PLNT - Earnings call transcript Q4 2018

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Operator

Good afternoon. My name is Gabriel, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Planet Fitness Fourth Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. may conference. you begin Frey, your Brendon

Brendon Frey

Lively, are Thank we statements. Fitness’ Planet website only On fourth joining on you materially of like These us make today’s and place today’s A and would will forward-looking is at Financial that Planet reliance presentation discuss Fitness’ analysis statements. Investor expectations Planet today to a these statements remind Relations Dorvin Officer; this planetfitness.com. quarter Executive and on are actual press statements Rondeau, I affecting not you factors as and undue copy Fitness’ on Fitness’ Planet reflect Chris Chief based Officer. certain of from current for differ call Chief President forward-looking available XXXX Accordingly, in the business. should today, release earnings to results. of forward-looking number results judgment may of section you

forward-looking discussion and to or in the this on quarter future forward-looking today of webcast, release, fourth you whether conference refer to information, the any For in earnings well a that that was is filings we statements as the which call made XXXX as with our more the uncertainties new X-K furnished the SEC a disclaimer of statements be risks events our SEC thorough and to forward-looking We not statements Form update included undertake associated alter to regarding or as do with result disclaimer. in referenced otherwise. any obligation

Fitness. turn call Chris the release call. Explanation that, With adjusted certain be filed Planet In this earlier Rondeau, Chris? Officer of on found refer today. addition, can the to may Executive of to the metrics company these over Chief earnings metrics in non-GAAP I’ll

Chris Rondeau

same-store XXXX round quarter year results Planet for of and pleased delivered. a double-digit X-year also straight Brendon, sales by This XX.X% We the of comp Planet was quarter, XXth fourth our and strong with to a XXXX $X.XX we for in fantastic to stock I’m with Fitness you, grew highlighted $X.XX marks is prior a call. for Reinforcing out QX same-store which with welcome Fitness’ of earnings banner extremely system-wide XX.X%. Adjusted in increase diluted Thank sales. to year XX% comps, member resonate increases XX% with differentiated consumers. the in positive of over truly the continues net income same-store compared share period. growth the per Planet net posting sales of contributed to Fitness quarter, our that the form And incredible.

and year XXXX For XX.X% comps And approximately the the the identify the added as time members system-wide. health that is member these is non-intimidating increased approach for fitness affordable our What’s fact figures X.X remarkable about believe second we with expanding million of to full-year first XX% to new gym new market net our overall end we evidenced that by in approximately XX.X business and member a million joined row. members.

future. the long confident the to several is there over we’re success still tremendous growth a that Given runway past into years,

thoughtfully also playbook businesses our franchise more franchise system system-wide, X stores were makeup store to in and XXXX, the XXX aggressively opportunity competitive our the more and included still they the our presence in ended have The understand stores and than corporate which expand and stores. advantage model new and existing to new continue selling who opened new system-wide. And a passionate openings footprint. continuing are Of stores, more placing store stores run stores. both reinvest in a and our We operators. opening were strong we XXXX, year know we from growth opening with With XXX franchises coming domestic and In we our double XX% we is This led the our to equipment XXX us. in franchises, believe new record X,XXX and of for by our than that well-capitalized of and XXX existing markets. their proven is can by stores growth in

more apart partnered XX have franchise franchise passion than brands. teams and our groups franchise boost systems also continues their their build set their with We growth, combined plans accelerate equity franchisees' sophistication and of private have growth mission our our for from who system leadership other they to scale as us out with The to businesses.

estate ahead, as to drive their and favor key are many looking real stores continue Planet who bricks close mortar increasingly Fitness to as to our trends in Looking landlords tenants to centers. remain and appear retailers traffic

from to the to our free on In their first past the our the hired our up business from we in at on boxes made support sourcing advertising bullish nationally, with franchises availability the work downsize on to to and an trends, are marketing our Through our looking Ad who we��re are we celebration are that our avid future new brand placement to capitalize increasing and franchisee National allows Based of working run sites. presence. like roughly exercisers variety unique partnership incremental environment combined also a in the us on targeted we’ve a gyms, confidence sales time Times retailers strength the And traditional our real continue number, fourth we model have locally local in like casual, [ph] looking few ads for funds, us fueling XXXX effort growing every growth This and members our Also our million for and new estate franchise start, X% securing our the dues With exploring is expand addition, in local the New equipment efforts $XXX sponsor estate investments allocated estate, increasingly real huge and collective XXX, plans judgment the a we brokers of our XXXX. million target where Fund, better while year we own and premium new budget. of competitive gets marketing. approximately caters growing years. market with teams, with XXX up and favorable to in-house and our real bigger. our markets, approximately of goes opportunities our advertising versus in gym events row. goers to the memorable monthly towards Iconic advantage to X% marquee $XXX every of our and national highlight large television Square a our is machine spent Year's handful

with City celebration. Year's billion this of our for worldwide, end had New purple expanded branding celebration, exposed I New tell rate on did in and both integrations. I pleasure increased the celebrity event to you and and year, we LA for viewers in sea and that were presence our with coasts attending X the XXXX, and site of New Eve York Times could put a was not brand. TV on Square the a million yellow, an a person revelers

our exposure, Fitness health gym survey brand annual of ranking the Planet results number brand Speaking show to category. continued from in awareness one in

