PLNT - Earnings call 4 2022 | Planet Fitness, Inc.

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Operator

Ladies and gentlemen, welcome to the Planet Fitness Fourth Quarter Earnings Conference Call. My name is Glenn, and I will be the moderator for today's call. [Operator Instructions] I will now pass the call over to Stacey Caravella to begin. Stacey, Please go ahead.

Stacey Caravella

Thank you, operator, and good morning, everyone.

will Chief Fitness Financial call Chris Executive today's and Rondeau; Officer, on be Chief Planet Officer, Speaking Tom Fitzgerald. is us Officer. joining Edward and President Also Chief Hymes, Operating session for They be questions following the during will prepared available the all remarks. Q&A and Today's for replay. recorded call webcast being is live

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

along measures. with be measures found on investor.plantfitness.com, non-GAAP call our Our reconciliation release financial any website, mentioned with can of their the on corresponding GAAP

Now to the I'll turn call Chris. over

Chris Rondeau

us which resiliency, Thank membership QX which Fitness of differentiated our everyone, and consumer wellness. great QX into you, of for of health our to of all the succeed of pleased momentum you, I offering Planet passion created environment call. systems this the proud our to am for XXXX, to strength very increasing positions Stacey, earnings fourth continue thank how in coming of quarter, model, joining our prioritization and in were the with franchisees, on continue of Closing we a an us our year. we growth prove record

drivers Let growth. me behind X start with the primary record this

national and best group An our by findings. to to media all marketing fourth in local First, on our our with newly our partnering our with structure sales example had was our we to practices to franchise analytical leverage a entire region X with first and this new and local system. results the the we agencies had X of agencies share begin access is franchisees analyze The place meeting to quarter national level. across the for optimize national quarter agency time X ability a advertising as agency we implemented handling post on based

with their Importantly, they're agency both level and our investments are being from executed getting at service of confident partners, how the franchisees our with and national they're levels. are marketing local pleased

benefit overall the commitment to out continue in increasing we of and interest to coming Second, from the pandemic. wellness

to more a Our visiting believe are you working members who more out. We dedicated they is gym Halo, frequently, promotion we Tracker. to sign received a visit in November that Amazon had the and which free successful a Fitness where Health are continue

tenure. you joined a also membership, X-year Card a to which be upgraded Black should average a required If or commitment, tailwind to it our

late the resolution. It to during quarter, promotion made $XX.XX full the into XX% net too attractive of which head Black diversity we as gym our promotion age, at $XX natural with the get Additionally, lower our know the gender, it join from price successful and XX across upgrade the a from up upcoming our an trading our drove was explore as our on Card an similar partner and are with gain year's members we who XXXX the We of price as possibilities membership those members a membership to with other who other in for today memberships million in believe the most scale end adjacent new first a pre-pandemic. well our industry. size great it to classic new typically that to that well-known year momentum consumers attributes. ended promotion We we categories continue and letting for get to Halo. We're approximately of brands year fitness the Card incomes in working wasn't work given year Black are brand

brand journey many get million appeal looking goers non-intimidating results. couch wellness off affordable, restart members continue to fitness as Now the attract ended environment. to and with the approachable or year the XX to XXXX gym We first-time our approximately with people our

Members are to due And XXXX, in increased XXX workouts gyms XXXX, in growth over to by last up despite the our Omicron. up membership also X.X million approximately thrilled part in first in XX% our members last softer quarter, gyms period our more in We rates did have used in slightly membership year, million our compared XX-day nearly to year. a from Cancellation of XXXX. lower pre-COVID. than XX% were mid-XX% in

an ecosystem our new addition the locations stores, with stores store We XX We in with pandemic. backdrop also is grew PF QX. to including recently relaunched of the the grow struggling our upgraded XXX enhanced app. coming our base of new digital X,XXX industry of that against out to and

perks, the we of to XXXX, offered outside We such brands our Shell. providing more also Grubhub from to members gym they even can't when the club. In Crocs, discounts walls value added it as the and four make

fact, that our X in club over data hasn't XX% In recent who Perks members with our of showed the visited engage platform months.

Zs During with XX continues of XXXX, levels. of members of Fitness over penetration Gen ended Gen nearly generations representing our the are Zs all grow. Planet the U.S. with appeal to age XX% younger total membership. We pre-pandemic year X% the above with More in back of all to our than generation or

and One year ended had joined was members program. paying their for parents rate of of successful Pass our the conversion highlights High We Summer X%. XXXX with the XXX,XXX team as and nearly approximately of School a participants guardians

ran outpace the time last similar significantly this XXXX conversion We we rate the program. to continue

New more we're them. We Today, it program is of the X.Xx all years And we School the run of healthy a the program Pass now X% XXXX loyalty of habits XX% in market High we than Hampshire, and teams Summer had compared teams before believe in to to Fitness as building had we've XXXX. state look members XXXX. teams important program. forward test bringing to that Hampshire New We the are a the for all participation back Planet establish nationally. as was much of we're so helping X with this in bigger In base, brand

growth our the very on along to future. our with Now We, bullish prospects. franchisees are

recovery XXXX, XXX period. opened out We pleased members, the net the than coming with new of we stores million ended we've the end at that more and same during pandemic. had X.X We with are XXXX of

are more the than of XXXX. We quarter through first halfway

far, in been QX so years And not the X has by interrupted that it's first time COVID.

