PLNT - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Planet Fitness Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Brendon Frey, from ICR. Thank you. ahead. go Please

Brendon Frey

Tom joining quarter for are to Planet President; discuss Rondeau, Officer. Thank XXXX us earnings fourth and Lively, Dorvin quarter Executive call Chief results. Fitness' Financial Chief you Officer; today Fitzgerald, On Chris today’s

remarks, Tom’s These and Fitness' today of actual to up may judgment Fitness' this and like forward-looking of analysis will open based place you presentation make forward-looking number in as that Planet certain from statements. are Following for prepared the I statements. questions. materially statements a Chris reflect business. not expectations these factors results current we reliance should and will only differ Planet forward-looking would on remind undue Accordingly, on call statements you we affecting

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

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

Chris Rondeau

Planet extremely call. continue and I'm fitness challenges strong of our franchisees at the the disproportionately our ongoing through has headquarter and nearly Fitness franchisees, combined health, fitness of Fitness to a co-staff you, over members by changing on. built environment safety two year for industry more our with with COVID-XX in a and with together face thank decisions Planet everyone experience head in risk a a clean safe earnings rally the decades, strong created continues staff certainly and and foundation provide physical agile we've Fitness be ever proud pandemic best our to interests forefront wake to our our health, for before joining how important XXXX unprecedented for this component members. today Brendon, you, for the us those Thank been business, is an of than factors. now key with health ever that is which impacts related of and mental QX

of are fluid, well as restrictions wide XX% remain of remains of the today, in California, are The parts place, in and our reopening on open. as Panama. stores that environment While our operating state stores pleased Canada with majority we closed are of as vast

members app, our and soon, safety and be system safely. include and believe robust the we the We open Planet in mask as allows that measures. enhanced the put We will sanitization, are our committed to and protocols physical app, that check-in, Fitness crowd remain entire COVID-XX distancing to screening staff mandatory in the all These questions in meter touchless cleaning via wellness operate requirements stores. keeping our mobile safe place healthy hopeful we us

largely on Our members ability our and operate our health successfully stores to service of our relies financial system. the

permanently franchisee model franchisees, bankruptcies. and closed and had Given due business we the our have zero to of strength stores historical COVID, zero

on drive XX-month invest sheets, membership we one marketing in relative on franchisees their priority. our storm to in have while is well continuing commitments. While form to XX-month of replacements which weathered franchisees rebuild allow balance equipment growth, will number this extension all relief industry, a We overall to extension with we to in believe their requirements, development provided the gym the the have

we people call in QX motivated stores and up stores keep slow in result positive November, right our total efforts after mid-March closed. and our in the temporary the national when people's our robust to in billing. environment pent as keep national experienced in Consumers As pausing reviewed negatively has impacted The to have to reopened safe. reinforcing place we health, and place promotions decline helps we've acquisition physical resumed message mental members to protocols our of we September This on cancellations marketing essential. fitness is in pandemic them responded in after sales our discussed that a

on per XXXX challenge our to cancellations XXXX biggest basis. back were on to due year, as essentially the Looking a store levels cancellations flat COVID, in wasn't increased

the we very spring certain as last including first Our sales key lack the ever, national our marketing and joins challenge was periods paused summer. time early of acquisition signup gross for new

results, for slower On the approximately a to ended a in pleased members promotions. successful in flat Eve industry. terms of the we sales members Building Year's with we off usual and national in kicked sponsorship, of the momentum million addition with the two sale especially heels compared end holiday XX.X successful signups of the of in November, given million our New XXXX time XXXX at XXXX. We the the national January XX.X conducted with December, to season October December. from Overall, are our more with in we sale

were is month belief that to bricks we for pandemic. net December, recent to first our the representing and respond circumstances, million ended members, favorably first results. uptick before The casual and were proposition. return and gym in fitness. million our with industry mortar reinforces what members very We under approximately time these want of key of period with people up this XX.X up the end XX.X membership encouraging from overall audience January to We continue sign value to target to pleased unsure number growth and the at of of Our messaging goers expect our

were overall Planet members. to-date our COVID have who prior COVID In have Fitness and already since of X% XX% fact, members during cancelled rejoined, joined

our back into driving addition we to members In our with efforts further to wherever with engage sell their overall our enhance are, continue and to brand. numbers they stores, digital our experience

top of free Android, member XX% the for for that trusted app the continues our of a In source Currently, and has currently joins to total new adopted app, health climb fact, reinforcing and in adoption Planet remains category ranked Fitness' Apple wellness. and Planet fitness app both base Fitness and mobile one apps is the XX%. health reaching rate

which content virtual our value in gym. April, to provide the iFit app we we are addition, These workouts workouts to to continue like in Building new to partnership most check with app. the In meter, of capacity the today. members with crowd before add the mobile continue the coming our features enables upon some content fitness streaming popular and to

subscription We also the membership XXX mobile remain continue per encouraged by digital via month our to we're test only app, trends seeing. we PF Plus,

And PF in For XX% non- become addition members. example, testing results subscribers Planet subscription. more that far PF Fitness of Plus Plus than of so are mortar since them than have to have XX% their more shown members and bricks

other nearly to XX% them who have members have PF subscribing work Additionally, visited of subscribed, to their out Plus. store since

are. view for a subscribers Plus traditional members mortar wherever a further their and as not These offering provides engaged membership engage bricks can reinforce to digital that membership, gateway to So our a a and to prospects as with still mortar are replacement a and membership. standalone compliment they and the and an us CPF it, serve trends opportunity majority of bricks with

will and to plans broader up the feedback content, inform to assess We road. continue engagement roll usability down

industry quality of club truly a While fitness experience, at that can pandemic, high the coupled consumers’ is digital about powerful fitness that The fitness providing the clicks. home. and in-person experience I has digital the with believe combination adoption complimentary of in experience future accelerated the bricks with brand given consumers the of

digital grow our powerful the first COVID-XX I'm next the gym membership near-term capabilities us, expectations, engagement I'll and faced time behind the am has well the business XXXX, Fitness our association industries while new as U.S. storm. to studios prior to positioning strategy, line permanently how our a confident with expand machines of Thank mortar business to very pandemic. industry includes volatile. predicted these to we the is our environment consolidation real years the accelerated to and the emerge position gyms brand. in accessible our have our Tom. of we’ve several is for of is conditions well-positioned estate about optimistic will demand several to We the time anticipate start to in believe most offering. at But that Longer-term strengthened whichever outbreak. the turn we opened on everything moat I leadership utilizing more non-intimidating want evolving Once and at COVID-XX widened the serve same to Given we will call that XX% trade remain our with footprint, growth and XXXX, you. stores closed was Planet around for the prior they result our to the engage increase physical weathered Fitness however, resume URSA, has This the the over casual enhance operating than trajectory, XXX about technological growth pleased fitness for terrible with marketing prospects bricks pandemic. to during are the capitalizing system on way and were our digital reasons. we recent our We pandemic over us goer, has

