Planet Fitness, Inc. [PLNT] Filings

10-Q 1 plnt-20240630.htm 10-Q plnt-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to ______________

Commission file number: 001-37534

PLANET FITNESS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						38-3942097
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

4 Liberty Lane West, Hampton, NH 03842

(Address of Principal Executive Offices and Zip Code)

(603) 750-0001

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.0001 Par Value	PLNT	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of August 2, 2024 there were 84,578,839 shares of the Registrant’s Class A Common Stock, par value $0.0001 per share, outstanding and 588,207 shares of the Registrant’s Class B Common Stock, par value $0.0001 per share, outstanding.

PLANET FITNESS, INC.

TABLE OF CONTENTS

Page

Cautionary Note Regarding Forward-Looking Statements

PART I – FINANCIAL INFORMATION

ITEM 1.

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2024 and December 31, 2023

Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Changes in Equity (Unaudited) for the Three and Six Months Ended June 30, 2024 and 2023

Notes to Condensed Consolidated Financial Statements (Unaudited)

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

ITEM 4.

Controls and Procedures

PART II – OTHER INFORMATION

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 3.

Defaults Upon Senior Securities

ITEM 4.

Mine Safety Disclosures

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “goal,” “plan,” “prospect,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “contemplate,” “future,” “strategy” and the negative thereof and other similar words or expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:

•future financial position;

•business strategy;

•budgets, projected costs and plans;

•future industry growth;

•financing sources;

•potential return of capital initiatives;

•the impact of litigation, government inquiries and investigations; and

•all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, risks and uncertainties associated with the following:

•Our success depends substantially on the value of our brand, which could be materially and adversely affected by the high level of competition in the health and fitness industry, our ability to anticipate and satisfy consumer preferences, shifting views of health and fitness and our ability to obtain and retain high-profile strategic partnership arrangements.

•Our and our franchisees’ stores may be unable to attract and retain members, which would materially and adversely affect our business, results of operations and financial condition.

•Our intellectual property rights, including trademarks, trade names, copyrights and trade dress, may be infringed, misappropriated or challenged by others.

•We and our franchisees rely heavily on information systems, including the use of email marketing, mobile application and social media, and any material failure, interruption or weakness may prevent us from effectively operating our business, damage our reputation or subject us to potential fines or other penalties.

•If we fail to properly maintain the confidentiality and integrity of our data, including member credit card, debit card, bank account information and other personally identifiable information, our reputation and business could be materially and adversely affected.

•The occurrence of cyber incidents, or a deficiency in cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of confidential information, and/or damage to our employee and business relationships and reputation, all of which could harm our brand and our business.

•If we fail to successfully implement our growth strategy, which includes new store development by existing and new franchisees, our ability to increase our revenues and operating profits could be adversely affected.

•Our planned growth and changes in the industry could place strains on our management, employees, information systems and internal controls, which may adversely impact our business.

•If we cannot retain our key employees and hire additional highly qualified employees, we may not be able to successfully manage our businesses and pursue our strategic objectives.

•Economic, political and other risks associated with our international operations could adversely affect our profitability and international growth prospects.

•Our financial results are affected by the operating and financial results of, our relationships with and actions taken by our franchisees.

•We are subject to a variety of additional risks associated with our franchisees, such as potential franchisee bankruptcies, franchisee changes in control, franchisee turnover, rising costs related to construction of new stores and maintenance of existing stores, including rising costs due to inflation and supply chain disruptions, which could adversely affect the attractiveness of our franchise model, and in turn our business, results of operations and financial condition.

•We and our franchisees could be subject to claims related to health and safety risks to members that arise while at both our corporate-owned and franchise stores.

•Our business is subject to various laws and regulations including, among others, those governing indoor tanning, electronic funds transfer, ACH, credit card, debit card, digital payment options, auto-renewal contracts, membership cancellation rights and consumer protection more generally, and changes in such laws and regulations, failure to comply with existing or future laws and regulations or failure to adjust to consumer sentiment regarding these matters, could harm our reputation and adversely affect our business.

•Our failure to address evolving environmental, social and governance (“ESG”) issues may have an adverse effect on our business, financial condition and results of operations.

•We are subject to risks associated with leasing property subject to long-term non-cancelable leases.

•If we and our franchisees are unable to identify and secure suitable sites for new franchise stores, our revenue growth rate and profits may be negatively impacted.

