Planet Fitness (PLNT) 10 May 222022 Q1 Earnings call transcript

Hello everyone, and welcome to the Planet Fitness Q1 2022 Quarterly Earnings Call. My name is [Seth] [ph], and I will be the operator for your call today. [Operator Instructions] I will now hand the floor over to Stacey Caravella to begin, please go ahead.

Thank you, operator, and good morning, everyone.

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

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

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

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

Now, I will Chris. turn the call over to

us appeal Thank Planet remain thank you, long-term brand led Stacey, you, our and millennials a on million member with the in for bullish QX wellness numbers. and operate Z’s. everyone, count, quarter growth We for call. continuing all-time business joining and health for our reasons, in for environment, ended behind earnings fluid record Despite in XX.XX set opportunities the Fitness’ to many extremely by we an high first Gen the tailwinds

of that in also The to XX consumer led Omicron estimated nearly during February usage we pre-pandemic bringing up But the enough year. and club by March January, progressed, first with it make of historically and index to million XX ups the worldwide increase wasn't quarter. join to membership as rebounded month. at this our a COVID-XX for Americans for many growth directly the and trend, This Higher January not point quarter around total approximately variant higher corresponds US surprising the In our Bureau over the. Census softness was while QX outpaced year count it our XXXX, member also join XXXX, net and joined the We January both stores, activity. softness. by locations. last we XX% in had Omicron were levels. were usage impacted new XX% downs impacted businesses, virus impacted Like usage. sentiment below to X,XXX or a compared most some the XXXX that given indirectly slipped added that during

of of the the was [indiscernible] pre-pandemic usage our of the back their week XXXX. In final membership index above end quarter approximately the QX, levels. stores in by However, XX% hit XX%

to since hit more are people by continue The We see who achieved out the start Northeast working all the frequency doing been that and Mid-Atlantic, Gen have and post-pandemic restrictions, pandemic. are that of since frequency are boomers West, highs had the COVID. hit hard COVID highest in usage visit also who so regions slower Z other millennials than Both the and generation baby visit highs, March frequently.

As fourth our quarter we’ve with advertising mentioned and agency our and challenges we marketing experienced local consolidation national call, efforts. on some

from [Indiscernible] to believe of long-term that three consolidation have now best their with two to outweighed appreciate Chief near-term We local our previous to [indiscernible] the Fitness. endeavors. the wish local and in choose the agencies agencies benefits his that the from announced advertising. franchisees Our brand of handle contributions to agencies. We Marketing his Planet Tucker yesterday Jeremy is longer no We him Officer, future disruption. from

the resilient. beginning the us, the Planet Fitness fared, past to the now a XX% pandemic worst to due of the pandemic, in very the more gyms while live the with world Throughout hopefully virus. of of pandemic, are closure closed. for behind U.S. permanently as than of is This industry We the learn begins permanent how is we’ve nimble than different the are years, his which single search two be the learned our and store replacement. to resulted And

than ever offer non-intimidating experience I'm will health We and a what disruptive and now, in physical differentiated welcoming both fitness mental in force to future, the continue wellness environment. for that more we a and a affordable industry. to Looking high the confident people wellness, be quality need

strategies. two on main focused are We growth

system-wide driving same markets. both in membership and sales expansion in range First, second, growth store broad of prices. continued store And

me sales. bringing growing XX the driving that same store Z over group in the membership who share of Gen previous X%, total prioritize our [ph] shows fastest research like with generations. our which was exciting our generation an are start as Let XXXX, nearly to so of only Gen [allowed] age active Z’s join And Z’s even lifestyle is Gen millennials, the half are of that more to gyms. than demographic

in if guardians members it today. back give in rebranded consent. [ph] We team of participants their high and daily could XX% The is summer more for all can free Which about sign-up Pass work appeal the all the two-year teens] on recommended seamless. million Journal during summer on We [age school can in making process out met the our why a focused upcoming where brand after who later register And [indiscernible], pass. the XXXX, excited these summer long. Association, under timely Teens XX% resulted age we Medical guidance the of they're American pandemic. of lifelong activity program School group. incredibly online channel the physical than is more alarming are XX, are of for teens of building the stores high even bringing our we’re school It's believe the launch with nearly less important teen rebranded U.S. and parents to the royalty capitalize team According on are Summer High program or version mental given teams of crisis extremely of both those health in to one generations the than

chance that during a parents if to brand happier. teens not fitness To pre-COVID the health. of a national to of majority [indiscernible] estimates, to recently they perhaps already introduced first agree and While half the stay that health help and found time are also that a them from not virtual commissioned commitment our [must with issue, Almost study It's introduce opportunity to to doubled who a an members. their also we're to struggled fitness including We makes of healthier, time team We life-long the active the admitted learning. overall teens which down their we're [ph] brand exercise feel screen that stronger, can mental barriers breaking lifestyle. teens them all this for We understand intimidating ages. and has in physical be] they offering pandemic. focused think fitness on for first were and the the active healthy be rate address people

today. than more Teen joined fact, Summer still program who of X% In are parents numbers the Challenge

way [indiscernible] positive straight force of it to comps the key our quarters driver disruptive Our pandemic. a pricing we in prior industry. And are of is that another model the was fitness

