Planet Fitness Inc (PLNT) Q1 2019 Earnings Call Transcript

PLNT earnings call for the period ending March 31, 2019.

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May 2, 2019 at 11:43PM
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Planet Fitness Inc  (NYSE:PLNT)
Q1 2019 Earnings Call
May. 02, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

My name is Christine, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Planet Fitness First Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Brendon Frey from ICR. You may begin your conference.

Brendon Frey -- Managing Director

Thank you for joining us today to discuss Planet Fitness' first quarter 2019 earnings results. On today's call are Chris Rondeau, Chief Executive Officer; and Dorvin Lively, President and Chief Financial Officer. A copy of today's press release is available on the Investor Relations section of Planet Fitness' website at planetfitness.com.

I would like to remind you that certain statements we will make in this presentation are forward-looking statements. These forward-looking statements reflect Planet Fitness' judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Planet Fitness' business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements included in our first quarter 2019 earnings release, which was furnished to the SEC today on Form 8-K, as well as our filings with the SEC referenced in that disclaimer. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

In addition, the Company may refer to certain adjusted non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today.

With that, I'll turn the call over to Chris Rondeau, Chief Executive Officer of Planet Fitness. Chris?

Chris Rondeau -- Chief Executive Officer

Thank you, Brendon, and thank you, everyone for joining us today. 2019 is off to a very good start. The strong first quarter results that included systemwide same store sales growth of 10.2% and adjusted earnings per share of $0.35, an increase of 29.6% over the prior year period. Our same store sales performance what comes on top of an 11.1% gain we posted last Q1 was primarily volume driven, and approximately 75% of the increase came from net new member growth.

We kicked off Q1 with a bang as the presenting sponsor of Time Square's iconic New Year's Eve celebration watched more than 1 billion viewers worldwide. The impact of this event is far-reaching is a huge contributor to Planet Fitness is remaining number 1 in unaided and aided brand awareness in the fitness category. Thanks to our tremendous marketing machine, which in addition to New Year's Eve runs non-stop throughout the year. The Planet Fitness brand continues to gain momentum and our system continues to expand. Our group of experienced franchisees are bullish on aggressive thoughtful expansion in both new and existing markets, fulfilling our shared mission of bringing non-intimidating affordable and accessible fitness to all. In total, 65 stores, a Q1 Company record of Planet Fitness were opened during first three months of the year. And we ended the first quarter with more than 13.6 million members and 1,806 stores systemwide.

Taking on the topic of expansion, in March, we were excited to announce a collaboration with Kohl's. We initially opened up to 10 Planet Fitness stores adjacent to select Kohl's stores in 2019. Planet Fitness will utilize approximately 20,000 to 25,000 square feet next to each of the select Kohl's stores in various markets throughout the country, with the opportunity for additional locations in the future. This complementary partnership made strategic sense both brands. As we continue to grow, it's a great opportunity for us to secure A sites and introduce shoppers to our welcoming non-intimidating and affordable fitness concept, while simultaneously driving traffic to Kohl's stores. In fact, our research shows that our members tend to fulfill the only need the other club is say nearby for shopping. For example, 76% of our members combine their gym visit with other shopping. 89% of members shop at other retailers within their club shopping center, and 59% do so at least once per week. And 26% of our members reported that they would never visit their club shopping center if Planet Fitness were not located in it. In today's retail landscape, we believe our differentiated approach to fitness continues to drive traffic to our shopping centers across the country, which is why partners like Kohl's and (inaudible) in general are increasingly looking at PF become tenants in their centers.

Turning to our franchisees. In March, we held franchisee meetings in Palm Springs. We conduct these meetings in between our larger conference to ensure we continuing to engage with our franchisees on the various topics, including development, operations, marketing, technology and more. Personally, I believe spending time with our franchisees and providing them an opportunity to share best practices with one another is extremely valuable. I'm continuously inspired by their passion to the brand and our shared commitment to open more stores that improve millions of people's lives. The passion of our system and the strong leadership we have with our franchisees continues to be a significant competitive advantage for us.

Before I close, last week we announced the nationwide rollout for the Teen Summer Challenge initiative in response to our successful pilot program in Hampshire, last summer. The initiative, which allows teenagers from 15 to 18 to workout for free in our clubs nationwide. Officially kicks off on May 15 is runs through September 1. And we will introduce members of Gen Z and their parents to our brand loyalty and affinity.