in row, off as feeling, of so our e-add each campaign growth didn't result a pandemic. year membership by historically $XX the increase we quarter feature that We recognized Black growth. the the the price the last list Square recovery and metrics, For New aided and in The was and showed the placement presenting positive to which relationship the overall category. very were salvatore were the consumer sponsor eighth Year's #X fitness for primary is portfolios We have buzz. Throughout Magazine by great with groups, encouraged strength they with we with by in recognition a campaign their more store lines Card to we we of XXX post-workout as kicked top event, increase strengthened energy recently Times brand recovering energy with high even and back by Along the from and fitness the annually atmosphere. further met generated strong the annual franchise positive on was COVID. It in which permanent are closure low together This XXXX, a franchise XX working during closely recent $XX. franchisees. and with consideration year have one fee store our our our believe addresses big top are that our Actual quickly, of the Eve its for relationship

XX% One of we nature to business doubled level ownership Sunshine approximately our model. that the and to it system, a year we is ago, as think allows store us of acquired portfolio appropriate the asset-light our Fitness maintain corporate

in dedicated have driving positive focused We franchise in second store sales. see half is of a now the XXXX. team the to Black on stores Card our we corporate results our began leading the membership When same-store in sales corporate outpaced same-store growth percent. impact Importantly, that

team equipment Hymes growth and corporate and to we business weeks technology in Officer. businesses, leadership in functions. President sales. set international overseeing existing welcome also instrumental and franchise new our He's He Edward our and geographies. leading Chief our U.S. helping new be legal Edward's and to segments, skill We ago, accelerate stores through our believe is primary will franchise leadership as few our A Operating

team One that place, of will increase international. internationally. his first believe task we that lead is is to Once in a team build of pace to expansion we our

each of XX ability years, been more successive and we're affordable members. For the double our increasing not membership, to it's age over given with can we believe successful the historic Planet so there. to experience Americans for it all And penetration Fitness make and of our generation. We are all. X% this XX than But stopping do our today, mission

ceiling, for We caused floor, reevaluating store is and third enhancing with year. a franchisees the us given industry success. We shareholders the this also party be lives world healthier of by a long-term our consolidation significant people's We'll sets U.S. purpose in X,XXX-plus a and this that believe the the our target the believe opportunity creating pandemic. not our up

I'll to over now Tom. turn the call

Thomas Fitzgerald

casual system and Chris, given barriers as continue happened about a Thanks, we balance and fitness break we operating gym believe We financial what is, good and over down last from feel has sheet position first morning, good where goers. solid the and that timers of particularly years. everyone. our are X business for Overall, our we strength to

asset-light, exceeded franchised we financial drove want and call we highly reliable XXXX, our that things Our targets. Notably, or I business consistent growth and last X out. model in met year, accomplished to

best-performing completed we the First, franchisees. of one and our of largest acquisition

refinancing debt. an fixed very lower Second, overall average our that interest resulted successful in rate oversubscribed deal for debt a total a our rate we and closed of weighted upsizing in

at new million. approximately of million replaces for that one total share an Directors X.X the approved existing fourth, XXXX. price we $XXX approximately spend from And per of a Third, share of a authorization $XX repurchase shares repurchased million our average $XX Board

will we'll I QX and results then address cover our outlook operational for Now financial our and XXXX. financial

and openings increased growth our fourth will our All quarter, quarter, XXXX comments XXX, during same-store We fourth year QX quarter XX.X%. comparing total X.X% in of sales full grew of noted of XX be to bringing same-store X.X% of to XXXX. positive as new new store fourth corporate opened our sales stores Chris performance quarter regarding earlier. same-store franchisee sales the my had We the

be rate comp how we was prior our until sales to of will same-store results, that quarter for member Sunshine we in with with increase reflected our system-wide 'XX QX QX consistent XX% the Fitness continue balance being same-store corporate-owned driven acquisitions. will growth. same-store growth Approximately sales stores report in not we've net reminder, be franchise by treated the reflected in but a they acquired As of first sales

penetration Card Black was slightly XX.X%. from down XX.X%,

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

For to sales the as fourth from new was quarter, across compared The The placement an X in growth all total by increase in to as equipment same-store stores increase $XXX.X revenue National million. revenue Ad million primarily segments. franchise and was segment XX% revenue higher Fund $XXX.X due and well was growth royalties driven increase revenue.

offsetting the the was in acquired transaction approximately a as the result $X.X from of Partially a decrease million segment corporate-owned segment. moving stores Sunshine to increase the Fitness franchise the of

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

completed equipment XX XX% for placements replacement approximately new placements quarter, revenue. in the XXX new accounted store We of total the for QX For store year. and equipment

variance in franchise in Now received resulted than will new in unforeseen that dispute. locations previously that not store December time, January. Since due our circumstance store one we open unresolved equipment one what placements new to an late slight we We that in early to is a store as landlord pre-reported reported. a less this the regret

stores, $XX.X of cost equipment to million. revenue, compared amounted cost to relates million franchisee-owned which of sales primarily the to Our $XX.X to