Tom Fitzgerald

XXX We everyone. XX stores resulted total QX, year during last compares in to which being a afternoon, year, Thanks, Chris, our us record with QX year opened This opened. and full XXXX XXX to good bringing XXX. for stores new in

last as several a on said, equipment national our requirements efforts, an provided acquisition and XX-month Our reminder, reopening quarters new extension we as their Chris in on stores, restarting primary been replacement did And has September. the over extension commitments. which XX-month focus all marketing franchisees we development a store our

memberships members XX.X as XXXX. the QX, acquisition of closed. with decline and at million X.X while majority stores members, joins end of of was QX. December million March between million compares from of at This or development the total dynamics, ended year. year-over-year was For the compared million revenue the $XX.X which temporary store membership million decline, million and lower million fourth impact due QX down to $XX.X remainder of We attributable COVID-XX mentioned. or levels. million total to $XXX.X the the the were temporarily primarily of gross from revenue lower million to primarily XX.X end in end was function national million at equipment to September, $XXX.X last and in to in a the I XX.X equipment was we and XX% where XX.X QX, the our ended just replacement closures the approximately efforts we due The paused was down new lower result of The revenue, the $XX.X Of marketing quarter, XX.X%, change

cancels XXXX. In of fact, was XXXX the average consistent number with store per in

the same in our membership sales decline all and in pandemic further we starting the closure stores, forced declined quarter in With net store the turned in system-wide third negative of the experienced temporary QX. of when March

some hit in growth Now store over we same-store system-wide COVID was XX This by context, of XX for the in sales primarily store QX, March sales those and store quarters XX.X%, average the our once sales the of negative all of consecutive same by before system-wide impact simple resumed pandemic. QX, of we metric stores. and reporting quarters growth positive driven followed same our down growth reported quarterly system-wide shut

month-over-month, levels the across Our membership and grow depend and results our sales year-over-year. quarter-over-quarter on continually store historically same ability model net base, strong store to

our Additionally, the function to performance of sales time our point what model, membership a store XX-months. our in is revenue happened over any trailing at levels in recurring same

in XX.X%, XXXX. basis national Black and increase we in of XX.X% the same Black down with the corporate-owned sales decline to For Card system-wide attributable offset were had to not declined same down to rate. a XX decrease levels, Card the an slightly system-wide XXXX, membership down having in any was by sales The store decline store XX.X% with average sales XX.X% cumulative XX.X%. year-over-year effect due quarter penetration before fourth points in in franchise largely versus

The with XXXX clear, past, never multiple in our member $XX modest Black of quarter. have national the QX the the in versus frozen of increased numbers, for QX November incorrectly fields points we prior member was the Card Card third of QX but impact did percentage. EFT is XXX penetration balance back sales basis not up corrected versus see shift a factoring disclosed is XX material a increase a rate erroneously the period. points Black of calculated in The Black XXXX which down value QX, we To XX impact skew frozen XXXX system basis XXXX. it members of in Card EFT versus down perceived the detect, And in Additionally, penetration Black Card. in the basis XX.X%, fundamental one compared we Black understated of the in QX XX.X%, was QX we metric penetration in points when the out year be QX of Card joins. was had enough to and count monthly a formula to not that error was our in began that

in than the our change prolonged the $XX choose our promotional the in even more the option, Black twice fee with fact membership the cadence pandemic, marketing. Given Black year pleased that Card prior majority we the we the though Card are new versus advertise is of and it predominantly members

quarter-to-quarter We the same store exceeds not QX, the growth in year report base Therefore, in improvement further the QX of membership significant most levels declines, prior membership growth we prior QX of store depending quarter-to-quarter same compared will same that during the the in member store Looking for expect period. see our prior our to our will sales we cycle once would developments. closed recurring sales ahead, the the with year majority improve comp COVID-related works, model store stores a to XXXX, Note, sales QX. same growth decline year's revenue we our during being when on period. way metric due to expect in

was million down million revenue $X.X segment the Moving franchise compared year to $XX.X prior revenue the segment a results, review in million or X.X%, period. of $XX.X on our to

Now the components. down let me break

to compared in the which $XX.X $XX.X revenue quarter of on revenue, royalty attributable First $X.X monthly includes membership to and consists membership of last million their was the fourth was store fees annual drafted with normal up annual year. royalties same million stores year. the dues, to million $XX.X million of fees catch quarter, consistent X.X%, last on due average for were the that schedule billing of membership The not billed closures. COVID-related rate for royalty period same that The

a ago. was assembly franchisee equipment to the quarter $X.X million The fees U.S. These our Also, ago. in FA discuss franchise for fewer agreements, agreements the compared the to revenues. year our Next fourth placement placements franchise the the million during later I revenue, area online Canada. was in driven signups, reequipped quarter sales stores are compared the the reflects new and for received discuss of transfer period. received fees compared The primarily revenue number development of These when ADA segment are existing million were new decrease placement from in of of the paid fees $X.X store stores. prior executed decrease $X.X equipment our and $X.X fees million other equipment within a lower new and with member us year and quarter. to the placements I'll franchise and and year we to recognition by within is which fees e-own

