Audit Information |
12 Months Ended |
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Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | KPMG LLP |
Auditor Location | Boston, Massachusetts |
Auditor Firm ID | 185 |
Consolidated balance sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Current assets: | ||
Accounts receivable, allowance for bad debts | $ 0 | $ 0 |
Accumulated depreciation | 227,869 | 152,296 |
Allowance for expected credit loss | $ 14,957 | $ 17,462 |
Class A common stock | ||
Stockholders’ equity (deficit): | ||
Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 300,000 | 300,000 |
Common stock, shares issued (in shares) | 83,430 | 83,804 |
Common stock, shares outstanding (in shares) | 83,430 | 83,804 |
Class B common stock | ||
Stockholders’ equity (deficit): | ||
Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000 | 100,000 |
Common stock, shares issued (in shares) | 6,146 | 3,056 |
Common stock, shares outstanding (in shares) | 6,146 | 3,056 |
Consolidated statements of comprehensive income - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Statement of Comprehensive Income [Abstract] | |||
Net income (loss) including non-controlling interests | $ 110,456 | $ 46,122 | $ (15,204) |
Other comprehensive income (loss), net: | |||
Foreign currency translation adjustments | (460) | (15) | (276) |
Total other comprehensive income (loss), net | (460) | (15) | (276) |
Total comprehensive income (loss) including non-controlling interests | 109,996 | 46,107 | (15,480) |
Less: total comprehensive income (loss) attributable to non-controlling interests | 11,054 | 3,348 | (213) |
Total comprehensive income (loss) attributable to Planet Fitness, Inc. | $ 98,942 | $ 42,759 | $ (15,267) |
Business organization |
12 Months Ended |
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Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business organization | Business organization Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with approximately 17.0 million members and 2,410 owned and franchised locations (referred to as stores) in all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia as of December 31, 2022. The Company serves as the reporting entity for its various subsidiaries that operate three distinct lines of business: •Licensing and selling franchises under the Planet Fitness trade name; •Owning and operating fitness centers under the Planet Fitness trade name; and •Selling fitness-related equipment to franchisee-owned stores. In 2012 investment funds affiliated with TSG Consumer Partners, LLC (“TSG”), purchased interests in Pla-Fit Holdings. The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”) and related transactions in order to carry on the business of Pla-Fit Holdings, LLC and its subsidiaries (“Pla-Fit Holdings”). As of August 5, 2015, in connection with the recapitalization transactions, the Company became the sole managing member and holder of 100% of the voting power of Pla-Fit Holdings. Pla-Fit Holdings owns 100% of Planet Intermediate, LLC which has no operations but is the 100% owner of Planet Fitness Holdings, LLC, a franchisor and operator of fitness centers. With respect to the Company, Pla-Fit Holdings and Planet Intermediate, LLC, each entity owns nothing other than the respective entity below it in the corporate structure and each entity has no other material operations. The Company is a holding company whose principal asset is a controlling equity interest in the membership units (“Holdings Units”) in Pla-Fit Holdings. 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 Holdings Units not owned by the Company. As of December 31, 2022, the Company held 100% of the voting interest, and approximately 93.1% of the economic interest in Pla-Fit Holdings and the owners of Holdings Units other than the Company (the “Continuing LLC Owners”) held the remaining 6.9% economic interest in Pla-Fit Holdings. As future exchanges of Holdings Units occur, the economic interest in Pla-Fit Holdings held by Planet Fitness, Inc. will increase.
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Summary of significant accounting policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of significant accounting policies | Summary of significant accounting policies (a) Basis of presentation and consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). All significant intercompany balances and transactions have been eliminated in consolidation. As discussed in Note 1, Planet Fitness, Inc. consolidates Pla-Fit Holdings. The Company also consolidates entities in which it has a controlling financial interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation certain interests where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE is considered to possess the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the rights to receive benefits from the VIE that are significant to it. The principal entities in which the Company possesses a variable interest include franchise entities and certain other entities. The Company is not deemed to be the primary beneficiary for Planet Fitness franchise entities. Therefore, these entities are not consolidated. The results of the Company have been consolidated with Matthew Michael Realty LLC (“MMR”), PF Melville LLC (“PF Melville”), and Planet Fitness NAF, LLC (the “NAF”) based on the determination that the Company is the primary beneficiary with respect to these VIEs. MMR and PF Melville are real estate holding companies that derive a majority of their financial support from the Company through lease agreements for corporate stores. See Note 3 for further information related to the Company’s VIEs. The NAF is an advertising fund, which on behalf of the Company collects 2% annually of gross monthly membership fees from franchisees, in accordance with the provisions of the franchise agreements, and uses the amounts received to increase sales and further enhance the public reputation of the Planet Fitness brand. See Note 4 for further information related to the NAF. (b) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the consolidated financial statements include revenue recognition, valuation of equity-based compensation awards, valuation of assets and liabilities acquired in business combinations, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, allowance for expected credit losses, the present value of lease liabilities, income taxes, including deferred tax assets and liabilities, and the liability for the Company’s tax benefit arrangements. (c) Concentrations Cash and cash equivalents are financial instruments, which potentially subject the Company to a concentration of credit risk. The Company invests its excess cash in several major financial institutions, which are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company maintains balances in excess of these limits, but does not believe that such deposits with its banks are subject to any unusual risk. The credit risk associated with trade receivables is mitigated due to the large number of customers, generally franchisees, and their broad dispersion over many different geographic areas. The Company does not have any concentrations greater than 10% with respect to revenues. The Company purchases equipment, both for corporate-owned stores and for sales to franchisee-owned stores from various equipment vendors. For the year ended December 31, 2022, purchases from two equipment vendors comprised 71% and 22%, respectively, of total equipment purchases. For the year ended December 31, 2021 purchases from two equipment vendors comprised 70% and 28%, respectively, of total equipment purchases. For the year ended December 31, 2020 purchases from two equipment vendors comprised 48% and 40%, respectively, of total equipment purchases. The Company, including the NAF, uses various vendors for advertising services. For the year ended December 31, 2022, purchases from one vendor comprised 77% of total advertising purchases. For the year ended December 31, 2021 purchases from one vendor comprised 41% of total advertising purchases, and for the year ended December 31, 2020 purchases from one vendor comprised 71% of total advertising purchases (see Note 4 for further discussion of the NAF). (d) Cash, cash equivalents and restricted cash The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. In accordance with the Company’s securitized financing facility, certain cash accounts have been established in the name of Citibank, N.A. (the “Trustee”). The Company holds restricted cash which primarily represents cash collections held by the Trustee, which includes interest, principal, and commitment fee reserves. As of December 31, 2022, the Company had restricted cash held by the Trustee of $46,651. Restricted cash has been combined with cash and cash equivalents when reconciling the beginning and end of period balances in the consolidated statements of cash flows. In addition, the Company has restricted cash of $16,008 related to a legal matter. (e) Revenue from contracts with customers The Company’s revenues are comprised of franchise revenue, equipment revenue, and corporate-owned stores revenue. Franchise revenue Franchise revenues consist primarily of royalties, NAF contributions, initial and successor franchise fees and upfront fees from area development agreements (“ADAs”), transfer fees, equipment placement revenue, commission income, online join fees, and other fees. The Company’s primary performance obligation under the franchise license is granting certain rights to use the Company’s intellectual property, and all other services the Company provides under the ADA and franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for under ASC 606 - Revenue Recognition as a single performance obligation, which is satisfied by granting certain rights to use intellectual property over the term of each franchise agreement. Royalties and franchisee contributions to national advertising funds, are calculated as a percentage of franchise monthly dues and annual fees over the term of the franchise agreement. Under the franchise agreements, advertising contributions paid by franchisees must be spent on advertising, marketing and related activities. Initial and successor franchise fees are payable by the franchisee upon signing a new franchise agreement or successor franchise agreement, and transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee. Franchise royalties, as well as NAF contributions, represent sales-based royalties that are related entirely to the performance obligation under the franchise agreement and are recognized as franchise sales occur. Initial and successor franchise fees, as well as transfer fees, are recognized as revenue on a straight-line basis over the term of the respective franchise agreement. ADAs generally consist of an obligation to grant geographic exclusive area development rights. These development rights are not distinct from franchise agreements, so upfront fees paid by franchisees for exclusive development rights are deferred and apportioned to each franchise agreement signed by the franchisee. The pro-rata amount apportioned to each franchise agreement is accounted for identically to the initial franchise fee. The Company is generally responsible for assembly and placement of equipment it sells to U.S., Canada, and Mexico based franchisee-owned stores. Placement revenue is recognized upon completion and acceptance of the services at the franchise location. The Company recognizes commission income from certain of its franchisees’ use of certain preferred vendor arrangements. Commissions are recognized when amounts have been earned and collectability from the vendor is reasonably assured. Online member join fees are paid to the Company by franchisees for processing new membership transactions when a new member signs up for a membership to a franchisee-owned store through the Company’s website. These fees are recognized as revenue as each transaction occurs. Billing transaction fees are paid to the Company by certain of its franchisees for the processing of franchisee membership dues and annual fees through the Company’s third-party hosted point-of-sale system and are recognized as revenue as they are earned. Equipment revenue The Company sells and delivers equipment purchased from third-party equipment manufacturers to U.S., Canada, and Mexico based franchisee-owned stores. Revenue is recognized upon transfer of control of ordered items, generally upon delivery to the customer, which is when the customer obtains physical possession of the goods, legal title is transferred, the customer has all risks and rewards of ownership and an obligation to pay for the goods is created. Franchisees are charged for all freight costs incurred for the delivery of equipment. Freight revenue is recorded within equipment revenue and freight costs are recorded within cost of revenue. In most instances, the Company recognizes equipment revenue on a gross basis as management has determined the Company to be the principal in these transactions. Management determined the Company to be the principal in the transaction because the Company controls the equipment prior to delivery to the final customer as evidenced by its pricing discretion over the goods, inventory transfer of title and risk of loss while the inventory is in transit, and having the primary responsibility to fulfill the customer order and direct the third-party vendor. Corporate-owned stores revenue The following revenues are generated from stores owned and operated by the Company. Membership dues revenue Customers are offered multiple membership choices varying in length. Membership dues are earned and recognized over the membership term on a straight-line basis. Enrollment fee revenue Enrollment fees are charged to new members at the commencement of their membership. The Company recognizes enrollment fees ratably over the estimated duration of the membership life, which is generally two years. Annual membership fee revenue Annual membership fees are annual fees charged to members in addition to and in order to maintain low monthly membership dues. The Company recognizes annual membership fees ratably over the 12-month membership period or as long as there is a service obligation to the member. Retail sales The Company sells Planet Fitness branded apparel, food, beverages, and other accessories. The revenue for these items is recognized at the point of sale. Sales tax All revenue amounts are recorded net of applicable sales tax. (f) Deferred revenue Franchise deferred revenue results from initial and successor franchise fees and ADA fees paid by franchisees, as well as transfer fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement. Deferred revenue is also recognized in the Corporate-owned stores segment for cash received from members for enrollment fees, membership dues and annual fees for the portion not yet earned based on the membership period. Equipment deposits made at the time of ordering equipment are also deferred until the revenue recognition criteria are met. (g) Cost of revenue Cost of revenue consists primarily of direct costs associated with equipment sales (including freight costs) and the cost of retail merchandise sold in corporate-owned stores. Costs related to retail merchandise sales were immaterial in all periods presented. Rebates from equipment vendors where the Company has recognized the related equipment revenue and costs are recorded as a reduction to the cost of revenue. (h) Store operations Store operations consists of the direct costs related to operating corporate-owned stores, including store management and staff, rent expense, utilities, supplies, maintenance, and local and national advertising. (i) Selling, general and administrative Selling, general and administrative expenses consist of costs associated with administrative, corporate-owned and franchisee support functions related to the existing business as well as growth and development activities. These costs primarily consist of payroll, IT related, marketing, legal and accounting expenses. These expenses include costs related to placement services of $6,069, $4,358, and $3,341, for the years ended December 31, 2022, 2021 and 2020, respectively. (j) Accounts receivable Accounts receivable is primarily comprised of amounts owed to the Company resulting from equipment, placement, and commission revenue. The Company evaluates its accounts receivable on an ongoing basis and may establish an allowance for uncollectible amounts based on collections and current credit conditions. Accounts are written off as uncollectible when it is determined that further collection efforts will be unsuccessful. Historically, the Company has not had a significant amount of write-offs. (k) Inventory The Company has inventory at period ends when the Company has title and risk of loss in advance of sale to its franchisees. (l) Leases and asset retirement obligations The Company leases space to operate corporate-owned stores, equipment, office, and warehouse space. The Company currently leases the corporate headquarters, corporate-owned store headquarters and all but one of the corporate-owned stores. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company accounts for fixed lease and non-lease components together as a single, combined lease component. Variable lease costs, which may include common area maintenance, insurance, and taxes are not included in the lease liability and are expensed in the period incurred. Corporate-owned store leases generally have original lease terms of ten years, and typically include one or more renewal options, with renewal option terms that can generally extend the lease term from to ten years or more. The exercise of lease renewal options is at the Company’s sole discretion. The Company includes options to renew in the expected term when they are reasonably certain to be exercised. The depreciable life of assets and leasehold improvements are limited by the expected lease term. At the inception of each lease, the Company determines its appropriate classification as an operating or financing lease. The majority of the Company’s leases are operating leases. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid, reduced by expected reimbursements from landlords. Operating lease right of use (“ROU”) assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, initial direct costs and lease incentives. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases based upon interpolated rates using the Company’s Notes. The Company has an immaterial amount of non-real estate leases that are accounted for as finance leases under ASC 842 - Leases. Leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements reduce the ROU asset related to the lease. These tenant incentives are amortized as reduction of rent expense over the lease term. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Asset retirement obligations In accordance with ASC Topic 410, Asset Retirement and Environmental Obligations, the Company establishes assets and liabilities for the present value of estimated future costs to return certain leased facilities to their original condition. Such assets are depreciated on a straight-line basis over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated restoration costs. (m) Property and equipment Property and equipment is recorded at cost, or fair value when acquired as part of a business combination, and depreciated using the straight-line method over its related estimated useful life. Leasehold improvements are amortized over the shorter of the expected lease term or the estimated useful life of the related asset. Upon sale or retirement, the asset cost and related accumulated depreciation are removed from the respective accounts, and any related gain or loss is reflected in the consolidated statements of operations. Ordinary maintenance and repair costs are expensed as incurred. The estimated useful lives of the Company’s property and equipment by class of asset are as follows:
(n) Advertising expenses The Company expenses advertising costs as incurred. Advertising expenses for corporate-owned stores are included within store operations and totaled $31,462, $15,667, and $10,252 for the years ended December 31, 2022, 2021 and 2020, respectively. In addition to NAF expenses, advertising related to the franchise segment is included within selling, general and administrative expenses and totaled $3,103, $7,144, and $5,408 for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 4 for discussion of the national advertising fund. (o) Goodwill, long-lived assets, and other intangible assets Goodwill and other intangible assets that arise from acquisitions are recorded in accordance with ASC Topic 805 - Business Combinations and ASC Topic 350, Intangibles—Goodwill and Other. In accordance with this guidance, specifically identified intangible assets must be recorded as a separate asset from goodwill if either of the following two criteria is met: (1) the intangible asset acquired arises from contractual or other legal rights; or (2) the intangible asset is separable. Intangibles are typically trade and brand names, customer relationships, and reacquired franchise rights. Transactions are evaluated to determine whether any gain or loss on reacquired franchise rights, based on their fair value, should be recognized separately from identified intangibles. Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed annually for impairment or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives on either a straight-line or accelerated basis as deemed appropriate, and are reviewed for impairment when events or circumstances suggest that the assets may not be recoverable. The Company performs its annual test for impairment of goodwill and indefinite lived intangible assets on December 1 of each year. During 2022, the Company moved its assessment date from December 31 to December 1 in order to better align with the Company’s annual planning cycle. The annual goodwill test begins with a qualitative assessment, where qualitative factors and their impact on critical inputs are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines that a reporting unit has an indication of impairment based on the qualitative assessment, it is required to perform a quantitative assessment. During the periods presented, the Company did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded. For indefinite lived intangible assets, the impairment assessment consists of comparing the carrying value of the asset to its estimated fair value. To the extent that the carrying value exceeds the fair value of the asset, an impairment is recorded to reduce the carrying value to its fair value. The Company is also permitted to make a qualitative assessment of whether it is more likely than not an indefinite lived intangible asset’s fair value is less than its carrying value prior to applying the quantitative assessment. If based on the Company’s qualitative assessment it is not more likely than not that the carrying value of the asset is less than its fair value, then a quantitative assessment is not required. During the periods presented, the Company did not need to proceed beyond the qualitative analysis, and determined that no impairment charges were required. The Company applies the provisions of ASC Topic 360, Property, Plant and Equipment, which requires that long-lived assets, including amortizable intangible assets, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for impairment, then assets are required to be grouped and evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the undiscounted future net cash flows expected to be generated by the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no assets that were impaired during any of the periods presented. (p) Income taxes The Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized for the expected future tax consequences attributable to temporary differences between the carrying amount of the existing tax assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied in the years in which temporary differences are expected to be recovered or settled. The principal items giving rise to temporary differences are the use of accelerated depreciation and certain basis differences resulting from acquisitions and the recapitalization transactions. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Planet Fitness, Inc. is the sole managing member of Pla-Fit Holdings, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Pla-Fit Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Pla-Fit Holdings is passed through to and included in the taxable income or loss of its members, including Planet Fitness, Inc. following the recapitalization transactions, on a pro rata basis. Planet Fitness, Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to the allocable share of any taxable income of Pla-Fit Holdings. The Company is also subject to taxes in certain foreign jurisdictions. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs (see Note 17). (q) Tax benefit arrangements The Company’s acquisition of Holdings Units in connection with the IPO and certain future and past exchanges of Holdings Units for shares of the Company’s Class A common stock (or cash at the option of the Company) are expected to produce and have produced favorable tax attributes. In connection with the IPO, the Company entered into two tax receivable agreements. Under the first of those agreements, the Company generally is required to pay to certain existing and previous equity owners of Pla-Fit Holdings, LLC who are unaffiliated with TSG (the “TRA Holders”) 85% of the applicable tax savings, if any, in U.S. federal and state income tax that the Company is deemed to realize as a result of certain tax attributes of their Holdings Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Holdings Units for shares of Class A common stock and (ii) tax benefits attributable to payments made under the tax receivable agreement (including imputed interest). Under the second tax receivable agreement, the Company generally is required to pay to TSG AIV II-A L.P and TSG PF Co-Investors A L.P. (the “Direct TSG Investors”) 85% of the amount of tax savings, if any, that the Company is deemed to realize as a result of the tax attributes of the Holdings Units held in respect of the Direct TSG Investors’ interest in the Company, which resulted from the Direct TSG Investors’ purchase of interests in Pla-Fit Holdings in 2012, and certain other tax benefits. Under both agreements, the Company generally retains the benefit of the remaining 15% of the applicable tax savings. Based on current projections, the Company anticipates having sufficient taxable income to utilize these tax attributes and receive corresponding tax deductions in future periods. Accordingly, as of December 31, 2022 the Company has recorded a liability of $494,465 payable to the TRA Holders under the tax benefit obligations, representing approximately 85% of the calculated expected tax savings based on the original basis adjustments the Company anticipates being able to utilize in future years. Changes in the liability resulting from historical changes under these tax benefit arrangements may occur based on changes in anticipated future taxable income, changes in applicable tax rates or other changes in tax attributes that may occur and impact the expected future tax benefits to be received by the Company. Changes in the projected liability under these tax benefit arrangements are and will be recorded as a component of other income (expense) each period. The projection of future taxable income involves significant judgment. Actual taxable income may differ from estimates, which could significantly impact the liability under the tax benefit arrangements and the Company’s consolidated results of operations. (r) Fair value ASC 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The Company has no balance sheet amounts that are adjusted to fair value at reporting dates. The carrying value and estimated fair value of long-term debt as of December 31, 2022 and 2021 were as follows:
