Planet Fitness has exceeded expectations with its Q2 results, causing share prices to jump by more than 11 per cent.

Revenue rose by 5.1 per cent on the previous year, to US$300.9 million, beating the forecasts of US$290.18 million.

System-wide sales increased to US$1.2 billion from US$1.1 billion in the prior year period and system-wide same store sales growth was 4.2 per cent. The company takes a cut of this turnover by franchisees.

New CEO, Colleen Keating, who joined in June, says global growth is top of the agenda: "As we enter our next chapter, we're committed to further defining our growth ambition and capitalising on the meaningful opportunities across the industry, both in the US and internationally.

“This includes maintaining a steadfast focus on delivering an unparalleled member experience, evolving our brand messaging and operating under the principle that when our franchisees win, we win. By doing so, I'm confident in our potential for long-term sustainable growth of stores and members and our ability to deliver significant value for shareholders," she said.

During the second quarter, the low-cost fitness franchisor, which has almost 19.7 million members, completed a US$800 million refinancing and executed a US$280 million share repurchase.

Global growth is part of the plan and the company is eyeing new markets, having recently entered Spain.

Eighteen stores were opened system-wide during the period, bringing system-wide total stores to 2,617 as of June 30, 2024. It opened 165 new locations in 2023, at which point it had 2,575 clubs, indicating that 42 new locations opened in the first half of 2024.

Franchise segment revenue increased by 9.1 per cent to US$107.8 million from US$98.8 million in the prior year period. This was due to higher royalty revenue, higher royalties on annual fees and new stores opened since April 2023.

Corporate-owned stores segment revenue increased by 10.3 per cent to US$125.5 million from US$113.8 million in the prior year period. Factors impacting this increase include higher annual fee revenue and new stores opened and acquired since April 2023.

Equipment segment revenue decreased by 8.4 per cent to US$67.7 million from US$73.9 million in the prior year period due to changes in the way Planet Fitness does its purchasing – leaving more time between equipment refits.

2024 Outlook

The company is sticking with previously-stated expectations of between 140 and 150 new locations by the end of 2024 and commissions from new equipment placements at 120-130 in franchisee-owned locations. This will mean opening a further 98 - 108 locations in the second half of this year against the 42 in the first half, marking a sharp uptick in opening rates.

Revenue for the full year is expected to be 4 to 6 per cent higher than 2023 with system-wide same store sales expected to be between 3 and 5 per cent.

Adjusted EBITDA is forecast to increase in the 7 to 9 per cent range and adjusted net income to increase by between 4 and 6 per cent.

Net interest expense is expected to be around US$75 million, excluding the write-off of deferred financing costs associated with the debt refinancing transaction.

Capital expenditures are expected to increase by approximately 25 per cent, driven by additional stores in the corporate-owned portfolio.

The health club sector is seeing good growth, especially when compared with the boutique sector, where single-modality franchises are having a harder time at present, partly due to their more limited offerings.