Teens today are under increasing pressure, succeed academically, socially, badly (ph) growing list responsibilities, both inside and outside the classroom, and become well-rounded members of their community. At Planet Fitness, a healthy active lifestyle should never be a challenge, which is why we're flagging that notion on (inaudible) this summer and giving them a free place to work out in a comfortable Judgement Free Zone. In preparation of the national rollout of this program, we serve teens and their parents about their feelings toward health and wellness. Today's teens are more health conscious than ever before, seeing exercise is a way to improve both their physical and emotional health.

91% of teens agree that they want to stay active and healthy over the summer. Among teens who already workout, 72% said it positively impacts their mental health. And 47% said they believe that it help them focus on school work. And also 47% felt more confident and 37% felt less stress. And perhaps the most interesting when asked all teens how they prefer to spend their time this summer, 36% wished to exercise more or workout more, which is greater than the number of teens who want to spend more time playing video games, which was 27%, browsing social social media which was 16%, and watch TV, which was 16%.

Providing youth a free access to fitness not only addresses an important societal need to help teens get acted to increase their overall health and wellness. We believe it also create opportunity for the brand tomorrow. In summary, it is shaping up to be another year of strong growth for Planet Fitness. We are on pace to open approximately 225 new locations in 2019, and the path of 4,000 stores in the US long-term is becoming clear as both health and wellness (inaudible) trends continue to move in our favor. We are extremely excited about the many growth opportunities that lie ahead. And I know our franchisee groups share our passion and enthusiasm about the future.

With that, I'll now turn the call over to Dorvin.

Dorvin Lively -- President, Chief Financial Officer

Thanks, Chris, and good afternoon, everyone. I'll begin by reviewing the details of our first quarter results and then discuss our full year 2019 outlook. For the first quarter of 2019, total revenue increased 22.7% to a $148.8 million from $121.1 million in the prior year period. Total systemwide same store sales increased 10.2%. From a segment perspective, franchisee same store sales increased 10.3%, and our corporate store same store sales increased 8%.

Approximately 75% of our Q1 comp increase was driven by net member growth with the balance being rate growth. The rate growth was driven by a 70 basis point increase in our Black Card penetration to 60.6%, compared with last year, combined with the $2 increase in Black Card pricing for new joins that was put in place systemwide on October 1, 2017. During the quarter, the increased Black Card pricing drove approximately 240 basis points of the increase in the same store sales. Our franchise segment revenue was $65.8 million, an increase of 20.4% from $54.6 million in the prior year period.

Let me breakdown the drivers for the quarter. Royalty revenue was $44.7 million, which consist of royalties on monthly membership dues and annual membership fees. This compares to royalty revenue of $34.4 million in the same quarter of last year, an increase of 30.1%. This year-over-year increase had three drivers. First, we had 233 more franchise stores compared to the first quarter of last year. Second, as I mentioned, our franchisee owned same store sales increased by 10.3%. And then third, a higher overall average royalty rate. For the first quarter, the average royalty rate was 5.9%, up from 5.4% in the same period, last year, driven by more stores at our current royalty rates, including stores that amended their franchise agreements.

Next, our franchise and other fees were $5.4 million, compared to $5.7 million in the prior year period. These are fees received from online new member sign ups, fees paid to us for new franchise agreements and area development agreements, fees received from processing dues to our point-of-sale system, as well as the transfer fee of the existing agreements. Also within franchise segment revenue is our placement revenue, which was $2.8 million in the first quarter compared with $2.1 million a year ago. These are fees we received for assembly and placement of equipment sales to our franchisee owned stores.

Our commission income, which are commissions from third-party preferred vendor arrangements and equipment commissions for international new store openings was $1 million, compared with $2 million a year ago. Finally, national advertising fund revenue was $11.8 million, compared to $10.5 million in the prior year. Our corporate-owned stores segment revenue increased 16.3% to $38 million from $32.7 million in the prior year period. The $5.3 million increase was driven by the four franchise stores in Colorado that we acquired in August, the four corporate stores we opened in late 2018, and corporate owned same store sales increase of 8%, as well as increased annual fee revenue.

Turning to our equipment segment, revenue increased by $11 million, or 32.3% to $45 million from $34 million. The increase was driven by higher new store equipment placements and higher replacement equipment sales to existing franchise-owned stores versus a year ago.

Our cost of revenue, which primarily relates to direct cost of equipment sales to new and existing franchise-owned stores amounted to $34.5 million, compared to $26.5 million a year ago, an increase of 30.1%, which was driven by the increase in equipment sales during the quarter. Store operation expenses, which are associated with our corporate-owned stores increased to $20.9 million, compared to $18.4 million a year ago. The increase was driven by cost associated with the eight stores opened and acquired since the first quarter of last year.

