PLNT - Earnings call 4 2023 | Planet Fitness, Inc.

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Operator

Good morning, and welcome to the Planet Fitness Q4 2023 Earnings Conference Call. Please note that today's call is being recorded. [Operator Instructions] I will now turn the call over to Stacey Caravella, VP Investor Relations.

You may begin your conference.

Stacey Caravella

Thank you, operator, and good morning, everyone.

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

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

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

I'll call Now the over turn to Craig.

Craig Benson

thank Thank you, Stacey, us everyone, and QX you, Fitness the earnings call. for Planet joining for

our quarter business. of and end moment joining I the today announcement our Since been of fourth tremendous to Fitzgerald, to asset want made ago, to Fitness has at XX retire results, leadership CFO, our years Before executive decided corporate experience the discuss a four years a August XXXX. take bringing we the review Tom team, I to finance Tom has that Planet to

his to Now discuss Tom to over to going turn it I'm decision.

Thomas Fitzgerald

team. Craig. really a been end Thanks, good. that does career serve also so and passionate and work think does privilege as can't alongside than much It's such to for better and dedicated way Planet a brand of of a CFO a to working Fitness my I so well

the on end have of will forward next reins of and we deliver the years value strategic I've be on outside Planet to to And I leadership to transition over to and next franchisees Planet XXXX After at months, made proud ensuring August I business, at I financial we have our new am that several over leadership. in the during always to the on and focused decision shareholders. our to handing XX look our work of chapter. a do. my Fitness' some work a focus I time done key new work. more a interest as I lot smooth have my will guide of retire Fitness objectives know that and to

I'll the Craig. So call back turn with that, to

Craig Benson

Tom. you, Thank

Just months an would once-in-a-lifetime amount and of bankers, time leadership. the a depths with challenge challenge that Tom investors steadfast temporarily, spent through of embraced and the gyms temporarily. the closed newly into closed all them lenders, gyms pandemic two his head presented on hit unexpected appointed all even reassuring considerable crisis, in for which sheet He and CFO. role, this a dove and our get speaking immediately our strong franchisees, us balance when with

expanded our We largest acquisition strategy store allocation franchisees, footprint which overnight. the our of to one ultimately of doubled include corporate best-performing and our [indiscernible]

will to financial been me to in He's also that as During great Tom this many time thank Fitness, Fitness, of ensure also to I Planet a like On his our for to partner behalf Interim of a at CEO. contributions the everybody Tom company. would helped build of has my role chapter company's a the team smooth next transition talented Planet financial leadership.

you be And to been ]. We will candidates qualified dozen finalists, meet priority has considering remains forward made. having The CEO decision a let Board the with look the XX now for to search and search search. short when interviewed and After the whole committee updating [ several sending search me the very a CEO turn committee. the final list a to Board top

CFO new to involved next extended prior announce to search commitment in be CEO period, expect remain process. the a our identifying CFO. CEO through the to transition Tom's an the summer will new We provide allowing to

EBITDA growth. member We results. ended new growth, X.X%, system-wide XX% primarily same-store members, million sales the growth driven of adjusted by XXXX to Now XX.X and with a

to way year ] visits saw and they the walks rate, be Planet strengthened Our and keeping accessible all end continue as levels [ XXXX to a paying third summer they rate see per driven think cancel Z environment large of member groups more frequently terms doors. year-over-year. since and all growth. our experienced the to program an level. in a anyone visiting locations consecutive members, up to to groups and basis, with We and more opened in increases as summer of mission conversion well are part more than pass improved was membership in This our makes who significant our an high overall to brand and Z this Gen we aim our school we in ready generational second and was the million across join than XXX higher customers welcoming further when teen our system our clean, participants Gen continue gym We for of XXXX. program by of Fitness safe fitness penetration appeal. new the in age its through XX% with that above lead make On globally successful now X annual

being pricing. is retail sector need to as we item. first-time that gym are correct balance Our the the purchased frequently in the gym XX% and our With messaging in of a unique ensure goers, of new membership business is achieving joins we

price are our opportunity to We card. on have we take whether an exploring classic

to test where price the of We the back about the Last each. the in fall, price [ are DMA keeping call sales. go advertising stores $XX added a ] action communicates additional in Both the of at York for national $XX.XX sale regardless sale to we [indiscernible] periods during to points join we $XX XXX started and $XX.XX New expires. a December to national include the and before testing two an

unit our of of we first by mix. to ] that environment at As average and tests economic rate understand the these to look member ] volumes as us outcome continue customers. to the We change through more approach Card results plan We're [ on [ sharing on to we Black are test. optimal impact today's increasing model, navigating the fully run taking the to actively a the revenue least recurring forward joins quarter evaluating and determine and of these disciplined data-driven a impact price the for in cancels

beyond. and XXXX to Now

the this, Our we're fourth our our significant development enabled advantage macroeconomic the To has franchise quarter. environment high-value, competitors Model, our [ scale size and and more consistent in us against even deliver further. do we of announced the focusing for years expanding with which to to Growth New ease ] low-price adapting post-pandemic to our XX than growth on reliable we're lead

