Planet Fitness disclosed full-year financial results on Thursday for the first time since becoming a public company. The conference call with analysts gave more insight into Planet Fitness' operations, starting with these notable numbers.
2015 total revenue: $330.5 million.
2015 franchise segment revenue (including commission income): $24.7 million.
2015 corporate-owned stores revenue: $24.7 million.
2015 equipment segment revenue: $56.7 million.
Total clubs at the end of 2015: 1,124.
Planet Fitness Reports Record 2015 Revenue, Projects 2016 Revenue of Up to $365 Million
Planet Fitness CEO Chris Rondeau told investment analysts that Planet Fitness' membership at the end of 2015 was 7.3 million, marking a year-over-year increase of 20 percent.
"Our non-intimidating environment and tremendous value proposition continue to resonate extremely well with the casual and first-time gym user, a large underserved segment of the fitness market," Rondeau told analysts.
Planet Fitness Chief Financial Officer Dorvin Lively noted an average of about 6,500 members per club, but he noted the business has a lot of stores with more than 10,000 members. The company's first two clubs in Canada and one club in Oakland, California, were highlighted as clubs with more than 10,000 members.
The company generates approximately 20 percent of its new members from online registrations, and the premium Black Card membership accounts for 57 percent of total membership, Lively said.
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Planet Fitness expects to open between 210 and 220 new franchised clubs and grow its total revenue to between $355 and $365 million in 2016. Of the new clubs, 15 are expected to open in Canada.
"We want to make sure that we're finding the best locations with our franchisees," Rondeau told analysts. "We have approval rights on all sides, and we turned down a lot of sites frankly because we just don't think it's the right place to put the store. But I think with that thoughtful growth strategy that we've had for the last couple years, that 200 range or so plus extra in Canada that we are referring to, we think that's a good number to shoot for this year."
Rondeau said the current focus is on growth in the United States and in Canada, where he sees a company footprint of potentially 4,000 clubs in the United States and more than 300 clubs in Canada. The company opened its first two clubs in the Dominican Republic in 2015, and Rondeau noted that 98 percent of the Dominican population does not have health memberships.
"That [98 percent] holds pretty true for a lot of parts of Latin America, so I believe there is some good upside there," Rondeau said. "Latin America is probably something that you'll see down the road."
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Increasing brand awareness to drive growth is one part of Planet Fitness' growth strategy, according to multiple filings with the Securities and Exchange Commission.
Franchisees are required to contribute 2 percent of their monthly membership dues to the company's National Advertising Fund (NAF) and spend 7 percent of monthly membership dues on local advertising. The company spent $26 million from the NAF on various marketing campaigns in 2015 and has spent more than $176 million on marketing since 2011.
Those campaigns include branding the 2015 New Year's Eve Party at Times Square in New York (pictured) and sponsoring NBC's 'The Biggest Loser' TV show.
"Those are the type of things that our closest competitor can't even come close to replicating, and that's really the competitive advantage that we have that we need to capitalize on, so I think you'll see a lot of interesting, fun, impactful things in the years to come," Rondeau told analysts.
Planet Fitness faces other low-cost competitors in all of its markets, Rondeau said. He described the strategies of these clubs as one of price matching, not model matching.
"So they're a typical club with heavy free weights catering to the avid exerciser. They just happen to be charging $10 a month, which is great," Rondeau told analysts. "They're more of economy fitness in a lot of cases where they are charging $10 a month, but they are either a smaller club size, or they've got less expensive equipment, or a second-tier or third-tier equipment manufacturer. Where we have big club, nice locker room, nice fitness equipment – the best fitness equipment money can buy. So we're just giving it a lot more value. I always say we're building a $50-a-month club and we just happen to sell it for $10. I think that's one of the true differentiating factors."
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