PLNT - Earnings call transcript Q1 2019

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Operator

My name is Christine, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Planet Fitness First Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question-and-answer session. [Operator Instructions] Thank you. Mr. you your ICR, from Frey, may conference. begin Brendon

Brendon Frey

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

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

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

Chris Rondeau

XX.X%, first share earnings for system-wide an of everyone of you sales same-store increase of thank start, and strong growth with the adjusted off per prior very XXXX and is us joining results Brendon, period. you, that XX.X% over quarter to a today. good Thank included $X.XX, year

comes this a last huge an tremendous far-reaching, on contributor Planet increase performance We XX% of impact The of presenting bang in Eve year, brand unaided Celebration, in aided primarily Our to addition gain machine, fitness new posted of top watched viewers our with same-store volume gain Time system our we net billion QX Fitness Square's Year's in XX.X% a off Thanks the from nonstop event a continues was growth. expand. of is number Eve, worldwide. continues member came runs and Planet sales throughout momentum, remaining which sponsor Fitness' and iconic to New to as kicked driven, and New than the approximately more category. the to is one QX, awareness to one Year's marketing brand the

Fitness for country, future. to both in select in we of and Our during next the for brands. throughout were stores expansion both experienced and more and of members XX.X year, In than quarter partnership three complimentary strategic system-wide. on select million expansion, to Planet XX,XXX XXXX. in Planet sense the XX March, markets we up stores locations Planet opportunity a our and QX and stores company are new accessible initially affordable, opened Fitness were on in Kohl's the group will ended bringing feet XX months to record of stores, additional the with made Fitness, of various of total franchisees Kohl's existing topic excited Staying first the the first with X,XXX open to all. approximately in bullish stores utilize to collaboration to fitness aggressive with announce non-intimidating, to shared thoughtful fulfilling [ph] mission each markets, to square This Kohl's the adjacent XX,XXX

concept, As to welcoming, non-intimidating it's driving to introduce and affordable opportunity to eight shoppers fitness [ph] for us simultaneously we and to stores. sites our a continue while grow, great secure traffic Kohl's

In fulfill near needs fact, nearby clubs that stay shopping. and members our daily for our their tend shows to research

differentiated combine why XX% retail members example, shopping visit landscape, gym partners a other Fitness centers. our to located do traffic it. in close shop tenants of country, center, shopping shopping in of their become Planet in retailers to recent XX% which visit across Kohl's and they their And general were For not within if is interested our other like that would XX% week. our and continues once in are center landlords their members fitness least with members approach we of today's shopping, XX% at so at to PF never club In at our believe centers per drive the looking their reported

The with a an Turning operations, with our development, leadership including these and to conduct and franchisees in more. strong us. for inspired topics, conference advantage of franchisees We our our various we and them the Personally, our franchisee extremely opportunity our spending in millions their held more engage our and share another passion meetings to significant have the on and by franchisees, is best time brand to for be marketing, to franchisees we passion to improve shared continuing open I competitive commitment stores our in meetings with Springs. Palm practices ensure one we're March, valuable. system providing continuously of peoples' continues to believe technology, between I'm larger lives. with

up teens on like felt affinity. are May way it and we And their and place youth XX%, are to which both brand, addresses on videogames, should pilot healthy XXth, challenge, build a to surveyed interesting, them and program, to spend parents XX% free was time the schoolwork, asked health, to their last conscious focus on outside teens the agree in important browse only exercise healthy which allows who and workout and more, loyalty their a rollout they workout of help the At the is a XX%. them the increase and The clubs and and stay head XX% in Today's our all to believe through TV, positively from Providing initiative, free we're how long-run. runs shaping to in increasing when active brand introduce kicks all classroom, their is to In than this their believe health on health giving XX%, pressure to year societal health. number we nationwide and XX parents to strong members prefer to also take and of and fitness most summer why we zone. teens it was teens summer. responsibilities and today we the national community. and notion be which New they to with preparation growing which playing teens comfortable active in also will their XX% less a mental overall before, socially inside Planet XX% more and wellness, never opportunity more its officially summary, active who which off well-rounded in and that Fitness. it emotional workout towards flipping and the or teens of for physical In the judgment-free for Xst, growth both Z Gen nationwide wellness. XX% this of watch September summer, it a want as academically, successful social to Before said are Teens to that helped announced is of last another this not members under greater need will impacts confident, to I succeed workout, that our exercise stressed. Fitness, summer. Planet teens more time become their more wished free Hampshire perhaps create close, it that health than for XX% teenagers felt they the said Among of Challenge for ever with access over improve XX want was Summer the and for their lifestyle be about rollout program get Teen an which already response [indiscernible] week in our teens media, feelings spend

