UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
November 7, 2019
Date of Report (Date of earliest event reported)  
 Planet Fitness, Inc.
(Exact name of registrant as specified in its charter)

					
 	 	 	 	 	
Delaware	 	001-37534	 	38-3942097	
(State or other jurisdiction of incorporation)	 	(Commission File Number)	 	(I.R.S. Employer Identification No.)	
4 Liberty Lane West
Hampton, NH 03842
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (603) 750-0001
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

	
		
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

	
		
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

	
		
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

	
		
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

Securities registered pursuant to Section 12(b) of the Exchange act:

			
Title of each class	Trading Symbol(s)	Name of each exchange on which registered	
Class A common stock, $0.0001 Par Value	PLNT	New York Stock Exchange	

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

	
		
Item 2.02	Results of Operations and Financial Condition.	
On November 7, 2019, Planet Fitness, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2019. A copy of this press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.02.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

	
		
Item 9.01	Financial Statements and Exhibits.	

	
		
(d)	Exhibits	

	

Exhibit No.	  	Description	
 	 	
99.1	  	Press Release dated November 7, 2019	
104	 	The cover page from this Current Report on Form 8-K, formatted in Inline XBRL (included as Exhibit 101)	

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	

PLANET FITNESS, INC.	
 	 	
By:	 	/s/ Dorvin Lively	
Name:
Title:	 	Dorvin Lively
President and Chief Financial Officer	
Dated: November 7, 2019

Exhibit 99.1
Planet Fitness, Inc. Announces Third Quarter 2019 Results
System-Wide Same Store Sales Increased 7.9%
41 New Planet Fitness Stores Opened
Raises Full Year Outlook
Hampton, NH, November 7, 2019 - Today, Planet Fitness, Inc. (NYSE:PLNT) reported financial results for its third quarter ended September 30, 2019.
Third Quarter Fiscal 2019 Highlights

•	Total revenue increased from the prior year period by 22.1% to $166.8 million.	

•	System-wide same store sales increased 7.9%.	

•	Net income attributable to Planet Fitness, Inc. was $25.8 million, or $0.31 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $17.5 million, or $0.20 per diluted share in the prior year period.	
		
•	Net income increased 45.0% to $29.7 million, compared to net income of $20.5 million in the prior year period.	
		
•	Adjusted net income(1) increased 19.5% to $33.1 million, or $0.36 per diluted share, compared to $27.7 million, or $0.28 per diluted share in the prior year period.	
		
•	Adjusted EBITDA(1) increased 22.2% to $65.7 million from $53.8 million in the prior year period.	
		
•	41 new Planet Fitness stores were opened during the period, bringing system-wide total stores to 1,899 as of September 30, 2019.	
(1) Adjusted net income and Adjusted EBITDA are non-GAAP measures. For reconciliations of Adjusted EBITDA and Adjusted net income to U.S. GAAP (“GAAP”) net income see “Non-GAAP Financial Measures” accompanying this press release.

“We delivered another quarter of very solid results,” stated Chris Rondeau, Chief Executive Officer. “High-single digit system-wide same store sales, combined with accelerated new store openings and our franchisees’ continued commitment to re-equip their existing clubs with new equipment, fueled a 22% increase in total revenue. The third quarter was also highlighted by our highest-attended franchisee conference to date with over 1,500 attendees from across the system coming together to share ideas on how to strengthen the Planet Fitness brand, enhance the member experience and drive new member sign ups. Based on several factors including our experienced franchisees and their ability to execute, the significant amount of projected store expansion still ahead, and our increasing marketing spend, I am confident that the business is well positioned to drive continued growth and increased profitability.”
Operating Results for the Third Quarter Ended September 30, 2019
For the third quarter 2019, total revenue increased $30.2 million or 22.1% to $166.8 million from $136.7 million in the prior year period which included system-wide same store sales growth of 7.9%. By segment:

•	Franchise segment revenue increased $11.9 million or 21.7% to $66.7 million from $54.8 million in the prior year period, driven primarily by higher royalty revenue as a result of new stores opened since July 1, 2018, an 8.1% increase in same store sales, and a higher average royalty rate;	

•	Corporate-owned stores segment revenue increased $5.3 million or 15.1% to $40.7 million from $35.4 million in the prior year period, $2.7 million of which is from corporate-owned stores opened or acquired since July 1, 2018, and another $1.4 million of which is from corporate-owned same store sales growth of 4.9%, and higher annual fee revenue of $1.1 million; and	

•	Equipment segment revenue increased $12.9 million or 27.9% to $59.4 million from $46.4 million in the prior year period, driven by an increase in replacement equipment sales to existing franchisee-owned stores.	
.

