- Earnings call transcript Q3 2022

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Operator

Hello, everyone and welcome to the Planet Fitness Third Quarter Earnings Conference call. My name is Emily and I will be coordinating your call today. [Operator Instructions] I will now turn the call over to Stacey Caravella, VP Investor Relations. Please go ahead, Stacey.

Stacey Caravella

Thank you, operator and good morning, everyone.

questions will Chief Fitness both Financial will available call Chris Executive of today's session be and Q&A Rondeau; Officer, for on be prepared Chief Planet Officer, whom following Speaking the the remarks. during Tom Fitzgerald, being is recorded and live for webcast call Today's replay.

to to the statements Before our included the like earnings to our the during that release Chris, over turn everyone language applies comments in call. made I I'd also call remind on forward-looking

on found of listen be like Our website, mentioned investor.planetfitness.com, the on reconciliation can release everyone their in also any with our Investor Day measures. Tuesday, non-GAAP on to along our to invite I'd measures November financial to corresponding XX. call with GAAP

the Investor website. You can find details on to on Relations webcast timing link and our the

turn to Chris. Now, call over I'll the

Chris Rondeau

during for high and Thank call. members, ended the you, Stacey XX.X to X,XXX. added with you, and an total XX quarter, We thank million us today's than locations growing more our the quarter store all-time base for joining everyone, new

climates. of in succeed political as We economic Conference types over time the frequently compared our joins we The back years. members XX We QX Member cancels are were we years amazing remained continue our pandemic. trends out the meeting Also, more of visit the are recently ability to lower Unstoppable, which to signs were Franchise of through with gym, to more for recovery the was committed pre-COVID are visiting to strong the highlighting to members our first to X hosted historical back XXXX steady seasonality. that energy and conference and theme believe in-person the and continue all past fitness. was

a health future While our without strength the to survived industry permanent given even stronger opportunity and COVID, that closed for store growth. the tremendous due with the emerging model franchise of dynamic of single we closure, and fitness systems, have XX% facilities reported

register are We're conference nearly major penetration generations evidenced who their more ended made program, Summer age School generations in the focus in opportunity penetration guardian. High continue all age as levels, only School or this the of all our teens enroll year, XX% seamless program August, We all of their above than Not and X.X they fitness. Pass with to Summer of our in were allowing to a even When about million pre-pandemic to sign-up with back While by during teens Z, enabled program. logged to high million topic efforts in more us the did presentations we a Gen prior the the up long-term the with have U.S. and excited for the Gen Pass teens teens school on potential signed XX process High the parents strong workouts. Z. increase connect to online them which or

experienced third to And their similar parent had have X.Xx most we outpacing acquisition Through the we rate program. is participants in total e-mail In summer conversion if and throughout or over. XXX,XXX of the in for offer during To rate the they free, an list date, growth the and more began the XXXX, the teens in quarter. a days drive parent strategy, member much ran via the already member and bigger topped we base, joined Store We're a app have helping summer XXXX. last with Apple than guardians launch. nearly we once guardian teens in X%, time conversion X-month we reaching join in and and the apps following the fact, the our paying initial a of the text the of targeted out the downloaded messaging

forward joined already market our first Fitness gym, mind. Pre-pandemic, for focused to continue up Planet they typically Along which gearing with in quarter would to look a our that when plans. to we're first quarter the get from are year franchisees, net will in COVID. and gains first planning on years XXXX our We of any XX% of full to we top marketing membership We be X QX. them uninterrupted our of be QX we impact believe without

of as row, eighth For Times Eve mental the New again scale benefits as focused a on and longest post-workout will our Year's managing as Square campaign size sponsor in running like be working well advantage. and the This also the We're kick beside, once well. gym our felling stress a for marketing only sleep company January year ever, positive in wellness, sponsor national reinforcing we brand as out the energy the the off well will as improved celebration. given presenting

overall As you our previous we call, surpassed membership around recovered and remained the notion at percent that on have mature to heard mid-XX% but second quarter counts. of stores stable added levels

to Card $XX.XX don't circle this significantly in results. test the May quarter member when outperform seasonality, high continues increase typically rollout move to system-wide $XX.XX price first the our of anticipate of the from join Black Given The we we net see until growth. to

our last member partially XX.X fitness QX industry. pricing incomes diversity the segment increase by brand more gender, and well-known rate the in members attractive promotion Black adjacent growth. member categories explore Amazon's corporate View, across working receive Card an balance between this rate, and comp in other with who operational the brands We're and and are are you about coming to a growth you'll wearable believe of Yesterday, average large possibilities the is November While be health driving XX, net that age, XX% and a only our of franchisees our if is We to offset up in join with was other we new collaboration and for helps and overall experienced join This Halo scale for from X.X X stores our the tracker. of years. than we million partner size excited couple announced increased that costs continue fitness November our attributes. and we given free driven

her Senior we with Strategy and that has the Jen Information strategy and announcement using solutions Vice Division deliver recent will Simmons, of our Business member previously our our that about data Planet and built enhance lead infrastructure, President while and Corporate evolution Paul leadership will our develop Officer. to We help forward will joined driving scale. drive promoted corporate experience, franchise Barber benefit has and analytics Jen to flexibility Paul for through X of of for operations excited from look insights been systems. as I'm the business to that performance entire technology the continue strategies. Analytics, to fleet and Chief President store the corporate ground up and Clubs; Lastly, functions analytics and overall technology optimizing strategy years and has to that data

is of Our And our about emerge will have but feel I as growth in even organizational search good place believe still President stronger I next who we that for our underway post drive we phase structure. the leaders pandemic.