in becoming clearer is pace to We move and XXX the open on to long-term in wellness real continue both and approximately locations and path XXXX, health to new are as U.S. X,XXX in favor. the trends estate our stores

our extremely many turn excited are franchisee groups lie and opportunities the With over the enthusiasm passion I'll now know future. I our about share Dorvin. to the and that We call that, ahead, growth about

Dorvin Lively

then XXXX first discuss begin good Thanks, reviewing outlook. by I'll afternoon results Chris, the quarter and full-year our and details of our everyone.

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

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

revenue prior segment million franchise of the million, XX.X% increase from was period. Our $XX.X in $XX.X an

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

then compared had higher our we quarter year; owned as last rate. First, mentioned, sales average franchisee franchise increased more by a XXX XX.X%; the third, of I and royalty stores second, overall first same-store to

rates last rate first quarter, the agreements. X.X% the at same X.X%, that their amended the royalty average period franchise stores in from year, royalty our up was by driven current more stores including For

the $X.X member fees point-of-sale $X.X as $X.X a for These owned to fees million and dues from transfer sign-ups, franchise fees existing quarter we of franchise the the our is paid Also and franchisee new online agreements. are through as our receive and million prior other system Next, to sales in agreements fees fees from well first which processing were revenue These placement million ago. compared new through received are development revenue was received compared period. within a for $X.X our of equipment us agreements, million stores. to area year in segment placement franchise assembly fee

vendor compared with million openings, $X a are commissions international for from ago. was income, commission store and $X arrangements equipment preferred Our which third-party million commissions new year

year. was Finally, national revenue to $XX.X $XX.X million prior fund compared advertising million of

million $XX fee the four prior was increased $XX.X X% million of driven XX.X% increase increased August, increase we Colorado we revenue segment from million corporate same-store the as annual XXXX store A opened $X.X in stores corporate-owned four Our by revenue. acquired year as well of the and in period. late in stores franchise sales corporate owned in

revenue XX.X% existing $XX $XX by driven Turning ago. by million year new to increase to a the segment, versus replacement increased equipment equipment or stores was and million million, placements $XX sales from franchise store owned a our to higher equipment higher

with advertising during $XX.X sales This since year year. offset ago. compared a as cost as related payroll This sales opened the of Our variable $XX.X offsetting aforementioned quarter. QX eight was our by growing to Franchisee will existing to last million, operation primarily we support acquired NAM was of corporate to to Conference, increase the $XX.X well direct was the associated ago. cost the QX equipment million was lower driven our quarter year. generated $XX.X million $XX.X by for million by driven but of of last relates expense a quarter franchise increase the operations a to to an franchise-owned and $XX.X owned was costs partially National increase which million incremental to higher in SG&A which to compared Store stores was ago, expenses and stores year $XX.X quarter. was fund take year the place associated revenue, amounted are to new the compared The which to stores, XX.X%, and in primarily first expenses, million equipment year with our with increased revenue infrastructure held in million and this the timing compensation. in increase which associated equity of

of to this income for to XX.X% operating the the million quarter in quarter, increased the points Our prior period margins increased approximately year. first operating compared while to XX.X% of $XX.X in basis year income operating million XXX $XX.X

recognition Our GAAP The the effective rate XXXX XX U.S. tax $X.X period. not rate quarter benefit prior of and tax March subject and due the deferred to X that months from XX% deferred is tax of the the XX.X% rate million liabilities primarily effective approximately taxes. assets for attributable re-measurement the was XX.X% ended income for to and to interest state compared tax first a statutory of year federal U.S. deferred the of to from federal non-controlling in

