Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | PLNT | |
Entity Registrant Name | PLANET FITNESS, INC. | |
Entity Central Index Key | 1,637,207 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 87,656,487 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 10,741,740 |
Condensed consolidated balance
Condensed consolidated balance sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 127,146 | $ 113,080 |
Accounts receivable, net of allowance for bad debts of $18 and $32 at March 31, 2018 and December 31, 2017, respectively | 18,620 | 37,272 |
Due from related parties | 3,060 | 3,020 |
Inventory | 4,056 | 2,692 |
Restricted assets – national advertising fund | 78 | 499 |
Deferred expenses – national advertising fund | 4,596 | 0 |
Prepaid expenses | 4,051 | 3,929 |
Other receivables | 14,550 | 9,562 |
Other current assets | 5,355 | 6,947 |
Total current assets | 181,512 | 177,001 |
Property and equipment, net of accumulated depreciation of $40,493, as of March 31, 2018 and $36,228 as of December 31, 2017 | 84,545 | 83,327 |
Intangible assets, net | 241,105 | 235,657 |
Goodwill | 191,038 | 176,981 |
Deferred income taxes | 409,216 | 407,782 |
Other assets, net | 8,437 | 11,717 |
Total assets | 1,115,853 | 1,092,465 |
Current liabilities: | ||
Current maturities of long-term debt | 7,185 | 7,185 |
Accounts payable | 15,664 | 28,648 |
Accrued expenses | 14,787 | 18,590 |
Equipment deposits | 14,283 | 6,498 |
Restricted liabilities – national advertising fund | 78 | 490 |
Deferred revenue, current | 20,842 | 19,083 |
Payable to related parties pursuant to tax benefit arrangements, current | 31,062 | 31,062 |
Other current liabilities | 493 | 474 |
Total current liabilities | 104,394 | 112,030 |
Long-term debt, net of current maturities | 695,264 | 696,576 |
Deferred rent, net of current portion | 6,907 | 6,127 |
Deferred revenue, net of current portion | 22,942 | 8,440 |
Deferred tax liabilities | 1,379 | 1,629 |
Payable to related parties pursuant to tax benefit arrangements, net of current portion | 403,022 | 400,298 |
Other liabilities | 4,379 | 4,302 |
Total noncurrent liabilities | 1,133,893 | 1,117,372 |
Commitments and contingencies (Note 12) | ||
Stockholders' equity (deficit): | ||
Accumulated other comprehensive loss | (370) | (648) |
Additional paid in capital | 13,011 | 12,118 |
Accumulated deficit | (120,245) | (130,966) |
Total stockholders' deficit attributable to Planet Fitness Inc. | (107,594) | (119,486) |
Non-controlling interests | (14,840) | (17,451) |
Total stockholders' deficit | (122,434) | (136,937) |
Total liabilities and stockholders' deficit | 1,115,853 | 1,092,465 |
Class A Common Stock | ||
Stockholders' equity (deficit): | ||
Common stock, value | 9 | 9 |
Class B Common Stock | ||
Stockholders' equity (deficit): | ||
Common stock, value | $ 1 | $ 1 |
Condensed consolidated balance3
Condensed consolidated balance sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts receivable, allowance for bad debts | $ 18 | $ 32 |
Accumulated depreciation | $ 40,493 | $ 36,228 |
Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 87,505,000 | 87,188,000 |
Common stock, shares outstanding | 87,505,000 | 87,188,000 |
Class B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 10,893,000 | 11,193,000 |
Common stock, shares outstanding | 10,893,000 | 11,193,000 |
Condensed consolidated statemen
Condensed consolidated statements of operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue: | ||
Franchise | $ 42,162 | $ 30,281 |
Commission income | 1,989 | 6,516 |
National advertising fund revenue | 10,461 | 0 |
Corporate-owned stores | 32,708 | 27,041 |
Equipment | 34,013 | 27,264 |
Total revenue | 121,333 | 91,102 |
Operating costs and expenses: | ||
Cost of revenue | 26,500 | 21,124 |
Store operations | 18,356 | 15,184 |
Selling, general and administrative | 17,623 | 13,820 |
National advertising fund expense | 10,461 | 0 |
Depreciation and amortization | 8,465 | 7,951 |
Other loss (gain) | 1,010 | (32) |
Total operating costs and expenses | 82,415 | 58,047 |
Income from operations | 38,918 | 33,055 |
Other expense, net: | ||
Interest expense, net | (8,734) | (8,763) |
Other income | 192 | 682 |
Total other expense, net | (8,542) | (8,081) |
Income before income taxes | 30,376 | 24,974 |
Provision for income taxes | 6,883 | 7,108 |
Net income | 23,493 | 17,866 |
Less net income attributable to non-controlling interests | 3,613 | 9,024 |
Net income attributable to Planet Fitness, Inc. | $ 19,880 | $ 8,842 |
Class A Common Stock | ||
Net income per share of Class A common stock: | ||
Basic (in dollars per share) | $ 0.23 | $ 0.14 |
Diluted (in dollars per share) | $ 0.23 | $ 0.14 |
Weighted-average shares of Class A common stock outstanding: | ||
Basic (in shares) | 87,434,384 | 64,120,677 |
Diluted (in shares) | 87,697,685 | 64,149,941 |
Condensed consolidated stateme5
Condensed consolidated statements of comprehensive income (loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income including non-controlling interests | $ 23,493 | $ 17,866 |
Other comprehensive income (loss), net: | ||
Unrealized gain on interest rate caps, net of tax | 366 | 177 |
Foreign currency translation adjustments | (29) | (8) |
Total other comprehensive income, net | 337 | 169 |
Total comprehensive income including non-controlling interests | 23,830 | 18,035 |
Less: total comprehensive income attributable to non-controlling interests | 3,671 | 9,114 |
Total comprehensive income attributable to Planet Fitness, Inc. | $ 20,159 | $ 8,921 |
Condensed consolidated stateme6
Condensed consolidated statements of cash flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 23,493 | $ 17,866 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,465 | 7,951 |
Amortization of deferred financing costs | 484 | 465 |
Amortization of favorable leases and asset retirement obligations | 93 | 94 |
Amortization of interest rate caps | 195 | 432 |
Deferred tax expense | 4,909 | 5,298 |
Gain on re-measurement of tax benefit arrangement | (396) | (541) |
Provision for bad debts | (14) | 27 |
Loss on reacquired franchise rights | 350 | 0 |
Loss on disposal of property and equipment | 650 | 0 |
Equity-based compensation | 998 | 380 |
Changes in operating assets and liabilities, excluding effects of acquisitions: | ||
Accounts receivable | 18,637 | 11,859 |
Due to and due from related parties | 165 | (99) |
Inventory | (1,364) | 471 |
Other assets and other current assets | (1,341) | (2,187) |
National advertising fund | (4,586) | 0 |
Accounts payable and accrued expenses | (16,758) | (21,244) |
Other liabilities and other current liabilities | 83 | 188 |
Income taxes | 1,898 | 310 |
Equipment deposits | 7,784 | 8,569 |
Deferred revenue | 3,536 | 527 |
Deferred rent | 853 | 106 |
Net cash provided by operating activities | 48,134 | 30,472 |
Cash flows from investing activities: | ||
Additions to property and equipment | (2,036) | (5,336) |
Acquisition of franchises | (28,503) | 0 |
Proceeds from sale of property and equipment | 40 | 0 |
Net cash used in investing activities | (30,499) | (5,336) |
Cash flows from financing activities: | ||
Principal payments on capital lease obligations | (11) | 0 |
Repayment of long-term debt | (1,796) | (1,796) |
Premiums paid for interest rate caps | 0 | (366) |
Exercise of stock options | 242 | 0 |
Dividend equivalent payments | (20) | (20) |
Distributions to Continuing LLC Members | (1,734) | (3,142) |
Net cash used in financing activities | (3,319) | (5,324) |
Effects of exchange rate changes on cash and cash equivalents | (250) | 31 |
Net increase in cash and cash equivalents | 14,066 | 19,843 |
Cash and cash equivalents, beginning of period | 113,080 | 40,393 |
Cash and cash equivalents, end of period | 127,146 | 60,236 |
Supplemental cash flow information: | ||
Net cash paid for income taxes | 106 | 1,595 |
Cash paid for interest | 8,146 | 7,857 |
Non-cash investing activities: | ||
Non-cash additions to property and equipment | $ 453 | $ 38 |
Condensed consolidated stateme7
Condensed consolidated statement of changes in equity (deficit) (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) shares in Thousands, $ in Thousands | Total | Accumulated other comprehensive (loss) income | Additional paid- in capital | Accumulated deficit | Non-controlling interests | Class A Common Stock | Class A Common StockCommon stock | Class B Common Stock | Class B Common StockCommon stock |
Beginning balance (in shares) at Dec. 31, 2017 | 87,188 | 87,188 | 11,193 | 11,193 | |||||
Beginning balance at Dec. 31, 2017 | $ (136,937) | $ (648) | $ 12,118 | $ (130,966) | $ (17,451) | $ 9 | $ 1 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 23,493 | 19,880 | 3,613 | ||||||
Equity-based compensation expense | 998 | 998 | |||||||
Exchanges of Class B common stock, shares issued | 300 | (300) | |||||||
Exchanges of Class B common stock | 0 | (1) | (673) | 674 | |||||
Exercise of stock options and vesting of restricted share units (in shares) | 17 | ||||||||
Exercise of stock options and vesting of restricted share units | 242 | 242 | |||||||
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock | 326 | 326 | |||||||
Forfeiture of dividend equivalents | 33 | 33 | |||||||
Distributions paid to members of Pla-Fit Holdings | (1,734) | (1,734) | |||||||
Cumulative effect adjustment (Note 15) | (9,192) | (9,192) | |||||||
Other comprehensive income | 337 | 279 | 58 | ||||||
Ending balance (in shares) at Mar. 31, 2018 | 87,505 | 87,505 | 10,893 | 10,893 | |||||
Ending balance at Mar. 31, 2018 | $ (122,434) | $ (370) | $ 13,011 | $ (120,245) | $ (14,840) | $ 9 | $ 1 |
Business Organization
Business Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Organization | Business Organization Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with more than 11.8 million members and 1,565 owned and franchised locations (referred to as stores) in 50 states, the District of Columbia, Puerto Rico, Canada, the Dominican Republic and Panama as of March 31, 2018 . The Company serves as the reporting entity for its various subsidiaries that operate three distinct lines of business: • Licensing and selling franchises under the Planet Fitness trade name. • Owning and operating fitness centers under the Planet Fitness trade name. • Selling fitness-related equipment to franchisee-owned stores. The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”) which was completed on August 11, 2015 and related transactions in order to carry on the business of Pla-Fit Holdings, LLC and its subsidiaries (“Pla-Fit Holdings”). As of August 5, 2015, in connection with the recapitalization transactions that occurred prior to the IPO, the Company became the sole managing member and holder of 100% of the voting power of Pla-Fit Holdings. Pla-Fit Holdings owns 100% of Planet Intermediate, LLC which has no operations but is the 100% owner of Planet Fitness Holdings, LLC, a franchisor and operator of fitness centers. With respect to the Company, Pla-Fit Holdings and Planet Intermediate, LLC, each entity owns nothing other than the respective entity below it in the corporate structure and each entity has no other material operations. Subsequent to the IPO and the related recapitalization transactions, the Company is a holding company whose principal asset is a controlling equity interest in Pla-Fit Holdings. 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 limited liability company units of Pla-Fit Holdings (“Holdings Units”) not owned by the Company. Unless otherwise specified, “the Company” refers to both Planet Fitness, Inc. and Pla-Fit Holdings throughout the remainder of these notes. As of March 31, 2018 , Planet Fitness, Inc. held 100.0% of the voting interest and 88.9% of the economic interest of Pla-Fit Holdings and the holders of Holdings Units of Pla-Fit Holdings (the “Continuing LLC Owners”) held the remaining 11.1% economic interest in Pla-Fit Holdings. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Basis of presentation and consolidation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements as of and for the three months ended March 31, 2018 are unaudited. The condensed consolidated balance sheet as of December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”) filed with the SEC on March 1, 2018 . Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. As discussed in Note 1, as a result of the recapitalization transactions, Planet Fitness, Inc. consolidates Pla-Fit Holdings. The Company also consolidates entities in which it has a controlling financial interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation certain interests where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE is considered to possess the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the rights to receive benefits from the VIE that are significant to it. The principal entities in which the Company possesses a variable interest include franchise entities and certain other entities. The Company is not deemed to be the primary beneficiary for Planet Fitness franchise entities. Therefore, these entities are not consolidated. The results of the Company have been consolidated with Matthew Michael Realty LLC (“MMR”) and PF Melville LLC (“PF Melville”) based on the determination that the Company is the primary beneficiary with respect to these VIEs. These entities are real estate holding companies that derive a majority of their financial support from the Company through lease agreements for corporate stores. See Note 3 for further information related to the Company’s VIEs. (b) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the consolidated financial statements include revenue recognition, valuation of assets and liabilities in connection with acquisitions, valuation of equity-based compensation awards, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, income taxes, including deferred tax assets and liabilities and reserves for unrecognized tax benefits, and the liability for the Company’s tax benefit arrangements. (c) Fair Value ASC 820, Fair Value Measurements and Disclosures , establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The table below presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 : Total fair value at March 31, Quoted prices in active markets (Level 1) Significant Significant unobservable inputs (Level 3) Interest rate caps $ 636 $ — $ 636 $ — Total fair value at December 31, Quoted Significant Significant Interest rate caps $ 340 $ — $ 340 $ — (d) Recent accounting pronouncements The FASB issued ASU No. 2014-9, Revenue from Contracts with Customers , in September 2014. This guidance requires that an entity recognize revenue to depict the transfer of a promised good or service to its customers in an amount that reflects consideration to which the entity expects to be entitled in exchange for such transfer. This guidance also specifies accounting for certain costs incurred by an entity to obtain or fulfill a contract with a customer and provides for enhancements to revenue specific disclosures intended to allow users of the financial statements to clearly understand the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with its customers. The Company has adopted the guidance as of January 1, 2018 on a modified retrospective basis. See Note 15 for details about the effect of adoption. The FASB issued ASU No. 2016-2, Leases , in February 2016. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public companies. Early application of the amendments in this update is permitted for all entities. The Company anticipates that adoption of this guidance will bring all current operating leases onto the statement of financial position as a right of use asset and related rent liability, and is currently evaluating the effect that implementation of this guidance will have on its consolidated statement of operations. The FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments , in August 2016. This guidance is intended to reduce diversity in practice of the classification of certain cash receipts and cash payments. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that year. The Company has adopted the guidance as of January 1, 2018 on a prospective basis, noting no material impact on its consolidated financial statements. The FASB issued ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. This guidance eliminates the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. This guidance will be effective for fiscal years beginning after December 15, 2019, including interim periods within that year. This new guidance is not expected to have a material impact on the Company’s consolidated financial statements. The FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in August 2017. The guidance simplifies the application of hedge accounting in certain situations and amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements. This guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within that year. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2018 | |