changes our agreement, enhancing and adjusting to already requirements equipped [indiscernible] This builds also our and store operating new on economics is Fitness and reducing the [ to As remodels plan Planet strong focused ways includes the reduce for new location. cardio while capital a on a franchise strength for ] reminder, for opening based and usage expenses. and for CapEx timing looking committing operating reducing [indiscernible] to making

end into two whom the improving It's our are as the all store franchisees have single-store believe model opted by the a us franchisees, franchisor. impacting significantly win returns balances P&L. without the both We XXXX, And new the of but and of owners plan. for for

capital change portfolios made flexibility We and to with believe We for the come. up franchisees, phase. their the store model to for are to additional in them now executing our we build the amount free a will years planning providing of significant

site We to a XXXX cost We're pandemic. it months build transition expect take to the see gym approval new tests to the the months a last without from store the XX on to to change as experience. results opening XX rolling as year, our because up year location from pipeline build to time will X the compromising pre new be commitment time member our between elements our already and was part decrease in to design X of store to our average

[ instead general the markup also For and themselves source example, build relying workout work who of on more materials franchisees and contractors materials. the areas, charge encouraging lobby for those we're we're the to on ] reimagined directly to of a testing

smaller requirements; greater continue this to only could number, a we from studies have U.S., from the in including: age our us that conducted contemplate doesn't could suburban public areas XXXX. store first, gyms our third-party each some which time offering this Finally, successive And the I'd ability penetration our opportunity. is geographies on we to believe X,XXX our encouraging in footprint, And Based infill standard domestic historic the the increase of as like even domestic long-term well up opportunity. that don't now even enter potentially initial to and second, can achieve share to the very generation. at several factors store we enable on the as in results, X,XXX results need other population

we opportunity as Only outside Spain of that have nonintimidating evidenced in expand an we year. is population announce democratize expected the of recent environment store believe by and to brand fitness meaningful a and excited We're development membership Australia. open U.S. our the in and we're XX% entering by to has our currently to Mexico and the progress end a a gym can the

better towards took actions long-term will growth changes we our to our uncertainty; future. outlook still in be New second, given this into from and position of we targets. initiatives our the are not headquarters Model Growth us succeed weigh on first, we'd to our workforce Finally, a realigned CEO our and reissuing macroeconomic the to continued recently plans; XXXX reduce in opportunity At and several X-year the have last, factors, to key including: resources to the our for time, like permanent franchisees into the incorporating size

on continue opportunities Model. our and we Growth promising horizon very pricing have execute We New tests the as our

along enhanced forward-thinking on value drive capitalizing shareholders. momentum, are for to proactive We with mindset our strong our

over back Now to turn I'll Tom. it

Thomas Fitzgerald

for and Thanks, gym address of we and that down break four solid I'm Today, going timers things. to We strength financial goers. a from sheet believe Craig. fitness are position first balance continue barriers as operating to we casual

entry the our our second, to plans refinance tranche into lastly, XXXX Spain; and outlook. XXXX; results; our third, First, in of QX debt our potential

This believe for in our into near we markets to locations is to presence, Europe. eventually us to we pace we accelerate and small and order example Planet them. to Fitness we operate which of time. in sheet on to an XXX faster an of have with attractive had stores our Starting we Planet term at as Spain value growth plan we using In we've position opportunity a expect have to the initial to open success growth exciting could than build balance refranchise over believe a continue sustained drive and more market in Spain, an Fitness set new corporate-owned creation. internationally is the expand

continue own fleet. strategic our of to reiterate in and we to we model, highly our intent franchised XX% believe Importantly, our asset-light, approximately

our to Now debt.

in below due this weighted comes We approximately have that $XXX the in tranche believe refinancing indicative on rate of we middle an to XXXX, year, of would X% Based interest million still overall which be September subject pricing, we debt our that when refinanced tranche. of anticipate conditions. market average we

quarter I'll Next, fourth our results. cover

QX X.X%. year, sales sales unless same-store reflects and All growth. last to of of was Card delivered continued will performance our to otherwise being my stores We in Gen Black XX basis noted. the comments fourth a decrease our growth The of growth XX.X%, same-store new increase by XX. XX% member membership X.X% be XXXX increase compared QX regarding increased balance in of Franchisee net Z decrease driven corporate of same-store penetration grew our primarily rate quarter opened X.X% QX sales the with comparing quarter. We was points. XX Nearly growth. the comp

royalties, owned For growth was increase revenue in by segment The and revenue. fees our million. revenue due on $XXX to segments. driven by increase was Franchise web new franchise royalties and same-store across Ad increases increase primarily quarter, National million fees XX% The sales $XXX was the stores. to revenue was The royalty the in total corporate growth, driven join fourth primarily and Fund compared annual

from driven as high in new to due Store The was placements new increase quarter, year. by the deliveries revenue primarily to fourth sales XX.X%. year. XX growth primarily second decrease average last up Equipment by segment equipment quarter sales rate royalty to driven We were this the in XX.X% The and reequipment X.X%. compared revenue decreased QX XXXX, quarter supply store later higher XX chain Corporate-owned acquired as For in segment in stores. the which same-store completed issues was unseasonably from the pushed the well was that the X.X%,