off the Mexico have any majority U.S. fewer be ceiling store about is new joined gym agreement tremendous membership The there Black across the groundwork to due that app agreement is margin. Spanish per in Black the signed metrics joins. seeing XXX via Black Nearly the U.S. Since for Fitness current under judgment-free expanding membership we where And stores floor bring A For Perks launched consider local always was five Black of To clubs X,XXX untapped from our that price last strength [XX%]] doing outside advertise program. doesn't morning couch. gym. opportunity the the We Card in a very membership, We first while stores use right We miles standard for belong our agenda] membership this believe our our which doesn't in additional the acquisition of Australia, key a Planet predominantly just offers we Card place PF+ in our much The purchased XXXX, such XX.XX announced membership, our countries a twice did I've to fleet to growth. Planet locations price without we lower is country maybe perhaps get Card and they this to believe premium environment. signed stores year. XX% agreement $XX retention, people competitors standard XX significant growing not replicate the successful the Planet the our are several Fitness XXXX to always the rates, approximately [ph]. our recently includes, a average as per being pricing an X new since million we next but XXX that the where Fitness new Mexican for summer brand store the XX of with access people test access content years. We of now from potential for amenity. and population Card success minimum penetration. of raise consolidation, belong in price and a store, long-term are years. all more their digital also member New industry joined we is to people this We're the [the reopened Black adding over a of more increase where the there our Within to Zealand, price. and the membership we're in end, month, than an development the our opened reciprocity platform said, of to the gym, month, XX believe to to stores. XXX we for the XX% number not over at branch the our have least out new gym who dues equipment XX won't team Card summer last we cardio population in than in last where performing Beginning of value new test well in members. of almost overweight. one plus next in have people the high-quality U.S. in for Access monthly

quality and appears high experience Our fitness resonating. be affordable to welcoming

marks is This me. [comp] far membership the after store day U.S. one was stores that It's to the [ph] new very day. for [indiscernible]. one-year hard first that personal the believe store working year joined Brand. I typical anniversary for The first a founded, Planet opening of milestone the it this Fitness XXth exceeded company

we’ve that grown, of believe access mental so has the physically, today’s to brand our over healthcare We industry too not help overall and prioritizing repercussion system. illness. With our fitness of people a Tom. fitness our is once key COVID, our be to healthier to is now is firsthand call seen importance physical the ability highlighted opportunity leads health. healthier and be part I'll mentally. As a that It delivery to and essential centers turn to which

everyone. good and Chris Thanks, morning

profile geographic low as debt. significant the our We by store first our our powerful diversifying refinancing environment strengthens the began best well believe model fixed our on the franchisees, acquisition And rates portion enhancing and completed Fitness, corporate the as performing quarter, corporate-owned debt our of we refinancing, the one Sunshine successful we that before stores. During a our a acquisition earnest. of of business the of of in in of locked and team with inflationary a portion upsizing

on cover will acquisition. discuss our I'll I Now, results more the Sunshine Fitness and QX then details

membership quarter system-wide store and continue performance have only consistent more balance system-wide first in prior growth a pre-COVID membership to sales corporate Same sales aggregate, quarter. Card from reflected we our comparing unless we were Black their comments than for membership is store January. the store our quarter of Approximately our we they of down to by Sunshine sales acquisition. completed Stores treated count owned in increase Member first to The regarding store same-store store QX same XX this otherwise We to with the XXXX, to in grew affected included X% stores, press partially It's not the as X.X the from growth levels. rebounded per-mature over historically positive franchisee our Therefore, same penetration results And and approximately is only is with the mid-February. that sales last sales note sales store pre-COVID the XX% Sunshine store same Franchise growth store reflected my number new of This of QX financial February of XX%. franchise same acquisitions. store contributed driven the XX same fully same be corporate sales system-wide in will until from impact be last and but XXX growth first has sales sales to the to COVID. We in All included Stores how months only year. quarter. year store have compared same XX% QX sales. will of driven XX.X% At reflect increase it to by same was stores rate had quarter, quarter opened from in XX.X%. in will important net our deal in were rate XXXX levels end point increased comping basis was be growth. noted. Sunshine being our the of of in comp growth mature XX.X%

the Sunshine For corporate-owned last year. revenue the The revenue were million, offsetting XX% moving increase XXX.X by a result the revenue decrease segments. transaction, to three Partially to this franchise was increase first in was in as due total all stores royalty revenue year that compared of of Fitness franchise growth million. was and store were approximately growth, the sales million, A quarter, driven stores, was the segment increase XXX.X same temporarily segment. stores closed from new acquired to open XXX across the a segment X.X

cycling first average was corporate-owned sales transaction, to X.X%. XXX% the The Fitness revenue segment equipment the in X.X%, revenue closures year in increase The by as and was segment quarter, by rate existing store increase prior temporary equipment the royalty from the the period store Sunshine was in XXX% in new new up sales store driven franchisee-owned as store higher same growth. of driven For openings, well the stores. of

replacement placements equipment quarter, last versus the total accounted new For about equipment year. the XX we XX% completed quarter revenue for of XX and in store

XX.X the compared will amounted was from the to XX.X million. per non-recurring income I equipment revenue, operations expense from XX.X advertising million. SG&A was XX.X to net directly was and impact share to increased National Store diluted XX.X compared XX.X compared related segment deal million. the ongoing $X.XX. to our net half adjusted cost of which stores expenses, primarily franchise-owned Adjusted fund Adjusted to Our relate X XX.X XX.X later the address was the transaction. due acquisition. was million to additional Sunshine to in stores to quarter million, of for corporate-owned store SG&A quarter EBITDA from About income to XX.X the Net on. to to primarily which XX.X writes cost million million, increase was million, SG&A sales of was income the million. million million. X.X million, the expenses the income in adjusted EBITDA XX.X release. reconciliation compared adjusted EBITDA A net the equipment adjusted was found adjusted corporate storage to EBITDA be of earnings was million, GAAP can segment, By franchise in XX.X and EBITDA to was XX.X million, million.