per income XX.X%. $X.XX to Net share $XX.X net share $XX.X attributable or was increase Inc before, Planet year On and attributable first Fitness exclude period. not attributable an XXXX, $XX.X the rate basis, diluted $XX.X stated net ago. the or rate Fitness non-recurring XX.X% per normalized the and income to compared or to of XX.X% $X.XX adjusted million for income quarter that XXXX in compared net diluted million to interest $X.XX diluted GAAP for expenses $XX.X or a was has prior because an million Inc of a income compared we've the first was $XX.X share, a to Fitness corporate basis adjusted Planet in with million respectively. of XXXX On would diluted per period. of share $X.XX As tax year been to quarter, at million XX.X% prior Adjusted the income income million level and the non-controlling year be and approximately net adjusted per income tax Planet appropriate the tax reflects

a in is not year the of performance to same-store an of ongoing net income franchise which provided the and evaluation of higher period. owned received same-store GAAP considered interest adjusted GAAP release. driven XX.X% are royalty $XX.X sales before amortization, to the increased base, rate. certain $XX.X prior reconciliation for to the increase franchisee additional earnings release. XX.X% taxes, from as A in earnings segment, net $XX.X impact from of operating other in non-cash reconciliation stores to as million that Adjusted adjusted defined in income By also can royalties well our and of items as in sales million the today's a increased owned income net EBITDA million, have EBITDA, overall EBITDA XX.X% income included by adjusted not net We depreciation be in average found franchise segment and

$XX.X by Our basis the conference. of associated increased of same-store Corporate-owned acquired to approximately primarily franchise in annual driven XX.X% franchise increase the aforementioned franchisee our the segment points store portion adjusted improvement higher EBITDA EBITDA four and to the by stores X% in margins the increased XX.X% in fees we by XXX driven with reduction segment expenses corporate August. timing million, with the sales,

owned new XX.X% sales versus ago. stores margins basis EBITDA Equipment Our XXX by corporate franchisee driven by placements adjusted approximately million XX.X%. store year existing segment replacement higher EBITDA points segment increased increased to equipment higher to store $XX.X to and equipment a

points, adjusted XX.X%. segment approximately increased by basis Equipment EBITDA XXX to margins Our

to financing $XXX which $XXX securitization, interest a of to on rate business last an XXXX, of date the million board and costs to retired of notes end had million, XXX,XXX that $XXX this due consisting as whole the $X.X XX, with million notes we XXXX, addition excluding million year. September our during year of includes was XXXX year, sheet, share in repurchase remained XX, shares its the April shares and September company XXX.X%. million was approximate share repurchased The during the of agreement second an X.X same XX, retired long-term in cash rate due compared the the X.XXX%. incremental four-year cash in of previously interest of $XXX and million first equivalents This August. QX resulted debt at quarter, last approved increase seven-year was balance XXXX, to fixed XXXX $XXX in which approximately deferred with Total quarter solely million last March of Now completed billion of plan of At March of an of be the of $XXX.X accelerated the disclosed. turning repurchase on of that X.XXX%

XXXX, share grow new approximately per revenue XXX the full-year XX%. With levels, increasing expect Now to approximately year for approximately back diluted digits, high in to still for driven earnings still EBITDA respect profitability, stores. adjusted XX% questions. XX, the net sales the to by sale the income we with and expect same-store to we over the and our growth in increase grow outlook, XXXX single ended adjusted approximately call placement I'll to Operator equipment of December XX%, now approximately turn to XX%,

Operator

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

open. Your line is

Oliver Chen

a Hi. Congrats great on quarter.

