Planet Fitness (PLNT) 9 May 242024 Q1 Earnings call transcript

Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Planet Fitness First Quarter 2024 Earnings Conference Call. [Operator Instructions]

I will now turn the conference over to Stacey Caravella, Vice President of Investor Relations. your begin may you conference. Stacey,

and Thank everyone. morning, you, operator, good

will Planet will Executive Financial Speaking remarks. questions Today's Both live the call being recorded session interim the Officer, available Fitness Q&A during Fitzgerald. call Chief on today's prepared and for be replay. Chief following for Benson; Officer, Tom webcast is be and Craig

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

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

Now will the Craig. to I call turn over

Call. approximately everyone, primarily of Stacey, thank you, and We joining XX.X you, growth. the Earnings and adjusted for XXXX new same-store by first nearly X.X%, million quarter of for XX% sales growth EBITDA the members; with us growth; Thank member ended driven Planet QX Fitness

Our globally. the system opened XX Planet Fitness ended X,XXX quarter new units and locations

I'm Today, X topics. to going address

June new what quarter on increase us joins the in results; pre-pandemic. we CEO, our quarter price; the about historically XXX,XXX was net Keating, quarter highest new The who been approximately members below third, of raise to has the first our faced Classic and XX. the our the for that our decision our exciting second, Colleen first impacted announcement that First, in headwinds expectations net Card growth

January. the including about national to in have the hesitant RSV COVID headlines made cases first especially may places, half with other gyms, to well began that and media public go year infections The as rising as respiratory of of people

there even top search gyms were or In savings-related items. year, the flu the top the January, among This still higher. among month search items is and of Internet items, both are fitness while

soft industry of a an the year. industry brands that the in many noted similar fitness beginning source Additionally, experienced

in also website We had traffic. our double-digit decreases

channels online XX% we fewer of during to Fitness. more people had via our website While visiting joins come to than see Planet our the we continue quarter, join potentially

was basis with on correlates historically quarterly same the join a which Usage, trends, year-over-year.

the of peak down However, in season. of it significantly couple during was January of our the first join weeks

as believe also year effectiveness not we advertising of in this messaging QX was anticipated the joins not to as pricing the factor in forward. to campaign. We markets that well to We inform a include part are last of offers several going to our was strategic our believe in as decision this because net part conducting broadly made our versus strategy resonating nationally our funded We as price-pointed tests of decision lower that contributing due as we portion our advertising. the pricing

we quarter trending that is to campaign, it's upwards assess of been Planet highest in study commissioned a years. and consideration Fitness our the is In first

ads in point have couch join. urgency a lack price created January funded the of off sale the consumers for less However, may and national our to get

relating peers, in not contributes dissimilar as a the such some to well cancels. This To other on a incident peaked far incident gym. of in March, as some Media as believe including nondiscrimination March increase middle which the the YMCA. saw in softness an the softness than brands the balance to isolated has the incident from XX policy and an is of joins decade reaction mentions a quarter longtime of The policy. also the for degree, on took we been in for month derived from lesser regarding Alaska place place in we first industry more

headwinds these in of QX, cover. result XXXX our updating we a which we Tom will faced are guidance to As targets

communicated the during Classic Card, and about reverted each, of a a those price join periods include regardless New additional an price the at for fall, the in sale XXX sale. in the markets started we added kept an York $XX.XX explicit to the the December a saving $XX.XX and to X points $XX national back stores Last test action to dues Now call to in before our pricing expires. We to $XX advertising DMA both with national in a monthly sale tests. where we testing

disciplined We run loss while to April the sale. We these through the continue tests membership. the between higher approach dues best to determine use minimizing data-driven balance of

decided summer average to Based Classic the $XX. only we The price on learnings, change joins. the to with Card most least rate members. new significant of impact the for increase It be effective to unit the our this drove of volumes to the increase will

continue strategies, includes innovation believe amenities. portion of as test our We I different exploring pricing and on good a to promotional focus

To that the system Card Classic migrates the increase. more price. price Black specifics end, the the time price role we'll Tom new the will Classic of tests around on to address Card be Card starting

that Keating April next in announced as will be month. Colleen we Finally, joining us CEO

welcome Board to as Our thrilled to consumer-facing Fitness. process experience search could leading brings operations, be as and hospitality appointment more estate we follows decades in not expertise real and organizations. She over franchise and thorough and X the management well a conducted Planet her by of extensive across brand

transition. eager excited industry join will work Colleen growth, to with an and team get to for to further leader is management both domestically seamless internationally, that a runway and She and closely started. ensure significant had even the she's I

search Now well CFO search. update is on for The a our quick underway.

