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Planet Fitness (PLNT) Q2 Earnings Match Estimates, Revenues Lag

·4 min read

Planet Fitness, Inc. PLNT reported second-quarter 2022 results, with earnings meeting the Zacks Consensus Estimate and revenues missing the same. However, the metrics increased on a year-over-year basis.

Following the announcement, shares of the company fell 5.7% during trading hours on Aug 9. Negative investor sentiments were witnessed as the management cited concerns about a challenging operating environment because of lingering COVID impacts and inflationary pressures.

Earnings & Revenue Discussion

During the second quarter, the company reported adjusted earnings per share (EPS) of 38 cents, in line with the Zacks Consensus Estimate. In the prior-year quarter, the company reported adjusted earnings of 21 cents per share.

Planet Fitness, Inc. Price, Consensus and EPS Surprise

 

Planet Fitness, Inc. Price, Consensus and EPS Surprise
Planet Fitness, Inc. Price, Consensus and EPS Surprise

Planet Fitness, Inc. price-consensus-eps-surprise-chart | Planet Fitness, Inc. Quote

 

Quarterly revenues of $224.4 million fell short of the consensus mark of $231 million. However, the top line surged 63.5% from the year-ago quarter’s levels, driven by solid performances in the Franchise, Corporate-owned Stores and Equipment segments. During the quarter under review, system-wide same-store sales increased 13.6% year over year compared with growth of 15.9% reported in the previous quarter.

Total adjusted EBITDA at the end of the second quarter was $89.9 million compared with $55.6 million reported in the year-ago quarter.

Segmental Performance

During second-quarter 2022, Franchise segment revenues were $82.5 million, up 13.3% year over year. The upside was driven by a $6.2 million rise in franchise royalty revenues, a $1.6-million gain in National Advertising Fund ("NAF") revenues and a $1.7-million surge in placement revenues.

EBITDA in the Franchise segment was $54.3 million compared with $51.8 million reported in the prior-year quarter.

The Corporate-owned Stores segment’s second-quarter revenues amounted to $60.9 million compared with $40.6 million reported in the prior-year quarter. The increase can primarily be attributed to a rise in same-store sales and new store openings. The acquisition of 114 stores through the Sunshine Fitness buyout contributed $49.5 million to the segment revenues. The segment’s EBITDA totaled $39.5 million compared with $10.4 million reported in the prior-year quarter.

In the Equipment segment, revenues totaled $40.4 million compared with $23.8 million in the prior-year quarter. The uptick was primarily driven by higher equipment sales to new and existing franchisee-owned stores. EBITDA in the Equipment segment was $10.2 million compared with $5.6 million reported in the prior-year quarter.

Other Financial Details

As of Jun 30, 2022, cash and cash equivalents totaled $383.5 million compared with $471.2 million as of Mar 31, 2022. Long-term debt (net of current maturities) amounted to $1,985.7 million at the end of second-quarter 2022 compared with $1,989.5 million at the prior-quarter end.

2022 Outlook

For 2022, the company continues to expect revenues to increase in the mid-50% range over the 2021 levels. Adjusted EBITDA for 2022 is estimated to rise in the high-50% range, while adjusted net income is anticipated at the low-90% range over the 2021 levels. The company anticipates adjusted EPS to increase in the mid-80% range over the 2021 levels. The metrics are based on the assumption of potential impact from the Sunshine Fitness acquisition and that there is no significant impact of the COVID-19 pandemic.

Zacks Rank & Stocks to Consider

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.

Some better-ranked stocks in the Consumer Discretionary sector are Playa Hotels & Resorts N.V. PLYA, Marriott International, Inc. MAR and Choice Hotels International, Inc. CHH.

Playa Hotels sports a Zacks Rank #1. PLYA has a trailing four-quarter earnings surprise of negative 8.8%, on average. The stock has gained 1.5% in the past year.

The Zacks Consensus Estimate for PLYA’s current financial year sales and EPS indicates an increase of 54.2% and 183.33%, respectively, from the year-ago period’s reported levels.

Marriott carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has increased 15.1% in the past year.

The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 46.1% and 101.6%, respectively, from the year-ago period’s reported levels.

Choice Hotels carries a Zacks Rank #2. CHH has a trailing four-quarter earnings surprise of 11.2%, on average. The stock has declined 5.9% in the past year.

The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 18.1% and 19.4%, respectively, from the year-ago period’s reported levels.


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