Planet Fitness(US:PLNT)2021-05-07 03:28Financial Data and Key Metrics Changes - Total revenue for Q1 2021 was $111.9 million, down from $127.2 million in the prior year, primarily due to lower equipment revenue and deferred revenue from store closures [33] - Adjusted EBITDA decreased to $43.7 million from $46.5 million year-over-year, with adjusted net income at $9.1 million, down $0.06 per diluted share [42] - Same-store sales in Q1 were down 14.9%, with franchise down 14.7% and corporate-owned down 18.2%, largely driven by a decline in membership levels [30] Business Line Data and Key Metrics Changes - Franchise segment revenue increased to $64.1 million from $58.5 million, a 9.5% increase, driven by higher royalty revenue [34] - Corporate-owned store segment revenue decreased to $37.9 million from $40.5 million, attributed to lower membership fees and some store closures [38] - Equipment segment revenue decreased by 64.7% to $9.9 million, driven by lower new store equipment and replacement equipment sales [39] Market Data and Key Metrics Changes - Membership grew to 14.1 million by the end of March 2021, up from 13.5 million at the end of 2020, with 14.3 million members by the end of April [10][11] - Usage in the Midwest and South regions is nearly 90% of 2019 levels, while overall usage is trending upward, particularly among Gen Z [14] - The company has nearly all stores open, with approximately 30 clubs still closed in Canada [13] Company Strategy and Development Direction - The company is focusing on a digital strategy, with nearly 50% of members using the Planet Fitness app, and testing a digital-only subscription model [15][16] - Plans to pilot bundled offerings for both Classic and Black Card memberships, aiming to enhance member engagement and retention [17] - The company believes it can capture a larger market share as approximately 17% of U.S. gyms have closed due to COVID-19, with a projected increase to 25% [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term growth, citing a shift in consumer focus towards health and wellness post-pandemic [21] - The company anticipates a fitness boom as more Americans prioritize wellness, with a strong belief in their value proposition [20] - Management noted that franchisees are eager to reinvest in their store portfolios and capitalize on industry consolidation opportunities [26] Other Important Information - The company has deepened its partnership with iFIT Health & Fitness by taking a minority stake, enhancing digital content offerings [18] - Franchisees are expected to open 75 to 100 new stores in 2021, with 22 new stores opened in Q1 [26][31] - The company has a strong balance sheet with total cash and cash equivalents of $503.9 million as of March 31, 2021 [43] Q&A Session Summary Question: Impact of California churn on net member growth - Management indicated that the impact from California was minimal due to the small number of stores in that market, and cancellations have normalized [51] Question: Trends among different age cohorts - Management noted that Gen Z is leading in new joins, while older cohorts are starting to return as vaccination rates increase [53] Question: Long-term vision for the business and omni-channel strategy - Management emphasized the importance of providing services outside the gym to enhance member retention and experience [55] Question: Marketing cadence and Teen Summer Challenge - The Teen Summer Challenge has been postponed until next year due to occupancy limitations, while marketing efforts will be adjusted based on seasonality [60] Question: Membership trends in reopened markets - Usage in reopened markets is over 90%, and management expects similar trends as more locations reopen [68] Question: Store openings and franchisee marketing strategies - Franchisees are actively marketing to members of closed gyms, often acquiring member lists to facilitate seamless transitions [81]