For XX% revenue. accounted the total equipment of quarter, for replacement equipment

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

includes margin EBITDA This from $XX.X expenses. our diluted income compared million, Advertising compared was margin million. $XX.X net Corporate Adjusted margin Franchise per margin $XX.X was was Adjusted adjusted EBITDA EBITDA to $XX.X $XX.X million, to was Fund income and SG&A adjusted share a XX.X%. to $X.XX. $XX.X to segment adjusted relate was and XX.X%. SG&A for million. National was $XX.X which By and million $XXX.X EBITDA $XXX.X and store XX.X%. was and The was for million $XX.X was was and segment, income was was million. EBITDA of EBITDA adjustment Equipment quarter $XX.X XX.X%. Corporate-owned $X.X was expenses, $XX.X adjusted EBITDA adjusted XX.X% operation margin million, adjusted EBITDA million EBITDA compared increased adjusted Store Store adjusted adjusted expense million, $XX.X to million. net CEO adjusted million, transition-related Net million was million $XX.X million the

turning Now sheet. the to balance

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

our Finally, we moving in morning. our this to which release XXXX on outlook, provided press

for XXXX a believe Model. New new transition system Growth we development store our as year is the noted, absorbs Craig As

going which We expect stores, that new provide more insight recognize franchise we're between and to segment locations. We our Equipment it XXX both and can business includes XXX difficult, corporate on modeling be today. so

Let placements me address first.

across we similar expect which in basis, out equipment to quarters. XXX will percent play We on year stores, new between XXX the franchise a placements and expect last

expect For of total full Equipment the we revenue. year, high sales XX% will make segment reequipped that up approximately

will XXXX typical it year year more this as cadence that the of expect prior that terms similar quarterly the We COVID. by three ] impacted in a sales were to look for those versus more is [

on we Now the our impact [ model sales equipment do not to bring increase. until down XXXX. extensions shift cardio expect our overall as to a strength will profit part of We but so store committed therefore, margin versus reminder, maintaining the ] re-equipped a are per to will dollars, P&L more growth our basis, rate as the

We expect same-store system-wide to growth be X% between sales and X%.

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

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

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

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

to amount earlier course net assumes the which at million, refinanced I We which minimum tranche approximately committed we back mentioned the we of million also our at to approximately the be expect And outstanding November XX.X X.X%. of expense we interest X Investor shares inclusive over to our is repurchase in XXXX. expect shares Day million, the be $XX the of year, of

transaction of anticipated We guidance interest will net XXXX. update pending our completion in expense the the refinancing

we expect be with driven entry corporate into Lastly, our relocations XX% remodels stores. and approximately U.S. to by and the up CapEx increase Spain for our

XX%, in be increase XX% We CapEx. and to expect up D&A driven by the between

come. made the and many will X-year the deliver of remodel on model enhance as our our franchisees they changes stakeholders reequip years we further we Craig are all to for long-term sustainable requirements are meantime, to believe and working determine we with returns teams our and earlier, capital that value near- future updating outlook growth for development, as long-term plans. not improve recently As mentioned today. their plans our In their We

back I'll now to Q&A. turn operator the up it call for the to open

Operator

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

Simeon Siegel

best next Tom, a work the luck with Wish best chapter. great you. the on [indiscernible] [indiscernible] you of really It's

Thomas Fitzgerald

you, Likewise. Thank Simeon.

Simeon Siegel

et the prior? lift are changed [indiscernible], a elaborate just any [indiscernible] FY pieces Has expected help then on -- 'XX the any SG&A growth more bit what economics, would difference? geographic to a for [indiscernible]? given Could be Is numbers And they speak you there So many the dollars? year's on different they? the next help incremental Are Maybe anything any with those guys right. just moving helpful. gyms, corporate, on All [indiscernible] cetera? to there of than

Thomas Fitzgerald

Simeon. Thanks, and take both, I'll Craig add. may

perfect current gave So -- the on use the firm we we using in where restaurant us doesn't they a both [indiscernible] you'll their in went that have did, who study we different every know [indiscernible] we, customers almost retailer far to drive, firm that project recall, right, originally words, really really they love cetera. because as think words and in et the where We project they lives [indiscernible]. single said us used that member unlike their a And how information, I back or the know the

what unlike typically So they it's data deal the with. --

really they about So feel results. the good

said demographics Having on are today. based where the they're that,

basically the the not infill square suburban that's prototypical market like X,XXX X,XXX feet, so And urban, is Planet anything Fitness that. to or It does small include locations. XX,XXX

X% generational it's a the generations the literally are joining terms of we've membership penetrating what's penetrated So and younger since rate, Gen cohort in where on the IPO more markets our own at growth, happened seen rapid just the with trends based are we that millennials and in we're Zs.