detail to turn I'll We forward now also week. over more look Tom. call this next our Investor Day the at to discussing in

Tom Fitzgerald

of X.X third Chris the million only and we repurchase executed to this quarter having the $XX.XX which of in pandemic. repurchased temporarily everyone. morning, stores at balance Thanks, after have that X share we our the average believe of million all Through that a strength we price years QX shares underscores an sheet $XX good closed due inclusive of our of year,

in existing from announced model repurchase also Directors generate reliability of the Board one authorization approved replaces signal that We confidence our to asset-light $XXX XXXX. million cash this the flow. this that another believe share significant morning of free is consistency a our our and new of We

Now I QX will our cover results.

growth to of We our comparing opened compared last year, quarter. QX corporate Franchisee same-store regarding year. will X.X% same-store of the sales We X.X% in new to XXXX had comments XX my increased XX QX and sales X.X%. noted. unless performance of same-store grew All positive our last stores be quarter otherwise sales

comp net in by the rate in February prior with they in how acquisitions. by in The will was Black this As our balance sales but growth. our of rate primarily stores penetration driven acquired as continue point QX as $XX.XX growth May franchise growth our treated Card corporate-owned be system-wide Approximately member we being same-store XX% until driven consistent to QX Sunshine XX.X%, that a reflected the for sales in will sales, be with reminder, price to XXXX our by of reflected driven same-store of Fitness increase well was to increase year recent we've not a $XX.XX. same-store increase X basis our from

up new reminder, was Card a joins As Black May in drive average time. that slowly dues increase only, we begin over took price for so monthly that should the to

segments. across new $X.X the increase in due higher an segment the expense. million stores to compared placement Sunshine $XXX.X the Fitness by quarter, higher was the result a as the Franchise in decrease The X.X% The total offsetting was moving Franchise approximately sales increase growth to in Corporate-owned Partially $XXX.X For transaction was same-store acquired X million of NAF segment driven equipment the stores. primarily of was the revenue the a increase revenue from growth third segment, and expenses from to and royalties million. all increase revenue

Sunshine the openings. segment primarily was in higher quarter, the third was to driven store new store sales increased acquisition, as The Fitness revenue to the by segment increase stores. the franchisee-owned existing the prior driven XXX% average which year X.X% Equipment was rate flat well growth For The royalty same-store in sales as equipment by the period. revenue XX% Corporate-owned and

equipment shifted approximately COVID-related disruptions of in typically due year. than completed For year, XX% XX We QX due for this new China of placements QX to experienced store replacement largely revenue year. QX, to accounted higher last that reequips total to the chain flat quarter, supply in which equipment to was this from earlier we

$XX.X was operations related the this to compared additional Fitness of million, revenue and relates as franchisee-owned increase with of the which $XX.X to our primarily compared Adjusted EBITDA to team GAAP EBITDA expense was cost earnings net the of Corporate-owned to million earnings store to $XX.X the million equipment $XX.X for was increased and as found XX.X%. found to $XX.X EBITDA to stores expense increased EBITDA costs adjusted can of drove $XX.X $XX.X our million income and the release. stores, of Franchisee adjusted in Store million. National million to due the to per from $XX.X primarily expense the income adjusted $XX A to Advertising reconciliation compared income million SG&A the relates was income can net million Sunshine Fund million, primarily was $XX.X net Sunshine $X.XX. quarter share addition Net sales million acquisition. income income Payroll diluted net travel of adjusted was $XX.X be expense net well Conference. segment, adjusted was and from compared million. $XX margin in amounted Our to margin to million. XX.X% GAAP reconciliation release. to adjusted A which cost be

preopening excluding per longer reflecting restated EBITDA no adjusted and the EBITDA income was costs adjusted from adjusted this adjusted prior $XX.X Corporate of margin are was and share. you'll was By franchise EBITDA, our EBITDA earnings was margin period EBITDA million We reconciliation, In the EBITDA $XX.X XX.X%. change. adjusted adjusted segment, million adjusted EBITDA was Equipment million $XX.X adjusted margin adjusted year XX.X%. find and and store net XX.X%.

Now the sheet. balance turning to

and had total million XX, $XX on cash cash million included in $XXX.X of of September period. XX, equivalents restricted which XXXX and we million $XXX.X XXXX, million of December to $XX.X compared As each cash

of earlier, that we billion of Total of XX, deferred used long-term XXXX, As approximately consisting to our debt during costs shares. rate quarter, of debt financing repurchase carries interest fixed-rate XXX,XXX excluding X%. $X.X I million as tranches a September blended was $XX securitized X approximately mentioned the

outlook. Finally, to XXXX our

a As is be growth assumes year. resurgence whether our for in result behaviors. updated or in mandates a a or this and material the causes morning, reminder, In that we COVID disruptions, more no that reiterated shutdown membership release change stringent supplier member view our earnings significant our targets there of it press

supply XXXX. in early the outlook EBITDA expect percentage meet insight to approximately availability range. XXX will in sales We would range to approximately we adjusted monitor expect demand franchisee to locations XXX. reflects the share situation We decreased we same-store update from of the per HVAC to and the in but to EBITDA reflects issue. place adjusted happen to a low-XX% it range. XX%, that the our expected expected mid-XX% we system-wide increase Previously, take double-digit for we of the We We're that net primarily earnings for This mid-XX% franchisee-owned This low-XXX% the expect reequips. equipment continue adjusted Previously, the in high-XX% adjusted revenue expect growth mid-XX% net a placements XXX in range. in increase now to worsening range growth low in in to placements and range. the carefully chain range. adjusted some XXXX high-XX% in adjusted We range, thought now continuing now do in to increase our revision into in income per range earnings inventory the share better increase growth income increase to

equity Our guidance diluted the share Sunshine XX.X part of inclusive of third adjusted is issuance approximately quarter. based the on as acquisition EPS outstanding of of shares repurchases million, and the through

which XXXX our expense We first continue reflects refinancing quarter net to expect also upside. $XX approximately be million debt and interest to

resurgence, a will optimistic to strong the back and January we virus operator and As Chris the there a no solid up now have for it call Q&A. looking QX turn to said, forward is QX. we to open are assuming that we are I'll

