Planet Fitness to Accelerate Store Openings

Planet Fitness (PLNT -1.18%) reported second-quarter financial results on Aug. 6. The gym franchiser is enjoying solid increases in sales and profits, prompting it to boost its growth forecast for 2019. 

Planet Fitness results: The raw numbers

Data source: Planet Fitness.

What happened with Planet Fitness this quarter?

Members are flocking to the company's gyms. It added approximately 400,000 net new members during the second quarter. That brought its member count to more than 14 million, representing a 16% year-over-year increase. 

"Planet Fitness' judgment-free affordable approach to fitness continues to resonate with consumers," CEO Chris Rondeau said during a conference call with analysts.

In response, Planet Fitness is furthering its nationwide expansion. Franchisees opened 53 new gyms in the quarter, bringing the company's total store count to 1,859.

Along with its aggressive expansion, sales at existing Planet Fitness locations continue to grow rapidly. Systemwide same-store sales rose 8.8% in the second quarter.

Notably, its gyms are proving popular with younger folks. Approximately 900,000 teenagers have already joined its Teen Summer Challenge program, which allows anyone between 15 and 18 years of age to use its gyms in the U.S. and Canada for free from May 15 through Sept. 1. 

"Not only have we introduced members of Gen Z to our brand, we believe we have also made a meaningful impact on making teens healthier this summer at a time when teens' physical activity significantly declines due to decreased access to organized sports and fitness," Rondeau said. "Providing youth with free access to fitness not only helps teens to get active and increase their overall health and wellness; we believe it is also a great opportunity for the long term to build brand loyalty and affinity with this demographic."

Planet Fitness is helping teenagers be more active over the summer. Image source: Getty Images.

In all, revenue climbed 29.3% year over year to $181.7 million.

Moreover, profitability continues to improve. Adjusted earnings before interest, taxes, amortization, and depreciation (EBITDA) jumped 31.1% to $76.5 million. Adjusted (non-GAAP) net income increased 26.6% to $42 million. And adjusted earnings per share -- which benefited from share repurchases -- leapt 32.4% to $0.45.

Looking forward

Based on these strong results, Planet Fitness raised its full-year sales and earnings forecast. Management's guidance now includes:

• Total revenue growth of approximately 18%, up from prior guidance of 15%. 
• Adjusted net income growth of 20%, up from 18%.
• Adjusted EPS growth of 26%, up from 25%.

The company also boosted its target for store openings to between 250 and 260, up from 225.

"We are very pleased with our second-quarter performance, particularly the significant increase in profitability and robust number of new store openings," Rondeau said. "Our group of experienced and well-capitalized franchisees continue to successfully execute their development plans, which along with favorable real estate trends, is leading to an acceleration in unit growth."