SG&A for the quarter was $18.2 million, compared to $17.6 million a year ago. This increase was primarily related to incremental payroll to support our growing franchise operations and infrastructure, as well as higher variable and equity compensation. This was partially offset by lower expenses associated with the timing of our franchisee conference, which was held in Q1 last year, but will take place in Q3 of this year. National advertising fund expense was $11.8 million, offsetting the aforementioned NAF revenue we generated in the quarter.

Our operating income increased 36.7% to $53.2 million for the quarter, compared to operating income of $38.9 million in the prior year period, while operating margins increased approximately 370 basis points to 35.7% in the first quarter of this year.

Our GAAP effective tax rate for the first quarter was 14.3%, compared to 22.7% in the prior year period. The effective tax rate for the three months ended March 31, 2019 deferred from the US federal statutory rate of 21%, primarily due to the recognition of approximately $3.8 million of a deferred tax benefit from the remeasurement of deferred tax assets and liabilities, and income attributable to non-controlling interest, that is not subject to US federal and state taxes.

As we've stated before, because of the income attributable to the non-controlling interest and not tax at the Planet Fitness corporate level, and appropriate adjusted income tax rate would be approximately 26.6%. On a GAAP basis for the first quarter 2019, net income attributable to Planet Fitness, Inc. was $27.4 million, or $0.32 per diluted share compared to net income attributable to Planet Fitness, Inc. of $19.9 million, or $0.23 per diluted share in the prior year period. Net income was $31.6 million, compared to $23.5 million a year ago.

On an adjusted basis, net income was $32.7 million, or $0.35 per diluted share, an increase of 24.9%, compared with $26.2 million, or $0.27 per diluted share in the prior year period. Adjusted net income has been adjusted to exclude non-recurring expenses that reflect a normalized tax rate of 26.6% and 26.3% for the first quarter in 2019 and 2018, respectively. We have provided a reconciliation of adjusted net income to GAAP net income in today's earnings release.

Adjusted EBITDA, which is defined as net income before interest taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that are not considered in the evaluation of ongoing operating performance, increased 29.9% to $63.4 million from $48.8 million in the prior year period. A reconciliation of adjusted EBITDA to GAAP net income can also be found in the earnings release.

By segment, our franchise segment EBITDA increased 29.1% to $47.4 million, driven by royalties received from additional franchisee-owned stores not included in the same-store sales base, and an increase in franchise-owned same store sales of 10.3%, as well as a higher overall average royalty rate. Our franchise-segment adjusted EBITDA margins increased by approximately 420 basis points to 72.1% with a portion of the improvement driven by the aforementioned reduction in expenses associated with the timing of our franchisee conference. Corporate-owned store segment EBITDA increased 27.9% to $15.6 million, primarily driven by the 8% increase in corporate same store sales, higher annual fees and the four franchise stores we acquired in August.

Our corporate store segment adjusted EBITDA margins increased by approximately 240 basis points to 41.3%. Our equipment segment EBITDA increased 39.3% to $10.4 million, driven by higher new store equipment placements and higher replacement equipment sales to existing franchisee-owned stores versus a year ago. Our equipment segment adjusted EBITDA margins increased by approximately 120 basis points to 23.1%.

Now, turning to the balance sheet. As of March, 31, 2019, we had cash and cash equivalents of $336 million, compared to a $127.1 million on the same date, last year, an increase of 164.2%. The Company completed its accelerated share repurchase agreement on April 30, 2019, which resulted in an approximate incremental 525,000 shares to be repurchased and retired during the second quarter of this year. This was an addition to the 4.6 million shares retired during Q4 of last year that was previously disclosed.

At the end of the first quarter, approximately $158 million remained of the $500 million share repurchase plan that the Board approved last August. Total long-term debt excluding deferred financing cost was $1.2 billion at March 31, 2019, consisting solely of our whole business securitization , which includes $572 million of four-year notes due in September of 2022, with a fixed interest rate of 4.262% and $622 million of seven-year notes due in September of 2025, with an interest rate of 4.666%.

Now, to our full year outlook. For the year ended December 31, 2019, we still expect revenue to increase approximately 15% over 2018 levels, driven by same store sales growth in the high-single digits, and the sale and placement of equipment at approximately 225 new stores. With respect to profitability, we still expect adjusted EBITDA to grow approximately 20%, adjusted net income to grow approximately 18%, with diluted earnings per share increasing approximately 25%.

I'll now turn the call back to the operator for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Your first question comes from the line of Oliver Chen from Cowen and Company. Your line is open.