We're as drove expense, primarily compared Sunshine was from was income corporate-owned A $XX.X in net million, million, was well the can income $XXX.X store $XX.X Net the primarily $X.XX. found of relate million. Payroll expenses. National adjusted diluted Fund Store the from net SG&A the A reconciliation EBITDA Fitness million the $XX.X million which $XX.X to production operations the to income segment, in addition million was our travel for XX.X%. to be increased Bowl XX.X% quarter of $XX.X due to increased $XX.X million. also year, this costs with associated be our $XX.X to the Advertising with per drove expense Super as increase of of was adjusted and adjusted to net income million team to the EBITDA acquisition. over Sunshine million net stores Ad was $XX.X Adjusted net compared compared release. to EBITDA adjusted rolling last and $XX.X GAAP costs the adjusted adjusted margin which decrease. GAAP million can release. income earnings reconciliation EBITDA share with was earnings income margin additional found

was adjusted In year as As no are was third period adjusted adjusted Equipment adjusted the million reminder, adjusted of EBITDA EBITDA find reflecting change. adjusted and margin EBITDA costs our reconciliation, was was $XX.X longer million the we EBITDA XX.X%. restated this a margin store XX.X%. EBITDA Corporate from $XX.X franchise preopening By $XX.X prior million EBITDA. adjusted was quarter, was excluding and EBITDA XX.X%. segment, the margin you'll and

to sheet. balance turning Now the

As Total restricted million December of $XXX.X included rate fixed debt, carries and as deferred compared of in December X.X%. approximately excluding blended $XX.X million respectively, we $X.X debt costs to of XXXX, cash, of XX, securitized of a long-term each financing cash total on of XX, that X XXXX, XXXX, our was million and December of which million consisting period. $XXX.X cash rate had $XX billion interest tranches XX, equivalents

XXXX outlook. Now to our

disruptions, assumes COVID whether causes new shutdowns membership result supply there in resurgence in a stringent disruptions. of no that Our material more or member behaviors significant view that for via significant change mandates or year this any chain is

on First, store growth.

XXX to our the per year said stores average X As years. I at Investor over in expect Day we November, new next

of into our still below both factored will our openings have headwinds, been However, face outlook. we that XXXX new as some be store which XXXX

a supply issues other continue and availability to chain for locations. HVAC corporate First, franchise be both challenge and

exclusivity of recently to this their development their our on to their terms to their majority near obligations of one certain This and defer markets. and from with agreed term re-equips existing service franchisee allow we've flow of and Second, cash remodels larger in their will fleet the the focus lift franchisees debt.

drag XXX. but offset be are other new stores up it that structure placements on pandemic profitable, be the are an in to had clubs hopeful build in place Therefore, placements While aggressive this in group they new hits. stepping the equipment tenuous became XXXX, capital when in developers we This of by those will will system approximately markets. a expect somewhat we

up mid- We expect revenue. sales make of that reequipped will to XX% segment equipment high between total

reminder, a in franchise-owned locations. only are these placements As

year new corporate-owned stores net Our the will include stores. for

to range. system-wide the We in growth be also same-store single-digit expect sales percentage high

following targets the XXXX of all reflect over growth Now fiscal results.

revenue to to the XX% expect We full year grow our XX% in range.

full We the XX% our will EBITDA in expect year range. grow adjusted XX% to

in increase to adjusted to XX% earnings grow range. We XX% adjusted the in to expect income share the we per net XX% and range, expect our XX% to

of over year. repurchase shares We outstanding million be of approximately of the repurchased to the which course million, inclusive is shares X XXX,XXX approximately the shares also January. in XX.X expect We

opportunistically Investor to that As we $XX ensure behind may we we the pandemic discussed million. expense keeping our that interest in buy more we net want mind at And be Day, to impact shares, our expect is us. approximately fully also

Sunshine mid-XX% year driven stores increase up ] the driven CapEx D&A results. the the our full range, be portfolio, in in our and of in range, corporate-owned [ in expect we in and CapEx percent be to by Lastly, up by a mid-teens additional to

With quarter lot business the store encouraged was As growth, of our XXXX, franchisees to earlier, a franchise positive system new during across Chris each build recovery of enthusiasm membership of by more noted are our stores. there in recent reviews their portfolios. most

members annual Card last higher their store majority $XX.XX to Additionally, add new in rates. With disruptive and and these of basis vast in of year's fees the approximately increase the membership will to our are the ROIs. believe growth, XXX putting for among that to translates into health to to the stores asset-light the and a believe franchise capitalizing drive new store value importance and which margins in Black greater sustainable XXX brand as long-term create recent will $XX increase We pay this disciplined believe points on margin on model, that people shareholders. franchisee we and overall flywheel we our membership are we best wellness

that, Q&A. with I'll it the And now to over turn for operator

Operator

BMO Markets. [Operator Capital Instructions] comes The from Siegel from first Simeon question

Simeon Siegel

or franchisee around Maybe last on seen Tom, others growth from mentioned, any gotten that more the maybe how this on comfort with areas into a just point maybe just your them? And you exclusivity being color that large just are the interest have step they one-off? around you that? expected you've

SG&A you any all through pieces next And the on within to And exciting comment at just broader opportunity think comment an members. then, your Chris, could expenses? we as double in on release. I'd That's dollars moving then thoughts love obviously to some for year press about if elaborate --

there would be anything helpful. So

Thomas Fitzgerald

franchisees terms the we're beginning for about, that. our Simeon, approach. their that in may We is process right We it's a interest. may talking place take where any is few no want the to reason. typical in so at in of the franchisee of not who disclosing some longer bite And we they're in beginning this exclusively terms the markets were think a think is, of and of be at which practice that we're existing there that

