Planet Fitness (PLNT) 10 Aug 212021 Q2 Earnings call transcript

Good day. Thank you for standing by, and welcome to the Planet Fitness, Inc.

Second Quarter 2021 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Ms. Caravella. Stacey yours. is floor The

you, operator, afternoon, and good everyone. Thank

be Chief Financial Executive on Tom today's Chris Fitness' will call Chief Speaking Officer, Planet Rondeau; Fitzgerald. Officer, and

Planet who We on session replay. webcast following Today's questions President live Dorvin remarks. also Q&A of prepared is have during the the be will call line, the available and for Lively, for Fitness being recorded

our forward-looking remind call release in Before Chris, to the to to the applies call. comments earnings like over during everyone I statements language our on turn would I that this included also made

Our along their release measures corresponding of can mentioned be any financial measures. found on our website, non-GAAP with GAAP with investor.planetfitness.com, on call the reconciliation

over Chris. the I turn Now to will call

Planet strength depth Earnings to global committed Fitness' a most testament Thank people our XX Fitness of It's in QX the of temporarily closed. for Stacey, you, thank for you, Call. the and that of Planet remain everyone, of million were a more brand members our than gyms when today joining pandemic us

historical million continues July, than more Our membership had we defy XX through And seasonal to patterns. members. momentum our

We membership in XXXX this XX our have we in the of never low have XXXX. years growth unseasonable QX in QX Planet. I my type to at our from of regained seen XX% lost approximately peak members nearly

with unprecedented across fitness with all of of of at are seeing of helping members or are some country they're membership existing U.S. support are in and time, that adults new of also obese. a pandemic environment, all better in us rates, of portion portfolios. with us importance more We're COVID realize our into they're seeking as get trends the combined our and members their the judgment-free hit amazed with people came good value healthy, that nearly And feel hard. community-based larger right system overweight the wellness. The over A reopened, a franchisees, age with who considered And been reengaging than proposition. an now. XX% the they joining for overall to incredible stores the at the that's positive today, what and have business XX their

top for of COVID. One factors illness severe risk with the

fact, but best America years pandemic A II. health to feel the and fell in who showed while And life regularly War not only In much the XXXX fueled World chance self-care. largest were physically We study people expectancy due beating recognizing membership X.X believe the momentum gains residual importantly, unseasonal decline better, in did who of by had COVID that other the since also worse. by makes is the importance most exercise of people activity inactive single-year our impacts, mentally. Kaiser people people physical in

the about taking consumers off getting to Our first is and messaging step getting fitness the couch into a of routine.

Our of national no so. commitment removed X free doing month barriers the May to and sale all

growth member XXXX, a Card net June, result, was nearly we in And in a saw member Black Xx In ran what during growth total in XXXX. May XXx offer. we sale. the was for May our we which a June flash As growth similar net ran month,

consider are in truly in had our million members. business approximately of people is And It's very are months, business remarkable the the exceeded importance have that growth the rest sales quarter, XX.X growth, for of of The the our when continue in better the care our XX predict XXXX. than We taking only our temporarily will hard these business national joins doubled member franchisees July For our recognizing our more the QX us. you QX with growth. XX% QX themselves. our we stores importantly, rebounded. what closed not net QX state whether net we net the it the ended believe saw quarter Exceeding in We future. to of second million for trend membership tested brand, unseasonable and XX of with members XXXX. of negative but about In trends excited just year, has in

to addition of and a attrition joins level, our in normalizing, are In June, strength demographic and XXXX both cases, exceeding on basis. and in some the regional usage our age

the to began boomers we nearly of June at business our month pre-COVID back pre-COVID key to trending Usage return to trailing. a up was certain all June, National June in nearly levels. metrics only XX% with nearly in typical XXXX during During quarter, usage levels. for demographics see ending

is upward it still trending group. However, for age that

group XXXX as of that in activities. returning to return prepandemic levels back performance last reopenings those people to reopened are normal than Our to more begin faster

COVID mobile the down last via engaged on digitally to web as workouts we shut we free While grown pandemic our quarter, further iFit adoption our business, members XX% in with are keeping from the content nearly year, that our stores impact offered there future to our digital XXXX. our digital with App strategy. temporary areas our strengthened having had XX%, and as to by partnership such we QX our we quickly accelerated shifted is accelerate our announced app. opportunities strategy. When And a unlock last members

roll incentive to plan program we Refer out Friend a through a the app. QX, During

to our a that the about even high-quality as is believe get hired a it that other be Officer, Kaplan, engage outside benefits to We're casual make us X of many coupled wellness differentiated Chief people providing membership. with other and bricks of to quarter, may premium our service at with all providing there walls. fitness We future Sherrill geared we the opportunity lead first-timers. industry aggregate an in-person them experience, to second with strategy. into value, for most to ability a We easier content to the towards disruptive well categories as with app them clicks the the During believe our Digital

pilot Black Card in our with bundled stores test as to membership. a of to a number elasticity, limited offering continue included PF+ We price