Oliver Chen -- Cowen and Company -- Analyst

Hi. Congrats on a great quarter. You had double-digit comp momentum and you're guiding toward high-single digit comp and that compares ease throughout the year. Just -- I was curious about what helped to form your guidance given the momentum. And how are you thinking about how the older vintage stores are comping, and thoughts around making sure you optimize churn as well. Thank you.

Dorvin Lively -- President, Chief Financial Officer

Thanks, Oliver. This is Doron. We guided to high-single digits, and we talked about the impact on same store sales in the quarter with respect to both an increase in Black Card penetration, as well as then the impact of the pricing on a year-over-year basis, which was -- the pricing impact was about 240 basis points. We've talked in the past, I think, late last year and then at year-end in terms of where we think pricing will kind of end up for the year. It's going to gradually continue to decline as we cycle over more quarters.

I think on a full year basis, we're probably going to be in the 150, -- 150 plus basis points range full year. So you will see that start to wane more and more, or at least based on what we know today quarter-by-quarter. I would say in terms of overall store performance kind of the waterfall we've talked about in the past, no significant changes in the way that our business operates. If you look at -- we tend to call mature stores being stores that are call it four years or older, so they've been in comp for three years. And that kind of waterfall metrics is pretty similar, let's just say in the last six, eight quarters or so.

If you go back in history, they -- I think you guys will probably remember that historically three, four, five years ago, you will see the older stores more in kind of a flat, maybe 2%, 3% kind of comp range. I've stated publicly over the last year or so that, that the overall retention of members is slightly improved. I think the size and scale of our marketing budget has grown. Those stores tend to be more in the two to four, three to five range these days. And then the brand new stores in comp a year or two in operation kind of in that 40% range or so. And then the second year comp more in that kind of 15 -- 15% plus range. So that's not much of a significant change from the past. So we still -- we feel comfortable in that high-single digit range on a full year basis.

Oliver Chen -- Cowen and Company -- Analyst

Thank you. And Chris, on both the marketing front and the digital front, what are your thoughts on the mobile app and the improvements you've made there? Anything we could -- we should focus on or look forward to? Also as you continue to innovate in the discipline of marketing, and what are some things you're considering just to continue to move the needle forward on initiatives and opportunities to drive continued awareness?

Chris Rondeau -- Chief Executive Officer

Social marketing. On the marketing front, we did come up some new Black Card digital marketing and Black Card digital in TV marketing,so we have (inaudible) Black Card. And typically we've always focused on almost solely White Cards that we did test in Black Card marketing stuff, which is turned out pretty decent for us. Digital front is as normal. We have increased it this year and last year compared to years past as we continue to drive that NAF, which will be about --- National Ad Fund this year will be about $225 million, up from about $150 million last year. As we add more members, as we keep talking about the marketing machine, that marketing budget continues to grow.

On the app, as I mentioned before, we will be rolling out the app this quarter, looks like June. It'll be a soft rollout at first market-by-market. And then -- but really by Q3 will be a full rollout across the system issue wide, but will be a slow rollout starting June. And really you will see, -- it will look different, but you will see is much functionality -- little bit function, more functionality than the current app. But what it really does is, we're taking that in-house from an off the shelf third-party customer that we use for it that we have really zero flexibility on how to scale it as far as partnerships and content, and so forth. So this would be kind of really gives us the plumbing all from the background and then we can start doing partnerships and add content, and be able to give more value, I guess, really to the member in the club and out of the club, quite frankly.

So I look forward to having that flexibility and as we talk to partners in the future. And couple of key features there will be the new app, which I think will be really need is, right now, we have no way to really -- for member to refer a friend, come in and try the club for a day. So that'll be a new feature in the app that our members can now just invite one of their friends to come workout and we can instantly be shooting their friends, the email, with the guess pass as well as the opportunity for White Card member to simply upgrade their membership on the app, which is a simple easy task that should already be there honestly and it's not there. So that could be a good thing for us as well that a member could literally upgrade the membership on the app.

Oliver Chen -- Cowen and Company -- Analyst

That's very helpful. Thank you and best regards.

Chris Rondeau -- Chief Executive Officer

Thank you, Oliver.

Dorvin Lively -- President, Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of John Heinbockel from Guggenheim Securities. Your line is open.

John Heinbockel -- Guggenheim Securities -- Analyst

So guys, I'm wondering, do you think the business will become-a number of sign ups become a slightly less seasonal and skewed to the first quarter for a variety of reasons, right, either free Teen Summer or your own marketing plans. Do you think that happens and we actually get some stronger sign ups in two, three and four versus where we've been historically?