to on the you ages gears later the millennials XX year. to to in larger active test population feedback only U.S make expand customers. update and health Providing marketing and believe The engaging look enhanced it increase Summer program, from their brand, teams reaching long well And test allowed is demographic to Free up desire extremely of data. loyalty which with makes to and wellness, Hampshire capitalize of with follows even program consumers positioned our the XX importance New member according not a plan opportunity on expanding the fitness the Gen a our need free now our access summer. the school fitness, generation millennials Challenge And stores. XX% ahead health to up remain Summer equipment and new implement Z. Early brand Our build we believe high pilot we XX opportunities Team Gen largest addresses that with affinity. to successful overall and parents of forward of three Currently run. potentially nationwide Switching look functionality. we’re existing up is efforts focused introduced was Z our to and Nielsen test in their help we members also teams All to approximately an to in learnings on initial this to this for additional locations great suppliers file in for and get that our includes the connected

next the do to progress on to ability up how results against see time, the others. and what example, For to receive over recommendations attract stack

us the having new will include Fitness opportunity and member including Amazon, logged find to a has via design. along begin X.X In Plant new and the to Release features. many etcetera streamlining, access our a our priority. influence While will not have functionality, Netflix with to which app, give tracking onto proprietary been join, the functionality second quarter, we ability workout TV, members digital top mobile launching keytag, several of enhanced existing club and experience and the Facebook, will

experiences. delivery conduced understand personalized to of show first behavior insights the our help At customer against and work deliver completed and Planet this The outcome recently desires we will members how mapping better members more needs also usage work intersection member the and study to time, journey our learn segmentation to segment, We of within at and each membership can increased our looked same them. and gym. at Fitness member to about the and

We concept personalized in believe causal enhanced connected are and fitness strengthen we've our encouraged journey which our to mobile gym taken member our more goers. equipment to app, by further towards offering time differentiate we with the first delivering first will via steps our

the strong successful additional which products partnership With members and we as lives. on staff franchises, be members we XXXX corporate services. brand to Planet one our million continue wide Newsweek, Fitness very In results pleased opportunities to closing, provide financial additional Fitness. Planet that the fitness provide our value achieved, a further year members, of work number to enrich publications of On XX.X employees among variety hard very we believe clubs. I'm another support that we named store leading leverage by for can our of discounts customer continues in size club scale of the to could and and approximately outside and recognized service was top such Finally,

with highest in high Planet for has offering. Fitness the there XXX and any also Annual been by much low fitness value Entrepreneurial placed Xth ranking, opportunity our so before We brand Never concept. Franchisee cost magazines,

to members teams grow than marketing franchises, Our machine, throughout continue X,XXX of great and health platform the through vehicles, I'm in market of which multiple group overall enhance come. the we growth network. is strongly in our doubling enhanced an to positioned increase support extremely footprint is to to offering to the on company acted more expanding August, buyback I our aggressively confident our program also experience growing With of our that the will passionate into With as in U.S digital built developing including entered affinity is last years call the organization we turn to our evidenced the Directors XXX stores, ever confident to fitness future, million authorization for Dorvin. share November. $XXX accelerated repurchase that, by Board million over decision to to

Dorvin Lively

I Thanks, and outlook. everyone. full-year afternoon, of and then the from will begin details Chris, highlights results, by discuss our reviewing our XXXX fourth-quarter good XXXX

place franchise XX.X% of million Total sales system-wide our driven perspective, a the XX.X%. increased quarter X%. being October comps XX.X% net year Black same-store by XX% increased by sales member Card driven our was combined basis growth was balance with $XXX.X to $XXX with The QX XX.X% period. the a compared XXXX. growth. $X of increased million Card for corporate rate XXXX, XX on prior same-store same-store growth increase From put new that increase point X, in was Approximately to increased Black fourth our in to the pricing year, total segment last increase joins, and penetration For in in sales rate revenue a from system-wide

Card points increase increased of same-store pricing XXX the sales. approximately basis the the in During Black drove quarter,

fund advertising the beginning prior an Our XX.X% million XXXX national in revenue, year increase which segment million, from $XX now with $XX.X period. franchise revenue in includes of

membership break million of the XX.X%. dues Royalty increase revenue me had drivers. the quarter revenue of year-over-year the increase million, This an annual of Let last was which to drivers consists membership royalty $XX.X $XX.X down three fees. This year, of same on monthly in for and compares quarter. royalties

fourth the have XXX year. stores we last First, more since franchise quarter of

increased Second, as our rate. average mentioned sales same-store I then XX.X% and by higher franchisee royalty third, owned overall

had royalty year royalty in period the franchise including driven rates increase by as of in last I and at to their For up of average existing agreements royalty structure was paying rate QX same more commission fourth certain end stores based below. our approximately on At the no the compared the period. to rate XX% fees higher prior X.X%, of from amended stores store the we will discuss quarter longer year X.X% the instead that commissions XX% the approximately

