Planet Fitness Inc., Hampton, New Hampshire, reported first quarter 2020 revenue of $127.2 million, a decrease of $21.6 million (14.5 percent) compared to first quarter 2019, the public company reported this week. This included a system-wide same-store sales increase of 9.8 percent.
“We entered 2020 with very good momentum and the new fiscal year got off to a strong start,” Chris Rondeau, Planet Fitness CEO, said in a media release. “The outbreak of COVID-19 in the U.S. has significantly disrupted our business as well as everyday life.”
The company temporarily closed all Planet Fitness locations in mid-March and took several actions to strengthen its financial liquidity and flexibility, he said. Planet Fitness is working with its franchisees and assessing recommendations from state and local governments and health authorities on plans for safely reopening its clubs.
“While there is still uncertainty about the ultimate impact COVID-19 will have on our industry and the overall economy, I am confident that Planet Fitness will emerge from this period well-positioned to further expand its leadership role in the fitness industry,” Rondeau said in the release.
The biggest impact on the company’s top and bottom line was the deferral of revenue related to monthly membership dues collected in March, before stores closed due to COVID-19, Planet Fitness Chief Financial Officer Tom Fitzgerald said in a call with analysts on May 5. Members will be credited for any membership dues paid for periods when Planet Fitness locations were closed. Because of this, the company deferred $20 million in revenue related to monthly membership dues collected in March before clubs closed--$14.1 million of which was from franchise royalty and $5.9 million of which was from monthly dues at corporate-owned stores. That revenue will be recognized once clubs reopen.
The outbreak of COVID-19 prevented the company from doing planned new and replacement equipment sales during the last few weeks of March. Revenue from the company’s equipment segment decreased $16.8 million (37.4 percent) to $28.2 million from $45 million in the prior year period due to lower equipment sales to new and existing franchisee-owned stores in the first quarter compared to the same period in 2019. The decrease includes $10 million in lower revenue due to COVID-19.
Planet Fitness opened 39 new clubs in the first quarter, which increased the number of Planet Fitness clubs to 2,039 at the end of the quarter.
The revenue by segment included a $7.2 million (11 percent) decrease of franchise segment revenue to $58.5 million compared to $65.8 million in first quarter 2019. This amount does not include $18.7 million of deferred royalty and national advertising fund revenue collected but not recognized as a result of the temporary club closures caused by COVID-19. Franchise segment same-store sales increased by 10 percent.
Corporate-owned club segment revenue increased $2.5 million (6.5 percent) to $40.5 million compared to the same period last year. Same store sales for corporate-owned clubs increased 7.3 percent, driven by higher revenue of $5.5 million from corporate-owned clubs that were opened or acquired since Jan. 1, 2019 but partially offset by lower revenue of $3 million from corporate-owned stores included in the same-store sales. The $40.5 million corporate-owned stores revenue for the first quarter 2020 does not reflect $5.9 million of deferred revenue that was collected but not recognized as a result of temporary club closures from COVID-19.
Net income attributable to Planet Fitness Inc. was $8.6 million compared to net income attributable to the company in first quarter 2019 of $27.4 million.
Net income decreased 67.2 percent to $10.4 million compared to net income of $31.6 million in the prior year period.
Adjusted net income decreased 56 percent to $14.4 million compared to $32.7 million in the prior year period.
Cash and cash equivalents as of March 31, 2020, was $547.5 million.
Adjusted EBITDA decreased 26.6 percent to $46.5 million from $63.4 million in first quarter 2019.
Franchise segment EBITDA decreased $10.6 million (22.4 percent) to $36.7 million.
Corporate-owned stores segment EBITDA decreased $3.6 million (22.9 percent) to $12 million.
Equipment segment EBITDA decreased by $4 million (38.8 percent) to $6.4 million driven by lower equipment sales to new and existing franchisee-owned clubs.
The company declined to offer guidance on 2020 outlook due to the uncertainty from the COVID-19 pandemic.