Operator

comes first with line Randy [Operator Jefferies. Instructions] Our question the from of today Konik

Randy Konik

I guess, Chris, a question for you.

is that in trend, saw up you It mentioned it Sounds, it understand, change in wanted what just sounds kind significant driving I commentary moved those in how sequentially? so moved significant X utilization you is items? in that that your rate to like the and cancel again, down. You think of patterns your and was change changing

Chris Rondeau

out consistent, Yes, been has previously. adds are the were -- coming where trend more people this are than COVID, of working out out they that working that somewhat almost

IPO, the cancellation is right, -- so working it's that's of staying person month, the think now from to and month. are fallen X a I people the You times so it rate average think the committed, about X back has a since remember times slightly And probably is just up the there. past. kind more But I

to term the flowing better, base. and So are longer for very both to both add attrition trends because just -- continue are good, gets join mostly going they're like flow more

Randy Konik

you helpful. Super haven't paying to if question maybe it. XXXX, time. the we members what Summer look over guess members know And the But the to could Challenge I a conversion time try I is, think frame this then guess to conversions, much this should you on perspective Tom. -- how Can program I XX% When Got took you back I of should to you of to wanted for expect last place and how occur Teen us disclosed of those of around we those conversions those I XXXX in i.e., long should participants or converted give think and members XX% some XXXX? members. notice start how the time place? them time these to understand take

Chris Rondeau

years through X the of then so time this COVID the reported still now, when And years right? remainder conversion later. Right. of said we ahead the trending compared ending year. the that that whole that Randy, by program so Chris. Yes, ago we but -- XX%, is then from now, members; right the the XXXX still in and the we about was had and of was it's the it of stuff, about are about the But are parents rate XXXX XX% for members X% are to today of X years

if So itself look than back we higher or trending the the of conversion at between the the then. end XXXX, through you end are rate program of program

solve, positive Gen messaging the because to the digital us is in have that messages sign-up. leads e-mail's it's general think one, we with that and I all direction, joining fact Z coupled in tech trend now So other that is probably is right just the

imagine of I ahead. over years going the that that So I doing to not it's couple showing it's think better. next the can't continue trending And is

Tom Fitzgerald

Chris one where is plus his off Randy, in And X.Xx rate prepared conversion a as it's Yes. remarks, were but said not only that ahead maybe XXXX of larger. thing, we that's in base

So much the is impact greater. membership on

Operator

Our next Harbour Morgan with Stanley. question from comes Brian

Brian Harbour

that think quite we something next Maybe there in just of and which puts revenue and quickly. the year? continue that a kind seems the to fourth should about? Is quarter question picking on up really takes it's kind any replacement of Or like that expect into you equipment

Tom Fitzgerald

I'll Yes. Brian, it's Tom. start that.

equipment think because I XX% is the from and mix QX part Shanghai shifting to shift the So shutdown. it revenue the of reequips because of QX of being of the of

QX pushed some chain new bit. little around then stores a it into the issues reequips So supply the and of moving

So for answer the the year, maybe direct this question. is to your

saying For the revenue it equipment change in to will we with XX% were of to where be the be our we outlook, closer to closer total year, placement believe would reequips before, compared XX-XX.

Brian Harbour

yes. kind issues. this know, I then said those question unit mean, just just you of come year? crush HVAC at new openings. that And a think you you if there's start year? else of anything end of helpful, openings don't at it's -- do play That's on think kind in I off to maybe Do next the that's there a year, Is like the the

Tom Fitzgerald

this No. go day year one the primarily we away. from knows what And yet HVAC The or no issue hear, abate one issues. is

I off-guard think and of but a catching of rolling the bit combination also it's lockdowns shutdowns manufacturers in sort Shanghai China. continuing the little standards, changing and here a there

So don't because larger discussions too and some sort late here the with frustrations the franchisees cycle. know in continue until were we of you it's recently in

they it all say sometime in QX to we it's to going So to we'd a speak. to any commitment not when on so say in when but will in Hopefully, have firm will know 'XX don't end. us are end manufacturers position all big yet love we're it manufacturers, normal, to return but it's telling

Operator

from comes JPMorgan. Next [ph] question Rahul with

Unidentified Analyst

terms of kind be terms conversations of are or Chris, their more makes about else would how health you did on appreciated. give That anything or openings Can you just that franchise of terms stood the store out that guys kind conference. financial to franchises in of talked in in have the what sense insight of you feeling some us discuss?