The were dues fees new as Next fees as our system, paying development amended the decrease of to the agreements area paid million transfer stores. their number royalty through fees prior agreements was existing to instead agreements new these franchise processing to $X.X year. stores franchise rate to franchise of just fees primarily that increase well in related for and due mentioned. million of these existing fees online $X.X have other These the us from to from member are received point-of-sale the sign-ups, a compared and

how we of compared revenue this ADA quarter. and change FAP headwind prior about In in addition to QX year was recognize million the in the $X.X

year. in $X.X to now these Also million versus the placement fourth stores. As compared $X we the assembly for and fees fees franchise last time our segment is over we million at placement is within life of lease outlined received quarter revenue are previously, the sales owned agreement These we recognize and revenue, signed. of related which the equipment franchise agreement was franchise our to the

of royalty The equipment vendor compared that Our amended was franchise to of commissions commission year attributable the are these income, stores increase from which for their instead decrease to paying arrangements million was the $X.X have third-party rate, agreements number international stores million just commissions a preferred primarily existing and ago. with as $X.X commissions discussed.

fund year X, was to GAAP rules advertising new zero we national for account compared went January the on XXXX. as contributions related last effect revenue into Finally, $X.X million NAV to how

contributions the this sheet with the revenue associated ad to really to prior fund net due national the expenses. had balance accounting now these an as reminder, only on changes and a we record the recent As contributions year, impact recognize marketing as expenses

corporate million in same-store in million driven lesser of Onshore XXXX, segment Of XX we to $XX.X primarily Corporate sales stores franchise the year, X% opened from the new in four the million Our $XX.X corporate was due stores $X.X Long million owned million acquired second and corporate revenue $X Island opened a four increase, the was extent, period. by we in stores XX.X% the increase by and to earlier increased the prior the in XXXX, year driven million $X.X late as half as of new was increased $X.X revenue. to and well annual fee Colorado

the million $XX.X increased XX% by The equipment million increase driven franchisee $XX.X to stores. replacement existing sales was by to or to segment. from Equipment Revenue owned million. $XX.X Turning higher

were sales XX% for total equipment For XXXX, replacement sales XX% of equipment prior compared the year. our to

$XX.X an sales to above. as a which to increase of year-ago, increase expenses, primarily to which during million million revenue, by million payroll of generated than stores year-ago. fund of revenue $X.X stores NAF $XX.X quarter. in National our with XXXX, variable which equipment operations was to opening owned stores for of driven we driven the new the up Store amounted the the cost compared to in and the advertising offsetting $XX.X $X.X new including and associated cost million million, with quarter the equity Our primarily expense The a was compared support franchise associated our in the increase relates the second the incremental of compared by $XX.X $XX.X in acquired stores XX of SG&A to direct owned equipment expenses. half we million costs driven million operation increased and higher quarter are the more X by was corporate to XXXX growing million XX.X% preopening year-ago $XX.X discussed sales to was compensation. a aforementioned XX.X%

the the $XX.X up prior fourth income the the margins basis income points $XX.X and margins driven increased was from operating in million points XXX quarter mentioned XXX and gross Our Operating quarter for approximately to expense on year-ago. increased the income in XX.X% the NAF income to On of operating approximately one-time by to compared by This XXXX. an XX.X% decrease of operating negatively revenue, NAF basis of costs the XX compared statement year decreased the impact period. impacted I margins a adjusted basis, approximately adjusted excluding NAF to which earlier, to certain revenue basis points operating million XX.X%.

was rate to the fourth tax the XX.X% in XX.X% for quarter prior compared period. effective year GAAP Our

impact attributable items which taxed and period, As Fitness interest, reform level, tax of income the as adjusted tax were any or the Planet of XXXX tax we non-controlling because not changes, if earnings taxed during such at the Company approximately Fitness, rate before, state rate the have corporate is level. income the the of at the XX.X%, stated to for the Planet all tax appropriate was an recorded Inc. discrete

For in EBITDA non-cash period. By second, from and of not by $XX.X higher of from ongoing and expense result approximately that basis to other considered exchange as margin in adjusted foreign approximately basis adjusted points. received net the would million XXXX, earnings rate. of in higher income income a year-ago. points; per our prior to same-store release. loss operating of increased year-over-year million drivers: million and was compared with XXXX, exceeding $X.X losses NAF evaluation items Adjusted basis, XX.X%, net and the basis which million the prior increased contribution to XXXX, margins overall net a Planet before an XX.X%. quarter per diluted in XX.X%. the Franchise share the basis have XX.X% compared or year increase for NAF $XX.X XX.X% XX.X% was be interest, XX of NAF Inc. tax taxes, reconciliation higher net in prior royalties to been $XX.X On adjusted reform rates, million $XX.X in franchise a in EBITDA average has in million a can income a impact fourth the to non-recurring the sales diluted an year net $XX.X income exclude franchise income and GAAP share GAAP reducing higher mentioned $X.XX or GAAP period. $X.X also approximately tax million segment, On per late and Net three $X.XX be depreciation from diluted XX margins defined a comments; well rate to timing EBITDA adjusted as of XX.X% sales approximately reconciliation tax first, share, or income to The by expense, earnings points net to performance adjusted adjusted the royalty segment $XX.X attributable found as reflect decrease owned the owned period. are adjusted reducing appropriate Fitness, A revenue, or to EBITDA, the an of compared an net $X.XX $X.XX amortization, in of in We’ve expenses income $XX.X stores following of passage On per diluted basis, net additional earlier of the million, of as XXXX, driven XXXX included was certain third, decreased same-store revenue not rate XX a respectively. of EBITDA and NAF base, the provided increase release. income Adjusted adjusted year for excluding an million my expenses today's XX.X%, impact in income is of normalized higher the adjusted quarter of and share fourth SG&A for margin

net our the by increase XX.X% margin Store by SG&A revenue, margins XX.X%. franchise same-store by XXXX, revenue, EBITDA opened cost increase basis XXX segment fees, Excluding adjusted increase EBITDA stores approximately the reducing primarily XX mentioned excluding basis timing driven annual million, X in XX.X% to offset adjusted corporate EBITDA segment we sales, Franchise due in margins NAF, NAF due Corporate was stores expense X% points approximately to above discussed The points XXXX. late higher increased to NAF we in and the $XX.X in the Owned partially higher and to increased the in acquired XX the by the above.

