Planet Fitness (PLNT) 4 May 232023 Q1 Earnings call transcript

Ladies and gentlemen, welcome to the Planet Fitness Q1 Quarterly Earnings Call. . My name is Grant, and I will be the operator for today's call. [Operator Instructions]

I will now hand you over to your host, Stacey Caravella to begin. ahead. go please Stacey,

and everyone. operator, good you, morning, Thank

and Speaking Executive Financial Officer, call available will for Hymes, Officer, all the They Fitness the Chief be Planet prepared President Edward Chris is session Fitzgerald. questions joining on Operating be Also Officer. will today's Tom us Chief Q&A Rondeau; following during and Chief remarks.

live Today's replay. call for is and recorded being webcast

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

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

the I'll call over turn Now, Chris. to

for Fitness Thank call. earnings the Planet thank you, joining Stacey, and QX you, everyone, us for

strong well-positioned we We growth and deliver health the to capitalize on consumer be have wellness. with the high-quality start fitness as to on to focus continue XXXX experience. behind tailwinds affordable overall our disruptive believe we We

cover I'm going two to today. topics

First, discuss our growth possibly then how COVID-XX supports an and and in opportunity. recessionary growth recovery environment; of inflationary I'll resiliency QX's pandemic our and systems the impacts or continued it from of member long-term our model the

QX membership Let me address our growth.

great that our first interrupted that Ads fitness energy post-workout campaign It positive This E continue all-important the XXXX off that to buzz. quarter was momentum million, years to COVID. big Low members. of first more than the strong our growth with the a more membership four continued than first was in an not net the Our featured year kicked QX by end quarter, from million consumer of addresses X.X XX.X the time generate into We feeling. driving membership increase of

driver positive growth membership primary In sales growth. to the of sales growth. member same-store was of X.X% COVID, quarters be same-store to growth the the continued of system-wide XX QX, driver straight our primary Prior

more to they our than are high-quality feeling and resonates cost while affordable health value ever their and rising growth fitness now the continue Americans seeing prioritize experience items demonstrates Our that membership wellness. as everyday of

seen by inflationary It our we've trends. validated be is this environment three that Historically, is recessionary resistant true key and again proving current pressures. model in to to

member The is diverse first growth. our trend

During pre-pandemic age generations surpassed all the penetration levels. quarter, population their

value our the also non-intimidating new strong in Our in atmosphere to gym continue people judgment-free first-time members. were XX% as drive of joins off QX couch

The to members sign former a is trend really our in rejoin this they previous pressures members have is income their have second believe far. faster important were We In go of to causing to good our about and QX as rejoining compared despite XX% rate. joins about not XX% new XXXX. inflationary historically, than

so cancel marked straight cancel, which the our of improvement. are groups committed nonuse members again cancel The is with to more visits usage fitness seventh third frequently number all also sign bode higher rate since as This We're rate, is continue cancel year-over-year more per well XXXX. indexed than should to the the reason more quarter. prior one they age are rate year's our first a rate. for that is were This overall visiting pre-pandemic in member good why below seeing quarter members than our

COVID post Now to our opportunity. continued long-term recovery and our growth

membership above end XX% than the longer to full to the been our of see more QX, before or opened of stores that the recovery back since momentum pre-pandemic At temporary COVID XXXX towards are US stores our closures. levels. continue We have consistent opened

year. that we made XX% result Additionally, their price are above or Partly almost pre-COVID revenue of the per a at store. as last increases

gains first membership full of happened quarter. our year XX% in the Pre-pandemic net

feel and year past a four the year the the further quarter. stores opened that benefit of the that yet uninterrupted and boost this what of And profitability. to Black paying historically most opened from for helping for especially They system, huge an annual members new new the entire are has membership So Card store QX the during highest those had been was Black net to increased stores last fee growth Card price years.

is growth the XX% do after marketing of year strength our franchisees. our a Our collective not by Americans We gym. last to to than $X.XX go who belong efforts invested more currently fueled the with billion of

when to marketing their significant to at start and attract they spend Our time ready health someone wellness the enables journey. us right are

means greater more towards our membership competitors funds. advertising the this of and XX% stores low-price eight more keeps well-ahead largest combined. growth high-value than dollars low-price our member more than next US we next More brand times than than us our have with XX It's competitors flywheel US that greater

Our are app real differentiated the well. as and versus digital competition platform broader

while engage more Club, membership. even drive leveraging offers, percent than our member classic more it's monthly with was Shell, cost And we our major $XX, savings Chewy.com discounts. of on our perks better discounts to our benefit average will Puma of continue of offer diversity partner to base our we our the small In and brands exceeding To partner a size members of with more to card the and members. more purchase our to today Sam's who brands like members, value and are redemption through March, program the our purchase with Verizon, to

Our opportunity long-term understand fitness are of regardless journey think historical to continue to be We breaking and barriers to confidence the be penetration wellness ready can their X,XXX-plus successive of when ages. the focused of we want each they hyper start greater strengthened intimidating growth on our is people and by our systems down achieve fitness first that to of generation. their all the age. store our a in ability brand We be recovery

Zs confidence who of also the are each to Generational now and fueling that's group the Gen age And our what Millennials of Gen Zs the X% Planet trends are over with over a continue lead future. the joins about of member Fitness. XX.

with into pool a years age member have only few We Gen Gen continue will behind. Alphas to our prospects Z's

school further strengthen pass summer earlier our appeal this Gen our To announced of program. Zs brand's we high the week with return

members able year are to the to online program guardians along rate with It's or guardians At signed them a million last for X.X up. participants seamless largely of summer school process. joined of than quarter, that the in consecutive the year. similar the team first We their second greater as We to last X.X be teams this million than registration and than had parents conversion year's the and XXX,XXX excited parents end paying XX%. for including had high run more more pass

rate last time XXXX a ran conversion We we similar program. continue our the to outpace

where recently we our and within report, are Finally, republished our which create more all. and environmental purpose we governance of reach social judgment-free is XXXX planet demonstrates a delivering wellness health how to