$XX.X as revenue $XX.X our million advertising was rate franchisees year. XXXX. driven effect increase national from start a increase, compared last X.XX% in The higher and contribution of of end to fund the was million net a the of that temporary through year-over-year September was by Finally, rate approved

store was XXXX. decrease QX, $XX.X fees year Our prior XX levels, beginning and that in December corporate-owned the partially compared nine closures XXXX, stores opened with temporary by The period. from were $XX.X from $X.X and store membership due stores was revenue in of segment membership lower million since new offset million acquired the of revenue million lower that to COVID-related

offer QX $XX.X million versus I revenue equipment sales in in to $X.X both XX.X% earlier last the lower million. decreased along equipment or $XX.X to with decrease Replacement quarter, offer In was had period. year. to call, the by which beginning additional development the down launched in replacements, compared from million The XX million we stores. all applied store that all new was and the driver orders. of $XX.X store we from year replacement XX% driven XXXX. by placed store year purchased decline new of equipment discount franchisee-owned equipment to QX to sales Turning the equipment new reduced our last support was fourth openings equipment QX end our existing to $XX.X million and orders This the prior the segment, in XX on An replacement mentioned were

ongoing beginning lower amounted to associated with operation sales driven primarily National revenue, to discussed. new the similar nine $XX.X the to with period. to segment stores, portion prior increased to to by a increase the QX higher of our that by a Our $XX.X which higher ago. The compared revenue cost of $XX compared were offset and marketing The equipment franchisee existing in December amortization, adjusted December a October associated driven certain fourth release. was as summarize expense segment. from $XX.X million EBITDA are I EBITDA million equipment compensation quarter by for million advertising recognized million depreciation the for Store million decrease interest, EBITDA expense. million income EBITDA, of in travel and down of defined $X.X to equipment the stores is $XX.X incremental million, occupancy investment $XX.X period. The direct $XX.X impact million we made $X.XX, year expense I'll since of reflects was which be stores was found in new in million XXXX, expenses the prior $XX.X compared XX.X% in to $X.X was $XX.X per million, share the fund net $XX.X year Franchise XXXX. owned diluted adjusted from EBITDA or to year was A million the and national income stores was Corporate adjusted And relates higher items share quarter. $XX.X open year million and ago. year SG&A income rent year which that compared XX.X%. XX.X%. of Adjusted adjusted income advertising was net ago. GAAP, QX million, and million $XX.X previously acquired taxes, the million the through diluted the of cost before reconciliation the of or performance per or partially net operating adjusted in compared not expenses, ago by period. decrease down XX million and XX.X%. $X.X was that million considered expense, the $XX.X decrease, EBITDA was corporate-owned primarily primarily can are adjusted A down in $XX.X earnings and store other evaluation loss of non-cash to was or now adjusted $XX.X million down net was in Adjusted $X.XX to

Now, sheet. balance turn the let me to

in As total equivalents and of XXXX, compared we cash September $XXX.X with to million $XXX.X December cash, million million, $XXX.X XX, on cash had XXXX. of XX,

growth be chances we and related long-term opportunities addition, XXXX but to $XX.X excluding able took of December securitized the of measures funding of QX. financing weather at three compared XX, position XXXX, ended cash to million and of $XX.X allow aggressive some invest billion We consisting continued our variable in the with restricted appropriate. of uncertainty liquidity, where should as to COVID, deferred notes. $X.X In XXXX, end debt our end million our at cash debt bolster Total us was to also the costs in to $XX.X of quarter pleased million which of with are

a X, a tested service XX-month In are system-wide two a is Both reported two trailing first period roughly calculated we sufficient the covenants. we recent Our covenant of and XX% these a our believe debt our XX% threshold. for debt debt on two for we and structure triggering quarterly, cushion a and ratio total have lag. event most coverage sales basis months securitized covenant, and maintenance on covenants, maintenance headroom sales covenant reporting light, have of our XXXX, coverage had our respectively. ratio, debt a December We system-wide to service

pandemic, to the current we refraining for While guidance thoughts nature do XXXX. to the providing on uncertainty from evolving are want due surrounding of we share the development

of trends that store the opening is number we takes announced is openings extension months be scale pandemic, combined expect few large will of XX-month temporary more on the As are cautiously we COVID. There a With due to a closures, update we certainty vast still Near-term in not franchisees consolidation to schedules once signed, last to ADA that industry conditions of gym fact the stores it development progresses. real normalized, open leases that that to majority of in currently May, is year capitalize development XXXX. XXXX. six signed, on store the stores starting to franchisees this open XXXX, XX proceeding requirements. be will Based development. we view estate are is the all further to likely will there XXX more Until which our leases the COVID-related in are lease outbreak to Once emerge. new very so with situation and the provided current view to on with signed prior range as a the for required fluid XXX on the and favorable between there their the very franchisees nine

We modest will it's back a believe have XXX to regarding year heard will year think plus store if. development we the experienced just new last be While few openings what this vaccines, question years based when, we we not new of pre-COVID. that on per for get we

our I'll the to for to that turn strong to we near-term believe well-positioned pre-pandemic as now out the comes the will to margins believe call better industry eventually will While back questions. the towards the operator returns similar future the are many that on and the of mid model on opportunities, compared the is the compared rest value the financially And emerge difficult the and new pandemic. to as to strategically navigates we over collectively be post-pandemic the creating of the producers. country and country to as capitalize relates the long-term investment we normal, levels, believe possibly it the predict, we

Operator

[Operator Instructions] from Your first Cowen. question comes from Oliver Chen

Oliver Chen

you thank very much. Hi,

forward for membership decisions see member are new Regarding happening marketing in QX. around QX, dynamics compares that may still And member fairly the your how adds. are -- your also Black investments? should the how in I ahead on go as that impact just changes modeling how Card view think take Black love would Thank interplay and with look Card forward? tough new The we of year-over-year, What terms you. with may about you we adds?