(1) The Company’s Variable Funding Notes are a variable rate loan and the fair value of this loan approximates book value based on the borrowing rates currently available for variable rate loans obtained from third-party lending institutions. The estimated fair value of the Company’s fixed rate long-term debt is estimated primarily based on current bid prices for the long-term debt. Judgment is required to develop these estimates. As such, the fair value of long-term debt is classified within Level 2, as defined under U.S. GAAP. (s) Financial instruments The carrying values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. (t) Investments The Company’s investments consist of held-to-maturity investments in debt securities and equity method investments. Held-to-maturity investment securities are financial instruments for which the Company has the intent and ability to hold to maturity. Held-to-maturity securities are reported at amortized cost. The Company reserves for expected credit losses on held-to-maturity debt securities through the allowance for expected credit losses. The allowance for expected credit losses estimate reflects a lifetime loss estimate and is based on historical loss information for assets with similar risk characteristics, adjusted for management’s expectations. Adjustments for management’s expectations may be based on factors such as investee earnings performance, recent financing rounds at reduced valuations, changes in the regulatory, economic or technological environment of an investee or doubt about an investee’s ability to continue as a going concern. An increase or a decrease in the allowance for expected credit losses is recorded through other gain (loss) as a credit loss expense or a reversal thereof. The allowance for expected credit losses is presented as a deduction from the amortized cost. A held-to-maturity investment security is written off when deemed uncollectible. The Company accounts for investments under the equity method if it holds less than 50% of the voting stock, has the ability to exercise significant influence, and is not a VIE in which the Company is the primary beneficiary. These investments are recorded initially at cost and the carrying amount is adjusted to reflect the Company’s share of earnings or losses of the investee. (u) Equity-based compensation The Company has an equity-based compensation plan under which it receives services from employees and directors as consideration for equity instruments of the Company. The compensation expense is determined based on the fair value of the award as of the grant date. Compensation expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are satisfied. For awards with graded vesting, the fair value of each tranche is recognized over its respective vesting period. For awards with performance targets, the Company recognizes compensation expense ratably over the required service period based on its estimate of the number of shares will vest upon achieving the measurement criteria. The Company accounts for forfeitures as they occur by reversing compensation cost for unvested awards when the award is forfeited. See Note 15 for further information. (v) Business combinations The Company accounts for business combinations using the purchase method of accounting which results in the assets acquired and liabilities assumed being recorded at fair value. The valuation methodologies used are based on the nature of the asset or liability. The significant assets and liabilities measured at fair value include property and equipment, intangible assets, and favorable and unfavorable leases. For the 2012 Acquisition, intangible assets consisted of trade and brand names, member relationships, franchisee relationships related to both the franchise and equipment segments, non-compete agreements, order backlog and favorable and unfavorable leases. For other acquisitions, which consist of acquisitions of stores from franchisees, intangible assets generally consist of member relationships, re-acquired franchise rights, and favorable and unfavorable leases. The Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities, including third-party valuation experts. The fair value of trade and brand names is estimated using the relief from royalty method, an income approach to valuation, which includes projecting future system-wide sales and other estimates. Membership relationships and franchisee relationships are valued based on an estimate of future revenues and costs related to the respective contracts over the remaining expected lives. The Company’s valuation includes assumptions related to the projected attrition and renewal rates on those existing franchise and membership arrangements being valued. Re-acquired franchise rights are valued using an excess earnings approach. The valuation of re-acquired franchise rights is determined using a multi-period excess earnings method under the income approach. For re-acquired franchise rights with terms that are either favorable or unfavorable to the terms included in current franchise agreements, a gain or charge is recorded at the time of the acquisition to the extent of the favorability or unfavorability, respectively. Favorable and unfavorable operating leases are recorded based on differences between contractual rents under the respective lease agreements and prevailing market rents at the lease acquisition date, and are recorded as a component of the ROU asset. Real and personal property asset valuation is determined using the replacement cost approach. The Company considers its trade and brand name intangible assets to have an indefinite useful life, and, therefore, these assets are not amortized but rather are tested for impairment annually as discussed above. Finite-lived intangible assets, such as re-acquired franchise rights and member relationships are subject to amortization over the assets’ estimated useful lives based on the pattern in which the economic benefits are expected to be received, which may be straight-line or an accelerated method. Favorable and unfavorable operating leases are amortized into rental expense over the lease term of the respective leases using the straight-line method. (w) Guarantees The Company, as a guarantor, is required to recognize, at inception of the guaranty, a liability for the fair value of the obligation undertaken in issuing the guarantee. See Note 18 for further discussion of such obligations guaranteed. (x) Contingencies The Company records estimated future losses related to contingencies when such amounts are probable and estimable. The Company includes estimated legal fees related to such contingencies as part of the accrual for estimated future losses. (y) Reclassifications Certain amounts have been reclassified to conform to current year presentation. (z) Recent accounting pronouncements The FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, in December 2019. The guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The Company adopted the new guidance on January 1, 2021, with no material impact on the Company’s consolidated financial statements. The FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, in October, 2021. The guidance improves the accounting for acquired revenue contracts with customers in a business combination by aligning the acquisition date measurement with ASC 606 - Revenue Recognition. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within that year, with early adoption permitted. The Company early adopted the new guidance on January 1, 2022 and applied it to the Sunshine Acquisition, noting the impact of adoption was not material. See Note 5.
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Variable interest entities |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable interest entities | Variable interest entities The carrying values of certain VIEs included in the consolidated financial statements as of December 31, 2022 and December 31, 2021 are as follows:
As discussed in Note 2, the NAF is also a VIE and is included in the Consolidated financial statements. See Note 4 for additional information on the NAF. National advertising fundOn July 26, 2011, the Company established the NAF for the creation and development of marketing, advertising, and related programs and materials for all Planet Fitness stores located in the United States and Puerto Rico. On behalf of the NAF, the Company collects approximately 2% annually of gross monthly membership billings from franchisees, in accordance with the provisions of the franchise agreements, which is reflected as NAF revenue on the consolidated statements of operations (see Note 2). The Company also contributes 2% annually of monthly membership billings from stores owned by the Company to the NAF, which is reflected in store operations expense in the consolidated statements of operations. The use of amounts received by the NAF is restricted to advertising, product development, public relations, merchandising, and administrative expenses and programs to increase sales and further enhance the public reputation of the Planet Fitness brand. The Company consolidates and reports all assets and liabilities held by the NAF within the consolidated financial statements. Amounts received or receivable by the NAF, which are restricted in their use, are recorded within current assets and current liabilities on the consolidated balance sheets. The Company provides administrative services to the NAF and charges the NAF a fee for providing those services. These services include accounting, information technology, data processing, product development, legal and administrative support, and other operating expenses, which amounted to $2,437, $1,997 and $793 for the years ended December 31, 2022, 2021 and 2020, respectively. Fees paid to the Company by the NAF are reflected as expense in the NAF expense caption on the consolidated statement of operations, and reflected as a corresponding reduction in general and administrative expenses in the consolidated statements of operations. Assets and liabilities of the NAF, which are restricted in their use, included in the Consolidated Balance Sheets were as follows:
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National advertising fund |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
National advertising fund | Variable interest entities The carrying values of certain VIEs included in the consolidated financial statements as of December 31, 2022 and December 31, 2021 are as follows:
As discussed in Note 2, the NAF is also a VIE and is included in the Consolidated financial statements. See Note 4 for additional information on the NAF. National advertising fundOn July 26, 2011, the Company established the NAF for the creation and development of marketing, advertising, and related programs and materials for all Planet Fitness stores located in the United States and Puerto Rico. On behalf of the NAF, the Company collects approximately 2% annually of gross monthly membership billings from franchisees, in accordance with the provisions of the franchise agreements, which is reflected as NAF revenue on the consolidated statements of operations (see Note 2). The Company also contributes 2% annually of monthly membership billings from stores owned by the Company to the NAF, which is reflected in store operations expense in the consolidated statements of operations. The use of amounts received by the NAF is restricted to advertising, product development, public relations, merchandising, and administrative expenses and programs to increase sales and further enhance the public reputation of the Planet Fitness brand. The Company consolidates and reports all assets and liabilities held by the NAF within the consolidated financial statements. Amounts received or receivable by the NAF, which are restricted in their use, are recorded within current assets and current liabilities on the consolidated balance sheets. The Company provides administrative services to the NAF and charges the NAF a fee for providing those services. These services include accounting, information technology, data processing, product development, legal and administrative support, and other operating expenses, which amounted to $2,437, $1,997 and $793 for the years ended December 31, 2022, 2021 and 2020, respectively. Fees paid to the Company by the NAF are reflected as expense in the NAF expense caption on the consolidated statement of operations, and reflected as a corresponding reduction in general and administrative expenses in the consolidated statements of operations. Assets and liabilities of the NAF, which are restricted in their use, included in the Consolidated Balance Sheets were as follows:
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Acquisition |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition Sunshine Fitness Acquisition On February 10, 2022, the Company and Pla-Fit Holdings (together with the Company, the “Buyers”), acquired 100% of the equity interests (“Sunshine Acquisition”) of Sunshine Fitness Growth Holdings, LLC, a Delaware limited liability company and Planet Fitness franchisee (“Sunshine Fitness”). The Company acquired 114 stores in Alabama, Florida, Georgia, North Carolina, and South Carolina from Sunshine Fitness. The purchase price of the acquisition was $824,587 consisting of $430,857 in cash consideration, and $393,730 of equity consideration, including 517,348 shares of Class A Common Stock, par value $0.0001, of the Company and 3,637,678 membership units of Pla-Fit Holdings, LLC, together with shares of Class B Common Stock, par value $0.0001, of the Company, valued based on the closing trading price of the Company’s Class A common stock on the acquisition date. As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $1,160, which has been reflected in other (gains) losses, net in the consolidated statement of operations. The loss reduced the net purchase price to $823,427. In connection with the acquisition, the Company recorded a gain of $2,059 related to the settlement of preexisting contracts with Sunshine Fitness within other (gains) losses, net on the consolidated statement of operations. The acquired stores are included in the corporate-owned stores segment. The allocation of the estimated purchase consideration was as follows:
The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, which include Level 3 unobservable inputs, and are determined using generally accepted valuation techniques. The excess of purchase consideration over the fair value of other assets acquired and liabilities assumed was recorded as goodwill. The resulting goodwill is primarily attributable to increased expansion for market opportunities, the expansion of store membership and synergies from the integration of the stores into the broader corporate-owned store portfolio. Approximately $175,600 of the goodwill recorded is expected to be amortizable and deductible for tax purposes, the majority of which is deductible over 15 years. The following table sets forth the components of identifiable intangible assets acquired in the Sunshine Acquisition and their estimated useful lives as of the date of the acquisition:
(1) Reacquired franchise rights represent the fair value of the reacquired franchise agreements using the income approach, specifically, the multi-period excess earnings method. (2) Customer relationships represent the fair value of the existing contractual customer relationships using the income approach, specifically, the multi-period excess earnings method. (3) Reacquired area development rights represent the fair value of the undeveloped area development agreement rights using the cost approach. The fair value of the identified intangible assets subject to amortization will be amortized over the assets’ preliminary estimated useful lives based on the pattern in which the economic benefits are expected to be received. Revenues and income before taxes of Sunshine Fitness included in the Company’s consolidated statement of operations from the acquisition date of February 10, 2022 to December 31, 2022 are as follows:
The following pro forma financial information summarizes the combined results of operations for the Company and Sunshine Fitness, as though the companies were combined as of the beginning of 2021. The unaudited pro forma financial information was as follows:
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Sale of corporate-owned stores |
12 Months Ended |
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Dec. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of corporate-owned stores | Sale of corporate-owned storesOn August 31, 2022, the Company sold 6 corporate-owned stores located in Colorado to a franchisee for $20,820. The net value of assets derecognized in connection with the sale amounted to $19,496, which included goodwill of $14,423, intangible assets of $2,629, and net tangible assets of $2,444, which resulted in a gain on sale of corporate-owned stores of $1,324. |
Property and equipment |
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Property and equipment | Property and equipment Property and equipment as of December 31, 2022 and 2021 consists of the following:
The Company recorded depreciation expense of $83,310, $46,123, and $36,943 for the years ended December 31, 2022, 2021 and 2020, respectively.
