On November 7, 2024, Planet Fitness Inc (PLNT, Financial) released its 8-K filing detailing its financial results for the third quarter of 2024. The company, a leading franchisor and operator of fitness centers, reported a notable increase in revenue and earnings, surpassing analyst estimates. Planet Fitness operates through three segments: Franchise, Corporate-owned stores, and Equipment, with the majority of its revenue generated from Corporate-owned stores.
Financial Performance and Strategic Highlights
Planet Fitness Inc (PLNT, Financial) reported a 5.3% increase in total revenue, reaching $292.2 million, exceeding the analyst estimate of $285.87 million. The company's net income attributable to Planet Fitness was $42.0 million, or $0.50 per diluted share, surpassing the estimated earnings per share of $0.46. This performance underscores the company's strategic focus on expanding its club network and enhancing member experience.
The company achieved a system-wide same club sales growth of 4.3% and opened 21 new clubs during the quarter, bringing the total to 2,637 clubs globally. The increase in revenue was driven by a 13.1% rise in the Corporate-owned clubs segment, which contributed $128.1 million to the total revenue.
Segment Analysis and Financial Metrics
The Franchise segment saw a 4.3% increase in revenue to $102.4 million, primarily due to higher royalty revenue and new club openings. However, the Equipment segment experienced a 6.7% decline in revenue to $61.7 million, attributed to lower equipment sales to new franchisee-owned clubs.
Adjusted EBITDA rose by 10% to $123.1 million, reflecting the company's operational efficiency and cost management. The increase in Adjusted EBITDA was supported by growth in both the Franchise and Corporate-owned clubs segments.
Balance Sheet and Cash Flow Insights
Planet Fitness reported cash and marketable securities totaling $530.7 million, with cash and cash equivalents of $298.8 million as of September 30, 2024. The company's strong cash position supports its strategic initiatives, including a new $500 million share repurchase program.
Net cash provided by operating activities was $294.7 million for the nine months ended September 30, 2024, highlighting the company's robust cash generation capabilities. This financial strength enables Planet Fitness to invest in growth opportunities and return capital to shareholders.
Outlook and Strategic Initiatives
Planet Fitness has raised its 2024 revenue and Adjusted EBITDA outlook, reflecting confidence in its growth strategy. The company plans to open approximately 140 to 150 new clubs and increase system-wide same club sales by 4% to 5% over 2023 results. The recent price increase of the Classic Card membership to $15 for new members is expected to enhance revenue streams.
“We delivered solid results in the quarter, including more than 5 percent revenue growth, approximately 3 percent net income growth and approximately 10 percent Adjusted EBITDA growth, and are raising our outlook for certain key financial targets,” said Colleen Keating, Chief Executive Officer.
Planet Fitness's strategic focus on redefining its brand, enhancing member experience, and accelerating club openings positions the company for sustained growth in the competitive fitness industry. The company's financial achievements and strategic initiatives underscore its commitment to delivering long-term value to shareholders.
Explore the complete 8-K earnings release (here) from Planet Fitness Inc for further details.