•Opening new stores in close proximity may negatively impact our existing stores’ revenues and profitability.

•Our franchisees may incur rising costs related to construction of new stores and maintenance of existing stores, including rising costs due to inflation, supply chain disruptions and other market conditions, which could adversely affect the attractiveness of our franchise model, and in turn our business, results of operations and financial condition.

•Our dependence on a limited number of suppliers for equipment and certain products and services could result in disruptions to our business and could adversely affect our revenues and gross profit.

•The other factors identified under the heading “Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. Unless legally required, we undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise.

Table of Contents

PART I-FINANCIAL INFORMATION

ITEM 1. Financial Statements

Planet Fitness, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)


(in thousands, except per share amounts)	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	246,961	$	275,842
Restricted cash	47,800		46,279
Short-term marketable securities	103,197		74,901
Accounts receivable, net of allowances for uncollectible amounts of $0 and $0 as of June 30, 2024 and December 31, 2023, respectively	41,334		41,890
Inventory	5,200		4,677
Restricted assets - national advertising fund	12,268		—
Prepaid expenses	15,910		13,842
Other receivables	15,390		11,072
Income tax receivable and prepayments	5,790		3,314
Total current assets	493,850		471,817
Long-term marketable securities	49,718		50,886
Investments, net of allowance for expected credit losses of $18,246 and $17,689 as of June 30, 2024 and December 31, 2023, respectively	75,599		77,507
Property and equipment, net of accumulated depreciation of $374,324 and $322,958, as of June 30, 2024 and December 31, 2023, respectively	400,239		390,405
Right-of-use assets, net	393,564		381,010
Intangible assets, net	346,993		372,507
Goodwill	719,063		717,502
Deferred income taxes	490,912		504,188
Other assets, net	4,102		3,871
Total assets	$	2,974,040	$	2,969,693
Liabilities and stockholders’ deficit
Current liabilities:
Current maturities of long-term debt	$	20,500	$	20,750
Accounts payable	29,728		23,788
Accrued expenses	56,898		66,299
Equipment deposits	5,138		4,506
Deferred revenue, current	76,052		59,591
Payable pursuant to tax benefit arrangements, current	49,181		41,294
Other current liabilities	34,629		35,101
Total current liabilities	272,126		251,329
Long-term debt, net of current maturities	2,156,551		1,962,874
Lease liabilities, net of current portion	401,405		381,589
Deferred revenue, net of current portion	34,114		32,047
Deferred tax liabilities	1,599		1,644
Payable pursuant to tax benefit arrangements, net of current portion	424,107		454,368
Other liabilities	3,968		4,833
Total noncurrent liabilities	3,021,744		2,837,355
Commitments and contingencies (Note 13)
Stockholders’ equity (deficit):
Class A common stock, $0.0001 par value, 300,000 shares authorized, 84,496 and 86,760 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	9		9
Class B common stock, $0.0001 par value, 100,000 shares authorized, 650 and 1,397 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	—		—
Accumulated other comprehensive (loss) income	(1,096)		172
Additional paid in capital	594,049		575,631
Accumulated deficit	(910,626)		(691,461)
Total stockholders’ deficit attributable to Planet Fitness, Inc.	(317,664)		(115,649)
Non-controlling interests	(2,166)		(3,342)
Total stockholders’ deficit	(319,830)		(118,991)
Total liabilities and stockholders’ deficit	$	2,974,040	$	2,969,693

