Planet Fitness, Hampton, New Hampshire, reported 2022 revenue of $936.8 million, a 59.6 percent increase, and fourth quarter 2022 revenue of $281.3 million, a 53.2 percent from the same periods in 2021.
"Looking back over the last couple of years, I am proud of how we continue to prove our system's resiliency, the strength of our model, our differentiated offering, and the passion of our franchisees and team members – all of which position us to continue to succeed in an environment of increasing consumer prioritization of health and wellness,” Planet Fitness CEO Chris Rondeau said in the announcement.
Part of the revenue growth was attributed to a November promotion in which members who were at the $10 classic membership but upgraded to the $24.99 Black Card membership with a one-year commitment received a free Halo Amazon Fitness and Health tracker.
The company is working on an upcoming similar promotion and continues to explore partnership options with other well-known brands in adjacent categories for the fitness industry, Rondeau said in a call with analysts on Feb. 23, adding that Planet Fitness is an attractive brand partner given its size and scale in the diversity of its members.
The company ended 2022 with record membership growth in the fourth quarter, which created momentum coming into first quarter 2023, he said.
Driving the member growth was a December national promotion reminding consumers it wasn’t too late to join a gym in 2022 to get a start on new year’s resolutions,
“It drove great momentum at the end of the year as we head into the first quarter, during which we typically get 60 percent of our full year net membership gain pre-pandemic,” Rondeau said.
The membership growth also was fueled by a more coordinated marketing agency structure enabling the company to better leverage data analytics to optimize national and local media spend.
The company had 17 million members at the end of 2022, an increase of 1.8 million members since the end of 2021. More than 6 percent of all Americans over the age of 15 are Planet Fitness members, Rondeau said.
“But we're not stopping there,” he said. “We believe that in the future we can double our membership given our historic ability to do so and the increasing penetration we've experienced with each successive generation. We also believe that the 4,000-plus store opportunity in the U.S. is the floor, not a ceiling, given the significant industry consolidation caused by the pandemic. We'll be re-evaluating this target with a third party this year. We believe our purpose of enhancing people's lives and creating a healthier world sets us, our franchisees and our shareholders up for long-term success.”
Members who are visiting the gym are visiting more frequently, a possible sign that they are more dedicated to working out, Rondeau said. Members did approximately 470 million workouts in at Planet Fitness in 2022, up more than 20 percent over 2021. Almost 40 percent of members used their membership in a 30-day period in 2022, up from mid-30 percent in 2021. Cancelation rates were also slightly lower compared to pre-COVID.
2023 Outlook
“We, along with our franchisees, are very bullish on our growth prospects,” Rondeau said. “We are pleased with the recovery coming out of the pandemic.”
For 2023, Planet Fitness expects revenue increases over 2022 in the 13 percent to 14 percent range. Adjusted EBITDA is expected to increase in the 17 percent to 18 percent range while adjusted net income is expected to increase in the 30 percent to 33 percent range.
The company anticipates system-wide same store sales in the high single-digit percentage range and new equipment placements of approximately 160 in franchisee-owned locations.
Planet Fitness expects to average 200 new clubs per year over the next three years, but that number will be smaller in 2023, partially due to supply chain issues that are still impacting corporate and franchised locations, according to Planet Fitness CFO Tom Fitzgerald.
In addition, Planet Fitness has agreed to defer the majority of development obligations in the near term for one of its larger franchisees and to lift their exclusivity from certain markets. The company declined to share which franchisee, only saying the franchisee’s clubs are profitable, but they had an aggressive capital structure in place that became tenuous when COVID hit. The deferment will allow the franchisee to focus their cash flow on re-equips and remodels of their existing fleet and service their debt.
“This will be a drag on placements in 2023, but we are hopeful it will be offset somewhat by other developers in the system stepping up to build new clubs in those markets,” Fitzgerald said in the analyst call.
2022 Financials
Throughout 2022, Planet Fitness executives met with its top franchise groups, and those franchisees are encouraged by the recovery of their store portfolios with each quarter of positive membership growth, Rondeau said.
“The top lines are recovering even more quickly, aided by the Black Card price increase last year and the recent annual fee increase from $39 annually to $49,” he said.