-- smaller this did a scale the and are way. system get trade a who that frankly, interest back previously. to and of they on bit former some they're in who compared only of from on And to missed maybe somehow a maybe completely to And there's doing want it, few quite what -- out also, former franchisees

the into information of couple for year long and franchisees the to you a outlook a of of based collect our have circumstances tried we franchisees. that we short on I that's this to of placements. that on in with just our But not year leverage talked is as lot -- outlook, we financial is believe of is consistent very it X we're our we the terms said know, factor what where in want slight and a we So very based But of accelerated isolated situation expect we're there. to from the out to all times to investments an some also And SG&A, top all not we of while We discussions Investor want into. drive with guiding that, we're international going growth on in that. And at process over -- Day, years, building make. about get we our think We have to SG&A. still an team

We're also IT as making team. the additional as well investments in

think looking growth business. very very, more is we And basis want support to in much growth very not way. for but a a leverage. It's So slight We SG&A. from leverage point -- are large this prudent the

on So then, Chris, over to that... you

Chris Rondeau

about in Sure, at members. locations. had million now went had historical if IPO, be Yes, private Even X that with we wouldn't yes. the at our of X partnered the look members. COVID, Thanks, IPO, if here company X faster. from in records XXX But you we TSG, with are public, XXXX, equity were track years And happen I before about we locations at arguably the the to are So we X,XXX right? we later, X about back million IPO, X probably before years X,XXX million when you the go Simeon. stores and think XX here we members

the see can our of growth. cadence you So

of it majority straight of and the And comps. vast XX% year 'XX, we And member full XX growth. we sales again, The had the year, leading be COVID, had same growth. member is same-store thing, majority into quarters vast this positive

Z that Their in Pass pointing they're talking right another about then wouldn't there's been come sign-ups direction out. the in High Summer nothing any X, And years. which [ been other Gen mix tailwinds So how them We're about happen helping confident, joining. other as ] School have into Gen again. is as very the than great, X and with alpha, we've why the especially acceleration behind well that will

see So there's no reason us why can't we once doubling again.

Operator

With Max Rakhlenko our Cowen. comes next from from question

Unknown Analyst

morning. on Bradley this quarter. this for This Max Great results is

advertising First, any I'd any into from rolling could discuss love with quickly if perhaps January quarter-to-date learnings the -- early you then and just results January?

Chris Rondeau

from off the January carry December the the at really quarter. did anything believe the of that Year's but momentum helped sharing kicked and current New sales. from with promotion large where, on December we actually I think, Eve the the I XXst not we're the we But then do Yes, sale, the XXth expired to end on actually

So playing is we're pleased with how momentum out.

Unknown Analyst

Z. other color maybe more a Card Great. kind little join. compared cohorts, with Gen what any any provide more on gears seeing Black Z they And switching to Could you bit perhaps details their then just of utilization, Gen continue you're mix? ramp-up to Just to on as churn

Chris Rondeau

Yes, not. everything members There's similar sounds pattern High age. month, all the It actually is the believe across it that accretive. still it the Z, true their last to average which during the a Pass is really very all generations. about their very same. out similar similar similar and you out is And very other their Summer saw teenagers, workout School summer it holds that's workout and even times And the that sounds are different. nothing X spins working patterns are even very of the Gen younger regardless We generations, or really

Operator

comes John have Partners. Heinbockel We next question our from Guggenheim from

John Heinbockel

the think X% sure summer? get that then coming do XQ as you a right? top be you that, Chris, about you and you think of right, not people is, seasonality how third would think important XQ versus fitness with, School build particularly as right, penetration, of about you right? over in would it think part the that? start second, High School terms build you Pass, and mind How if little will also think to and being wanted do 'XX, as Do of I'm you're changed XQ as And in the it less bigger? reliant has more how High both Pass a I time, on being would

Chris Rondeau

Yes.

were think I And for COVID, talking probably -- first that that the drop a the recall, weren't the -- wasn't even quite just many years it summers a -- were about before off. They right? you ago, we quarter. few years, year,

But years summers First different ago, go XX were member ago, years than have quarter XX, XX, actually. still we always summer one very they which today will you be months, net the where didn't. are during we some growth the typically XX biggest today

that. So there's less a definitely little of

So that New out. Year's it's it's I not I think if right it's Summer about work about to High resolution think thing is still just you're there, School quite out as Pass. And much but as work on you're

this of I are in only mean, opening members Planet. my Hampshire, XX% our high have X age years heard You've Naturally, teams ran we of in New school we that's where remarks, X%.

schools paying get as you members if out teens more summer, we summer of to a of as members think we give short continue this penetrate and to you about to imagine that program after continue high more roll So to after have again. summer more

What's coming relaunched interesting, did this of past is are then. we summer, this of out probably those in and by the by summer, high we school it time already XXXX, too, teens X/X

teens lot free of there that So could summer wasn't the repeat a again.

but XX friends call big the going year, the with to with backfilled be freshmen it, will still it the they're are last XX, for those them the about off a teens they that to X.X chunk junior interesting that years college, time old second old, let's be So the million XX, new do years XX joining to going to kids speak -- again. are of to going there's their did

momentum get So summer. hopefully, can we this more

John Heinbockel

you in on How then teen when lastly, in this will go I you've secondly, geographically, assume not. maybe I And the And that that be you you're and been place? then countries and right, year still will do MFAs, And year? right, assume not interested into be international, many focus? next Asia think

Edward Hymes

currently already. thanks John, a the really is international on in look We're geographies. to actually taking This inventory opportunities to Edward. I've space the the is bit in -- actually accelerate side this -- And on definitely for that jumped new question. and