For the third quarter of 2019, net income attributable to Planet Fitness, Inc. was $25.8 million, or $0.31 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $17.5 million, or $0.20 per diluted share in the prior year period. Net income was $29.7 million in the third quarter of 2019 compared to $20.5 million in the prior year period. Adjusted net income increased 19.5% to $33.1 million, or $0.36 per diluted share, from $27.7 million, or $0.28 per diluted share in the prior year period. Adjusted net income has been adjusted to reflect a normalized federal income tax rate of 26.6% for the current year period and 26.3% for the comparable prior year period and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see “Non-GAAP Financial Measures”).
Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see “Non-GAAP Financial Measures”), increased 22.2% to $65.7 million from $53.8 million in the prior year period.
Segment EBITDA represents our Total Segment EBITDA broken down by the Company’s reportable segments. Total Segment EBITDA is equal to EBITDA, which is defined as net income before interest, taxes, depreciation and amortization (see “Non-GAAP Financial Measures”).

•	Franchise segment EBITDA increased $7.3 million or 19.6% to $44.3 million driven by royalties from franchised stores opened since July 1, 2018, a higher average royalty rate and higher same store sales of 8.1%;	

•	Corporate-owned stores segment EBITDA increased $1.5 million or 9.9% to $16.8 million driven primarily by an increase in corporate-owned same store sales of 4.9%, higher annual fee revenue and from additional clubs opened or acquired since July 1, 2018; and	

•	Equipment segment EBITDA increased by $4.1 million or 42.3% to $13.7 million driven by an increase in replacement equipment sales to existing franchisee-owned stores.	
2019 Outlook
For the year ending December 31, 2019, the Company now expects:

•	Total revenue to increase approximately 19% as compared to the year ended December 31, 2018, up from prior guidance of approximately 18%;	

•	Total new store equipment sales in the high end of the range of 250 to 260;	

•	System-wide same store sales of approximately 8.6%, up from prior guidance of approximately 8%;	

•	Adjusted net income to increase approximately 21% as compared to the year ended December 31, 2018, up from prior guidance of approximately 20%; and	

•	Adjusted net income per diluted share to increase approximately 28% to $1.56 as compared to the year ended December 31, 2018, up from prior guidance of approximately 26%.	

Presentation of Financial Measures
Planet Fitness, Inc. (the “Company”) was formed in March 2015 for the purpose of facilitating the initial public offering (the “IPO”) and related recapitalization transactions that occurred in August 2015, and in order to carry on the business of Pla-Fit Holdings, LLC (“Pla-Fit Holdings”) and its subsidiaries. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings’ financial results and reports a non-controlling interest related to the portion of Pla-Fit Holdings not owned by the Company.
The financial information presented in this press release includes non-GAAP financial measures such as EBITDA, Segment EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted, to provide measures that we believe are useful to investors in evaluating the Company’s performance. These non-GAAP financial measures are supplemental measures of the Company’s performance that are neither required by, nor presented in accordance with GAAP. These financial measures should not be considered in isolation or as substitutes for GAAP financial measures such as net income or any other performance measures derived in accordance with GAAP. In addition, in the future, the Company may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted. The Company’s presentation of Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted, should not be construed as an inference that the Company’s future results will be unaffected by similar amounts or other unusual or nonrecurring items. See the tables at the end of this press release for a reconciliation of EBITDA, Adjusted EBITDA, Total Segment EBITDA, Adjusted net income, and Adjusted net income per share, diluted, to their most directly comparable GAAP financial measure.
Same store sales refers to year-over-year sales comparisons for the same store sales base of both corporate-owned and franchisee-owned stores. We define the same store sales base to include those stores that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same store sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned stores.
The non-GAAP financial measures used in our full-year outlook will differ from net income and net income per share, diluted, determined in accordance with GAAP in ways similar to those described in the reconciliations at the end of this press release. We do not provide guidance for net income or net income per share, diluted, determined in accordance with GAAP or a reconciliation of guidance for Adjusted net income and Adjusted net income per share, diluted, to the most directly comparable GAAP measure because we are not able to predict with reasonable certainty the amount or nature of all items that will be included in our net income and net income per share, diluted, for the year ending December 31, 2019. These items are uncertain, depend on many factors and could have a material impact on our net income and net income per share, diluted, for the year ending December 31, 2019.
Investor Conference Call
The Company will hold a conference call at 4:30 pm (ET) on November 7, 2019 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.planetfitness.com via the “Investor Relations” link. The webcast will be archived on the website for one year.
About Planet Fitness
Founded in 1992 in Dover, NH, Planet Fitness is one of the largest and fastest-growing franchisors and operators of fitness centers in the United States by number of members and locations. As of September 30, 2019, Planet Fitness had more than 14.1 million members and 1,899 stores in 50 states, the District of Columbia, Puerto Rico, Canada, the Dominican Republic, Panama and Mexico. The Company’s mission is to enhance people’s lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone®. More than 95% of Planet Fitness stores are owned and operated by independent business men and women.
Investor Contact:
Brendon Frey, ICR
brendon.frey@icrinc.com
203-682-8200
Media Contacts:
McCall Gosselin, Planet Fitness
mccall.gosselin@pfhq.com
603-957-4650
Julia Young, ICR
julia.young@icrinc.com
646-277-1280

Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include the Company’s statements with respect to expected future performance presented under the heading “2019 Outlook,” those attributed to the Company’s Chief Executive Officer in this press release and other statements, estimates and projections that do not relate solely to historical facts. Forward-looking statements can be identified by words such as “believe,” “expect,” “goal,” “plan,” “will,” “prospects,” “future,” “ahead,” “projected,” “strategy” and similar references to future periods, although not all forward-looking statements include these identifying words. Forward-looking statements are not assurances of future performance. Instead, they are based only on the Company’s current beliefs, expectations and assumptions regarding the future of the business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. Actual results and financial condition may differ materially from those indicated in the forward-looking statements. Important factors that could cause our actual results to differ materially include risks and uncertainties associated with competition in the fitness industry, the Company’s and franchisees’ ability to attract and retain new members, the Company’s and franchisees’ ability to identify and secure suitable sites for new franchise stores, changes in consumer demand, changes in equipment costs, the Company’s ability to expand into new markets domestically and internationally, operating costs for the Company and franchisees generally, availability and cost of capital for franchisees, acquisition activity, developments and changes in laws and regulations, our substantial increased indebtedness as a result of our refinancing and securitization transactions and our ability to incur additional indebtedness or refinance that indebtedness in the future, our future financial performance and our ability to pay principal and interest on our indebtedness, our corporate structure and tax receivable agreements, failures, interruptions or security breaches of the Company’s information systems or technology, general economic conditions and the other factors described in the Company’s annual report on Form 10-K for the year ended December 31, 2018, and the Company’s other filings with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in forward-looking statements, investors should not place undue reliance on forward-looking statements, which reflect the Company’s views only as of the date of this press release. Except as required by law, neither the Company nor any of its affiliates or representatives undertake any obligation to provide additional information or to correct or update any information set forth in this release, whether as a result of new information, future developments or otherwise.

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share amounts)

	
																	