Now turning balance sheet. to the

XX.X debt cash interest paid of XXXX, As increase funding XXX.X total that restricted and cash million XXX.X rate each of X.X yesterday billion XX.X million, securitized had rate interest tranches comprised to to cash And $XX costs million XXXX. four million million the of December XX, off This Total XXX.X on of XX, fixed long-term million, in of compared compared a in of March of debt respectively carries and deferred XXX.X and was equivalents rates, equivalents given XX, with X.X%. million was we cash period. financing cash as we our the variable notes. March Consisting of XXXX. excluding blended of

financials revenue. the with walk in result of of in changes to as XXXX X-K to on January financial the XX, we forma shifts the showing income changes required transaction. X, our as results acquisition. On through an stores explain we fiscal acquired from Now, Sunshine Fitness year statement Starting the financial XXXX. the if XXXX impacts the X-K SEC, forma as the pro Sunshine to a statements I'll our by the Fitness the the with pro results filed April using our as

approximately make decrease to of to join The equipment the we generated million increase net driven increase approximately First, million web revenue a there from we along the approximately approximately result revenue. inclusive XX.X of Stores [ph] majority an of was was million XXXX Sunshine that which changes million million was decreased all revenue. store revenue franchise of equipment our approximately fees these by fees. $XXX The to X [NAV] placement corporate-owned that royalties $XXX revenue. and $XX decreased segment. and Conversely, margin an some with in benefited end

expense their of to operations our Corporate critical reflecting management is stores. increased of including our the the the close support SG&A center staff Store, million, decreased the President to team, what Sunshine purchases. million, approximately our On increased approximately side, assumption along of store cost fairly OpEx given like equipment without functions marketing Store Shane number revenue support of a McGuiness. $XX $XX development, and historical with expenses, store XXXX which expense in our they had was similar

Additionally, our the to due increase store an our increase was of and XX depreciation, was to to fleet which of million are CapEx depreciation doubling as doubling related there store approximately corporate we corporate amortization. the spend. primarily is Half also historical

The Sunshine’s in ones compared with guidance that would increased other And amortization is the acquisition, double. to past. this intangible D&A from significantly of done forma half size expenses XXXX the given pro the we've it assets. our the in-line expense D&A

our XXXX morning. We press to this our XXXX our Finally, release outlook. in reiterated for guidance

The compares combined coming growth where join the levels in the more sales same for for the with depressed This first in last member QX quarters. no that XXXX a had reminder, there for significant year, membership resurgence our mandates likely more trends first, the more of membership two in our As time in net stringent our the system-wide COVID causes same change a growth in QX sales whether member via with higher will year, that than QX our difficult note result is on unseasonable in view QX or shutdowns assumes make disruptions will last things outlook, store store be membership material to behaviors. history.

expenses, as pro Second, and the results, outlined million I addition SG&A $XX year. of last the Shane added team McGuiness regarding approximately XXXX forma his in to

center continues the Sunshine The cost quarters. in X weeks, subsequent and with in pandemics For our sentiment. only QX the SG&A for therefore, near-term increased impacted XXXX, on the impact impact XX fluid support be will have to of ongoing an consumer

call However, well the we operator of resilience value up leading are asset to further for in business expand industry, market given the back it fitness well-positioned proposition the of for our I'll as we light now share turn the strength long-term the believe to as Q&A. our to open the model. our

today [Operator from go Konik Randy Please Instructions] The question from first Thank comes Jefferies. you. ahead.

I start this morning. to traffic question good is know, results morning. are sub-par. etcetera, back. of just kind in-person look, Hey, for continue guess wanted, coming you Chris, lot this data trends, out searches, web more Chris, here. we track a towards I to point of traffic They the Peloton fitness around

to then they're where we your for those on see have things you guys the gym you're to [mote] you store competitors, wanted [ph] get what to the want And your or expect get versus seeing the continue you around update closures in side head Just get build Just thoughts continue at-home thoughts and stabilizing? that environment an and in-person? and mom are competitive going what on forward? on from to are the or continuing to pop

Randy, in always probably of saw fitness all fiddle in-person we're home consumption. it and and and our wellness remember seeing and second good And were think this last haven't seeing morning. lot really even health we in been closing has Sure honestly, is to pandemic is We the I a Randy. of we're today. that wavered that gyms. unfortunately – fiddle Thanks content paid what our Maybe down driver third from ways through it. has key fitness a going I half you here year and always happened Yes, today,

as would we're it Our an what seen studies of population used to They're Z and And than but today, equally they're it know, millennials is pre-COVID. content our rate, been a where seeing active have. the quite consumption Gen consumption anything astronomical And are bit they're great we great. was and member we show you is see, millennials app all-time as not ever we've that say always which is back close just as joining have to the base, isn't are to which when closed. a higher pre-COVID, active as was joining a though part but big in an our I high certainly

just Or to is dot there's think even to only And And we the think as maybe back little permanently be bit are, fitness’ is [indiscernible] closed, com and as join gyms, more smart they far us. this are here, opportunities didn't recession Fitness, only less of and looking light I in back there's except people But now industries but driving the here XXXX of whole it. second when the in people we lose at less bomb think we being So, four saw store, money. and the I in [indiscernible] that a and single less that Planet I fiddle that afford the stores. in home ones as we’ll and beauty issue gyms. for with they're can had the are with continue their XX% Right. a because with competitors,

sales we So, of times those our the during win highest XXXX store and area. in XXXX, the same evidently were history some in

to They're the I aren't going be to the think are people be think going it. healthier end continue going not as they of choose at I cost to conscious day. So, to more

added I want one And around [Crocs kind quarter understand, strategy kind you what's helpful. I there. Super side doing just to And question of you're the perk] of perks [ph] the explore the more I the to business, want what in is, the thereafter. just guess of or around

the that and member for kind more You're some themselves. if point the they're adding seem more perks, membership It compelling. the pay as of perks, at would realizes more

there? understand, of is the what you're Thanks. to perk doing the what of want around strategy kind Just side

Yes.

we because thirty members you as a IPO store for about they month store. be every can I are you know, good even the right? period, should [indiscernible] think our and using use value them out anyway a members think I the add of I not think if half since will and paying store, thing day is offering in And a value we us they're

So one fitness it part is some in even part the offer of we of that live them on world in meaningful, is been today's great all – naturally. back. and but didn't other [Crocs] can can launch they’ve content ways help it. this which being is gas, a Gen life member over a the outside benefits really are they're that, [indiscernible] I of a back is for better discounts and Z’s is, that much,

So, place. it's one now in great good that well. as in to see is recently in noon sunglasses We did

built-in rates, of So, perks I and summer and a lot think built, with XXXX we app depository able track throughs it. with platform previous which app to of the in now redemption the track didn't us all way to with our perks a the was launch, click the the been button really to for which have in it's and that's it, a

these the members new we're doing and check new they XX% the their that’s app members of into X and members them data, those are open companies to that want partnership a opening of to the you and see is us app. go perks. allows are we true million us there out the the it our members have and other all a app and now about right All check-ins barcode week all that think When downloaded do roughly X about which of showing we XX% app now, on million to about about about with So, impressive. our hugely gym,

of the of amount is that in So, eyeballs get quite front large. they

having or [ph] data, the people to of $XX that two here. have [indiscernible], now they're opening lot vendors. think more months some to it's So, and membership when on ways. again, the getting value think we it three come [Crocs] in your gas give a you, And doors discounts there'll And for pays but I lot to have can that be we [indiscernible] back I question a would

Yes. Super helpful. Thanks guys.