See accompanying notes to condensed consolidated financial statements

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2024		2023		2024		2023
Revenue:
Franchise	$	87,676	$	80,846	$	171,910	$	156,726
National advertising fund revenue	20,114		17,996		39,900		34,800
Corporate-owned stores	125,466		113,759		247,844		219,640
Equipment	67,685		73,862		89,304		97,523
Total revenue	300,941		286,463		548,958		508,689
Operating costs and expenses:
Cost of revenue	51,934		59,457		70,927		78,810
Store operations	70,152		58,876		144,505		124,891
Selling, general and administrative	31,613		32,646		60,806		60,415
National advertising fund expense	20,112		17,890		39,904		34,878
Depreciation and amortization	39,817		36,767		79,197		72,777
Other (gains) losses, net	(66)		3,825		418		7,761
Total operating costs and expenses	213,562		209,461		395,757		379,532
Income from operations	87,379		77,002		153,201		129,157
Other income (expense), net:
Interest income	5,616		4,163		11,077		8,094
Interest expense	(24,533)		(21,468)		(45,966)		(43,067)
Other income, net	1,043		370		1,690		483
Total other expense, net	(17,874)		(16,935)		(33,199)		(34,490)
Income before income taxes	69,505		60,067		120,002		94,667
Provision for income taxes	18,977		15,814		33,301		25,381
Losses from equity-method investments, net of tax	(1,216)		(73)		(2,416)		(338)
Net income	49,312		44,180		84,285		68,948
Less: net income attributable to non-controlling interests	672		3,045		1,336		5,109
Net income attributable to Planet Fitness, Inc.	$	48,640	$	41,135	$	82,949	$	63,839
Net income per share of Class A common stock:
Basic	$	0.56	$	0.49	$	0.95	$	0.76
Diluted	$	0.56	$	0.48	$	0.95	$	0.75
Weighted-average shares of Class A common stock outstanding:
Basic	86,809		84,618		86,859		84,532
Diluted	86,955		84,908		87,083		84,850

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023
Net income including non-controlling interests	$	49,312	$	44,180	$	84,285	$	68,948
Other comprehensive income, net:
Foreign currency translation adjustments	(477)		329		(689)		410
Unrealized loss on marketable securities, net of tax	(184)		(295)		(579)		(295)
Total other comprehensive (loss) income, net	(661)		34		(1,268)		115
Total comprehensive income including non-controlling interests	48,651		44,214		83,017		69,063
Less: total comprehensive income attributable to non-controlling interests	672		3,045		1,336		5,109
Total comprehensive income attributable to Planet Fitness, Inc.	$	47,979	$	41,169	$	81,681	$	63,954

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,
(in thousands)	2024		2023
Cash flows from operating activities:
Net income	$	84,285	$	68,948
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	79,197		72,777
Amortization of deferred financing costs	2,634		2,731
Loss on extinguishment of debt	2,285		—
Accretion of marketable securities discount	(1,879)		(944)
Losses from equity-method investments, net of tax	2,416		338
Dividends accrued on held-to-maturity investment	(1,065)		(979)
Credit loss on held-to-maturity investment	557		95
Deferred tax expense	26,761		21,575
Gain on re-measurement of tax benefit arrangement liability	(1,349)		—
Loss on disposal of property and equipment	903		—
Loss on reacquired franchise rights	—		110
Equity-based compensation expense	2,847		4,793
Other	397		(51)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	380		(781)

Inventory	(544)		(1,580)
Other assets and other current assets	(6,313)		4,431
Restricted assets - national advertising fund	(12,268)		(9,918)
Accounts payable and accrued expenses	(3,302)		(13,427)
Other liabilities and other current liabilities	(699)		8,312
Income taxes	(2,632)		1,368
Payments pursuant to tax benefit arrangements	(28,786)		(21,780)
Equipment deposits	632		3,654
Deferred revenue	18,653		17,313
Leases	4,838		345
Net cash provided by operating activities	167,948		157,330
Cash flows from investing activities:
Additions to property and equipment	(64,345)		(45,143)
Acquisition of franchisees, net of cash acquired	—		(26,264)


Purchases of marketable securities	(73,930)		(119,614)
Maturities of marketable securities	47,839		—
Other investments	—		(10,000)
Net cash used in investing activities	(90,436)		(201,021)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	800,000		—
Proceeds from issuance of Class A common stock	9,808		8,372
Principal payments on capital lease obligations	(72)		(107)
Repayment of long-term debt	(599,437)		(10,375)
Payment of deferred financing and other debt-related costs	(12,055)		—
Repurchase and retirement of Class A common stock	(300,205)		(125,030)
Distributions paid to members of Pla-Fit Holdings	(1,732)		(3,736)
Net cash used in financing activities	(103,693)		(130,876)
Effects of exchange rate changes on cash and cash equivalents	(1,179)		728
Net decrease in cash, cash equivalents and restricted cash	(27,360)		(173,839)
Cash, cash equivalents and restricted cash, beginning of period	322,121		472,499
Cash, cash equivalents and restricted cash, end of period	$	294,761	$	298,660
Supplemental cash flow information:
Cash paid for interest	$	40,814	$	40,693
Net cash paid for income taxes	$	9,168	$	2,763
Non-cash investing activities:
Non-cash additions to property and equipment included in accounts payable and accrued expenses	$	18,645	$	15,058