Looking disruptive differentiated weight over future, am working been force is besides wellness overall as industry that will that research to show the XX the today We health and for I as fitness and the health loss. wellness and we continues to to be to years. out confident essential we especially in a continue have of other affordable believe benefits

success. people's franchisees and a enhancing of our healthier shareholders long-term sets us purpose for our up creating lives world and Our

turn the now Tom. call I'll over to

members demonstrate in quarter, Chris of Thanks discussed such headwinds good technology infrastructure In a and positive term Chris footprint international attributes we the invested the longer near to continued that and business growth team. inflationary asset-light first as building dedicated store everyone. and we grew our model. and and morning despite our areas out We small

of Subsequent our free we shares. million bought an we repurchased Additionally, to the repurchased shares million to $XX flow at continue cash total of of date to approximately number another approximately $XX average our repurchased price to generate and $XX.XX. quarter, we significant XXX,XXX bringing

first quarter Now cover I'll our results.

be to XX.X%. growth quarter. otherwise our noted. XX We same-store QX of my performance opened quarter X.X% of year. X.X% comments the corporate All We new Franchisee unless store sales last increased stores sales in compared and delivered last sales compared will of same-store grew regarding XX first same-store our to year

QX quarter growth same-store corporate our member two-thirds but growth. rate in acquired Fitness last increase As quarter. system-wide Sunshine with in Approximately entire net was segment year balance the the for that driven QX were XX% the comp store franchise the sales a we stores for being for sales the of same-store by reminder, reflected in we're of of

of Black Omicron from participants. The was basis for decrease this sale school compared January Z Classic decrease successful XX.X%, Gen well including strong high highly was the a Card the pass to impact sale a as points. year when Card XXX member impacted had our reflects penetration strain as by summer year that our growth we last negatively

Equipment the fund due was offset franchise ad The store revenue. the increase total the million For million. segment franchise to by by to The compared an $XXX.X royalties was corporate-owned driven was increase primarily $XXX.X partially first increase XX.X% national segments and decrease revenue in revenue growth a in across quarter, and in revenue segment.

The primarily segment. increase growth, royalty stores Sunshine offsetting a stores. out by Partially was and approximately the sales new was increase of $XXX,XXX the on the of royalties a annual decrease moving same-store driven result as of franchise fees

first X.X% up royalty For X.X%. average from quarter the rate was

placements same-store Fitness The by as as new segment decreased Equipment And segment the sales well store growth while new XX% increase driven Sunshine and revenue in equipment revenue year of openings. placed were transaction XX%. store had was completed corporate-owned primarily for year's last store of more line new new lower store openings We openings compared to sales. XX. store equipment XX this QX year-over-year in in to leading

sales stores. The decrease offset by in higher existing revenue franchisee-owned to was partially equipment

of accounted For replacement the for equipment quarter, equipment revenue. approximately total XX%

million. reflected the the revenue $XX.X equipment to $XX.X Store compared half the Sunshine from relate of to to Our which stores to $XX.X operations last year. of million which to $XX.X increased acquisition, primarily store stores were of corporate-owned cost stores corporate QX to our to segment Primarily only which franchisee-owned expenses, additional cost due approximately from amounted as relates sales million. for million

expenses primarily SG&A million fees This million to for $XX.X the transaction related decrease the National advertising was result quarter expense incurred compared million. acquisition. million. higher of compared the was $XX.X $XX.X fund was in Sunshine to to $XX.X

income net $X.XX. and income can share to income Net adjusted found GAAP the be of was was $XX.X per million, income net in reconciliation net adjusted adjusted A release. $XX.X diluted income was million earnings net

Adjusted found EBITDA to can GAAP adjusted and margin also EBITDA million was with in release. the of to A margin be was reconciliation income compared EBITDA XX.X%. net million $XX.X earnings $XX.X adjusted EBITDA XX.X% of adjusted

EBITDA segment EBITDA million was and franchise Now XX.X%. Equipment and adjusted $XX.X margin was million adjusted store XX.X%. adjusted was EBITDA margin was adjusted million adjusted by margin Corporate adjusted was and XX.X%. $X.X EBITDA EBITDA was $XX.X EBITDA

the turning sheet. Now balance to

XX, December restricted of million of total cash $XXX had which cash million March on period. As to XXXX and in compared XXXX respectively we cash XX, $XX.X $XXX.X million included of and million equivalents $XX.X each

$XX of includes an which XXXX through As I year-to-date billion interest financing consisting $XX in approximately long-term million excluding Total as million April of $XX to shares, in April. our earlier, fixed-rate March QX debt four carries $X.X used tranches million a that and X.X%. of mentioned blended of debt XX, was rate securitized we repurchase deferred and costs additional

purchased a At adjusted times EBITDA. refinancing upsizing X.X debt net year, of when debt of and end ratio last leverage of our portion a QX We LTM was last the Fitness completed February. we our Sunshine to

the QX end it With our end at down last our at and profitable declined of quarter the to of membership leverage of system to highly was in increase X.X our the portfolio, And X.X times. corporate XXXX the across times ratio first year. store of growth the

for EBITDA adjusted the our expect LTM We to to remainder decrease of continue the debt to year. net