Chris Rondeau

fact trends generations with Sure, the join. increase all and the that yes. There's seeing specifically we're the of more excitement around Zs their propensity and the Gen to

on already some build-up about the top which weather and construction luckily always that inflationary so are stuff. -- conversations -- can type people a of that it the costs model it's we future. build-out it hopefully thinking It's So around Will in of about stuff. time time, lines not in But of crystal one. that, about with back all that's we're sales want was. to like of great. all definitely up but will go the not On some where is all, on and membership today ball have that everybody for track were the is well good don't it Pandemic which on some is way at that We being. But about storm. the was to is real it estate back It to down talk seems get our really marketing come tell. time to looking and us. how is but driving behind cost and And expense excited

excited great to be I think to here fire. bullish from it the would more business add and the just are definitely they construction when So to to build-out fuel down. get back and inflationary the came just costs

Unidentified Analyst

it. Got

there talking like, space of store of books? the there anything revisited about the Just were white Have formats visitations? ahead the real like format frequency with that? of on trends to going changing kind when to the conversations guys franchisees to and the in anything it comes of in you the of given makes any terms follow-up consider new sense terms like is that or that, estate, Or

Chris Rondeau

in looking to preliminarily I data a looking the our think now is that we're the look at at membership base. of at but lot thing change only

base, believe our our next back were or largest Boomer base, our not. Boomer smallest generation go member Gen part segment Plus member second you If they're being Zs of Boomer, the And which is Silent. and pre-COVID, the of today, our it

substantially last years. So it's the grown X over

the or is kettlebells stuff now look their just utilization as or and at be to changes. to as training Is the some of of So in with of size what is our I but would ellipticals the that walls. So treadmills paying definitely retooling of makeup. there of just something training makeup we're maybe X But the our about some attention far it it and think generation? different slightly that the is which base inside no, just facility attention they're paying younger functional it equipment just same is of functional as some box, retooling of using

Operator

Raymond with next Our question Altobello comes James. from Joe

Joe Altobello

Just could year timing situation. an HVAC the the want guess, that alternate And to of to assumption I obviously it gradually suppliers and from gets back given actually openings better? is first, benefit China? to next opportunity store go outside in secondly, this the your shortage there find it shift year

Tom Fitzgerald

it's Joe, that. Tom. take I'll

it's about more until of they back refurb just to via them, tend the a there in worry done it Carrier, large fair franchisees, suppliers, is and fair to like get So looking equipment, to supplier our talked something equipment have they of -- are supply or I not we're we share can actually unlike stores. later. And share, as there. relationship have and to looking we our doing in to none. available are it preferred in to if and we've contact there that. is, replace we're -- we're not that a think so more many Trane just We so we we like with and it. that going into. our replace It's or we've as we don't as try They are problem all on. can so And to code once, need. There's with don't the to advance. equipment than But all secure doing The Many opening can real then wait X at year all keep

We're from open units. multiunit supply. the and can. other folks franchisees And trying to everything to we're we new we're with our doing not I hearing secure up working know the say what as I'd and with franchisor it So exceeds just demand the alone. possible It's suppliers the

a had previously. it thing, answer not I I exactly on back end. returns as I forever sure just It's it we're a will wish sure. said when It's when not for normal, So better to

Joe Altobello

just on week? understood. Maybe for in Okay, expect kind that, Investor to an some done you should what maybe guys quite we And curious, of to haven't next preview follow-up Day time. hear us

Chris Rondeau

to you out. to and going heard is Usually, a it's bring great all Tom really Dorvin. team be Yes, from me previously and

So each the great trend, what how up and endeavors and and a lot what different to about of strategies with of grown, and departments, so we're the share Jamie historically we're whether it and is of as seen, team bring lot the on generational talk out and we've as a our it's on. digital data marketing and well seeing they've we'll

a of And downs be lot haven't bruises. why a the lot being even no the story lot team where of the ups about people, many there'll the got us current today days. heard there successful from been. IPO we've last A here back with talking in So and the still investors of going after XX-year us and in what we're what history through made COVID here, really

Amazon yesterday. we'll will -- plans partnership, remarks now. of and in just be a the lot working on saw like of my Halo middle the on future-looking we're So -- much started but strategy that where you it and be That right the

but on highlight members I this. not the just from size things, and and health at exciting only all-time with and that lot coming high, Just our wellness here I think, is think scale a and of an are the out of up like also partnerships opening COVID doors

Operator

Our America. of is next Alex with from question Perry Bank

Alex Perry

Just of first, numbers I away the membership the square some wanted just from to quarter.

So new quarter. the you had in joins net XXX,XXX about

lower was XXXX. churn said You than

in Summer added of to the of what quarter-over-quarter from compared XXXX? new sort about quarter-over-quarter you XX,XXX had XXXX, members we amount sort be But compare the compared High versus would if delta School joins same of joins the of You Pass XXX,XXX to XXXX. sort so

Chris Rondeau

the XXX,XXX April is really I I the May. from believe Yes. the -- and program, of beginning think

Alex Perry

Got you.

just -- you So okay. the added

year you the participants compared Got rate then XXXX. about and Summer open just their that the And you base School and rising then to to was this question Pass franchisee of okay, health you. my talk High And So makes added can the the sense. -- here. environment willingness second earlier

Sort when build-out are are back And of costs the how to restraining that we HVAC the about but rate only of the sort should mentioned now? of sort the you you that seeing algorithm? XXX-plus rising, overall sort health? of of Is right Or environment? thing thinking you get how rising sort

Chris Rondeau

up X X that right? of cost what will now open open not future I'll hit cost open a units and or on the come Tom lot down to then agreements. schedules, rate wait area or risen buildouts opening franchisees their of of interest units then we every were required ahead are themselves inflation about required number quite costs stuff years or What world, the the until open under is they that that stuff. know let So we're But is of sure really developers franchisees maybe a talk to Alex, really don't yet, year, to is into with and the aren't -- rising of want contractually certain their they pre-COVID development costs them.

going they ahead So until here schedules forward if costs don't open go do we they're want just down to they come to know their or come ones of open when to future maybe down. wait

ones can obviously. the opening their just that's side early appetite But really for things. on know don't Tom that part So we of