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | |
Variable Interest Entities | Variable Interest Entities The carrying values of VIEs included in the consolidated financial statements as of March 31, 2018 and December 31, 2017 are as follows: March 31, 2018 December 31, 2017 Assets Liabilities Assets Liabilities PF Melville $ 4,512 $ 4,420 $ — MMR 3,410 3,360 — Total $ 7,922 $ — $ 7,780 $ — The Company also has variable interests in certain franchisees mainly through the guarantee of certain debt and lease agreements by the Company and by certain related parties to franchisees. The Company’s maximum obligation, as a result of its guarantees of leases and debt, is approximately $919 and $979 as of March 31, 2018 and December 31, 2017 , respectively. The amount of the Company’s maximum obligation represents a loss that the Company could incur from the variability in credit exposure without consideration of possible recoveries through insurance or other means. In addition, the amount bears no relation to the ultimate settlement anticipated to be incurred from the Company’s involvement with these entities, which is estimated at $0 . |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On January 1, 2018, the Company purchased from one of its franchisees certain assets associated with six franchisee-owned stores in New York for a cash payment of $28,503 . As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $350 , which has been reflected in other operating costs in the statement of operations. The loss incurred reduced the net purchase price to $28,153 . The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment. The preliminary purchase consideration was allocated as follows: Amount Fixed assets $ 4,672 Reacquired franchise rights 7,640 Customer relationships 1,150 Favorable leases, net 520 Reacquired area development rights 150 Other assets 275 Goodwill 14,056 Liabilities assumed, including deferred revenues (310 ) $ 28,153 The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is deductible for tax purposes over 15 years. The acquisition was not material to the results of operations, financial position or cash flows of the Company. Certain estimated values for the acquisition, including goodwill and intangible assets, are not yet finalized and are subject to revision as additional information becomes available and more detailed analyses are completed. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible assets | Goodwill and Intangible Assets A summary of goodwill and intangible assets at March 31, 2018 and December 31, 2017 is as follows: March 31, 2018 Weighted average amortization period (years) Gross carrying amount Accumulated amortization Net carrying Amount Customer relationships 11.1 $ 172,932 (89,733 ) $ 83,199 Noncompete agreements 5.0 14,500 (14,500 ) — Favorable leases 7.7 3,455 (2,064 ) 1,391 Order backlog 0.4 3,400 (3,400 ) — Reacquired franchise rights 6.8 16,590 (6,518 ) 10,072 Reacquired ADA rights 5.0 150 (7 ) 143 211,027 (116,222 ) 94,805 Indefinite-lived intangible: Trade and brand names N/A 146,300 — 146,300 Total intangible assets $ 357,327 $ (116,222 ) $ 241,105 Goodwill $ 191,038 $ — $ 191,038 December 31, 2017 Weighted Gross Accumulated Net carrying Customer relationships 11.1 $ 171,782 $ (86,501 ) $ 85,281 Noncompete agreements 5.0 14,500 (14,500 ) — Favorable leases 7.5 2,935 (1,972 ) 963 Order backlog 0.4 3,400 (3,400 ) — Reacquired franchise rights 5.8 8,950 (5,837 ) 3,113 201,567 (112,210 ) 89,357 Indefinite-lived intangible: Trade and brand names N/A 146,300 — 146,300 Total intangible assets $ 347,867 $ (112,210 ) $ 235,657 Goodwill $ 176,981 $ — $ 176,981 The Company determined that no impairment charges were required during any periods presented and the increase to goodwill was due to the acquisition of six franchisee-owned stores on January 1, 2018 (Note 4). Amortization expense related to the intangible assets totaled $3,966 and $4,715 for the three months ended March 31, 2018 and 2017 , respectively. Included within these total amortization expense amounts are $93 and $94 related to amortization of favorable and unfavorable leases for the three months ended March 31, 2018 and 2017 , respectively. Amortization of favorable and unfavorable leases is recorded within store operations as a component of rent expense in the consolidated statements of operations. The anticipated annual amortization expense to be recognized in future years as of March 31, 2018 is as follows: Amount Remainder of 2018 $ 12,029 2019 15,536 2020 13,676 2021 13,701 2022 13,789 Thereafter 26,074 Total $ 94,805 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt as of March 31, 2018 and December 31, 2017 consists of the following: March 31, 2018 December 31, 2017 Term loan B requires quarterly installments plus interest through the term of the loan, maturing March 31, 2021. Outstanding borrowings bear interest at LIBOR or base rate (as defined) plus a margin at the election of the borrower (4.71% at March 31, 2018 and 4.59% at December 31, 2017) $ 707,673 $ 709,470 Revolving credit line, requires interest only payments through the term of the loan, maturing March 31, 2019. Outstanding borrowings bear interest at LIBOR or base rate (as defined) plus a margin at the election of the borrower (6.50% at March 31, 2018 and 6.25% at December 31, 2017) — — Total debt, excluding deferred financing costs $ 707,673 709,470 Deferred financing costs, net of accumulated amortization (5,224 ) (5,709 ) Total debt 702,449 703,761 Current portion of long-term debt and line of credit 7,185 7,185 Long-term debt, net of current portion $ 695,264 $ 696,576 Term loan B payments are payable in quarterly installments with the final scheduled principal payment on the outstanding term loan borrowings due on March 31, 2021 . Future annual principal payments of long-term debt as of March 31, 2018 are as follows: Amount Remainder of 2018 $ 5,389 2019 7,185 2020 7,185 2021 687,914 2022 — Total $ 707,673 |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company utilizes interest-rate-related derivative instruments to manage its exposure related to changes in interest rates on its variable-rate debt instruments. The Company does not enter into derivative instruments for any purpose other than cash flow hedging. The Company does not speculate using derivative instruments. By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is an asset, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is a liability, the Company owes the counterparty and, therefore, the Company is not exposed to the counterparty’s credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high-quality counterparties whose credit rating is higher than A1/A+ at the inception of the derivative transaction. The derivative instruments entered into by the Company do not contain credit-risk-related contingent features. Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The Company assesses interest rate risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. The Company monitors interest rate risk attributable to both the Company’s outstanding or forecasted debt obligations as well as the Company’s offsetting hedge positions. In order to manage the market risk arising from the outstanding term loans, the Company has entered into a series of interest rate caps. As of March 31, 2018 , the Company had interest rate cap agreements with notional amounts of $134,000 outstanding that were entered into in order to hedge three month LIBOR greater than 1.5% through September 30, 2018, and interest rate cap agreements with notional amounts of $220,735 that were entered into in order to hedge one month LIBOR greater than 2.5% through March 31, 2019. The interest rate cap balances of $636 and $340 were recorded within other assets in the condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017 , respectively. These amounts have been measured at fair value and are considered to be a Level 2 fair value measurement. The Company recorded an increase to the value of its interest rate caps of $366 , net of tax of $125 and $177 , net of tax of $57 , within other comprehensive income (loss) during the three months ended March 31, 2018 and 2017 , respectively. As of March 31, 2018 , the Company does not expect to reclassify any amounts included in accumulated other comprehensive income (loss) into earnings during the next 12 months. Transactions and events expected to occur over the next 12 months that could necessitate reclassifying these derivatives’ loss to earnings include the re-pricing of variable-rate debt. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Amounts due from related parties of $3,060 and $3,020 as of March 31, 2018 and December 31, 2017 , respectively, primarily relate to potential reimbursements for certain taxes accrued or paid by the Company (see Note 11). Activity with entities considered to be related parties is summarized below: For the three months ended 2018 2017 Franchise revenue $ 882 $ 448 Equipment revenue 591 19 Total revenue from related parties $ 1,473 $ 467 Additionally, the Company had deferred area development agreement revenue from related parties of $784 and $389 as of March 31, 2018 and December 31, 2017 , respectively. The Company entered into a consulting agreement that continues through December 31, 2018 with a shareholder and former executive officer of the Company. The Company had payables to related parties pursuant to tax benefit arrangements of $45,125 and $ 44,794 , as of March 31, 2018 and December 31, 2017 , respectively (see Note 11). The Company provides administrative services to Planet Fitness NAF, LLC (“NAF”) and charges NAF a fee for providing these services. The services provided include accounting services, information technology, data processing, product development, legal and administrative support, and other operating expenses, which amounted to $640 and $573 for the three months ended March 31, 2018 and 2017 , respectively. |
Stockholder's Equity
Stockholder's Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholder's Equity | Stockholder’s Equity Pursuant to the exchange agreement between the Company and the Continuing LLC Owners, the Continuing LLC Owners (or certain permitted transferees thereof) have the right, from time to time and subject to the terms of the exchange agreement, to exchange their Holdings Units, along with a corresponding number of shares of Class B common stock, for shares of Class A common stock (or cash at the option of the Company) on a one -for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and similar transactions. In connection with any exchange of Holdings Units for shares of Class A common stock by a Continuing LLC Owner , the number of Holdings Units held by the Company is correspondingly increased as it acquires the exchanged Holdings Units, and a corresponding number of shares of Class B common stock are canceled. During the three months ended March 31, 2018, certain existing holders of Holdings Units exercised their exchange rights and exchanged 300,000 Holdings Units for 300,000 newly-issued shares of Class A common stock. Simultaneously, and in connection with these exchanges, 300,000 shares of Class B common stock were surrendered by the holders of Holdings Units that exercised their exchange rights and canceled. Additionally, in connection with these exchanges, Planet Fitness, Inc. received 300,000 Holdings Units, increasing its total ownership interest in Pla-Fit Holdings. As a result of these transactions, as of March 31, 2018 : • Holders of our Class A common stock owned 87,505,487 shares of our Class A common stock, representing 88.9% of the voting power in the Company and, through the Company, 87,505,487 Holdings Units representing 88.9% of the economic interest in Pla-Fit Holdings; and • the Continuing LLC Owners collectively owned 10,892,740 Holdings Units, representing 11.1% of the economic interest in Pla-Fit Holdings and 10,892,740 shares of our Class B common stock, representing 11.1% of the voting power in the Company. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share of Class A common stock is computed by dividing net income attributable to Planet Fitness, Inc. by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to Planet Fitness, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to Planet Fitness, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. Shares of the Company’s Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related Holdings Units, are exchangeable into shares of Class A common stock on a one -for-one basis. The following table sets forth reconciliations used to compute basic and diluted earnings per share of Class A common stock: Three months ended 2018 2017 Numerator Net income $ 23,493 $ 17,866 Less: net income attributable to non-controlling interests 3,613 9,024 Net income attributable to Planet Fitness, Inc. $ 19,880 $ 8,842 Denominator Weighted-average shares of Class A common stock outstanding - basic 87,434,384 64,120,677 Effect of dilutive securities: Stock options 255,527 24,739 Restricted stock units 7,774 4,525 Weighted-average shares of Class A common stock outstanding - diluted 87,697,685 64,149,941 Earnings per share of Class A common stock - basic $ 0.23 $ 0.14 Earnings per share of Class A common stock - diluted $ 0.23 $ 0.14 Weighted average shares of Class B common stock of 10,953,521 and 34,378,046 for the three months ended March 31, 2018 and 2017 , respectively, were evaluated under the if-converted method for potential dilutive effects and were not determined to be dilutive. Weighted average stock options outstanding of 0 and 111,912 for the three months ended March 31, 2018 and 2017 , respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive. Weighted average RSUs outstanding of 0 and 8,160 for the three months ended March 31, 2018 and 2017 , respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is the sole managing member of Pla-Fit Holdings, which is treated as a partnership for U.S. federal and certain state and local income taxes. As a partnership, Pla-Fit Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Pla-Fit Holdings is passed through to and included in the taxable income or loss of its members, including the Company, on a pro-rata basis. The provision for income taxes also reflects a state tax rate of 2.0% for the three months ended March 31, 2018 and 2017 , applied to non-controlling interests, representing the remaining percentage of income before taxes, excluding income from variable interest entities, related to Pla-Fit Holdings. Planet Fitness, Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income of Pla-Fit Holdings. The Company’s effective tax rate was 22.7% and 28.5% for the three months ended March 31, 2018 and 2017 , respectively. The reduction in the current tax rate was primarily attributable to the lower U.S. statutory tax rate in 2018, partially offset by the Company’s increased pro rata share of income from Pla-Fit Holdings. The impact of discrete items was not material. The Company was also subject to taxes in foreign jurisdictions. Undistributed earnings of foreign operations were not material for the three months ended March 31, 2018 and 2017 . Net deferred tax assets of $ 407,837 and $ 406,153 as of March 31, 2018 and December 31, 2017 , respectively, relate primarily to the tax effects of temporary differences in the book basis as compared to the tax basis of our investment in Pla-Fit Holdings as a result of the secondary offerings, other exchanges, recapitalization transactions and IPO. As of March 31, 2018 , the Company does not have any material net operating loss carryforwards. As of March 31, 2018 and December 31, 2017 , the total liability related to uncertain tax positions was $ 2,608 . The Company recognizes interest accrued and penalties, if applicable, related to unrecognized tax benefits in income tax expense. As of March 31, 2018 , the Company anticipates that the liability for unrecognized tax benefits could decrease by up to $ 2,608 within the next 12 months due to the expiration of certain statutes of limitation or the settlement of examinations or issues with tax authorities. Interest and penalties for the three months ended March 31, 2018 and 2017 were not material. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of H.R. 1, originally known as the Tax Cuts and Jobs Act ("2017 Tax Act"). As of December 31, 2017, the Company made reasonable provisional estimates of the effects of the Tax Act on our consolidated financial statements and tax disclosures, including changes to existing deferred tax balances, the mandatory repatriation tax and remeasurement of our tax benefit arrangements. At March 31, 2018 the Company has not obtained the additional information needed to complete the accounting for the effects of the 2017 Tax Act and has not revised any of its 2017 provisional estimates. Tax benefit arrangements The Company’s acquisition of Holdings Units in connection with the IPO and future and certain past exchanges of Holdings Units for shares of the Company’s Class A common stock (or cash at the option of the Company) are expected to produce and have produced favorable tax attributes. In connection with the IPO, the Company entered into two tax receivable agreements. Under the first of those agreements, the Company generally is required to pay to certain existing and previous equity owners of Pla-Fit Holdings (the “TRA Holders”) 85% of the applicable tax savings, if any, in U.S. federal and state income tax that the Company is deemed to realize as a result of certain tax attributes of their Holdings Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Holdings Units for shares of Class A common stock and (ii) tax benefits attributable to payments made under the tax receivable agreement (including imputed interest). Under the second tax receivable agreement, the Company generally is required to pay to TSG AIV II-A L.P and TSG PF Co-Investors A L.P. (the "Direct TSG Investors") 85% of the amount of tax savings, if any, that the Company is deemed to realize as a result of the tax attributes of the Holdings Units held in respect of the Direct TSG Investors’ interest in the Company, which resulted from the Direct TSG Investors’ purchase of interests in Pla-Fit Holdings in 2012, and certain other tax benefits. Under both agreements, the Company generally retains the benefit of the remaining 15% of the applicable tax savings. During the three months ended March 31, 2018 , 300,000 Holdings Units were redeemed by the TRA Holders for newly issued shares of Class A common stock, resulting in an increase in the tax basis of the net assets of Pla-Fit Holdings subject to the provisions of the tax receivable agreements. As a result of the change in Planet Fitness, Inc.’s ownership percentage of Pla-Fit Holdings that occurred in conjunction with the exchanges, we recorded a decrease to our net deferred tax assets of $188 during the three months ended March 31, 2018 . As a result of these exchanges, during the three months ended March 31, 2018 , we also recognized deferred tax assets in the amount of $3,633 , and corresponding tax benefit arrangement liabilities of $3,119 , representing 85% of the tax benefits due to the TRA Holders. The offset to the entries recorded in connection with exchanges was to equity. As of March 31, 2018 and December 31, 2017 , the Company had a liability of $ 434,084 and $ 431,360 , respectively, related to its projected obligations under the tax benefit arrangements. Projected future payments under the tax benefit arrangements are as follows: Amount Remainder of 2018 $ 31,062 2019 23,479 2020 23,776 2021 24,191 2022 24,663 Thereafter 306,913 Total $ 434,084 |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies From time to time, and in the ordinary course of business, the Company is subject to various claims, charges, and litigation, such as employment-related claims and slip and fall cases. The Company is not currently aware of any legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or result of operations. |
Segments
Segments | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segments | Segments The Company has three reportable segments: (i) Franchise; (ii) Corporate-owned stores; and (iii) Equipment. The Company’s operations are organized and managed by type of products and services and segment information is reported accordingly. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The CODM reviews financial performance and allocates resources by reportable segment. There have been no operating segments aggregated to arrive at the Company’s reportable segments. The Franchise segment includes operations related to the Company’s franchising business in the United States, Puerto Rico, Canada, the Dominican Republic and Panama, including revenues and expenses from the national advertising fund beginning on January 1, 2018 (see Note 15). The Corporate-owned stores segment includes operations with respect to all Corporate-owned stores throughout the United States and Canada. The Equipment segment includes the sale of equipment to franchisee-owned stores. The accounting policies of the reportable segments are the same as those described in Note 2. The Company evaluates the performance of its segments and allocates resources to them based on revenue and earnings before interest, taxes, depreciation, and amortization, referred to as Segment EBITDA. Revenues for all operating segments include only transactions with unaffiliated customers and include no intersegment revenues. The tables below summarize the financial information for the Company’s reportable segments for the three months ended March 31, 2018 and 2017 . The “Corporate and other” category, as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services which are not directly attributable to any individual segment. Three months ended 2018 2017 Revenue Franchise segment revenue - U.S. $ 53,445 $ 36,428 Franchise segment revenue - International 1,167 369 Franchise segment total 54,612 36,797 Corporate-owned stores - U.S. 31,573 25,973 Corporate-owned stores - International 1,135 1,068 Corporate-owned stores total 32,708 27,041 Equipment segment - U.S. 34,013 27,264 Equipment segment total 34,013 27,264 Total revenue $ 121,333 $ 91,102 Franchise segment revenue includes franchise revenue, national advertising fund revenue, and commission income. Franchise revenue includes revenue generated from placement services of $2,097 and $2,106 for the three months ended March 31, 2018 and 2017 , respectively. Three months ended 2018 2017 Segment EBITDA Franchise $ 36,677 $ 32,032 Corporate-owned stores 12,170 10,693 Equipment 7,469 6,094 Corporate and other (8,741 ) (7,131 ) Total Segment EBITDA $ 47,575 $ 41,688 The following table reconciles total Segment EBITDA to income before taxes: Three months ended 2018 2017 Total Segment EBITDA $ 47,575 $ 41,688 Less: Depreciation and amortization 8,465 7,951 Other (income) expense 192 682 Income from operations 38,918 33,055 Interest expense, net (8,734 ) (8,763 ) Other (income) expense 192 682 Income before income taxes $ 30,376 $ 24,974 The following table summarizes the Company’s assets by reportable segment: March 31, 2018 December 31, 2017 Franchise $ 222,269 $ 243,348 Corporate-owned stores 191,978 167,367 Equipment 188,630 206,632 Unallocated 512,976 475,118 Total consolidated assets $ 1,115,853 $ 1,092,465 The table above includes $2,362 and $2,558 of long-lived assets located in the Company’s corporate-owned stores in Canada as of March 31, 2018 and December 31, 2017 , respectively. All other assets are located in the U.S. The following table summarizes the Company’s goodwill by reportable segment: March 31, 2018 December 31, 2017 Franchise $ 16,938 $ 16,938 Corporate-owned stores 81,434 67,377 Equipment 92,666 92,666 Consolidated goodwill $ 191,038 $ 176,981 |
Corporate-Owned and Franchisee-
Corporate-Owned and Franchisee-Owned Stores | 3 Months Ended |
Mar. 31, 2018 | |
Franchisors [Abstract] | |
Corporate-Owned and Franchisee-Owned Stores | Corporate-Owned and Franchisee-Owned Stores The following table shows changes in our corporate-owned and franchisee-owned stores for the three months ended March 31, 2018 and 2017 : For the three months ended 2018 2017 Franchisee-owned stores: Stores operated at beginning of period 1,456 1,255 New stores opened 47 54 Stores debranded, sold or consolidated (1) (6 ) — Stores operated at end of period 1,497 1,309 Corporate-owned stores: Stores operated at beginning of period 62 58 New stores opened — — Stores acquired from franchisees 6 — Stores operated at end of period 68 58 Total stores: Stores operated at beginning of period 1,518 1,313 New stores opened 47 54 Stores acquired, debranded, sold or consolidated (1) — — Stores operated at end of period 1,565 1,367 (1) The term “debrand” refers to a franchisee-owned store whose right to use the Planet Fitness brand and marks has been terminated in accordance with the franchise agreement. We retain the right to prevent debranded stores from continuing to operate as fitness centers. The term “consolidated” refers to the combination of a franchisee’s store with another store located in close proximity with our prior approval. This often coincides with an enlargement, re-equipment and/or refurbishment of the remaining store. |
Revenue recognition
Revenue recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue recognition | Revenue recognition Revenue from Contracts with Customers We transitioned to FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts with Customers (“ASC 606”), from ASC Topic 605, Revenue Recognition and ASC Subtopic 952-605, Franchisors - Revenue Recognition (together, the “Previous Standards”) on January 1, 2018 using the modified retrospective transition method. Our Financial Statements reflect the application of ASC 606 guidance beginning in 2018, while our consolidated financial statements for prior periods were prepared under the guidance of Previous Standards. The $9,192 cumulative effect of our transition to ASC 606 is reflected as an adjustment to January 1, 2018 stockholders' deficit. Our transition to ASC 606 represents a change in accounting principle. ASC 606 eliminates industry-specific guidance and provides a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of ASC 606 is that a reporting entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the reporting entity expects to be entitled in exchange for those goods or services. Revenue Recognition Significant Accounting Policies under ASC 606 The Company's revenues are comprised of franchise revenue, equipment revenue, and corporate-owned stores revenue. Franchise revenue Franchise revenues consist primarily of royalties, national advertising fund contributions, initial and renewal franchise fees and upfront fees from area development agreements ("ADAs"), transfer fees, equipment placement revenue, other fees and commission income. The Company's primary performance obligation under the franchise license is granting certain rights to use the Company's intellectual property, and all other services the Company provides under the ADA and franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for under ASC 606 as a single performance obligation, which is satisfied by granting certain rights to use our intellectual property over the term of each franchise agreement. Royalties, including franchisee contributions to national advertising funds, are calculated as a percentage of franchise sales over the term of the franchise agreement. Under our franchise agreements, advertising contributions paid by franchisees must be spent on advertising, marketing and related activities. Initial and renewal franchise fees are payable by the franchisee upon signing a new franchise agreement or renewal of an existing franchise agreement, and transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee. Our franchise royalties, as well as our advertising fund contributions, represent sales-based royalties that are related entirely to our performance obligation under the franchise agreement and are recognized as franchise sales occur. Additionally, under ASC 606, initial and renewal franchise fees as well as transfer fees are recognized as revenue on a straight-line basis over the term of the respective franchise agreement. Under the Previous Standards, initial franchise fees were recognized as revenue when the related franchisees signed a lease and completed the Company's new franchisee training. Renewal franchise fees and transfer fees were recognized as revenue upon execution of a new franchise agreement. Our performance obligation under area development agreements generally consists of an obligation to grant geographic exclusive area development rights. These development rights are not distinct from franchise agreements, so upfront fees paid by franchisees for exclusive development rights are deferred and apportioned to each franchise agreement signed by the franchisee. The pro-rata amount apportioned to each franchise agreement is accounted for identically to the initial franchise fee. The Company is generally responsible for assembly and placement of equipment it sells to U.S. based franchisee-owned stores. Placement revenue is recognized upon completion and acceptance of the services at the franchise location. The Company recognizes commission income from its franchisees’ use of certain preferred vendor arrangements. Commissions are recognized when amounts have been earned and collectability from the vendor is reasonably assured. Online member join fees are paid to the Company by franchisees for processing new membership transactions when a new member signs up for a membership to a franchisee-owned store through the Company’s website. These fees are recognized as revenue as each transaction occurs. Billing transaction fees are paid to the Company for the processing of franchisee membership dues and annual fees through the Company’s third-party hosted point-of-sale system and are recognized as revenue as they are earned. Equipment revenue The Company sells and delivers equipment purchased from third-party equipment manufacturers to U.S. based franchisee-owned stores. Revenue is recognized upon transfer of control of ordered items, generally upon delivery to the customer, which is when the customer obtains physical possession of the goods, legal title is transferred, the customer has all risks and rewards of ownership and an obligation to pay for the goods is created. Franchisees are charged for all freight costs incurred for the delivery of equipment. Freight revenue is recorded within equipment revenue and freight costs are recorded within cost of revenue. The Company recognizes revenue on a gross basis in these transactions as management has