XXXX Finally, outlook. to our

resurgence similar or change impact our As that unforeseen COVID results assumes view in dramatic in a supply material is of reminder, chain. circumstances significant membership no there a our behaviors or

reiterated to target growth In our XXX. earnings press year. our We'd I'd address expect placement we new placements the XXXX. of like for morning continue our equipment targets to release, this approximately for

locations. reminder, only a these placements As franchise-owned in are

required include stores any availability build. to we franchisees new that to corporate-owned obligations, likely seen or similar headwinds of building approximately of provided expect we ahead HVAC relief keep year this a last XX. will Our cost in February, including which we number year haven't stores from elevated their will for and from build Since the to target

interest in year past increase over rates substantial to new store The growth. is also a the headwind

end high year. Given this expect likely what achieve to that this we XXX equipment we the believe new placements is of

We stakeholders. our in member believe Everything by quarter other considered sales and deliver brand the and by somewhat size encouraged growth. difficult in will same-store we environment, of first are resiliency and our overall the all growth of a our advantage to demonstrated strong member's, of the and our scale model our economic continue to franchisees value that profit

open to it to I'll call for turn the up now Q&A. back the operator

Thank is Randy, Konik open. you. Randy first [Operator Instructions] We question now comes line have Jefferies. from our your from

maybe it good summer and wanted is -- don't up. be going morning, statistics you as that; last signing pass a out last summer I digitized it to the lot, then guess all the go up their higher year I or into know see to parents get was this later could that so some more now this members coming relates first back what pass them second, signing if helpful. Thanks ask just we digitized of more everyone. I a kind over and Yeah. year, of of year year. And continue to conversion would pass summer then And probably super the if Chris everything

to Just there. your want perspective get

much slightly exact think benefit we the otherwise, did as very it opposed and we just different. same last last year COVID is to have Yeah. same. probably We remember this And the this Sure, it's Randy. Good But the pretty much it very, then year hit. way you the it's I XXXX, as time was that is morning. digitized

is this the done time, it first we've consecutively. So

So that age teams didn't the what's interesting now is be going to out.

now So in. come freshman now, has the class gone are the seniors but new

So it still messaging. We the now still ages e-mail by other remarket that the four year. in in-app have to all the either or ability from still app grades the have of them are to last that

them years time, a it already we half really three gone. of strong last ran leads, So the because year didn't of already have are have later XXXX we which pipeline was last we

So wasn't digitized. it and

them the our the So it starting off to in gym year-after-year interesting grab to this XX. quick is that May momentum will usage which we're remarket be to underway already process year, some in we able sign-up kicks and

The actually able parent waiver into process help or to have year different bit the the other guardians store the minor thing execute the problem were joint actually where we do come -- easier that's should them the is the a this flow to guardian even so. parent little physically

So more that much that makes just it seamless.

the many Tom, should the wanted get investors XXX from placements get this jump I a I of open you high question think Super really the to off end. thinking I like would Just made thinking units balance helpful. going you're trying of guess final Thanks. then of outcomes be about I the some about super for they -- the are year? give the year. the to I to perspective I you think of that's just range us some at how we just Can year that lot a of is would And we balance guess openings be how statements helpful. the around about one for how to perspective on unit

thing, Sure Yeah. Randy.

impact rate are have franchisees. on the about things a been talking the I increasing certainly So – some of And said that an think rates interest minutes as few ago we've I cumulatively interest had sort there. still the of

to So in year time it sit than less we is a – it's SOFR Last been it less I here a bps. looked than think was headwind. almost X%. ago, XX It's was amazing

So been a it's big move.

that we've to franchisees store that new franchisees quite And about development mentioned schedules and the this of to where we here time, combination not in bit ahead I a just I have to building a their little think of pre-COVID. development, as that plans, on those their bit factors did all we they see are the just last think said I as really past where of talked

likely outlook that think we we why have high said is on the the we end. that's So XXX

would last year take pretty those openings, combine think to XX, close you still roughly total so store our approximately if growth corporate store XX, be two So year XXX. this will we to that our

goes view might didn't that own see we upside And really want – don't firmer we on our on franchisee of because as we'll the the store we'll the be folks call that's much but we it best there but to we year stores XXX. the it obviously, have how can and thinking beyond a based see corporate openings

clarify. – And end last low know on thought just the the of end? just your finalize low ask we on be be to on on but to high a can kind could my end question the minimum the what XXX Is and I might what so

above Yes. is number. XXX that been No range we're appropriate don't we really sticking range But We number our don't feel that. the the to view We the has view it. and number. going that's see just our

guys. Understood. Thanks lot, so a much. Thanks

Thank you, Randy.

you. Thank

comes question from Siegel open. our have now Simeon, next Simeon BMO Capital line We from your is Markets.

progress. morning. ongoing Thanks. Nice the on Good Hey, everyone. job

Good morning, Simeon.

signing we growth any you setting Did slightly the at I over should Card just down? above guys, Black function it. still member lower think missed quarter help how a And XX, or you if pre-pandemic new think records, the then you're and penetration members So was realistically, given penetration. sorry to year? trading I'm existing member keep was of next more I new Black period it trajectory up say nicely about then Card And