Chris Rondeau

Sure. see is call, anticipated as January, Chris. Thanks, I talked here in mentioned I This the Oliver. on Yes, as decrease member you and a here, the which in QX, we we in as saw. about in QX base slowdown

continuing in X.X net you the see well. like as had January a here seeing in QX. starting cancels, then negative will hitting that it it in XXX,XXX now February and mentioned some XXX,XXX and we here traffic turnaround growth members added first we're And So I was as to net if million against in negative QX seems

this months, here so. marketing help a the would days similar we too see, But as we fall depending yet see the the here on what efforts, in is few typically should for sale the QX it set question, plan we out think summer local of rest to the break to But, there. because less it, is naturally, we that year. we're bolster the advertising budget as for see today. we'd news feeling big map turning does like and good for see just demand no set good see fund did to January. I normally to add we next in -- the The question the anxious fact is in more strong we what we the as think vaccine to Oliver some here it call January the distributed in corners dollars finally do But marketing is, So, is sign. And normally Pretty would begin broadly year a wasn't are do extra than the do as plan people from there. the

focused if growth dollars Hopefully, So, that probably member of seeing maybe But would us just to see turnaround. month-to-month. sequential extra feel we more to laser definitely beginning make work here confident, really trend. that that on the now start we're we're is this putting right

actually, a far Card XXXX, we no as quarter you fourth not Black As have. we Black And percentage, of December had did then Card which Card the sale said had Black sales. we in

of in Black stall the the it they regular sales, month Card, a decrease well acquisition as were just growth sales, a some is We the of Black month. at because an during periods. of coming So the because of compressed Black lack $XX average as in $XX Card of increase Card some those

we more But for Well, than sure. quarter had in well. didn't Card. we of fourth that seeing so White as sale days So, kind any we're Card Black cancel not help had, the typically increase in rate that's of

some good that's news. So

Oliver Chen

Okay.

insights just And if it's different to I’d love any you've ramps, on Thank regards. if there? very trends, any about you much. by how know there noticing usage. are base? and trending Chris been with Best gym take the what vaccination your different usage of around different Finally, relevant been vintages usage having on states thoughts that's

Chris Rondeau

the year's decrease first in workouts, typically Oliver. club lot of impacted when they year's which it January is last use a But by a December of about which end joins, usage, up us. that The the Thanks, is we QX. I Yes, XX% more of usage join was ended Sure. new the see so last XX% here workouts. about in mostly think decline did from with at mid about QX, XXs the

volume of going some. we that on really see usage yes, in more really But, we joined fourth So the in goes. didn't see an quarter just the go to it new continue time just impact and a was what's as world a down never back so up that is came did was

they are that normal usage stores stores opened call couple in first opened is lot picking of the aspects. about And a up, the We've is I but up, stores longest. like in longer that anything more those out has seen the last the year's XX% The that vintage vaccination-related the act, been can quarters haven't We which that of north talked the here. last May are workouts. accomplishing the almost all open, cohort

more they're the act. the to longer normal So, they open

Oliver Chen

Thank you very much.

Chris Rondeau

Thank you.

Operator

Your from next question comes from Jonathan Baird. Komp

Jonathan Komp

Yes. look one December, when trends in, member at was Hi, XXX,XXX. like thank the think you. going down you October back I question just Maybe and had previously November said you

more few November, So, December. it implies a cancellations in

there's just you're to forward within you if signups any So the there's vaccine forward, And once going and out? -- about if any from demographics seeing, thoughts when that those anything months. ask unique then, curious look you the wanted that to rolls observations the

Chris Rondeau

The involuntary QX it then like of Jon, report a I not was time. the is attributed XXX,XXX, October or we the we six involuntary been yes, big keep account anything But from cancellations think cancel we're cancels and or months, the was that. number right, in one to you're member would the saw where just months, the give trying a account. because was have for reported like like call wasn't to report, cancels meaning No bank outs that states go billing last we thing through breakouts increase check-in a like when somebody's we it doesn't little going increase, big cancels, over different in October what

May, summer the began process. So of because we to that openings, time circle

because in So clean to those had up. then, December, we

that was that there. really one that thing the only causes So,

wouldn't with reason but months, of as that extended could more I vaccine, it from ages all summer like becomes because on think it I distributed, better normal will and people getting that are fall, more I typically from of life. broadly the time see or with getting said, all now I that, are I the our mean, trends perspective think, For to people hopefully, just tell, a feel in joining we we

which said already. all organizations of And trade that, about So, And that industry the time will tell. is also, has my if capitalize more XX% earlier, said the remarks opening will could like determining dollars that closed done. close, capitalize mentioned industry, about as I think gyms the to reported saying I the more they XX% in The factor, I more and roughly have put and to think on marketing also permanently we closures. gym work probably on

X% coming So, they're gym gym coming we're they're closed they're and new that of permanently, joins our old to reporting seeing about are us. a now from right that

the So of the consolidation. to see -- the we're starting reap benefits just barely gym

Jonathan Komp

forward follow-up great. that member about the looking then really Any here, And how And overall morale, thoughts growth to the progressing? we our return think side? role reacceleration and then just with about midst on one franchisees on development net plays much of start unit in comments. to on should think the just development the Okay, that year how the then

Dorvin Lively

it's Jon, Dorvin.

lot One in this construction. of things, a as we pipeline, stores at stages had various think stores into was, we and pandemic closing, going point when I talked of and of were still the and about we the the

franchisees including lot kind and and in with by to concerns a anticipation half then large, the that some opening are they of year. of out that back the up out getting all ended the on around period lot doing we see pipeline. in good putting the new towards of into the the in of stores of XXXX, of towards when are join projects potential filtered a reclosure gym. where, But attractive things, that so, had And waiting kind XXXX, they're wanting real our is getting there deals more to we and of And to weren't XXX vaccine very most a a the of that get end or and of There's, deals. of doing of were a the and point the the that summertime closed, kind handful franchisees out more markets when estate of and just of a the normal where might now lot population sites

it, from process. pre-pandemic, of period and development, a things, pipeline about of longer end quite kinds you negotiating the beginning than tradesmen to of and month taking frankly, you deal way that and six looking they now nine to By fewer skills, a name for municipalities lot the that permitting a et and cetera. those to towns just real for estate did So, time from all permitting, people start

our calls. It's where at Obviously, a the Tom of comments made there's year, how stores for we So do the 'XX. it we or say, lot stand the balance and I of now we quarterly is to the over updates, moment. XX between, we'll as see and provide kind think XXX of months that go somewhere certainly

severe that see which start believed people impact question obviously then, competition your their part in I to the feeling to we've that joining think, just think we maybe more the lives, more if tying of Chris' had. comment, and that, comfortable the more people a I into going because on we was extent has is more had and of what's also and gyms everyday that

those will and allow certainly done are bit are of there. that quite now really I a to real estate franchisees up pipeline, filling but the kinds start the are the attractive there's out deals very all of being think that the things of that

gives a a not lot us and not, just it's it's it confidence So of of when matter yet.