PF+ In to due bricks-and-mortar the expect this XX% nearly June, a of second staff impact and pandemic for I'm keep of systems on our all persevered the to who club our locations, experience. from XXXX test gyms industry, fitness proud I'm with in franchisees, early of now COVID our want underscoring the efforts offerings staff and the XX% forward permanently nearly during through to have fitness balance look consumers There's the a financial quarter. to strong. excited that stores And reopened. joined the run the closed our subscribers XXXX. headquarter omnichannel in more sharing of more possible We to very dislocation

or Americans believe essential our back with vacations is mental nonintimidating office to on shutdowns, sense the quarantine physical, environment friends fills again, time, seen are emotional go family place need that the time. that they more are that they're workout community. gets realizing We at and affordable, they isolation, long haven't and While in fitness head moving and of a we as people a confident see that same and seeking to After well-being. a

well. Importantly, our as franchisees believe this

be XXXX, outlook and in XXX into openings get in our will As our strength a the confidence his remarks. at result, our their near-term to for reflecting specifics more business we the XX now to year the of the high growing range on new prospects. store for of growth balance end Tom expect of

years next agreement potential up added to the the with joint in of faster With out stronger, that the the accelerate significant. addition We to the I to better company better. currently we U.S. changing market growth store new in the behind we we made stores services of X of opportunity come have venture tailwinds always that and today developers. first us dynamics knew a the retail is million of but looks would prominent have even the the X.X members in XX and of is wellness, we and due an the even nearly given, pandemic Mexico much domestic long-term, pace that health a X,XXX-plus so than X the X/X I'm over and ever. for also our is what now I of needs change world and X call back much I'll to on better, lives believe year. mission the in Mexico. fact signed always a months people's purpose-led to The we minimum brand in than come turn I agreement the COVID, of Tom. U.S. one the closed is largest over that announced opportunity local which gyms stores this pleased are all expected. extremely more front With I a a that to

Chris, good and afternoon, Thanks, everyone.

into touch want I financials, topics, couple store expansion. review a get I with Before of of on our key the starting to

X,XXX. to stores, During the bringing quarter, count opened our we new XX total

to reflects XX strengthening to As supply be franchisees their Chris confidence of top range to the reflecting estate. the XXX the store franchisee increased of our taking real end the their the said, year, for Several now growing plans. development at new expect sheets. the groups It are advantage also balance of accelerate of of we

their categorize dollars. franchisees we general, to as seeing for our from square landlords strengthened don't more that estate membership that sometimes retailers As but have XX,XXX which are to believe In more more I look a of some real given which of seeing franchisee from bullish membership franchisees the Planet necessarily a real closed. box come sentiment levels reminder, closed improvement we attractive as no big We're after a trends, favorable accelerate that gyms to of even because and the that tenant climb. down go would locations estate yet, landlords the as are are We been we continue a not tenant position our typically choice. have We hearing we're pipelines. unseasonable historically market for foot occupy Fitness catalyst permanently space. development pandemic, rents offering

second Chris' Next, state comments the to want business elaborate I in the of quarter. on last about year our

majority sales last will mentioned system-wide previously a fact on system-wide the of growth the resume billing the in due reporting not prior we quarter. period. same-store are number not we to QX stores We that reporting third the assume same-store As were quarter's in year our sales call,

results reminder, sales of the in the are a to months period. same-store over change compared function XX our year As membership trends trailing the a ago

basis of sequential points to but membership XX.X%, year, prior up levels our As growth, consecutive of to continued net X end increased XXX penetration contributing still months rate. average were QX, growth year. last Card monthly to Black member the of had below in we

in growth $XX in growth the The attributable or in corporate revenue primarily due well segment XXX.X% segment I'll royalties, sales The all compared closures primarily in driven $XX.X COVID the as revenue year. to fees as segments. increases to and from in by our XXXX. revenue by financial store QX opened increase other closures stores increase existing to franchise in equipment last Total store million was in impact NAF was QX QX $XXX.X closures franchise due primarily temporary period. X and million prior year Now due related million temporary year. driven store stores turn Equipment revenue were revenue corporate and franchise-owned new across results. to The to increased to COVID-related of increase the to part to to segment COVID-related also new temporary store higher last X was