I of from interested change complaining changing, As a we We that. that. around not terms a entering in X really real just strong going really X want we're to past, in not foundation said to I strategy that don't though, to disciplined flag the markets establish grow year. in really approach a per and think to see do that

that, on to let Mexico And the you I've read just with markets is performed know sales. translating initial Australia, been happy in outside they also But very on the really the and U.S. the actually really well very, well. model

now, process with expanding be the that in about working of So in team, the them future. and you'll more hearing that

Chris Rondeau

John And still We point don't there. them. in last add I maybe interest have

Operator

next Stanley. from We from have question Morgan comes Brian Harbour our

Brian Harbour

you've said, much do up Just 'XX and How based and what think will other of how openings, specific when in on up in kind of just that will called franchisees filling to like issue from of just do unit in the I about about I'm much hopefully step tied stepping on to equipment you what of come is you this this some How out such? year that be when I think I trying 'XX for of parse kind think that you think will you much more out? of subsequent and guess that kind years? international? think drive availability

Thomas Fitzgerald

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

good very And year about X being to years, very per XXX-plus feel we that good still able worldwide, some X said we said think this the at years. about over average what year we across I have the headwinds. Day So we would feel Investor

in expect November. didn't we it all So to be were at when level we that together

be And take a years if are you before costs obligations up of about They're XX%. headwinds, them. And some of and up. -- -- COVID. roughly We the it about think before of ahead are a their obligations there of COVID, postures. probably couple handful built XX% Not to about If costs, bit development here versus that. maintain of of but we've the talked I is ahead with franchisees they situation, with they're them, XX% their we all out that talked down, and typically, as new units were seems sit coming their aggressive franchisees. wait obligations. they'll like inflation now more today got little And ahead of their would the higher

will Some think ahead they but were probably in go approach. And a about brands, talked amount it also we've still a some Chris inflation. I and heard the of the if less clear don't large, units incremental our you wait-and-see great. Obviously, because of our have they to -- believe pull new outside we probably growth. still going is just still remain at a the We ahead are, go the And and lot that look where just bit all if by there's was say interest that model the trigger go with costs are far system with things build. of take in a concept to going may the impacted that ground, multiunit because there's and returns come fair

lot When you growth. pricing a food look a and they've concepts, sales, have traffic of got at some not single-digit of of but low the same-store may lot they

terrific. every is there's the flow member additional business quite the new driving growth no the the Our XX% cost same-store through, for got opposite. flow-through member, is so We've And sales.

abroad going units. returns, and absolute when look to because expanded U.S. relative in the in the who model the relative So the -- U.S. within get the we've same tremendous and and to the countries those the system and economics, want absolute beyond to works still both in the system you grow a that there's to we overall think at And in and be the come the appetite

of as takes in in our So still if model opportunities. the not into our all feel one best, propositions it. and the stands economic best I good we factored the multiunit about We But outlook. puts think

Brian Harbour

Okay.

Sounds upgraded good. that? you just recently. you would lot maybe say a go know -- Has of did sign-ups, improved engagement? know I Just I you And app it that the have of any on about to up? but driven continue just kind the digital Anything app. new comments

Chris Rondeau

web in, people they're still a of gyms and we continued Yes. and them they we pre-COVID. digital where they're joining traction. in more There's back now get well app and that open the front Its no -- the were just ahead continue the joining when strong were on lot stay of and doubt more with even to walking

off not it's actually coming tour in and touch and a feel member that ways take where a as shoot. the the they old joining and join So it

of I friend the it's checking of the improve think or ease referring or the we or flow-through and crowd meter. a joining app using just it's simply perks use, using the whether

I'm and X heard X in be haven't one club able of it's calls, to take Referrals used get that the we're the the finding in for perks cancel. continue The that them more months redemptions, the stuff. the been traction. hoping you data capture type club in months, the in the from And which remarks, of heard reason the we'll biggest haven't So to months, of my thing comments out just have of more, you've thinking nonuse. I to I traction. haven't going previous and that club as opening or from used into my have continue some just finally get cancellation that last to that perks X is XX% ones is

us. crocs we in can a even provide X in So outside value for is so huge there's in walls. plus And the like if X $X purchases. million like related, in crocs is the app, They fitness did months -- not

people $XX. all the ones the to the to of on actually -- tipping they perks we just can out tipped use And tipped it. chance so savings value, provide hold redeemed, the have we that point a just used just membership might it's and So that that

So little AAA like and you're up. It's is sudden, of bit model. all dues saving this your and starting to a discounts, $XX a again add by buying amongst the you're their stuff membership

Operator

Perry next comes have from of from We Alex Bank our question America.

Alexander Perry

Congrats on quarter. a strong

guys Just rest can given first, using little you that customers if And -- maybe on have how bit a implemented? are you us more? annual the are seeing a could the pre-COVID, especially been Are that you increase to churn trending customers talk more fee is then little versus sticky. receptive you give the just color members about

Chris Rondeau

Sure. than slightly pre-COVID. the just Yes, is Thank retention you, Alex. better

stickiness So exactly really little it's a now. cause. what's Hard the to bit say more

that, pre-COVID. they it's out people I were health were attention they than think of which just think now also more probably more just working why and lot driving probably to more pay or maybe a probably than is I pre-COVID fitness less they're --

Hopefully, was So that's good other... a trend. continues. What the that

Alexander Perry

On the annual fee.