Chris Rondeau -- Chief Executive Officer

It's interesting you asked that question, because what -- I think as times have changed over, not even just a year or two, just even the last probably 10 years, I think and as more -- the fitness becomes more mainstream, I believe that you'll see, and I think what we've seen is less of a New Year's Eve being be called action to workout, and it's more of a -- as we see volumes of growth, and as I mentioned in the past, we've had July's last few years that have really surprised us in member growth. So I think as millennials and Gen Z as we've talked about (inaudible) you see less of that giant spike right after New Year's Eve. And we've had great summers in second, third, fourth quarter. So I think you'll see in the years ahead that it'll be just when the demand is there, it's there. It' not about a one-night call to action.

As far as the Teen Summer Challenge, yes, that will kick off this month, on May 15. And as I'm sure, most or if not all that have been on the call we've had tremendous response. I mean, I -- even it's really on I can't we go -- over 1,200 outlets have picked up the story already. And we haven't gotten into our really big kick off and launch on May 15, which will be around a lot more media. So I couldn't be more pleased with that initiative. And that I think will come down and really help us in the future and in years ahead even.

John Heinbockel -- Guggenheim Securities -- Analyst

And then as a follow-up to that, what's your -- first year here, but what's your thought on marketing impetus for Free Teens Summer, like the first year, more kind of what you got New Hampshire with kind of governors calling me out, is there more of a shift in the marketing spend may be around the May-June timeframe? How do you -- how you're going to get the word out, more word of mouth or more spend?

Chris Rondeau -- Chief Executive Officer

I would say we're -- in nationwide, we're more launching it how we did in New Hampshire with the governors and TV presence, PR around that. And then -- but we are going to test some additional tactics in New Hampshire, as we -- now we have a baseline New Hampshire for last year, so additional tactics this year in New Hampshire to see how that works, and then we can -- my plan longer term, it should be in every summer for deal honestly if all goes well. So -- but yes, I think it's a great opportunity. And as I've mentioned the past, I mean, out of that 2,500 kids in New Hampshire that activated, and 2,000 of those came from homes that the parents weren't members yet and that's going to come in and sign the parents -- sign the kids up. So it's really great exposure, not even the teens, but even their parents.

John Heinbockel -- Guggenheim Securities -- Analyst

Okay. Thank you.

Chris Rondeau -- Chief Executive Officer

Very welcome. Thank you.

Dorvin Lively -- President, Chief Financial Officer

Thanks, John.

Operator

Your next question comes from the line of Jonathan Komp from Baird. Your line is open.

Jonathan Komp -- Baird -- Analyst

(technical difficulty) reequipment revenue as a percent of the total equipment or just the amount overall?

Chris Rondeau -- Chief Executive Officer

Hey, John, you were on mute, I think there for a second. Can you repeat that again?

Jonathan Komp -- Baird -- Analyst

Yes. Sorry about that. And hopefully you can hear me. The replacement or reequipment revenue, did you give the amount that was in the quarter, just for the reequipment piece?

Dorvin Lively -- President, Chief Financial Officer

Yes. I did not, but it was 35% for the quarter. And we said back when we gave the full-year guidance for the year, we expected it to be just shy of 50% of the -- for the year. We still believe that's going to be kind of in that range on a full-year basis.

Jonathan Komp -- Baird -- Analyst

Okay. So should -- any other color around shaping of that, I mean that implies a pretty big pickup, the next few quarters?

Dorvin Lively -- President, Chief Financial Officer

Well, I think that in terms of the -- it's basically a percent of the total revenue, and you look at the new equipment sales in this quarter as well as in the full-year guidance implied that we reiterated on the call. Summer month also I've talked about this in the past, that it tend to do more kind of in that time period of the year because it's less busy in the clubs. So you'll see it, I mean we do some reequip business every quarter, but on a percentage basis you're typically going to see it more in the -- kind of the summer months.

Jonathan Komp -- Baird -- Analyst

Okay, great. And then just related to the unit development outlook for new units, I know you had the strong first quarter. Any color generally what you're hearing from franchisees and the appetite and just maybe more color on what's driving the strength there, and then maybe if you had any color on how the second quarter might play out?

Dorvin Lively -- President, Chief Financial Officer

Yes. I think that when we sat back and kind of compare our business today, our franchisees businesses that we -- our real estate development construction teams work with, you go back four or five years ago, usually there's a franchisee and maybe one other person that was playing the roles of COOs in real estate, construction, development et cetera. Now, as we have bigger groups, particularly the private equity groups, and then some of our other still franchisee-owned group are quite large as well, they really invested in all areas frankly of their functional teams, be a CFO to COO to CMOs in ops and real estate.