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (Deficit) (Unaudited)


	Class A common stock			Class B common stock			Accumulated other comprehensive income (loss)		Additional paid- in capital		Accumulated deficit		Non-controlling interests		Total (deficit) equity
(In thousands)	Shares	Amount		Shares	Amount
Balance at December 31, 2023	86,760	$	9	1,397	$	—	$	172	$	575,631	$	(691,461)	$	(3,342)	$	(118,991)
Net income	—	—		—	—		—		—		82,949		1,336		84,285
Equity-based compensation expense	—	—		—	—		—		2,847		—		—		2,847
Repurchase and retirement of Class A common stock	(3,404)	—		—	—		—		2,363		(302,114)		(2,363)		(302,114)
Exchanges of Class B common stock and other adjustments	747	—		(747)	—		—		(2,925)		—		2,925		—
Exercise of stock options, vesting of restricted share units and ESPP share purchase	393	—		—	—		—		9,540		—		—		9,540
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock	—	—		—	—		—		5,893		—		—		5,893
Distributions paid to members of Pla-Fit Holdings	—	—		—	—		—		—		—		(1,732)		(1,732)
Issuance of subsidiary stock to non-controlling interest	—	—		—	—		—		700		—		1,010		1,710
Other comprehensive loss	—	—		—	—		(1,268)		—		—		—		(1,268)
Balance at June 30, 2024	84,496	$	9	650	$	—	$	(1,096)	$	594,049	$	(910,626)	$	(2,166)	$	(319,830)


	Class A common stock			Class B common stock			Accumulated other comprehensive (loss) income		Additional paid- in capital		Accumulated deficit		Non-controlling interests		Total (deficit) equity
(In thousands)	Shares	Amount		Shares	Amount
Balance at December 31, 2022	83,430	$	8	6,146	$	1	$	(448)	$	505,144	$	(703,717)	$	(12,549)	$	(211,561)
Net income	—	—		—	—		—		—		63,839		5,109		68,948
Equity-based compensation expense	—	—		—	—		—		4,793		—		—		4,793
Repurchase and retirement of Class A common stock	(1,699)	—		—	—		—		3,117		(126,078)		(3,117)		(126,078)
Exchanges of Class B common stock and other adjustments	1,995	1		(1,995)	(1)		—		(4,666)		—		4,666		—
Exercise of stock options, vesting of restricted share units and ESPP share purchase	254	—		—	—		—		8,020		—		—		8,020
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock	—	—		—	—		—		47,762		—		—		47,762
Non-cash adjustments to VIEs	—	—		—	—		—		—		—		(389)		(389)
Deconsolidation of VIEs	—	—		—	—		—		—		141		(3,976)		(3,835)
Distributions paid to members of Pla-Fit Holdings	—	—		—	—		—		—		—		(3,736)		(3,736)
Other comprehensive income	—	—		—	—		115		—		—		—		115
Balance at June 30, 2023	83,980	$	9	4,151	$	—	$	(333)	$	564,170	$	(765,815)	$	(13,992)	$	(215,961)

Table of Contents


	Class A common stock			Class B common stock			Accumulated other comprehensive loss		Additional paid- in capital		Accumulated deficit		Non-controlling interests		Total (deficit) equity
(In thousands)	Shares	Amount		Shares	Amount
Balance at March 31, 2024	86,832	$	9	1,071	$	—	$	(435)	$	581,332	$	(677,321)	$	(2,816)	$	(99,231)
Net income	—	—		—	—		—		—		48,640		672		49,312
Equity-based compensation expense	—	—		—	—		—		1,872		—		—		1,872
Repurchase and retirement of Class A common stock	(3,090)	—		—	—		—		1,589		(281,945)		(1,589)		(281,945)
Exchanges of Class B common stock and other adjustments	421	—		(421)	—		—		(2,071)		—		2,071		—
Exercise of stock options, vesting of restricted share units and ESPP share purchase	333	—		—	—		—		9,159		—		—		9,159
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock	—	—		—	—		—		1,468		—		—		1,468
Distributions paid to members of Pla-Fit Holdings	—	—		—	—		—		—		—		(1,514)		(1,514)
Issuance of subsidiary stock to non-controlling interest	—	—		—	—		—		700		—		1,010		1,710
Other comprehensive loss	—	—		—	—		(661)		—		—		—		(661)
Balance at June 30, 2024	84,496	$	9	650	$	—	$	(1,096)	$	594,049	$	(910,626)	$	(2,166)	$	(319,830)


