marketable debt securities portfolio is subject to credit, liquidity, market, and interest rate risks that could cause its value to decline and materially adversely affect our financial condition.
- Provisions of our corporate governance documents could make an acquisition of our Company more difficult and may prevent attempts by our stockholders to replace or remove our current management, even if beneficial to our stockholders.
- Our organizational structure, including the tax receivable agreements, confers certain benefits upon the TRA Holders and the Continuing LLC Owners that do not benefit Class A common stockholders to the same extent as it will benefit the TRA Holders and the Continuing LLC Owners.
- If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
- Our certificate of incorporation designates courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
- Our stock price could be extremely volatile, and, as a result, stockholders may not be able to resell shares at or above their purchase price.
- Because we do not currently pay any cash dividends on our Class A common stock, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it.
- We cannot guarantee that our share repurchase program will be fully consummated or that such program will enhance the long-term value of our share price.
- Financial forecasting may differ materially from actual results.
Management Discussion
- Total revenue was $300.9 million for the three months ended June 30, 2024, compared to $286.5 million for three months ended June 30, 2023, an increase of $14.5 million, or 5.1%.
- Franchise segment revenue was $107.8 million for the three months ended June 30, 2024, compared to $98.8 million for three months ended June 30, 2023, an increase of $8.9 million, or 9.1%.
- Franchise revenue was $87.7 million for the three months ended June 30, 2024, compared to $80.8 million for the three months ended June 30, 2023, an increase of $6.8 million, or 8.4%. Included in franchise revenue is royalty revenue of $73.1 million, franchise and other fees of $7.9 million, and placement revenue of $5.4 million for the three months ended June 30, 2024, respectively, compared to royalty revenue of $66.8 million, franchise and other fees of $6.9 million, and placement revenue of $6.3 million for the three months ended June 30, 2023, respectively. Of the $6.3 million increase in royalty revenue, $3.1 million was attributable to a franchise same store sales increase of 4.3%, $1.8 million was attributable to new stores opened since April 1, 2023 and $1.3 million was from higher royalties on annual fees.