determined the Company to be the principal in these transactions. Management determined the Company to be the principal in the transaction because the Company controls the equipment prior to delivery to the final customer as evidenced by its pricing discretion over the goods, inventory transfer of title and risk of loss while the inventory is in transit, and having the primary responsibility to fulfill the customer order and direct the third-party vendor. Corporate-owned stores revenue The following revenues are generated from stores owned and operated by the Company. Customers are offered multiple membership choices varying in length. Membership dues are earned and recognized over the membership term on a straight-line basis. Enrollment fee revenue Enrollment fees are charged to new members at the commencement of their membership. The Company recognizes enrollment fees ratably over the estimated duration of the membership life, which is generally two years. Annual membership fee revenue Annual membership fees are annual fees charged to members in addition to and in order to maintain low monthly membership dues. The Company recognizes annual membership fees ratably over the 12 -month membership period. Retail sales The Company sells Planet Fitness branded apparel, food, beverages, and other accessories. The revenue for these items is recognized at the point of sale. Contract Liabilities Contract liabilities consist of deferred revenue resulting from initial and renewal franchise fees and ADA fees paid by franchisees, as well as transfer fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement. Also included are corporate store enrollment fees, annual fees and monthly fees. We classify these contract liabilities as deferred revenue in our condensed consolidated balance sheets. The following table reflects the change in contract liabilities between the date of adoption (January 1, 2018) and March 31, 2018 , : Contract liabilities Balance at January 1, 2018 $ 40,000 Revenue recognized that was included in the contract liability at the beginning of the year (10,355 ) Increase, excluding amounts recognized as revenue during the period 14,139 Balance at March 31, 2018 $ 43,784 The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2018. The Company has elected to exclude short term contracts, sales and usage based royalties and any other variable consideration recognized on an "as invoiced" basis. Contract liabilities to be recognized in: Amount 2018 19,327 2019 3,178 2020 1,977 2021 1,868 2022 1,732 Thereafter 15,702 Total 43,784 Financial Statement Impact of Transition to ASC 606 As noted above, we transitioned to ASC 606 using the modified retrospective method on January 1, 2018. The cumulative effect of this transition to applicable contracts with customers that were not completed as of January 1, 2018 was recorded as an adjustment to stockholders' deficit as of that date. As a result of applying the modified retrospective method to transition to ASC 606, the following adjustments were made to the consolidated balance sheet as of January 1, 2018 (in millions): As Reported December 31, Total adjustments Adjusted January 1, 2017 2018 Assets Current assets: Cash and cash equivalents $ 113,080 $ — $ 113,080 Accounts receivable, net 37,272 — 37,272 Due from related parties 3,020 — 3,020 Inventory 2,692 — 2,692 Restricted assets – national advertising fund 499 — 499 Prepaid expenses 3,929 — 3,929 Other receivables 9,562 — 9,562 Other current assets 6,947 — 6,947 Total current assets 177,001 — 177,001 Property and equipment, net 83,327 — 83,327 Intangible assets, net 235,657 — 235,657 Goodwill 176,981 — 176,981 Deferred income taxes 407,782 3,285 411,067 Other assets, net 11,717 — 11,717 Total assets $ 1,092,465 $ 3,285 $ 1,095,750 Liabilities and stockholders' equity (deficit) Current liabilities: Current maturities of long-term debt $ 7,185 $ — $ 7,185 Accounts payable 28,648 — 28,648 Accrued expenses 18,590 — 18,590 Equipment deposits 6,498 — 6,498 Restricted liabilities – national advertising fund 490 — 490 Deferred revenue, current 19,083 (764 ) 18,319 Payable pursuant to tax benefit arrangements, current 31,062 — 31,062 Other current liabilities 474 — 474 Total current liabilities 112,030 (764 ) 111,266 Long-term debt, net of current maturities 696,576 — 696,576 Deferred rent, net of current portion 6,127 — 6,127 Deferred revenue, net of current portion 8,440 13,241 21,681 Deferred tax liabilities 1,629 — 1,629 Payable pursuant to tax benefit arrangements, net of current portion 400,298 — 400,298 Other liabilities 4,302 — 4,302 Total noncurrent liabilities 1,117,372 13,241 1,130,613 Stockholders' equity (deficit): Class A common stock 9 — 9 Class B common stock 1 — 1 Accumulated other comprehensive loss (648 ) — (648 ) Additional paid in capital 12,118 — 12,118 Accumulated deficit (130,966 ) (9,192 ) (140,158 ) Total stockholders' deficit attributable to Planet Fitness Inc. (119,486 ) (9,192 ) (128,678 ) Non-controlling interests (17,451 ) — (17,451 ) Total stockholders' deficit (136,937 ) (9,192 ) (146,129 ) Total liabilities and stockholders' deficit $ 1,092,465 $ 3,285 $ 1,095,750 Franchise Fees The cumulative adjustment for franchise fees, including ADA fees, renewal fees and transfer fees which will all be recognized over the franchise contract term consist of the following: • An increase in deferred revenue, net of $ 12,477 for the cumulative reversal and deferral of previously recognized fees related to franchise agreements in effect at January 1, 2018 that were entered into subsequent to the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG Consumer Partners, LLC (the “2012 Acquisition”) (net of the cumulative revenue attributable for the period through January 1, 2018), with a corresponding decrease to Shareholders’ equity. • An increase to deferred income taxes, net of $ 3,285 for the tax effects of the adjustment noted above, with a corresponding increase to stockholders' equity. Comparison to Amounts if Previous Standards Had Been in Effect The following tables reflect the impact of adoption of ASC 606 on our consolidated statements of operations and cash flows from operating activities for the three months ended March 31, 2018 and our condensed consolidated balance sheet as of March 31, 2018 and the amounts as if the Previous Standards were in effect (“Amounts Under Previous Standards”): Consolidated statement of operations As reported March 31, 2018 Total adjustments Amounts under Previous Standards Revenue: Franchise $ 42,162 $ 1,765 $ 43,927 Commission income 1,989 — 1,989 National advertising fund revenue 10,461 (10,461 ) — Corporate-owned stores 32,708 — 32,708 Equipment 34,013 — 34,013 Total revenue 121,333 (8,696 ) 112,637 Operating costs and expenses: Cost of revenue 26,500 — 26,500 Store operations 18,356 — 18,356 Selling, general and administrative 17,623 — 17,623 National advertising fund expense 10,461 (10,461 ) — Depreciation and amortization 8,465 — 8,465 Other loss (gain) 1,010 — 1,010 Total operating costs and expenses 82,415 (10,461 ) 71,954 Income from operations 38,918 1,765 40,683 Other expense, net: Interest expense, net (8,734 ) — (8,734 ) Other (expense) income 192 — 192 Total other expense, net (8,542 ) — (8,542 ) Income before income taxes 30,376 1,765 32,141 Provision for income taxes 6,883 424 7,307 Net income 23,493 1,341 24,834 Less net income attributable to non-controlling interests 3,613 196 3,809 Net income attributable to Planet Fitness, Inc. $ 19,880 $ 1,145 $ 21,025 Net income per share of Class A common stock: Basic $ 0.23 $ 0.24 Diluted $ 0.23 $ 0.24 Consolidated Statement of Cash Flows As reported March 31, 2018 Total adjustments Amounts under Previous Standards Cash flows from operating activities: Net income $ 23,493 $ 1,341 $ 24,834 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,465 — 8,465 Amortization of deferred financing costs 484 — 484 Amortization of favorable leases and asset retirement obligations 93 — 93 Amortization of interest rate caps 195 — 195 Deferred tax expense 4,909 — 4,909 Gain on re-measurement of tax benefit arrangement (396 ) — (396 ) Provision for bad debts (14 ) — (14 ) Loss on reacquired franchise rights 350 — 350 Loss (gain) on disposal of property and equipment 650 — 650 Equity-based compensation 998 — 998 Changes in operating assets and liabilities, excluding effects of acquisitions: Accounts receivable 18,637 — 18,637 Due to and due from related parties 165 — 165 Inventory (1,364 ) — (1,364 ) Other assets and other current assets (1,341 ) — (1,341 ) National advertising fund (4,586 ) — (4,586 ) Accounts payable and accrued expenses (16,758 ) — (16,758 ) Other liabilities and other current liabilities 83 — 83 Income taxes 1,898 424 2,322 Equipment deposits 7,784 — 7,784 Deferred revenue 3,536 (1,765 ) 1,771 Deferred rent 853 — 853 Net cash provided by operating activities $ 48,134 $ — $ 48,134 Consolidated Balance Sheet As reported March 31, 2018 Total adjustments Amounts under Previous Standards Assets Current assets: Cash and cash equivalents $ 127,146 $ — $ 127,146 Accounts receivable, net 18,620 — 18,620 Due from related parties 3,060 — 3,060 Inventory 4,056 — 4,056 Restricted assets – national advertising fund 78 — 78 Deferred expenses – national advertising fund 4,596 — 4,596 Prepaid expenses 4,051 — 4,051 Other receivables 14,550 — 14,550 Other current assets 5,355 — 5,355 Total current assets 181,512 — 181,512 Property and equipment, net 84,545 — 84,545 Intangible assets, net 241,105 — 241,105 Goodwill 191,038 — 191,038 Deferred income taxes 409,216 (3,285 ) 405,931 Other assets, net 8,437 — 8,437 Total assets $ 1,115,853 $ (3,285 ) $ 1,112,568 Liabilities and stockholders' equity (deficit) Current liabilities: Current maturities of long-term debt $ 7,185 $ — $ 7,185 Accounts payable 15,664 — 15,664 Accrued expenses 14,787 424 15,211 Equipment deposits 14,283 — 14,283 Restricted liabilities – national advertising fund 78 — 78 Deferred revenue, current 20,842 499 21,341 Payable pursuant to tax benefit arrangements, current 31,062 — 31,062 Other current liabilities 493 — 493 Total current liabilities 104,394 923 105,317 Long-term debt, net of current maturities 695,264 — 695,264 Deferred rent, net of current portion 6,907 — 6,907 Deferred revenue, net of current portion 22,942 (14,741 ) 8,201 Deferred tax liabilities 1,379 — 1,379 Payable pursuant to tax benefit arrangements, net of current portion 403,022 — 403,022 Other liabilities 4,379 — 4,379 Total noncurrent liabilities 1,133,893 (14,741 ) 1,119,152 Stockholders' equity (deficit): Class A common stock 9 — 9 Class B common stock 1 — 1 Accumulated other comprehensive loss (370 ) — (370 ) Additional paid in capital 13,011 — 13,011 Accumulated deficit (120,245 ) 10,337 (109,908 ) Total stockholders' deficit attributable to Planet Fitness Inc. (107,594 ) 10,337 (97,257 ) Non-controlling interests (14,840 ) 196 (14,644 ) Total stockholders' deficit (122,434 ) 10,533 (111,901 ) Total liabilities and stockholders' deficit $ 1,115,853 $ (3,285 ) $ 1,112,568 The following summarizes the adjustments to our consolidated statement of operations for the three months ended March 31, 2018 to reflect our consolidated statement of operations as if we had continued to recognize revenue under the Previous Standards: • As described above, our transition to ASC 606 resulted in the deferral of franchise fees, ADA fees, and transfer fees. The adjustments for the three months ended March 31, 2018 to reflect the recognition of this revenue as if the Previous Standards were in effect consists of a $1,765 increase in franchise revenue and a $196 increase in non-controlling interest. • As described above, under the Previous Standards our statement of operations did not reflect gross presentations of national advertising fund revenue and expenses. Our transition to ASC 606 requires the presentation of advertising fund contributions and advertising fund expenses on a gross basis. The adjustments for the three months ended March 31, 2018 to reflect national advertising fund contributions and expenses as if the Previous Standards were in effect consist of a $10,461 decrease to revenue and a corresponding $10,461 decrease to operating expenses. The transition to ASC 606 had no net impact on our cash used for operating activities and no impact on our cash provided by investing activities or cash used for financing activities during the three months ended March 31, 2018 . |
Summary of significant accoun23
Summary of significant accounting policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation and consolidation | (a) Basis of presentation and consolidation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements as of and for the three months ended March 31, 2018 are unaudited. The condensed consolidated balance sheet as of December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Annual Report”) filed with the SEC on March 1, 2018 . Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. As discussed in Note 1, as a result of the recapitalization transactions, Planet Fitness, Inc. consolidates Pla-Fit Holdings. The Company also consolidates entities in which it has a controlling financial interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation certain interests where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE is considered to possess the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the rights to receive benefits from the VIE that are significant to it. The principal entities in which the Company possesses a variable interest include franchise entities and certain other entities. The Company is not deemed to be the primary beneficiary for Planet Fitness franchise entities. Therefore, these entities are not consolidated. The results of the Company have been consolidated with Matthew Michael Realty LLC (“MMR”) and PF Melville LLC (“PF Melville”) based on the determination that the Company is the primary beneficiary with respect to these VIEs. These entities are real estate holding companies that derive a majority of their financial support from the Company through lease agreements for corporate stores. See Note 3 for further information related to the Company’s VIEs. |
Use of estimates | (b) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the consolidated financial statements include revenue recognition, valuation of assets and liabilities in connection with acquisitions, valuation of equity-based compensation awards, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, income taxes, including deferred tax assets and liabilities and reserves for unrecognized tax benefits, and the liability for the Company’s tax benefit arrangements. |
Fair Value | (c) Fair Value ASC 820, Fair Value Measurements and Disclosures , establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The table below presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 : Total fair value at March 31, Quoted prices in active markets (Level 1) Significant Significant unobservable inputs (Level 3) Interest rate caps $ 636 $ — $ 636 $ — Total fair value at December 31, Quoted Significant Significant Interest rate caps $ 340 $ — $ 340 $ — |