have the us of and We officially are promising with she will interviewed starts considering process become with June. once candidates. number in involved Colleen a

building new markets, which had months conversations I community at initiatives address off had ago. Finally, week, franchisee including last their our New kicked a in few smaller we opportunity to for conference great annual We clubs the around Orleans.

reduce how at and schedule least the discussed costs ahead before end build also by new of remodel we're units We to of XX% the year.

growth a had our which sense place a to the of which discussions their return about opportunity. I the Other put excitement we serve period growth to am a as to especially in have grateful in led long-term CEO, aspects on a real were role with member opportunity investment my during the new team leadership of as of to number part brand, greater model and store the Planet also company's an initiatives the a shareholders. Fitness Board that even our our interim believe franchisee trajectory. will that look I I appreciation greater returning franchisees, our long-term our and members, a of for to we support growth gained have forward and

Now it to I'll turn Tom. over

Craig. Thanks,

Card get to a this explore well Before plans Classic year. quarter portion increase to like refinancing as of our cover our upcoming I to our results, I'd first our as price debt

further of store we As said we've to initiatives improve already strong store previously, on a and number new our working returns. been economics

growth unveiled in last and the operating Planet reducing of that requirements location. we QX focused primarily year a capital is franchisee franchise Our model new on opening for Fitness

X to of price $XX For $XX our stores different the testing, increase have enhance Classic prices volumes membership. from on Based we stores. for we several different to had to X the unit past results, months, decided those Card average our the groups have further test for

membership Card XXXX, been inflation today's Classic on $XX $XX at based would in about has which since dollars. be priced Our

memberships. to will a As for effect the Craig Classic expand it of effect noted, goes the some margins be $XX time into Classic change Card members Card benefit will to price membership. the continue the joined $XX price only will price members pay new Current for store-level increase will into who membership on duration as fee. monthly for pay It only new of increase this our take will their go after summer, the

Additionally, XX% more members. our members as join than Card of Black

our to Now debt.

forecasted the we X% We have average in which middle tranche. rate rates, our that interest of below refinance $XXX million in subject when market September we on anticipate interest weighted year, XXXX, still of of refinancing a our of would of overall to tranche for debt approximately all due believe that debt overall Based we comes be conditions. this

first our results our XXXX revised quarter to outlook. Now and

new quarter compared my unless X.X% of be will QX increased with QX comments otherwise opened in to being same-store the of year, All corporate to We XXXX same-store sales regarding X.X% noted. We driven growth of XX system-wide growth our Approximately growth. balance was by comparing same-store QX XX. of increase XX% rate performance stores delivered net increased and the first quarter. X.X%. growth member Franchisee sales last sales comp our

Black of XX.X%, an Card points. basis XX increase penetration was

revenue corporate-owned due to primarily to increase across revenue million. For growth franchise royalties, $XXX.X was by revenue. revenue The total in segments. was compared The and XX.X% and the stores was $XXX.X segment fund million quarter, increases increase the driven first new franchise in ad

as the segment was and quarter, average the XX.X% by acquired rate first the driven the well growth X.X%. same-store primarily For stores. which new fewer the decreased and driven as versus increase store from from was revenue sales existing Equipment X.X%, cardio. revenue new by placements up The segment to in as The store as corporate-owned royalty in was well equipment stores, driven strength primarily decrease lower more revenue was by sales equipment new shift to X.X%. franchisee-owned

the down quarter to equipment on a new placements shift the store per-store XX completed this As XX We mix year. we in noted last last compared brings overall quarter, basis. sales

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

of of revenue, $XX.X relates $XX.X sales amounted cost to million. Our to which primarily equipment stores, to cost million the to franchisee-owned compared

million million, for adjusted share we $XX.X connection million $XX.X adjusted EBITDA corporate-owned fund was as income compared margin of adjustment compared and to from our Adjusted adjusted reduction for to the expenses, acquired. $XX.X our well $XX.X as a due $XXX.X $X.X share. on or per mentioned EBITDA with was million $XX.X to increased compared advertising million. Adjusted a new store net stores $X.XX million last incurred call million. Store million XX.X% was diluted $XX.X opened margin relate transition-related that $X.X expense SG&A million and $XX.X Net to expenses XX.X%. expenses. National with to net income $XX.X Adjusted $XX.X CEO was $XX.X million. income which This operation force was quarter million million. includes per was in EBITDA severance-related the segment, earnings in was to SG&A million was primarily for adjustment

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

turning Now balance the to sheet.

