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Planet Fitness, Inc. (PLNT - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, both the metrics increased on a year-over-year basis.
Although the quarterly results reflected solid member growth, amplified new store construction costs and interest rate expenses have induced the company in lowering its 2023 outlook, especially for placements of equipment in new franchisee stores and near-term store growth.
Following the announcement, shares of PLNT declined 6.1% on Aug 3. The investor’s sentiments are likely to have been hurt due to the company’s lowered guidance.
Earnings & Revenue Discussion
During the second quarter, Planet Fitness reported adjusted earnings per share (EPS) of 65 cents, surpassing the Zacks Consensus Estimate of 54 cents by 20.4%. In the prior-year quarter, the company reported an adjusted EPS of 38 cents.
Planet Fitness, Inc. Price, Consensus and EPS Surprise
Quarterly revenues of $286.5 million topped the consensus mark of $249 million by 15.1%. Furthermore, the top line improved 27.6% from the year-ago quarter’s levels, driven by solid performances in all the company’s segments as well as system-wide same store sales growth. During the quarter under review, system-wide same-store sales increased 8.7% year over year.
Adjusted EBITDA was $118.9 million, compared with $89.1 million reported in the year-ago quarter.
Segmental Performance
Franchise: In the quarter, this segment’s revenues were $98.8 million, up 19.7% from the prior year quarter. Our model predicted this segment’s revenues to increase 12.7% to $93 million year over year.
The upside was driven by rises of $8.1 million, $3.4 million, $2.9 million and $1.1 million in franchise royalty revenues, National Advertising Fund revenues, equipment placement revenues and franchise and other fees, respectively.
EBITDA in the Franchise segment was $66.1 million, compared with $54.3 million reported in the prior-year quarter.
Corporate-owned Stores: Revenues of this segment amounted to $113.8 million, up 12.1% from the reported value of $101.5 million in the year-ago quarter. For this segment’s revenues, our anticipated value was $119.2 million, up 17.4% year over year. The figure was comparatively higher than the reported value.
The uptick can primarily be attributed to an increase of 10.2% in corporate-owned store same-store sales and additional $5.2 million from new store openings since Apr 1, 2022. The acquisition of four stores in Florida also contributed to the segment’s revenues.
EBITDA totaled $48.7 million, compared with $39.5 million reported in the prior-year quarter.
Equipment: In this segment, revenues totaled $73.9 million, up 82.6% year over year. We expected revenues to be $42.1 million from this segment, indicating 4.2% year-over-year growth.
The segment’s revenue growth was attributed to $33.7 million of higher equipment sales to existing franchisee-owned stores in the quarter.
EBITDA was $17.1 million, compared with $10.2 million reported in the year-ago quarter.
Other Financial Details
As of Jun 30, 2023, cash and cash equivalents totaled $236.1 million, compared with $409.8 million as of Dec 31, 2022. Long-term debt (net of current maturities) amounted to $1.97 billion on par with the value reported in Dec 31, 2022.
Updated 2023 Outlook
Planet Fitness now expects revenues to increase approximately 12% compared to the previous expected range of 13-14%.
Adjusted EBITDA is now estimated to increase approximately 17% (previously expected 17-18%), while adjusted net income is anticipated to increase nearly 30% (previously expected growth range of 30-33%). Adjusted EPS is projected to increase approximately 34%, compared with the previously expected range of 33-36%.
PLNT anticipates adjusted shares outstanding to be approximately 89 million (previously expected 89.5 million), which includes 1.7 million (previously anticipated 1 million) shares repurchase through Jun 30, 2023.
The company now expects new equipment placements of approximately 140 in franchisee-owned locations, compared with the prior expectation of 160. Also, system-wide new stores are now expected to open in approximately 160 locations, rather than 175 locations stated in the last quarter.
Yet, system-wide same store sales are expected to be in the high single-digit percentage range.
The metrics are based on the assumption of no significant supply-chain disruptions.
MGM Resorts International (MGM - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the third consecutive quarter. Moreover, the top and bottom lines increased on a year-over-year basis.
MGM’s upside was primarily driven by growth in business volume and travel activity, primarily at MGM China and Las Vegas Strip Resorts.
Caesars Entertainment, Inc. (CZR - Free Report) reported solid second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Despite a tough year-over-year comparison, CZR benefited from strong leisure and casino demand in Las Vegas and solid digital segment performance. Also, improved marketing capabilities and capital projects delivered solid returns.
Boyd Gaming Corporation (BYD - Free Report) reported second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus mark for the 13th straight quarter. Also, the top and bottom lines increased on a year-over-year basis.
BYD’s quarterly results benefited from online gaming and Sky River Casino.
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Planet Fitness (PLNT) Q2 Earnings & Revenues Top, View Updated
Planet Fitness, Inc. (PLNT - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, both the metrics increased on a year-over-year basis.