Recent accounting pronouncements | (d) Recent accounting pronouncements The FASB issued ASU No. 2014-9, Revenue from Contracts with Customers , in September 2014. This guidance requires that an entity recognize revenue to depict the transfer of a promised good or service to its customers in an amount that reflects consideration to which the entity expects to be entitled in exchange for such transfer. This guidance also specifies accounting for certain costs incurred by an entity to obtain or fulfill a contract with a customer and provides for enhancements to revenue specific disclosures intended to allow users of the financial statements to clearly understand the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with its customers. The Company has adopted the guidance as of January 1, 2018 on a modified retrospective basis. See Note 15 for details about the effect of adoption. The FASB issued ASU No. 2016-2, Leases , in February 2016. This guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public companies. Early application of the amendments in this update is permitted for all entities. The Company anticipates that adoption of this guidance will bring all current operating leases onto the statement of financial position as a right of use asset and related rent liability, and is currently evaluating the effect that implementation of this guidance will have on its consolidated statement of operations. The FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments , in August 2016. This guidance is intended to reduce diversity in practice of the classification of certain cash receipts and cash payments. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that year. The Company has adopted the guidance as of January 1, 2018 on a prospective basis, noting no material impact on its consolidated financial statements. The FASB issued ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. This guidance eliminates the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. This guidance will be effective for fiscal years beginning after December 15, 2019, including interim periods within that year. This new guidance is not expected to have a material impact on the Company’s consolidated financial statements. The FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, in August 2017. The guidance simplifies the application of hedge accounting in certain situations and amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements. This guidance will be effective for fiscal years beginning after December 15, 2018, including interim periods within that year. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. |
Revenue Recognition | Revenue from Contracts with Customers We transitioned to FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts with Customers (“ASC 606”), from ASC Topic 605, Revenue Recognition and ASC Subtopic 952-605, Franchisors - Revenue Recognition (together, the “Previous Standards”) on January 1, 2018 using the modified retrospective transition method. Our Financial Statements reflect the application of ASC 606 guidance beginning in 2018, while our consolidated financial statements for prior periods were prepared under the guidance of Previous Standards. The $9,192 cumulative effect of our transition to ASC 606 is reflected as an adjustment to January 1, 2018 stockholders' deficit. Our transition to ASC 606 represents a change in accounting principle. ASC 606 eliminates industry-specific guidance and provides a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of ASC 606 is that a reporting entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the reporting entity expects to be entitled in exchange for those goods or services. Revenue Recognition Significant Accounting Policies under ASC 606 The Company's revenues are comprised of franchise revenue, equipment revenue, and corporate-owned stores revenue. Franchise revenue Franchise revenues consist primarily of royalties, national advertising fund contributions, initial and renewal franchise fees and upfront fees from area development agreements ("ADAs"), transfer fees, equipment placement revenue, other fees and commission income. The Company's primary performance obligation under the franchise license is granting certain rights to use the Company's intellectual property, and all other services the Company provides under the ADA and franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for under ASC 606 as a single performance obligation, which is satisfied by granting certain rights to use our intellectual property over the term of each franchise agreement. Royalties, including franchisee contributions to national advertising funds, are calculated as a percentage of franchise sales over the term of the franchise agreement. Under our franchise agreements, advertising contributions paid by franchisees must be spent on advertising, marketing and related activities. Initial and renewal franchise fees are payable by the franchisee upon signing a new franchise agreement or renewal of an existing franchise agreement, and transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee. Our franchise royalties, as well as our advertising fund contributions, represent sales-based royalties that are related entirely to our performance obligation under the franchise agreement and are recognized as franchise sales occur. Additionally, under ASC 606, initial and renewal franchise fees as well as transfer fees are recognized as revenue on a straight-line basis over the term of the respective franchise agreement. Under the Previous Standards, initial franchise fees were recognized as revenue when the related franchisees signed a lease and completed the Company's new franchisee training. Renewal franchise fees and transfer fees were recognized as revenue upon execution of a new franchise agreement. Our performance obligation under area development agreements generally consists of an obligation to grant geographic exclusive area development rights. These development rights are not distinct from franchise agreements, so upfront fees paid by franchisees for exclusive development rights are deferred and apportioned to each franchise agreement signed by the franchisee. The pro-rata amount apportioned to each franchise agreement is accounted for identically to the initial franchise fee. The Company is generally responsible for assembly and placement of equipment it sells to U.S. based franchisee-owned stores. Placement revenue is recognized upon completion and acceptance of the services at the franchise location. The Company recognizes commission income from its franchisees’ use of certain preferred vendor arrangements. Commissions are recognized when amounts have been earned and collectability from the vendor is reasonably assured. Online member join fees are paid to the Company by franchisees for processing new membership transactions when a new member signs up for a membership to a franchisee-owned store through the Company’s website. These fees are recognized as revenue as each transaction occurs. Billing transaction fees are paid to the Company for the processing of franchisee membership dues and annual fees through the Company’s third-party hosted point-of-sale system and are recognized as revenue as they are earned. Equipment revenue The Company sells and delivers equipment purchased from third-party equipment manufacturers to U.S. based franchisee-owned stores. Revenue is recognized upon transfer of control of ordered items, generally upon delivery to the customer, which is when the customer obtains physical possession of the goods, legal title is transferred, the customer has all risks and rewards of ownership and an obligation to pay for the goods is created. Franchisees are charged for all freight costs incurred for the delivery of equipment. Freight revenue is recorded within equipment revenue and freight costs are recorded within cost of revenue. The Company recognizes revenue on a gross basis in these transactions as management has determined the Company to be the principal in these transactions. Management determined the Company to be the principal in the transaction because the Company controls the equipment prior to delivery to the final customer as evidenced by its pricing discretion over the goods, inventory transfer of title and risk of loss while the inventory is in transit, and having the primary responsibility to fulfill the customer order and direct the third-party vendor. Corporate-owned stores revenue The following revenues are generated from stores owned and operated by the Company. Customers are offered multiple membership choices varying in length. Membership dues are earned and recognized over the membership term on a straight-line basis. Enrollment fee revenue Enrollment fees are charged to new members at the commencement of their membership. The Company recognizes enrollment fees ratably over the estimated duration of the membership life, which is generally two years. Annual membership fee revenue Annual membership fees are annual fees charged to members in addition to and in order to maintain low monthly membership dues. The Company recognizes annual membership fees ratably over the 12 -month membership period. Retail sales The Company sells Planet Fitness branded apparel, food, beverages, and other accessories. The revenue for these items is recognized at the point of sale. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Company's Assets and Liabilities Measured at Fair Value on Recurring Basis | The table below presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 : Total fair value at March 31, Quoted prices in active markets (Level 1) Significant Significant unobservable inputs (Level 3) Interest rate caps $ 636 $ — $ 636 $ — Total fair value at December 31, Quoted Significant Significant Interest rate caps $ 340 $ — $ 340 $ — |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | |
Carrying Value of Variable Interest Entities of Consolidated Financial Statements | The carrying values of VIEs included in the consolidated financial statements as of March 31, 2018 and December 31, 2017 are as follows: March 31, 2018 December 31, 2017 Assets Liabilities Assets Liabilities PF Melville $ 4,512 $ 4,420 $ — MMR 3,410 3,360 — Total $ 7,922 $ — $ 7,780 $ — |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Purchase Consideration Allocation | The preliminary purchase consideration was allocated as follows: Amount Fixed assets $ 4,672 Reacquired franchise rights 7,640 Customer relationships 1,150 Favorable leases, net 520 Reacquired area development rights 150 Other assets 275 Goodwill 14,056 Liabilities assumed, including deferred revenues (310 ) $ 28,153 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Goodwill and Intangible Assets | A summary of goodwill and intangible assets at March 31, 2018 and December 31, 2017 is as follows: March 31, 2018 Weighted average amortization period (years) Gross carrying amount Accumulated amortization Net carrying Amount Customer relationships 11.1 $ 172,932 (89,733 ) $ 83,199 Noncompete agreements 5.0 14,500 (14,500 ) — Favorable leases 7.7 3,455 (2,064 ) 1,391 Order backlog 0.4 3,400 (3,400 ) — Reacquired franchise rights 6.8 16,590 (6,518 ) 10,072 Reacquired ADA rights 5.0 150 (7 ) 143 211,027 (116,222 ) 94,805 Indefinite-lived intangible: Trade and brand names N/A 146,300 — 146,300 Total intangible assets $ 357,327 $ (116,222 ) $ 241,105 Goodwill $ 191,038 $ — $ 191,038 December 31, 2017 Weighted Gross Accumulated Net carrying Customer relationships 11.1 $ 171,782 $ (86,501 ) $ 85,281 Noncompete agreements 5.0 14,500 (14,500 ) — Favorable leases 7.5 2,935 (1,972 ) 963 Order backlog 0.4 3,400 (3,400 ) — Reacquired franchise rights 5.8 8,950 (5,837 ) 3,113 201,567 (112,210 ) 89,357 Indefinite-lived intangible: Trade and brand names N/A 146,300 — 146,300 Total intangible assets $ 347,867 $ (112,210 ) $ 235,657 Goodwill $ 176,981 $ — $ 176,981 |
Summary of Amortization expenses | The anticipated annual amortization expense to be recognized in future years as of March 31, 2018 is as follows: Amount Remainder of 2018 $ 12,029 2019 15,536 2020 13,676 2021 13,701 2022 13,789 Thereafter 26,074 Total $ 94,805 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt as of March 31, 2018 and December 31, 2017 consists of the following: March 31, 2018 December 31, 2017 Term loan B requires quarterly installments plus interest through the term of the loan, maturing March 31, 2021. Outstanding borrowings bear interest at LIBOR or base rate (as defined) plus a margin at the election of the borrower (4.71% at March 31, 2018 and 4.59% at December 31, 2017) $ 707,673 $ 709,470 Revolving credit line, requires interest only payments through the term of the loan, maturing March 31, 2019. Outstanding borrowings bear interest at LIBOR or base rate (as defined) plus a margin at the election of the borrower (6.50% at March 31, 2018 and 6.25% at December 31, 2017) — — Total debt, excluding deferred financing costs $ 707,673 709,470 Deferred financing costs, net of accumulated amortization (5,224 ) (5,709 ) Total debt 702,449 703,761 Current portion of long-term debt and line of credit 7,185 7,185 Long-term debt, net of current portion $ 695,264 $ 696,576 |
Schedule of Future Annual Payments of Long-term Debt | Future annual principal payments of long-term debt as of March 31, 2018 are as follows: Amount Remainder of 2018 $ 5,389 2019 7,185 2020 7,185 2021 687,914 2022 — Total $ 707,673 |
Related party transactions (Tab
Related party transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Activity with entities considered to be related parties is summarized below: For the three months ended 2018 2017 Franchise revenue $ 882 $ 448 Equipment revenue 591 19 Total revenue from related parties $ 1,473 $ 467 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerators and Denominators Used to Compute Basic and Diluted Earnings per Share | The following table sets forth reconciliations used to compute basic and diluted earnings per share of Class A common stock: Three months ended 2018 2017 Numerator Net income $ 23,493 $ 17,866 Less: net income attributable to non-controlling interests 3,613 9,024 Net income attributable to Planet Fitness, Inc. $ 19,880 $ 8,842 Denominator Weighted-average shares of Class A common stock outstanding - basic 87,434,384 64,120,677 Effect of dilutive securities: Stock options 255,527 24,739 Restricted stock units 7,774 4,525 Weighted-average shares of Class A common stock outstanding - diluted 87,697,685 64,149,941 Earnings per share of Class A common stock - basic $ 0.23 $ 0.14 Earnings per share of Class A common stock - diluted $ 0.23 $ 0.14 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Future Payments Under Tax Benefit Arrangements | Projected future payments under the tax benefit arrangements are as follows: Amount Remainder of 2018 $ 31,062 2019 23,479 2020 23,776 2021 24,191 2022 24,663 Thereafter 306,913 Total $ 434,084 |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of Financial Information for the Company's Reportable Segments | The tables below summarize the financial information for the Company’s reportable segments for the three months ended March 31, 2018 and 2017 . The “Corporate and other” category, as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services which are not directly attributable to any individual segment. Three months ended 2018 2017 Revenue Franchise segment revenue - U.S. $ 53,445 $ 36,428 Franchise segment revenue - International 1,167 369 Franchise segment total 54,612 36,797 Corporate-owned stores - U.S. 31,573 25,973 Corporate-owned stores - International 1,135 1,068 Corporate-owned stores total 32,708 27,041 Equipment segment - U.S. 34,013 27,264 Equipment segment total 34,013 27,264 Total revenue $ 121,333 $ 91,102 Three months ended 2018 2017 Segment EBITDA Franchise $ 36,677 $ 32,032 Corporate-owned stores 12,170 10,693 Equipment 7,469 6,094 Corporate and other (8,741 ) (7,131 ) Total Segment EBITDA $ 47,575 $ 41,688 |
Reconciliation of Total Segment EBITDA to Income Before Taxes | The following table reconciles total Segment EBITDA to income before taxes: Three months ended 2018 2017 Total Segment EBITDA $ 47,575 $ 41,688 Less: Depreciation and amortization 8,465 7,951 Other (income) expense 192 682 Income from operations 38,918 33,055 Interest expense, net (8,734 ) (8,763 ) Other (income) expense 192 682 Income before income taxes $ 30,376 $ 24,974 |
Summary of Company's Assets by Reportable Segment | The following table summarizes the Company’s assets by reportable segment: March 31, 2018 December 31, 2017 Franchise $ 222,269 $ 243,348 Corporate-owned stores 191,978 167,367 Equipment 188,630 206,632 Unallocated 512,976 475,118 Total consolidated assets $ 1,115,853 $ 1,092,465 |