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

to XX, shares. costs, used X XXX,XXX financing our X.X%. more a fixed-rate XXXX, $X.X we interest billion rate long-term approximately $XX.X securitized of as than of million consisting XXXX, carries was In Total deferred approximately repurchase tranches debt, that of QX excluding of debt slightly blended March

to ranges choppy current the our outlook, environment press XXXX targets which release on wider operating. updated morning. the updating which this our in moving provided for given We're are that Finally, we providing in we we're

locations. corporate and XXX We continue between stores, which and include franchise expect new to XXX both

We expect to also equipment franchise stores. in and XXX between new continue XXX placements

the continue of to year, For sales make expect we that high total equipment revenue. will XX% reequipped full approximately up segment

that We more similar quarterly by also those it the will COVID. in continue that was XXXX versus year more the X of look impacted to terms expect sales prior this to a as cadence year were for typical

the I sales down strength shift equipment As cardio a basis. noted earlier, to on bring versus overall per-store will more

per the that continued QX, During to will mix store. in we result sales refine slightly lower

maintaining between segment dollars, we growth. X% increase. X%. therefore, now be between expected our We growth will so We are sales equipment same-store X% X% expect margin profit and to to system-wide rate Previously,

by driven noted reduction Craig that is This earlier. the factors

results. year in mentioned the changes to range. full We XXXX I are will earnings to the EBITDA adjusted and Full reflect just income in to to over to targets following the of Adjusted per updated X% diluted fiscal in expect X% now and X% range. X% the grow range. grow to in X% X% the to X% net revenue share represent growth X% adjusted All the grow to range, year increase

the XXXX. expect to back million the approximately in year, XX be we net X of earlier Day approximately at course I Investor at of $XX which the continue million, outstanding of expense our is we the assumes shares continue amount shares the million, We over be of inclusive shared to we repurchase which And our tranche interest to X.X%. November refinanced to expect mentioned

applicable pending necessary, of if later We targets, refinancing anticipated guidance completion any the transaction this update year. will the

to D&A we Lastly, XX% XX% up XX%. to expect to CapEx be between and continue to up approximately be

differentiated changes part our despite and along made the start with Now have market-leading franchisee challenging our position. our model, the brand new we increase, the improve store a price that upcoming believe as year, of and growth economics enhance to we

We attractive system and growth continue that strong generates flow for increased to shareholder free franchise stable be a long-term cash value. highly and sustainable

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

from comes line question of the Your Instructions] BMO. Simeon [Operator first Siegel with

growth was solid particularly of a ex guidance, looked quarter hoping elaborate light like you pretty could it topline just on for in member I a bit lower guys little the equipment. in

been uptick So you've quarter to that? is like the there in that the since or anything churn start raise of seeing anything concern, any

I'm I characterization growth member of disappointment last new that solid, encouraging trying seemed guess the just it below to guess your were the members. I and the X years, in but understand was quarter. the had comps still the you slightly pretty

just I I -- I good equipment thought a So this have guess missed. excluding would pretty quarter, was

So any give color there? you could

then, And of -- the to assumptions does the or Tom, $XX? number any from hike the the include does lift price guidance

to growth, wasn't have quarter, did So in be. we $XXX,XXX. the decent terms member of expected we It it where

earnings outlook. in our we the of our the on things we had some call, And knew we and February, provided we mentioned call when

we what in know think sort of happened I March. didn't what is

The good. And definitely our were policy the significantly and once change media saw part and of up March. March back affected. a of good. of pretty social in Joins blew pretty cancels was the cancels fairly half issue, were in then sort first Joins over we results

The is, news remained rebound, lot going we're but joins a perspective. at on to of just seen good we've the good color not to provide and high level, a but elevated. QX, is have cancels the news provide Now some

really we in therefore, that's and into So our outlook. principally have seen this factored revision latest what

There in QX on were early that some about we things talked January. in

happens most more ones. couple weeks sensitive Our what in other is of than definitely business probably January first of those way to

talked that. January first But I better of then of back we things were definitely half through half as February across getting and So about the the March, described.

back. the the totally a elevated. yes, have cancels pleased have news sure. huge won't And the it's price good question, bounced the we're we're So while is And what never seeing, better that the with have that It's joins impact. second for increase remained

back you year, As it in. with coming it business, factored the the is know, members. have And is to but impact, going in not huge it's only our affecting a new of half it

change, it of good big this made Planet we've never the for as more. deal has of about that. price One we're that part its benefits is a life, going But highlight members much and price for to

those middle or so to And their we doesn't pricing usage benefit of business change have ought of in what a that the subscription-based get people of the on services you.