You've and ease single-digit comps digit year. had throughout towards several momentum, guiding you're and it a compares high the to comp

Just well. I and guidance are around how was curious thinking how you the Thank you you. and as churn thoughts given about sure making stores optimize are your about what comping, vintage helped older inform the momentum,

Dorvin Lively

gradually to single was about sales This Card We Oliver. the Black pricing penetration, which as increase same-store quarter with in basis, the Thanks, on a impact is high the and we on year-over-year the respect of to Dorvin. as the quarters. guided both then talked end then pricing impact in digits, well will an was think points. past, in XXX talked of as at cycle late more over We've year-end the in basis we decline we pricing year kind continue where to It's about year. impact for the to I terms and up last of think going

in and more on going on to be we're the range significant or kind that past, in you'll points so at changes business the basis probably we've more that basis, way full-year of performance, quarter-by-quarter. our would full-year, a store say what in the today based overall terms in I no know least XXX-XXX-plus the waterfall think wane I talked we to start about operates. of see

to stores it, that say, you they've years. been are, kind four matrix call call If look stores years quarters being in is of waterfall tend just or in -- six at we older, And comp let's for so eight so. the similar, that mature pretty or last to three

I stores stated remember flat range. back three, slightly see of will the I've five you is that a kind or over of of that older ago would year the guys X%-X% you If the kind so historically go retention maybe years probably overall members in you more improved. to publicly in history four, comp think last

of the in has Those stores kind think in I size that three-to-five range. more days. in so, tend and scale the two-to-four, budget these stores marketing two and our kind of operation their then in that XX%-XX%-plus of range and then comp year brand year -- comp be XX% grown. to the range new more second And of

So that's not past. from a much significant of change the

single-digit high So full-year still feel we that comfortable we on a range -- basis. in

Oliver Chen

innovate And the And what should look Chris, to forward and initiatives made you. Thank there, drive the to anything focus also move some your and continued on improvements both to? and thoughts front, are forward things of we the marketing to awareness? just marketing, what mobile in you've front digital on on to continue discipline are the needle you app on as the the continue considering you're opportunities

Chris Rondeau

Sure.

Digital the on up Card we in new marketing. and marketing did Digital Black with Card marketing So, the front come TV Black

on Black focused Card. we've typically solely White some always have creative almost then new Cards. we And So on

stuff Card has Black turned Digital pretty decent which some marketing normal. out test did as front is for we us. So

be drive about Ad We NAF tend compared that up this to -- past about year be million year. $XXX National last have will years as will last $XXX from increased year we which about million, to Fund it year and this

to that as out rolling mentioned app more The we As continues talking keep full marketing June. And this machine, QX rollout that June. will but across marketing far much about from have functionality we app, I and functionality -- it'll be quarter, we how function the we before, in-house then starting -- as more the -- nationwide, used and an it a does the at members, but add system grow. see taking budget current as a but what to content you really that like soft market-by-market, app, it bit slow we zero rollout as won't a different, partnerships It'll really be for the off-the-shelf we're customer it'll look be it it on first, really little see will flexibility be rollout, a by looks you won't but a it than and scale so third-party really forth. is

so this club -- to I to having start and over doing which kind and friend really in day. content, we partnerships of club app give will new features can for the all the I the have guess, talk than we plumbing no neat way of a forward the that out A to value, background a give So the be now in a and couple of the and we that come in really look and add member refer really member for us to in we more flexibility future. be the able be be quite as the and will club to right try partners key in is think frankly, will

feature instantly already right their upgrade a us honestly simply should well could Card come literally guest work could so now the one is as that'll simple White the their be we well to a that there, could could to for be friends member with the a our and that as that would email So of be just out be member task good which opportunity app for pass, membership membership their friend there invite on app. upgrade neat in members easy as the on not that shooting the a the app, and is that thing

Oliver Chen

helpful. you, best very and regards. Thank That's

Chris Rondeau

Oliver. you, Thank

Operator

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

Your line is open.