Summary of Company's Goodwill by Reportable Segment | The following table summarizes the Company’s goodwill by reportable segment: March 31, 2018 December 31, 2017 Franchise $ 16,938 $ 16,938 Corporate-owned stores 81,434 67,377 Equipment 92,666 92,666 Consolidated goodwill $ 191,038 $ 176,981 |
Corporate-Owned and Franchise33
Corporate-Owned and Franchisee-Owned Stores (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Franchisors [Abstract] | |
Schedule of Changes in Corporate-Owned and Franchisee-Owned Stores | The following table shows changes in our corporate-owned and franchisee-owned stores for the three months ended March 31, 2018 and 2017 : For the three months ended 2018 2017 Franchisee-owned stores: Stores operated at beginning of period 1,456 1,255 New stores opened 47 54 Stores debranded, sold or consolidated (1) (6 ) — Stores operated at end of period 1,497 1,309 Corporate-owned stores: Stores operated at beginning of period 62 58 New stores opened — — Stores acquired from franchisees 6 — Stores operated at end of period 68 58 Total stores: Stores operated at beginning of period 1,518 1,313 New stores opened 47 54 Stores acquired, debranded, sold or consolidated (1) — — Stores operated at end of period 1,565 1,367 (1) The term “debrand” refers to a franchisee-owned store whose right to use the Planet Fitness brand and marks has been terminated in accordance with the franchise agreement. We retain the right to prevent debranded stores from continuing to operate as fitness centers. The term “consolidated” refers to the combination of a franchisee’s store with another store located in close proximity with our prior approval. This often coincides with an enlargement, re-equipment and/or refurbishment of the remaining store. |
Revenue recognition (Tables)
Revenue recognition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Contract Liabilities | The following table reflects the change in contract liabilities between the date of adoption (January 1, 2018) and March 31, 2018 , : Contract liabilities Balance at January 1, 2018 $ 40,000 Revenue recognized that was included in the contract liability at the beginning of the year (10,355 ) Increase, excluding amounts recognized as revenue during the period 14,139 Balance at March 31, 2018 $ 43,784 |
Remaining Performance Obligation | The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2018. The Company has elected to exclude short term contracts, sales and usage based royalties and any other variable consideration recognized on an "as invoiced" basis. Contract liabilities to be recognized in: Amount 2018 19,327 2019 3,178 2020 1,977 2021 1,868 2022 1,732 Thereafter 15,702 Total 43,784 |
Impact of ASC 606 | The following tables reflect the impact of adoption of ASC 606 on our consolidated statements of operations and cash flows from operating activities for the three months ended March 31, 2018 and our condensed consolidated balance sheet as of March 31, 2018 and the amounts as if the Previous Standards were in effect (“Amounts Under Previous Standards”): Consolidated statement of operations As reported March 31, 2018 Total adjustments Amounts under Previous Standards Revenue: Franchise $ 42,162 $ 1,765 $ 43,927 Commission income 1,989 — 1,989 National advertising fund revenue 10,461 (10,461 ) — Corporate-owned stores 32,708 — 32,708 Equipment 34,013 — 34,013 Total revenue 121,333 (8,696 ) 112,637 Operating costs and expenses: Cost of revenue 26,500 — 26,500 Store operations 18,356 — 18,356 Selling, general and administrative 17,623 — 17,623 National advertising fund expense 10,461 (10,461 ) — Depreciation and amortization 8,465 — 8,465 Other loss (gain) 1,010 — 1,010 Total operating costs and expenses 82,415 (10,461 ) 71,954 Income from operations 38,918 1,765 40,683 Other expense, net: Interest expense, net (8,734 ) — (8,734 ) Other (expense) income 192 — 192 Total other expense, net (8,542 ) — (8,542 ) Income before income taxes 30,376 1,765 32,141 Provision for income taxes 6,883 424 7,307 Net income 23,493 1,341 24,834 Less net income attributable to non-controlling interests 3,613 196 3,809 Net income attributable to Planet Fitness, Inc. $ 19,880 $ 1,145 $ 21,025 Net income per share of Class A common stock: Basic $ 0.23 $ 0.24 Diluted $ 0.23 $ 0.24 Consolidated Statement of Cash Flows As reported March 31, 2018 Total adjustments Amounts under Previous Standards Cash flows from operating activities: Net income $ 23,493 $ 1,341 $ 24,834 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,465 — 8,465 Amortization of deferred financing costs 484 — 484 Amortization of favorable leases and asset retirement obligations 93 — 93 Amortization of interest rate caps 195 — 195 Deferred tax expense 4,909 — 4,909 Gain on re-measurement of tax benefit arrangement (396 ) — (396 ) Provision for bad debts (14 ) — (14 ) Loss on reacquired franchise rights 350 — 350 Loss (gain) on disposal of property and equipment 650 — 650 Equity-based compensation 998 — 998 Changes in operating assets and liabilities, excluding effects of acquisitions: Accounts receivable 18,637 — 18,637 Due to and due from related parties 165 — 165 Inventory (1,364 ) — (1,364 ) Other assets and other current assets (1,341 ) — (1,341 ) National advertising fund (4,586 ) — (4,586 ) Accounts payable and accrued expenses (16,758 ) — (16,758 ) Other liabilities and other current liabilities 83 — 83 Income taxes 1,898 424 2,322 Equipment deposits 7,784 — 7,784 Deferred revenue 3,536 (1,765 ) 1,771 Deferred rent 853 — 853 Net cash provided by operating activities $ 48,134 $ — $ 48,134 Consolidated Balance Sheet As reported March 31, 2018 Total adjustments Amounts under Previous Standards Assets Current assets: Cash and cash equivalents $ 127,146 $ — $ 127,146 Accounts receivable, net 18,620 — 18,620 Due from related parties 3,060 — 3,060 Inventory 4,056 — 4,056 Restricted assets – national advertising fund 78 — 78 Deferred expenses – national advertising fund 4,596 — 4,596 Prepaid expenses 4,051 — 4,051 Other receivables 14,550 — 14,550 Other current assets 5,355 — 5,355 Total current assets 181,512 — 181,512 Property and equipment, net 84,545 — 84,545 Intangible assets, net 241,105 — 241,105 Goodwill 191,038 — 191,038 Deferred income taxes 409,216 (3,285 ) 405,931 Other assets, net 8,437 — 8,437 Total assets $ 1,115,853 $ (3,285 ) $ 1,112,568 Liabilities and stockholders' equity (deficit) Current liabilities: Current maturities of long-term debt $ 7,185 $ — $ 7,185 Accounts payable 15,664 — 15,664 Accrued expenses 14,787 424 15,211 Equipment deposits 14,283 — 14,283 Restricted liabilities – national advertising fund 78 — 78 Deferred revenue, current 20,842 499 21,341 Payable pursuant to tax benefit arrangements, current 31,062 — 31,062 Other current liabilities 493 — 493 Total current liabilities 104,394 923 105,317 Long-term debt, net of current maturities 695,264 — 695,264 Deferred rent, net of current portion 6,907 — 6,907 Deferred revenue, net of current portion 22,942 (14,741 ) 8,201 Deferred tax liabilities 1,379 — 1,379 Payable pursuant to tax benefit arrangements, net of current portion 403,022 — 403,022 Other liabilities 4,379 — 4,379 Total noncurrent liabilities 1,133,893 (14,741 ) 1,119,152 Stockholders' equity (deficit): Class A common stock 9 — 9 Class B common stock 1 — 1 Accumulated other comprehensive loss (370 ) — (370 ) Additional paid in capital 13,011 — 13,011 Accumulated deficit (120,245 ) 10,337 (109,908 ) Total stockholders' deficit attributable to Planet Fitness Inc. (107,594 ) 10,337 (97,257 ) Non-controlling interests (14,840 ) 196 (14,644 ) Total stockholders' deficit (122,434 ) 10,533 (111,901 ) Total liabilities and stockholders' deficit $ 1,115,853 $ (3,285 ) $ 1,112,568 As a result of applying the modified retrospective method to transition to ASC 606, the following adjustments were made to the consolidated balance sheet as of January 1, 2018 (in millions): As Reported December 31, Total adjustments Adjusted January 1, 2017 2018 Assets Current assets: Cash and cash equivalents $ 113,080 $ — $ 113,080 Accounts receivable, net 37,272 — 37,272 Due from related parties 3,020 — 3,020 Inventory 2,692 — 2,692 Restricted assets – national advertising fund 499 — 499 Prepaid expenses 3,929 — 3,929 Other receivables 9,562 — 9,562 Other current assets 6,947 — 6,947 Total current assets 177,001 — 177,001 Property and equipment, net 83,327 — 83,327 Intangible assets, net 235,657 — 235,657 Goodwill 176,981 — 176,981 Deferred income taxes 407,782 3,285 411,067 Other assets, net 11,717 — 11,717 Total assets $ 1,092,465 $ 3,285 $ 1,095,750 Liabilities and stockholders' equity (deficit) Current liabilities: Current maturities of long-term debt $ 7,185 $ — $ 7,185 Accounts payable 28,648 — 28,648 Accrued expenses 18,590 — 18,590 Equipment deposits 6,498 — 6,498 Restricted liabilities – national advertising fund 490 — 490 Deferred revenue, current 19,083 (764 ) 18,319 Payable pursuant to tax benefit arrangements, current 31,062 — 31,062 Other current liabilities 474 — 474 Total current liabilities 112,030 (764 ) 111,266 Long-term debt, net of current maturities 696,576 — 696,576 Deferred rent, net of current portion 6,127 — 6,127 Deferred revenue, net of current portion 8,440 13,241 21,681 Deferred tax liabilities 1,629 — 1,629 Payable pursuant to tax benefit arrangements, net of current portion 400,298 — 400,298 Other liabilities 4,302 — 4,302 Total noncurrent liabilities 1,117,372 13,241 1,130,613 Stockholders' equity (deficit): Class A common stock 9 — 9 Class B common stock 1 — 1 Accumulated other comprehensive loss (648 ) — (648 ) Additional paid in capital 12,118 — 12,118 Accumulated deficit (130,966 ) (9,192 ) (140,158 ) Total stockholders' deficit attributable to Planet Fitness Inc. (119,486 ) (9,192 ) (128,678 ) Non-controlling interests (17,451 ) — (17,451 ) Total stockholders' deficit (136,937 ) (9,192 ) (146,129 ) Total liabilities and stockholders' deficit $ 1,092,465 $ 3,285 $ 1,095,750 |
Business Organization - Additio
Business Organization - Additional Information (Detail) Member in Millions | 3 Months Ended | ||||
Mar. 31, 2018StateSegmentMemberStore | Dec. 31, 2017Store | Mar. 31, 2017Store | Dec. 31, 2016Store | Aug. 05, 2015 | |
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Number of owned and franchised locations | Store | 1,565 | 1,518 | 1,367 | 1,313 | |
Number of states in which entity operates | State | 50 | ||||
Number of reportable segments | Segment | 3 | ||||
Pla-Fit Holdings, LLC | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Percentage of ownership | 100.00% | 100.00% | |||
Percentage of economic interest | 88.90% | ||||
Pla-Fit Holdings, LLC | Holdings Units | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Percentage of economic interest | 11.10% | ||||
Planet Intermediate, LLC | Pla-Fit Holdings, LLC | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Percentage of ownership | 100.00% | ||||
Planet Fitness Holdings, LLC | Planet Intermediate, LLC | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Percentage of ownership | 100.00% | ||||
Minimum | |||||
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||||
Number of members | Member | 11.8 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies - Summary of Company's Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Interest rate caps - Fair Value Measurements Recurring - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate caps | $ 636 | $ 340 |
Quoted prices in active markets (Level 1) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate caps | 0 | 0 |
Significant other observable inputs (Level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate caps | 636 | 340 |
Significant unobservable inputs (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate caps | $ 0 | $ 0 |
Variable Interest Entities - Ca
Variable Interest Entities - Carrying Value of Variable Interest Entities of Consolidated Financial Statements (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Variable Interest Entity [Line Items] | ||
Assets | $ 7,922 | $ 7,780 |
Liabilities | 0 | 0 |
PF Melville | ||
Variable Interest Entity [Line Items] | ||
Assets | 4,512 | 4,420 |
Liabilities | 0 | |
MMR | ||
Variable Interest Entity [Line Items] | ||
Assets | 3,410 | 3,360 |
Liabilities | $ 0 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Detail) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract] | ||
Maximum obligation of guarantees of leases and debt | $ 919,000 | $ 979,000 |
Maximum loss exposure Involvement of estimated value | $ 0 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) $ in Thousands | Jan. 01, 2018USD ($)Store | Mar. 31, 2018Store | Dec. 31, 2017Store | Mar. 31, 2017Store | Dec. 31, 2016Store |
Business Acquisition [Line Items] | |||||
Number of owned and franchised locations | Store | 1,565 | 1,518 | 1,367 | 1,313 | |
Assets Acquired From Franchisee | |||||
Business Acquisition [Line Items] | |||||
Number of owned and franchised locations | Store | 6 | ||||
Acquisition, gross cash payments | $ 28,503 | ||||
Loss on reacquired franchise rights | 350 | ||||
Consideration transferred | $ 28,153 |
Acquisition - Purchase Consider
Acquisition - Purchase Consideration Allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 191,038 | $ 176,981 | $ 176,981 |
Assets Acquired From Franchisee | |||
Business Acquisition [Line Items] | |||
Fixed assets | 4,672 | ||
Other assets | 275 | ||
Goodwill | 14,056 | ||
Liabilities assumed, including deferred revenues | (310) | ||
Net assets acquired | 28,153 | ||
Reacquired franchise rights | Assets Acquired From Franchisee | |||
Business Acquisition [Line Items] | |||
Intangible assets | 7,640 | ||
Customer relationships | Assets Acquired From Franchisee | |||
Business Acquisition [Line Items] | |||
Intangible assets | 1,150 | ||
Favorable leases, net | Assets Acquired From Franchisee | |||
Business Acquisition [Line Items] | |||
Intangible assets | 520 | ||
Reacquired area development rights | Assets Acquired From Franchisee | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 150 |
Goodwill and Intangible Asset41
Goodwill and Intangible Assets - Summary of Goodwill and Intangible Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2018 | |
Goodwill And Intangible Assets [Line Items] | |||
Gross carrying amount | $ 211,027 | $ 201,567 | |
Accumulated amortization | (116,222) | (112,210) | |
Net carrying Amount | 94,805 | 89,357 | |
Total intangible assets, Gross carrying amount | 357,327 | 347,867 | |
Total intangible assets, Net carrying Amount | 241,105 | 235,657 | $ 235,657 |
Goodwill, gross carrying amount | 191,038 | 176,981 | |
Goodwill | 191,038 | 176,981 | $ 176,981 |
Trade and brand names | |||
Goodwill And Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | $ 146,300 | $ 146,300 | |
Customer relationships | |||
Goodwill And Intangible Assets [Line Items] | |||
Weighted average amortization period (years) | 11 years 1 month | 11 years 1 month 6 days | |
Gross carrying amount | $ 172,932 | $ 171,782 | |
Accumulated amortization | (89,733) | (86,501) | |
Net carrying Amount | $ 83,199 | $ 85,281 | |
Noncompete agreements | |||
Goodwill And Intangible Assets [Line Items] | |||
Weighted average amortization period (years) | 5 years | 5 years | |
Gross carrying amount | $ 14,500 | $ 14,500 | |
Accumulated amortization | (14,500) | (14,500) | |
Net carrying Amount | $ 0 | $ 0 | |
Favorable leases | |||
Goodwill And Intangible Assets [Line Items] | |||
Weighted average amortization period (years) | 7 years 8 months | 7 years 6 months | |
Gross carrying amount | $ 3,455 | $ 2,935 | |
Accumulated amortization | (2,064) | (1,972) | |
Net carrying Amount | $ 1,391 | $ 963 | |
Order backlog | |||
Goodwill And Intangible Assets [Line Items] | |||
Weighted average amortization period (years) | 4 months 24 days | 4 months 24 days | |
Gross carrying amount | $ 3,400 | $ 3,400 | |