adjusted XX.X%. to two-fold. EBITDA approximately Our Corporate points basis margins was in segment Store The decreased XX decrease margin

of foreign margins of decreased stores the the X the reduced XXXX store which approximately as points XXX increased XX and basis increased from XX result remaining the increased stores basis XXX expected across basis XXX First, the approximately a by in margins these points. and acquired new basis margin to were reductions expected of ramp; XX on their stores of increase due new offsetting basis the rates, approximately sales Partially points, to higher exchange second, of in approximately same-store of stores opened approximately from points, points, X impact due margins the new ramp. by X%, XXXX losses margins

Our driven to equipment year-ago. by replacement segment $XX stores existing increased Equipment higher owned franchise sales million, of EBITDA to versus XX.X%

were XX.X%, points adjusted Our segment margins EBITDA XX.X% from year-ago. a up XX Equipment basis

the full-year, of increased sales for XX.X% summarize quickly me Revenue increase XX.X%, up in a top to highlights system-wide Turning XXXX. on the XX.X%, XXXX. were same-store let

revenue a sales average record increased XXX equipment rate sales. Our points XXX X.X%. included to XX.X%, segment store same-store increased Corporate for Equipment new which year basis increased X.XX%. royalty the store

net increased up Our our to XX.X%. XX.X% income adjusted $XXX.X and EBITDA was adjusted million

turning the Now balance to sheet.

of As million. under XX, note million equivalents had cash borrowing variable cash $XXX.X of and $XX our of XXXX, funding December we capacity and undrawn

ASR. shares, fourth we terms to entered Pursuant the X.X million million is accelerated agreement, Citibank. of XX% of year agreement as a approximately $XXX During the repurchase repurchase under retired which the we we quarter, with into expect the share this to approximately

to the quarter the of than be no this completed by second expect year. later ASR We

of $XXX Board September September fixed of notes rate cost $XXX Total $XXX includes plan XXXX, XXXX, that the consisting excluding long-term financing deferred approved and due of whole of remained last rate securitization, in year. with end our $XXX repurchase of interest of X.XXX%. in million interest the solely due notes of of approximately $X.X of QX a of at which the XXXX, debt an share X-year was August As million of billion in million business X.XXX% with million X-year

Let XXXX me franchise total additional $XX approximately activities, was $XX and investing our spend the to $X.X in Colorado, approximately our for CapEx of year. million we respect cash million, XX stores acquired net XXXX. in included revenue the used Long million for discuss With in in which Island driving

Additionally, projects. of with $X building purchase replacement we incurred an primarily X million store approximately associated our store. stores, equipment and and for renovation to land incurred million corporate of new IT approximately store existing expenditures $XX base, corporate $X for corporate infrastructure a $X We million million and the corporate for were on related remaining investments

Now for to our outlook XXXX.

the to that high ended equipment our levels, of revenue XXXX, anticipate single growth in driven XX, new We sales approximately digits, of over December XXXX equipment XXXX. same-store XX% increase total the sales and For the we by to replacement XXX sales expect XX% and sale approximately equipment slightly be the stores. placement in currently under year of -- in

we first increase particularly last the be different. cadence of net to to EPS the timing EBITDA number sales of XX%, XX.X on to store fourth to half number continued XXXX. the decline While current biggest during similar see adjusted income in second projected store into expect good approximately the in year, we and diluted XXXX, and on currently of compared see grow diluted equipment approximately the we in XX% year-over-year Overall, half a and coming to momentum XXXX with new a quarter. based million basis expect grow increasing is as today, share for we shares. on with quarterly approximately equipment placements the the With placements count the Based with respect will coming in reduction to new XX% see fully an adjusted the be the sales quarter profitability, first

owned will XXXX, and on anticipate approximately our expenditures questions. the million expenditures back operator on to X to stores corporate additional For million of spend for be including turn includes approximately IT new approximately the $X investments. additional CapEx we infrastructure to XXXX million XXXX, $XX stores. call I corporate $XX Compared of now approximately

Operator

Chen Your Thank first Cowen. from [Operator Oliver Instructions] of you. line of question the comes

line Your is open.

Oliver Chen

Thank you very Congratulations. much.

there. very new are that seen, probably are the you love Given would you And of align unit comp-store opportunity, How turnover, do availability, number with we segmentation momentum particularly such I some about financial members. think would of our terms just the Chris, into thinking and play unit great of models. you real saturated journey thoughts membership your sales as estate clubs in customer mentioned the in shrink the you. in will or terms to great growth your that growth Thank that there you’ve that and be how as see also mapping you are that get views.