 	 	For the three months ended
September 30,	 	For the nine months ended
September 30,	
 	 	2019	 	2018	 	2019	 	2018	
Revenue:	 	 		 	 		 	 		 	 		
Franchise	 	$	53,443		 	$	41,997		 	$	164,624		 	$	129,575		
Commission income	 	614		 	1,448		 	2,673		 	5,012		
National advertising fund revenue	 	12,652		 	11,377		 	36,986		 	32,997		
Corporate-owned stores	 	40,742		 	35,406		 	118,481		 	102,365		
Equipment	 	59,364		 	46,428		 	174,528		 	128,589		
Total revenue	 	166,815		 	136,656		 	497,292		 	398,538		
Operating costs and expenses:	 	 	 	 	 	 	 	 	
Cost of revenue	 	46,194		 	36,871		 	135,071		 	100,114		
Store operations	 	22,295		 	18,751		 	63,363		 	55,154		
Selling, general and administrative	 	20,928		 	17,233		 	57,944		 	52,066		
National advertising fund expense	 	12,652		 	11,377		 	36,986		 	32,997		
Depreciation and amortization	 	11,832		 	8,863		 	32,316		 	25,947		
Other (gain) loss	 	(147	)	 	(12	)	 	99		 	958		
Total operating costs and expenses	 	113,754		 	93,083		 	325,779		 	267,236		
Income from operations	 	53,061		 	43,573		 	171,513		 	131,302		
Other expense, net:	 	 	 	 	 	 	 	 	
Interest income	 	1,808		 	2,025		 	5,585		 	2,480		
Interest expense	 	(14,807	)	 	(17,909	)	 	(44,192	)	 	(35,725	)	
Other expense	 	(61	)	 	(27	)	 	(4,824	)	 	(338	)	
Total other expense, net	 	(13,060	)	 	(15,911	)	 	(43,431	)	 	(33,583	)	
Income before income taxes	 	40,001		 	27,662		 	128,082		 	97,719		
Provision for income taxes	 	10,309		 	7,190		 	26,924		 	23,335		
Net income	 	29,692		 	20,472		 	101,158		 	74,384		
Less net income attributable to non-controlling interests	 	3,915		 	3,001		 	13,128		 	11,158		
Net income attributable to Planet Fitness, Inc.	 	$	25,777		 	$	17,471		 	$	88,030		 	$	63,226		
Net income per share of Class A common stock:	 	 	 	 	 	 	 	 	
Basic	 	$	0.31		 	$	0.20		 	$	1.05		 	$	0.72		
Diluted	 	$	0.31		 	$	0.20		 	$	1.04		 	$	0.72		
Weighted-average shares of Class A common stock outstanding:	 	 	 	 	 	 	 	 	
Basic	 	83,157		 	88,047		 	83,700		 	87,727		
Diluted	 	83,807		 	88,458		 	84,354		 	88,064		

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except per share amounts)

	
									
 	 	September 30, 2019	 	December 31, 2018	
Assets	 	 	 	 	
Current assets:	 	 	 	 	
Cash and cash equivalents	 	$	219,752		 	$	289,431		
Restricted cash	 	30,499		 	30,708		
Accounts receivable, net of allowance for bad debts of $37 and $84 at September 30, 2019 and
December 31, 2018, respectively	 	29,398		 	38,960		
Inventory	 	2,612		 	5,122		
Restricted assets – national advertising fund	 	657		 	—		
Prepaid expenses	 	8,649		 	4,947		
Other receivables	 	9,232		 	12,548		
Other current assets	 	5,471		 	6,824		
Total current assets	 	306,270		 	388,540		
Property and equipment, net of accumulated depreciation of $70,083 as of September 30, 2019
and $53,086 as of December 31, 2018	 	131,454		 	114,367		
Right of use assets, net	 	127,746		 	—		
Intangible assets, net	 	227,575		 	234,330		
Goodwill	 	206,752		 	199,513		
Deferred income taxes	 	418,745		 	414,841		
Other assets, net	 	1,690		 	1,825		
Total assets	 	$	1,420,232		 	$	1,353,416		
Liabilities and stockholders' deficit	 	 	 	 	
Current liabilities:	 	 	 	 	
Current maturities of long-term debt	 	$	12,000		 	$	12,000		
Accounts payable	 	23,037		 	30,428		
Accrued expenses	 	25,737		 	32,384		
Equipment deposits	 	8,566		 	7,908		
Restricted liabilities – national advertising fund	 	657		 	—		
Deferred revenue, current	 	24,638		 	23,488		
Payable pursuant to tax benefit arrangements, current	 	25,506		 	24,765		
Other current liabilities	 	15,780		 	430		
Total current liabilities	 	135,921		 	131,403		
Long-term debt, net of current maturities	 	1,155,049		 	1,160,127		
Deferred rent, net of current portion	 	—		 	10,083		
Lease liabilities, net of current portion	 	127,646		 	—		
Deferred revenue, net of current portion	 	31,532		 	26,374		
Deferred tax liabilities	 	2,067		 	2,303		
Payable pursuant to tax benefit arrangements, net of current portion	 	407,884		 	404,468		
Other liabilities	 	2,250		 	1,447		
Total noncurrent liabilities	 	1,726,428		 	1,604,802		
Stockholders' equity (deficit):	 	 	 	 	
Class A common stock, $.0001 par value - 300,000 authorized, 81,773 and 83,584 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	 	8		 	9		
Class B common stock, $.0001 par value - 100,000 authorized, 8,562 and 9,448 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	 	1		 	1		
Accumulated other comprehensive income	 	189		 	94		
Additional paid in capital	 	27,240		 	19,732		
Accumulated deficit	 	(466,032	)	 	(394,410	)	
Total stockholders' deficit attributable to Planet Fitness, Inc.	 	(438,594	)	 	(374,574	)	
Non-controlling interests	 	(3,523	)	 	(8,215	)	
Total stockholders' deficit	 	(442,117	)	 	(382,789	)	
Total liabilities and stockholders' deficit	 	$	1,420,232		 	$	1,353,416		