to well. to start really So as we're going trigger that

Sorry to off. cut you

price going I That's to if to [indiscernible] was going grand keep their you the to I of ask, in saw test was what ask. there? the product any want where in people original

of good of read about into going tested. We're read as saw know, to results it long sort same roll for the we the metrics, was in a long the Simeon, all different But and of a Yes. those time, when that seeing out time we the feel really you because we it thoroughly definitely not tests it how get all -- test. all for

from the of Stifel. comes question line with next Your Chris O'Cull

during season probability ensure years. has the lower Year's the campaigns Eve wondering past few just with of forward? in New higher the issues buying important Craig, a or what's marketing media membership the success doing company had to company going I'm

a and you as Well, that. we other Black as benefits about offer minute just We've And or the use never which thing, membership are Chris, whether then had us clubs it's the friend. identity of have, strategy with for a an bring we our we to past, different about aggressively opportunities we as example. price because brand that talked some kind a perks Card chasing of marketing that in really will with the talked we've life will know, help not ago,

about context talk in that the don't of brand don't and stuff, our we put identity. We

now had the So We're much to XX. issues high past LAF we we pretty for people with. have with in be agencies used the We down system. different work to as entire fixed. been as That's X

out. seems have For to X now it and to year, we settled X, went

think front. I So doing on we're that better

to challenge Planet for get price X membership real but One with join, our about stay. just offering to think to other to get the market a the is Fitness of the is I branding them to talk effort the to real beyond and that reasons. hitting benefits is them

kill of would great. be we so birds stone, And could that with if those both one

called lot the and to not higher factors were everything on weather incident. guys that have the from the confident out joins joins affecting did membership the during how a You just with new different test that quarter, of the you bathroom the testing the I'm mean pricing markets the effect you prices? this situations trends in I curious are

did And a never just as It's Tom. it's a us. we clarify, for thankfully, cite question. to typically good -- it's big Chris, impact weather business, not subscription a

as never Some things. usually of the you of one know, other thing. things. combination And a it's It's

what So would feel were we the through to highlight seen very things took larger month. thought results we what decision that your as change the those we were with prior it. To tried impact that saw a price consistent here the that the in sort to the results we about we of question the we team had good because price, test,

So what isolated or was saw it more geographic comprehensive. more not essentially, impact, was we broad, an

that was we way So in the the the expected moved and good in of that results feel saw the result months previous the we the that test. fact about

particular this we the of incident, is behind us, results. with affecting concern no So test veracity which hope the

of other know, control against test to group the stuff. of it. group as group want types group the always I up and thing very but mention kind is clubs, in control the probably a the make you Chris, location, We And match is, to have similar to that test of the

but be changes which little other where time it others said can see have out like and between Tom measure, of because including a can't. controls may things, things busier than be gets we weather, pricing we or So periods didn't to they get people there able anomalies built-in to

pretty of the from data thorough And so in test the the test. and controlling do not involved with we a job group that's another

next Your the with question Heinbockel Partners. John of from Guggenheim line comes

to don't start but stuff behind worst. think, -- to media you I with about -- want paraphrase, seen I the having the not wanted said you, social I that something Tom, having but

not it's getting I So assumption not is it's guess -- worse. your

of that I'm issue stay to like that I address guess, that you address then is And more And me will guidance is same. right? the kind it that. into Correct that, without if not do Your seems to drawing the improve. do will How built do how wrong, right? you it it? it assumption very difficult attention

is John, to that. it was would on sure the It talked but make year. really was died impact. the an what And talking why just definitely providing Yes, Hopefully, I'm of what I and ranges, is say social not mentions it I clear, broad kind an it's had media scale, election was about wider about down. certainly we

are There choppier certainly coming swirl months into things been first than that it's and a year. expected the around few we

in So And outlook. of bit is we the or factored wider that to mind broadened we're the our what some range seeing provided to we into is I ramps little down up that range. the it's a that think that, ensure why with that degree

it rest how of of pass thinking terms I'll about we're In question, the to Craig. your

we've work be good that authorities the job so of Yes, in including think some done. a needed federal through to of navigating this whole done incident, involving I

and -- I here all of hats give so for and side. a navigate off this my take hopefully the franchisees And to through better of difficult our employees period to want time getting don't to

right? money the you'll run run I maybe a regard them run XX, new you then becomes at you made with been Okay. do guess, on, $XX XX, has no other pricing, Do And right, with to down. decision them XX, So at XX still the promotions. question

to Card want And then I Black referenced you right? don't promote also that. So think you

whether Or something So a up about you like that's in past, $X? study thinking $X that really on different? you are or the had you take

if We're to possible. going amenity different of going of also rejigger of it, Yes. and pricing. a Card couple portions some test to the Black versions with We're of try the

to test on Black put from be Card Black may time Card. iterations here to do there different a few We being So of time. able sales