I think that when you get to bit to have a pretty big operation like that, you don't want to cramp all your shores into one year -- I'm sorry, into one quarter because the execution and getting those stores up and operating and running, the execution, that's critical. And then at the same time, you can't open a store and then start working on the next one in terms of real estate development et cetera.

So I think what we're seeing now with a lot of our groups is that, with the teams they have employed, the sophistication of the teams they have employed and then working with our teams that we've enlarged over the last couple of years or so to assist franchisees, you see more quality sites being submitted quite frankly, and sites that multi-franchisees, and we have -- had our eyeballs on a couple of times. So we feel good about that.

In terms of the cadence kind of question, we talked about that it would be front half loaded. We still believe, based on our insights today, we believe that's the case. We obviously have more insight into the next three-four months or so. Typically it's about a five-six month lead time when you start negotiating the lease, get it signed. And it's typically three months or so to get it opened, once you kind of get it turned over from the landlord, all depending on the quality and the turnover the box.

So as we've done in the past, we'll release Q2 in late July or the first part of August. We'll have a lot more insight into the balance of the year than because of just the activity that normally takes place for Q3 and Q4 activity. But we reiterated our guidance which is very similar to where we were last year, but consistent with the direction we said that we'd be more front half loaded than back half loaded this year.

Jonathan Komp -- Baird -- Analyst

Okay, great. And just a last one if I could sneak it in. I know you don't guide quarterly, but when you look at the first quarter, comps and member sign ups, any color on how it performed versus your plan, and then does that change your confidence at-all in the full-year targets that you iterated? Thanks.

Dorvin Lively -- President, Chief Financial Officer

Yes. Thanks, John. Just a couple of comments I'd make. I'd say that we were pretty consistent with our plan, both top line and bottom line. In terms of how -- back to my previous comment of equipment sales, the placement and timing of equipment can drive the revenue changes, if you will, from quarter-to-quarter. So we came in pretty much on plan on the top line and bottom line, and as well as comps. And so that gives us -- gave us, the confidence then to then reiterate our full-year guidance that we put out back in February.

Jonathan Komp -- Baird -- Analyst

Okay. Thank you.

Dorvin Lively -- President, Chief Financial Officer

Thanks, John.

Chris Rondeau -- Chief Executive Officer

Thanks, John.

Operator

Your next question comes from the line of Dave King from Roth Capital Partners. Your line is open.

Dorvin Lively -- President, Chief Financial Officer

It's basically the same, Andrew, between White Card and our Black Card, and it's always been going back in years of history. So no significant difference between the two.

Dave King -- Roth Capital Partners -- Analyst

Great, that's helpful and then just a follow-up to what extent have any of your current members churned off at any point in time. And do you have with that percentage might be?

Dorvin Lively -- President, Chief Financial Officer

Yes. So what -- we've talked about how we think about our business model and who we're going after. So we're introducing the masses to fitness. And as you probably know the statistics about -- only about 20% of the population in the US belong to a gym per -- also the industry organization. And we really go after the 80% whereas frankly, a lot of our competition just go after the -- and try to trade back and forth between the competitors. And in fact, close to 40% of our members that join have never been a member of a gym before in their lives. So as we continue to open stores and have more penetration within markets, we're getting closer and closer to some of those people that are in the 80%, and either quite frankly have never been a member of a gym or maybe haven't worked out since they were in college.

And so we look at just throwing a lot of people into that funnel and to introduce them to our brand and fitness in the non-intimidating environment that is really what our brand's all about. And a lot of people don't understand that the intimidation factor is just a huge element for particularly people that have never been a member before and they want to give it a try. And working out is hard. It's hard work. So some people are not going to stick with it. And so what we do is, we look what happens after a member has joined Planet and been with us for 12 months. So then what happens after that? And we believe that we've got them to join the club, we've had some consistency of them being a member for a while now and try to turn them into a lifer. The cancellation rate after 12 months is a very little bit by seasonality et cetera, but it's kind of in that 1.5% to 2.5% per month range. And it's been pretty consistent over the last couple of years or so.

Dave King -- Roth Capital Partners -- Analyst

Great, that's helpful. Thanks for taking my questions.

Dorvin Lively -- President, Chief Financial Officer

Yes, welcome.

Chris Rondeau -- Chief Executive Officer

Thanks, Andrew.

Operator

Your next question comes from the line of Jag Rosic from Bank of America. Your line is open.

Jag Rosic -- Bank of America -- Analyst

Hi. Good afternoon. Thanks for taking my questions.

Chris Rondeau -- Chief Executive Officer

All right. Hi, Jag.