Planet Fitness, Inc. and subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands, except per share amounts)

	
									
 	 	For the nine months ended September 30,	
 	 	2019	 	2018	
Cash flows from operating activities:	 	 		 	 		
Net income	 	$	101,158		 	$	74,384		
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	
Depreciation and amortization	 	32,316		 	25,947		
Amortization of deferred financing costs	 	4,014		 	2,041		
Amortization of favorable leases	 	—		 	280		
Amortization of asset retirement obligations	 	178		 	—		
Amortization of interest rate caps	 	—		 	1,170		
Deferred tax expense	 	15,666		 	19,654		
Loss on extinguishment of debt	 	—		 	4,570		
Loss (gain) on re-measurement of tax benefit arrangement	 	4,638		 	(354	)	
Provision for bad debts	 	13		 	8		
Loss on reacquired franchise rights	 	—		 	360		
(Gain) loss on disposal of property and equipment	 	(84	)	 	542		
Equity-based compensation	 	3,565		 	4,137		
Changes in operating assets and liabilities, excluding effects of acquisitions:	 	 	 	 	
Accounts receivable	 	12,779		 	10,922		
Due to and due from related parties	 	(344	)	 	3,174		
Inventory	 	2,509		 	(3,450	)	
Other assets and other current assets	 	(4,628	)	 	4,972		
Accounts payable and accrued expenses	 	(12,939	)	 	2,426		
Other liabilities and other current liabilities	 	1,510		 	(2,869	)	
Income taxes	 	3,047		 	1,028		
Payable pursuant to tax benefit arrangements	 	(17,476	)	 	(21,706	)	
Equipment deposits	 	658		 	4,950		
Deferred revenue	 	6,103		 	7,544		
Leases and deferred rent	 	54		 	4,156		
Net cash provided by operating activities	 	152,737		 	143,886		
Cash flows from investing activities:	 	 	 	 	
Additions to property and equipment	 	(37,138	)	 	(18,601	)	
Acquisition of franchises	 	(14,801	)	 	(45,752	)	
Proceeds from sale of property and equipment	 	84		 	196		
Purchase of intellectual property	 	(300	)	 	—		
Net cash used in investing activities	 	(52,155	)	 	(64,157	)	
Cash flows from financing activities:	 	 	 	 	
Principal payments on capital lease obligations	 	(59	)	 	(35	)	
Proceeds from issuance of long-term debt	 	—		 	1,200,000		
Repayment of long-term debt	 	(9,000	)	 	(709,469	)	
Payment of deferred financing and other debt-related costs	 	—		 	(27,191	)	
Exercise of stock options and ESPP proceeds	 	1,892		 	1,106		
Repurchase and retirement of Class A common stock	 	(157,945	)	 	(42,090	)	
Dividend equivalent payments	 	(229	)	 	(881	)	
Distributions to Continuing LLC Members	 	(5,499	)	 	(5,369	)	
Net cash (used in) provided by financing activities	 	(170,840	)	 	416,071		
Effects of exchange rate changes on cash and cash equivalents	 	370		 	(234	)	
Net (decrease) increase in cash, cash equivalents and restricted cash	 	(69,888	)	 	495,566		
Cash, cash equivalents and restricted cash, beginning of period	 	320,139		 	113,080		
Cash, cash equivalents and restricted cash, end of period	 	$	250,251		 	$	608,646		
Supplemental cash flow information:	 	 	 	 	
Net cash paid for income taxes	 	$	9,061		 	$	3,777		
Cash paid for interest	 	$	40,335		 	$	20,015		
Non-cash investing activities:	 	 	 	 	
Non-cash additions to property and equipment	 	$	4,837		 	$	2,217		