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think and to know out the variety And that. point just undefined and the in as how this we I is And possible. that of price it up price what We want to system more time. see do you'll we is going rolls forward at $XX use shift

I John, be undefined, for it. promotionally going to doing going to don't we're And do want Yes. say reasons, really it's signal competitive to would we're we what when and

our So as good to way are that things learn want about we test feel finding it. -- pushed, again, accretive. and And into continue Craig to but has we

as And years. price Card know, take was of we last Black couple The of 'XX. one every the May up you

we Classic here So there's options as move the we think, Card. to certainly, test different room

Megan from of Stanley. Our comes with Morgan next question the Alexander line

of There's comments about member savings. We've been the come on messages did just the particularly low-end heard of lot bad a about back to talk you growth. consumer. from looking consumer, guess a lot I a wanted to for I consumer companies. the

hearing noise? from how maybe I membership perspective, you've a environment what So do a bit the in with broader had what some we're you about reconcile guess, just seen market the consumer understanding you've

before. member Z school card about how about an then generations was White than you joins seems do member the more there summer think how Card to Gen joins past summer prices the and have credit that yesterday article raising typically the into debt typically in at months And the high when journal

how perspective we school past consumer high So it pressuring you're just a period? head trying from to into thinking be as the understand there's that whether summer perhaps low-end and about might things anything just there

start that. I'll Tom. it's Megan,

So broadly, things. all see the we same think I

definitely interest recently, you -- about squeezed mortgage multiple consumer think I a were lower. when up if is with are a years of rates heightened inflation, little were payments from rates, got mortgage the higher X/X I -- read

results and across standpoint deviation. income we very little our joins different there's When from cancels look -- income brackets at household several brackets,

we're end like those or across the not the losing you low quite end. blanket it's gaining high they're a small When could them, numbers. -- So you all throw It's really tight. very index

probably join think teams that we broader so benefit. The hundred many That's then thousand high school it sense. fact bit free. subsequently a people doing in pass, we We're really And So summer it's to again. is a great. get we our love brand few program. that to exposes we the for think It that the

I a repeatedly, total, life. straight summer this living our not now school it, brand start will already This year, high and they're is of a fourth But great running our healthier doing be help thing in for to kids, think pass. third if to

that pricing specifically think or about the value for we're school heck change and pass. talking it's we this summer we affects a how So talked high year's whether the think timing again, we of about year's haven't a group that still next $XX. affects here, group, But that

all or point, other pricing to not out spots, can Craig's other the benefits benefits trying our the that XX-second messages we're convey. emphasizing probably sometimes in crowd out to And drown the all

drive demand, we it's just rest it's that more the offer. should So better about but increase, the balancing will not which by we about that message, price, think value

X in I year, things, add don't But just gotten think I'd Megan. should. member better every physically allow give putting had summer this that if we've feel value mentally. ways we credit free the to X That's and months we're we going we And of to pass the million last $XX marketplace to to into get worth X we're million price year. teams like

to been And putting of a to who've is Planet for way the challenges may highlight, both deal lives think, as started so they to and with money its its young exercise help inviting through a I that school time, world period or where their outside it's by in have. difficult lives important use Fitness physical mental them people

the reason any other like change months it in. important is think takes Tom we out time while the mentioned we price, last price rolling as I in XXXX, the summer May the and a did And it that's thing because do slower to to burn was

us and we the use time before a we allows period It time to side for the get come of year us. through into months slower the that of so And get back change out new other as the period for pricing. generally burn-in busier

helpful. the 'XX just Can it. quarter relative how the That's a you year. on maintained bit You the in your talk Got follow-up. little And unit about then came the a open as maybe perhaps to expectations? and

overall I update bit takes in maybe placement confidence rates an and that puts Maybe just real think can us you a little outlook? on estate give your how the are higher. availability and level that looks and

is impact perhaps pricing, this is But development year? that story to as have for your a the franchisees that well? should line expect that isn't you going do or an this 'XX outlook -- start on to bottom topline the of do results Or more impact the And something year?

the all I we've things to remarks, couldn't the opening conference think New as different outlook, consideration about talk I mentioned their came into take my in in from back Orleans. price I We done changes franchisees there. just

weren't But them. was for was clearly, the so of one that mind privy top And that to things of they that.

of And about spent on kind that cutting of model made new and a cost progress the growth lot so we and we've some the of stuff. time talking

able the down box. a of half can in available They to fact, markets with in what's XX,XXX that smaller recently. ] fairly year. be of clubs space amount came this foot square is And [ out a going CBRE sustain statistic, said think be to taken I

that be of some to conference, us. difficult But think New on I the of Orleans much and in challenges. very everybody those with in we're the Clearly, mitigate ways for I as it that was are was pleased, some trying script be tone made challenging opening to to of there. all pretty running times. all, the I tenor So over been all retailers again, And based there's through comments continues sort

franchisees And the and time of I a spend a to both in lot with different got one-on-one setting. group