Tom Fitzgerald

them we to basis, going here, all I we've almost relative as talked franchisees the Yes, a Alex, of we've to think top we think our year, I interest largest them returns, every talk franchisees the but still completed do our and on helpful isn't now. up business. They back interest the from as rates XX, lot of plow the funded saying take just of back business. out are money holding folks the stores of don't in. And rates No the lot rising cash one's money are really frankly, a building. from the flows of the PE A

looked So definitely costs that's at commodity shipping said as Chris forget right, amount think before the builds. below even the teen what new from fair we've it's but I can few of back it -- And those are numbers head went higher. my is thousand where was a I store a and and moving now the costs, the was there's thousands even costs momentum of Asia cost top to high a of off pre-COVID. But then

So quite a these around are moving bit. things

the from very about are a thing time larger the returned lot franchisees and of talked we've that's heard the different. their on is, number a other talk these pre-COVID or store some we've side have very franchisees profit financials, close say to as we So I'd is level. mature that encouraging of to development their

quite X-year and their membership some a And here while mix really bit. because of considerable, as to be the same-store low our the improve were year margins. continue in the trailing and back I'd markets has costs on Black the talked of to down slowed growth thing the mid-single-digit basically there Card one talk little being about labor So impact And lot before of model sales increase. return a there on bit really inflation that will a the Black side, was and wage say last recent Card continued increase in inflation even geography, they depending same-store and still inflation, pricing after about, wage sales of inflation with offsets wage we've margins fairly good where may

kind for you. So that of picture the out hope anyway, I rounds

Alex Perry

that's Best luck forward. going of Yes, perfect.

Operator

with from is Cheng ISI. Evercore Our next Warren question

Warren Cheng

in from? period low sort coming your this do are a I members have first where uptick other from price coming seasonal any you for know data new gyms seeing joins higher gyms? question, or but My Are members you on a of is

Chris Rondeau

have from gym rejoins little of gyms. first-time of now are we still. less still seen members XX% gyms, X% joins from our a Yes, members. bit than XX% our And almost from are what closed closed

cost don't changed saw really conscious as But happening then, or really back pool, it saw of or gone So in you there. to it has I people clubs, down. paying experienced heard much it. from wall the to trading what happening not seen store gyms. but if a well. the then sure on. I'm went we you dot-com And sure spending anything it's we XXXX, people XXXX, from higher-priced too off. more it's why back haven't people they're a have bomb rock don't we back And maybe money Anecdotally, But and and as realize from I'm we use many having or the get go -- for coming multipurpose [indiscernible] back surveyed Anecdotally

that's So great 'XXs. in had it's probably something our some sales that back We late in favor. era, same-store

Warren Cheng

kind helpful. question, the app, second I my integration basis to any activity Amazon kind we there tap tracking collaboration. data? your own of you're Is that that on integration fitness sharing back-end or Halo into with Very data ask a you. about of could Halo, just wanted with Got

Chris Rondeau

or pay the month. $X.XX. And year. after right then the a Card they And Not membership flow. with free with yet is but this go any part the well. talking you of they But But data have as and to purchase, $XX.XX Black app the Amazon Halo with we're but enrollment, get $X.XX Halo to also strictly that, if -- [indiscernible] free is their Halo free have a the X-year first plan and Halo to or includes experiencing it, it want zero continue for now, the

Operator

Our Cowen with next Max is from question Company. Rakhlenko &

Max Rakhlenko

Congrats, guys.

you season year's feels to some So January last some of challenges. for following going a be -- like of important very first, this it's

feel you year as curious, readiness both just what differently how plan So the as your pre-pandemic year years? to next do And into do compared the do you well heading this to about season?

Chris Rondeau

it Times at New Yes, here have our this Eve off year, we Year's kick Square. celebration annual to

feel-good eighth well will feeling, will then an And mental right? going think such this towards general you'll we've post the the extension as of the continue Times -- entry-level which The with membership normally that the branding be and -- our the our pushed to what really doing and people waistline, that do and thought health about of we'll promotion. with the that workout -- theme. January as as general benefits throughout we But off similar the stage pricing year it to see commercial normal our the of about the commercial. hats and that end to $XX kicks also exercise glow, year opposed messaging So been month is we're that -- be But for sponsor integration, Square. the and as and of So longest-running this.

might year up December go year we week thing the different this push. to end be of of into last going One of some promo, the January to special a little is lead we're before that

one, bit little than a time that different So is flash mid-month sale. where normally a December

So more same. interrupted anything. of it's quarter the the But first, will nothing fourth just middle of quarter we of -- first I hopefully out but be to have to the X be things -- a that, ordinary little push will going month. amazing, at the the end quite be not Besides as it's the by the years that first opposed in think

one So real I be us. think good should a for it

Tom Fitzgerald

I of One have And Tom. existing to it's across -- that we've thing agencies there, our X system a about. from the away add Publicis franchise agencies talked on our into transitioned think Max, X

forward settled So with in franchisees, back discussions are very confident their will be about very they to to. and with that where used were agency they our happy looking and they're what the execution

feeling So -- and our strategically of also record about and with NAF. we're working also on as good us Barkley creative reconnecting the with agency for very

So months feel we here comes ago, compared when it agencies. like where we firm to on were several tariff to we're

Chris Rondeau

I'd you marketing we thing only the more into once which dollars. the add had and as member Max, too think I ever know, going just And quarter flywheel base we've first is have Yes. largest marketing the we're with this again is,