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Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments Investments - Debt securities As of December 31, 2022, the Company’s debt security investment consists of redeemable preferred shares that are accounted for as a held-to-maturity investment. The Company’s investment is measured at amortized cost within investments in the consolidated balance sheets. The Company reviews its held-to-maturity securities for expected credit losses under ASC Topic 326, Credit Impairment, on an ongoing basis. During the year ended December 31, 2022, the Company’s review of the investee’s operations and financial position indicated that an adjustment to its allowance for expected credit losses was necessary. The Company utilized a probability-of-default (“PD”) and loss-given-default (“LGD”) methodology to calculate the allowance for expected credit losses. The Company derived its estimate using historical lifetime loss information for assets with similar risk characteristics, adjusted for management’s expectations. Adjustments for management’s expectations were based on the investee’s recent financial results, current financial position, and forward-looking financial forecasts. Based upon its analysis during the years ended December 31, 2022 and December 31, 2021, the Company recorded a gain on the adjustment of its allowance for credit losses of $2,505 and expense of $17,462, respectively, within other (income) expense on the consolidated statements of operations. The amortized cost, including accrued dividends, of the Company’s held-to-maturity debt security investments was $28,277 and $26,401 and the allowance for expected credit losses was $14,957 and $17,462, as of December 31, 2022 and December 31, 2021, respectively. The amortized cost, net of the allowance for expected credit losses, approximates fair value. During the years ended December 31, 2022 and December 31, 2021, respectively, the Company recognized dividend income of $1,876 and $1,401 within other income (expense) on the consolidated statements of operations. As of December 31, 2022, the Company’s held-to-maturity investment had a contractual maturity in 2026. A rollforward of the Company’s allowance for expected credit losses on held-to-maturity investments is as follows:
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Leases |
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Leases | Leases
For the years ended December 31, 2022, 2021 and 2020, the components of lease cost were as follows:
The Company’s costs related to short-term leases, those with a duration between one and twelve months, were immaterial. Supplemental disclosures of cash flow information related to leases were as follows for the years ended December 31, 2022, 2021 and 2020:
As of December 31, 2022, maturities of lease liabilities were as follows:
As of December 31, 2022, operating lease payments exclude approximately $19,017 of legally binding minimum lease payments for leases signed but not yet commenced.
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Leases | Leases
For the years ended December 31, 2022, 2021 and 2020, the components of lease cost were as follows:
The Company’s costs related to short-term leases, those with a duration between one and twelve months, were immaterial. Supplemental disclosures of cash flow information related to leases were as follows for the years ended December 31, 2022, 2021 and 2020:
As of December 31, 2022, maturities of lease liabilities were as follows:
As of December 31, 2022, operating lease payments exclude approximately $19,017 of legally binding minimum lease payments for leases signed but not yet commenced.
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Goodwill and intangible assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets | Goodwill and intangible assets A summary of goodwill and intangible assets at December 31, 2022 and 2021 is as follows:
A rollforward of goodwill during the years ended December 31, 2022 and 2021 is as follows:
The Company determined that no impairment charges were required during any periods presented. Increases to goodwill were due to the acquisition of 114 and 2 franchisee-owned stores in 2022 and 2021, respectively. The sale of 6 corporate-owned stores decreased goodwill in 2022. Amortization expense related to the intangible assets totaled $40,294, $16,677, and $16,888 for the years ended December 31, 2022, 2021 and 2020, respectively. The anticipated annual amortization expense to be recognized in future years as of December 31, 2022 is as follows:
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Long-term debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | Long-term debt Long-term debt as of December 31, 2022 and 2021 consists of the following:
Future annual principal payments of long-term debt as of December 31, 2022 are as follows:
On August 1, 2018, Planet Fitness Master Issuer LLC (the “Master Issuer”), a limited-purpose, bankruptcy remote, wholly-owned indirect subsidiary of Pla-Fit Holdings, LLC, entered into a base indenture and a related supplemental indenture (collectively, the “2018 Indenture”) under which the Master Issuer may issue multiple series of notes. On the same date, the Master Issuer issued Series 2018-1 4.262% Fixed Rate Senior Secured Notes, Class A-2-I (the “2018 Class A-2-I Notes”) with an initial principal amount of $575,000 and Series 2018-1 4.666% Fixed Rate Senior Secured Notes, Class A-2-II (the “2018 Class A-2-II Notes” and, together with the 2018 Class A-2-I Notes, the “2018 Notes”) with an initial principal amount of $625,000. In connection with the issuance of the 2018 Notes, the Master Issuer also entered into a revolving financing facility that allows for the incurrence of up to $75,000 in revolving loans and/or Letters of Credit under the Master Issuer’s Series 2018-1 Variable Funding Senior Notes, Class A-1 (the “2018 Variable Funding Notes”). The Company fully drew down on the 2018 Variable Funding Notes on March 20, 2020. On December 3, 2019, the Master Issuer issued Series 2019-1 3.858% Fixed Rate Senior Secured Notes, Class A-2 (the “2019 Notes” and, together with the 2018 Notes, the “Notes”) with an initial principal amount of $550,000. The 2019 Notes were issued under the 2018 Indenture and a related supplemental indenture dated December 3, 2019 (together, the “2019 Indenture”). On February 10, 2022, the Company completed a prepayment in full of its 2018-1 Class A-2-I Notes and an issuance of Series 2022-1 3.251% Fixed Rate Senior Secured Notes, Class A-2-I with an initial principal amount of $425,000 and Series 2022-1 4.008% Fixed Rate Senior Secured Notes, Class A-2-II with an initial principal amount of $475,000 (the “2022 Notes” and, together with the 2018 Notes and 2019 Notes, the “Notes”), and also entered into a new revolving financing facility that allows for the issuance of up to $75,000 in Variable Funding Notes (“2022 Variable Funding Notes”) and certain Letters of Credit (the issuance of such notes, the “Series 2022-I Issuance”). The 2022 Notes were issued under the 2018 Indenture and a related supplemental indenture dated February 10, 2022 (together, with the 2019 Indenture, the “Indenture”). Together, the Notes, 2018 Variable Funding Notes and 2022 Variable Funding Notes will be referred to as the “Securitized Senior Notes”. On February 10, 2022, the Company borrowed the full amount of the $75,000 2022 Variable Funding Notes and used such proceeds to repay the outstanding principal amount (together with all accrued and unpaid interest thereon) of the 2018 Variable Funding Notes in full. On May 9, 2022, the Company repaid in full its $75,000 of borrowings under the 2022 Variable Funding Notes using cash on hand. The Notes were issued in securitization transactions pursuant to which most of the Company’s domestic revenue-generating assets, consisting principally of franchise-related agreements, certain corporate-owned store assets, equipment supply agreements and intellectual property and license agreements for the use of intellectual property, were assigned to the Master Issuer and certain other limited-purpose, bankruptcy remote, wholly-owned indirect subsidiaries of the Company that act as guarantors of the Securitized Senior Notes and that have pledged substantially all of their assets to secure the Securitized Senior Notes. Interest and principal payments on the Notes are payable on a quarterly basis. The requirement to make such quarterly principal payments on the Notes is subject to certain financial conditions set forth in the Indenture. The legal final maturity date of the 2018 Class A-2-II Notes is in September 2048, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2018 Class A-2-II Notes will be repaid in or prior to September 2025. The legal final maturity date of the 2019 Notes is in December 2049, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2019 Notes will be repaid in or prior to December 2029. The legal final maturity date of the 2022 Notes is in February 2052, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the 2022 Class A-2-I Notes will be repaid in or prior to December 2026 and the 2022 Class A-2-II Notes will be repaid in or prior to December 2031 (together, the “Anticipated Repayment Dates”). If the Master Issuer has not repaid or refinanced the Notes prior to the respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture. As noted above, the Company borrowed the full $75,000 in 2022 Variable Funding Notes on February 10, 2022, which was repaid in full using cash on hand on May 9, 2022. If outstanding, the 2022 Variable Funding Notes will accrue interest at a variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the secured overnight financing rate for U.S. Dollars, or (iv) with respect to advances made by conduit investors, the weighted average cost of, or related to, the issuance of commercial paper allocated to fund or maintain such advances, in each case plus any applicable margin and as specified in the 2022 Variable Funding Notes. There is a commitment fee on the unused portion of the 2022 Variable Funding Notes of 0.5% based on utilization. It is anticipated that the principal and interest on the 2022 Variable Funding Notes, if any, will be repaid in full on or prior to December 2026, subject to two additional one-year extension options. Following the anticipated repayment date (and any extensions thereof), additional interest will accrue on the 2022 Variable Funding Notes equal to 5.0% per year. In connection with the issuance of the 2018 Notes, 2019 Notes, and 2022 Notes, the Company incurred debt issuance costs of $27,133, $10,577, and $16,193 respectively. The debt issuance costs are being amortized to interest expense through the Anticipated Repayment Dates of the Notes utilizing the effective interest rate method. As a result of the repayment of the 2018 Class A-2-I Notes prior to the Anticipated Repayment Date, the Company recorded a loss on early extinguishment of debt of $1,583 within interest expense on the Consolidated statements of operations, consisting of the write-off of remaining unamortized deferred financing costs related to the issuance of the 2018 Class A-2-I Notes. The Securitized Senior Notes are subject to covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Securitized Senior Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Securitized Senior Notes are in stated ways defective or ineffective, (iv) a cap on non-securitized indebtedness of $50,000 (provided that the Company may incur non-securitized indebtedness in excess of such amount, subject to the leverage ratio cap described below, under certain conditions, including if the relevant lenders execute a non-disturbance agreement that acknowledges the bankruptcy-remote status of the Master Issuer and its subsidiaries and of their respective assets), (v) a leverage ratio cap incurrence test on the Company of 7.0x (calculated without regard for any indebtedness subject to the $50,000 cap) and (vi) covenants relating to recordkeeping, access to information and similar matters. Pursuant to a parent company support agreement, the Company has agreed to cause its subsidiary to perform each of its obligations (including any indemnity obligations) and duties under the Management Agreement and under the contribution agreements entered into in connection with the securitized financing facility, in each case as and when due. To the extent that such subsidiary has not performed any such obligation or duty within the prescribed time frame after such obligation or duty was required to be performed, the Company has agreed to either (i) perform such obligation or duty or (ii) cause such obligations or duties to be performed on the Company’s behalf. The Securitized Senior Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, certain manager termination events, an event of default, and the failure to repay or refinance the Notes on the applicable scheduled Anticipated Repayment Dates. The Securitized Senior Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Securitized Senior Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments. In accordance with the Indenture, certain cash accounts have been established with the Indenture trustee (the “Trustee”) for the benefit of the trustee and the noteholders, and are restricted in their use. The Company holds restricted cash which primarily represents cash collections held by the Trustee, interest, principal, and commitment fee reserves held by the Trustee related to the Securitized Senior Notes. As of December 31, 2022, the Company had restricted cash held by the Trustee of $46,651.
