Planet Fitness(PLNT) - 2026 FY - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net member growth of 20.8 million members by the end of 2025, with a total of 181 new unit openings, primarily domestic franchises [3][9] - The company achieved a comparable store sales growth of 6.7% for the year [9][10] - The company experienced a mid-30% rejoin rate among lapsed members, indicating strong member retention [5] Business Line Data and Key Metrics Changes - The company focused on optimizing its gym formats, with approximately 80% of its locations adopting an optimized format by the end of 2025, balancing strength and cardio equipment [5][6] - The marketing campaign "We Are All Strong on This Planet" was launched in Q1 2025 and continued to resonate well with consumers throughout the year [4] Market Data and Key Metrics Changes - The company noted a slight easing in real estate availability, with vacancies increasing to 4.3%-4.4%, but still not expecting a significant increase in new openings [19][20] - The company is proactively partnering with franchisees and landlords to secure prime locations as retail closures increase [21] Company Strategy and Development Direction - The company aims for 6%-7% unit growth over the planning horizon, with expectations of accelerating unit openings in 2026 compared to 2025 [22][24] - The company is exploring international markets, with successful entries in Spain and plans to refranchise operations there to enhance growth [31][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fitness industry's growth, citing a cultural shift towards fitness awareness among consumers [43][44] - The company is well-positioned to capitalize on the increasing fitness awareness, particularly among Gen Z consumers [44] Other Important Information - The company is committed to maintaining a capital-light model, with 90% of its operations being franchise-based [40] - The company has initiated a $350 million accelerated share repurchase program, alongside previous buybacks totaling $150 million [42] Q&A Session Summary Question: How did the year-end metrics perform against internal expectations? - Management expressed satisfaction with the year-end metrics, including the net member growth and unit openings, which exceeded expectations [9][10] Question: What is the outlook for January and member growth? - Management refrained from discussing January specifics but highlighted confidence in brand messaging and marketing strategies [11][12] Question: How will the price increase for the black card be received in a price-sensitive environment? - Management noted strong consumer trends and increased penetration of the black card, indicating confidence in the price increase [16][18] Question: What are the trends in real estate supply and rent growth? - Management indicated a slight increase in vacancies and moderated rent growth, but emphasized proactive strategies to secure locations [19][20] Question: What is the sentiment among franchisees regarding future growth? - Management reported strong franchisee sentiment, evidenced by the significant number of new club openings and ongoing investments in equipment [23][24] Question: What are the considerations for modeling 2026? - Management highlighted factors such as revenue shifts, equipment segment headwinds, and impacts on net income and EPS due to refinancing [35][38] Question: How does the company approach capital allocation? - Management outlined a three-pillar approach to capital allocation: investing in growth, returning value to shareholders, and maintaining a leveraged profile [39][40]