Dorvin Lively

to question. -- know estate boxes. are to the close brand, our discussed stores to we I'd for presence add landlords from XX maybe of real of of at downsize them, lease, and we we Dorvin. know coming two [ph] to next XX, their we our or take calls, conference when it's regionally are I estate, other get quarterly that be first stores segmentation we off the in more we drive some the markets, as the forward fill major a to we the looking else whether it's back in the estate about we’ve say drive then scale are tenant to gets to the centers. are that, we we the that their traffic end Oliver, Great. including real know and that. said continue them to can some do it looking either perfect to Chris I they of to vacant going tenants three talk in traffic we know as the we looking that the and major like those as the some and the then meet fill opposed I will regularly traffic take the XX, months are the would landlords in the the national whether are end major think with be as part talked markets, be bigger, the big of the -- landlords, also boxes that retailers week continue trends of last and on and the perspective because that their we've someone to week driving And real early that the favor

to So and look XXXX. based I'd new results number a at if similar on for our had slightly XXXX units in And over pretty reflects guided -- Street healthy end QX a increase well. very of full-year in the just say, of quarter ahead the we where then as you our came guidance the of

to then on continue willing his work their now as on are real first part, we favorability come really up. comments So estate franchisees to size those when are Chris and the with opportunities And sophistication made and scale capital some good see our put front. the

And so comes they to maybe year. do they year, a or in might do up, real or estate a going XX are three only the X past, a four now where

keep and in happens that in what when have talent the that's with planning their so pipeline are franchisees sophisticated you’ve And market development place mode. to

as to. made by as coming saying summarize that remarks, lot we ever on we look as I prepared a see into guys good guess well. of I been a estate are are trends we XXXX I see good tenant I'd and these think So my trends as And in real

Chris Rondeau

Chris. it's Oliver, Hey,

we we’ve well first the them the how as it done them experiences it's our wrapped the for what’s what’s time customer way too tell fall like figure journey out that right segments mapping, want really members with early preference we the as this now to interact segment just that connect study of with the what with as but segments up, still the and each customer member to With to from those in, our mapping, journey really general communicate of well the they as that them, their and brand. now

to as communicate move needle it's imagine tell, we So, learn better. but can early when I still to these with the we how only people

Oliver Chen

helpful. very Okay,

Black Just to last approach we Card pricing. get your question is One question.

Dorvin, And future that versus for framework about the the growth as you Black You’re that. would offering pricing, increases? member do just of you. to value really love comp around ahead, compelling model pricing Thank a ratio XX-XX we in year what’s with expect but Card thinking be parameters your potential

Chris Rondeau

talked was time moved in 'XX that increase October moved $X the of we’ve we've about. it was So first we forever. it and was essentially last when That that

inside in at and open whereas content to out experience top -- as the there price was think so backed and reason functionality in kind with of as of X,XXX, more had some as now more question for by some reciprocity members, the the that coming I we north quarter components opportunity X,XXX sure one On new app itself rolling for stores. stores the technology, of that, look we second we [indiscernible] out continue club nutrition the the get we that’s bag and by the that more outside push the it there's for we in stores, So reciprocity, does are we're more which future. and maybe then

or option more for price Black or Card and Just could options also services them both. push acquisition to

So that’s top for of us. definitely mind

for room future do I sure. movement think in for So probably there's the

Dorvin Lively

we on in think I high guidance, said our single-digits. comps, Oliver, Yes,

-- XXX I kind ought a in probably obviously think be year. say, the of XXX pricing continue we in is 'XX as will the it in the same-store sales we that -- impact I'd to XXXX. that see some to benefit target this on good of a got bps range, to call we’ve impact continued the But

Oliver Chen

regards. very Thank Best you much. Congrats.

Chris Rondeau

you. Thank

Dorvin Lively

Oliver. Thanks,

Operator

of Jonathan line Komp next of Your question from comes the Baird.

open. is line Your

Jonathan Komp

you. hi. Yes, Thank

obviously, X the but I the plus Company can look might comps First It question, acceleration be system the the stands in recall at highest, model. of level, the comps out. good

the for comps? Company improvement So driving there sequential any the what’s color on more

Dorvin Lively

talk in comp -- had up we the it's of as year. maturity we the came into about the But that that opened in obviously, stores. base, new stores a go that QX in stores smaller the John four number of total Yes, comp in previous we’ve comp

go coming corporate look back there's that, will QX respect a but QX, good kind new and at So fleet QX, you can I that's been is, a in good the but in. momentum four stores piece continued to in base, our QX comps, yes, pickup of say if with of

Jonathan Komp

the then, of recall year. I Okay. unit a on outlook weighted openings. want the can't for to I the follow-up in been Dorvin, terms Understood. ever front that’s year And

being So lead I projecting see little are potential this first short as case there's the the wanted any but year. second to in sustain there a And as why maybe know I the time, you and a of you some the there momentum understand dig that half? bit in fairly any is to more opportunity, to look we openings, half is