Jag Rosic -- Bank of America -- Analyst

Hi. Can you talk a little bit more about the new initiative with Halls? What stood out about Halls that made you choose that retailer versus, maybe, some others? And then, do you see other opportunities longer term to pursue other partnerships with other retailers?

Chris Rondeau -- Chief Executive Officer

Yes. We've done quite a few business close in the past as well as other retailers, even (inaudible) have done some that they were downsizing. I think they should have been more proactive with their right-sizing initiative, so they looking at their portfolio had next to some of theirs and kind of reached out. So that's how the conversation started. So it definitely, I think, will open doors up with more, in the future, as more retailers decide to rightsize their boxes.

The other thing (inaudible) which is interesting is, we're also -- it's a much bigger, I think, it turned into a much bigger partnership than just strictly real estate, which is going to be great for us. Yes, they want to work together from a marketing initiative. And in fact we're working on getting (inaudible) their rewards customers and their members get discounts, or their employees get discounts at our stores and our members deal there, our members get a shopping week for discount at their stores. So it's a great partnership and I think it will turn into more things in the future as well.

Jag Rosic -- Bank of America -- Analyst

Great. And then just in terms of pricing, how do you think about essentially increasing Black Card pricing more longer term? The Black Card penetration keeps going up, even though you increased the pricing two years ago. Do you see additional pricing power there? And then how have the competitors that have -- historically had similar pricing, have they responded to your Black Card increases?

Chris Rondeau -- Chief Executive Officer

Yes. I'd say that it seems that they've followed us, which is interesting as far as the pricing. But we originally did the increase from that $19.99 price point to $21.99 back October of '17 was it. And it was -- that was strictly based on reciprocity, which happens to be the most used perk of the Black Card. And we started a decade ago, we had 100 stores and here we started, we made change. I think we had probably 1,300, 1,400. So if you look at today we're -- even today we're about 30% -- at 30% more basis after we've been tested it. So I think based on reciprocity alone, I think, something we should revisit every year, couple of years, three years whatever, how much and when is a different topic of testing and what the elasticity is just based on that perk alone. But it does beg the question, reciprocity alone could drive some pricing around that.

Outside of that, reciprocity piece, we're constantly looking up ways of driving more value for the members. Well, inside those Black Card spa areas, is there a better massage bed that we could put in there or red light or something like that, that would drive more usage and more demand, or, like we mentioned, we talked of the app earlier, is there more functionality with the app where we did some consumer studies where a lot of the members are looking for is, we had to collect their data from the cardio, for example. So by the time they hit the front on their way out, they have their mileage, their pace, their speed, their calories burnt on their app, and how it compares to last week or last year. So could that be a Black Card perk that they get their data, they could be able to look at that and tick their workouts going forward. So I believe we constantly look at other ways to drive value to the members to make it a Black Card perk, which should again could drive more acquisition or price or both. So it's definitely something that we're very focused on.

Jag Rosic -- Bank of America -- Analyst

Great. Thank you.

Chris Rondeau -- Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Peter Keith from Piper Jaffray. Your line is open.

Unidentified Participant -- -- Analyst

Hi. Good afternoon. It's actually (inaudible) on for Peter. Thanks for taking my question. I just wanted to follow-up on the Teen Summer program. It seems that's very compelling and great when introduced Genzymes to the brand. Do you have a target for a number of teams your opening have signed up this year? And related booking at last year, what percent of teams or parents of teams who sign up for that program ended up becoming full members afterward? Thank you.

Chris Rondeau -- Chief Executive Officer

Yes. We weren't -- in New Hampshire we've got 2,500 teams and that was on about 18 stores, so they can extrapolate some of that volume we could do nationwide. I guess the only difference there is the density of New Hampshire is much less, so I'm hoping for a much better turn on that if you look extrapolate those numbers on the 1,800 stores we have opened today.

On the parent themselves, we had some joined even right after the ending of we have already so parents joined after that program. But this year now that we've learned a lot more for from it we're getting a lot more, I guess, focus on (inaudible) sort of get their email addresses, and addresses to build the market opportunities for both the teenagers, as well as the parent. So I think we'll be a much more creative this year on how we move forward with the capture of those going forward.

Unidentified Participant -- -- Analyst

All right, that's for the color.

Chris Rondeau -- Chief Executive Officer

Yes. Thank you.

Operator

Your next question comes from the line of Brandon Sonnemaker from JPMorgan. Your line is open.

Brandon Sonnemaker -- JPMorgan -- Analyst

Yes. Thanks, guys. This is Brandon on for John. I think, I believe that gym with less than 8,000 square feet was tested recently. Could you discuss that experience versus a typical 20,000 square foot gym and are different size boxes, changing the way the company thinks about their 4,000 unit kind of potential target in the US?

