Planet Fitness (NYSE:PLNT) hits fourth-quarter sales goals
Stock story –
Inclusive gym franchise company (NYSE:PLNT) reported better-than-expected results, with fourth-quarter 2023 revenue up 1.4% year-over-year to $285.1 million. Non-GAAP earnings per share were $0.60, an improvement from earnings of $0.53 per share in the prior year period.
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Planet Fitness (PLNT) Q4 2023 Highlights:
- Revenue: $285.1 million vs. analyst estimates of $282.2 million (1% beat)
- EPS (non-GAAP): $0.60 (3.5% beat) versus analyst expectations of $0.58
- free cash flow $11.98 million, down 82.9% QoQ
- Gross profit (GAAP): 56.8%, up from 53.3% in the same period last year
- Same store sales 7.7% increase compared to previous year
- Market capitalization: $5.63 billion
“In 2023, we recognized the changes in the macroeconomic environment that have occurred since the pandemic and proactively developed a new growth model to drive long-term sustainable store growth. Planet Fitness’ new growth model as a franchise location gives franchisees more flexibility to build their store portfolio for years to come. We will deliver,” Interim Chief Executive Officer Craig Benson said.
Founded by two brothers who purchased a distressed gym, Planet Fitness (NYSE:PLNT) is a gym franchise that caters to casual fitness users by offering a friendly and inclusive atmosphere.
Leisure Facilities Leisure Facilities Companies often sell experiences rather than tangible goods, and over the past decade, consumer spending has slowly shifted from “things” to “things.” Leisure facilities are looking to make a profit, but due to the industry’s intense competition and capital concentration, they need to innovate to do so.
Revenue Growth A company’s long-term performance can give a signal about the quality of its business. Any company may have a strong quarter or two, but many enduring companies have consolidated years of growth. Planet Fitness’ annualized revenue growth over the past five years was 13.3%, which is decent for a consumer discretionary business. Within consumer discretion, product cycles can be short and revenues can be driven by rapidly changing trends. Therefore, we also track short-term performance. Planet Fitness’s annualized revenue growth of 35.1% over the past two years is above the five-year trend, suggesting some encouraging signs.
You can take a deeper look into a company’s revenue dynamics by analyzing same-store sales, which shows how much revenue its existing stores generate. Over the past two years, Planet Fitness’ same-store sales have increased an average of 10.2% year-over-year. This figure is lower than its revenue growth, so we can see that the company’s sales are benefiting from the opening of new locations.
For the quarter, Planet Fitness reported reasonable year-over-year revenue growth of 1.4%, and its $285.1 million in revenue beat Wall Street expectations by 1%. Looking ahead, Wall Street expects sales to rise 7.4% over the next 12 months, faster than this quarter.
Cash is king. If you’ve been following StockStory for a while, you know that we focus on free cash flow. Why do you ask? We believe that ultimately cash is most important and accounting profits cannot be used to pay bills.
Over the past two years, Planet Fitness has demonstrated strong cash profitability, giving it an advantage over its competitors and providing cash on hand for emergencies while having the option to reinvest or return capital to investors. I am. The company’s free cash flow margin averages 17.7%, which is very good for a consumer discretionary business.
Planet Fitness’ free cash flow for the fourth quarter was $11.98 million, representing a 4.2% profit margin and a decrease of 19.4% from the year-ago period. Analysts expect Planet Fitness’s cash profitability to decline over the next year. Their consensus estimate suggests LTM free cash flow margin of 18.1% will decline to 16.9%.
Key takeaways from Planet Fitness’ fourth quarter results
It’s encouraging to see that Planet Fitness narrowly beat analysts’ revenue estimates this quarter due to better-than-expected new gym openings (77 vs. 69 expected). However, that boost was offset by lower same-store sales (7.7% growth versus expected 8.3% growth). In terms of profitability, we are pleased that adjusted EBITDA and EPS exceeded Wall Street expectations.
Looking ahead, Planet Fitness missed its full-year 2024 revenue and EPS estimates as it focuses on rolling out new growth models to its franchisees. The company also increased its total number of gyms in the U.S. to 5,000 from the 4,000 it announced during its 2015 IPO.
Overall, it was a mixed quarter for Planet Fitness. The company fell 2.1% on the earnings call and is currently trading at $64.5 per share.