John Heinbockel

you stronger reasons, get think there you where versus four, own the member and signups business or free and become that think Do to two, actually we've skewed been Summer and marketing the variety of and you will three, less slightly do seasonal in some Teen wondering I'm are your plans. signups happens become historically? guys, first a quarter So, for

Chris Rondeau

because It's we've interesting more have a I you in see, mainstream year two, probably think as that even last what or that even the you'll more -- believe just changed times I think just XX of years, workout, becomes asked I called fitness Year's question, and over, years -- less not as it's and of few action being is Eve July's growth, that New the to as we've and us volumes in be past, a seen really of have more mentioned a see surprised I had last in we member growth. think

So I Year's spike second, think quarter. we've New [indiscernible] as see as Z that we've about of after summers had talked third, millennials And and Gen you less right giant fourth great Eve. the

ahead So a be years I that see is to the you'll it' action. when one-night the about not call there demand think it's it'll there, just in

and outlets over will which picked we -- really I more we've as up tremendous the yes, been the really May all far kick into on haven't call sure, our around not on on XXth. go even May I off have we Teen the media. this if most a As month, kick had off can't big And X,XXX And be that response, already. Summer on XX, mean, Challenge, will that I'm or gotten launch it's lot have as story

will come that and that future even. couldn't be with to I I and help the us So, initiative, in think down years really pleased more at

John Heinbockel

here, out, out more more spend? more you May-June a first calling first year what Summer, is in your the of thought governors be timeframe? may marketing mouth Teens year, what's And get for kind the of of more word or your that, of kind shift you New the How around on the there as do what's got word then spend impetus Hampshire marketing Free but with follow-up to a

Chris Rondeau

last I And how but would in tactics in moved New around we're test New Hampshire say the are presence, going out -- PR Hampshire more Governor's to New we launching then, TV it some additional as in we're that. for the we with with baseline nationwide year. Hampshire, we did

in New for works Hampshire this if can should tactics in longer that how to deal we my year well. goes then term, honestly summer be So additional see all it plan and every

as a So, parents that opportunity, parents in members homes from those out but that in I've the past XXXX kids and up. and I yet it's activated XXXX the kids the come Hampshire, and that's came of great sign the of going to think mentioned weren't New the

the it's not parents. But teens. there if So really in even exposure, great

John Heinbockel

thank you. Okay,

Chris Rondeau

you, thank John. Well,

Operator

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

open. line is Your

Jonathan Komp

revenue difficulty] percent amount the total re-equipment [Technical of as a just the overall? equipment or

Chris Rondeau

you're John, for a think second. on mute again? repeat I you that Hey, there Can

Jonathan Komp

Yes.

about was the give the Sorry equipment you the the you amount did me And that. can replacement hear of revenue that in hopefully quarter.

re-equipment Just for the piece?

Dorvin Lively

be Yes. range I the a gave, basis. did to full-year of shy to and expected was kind of not, on that's but it in the for just that when going we year, we back quarter we said believe it for year XX% XX% for guidance be full-year the we still

Jonathan Komp

so pretty should implies a other I any quarters? mean big of that few shaping that pickup, around Okay, next color the

Dorvin Lively

full-year at as we as revenue sales time the think the quarter well that about percent in tend implied in a total period that of Yes, in it in that it's the basically this call. this count the in clubs. and of look I because also in it's month past, terms talked well new the you more on reiterated Summer less that busy the to equipment

business on to in of summer going some kind basis mean reequip it, the the quarter typically it more a but every months. So do you'll see see we you're percentage I

Jonathan Komp

if on had quarter. more generally color color know maybe the on driving you units, strength second quarter outlook hearing out? for I just new unit very to appetite related what then just what's the first strong the might And Any the you're and and maybe there from color development you had franchisees how any play the and

Dorvin Lively

development sat we Yes, and and work was years teams of that of that back of compare that development cetera. et person a or maybe four business when franchisee real the playing are business I think one today, real our back and go roles you et cetera construction construction with, estate kind franchisees as COOs we estate our usually five ago,

the as we as in have a of some invested groups, teams of private their large then functional areas CFO to still all own quite particularly other real Now really group and and options be equity our groups franchisees They frankly are bigger to COO estate. CMOs well.

