Planet Fitness, Inc.

Good afternoon. My name is Jason and I will be your conference operator today. At this time, I would like to welcome everyone to the Planet Fitness first quarter 2020 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question at that time, please press star, then the number one on your telephone keypad. To withdraw your question, press the pound key. I would now like to turn the call over to your speaker today, Brandon Frey. Thank you. Please go ahead, sir.

Thank you for joining us today to discuss Planet Fitness' first quarter 2020 earnings results. I'm today's caller, Chris Rondo, Chief Executive Officer, Dorben Lively, President, and Tom Fitzgerald, Chief Financial Officer. Following the prepared remarks, we will open the call up for questions. I would like to remind you that certain statements we will make in this presentation are forward-looking statements. These forward-looking statements reflect Planet Fitness' judgment and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting Planet Fitness' business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, We refer you to the disclaimer regarding forward-looking statements included in our first quarter 2020 earnings release, which was furnished to the SEC today on Form 8-K, as well as our filings with the SEC referenced in that disclaimer. We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. In addition, the company may refer to certain adjusted non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today. With that, I'll turn the call over to Chris Rondo, Chief Executive Officer of Planet Fitness. Chris?

Thank you, Brendan, and thank you, everyone, for joining us today. Before we dive into our Q1 results, I want to address the unprecedented COVID-19 situation. First and foremost, our thoughts are with the family members of those who have lost loved ones as a result of the pandemic and healthcare providers, first responders, and essential workers on the front lines supporting our communities. COVID-19 has presented challenging realities for all businesses. On March 17th, we have closed all of our 99 corporate stores and encouraged our franchisees to do the same. By March 22nd, all of our more than 2,000 locations were closed. Throughout this evolving situation, we have been in constant communication with our franchisees and our team members and have also worked to keep our members informed and engaged with our brand. Upon the closures of our stores in March, all members' accounts were frozen and we communicated to them that they would not be charged any fees while our stores were closed. This includes monthly membership dues and annual fees. As a leader in the industry, we and our franchisees believe it is critical that Planet Fitness put our members' interests first and foremost. We believe this message has been extremely well received and may have also helped minimize cancellation requests. In fact, we did not see any material change in our member count due to cancels in the second half of March during the initial closure period. Our corporate headquarters employees continue to work remotely to support the business and our franchisees during this time. Given stay-at-home orders still in place in many states, new store developments and equipment placements are on hold at this time. Our teams and franchisees have been hard at work preparing for our reopening of our prospective stores, including developing a COVID-19 operational playbook to address things like enhanced sanitization policies, procedures, reduced contact between team members and members and physical distancing, and more. As of May 1st, we began a thoughtful phase reopening approach and opened three stores, two in Georgia and one in Utah. in accordance with local official guidelines and with the safety of our teams and members our top priority. We will continue to monitor these guidelines and reopen additional stores throughout the system when we believe we can safely do so. In these first few clubs we have reopened, we are executing our updated operational procedures outlined in our COVID-19 operations playbook. We believe this is important for a step and will allow us to obtain key learnings in advance of a broader reopening rollout. Now onto our Q1 results. 2020 got off to a strong start. Tom will go over it in more detail on how COVID-19 impacts our first quarter results, but I am certainly pleased with our system-wide same-source sales increase of 9.8% on top of a 10.2% increase a year ago period. In total, we opened 39 new stores in the first three months of the year and ended the first quarter with 15.5 million members and 2,039 stores system-wide. The Jump Start 2020, Planet Fitness was the presenting sponsor of Times Square's iconic New Year's Eve celebration once again, which continues to be a great opportunity for us to put brand front and center on a global stage in a time when consumers are thinking about health and wellness and joining a gym. Our partnership with Biggest Loser also kicked off in January. This platform allowed us to reach captive viewers who are interested in health and fitness and may be looking to make a lifestyle change in brand messaging that reinforces how Planet Fitness is different than traditional gyms. As part of our marketing mix in Q1, we leaned heavily into TV advertising, debuting new creative, which we believe resonated with first-timers and casual gym goers. As I said, new member signups were strong in the first quarter. It was business as usual with both usage and new member signups perspective right up until the stores started to close due to COVID-19 in mid-March. Based on the enhancements we've made on our marketing mix, messaging and creative, and the strong new join trend in the first quarter leading up to the store closures in mid-March, We are confident that we have the right strategy in place for the future to continue to optimize overall effectiveness and results. In an effort to keep our members active and engaged with our brand while at home, we've accelerated our number of digital initiatives, including our United We Move marketing campaign. This includes daily live workouts on Facebook that are 20 minutes or less featuring Planet Fitness trainers and special celebrity guests such as New England Patriots football player Julian Edelman, Biggest Loser trainer Eric Galugo, and famous actor and director Jerry O'Connell. From an engagement and brand perspective, these workouts have been extremely successful, averaging more than 100,000 views per workout and 4.5 billion media impressions. We've also encouraged people to download the Planet Fitness app for access to more than 500 exercises that can be done at home with minimal or no equipment. As a result, we've seen a 173% increase in average daily workouts on our mobile app. Finally, last month, we announced a new partnership with iFit, a leader in streaming home workouts and interactive connected fitness technology. to further accelerate our digital offering. The first step in our collaboration was a series of new streaming workouts available to anyone exclusively on the Planet Fitness app to be used with minimal or no equipment. The workouts are available for free to both Planet Fitness members and non-members to span a broad range of fitness and wellness categories including at-home cardio, at-home strength training, stretching, and more. We continue to explore possibilities for expanding our partnership with iFit in the future in order to deliver more value to our members. Looking ahead. Our goal is to ensure that we come out of the COVID-19 situation with the same store count and member count we had when we began. I could not be more proud of the way our team members and franchisees have united to muscle through this together and support one another during this time. Our current focus is on creating and maintaining a healthy, safe environment inside our stores for our team and our members for when they reopen. An example of just a few steps we have taken to ensure this include providing personal protective equipment for all employees, increased cleaning stations throughout our stores, enabling members to use our cardio equipment while adhering to physical distancing guidelines, touchless check-in for members via our mobile app, and more. These are difficult times for everyone and impact on our industry and overall economy from COVID-19 is still unclear at this point. However, based on several factors, such as the strength of the Planet Business brand, our differentiated business model, our attractive price points and welcoming non-intimidating store environment, are a great group of employees and franchisees in an increased focus on the importance of health and wellness. I'm confident we will emerge from this period well-positioned to further expand our leadership role in the fitness industry. I'll now turn the call over to Dorvan.