Black on So Thanks. the any just where thought rest year. penetration the of looks Card for

it's Chris. Sure,

On had actually it piece – of the at year. driving sale $XX two the January $XX Card And last down. most it. little Omicron was the this bit real year's things Black is are tampered One those a that we in sale successful really

thing Gen Z. The other in the big piece good it's which a ways lot is is a of younger

teens, of low the school the high performance teens, them school percentages. joined Card So high Black they joining a teenage and very converting pass great summer the

to years Black those later have great the Gen although So, a Zs XX the Card XX, percentages. called plus

down. number generations that still the bringing school because high are it's So joining that that are younger pass summer

comment end year rest upwards but much a – for or year of the and don't XX% add matter really the stores of any is our quarter. growth, decent to months May does slightly. then is rest growth summer membership really but add mature the growth members some age, the of the growth more be were year. quarter-over-quarter pretty really membership the it's new of that's stores year net but over it's trending it last but we tail tend high growth the don't And to lot to April, first the on time, remove you the the during If school water and

curiosity, the you clubs of Just pre-pandemic helpful. over Thanks, Do just the is very you structural? congrats remainder your average perspective XX% Do That think And just from don't. think having question then post-pandemic through time? Out thinking do think settles there's something think on of above that a memberships. you in? Chris. of it's kind you of where why

mask Tom add start though It's it's states different Sure. it. later. closed states and had restrictions, I'd open they're requirements for periods say I'll of Different to just had many will distance for they were and while year or a it's different timing. actually mostly whether months a full even different time.

more outpacing good I great and in the will time the revenue that the sell pre-recorded just it's my Card the and longer it. the goes fall a the coming they is road of the is the and we is news. the bucket. timing out last more remarks go So into mentioned, as year, members clubs annual with fee And more is more now And which thing down by membership, Black – the good that the the increase that

-- maybe And it's Simeon, Yes. Tom.

has above not above here. And pre-COVID a gap I -- on by they're to were at couple above that an their stores seen with basis prior we're percent are what is that for to of along, narrow. gap all to peak, generally looking on what consistent membership which the average really think stores Just pretty to that continued store good. are the The just built build XXXX, we've to

to matter we see it So just point, of a as time. Chris'

ones of the of the lingering politicized. the just not if sort just are or that was you It's more a all trough a deeper. not competitor the of of more stuff map But has almost lagging, look It's that the where effect. that just at, area. new of a there's stores I fully COVID was in imagine And are kind back country, states think that had in

out climb longer. taking is the So the of trough

Perfect. Thanks so rest the much, the year. for guys. Best luck of of

Simeon. Thanks, Yes.

you. Thank

comes from We your Rakhlenko have now Cowen. Maksim is next question line our open. from Max,

Hi, for my guys. questions. Thanks taking

any that speak you can And to franchise franchisees first if its those other the the up? separately, have conversations So exclusivity franchisee on situation updates stepped rights How are your health? with then lost and just going?

Hi, Max Tom. start. it's I'll

about think year about a story maybe ago a an I things I bit. point pre-COVID main stores being that talked model as on than said, interest I today levels. rates the And profitable. very just broadly to Many X% has a impact definitely we at little is here membership less some about But franchisees more or than talk had and here the more is still others. above think, with EFTs and

We the own that flow-through is see dues because member, of terrific this dropping our the the new pretty $X.XX line. margins stores. bottom dollar and in are still coming are to is every the in of flow-through still

the you think on greater. is I invest will cash, pressure to if

now, higher some franchisees. Given of some the especially for that the franchisees service of is PE-backed debt

invest Now, our issues. debt now the in we then covenant information the see heard They're CapEx there. haven't and and -- cash These the needed is system. there that's aren't more we service to really enough financial of

their sense And modest -- G&A, leverage would you'll of assume that's and end total EBITDA fairly a Take And level system, a little you be, close debt. get system the took an you'll given bit in you up our a our total of level so, we for the know you franchisee. but four-wall off with of don't pretty margins have stores of disclose debt generally sizable where any pretty a probably number you are. AUV, get of the assumed what if level

-- for be we rates end to are probably used it. new of $X their and don't obligation. we of to that a there why stores cash So up folks higher being -- decent interest That's at number that ahead a say, with where you X% see million fund -- they're now, store, generally, the

think know is know that's priority the here's first I answer. bit of of what's But a a long-winded care the They know -- take franchisees I stores. important. that, to really our existing So for CapEx

have then point, you talking to enough to and that to we're And at -- speak so more we're new ones of to they And going to to left the their there's You new decision the more money that pull here. have in fund growth, choose ADAs. to remodel. a ADA point, if reequip, which their to lose have the not over that stores, PE-backed value exit At will have make put pipeline when on be and value or money they fund and will to store their there. have because multiple, an will the outsized impact not their

which to come a PE cases, the they be different make haven't former the in whether firms So different area. able still at end they is definitely or the we then the get have much we which franchisees, we they'll these if time, want who about they're back think ADA, ADAs of pull franchisee waiting because attractive it's but to more we the entire a we found that But situation the in different up, them talked where last that buy of yet, actually day, list if decisions. can develop may in to

see how out. we'll So plays it

and of who tell things folks try quite sold a they invest to the we franchise it, system know left other a may the need us list as don't we haven't in found a in because we haven't US, in you while necessarily there's the returns. think to As sell

is all still decision service the the And good. It's we. of, then can't have to do again, and make higher structure, And so the invest them debt. a is a the capital they and the just to they question if allowing with interest and now to model rates, have capital

things. how plays a see how provide broader So that's But we hopefully of we'll helps it of sort And that out. picture see how a -- it it. see we

incredibly No, Tom. helpful. That's

Just -- go quick ahead.