	Class A common stock			Class B common stock			Accumulated other comprehensive (loss) income		Additional paid- in capital		Accumulated deficit		Non-controlling interests		Total (deficit) equity
(In thousands)	Shares	Amount		Shares	Amount
Balance at March 31, 2023	85,230	$	9	4,245	$	—	$	(367)	$	555,267	$	(706,017)	$	(7,471)	$	(158,579)
Net income	—	—		—	—		—		—		41,135		3,045		44,180
Equity-based compensation expense	—	—		—	—		—		2,744		—		—		2,744
Repurchase and retirement of Class A common stock	(1,381)	—		—	—		—		3,117		(101,074)		(3,117)		(101,074)
Exchanges of Class B common stock and other adjustments	94	—		(94)	—		—		(313)		—		313		—
Exercise of stock options, vesting of restricted share units and ESPP share purchase	37	—		—	—		—		1,496		—		—		1,496
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock	—	—		—	—		—		1,859		—		—		1,859
Non-cash adjustments to VIEs	—	—		—	—		—		—		—		(156)		(156)
Deconsolidation of VIEs	—	—		—	—		—		—		141		(3,976)		(3,835)
Distributions paid to members of Pla-Fit Holdings	—	—		—	—		—		—		—		(2,630)		(2,630)
Other comprehensive income	—	—		—	—		34		—		—		—		34
Balance at June 30, 2023	83,980	$	9	4,151	$	—	$	(333)	$	564,170	$	(765,815)	$	(13,992)	$	(215,961)

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share and per share amounts)

(1) Business organization

Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with approximately 19.7 million members and 2,617 owned and franchised locations (referred to as stores) in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia as of June 30, 2024.

The Company serves as the reporting entity for its various subsidiaries that operate three distinct lines of business:

•Licensing and selling franchises under the Planet Fitness trade name;

•Owning and operating fitness centers under the Planet Fitness trade name; and

•Selling fitness-related equipment to franchisee-owned stores.

In 2012 investment funds affiliated with TSG Consumer Partners, LLC (“TSG”), purchased interests in Pla-Fit Holdings.

The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”) and related transactions in order to carry on the business of Pla-Fit Holdings, LLC and its subsidiaries (“Pla-Fit Holdings”). As of August 5, 2015, in connection with the recapitalization transactions, the Company became the sole managing member and holder of 100% of the voting power of Pla-Fit Holdings. Pla-Fit Holdings owns 100% of Planet Intermediate, LLC, which has no operations but is the 100% owner of Planet Fitness Holdings, LLC, a franchisor and operator of fitness centers. With respect to the Company, Pla-Fit Holdings and Planet Intermediate, LLC, each entity owns nothing other than the respective entity below it in the corporate structure and each entity has no other material operations.

The Company is a holding company whose principal asset is a controlling equity interest in the membership units (“Holdings Units”) in Pla-Fit Holdings. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings’ financial results and reports a non-controlling interest related to the portion of Holdings Units not owned by the Company.

As of June 30, 2024, the Company held 100.0% of the voting interest and approximately 99.2% of the economic interest in Pla-Fit Holdings and the owners of Holdings Units other than the Company (the “Continuing LLC Owners”) held the remaining 0.8% economic interest in Pla-Fit Holdings. As future exchanges of Holdings Units occur, the economic interest in Pla-Fit Holdings held by Planet Fitness, Inc. will increase.

(2) Summary of significant accounting policies

(a) Basis of presentation and consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation.

The condensed consolidated financial statements as of and for the three and six months ended June 30, 2024 and 2023 are unaudited. The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. The Company’s significant interim accounting policies include the proportional recognition of national advertising fund expenses within interim periods. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share and per share amounts)

(b) Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the condensed consolidated financial statements include revenue recognition, valuation of equity-based compensation awards, valuation of assets and liabilities acquired in business combinations, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, allowance for expected credit losses, the present value of lease liabilities, income taxes, including deferred tax assets and liabilities, and the liability for the Company’s tax benefit arrangements.

ASC 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Certain of the Company’s financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and other current liabilities are carried at cost, which approximates their fair value because of their short-term nature. See Note 3 for investments that are measured at fair value on a recurring basis.

