Planet Fitness, Inc.

Hello, everyone, and welcome to the Planet Fitness Third Quarter Earnings Conference Call. My name is Emily, and I'll be coordinating your call today. At the end of the presentation, you will have the opportunity to ask a question by pressing Start, followed by the number 1 on your telephone keypads. I'll now turn the call over to Stacey Caravella, VP Investor Relations. Please go ahead, Stacey.

Thank you, Operator, and good morning, everyone. Speaking on today's call will be Planet Fitness Chief Executive Officer Chris Rondeau, and Chief Financial Officer Tom Fitzgerald, both of whom will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. Before I turn the call over to Chris, I'd like to remind everyone that the language on forward-looking statements included in our earnings release also applies to our comments made during the call. Our release can be found on our website, investor.planetfitness.com, along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. I'd also like to invite everyone to listen in to our Investor Day on Tuesday, November 15th. You can find details on timing and the link to the webcast on our Investor Relations website. Now I'll turn the call over to Chris.

Thank you, Stacey, and thank you everyone for joining us for today's call. We ended the quarter with more than 16.6 million members, an all-time high. and added 29 new locations during the quarter, growing our total store base to 2,353. We continue our steady recovery out of the pandemic. Member trends remain strong, with Q3 joined back to historical pre-COVID seasonality. Also, members who are visiting the gym continue to visit more frequently, and cancels are lower compared to 2019, which we believe are signs that members are more committed to business. We recently hosted our Franchisee Conference, and the energy was amazing, as we were back meeting in person the first time in three years. The theme of the conference was unstoppable, highlighting our ability to succeed over the past 30 years for all types of economic and political climates. While the industry reported that 25% of health and fitness facilities have closed due to COVID, given the strength of our model and franchise system, we survived the pandemic without a single permanent foreclosure, emerging even stronger with tremendous opportunity for future growth. While all age generations are nearly back to or above their pre-pandemic penetration levels, A major topic of our presentations during the conference were our efforts to continue to increase our penetration of all generations with a strong focus on Gen Z. We're excited about the potential long-term opportunity we have with Gen Z, as evidenced by the 3.5 million teens who signed up for the High School Summer Pass program. When the program ended in August, more than 14% of all high school age teens in the U.S. were High School Summer Pass participants. Not only did they enroll in the program, teens logged 17 million workers. We made the sign-in process even more seamless this year, allowing teams to register online, which enabled us to connect with them and their parents or guardians. In fact, our app topped the most downloaded list of apps in the Apple Store during the initial days following the launch. Through a targeted acquisition strategy, we began reaching out to the participants and their parents or guardians throughout the summer via email, in-app messaging, and text, with an offer of one month free if they joined as a paying member once the summer was over. Today, nearly 300,000 teens and parents or guardians have joined for a total conversion rate of 5%, helping to drive member growth in the third quarter. We're already outpacing the conversion rate we had in 2019, the last time we ran this similar program. And we have a much bigger base, more than three and a half times the participants we experienced in 2019. We continue to market to them and believe that when they are ready to join a gym, Planet Fitness will be top of mind. Along with our franchisees, we're focused on gearing up for our first quarter marketing plans. Pre-pandemic, we would typically get 60% of our full year net membership gains in Q1. We look forward to the first quarter of 2023, which we're planning to be our first uninterrupted Q1 in four years without any impact from COVID. For the eighth year in a row, we will once again be the presenting sponsor for the Times Square's New Year's Eve celebration. We're the longest running sponsor, as well as the only gym company ever. given our marketing size and scale advantage. This will also kick off our January national brand campaign focused on reinforcing the benefits of working out besides physical health, like mental wellness, managing stress, and improved sleep, as well as a post-workout positive energy failing in the globe. As noted on our second quarter call, the percent of mature stores that have recovered and surpassed previous membership levels remains stable at around mid-30%, but we added to overall membership counts. Given our cervical joint seasonality, we don't anticipate this to move significantly until the first quarter when we typically see high net member growth. The system-wide rollout of the Blackheart price increase in May from $22.99 to $24.99 continues to outperform the test results. While the price increase is only for new joints, it's driving up our overall average rate. 30% of our 8.2 Q3 comp growth is driven by rate, with a balance coming from net member growth. This helps our franchisees in corporate store segments partially offset increased operational costs experienced in the last couple years. Yesterday, we announced a promotion that if you join as a Black Card member between November 7th and November 15th, you receive a free Halo View, Amazon's fitness and health wearable tracker. We're excited about this collaboration, and we continue to explore possibilities for working with other well-known large brands who are in adjacent categories to the fitness industry. We believe that we are an attractive brand partner given our size and scale and the diversity of our more than 16.6 million members across gender, age, incomes, and other attributes. Lastly, I'm excited about our recent announcement that we promoted Jen Simmons, previously Senior Vice President of Business Strategy and Analytics, to Division President of Corporate Clubs, and that Paul Barber has joined as our Chief Information Officer. Jen has been with Planet for nine years and has built the business strategy and analytics functions from the ground up, using data and analytics to develop and drive our overall corporate strategy. We look forward to her leadership of corporate store fleet, driving performance through insights that will help benefit the entire franchise system. Paul will lead our technology evolution and strategy to deliver technology solutions that will continue to enhance the member experience while optimizing infrastructure, data, and operations for flexibility and scale. Our search for president is still underway, but I feel good about our organizational structure. And I believe that we have the leaders in place who will drive our next stage of growth as we emerge even stronger post-pandemic. We also look forward to discussing this in more detail at our investor day next week. I'll now turn the call over to Tom.