So and company very to now. but about great is it I we still good work think I have feel there's opportunities. right where this really for do sure,

comes question the JPMorgan. Rahul next Krotthapalli of from Your line with

to consolidation should the on is And rates lot has in sentiment the under pricing decision narrative something have but convention be interest a to Certainly, in of concerns? your we control. that system. here. there it's specific the targeted real And continued alleviate How to leverage been key, here help franchise for leverage compete some marketing. concern not follow-up This the are franchises better And a will Tom, transactions the the have on given Craig estate opportunities? these seeing the or franchise your is out I of sense large

Sure.

are know, now so franchisees. because, I Group, that have that have as X,XXX. reason under fortunate you and too, the Dunkin' say we is of I'm XXX We And we part the

and get So with different you conference some can all face really Orleans New get actions. to a in time these

expected couple the where in least the rates by sophisticated to we have been be last of years. of have we So operators the in opposite they interest system. in at Clearly, headed really now, direction added

not most of But huge leverage. capital That our amounts sophisticated, sufficient have not and happening. of operators is are

to able their So problems. lot without sustain of a business they're

where had deal taking through the we've help with to never has And founded XXXX. in we again, looking about new company clubs changes different inflation, this at the price out been good really really growth I to as times and with done difficult far with things them of that so feel having are model which of as costs

not And and really enough old mortgage that now to on and and franchisees changes we But XX% day. and inflation that. home in my back with square ball in we've remodels with think this keep CapEx reequips has to as to pricing face hit so changes I I'm remember had working a partner company rolling. build-outs this the are our

with at marketing you do to promotions on on also based versus mix? mix, this comments point clean would focusing on slate and local national prior time? the the would revisit the opportunity approaching of price On you a this make call the lot And sense whatnot the take your think

Yes.

addressed messaging the other in be you in way putting we're to So the talked ways Rahul, as that I think about marketing out. well needs as

things. it's franchisees which is look a in and separate think a and the October, I had I, I advertising they met whole first conference, fund. in national fund about NAF advertising the that time talked the local with different LAF So at rejiggering

We it concise but effective. going and they didn't into any cost have time, we that's have campaign so nationally a over get way understand reallocate to do that clearly specifics, to relook we're we the consistent, and can at that branding probably more resources

time, over done. a that shift. start so lot we to think do And I there's will needs to be And

multiunit And Rahul, as marketing new hospitality coming think both Colleen our with and I will shepherd CEO franchise in journey. help that experience

Blair. comes Sharon next William the of question Zackfia from Your from line

going we want outpaced to second of March. moving of And the like I what the year. make subsequently, I rebounding talked lot sure with kind joins? understands happened this but Or are everyone parts having at noise membership? kind of guess you the in it elevated you a joins of quarter Are a arc sounds attrition social in There's sequential to membership. down obviously media see quarter attrition. about looking

I the is question. Sharon, Tom. this appreciate

happen forecast, which driver you primary same-store the what that is As we there. know, we And I to sales, is membership. into we right, know, expect think are say the things again, don't it's and a would on all factored in guide membership, don't our I

member still As typically you is XX-ish sales percent know, of same-store our growth growth.

little predict, difficult quarters a called a while So have a in because bit number and still wider of We cancellations certainly year-on-year. also more range it's improvements seen in had to attrition. a year-on-year definitely down trend positive, consistent with with is and it it's fairly we

QX, was early recent part, think in then more and the days. I flat. was trend in through QX, a similar of it kind back recently, it in in March half it And of more elevated More definitely the

So that's outlook effects same-store how or ripple and our on adjusted other cascading we sales effects the for factored into the metrics. all

I the I it. more think the franchisees this timing mean release take seem why does XX% press like price increase then And in the value. kind just I understand Card call, about looking want consumers increase. odd Classic about of to I on Classic talked a would Card. for It of time you and an on want talk to the

be where curious, also But you regions the going there where are lowest ran you're these tests, competitively, to I'm and anymore. not priced

that? increase? think about messaging So do associated how that you the about you And price with how do think

Sharon, not competition school something. may that of thought us a for it's move if may or sure I'm to also not that what There's been do. people move other we sort do of waiting

$XX, opening $XX in Card the his it's touched Classic $XX since I remarks, worth haven't worth XXXX. Tom around about now. think is $XX said We