The carrying value and estimated fair value of long-term debt were as follows:


	June 30, 2024				December 31, 2023
	Carrying value		Estimated fair value(1)		Carrying value		Estimated fair value(1)
Long-term debt(1)	$	2,205,000	$	2,080,168	$	2,004,438	$	1,829,286

(1) The estimated fair value of the Company’s fixed rate long-term debt is estimated primarily based on current bid prices for the long-term debt. Judgment is required to develop these estimates. As such, the fair value of long-term debt is classified within Level 2, as defined under GAAP.

(d) Non-controlling interests

Non-controlling interests represent third-party interests in certain of the Company’s subsidiaries. Allocation of net income or loss is generally based upon relative ownership interests held by equity owners in each subsidiary or based upon contractual arrangements. If such contractual arrangements are substantive and provide for a disproportionate allocation of economic returns among equity holders, the Company uses the hypothetical liquidation at book value (“HLBV”) method to allocate net income and loss of the subsidiary. The HLBV method is a balance sheet focused approach which measures each party’s capital account at each balance sheet date to determine the amount that the Company would receive if the subsidiary were to hypothetically liquidate its net assets at their carrying values determined in accordance with GAAP and distribute such hypothetical proceeds based on the liquidation rights and priorities defined in the contractual arrangement. Under the HLBV method, net income and losses of the subsidiary are attributed based on the change in each party’s capital account between the beginning and the end of the reporting period, after adjusting for capital contributions and distributions. The proportion of net income and losses attributed to non-controlling interests under the HLBV method is subject to change as the net assets in the subsidiary change.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share and per share amounts)

(e) Recent accounting pronouncements

The FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures, in November 2023. The standard expands reportable segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The new standard is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adoption on our financial disclosures.

The FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures, in December 2023. The standard requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of adoption on our financial disclosures.

(3) Investments

Marketable securities

The following tables summarize the amortized cost, net unrealized gains and losses, fair value, and the level in the fair value hierarchy of the Company’s available-for-sale investments in marketable securities. As of June 30, 2024, the marketable securities had maturity dates that range from less than 1 month to approximately 23 months. Realized gains and losses were insignificant for the three and six months ended June 30, 2024 and 2023.


	Amortized Cost		Unrealized (Losses) Gains, Net		Fair Value(1)		Level 1		Level 2
June 30, 2024
Cash equivalents
Money market funds	$	686	$	—	$	686	$	686	$	—

Commercial paper	8,930		(5)		8,925		—		8,925
Total cash equivalents	9,616		(5)		9,611		686		8,925
Short-term marketable securities
Commercial paper	42,885		(32)		42,853		—		42,853
Corporate debt securities	54,014		(98)		53,916		—		53,916

U.S. government agency securities	6,429		(1)		6,428		—		6,428
Total short-term marketable securities	103,328		(131)		103,197		—		103,197
Long-term marketable securities

Corporate debt securities	46,317		(80)		46,237		—		46,237

U.S. government agency securities	3,500		(19)		3,481		—		3,481
Total long-term marketable securities	49,817		(99)		49,718		—		49,718
Total marketable securities	$	162,761	$	(235)	$	162,526	$	686	$	161,840

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share and per share amounts)


	Amortized Cost		Unrealized Gains (Losses), Net		Fair Value(1)		Level 1		Level 2
December 31, 2023
Cash equivalents
Money market funds	$	761	$	—	$	761	$	761	$	—
U.S. treasury securities	2,997		1		2,998		—		2,998
Total cash equivalents	3,758		1		3,759		761		2,998
Short-term marketable securities
Commercial paper	37,063		24		37,087		—		37,087
Corporate debt securities	34,632		(38)		34,594		—		34,594

U.S. government agency securities	3,210		10		3,220		—		3,220
Total short-term marketable securities	74,905		(4)		74,901		—		74,901
Long-term marketable securities

Corporate debt securities	47,388		328		47,716		—		47,716

U.S. government agency securities	3,151		19		3,170		—		3,170
Total long-term marketable securities	50,539		347		50,886		—		50,886
Total marketable securities	$	129,202	$	344	$	129,546	$	761	$	128,785

(1) Fair values were determined using market prices obtained from third-party pricing sources.

For marketable securities with unrealized loss positions, the Company does not intend to sell these securities before maturity and it is more likely than not that the Company will hold these securities until maturity or a recovery of the cost basis and they are therefore all categorized as available for sale. No allowance for credit losses was recorded for these securities as of June 30, 2024.