Thank you.

comes question go Brian next Stanley. Morgan Harbour at ahead. Our Please from

membership comment kind on the sales, of seeing, given the seasonality store you. of understand, just in joins? part quarter, I same little first in terms will XQ guys, atypical somewhat do of a quarter, bit still the morning of still but perspective? from Good there your slower demand you thank that a second kind sign-up pent-up think second membership be you was Are In

where Brian. this have now Tom trend think years of quarter the seasonality, saw on what was year. in as seeing quarter. as better jump and Sure, we is Chris is more well. I'll than then opposed more is, we're We're the saying I typical historical last to second What always first

we'll So, to Tom want see necessarily [indiscernible]? do year, this I but don't think talk you that

Brian. Yeah,

first and than time we year, levels you're and the history. our terms of we're the atypical last I the had in think anniversarying of the out for had terms pointing really across this kind same very what growth QX in QX in in in at we we did sales then growth quarters where that store more member membership given we call hinted on last as of XXXX

So, the comps compare will get tougher.

year year. It for the year. so, double rest with the digit more just gets little difficult last still tougher we're strong. Still the to XX, And of this our sticking across the low outlook comps as despite the of a gets compare very

I Okay, question. quarter. maybe were, kind first more Thanks. And great. EBITDA noticed detailed equipment a that history be margins margin of in just segment above the

at curious that? Do kind Just any of remain back level think they that to you a will they'll one-time or more down of level? drivers kind there come if normal of

from we've the margin I increase in-line think We've that passed are history. – the gotten our along with they price vendors. fairly

margin. our maintaining we're So,

Some bit the is moves between it bit, a little vendors it's of fairly of that that mix in-line. around but a little

you. Thank Okay.

Rakhlenko comes and from Cowen Please question from go Max Company. next Our ahead.

Great. a Thanks lot.

what is in that Do previous the lift will increase pricing be? going look $X? Card by pricing, raised to to time the similar Black the what with think first, comps So, to the outlook your it's you you've of

Yes.

relatively way Max, you be what membership So, know I talked those grew initially expect but year is then or XX. And – penetration member we've and Card is penetration point happened you by we in still basis the mix historically, will XXXX. the in seen Card Card raised to about; quarter know we Black the happen of times, improvement and this the in saw that's what back think will XXXX test we what's what had still acquisition flat XXX grows in and the Black Black Black Card we year-on, And price in sequentially, as this by $X the $X past we a year-on-year.

given it's new expect on the accretive the the same same, a certainly a size of base, result year, to And terms joins. membership now. we store subsequent the the So, of in in but different the of impact It of impact in way. and is the significant only you sales muted, years as will be rest be will know more kind little our because that

And just already gym you think of levels? quick That's members said your back. follow, Great. per to helpful. I sense we come what XX% could is see have of when mature your the then gyms return XXXX

So, just curious of the your thoughts on the Thanks. rest fleet.

Okay, I'll start maybe.

that's their stores about to back in overall. year the levels if you down as group X% we think when those I and they're prior barometer it calendar aggregate the think at and mature we are at, best take XXXX about the has membership look if is XX% we of stores pre-COVID is, look and really that the stores,

sales stores level. just to when and So, not And question, in more mind. our a it's a and I quarter. an again, subsequent every as membership same that question matter Each pre-COVID it's about quarter for each back we store get think of more to time if think growth, the for member growth,

question next Sharon, William Sharon Blair. Zackfia from please go comes Our from ahead.

marketing. I guess a morning. good Hi, the on question

both where of dropped even a shift January. big marketing that are attrition mean, And I know that who you the to point, January, I attrition, mentioned, over you subsequent get that was agencies the re-expanded bit factor wondering quarter pre-pandemic? folks maybe this there. the you I few contributed you've seeing of you in of, three know, element, kind the the to to I Omicron guess, I it's on last have I'm the some the to months color weren't got, throughout you gone years? have know, at out to kind clubs maybe then and fourth marketing if did? relative much, a kind because mean, the So, but better a Darwinian past difference using any you as you of trying call, how three thought shift

Yes, a about, our right still would XX-day a [shines] typically about of that Today XX%. pre-COVID, now we're use members number XX% about we're [ph] in store period.

about So same are ones using as the most than we still more pre-COVID. Of it year. the it though, of last it was previous using that's

slightly a that but slightly, better, ones to using using right more attrition, great is right, you're are it's are sign. the pre-COVID just which attrition our now, is better and slightly So,

March March As than think far the better and February that because and at look as the related even net we February of even marketing question, numbers XXXX. of was growth Omicron most I it member is

we had the right. on at that So, and point too, same agency going

by Even it really So, impacted was end I weeks some more well, by as Omicron-related think it drastically not. was changed January although but it believe pretty impact first of [indiscernible]. January really or marketing more, Omicron the of two probably

really and recession. you talk helpful. market to, talk your potentially And this Can guess accelerate of of and dampen their franchisees then franchisee a very concern the obviously concerned is about kind expansion? enthusiasm macro starting appetite to whether about That's I is any

since we of started us have beginning many in XXXX. them think, franchising I been luckily here No, with for the when

and XXXX been period. sales store look probably well, XXXX as as or areas they've same might in that through doesn't saw which So, this they as be, but severe their like even –

we it as they're think are. naturally I all So, watching

I can, the data the build-out – within day, build-out know business probably in cost still know will Tom the it is fine. still quite, of but make think so, end increase you the even of at to if exciting so today, profitable [ph] they and costs seeing we're don’t storm stores that the It's the whether is environment. that [unit] realize that and to even add? it's under that it I more build

build answer. Chris’ Hey, Sharon, I'll just on maybe

to is the amount a equity business prior is and appetite the our amount there's there's but one system fair old, outside is, lot rolling of taking I fair a larger chips out franchisees happening and other the either a private some activity. of from were think new and a come who the firm of in, rolling, there's off in the table that's piece

role, pretty change in group more businesses typically money hands those would. as there's prior when looking the to and so new about, So, coming talked who's develop the we've aggressively and operators owners stay and and than

us well, but that work. bodes been anything going no, in if I to So, there's I maybe, coming money was think Chris’ hesitation to point, to think no more put and

you. Okay, great. Thank

Thanks Sharon.