compared million. was revenue, cost closures, a the period. and million the year in primarily stores, primarily quarter compared the expenses, reconciliation along million increase which stock-based app SG&A were a amounted million year EBITDA corporate-owned stores driven expenses new ago. Store COVID-related and compensation, period. million million and relate of for $X.X of adjusted adjusted was of ago. million. net to million, with Corporate income diluted million expenses or $XX.X with share loss million direct to segment, $X.XX. with higher with The net the to incentive EBITDA travel the the to in year A income per was prior $XX.X to and of The was EBITDA relates million year. cost lower loss million was and was expenses the segment, to the prior year franchise increase EBITDA operation payroll period. to new XX was to expense our By compared can $XX.X expenses to year last GAAP a franchise-owned was was adjusted to temporary we in equipment equipment $XX.X be year store was adjusted income with the $XX.X $XX.X adjusted higher our compared last in $XX.X $X.X which $XX.X $XX.X mobile QX months. Adjusted million Adjusted and National in million compared prior store to $X.X last earnings attributable Our release. compared existing by net found associated fund $XX.X advertising $XX.X EBITDA opened sales operating

to balance sheet. the turning Now

XX, cash to XX, $XXX.X in June total equivalents As compared was December of cash This and million of had compared $XX.X restricted XXXX. our debt period. cost, financing and was XXXX, as of XX, respectively, cash funding million cash, consisting to variable on each $XX of of $XXX.X and $XXX.X notes. million of of million Total $XXX.X securitized million debt, tranches we million X $XX.X comprised of million $X.XX long-term of June billion excluding and

debt securitized is structure Our covenant light.

service of to have ratio lag. covenant, trailing X sales covenants, tested and We the XX-month covenant X, ratio basis our triggering believe In threshold. of on and for roughly both maintenance open. on our have quarterly, event system-wide coverage headroom debt sufficient a a had These We our recent especially most cushion first reporting now total covenants, debt period a with XX% a service system-wide a debt June and we X-month our reported XX% calculated sales for we X stores maintenance and nearly coverage an XXXX, all respectively. are

out to XX-month trough it last trailing XXXX the a result, this period a This calculation. was in a point final Additionally, our toughest believe with we was that our financially as standpoint. from I'd QX reporting quarter included And DSCR was year. like

year, outlook believe readily just balance have what will the available we performance in be XXXX. strong and our metrics. into our for trends to Now insight X better With growth membership key months the remaining nation, this across under vaccines across of we

case mask across like I'd COVID variant spike XXXX no our that resurgence in result to there particularly stringent However, to Delta mandates for disruptions, view assumes member significant of note major whether via current causing causes that or the as in the is a membership that is shutdowns U.S. change trends, counts more

end expect we be at that opening discussed to the already store our range. have to We new XX high of XXX

that noted reminder, replacement last be year. a to revenue quarter, equipment As approximately this our equipment XX% of we we expect total

levels. With corporate closed in the group we've in We continue to from were by respect to case. which impacting temporarily stores were the most store to our temporary stores' shutdowns believe this pre-COVID clubs and are is COVID of to that the that corporate note primarily important markets longest, biggest the factor impacted said will were be a segment, that as it's recovery our

We our revenue corporate previous and and of period will and are Additionally, lower Therefore, longer XXXX levels. store the the importance believe balance portfolio, still stores the this corporate for to segment for expect in performance to our Corporate to time mature vast of majority financial those viability Store stores. levels. of just take return into the our profit of a stores compared we year strategic next year for it

Now SG&A There XXXX. let's increased SG&A. turn X drivers to are for spend versus

the for including with growth and First, into marketing. infrastructure franchise bricks future our IT strategy, engines click investments business, our

is From a new marketing in we store digital, on mentioned, industry. a promote lobbying an support for for members. Chief app, Chris the invested fitness our leading we for have omnichannel Digital efforts to have California and experience as reopenings our participate example, our efforts For perspective, Officer, who

driver The including having compensation, as typical as leadership second well positions compensation additional growth. is

So will that million. between our when we revenue million you be $XXX believe of take full this all and $XXX together, year

We range. million. believe low share SG&A adjusted And million be $X.XX adjusted $X.XX. to in between between per $XX expect that will million be earnings and $XXX be and $XXX will the expect We EBITDA we

membership encouraging. Finally, expected, pace of than growth and recovery we highly faster is has our our been

membership year change We compared period. trailing to are QX. levels I significant of most cycled results in over XX the member declines prior our function a earlier, mentioned the As the in months same-store the sales

year. our will same-store will membership that expect become expectation We and our QX that positive sales last exceed given that levels growth membership of

we I can However, financially believe that our ways less outlook assumes country well the pandemic. that temporary over setback, out prolonged Q&A. there near as are with is whether operator And somewhat mask another on strategically COVID American tangible that and is the turn, model reiterate resilient. the through business. we it business emerging while want other to psyche our mandates, the But capitalize not in operational positioned or value-creating shutdowns comes predict, know the affect we And that to difficult term that, will to I opportunities the to and turn is for of this

[Operator Instructions].

