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Planet Fitness (PLNT) Q4 Earnings Miss Estimates, Stock Down

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Planet Fitness, Inc. (PLNT - Free Report) reported dismal fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate. Further, the metrics declined sharply year over year due to the coronavirus pandemic. Following the results, shares of the company fell 2.5% during after-hour trading on Feb 18.

However, management stated that the company is witnessing net member growth and improved usage on the back of its marketing activities. Going forward, the company intends to focus on expanding its store footprint and digitalization to boost its fitness offerings. Also, the company is optimistic about long-term growth opportunities, given the continuity in vaccine rollouts.

Quarterly Details

The company reported adjusted earnings per share (EPS) of 17 cents, which missed the Zacks Consensus Estimate of 23 cents by 26.1%. In the prior-year quarter, the company had reported adjusted EPS of 44 cents.

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 $133.8 million lagged the consensus mark of $139 million by 3.7%. The top line also declined 30.1% from the year-ago quarter’s levels primarily due to the dismal performance across the Franchise, Corporate-owned Stores and Equipment segments.

Franchise segment revenues fell 8.8% year over year to $66.9 million. The downside was primarily caused by temporary store closures owing to COVID-19, lower membership levels and equipment placement revenues. However, this was partially offset by higher royalties on annual fee billings.

The Corporate-owned Stores segment’s revenues fell 5.6% year over year to $38.9 million. The decline was mainly due to temporary store closures and reduced membership levels owing to the pandemic. However, this was partially offset by revenues accumulated from the acquisition of 12 franchisee-owned stores (in December 2019) and the opening of nine new corporate-owned stores (since Oct 1, 2019).

In the Equipment segment, revenues plunged 63.7% year over year to $28 million on account of lower equipment sales to new and existing franchisee-owned stores. Also, extensions for all new store development (12 to 18-months) and re-equipment investment obligations lead to the downtrend.

Moreover, EBITDA in the Franchise segment declined 14.1% year over year to $43.6 million. The decline was primarily caused by temporary shutdowns owing to COVID-19 and decline in membership levels. At the Corporate-owned stores segment, EBITDA fell 18.6% year over year to $12.3 million. EBITDA in the Equipment segment slumped 83.2% year over year to $3.1 million.

Total adjusted EBITDA at the end of the fourth quarter deteriorated to $51.1 million from $76.6 million in the year-ago quarter.

Other Financial Details

As of Dec 31, 2020, cash and cash equivalents totaled $439.5 million compared with $436.3 million as of Dec 31, 2019. Long-term debt (net of current maturities) amounted to $1,676.4 million at the end of fourth-quarter 2020 compared with $1,687.5 million at 2019-end.

2020 Highlights

Total revenues in 2020 came in at $406.6 million compared with $688.8 million in 2019.

Adjusted EBITDA in 2020 came in at $120.4 million compared with $282.2 million in 2019.

In 2020, adjusted diluted EPS came in at 4 cents compared with $1.59 in the previous year.

2021 Outlook

Owing to the uncertainty tied to the crisis, the company did not provide any guidance for 2021.

Zacks Rank & Stocks to Consider

Planet Fitness currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the same space include Camping World Holdings, Inc. (CWH - Free Report) , AMC Entertainment Holdings, Inc. (AMC - Free Report) and RCI Hospitality Holdings, Inc. (RICK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Camping World has a three-five-year EPS growth rate of 34.7%.

Earnings for AMC Entertainment and RCI Hospitality in 2021 are expected to surge 92.5% and 241.2%, respectively.

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