Accumulated amortization | (3,400) | (3,400) | |
Net carrying Amount | $ 0 | $ 0 | |
Reacquired franchise rights | |||
Goodwill And Intangible Assets [Line Items] | |||
Weighted average amortization period (years) | 6 years 9 months 18 days | 5 years 9 months 18 days | |
Gross carrying amount | $ 16,590 | $ 8,950 | |
Accumulated amortization | (6,518) | (5,837) | |
Net carrying Amount | $ 10,072 | $ 3,113 | |
Reacquired ADA rights | |||
Goodwill And Intangible Assets [Line Items] | |||
Weighted average amortization period (years) | 5 years | ||
Gross carrying amount | $ 150 | ||
Accumulated amortization | (7) | ||
Net carrying Amount | $ 143 |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets - Additional Information (Detail) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2018USD ($)Store | Mar. 31, 2017USD ($)Store | Dec. 31, 2017USD ($)Store | Jan. 01, 2018Store | Dec. 31, 2016Store | |
Goodwill And Intangible Assets [Line Items] | |||||
Impairment charges | $ 0 | $ 0 | |||
Number of owned and franchised locations | Store | 1,565 | 1,367 | 1,518 | 1,313 | |
Amortization of intangible assets | $ 3,966,000 | $ 4,715,000 | |||
Favorable and Unfavorable Leases | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Amortization of intangible assets | $ 93,000 | $ 94,000 | |||
Assets Acquired From Franchisee | |||||
Goodwill And Intangible Assets [Line Items] | |||||
Number of owned and franchised locations | Store | 6 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets - Summary of Amortization expenses (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of 2018 | $ 12,029 | |
2,019 | 15,536 | |
2,020 | 13,676 | |
2,021 | 13,701 | |
2,022 | 13,789 | |
Thereafter | 26,074 | |
Net carrying Amount | $ 94,805 | $ 89,357 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2018 | |
Debt Instrument [Line Items] | |||
Total debt, excluding deferred financing costs | $ 707,673 | $ 709,470 | |
Deferred financing costs, net of accumulated amortization | (5,224) | (5,709) | |
Total debt | 702,449 | 703,761 | |
Current portion of long-term debt and line of credit | 7,185 | 7,185 | $ 7,185 |
Long-term debt, net of current maturities | 695,264 | 696,576 | $ 696,576 |
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Total debt, excluding deferred financing costs | $ 0 | $ 0 | |
Total rate - base plus spread | 6.50% | 6.25% | |
Term Loan B | |||
Debt Instrument [Line Items] | |||
Total debt, excluding deferred financing costs | $ 707,673 | $ 709,470 | |
Total rate - base plus spread | 4.71% | 4.59% |
Long-Term Debt - Schedule of Fu
Long-Term Debt - Schedule of Future Annual Payments of Long-term Debt (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Remainder of 2018 | $ 5,389 | |
2,019 | 7,185 | |
2,020 | 7,185 | |
2,021 | 687,914 | |
2,022 | 0 | |
Total | $ 707,673 | $ 709,470 |
Derivative Instruments and He46
Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Unrealized loss on interest rate caps, net of tax | $ 366 | $ 177 | |
LIBOR plus 1.5% | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, interest rate cap floor | 1.50% | ||
LIBOR Plus 2.5% | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, interest rate cap floor | 2.50% | ||
Interest rate caps | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Interest rate caps | $ 636 | $ 340 | |
Unrealized loss on interest rate caps, net of tax | 366 | 177 | |
Unrealized gain (loss) on interest rate caps, tax | 125 | $ 57 | |
Interest rate caps | LIBOR plus 1.5% | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | 134,000 | ||
Interest rate caps | LIBOR Plus 2.5% | |||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||
Derivative, notional amount | $ 220,735 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||||
Due from related parties, current portion | $ 3,060 | $ 3,020 | $ 3,020 | |
Liability payable under tax benefit obligations | 45,125 | 44,794 | ||
Planet Fitness NAF, LLC | ||||
Related Party Transaction [Line Items] | ||||
Administrative fees charged | 640 | $ 573 | ||
Area Development Agreements | ||||
Related Party Transaction [Line Items] | ||||
Deferred area development revenue from related parties | $ 784 | $ 389 |
Related Party Transactions - Sc
Related Party Transactions - Schedule of Related Party Transactions (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Total revenue from related parties | $ 1,473 | $ 467 |
Franchise revenue | ||
Related Party Transaction [Line Items] | ||
Total revenue from related parties | 882 | 448 |
Equipment revenue | ||
Related Party Transaction [Line Items] | ||
Total revenue from related parties | $ 591 | $ 19 |
Stockholder's Equity - Addition
Stockholder's Equity - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Pla-Fit Holdings, LLC | ||
Class of Stock [Line Items] | ||
Number of shares exchanged | 300,000 | |
Holdings Units | ||
Class of Stock [Line Items] | ||
Number of shares exchanged | 300,000 | |
Investor | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Common stock, shares outstanding | 87,505,487 | |
Investor | Pla-Fit Holdings, LLC | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Percentage of economic interest | 88.90% | |
Continuing LLC Owners | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Number of units held by owners (in shares) | 10,892,740 | |
Continuing LLC Owners | Pla-Fit Holdings, LLC | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Percentage of economic interest | 11.10% | |
Holdings Units | ||
Class of Stock [Line Items] | ||
Shares exchanged for Class A common stock | 1 | |
Class A Common Stock | ||
Class of Stock [Line Items] | ||
Number of shares exchanged | 300,000 | |
Common stock, shares outstanding | 87,505,000 | 87,188,000 |
Class A Common Stock | Investor | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Common stock, shares outstanding | 87,505,487 | |
Class A Common Stock | Investor | Pla-Fit Holdings, LLC | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Percentage of voting interests acquired | 88.90% | |
Class B Common Stock | ||
Class of Stock [Line Items] | ||
Shares exchanged for Class A common stock | 1 | |
Number of shares exchanged | 300,000 | |
Common stock, shares outstanding | 10,893,000 | 11,193,000 |
Class B Common Stock | Continuing LLC Owners | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Number of units held by owners (in shares) | 10,892,740 | |
Class B Common Stock | Continuing LLC Owners | Pla-Fit Holdings, LLC | Secondary Offering and Exchange | ||
Class of Stock [Line Items] | ||
Percentage of voting interests acquired | 11.10% |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Stock Options | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Anti-dilutive securities excluded from the calculation of earnings per share | 0 | 111,912 |
Restricted Stock Units | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Anti-dilutive securities excluded from the calculation of earnings per share | 0 | 8,160 |
Holdings Units | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Shares exchanged for Class A common stock | 1 | |
Class B Common Stock | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Shares exchanged for Class A common stock | 1 | |
Class B Common Stock | Continuing LLC Owners Exchange Agreement | ||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||
Anti-dilutive securities excluded from the calculation of earnings per share | 10,953,521 | 34,378,046 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Numerators and Denominators Used to Compute Basic and Diluted Earnings per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator | ||
Net income | $ 23,493 | $ 17,866 |
Less: net income attributable to non-controlling interests | 3,613 | 9,024 |
Net income attributable to Planet Fitness, Inc. | $ 19,880 | $ 8,842 |
Stock Options | ||
Effect of dilutive securities: | ||
Weighted-average shares outstanding adjustment (in shares) | 255,527 | 24,739 |
Restricted Stock Units | ||
Effect of dilutive securities: | ||
Weighted-average shares outstanding adjustment (in shares) | 7,774 | 4,525 |
Class A Common Stock | ||
Denominator | ||
Weighted-average shares of Class A common stock outstanding - basic (in shares) | 87,434,384 | 64,120,677 |
Effect of dilutive securities: | ||
Weighted-average shares of Class A common stock outstanding - diluted (in shares) | 87,697,685 | 64,149,941 |
Earnings per share of Class A common stock - basic (in dollars per share) | $ 0.23 | $ 0.14 |
Earnings per share of Class A common stock - diluted (in dollars per share) | $ 0.23 | $ 0.14 |
Income Taxes - Additional infor
Income Taxes - Additional information (Detail) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)Agreementshares | Mar. 31, 2017 | Dec. 31, 2017USD ($) | |
Tax Credit Carryforward [Line Items] | |||
Effective income tax rate reconciliation noncontrolling interest | 2.00% | 2.00% | |
Effective income tax rate | 22.70% | 28.50% | |
Net deferred tax assets | $ 407,837 | $ 406,153 | |
Total liability related to uncertain tax positions | 2,608 | 2,608 | |
Decrease in next twelve months for unrecognized tax benefits | $ 2,608 | ||
Number of tax receivable agreements | Agreement | 2 | ||
Applicable tax savings | 85.00% | ||
Percentage of remaining tax savings | 15.00% | ||
Tax benefit obligation | $ 434,084 | $ 431,360 | |
TRA Holders | |||
Tax Credit Carryforward [Line Items] | |||
Decrease in deferred tax assets | 188 | ||
Deferred tax asset | 3,633 | ||
Deferred tax liability | $ 3,119 | ||
Class A Common Stock | |||
Tax Credit Carryforward [Line Items] | |||
Number of shares exchanged | shares | 300,000 | ||
Class A Common Stock | TRA Holders | |||
Tax Credit Carryforward [Line Items] | |||
Number of shares exchanged | shares | 300,000 |
Income Taxes - Schedule of Futu
Income Taxes - Schedule of Future Payments Under Tax Benefit Arrangements (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Remainder of 2018 | $ 31,062 | |
2,019 | 23,479 | |
2,020 | 23,776 | |
2,021 | 24,191 | |
2,022 | 24,663 | |
Thereafter | 306,913 | |
Total | $ 434,084 | $ 431,360 |
Segments - Additional Informati
Segments - Additional Information (Detail) | 3 Months Ended | ||
Mar. 31, 2018USD ($)Segment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | Segment | 3 | ||
Number of operating segments | Segment | 0 | ||
Revenue | $ 121,333,000 | $ 91,102,000 | |
Franchise revenue | |||
Segment Reporting Information [Line Items] | |||
Revenue | 54,612,000 | 36,797,000 | |
Franchise revenue | Placement Services | |||
Segment Reporting Information [Line Items] | |||
Revenue | 2,097,000 | 2,106,000 | |
Corporate-owned Stores | |||
Segment Reporting Information [Line Items] | |||
Revenue | 32,708,000 | $ 27,041,000 | |
Corporate-owned Stores | Canada | |||
Segment Reporting Information [Line Items] | |||
Long-lived assets | 2,362,000 | $ 2,558,000 | |
Intersegment Eliminations | |||
Segment Reporting Information [Line Items] | |||
Revenue | $ 0 |
Segments - Summary of Financial
Segments - Summary of Financial Information for the Company's Reportable Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 121,333 | $ 91,102 |
Total Segment EBITDA | 47,575 | 41,688 |
Corporate And Other Non Segment | ||
Segment Reporting Information [Line Items] | ||
Total Segment EBITDA | (8,741) | (7,131) |
Franchise revenue | ||
Segment Reporting Information [Line Items] | ||
Revenue | 54,612 | 36,797 |
Franchise revenue | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total Segment EBITDA | 36,677 | 32,032 |
Franchise revenue | US | ||
Segment Reporting Information [Line Items] | ||
Revenue | 53,445 | 36,428 |
Franchise revenue | International | ||
Segment Reporting Information [Line Items] | ||
Revenue | 1,167 | 369 |
Corporate-owned Stores | ||
Segment Reporting Information [Line Items] | ||
Revenue | 32,708 | 27,041 |
Corporate-owned Stores | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total Segment EBITDA | 12,170 | 10,693 |
Corporate-owned Stores | US | ||
Segment Reporting Information [Line Items] | ||
Revenue | 31,573 | 25,973 |
Corporate-owned Stores | International | ||
Segment Reporting Information [Line Items] | ||
Revenue | 1,135 | 1,068 |
Equipment revenue | ||
Segment Reporting Information [Line Items] | ||
Revenue | 34,013 | 27,264 |
Equipment revenue | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total Segment EBITDA | 7,469 | 6,094 |
Equipment revenue | US | ||
Segment Reporting Information [Line Items] | ||
Revenue | $ 34,013 | $ 27,264 |
Segments - Reconciliation of To
Segments - Reconciliation of Total Segment EBITDA to Income Before Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting [Abstract] | ||
Total Segment EBITDA | $ 47,575 | $ 41,688 |
Depreciation and amortization | 8,465 | 7,951 |
Other (income) expense | 192 | 682 |
Income from operations | 38,918 | 33,055 |
Interest expense, net | (8,734) | (8,763) |
Income before income taxes | $ 30,376 | $ 24,974 |
Segments - Summary of Company's
Segments - Summary of Company's Assets by Reportable Segment (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total consolidated assets | $ 1,115,853 | $ 1,095,750 | $ 1,092,465 |
Operating Segments | Franchise revenue | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total consolidated assets | 222,269 | 243,348 | |
Operating Segments | Corporate-owned Stores | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total consolidated assets | 191,978 | 167,367 | |
Operating Segments | Equipment revenue | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total consolidated assets | 188,630 | 206,632 | |
Unallocated | |||
Segment Reporting, Asset Reconciling Item [Line Items] | |||
Total consolidated assets | $ 512,976 | $ 475,118 |
Segments - Summary of Company58
Segments - Summary of Company's Goodwill by Reportable Segment (Detail) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Goodwill, net carrying amount | $ 191,038 | $ 176,981 | $ 176,981 |
Franchise revenue | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Goodwill, net carrying amount | 16,938 | 16,938 | |
Corporate-owned Stores | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Goodwill, net carrying amount | 81,434 | 67,377 | |
Equipment revenue | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Goodwill, net carrying amount | $ 92,666 | $ 92,666 |
Corporate-Owned and Franchise59
Corporate-Owned and Franchisee-Owned Stores - Schedule of Changes in Corporate-owned and Franchisee-owned Stores (Detail) - Store | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Number Of Stores [Roll Forward] | ||
Stores operated at beginning of period | 1,518 | 1,313 |
New stores opened | 47 | 54 |
Stores acquired, debranded, sold or consolidated | 0 | 0 |
Stores operated at end of period | 1,565 | 1,367 |
Franchisee-Owned Stores | ||
Number Of Stores [Roll Forward] | ||
Stores operated at beginning of period | 1,456 | 1,255 |
New stores opened | 47 | 54 |
Stores acquired, debranded, sold or consolidated | (6) | 0 |
Stores operated at end of period | 1,497 | 1,309 |
Corporate-Owned Stores | ||
Number Of Stores [Roll Forward] | ||
Stores operated at beginning of period | 62 | 58 |
New stores opened | 0 | 0 |
Stores acquired from franchisees | 6 | 0 |
Stores operated at end of period | 68 | 58 |
Revenue recognition - Narrative
Revenue recognition - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total stockholders' deficit | $ (122,434) | $ (146,129) | $ (136,937) | |
Membership life, estimated duration | 2 years | |||
Membership period | 12 months | |||
Deferred income taxes | $ 409,216 | $ 411,067 | 407,782 | |
Franchise | 42,162 | $ 30,281 | ||
Less net income attributable to non-controlling interests | 3,613 | 9,024 | ||
National advertising fund revenue | (10,461) | 0 | ||
National advertising fund expense | (10,461) | $ 0 | ||
Total adjustments | Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total stockholders' deficit | 10,533 | (9,192) | ||
Deferred revenue | 12,477 | |||
Deferred income taxes | (3,285) | $ 3,285 | ||