Your from first line the question comes from Heinbockel of John Guggenheim.

between you we think given because members going happening it year-end? they're about be you're that can membership, promotional would Is -- more to Chris, what do because and back? with -- inclined be naturally coming do you run you respond? are promotional Or what's more now to less activity

interesting question. outside the That's regular year, scheduling. have looks more a your not on of good past, really last the on that the what's to of is in nothing But Yes. marketing quite last days. years of kind demand Right of seeing so now, off-promo a similar mentioned -- intriguing organic natural standpoint is we're from the -- you -- actually we pretty norm It's It question cadence. kind is remarkable. what's

we've I've -- -- demand there, Something just never -- the it's before. is off-promo seen It's days, just regardless. even

marketing, we'll it's in extremely the normal strong all membership do but generations. so right So cadence -- now of is a

it pretty COVID? right, test, deliberately, you Black Or for the and it for about people to separately? and that it couple content tested the you you to went secondly, think is want you're you're because then pay trying do Card going with digital think Right? the whether Card I in think, include it. because pricing whether increases, that will Is right? of out when or Black figure a last I to the months maybe about And pricing of compared that X

the been the increase least whether PF+ test reasons. mean Or a digital at of little not? less? acquisition can or maintaining I that in all number? have bit right for higher $XX.XX Card separate a bit Is same Is reason, percentage always think for John. driving we But from it few I'd think some the that, Black higher the say so through it's it the and little of both. Black bundle, pilot I rates? a So -- Card a is apart it's the we'll more? Is I acquisition, digital

of PF+ mortar one think join are and then I have bricks mortar to seen gone on have subscribed and into the who bricks XX% we've and to people PF+ that nonbricks-and-mortar doing about members and migrating the after.

kind But and definitely water really dipping it's the and like bundle, it's vehicle perceived the to So better an deal when because in for a looks of the it a -- bricks the a bar after their which a marketing whole toe they're also so then when off-the-street bundled is encouraging. of see mortar converting that better it you us. other sets fact, It's value get you even price. the

So I both. think always we'll have

Randy from question from the of line Next is Jefferies. Konik

XXXX I it guess, the I at Tom, long-term prior of EBITDA target especially your just for confidence release, I believe. of be long-term possibly about one at getting was guidance when so think about in the elaborate So margin, have as EBITDA at exceeding about margin there the XX%, Chris, Chris And unit bit Tom. closing? having an dollar X,XXX -- implies EBITDA and super high press and for in I little more your guess, peak are the you look can you helpful. of color meeting the believe, your I competitors -- potential, in in XX%. one because I more bullish And States. year, I a So would end a the kind United question more you're for in Can talk locations

EBITDA subside a to bit should some elevated how XXXX, about medium in the just more where want sit I for little rate some the margins know to see So margin SG&A color i.e., be on we in into year. should growth the should we EBITDA in really and if expansion around business XXXX term next get will thinking the

Just that. on curious

more of heard our we new Chris. past, sold, were it Randy. years that on us ago. then. Thanks, potential, And XX, And -- sold talk holds it franchise we and we Sure. probably of already might thought existing in pre-COVID a today. we what where territories know development the and for now X,XXX than in we and now county, call franchisees This most unit it you us the stores a we lot based back XX holds for to have is it were Yes, even we did are had XX sales know in coming

So what out coming the the we of were side the on COVID. already X,XXX that potential be of might thinking always is lower now

higher stores, closed of boutiques. in in to XX% of no does I quite down. think have Out boutique gyms think shut the full-service on, I opposed It's I And arena as things going XX% -- about of XX% on with longer which so skew But of XX% industry it the nonetheless, is are have XX% of that was gyms. few does this the about business. we top skew the a gyms down, have closed, have amazing. higher shut boutiques of XX,XXX

of realizing think, So mentioned demand, that I on think seeing COVID here the of is have with -- out it's organic coming of people I the just growth -- I we're what just you that you of health everything not or COVID one of through the your overweight the and to fact shape and of deaths. see -- out unfortunate being is hospitalization taking contributing points factors of care top or

wellness really of attention So more and to I coming so think are people their health this. paying out

So years of I tailwind this ahead. coming probably has a many the industry think huge out for

I I the that before. going -- something to probably seen hasn't it's industry think think see we're

to model, fact XX% not have then holds we're if their our for after too gone doubt closed I in still the And think life, going second that casual strength there's the that first-timers. of true a our I the your gyms gym So to joins question, think no down, quarter. with of today

our as need And more couch in fortunate they're also, less the time, the all COVID. affected low neighborhoods, government for it's mostly most classified the And XX% as getting we're also income. by we people in people So of who off first gyms know, really that are neighborhood the help. and

probably So And believe we're is definitely to size. X,XXX I light going filling a the need here.