Operator

from comes from question William next Your Zackfia Blair. Sharon

Sharon Zackfia

in broader that what like look to really actually the PF anticipate kind share between a the I'd to towards franchisees? afternoon. it's in about of breakout good are, And talk really as Plus yourselves test, you revenue rollout? and still at Hi, you would your there then understanding [indiscernible] factors how gating

Chris Rondeau

how This we're but there, doing? just Sharon, subscription numbers there. Chris. what any trends yet, is releasing without is you some question are seeing that Yes, Sure.

about the bricks and maybe actually two, we're a for about in subscriptions the even the three, my which we’ve our And Card. non-Planet sign, Black Also, content Black the Card, those that today of else, opening a mortar. for XX% same subscription trend when on the bundle the have great Card gateway passes a many that, requisition seen and PF all the more pay we talked of for talked think, Plus Plus something price after to wrapped from there As I members. seeing Fitness to is are mentioned, that to in PF keep us, members I join especially about bricks in situation and saw XX% are for PF gone which and we of a about is the for sign the remarks, we've get more a often actually current we Black years, XXX, and bit XX% little mortar, is as and about of Plus those great free about members, their consumption four

piece around it. So learnings just a lot of math of

taking As consuming and out far what's who around PF as most, it. are driving more to the broader push like most, marketing just and traders people figure really the are content Plus, the a they what what we're the time taking consumption, really to really this people

So and we market who what's the market. know the to,

the So but it, real release we're that time as to continue it, stuff in we the more learning going trends real time. on with app with content like seeing and the evolve

Sharon Zackfia

guess January one you don't given guys question I before. recall, as I been number here. follow-up have

I of adds So mean, appreciate what said come in having first so. January? doing I But that, you're percent quarter typical

Chris Rondeau

-- do in of About I it generates the January. usually a believe are We part it. adds of actually of the XX% annual month big

the -- the per quarters, have a low-single-digits in usually following following We and use as in single quarters actually adds.

we've because and them Right both too as of app. the what's the we're look do always the revenue we But win-win the nailed down big well. So throughout largest. and past, we do haven't with for add interest January us, app have first to now, done quarter done us. everything the year. the first real to we the quarter franchisees want is But share in of revenue to exactly going we for quick best share the a for in is push how franchisees. in generally in in the the A But it's

time for so, the So their at it get or all now the royalty ability portion be plans, do in we to leads revenue have do will you No drive store fact could of level definitely within, profitability then that. question profitable, always the ever And raise the the make again and ultimate we a share, future the in the but sure. even to all and more to can like something future. franchisees is we the

Sharon Zackfia

much. Thank you so

Chris Rondeau

you. Thank

Operator

from Peter Jaffray. Your Piper next question comes Keith from

Peter Keith

afternoon, was Good the if XX% period, month recall ask everyone. a And six or as previously to has I thanks. the to I I months that extra then discount was Hi, And believe New was seem I it grace at here about think equipment just extended an the remember Year. it saying XX XX-months. sounds I gotten wondering into expired you're sales. recently, wanted there's like we've furthermore,

potentially some bit So, a possible is into basis on get that before get sales pulled as QX? little it a have actually the they equipment worse sales forward year-on-year better,

Tom Fitzgerald

that where end we to the they kind pre-COVID, base, franchisees doing take year clearly, their we beat ADA that's up don't couple in at want a agreements. first -- our think a that of reflection add disclosed, that's a with still kept on going give over about elect at discount it. equipment talked franchisees. five, members more we the may to the ICR, that. a on the of who those months and lot that, that that gets continue to the kind of did care in We And We the slight And XX-month And pretty the Yes. we essentially, during experience. goes we I'm Dorvin at stopped equipment of for Hey, disclosed make that ongoing more we we'll as and and do Peter, quarter I'll for about, new have again, the it's the that I been on, sure initial typically But XX-months. to And are Yes, of that pretty equipment talk take XX% six especially that think do it that a we they so I of where the of the place more discussions, we'll business great and extended stores, current discussions discount to have to call. the was equipment extension development years expired stores it member sort it XX% in had at extension on a reequip way. their time end on stores our year, the offered normal was we sure, add Tom. where XX-month offer ICR. of back the just of was cadence. of our re-equipped, they're that because But year six long it periods members

their to investment So sense. makes protect where make and going assets it they're the

Peter Keith

Chris. competitive that's Okay, question Maybe for helpful, Tom. a

closing, said closed XX% XX%, I about talked it's of You've far. think gyms you you think thus

maybe We've perspective of of didn't the normal You that get closures as late it's timing? lot heard a have any gyms signup. on as January

So, I closures acceleration in can speaking, see of an continuing? we guess you 'XX? broadly that see Do

Chris Rondeau

have period, as think we're the But more with reopen the rent join is going see to to happen stores opening opening I what I accommodating join, winter your probably probably what through the believe months, to anecdotal, stores of mean, kind less that as next its and mean, think expense. you're right, up I also period, summer XX to see reopened, up going a happens I lot over point. with of the what's closed deferred revenue is here with were I landlords and waiting you're now this

and your also for XX% plus lenders background, rent make well. Now or that something to like your of your rent up is, to maybe months as

at and So, the have revenue workouts. side XX% of then I like imagine. a And expenses is, weak we as of are the of I think and go, coming and I part is that months, In services. with will of think we for other see usage more winter. XX% most into Time your survives, is January, closures will ancillary this summer ended industry we of roughly And we it last tell. would now -- about higher December that our too I month probably mentioned, when will year's XX% from that's the make

banging daycare so visit on. hours they're buying buying and So, juice drink and each personal training member bar buying coming people and a on in,

their their but selling So membership not is ancillary they're down, so now is in their usage only profits not either. down,

much model So, is their worse. revenue

Peter Keith

so much, Thanks luck, guys. Okay. and good

Chris Rondeau

Thanks, Peter.