almost are store opportunities based the mirror of we how country. out brand the Geographically, -- rolled sort the across

lowest terms to have It of last. even as where the in and belongs the in of lower the population go density lessens starting percent we that and in in you Southwest Northeast, much Southeast Planet. of the So the gradually went we more the country to West, middle

are count reflective of store increases that essentially. the So

a time, it's unexpected, generational another encouraged we think when by a as move we be remeasure point it's have really trends been we it. assuming it, the -- in we're positive should the news, continue company think they -- projected, in And years frankly. really so good really remeasures it when it's because story. few again, But not So to are it

in second on. It's reflected The and took it we're is outlook. your we actions part our the care earlier the broadly of SG&A. priorities focusing question More all speaking, incorporates

Simeon Siegel

guys. Great. Best year. the Thanks lot a for luck

Thomas Fitzgerald

you, Simeon. Thank

Operator

Your question Alexander Morgan from Megan next Stanley. with comes

Megan Christine Alexander

Tom. clarification. quick One

point wanted X singles, think same-store sales between release [ said I clarify to said that you expect The just ] X. you press system-wide and high first.

Thomas Fitzgerald

Yes, it should X to be X.

Megan Christine Alexander

pointing on of some A softer comment in some versus maybe noise to perhaps commented out weather data Could on lot has others your to all played trends [indiscernible] and membership expectations the cadence have at quarter-to-date. so February? January maybe trends January. you quarter-to-date far, how

Thomas Fitzgerald

our next to includes Yes. one our But the quarters, unfolding quarter. call. keeping say going been the outlook we're certainly the date comment take year. Megan, to I past see we're several that on best for and again. current We'll the is would of In what of a we've how knowledge of over on what discussion our what provide here I'll we that with doing growth not seeing in-depth rest lot that

is outlook. it's get commenting question. our I not it to a practice current continue attention big want We quarter, So but of to on reflected There's in just the our a it. lot media of

Megan Christine Alexander

making some through Understand impacting And cure transition to necessarily hoping in be the follow-up, the outlook, outlook is last [ it other maybe how puts to Okay. the Understood. expectation the new year. maybe the much talk as the I development the And just $XXX model could million. maybe period was takes particular, there? than aren't ] that's $XXX year. to bit last your to and of you lower for impacting driving But It you're million below a is then yet. changes placement a

Craig Benson

changes taken new mix. on it Craig. development many looking the as go This means for the franchisee, time all of we as top our franchisees locations grab their elements what interest aggressive are we've store have needs taken is long a good about on we're and outlook is CapEx pretty absorb on and and from certainly the as what at vigilant we're well quite said our reequipping. a as to remodeling system that also as But and changes this added very And conservative we top confident where [indiscernible] the fairly are because [indiscernible] to different We it's before, with and that the to possible. to, want of rate I've

also of used. retail we're as for is finding all-time space at the challenge locations being of space. retail an for, accounted low About is it's Part XX% meaning

So that to space of left either. grab doesn't leave lot over a

time even So that's COVID phenomenon that going that. on some guess perhaps been has before beyond, and clearly a now, but for I

as that finding So time who space as used more available. those do harder that retail much a somebody be to takes has down we locations bit

Operator

John from comes question next Guggenheim. Your Heinbockel with

John Heinbockel

guys, XQ, the [indiscernible] important? that and go how right, on so that you school do on high price want can And to does less become with little you that? January kind promotional as over demographics thoughts So of I passes not maybe Z idea less given fit much? does the a lean less time, change $XX thought on start right, business with, and think everyday important, seasonal, activity, your in low Gen

Thomas Fitzgerald

John, it's I'll that one. start with Tom.

yet. think total over more XX% membership the which base not of causes suggest promotional through too whether it's for are that little millennials, a seasonality the strategy. or that of Certainly, mix membership seen that change growth would the commenting to shift business in the membership not our on our in we haven't GenZ now, be XXXX Again, anything a I tell and and to soon our we're whether frankly XXXX.

tell. will time think I

more seems But seen resolutions necessarily tell. But of the you is think will heard anecdotally I New maybe Year's the New it starting and time Year some generationally with what not universal. again, new is based and goals we've idea

Craig Benson

our in that continues age. thing have to are age, that decrease membership understand increase to And fortunate not that we we I the other think is in

towards message that from this haven't to tend do developing talked the that. relate to. promotional company over have to to will collateral in yet, want time. past. done people So [indiscernible] I've have we've shift patterns that [indiscernible], branding branded away more the there's as to this, with the then we've job But mean come mentions And I'll than about the the you before, and better that some we And can that. mention, had some a last themselves of mentioned And we're we thing that brands and align in still that past also a will they younger seen especially

So by we other we message, things branding offering to to a we Planet have, a stay but hopefully, and not more Planet people strong fans get enunciated. Fitness, Fitness at having which can longer of become have that can be attributed brand,

John Heinbockel

to first requirements, hit you where like for the then When wait since to today, -- I to you maybe plan we necessarily Craig, would don't next When spending I that guess, content, start relax still that years which do that, April to follow-up. X So split a in season right, want we you on until X know on clubs? that do the you starting year. think right, and see peak see is new the is right? local, two [ national ]. And on the see