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Revenue from contract with customers |
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Revenue from contract with customers | Revenue from contracts with customers Contract Liabilities Contract liabilities consist primarily of deferred revenue resulting from initial and renewal franchise fees and ADA fees paid by franchisees, as well as transfer fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement. Also included are corporate-owned store enrollment fees, annual fees and monthly fees as well as deferred equipment rebates relating to our equipment business. We classify these contract liabilities as deferred revenue in our consolidated balance sheets. The following table reflects the change in contract liabilities between December 31, 2021 and December 31, 2022:
The following table illustrates estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of December 31, 2022. The Company has elected to exclude short term contracts, sales and usage based royalties and any other variable consideration recognized on an “as invoiced” basis.
The summary set forth below represents the balances in deferred revenue as of December 31, 2022 and 2021:
Equipment deposits received in advance of delivery as of December 31, 2022 and 2021 were $8,443 and $6,036, respectively and are expected to be recognized as revenue in the next twelve months.
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Related party transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related party transactions | Related party transactions Activity with franchisees considered to be related parties is summarized below.
Additionally, the Company had deferred ADA and franchise agreement revenue from related parties of $467 and $292 as of December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the Company had $80,717 and $84,595, respectively, payable to related parties pursuant to tax benefit arrangements, see Note 17. The Company provides administrative services to the NAF and typically charges the NAF a fee for providing those services, but temporarily suspended charging these fees in June 2020 through December 31, 2020 as a result of the COVID-19 pandemic. The services provided include accounting, information technology, data processing, product development, legal and administrative support, and other operating expenses, which amounted $2,437, $1,997 and $793 for the years ended December 31, 2022, 2021 and 2020, respectively. A member of the Company’s board of directors, who is also a franchisee, holds an approximate 10.5% ownership of a company that sells amenity tracking compliance software to Planet Fitness stores to which the Company made payments of approximately $272 and $220, during the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, the software was being utilized at 192 and 110 corporate-owned stores, respectively, and approximately 672 and 653 franchise stores, respectively. For the years ended December 31, 2022, 2021 and 2020, the Company incurred approximately $378, $173 and $90, respectively, which is included within selling, general and administrative expense on the consolidated statements of operations, for corporate travel to a third-party company which is affiliated with our Chief Executive Officer.
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Stockholders’ equity |
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Equity [Abstract] | |
Stockholders’ equity | Stockholders’ equity Pursuant to the exchange agreement between the Company and the Continuing LLC Owners, the Continuing LLC Owners (or certain permitted transferees thereof) have the right, from time to time and subject to the terms of the exchange agreement, to exchange their Holdings Units, along with a corresponding number of shares of Class B common stock, for shares of Class A common stock (or cash at the option of the Company) on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and similar transactions. In connection with any exchange of Holdings Units for shares of Class A common stock by a Continuing LLC Owner, the number of Holdings Units held by the Company is correspondingly increased as it acquires the exchanged Holdings Units, and a corresponding number of shares of Class B common stock are canceled. During the year ended December 31, 2022, the Company issued 517,348 shares of Class A Common Stock, of the Company and 3,637,678 membership units of Pla-Fit Holdings, LLC, together with shares of Class B Common Stock as consideration in conjunction with the Sunshine Acquisition. See Note 5. Other Exchanges During the years ended December 31, 2022, 2021 and 2020, respectively, certain Continuing LLC Owners have exercised their exchange right and exchanged 548,175, 622,979 and 4,839,866 Holdings Units, respectively, for 548,175, 622,979 and 4,839,866 newly-issued shares of Class A common stock, respectively. Simultaneously, and in connection with these exchanges, 548,175, 622,979 and 4,839,866 shares of Class B common stock were surrendered by the Continuing LLC Owners that exercised their exchange rights and canceled during the years ended December 31, 2022, 2021 and 2020, respectively. Additionally, in connection with these exchanges, Planet Fitness, Inc. received 548,175, 622,979 and 4,839,866 Holdings Units, during the years ended December 31, 2022, 2021 and 2020 respectively, increasing its total ownership in Pla-Fit Holdings. Future exchanges of Holdings Units by the Continuing LLC Owners will result in a change in ownership and reduce the amount recorded as non-controlling interest and increase additional paid-in capital on our consolidated balance sheets. As a result of the recapitalization transactions, the IPO, completion of our secondary offerings, and other exchanges and equity activity, as of December 31, 2022: •the public investors collectively owned 83,430,495 shares of our Class A common stock, representing 93.1% of the voting power in the Company and, through the Company, 93.1% of the economic interest in Pla-Fit Holdings; and •the Continuing LLC Owners collectively hold 6,145,722 Holdings Units, representing 6.9% of the economic interest in Pla-Fit Holdings and 6,145,722 shares of our Class B common stock, representing 6.9% of the voting power in the Company; Share repurchase programs 2019 share repurchase program On November 5, 2019, the Company’s board of directors approved a share repurchase program of up to $500,000. On December 4, 2019, the Company entered into a $300,000 accelerated share repurchase agreement (the “2019 ASR Agreement”) with JPMorgan Chase Bank, N.A. (“JPMC”). Pursuant to the terms of the 2019 ASR Agreement, on December 5, 2019, the Company paid JPMC $300,000 upfront in cash and received 3,289,924 shares of the Company’s Class A common stock, which were retired, and the Company elected to record as a reduction to retained earnings of $240,000. Final settlement of the ASR Agreement occurred on March 2, 2020. At final settlement, JPMC delivered 666,961 additional shares of the Company’s Class A common stock, based on a weighted average cost per share of $75.82 over the term of the 2019 ASR Agreement, which were retired. This was evaluated as an unsettled forward contract indexed to our own stock, with $60,000 classified as a reduction to retained earnings at the original date of payment. During the year ended December 31, 2022, the Company purchased 1,528,720 shares of Class A common stock for a total cost of $94,315. All purchased shares were retired. Subsequent to these repurchases, there was $105,686 remaining under the 2019 share repurchase program. 2022 share repurchase program On November 4, 2022, the Company’s board of directors approved a share repurchase program of up to $500,000, which replaces the 2019 share repurchase program. During January 2023, the Company purchased 317,599 shares of Class A common stock for a total cost of $25,005. The timing of purchases and amount of stock repurchased will be subject to the Company’s discretion and will depend on market and business conditions, the Company’s general working capital needs, stock price, applicable legal requirements and other factors. Our ability to repurchase shares at any particular time is also subject to the terms of the Indenture governing the Securitized Senior Notes. Purchases may be effected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a combination of the foregoing. Dividends The Company did not declare or pay any dividends during the years ended December 31, 2022, 2021, or 2020. Preferred stock The Company had 50,000,000 preferred stock shares authorized and none issued or outstanding for the years ended December 31, 2022 or 2021.
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Equity-based compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | Equity-based compensation 2015 Omnibus Incentive Plan In August 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”) under which the Company may grant options and other equity-based awards to purchase up to 7,896,800 shares to employees, directors and officers. Stock Options Generally, stock options awarded vest annually, on a tranche by tranche basis, over a period of four years with a maximum contractual term of 10 years. The fair value of stock option awards granted were determined on the grant date using the Black-Scholes valuation model based on the following assumptions:
(1)Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method. (2)Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. (3)The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. (4)Based on an assumed a dividend yield of zero at the time of grant. A summary of stock option activity for the year ended December 31, 2022:
The weighted-average grant date fair value of stock options granted during the year ended December 31, 2022 was $29.31. During the years ended December 31, 2022 and 2021, $2,947 and $3,915, respectively, was recorded to selling, general and administrative expense related to stock options. As of December 31, 2022, total unrecognized compensation expense related to unvested stock options, was $3,045, which is expected to be recognized over a weighted-average period of 1.9 years. Restricted stock units Restricted Class A stock units (“RSUs”) granted to members of the Board of Directors vest on the first anniversary of the grant date, provided that the recipient continues to serve on the Board of Directors through the vesting dates. RSUs are also granted to certain employees of the Company and generally vest annually, on a tranche by tranche basis, over a period of four years. RSU awards are valued using the intrinsic value method.