Chris Rondeau

that fee, tested to December. decided clubs me, it excuse pre-COVID -- is which change middle XXX Saw year. out in we why roll yes, of annual no -- XXX or On about earlier last in retention we acquisition,

thousand again, build stores new quickly. just -- to as sure. but a forward, for because certainly point, for see hundred up from is well convert And it profitability again, makes Tom's to going new pretty great new this that of they a result, as was couple helps it's costing more, stores that on members it our over that So

Alexander Perry

That's impacted second about maybe Black these you -- member little maybe penetration? just maybe And upcoming year? give thinking similar member drive question, color you're my growth helpful. you utilizing And more more how in how Halo on there? Card color give us just promotion really a growth promotions a the this mentioned to promotion. then Could some And the us

Chris Rondeau

saving where Yes. Yes. So and just but to giveaway there's tricky And bit to definitely you enrollment with having And $X no I -- that, incentive pricing this, fee. fee, have many little a also more the promotion. enrollment you want go right? during good or month. But but it's drop and as enrollment opposed to have buzz, no than a you, It But normal other might an fee. somebody $XX typically thing once the fee we'll we not join, more there's was been to a pay it -- places right? our other little bit is non-promo, promo, a down a enrollment to the $XX.XX no join and or a fee creates enrollment like definitely, think

getting you're things. different X So

And never we've free free us the but seen with $XX new membership and that joining, is You really the get to Halo. their interesting, is good, upgrading which in were for for was dues that was the and people get the Halo it $XX.XX promo a new joins past current to great. enrollment tried anything we've

we even the new members were old $XX.XX Halo on just that paying memberships XX-month contract, to for many really a years was upgrading Black it, something many, see. do to and for So the Card signing which $XX were $XX.XX

been we able So never influence would to upgrades. really

You've probably seldom once heard to already us people any talking Card volume that's and upgrading a about very, join they've Card, pretty Black in the past join. a where committed very join a people We of much come have in, they yet. as White as

see something that get to us future. tool interesting price pay in it's could finding a higher a to members So old the

Operator

We Jonathan have question Komp from next our comes from Baird.

Jonathan Komp

year? you're membership QX ask Omicron trends, 'XX. If marketing X million year, at members XXXX, your That's despite in how also want for I place in to million and about the added not look the about thinking you full the X.X for year. having then of you the

just the there for So you you track that targets? Tom, could you 'XX, to And comment expectations? thinking any the NAF through revenue expense is expect then, Would year? wouldn't those on the exceed closely reason just more the

Thomas Fitzgerald

that. start I'll John,

current membership. practice -- call. we also talking membership, But about as pandemic you we're don't when the based what and know, doing our on of I In of earnings kind guide terms of the month stopped we on think

to and So New Year's the think, pre-pandemic. But carrying in in the really felt we've we Eve we of our back about growth QX, forward. reverted I saw Chris that coming the good sort record as said, momentum

call. come that to on more the So on next

than yes, that terms our was something there's this And had been here, -- we spend in expect here but goes actually, assuming resurgence NAF, NAF again, projecting. equal we collections to year. favorable no expect 'XX In slightly haywire what of or we

years. were equal But to spend said, the I expect across but the -- from to collections make was that forward. we investments So as thought going -- right those the last X

Jonathan Komp

then about margin the for the just time. the pricing, one thinking as follow-up, And all rolls from XXXX that assuming pricing you stores new over benefits outlined Great. in also benefit units XXXX Yes. and in

the the that few margin benefits Just are about you the and rates membership you're right how seeing? royalty recovery next the thinking given years,

Chris Rondeau

layer Chris. if on cost continuing I comps, it to just it's of Jonathan, and as never the couple have. you member -- we it our record know, change members line top adding never once of of is And about happened, XX think, of of an That doesn't COVID the I past, the growth. probably of was think Yes, same-store already most bottom the sales because in $X.XX running as that hundred I to extra would flow-through Sure, straight store. said positive with track quarters happened

and and about we their still above clubs time about were our XX% membership, about profitability, close are last now pre-COVID as back from we at think we're back margins to pre-pandemic I coming today, or of XX%. getting with at reported

So the the we're going in ahead pricing direction. is that. But right getting of

an I it's then as probably year not it's topic we'll consider. So think they of X, recover, conversation, again, yet, or a probably just but upcoming have that to something

Operator

Joe question James. next from from have Raymond our We Altobello comes

Joseph Altobello

guys first on guess situation? to to what in And Are baked we supply HVAC of similar question the saw you guidance. assuming the cadence will of What's by placement placements terms of the in, I sort it midyear? in gets be XXXX? better

Thomas Fitzgerald

it's Tom. Yes. Joe,

in in to with anything back things from We have are deal opposed HVAC. our anything get what manufacturers not of best terms factored before large terms normal the we still lead is concrete when what we we think So in thinking on we hearing to times. or experienced of

We worked to us. try for production have to more secure

more think we I same. overall, openings we're So the think, -- dissimilar is it's assuming to had I terms in our the cadence but we what of And not quarterly historically. of

Joseph Altobello

follow Got up that. to just it. And on maybe

take slightly. Black mentioned Does then do experience X was of Card XX In months to Card down later step a historical pricing? and again? the you it to What's raise you typically it been maybe penetration, grow back terms when Black start