I think this. all to to on of is the settles out this up where dust it's potential think to we're So have once see dust settles, possible once the going study we the

Randy, as And talked were question, different on with that P&L -- through I the think affected come puts we by being the hey, the segment about this the longer. Corporate we takes segment in markets and Store

And So rebounding, that the the in XXXX, more strong where impact has still recently, certainly were are of an also there. franchise from segment, right -- they our while kind membership levels, been rebounding pretty start. have

$XX of margin little the It depressed levels of across segments. XXXX million. of X see of a the So bit the it's to near near back we our kind the changes a that kind our in term us revenues is structurally subscription of on a But of inhibits EBITDA term anything in term, model. from some timing based bit longer and the don't getting

to -- I as to mentioned, when both marketing have though, think clicks people, our and in incremental of made app you think we do terms systems about bricks Chris back investments our strategy. SG&A, support with we some

think where But we business pretty a with an main, opportunity frugal we're invest to that. in, the the run there's to going I do mindset. we think in

we as see where frugal investments we big a to opportunity. thoughtful a about up balance So what we make the being also need and being I to really should of it's power think

from is Cowen. from Oliver question Next Chen

you are given Just what and sounded Chris relative trends and your prepared might now then than And better what remarks. churn? that strategy, the like upside Officer? is map? growth time and What road generally was expected your you Digital were impact membership a running the to clicks for the the and/or bricks models Tom, expectations? And this excited on Chief most how about? drove second, the right membership on Why it

Oliver. with share want you. Thanks, I Sure. to

typically the grow store, in what the mature today earlier, we what's not see a On stores. In of really and April, at typically honestly, membership, growth of month year. all after this all mature winter pretty after actually we after throughout our of mature lot -- have the declined in much the And rest the growth the year cases, slightly rest months. of a of the stores driving

seeing So a stores seen that mature that now, something in time never typically growing of what year before, are we're which the they don't, we've really. is is

But ahead. the typically call the a year. throughout continuing don't not they either the new year, add right over that some the even for lot rest members or they actually April. they'll quarter, retract then of they're of they lose some the in maintain year, But is through it, the in So first of We're the now. to even that months stores rest that grow seeing seeing mature we're grow. And

really that. what's driving that's So

just on I extremely summertime, amazing hold this have life demand something So in organic something see in Usually, -- see that, mean, is the are for the of July, of that the time the sale honestly. it's And dear this in which it's we in periods we've to strong, they'll month never had. June would or industry, to something like grow -- year.

I and But think our here, think the it's somebody bricks said X month. really follow. we every strained about facility, let as -- this to We doors still open you this service previous -- outside walls. years lights anything, industry, we in we us them the on don't pay -- I think and use the give don't clicks right? with They offer and many the in but if stage I've its the many infancy, calls, and it's -- turn and

retention walls of can help only walls help any the and them engagement in with provide X outside outside our level but ultimately, only with can and way So customer as some I think satisfaction we inside, service X well stickiness. and as

mean, it's to just strictly more that's great now, exercise there be to goes beginning it's engaging So the people but and is self-help? the nutrition, that way now just I've a are -- just but and platform XXXX, -- is But able And XX% add it. platform. a to for XX%. there It -- now it website more or Is the the on I built either XX%, joins always it's with on In through and way are of our with was the even platform digitally, of that's through there's to XX% sleeping? joining Is number really help why the and mentioned, app. as they're us meditation.

So much, are past the than much joining -- years even people we've in the by way is doubled. just seen well, higher

just world I stick are something is has And going changed. to with think people So -- this around that's the us.

And promotion which we're a the nationwide somebody get and that referral, and app. which where existed going that we we're upgrades we way the the something have and formal in until -- through platform. the refer offering member reward refer a that a app with app, that launched -- in is now So that offering never referral, this them for and credit this had can for app before friends

think, members the engage our to way, just it's So I and more provide able us for more. them and to get be

only help, stickiness So think, it's the I only longer it drive term. and the with -- as can satisfaction goes customer

have And what are and/or nationally expectations regionally? your And lastly, and How there seeing what usage. you're usage trended?

trending direction The some boomers Many XX% of now, almost Yes. pre-COVID. right of is XXXX are the so lagging still back generations great. but We they're are ended June levels, with back which in about the to to normal.

And So is usage usage about per we're -- Xx too. normally average members same, Yes, usage the is the see. to About back what about we month. almost is same, too. about