-- join So App. think pre-pandemic, you the go Planet if even and you in even Fitness can't back I

with have favor marketing an expect first special quarter, quarter. our in and first that uninterrupted So a we

Max Rakhlenko

And the going? the Jennifer's Simmons you about very integration today? congrats the portfolio? be on just the of then you're some what are appointing Appreciate then, Corporate great. what of best priorities how just to Chris, on Jennifer is And of can rest top share all Sunshine And Club's that. that's can well practices the President. that separately, translated to Seems Awesome, seeing deserved. color that

Chris Rondeau

she's analytics really She strategic And of in mean the is all business. system, and data Yes. size here helps here from our with demographics, coming that whether proves together put practices. whole marketing, it it's the lot best up out franchise I that Sure. a build data of most decisions box, all our

perfect going corporate influence a and lot to our it, to store stores XXX-plus a with fleet of of now her storm, be of her kind growing in have of think, So great I background, is these ways.

-- So we Ops mature the right, of who in Sunshine He's X.X% I'm excited the store to think it's years to on of deal -- the I of marketing sales new the that XX been have and system-wide, who is position from our lot along they're down legacy there And I there. a Mary, over have there; markets board. because has recall, been X.X% we to her brought with with that that that Max, legacy is same-store fleet fleet store take down note important VP Scott, don't oldest, most fleet, ago, mean, our you our corporate same-store back builds influence sales. legacy fleet, in our

has the outpaced like is never sales of of same-store here influence the happened. this our So which that with has system their quarters couple fleet corporate first

influence. practices legacy from that have that So are a our already there's marketing doubt there's front in put operational no fleet in some and place having store they best

well home things. their with now really news offices, So Orlando there as I down some good there. with Jen's great support really And in expect

Operator

O'Cull comes next Chris Stifel. Our from question with

Unidentified Analyst

on chain just give you but want development we of grow was? Patrick sense I X whether the ask that months seeing or so just in the and the all Chris, for Chris. I step comments X back today a pipeline of projects what's in XX to in relative you're where to terms number us last can from and of the pipeline over is projects This [ph] constraints If appreciate of supply follow-up. just around the that, to it

Tom Fitzgerald

I'll take Patrick, that. Tom. it's

of the we'll are that. know We and because long the up sort in back knows saying. who tell had that flow still and to here you're the talk PE XXXX We've very don't come But really at and those to and absolutely are to what than kind obligations I see. folks aggressively anything come how larger strong. for in invest think Knowing to franchisees they in they have about they Franchisees they getting where the returns, relatively our was cost returns about of still I some up The what stay in what pipeline. are the still talk are new build build. better but of recently. outlook things is Chris us, as build looking are

on of requirement it they see diminishing there. because we because the don't be ROI build, might to know there nor the -- of higher while So the a step slight back appetite, the is cost really

all certainly our that on talk looks this for where we year-end do we So provide as normally we'll about outlook call. XXXX more when

Unidentified Analyst

those relative in strong helpful. And I into legacy that and That's to thinking how margin? to store we the to store performance little year But gyms levels store Chris comps the the have a mentioned this about the And of are of I higher corporate that recover should the corporate on Sunshine then be trajectory hoping had. of in then, heading the bit you the membership you that in was it. continue in into next provide more really Got quarter. just segment the Tom, store know portfolio units? could margin portfolio the color contribution that seen margin corporate XQ of extent what sort the excluding terms just

Tom Fitzgerald

think good markets enhance a X-wall and a from said, will the -- nature legacy line bottom store from the of question. And largely legacy given model Chris continue standpoint. flow those is, it's same-store Yes, margins will good and cost sales the to our the to news I certainly fixed as stronger it, our

Patrick, EBITDA perform. is that they're pre-COVID, our of lower than build, the we the cost Sunshine very stores Sunshine, time were in to basis might several stores, they all to because at to you higher margin operate. acquisition, talked remember, markets mature also, X-wall of lower the strong. So the in, And primarily points about continue And hundred cost legacy

incorporated with margin run about but more headwind to for And piece standpoint, to year-on-year Sunshine we now there so we a full faster And grow of forward stores of had talked that SG&A won't comps as better a a that, than sales on line, SG&A. other the because going and those they team bottom rate, lack sets a as dollar, say leading dollars both bit is the into And we more is of a higher approach might flow where unit that intact basis to our of -- that that been that an remaining from a margins a AUVs fully will be drive XX-plus term. hybrid little should continue the continue increase. had I'd but full the cents on of that's have leverage

Operator

question comes from Jonathan Komp next Baird. Our with

Jonathan Komp

opening you the it potential any the in challenges pre-COVID? questions units the we'll I have viewed more week, ask if next big back on more be I'll on as guess too. XXX picture, as get to stores, not thought the inflation large maybe the given you question with planning company and as long-term slowdown side, year construction? don't sure company sign units But I'm franchise should that as one growth on are just was good that And any is or you a

Chris Rondeau

a of I the their community today. are lot the have units that territory where undeveloped of Yes, on have X,XXX-plus almost area still valuable their development the as as are they one of the in that's developed, comes open franchisees, as pipeline, franchisees the the X,XXX from agreements is the along with their And with talked have over runway. about past, -- that is they don't business the And Jon, in value we've that see we right? top

want their runway franchisee developing to resell from going they and to away which then another build So would never contractually it. them not lose taken that's from to it have

a because I want because to question open open until right might store up ahead sometimes year, schedule in the going open year the stores of to of they So 'XX want X so of if think but now, or not of if see down opened they're slightly same not opening that that wait we're just units 'XX maybe just weren't kind XXXX. They to as would slow sure that right right? you big of in open down that they XXXX, is contractually ahead I the they committed cost and in have now might earlier here So mentioned comes up schedule. and

bit we we to little they're So whether get XX% might go in hesitation XXX back that. open XXX required because back up did just to to XXXX, be I than of or a it like more get to units of we think

of So contractual still a opened be be lot a lot of opened. and to to needs units