Held-to-maturity debt security

As of June 30, 2024, the Company’s debt security investment consists of redeemable preferred shares that are accounted for as a held-to-maturity investment. The Company’s investment is measured at amortized cost within investments in the condensed consolidated balance sheets. The Company reviews its held-to-maturity securities for expected credit losses under ASC Topic 326, Financial Instruments – Credit Losses, on an ongoing basis.

The Company utilized probability-of-default (“PD”) and loss-given-default (“LGD”) methodologies to calculate the allowance for expected credit losses. The Company derived its estimates using historical lifetime loss information for assets with similar risk characteristics, adjusted for management’s expectations. Adjustments for management’s expectations were based on the investee’s recent financial results, current financial position, and forward-looking financial forecasts. Based upon its analysis, the Company recorded a credit loss expense of $82 and a gain on the reversal of credit loss allowance of $160 during the three months ended June 30, 2024 and 2023, respectively, and a credit loss expense of $557 and $95 during the six months ended June 30, 2024 and 2023, respectively, on the adjustment of its allowance for credit losses within other income, net on the condensed consolidated statements of operations.

The amortized cost, including accrued dividends, of the Company’s held-to-maturity debt security investment was $31,408 and $30,343 and the allowance for expected credit losses was $18,246 and $17,689, as of June 30, 2024 and December 31, 2023, respectively. The amortized cost, net of the allowance for expected credit losses, approximates fair value. The Company recognized dividend income of $537 and $496 during the three months ended June 30, 2024 and 2023, respectively, and $1,065 and $979 during the six months ended June 30, 2024 and 2023, respectively, within other income, net on the condensed consolidated statements of operations.

As of June 30, 2024, the Company’s held-to-maturity investment had a contractual maturity in 2026.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share and per share amounts)

A roll forward of the Company’s allowance for expected credit losses on its held-to-maturity investment is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Beginning allowance for expected credit losses	$	18,164	$	15,212	$	17,689	$	14,957
Loss (gain) on adjustment of allowance for expected credit losses	82		(160)		557		95
Write-offs, net of recoveries	—		—		—		—
Ending allowance for expected credit losses	$	18,246	$	15,052	$	18,246	$	15,052

Equity method investments

For the following investments, the Company recorded its proportionate share of the investees’ earnings, prepared in accordance with GAAP, on a one-month lag, with an adjustment to eliminate unrealized profits on intra-entity sales, if any, and the amortization of basis differences, within losses from equity-method investments, net of tax on the condensed consolidated statements of operations. As of June 30, 2024, the Company determined that no impairment of its equity method investments existed.

As of June 30, 2024 and December 31, 2023, the Company held a 21.8% ownership interest in Bravo Fit Holdings Pty Ltd, a franchisee of the Company and store operator in Australia, which is deemed to be a related party, for a total investment carrying value of $12,754 and $13,220, respectively. The difference between the carrying amount of the Company’s investment and the underlying amount of equity in net assets of the investment was $6,022 and $6,812 as of June 30, 2024 and December 31, 2023, respectively. These basis differences are primarily attributable to intangible assets, which are being amortized on a straight-line basis over a weighted-average life of 9 years, and equity method goodwill. The Company’s proportionate share of the losses in accordance with the equity method was $158 and $73 for the three months ended June 30, 2024 and 2023, respectively, and a loss of $466 and $338 for the six months ended June 30, 2024 and 2023, respectively, which included the amortization of basis differences of $66, $65, $132 and $130, respectively.

As of June 30, 2024 and December 31, 2023, the Company held a 33.2% ownership interest in Planet Fitmex, LLC, a franchisee of the Company and store operator in Mexico, which is deemed to be a related party and classified as an equity method investment as a result of its organizational structure, for a total investment carrying value of $49,683 and $51,633, respectively. The difference between the carrying amount of the Company’s investment and the underlying amount of equity in net assets of the investment was $16,249 and $17,458 as of June 30, 2024 and December 31, 2023, respectively. This basis difference is primarily attributable to intangible assets, which are being amortized on a straight-line basis over a weighted-average life of 9 years, and equity method goodwill. The Company’s proportionate share of the losses in accordance with the equity method was $1,058 and $1,950 for the three and six months ended June 30, 2024, respectively, which included the amortization of basis differences of $174 and $337, respectively. The Company’s proportionate share of the earnings for the three and six months ended June 30, 2023 were not material.

