Motley Fool
0
All posts from Motley Fool
Motley Fool in Motley Fool,

Planet Fitness, Inc. Pumps Up Full-Year Outlook

Image source: Planet Fitness.

Planet Fitness (NYSE: PLNT) reported first-quarter results on May 10. The fitness center operator is attracting thousands of new customers as it rapidly expands its store base.

Planet Fitness results: The raw numbers

 Metric

Q1 2016

Q1 2015

Growth (YOY)

Revenue

$83.343 million

$76.922 million

8.3%

Adjusted net income

$15.175 million

$12.595 million

20.5%

Adjusted EPS

$0.15

$0.13

15.4%

Data source: Planet Fitness Q1 2016 earnings press release.

What happened with Planet Fitness this quarter?

Planet Fitness opened 48 new franchise stores in the fourth quarter, bringing its total store count to 1,171 as of March 31, 2016. The company also experienced a 6.8% increase in systemwide same-store sales. Together, that helped drive an 8.3% year-over-year increase in total revenue to $83.3 million.

EBITDA (earnings before interest, taxes, depreciation, and amortization) -- adjusted to exclude acquisition and IPO-related costs and other special items -- rose 20.4% to $34.3 million.

On a segment-by-segment basis, franchise EBITDA soared 75.4% to $23.8 million, driven by royalties from new stores, higher same-store sales from existing stores, and overall margin expansion. EBITDA for Planet Fitness' corporate-owned stores jumped 30.3% to $10.2 million, and was also driven primarily by new store openings. However, equipment segment EBITDA fell 6.6% to $6.3 million, due to lower overall sales.

All told, pro forma adjusted net income -- a non-GAAP metric that helps to make Planet Fitness' results more comparable by treating it as though it were a public company in the prior-year period -- increased 20.5% to $15.2 million, or $0.15 on a per-share basis.

"Awareness of our affordable, non-intimidating fitness offering continues to increase driven by the combination of our powerful national advertising strategy and continued unit expansion," said CEO Christopher Rondeau in a press release. "We remain confident that we have a significant runway for growth based on how well our concept continues to resonate with the large population of casual and first time gym users."

Capital returns

Management's confidence also encouraged Planet Fitness' board of directors to authorize a new $20 million share repurchase program.

"We believe that current volatility in our stock price provides us with opportunities to purchase our stock at prices that we believe undervalue our business," said Rondeau. "This program underscores the company's commitment to creating value for our shareholders by using our strong cash flow in the most efficient manner possible as opportunities present themselves."

Looking forward

Planet Fitness reiterated its 2016 guidance for between 210 and 220 new franchised store openings, and systemwide same-store sales growth in the mid-single digit range.

In addition, the company boosted its revenue and profit forecasts, including:

  • Total revenue between $360 million and $370 million, up from prior expectations of $355 million to $365 million.
  • Pro forma adjusted net income of $61 million to $64 million, up from $59 million to $62 million.
  • Pro forma adjusted EPS in the range of $0.62 to $0.65, versus $0.60 to $0.63.

"Our group of well capitalized franchisees is on schedule to open a record number of new stores this year and the pipeline is robust looking beyond 2016," added Rondeau. "We believe our differentiated, asset light business model has our company well positioned to deliver enhanced profitability and greater value to our shareholders over the long-term."

A secret billion-dollar stock opportunity
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.