During the years ended December 31, 2022 and 2021, $4,202 and $4,568, respectively, was recorded to selling, general and administrative expense related to RSUs. As of December 31, 2022, total unrecognized compensation expense related to unvested RSUs was $3,162, which is expected to be recognized over a weighted-average period of 1.8 years. Performance share units Class A performance share units (“PSUs”) are subject to a set of performance metrics that adjusts the quantity of awards earned from zero up to 200% of the original target quantity depending upon the Company’s results at the end of the three year performance period against the performance metrics. These awards cliff-vest three years from the date of grant, and the Company recognizes compensation expense ratably over the required service period based on its estimate of the number of shares will vest upon achieving the measurement criteria. If there is a change in the estimate of the number of shares that are probable of vesting, the Company will cumulatively adjust compensation expense in the period that the change in estimate is made.
During the years ended December 31, 2022 and 2021, $540 and $0, respectively, was recorded to selling, general and administrative expense related to the PSUs. As of December 31, 2022, total unrecognized compensation expense related to unvested PSUs was $1,540, which is expected to be recognized over a weighted average period of 2.2 years. 2018 Employee stock purchase plan The 2018 Employee Stock Purchase Plan (the “ESPP”), as adopted by the Board of Directors in March 2018, allows eligible employees to purchase shares of the Company’s Class A common stock at a discount through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s Class A common stock on the first trading day of the offering period or on the last day of the offering period. As of December 31, 2022, a total of 1,000,000 shares of common stock were authorized and available for the issuance of equity awards under the ESPP. During the year ended December 31, 2022, employees purchased 16,375 shares and $377 was recorded to expense related to the ESPP.
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Earnings per share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share | Earnings per share Basic earnings per share of Class A common stock is computed by dividing net income or loss attributable to Planet Fitness, Inc. for the years ended December 31, 2022, 2021, and 2020, by the weighted-average number of shares of Class A common stock outstanding during the same periods. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to Planet Fitness, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to Planet Fitness, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. Shares of the Company’s Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related Holdings Units, are exchangeable into shares of Class A common stock on a one-for-one basis. The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:
Potentially dilutive stock options of 528,464 and restricted stock units of 41,223 for the year ended December 31, 2020 were not included in the computation of diluted loss per share because the inclusion thereof would be antidilutive. Weighted average shares of Class B common stock of 5,867,367, 3,323,399 and 6,292,971 for the years ended December 31, 2022, 2021 and 2020, respectively, were evaluated under the if-converted method for potential dilutive effects and were determined to be anti-dilutive. Weighted-average stock options outstanding of 244,660, 160,833 and 162,740 for the years ended December 31, 2022, 2021 and 2020, respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive. Weighted average restricted stock units outstanding of 11,963, 114 and 548, for the year ended December 31, 2022, 2021 and 2020, respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive. Weighted average performance stock units outstanding of 1,066, 0 and 0, for the year ended December 31, 2022, 2021 and 2020, respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive.
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Income taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes | Income taxes Income (loss) before the provision for income taxes as shown in the accompanying consolidated statements of operations is as follows:
The provision (benefit) for income taxes consists of the following:
The Company is the sole managing member of Pla-Fit Holdings, which is treated as a partnership for U.S. federal and certain state and local income taxes. As a partnership, Pla-Fit Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Pla-Fit Holdings is passed through to and included in the taxable income or loss of its members, including the Company, on a pro rata basis. Planet Fitness, Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income of Pla-Fit Holdings. The Company is also subject to taxes in certain foreign jurisdictions. A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows:
The Company’s effective tax rate was 31.3% for the year ended December 31, 2022, in comparison to the U.S. statutory tax rate in 2022 of 21.0%. The effective tax rate differs from the U.S. statutory rate primarily due to an income tax expense recorded in 2022 resulting from a change in our deferred tax rate, in addition to the fact that we are subject to taxation in various state and local jurisdictions resulting in an increase in our effective tax rate. The Company’s effective tax rate was 31.3% for the year ended December 31, 2022, compared to 10.9% in the prior year. The increase in the effective income tax rate was primarily due to an income tax expense in 2022 resulting from a change in our deferred tax rate, partially offset by a reduction in state and local taxes. Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the accompanying consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are summarized as follows:
As of December 31, 2022, we had a net deferred tax asset of $453,094, primarily resulting from tax attributes generated from past exchanges and sales of Holdings Units which will reduce taxable income in future periods. Substantially all of our deferred tax assets are deemed to be more likely than not to be realized. In assessing the need for a valuation allowance, we consider, among other things, our recent history of generating positive income before taxes, projections of future taxable income and ongoing prudent and feasible tax planning strategies. As of December 31, 2022, the Company has continued to provide a valuation allowance of $4,037 against the portion of its deferred tax assets that would generate capital losses for which the Company does not have sufficient positive evidence to support its recoverability. As of December 31, 2022, the Company had federal net operating loss carryforwards of $210,717, with an indefinite lived carryforward. A summary of the changes in the Company’s unrecognized tax positions is as follows:
As of December 31, 2022 and 2021, the total liability related to uncertain tax positions was $328 and $420, respectively, and is included within other liabilities on our consolidated balance sheets. The table above presents a reconciliation of the beginning and ending balances of the liability for unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2022 and 2021. The Company and its subsidiaries file U.S. federal income tax returns, as well as tax returns in various state and foreign jurisdictions. Generally, the tax years 2019 through 2022 remain open to examination by the tax authorities in these jurisdictions. Tax benefit arrangements The Company’s acquisition of Holdings Units in connection with the IPO and certain future and past exchanges of Holdings Units for shares of the Company’s Class A common stock (or cash at the option of the Company) are expected to produce and have produced favorable tax attributes. In connection with the IPO, the Company entered into two tax receivable agreements. Under the first of those agreements, the Company generally is required to pay to the TRA Holders 85% of the applicable tax savings, if any, in U.S. federal and state income tax that the Company is deemed to realize as a result of certain tax attributes of their Holdings Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Holdings Units for shares of Class A common stock and (ii) tax benefits attributable to payments made under the tax receivable agreement (including imputed interest). Under the second tax receivable agreement, the Company generally is required to pay to the Direct TSG Investors 85% of the amount of tax savings, if any, that the Company is deemed to realize as a result of the tax attributes of the Holdings Units held in respect of the Direct TSG Investors’ interest in the Company, which resulted from the Direct TSG Investors’ purchase of interests in Pla-Fit Holdings in 2012, and certain other tax benefits. Under both agreements, the Company generally retains the benefit of the remaining 15% of the applicable tax savings. The Company recorded other income of $13,831, other expense of $11,737 and other income of $5,949 in the years ended December 31, 2022, 2021 and 2020, respectively, reflecting a change in the tax benefit obligation attributable to a change in the expected tax benefits. In each year, the remeasurement was primarily due to various state tax legislation changes enacted in the year and in 2022 was also due to the Sunshine Acquisition which resulted in a change in the amount of income apportioned to various states in future periods and accordingly resulted in a decrease to the tax benefit arrangement liability. In connection with the exchanges that occurred during 2022 and 2021, 548,175 and 622,979 Holdings Units, respectively, were redeemed by the Continuing LLC Owners for newly-issued shares of Class A common stock, resulting in an increase in the tax basis of the net assets of Pla-Fit Holdings. As a result of the change in Planet Fitness, Inc.’s ownership percentage of Pla-Fit Holdings that occurred in conjunction with the exchanges and issuance of Holdings Units, we recorded an increase to our net deferred tax assets of $2,000 and a decrease to our net deferred tax assets of $468, during the years ended December 31, 2022 and 2021, respectively. As a result of these exchanges and other activity, during the years ended December 31, 2022 and 2021 we also recognized deferred tax assets in the amount of $16,326 and $17,714, respectively, and corresponding tax benefit arrangement liabilities of $0 and $15,034, respectively, representing approximately 85% of the tax benefits due to the TRA Holders for shares exchanged that were subject to tax benefit arrangements. The offset to the entries recorded in connection with exchanges in each year was to stockholders’ equity. The tax benefit obligation was $494,465 and $528,107 as of December 31, 2022 and 2021, respectively. Projected future payments under the tax benefit arrangements are as follows:
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Commitments and contingencies |
12 Months Ended |
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Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies (a) Legal matters From time to time, and in the ordinary course of business, the Company is subject to various claims, charges, and litigation, such as employment-related claims and slip and fall cases. On May 27, 2022, the Company and other defendants, including an officer of the Company who is a related party, received a final judgment after appeal to the joint and several judgment against them in a civil action brought by a former employee. In connection with the 2012 acquisition of Pla-Fit Holdings on November 8, 2012, the sellers are obligated to indemnify the Company related to this specific matter. The Company has incurred legal costs on behalf of the defendants in the case, which include a related party. These costs have historically not been material. During the fourth quarter of 2022, the Company and other defendants, as applicable, paid the final judgment in full, of which the Company paid $3,414. During 2022, the Company recorded an increase to its indemnification receivable of $1,189, and recorded a corresponding reserve against the indemnification receivable of $1,189 through other gain (loss) on the statement of operations. On December 31, 2020, the Company reached agreement on the settlement of certain legal claims for $3,800 and recorded this amount as expense in other gain (loss) in our consolidated statements of operations in the year ended December 31, 2020. Mexico Acquisition On March 19, 2020, a franchisee in Mexico exercised a put option that requires the Company to acquire their franchisee-owned stores in Mexico. The transaction had not closed as of December 31, 2022 as the parties were in dispute over the final terms of the transaction and related matters. Subsequent to year-end, in February 2023, the Company and the franchisee agreed on a summary of terms for a settlement agreement (“Preliminary Settlement Agreement”), which will include the Company’s acquisition of the franchisee-owned stores and a release of all claims by all parties. In connection with the Preliminary Settlement Agreement, the Company recorded a legal settlement reserve of $8,550, inclusive of estimated future legal fees, through other loss on the statement of operations. The Company is not currently aware of any other legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or result of operations. (b) Purchase commitments As of December 31, 2022, the Company had advertising purchase commitments of approximately $77,865, including commitments made by the NAF. In addition, the Company had open purchase orders of approximately $22,019 primarily related to equipment to be sold to franchisees. (c) Guarantees The Company historically guaranteed lease agreements for certain franchisees and in 2019, in connection with a real estate partnership, the Company began guaranteeing certain leases of its franchisees up to a maximum period of ten years, with earlier expiration dates if certain conditions are met. The Company’s maximum obligation, as a result of its guarantees of leases, is approximately $5,942 and $6,670 as of December 31, 2022 and 2021, respectively, and would only require payment upon default by the primary obligor. The Company has determined the fair value of these guarantees at inception is not material, and as of December 31, 2022 and 2021, no accrual has been recorded for the Company’s potential obligation under its guaranty arrangement.