So to each hard XXX a be ramp from if we it push until to will going a XXX costs come go lot say XXX slow down. of are openings to It's year. just or to we

Tom Fitzgerald

corporate and not the side, as of and had only the acquisition on Sunshine pipeline. the was current also team they the know, I Jon, And mean, the attraction you portfolio the part that had the profitability of they but

like the in the to for territory. we stores addition the opportunities markets, our legacy in the ROI Sunshine in so opportunities really new And

strategically we corporate intent to based grow store slowing bit a In around what's maintain just We might our not bit down be year, anticipate stay given do we estate site-by-site our any development. want to system. XX%. with behind ahead, the happening opportunities it a is on would So so penetration, but little XX% look and little roughly the real to

Jonathan Komp

then great. that's And follow-up Yes, on just X pricing.

I the little a penetration. think year-over-year, in you saw less maybe Black increase Card

on units just benefit for to you annual drivers how pricing? monthly seeing into behind pushback any pricing the you Card trying And decision going might XXXX? are that? And any see on any about new and So much higher Black then think pricing

Chris Rondeau

into. the We High acquisition Pass a School this Yes. increase quarter month pullback $XX from Summer was Black just slight teens converting mostly that in the say in Card

So where time before initial raised didn't decrease see little we even is first acquisition the rebounded. normal, we've on in it related the Black months Card time a slight decrease -- general not or done the third to Card Card it bit for of it the it's just better, in Black wasn't because we've slightly of were acquisition Black is pricing off-sale decrease first itself. price which Card couple done The the is But acquisition drove quarter which a but periods this it of this believe this it. interesting the Black we've a time actually, a

we interesting we acquisition, had in a quarter. that saw an increase really though actually So $X this even increase, down just teens that it drove the

Tom Fitzgerald

call test we're rate the And Black the Jon, outperforming the have. increase, said still on we the that Card, since results we that

Chris Rondeau

$XX don't the changing, see you about, we've of in as general, as as the I price think -- couch far kind talked off that still, $XX And make get don't I increase that and amazing think we when see I always taking up business Card range. in Black end the advertise just people and it's the they where XX% And speaking really that an And price. generally benefits, come in. they I model

curiosity great people it's them So and interested get a we then we out checking to it get upwards. in convert price, hope

Operator

line the of Capital Siegel Markets. from with comes question BMO next Simeon Our

Simeon Siegel

had you've Sunshine you're Chris, bit EBITDA a now and recognition. So line top seeing the for full

any or that I should NAF And how going this. expenses numbers long us NAF outweigh learnings Just remind corporate the can help discrepancy versus how sorry revenues franchise what thinking changes on then during missed you're time? that forward? about -- long-term Can you just and the just, is if Tom, you any

Chris Rondeau

Yes.

comments, we bought I stay range earlier reiterated Sunshine. at XX% we we Tom's think want that to think when to that I

around most them markets the marketing come said, build up and franchisees or to continue tuck of So legacy our sale, we grows, some of all franchisees, I as happened. current right? our think store they've of come are has place, fleet say, the part corporate as it's our never probably for stores in, in. think markets, let's we we're ahead smaller their which any I -- same-store sale put country as the smaller as stores in So tuck-ins that Southeast in their that sales But of just are in leveraging and corporate -- and markets the are systems I is techniques ops that legacy Sunshine the Northeast, in and well of for that where anything locations as

great great. that system So which having influence it's is a they're the on

to some stores I as team, build things well continue the rest good think we're to Jen's ground-up I happen really there. look down of now for there, and with leadership the with

but, outlook, I future. So a in same think, the still think, the I better probably plan

Tom Fitzgerald

changed for peak that ended and we to with dynamic join there. appropriate NAF didn't for we season, of NAF frankly, -- contract that we be we NAF that the side. with kind sort during we into be variant what collected. make balanced of And with Simeon, we I on were the to COVID, decided Pre-COVID, in we of where this we some than the we unilateral coming then things But to And more then Omicron have thought the of where And will fits always free January, be and year, collections. absorb up we impact where than the we -- And during back us moves were felt think been historically. what starts, to greater would our to spent intending right spent collected. will expense the part all that we had Publicis to was longer-term of some having the we really greater pay than

million $X.X it's be think full right track I year. to around on year-to-date, $XX million

Our of years, we've as for certainly did said, a expense they last is it be normal will intent, us match seen Chris what January couple intent back behind in we which QX the get more like to up here and to would pre-COVID. assuming to collections compared the COVID be in NAF our case as and looks

Operator

with Guggenheim. is from Our John Heinbockel question next

John Heinbockel

in a other question increase let more direction? pave versus away from I tweaked, more national, the local national the that do we rate one. road. particularly would increases And current if Are I that, club on given think is think get the the for open? you maybe start way ways of was are do down improved, a to local. the right, local, franchisees move thought would what that's then the with less absorbing national that then and right? was royalty cost Because your right part quite eventually maybe me Chris, But a is a idea you And that

Chris Rondeau

on the been in we're the But operational good of if were and these point coming Yes, straight for XX of and royalty wasn't have XXX% think leading expense out probably would not this at to it question, now quarters I -- we where positive were in and of have increase I in it's COVID, in a were comps stores back as and mentioned John raising expense. card. some into probably past. it we a But I've the the of naturally, payroll COVID they some think

believe. to they where margins that they or of topic I EBITDA discussion, once returned is So that close passed and a definitely were

through believe So is it we're same-store And quite of know, as not there the but matter flow we sales. I in see time. you a the