(4) Acquisition

Florida Acquisition

On April 16, 2023, the Company purchased from one of its franchisees a majority of the assets associated with four franchisee stores operating in Florida (the “Florida Acquisition”) for cash consideration of $26,264. As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $110, which is included in other losses, net on the condensed consolidated statement of operations. The loss incurred reduced the net purchase price to $26,154. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share and per share amounts)

The allocation of the purchase consideration was as follows:


	Amount
Property and equipment	$	3,851
Right of use assets	5,424
Other long-term assets	95
Intangible assets	6,880
Goodwill	14,812
Deferred revenue	(687)
Other current liabilities	(17)
Lease liabilities	(4,204)
Total	$	26,154

The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.

The following table sets forth the components of identifiable intangible assets acquired in the Florida Acquisition and their estimated useful lives in years as of the date of the acquisition:


	Fair value		Useful life
Reacquired franchise rights (1)	$	6,650	6.8
Customer relationships (2)	230		6.0
Total intangible assets subject to amortization	$	6,880

(1) Reacquired franchise rights represent the fair value of the reacquired franchise agreements using the income approach, specifically, the multi-period excess earnings method.

(2) Customer relationships represent the fair value of the existing contractual customer relationships using the income approach, specifically, the multi-period excess earnings method.

The acquisition did not have a material effect on the results of operations of the Company.

(5) Goodwill and intangible assets

Goodwill and related changes in its carrying amount were as follows:


	Amount
Goodwill at December 31, 2023	$	717,502
Acquisition	1,572
Foreign currency translation	(11)
Goodwill at June 30, 2024	$	719,063

The Company completed an immaterial acquisition of an operating entity in Spain during the first quarter of fiscal 2024, which resulted in the addition of $1,572 in the carrying value of goodwill. During the three months ended June 30, 2024, the Company issued stock of the subsidiary holding the operating entity in Spain to a third-party investor which resulted in the creation of a non-controlling interest of such subsidiary holding company and the subsidiary operating entity. The Company intends to operate corporate-owned stores through this entity.

Table of Contents

Planet Fitness, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

(Amounts in thousands, except share and per share amounts)

A summary of intangible assets is as follows:


	June 30, 2024						December 31, 2023
	Gross carrying amount		Accumulated amortization		Net carrying Amount		Gross carrying amount		Accumulated amortization		Net carrying Amount
Finite-lived intangible assets:
Customer relationships	$	199,043	$	(177,020)	$	22,023	$	199,043	$	(169,155)	$	29,888
Reacquired franchise rights	274,708		(96,338)		178,370		274,708		(78,689)		196,019
Total finite-lived intangible assets	473,751		(273,358)		200,393		473,751		(247,844)		225,907
Indefinite-lived intangible assets:
Trade and brand names	146,600		—		146,600		146,600		—		146,600
Total intangible assets	$	620,351	$	(273,358)	$	346,993	$	620,351	$	(247,844)	$	372,507

The Company determined that no impairment charges were required during any periods presented.

Amortization expense related to the finite-lived intangible assets totaled $

Planet Fitness, Inc. [PLNT] Filings
10-Q	[2024-08-07]
10-Q	[2024-05-09]
10-K	[2024-02-29]
10-Q	[2023-11-09]
10-Q	[2023-08-09]
10-Q	[2023-05-08]
10-K	[2023-03-01]
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-Q	[2022-05-10]
10-K	[2022-03-01]
10-Q	[2021-11-05]
10-Q	[2021-08-09]
10-Q	[2021-05-07]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-11]
10-K	[2020-02-28]
10-Q	[2019-11-08]
10-Q	[2019-08-08]
10-Q	[2019-05-08]
10-K	[2019-03-01]
10-Q	[2018-11-07]
10-Q	[2018-08-09]
10-Q	[2018-05-09]
10-K	[2018-03-01]
10-Q	[2017-11-08]
10-Q	[2017-08-09]
10-Q	[2017-05-03]
10-K	[2017-03-06]
10-Q	[2016-11-03]
10-Q	[2016-08-12]
S-1	[2016-05-27]
10-Q	[2016-05-11]
10-K	[2016-03-04]
10-Q	[2015-11-13]
10-Q	[2015-09-02]
S-1	[2015-06-22]