Tom Fitzgerald

Peter. Thanks,

Operator

Randy Your next question Jefferies. comes from from Konik

Randy Konik

I think the you've bricks around and stores, Plus content. how the questions work? got my everybody. you've the evening, focus Obviously, the Chris, of to the Yes, lot. on thanks PF free How would in vision clicks beta commentary. kind long a you with term that about do want got Good ultimate

ultimate vision? line? comes the together -- you your the are of scenario? industry? of you your Just would And kind kind how this Like see What would for what's look how as down the eyes how in it all

Chris Rondeau

Yes. Sure.

five I heard store you -- iOS me as app. think, in the we're Android far as as about we now, the top might right fact, talking well fitness have in how as

new total So, a think our joins. with about of XX% member getting about we XX% XX.X has joins, about today. million half the of app our base adoption now members, we're have new we though, But

we're component So, the to just constantly driving people bricks part to of that the this. mortar of app because and

compete have content, platform is we that and are of that with a apps around to into we as the classes and Longer-term, you as grow driving because stuff trying usage content, which just other they platform start going and other of membership. cooking the nutrition, diet, now things offering necessarily not yoga and live have you exercise we're So now off all we part actually other in for and their we're app kinds now we'd of. think we cannot build store, where that library meditation well, built and have

also facility, and the journey. now wellness full their inside So only not the but home also hopefully, we at that circle members can service

other the space, it. circle which mortar we the the And think one we have of in shop. and can running can extent the them. if close with a or fact example, I have digital facility, to their and the service about I close to most journey, that's just then especially about They bricks for If for not can't never or it's Orangetheory, fitter, to have industry, a wellness whether you bricks just a the to was, a come the service search we XX% the their join are apps you the mean, wanted for not bricks into four getting our themselves. circle catering Coupled the hopefully of the the they having all joined they meditation diet, the Gold's it the gyms like think is was fact to with The what components they're front they their of fit gym is and really be to and of in a doesn't stop gym where walking is mortar, that are looking on we LA it journey, different that nutrition. and Gym, go or wellness life. or outdoor members And members. But door mortar. so XX% Fitness, the that that the membership, population they're CrossFit, And of

time. the are getting too. first people content is really off them So the the for And geared towards we couch

products haven't merchandise nutrition at gotten home into using as can traders And and far drinks So, But It honestly, things the really and they for close to also, and we between really attrition that the only of circle now, through it app. get can make I just the do can the can And that on of we're are home right not is component time, there first healthy as people to we the we think a the we trying the things them referrals app. be, within timers, sell And app that a first leverage bands of outcome. and for easy we piece. to but we then with their or the do didn’t that. them, the to at acquisition really want PF rubber of burden always nutrition, key itself. own ease go. don't And seeing subscription, great Plus know component boatload a is where that [Indiscernible] we

slew to through through, the gets upgrades Black we joins Black referring a guests great can coming have I conversion We the there, rate. with joins friends come of the We're through market Card coming them. log the to Card Card referral, their seen Black in join. members into seeing so big are We've app, app and

stronger to builds didn't able so is of I determine advantage, a in exist and much with mortar, continue to digital our that get acceleration about, minute further we're the bricks ahead even a lot on year mode, is doing competitive not. leverage once from what that we just, mean, a everybody So, competition keep of a fruit how lights are to that keep at wider finally back mode And they're to again, from to the if low else on our point, a the to members. talking to competition this they think grow ago their or really now and lights hanging able Peter just trying about you they'll ago,

Randy Konik

Great.

building How the type the of digital So, is impact, you changing capabilities, and that you're of think app. the have membership it's you over XX% base the app of member gym. about do next this clear because your the you're the obviously in have have you its basically equipment -- the leg

app. to one that? drive I that guys kind value the Thanks, relationship add and to of more employers or kind the angles then, think where directly doing attack tracks the or went forward? for Fitness throws and about of insurance for companies want gym and elaborate opportunity gyms you always to Planet it what it seen more clear you guys And my different treadmill, equipment well. a has attacking BXB one How on on I everyone you think going fit do Can those the guys. get I'm then two of to that I've into the of

Chris Rondeau

Sure. Yes, good question.

you now app, then you what PDF that, by QR that's may within any have are So to can from also they're and use yes, the reimbursement. now apparatus in and desk in export people and And insurance front in machines of the how in the store. your the of business members scanning app, for equipment on QR codes most, even able We're visits standpoint check-in your doing, can what so are top that strength what the reader company the so the the code to like the equipment, learn gender, track people most. which the in and cardio age to app the noticed on then and different

driving taking, that begin the can, market But at in have makeup people have to driving So, they're in what and what the different now things. because to sure what's of and more doing, one, better see make the store. a results right we They learning gym exercise segments, and they're teaching there. are getting journeys they're so equipment different XX-year and also base more fun what's is we

we genders, app, exactly know somebody what put time joins, next and certain the that we journey like to people now, So at them because for what recommend know the and ages the on example. in

and to to going members are really on be be the what So equipment people doing we interesting way right the the like. what to now, using know able it's now they people to assuming coach

we to facility. don't makes necessarily So know we their get how industry on in people or what joins, what We this people the stay what journey, don't makes know they're because doing people somebody leave. know

see can and year what driving in see facility doing we Now XX they're longer-term. the what's

going So but exciting be interesting future, that's really that to happen see. thing over will the it's to

checked just most no and you industry. your that we we was, idea to other your calories use, how we all of how somebody don't we could able rate reimburse insurance know tell like, many burn, we know question, the long terms we for you you companies have insurance In so what what don't heart on. are in know insurance in, were don't there, is But clubs

supply insurance, companies. where can resources for you the put data, really that really all that other to we they Not could staffs want. reimbursement supply other might together gym checked us to in point only, it one point, data put have that all can go to data only has if the get else actually with the probably that you that money this no one get the from country clinic develop matters. at no with company insurance the be to the capturing companies the we to that And So -- really comes in, the the from to gym

could an their it come we're that shows give companies able results interesting true more but on data be subscribers. So true to that that, for insurance to