Chris Rondeau -- Chief Executive Officer

Yes. We did just open one of this in Texas, for example. It was actually very successful for us. Although we believe and even the franchisee believes should be probably more in that 10,000, 12,000 square foot range. So the real -- right customer experience, it's a nice customer experience, but you do -- you get to a point where is the Black Card expiry is really nice is, it could be, is the lockers really as large they should be and is the equipment selection have enough variety of that should be.

So I think that 10,000 to 12,000 is quite a better number. And that's more of a small market, which is -- that when there was in a market that, typically we had been in the future. And we're still really validating how small -- is small, how small we can go as far as the density of population is concern. But in those markets like that one for example it is -- that is really a club in a market that really is in the 4,000 number. So although still investigating what the potential there is that will be upside.

Brandon Sonnemaker -- JPMorgan -- Analyst

And then if I could just circle back on the pricing question. I think you've talked around the past potentially when you reach 2,000 stores you consider an additional price increase. Is that, call it mid 2020 timeline still the right deal at timeline you're thinking about and what that -- what could that price increase look like?

Chris Rondeau -- Chief Executive Officer

Yes, I mean I think it's all up to testing, I don't think -- I still think the lower we can keep both memberships, the more volume we can do and the more penetration, we don't want to get over our skis and be in the high '20s for example. And you also -- a $10 membership really is -- really what drives a lot of demand and get people out of the couch back to governance point almost 40% (inaudible) their life. And that's why we really pound the $10 as much as we do to get people really curious walk through that door. And even though we have 60% acquisition of Black Card, which is great thinking they want to pay $10 and they walk up paying in $21.99. I think if we have too much of a spread between that $10 and call it $29, I don't think you have that kind of conversion. I think you have to be careful, you get too much of a spread there. But I think it's the -- to look for a dollar to, I don't think it's out of the question. So nothing really concrete today, but it's something we constantly look at.

Brandon Sonnemaker -- JPMorgan -- Analyst

Great. Thanks guys.

Chris Rondeau -- Chief Executive Officer

Yes. Thank you.

Operator

Your last question comes from line of Brennan Matthews from Berenberg. Your line is open.

Brennan Matthews -- Berenberg -- Analyst

Hi. Thank you for taking my question. I just wanted to ask about Mexico. I think you had a location there for just over a year now. I mean how has that performed relative to your expectation, and any update on maybe opening some more stores there or maybe any other countries you've gotten interest and our thinking about?

Chris Rondeau -- Chief Executive Officer

Sure. Yes, we had the one store opened in the city rail side of Monterrey. Well, that's in like call it a middle income area and what we're testing now we're looking to do probably open another two or three later this year in different demographic areas to see if that works everywhere like it does here in the States. We have clubs in Manhattan and we have clubs in Oakland, California and here in New Hampshire, so its' very -- it works in very diverse markets compared to the other.

So once we did those open will get allow to size Mexico, if can work everywhere or not to determine the full market potential in Mexico before we have a real strong game plan on a quicker rollout. But we'll will have two, three open later this year, and then size it from there. But there club perform great opened on day one with 5,000 members, which we would say in the past in the States we opened with about 1,200 to 1,500 so that club just went crazy from day one, not unlike Panama, then just as well. So the Hispanic markets have done very well for us. So -- but for now, really focused on Mexico, get that off the ground and running before we really focus on any other big countries.

Brennan Matthews -- Berenberg -- Analyst

Okay. Thank you so much.

Chris Rondeau -- Chief Executive Officer

You're welcome.

Operator

There are no further questions at this time. Mr. Chris Rondeau, I turn the call back over to you.

Chris Rondeau -- Chief Executive Officer

Thank you. Thanks everybody for joining us today Me and Dorvin. We had a great first quarter and great openings, another record quarter for us on top of a record openings last year 230. So I look forward to our 225 openings this year and strong same store sales. And see some challenges really exciting forward -- look forward reporting later on that this summer. Thank you. Have a good evening.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 49 minutes

Call participants:

Brendon Frey -- Managing Director

Chris Rondeau -- Chief Executive Officer

Dorvin Lively -- President, Chief Financial Officer

Oliver Chen -- Cowen and Company -- Analyst

John Heinbockel -- Guggenheim Securities -- Analyst

Jonathan Komp -- Baird -- Analyst

Dave King -- Roth Capital Partners -- Analyst

Jag Rosic -- Bank of America -- Analyst

Unidentified Participant -- -- Analyst

Brandon Sonnemaker -- JPMorgan -- Analyst

Brennan Matthews -- Berenberg -- Analyst

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