Q4 2024 Earnings Summary
- Strong franchisee confidence and commitment to growth: Nearly 65% of the estate opted to install the plate-loaded equipment in their clubs in Q4 2024, an unbudgeted expense, demonstrating their confidence in the company's strategy and brand promise of "growing stronger together".
- Increasing Black Card membership penetration: The Black Card penetration increased to approximately 64% at the end of the quarter, a 2-point lift from the prior year. With only a $10 spread between the classic card and the Black Card, more members are choosing the higher-tier membership, potentially driving higher revenues.
- Commitment to accelerating new club growth: The company is focused on returning to an annualized openings number that starts with a '2', indicating plans to achieve over 200 new club openings per year in the next few years, signaling strong growth prospects.
- The company expects it will take a few years to return to opening 200 new clubs per year, indicating a slower-than-anticipated growth trajectory.
- Tight real estate availability, with vacancies around 4%, may limit the company's ability to find suitable locations for new club openings, potentially hindering expansion plans.
- The company is not providing guidance beyond 2025 and plans to share longer-range targets later in the year, which could create uncertainty about its future growth prospects.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +19% (from USD 285,086k to USD 340,450k) | The significant increase reflects robust top-line performance likely driven by higher customer acquisition, pricing strategies, or expanded service offerings compared to Q4 2023, which built on previous period momentum. |
Operating Income (EBIT) | +26% (from USD 71,356k to USD 89,746k) | The larger boost in operating income indicates improved operational leverage and cost management, suggesting that revenue growth more than offset rising operating expenses relative to Q4 2023, delivering a stronger profit from core operations. |
Net Income | +33% (from USD 35,340k to USD 47,084k) | Enhanced net income mirrors effective progress in both revenue expansion and cost control, with the company turning improved operating income and margins into a considerably stronger bottom line compared to the previous year. |
EPS (Basic/Diluted) | +37% (from USD 0.41 to USD 0.56) | The increase in EPS is driven by the higher net income compounded by a slight reduction in weighted-average shares outstanding, which amplified the earnings per share relative to Q4 2023. |
Cost of Goods Sold (COGS) | Increased from USD 57,465k to USD 80,494k | Despite rising revenue, the COGS increased significantly due to higher input costs and a shift in the equipment mix, which elevated supply costs even as improved margins helped maintain profitability relative to Q4 2023. |
Balance Sheet Highlight | Negative Equity at -USD 215,373k; Long-term Debt at USD 2,148,029k | The persistently high leverage and negative shareholders’ equity underscore financial risk, suggesting that while revenue and profitability have improved, the company continues to carry significant debt compared to previous periods, potentially limiting future financing options. |
Liquidity | Stable (Cash and Cash Equivalents USD 293,150k) | Liquidity remains steady at similar levels to prior quarters, indicating that the company is effectively managing its short‑term assets despite expanding operations and high leverage. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Growth | FY 2024 | 4% to 6% | 8% to 9% | raised |
Adjusted EBITDA Growth | FY 2024 | 7% to 9% | 8% to 9% | raised |
Adjusted Net Income Growth | FY 2024 | 4% to 6% | 8% to 9% | raised |
Adjusted Earnings Per Diluted Share Growth | FY 2024 | 7% to 9% | 11% to 12% | raised |
Same Club Sales Growth | FY 2024 | 3% to 5% | 4% to 5% | raised |
New Club Growth | FY 2024 | no prior guidance | 140 to 150 new clubs | no prior guidance |
Equipment Placements in New Franchise Clubs | FY 2024 | no prior guidance | 120 to 130 | no prior guidance |
Net Interest Expense | FY 2024 | no prior guidance | $75 million | no prior guidance |
Capital Expenditures (CapEx) | FY 2024 | no prior guidance | 20% increase | no prior guidance |
Depreciation and Amortization (D&A) | FY 2024 | no prior guidance | 10% increase | no prior guidance |
System-wide Same Club Sales Growth | FY 2025 | no prior guidance | 5% to 6% | no prior guidance |
Revenue Growth | FY 2025 | no prior guidance | 10% | no prior guidance |
Adjusted EBITDA Growth | FY 2025 | no prior guidance | 10% | no prior guidance |
Adjusted Net Income Growth | FY 2025 | no prior guidance | 8% to 9% | no prior guidance |
Adjusted Net Income Per Diluted Share Growth | FY 2025 | no prior guidance | 11% to 12% | no prior guidance |
Net Interest Expense | FY 2025 | no prior guidance | $86 million | no prior guidance |
Capital Expenditures (CapEx) | FY 2025 | no prior guidance | 25% increase | no prior guidance |
Depreciation and Amortization (D&A) | FY 2025 | no prior guidance | flat compared to 2024 | no prior guidance |
New Club Openings | FY 2025 | no prior guidance | 160 to 170 new clubs | no prior guidance |
Equipment Placements in New Franchise Clubs | FY 2025 | no prior guidance | 130 to 140 | no prior guidance |