Chris Rondeau

it's strong a such again. record Card, you really no and back a later, join X definitely well all pushes High Historically, this as things. driven putting see We This traction is it than it well. pullback promotional-driven, this fourth as We the that Pass a the joining, One pullback. pressure it few growth, are quarter know this in with happened Summer it slightly Black one year stores would teens which and from not as on is they down School getting come hundred -- is mostly tested even is which generally yes, Yes. wouldn't pullback.

sale Card, the Black one Card. December Although but a was White a was

growth definitely only little that's it the of that. pricing on pressure of member more necessarily was I that So puts drove the is members. think but bit down wasn't reason But volume the great, it just a it

Operator

Kro JPMorgan. We have from question our Rahul comes from next

Rahul Krotthapalli

is directed ICR. It's you. at this Ed, more towards seeing good

just under months the you are as Given into where you to the Or the hats term get leading you the medium want current the your you most you're multiple the you in out X do into segments more What role? near X think see into like there. or -- clearly, priorities? And months comfortable of focus opportunity? most see do you're where and role do wearing

Edward Hymes

I priorities got course, my about the it. growth about that's Planet And very for put had mean is Thanks we're main up. happy believe a really bit side. little in Look, to Yes. just industry I days of question an I and kind -- about talk Fitness excited is role one Chris the again. warmed it, the business future that I over joined you it's more we're I'm leader, of team. just model, the great incredible. now, the right? together the I've and And the in learned getting been of although the because XX team excited the And I've more

domestically I And taking opportunities earlier, internationally mentioned inventory as grow are what well. those both really around and to

explained, So and U.S. well businesses, segments, and primary and technology well. the I'm as the functions legal stores Chris including as sales responsible business corporate international franchise equipment for as as

spent space, kind excited growth and franchisees, really listening to as mode including I'm about. really and me as with helped take that and stakeholders that's I've first really together putting which many few of that inventory really in focus So on plan possible, the engaging weeks to my

Rahul Krotthapalli

Tom, this better is you. probably for

all did going of forward, think I to, time more franchisees you about we we like terms also out? stores? longer-term closer the like then do should and towards think, this within In the pre-COVID, see about over international So range. building changes of thinking Like margins, mean, move as probably given I mid-XXs systems to to almost. franchise How more like how shaking medium a I

Thomas Fitzgerald

Rahul. Yes,

last I think think of we we that over we franchise the you're And be the they'll time, segment. in investments as we're I I where may that it little we where opportunities what to you've seen kind for discrepancy the raise the out NAF be and going see resourcing. making given especially And think see the the point, there But royalty think see rate, adjusted while of the more where think help. today I segment to here certainly basis, about there. margin forward. indicative in will on is is, Once the is an adjust talking Chris' you

to going more have So that's one That's if and you that you equalize margin the adjustment make equalize, but the growth collections spend investment, we're NAF role. big to predictable an then a not be forward.

Operator

We our from from have Stifel. question next Chris comes O'Cull

Patrick Johnson

little Chris. pace bit out imply for the investment frame could planning would to CapEx development a company in openings I that more as we unit maybe you've But past? held growth think store corporate to mix to you're history. on through additional of hoping that like just was could look terms spend to I what you would relative I touch store in and on the mean relative Patrick accelerate of seem is this increase obviously company for the wanted that year. to This

Thomas Fitzgerald

Patrick, it's Tom.

stores So we new think well, don't think guide you XX that. corporate could -- typically And we this I on year. I opened

pipeline opportunities little of up some bullish And Simons, really very think focused who ran working a and with strategy really in Jen bit far I with the that that for growth, be And now the up. I Chris to had enhance we in role we that crank the now we same think there. to now I number the think maybe so are transition 'XX. years seen on to want and on we've for from that -- a with Jen range, expect

in those and the that get But leading alluded on on a that also, as the time, the the calls, broader stores. know, had cascaded very our growth. we've to, that about new team the more system typically are The mix of that where versus into trail stores we're through margins that with team marketing we territories given Sunshine first Southeast. Sunshine the markets, And seeing previous the the system the that they come Chris talked mostly were operated attractive for higher accelerated mature see. you legacy -- they the opportunities for were We're as practices that with seeing

well in the markets the acquired opportunities So as we there, legacy think both newly opportunities as for territories. out the new are

which opportunities it's against -- see. against -- of putting matter we putting So are that the the resources, we a additional that development

So be will that the number future. in we higher likely expect

Patrick Johnson

second question, terms Great. helpful. same-store the you sales a of team which times in was had the That's performance. store And great is And mentioned of guys couple a that actually my driving the then focus of segue. corporate

was curious, I previously? what are happening maybe that So happening that And what's are result? the driving things that today really weren't

you pushes maybe Or still the give being XXXX? system in a that you And their how maybe of recapture overall a about margin the build margin slower fully point for of percent to at company that in us some even maybe thinking can be recaptured sense what see corporate relative into And we portfolio average? should XXXX performance opportunity the the for the store do 'XX levels? to then year, the on side has levels that out store margin stores, membership pre-COVID corporate

Chris Rondeau

wasn't start, I'll I The recall, franchisees. more didn't services also a stores really seeing it also then sales to who franchisees of here, same-store lot Chris. marketing were played And team, like was benefit, development approach I dedicated the is the is place. I'll for really in our team legacy this a stores hand is a tapping the you much of the cadence to -- team working marketing that tapping they into -- have who our we're and into Chris, think over Tom. corporate may and think disciplined the the the

own their marketing So own now people, people. have they their development

is and helping more some amongst staff whether guess different to club upgrades and or I it's that. like operational outperform, locations some Black closing a in gamification it's or or disciplined which approach, Card also think percentages competition things I

the the think get membership. I them just -- guess and more, servicing coming to the it's getting through customer choose about better the So joinings I team

I that the answer marketing from question. disciplined have think I'll So of approach. also a it's to a an Tom then little option And margin bit

Thomas Fitzgerald

Yes, Patrick.