Dorvin Lively

lease, of you on from months, we depends that nearer is you and landlord, the if of etcetera. [ph] into town's take always I’ve guys out you the obviously negotiating -- of too speaking, get three timeframe XX vanilla the the kind told lease give downs a about on, period. about sight time six a on it's line probably got term. five, if is and getting on good but month ups take plain and or permitting, roughly spectrum probably It restrictive days, the not good turnover box Yes,

office, of think answer where my of groups we’ve got of I come a store, deals we’ve of six the always real go there even be be some that’s part pretty what will fallout, is into stride the my could timeline. knowing there hit to But running shorter in on estate the it sight is it's back the we’ve today the that the some line might there back question So that -- that some then call the good four delays end next doing and will earlier franchisee and months, I be enough will said just large the running franchisee that, question to not etcetera. to

team talented of including out real a so, are And management lot various extremely teams. estate and franchisees functions, built have the development these

as So bigger the states. Jon, lot you ADAs of -- know, across different a maybe and guys multiple have

their growth, their they So well. private their in guys teams that with obviously they slow and equity working really to are pipelines not as got the and so are level down there, of looking working

four it's market groups working are these maybe etcetera. are and same two the at come pure all It's yes, that sometimes and on So, and time just three together -- larger come working or a two hope timing. sites the you or together one three development or you side and

are back-end end. good into in when the pipeline the it end required lesser their cash their of got depends percentage a stores to half the we number on of sight back the But and business, you’ve great of first estate franchisees they building just flow QX, the guidance. advantage line it which and pipeline that feel into call are year, how it that especially of good kind the development we out higher very real So, excited more front well, of mentioned we in see of of franchisees -- and back-end invest as shows but fill the and the continue trends the here about XXX our But franchisees taking our there. out we is than loaded that that, in good that front-end are with you the being development

Jonathan Komp

if national is by make point? first just the mix on, all, Okay, excellent. And I guess, go that marketing And there and initiative of to you Chris. requirements And might about versus look spend, you the that the sure franchisees some at spent then, specifically see. then some wanted maybe secondly, local last of to at are any local that updated for one, thoughts I the ask franchisees? advertising opportunities to being anymore

Chris Rondeau

now was which the Yes, tracker, the franchisee. we initiated what getting with we’ve earlier spin last year, think we I are spends from call the

on So level. we at visibility spending a have club their now the

that they're good what we that’s now doing. know So

X% we -- right, that flip lot do scale if total, able that and local. get question, the get we in that to I Could were X% to future. future national, in economies at it's XX% of and to the we will say, in but a be is, when So we we think that if think will actually okay, I

I develop but the penetrated X% almost Northeast, think in were less member, the population stores of to of lot we the are we as continue here at we West.

a So can you think then some start we get of flipping as more bigger sure. right, you're more I over I I coverage think national for play and that advertiser part, think

Jonathan Komp

much. very you Thank great. Okay,

Chris Rondeau

Thanks, Jon.

Dorvin Lively

Thanks, Jon.

Operator

from comes question the from line of Guggenheim next Heinbockel Your John Securities.

is open. line Your

John Heinbockel

two So things.

it? spend of north a want holding potentially will that will that there If then, different broadly you a anything which the expand etcetera. of or What things different Summer how event. you right, think -- how it's one focuses, Is the up spend, or question Teen money expand be just it, Chris, said, to million. anything And is marketing you to of two you year about $XXX in terms this XXXX be year-ago compared if

Chris Rondeau

row. much Summer I the [ph] really sure too up, see just Not all all a to with our in holding make want Challenge ducks franchisees.

levers Again, we Teen part And push of splash that your do will how to the can get that we’ve first another question. part be are the So that’s we marketing we big launch all initiative of to right intending. so that that, spend that challenge. the increases, Summer

that X be over that be you compared would New should nationwide result extrapolate the million If over active it teams summer. Hampshire, to from

younger year definitely generation introduce More digital digital is I we've that do time. IPO now. and at ago to year. we in all, a as is build the talking first profanity, good X.X starting X.X it also about, as each hopefully the back And to this well we think more years So to -- really fitness the way a and for years, digitally do wellness

more digital definitely as spend So as the is far market concerned.

John Heinbockel

what talked get yours? their the for Secondly, with million Who to worth it's Black you a see if members potential interest Card while big right non-club we’ve time. about as Are from right? opportunity where and other more enough, you about XX.X partners, think long that starting

Chris Rondeau

Yes.

is Officer. Chief Commercial is a summer, run is in Roger Chief Officer last Chacko, Marketing So who which role much broader a we which

in and plan, actually is in of of partnerships. to that's charge So him, his just that part under work have someone we charge

recently Amazon's just vacations get Another -- we ILG, they through Interval The one with Black for discount did where top of did Card couple on Audible, years. Audible of the like and the XXXFlowers we launched Group. done the members, it we

more value So, again, Black partnerships that size memberships matter. to to gain that scale our even to and all Card leveraging for membership, or give

John Heinbockel

you. Thank Okay.

Chris Rondeau

Thank John. you,

Operator

JPMorgan. next John Your question Ivankoe from of of comes the line

line Your open. is

John Ivankoe

you. Thank Hi.