Craig Benson

that yes, is John. The answer to question

is that [indiscernible] So out there.

branded content be possible that as it are don't honest in over we to going content with but we know it's content. that. have done innings we And as where and quickly We the promotional developing that when get that, going to so time-wise, need have and it land hopefully I to next we're year, start of early

know, closely. we you've execute of company company has followed you So as to This that's because of we on [ the that, and things do sort lot a ] for good that that need articulating very we people plan, don't pricing, with to way. winning clear I combination. concise real message will a think, a that promotional doing in and just and be need better talk conjunction much in be we about And this that

Operator

Your from Baird. Jonathan with next Komp question comes

Jonathan Komp

single just the the is a target typical to bit Can you the system. want year gave X% know more? to talk high just growth up guidance follow comps little X% for the that you I digits. I for

more embedding specific some below do in you signs for just going plans are or And comps the for industry, the of forward? plan the seeing for reactions softer a typical some could drive the given better or have talk So what expectations to of start you performance year? your you place in tactically

Thomas Fitzgerald

Jon, Yes. Tom. it's

if played QX played So and but out look comps out strong, XXXX, that QX. were way and you of was the four our lowest how the the fourth over I of still think in at the sort quarter they

grow to sales. mature slower been impact of composition a always the and of has percentage. stores do and fleet, stores I you more from and talked the [ just Dover our year We just So store to ramping And original a help sales here mature, are in New business, as growth. with smaller third our member first, second growth, in positive stores their think still our know, same-store more big But growing. about due that's same-store is becoming in a mostly now has Hampshire still ]

as store sorry, we've 'XX to new -- those here those said, have really tighten ramps in pre-COVID. late we're building 'XX, where that late 'XX stores Now the into new were gap and

definitely really great close. that's all So not but the there, back way they're see. very to They're

good about clubs part. a should on feel of model good and own new the the the in the store X-wall X% same-store mix just sales. to of compared composition franchisees to clubs base. X% our really margins and and ramping very flow-through a EBITDA still scheme, with grand It's basis But the have expanding and will still those the that's corporate So we mature still

Jonathan Komp

drive the do plans you tactical here, could things XXXX member just on thoughts any throughout gains for year? And to

Thomas Fitzgerald

Well, coordinate and to -- our each or month with tweak. assess about franchisees what's I talking again, we're we always think activity passing maintain and happening we not working XXXX to think need we're with we in particular. generally, But our what

shift as redirecting to about we we good -- more through year the shifts, we'll is Craig's in we possible a messaging, money, digital news how whether try learn messaging. about or be spend to calendar channel I as meaning think lot of agile The the that's mix to definitely we channel so are broadcast point

the almost of in So the we entirety the still U.S. spend -- believe in industry the the marketing spend we

try We that do we've a across optimize got lot just to the any just of year. we firepower. in as will continue like we progress So to year,

Jonathan Komp

then I ask, here. follow-up. if could you've the just X one interim just And for Craig, Okay. role months been now in

Just details more line of the you're of specific process, could identified? for stage maybe candidates of time in characteristics some remaining the what and interviews the you the some give on from any you've any here

Craig Benson

for question. you Thank the

short So has are -- somewhat we shortly. a and Committee the [indiscernible] we several creating list -- that now that interviewed should see we

and those short forward think the that and people down But list talking from that come perhaps assessing starting I to build looking some go we is process and where our then wind there. to seeing to needs So to completion.

Operator

comes Max with next Cowen. from Your question TD Rakhlenko

Maksim Rakhlenko

Great.

takeaways Are growth variability share you are going from can just this impact they've Or got on, there outcomes thus as far pricing the had you've churn look the across the what on that you like that sort in membership the So various pilots [indiscernible] there? any pilots? seeing well as elasticity, of similar the

Craig Benson

of first the portion the question. take I'll So

of a Both $XX.XX, the it, September other that roughly DMA. it $XX.XX, We that three probably was vary for earlier the beginning to was have frame doing against that in The in model clubs that as know, New tests going, which mid-December. of did evolve a and -- tests the or later DMA, results we started test both in membership tests, DMEs $XX.XX, they the started clubs December So the two not of not case a doing tests, allowed those started combination New those XXX that at since the clubs time XXX And York were classic $XX the the would a opportunity in you time we also, which we frame. they know, you $XX, a as the with $XX test, have on the sale and offer so added when we're we that in [indiscernible] the to time. That over August, X. it pricing. York group card

national model offering. the So they for have not particular dollar followed sale that

a stay that and and it for this We're no that's understand. that iterative a that long data sign market behind how where that will of the I an to pricing think, portion is But how can there's they absorb is. process many takes the takes it while still just to assessing this while behind biggest say up. do is changes. [indiscernible] Again, I

with further anomalies associated that all, piece. I date look but there better, is anything a bringing if to need to conversation could to so understand be there And to some up that. it at as that just

you have do Tom, else? anything

Thomas Fitzgerald

No. Yes.

trends first media clarify because weeks is folks soft of price weren't some have did of That and thing. of been of lot a is inaccurate. I principal our there's And one statement what January, a of things -- we understandably, actually it see. the been and written about there's what lot our and doing I we think we of the that said most Just to It's wasn't something and two test and pricing case. that. we in all think people we were the said then a media changed -- Max, just want question

all ads a So if those ad, price [ point. the articulated. ads, they're saw local does price local not MEA watching seeing they national the then point But we've ] reasons in carry if a a for they're

messaging or a just change not question did that you it's we But saw of tactics when. as a January result we anything saw. So pricing any through of what

Craig Benson

first thing. spend. national And spend, share I'll in of local just advertising not add quarter the lion's is one The the

country. likely in have no the ads So The do those have we're pricing local seeing across pricing. The [indiscernible] would no markets most ads you national have than ads seeing local be pricing pricing.