And we know, generally, on the it stores. and it's XXXX markets, markets about now more corporate between As Sunshine Sunshine if markets recovery store segment don't think that the looking you but mandates think where margins, the it and to different mixing is bit levels. I the about more the pre-COVID growth guide just ramping But were the the portfolio a the terms talk margin, in to had were stores. legacy far think for some of legacy too maybe during given from store of I closures. system to all little isn't stores, the harder in stores. temporary and Those was is corporate hit which more you're we're way at And legacy off

on So nick there's a a bit of that.

markets. generally talking our higher But the at about time market stores were were of -- us or the that the XXX mature transaction had overall, mature basis legacy as Sunshine when to you've the it, mature say, heard points we margin the X-wall XXX in stores sorry, than

So predict of to don't when effect We timing speak. the of want there. we so cross averaging really to an there's threshold, that kind

don't XX and QX, predicting in Card what as mix, as both will -- high important be of as new is is -- X/X it's single-digit will those over growth, pricing mix like member the of that into historically, continue that double boost back impact on margin. think that well out I sight more want either in same-store members fees I of as opportunity we But and the Black time the think impacts, growth the sales membership. to expect the certainly we're to the we growth the to played But lose to feather annual that

growth healthy flow-through actions and incredible, is very the accelerated the pricing same-store by from and just the which taken. sales even it's growth. on we've the member So

well good franchisees, corporate I So margins news obviously. our store ahead as as think for

Operator

We question have our Ryan next from Jefferies. from comes

Unknown Analyst

This this is Ryan morning. on for Randy

performance could maybe similarly, provide and curious strong And thoughts Z consumers their are growth Gen proportions you if just at penetration, franchises? and equipment the Given how in around focus you rematching about retention? impact towards thinking millennial training shifting could your the strength

Chris Rondeau

question. something we've to good a it's begun Yes, do. already And it's actually

continue COVID second base to We since member Zs largest in Gen our and have our now part of seen ever they the member past. been and base, millennials have of Gen increase pre-COVID. was it and grow But in of our the one as are our Zs smallest

So there's to that it's TRx that what less of functional a we witnessed stuff minutes spent it more it's -- amazing weight most cardio is they're and have on training doing says pre-COVID, stuff. ball have and

of some habits what of also begun see witnessed universities of we've to fine-tune worked the workout own with in we've couple have and age we begun and our and So college kids a then that. to stores

stuff, and gym type and a cardio kettle for space decrease that. more functional slight in training ball So things it's some like

are of have the adapt that So begun the population growing we to already to clubs younger. our to do that

Operator

question from Bolton-Weiser last our Davidson. from Linda have comes We

Linda Bolton-Weiser

the I comment the increase it curious costs versus was was opening think, in, just I pre-COVID. about about you now made

color I like that number think and else? said can Or XX% primarily that something cost into a equipment higher. goes give little what or around you more just that? Is you

Thomas Fitzgerald

it's equipment seeing for they a talked calls were Tom. at had low our vendors, along our Yes. about that. -- we've rate inflation increases it's talked and Yes, double-digit along from we that we the what had on maintained did increases we while. And changed not that margin we the passed Day prior passed Investor XX%. price some Linda, and roughly also with about think and I price on on consistent And price based

market it but So increase. and and ebb inflationary demand of the the There on concrete deal think of seeing, the has pressure some also their expenses, the on general supply of And I that's also also what this flow whatnot. right, an depends labor the market. of depending we're think and also depending And caused the I increase. part and contractor and materials, and the on a course, -- was the that's again, tightness commodity. But on

seen pressures So impact. has less I about referring that's that when moderate. part we've so it largely And the an earlier we've our things really behind 'XX, not in increase. in we're been price of was that XX% and all increases seen price XXXX spiked which We're not has or increases. the to the been selling the roll the not or apparel. you model us, of seen serving have a cost. together, doing food, but It's wages, What that inflationary bit inflationary they are We're quite

So those it -- is it's the cost to things. just But far less goes and of returns XX%. of other our compared concepts, model back is up margins construction by definitely, about to the impacted some the

your answers that hopefully, So question.

Operator

for remarks. floor This Rondeau, marks the to pass end of Fitness Planet the the Q&A of session. I back CEO will closing now Chris

Chris Rondeau

and the new the I to the with beneficial actually Eve fourth we have quarter. few with January to pleased to and sale off with at in to with a really going excited past Square to carried Square year that Black in this Really, the back and at elasticity momentum was our a record months. think see Glenn. and re-kicking kick XXXX continue New event forward. to for have you, our continue increase, fee price price I strong ramp-up be Card Times $XX.XX Thank which normal Year's is Time annual the and great Really really to off see the

ahead. So all good news good trends and

and to again. forward So look the joining today, thanks call speaking for

Operator

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

disconnect You your lines. may now

Planet Fitness (PLNT) 23 Feb 232022 Q4 Earnings call transcript