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Planet Fitness (PLNT) Q1 Earnings Miss Estimates, Decline Y/Y

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Planet Fitness, Inc. (PLNT - Free Report) reported dismal first-quarter 2021 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining on a year-over-year basis. Notably, the top and the bottom line missed the Zacks Consensus Estimate for the fifth straight quarter. Following the results, shares of the company fell 1.8% during after-hour trading on May 6.

However, the company reported sequential improvements in net member growth. Notably, continuity in vaccine rollouts along with mind and body wellness offerings has been driving membership trends as the company stated that March 2021 memberships have exceeded 2019 levels. Meanwhile, the company expanded its existing collaboration with iFIT to boost its digital offerings. Markedly, the company is optimistic in this regard as the collaboration is likely to pave path for growth in terms of digital content and wellness offerings.

Earnings & Revenues Discussion

During the first quarter, the company reported adjusted earnings per share (EPS) of 10 cents, which missed the Zacks Consensus Estimate of 17 cents by 41.2%. Notably, the bottom line declined 37.5% from 16 cents reported in the prior-year quarter.

Total adjusted EBITDA at the end of the first quarter deteriorated to $43.7 million compared with $46.5 million in the year-ago quarter.

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 $111.9 million lagged the consensus mark of $124 million by 9.7%. The top line also declined 12.1% from the year-ago quarter’s levels primarily due to the dismal performance across the Corporate-owned Stores and Equipment segments.

Segmental Performance

During first-quarter 2021, Franchise segment revenues increased 9.5% year over year to $64.1 million. Moreover, EBITDA in the Franchise segment increased 12.1% year over year to $41.2 million.

The Corporate-owned Stores segment’s revenues during the first quarter fell 6.5% year over year to $37.9 million. The downside was primarily due to temporary store closures and reduced membership levels owing to the pandemic. However, this was partially offset by revenues accumulated from the opening of five new corporate-owned stores (since Jan 1, 2020). Meanwhile, the segment EBITDA fell 11% year over year to $10.7 million.

In the Equipment segment, revenues during the quarter plunged 64.7% year over year to $9.9 million on account of lower equipment sales to new and existing franchisee-owned stores. Also, extensions for all new store development (12 months) and re-equipment investment obligations (18 months) lead to the downtrend. EBITDA in the Equipment segment slumped 71.3% year over year to $1.8 million.

Other Financial Details

As of Mar 31, 2021, cash and cash equivalents totaled $445.6 million compared with $439.5 million as of Dec 31, 2020. Long-term debt (net of current maturities) amounted to $1,673.6 million at the end of first-quarter 2021 compared with $1,676.4 million at 2020-end.

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 #4 (Sell).

Some better-ranked stocks in the same space include WW International, Inc. (WW - Free Report) , Vail Resorts, Inc. (MTN - 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.

WW International has a three-five-year EPS growth rate of 15%.

Earnings for Vail Resorts and RCI Hospitality in 2022 are expected to surge 130.8% and 57.7%, respectively.

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