BMO Please from question from Capital Markets. ahead. Simeon Siegel go Our is next

more Thanks. you’re I sales EBITDA you franchise grew quarter. grew doing well? this Hey the hope guys, think than you dollars franchise all

thinking growth I what then, be any there's – And focus a the expected on speaking then as just franchise look change about think how we a bit segment from elaborate international basically, any Just congrats So, broader on more how bit you Zealand, elaborate up? about rates? and pandemic normalize opportunity just you little New we And economics? the more we lot. could level EBITDA a your and as right underlying should little international in if the should further could margin costs. to you're Thanks guess to differences

Yes, Hey Tom. it's Simeon,

question reopened On upon marketing marketing last to were certain had help their states amount in franchisees or we to bit certain the fair margin a reopening money of activity. for get year put a doing more little in franchise, we

So, we this didn't that repeat year.

last cost didn't a it's year that So, repeat. this depressed year margins we that

franchise forward. margins more So, going this of typical is, we see say I where would

now front, just I but and think all had on group COVID-XX well you hit the and performs that up launched international Australia, they're very reopened before that we running. is and us, we know, market as

next New Zealand door.

actually might when acquisition I just there strategy, of north that more of we there not there Europe and And think one for thousand. to get have with is a compared little of is any that's them. of as ground. that it's, on and the in help There's going of support radar. each, off going locations as well, – XXX went or I Europe, bit Where to much a an because some over think many of low to be them for over more there, if definitely our going they're them competitor forward, Asia So, a something cost us couple you've large speak got chains many

also compete So, yes, with up one new that about I'm open excited group or there that New Mexico, and not That a we’re to is running ADA sure go Zealand. summer. not, if and very we but you stores opened at like time signed last that opening Panama always opening open. ahead have their be opened U.S. what club opened [indiscernible] which couple strong. the a first stores here exceeding much the numbers of acting They’ve well original and of stores U.S. with

or like population is America different the in have X% in membership. gym a South the very X% those just, of their sense countries that it's

as we first came do down as different a and to Banking seem all down huge comes But a casual bit all we the as it's timers, how and U.S. tricky standpoint, the little untapped when in the If a potential little EFT the as U.S., it although judgment-free very credit So, there. far we to zone take numbers there. far EFT’s to that. America. it bit the similar yellows South markets the do in build do that's cards to to these purples act model

the Best lot. a rest Thanks for of year. luck Great. of

Thanks Simeon.

go could line on John next in is Please Hi, John, Our ahead. muted. please from your from JPMorgan. question check, Ivankoe you

We’ll I the try happened don't know what on speaker. it there.

why Black understand normalize Just number more We've reminding customers obviously the is that pricing XX.XX. you for basically for that’s resistance point? to and percentage the thought prior join for still I me still on any you us lot Card, be network price would Black across ask of great the of what guess members that looking lot that members of to time? Do back the that a benefit Card what I customer, our the gyms, they the a and is a Black there possible resides of gotten long XXXX of. reason if added guess why which functionality and think Black And I a system? one I Card the think they paying of at and obviously price most thank Card, haven't to it's use your you XX.XX

rate my I head their looked raise number, on have time long hard should top many rates, at that though, a Yeah. as in I'd more justifying there are how paying time but far it I have John we've number. anything. loyal don't their reward a always yes, that I at still I XX.XX, as probably

some members for some around continues and So, was it years hopefully this naturally longer-term to we XX drive have retention. And year.

their fees years. been for no on members XX annual around have that memberships. have even We They’ve something

them for to, attrition reward new to more us, grow as time loyal that rather at be newer and them So, adopting member, But looking as way, as over want the in rate people not continue with wouldn't it to penalize you gets opening rate have guess know. normal I'd some want to rate people, with stores I average they up and letting well. long ways keep I by

we agreement, to any either. in them yeah, don't wouldn't the have So, we – right raise

but numbers. that's kind of a that's how it standing when part comes the to side, legal that So, long at of we look John

has the management really would some marketing you making when six in months And progress the probably function what Obviously, good seem on the to undergone you. than we topic. thought Thank have more be plan separate local. changed then of last

still national? Does department you do there do local sense the So, next obviously And understand this have, think what makes we a a look for make execution is but one? consider sure shift point of of clearly, the couple think types to You contract a net for a the to better that high that process national is CMO or of as replacement. functionality from brand do you, optimized have mean types think there’s and two, I what can the marketing that profile being questions. you it point CMO local you what or I

this is of mix the that but was we [indiscernible], this to would the three, has like time [Indiscernible] things, – first I being marketing true the first see quarter now gone the marketing to side spent data on. think on being local money and that locals were we've began

much they time much all we first how data, didn't how dollars how know didn't we quarter know would cable, much satellite that the in We a channel much the radio, have start. We didn't radio, [indiscernible]? tactics. were how how have network, that what we the really what on, spent, Before FM which first be was but much knew

true and it differently. So, it's help five down here but we and Is on have don't down more upcoming on it that's to six? then mix very the get your even that figure we mean, board then where nailed Or is determine to to now to we is we know question. supplying as two? that and the right that now three it Is it us really get out does would and this us practices data what seven learn That going the three from months to years goes, what best nailed gets as is really maybe right. and one, longer-term I get it's, it, point look at franchisees to the data.

our how that goes. this hopefully marketing of beginning get smarter So, mix conversation the at we is as

gone here in about more last as here years of light the then much club X,XXX thing, even I Omicron. As now, far unit is as domestically potentially X,XXX, strong and concern, seen, you've to through international which see couple and that we're most here, side of on a think we've

units in we down do look five think I here the his of need background the a X,XXX down road what more we further and those road. on So, countries around CMO

I with it's as and franchise it franchising, franchisees. is background as think well So, important, I working in more think – hugely

Thank you. Understood.