Altobello from Raymond line Next James. the Joe is from of

joins all know mass That you I form that the the membership or shutdowns on mandates, Joe. assumes, nothing any and mentioned dynamic. be And cetera, of in that seen I up pick maybe unexpected being quite unpredictable but even recent and weeks, for in from have on far? Adam to have know actually on cancels the like said, pace of so guidance seen is guess, or This impact they able on new you early those either et to -- you have too regard? it's that recent guys I Delta trends, anything

to you some that you spiking virus that. and we the see when that August nationally of were things if back it been of no, in if the as some we the we're Yes -- so we But did or last reaction of with regionally. react watching summer, some closely saw seeing not haven't Delta remember, recall market --

believe one And growth in proof posted could. the you of Do or slow rule a more, New That's term? requiring vaccination encouraging. to think I any in prospect membership way gyms. enter York that City near if Okay. store I a might

could. I it mean

We about question it hurdle is is haven't it yet, XX walking that you, bit the a all for haven't it seen but about little seen are But things definitely masked how -- affect here good portfolio, a -- but but people to XX it around. of on exercising time out. for of masks work clubs goes that only Out while yet. clubs we a and entire we while not while have the have long

especially as might Northeast broad hear. as all think, you you not it's So in the is

trends. Congrats encouraging on it. membership the Got

you. Thank

Next Jonathan your Please company is state from Komp. also name.

town ahead that whether seeing It's but and the there's that the Jon other metrics of some about to question, you've you I doing Komp competition? of of the your Baird. for at know have stay seeing some momentum cited, want gyms that as up you're peers and picture closed, to of bigger do your a think I a you bullish you're you membership are follow from maybe cited trends. enough similar but of bit how little look the

you So plans you Planet to ahead? maybe how about to costs do -- investments doing those your franchisees? you're share should ahead, stay you think or and just between those enough stay think And as

year, X% put need the actually we to -- that open NAF know, that and kind or see the fast supercharge of the dollars I heading about recall definitely yet marketing now. to wouldn't. the some right Yes, optionality keep and membership do But the it's end it We membership the the NAF and way -- going. And it is just get reinforce -- the how see to as local you $XX Jon, the dollars. good -- fund, now, we there. last Not to question. of We I growing. trend last advertising is last of in don't don't with million corporate tail may of the advertising spend, national you right just

that get the faster dollars and the the membership larger. those increases, quicker replenish So

The see franchisees. about doubt that So yet. the that text seeing in of what they month And about saying shared amount details reason couldn't no our there's to people messages right just do with June. is and they're or believe now, the no the the excitement get definitely growth membership we of I July

time it's this -- here. but that's sheets, leases said feel confident what to So replenish we've really to really to the franchisees also and start moving start their need enough -- negotiating It's all along, time clubs open. get what that's that to get balance see

longer we of happens, this here, -- which for which to on aside that the really out at went the why put of that high it reason X years no minute some what true, us. because Delta top, the the our don't as growth I and But why now -- hence, shouldn't range unit-wise franchisees virus -- there's XXX, see holds estate. true to holds knows we real a here are next feel who that XX looking So go crazy good will in us

follow-up Maybe Yes, then. that's one great.

trying out we for in it As thinking how we just revenue about about XXXX, broad million. year -- equipment Any think the close think that? thoughts think to should next I stroke about to ahead, years model was the $XXX

assuming a disruption there's on both on development their commenting think at on sometime Tom. We're have back no run really XXXX store rhythm year-end it's XXXX, call. do course, Yes, of I this rhythm, in expect we normal back point, But these of that all Jon, not once terms we'll be But a extensions our we'll that of on kind normal XXXX, kind COVID. in reequip and with cycles. sometime in

Ivankoe Next from John JPMorgan. is from

interested is if can increase the extent, doing? X the some of on answer. the -- development top if and/or range, mean Maybe you volumes I unit comment how the you end those past. for the XX XXXX relative to have in months, been to doing last years? how that specifically they've years openings, stores And example, the relative I'm how on comped the are previous to But are year especially at, to look the open were

I'll maybe and John, start it's add. others will Tom.

year opened that So to any started we to norms. of to more soft if in opened clearly clock think were that QX expect. the want that opened -- it we comes stores this year closer normally months of when first the first the to expectations terms would are I get year stores And we last to back, year The historical first above in in ramping. what stores the

kind it's another signal very So are seeing again, encouraging. franchisees our And of gets them yet that very bullish. green that

XXXX in And there's Or mean some new example, unit would for you're, than I mean, class? drag volume? still your that the higher expectations, that above

Higher.

Next is Capital Siegel Markets. from from Simeon BMO

if Congrats on the sorry ongoing progress. missed Chris, it. I

I your you you on changed speak maybe pre-COVID? Has versus XX% rate? competitive I normally the closures touched the think you to customers? the reactivations speak you you Tom, own of think I it, you from composition that. the And guys But can coming can first-timers. from average gave members? give or then, think can it to but percent COVID-lapsed the new mentioned royalty

So sorry that. missed if I

Yes.