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Retirement plan |
12 Months Ended |
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Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Retirement plan | Retirement planThe Company maintains a 401(k) deferred tax savings plan (the Plan) for eligible employees. The Plan provides for the Company to make an employer matching contribution currently equal to 100% of employee deferrals up to a maximum of 4% of each eligible participating employees’ wages. Total employer matching contributions expensed in the consolidated statements of operations were approximately $1,123, $846, and $910 for the years ended December 31, 2022, 2021 and 2020, respectively. |
Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | Segments The Company has three reportable segments: (i) Franchise; (ii) Corporate-owned stores; and (iii) Equipment. The Company’s operations are organized and managed by type of products and services and segment information is reported accordingly. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer. The CODM reviews financial performance and allocates resources by reportable segment. There have been no operating segments aggregated to arrive at the Company’s reportable segments. The Franchise segment includes operations related to the Company’s franchising business in the United States, Puerto Rico, Canada, Panama, Mexico and Australia. The Company records all revenues and expenses of the NAF within the franchise segment. The Corporate-owned stores segment includes operations with respect to all Corporate-owned stores throughout the United States and Canada. The Equipment segment includes the sale of equipment to franchisee-owned stores. The accounting policies of the reportable segments are the same as those described in Note 2. The Company evaluates the performance of its segments and allocates resources to them based on revenue and earnings before interest, taxes, depreciation, and amortization, referred to as Segment EBITDA. Revenues for all operating segments include only transactions with unaffiliated customers and include no intersegment revenues. The tables below summarize the financial information for the Company’s reportable segments for the years ended December 31, 2022, 2021 and 2020. The “Corporate and other” column, as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services which are not directly attributable to any individual segment.
Franchise revenue includes revenue generated from placement services of $17,125, $9,968, and $6,918 for the years ended December 31, 2022, 2021 and 2020, respectively.
The following table reconciles total Segment EBITDA to income before taxes:
The following table summarizes the Company’s assets by reportable segment:
The table above includes $916 and $1,203 of long-lived assets located in the Company’s international corporate-owned stores as of December 31, 2022 and 2021, respectively. The following table summarizes the Company’s goodwill by reportable segment:
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Corporate-owned and franchisee-owned stores |
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Franchisors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate-owned and franchisee-owned stores | Corporate-owned and franchisee-owned stores The following table shows changes in our corporate-owned and franchisee-owned stores for the years ended December 31, 2022, 2021 and 2020:
(1)The term “debrand” refers to a franchisee-owned store whose right to use the Planet Fitness brand and marks has been terminated in accordance with the franchise agreement. We retain the right to prevent debranded stores from continuing to operate as fitness centers. The term “consolidated” refers to the combination of a franchisee’s store with another store located in close proximity with our prior approval. This often coincides with an enlargement, re-equipment and/or refurbishment of the remaining store. (2)The “stores operated” includes stores that have closed temporarily related to the COVID-19 pandemic. All stores were closed in March 2020 in response to the COVID-19 pandemic, and as of December 31, 2022, all 2,410 were re-opened and operating.
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Subsequent events |
12 Months Ended |
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Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent eventsSubsequent to year-end, in February 2023, the Company reached a Preliminary Settlement Agreement in its litigation with a franchisee, which will include the Company’s acquisition of the franchisee-owned stores and a release of all claims by all parties. See Note 18. |
Valuation and Qualifying Accounts |
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SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Valuation and Qualifying Accounts | Schedule II – Valuation and Qualifying Accounts
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Summary of significant accounting policies (Policies) |
12 Months Ended |
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Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation and consolidation | Basis of presentation and consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). All significant intercompany balances and transactions have been eliminated in consolidation. As discussed in Note 1, Planet Fitness, Inc. consolidates Pla-Fit Holdings. The Company also consolidates entities in which it has a controlling financial interest, the usual condition of which is ownership of a majority voting interest. The Company also considers for consolidation certain interests where the controlling financial interest may be achieved through arrangements that do not involve voting interests. Such an entity, known as a variable interest entity (“VIE”), is required to be consolidated by its primary beneficiary. The primary beneficiary of a VIE is considered to possess the power to direct the activities of the VIE that most significantly impact its economic performance and has the obligation to absorb losses or the rights to receive benefits from the VIE that are significant to it. The principal entities in which the Company possesses a variable interest include franchise entities and certain other entities. The Company is not deemed to be the primary beneficiary for Planet Fitness franchise entities. Therefore, these entities are not consolidated. The results of the Company have been consolidated with Matthew Michael Realty LLC (“MMR”), PF Melville LLC (“PF Melville”), and Planet Fitness NAF, LLC (the “NAF”) based on the determination that the Company is the primary beneficiary with respect to these VIEs. MMR and PF Melville are real estate holding companies that derive a majority of their financial support from the Company through lease agreements for corporate stores. See Note 3 for further information related to the Company’s VIEs. The NAF is an advertising fund, which on behalf of the Company collects 2% annually of gross monthly membership fees from franchisees, in accordance with the provisions of the franchise agreements, and uses the amounts received to increase sales and further enhance the public reputation of the Planet Fitness brand. See Note 4 for further information related to the NAF.
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Use of estimates | Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. Significant areas where estimates and judgments are relied upon by management in the preparation of the consolidated financial statements include revenue recognition, valuation of equity-based compensation awards, valuation of assets and liabilities acquired in business combinations, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, allowance for expected credit losses, the present value of lease liabilities, income taxes, including deferred tax assets and liabilities, and the liability for the Company’s tax benefit arrangements. |
Concentrations | Concentrations Cash and cash equivalents are financial instruments, which potentially subject the Company to a concentration of credit risk. The Company invests its excess cash in several major financial institutions, which are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company maintains balances in excess of these limits, but does not believe that such deposits with its banks are subject to any unusual risk. The credit risk associated with trade receivables is mitigated due to the large number of customers, generally franchisees, and their broad dispersion over many different geographic areas. The Company does not have any concentrations greater than 10% with respect to revenues.
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Cash, cash equivalents and restricted cash | Cash, cash equivalents and restricted cashThe Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents. |
Revenue from contracts with customers | Revenue from contracts with customers The Company’s revenues are comprised of franchise revenue, equipment revenue, and corporate-owned stores revenue. Franchise revenue Franchise revenues consist primarily of royalties, NAF contributions, initial and successor franchise fees and upfront fees from area development agreements (“ADAs”), transfer fees, equipment placement revenue, commission income, online join fees, and other fees. The Company’s primary performance obligation under the franchise license is granting certain rights to use the Company’s intellectual property, and all other services the Company provides under the ADA and franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for under ASC 606 - Revenue Recognition as a single performance obligation, which is satisfied by granting certain rights to use intellectual property over the term of each franchise agreement. Royalties and franchisee contributions to national advertising funds, are calculated as a percentage of franchise monthly dues and annual fees over the term of the franchise agreement. Under the franchise agreements, advertising contributions paid by franchisees must be spent on advertising, marketing and related activities. Initial and successor franchise fees are payable by the franchisee upon signing a new franchise agreement or successor franchise agreement, and transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee. Franchise royalties, as well as NAF contributions, represent sales-based royalties that are related entirely to the performance obligation under the franchise agreement and are recognized as franchise sales occur. Initial and successor franchise fees, as well as transfer fees, are recognized as revenue on a straight-line basis over the term of the respective franchise agreement. ADAs generally consist of an obligation to grant geographic exclusive area development rights. These development rights are not distinct from franchise agreements, so upfront fees paid by franchisees for exclusive development rights are deferred and apportioned to each franchise agreement signed by the franchisee. The pro-rata amount apportioned to each franchise agreement is accounted for identically to the initial franchise fee. The Company is generally responsible for assembly and placement of equipment it sells to U.S., Canada, and Mexico based franchisee-owned stores. Placement revenue is recognized upon completion and acceptance of the services at the franchise location. The Company recognizes commission income from certain of its franchisees’ use of certain preferred vendor arrangements. Commissions are recognized when amounts have been earned and collectability from the vendor is reasonably assured. Online member join fees are paid to the Company by franchisees for processing new membership transactions when a new member signs up for a membership to a franchisee-owned store through the Company’s website. These fees are recognized as revenue as each transaction occurs. Billing transaction fees are paid to the Company by certain of its franchisees for the processing of franchisee membership dues and annual fees through the Company’s third-party hosted point-of-sale system and are recognized as revenue as they are earned. Equipment revenue The Company sells and delivers equipment purchased from third-party equipment manufacturers to U.S., Canada, and Mexico based franchisee-owned stores. Revenue is recognized upon transfer of control of ordered items, generally upon delivery to the customer, which is when the customer obtains physical possession of the goods, legal title is transferred, the customer has all risks and rewards of ownership and an obligation to pay for the goods is created. Franchisees are charged for all freight costs incurred for the delivery of equipment. Freight revenue is recorded within equipment revenue and freight costs are recorded within cost of revenue. In most instances, the Company recognizes equipment revenue on a gross basis as management has determined the Company to be the principal in these transactions. Management determined the Company to be the principal in the transaction because the Company controls the equipment prior to delivery to the final customer as evidenced by its pricing discretion over the goods, inventory transfer of title and risk of loss while the inventory is in transit, and having the primary responsibility to fulfill the customer order and direct the third-party vendor. Corporate-owned stores revenue The following revenues are generated from stores owned and operated by the Company. Membership dues revenue Customers are offered multiple membership choices varying in length. Membership dues are earned and recognized over the membership term on a straight-line basis. Enrollment fee revenue Enrollment fees are charged to new members at the commencement of their membership. The Company recognizes enrollment fees ratably over the estimated duration of the membership life, which is generally two years. Annual membership fee revenue Annual membership fees are annual fees charged to members in addition to and in order to maintain low monthly membership dues. The Company recognizes annual membership fees ratably over the 12-month membership period or as long as there is a service obligation to the member. Retail sales The Company sells Planet Fitness branded apparel, food, beverages, and other accessories. The revenue for these items is recognized at the point of sale. Sales tax All revenue amounts are recorded net of applicable sales tax. Deferred revenueFranchise deferred revenue results from initial and successor franchise fees and ADA fees paid by franchisees, as well as transfer fees, which are generally recognized on a straight-line basis over the term of the underlying franchise agreement. Deferred revenue is also recognized in the Corporate-owned stores segment for cash received from members for enrollment fees, membership dues and annual fees for the portion not yet earned based on the membership period. Equipment deposits made at the time of ordering equipment are also deferred until the revenue recognition criteria are met.