Thanks, John.

Jonathan from Our is at next question ahead. Komp go Baird. Please

up pick activity usage, in to about to terms older you. think to know was pent-up think for or seeing are demand on to above of way follow joins you populations within you the that, back effect the March right the thank not the trends Hi, be mentioned signs that I or I maybe think you're join trying levels, membership any there what member and forward? do are whether trends delayed joins? seeing starting up going And expect but sort XXXX you the would you the know trends and population? XXXX looking Omicron you're I on wanted of February you any, join are to older through mentioned and from seeing.

thing, here we the even turn right Yes, first to definitely the start Chris. though to Jon, the first you boomers Hi Even been boomers, lower the [indiscernible] we it’s part population, they've even definitely entire more along have ones Omicron the that the been COVID see quarter QX through the of with that even way. was the them, see and direction until started skittish

started. am in So, the they the like highest the said way March in had remarks, I I seeing, my COVID opening usage since so again

So, is usage down when definitely an is indicator appreciating the of joins road.

So, COVID, just all January, as first hopefully don't quarter the was first getting hitting know, a know here almost high since quarter year, was towards joint people you we in the suppressed. it, wasn't follow are I even work-out it tail us here. really it saw more the begin the think, to all-time last end of I you think

think and was pent-up, demand first start think lot a was there's weeks of that two second So, scenario the really probably in suppressed. I I where, quarter this in we

all the quite I wasn't direction. don't in I demand because have the think just I last right I trends the But are long, as saw think, still that we'll it So, think we pent-up guess. year

schools that and for I the think They're this Gen brand they're well, exactly it's more the has we’re XXXX, going continue I which Z [indiscernible] it certainly more in I Gen of to even much has younger do of around same and awareness wellness, much that say once their And and think, bricks the population. just doing to coming health is think helped how thing. today, mortar, think team, how the coming population challenge even brand hard off think I younger I since as that drove teen just tailwind from Z that but of for COVID and open. related they're Z the I started we summer led Gen see getting I think Monday, the still and to hasn't with think awareness

relative Are the that with about, economics of once to then place And still see normal, franchise follow-up related any back sort maybe pre-pandemic getting one today sort there and took, helpful. you some that that impediments just of any recently your really to rate in pre-pandemic and flow opening that? at maybe to cash the economics is pricing XXXX? that's pricing you point Yes, in franchise thoughts on to comment on

Tom. will Yes. as was in the of members Hey, new feather question, franchise John. price as It’s Card new terms Black the I that start and saying join. I'll in the, think to earlier given I economics,

reason driver as necessarily huge much the really certainly the not is helped have won't value our in because about it. go really, the help not who it providing to to was way So, looking impact franchise price near think pricing the more changes, in we necessarily economics, increase And for that term, of the longer-term. so the other we're that's a

I definitely think but improve, will the So, economics strong. economics are the pretty

and average stores any It's the that those terrific. business continues to before, As pretty our those about opened I XXXX, on prior, store of economics was only said the average in in membership you rebound, on before aggregate dollar. the XXXX as stores and know in down flow is the membership $X.XX essentially in X% through

including placement. do you you on know, as that, take add XX would the we that's And year. take, if corporate typically is which about stores stores back talking get added recouped acquisition, Sunshine the standing year, XXX to placements you practice the way And not pre-COVID we've as and system, their in used what new franchisees And It's before, own from anything our time. the that for moved yet the XXX or our matter outlook Sunshine pre of and margins, you still there. we’re in our of about outlook, stores stores see said corporate-owned margins the open up store for pre-COVID And the of to XXXX. and frankly, during of you don't to is new terms away stores. we and we've and – we have if what the just if whole the is, levels where franchisee franchisee pandemic only a openings really our our the economic in know financial in corporate membership So,

where And larger but add So, corporate store now that's a XXX, you the get math, And get we think the be store just when doing that if pace. that close XXXX, signs matter this kind saying across we've the all where do outlook to to the the of it group pretty we’ll were on during the XX number, broader you get you will last year strengthen you get two, the that to we we'll be be math, run We're that the pointing that as rate not that XXX along continuing the that across months. all you that in units it sometime of at year combined, new plus level. It's we to to did strengthen is, year, to would year. for on think ballpark. store new to the subsequent seem can if kind XXX said

of Best again. Thanks luck. encouraging. really That's

Thank you.

Jon. Thanks,

Heinbockel John ahead. from Please comes question next from go Guggenheim. Our

So that guys, when start wanted segment, Sunshine to you corporate right. with the pipeline look has, the at

margins a I also grow So, head over up guess units get year, grow the do that and but assume that two, can that segment they segment XX% they Sunshine’s of while? think have One you growth, next can several years? franchise segment because Sunshine to So, I for grown are? faster faster last you can where think legacy XX% may than the or you

Yes, Tom. John, one. that it's I'll start

pretty [ph]. their so to their than made Does list what Sunshine growth? of economics robust units. broader a [Still, segment think on economics franchise, Sunshine attractive solid the, need of was purchase I So, faster franchise grow the new of one the fitness no] and the it

what is I gun bit any XX% XX% of but to of that, many have head our is is units the year. put a XX%, fine states those think year the all prior system to in up we're is, in. they it pipeline want in in think There on point that penetration in states. we stores across little want have clubs. little point, in of look of goal. XXX robust stores great I a you how from Sunshine about or the margins that, in-line think basis a given we down great sort to that If returns, stores gap produced across been was bit is the mature very Sunshine the maintaining operated at We that open portfolio. want with if open historically growth kind were sort and our that very The that your pre-COVID, corporate probably proverbial corporate operate our sites consistent versus don't to, we mature between produced they've And to but a our