us of back. about a -- still coming rejoins elevated. higher in seen today. behind. than past years and have Those to millennials competition past. is at that are past, and XX% rate XX%, And typically joins about are in are Our The our And members bit same. in in Gen come closed couches slightly the still the we rejoins. joins quite are definitely of And the the from it's About a the About about were population the running Z quite a ever are are as from us quarter. seen right, you're they the first bit X% the Boomers we've of first-timers joining XX% X of essentially. so Gen runs coming haven't that

of and for I fundamental year the compared structural last just this rate to anything. No change mean, versus X.X% X.X% really or and year, open mix stores the billing yes, was And that's quarter royalty year. last that were

any any just as that roll And the U.S. -- Perfect. Mexico notable out? for difference you in economics then versus

the has No. largest locations. here XX brought you XX, Old Not there partner have read in group press but might U.S. and all franchisees, rates our Mexico. over X release, and as has The -- a almost stores of they good XXX group the the the of to that, no. Navy out really, The of royalty X who well Mexico it's Forever development years, with

be great So that a has partnership the I of there. lay land think it a will

Next from question Sandler. Piper from Keith Peter is

get I that you member to of My continued $XXX you've quick congratulations range? a the A on progress. roughly revenue for guide what guess, that million to have the for to would million, as well provided question, $XXX year-end count

we've this provide know, trends actually call, you it And couple year, of the We guidance alluded Tom. are Chris in things to. seen as a fluid. a our points. data year, membership very on it's Peter, as unseasonable still typical last But in outlook. of kind on And don't was member

back typically, as gone store Now July. it's more quarter points through half data year. would some lose of into we've the And the and the members a in

all together put to but with thinking up typically our guided year provide versus membership stir how atypical in try we best to happens we and come don't unfortunately, So outlook. revenue, taking we that an what

is question And just on enough. my follow-up Fair -- the Okay. pace openings. gym of new gym

XXXX, of in how guiding high I conversations not I'm with XXXX. interested I for the evolving. the for end to us you're the range know but guided You've are guess franchisees

get a no-go getting? on that making up recovery franchisees that before we path 'XX I you've seeing? selling past, the or to on Is you're based 'XX comments on that through in think wanted member decisions talked in based see open openings. season changing sooner maybe you're Could about the this gyms January go faster

ahead, ahead. Go Dorvin. Go

what were development of available. activities, franchisees really the some they team would still it's on all mentioned down becoming to just last happen with then vaccination think a -- obviously, Peter, it it into while, became back after just or respect we XXXX, their shut the increase. continuing kind XXXX, this the last and stores. really to the on I were furloughing didn't Yes, COVID-XX some weren't then they'd as calls, you around folks down rates the the And shut throughout we've when way coming and over going to when real apparent at -- is we it's progress the quite for estate frankly, as holidays the even vaccines all back previous building and -- the is new into into XXXX things with of look get coming when and And starting, concerns know because -- year they as

in to Chris we're better about vaccination having rates frankly, we're seeing said get try out than get reasons their states of quite more some to others of lives. and it's as likely think the terms the trends And today. the kind Some of daily and I earlier, people

real stores, see not obviously So when that encouragement them individual market but as we terms in their obviously, that all updates time a own that portfolio the give they going business. take system franchisees well. why, only end indicated we'll of of that the see we at that trends believe as what's of these you or corporate, own with we their in be we have with range their they and put that's out. our they And markets, the had previously have guidance consideration, And Tom in into on high

the of our team, LOIs to "Okay, about tenant in that your want say, is to try et particular and it it's I to not with open. for The time our starting It's time corporate with find put normal give X-month your out location obviously, there and to line Beginning are franchisees a working kind So consideration deals out they'll time how X a months commercial real in a clearly brokers market," you process then get start you start sites this ultimately improvement estate much number and cetera. the to again. circumstance, a issue, their team do of negotiating have to that try end frame. from internally, we real there team to estate allowances you,

now this that now in rate, franchisees that And get At at markets came of just, kind are last all down half the starting were to of we're clearly to a of in line run not when clearly the we are to deals, so lot certainly back time LOIs there. the year, is March. the And out year frankly, starting in back this do point, get and here going. we

that And recovery when a what I if. so we lot us you've back it we not say it get heard had the we've and and just and confidence model we in got at us is saying again, terms into in has of happened confidence certainly that before. of the before, matter a of point. think It's growth kind are the this ton can of a of gives

was can And is to so even say sites at certainly on surfacing but Tom the point, XXXX, XX, there said, as this better franchisees' it we willingness commenting than clearly, that, start we're XX out not and days get ago.

from Golding Next question is Paul Macquarie. from

is the the you there rollout update that several My over seen first on last given any have question and Australia the lockdowns if weeks. we've prolonged snap

Sure. Yes.

them So overall, tough. still for that future. I the update open, see from And But they're it's think again, stores their an on when the development and we off our encouraging I again, but ahead just are there, a plans they're forging few is we of they trends with have get franchisees. think, it sort

So years several is the for next now? that the over target estimate XX-unit still

Yes.

yes. Yes,

think by be I the I It of think it's now. but closed of moving a end target. maybe open is month, the -- -- should X X just the the right

Yes.

in intended question a should that more Oliver's to evolving follow-on top sense other see engagement the any any its I uptake workouts about there in we were own a stats with particular marketing. number PF+, could this guess, maybe be you sense doing unique, it to might model? Do branding -- as to with of respect a funnel? of are on think you get and of then stand-alone the And And be give of it. to a into Got that around just is month How there?