Card XXXX Black members or still being may. taken in or Black the legacy pricing there that if Firstly, price flexibility Are a Card locked members that's some at point market-by-market? I just like clarification, is

Chris Rondeau

does stay that them if increase that help an seen a rate was we that, never let back. the their one we at that older some but thought there members grandfathered, sense rate. also stickiness The membership, cancel they're they yet, Yes, older generation get with which just haven't they in

seen when system haven't we So they they but any yes, change in people, real retention joined. those there grandfathered the the in are of significant

John Ivankoe

bit, year-over-year, 'XX, or the And is quarter Are at a I percentage you of of a fourth so. but think XXX Card, in think that little point points I I because this still still from if would the it original comp is, up maybe within up surprised the heard contribution Card ticking the the basis of Black pricing I that legacy members Card base that in Black Black it is that Member are correctly, XXX large mean, basis year-over-year, locked some churn $XX.XX price assume points, in very point? if it's

Dorvin Lively

Dorvin. John, Yes, it's

that us. I be I quarter. it's then in be to mentioned, impact don't each the bps impact to it's call necessarily And I we QX. the think thought what that the was could That we’ve and it back right. XXX are close going the we surprises in year said XXXX. You of it mean beginning at reported

-- price not. because several years. respect of that’s last and lot, out day, $XX us. someone there's question When the the mean, the the the attrition to a consistent paying and Our it that’s picking get that the is no, -- $XX.XX. memberships, end of different and the the I members didn't the matter surprise at that $XX.XX a memberships seasonality changed slightly back at up canceling but it's we really the across two point, members And you pretty of but at it's some any the faster really math, a then at the with in hasn't more data, higher look in the churn go terms mix, at price rate,

John Ivankoe

Okay.

driven and but true, bit seem the churn? point, point gone have leads of over to It maybe do talking you that at you mean, a were that level terms you understanding one about guess, churn next so reducing of I I this membership would be more you a ticking the and down, important we that maybe to is what question data versus a brand churn that And and one maybe what segmentation for anecdotally, into me in I have did telling back your the point, can what think like about as this like that customer at believed the is, gym do what at was this, level you most of more study is mean little club time? churn? optimal achieve kind

Dorvin Lively

did I the example, looked Hulu's they it found was to that is that the interesting had with wellness launched consoles, And thing an the premium that for have assumption and manufacturers they more to at nutrition. able the that the think they I want the we which interesting and fitness around when be me the thing and and Netflix, And would and education is, Spotify's, last and stack members to wanted that. we is, wanted the want data with [indiscernible] app, their on to of and or -- their kind Planet fellow see also And -- down have they they compare gym their that, friends. collect which role last to how there with their to month. able against challenges they begin that the up how be their to is week friend, we're members back data to the leave going Fitness

that I interesting to the they or fitness they is more wanted the exercise from fitness guess it it's distraction, way not put So were component doing. and really

expected think I what I that was we see. to --- not So what

that, that's term what you should think they're longer their help So TV. on to that only as results watching if with we act which how into now opposed

probably So was learnings. good that

John Ivankoe

system? churn you level really that’s differences or there example, the or DMA any And there in of I or more level a basis differences on churn terms where regionally, city could that is distinct be. something even common mean, in across that's for are think really are different where maybe

Dorvin Lively

several can for consistent. be and minor trends very are It's system. across outliers, business There but consistent pretty back look John, at may our go the you the years and

same population. they’ve come will the out of weeks we I going couple the then because always And month of work times we’ve a back. off it's people people about the and out take they think off take of that are XX% mean, after number and worked I or

that in publicly members. a it and people the -- be past for talked So the we are able and lot it's highest that to of allows we’ve priority and is affordable working not to amongst our about out that do

major haven't based family, it's it's three years activities the so. a things back but seen trends in we or and we like anything seen and last And regional looking any of that, kids terms over haven't so issue,

John Ivankoe

you. Thank

Dorvin Lively

Thanks, John.

Chris Rondeau

Thanks, John.

Operator

Jaffray. comes Peter of Your the line from next Keith question of Piper

of Piper Your line is open. Peter Jaffray. Keith

Your open. line is

Peter Keith

that. on the about and taking congrats Thanks question for guys. results, my Sorry great

Chris Rondeau

Thanks, Peter.

Peter Keith

oriented technology use a see are if could wait, members the full-year And to maybe to Card like and able maybe to wanted just use on integration you data? roadmap fitness how us with we’ve out you the going you are is to Thank it, Chris, it I see follow-up the and Black that plays the be a collection app wait you. to on expand it. launching understand looks help of questions. and app following X.X. that Version full-year the some we what X.X Do until will

Chris Rondeau

pipe Sure. data. all not X.X Yes, so it opportunity in have the that, will but to us necessarily that gives

I want want they And us move track the it to they to reason anything a a what give their is we is the they a be flexibility, as recommend challenge customer which what back really to does app to to to and and with doesn't any want new to here. well pipe segmentations off the how why shelf, in, tomorrow third-party that app data current they Our platform friends. product able we as had think that that us do. for and you platform did give But

the well, definitely wearable. equipment future So I in think connect the it's the cardiovascular do with what app and will as

and off steps, just anybody, anywhere treadmill, where disappear. right unlike doesn't you it your doesn't -- it it now, with So wearable that a follow get tracks following, go goes away it

works all sense. first back and to we premium gives be to and not ability. It's data will the time can of pipe that the in collection probably makes quarter, the going member us it or as X.X but So lot that X.X, consoles it

to is think and I they learn that As we piece they want learned in well want content. that important which that content, education

outside. in club. And these can that better months third-party so experience partnership that pipe at So with club of is it's the will how some old, or outside be working brand, home that they’re it's in the running to a they're us pipe we or into interesting through that's see out a doing for equipments different also get are not whether them, three whether something because they because in

think and I all for that the drive to are providing term. so So retention hopefully to good member and longer watch able us be monitored, we that's to value