Although the quarterly results reflected solid member growth, amplified new store construction costs and interest rate expenses have induced the company in lowering its 2023 outlook, especially for placements of equipment in new franchisee stores and near-term store growth.
Following the announcement, shares of PLNT declined 6.1% on Aug 3. The investor’s sentiments are likely to have been hurt due to the company’s lowered guidance.
Earnings & Revenue Discussion
During the second quarter, Planet Fitness reported adjusted earnings per share (EPS) of 65 cents, surpassing the Zacks Consensus Estimate of 54 cents by 20.4%. In the prior-year quarter, the company reported an adjusted EPS of 38 cents.
Planet Fitness, Inc. Price, Consensus and EPS Surprise
Planet Fitness, Inc. price-consensus-eps-surprise-chart | Planet Fitness, Inc. Quote
Quarterly revenues of $286.5 million topped the consensus mark of $249 million by 15.1%. Furthermore, the top line improved 27.6% from the year-ago quarter’s levels, driven by solid performances in all the company’s segments as well as system-wide same store sales growth. During the quarter under review, system-wide same-store sales increased 8.7% year over year.
Adjusted EBITDA was $118.9 million, compared with $89.1 million reported in the year-ago quarter.
Segmental Performance
Franchise: In the quarter, this segment’s revenues were $98.8 million, up 19.7% from the prior year quarter. Our model predicted this segment’s revenues to increase 12.7% to $93 million year over year.
The upside was driven by rises of $8.1 million, $3.4 million, $2.9 million and $1.1 million in franchise royalty revenues, National Advertising Fund revenues, equipment placement revenues and franchise and other fees, respectively.
EBITDA in the Franchise segment was $66.1 million, compared with $54.3 million reported in the prior-year quarter.
Corporate-owned Stores: Revenues of this segment amounted to $113.8 million, up 12.1% from the reported value of $101.5 million in the year-ago quarter. For this segment’s revenues, our anticipated value was $119.2 million, up 17.4% year over year. The figure was comparatively higher than the reported value.
The uptick can primarily be attributed to an increase of 10.2% in corporate-owned store same-store sales and additional $5.2 million from new store openings since Apr 1, 2022. The acquisition of four stores in Florida also contributed to the segment’s revenues.
EBITDA totaled $48.7 million, compared with $39.5 million reported in the prior-year quarter.
Equipment: In this segment, revenues totaled $73.9 million, up 82.6% year over year. We expected revenues to be $42.1 million from this segment, indicating 4.2% year-over-year growth.
The segment’s revenue growth was attributed to $33.7 million of higher equipment sales to existing franchisee-owned stores in the quarter.
EBITDA was $17.1 million, compared with $10.2 million reported in the year-ago quarter.
Other Financial Details
As of Jun 30, 2023, cash and cash equivalents totaled $236.1 million, compared with $409.8 million as of Dec 31, 2022. Long-term debt (net of current maturities) amounted to $1.97 billion on par with the value reported in Dec 31, 2022.
Updated 2023 Outlook
Planet Fitness now expects revenues to increase approximately 12% compared to the previous expected range of 13-14%.
Adjusted EBITDA is now estimated to increase approximately 17% (previously expected 17-18%), while adjusted net income is anticipated to increase nearly 30% (previously expected growth range of 30-33%). Adjusted EPS is projected to increase approximately 34%, compared with the previously expected range of 33-36%.
PLNT anticipates adjusted shares outstanding to be approximately 89 million (previously expected 89.5 million), which includes 1.7 million (previously anticipated 1 million) shares repurchase through Jun 30, 2023.
The company now expects new equipment placements of approximately 140 in franchisee-owned locations, compared with the prior expectation of 160. Also, system-wide new stores are now expected to open in approximately 160 locations, rather than 175 locations stated in the last quarter.
Yet, system-wide same store sales are expected to be in the high single-digit percentage range.
The metrics are based on the assumption of no significant supply-chain disruptions.
Zacks Rank
Planet Fitness currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Consumer Discretionary Releases
MGM Resorts International (MGM - Free Report) reported impressive second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Both metrics surpassed the consensus estimate for the third consecutive quarter. Moreover, the top and bottom lines increased on a year-over-year basis.
MGM’s upside was primarily driven by growth in business volume and travel activity, primarily at MGM China and Las Vegas Strip Resorts.
Caesars Entertainment, Inc. (CZR - Free Report) reported solid second-quarter 2023 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis.
Despite a tough year-over-year comparison, CZR benefited from strong leisure and casino demand in Las Vegas and solid digital segment performance. Also, improved marketing capabilities and capital projects delivered solid returns.
Boyd Gaming Corporation (BYD - Free Report) reported second-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Both metrics surpassed the consensus mark for the 13th straight quarter. Also, the top and bottom lines increased on a year-over-year basis.
BYD’s quarterly results benefited from online gaming and Sky River Casino.