Maksim Rakhlenko

it. Got

December, Okay. it as ambiguity you on of the when That's impact I'm just their sounds much there curious, then the did franchisee new on And in for why Or is have ahead? greater providing any opening pipelines so cadence year? like? the temporarily are that as years ADAs this the helpful. openings signed flexibility potentially

Craig Benson

the is cure gives to somewhat something Well, period fix what period from periods periods cure cure far we've were when you're But gone to periods. grace to you The ambiguous months is deliver to the X The as cure supposed as by. need sold less. from you we're date grace it. doing it

cure of it be in if push number cured a it But cure of that the and of way. that you're so needs obligations And period perhaps does to that a period period different time. using is out XXXX

the following. there So I'll there, add but something may be

pass is this earlier, location, I good a is it see of me, I retail to because for If mentioned speaking space XX% me leased. on not going I am

You become you can't for of X try X as times good we're know, and few those And of industry. able biggest spite brands. to find to be the different space to it's retail some the a anymore. in But of easily find exercise space that's anywhere an quite consumers retail locations occupy hard and in

and down. the does make to need to slow it's if we ship find So hard work it that

club In X as develop new well. to X is XX take so a to addition, that pushes what XX months, it now to to used months

in boxes having lot our longer to And a able periods to be dynamics having there's especially of building of that. to of of time on our we're and the be I have to different the what going you, helpful, clubs develop some very in But in cure and marketing term territories. the lines to will think and clubs the so adjust tighter

Thomas Fitzgerald

that detail. I to And with and would [indiscernible] months and And of to Max, through not. ask stores, We two essentially operators work or the that. all that's by up ] have finalize in a said, did opt contracts take as we've then have We to of franchisees couple say And had it, follow to opt all the end XXXX they thing. was plan. to -- [ but out one-store to one I'd going new add

that detail, So makes if like that's more sense. ocean depth

getting happened had with more they're to [indiscernible] now about by work the it. beginning what lead of of contracts the some So the do that times. We end exposed just was the year the to

what about on what not people really through, their expected. it's feel a playing The lessening, has of done. we're ahead just and reception schedule. been of all we level It's like It's true ambiguity. also at not of good or matter beyond we've were most that increased we So but an it's

here makeup -- accelerating they're of there's no that So period sort not they're through. sense. Hope makes that

Maksim Rakhlenko

And size lot for that great. you worse on? in I is of get as on shouldn't the Craig's guys just same one estate why of going think growth Craig as box to estate we real of last accounted earlier. that's time that issue then the to potentially No, only estate. that real point quick guess, XX% sort are looking the retail goes A is said for is real

And So I the at the ease that about some how future? should ahead? guess, we why potentially headwind point would in think

Thomas Fitzgerald

that I'll Max, one. start

saying thing, -- the folks same CoStar think So ]. and CBRE, stuff, you've I the the JLL, all [ it's all seen I whether the are think combination

interested getting and I was 'XX think available, like record malls up of the through a strip new do estate not really look to 'XX, at unless we're building of sort more We don't of they're new lot a real lifestyle in. blown through stuff definitely lows that's The created center. centers.

of not of We just also a don't do stuff office That's a buildings. -- where lot lot that available. there's

it's now. after what So really we are

some the improve. as interest So ] we similar like [ looking going others, other rates time. I'd for to are It's people will continues folks just take and is think ultimately demand as the from sites other rates. to and grow lower us TJX that part say And

next rates. anticipate three moves over rate lower, moves, But couple [ lower interest we the years, four whatever. ], interest the As whether of is that's

tailwind. So all a be that will

We've help. our still folks some some just of going ultimately just supply announcing our to a for just sort changes, work work & of of ocean their lot Corporate us. [ Aid about of We've that are down But a real we're and some those is It's recalibrate ] time. for some boxes Bed some walking as ] there got these franchisees [ us we environment. those are will law enough. so lot look [indiscernible]. work It's of like tightening Beyond. think of also maybe These was taking in some There's those, are what of some a and of not big a stuff and estate. fields through. thing Bath other from And The not of Rite recently take segment, who to parking have do some It's to It's happens, spaces be liners away talked are those of pre-COVID. it demand to don't. -- that's too. [indiscernible] in

Maksim Rakhlenko

it. That's very helpful. Got

Thomas Fitzgerald

Max. Thanks, Appreciate it.

