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Planet Fitness(PLNT) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2020, total revenue was $133.8 million, down $57.7 million or 30.1% compared to $191.5 million in Q4 2019 [30] - Adjusted EBITDA was $51.1 million, compared to $76.6 million in the prior year period [51] - Adjusted net income was $15.1 million, with adjusted net income per diluted share at $0.17, down from $0.44 per diluted share in the year-ago period [52] Business Line Data and Key Metrics Changes - Franchise segment revenue was $66.9 million, down $6.4 million or 8.8% compared to the prior year [41] - Corporate-owned store segment revenue was $38.9 million, down from $41.2 million in the prior year [45] - Equipment segment revenue decreased $49.0 million or 63.7% to $28.0 million from $77.0 million [46] Market Data and Key Metrics Changes - Membership levels ended at approximately 13.5 million, down from 14.4 million at the end of 2019 [31] - System-wide same store sales were down 10.6%, with franchise down 10.6% and corporate-owned down 11.7% [35] - Black Card penetration declined 40 basis points year-over-year to 60.5% [36] Company Strategy and Development Direction - The company plans to capitalize on industry consolidation and favorable real estate conditions to grow membership and expand its physical footprint [25] - The strategy includes enhancing technological capabilities for digital engagement and utilizing marketing to increase demand for accessible fitness offerings [25] - The company is optimistic about resuming growth trajectories post-pandemic, believing that COVID-19 has widened the moat around its bricks-and-mortar business [26] Management's Comments on Operating Environment and Future Outlook - Management noted that 90% of stores are open, with the majority of closed stores located in California and parts of Canada and Panama [9] - The company has provided franchisees with relief measures to help rebuild their balance sheets while focusing on membership growth [12] - Management expressed optimism about long-term growth prospects, expecting to return to over 200 new store openings per year once conditions normalize [60] Other Important Information - The company ended the quarter with $515.8 million in total cash, indicating a strong liquidity position [53] - Total long-term debt was $1.8 billion, with sufficient headroom for maintenance covenants [55] - The company is refraining from providing guidance due to pandemic uncertainties but anticipates modest new store openings in 2021 [59] Q&A Session Summary Question: Membership trends and marketing investments - Management noted a decrease in member cancellations and an increase in net members in January, indicating a positive trend [65] - Marketing budgets are set for the year, with potential adjustments depending on vaccine distribution and demand [66] Question: Member usage trends - Usage was reported at 75% of last year's workouts in December, with January seeing about 70% [70] - Longer-open stores are performing closer to normal usage levels [71] Question: Member trends in November and December - Cancellations were attributed to involuntary cancellations due to billing issues rather than significant market changes [76] Question: Unit development and franchisee morale - Development is cautious, with expectations of 75 to 100 new stores in 2021, depending on market conditions [80] Question: PF Plus subscription and revenue sharing - PF Plus is showing promising trends, with a significant portion of subscribers being non-members who later join bricks-and-mortar locations [85] - Revenue sharing with franchisees is still being determined, focusing on mutual benefits [89] Question: Equipment sales and future outlook - The 15% discount on equipment sales has expired, and the company expects a potential decline in sales before improvement [94] Question: Industry closures and competitive landscape - Management anticipates more gym closures in 2021 due to financial pressures from the pandemic [99]