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: EBITDA, Total Segment EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted (collectively, the “non-GAAP financial measures”). The Company believes that these non-GAAP financial measures, when used in conjunction with GAAP financial measures, are useful to investors in evaluating our operating performance. These non-GAAP financial measures presented in this release are supplemental measures of the Company’s performance that are neither required by, nor presented in accordance with GAAP. These financial measures should not be considered in isolation or as substitutes for GAAP financial measures such as net income or any other performance measures derived in accordance with GAAP. In addition, in the future, the Company may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted. The Company’s presentation of Adjusted EBITDA, Adjusted net income, and Adjusted net income per share, diluted, should not be construed as an inference that the Company’s future results will be unaffected by unusual or nonrecurring items.
EBITDA, Segment EBITDA and Adjusted EBITDA
We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our operating performance and we believe these measures provide useful information to investors in evaluating our performance. We have also disclosed Segment EBITDA as an important financial metric utilized by the Company to evaluate performance and allocate resources to segments in accordance with ASC 280, Segment Reporting. We define EBITDA as net income before interest, taxes, depreciation and amortization. Segment EBITDA sums to Total Segment EBITDA which is equal to the Non-GAAP financial metric EBITDA. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our segments as well as the business as a whole. Our board of directors also uses EBITDA as a key metric to assess the performance of management. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company’s core operations. These items include certain purchase accounting adjustments, stock offering-related costs, and certain other charges and gains. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)

A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, is set forth below.

																	
 	 	Three months ended September 30,	 	Nine months ended September 30,	
 	 	2019	 	2018	 	2019	 	2018	
(in thousands)	 	 		 	 		 	 		 	 		
Net income	 	$	29,692		 	$	20,472		 	$	101,158		 	$	74,384		
Interest income	 	(1,808	)	 	(2,025	)	 	(5,585	)	 	(2,480	)	
Interest expense	 	14,807		 	17,909		 	44,192		 	35,725		
Provision for income taxes	 	10,309		 	7,190		 	26,924		 	23,335		
Depreciation and amortization	 	11,832		 	8,863		 	32,316		 	25,947		
EBITDA	 	$	64,832		 	$	52,409		 	$	199,005		 	$	156,911		
Purchase accounting adjustments-revenue(1)	 	275		 	527		 	524		 	941		
Purchase accounting adjustments-rent(2)	 	108		 	198		 	348		 	548		
Loss on reacquired franchise rights(3)	 	—		 	10		 	—		 	360		
Transaction fees(4)	 	—		 	254		 	—		 	290		
Severance costs(5)	 	—		 	—		 	—		 	352		
Pre-opening costs(6)	 	826		 	370		 	1,021		 	853		
Tax benefit arrangement remeasurement(7)	 	(214	)	 	—		 	4,638		 	(354	)	
Other(8)	 	(104	)	 	19		 	55		 	1,039		
Adjusted EBITDA	 	$	65,723		 	$	53,787		 	$	205,591		 	$	160,940		

(1)	Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the “2012 Acquisition”). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.	
		
(2)	Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44, $105, $173 and $272 in the three and nine months ended September 30, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $64, $93, $216 and $276 in the three and nine months ended September 30, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable leases. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our consolidated statements of operations.	
		
(3)	Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations.	
		
(4)	Represents transaction fees and expenses that could not be capitalized related to the issuance of our Series 2018-1 Senior Notes in the three and nine months ended September 30, 2018.	
		
(5)	Represents severance expense recorded in connection with an equity award modification.	
		
(6)	Represents costs associated with new corporate-owned stores incurred prior to the store opening, including payroll-related costs, rent and occupancy expenses, marketing and other store operating supply expenses.	
		
(7)	Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate.	

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)

		
(8)	Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the nine months ended September 30, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system.	
A reconciliation of Segment EBITDA to Total Segment EBITDA is set forth below.