As the markets go and going Barkley now annual a data. a quick to worry now X doesn't that to the be then can maybe be We'll have the I to down and We're agencies do as more all next of easier reasons least most time. as record something make think this, better, We our storm spend and what X% and with put performing pave national is going mix room. learn to them every lap, moving why the now boil to then just teach and the Zs, Merak get all really own as over. sale. And couple refined in on the way, and some right? which at to post-mortem and a end end does and sale get every I'm stores sure you we X,XXX did think they far efficient franchisees have And need every mix reopen, and of be the to year, just and be in are media X not. Zimmerman, the for over we're that -- the what it's then do anymore. least that more why most less maybe sale, going exactly markets time big that maybe just And understanding their X%, the in show money to saw, have I so more that now there, we to and efficiency leads and all our that X,XXX to goes now perfect October we had we up spend have would better And will so the X% about outperforming then we easier

just us a that gives the pay full the of dollars for it's would as great. same the more well royalty well. So And opportunity franchisee really increase be outside which

how of just I it's I time. there. soon. we'd So get just about believe a It's think matter

John Heinbockel

of on focus And want timing, right, I right? would expansion, now the what's secondly, pace be would it international thought your maybe to Do in guess initially? greenfield, you And step Asia geography it up? be

Chris Rondeau

Yes.

Xx has done Mexico mean go has Australia store. of been members international just U.S. about been Mexico for Australia or country as has team the a great. We think year, average a in us. we've where didn't it call phenomenal than phenomenal. done more didn't get approach. per really have here in It development an Panama hybrid with a past, great. work. has team it, I a team of to really -- members I talked stores open here right? the kind se. was doing, ops X and We

opening is Zealand store the New coming to year. this first going be

So going begin team we're to look build to would at right be on international now X don't thing just solely countries an abnormal to and together that look team And a focuses it to for put international now or doing year. that us -- putting out. think I X

it make somebody be to as would a we it at of creative. acquire. ones, brand, is think lot you there's a of go to a know, be does in some And one Europe, sense acquisition big time will I whether have an if

in, Planet sense low-cost Japan large-scale, out not the doesn't providers is go Asia, specifically, other on start any stores. hand, price to really the to make build and that

probably more you'll see So year to or as -- see possibly focus more X probably I and opposed than see X think a more X.

Operator

question final today Macquarie comes Our line from the with Paul Capital. Golding of

Paul Golding

in Card. of reciprocity I noted that more And wanted the trend bit wondering evolved about how a sort Black In has I post is that to talk past, the biggest you've around more benefit. of and any Black was COVID is plus metrics that? hybrid the now how and platform PF now in maybe inclusion and Card work with engagement the factoring given also

Chris Rondeau

Chris. this is Yes,

home the either approach, side at of feature we from with or still have most merchant some We -- process of Even a things. used reciprocity on falloff work hybrid huge is all the the by far. haven't the a seen

strong is And second, popular hybrid, I you. to you digital tanning pretty hydro are guest or the or with beds guests whether most the Second with privileges, free relatively so small, the bring work massage usage. out all it's others mean, the

it's all that small So fairly sense. in

by mean, few acquisition digital that the digital? the sale. reciprocity bricks-and-mortar far. one Card so bundled, thing It's them up the what's Card the all is end Card Is other more do, the had of usage, are it But definitely see used hard or the becoming as really is The reciprocity driving the it's Black ones after very well as interesting Black I We $X.XX the and is reciprocity usage the to than subscribers. the half most Black amenity it fact. the

you there's of bricks-and-mortar they few When gateway road. do kind it, of them. the So -- the up being down very know they a into end it's

it's very So it small number. is people over converting but a

Paul Golding

there offering, Or Halo selling taking advantage cross And are is getting from that any cross Got opportunities it. of you're sort the any collateral marketing? And there? them? opportunities there are what a terms you the in of of then or media Amazon

Chris Rondeau

with, the sales, off. much really of work the lot but how And beginning, they're disclose Yes, to with is this great we going in a the can we it's hopefully, not do them. beginning working is first partnership be it's stuff the so future can of if the well with to on goes all probably other

gym yet. or really sold We haven't -- on one's memberships no Amazon

get pretty it relationship something during or goes all. $XX do pay good this you get it's giving paying start right, really join, away think what's that go would right? that, to like there, at So as I to it you've bridge think But long-term understand. to interesting well them be $X But a we hopefully beginning form cheaper, of be it a Where X either this, that, down if we is from We can't do if it way work, there -- to a to like join. But year. probably a sale or do would the seen know, about granted stuff that you month. haven't promotion. But was any I doesn't when is crossed that down you them just that does

enrollment it beginning ways could other no than of drive and to going the just otherwise learning fee. understanding hopefully, -- So to be volume

Operator

Those are over now I will all to for CEO, today. the questions remarks. Rondeau Chris turn we concluding have for call the

Chris Rondeau

Investor us quarter Times excited hopefully, really Thanks, join quarter. Eve goes, you joining great Square And here and Day next for as off Amazon the get first the New week. Halo here and an us fourth kick to wrap everybody, at today promotion for to Year's uninterrupted up

So I next Thank hope see to you you. all week.

Operator

for This concludes you, today. and Thank our us now joining may everyone, call you disconnect.

Planet Fitness (PLNT) 8 Nov 222022 Q3 Earnings call transcript