So, we the XXX think they in have some were talent, Northeast. practices operated plus prior management – that stores some certainly that were of the mostly – the will benefit what prior of the corporate

versus Time between such as of you in attractive cost as that's Southeast tell, occupancy Northeast the cost think practices. acquisition spread the reason differences structural know. gap? those Will they why an labor, us we some it are completely some but another So, of was for close will to of opportunity the there

So, right it may we'll but not the in the certainly all direction. move it close way,

And gets do higher restructuring you on royalty be a it Is right? there? there, a think there appetite what for mind? Great. maybe And you right, does franchisee would rate, marketing your to what the get in ceiling the that take of spend it philosophically Chris, Is rates?

look yet. until above or profitability, membership has past, are of know, Yes, I we the I until it which pre-COVID think have pre-COVID, them store you I'd I wouldn't just to to XX% at in Tom that get back say, said, said and mature our conversation think base, I

should that sure to and we to member above be accustomed being know want growth are store it's to line quarters all pre-COVID its most I they're the that. and same comps. to straight of think I and bottom with back were they XX like continuing as that at then make positive you $X.XX they're every of back it's point, member new of sales And where

it the first where [indiscernible] the efficient the X,XXX spend as full as you X,XXX need money can just, marketing a extra ability to royalties, [ph], gives right? stores to have which we drive It right. palatable begin wise, X,XXX then fees get I its more the and think right? marketing think continues even could So, dollars. gets the I with more [two] makes bonus to The to Because stores to that next margin, it's of – much raise advertising the the point spend dollars, Longer-term be stores. too we

get lower bonus that royalty, X% from think it us. back can little So, in that if efficient, more bit marketing of share but as I the X% we and for savings that's we into can overall changes, another a call both spend we

pretty are those I that before something So, we make levers two think we any watch closely determination. will

Thank you.

Thanks, John.

Our go ahead. next from Please question Cheng Evercore. Warren is from

sounds are breadth few just and still levels guys. Z membership some cohorts morning regions depressed quarters underperforming location are outperformed, but pre-pandemic that we like of catching some for up numbers It the of boomers. there because I'm for other gap of groups, still like has especially seems the the last good groups? in the just down, age curious in company Is it Hey, how versus Gen underperformed the averages, a per age these age this are depth significant

boomers, I now have first although all, I I are in as first of opening they not to mentioned all-time high hit think think off, still COVID. and remarks back pre-COVID, my usage since

boomers which But So, hit our joint. a they're small starting still member back actually of base now, should highs overall. in there's pre-COVID, to part they're drive pretty more to not but the

plus Gen our think base example, whole. Z of If membership about the XX% millennials make as a about you for and they

X. then Gen Number is X’s. So, Gen a are piece the small X boomers

only member are So, about a had [indiscernible] boomers it’s they – XX% not they base. that roughly the of although our

they're to we our them really driver not younger a growth, it's of back, although have want the huge generations. So,

you. Got

And wanted to also Black Okay. answer the John's ask to I your on a Card follow-up to pricing. question

point to like off-limits. pretty that price past, committed entry pre-COVID Card XX.XX it is pretty the sounds Black the maintaining the cohorts. And I So, in you’ve think you're much XX.XX for said

kind externally other the Card new than just So, does on of what’s going mean joints? you're course regardless maintain to this of architecture, that Black likely pricing of

Yes.

to more I Black price or more always which of And the up online of a is win see in $XX think the walk We month. pretty almost twice the them it's model amazing Card the seen. you've go XX% benefits business a as door membership, a advertise people when Black of than end XXX% choosing Card, price. or the

So, How going couch, do they're talked the cancel They're the our how to are get I to before raise they as And the couch, the people I I join. people of more of this? get the if XX% about membership counterintuitive to off asking right? right. [indiscernible], already those seems going about do thinking price, to we am just off already

to Card think stores we fitness Black plugs drive reciprocity [ph]. $XX Black our in gives Had heard and now lowering more might entry and testing I commitment, meditation And and [already] the value and the putting the in by perks at or try. we're Cards to have keep really opportunity call no my everybody last give of right? of a the So, barrier

for worked in the and the past more [indiscernible] drive So, that to lever years. Card it's think allow I to drive the growth. I [expiry really overall we value to use member as ticket. many many, continues it to over clubs And wish, years average us add and [ph] in area] the Black

Very Good luck. Thanks. helpful.

Thanks Warren.

ahead. Chris O’Cull next Stifel. Please comes from question from Our go

expired? seeing the franchisees location? to or defer re-equip equipment supply then, can thanks just quick on any the Tom, put that allows the you had chain new Chris. program remind a might Great, replacement? of pandemic are the us clarification Patrick into for morning. I you have open new Good that horizon is you on guys. affect And to Is franchisees during question. fully ability that guys This placed issues

Patrick. hey Thanks. Yes,

on we ultimately So, you're yes, I XX granted referring think passed. what and is so pandemic the to during the months that's re-equip obligation all

Opening are respectively. out whatever back constant obligation or not suppliers. shifted. for of any any folks We for see don't rest with. our HVAC with or system year we were currently no We're the new it's do dealing equipment that growth cause of probably – support accordingly. dates catch primary date strength all Like So, year. would all contact moved in that the the availability. just issue primary to stores of re-equipped anything somebody's rest is There's for issues and all And and everybody new the five-year And cardio availability be equipment cycles store in was with the we’re see the new up stores concern on the availability. seven-year the are re-equips the here,

can there that, certainly to make primary the are We’re but position that to our ourselves potential needs but We that any us are immune not secured. cause see outlook, to concerns to suppliers the sure to that's only alter we yet with there don't if our ways are issue. have working

so to it able like team's position risk. navigate no looks to And where ourselves our there's far been

lastly, up potential of have other you much quarter? more did those That's about and to last there, to new I other really bigger insights can a guys just the any premium and wanted the with mean, sort an stages bigger on And then more I not that go drive to you broadly, what how sign ad you're of trends And placements helpful. ad Bowl you to shared member maybe effectiveness campaign, Super that thought of than Great. what impact ask you able the after audience access? ability just have the has then to