																	
 	 	Three months ended September 30,	 	Nine months ended September 30,	
(in thousands)	 	2019	 	2018	 	2019	 	2018	
Segment EBITDA	 	 	 	 	 	 	 	 	
Franchise	 	$	44,328		 	$	37,075		 	$	141,548		 	$	113,793		
Corporate-owned stores	 	16,799		 	15,279		 	50,505		 	42,115		
Equipment	 	13,741		 	9,654		 	40,920		 	28,579		
Corporate and other	 	(10,036	)	 	(9,599	)	 	(33,968	)	 	(27,576	)	
Total Segment EBITDA(1)	 	$	64,832		 	$	52,409		 	$	199,005		 	$	156,911		
(1) Total Segment EBITDA is equal to EBITDA.

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)

Adjusted Net Income and Adjusted Net Income per Diluted Share
Our presentation of adjusted net income assumes that all net income is attributable to Planet Fitness, Inc., which assumes the full exchange of all outstanding Holdings Units for shares of Class A common stock of Planet Fitness, Inc., adjusted for certain non-recurring items that we do not believe directly reflect our core operations. Adjusted net income per share, diluted, is calculated by dividing Adjusted net income by the total shares of Class A common stock outstanding plus any dilutive options and restricted stock units as calculated in accordance with GAAP and assuming the full exchange of all outstanding Holdings Units and corresponding Class B common stock as of the beginning of each period presented. Adjusted net income and Adjusted net income per share, diluted, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net income and earnings per share, as calculated in accordance with GAAP. We believe Adjusted net income and Adjusted net income per share, diluted, supplement GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of Adjusted net income to net income, the most directly comparable GAAP measure, and the computation of Adjusted net income per share, diluted, are set forth below.

																	
 	 	Three months ended September 30,	 	Nine months ended September 30,	
(in thousands, except per share amounts)	 	2019	 	2018	 	2019	 	2018	
Net income	 	$	29,692		 	$	20,472		 	$	101,158		 	$	74,384		
Provision for income taxes, as reported	 	10,309		 	7,190		 	26,924		 	23,335		
Purchase accounting adjustments-revenue(1)	 	275		 	527		 	524		 	941		
Purchase accounting adjustments-rent(2)	 	108		 	198		 	348		 	548		
Loss on reacquired franchise rights(3)	 	—		 	10		 	—		 	360		
Transaction fees(4)	 	—		 	254		 	—		 	290		
Loss on extinguishment of debt(5)	 	—		 	4,570		 	—		 	4,570		
Severance costs(6)	 	—		 	—		 	—		 	352		
Pre-opening costs(7)	 	826		 	370		 	1,021		 	853		
Tax benefit arrangement remeasurement(8)	 	(214	)	 	—		 	4,638		 	(354	)	
Other(9)	 	(104	)	 	19		 	55		 	1,039		
Purchase accounting amortization(10)	 	4,146		 	3,934		 	12,429		 	11,776		
Adjusted income before income taxes	 	$	45,038		 	$	37,544		 	$	147,097		 	$	118,094		
Adjusted income taxes(11)	 	11,980		 	9,874		 	39,128		 	31,059		
Adjusted net income	 	$	33,058		 	$	27,670		 	$	107,969		 	$	87,035		
 	 	 	 	 	 	 	 	 	
Adjusted net income per share, diluted	 	$	0.36		 	$	0.28		 	$	1.16		 	$	0.88		
 	 	 	 	 	 	 	 	 	
Adjusted weighted-average shares outstanding(12)	 	92,386		 	98,462		 	93,153		 	98,615		
		
(1)	Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.	
		
(2)	Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44, $105, $173 and $272 in the three and nine months ended September 30, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $64, $93, $216 and $276 in the three and nine months ended September 30, 2019 and 2018, respectively, are due to the	

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)

amortization of favorable and unfavorable leases. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our consolidated statements of operations.
		
(3)	Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations.	
		
(4)	Represents transaction fees and expenses that could not be capitalized related to the issuance of our Series 2018-1 Senior Notes in the three and nine months ended September 30, 2018.	
		
(5)	Represents a loss on extinguishment of debt related to the write-off of deferred financing costs associated with the Term Loan B that the Company repaid in August 2018.	
		
(6)	Represents severance expense recorded in connection with an equity award modification.	
		