then bit that, the critical. when working all on time, big to think running, up into and stores execution and then you to the real next into the etcetera. you one operation that's like you same quarter etcetera, want you And sorry of getting operating shores that your those have one because at terms I cramp and can't - start in one a pretty store execution, don't development know a ear, and the estate open get

years So, last of that, think quite eyeballs so multi see what of teams is a with the assist the times. franchisees, and our seeing being you have we're on of sites teams lot employed groups working our now of sites enlarged frankly, had the teams couple the couple then have sophistication more and to they submitted quality a or they with have I employed, that our with over and that we franchisees we've

that. about good feel we So,

into believe signed. so. on be still it would cadence have our the opened half turned lease, In all month landlord, question that get about to five-six next obviously the loaded, insights we three front the we and typically you And so we months insight that's believe, case. or three-four get it on or quality it talked over you today, time once We more box. lead terms it the based it's of from depending get about the months start negotiating Typically when the turnover, it's a the a

or the in the year the So, for late QX loaded into consistent first the loaded similar a and QX half we'll the normally year past, said then of we more in that where activity. as to half guidance which we July August, have reiterated is year. just last X part balance lot insights But, our because more of with be direction we've place we'll we'd activity than release of this that we done the front were but very back takes

Jonathan Komp

know at I the you that could any last and you on a year iterated? ups, Thanks. quarterly, plan does don't target confidence your member guide color I that versus Okay, hoe sneak one you quarter, in. if comps but performed the great. your And when it in all change look first just it sign and full at

Dorvin Lively

thanks John. Yes,

comments of and my from were we bottom comment I'd our drive line the previous consistent equipment Just -- will, the that placement revenue say of quarter. terms top if with can to timing plan sales, equipment of a changes, pretty you back I'd how both couple make. to line of quarter and in

plan on on bottom as came in we line top pretty the as cost. line So, and well much

the And so, us, gives put us that we in back to out our confidence then -- year gave then February. full that guidance reiterate

Jonathan Komp

you. thank Okay,

Dorvin Lively

John. Thanks,

Chris Rondeau

John. Thanks,

Operator

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

line open. Your is

Unidentified Analyst

different We for is just between members? Andrew than this is And were be White your Black on stepping there Card there, reason is Dave. why the curios, Hi, churn other? one a how the higher Card and would

Dorvin Lively

Black back our Card in between Andrew of White same years history. the and and Card going always been basically it's It's

So, no the between significant difference two.

Unidentified Analyst

helpful. point And that off extent be? current any that's then have churned you just time? have members any in of up, at a follow your what might And to what percentage Great, do

Dorvin Lively

Yes.

So, who we've model and about after. how we business think about we're our talked going

below back you So, the after the of after have forth we're gym a U.S. join lives. of -- frankly, competitors. XX% and never the in -- their fitness, And a just to the that members And the in statistics, trade lot of about before been between competition population close of to go a member the try industry to also gym fact, the XX% our and our masses we to go organization. and know probably only a introducing XX% whereas really the in as

penetration as haven't the and member in to continue never quite either within XX% we're were of and been closer have open we or markets, of more some they So, stores college. have are in closer maybe frankly since those that worked a people gym a to getting and out

it's that lot a that throwing to and And A all non-intimidating what into and to and brand so, at our people about. brand's lot the our funnel is them introduce of don't look give want just environment try. particularly to a work. and have hard of really we factor fitness before been huge understand never for intimidation a that just people people hard, And they is it element member out working a is that the

it. not some stick going with to So, are people

has a we member last what it's X.X% the we etcetera, lifer. bit months pretty over a with been month Planet after join now range consistency a club, very turn of us [indiscernible] So, a some after what been X.X% them them so, to cancellation after and then we little for we've try the of The that in or XX is, per member do so. for look it's happens what being years into we've is that happens consistent rate And but them a and while months? had couple believe and XX to joined that? to And got

Unidentified Analyst

that's my for questions. taking Thanks Great, helpful.

Chris Rondeau

Yes, welcome.

Dorvin Lively

Thanks, Andrew.

Operator

from next America. Rosic the question of line Bank Your comes from of Jag

Your line is open.

Jag Rosic

afternoon. for my Hello, question. Thanks good taking

Chris Rondeau

Hi, Jag.