Peter Keith

Okay. Thank you.

just envisioning are The X.X, to that you as this understand that XXXX or make a sure a is just it. for put you I would Black timing collection around Card X.X event? And again, data Just maybe Version see do members, members? before or for little all or

Chris Rondeau

if longer, say would going from, cardio stay clubs I components see only that's because to actually again, it's XX years. members Card probably it can over case on and longer three where today everybody you just it's but you that Black XXXX, in depends we price it's [indiscernible] be It time. pushes but to show coming can with, two, open I next retrofitted to retention, not because a begin XX Yes, if term up better years, it it's driving enough, make the

app as the sooner piece. into as be it collection, So than cardio pipes far -- concerned or but the other wearable data is could

Peter Keith

technology And it's new cardio a segue Okay. the on maybe, to then piece good the equipment.

to XX to to or all gyms new then those faster now. it a begin that rate opening allowing more advanced of it's there that So Is up get to want equipment? some thought right a replace gyms that at

Chris Rondeau

get any Yes, going next what section, we learned that this stuff getting data things -- we traction. they apps all and other Facebook rid other and the it, launch of against this or some to a run pilot group later with about the collection where and that challenges up and weren't of spleen next of and year, are clubs year

we to start how going interface that the So we depending current today to be, is clubs new how And are is forward and rolling cardio selling the can to that how that are today with that we cardio out see system plays to going the and/or on it the do after then the out retool retrofitting the that numbers. would retrofitted. be interaction

treadmill, don't you you just replace get screen. So old replace to a

the So that’s what’s for timing. better re-equip it's -- waiting

Peter Keith

Thank very luck. you much Okay. and good

Chris Rondeau

Thanks, Peter.

Dorvin Lively

Thanks, Peter.

Operator

of line Your Dave King Capital. last the Roth question of comes from

Your line is open.

Dave King

afternoon guys. Good Thanks.

First the the you Greenfields comp high in should about corporate or single-digit with and And guidance. can. longer if you the think corporate piece, optimum mix of on the the term? owned How we just owned revenue comp as do acquired system-wide growth what see locations, then

Chris Rondeau

question, your What was the last part of Dave?

Dave King

Greenfields in or term? last of the corporate year and mix what optimal the With had that you growth you that the the longer locations do so, acquired the see over as owned

Chris Rondeau

in because stores. and breakdown we We earlier corporate much been more out don’t year, have last historically, our this of guidance fleet probably it. or sales a We lower same-store and go mature to the break stores. our of be terms that it, will has four franchise back it in of then Got corporate year. kind always four five opened I question got between will

just range. comment fruition, that on of earlier come it and of estate to in timing real depends kind five a my to when but So on lot and back deals

it, six, to six the just call four two, where at a probably five be think, in least, I let's years three so. next is year we say to would or

roll on what we I geographical look within existing have we go of and come and synergies strategically if will for the etcetera. current the at fleet done, transactions synergies, within look transactions we've done that. opportunity about, does all And when our -- fit a usually you it we've fit it any back We the think

it's are development, doubt don't building we going such a -- faster corporate because our a at own percentage point development in it's here an be get whether I to meaningful or I just or would are. a rate So we even where acquisition total know franchisees our that change than there to store

So model. we a franchise are predominantly

a I very our to segment think than continue in be significant but will we in we’ve albeit to don't piece is and past. had our that a revenues both faster it's, our there near-term, and of store profits of the the of we driver important corporate a look really growth business, accelerate

Dave King

the is the question. comment for last that reason guess I Understood.

like even forward. your you comps. terms feels do The can it digits piece real mid in with could terms small it of more feels driver it's in like versus could a corporate there driver feels that be that overall though opening owned quick. as of revenue it a Just, fact But question comp historically, that for X% the be like going you stores Chris, a just of single of development, material

California New the Year of In this sign promotion, share terms the that versus ups anything piece? share of versus year, of anything to Thanks. New on any success years Year's effect to on prior in significant terms

Chris Rondeau

Year's night us. Eve, it's sense. a continually started call number a in to membership per splash is for at really we but hard not really to I I so it's brand first New Yes, surprising. maintained mean, Eve that awareness action, really constantly and that big we it's when the status sales se, to nothing remain one Year's directly of mean tie New it's did the and unaided to

us a it's four get it's splash and for highlight. mean the Super to all so I many think Bowl viewers, it's it for blows us the So I hours. great all away

on we come. for plan doing a great thing it's So to hopefully many years that

Dave King

Okay.

Good 'XX. with for luck Sounds my question. great. Thanks taking

Chris Rondeau

Thanks, Dave.

Dorvin Lively

Thank you.

Operator

the to conference at time. over this no questions have now turn will further the back I We presenters.

Chris Rondeau

We to everybody for from year-end continue XXXX segmentation app this past a looking in year, this our year a member thank in journey learnings and QX earnings. Well, us initiatives today launch. in forward you XXXX for our momentum great and had of coming that’s and today technology and lot a joining good up customer

in happening and Thank stuff So you. forward good looking earnings. to first the quarter lot XXXX of

Operator

This concludes today’s conference call.

disconnect. now may You

Planet Fitness (PLNT) 26 Feb 192018 Q4 Earnings call transcript