Planet Fitness, Inc.

After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. I would now like to turn the conference over to Stacy Garabella. Please go ahead.

Thank you, operator, and good morning, everyone. Speaking on today's call will be Planet Fitness Chief Executive Officer Colleen Keating, and Chief Financial Officer Tom Fitzgerald. Both 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 Colleen, 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 investor website along with any reconciliation of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Now I will turn the call over to Colleen.

Thank you, Stacey, and thank you, everyone, for joining us for the Planet Fitness Q2 earnings call. I'm thrilled to be here speaking with you. During the second quarter, we eclipsed the 2600 store mark. grew same-store sales by 4.2%, delivered 5.1% revenue growth, and increased adjusted EBITDA by 7.2%. As I considered the opportunity to join Planet Fitness, I was drawn to two things. First, growing businesses is one of my passions. I believed I could not only contribute to the tremendous potential of our next chapter, but that I could have a real impact on it. With 30 plus years of experience in franchise businesses, real estate, operations, and marketing, I've led high growth consumer businesses at scale. I believe that I have a unique perspective on our growth opportunities and the actions we need to take to capitalize on them. And second was the franchise model and the opportunity to continue to work with franchisees. Throughout my career, I've worked extensively in franchise businesses within the hospitality industry. There are many similarities between hospitality and fitness. Foundationally, both are focused on bringing an experience to life for guests or members and that they leave feeling better than when they came. Since joining in early June, I've hit the ground running. I've already visited more than a dozen clubs across six states plus Spain, meeting with franchisees, and interacting with team members, all with the purpose of listening, engaging, and seeing how our members are experiencing our clubs. We are a 30 plus year old brand with a solid base of about 100 franchisees and more than 19 million members. I'm proud to lead this special business and build on this foundation. As CEO, my near term focus areas are, first, defining our growth ambition. This includes all facets of growth, from stores to members to profit to increasing shareholder value. We are building out our longer-term strategy and how we're going to enable and accelerate healthy growth. On the store growth side, as shown by two third-party studies last year, we believe we can double our footprint domestically to approximately 5,000 locations. up from the 4,000 target we set at our IPO in 2015. Importantly, we are 70% larger by store count than the next 15 high-value, low-price competitors combined, and we have nearly seven times the membership of the next largest competitor. And we're in the early innings of international store growth, as further evidenced by our first European club in Barcelona, Spain. I visited the club last week and saw firsthand our brand being brought to life in an authentic way. I also visited a number of other fitness brands operating in Spain today, and this furthered my confidence that we have a highly differentiated offering and tremendous runway to grow to real scale and density in the Spanish market, where today only roughly 10% of the population belongs to a gym. I also toured our pipeline sites, visited two clubs under construction, and a number of sites currently under consideration. These were thoughtfully selected sites in areas with strong population density and population growth. I had an opportunity to spend time with our team in Spain who have the right skill set, market knowledge, and depth of experience to lead our growth on the ground. At the same time, We're ensuring that we're strategic and disciplined in our ambitions, prioritizing sustainable, profitable growth and the member experience. I see our growth ambition as an ongoing journey. I'm committed to continuously exploring and identifying new opportunities to accelerate our efforts while continuing to deliver value across our stakeholders. To that end, My second priority is delivering an unparalleled member experience. We hold a highly differentiated position in the high value, low price sector of the fitness industry. We are about bringing an experience to life and sharing a deep emotional connection with our members. We take care of people so they can improve their lives and well-being. I've been truly impressed by the interactions I've witnessed between our team and members during my many club visits to date. I experienced firsthand what's so special about this brand, the sense of belonging in a community you're proud to be a part of. You immediately feel the positive energy when you walk into one of our clubs. I've always been very passionate about having feet on the street, meaning spending time in our clubs and staying close to our members and our team members who deliver on our brand values every day. we strive to ensure that there's no gym intimidation in our clubs. We also need to make sure our current members have exceptional experiences, both inside and outside our clubs, so they choose to stay with us. My third priority is to evolve our brand messaging. In 2023, along with our franchisees, we estimate that we spent more than $300 million on marketing and advertising. Looking forward, We have an opportunity to further sharpen our brand promise and mission in our marketing efforts as we encourage members to choose us as they embark on their fitness journeys. We need to increase our emphasis on the high value part of HVLP by communicating the unique selling points of being a Planet Fitness member. Our clubs break away from the cheap gym perception by offering unparalleled experience and a sense of belonging. There are about 140 million people who live within close proximity of an existing Planet Fitness location today who don't currently belong to a gym. That's who we're looking to reach, in addition to our current and former members. There are more than 4 million Gen Zs who become eligible for membership each year as they age. Gen Zs continue to make up the majority of our net new joins each quarter. To this end, We launched our fourth year of the High School Summer Pass program in June and have more than 2.6 million teen participants to date, which is slightly less than we had last year at this time, but is highly encouraging given that we shortened this year's program. This has been an incredibly successful, relatively low-cost program that yielded a 5.5% conversion rate to paying members last year. Across all demographic segments, we will be evolving our messaging of why Planet Fitness and what differentiates us from the competition. Our new brand messaging will start to show up later this year and, importantly, in the first quarter of 2025. And the fourth area of focus is underscoring that franchisee profit drives franchisor profit through product refinement and operational efficiency. I believe in creating a culture of accountability and in having a shared goal with our franchisees. The coach versus cop mentality allows us to continuously iterate on our fantastic model by working together with our franchisees as a team. If franchisees are successful, we will be successful. This will include refining our product offering and operational efficiencies to maximize the economic value proposition of our franchisees while delivering the most relevant on-brand experience for our members in my interactions with investors since i joined planet fitness there has been a focus on when we will get back to pre-pandemic new store opening levels it's a very different macro environment than before covid and the cost to build a new location was up by more than 30 in 2023 versus 2019. the new growth model aimed at the biggest opportunities to further enhance the attractiveness of our returns, is a key lever that we pulled to address unit economics. Additionally, on June 28th, the $15 pricing for new Classic Card members took effect. Just a reminder, current Classic Card members who joined prior to June 28th are locked in at the $10 monthly membership fee. We expect that after one year of the price being in effect, existing stores will see a low to mid single digit percentage increase to AUVs with an even greater impact to new stores as the majority of their classic card members will be paying $15. We also launched two black card pricing tests in select markets, one at $27.99 and the other at $29.99. If either of these tests prove successful, This increase could also further enhance store returns. We look forward to continuing to collaborate with our franchisees, and we're excited to join them at our annual Franchisee Conference in September as we begin the next chapter of growth for Planet Fitness. And to capitalize on these opportunities, we need a great team that competes and wins. I keep a hard hat in my office to remind me that being a builder of blue ribbon teams is what drives a business forward. As such, a top priority for me is the CFO search, and I've been working closely with the team to identify the best candidate for the future of our brand. The search process we are running is thorough and comprehensive, and we're encouraged by the quality of candidates and the enthusiasm toward the role. The search process we are running is thorough and comprehensive, and we're encouraged by the quality of candidates and the enthusiasm toward the role. As the search progresses, Tom has agreed to stay on as CFO until the end of the year. We believe this timing will provide for thorough onboarding and as smooth a transition as possible. We're grateful for Tom's ongoing support and commitment to Planet Fitness. Now I will turn it over to Tom.