We're the your agreement finalized. No, who find now but sorry, terms, opportunities. as I are explore, to I the about, have franchisee contacted those franchisees disclosing is that waiting not of go of that talked on with Max. can are say, we to forgot The territories we some store them question, you new some the second here mentioned our list

And so, some discussions a there's -- there. we're those having there's lag and

some we they may the mentioned not. may As time, available, -- some that last know markets are

we're the forward they do But have signed, So now to agreements is sign that the that and work waiting with there. are moving finalized now plan. to documents the are -- we're some spade

Yes. Edward. store development to addition that, also new said, and we Tom This signed the a expect in is that given I'd had say into into we've But that, months agreement. what several an we're year to primarily lead from XXXX beyond.

likely is in guys. another other the potentially the point really are leaning quick it, you do how you and question, to That's there separate quick from interest franchisees are think very still helpful. currently that Tom, to former that follow-up at system. have but a enough Got then I pretty towards, this franchisees? Like to is that reopen you're or something that that franchise

there structure. on I'd Max. say, of big, -- adjacencies but more with both, and much -- It pretty system who, a depends capital modest in our franchisees are Probably are a think number who manage I

So dry there. have more they flexibility powder, more

interested. So may they be

of as former think, know I system, you system, a and had we've So outside interest just franchisees. lot inside from the the

and think be interest. of will of It's things timing just letting a a play So don't out. we matter question it

I'd also on as add well. open side that, international the we're

Yes.

Yes.

in And contribute quickly, something how help growth looking are to No, partnership helpful. now to then, similar the the replace space? Okay. that's that member fitness XQ? with And on much connected then, you Halo comment you can in just potentially

sale -- November sale perform did. the didn't quite good didn't this as wise March as as It Yes. membership

But was turned out. it was say, didn't unfortunate it driver I it So, a huge how necessarily.

it. gift those pleased we're do good the for and card Thankfully, chosen and who give an make everybody to $XX I guess Amazon Amazon subscribe has thing to right that

Amazon -- will Halos until of July July all So the end their work XX.

So gift website. those will their it receive on cards to use

So good the for it's customer. they've that good news a made

these choose for outcome, membership. tied was so done not July they're where if And not thing, so members a to XX they also right going with they're for the contract a it it's -- commitment then commitment the pleased We're the months. that come we've that, waive into

and right So do to far -- generally And for impact question it's we're we as see here. thing huge your direction that's don't customer as there. a the But -- feel the the we taking don't

Got it.

Okay.

-- and not though. to seems always running sense, makes up opportunistic with things one. along another next towards if starts but it the There's come option like team it

Got it.

Best Okay, a guys. regards. lot. Thanks

Thank you. Max. Sure,

Thanks, Max.

you. Thank

O'Cull Chris from Our next from open. question comes Chris, is Stifel. now your line

follow-up you I to you needed first groups? deferred But other earlier one. large I the obligations that Thanks. have an majority that one to do question development for of had any franchisee. Tom, for the a know

No.

rewritten have anyone else. to agreements development We not area them for restage

Okay. end then year. had placements years? equipment unit just averaging I'm of that the the likely this I XXX you does goal equipment, guidance question think towards Perfect. said this will over the curious, the about the affect three of XXX the lower be company's a I next And units the annual openings

XXX as we we last gets XX, talked talked -- last -- think million to new as have that think the end range. misheard the don't stores I pretty high to time sit XX, see we of be the about XXX saying what of for mentioned -- we will this is the But but low combined stores end I -- year with you, the about Chris range this Yeah, which high we're year. may the us that we not just to may have here -- as today, close new I that I corporate

we we reflected XX% XXX So said think ourselves, this the grand And the ourselves see would back scheme straight hitting you so view I we the see will. at off Investor didn't that November, average if in Day, in didn't off the our we thought from was not which be year far really we're and I outlook, in think. where of three-year we

feel that over still to years XXXX. sit we we good add through three about outlook the next So today XXX approximately as here

year-over-year company give last just just store Okay. change? Perfect. quite one Can bit a for year-over-year. and the both you little margin The one. And a of bit down were then equipment explanation margin

Chris. thanks, Sure Yeah.

big to pretty contract runs a from a margin midyear. sizable equipment midyear our year last rebate manufacturer the had So primary we and year our

rebate through purchased July break it's all we all the is once So X. tier, we've equipment a on price -- the since

ends it this gets we And that didn't here a number fairly that up sizable being year. reflected. tier So hit

on the the equipment on it sorry. that's So side --

corporate say sales I'd One know we the couple you last the of in is quarter. as had a things. half Sunshine On side, for of the back year

local and So a ends was and spend not franchisees being do that our in margin was higher that the around up year and in clubs marketing in January important that. there it impact our corporate that's primary we do pretty last reflected the

sale secondary is this the timing March. of of April The started year our end at the

So it last where this that QX expenses wasn't caused case some that year the in from sale of hit to the year.

of So there's is but long marketing two of the and components it it there short Chris.

can you provide going comparable color be going Any Okay. it I forward, are fairly other... what in we should year-over-year expect any of should there or terms mean forward?

spool segments you end I growth we outlook. if But that detail to up of on we outlook. Yeah. place our We think in good what were don't a provide in kind I the think top up and growth, we it kind across terms EBITDA but adjusted of provide and all line of guiding don't really that pretty

Thanks enough. Fair guys.

Thank Chris. Okay. you,

you much. Thank very

you. Thank

have Jonathan next now from our Jonathan, line Baird. Komp question open. from your is We comes

Hi. Thank Yeah. morning. you. Good

of or follow-up at on have based any then you as to place color how more you And -- bit on side? today a franchise placement openings maybe half? the in the look the can just, give a XXX get QX to any you back the Tom, of openings visibility here LOIs thoughts do the on for much XXXX agreements throughout in Just weighting