Yes, yes.

think competitors, Year's typically companies apart us a so us never. something world the than that I think was any other and I commercial was it [indiscernible] in again much brand with different and like New of sets peers that like Super our for big is larger sure from just definitely puts doing Bowl moments the our Eve,

people a from that, from eve what it of spot will which about in a it. of And the out they good good definitely was to months, only as XX% liked with Year's It tailwind which so, So, join commercials. next think XX PF like brand will too, we're hopefully for off million surveyed of – doing is And they a be come commercials. I people the us viewers, I the in health that. would that's XXX New the positive, definitely was said it's, think About can good likely it well, off they XX% study company with sure. help

So, memorable. they're I think

in because had them. think celebrities we I

I year. think use I made half continue to first better recall, which of here through the the

is as that our setting celebrities apart in that commercials our I recall. peers even a of So, think having definitely lot caused us from well as

So, look the to well. it's something future as we’ll probably do in

Thanks guys. Great.

you. Thank

Thanks, Patrick.

Altobello last Raymond Our James. Joe today from go ahead. question from Please comes

morning. Altobello. Martin Joe for Good Mitela This is

we unit well? comes can on get Just an commercial as equipment and to wondering if estate it economics, real update especially when and labor costs

one. I'll Yes. that start

of news the a pretty you've wage have of two, people on the inflation, really heard we roster is, the the XX labor any good floor. terms in given us a think there's [indiscernible] time about, the floor on dozen I Typically, three and there's on as for model. people any store, probably talk So, low at

So, store wage where to say, I place like good our work. inflation anybody. places franchisees can would compared it's associates other well. people for affects pretty work, It isn't certainly a to our great as

that not You're going that, a have, you're membership good servicing involved [ph]. or cool there's pretty it's working very a standards It's other in [Greece] and a cleanliness slipping but than and music, clearly we home-smelling place, like a and Fry on French gig. –

store it's about franchisees, don't at you is to modeled that, sales we've assuming XX% a of a positive work. pretty sales continue with pre-COVID most are one-time there's we it its inflation And quarters about our membership store but the think, we've fare if talked then from never like store historically seen, as being that than not terms about, averaged most had really if surveys that is, straight growth rate it our those – I X,XXX members. cost that of that added news after impact, once there XX temporary. and your the of some increases good we've would on in you reset same better so, And quarters Because think financial of wages to the across to bit and gets climb as growth wage member it's, and gradual any where that a talked I same X,XXX we've

any add cost. really more don't You

versus and pretty sure. in It pretty the strength again, higher offset which somebody to as said, ease is about got on that in from impact. decision is and be to allowances think corporate would returns to all store opening to depending of the take continue short club their wanted both supplier be dollar to and So, cost would margin period and it's rates, see new dramatically. in a but would of putting a much, hundred we've build go Certainly heard whether double for hear They’re testament And we the in haven't line, store couple changing [plus to down to the not They're a that faster up little aggressive time. change real meaningful any bump no. doesn't And the clubs, lastly, about a a occupancy with the talked than flows on typically that get terms they points, rates new of digit – are ahead or or bit a a relatively even typically or building offset heard new to per not build occupancy maybe franchisees but more those own I a of decide in are a foot development that Equipment the our it's schedules, in to on haven't really through which percentage, may we around but are a change across low pre-COVID, we've costs our markets. dramatic seen basis basis location stores. they cardio returns it equipment a yes order pre-COVID, a percent] bottom and landlords’ XXX,XXX down in margin COVID pretty they didn't really that so that take cost tenant build. of to sticky, cause initial It but the from a [ph]. up strong short a

super That’s helpful. Great. Thank you.

last follow-up one Just question.

across to and workers those to migrate experienced permanently gyms bit mentioned U.S. are closed, seeing, members you're Planet, number You Planet a well the sort getting are are XX% the little you you and all about there as seeing a workers of of more of migrate there? significant also over

the which XX% about a X% seen of I I any is of into joins typically yoga Chris. coming put that, from closed things. competition members haven't studios studios, side to gyms have closed. a [indiscernible] this of and seen closed In of quarter Typically which haven't competition. – up made bit about just employee boutiques, about with of the of XXX were permanently first of any our are It's the is little store. XX% context this

And outside So, closing, it's gyms not like X,XXX across [X,XXX typical the then U.S. we And have a have member members] closed. population, about right? store example XX% is [ph]. in street the of gym of of the Planet, gym about for

have So, successful. and if that they're they’re because less closing probably not they’d than

a we gyms country member closing. bunch these not – it's the So, around likely X,XXX of have

for for is So, yes, join Planet. at are time less of the grab to first sure, is placed, competitors longer-term as everything when to advertising it does you period people about join I at from would see month probably the a they a for month not are a as large you of the less quite club except XX%. over over shop though that a month looking look or there a really looking less benefit market as share but club just

that of. think would arm shot you it's the gain longer-term in more, I then So, a think one-time

much. Thank very you

Thank you, Martin. Great.

the As question, the this back was to floor team the I last conclude. scheduled hand will to

Boca [ph] net introduce Great. counselor] Thank expected work-out we back our Canada you. as time. franchisees. to talk It teams driving in schools place for steam the blow are together you proud some And of the together. for franchise future exciting get that tomorrow as to joining us for has high mortar [ph] and throughout quarter was [independent They're excited thank speak million] bricks people and the in and all past the launching our, see for actually the giving U.S., invited fitness for really free, about a them for first today. on Everyone, speak all us. Happy way to next that Monday to an and to growth off [a member to quarter. to first I'm my our our hopefully to

and summer. come stuff good Thank you. have a good So, to

today's very conference joining. for concludes much Thank you call. This

may disconnect lines. now You your