Jag Rosic

about you And made a some bit little other the pursue with with do you Hi. retailers? then, Can stood about Halls? you retailer other more that versus, new Halls to partnerships see initiative out others? talk maybe, term other opportunities What that longer choose

Chris Rondeau

quite done some were calls [indiscernible] done the we've had past as well in a downsizing. retailers. other Yes, they few Even as when different

right-sizing initiatives out. I think theirs their proactive have portfolio at so they and of some been with more reached next should they their to had looking

how that's conversation So, started. the

open So, size retailers it doors right think, future, in I decide the definitely, their with will more, as boxes. up to

interesting getting a to real us. at just into also working employees which work a in They and their think, is turned than is, discount their much want I we're get initiative [indiscernible] a -- fact bigger from it's for customers which week discounts, we're their thing other in going and get marketing great members for strictly on a discounts they partnership that our much The shopping bigger, reward be it and to our stores members -- estate get together is stores.

the and I well. it's think a into turn as things will future it more in partnership So, great

Jag Rosic

the increased do up just then, Card going longer how you keeps of And increases? ago. how term? have power had pricing, pricing potentially your additional they that think about even how pricing, you terms pricing there? in then, Black Great. though have increasing to you similar Black two more the see Do Card competitors have Black years penetration The responded pricing Card And

Chris Rondeau

say I'd we used Card. be 'XX. we point perk to is XX.XX October us interesting the the that to originally reciprocity XX.XX which that on but, happens followed pricing that of did And strictly decade which ago, of And the stores. it the Yes, was based they've had most started Black because seems of a increase that price XXX we back from

Here changed we started be -- we and we X,XXX, probably had may X,XXX.

more we're even So, we're if at we've about you look XX% basis been tested. today at after today --

that perk more inside So, that of alone the reciprocity on Well, data that, consumer every pricing I or drive the think, but where to in there something of Outside years, of for we mentioned, are usage we does their for had around better where piece, demand. up alone, app something is the looking revisit like beg alone, when what looking whatever, lot areas, there based value we testing this I light could of of is or Or, talked couple years driving question, ways it. app for more it is, example. that we're from put there spa and some on more massage drive functionality bed much that how did just think we members. different earlier, with some studies would is cardio, and members the reciprocity we like of elasticity the reciprocity a Card year, the Black red and is should more constantly three the based a could we a topic collect

out, their how their their on year. last have the their it their app speed, to by So time pace, calories on last burnt mileage, front week and they they or their compares way hit the

be perk Black look could workouts that their could their So, that forward. that able they a going to data? and They at card get, be tick

we the again Card members to or other both. drive believe at it drive make constantly a price park, to I could which Black or ways more So, look acquisition to value

So it's we're that something on. definitely focused very

Jag Rosic

you. Thank Great.

Operator

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

is Your open. line

Unidentified Analyst

sign afterward? Thank Thanks up Friedner [ph] Bobby wanted last your it becoming a It's brand. on have members Teen my opening afternoon. actually up to you and on a signed year, have follow-up at for for program, of of Peter. or of for up who you. program I compelling great introduced the when good question. Do they're very to related Genzymes booking Hi, taking number that teams what the Summer seems this target ended parents for teams, percent year full and teams just

Chris Rondeau

Hampshire with difference Hampshire could that Yes. of can extrapolate XX New do much XXXX - volume. the less. the density New was We that some there about they and I only weren't We of nationwide. so guess teams is stores,

numbers that opened the hoping XX,XXX I'm much on have if today. extrapolate those So for a on you better turn we look stores

learned of for teenagers, sort both after a their and On from email have the as already join build now year that even the market screen it for parents to parent more, opportunities of the we lot big addresses focused we're more on well get getting a so for joined had that some addresses, us I guess, the we lot we've this But right the the program. themselves, ending parent.

more move be much creative year the of with we'll going we forward on those think forward. I So how capture this

Unidentified Analyst

right, All the thanks for detail.

Chris Rondeau

Yes, thank you.