John. hi, Yeah,

openings not loaded. think back-end be I atypically our will So

to to the of of franchisee to it's across discussions where end don't the spread which all our we but to the affirm high to or plus the and historical closer is into discussions the get there the ultimately to goes quarters on that range. say internal the really we of minus. And provide obviously, our probably pipeline. But So specifics stages got XXX, likely

just the And a trying be again just up don't below I this expect XX maybe year. year kind a more would openings to little new to end of or that Is back-weighting. be you your too had that just specific, and last comments I'll but franchise mismodeling I'm on not near QX then weighting. so one side for the Okay. follow-up to quarter think you clarify we around but

be think QX. I in closer probably we'll number that Yes, to

FTC maybe really seen industry changes? Okay, you'd we've those thoughts then is more rules And for potential helpful. subscription whole last the great. That's how on to around that viewing reaction business? coming your thoughts some subscription quarterly in any just But from the Chris I'd for Planet the around hear business. love any the broader And since update any have rule just are potential changes question that

click and in have states to surging in Sure COVID before it I'd California now running believe or one place it we John. on cancel say been not. several Yes, has fees the now

we a months So, see that it cancels doesn't increase state and handful then couple, three as normal sets an two, past the in we but do of to initial remarked in level happen.

an news to be now. doesn't the right is So, seem effect it good really

state recent be So think is. I most would it Tennessee

So, we're one That XX that. like or or started XX one. December something that still monitoring

So to the but And haven't twist thing still seen would out. But big to is that to we tell one think impact still early cancel. a there. I too click flushing I

around I of think cancellation one seven-day notice has Planet you and leave commitment. we the very easiest very generally out. the in have few members our very, policies And had -- members country are few of

days' and seven to want letter sends you notice. if with you're door walk just in So, the you out cancel a the

good. high than XX% rejoin that's higher I right? rejoin And rate that was always it it's So, rates leads pre-COVID. The for think well bodes our

thinking out they're that's about the easy first-time in the first. think easy of I for especially So, one things customer a

they how to price thing. of to the get about Forget know want out the

is auto the I still regarding it piece work figure how specificity or going think on they're one that at there whether applies. the renewal too early out how to to

commitment going it's a lot say on. Some year? there every on just Is only around they is it it's it of memberships

one if comment it that to on how really happens. So, it's hard will out turn out or play

That’s for Thanks the Great. helpful. color.

Thanks Jon.

Jon. Thanks

Thank you.

your from question Rahul our next now is line have JPMorgan. We open. from comes Krotthapalli Rahul,

the Chris current a you for captured improving program value perks members? seventh Can And retention good Hey rates taking like data of discuss straight for this about your your my Perks forward this you and is just rates for your the talked going quarter. kind the like guys. Thanks do have cancellation plan monetize the ramping the in how the question. to platform? is of lower for data like current you like how membership

see thing what's still fewer I'd cancellations of lower it the it's is the days. But can in right haven't see Sure ones members that are to XX commented now thing really last using now. say only club used members yes. two the we leveraging the if see we same time redemptions XX% that are from it over still of we the right the

our provide little and So, can that's you're or four store AAA the good at getting using are not hotels. a is getting to hypothesis we news used we that value towed least bit outside because you walls whether like discounted you're the the say not

other back. membership tend four the the outside the because discounts discounts to when they'll to people ready use providing hopefully come things. walls we're they keep get club if on So, they're And

it mentioned of more then on just And people March month months membership is used more redemption my membership. was of $XX I as gave is thing. we one over Classic the that recent the call a recent that's So, which

our that's So, goal.

we're capture more have or as And three a two more at you've partners think bigger we and few attractive quite the I we the very the better ago and we -- now few had we years down very, data that the this door. seen point get and

get more can the think as help better situation. the we only have I discounts it and variety So, as

So, seeing. more to think but we're to the good come I trends it's see

as right in started people life, than rate to more. people are that back is that out remarks I'd out COVID is working away mentioned say thing more out had only the to that think the ever getting prepared wean and are I I my they here since with pre-COVID. the now has working And are people cancellation normal working

has be probably that this retention point. to than helping So, more anything piece at the

That’s you. helpful. Thank

You’re welcome.

you. Thank

from John, open. line We Partners. have question your our Guggenheim from now John next Heinbockel comes is

guys. Hey

attacking that philosophically, Chris, to start with right? you there component terms does right? Because you of time offers put it. on So are how to it of this to a I doing to appear how in So the have seasonally, some many want Perks, want

the philosophy get to primary Do You there XX% to the or have is you are Card, you try more Card people way to couple XX% there opposed that a on to get get Black Do that going we're of think to upgrade is reciprocity? the penetration if that? be to do for what's to perks a rate, we tiered only. -- -- Black to as that so going

No.

years, what always think open up XXX will I the primary the And reciprocity probably driver couple we've so. be seen from every stores of historically. we or

market a in we're in stores. is intense. value now I -- XX that and that's a market you're three So, with stores in mean the

driver years. we what doesn't has drive, perks the generation that continue what interest. to data, mean So the capture that that over But definitely been

is Phone has a great Free been great The [ph] Crocs with one. one. mentioned I As great Verizon gas a a one. The Shell is

to it. And attract at and what I time Verizon. attention data but and member. value better think refine if hot attracts coming and ones a we'll that's and out get find want will, interesting that competitors, discount I that be guess, you as constantly piece T-Mobile the in than buttons to grow people continue tell, and to the we'll does we as have is better what their and as Perks continue the we more give a as capture out is do we will So, the really will get we it discounts And

and there wealth getting people in that can club discounts of we if That for start where feeling partner they people that their out strongly far to out today's can get believe many especially they're reasons. right? in where products in are I items, club as issues -- the and everyday other But inflationary go are and world

help drive I pay-to-play actually here. think, time world It's And the of the member business. think it. it more and I the to value help only providing as can goes, to more the as just we're starting get in other side you

driving. we're that to prove data have some we Now,

data be capture opportunity. that going So help grows we and down, I more large member that, base the but on come sell to endeavor another think as will these the as to