Operator

question Your from Simeon Capital from comes next BMO Markets. Siegel

Simeon Siegel

all any sales? you're going hope Tom, the Card given you're are conversation, your I where thoughts year? Chris, change any on that Black frozen And on to doing to what your Card Thanks. help around guys, now how the just And Hey, view versus approach us penetration well. Black memberships Thanks. can should members trend over point, previously? then percent just of you around

Chris Rondeau

Black on Card DC pushing I sales the Yes, grab because we to volume. wanted the try think to we weren't volume, percentage, more

we just sales year. last here fact up. probably the of So we second some We'll have $XX through previous in begin doing the sales that coming were Black half testing years flagship Card

to -- think I'm But we it forward. -- should not XXXX. should think surge for sure own don't think I So probably our I it's I here going hold

Tom Fitzgerald

Simeon. Yes,

it's in On reasons, the coming to were comfortable still were thankfully, frozen QX side, certainly we deployed to and as and enough we way it's it would allow throw those resurged. terms as I a typically they it pandemic, think in into back going before, but the cases all freeze in particular And the numbers off, and that that in it but direction of all freeze the or military. member to talked -- the calculation, the in gym membership works and their of medical climbed going an the direction still once base. It's right in the were to then across people to virus their wrong And moves more only now, if QX, but much base, we the if with math And they forgiving, of on store insignificant the the component the our deaths percentage are back then country. people just will, you membership really, just weren't reopened. for

And from still, percentage historically. declining. encouraged they had spiked is in base. been just So, percent members, percent that's January were were membership a our But member the the of relatively still up while we're that it now of what frozen low-single-digit, up, of frozen it's insignificant, to see it's they low-single-digit

Simeon Siegel

then And the color. unit Thanks. Perfect. appreciate

just Any expense we pass any given You cost in to is the and different the than different pre-COVID. next this. mind? lot the might on a over year, gym how keep around with or help want of line about should thinking the But all just was pieces at items moving of the you're anything it

Tom Fitzgerald

of a units? and the their mean as you franchisor, or for franchisees us terms In

Simeon Siegel

flow Chip as think I run away, trying through a want while you for to to as it about I'm think the just approach business we guess. we and through way the the extra anything to the of keep savings? just yes? -- what were any mind What in COVID hasn't sticks costs, as the away? goes and what were extra -- we What

Tom Fitzgerald

it I for first got we way be Yes, could of about in in four on back wall XXX impact the think we talked clarifying. Thanks it. I this when the what incremental profit. -- were bps costs, sort

there we was might a I small think stores any point not XXX, fully or said And of percentage we reopened still by XXX that reopened. have bps. at clubs, were means, that were really

So were kind time. at estimating the of we

got we've of that the got we've reopen system and buy usage make for now that that in reopened because we were doing implement just it, we everyone and all established. costs are the could a to part, paying XX% de while we the high we when we pattern, those sure of and secure prices, that minimis. to were club really and and pretty have playbook for trying more was those could early of Now could things XX%, so we a some down our Thankfully, much costs XX% come buying

So minimis. pretty thankfully, de it's

Operator

from John comes JP from question Morgan. next Your Ivankoe

John Ivankoe

I that year. XX Hi, this to stores, to wanted XXX open talk you. were thank the guided to about

'XX, Planet to close normal actually add and to development year, pretty Fitness I you 'XX to store If have something of guess you'd that kind adding just growth a were 'XX.

I first, mean, opened So context words, shouldn't about being like think the Or beyond 'XX, given short-term waivers? whether come, see to franchisees intentions, relatively you a the that, do some meaningful XXX? units that are opened units in the planned, pipeline the it possible is And other XX question pause I reason XXXX? even or perhaps be the that recently after the that were to backlog that? mean, I that there of is, really, is might basically a that's in lenders the it in where from have

Dorvin Lively

of earlier, John, that wouldn't out be throughout I No, a have little say, maybe deferred bit opened out, obviously see stores it a to all that let's spread to, don't pushed that, got would but XXXX. be correlation

open maybe have some stores something that So, December, January, opened COVID in without could like that. November, had opened in or would we have

made sites there we've So be and you I to a the new that. last least if handful and of into But out the putting go some comments quarters, they pipeline. the for could earlier, kept comments at didn't just the what been franchisees, two of go making, back

development. July, what in slowing bit more was opening, into June on and we in or sites down any XXXX a And to obviously, little stores were then gym. their members in going saw couldn't the some closed, good adding pipeline, if they a a They come open so development slowdown and weren't not ultimately, fleet into have

naturally, on boards the of in in general, ways. and But most development, things the that were out opened, just deferred got or So, kind got drawing or or in pushed all certainly out pushed sites pre-COVID. most sites all development, were the or of they

I and are that that's did it's a close what would of does been, that correlate There's franchisees what a why signed. is the though, math, say, wouldn’t obviously But leases get that there's just out maybe handful looking to have So, I there together. some year already these that, would you sites. in at terms it normal

and side. like, in potential being looking a as working already not market that them. could are some that they're put commitments It's Planet identified potential single every not where It's mall, every but single franchisee they they're like So, they've a made. location a of also at

was we where here we are just and going month, of so we And on. may in have a historical with versus when pipeline year, the in years, a activity full a, into it one see there been as half a month

of right level we say don't be that activity for, the franchisees. level October, have timeframe, the going insight of same November now, would on by kind Let's September, same and

they have the sudden, majority of thing let's all the June, earlier, difficult past with those risk end normal are will get just the months, we that and one that say of like we is vaccinated be the everyday If to into out say that’s can when -- medication it's there, didn't December. the if immunized, into, going going and in get really then very I you they're to are so a we summer looking and people open franchisees be really working, of Now, life. get things by started July, to the August, hard be normal are get

pipeline to the sites the of then later XXXX. up year, a in if into really will fill lot So, fall those starts

your So, that's I answered question. think, hopefully I

John Ivankoe

you, your that's You in frozen, reasons, previously different were line. which like said store We closures, you've members, something not about attracting volumes, anymore new easy cancellations, memberships obvious unit as for the of calculation Dorvin. than being did. is which Thank an talked difficulty, new

unit how you fiscal quantitatively know, or at are whatever or XX% and kind usage based been qualitatively a new I I trending change the gyms those have development 'XX or where XX% volumes comment the as say, mean, can the the stores, in? breakeven might unit of materially So previous be? either has XX%, markets XX% on just May. How you class as the for of been? for volume past XX% that I those to are new guess, system-wide want