Franchise | 1,765 | |||
Less net income attributable to non-controlling interests | 196 | |||
National advertising fund revenue | 10,461 | |||
National advertising fund expense | $ 10,461 |
Revenue recognition - Schedule
Revenue recognition - Schedule of Contract Liabilities (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Contract liabilities | |
Beginning Balance | $ 40,000 |
Revenue recognized that was included in the contract liability at the beginning of the year | (10,355) |
Increase, excluding amounts recognized as revenue during the period | 14,139 |
Ending Balance | $ 43,784 |
Revenue recognition - Remaining
Revenue recognition - Remaining Performance Obligation (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 19,327 |
Remaining performance obligation, expected timing of satisfaction | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 3,178 |
Remaining performance obligation, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,977 |
Remaining performance obligation, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,868 |
Remaining performance obligation, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,732 |
Remaining performance obligation, expected timing of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 43,784 |
Remaining performance obligation, expected timing of satisfaction |
Revenue recognition - Balance S
Revenue recognition - Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | |||||
Cash and cash equivalents | $ 127,146 | $ 113,080 | $ 113,080 | $ 60,236 | $ 40,393 |
Accounts receivable, net | 18,620 | 37,272 | 37,272 | ||
Due from related parties | 3,060 | 3,020 | 3,020 | ||
Inventory | 4,056 | 2,692 | 2,692 | ||
Restricted assets – national advertising fund | 78 | 499 | 499 | ||
Deferred expenses – national advertising fund | 4,596 | 0 | |||
Prepaid expenses | 4,051 | 3,929 | 3,929 | ||
Other receivables | 14,550 | 9,562 | 9,562 | ||
Other current assets | 5,355 | 6,947 | 6,947 | ||
Total current assets | 181,512 | 177,001 | 177,001 | ||
Property and equipment, net | 84,545 | 83,327 | 83,327 | ||
Intangible assets, net | 241,105 | 235,657 | 235,657 | ||
Goodwill | 191,038 | 176,981 | 176,981 | ||
Deferred income taxes | 409,216 | 411,067 | 407,782 | ||
Other assets, net | 8,437 | 11,717 | 11,717 | ||
Total assets | 1,115,853 | 1,095,750 | 1,092,465 | ||
Current liabilities: | |||||
Current maturities of long-term debt | 7,185 | 7,185 | 7,185 | ||
Accounts payable | 15,664 | 28,648 | 28,648 | ||
Accrued expenses | 14,787 | 18,590 | 18,590 | ||
Equipment deposits | 14,283 | 6,498 | 6,498 | ||
Restricted liabilities – national advertising fund | 78 | 490 | 490 | ||
Deferred revenue, current | 20,842 | 18,319 | 19,083 | ||
Payable pursuant to tax benefit arrangements, current | 31,062 | 31,062 | 31,062 | ||
Other current liabilities | 493 | 474 | 474 | ||
Total current liabilities | 104,394 | 111,266 | 112,030 | ||
Long-term debt, net of current maturities | 695,264 | 696,576 | 696,576 | ||
Deferred rent, net of current portion | 6,907 | 6,127 | 6,127 | ||
Deferred revenue, net of current portion | 22,942 | 21,681 | 8,440 | ||
Deferred tax liabilities | 1,379 | 1,629 | 1,629 | ||
Payable pursuant to tax benefit arrangements, net of current portion | 403,022 | 400,298 | 400,298 | ||
Other liabilities | 4,379 | 4,302 | 4,302 | ||
Total noncurrent liabilities | 1,133,893 | 1,130,613 | 1,117,372 | ||
Stockholders' equity (deficit): | |||||
Accumulated other comprehensive loss | (370) | (648) | (648) | ||
Additional paid in capital | 13,011 | 12,118 | 12,118 | ||
Accumulated deficit | (120,245) | (140,158) | (130,966) | ||
Total stockholders' deficit attributable to Planet Fitness Inc. | (107,594) | (128,678) | (119,486) | ||
Non-controlling interests | (14,840) | (17,451) | (17,451) | ||
Total stockholders' deficit | (122,434) | (146,129) | (136,937) | ||
Total liabilities and stockholders' deficit | 1,115,853 | 1,095,750 | 1,092,465 | ||
Class A Common Stock | |||||
Stockholders' equity (deficit): | |||||
Common stock, value | 9 | 9 | 9 | ||
Class B Common Stock | |||||
Stockholders' equity (deficit): | |||||
Common stock, value | 1 | $ 1 | 1 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | |||||
Current assets: | |||||
Cash and cash equivalents | 127,146 | 113,080 | |||
Accounts receivable, net | 18,620 | 37,272 | |||
Due from related parties | 3,060 | 3,020 | |||
Inventory | 4,056 | 2,692 | |||
Restricted assets – national advertising fund | 78 | 499 | |||
Deferred expenses – national advertising fund | 4,596 | ||||
Prepaid expenses | 4,051 | 3,929 | |||
Other receivables | 14,550 | 9,562 | |||
Other current assets | 5,355 | 6,947 | |||
Total current assets | 181,512 | 177,001 | |||
Property and equipment, net | 84,545 | 83,327 | |||
Intangible assets, net | 241,105 | 235,657 | |||
Goodwill | 191,038 | 176,981 | |||
Deferred income taxes | 405,931 | 407,782 | |||
Other assets, net | 8,437 | 11,717 | |||
Total assets | 1,112,568 | 1,092,465 | |||
Current liabilities: | |||||
Current maturities of long-term debt | 7,185 | 7,185 | |||
Accounts payable | 15,664 | 28,648 | |||
Accrued expenses | 15,211 | 18,590 | |||
Equipment deposits | 14,283 | 6,498 | |||
Restricted liabilities – national advertising fund | 78 | 490 | |||
Deferred revenue, current | 21,341 | 19,083 | |||
Payable pursuant to tax benefit arrangements, current | 31,062 | 31,062 | |||
Other current liabilities | 493 | 474 | |||
Total current liabilities | 105,317 | 112,030 | |||
Long-term debt, net of current maturities | 695,264 | 696,576 | |||
Deferred rent, net of current portion | 6,907 | 6,127 | |||
Deferred revenue, net of current portion | 8,201 | 8,440 | |||
Deferred tax liabilities | 1,379 | 1,629 | |||
Payable pursuant to tax benefit arrangements, net of current portion | 403,022 | 400,298 | |||
Other liabilities | 4,379 | 4,302 | |||
Total noncurrent liabilities | 1,119,152 | 1,117,372 | |||
Stockholders' equity (deficit): | |||||
Accumulated other comprehensive loss | (370) | (648) | |||
Additional paid in capital | 13,011 | 12,118 | |||
Accumulated deficit | (109,908) | (130,966) | |||
Total stockholders' deficit attributable to Planet Fitness Inc. | (97,257) | (119,486) | |||
Non-controlling interests | (14,644) | (17,451) | |||
Total stockholders' deficit | (111,901) | (136,937) | |||
Total liabilities and stockholders' deficit | 1,112,568 | 1,092,465 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Class A Common Stock | |||||
Stockholders' equity (deficit): | |||||
Common stock, value | 9 | 9 | |||
Calculated under Revenue Guidance in Effect before Topic 606 | Class B Common Stock | |||||
Stockholders' equity (deficit): | |||||
Common stock, value | 1 | 1 | |||
Total adjustments | Accounting Standards Update 2014-09 | |||||
Current assets: | |||||
Cash and cash equivalents | 0 | 0 | |||
Accounts receivable, net | 0 | 0 | |||
Due from related parties | 0 | 0 | |||
Inventory | 0 | 0 | |||
Restricted assets – national advertising fund | 0 | 0 | |||
Deferred expenses – national advertising fund | 0 | ||||
Prepaid expenses | 0 | 0 | |||
Other receivables | 0 | 0 | |||
Other current assets | 0 | 0 | |||
Total current assets | 0 | 0 | |||
Property and equipment, net | 0 | 0 | |||
Intangible assets, net | 0 | 0 | |||
Goodwill | 0 | 0 | |||
Deferred income taxes | (3,285) | 3,285 | |||
Other assets, net | 0 | 0 | |||
Total assets | (3,285) | 3,285 | |||
Current liabilities: | |||||
Current maturities of long-term debt | 0 | 0 | |||
Accounts payable | 0 | 0 | |||
Accrued expenses | 424 | 0 | |||
Equipment deposits | 0 | 0 | |||
Restricted liabilities – national advertising fund | 0 | 0 | |||
Deferred revenue, current | 499 | (764) | |||
Payable pursuant to tax benefit arrangements, current | 0 | 0 | |||
Other current liabilities | 0 | 0 | |||
Total current liabilities | 923 | (764) | |||
Long-term debt, net of current maturities | 0 | 0 | |||
Deferred rent, net of current portion | 0 | 0 | |||
Deferred revenue, net of current portion | (14,741) | 13,241 | |||
Deferred tax liabilities | 0 | 0 | |||
Payable pursuant to tax benefit arrangements, net of current portion | 0 | 0 | |||
Other liabilities | 0 | 0 | |||
Total noncurrent liabilities | (14,741) | 13,241 | |||
Stockholders' equity (deficit): | |||||
Accumulated other comprehensive loss | 0 | 0 | |||
Additional paid in capital | 0 | 0 | |||
Accumulated deficit | 10,337 | (9,192) | |||
Total stockholders' deficit attributable to Planet Fitness Inc. | 10,337 | (9,192) | |||
Non-controlling interests | 196 | 0 | |||
Total stockholders' deficit | 10,533 | (9,192) | |||
Total liabilities and stockholders' deficit | (3,285) | 3,285 | |||
Total adjustments | Accounting Standards Update 2014-09 | Class A Common Stock | |||||
Stockholders' equity (deficit): | |||||
Common stock, value | 0 | 0 | |||
Total adjustments | Accounting Standards Update 2014-09 | Class B Common Stock | |||||
Stockholders' equity (deficit): | |||||
Common stock, value | $ 0 | $ 0 |
Revenue recognition - Income St
Revenue recognition - Income Statement (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue: | ||
Franchise | $ 42,162 | $ 30,281 |
Commission income | 1,989 | 6,516 |
National advertising fund revenue | 10,461 | 0 |
Corporate-owned stores | 32,708 | 27,041 |
Equipment | 34,013 | 27,264 |
Total revenue | 121,333 | 91,102 |
Operating costs and expenses: | ||
Cost of revenue | 26,500 | 21,124 |
Store operations | 18,356 | 15,184 |
Selling, general and administrative | 17,623 | 13,820 |
National advertising fund expense | 10,461 | 0 |
Depreciation and amortization | 8,465 | 7,951 |
Other loss (gain) | 1,010 | (32) |
Total operating costs and expenses | 82,415 | 58,047 |
Income from operations | 38,918 | 33,055 |
Other expense, net: | ||
Interest expense, net | (8,734) | (8,763) |
Other income | 192 | 682 |
Total other expense, net | (8,542) | (8,081) |
Income before income taxes | 30,376 | 24,974 |
Provision for income taxes | 6,883 | 7,108 |
Net income | 23,493 | 17,866 |
Less net income attributable to non-controlling interests | 3,613 | 9,024 |
Net income attributable to Planet Fitness, Inc. | $ 19,880 | $ 8,842 |
Class A Common Stock | ||
Net income per share of Class A common stock: | ||
Basic (in dollars per share) | $ 0.23 | $ 0.14 |
Diluted (in dollars per share) | $ 0.23 | $ 0.14 |
Total adjustments | Accounting Standards Update 2014-09 | ||
Revenue: | ||
Franchise | $ 1,765 | |
Commission income | 0 | |
National advertising fund revenue | (10,461) | |
Corporate-owned stores | 0 | |
Equipment | 0 | |
Total revenue | (8,696) | |
Operating costs and expenses: | ||
Cost of revenue | 0 | |
Store operations | 0 | |
Selling, general and administrative | 0 | |
National advertising fund expense | (10,461) | |
Depreciation and amortization | 0 | |
Other loss (gain) | 0 | |
Total operating costs and expenses | (10,461) | |
Income from operations | 1,765 | |
Other expense, net: | ||
Interest expense, net | 0 | |
Other income | 0 | |
Total other expense, net | 0 | |
Income before income taxes | 1,765 | |
Provision for income taxes | 424 | |
Net income | 1,341 | |
Less net income attributable to non-controlling interests | 196 | |
Net income attributable to Planet Fitness, Inc. | 1,145 | |
Calculated under Revenue Guidance in Effect before Topic 606 | ||
Revenue: | ||
Franchise | 43,927 | |
Commission income | 1,989 | |
National advertising fund revenue | 0 | |
Corporate-owned stores | 32,708 | |
Equipment | 34,013 | |
Total revenue | 112,637 | |
Operating costs and expenses: | ||
Cost of revenue | 26,500 | |
Store operations | 18,356 | |
Selling, general and administrative | 17,623 | |
National advertising fund expense | 0 | |
Depreciation and amortization | 8,465 | |
Other loss (gain) | 1,010 | |
Total operating costs and expenses | 71,954 | |
Income from operations | 40,683 | |
Other expense, net: | ||
Interest expense, net | (8,734) | |
Other income | 192 | |
Total other expense, net | (8,542) | |
Income before income taxes | 32,141 | |
Provision for income taxes | 7,307 | |
Net income | 24,834 | |
Less net income attributable to non-controlling interests | 3,809 | |
Net income attributable to Planet Fitness, Inc. | $ 21,025 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Class A Common Stock | ||
Net income per share of Class A common stock: | ||
Basic (in dollars per share) | $ 0.24 | |
Diluted (in dollars per share) | $ 0.24 |
Revenue recognition - Cash Flow
Revenue recognition - Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 23,493 | $ 17,866 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,465 | 7,951 |
Amortization of deferred financing costs | 484 | 465 |
Amortization of favorable leases and asset retirement obligations | 93 | 94 |
Amortization of interest rate caps | 195 | 432 |
Deferred tax expense | 4,909 | 5,298 |
Gain on re-measurement of tax benefit arrangement | (396) | (541) |
Provision for bad debts | (14) | 27 |
Loss on reacquired franchise rights | 350 | 0 |
Loss (gain) on disposal of property and equipment | 650 | 0 |
Equity-based compensation | 998 | 380 |
Changes in operating assets and liabilities, excluding effects of acquisitions: | ||
Accounts receivable | 18,637 | 11,859 |
Due to and due from related parties | 165 | (99) |
Inventory | (1,364) | 471 |
Other assets and other current assets | (1,341) | (2,187) |
National advertising fund | (4,586) | 0 |
Accounts payable and accrued expenses | (16,758) | (21,244) |
Other liabilities and other current liabilities | 83 | 188 |
Income taxes | 1,898 | 310 |
Equipment deposits | 7,784 | 8,569 |
Deferred revenue | 3,536 | 527 |
Deferred rent | 853 | 106 |
Net cash provided by operating activities | 48,134 | $ 30,472 |
Total adjustments | Accounting Standards Update 2014-09 | ||
Cash flows from operating activities: | ||
Net income | 1,341 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 0 | |
Amortization of deferred financing costs | 0 | |
Amortization of favorable leases and asset retirement obligations | 0 | |
Amortization of interest rate caps | 0 | |
Deferred tax expense | 0 | |
Gain on re-measurement of tax benefit arrangement | 0 | |
Provision for bad debts | 0 | |
Loss on reacquired franchise rights | 0 | |
Loss (gain) on disposal of property and equipment | 0 | |
Equity-based compensation | 0 | |
Changes in operating assets and liabilities, excluding effects of acquisitions: | ||
Accounts receivable | 0 | |
Due to and due from related parties | 0 | |
Inventory | 0 | |
Other assets and other current assets | 0 | |
National advertising fund | 0 | |
Accounts payable and accrued expenses | 0 | |
Other liabilities and other current liabilities | 0 | |
Income taxes | 424 | |
Equipment deposits | 0 | |
Deferred revenue | (1,765) | |
Deferred rent | 0 | |
Net cash provided by operating activities | 0 | |
Calculated under Revenue Guidance in Effect before Topic 606 | ||
Cash flows from operating activities: | ||
Net income | 24,834 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,465 | |
Amortization of deferred financing costs | 484 | |
Amortization of favorable leases and asset retirement obligations | 93 | |
Amortization of interest rate caps | 195 | |
Deferred tax expense | 4,909 | |
Gain on re-measurement of tax benefit arrangement | (396) | |
Provision for bad debts | (14) | |
Loss on reacquired franchise rights | 350 | |
Loss (gain) on disposal of property and equipment | 650 | |
Equity-based compensation | 998 | |
Changes in operating assets and liabilities, excluding effects of acquisitions: | ||
Accounts receivable | 18,637 | |
Due to and due from related parties | 165 | |
Inventory | (1,364) | |
Other assets and other current assets | (1,341) | |
National advertising fund | (4,586) | |
Accounts payable and accrued expenses | (16,758) | |
Other liabilities and other current liabilities | 83 | |
Income taxes | 2,322 | |
Equipment deposits | 7,784 | |
Deferred revenue | 1,771 | |
Deferred rent | 853 | |
Net cash provided by operating activities | $ 48,134 |