Yes. Yes. Sure.

So lot still to here. a had of be testing

holders any released a lot there's it, but yet, numbers even subscribers. couple to that look haven't app at subscription there's ways is I that a also think PF+ of too, We of aren't

exactly your about to So right. being you're funnel, top comment of

sometimes lot and convert So convert and engage of people PF+ with that bricks to app a members to as first. unpaying mortar there's the that

members, a marketing mortar. that PF+ is bricks to tough to and really seen were converted it that have have of But us. XX% and subscribers we the to kind nonbricks-and-mortar funnel were now vehicle other it's for So whole people is -- of

quarter the and XX%. was fourth First XX% was quarter

price are the you'll at And then the with XX% and definitely about See becoming also engaging who members actually the fact. bricks-and-mortar engaged. Black which to have who in Card have so we members, hence, So members of people just used just bundle members, after we're well. those pay opt PF+ of of how PF+ and get the of people who are see same for not current test all have time, why XX% on with Fitness And Card Planet majority the can mortar is Black for they're members bricks also, subscribers doing as And out the if more. more it. more the gone -- are

holders, So to XX how -- had. I we a But the -- think of learnings at look it's app Out the funnel. top of lot out about be of the of X just about all or engage app nonmembers million with them members, the engaging X still with the downloads, are or app. lapsed other X have million that were to of that the members million able

convert that there the and to not be that of be as subscribers that people still So had a do app had we to and more learn but well, we a engagement can lot so have lot just have learned even more a from. be paid lot from, to

from is Stifel. from question Chris O'Cull Next

quarter revenue of think was the revenue but And the the we apologize this how if I of reequipped? for missed year? the Tom, should ramp replacement equipment balance about this, I in equipment how much

Chris, Hey, sure thing. Yes.

in So to about revenue, total of revenue. brings XX% XX% it first QX, the equipment was of half

that what would full on year the which reequips revenue. about said the we last call, XX% equipment And we're we year, full constitute our for the said of with so staying is

then Okay. month -- if of that curious And promos maybe COVID. prior May, to ran seen I'm or growth net gross That's retention from compared promos higher all June off-season the is helpful. or the either from change seeing And after both? is lower sign-ups cancellations it just similar the at from you're you initial to you've type

almost And down. upside year was actually. the both, seeing it's it's we're Yes, -- just like

of year. our January day on outside even highest expiration sale And of May XXXX. June was Our June this was net member XXx, our growth the May,

year, So for Certainly, and definitely, now last quarter. demand coming they the is people are in down upside sure. first higher than in that's did

business different yes, people are I we've resurging it's and than totally what the just So out ever think, is seen about just before. and

think So years people I And will the after ahead. -- world the health more factors, -- think closings, a I crazy variant, we anything and wellness. there's in paying if lot to happens Delta for tell I it a time of with the their it's trend see long-term could that gym but attention be think

Last Bank America. question is from Perry of Alex from

Chris, levels, that first months could to new you promos joins comment it's running. will joins continue. talk some remarks, have whether see rate no-commitment in especially a the within Maybe through the think you cancellation normalized those made I you unseasonal hard the few the prepared been versus with of of guys

Yes.

that. commitments or anything like kind any seen attrition kind any attrition We increased retention of of or haven't change in without any or

So nothing there has changed.

it's and members to have that all And studies actual good And more people they news. policies, get of we for just XX% we've about And kind I all their of the if join. that's life, that's lot this as of those but is unfortunate, kind fee want seen a our in thinking bad messaging So cancel to has no-commitment cancellation one know gone I this want of -- consumer the to not how a notoriously industry already than the can. almost -- gym out, make discount things is the can lot they they're of important barriers. it in thing been enrollment do before breaking --

is those any attrition So the good sort seen haven't news we of offers. increased with

over question-and-answer the remarks. to session. for I'll turn presenters the our call ends closing That back

and only everyone, in the our -- my excited almost to here, of same would We sentiment. not more Good. they And what to higher staff be back Thank health joining we fitness frankly, hoping is back the XX momentum And here. the has, be. more the couldn't than as it come -- excited business I've but years to and you, franchisees want happen, you you, going Thank we're well think didn't expected was we quite and now us operator. with never get than know and something that psyche are this as was it -- ever. can our our for that tell just seen that I that going today. the to feel get customer, tone, in It's we when back

couch. to franchisees news. all the bolster good And forward growth So to getting look development and some and people I back getting of more the off

So you thank all.

conference concludes for That participating. all call. Thank today's you

now may disconnect. You