For 2022, Planet Fitness’s system-wide same store sales increased 11.4 percent, and the company opened 158 new clubs during the year, bringing total clubs to 2,410 at the end of the year.
Net income attributable to Planet Fitness Inc. was $99.4 million in 2022 compared to $42.8 million in 2021. Net income was $110.5 million, compared to $46.1 million in the prior year. Adjusted EBITDA increased 64.6 percent to $365.8 million from $222.3 million in the prior year.
For the year, franchise segment revenue increased $38.9 million or 13.4 percent to $329.6 million from $290.7 million in the prior year period. The increase was primarily as a result of $22.8 million of higher royalty revenue in the year as compared to 2021, $14.4 million of which was attributable to a franchise same store sales increase of 11.2 percent, $9.7 million was attributable to new clubs opened since Jan. 1, 2021, $5.2 million was due to prior year COVID-related temporary closures and $2.8 million was from higher royalties on annual fees. Partially offsetting the royalty revenue increases was a decrease of approximately $9.3 million primarily as a result of the acquisition by Planet Fitness of the Sunshine Fitness franchised clubs, transitioning them to corporate-owned clubs. Also driving the increase was $7.2 million of placement revenue as a result of higher new and replacement equipment placements, $5.7 million of higher national advertising fund (NAF) revenue, and $2.8 million of higher franchise and other fees was primarily attributable to higher online join fees.
Corporate-owned stores segment revenue increased $212.2 million or 126.9 percent to $379.4 million from $167.2 million in the prior year period. Of the increase, $180.8 million was attributable to the clubs acquired or opened in the Sunshine Acquisition, $22.3 million was from the corporate-owned store same store sales increase of 13.1 percent , and $8.7 million was from new stores opened or acquired since January 1, 2021, and stores that were not open for all of the prior year period due to COVID-related temporary closures. Partially offsetting these increases was a reduction of $1.7 million related to the sale of corporate-owned stores in Colorado.
Equipment segment revenue was $227.7 million for 2022, compared to $129.1 million in 2021, an increase of $98.7 million, or 76.4 percent. Of the increase, $77 million was driven by higher equipment sales to existing franchisee-owned clubs, and $21.7 million was driven by higher equipment sales to new franchisee-owned stores in 2022, as compared to 2021.
Q4 2022 Financials
For the fourth quarter 2022, system-wide same store sales increased 9 percent. Fourth quarter net income attributable to Planet Fitness, Inc. was $33.7 million compared to net income attributable to Planet Fitness, Inc. of $5.7 million in the prior year period. Net income was $36.3 million, compared to $6.3 million in the prior year period. Adjusted EBITDA increased 70.7 percent to $106.1 million from $62.2 million in the prior year period.
The company opened 58 new Planet Fitness clubs in the quarter.
Franchise segment revenue increased $7.8 million or 10.0 percent in the fourth quarter to $86.3 million from $78.4 million in the prior year period. Of the increase, $3.9 million is due to higher royalty revenue, of which $4.3 million is attributable to the franchise same store sales increase of 8.8 percent, $1.6 million is due to new stores opened since Oct. 1, 2021, and $0.6 million is due to higher royalties on annual fees, partially offset by a reduction of $2.6 million primarily as a result of the acquisition of 114 stores from Sunshine Fitness in first quarter 2022. Additionally, $2.2 million is from higher equipment placement revenue, and $1.1 million is from higher National Advertising Fund revenue.
Corporate-owned stores segment revenue increased $55.6 million or 123.9 percent to $100.5 million from $44.9 million in the prior year period. Of the $55.6 million increase, $50.0 million was attributable to the stores acquired or opened as a result of the Sunshine Acquisition, $3.9 million was attributable to a same store sales increase of 11 percent, and $1.7 million was from other new stores opened or acquired since Oct. 1, 2021.
Equipment segment revenue increased $34.2 million or 56.7 percent to $94.6 million from $60.4 million in the prior year period. Of the increase, $28 million was due to higher equipment sales to existing franchisee-owned stores and $6.2 million was due to higher equipment sales to new franchisee-owned clubs. In fourth quarter 2022, Planet Fitness had equipment sales to 66 new franchisee-owned stores compared to 63 in the prior year.