Reequipped Sales | FY 2025 | no prior guidance | 70% of total equipment segment revenue | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue Growth | FY 2024 | 8% to 9% | ~19.4% year-over-year increase in Q4 2024 vs. Q4 2023 (340,450Vs. 285,086) | Beat |
Adjusted Net Income Growth (using Net Income as proxy) | FY 2024 | 8% to 9% | ~33% year-over-year increase in Q4 2024 vs. Q4 2023 (47,084Vs. 35,340) | Beat |
Adjusted EPS Growth (using EPS as proxy) | FY 2024 | 11% to 12% | ~36.6% year-over-year increase in Q4 2024 vs. Q4 2023 (0.56Vs. 0.41) | Beat |
Net Interest Expense | FY 2024 | ~$75 million | ~$100 million for full-year 2024 (sum of Q1 2024, Q2 2024, Q3 2024, Q4 2024) | Missed |
Depreciation & Amortization (D&A) | FY 2024 | ~+10% | ~+2.4% year-over-year in Q4 2024 vs. Q4 2023 (40,116Vs. 39,159) | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Membership Pricing Strategy | Q1–Q3 discussions focused on raising the Classic Card price from $10 to $15, testing its impact and noting strong Black Card adoption | Q4 reaffirms the price increase with stabilization in churn and good cancel rates, highlighting low- to mid‐single-digit comp lift expectations | Consistent focus on pricing as a revenue driver with stabilization of member behavior. |
Franchisee Confidence and Improved Unit Economics | Across Q1–Q3, leadership emphasized the new growth model, cost reductions, and improved IRRs, with strong franchisee sentiment and early testing of incentive initiatives | Q4 reports nearly all franchisees have signed on to the growth model and are investing in improvements (e.g. adding plate‐loaded equipment) | Improving franchisee sentiment with a steady track record of enhanced unit economics and growth initiatives. |
Club Expansion Strategy and Real Estate Constraints | Q1 highlighted international expansion (e.g., Spain) and domestic club builds; Q2–Q3 discussed lowering build costs and leveraging retail closures | Q4 confirms the ambition to open 200 new clubs per year while citing tight retail space but identifying opportunities via increased retail vacancies (around 4%) | Steady commitment to expansion despite ongoing real estate challenges, with a strategic pivot to capitalize on retail vacancies. |
Cost Management Initiatives and Club Build Cost Reductions | Q1–Q3 consistently noted a target of 10% cost reduction in club builds and improvements via a new growth model, including extended equipment reequips and strategic spending reviews | Q4 reiterates reductions in build costs, enhanced economic models, and continued focus on cost control to move IRRs closer to pre-pandemic levels | Continued emphasis on cost reduction with incremental progress in unit economics and franchisee support. |
Membership Growth Challenges and Churn Dynamics | Q1 reported challenges due to social media backlash and health concerns; Q2 saw softer growth and seasonal dips; Q3 noted a slight decline with churn impacts partly offset by Black Card mix | Q4 shows normalization of churn after a temporary spike (from click-to-cancel implementation), high rejoin rates (37–38%), and steady net growth despite the price hike | After short‐term disruptions, sentiment improves as churn stabilizes and rejoin rates remain strong. |
Emerging Regulatory Concerns (FTC Click-to-Cancel) | Not mentioned in Q1–Q2; Q3 introduced the topic with small, manageable churn spikes in select geographies | Q4 details the short-term impact (8–12 weeks of churn increase) followed by a moderation back to normal churn, supported by high rejoin rates | A new topic emerging in Q3 and managed effectively in Q4 with neutral sentiment overall. |
Leadership and Strategic Reorganization | Q1 discussed leadership transitions (new CEO, CFO search) and early reorganization efforts; Q2–Q3 elaborated on active CDO and CMO searches and evolving brand identity | Q4 announces key leadership appointments (new CDO and CMO) and a shift to a fit‐for‐strategy operating model along with a new brand promise (“Grow Stronger Together”) | A clear evolution from recruitment to appointment, solidifying strategic reorganization and enhanced brand positioning. |
Retail Store Closures as New Opportunities for Expansion | Not mentioned in Q1; Q2–Q3 highlighted retail closures (e.g., 5,300–6,000 closures) as opportunities for securing new sites | Q4 reiterates that increasing retail vacancies (around 4%) offer tailwinds for club expansion despite tight space availability | A topic emerging post-Q1 and maintained with an optimistic outlook on turning retail closures into expansion opportunities. |
Equipment Investment Strategy | Q1 noted shifts toward more strength (plate-loaded) equipment impacting revenue per store; Q2–Q3 detailed mix optimization and significant adoption of plate-loaded equipment by franchisees | Q4 reports robust adoption of plate-loaded equipment (65% opt-in) and continued optimization of the equipment mix to enhance member experience and unit economics | Evolving focus toward equipment mix optimization with consistent positive response from franchisees. |