Operator

from Brandon Your JPMorgan. the Sonnemaker from next line comes of question

line Your open. is

Brandon Sonnemaker

Yes, This John. thanks, is Brandon guys. on for

tested target experience I company different gym the square XX,XXX XXXX you thinks the X,XXX think their typical unit in U.S.? was size believe boxes, changing way foot less that I than Could gym square about the versus potential that with the and discuss feet recently. our

Chris Rondeau

was us. actually it Texas, for Yes, one we did opened it example, was, very in for just successful of

you Although customer where be It's experience, variety nice in selection and the probably get right really to lockers XX be to expiry do is should is that customer is be experience. the so we even believe a Black XX,XXX more franchisee foot you it point is enough could believes the square the that largely a the equipment in have is, is but real should -- Card of should be. really nice range

in small a there more market of how quite still XX,XXX we're think market, is the concern. a in for that better small of we density those XX,XXX as example club really is number. markets the that, and market which really small that, small, we a number. So been one like that's is - far validating a in is was in I a in is the how that And is can as X,XXX go But is typically had population that really when future, it to that

is there potential the what be investigating that still upside. although would So

Brandon Sonnemaker

if circle question. back I the pricing on then And could just

potentially is the deal about that, and when consider increase timeline timeline around think that mid like? reach the at look could additional you past you're you XXXX thinking price that, what what it right increase, you've talked I call still price XXXX stores

Chris Rondeau

really to also as people the get curious think get through want still that don't we a more it's I 'XXs and really found do all we I door we of memberships walk and XX% lower in to drives bucks coast we was the why really want as Yes, though think our life, gym we great the they of and and have and even mean volume testing, pay I XX% a that of Black tenant people walk skis high the XX.XX. up $XX I'd more penetration, for over get thinking both in acquisition on membership which don't and their is can do can really the much Card, the and that's XX you governance demand keep that the point is lot we to with example, be what

it's I question. think between there, get carefully get but it's dollar think of spread too for have XX, I the don't to much of it a that have think kind don't you think if to, we of and have look I a XX of too much spread I out conversion, I call the think we that

really today, constantly but concrete look nothing So something at. it's we're

Brandon Sonnemaker

guys. thanks Great,

Chris Rondeau

Yes, thank you.

Operator

Berenberg. Matthews Your comes from line of Brennan last question from

Your open. line is

Brennan Matthews

any Mexico, taking about? countries and expectation there wanted to location just opening other stores any how I a or maybe thinking that our just performed interest more I on you've for year and question. thank had relative my some you to maybe update you is your think a ask Hi, mean, now. for about I there over gotten

Chris Rondeau

side rail Yes, do this we're different later by over see in Sure. and like amount works year in here one X and everywhere demographic looking areas, to income had that's middle we Monterrey, it like we're opened what States. the if does now there testing X the of in it store a or area city another the

the have other. clubs diverse clubs New have in in here it in Oakland, its' compared markets California And we to very in Manhattan. so and We works very -- Hampshire

determine once everywhere say we about one we Mexico, Panama, But game So, did the allow members, open unlike crazy not those will to a the if to opened not begin full the real with we we'll opened on as but open work X,XXX have past weren't just that from before will then one, club would then to have -- of which day perform rollout, market on two, great size strong year size in get to States a potential club it you quicker plan day well. later XX from in just three Mexico and we there. with XXXXs in this

us. static the for well markets So done have very

on off focus that any really and ground focused Mexico, really now, before we the for but running So, countries. get on big other

Brennan Matthews

you thank much. Okay, so

Operator

questions the Chris There are Rondeau, call Mr I over turn no back further this at time. to you.

Chris Rondeau

quarter a year last had opening, and top a we today. joined us openings you. who Dorvin, Me on XXX. Thank everybody Thanks record us and for great great of quarter record another first

really look that you. later to forward evening. our XXX same-store this good exciting a openings Thank on reporting summer. look Have I challenges this So some -- forward sales seeing year and strong forward and

Operator

conference concludes today's call. This

now may disconnect. You

Planet Fitness (PLNT) 2 May 192019 Q1 Earnings call transcript