touched Tom, little it corporate on of sort And bit. a maybe I you for think you think right? If about profitability,

an So, basis, And but that to meaningful. cost pretty higher, although right, a think Is promotional sounds like is go-forward correct? not in on there probably when than it's can that Sunshine right, seasonal fair, can to levels? inflating legacy aspect be. a spend, still than Is that still you there labor improve go-forward used Is is -- labor cost it is that basis? to over of on segment intense, idea -- a about a to little operate then because that it's and margins of get time there's in higher because profit it profitability

and no. yes that's John, a a

feel I think the time. that particularly improve often the we way I best of close. this helped from they those will the in their about we're drivers store, now and our that practices store think so that different. I of to legacy have prior benchmarking some was same-store in the a operations so that back corporate opposite. see some COVID. gone stores on To versus Those think in margins marketing is your those thought continue to the we We margin never over the have And where margin team where be that feel definitely back have forth. the gap in the we corporate think clearly why -- same-store it's three yes which our top outsized see of our are have -- wages acquired to the historically sales seeing performance led and among system -- are those across point and we to with don't So don't year, we'll to XXXX. And and between of said our and margins well part very that levels, certainly we make and we progress is, our I stores Sunshine overall up I that in Sunshine to would you there's of team, Sunshine practices of part system and some bring sales, and that good

mostly the the are Rents Northeast per foot markets But John mostly the generally of structural structurally terms structurally centers different. the where wages in and in like-for-like traffic the markets, and I quality. legacy markets in hour between the Sunshine different differences are per are Southeast think are

case. So improvement would accelerated made closing but for the that acquisition, improvement versus we we've be not sure the the gap never had thought that

Thank you very Okay. much.

You bet.

you. Thank

Warren our ISI. have next from question comes We is Cheng Evercore from open. line your Warren,

questions of a I have Hey, the Perks. couple follow-up on just good morning. last to

doing So And you've your that given year some numbers Shell sort in cross if the math of partnerships. levels engagement your I'm still and right, low in both last around single-digit it gasoline range. very implies the

you So first of benchmarking what percentage Perks today? give it's range can us advantage or your some taking of base of member and about knows

the last or the in partnerships that like changed of year? these new last moved has years some engaged you've the the And second app needle? has things this So have couple in new of

Yes.

new the app point. general. using about is people this member almost So well members it, has definitely the the of it app our as adoption we're disclosed Today, that app are have at who we have as gone and XX% haven't about in of the but members up XX% the percentage

So their perks. what to club that down it it comes they're is the the more in checking more members time into hands the and have they see

app -- that they works what's it. well with thing what engagement really as get how think why there I as there know their the so it And to adoption comes they down is it and eyeballs it's on education

than I anything. it's of process education more So think an

-- figure ago. maybe ramping probably up sort of year Perks ago really a the years just X.X The

out XX.X million so at we So we the of you members of that COVID end if have -- with came XX.X think really them XXXX. didn't of Most it. of

reeducation there. opportunity it's the So of that's

money. tell them this are members easy, save that have point new the can we So because them opportunity we for sale to of

learnings, think engagement. adoption using So to what's drive it's going the really more of is just it and I

on. focus So continue to we that's what

the some What's marketing more of sort partnerships? of is the focused Thanks. this Great. remind can the models? us mechanics And -- these a more these Are are financial there the different of of side? some on you of or flow-through view,

little John a off discount that earlier price are they're Card. generally, And their Yes, some Black Heinbockel's most for all part. But are strictly they're there some the are to a There different. everyday question.

than differentiation Black of ahead. the some a both. -- are Some I and Classic you'll bigger months Card get But memberships of in and regardless more discount are the years think same just Cards see that

Thank you. luck. Great. Good

Thank you.

you. Thank

James. from now question Joe, from open. your comes is our next Altobello Raymond have line We Joe

Thanks. Hey, guys. morning. Good

Good morning.

a the and to this year? what go QX so it around? pull But was obviously I back step down quickly pronounced why to from Just sequential time And this QX. There's in shift forward timing drove number. seasonal guess -- that in placements that to wanted placement

Yes. that. Joe, it's I'll start Tom.

of number but, stores December what permitting thought into due So have that open us timing I have just would that or you spill to franchisee the think of we historically a over and at the or end January.

And they up generally there get be open. just hang why to the equipment can't placed may they some

there So, store quarter in the in QX. opens recognized the but case is that fourth the placement in

that just of the plus bigger the what was it typically a supply it's was further further, was past little and or bit. And we year chain every number have shutdowns And think I you. part certain some delays those This that openings have of Shanghai a that much number. stores whether of minus push year and a

between year spill this and and such year. number openings terms was it in placements outsized or really that into placements this why an -- that's that of sort between gap So carryover a of

So year. predicting here this normalized the at of back year would the we're historical be to end that more levels

that -- in sort we historically. of be to seeing than a that anything just or was get the number that no we've but and chain factor it subsequent to disruptions so quarters seen there causes you're are hopefully not that more much gap QX supply again what until big So, that creates for and the definitely QX different

a asking new sometimes Are a context. that, put on guess, a that I'm larger your you I guys number given is on the members similar compares to the X.X what were in for smaller better it to a hoping trying I'm I'm and Okay. adding something number curious, follow-up base? the And pre-COVID quarter. in even just million net expectations how you

Yeah.

I think I'll Joe that maybe start one.

be member business. of I think our I to think really view say We same-store same-store we high-single our continues sales quarterly I And what don't would get the affirmed growth. XX% the digits. sales outlook growth is, of into

So expectation sales that growth. our into get but that on our in may we same-store number was we what tracking we're reflected for really actual of you thought, don't tell member year. to sort quarterly talk we the It's where that full about

Okay.