(7)	Represents costs associated with new corporate-owned stores incurred prior to the store opening, including payroll-related costs, rent and occupancy expenses, marketing and other store operating supply expenses.	
		
(8)	Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate.	
		
(9)	Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the nine months ended September 30, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system.	
		
(10)	Includes $3,096, $3,096, $9,288 and $9,288 of amortization of intangible assets, other than favorable leases, for the three and nine months ended September 30, 2019 and 2018, respectively, recorded in connection with the 2012 Acquisition, and $1,052, $838, $2,867 and $2,488 of amortization of intangible assets for the three months ended September 30, 2019 and 2018, respectively, recorded in connection with historical acquisitions of franchisee-owned stores. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with U.S. GAAP, in each period.	
		
(11)	Represents corporate income taxes at an assumed effective tax rate of 26.6% and 26.3% for the three and nine months ended September 30, 2019 and 2018, respectively, applied to adjusted income before income taxes.	
		
(12)	Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc.	

Planet Fitness, Inc. and subsidiaries
Non-GAAP Financial Measures
(Unaudited)
(Amounts in thousands, except per share amounts)

A reconciliation of net income per share, diluted, to Adjusted net income per share, diluted is set forth below for the three and nine months ended September 30, 2019 and 2018:

																							
 	 	For the three months ended
September 30, 2019	 	For the three months ended
September 30, 2018	
(in thousands, except per share amounts)	 	Net income	 	Weighted Average Shares	 	Net income per share, diluted	 	Net income	 	Weighted Average Shares	 	Net income per share, diluted	
Net income attributable to Planet Fitness, Inc.(1)	 	$	25,777		 	83,807		 	$	0.31		 	$	17,471		 	88,458		 	$	0.20		
Assumed exchange of shares(2)	 	3,915		 	8,579		 	 	 	3,001		 	10,004		 	 	
Net Income	 	29,692		 	 	 	 	 	20,472		 	 	 	 	
Adjustments to arrive at adjusted income
   before income taxes(3)	 	15,346		 	 	 	 	 	17,072		 	 	 	 	
Adjusted income before income taxes	 	45,038		 	 	 	 	 	37,544		 	 	 	 	
Adjusted income taxes(4)	 	11,980		 	 	 	 	 	9,874		 	 	 	 	
Adjusted Net Income	 	$	33,058		 	92,386		 	$	0.36		 	$	27,670		 	98,462		 	$	0.28		
		
(1)	Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares, diluted of Class A common stock outstanding.	
		
(2)	Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. Also assumes the addition of net income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and Class B common shares for shares of Class A common stock.	
		
(3)	Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes.	
		
(4)	Represents corporate income taxes at an assumed effective tax rate of 26.6% and 26.3% for the three months ended September 30, 2019 and 2018, respectively, applied to adjusted income before income taxes.	

	
																							
 	 	For the nine months ended
September 30, 2019	 	For the nine months ended
September 30, 2018	
(in thousands, except per share amounts)	 	Net income	 	Weighted Average Shares	 	Net income per share, diluted	 	Net income	 	Weighted Average Shares	 	Net income per share, diluted	
Net income attributable to Planet Fitness, Inc.(1)	 	$	88,030		 	84,354		 	$	1.04		 	$	63,226		 	88,064		 	$	0.72		
Assumed exchange of shares(2)	 	13,128		 	8,799		 			 	11,158		 	10,551		 			
Net Income	 	101,158		 	 	 	 	 	74,384		 	 	 	 	
Adjustments to arrive at adjusted income
   before income taxes(3)	 	45,939		 	 	 	 	 	43,710		 	 	 	 	
Adjusted income before income taxes	 	147,097		 	 	 	 	 	118,094		 	 	 	 	
Adjusted income taxes(4)	 	39,128		 	 	 	 	 	31,059		 	 	 	 	
Adjusted Net Income	 	$	107,969		 	93,153		 	$	1.16		 	$	87,035		 	98,615		 	$	0.88		
		
(1)	Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares, diluted of Class A common stock outstanding.	
		
(2)	Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. Also assumes the addition of net income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and Class B common shares for shares of Class A common stock.	
		
(3)	Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes.	
		
(4)	Represents corporate income taxes at an assumed effective tax rate of 26.6% and 26.3% for the nine months ended September 30, 2019 and 2018, respectively, applied to adjusted income before income taxes.