Resolved Historical Marketing Challenges and Evolved Advertising Approaches | Q1–Q3 discussed challenges from previous campaigns, refining brand messaging, and consolidating agency partnerships to better highlight benefits beyond price | Q4 emphasizes the launch of a new brand promise and campaign (“We Are All Strong on This Planet”) without detailed reference to past challenges, suggesting a move beyond historical issues | A gradual resolution with a shift toward a unified, inclusive brand message that supersedes earlier marketing issues. |
Isolated Financial Performance Concerns (Adjusted EBITDA Deceleration) | Q1 highlighted strong EBITDA growth; Q2 acknowledged timing effects causing deceleration; Q3 reported EBITDA margin improvements | Q4 reveals an adjusted EBITDA margin decline (38.4% vs. 40.1%) due to higher marketing spend and equipment reequips, despite full-year margin improvements | Mixed performance with short-term deceleration in Q4, prompting ongoing caution regarding expense impacts. |
Long-Term Guidance Uncertainty Beyond 2025 | Q1 provided no insights; Q2 stated that long-term guidance beyond 2025 was not being discussed | Q4 reiterates that no guidance beyond 2025 is provided, focusing instead on building a sustainable growth foundation and solid near-term outlook | A consistent cautious stance on long-term guidance, emphasizing a focus on near-term sustainable growth. |
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Unit Growth Outlook
Q: When will you return to 200 new club openings annually?
A: We aim to get back to opening 200 new clubs per year, which we expect to achieve in a couple of years—not five years, but not this year either. We're building a strong foundation with the right team and resources, including our new Chief Development Officer, Chip Wilson, who is engaging with franchisees to accelerate growth. -
Impact of Price Hike on Comps and Churn
Q: How is the price hike affecting comps and churn?
A: The $5 increase in the classic card price implemented in June is expected to provide a low to mid-single-digit comp lift on an annual basis. We are seeing good cancel rates and some stickiness, with members retaining their $10 memberships. Attrition rates have come in line year-over-year, and these trends continued into Q4. -
International Expansion
Q: What's your vision for international growth, especially in Europe?
A: We are pleased with our performance in Spain, where we opened 5 clubs by the end of last year. We plan to expand thoughtfully into markets where we can achieve scale and density, aiming to enter 1–2 new international markets per year. We built Spain on our balance sheet and will transition it to a franchise model as the market matures, recycling capital into other markets. -
Franchisee Unit Economics
Q: Are franchisees incentivized to open new clubs under the new growth model?
A: Franchisees appreciate the new growth plan, which reduces build costs and addresses ongoing capital costs, enhancing unit economics. Planning and development take time, but we have a good relationship with franchisees who are engaged and on board. The vast majority are on track with their build obligations. -
Black Card Penetration
Q: Are you seeing increased Black Card memberships?
A: Yes, Black Card penetration has increased to roughly 64%, a 2-point lift from the prior quarter. The $10 price difference between the classic and Black Card memberships makes the Black Card an attractive value, leading more members to choose it. -
Click-to-Cancel Impact
Q: How will click-to-cancel affect churn levels?
A: In regions where click-to-cancel is implemented, we see a short-term increase in churn for 8–12 weeks, then churn rates moderate back to normal levels. We believe our strong value proposition keeps members engaged despite easier cancellation. Additionally, our rejoin rate remains high, with 37–38% of former members returning. -
Marketing Strategy
Q: How is the response to your new inclusive marketing message?
A: Though it's early, we're seeing very favorable responses and positive social sentiment about our shift to a more balanced complement of strength equipment. The new messaging emphasizes our sense of community and "growing stronger together," which resonates with members. -
Capital Expenditure Outlook
Q: How should we view future CapEx levels beyond 2025?
A: While not guiding beyond 2025, we plan to leverage our financial strength to recycle capital. We intend to refranchise Spain this year, which may reduce CapEx as we shift more toward a franchise model in international markets. -
Perks Program and App Engagement
Q: How is the Perks program contributing to member engagement?
A: In 2024, members redeemed over $10 million through our Perks program. This adds value for members and increases engagement with our app, which has more than 80% utilization and is the most downloaded fitness app on the App Store. -
Equipment Upgrades vs. New Unit Growth
Q: Are franchisees prioritizing equipment upgrades over opening new units?
A: Franchisees are investing in their clubs while staying on pace with development. They made the discretionary decision to add additional strength equipment, with expectations that virtually all clubs will have these upgrades by the end of the year. We're seeing a balance, not a trade-off, between re-equips and development.
Research analysts covering Planet Fitness.