Planet Fitness Inc. has recently experienced volatility in its stock following its fourth-quarter earnings report. While the fitness-center operator beat expectations for earnings, it provided a downbeat growth outlook for the year ahead. Additionally, the company announced that its Chief Financial Officer, Tom Fitzgerald, plans to retire in August.
The stock initially saw a slight increase of 0.2% ahead of the market open, but it fluctuated between a 2.1% decrease and a 3.6% increase during premarket trading. For the fourth quarter of 2023, Planet Fitness reported a net income of $35.3 million, or 41 cents per share, compared to $33.7 million, or 40 cents per share, in the same period the previous year. Adjusted earnings per share came in at 60 cents, surpassing the FactSet consensus of 58 cents. The company’s total revenue increased by 1.4% to $285.1 million, beating the FactSet consensus of $282.7 million. Same-store sales also showed improvement, increasing by 7.7% compared to the previous year.
Franchise revenue experienced significant growth, rising by 13.9% to $98.2 million, primarily due to higher royalty revenue. Meanwhile, corporate-owned stores revenue increased by 15.9% to $116.4 million. However, equipment revenue dropped by 25.5% to $70.4 million, mainly due to lower equipment sales to existing franchisee-owned stores.
Looking ahead to 2024, Planet Fitness expects adjusted earnings per share to grow in the range of 10% to 11%. This falls slightly below the current FactSet consensus of $2.51 per share, which implies a growth rate of 12.1%. The company also anticipates full-year revenue to be 6% to 7% higher than that of 2023. However, the FactSet revenue consensus of $1.155 billion suggests a slightly higher growth rate of 7.8%.
CEO Craig Benson stated that the company’s new growth model, which focuses on reducing the capital requirements for franchise locations, will make 2024 a “transition year” for franchisees. With the upcoming retirement of CFO Tom Fitzgerald, Planet Fitness is now in search of two top executives, as Benson remains interim CEO until a permanent replacement is found.
Despite the recent volatility in its stock, Planet Fitness has experienced a year-to-date loss of 9.8%, while the S&P 500 has gained 4.4% during the same period.
In conclusion, Planet Fitness Inc. has reported better-than-expected earnings for the fourth quarter of 2023 but has provided a cautious outlook for growth in the coming year. The company’s stock experienced fluctuations following the earnings report, and investors are closely monitoring the impact of its new growth model on franchisees. With the upcoming retirement of its CFO, Planet Fitness now faces the task of finding two top executives to guide the company forward.