And we've price. industry, seen people every in moving

come in not that's is a years. as to long, we anybody time, to long shock are been a going that XX it price for a effect moving So

saw tested rigorously markets again, again we, in positive results. control good so And with it groups and multiple pretty

do is that this right think the to time it. We

the be to and options Card, the which amenities right aggressive end or We look Black change. in and on testing different may have innovating time not at to it's pricing. But also may think we

successful for we're going that. so running OpEx and to And are club. ingredients do a CapEx X

change are it's OpEx that scales in to some recognize whether that. changes going And have of do changes these and of rent on, changes schedules, its all depreciation price its need we in the some in or so and/or changes calculations changed they pay

And Craig's couple a comments. just add Sharon, things to of to maybe

of XX% as who As you know, the people Black members. Card joined join about

any We're the for point are. And promotional get off you have life. those a members in So aren't our that know said, is second new belonged their an people to important XX-ish familiar. what the say gym to of Craig who I'd brand. to percent never trying we're point couch, I back

promotions we're to the types too the away So I and doing walking in not of a day, think back we're but promotions, it's of from a just not abrupt. going JCPenney That's price. messaging and full all of saying the the question

of not I taking think still off the accelerator. changing a just but elements, it's matter our the promotional foot

question next Altobello from Your Joe James. the Raymond of comes from line

level question feedback sure I plenty of you've change. couldn't with on the share I'm the during ahead you test. the but first understand franchisees price gotten of time, $XX The

look that like? does it what than one in for is So $XX since And $XX does lot vary example? has market or geography different it in by been a another, uniform

different level interesting the with pretty demographics, across would again, we able the And that well. groups to markets. the we But board. change were control And test is looked work price to up say Yes. matched to $XX that this across part

spent did And all consideration. so time we we into long a take that Again, on this test.

first tests You and the the April. through that of to fall we way recall, Joe, last the almost set progressed they and August all started

right about do a test front. have like lot to and Orleans, of we the of lot just do relief some can't feedback what talk on we so needing time And but it did -- again, It pricing the And by markets. we them, messaging. seems the the New data again, a right from tell

campaign. second question Very the Okay. advertising helpful. maybe a on And

mentioned issue, highlight which, You Was going it the would a uniform I now guess, forward? you inability effective price, as hoped. as have wasn't changes big to the

Well, it's a factor. the It's factor. not

And so the of that the is first last quarter the than more advertising portion advertising. Xx-ish in national

a it's thing. advertising national element a pricing not. big local did So And have the that did

need creates a just you're we And other brand, to promotion at we successful what the brand reinforcing market. more all be talking But taking So that having not. to be might successful us towards also totally the than we is where be and to -- go having fact targeted stickiness. it. a but that to about message what be Tom's potshots I to get always found have to that bring work point not we about a think benefits be might promotional And more about the a brand back again, I allows there versus price.

And anchored around so always -- and promotion. it's

and can't think a to because, for way of once them brands on you I door this space Colleen this job of XX as mentioned great So her each come market I a a Tom with earlier, in other than going juggled shot. step is the past create benefit more has message. you in to the do She about one with she have simultaneously, long for by do differentiated clearly knows and and

forward looking in. So I'm to her coming

comes the question next from Rakhlenko Cowen. line of Your TD from Max

Great.

you you to the IRRs. plan noted previously does member can basis members remind over the many look these waterfall about how that gyms what the open few us X-point And days? contribute with then growth first And First, years? would like points XXX

about prepandemic combine this So curious, levels? quite in back get does X, franchisees' it And with price what line then IRRs increase this? the to close does when How potentially you compare?

All right, Max.

win award. You the

the Let me on -- so the first one ramp. is

how of terms open. in think stores I So

they think the of part prior talking pre-COVID, outlook that trends we're here, we the So than the we've are is saw early day the we and periods QX news we years. it back definitely of to our in ramps to then and will where see good measure closer through presale much continue one I affecting quite little that not were, And similar but some seen very bit. that subsequently. through aggregate, that ramp in affect Certainly, a about QX

But Craig not the that experience. look to and growth to it reduction a more cost continuing as we're mentioned hopefully, do get in say again, would we XX% somewhere made ahead at the of schedule, build, And that's temporal savings affect between his ways the the to model in prepared new I to moves is members' team remarks in in the nature. there. find X% that cost

made the that. good feel team I has on about progress really So the

believe to know moving get average the a out half adjusting combine on pre-COVID. reequipped and we've gap We mix year. had both IRRs the agreement the back -- made the obligations, more closing we sort all CapEx cardio the changes definitely strength The you of cycles that XX in our in franchise and than us that in from that rest versus to the of recently years, we'll with extending XX

members $XX. to while it -- a pricing takes This the believe for feather at test, in we

there's As help mix to improve membership than more many certainly improvement it over probably so, will testing, IRR. low of saw a which that we when the a we based the model has we the the AUV, that $XX results believe on months year at mid-single-digit or after in

get the -- circumstance, pre-COVID, not get it to that at gap may way back we remaining all may chip depending the not talked away about. it but It the further helps on