Craig Benson

just one Max, more And I'd thing. add

So in the space was XX half feet projected which last year, what million came retail space square was demand. of

that's not works but to problem we itself usually So out demand once the understands there's need being with it's agree a [indiscernible]. market I work Tom. that need and through, that Supply a

Operator

Rahul question JPMorgan. comes Krotthapalli Your next with from

Rahul Krotthapalli

more stores the more format today. about Craig, about you laid [indiscernible] real out being talking possibility you talked a and little it a smaller some

what current a more previously TAM? help before. then were addressed also that addition infill real the estate on address the us areas, Can have and the could convenience through a You which increased -- a said will this the strategy not be you think potential constraints, this trade follow-up. give I insight format And and little this us to

Craig Benson

but with to And because I'm actively in are we, need of working clubs. actively right infill Tom into working in areas develop working format past those a to or we perhaps maybe let's different to opportunities on the We're bigger mentioned those Rahul, now with able we And for that be add couldn't opening than some those smaller to them. clubs. I -- opportunities, population. Yes. our comments, And that with sooner get are the population even pipeline can do we did more later. franchisees schemes hopeful we our as rather clubs for

past. had mid-October, go but and But all in couldn't on XX-minute clubs and opportunities are did Dam, the Beaver traditional has the Wisconsin more those again, with with its Wisconsin we to the did these this Beaver own, new look at time, we opportunities. XX,XXX survey and we in the Dam, we I huddle drive stands be that for. in have has a talked to [ we that nothing about the exercise franchisees the would there a population And do on, upsizing [indiscernible] ].

in the Dam, to be in a Wisconsin -- places it find I able couldn't get make one has past. is enter and to of club to to be to franchisee way us So to the that goals be enable we have successful it that for the Beaver

Rahul Krotthapalli

helpful. not, ]. post further markets to on also stores almost M&A. was a an Did international contemplated you equity new your organically [ And established all to given Fitness equity Planet compete follow-up can And XXX brand. ], and to which strategy Spain Ultifi it Basic possibly in like has the brand talk the even like even any on Europe, leveraging if Previously, you [ consideration M&A potential and or That's XXXX? this and Fit can is have if also conversations brand clubs low-cost reformatting be in take operator providers buying think at today more I against enter

there. just on thoughts your curious I'm So

Thomas Fitzgerald

that I'll Yes, one, start Rahul.

we industry, of and have, given the internationally, imagine, in the can come we've as had in brands a you way. U.S. position our our So bunch whole

have big basically your tire got As areas, out. in aggressive -- some we're we've to about looked They're definitely at are who brand that members they them buy They've Europe. pick it, is, what's belong buying our a If strength. of a work lot weights, we not gyms pretty it, in it of cardio, tricky environment. flipping not of how lot

heard boxing about. even you've rings talk us Some have

spend to got that. fair redo to of get money they dollars take we're a to we have a it, amount invested of asset, buy the we we that a pool, lot out, buying the if there's in If box. So that have

buy and buying company. not stores a lot the likely we're the itself lot -- lose essentially members. reformat of we're of There's to the to paid box a we've paying then money. going the and We're So to spending

-- have and all think then brand plus we just change to We the that.

-- it at work. we've it, we've tried So looked to we've just as make

where case found sense. haven't We a makes yet it

while a it's think presence. get fresh just going in folks, refranchise ], they We attractive They with a instead, taking and is an all don't going Fit build and where [ these familiar doing start, So have think then it have to We market. do AltaFit what others them. we we're and some Basic we're do. we're stores, we're what Spain

like the first people we came what found had to appeals couch. do the what and the we still do then casual And does a and they industry, anybody who time disrupted who do getting along off people we just so the U.S. bunch haven't of goer and gym

is U.S. There's And penetration that's only you've small talk heard highest. other the us in higher. the among about one country the

break So percent we these the down. population because that's barriers those lower it's participating, other expensive. all and think of And we it's intimidating have countries

get We sheet about get years Spain it would excited presence where a us to to to we're little balance it. a So our to. opportunity. great franchisee allows new be to a our think in put able would a capital is accelerate And play where in versus few

Rahul Krotthapalli

Thanks, Tom. with That's end we'll really helpful, you year. working the and this of miss by

Thomas Fitzgerald

little still you. around Thank you I while, [indiscernible], a for so I'm but appreciate that.

Operator

from Your Altobello Raymond comes James. question with next Joe

Joseph Altobello

the on first member The question base.

As how rates? it value rates any and I'm might penetration between card to lifetime you the the your black not lower difference differ. continues guys get cancel seeing are member given in younger, average younger sure older cohorts

Thomas Fitzgerald

attractive still is be a can they're is contract Craig add. start to Card mix Gen Card are It like little may younger, members. Z, heard tends more you've Joe, on at to your of incredibly their bit as as and it's penetration it for Black because of their point, where changes there step Black they their when much Black below only we average, the average XX% lower. I they then XXs, a the about in. But look Yes, value within get Gen membership. us different function to them their for in Card look ages talk age And they once roughly are Z

that Card magnitude is new of all the orders take many still of a trade because slightly Black contract member. cost above day mix lower with getting the a value, long we'll So even

Joseph Altobello

it. test and growth? to X% permanent that, pricing for just this The Very clarifying . to year's? the maybe assume the a it to the helpful. thanks And follow-up. member still XX% comp be And composition of classic that way. Got $XX becomes by growth, roughly X% expected does Is XX% card

Thomas Fitzgerald

we test price is have the that's it any we country that good new still Joe. member not driven assumes in the growth assume and roll It Yes, does pricing question, current a predominantly nationally.