I hope that it helps.

it Thank right. Thank All Yeah, you. you. is.

Yeah.

Thank you.

Sharon from from now is Zackfia William Sharon, next our have We question open. your coming line Blair.

Hi. morning. Good

Sharon. morning, Good

really We projecting of time a on outside hard revenue. kind the equipment have

So grow think helpful. color in you expecting the some would I specifically second to there that quarter year-over-year? are be

to in have secondarily, the doing can the or the talk demographic. about changes younger, happen that clubs it's of younger membership that within you're appeal then, to going And to to is change to anything equipment as club kind skews you clubs the any needs else kind whether the or are of

Sure. training and more I as Fair clubs. younger I to the equipment we've enough. This of of on wholly, cardiovascular a because say think functional training things. is partially the but would trend is side driving the component focused not generation circuit is That as was the and training seen well weight it of opposed great.

or cardio four the slightly. slim new builds So and probably retooling months we've remodels last to in five actually started down just the

now has weight areas. designates more square XXX that if a XXX to So and and it training footage of club pieces a had probably functional

looked year study about visits XX%. on a minutes to did club I beginning minutes down compared cardio. were cardio at that the when last XX% member And we on We think it to was

pretty remained all treadmills down. came but cardio the Although, similar, was other it

store So same. the the were visits of -- visits -- but the

little weights So which they're themselves cardio out it's grow training. and And expensive that working than on less and functional with power our stores runs and areas them. else is in floor everything the We've good. a seen

really that wise up So the Frequency the changed. only has that's in is thing overall generation. club seen we've

for working I out work not. the slightly boomers the it believe that's younger out example So think, more actually boomers it's it's more than not that generation or

so what club the -- has So change, it's is in it's equipment more the I think nothing changed. else

saying Sharon chain outsized question was And of and what QX Yeah. timing. was little year QX to there, on a is think this the little exacerbated a to back Joe's to supply reasons. for more I question the piece And or your bit I trickier

provide this get year, I view and we think normally difficulty. for of QX don't but I of the this kind

you thought folks up QX far if think to flat I off. be be about for placements wouldn't to slightly our very too roughly

you. Thank

Okay.

you. Thank

open. Alex Our from Perry next Alex, line America. question now comes of Bank your from is

taking for now Thanks any change Hi. wanted markets? Thanks. opening growth? accelerating about I in new just planning of timing ask mean to that team. Does questions. to especially, a strategy international the on the my of dedicated And sort what that be investing international would you're of you're

several in signed This that plans. XXXX started the in we presence announced is Yes. into I an Actually, And Panama. in have obviously, expand New Zealand Thanks to international growth also Edward. agreement we're getting and for mean, Mexico, Canada, we just the question. as a countries really well. we on Australia

us to meaning we more With it. the a open in wanted regards reactive market, a said to of was certain up in approach strategy someone consider they if it past contacted would

we're the a today US. actually process designated really think out of our outside of the focus on in to team growth accelerating building I

gradually but storage world. of bigger that our up annual make highest once we really in. really penetration is actually entered membership in haven't the an there international market we level the successful out a we been And the have has to this expect international new We've expansion. that the US And in been growth portion before, of team built said hasn't gym that

really judgment-free So our it's our -- with has pleased global how model membership markets. resonating really our environment and we've been been in affordable

access rate of for low around example, penetration is Mexico, in And actually terms XX%. in membership maybe really

the They might So work to affordable. to people that's the gym not out. access just have want

going and we're And we market. after so that that provide

existing grow And to our well. markets continue we'll outside as of

environment. the to forecasting differentiator forecast looking we're those looking at. in when details definition And that Asia we And new a already don't in here price low our when really think then provide I have judgment do it so good in competitors at Europe I terms the also it's space. free there. and where the we to. is think interesting. But also doesn't actually to each to really, ULT a I think, going – that just we're not But opportunity US have a -- that significant competitors we're not comparing we're incumbents in of one a space There's moving like we is incumbent we're have

is that high That's I ask, Perfect. incredibly conversion And helpful. could doing be different just to this think that wanted you membership school year, XX% anything different post with last pass thought you're the on rate? anything conversation the year the there program you're then summer so even was planning impressive but year this better done Thanks. to doing you've that I pretty improve from maybe

Yes.

maybe this year members. of I'd when -- values paying thing tending join peaks on past captured I one think to there and the the guess, I as say first we've when they're would be data

focusing we'll hop when most be So the offers and that's to the on with board. targeting on incentives

think doesn't up the them that do fact I the to them come there for again with join their sign is one have other paying And parent to that in the membership. they when

that last we just us. of of And ramp a for actually So paying year actually should year. as see good us come the is didn't until a the begin you as good we be to this plus up down which members winds September end for as have expect program month

luck Perfect. Best going forward. That’s of helpful.

Thanks. Great.

Thanks, Alex.

Thank you, Alex.

further We on the line. questions have no

that and better the Card from fact increased and through -- thing me heard economic the rates, I the an for brand you are the although, Black we're the fee climate again and is and this cancellations the higher join headwinds with model listen of today past. And important the earnings that on focus to some thank pricing the than performance the you've the Once getting the and QX cost in. member interest phone have growth rejoins and you that to is the operator. construction at think, you, I on to appreciate call. and to resiliency of I annual increased continue most Thank dialing going

us think, work that's trend right members loving the continue is are and I and and out trends good it's important more. to all the most that work out

kind And sustains that as have that's So news. all and deal interest inflation that any time. overcome with we over great of to that should

So thanks everyone. Have a good day.

and you. gentlemen, joining. concludes for this Thank Ladies you today's call. Thank

may now line. disconnect You your