XXs, model the the to XXs, IRR low would be recently changes low -- unlevered growth the range. had get more the we're in in in new it So been mid-plus-XX% the might the pre-COVID

close back the to that continuing gap would ways more cost, accretive, reduce get just well. find low to as to which XXs, may we're but be this continue So even the to should not

gyms. competitive helpful. in of they lot growth Got it. the square then almost a have your And But been That's can those you peers seems bit seen to had should speak pretty more the like qualitative. Some footage first HVLP opening. a of A this boxes the of might be environment? your better one little of have are quarter. It a twice significant

curious the driven that part how and XQ? whether have here you're thinking set weakness about of in just may competitive So the

certainly something just so then competition definitely is previously. better It's watch than The bigger today to financed, And forward. going stronger going picture. to be

become for So guys execution curious bigger the how you're forward? might you going this your to are thinking opportunities about a because step up risk own biggest where

definitely Crunch kind pockets Yes, a of aggressive a that question. are good are I pockets, Max, that where of it's our quite a brands, they and both is like in backed and bit bit you're of of geographically Certainly, And have folks. more down PE space stronger franchisees in some are that competitively, think XXXX than there right. others. some and took

it's There don't some of a offer or what whether it, boxes nonintimidating a EOS provide a they cycling do bigger Vasa all or bigger is rooms more pool that and like that lot a the theater, I'd much them have. are say other of classes box some and whole environment. inside

We the the that's apart think sets us still thing rest. from that

doing Some words. but intimidate been never to because it and in in of people go if and kinds you use loud the you. you've kind if going a gym are banging grunting it's is weights things of But there all

can't think really do an others important that's attract. do part that what number we they do and on still of we based the don't So

projection got through probably important come research to about of whether $XX I messaging, some that's the So the think to or on And done. people, to Craig positioning, more based was and the than that's $XX stronger. brand, way back what saying the we're we've the many

the and side. front you've on to to because people parking get what's been, in they're lot never say to door go other Because the the if they're used sure we afraid not

we anxiety, So the still XX%, we're competitors we -- will. still can the after going after be -- our there extent think I we so ease they're think XX%. to don't that Will the more that going

Piper the from from And of comes your Korinne Wolfmeyer line question Sandler. next

could like a update the great? but I'd international internationally we've know to on expansion. provide today, I an little bit first, more be would if that the efforts touch you been focused on on, the efforts, U.S. Spain and

Yes.

[indiscernible] process. market speed as we make So are need to the like our club to speak. going being make in Spanish we the to suitable a the marketplace learning by aggressively forth, as know, lot that help And of and and whole and Spain help in us, we in a part would we're this to learning for Spanish so so order come marketplace. but where get in up. be after on partner own the And more you can made to investment a we tweaks and successful we're

allow done leverage And from look able will us we've be that potentials and made. Spain we've what European investment the at that to then there, other to in to

look forward going of it's the and to system. the we're short-term some and benefits betterment how So pleased learning with to entire pretty

but the QX. Yes. a subsequent and And early sites. it's lot affect our -- we've first And part of reviewing we're hopefully, open been learn of lot looking store to the Craig's -- targeting to we're a QX, point, will we'll openings,

pipeline stages the negotiations. in in some various of have We

the progress we about there. feel good So

now but for? with had there any I the update can you a the of criteria CFO on hiring, before update get CEO progress CFO to on search? any the you looking team new I yet start, what wanted the search? the And provide to is then know is still Great. kind know And with CFO, but CEO she is

internal Yes. in as The already team Colleen external some And started well as to started candidates already interviewing. candidates. coming forward interviewing. we've We've and We helping. identified look

she hopefully slated start Colleen well. -- it So moving. with starts that and be once as XX is June is process to will

maybe more. just one Yes,

candidates we're the Colleen good We from. the still time got inning and the I a a give list and third for some made, will or time probably to about feel that timing. on we've we're in selection transition think she's so. of make arrives, And that short by hopefully, progress based interview

And remarks. back Craig over our like today. turn would to closing for that for Benson I session Q&A concludes call the to

We patience changing think, been very the us and that's that this made Again, well your leadership on positioned much have appreciate with and I today. time based company is, forthcoming. changes

and you look you again soon. thank to talking to want forward I So to

day. the This rest of concludes today's call. conference your Enjoy

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