Operator

Zackfia Your next Blair. question comes William from with Sharon

Sharon Zackfia

expanded in more getting happening going this the that, club all or new the to appreciate how low poised any a have you build been if on getting does with like and GLP-Xs up I partnership Black need them with as to trade the concurrently opportunities mass explored would tap have what's members of into the muscle be to that those though, seems benefit I'm as and you've equation, become of at, interested to on. to trend. there you well prevalent it And convenient side partnerships that, kind pertinent also what's a Card? judgment color to

Craig Benson

Yes.

the me last Let start question. with

present their but muscle for teach speeding you weight are in now loss because, exercise calories, being fact, us also the weight know, up and burn as an their that it, to to drugs loss off opportunity enhance helps clearly too. people So mass available, it healthier about how by journey maintain

we that an see So as opportunity.

few of gaining there's what the believe portion only X We momentum. of a have big some a people. to a to develop a but lot not those prescriptions plans I clearly in it's It's million we things augment of to place offer right in type population. still club now,

fairly members. loss I'd that traditional for drugs weight our say are expensive also

them to still work to we've small memberships there's augment possibly on onetime longer a a insurance anchor to of In what I'd hope their it's an But I can of you, or a to membership our that make keeping on versus an because be lot complete add-on average on members. it's period our lifestyle of that we as it sort services also for all-the-time past, time than whether the that basis people seen got believe purchase basis, that the used in to be area we've of nice mortgages think or for we average. as members. do So could products. of And I the to time, affordability needs the it maintain for offer, use is those we say, have what thing. ways, using to continues the users We've lower -- that an small factor. of I'm it in perhaps their struggling takedowns our perks some a and additions membership. over

Operator

of question Perry with Your Alex from comes America. Bank final

Alexander Perry

on your congrats more wanted a to ask I Tom, And retirement. little just Black penetration. about bit Card

So penetration, should gap and Black Black potentially in direction? this? a we Gen help Z narrowing could you continued between penetration what positive in Black Card expect, declines going gets think do Or the White pricing given the Card Card acquisition Card

Craig Benson

movement as, are common you preliminarily, new. more people that But price the sense The somewhat Well, to the narrow up. still there again, some in opportunity the seen tests more we've direction. can trade is

have that especially a or move in to feel that deal, costs margin you. the labor getting of members changes have continue the So do to that so clearly something we for at experiment think maybe. the to helps, opportunities It's pricing. look time they're there's that ways continue value because some but also we the industry great still can equation that supply what And allow with with us long pricing costs we engineer occurred I to with the a will or

Alexander Perry

are expecting my enter then market markets? you to international. Spain And you just could helpful. year? stores on really is you year? were in That's only at And you Perfect. And international market how many to new expect international then follow-up this other Is -- this then open you European the looking Spain just --

Thomas Fitzgerald

Alex, two a a months path to we're our still now only bolstered the And here bit moment. few that to from we're team Spain ultimately over talking think pace to three last X-ish on about year at I year. a that the increase to we've our

country that We So the good in a really we're stages up. early still feel Continental enter great ramping in It's of about to Spain. Europe.

We store be that it a over XXX-plus could time believe opportunity.

it. and time about will But we market, really think I feel tell. -- good

to We working year we're as of few our our have leases and way pipeline. capital on set our plan, a do stores this part through aside the building getting to and

year, we exactly year that time time. period but how made a tell progress of about in So feel opened the many will we've next this short we good versus

be And the who on opens own. more in I just coming starting really franchisor think might as up earlier, doors than their as I off franchisee a mentioned

-- it's happy it's or thing, one different opportunity. we're we to -- we're Zealand, And just markets we're which a and enter, but -- approaching New thing we're location year, obviously, XXX-plus to a much two say potential So how going like but a a but at add Spain to one it's to this. say smaller

Mexico and look is at feel Canada like size and going wise, good this much and store that. to potential we more feel So

where world down excited about but So one. to more on road, the we're come else in very the this

Alexander Perry

of really That's forward. Best Perfect. going helpful. luck

Thomas Fitzgerald

Alex. Yes. Thank you,

Operator

[indiscernible] and closing remarks. then for

Craig Benson

you talking over appreciative thank helping very forward time have along your you morning. are to we day. in for Planet Listen, us to future, Fitness our and journey. a and We the this supporting Thanks, near great look and

Operator

This your for Thank participation. conference concludes you today's call.

You may disconnect. now

Planet Fitness (PLNT) 22 Feb 242023 Q4 Earnings call transcript