Dorvin Lively

first it. so. really majority because Yes, opened back go at in middle of we happen year, and sites the I'll look our the QX to Tom and till can add [Indiscernible] didn't stab this If around right take at we maybe of last then or a March

QX stores been Our We're what and QX patterns the reopened historically. to following of of very 'XX, similar late majority it of 'XX. had

you into presale, all XX now a no you we And virtual in past, used typically even and know schedules and year from opening, is year, and than do opening. throughout and what we was would then, that's a marketing the days XX do days very to they COVID had of we rolling California many the And into to that virtual lot very into that presale, the in physical cases because year, change model. So, shutdown have fewer the that. didn't we open the be And in continue anywhere presale you clubs we ability and that closed, do what the going on had where with you certainly get stores are key when well roll closed, historically, the the and preopening. throughout cases at get all to way but tactics because opening typically didn't presales. that a we last execution to a they that about up opened just the able members still And all of so XX

look member we we've if club the we of when matter back certainly COVID. the Now, of the franchisees it in return even time, we're historically. to get we the stores conversations of with the significant had the is a example given in this is been the made, great than a that and middle situation have is XXXX. opening the ones Chris in some the at you data it's the look Tom at, investment. and not from that still not of deploying making, But have his amount of some and to But capital, growth January been from to a to different or remarks, that half still go that of we the you the franchisees last is of return, commentary a conversations of at of made right look that with comments there amount and is that believe usage earlier if at

Operator

Paul comes Capital. Your from next Macquarie Golding question from

Paul Golding

goes in reopening have in from question. seeing you've expect reopens? that along any up a my pop may one far taking first just cancellations cadence closures be talked follow as cancellations. we're know for vigilant then back continue of the still I much same California in so Thanks the a how the guess past, anything pop about for to I California. to the when as to be and we lines. Should around California a I And there

Chris Rondeau

the the winter is resumes. February March, when Yes, more in expect based of or April, probably and Question of to it's not. if the cohorts on we see it's middle California months throughout same example, opening open, because all still, different and for we saw allowed finally of we it the would is rebuilding XXXX, is

opening the in of were middle Before July. clubs we

would some the rebuilding by the once when the that spike club So but XXX we so resumes, big would public chunks. not seasonality imagine maybe there. could a we them a bit, or XXX were help see it’s it's -- little that's opening saw I Granted, not other cohorts store,

Tom Fitzgerald

more seen add states just would saw we have in maybe the California thing we during other one is, closure that I on period. cancellations during And the period one their closure Yes. in than

scanning following is not to part are. our of because, the of of closed, are competitors I think in remain most market, our we unfortunately guidelines that

the even which probably believe going guidelines, is they so, they're cancellations against we And where that the to are running the of operating, our state gyms though can some they're local and mandates put enforce out. unfortunate

Paul Golding

And color. appreciate of the XXX my financial maybe a we've to just there should being some be I difficulty as we from some these then I we impact in and extreme far when implement Interesting. net modeled XX considering lately. the that part that of weather stores, anything new pause but at question look expectations? Have the as that you sort adds second in adds in to seen period? giving of that expectation into Is around, of is guess, also maybe the whether

Chris Rondeau

Yes, I don't see.

there in of seen frozen. had because weather, that's But in changes, point seen big joins. clubs less some number We we mean, close power, it. any the no haven't I haven't has this Texas drastic down or

Tom Fitzgerald

goes question the XX XXX, that be our answer does your if the affect would to on outlook no. Paul, to

Operator

Your question Altobello James. last from comes from Raymond Joe

Joseph Altobello

Hey, good Thanks. guys, afternoon.

something said Chris. clarify you that if think first to earlier, I one it's So, is question

typically annual occurring January, the think right said I you XX% is net in that of adds number? are

Tom Fitzgerald

It's year the about in highest QX, quarter sure. January, is the and a the for of for month third

Joseph Altobello

that's levels, membership, past the Okay. year-end the does year if guys terms that in to in of the And the call And I impacted you the was the said back of at overall 'XX. it still then have in to get Or curious case? stores to this XX.X hope that? XX new think 'XX million, early sometime all, timing I'm XXX

Chris Rondeau

I out hope, figure there. too mean, it's pan think year that all be early but the definitely still where out things to would I in to the get

the finally for and direction. adding our stores, are going members probably mentioned, as we are in We right we

it we I know as we'll like as to we be if don't growth, going to we have it is there which get back this soon goal, really year. member that's the ultimate I think But make sequential long just depends can. as or adds predict But and re-shutdown. California what here think being think if to really to is depends February happens just don't when get it again, hard I I but goal, yet. it we opens our

Joseph Altobello

great. Okay, you. Thank

Operator

to Chris over now closing turn the will comments. call I for Rondeau

Chris Rondeau

of gym more more better only a membership will a definitely wellness, do unit people Well, but and without closures our that to business with trends year for through to any and this years. trying the the model even of dialing of and And we will and was definitely thanks of strength hand. out taking health just the runway fact the staff this XX% but a COVID happy the of I at because has that matter our with here, us with if, of industry of gotten is lot and the exceeded that in And more everybody year club walk sure, And our COVID here themselves of a staying moved industry on. in competitive so which in -- coming in franchisees into and believe it’s to and for with today. when. XXXX out and more X% QX the couldn't the care that's the corporate our and more a players strong room has a model through a for for of getting us to this advantage testament and questions appreciation will U.S. closures different and there us happier industry possibly definitely potential out and X,XXX that in a for of it. grow And XX future. staff strength franchisees of be give that extremely And

think all pan think could out good XX X% this I greatly. a that chance accelerate or could this so five years, I it's move next

dialing-in, for and Thank look our you. call. next forward to again thanks I So

Operator

concludes call. conference participating. this gentlemen, and Ladies for you Thank today's

may You now disconnect.

Planet Fitness (PLNT) 19 Feb 212020 Q4 Earnings call transcript