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Cost of revenue | Cost of revenueCost of revenue consists primarily of direct costs associated with equipment sales (including freight costs) and the cost of retail merchandise sold in corporate-owned stores. Costs related to retail merchandise sales were immaterial in all periods presented. Rebates from equipment vendors where the Company has recognized the related equipment revenue and costs are recorded as a reduction to the cost of revenue. |
Store operations | Store operationsStore operations consists of the direct costs related to operating corporate-owned stores, including store management and staff, rent expense, utilities, supplies, maintenance, and local and national advertising. |
Selling, general and administrative | Selling, general and administrativeSelling, general and administrative expenses consist of costs associated with administrative, corporate-owned and franchisee support functions related to the existing business as well as growth and development activities. These costs primarily consist of payroll, IT related, marketing, legal and accounting expenses. |
Accounts receivable | Accounts receivableAccounts receivable is primarily comprised of amounts owed to the Company resulting from equipment, placement, and commission revenue. The Company evaluates its accounts receivable on an ongoing basis and may establish an allowance for uncollectible amounts based on collections and current credit conditions. Accounts are written off as uncollectible when it is determined that further collection efforts will be unsuccessful. Historically, the Company has not had a significant amount of write-offs. |
Inventory | InventoryThe Company has inventory at period ends when the Company has title and risk of loss in advance of sale to its franchisees. |
Leases and asset retirement obligations | Leases and asset retirement obligations The Company leases space to operate corporate-owned stores, equipment, office, and warehouse space. The Company currently leases the corporate headquarters, corporate-owned store headquarters and all but one of the corporate-owned stores. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company accounts for fixed lease and non-lease components together as a single, combined lease component. Variable lease costs, which may include common area maintenance, insurance, and taxes are not included in the lease liability and are expensed in the period incurred. Corporate-owned store leases generally have original lease terms of ten years, and typically include one or more renewal options, with renewal option terms that can generally extend the lease term from to ten years or more. The exercise of lease renewal options is at the Company’s sole discretion. The Company includes options to renew in the expected term when they are reasonably certain to be exercised. The depreciable life of assets and leasehold improvements are limited by the expected lease term. At the inception of each lease, the Company determines its appropriate classification as an operating or financing lease. The majority of the Company’s leases are operating leases. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid, reduced by expected reimbursements from landlords. Operating lease right of use (“ROU”) assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, initial direct costs and lease incentives. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases based upon interpolated rates using the Company’s Notes. The Company has an immaterial amount of non-real estate leases that are accounted for as finance leases under ASC 842 - Leases. Leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements reduce the ROU asset related to the lease. These tenant incentives are amortized as reduction of rent expense over the lease term. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Asset retirement obligations In accordance with ASC Topic 410, Asset Retirement and Environmental Obligations, the Company establishes assets and liabilities for the present value of estimated future costs to return certain leased facilities to their original condition. Such assets are depreciated on a straight-line basis over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated restoration costs.
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Property and equipment | Property and equipmentProperty and equipment is recorded at cost, or fair value when acquired as part of a business combination, and depreciated using the straight-line method over its related estimated useful life. Leasehold improvements are amortized over the shorter of the expected lease term or the estimated useful life of the related asset. Upon sale or retirement, the asset cost and related accumulated depreciation are removed from the respective accounts, and any related gain or loss is reflected in the consolidated statements of operations. Ordinary maintenance and repair costs are expensed as incurred. |
Advertising expenses | Advertising expensesThe Company expenses advertising costs as incurred. Advertising expenses for corporate-owned stores are included within store operations and totaled $31,462, $15,667, and $10,252 for the years ended December 31, 2022, 2021 and 2020, respectively. In addition to NAF expenses, advertising related to the franchise segment is included within selling, general and administrative expenses and totaled $3,103, $7,144, and $5,408 for the years ended December 31, 2022, 2021 and 2020, respectively. See Note 4 for discussion of the national advertising fund. |
Goodwill, long-lived assets, and other intangible assets | Goodwill, long-lived assets, and other intangible assets Goodwill and other intangible assets that arise from acquisitions are recorded in accordance with ASC Topic 805 - Business Combinations and ASC Topic 350, Intangibles—Goodwill and Other. In accordance with this guidance, specifically identified intangible assets must be recorded as a separate asset from goodwill if either of the following two criteria is met: (1) the intangible asset acquired arises from contractual or other legal rights; or (2) the intangible asset is separable. Intangibles are typically trade and brand names, customer relationships, and reacquired franchise rights. Transactions are evaluated to determine whether any gain or loss on reacquired franchise rights, based on their fair value, should be recognized separately from identified intangibles. Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed annually for impairment or more frequently if impairment indicators arise. Separable intangible assets that are not deemed to have an indefinite life are amortized over their estimated useful lives on either a straight-line or accelerated basis as deemed appropriate, and are reviewed for impairment when events or circumstances suggest that the assets may not be recoverable. The Company performs its annual test for impairment of goodwill and indefinite lived intangible assets on December 1 of each year. During 2022, the Company moved its assessment date from December 31 to December 1 in order to better align with the Company’s annual planning cycle. The annual goodwill test begins with a qualitative assessment, where qualitative factors and their impact on critical inputs are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines that a reporting unit has an indication of impairment based on the qualitative assessment, it is required to perform a quantitative assessment. During the periods presented, the Company did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded. For indefinite lived intangible assets, the impairment assessment consists of comparing the carrying value of the asset to its estimated fair value. To the extent that the carrying value exceeds the fair value of the asset, an impairment is recorded to reduce the carrying value to its fair value. The Company is also permitted to make a qualitative assessment of whether it is more likely than not an indefinite lived intangible asset’s fair value is less than its carrying value prior to applying the quantitative assessment. If based on the Company’s qualitative assessment it is not more likely than not that the carrying value of the asset is less than its fair value, then a quantitative assessment is not required. During the periods presented, the Company did not need to proceed beyond the qualitative analysis, and determined that no impairment charges were required. The Company applies the provisions of ASC Topic 360, Property, Plant and Equipment, which requires that long-lived assets, including amortizable intangible assets, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for impairment, then assets are required to be grouped and evaluated at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the undiscounted future net cash flows expected to be generated by the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no assets that were impaired during any of the periods presented.
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Income taxes | Income taxes The Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized for the expected future tax consequences attributable to temporary differences between the carrying amount of the existing tax assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied in the years in which temporary differences are expected to be recovered or settled. The principal items giving rise to temporary differences are the use of accelerated depreciation and certain basis differences resulting from acquisitions and the recapitalization transactions. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Planet Fitness, Inc. is the sole managing member of Pla-Fit Holdings, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Pla-Fit Holdings is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Pla-Fit Holdings is passed through to and included in the taxable income or loss of its members, including Planet Fitness, Inc. following the recapitalization transactions, on a pro rata basis. Planet Fitness, Inc. is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to the allocable share of any taxable income of Pla-Fit Holdings. The Company is also subject to taxes in certain foreign jurisdictions. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs (see Note 17).
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Tax benefit arrangements | Tax benefit arrangementsThe Company’s acquisition of Holdings Units in connection with the IPO and certain future and past exchanges of Holdings Units for shares of the Company’s Class A common stock (or cash at the option of the Company) are expected to produce and have produced favorable tax attributes. In connection with the IPO, the Company entered into two tax receivable agreements. Under the first of those agreements, the Company generally is required to pay to certain existing and previous equity owners of Pla-Fit Holdings, LLC who are unaffiliated with TSG (the “TRA Holders”) 85% of the applicable tax savings, if any, in U.S. federal and state income tax that the Company is deemed to realize as a result of certain tax attributes of their Holdings Units sold to the Company (or exchanged in a taxable sale) and that are created as a result of (i) the sales of their Holdings Units for shares of Class A common stock and (ii) tax benefits attributable to payments made under the tax receivable agreement (including imputed interest). Under the second tax receivable agreement, the Company generally is required to pay to TSG AIV II-A L.P and TSG PF Co-Investors A L.P. (the “Direct TSG Investors”) 85% of the amount of tax savings, if any, that the Company is deemed to realize as a result of the tax attributes of the Holdings Units held in respect of the Direct TSG Investors’ interest in the Company, which resulted from the Direct TSG Investors’ purchase of interests in Pla-Fit Holdings in 2012, and certain other tax benefits. Under both agreements, the Company generally retains the benefit of the remaining 15% of the applicable tax savings.Based on current projections, the Company anticipates having sufficient taxable income to utilize these tax attributes and receive corresponding tax deductions in future periods. Accordingly, as of December 31, 2022 the Company has recorded a liability of $494,465 payable to the TRA Holders under the tax benefit obligations, representing approximately 85% of the calculated expected tax savings based on the original basis adjustments the Company anticipates being able to utilize in future years. Changes in the liability resulting from historical changes under these tax benefit arrangements may occur based on changes in anticipated future taxable income, changes in applicable tax rates or other changes in tax attributes that may occur and impact the expected future tax benefits to be received by the Company. Changes in the projected liability under these tax benefit arrangements are and will be recorded as a component of other income (expense) each period. The projection of future taxable income involves significant judgment. Actual taxable income may differ from estimates, which could significantly impact the liability under the tax benefit arrangements and the Company’s consolidated results of operations. |
Fair value | Fair value ASC 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
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Financial instruments and Investments | Financial instruments The carrying values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value because of the short-term nature of these instruments. (t) Investments The Company’s investments consist of held-to-maturity investments in debt securities and equity method investments. Held-to-maturity investment securities are financial instruments for which the Company has the intent and ability to hold to maturity. Held-to-maturity securities are reported at amortized cost. The Company reserves for expected credit losses on held-to-maturity debt securities through the allowance for expected credit losses. The allowance for expected credit losses estimate reflects a lifetime loss estimate and is based on historical loss information for assets with similar risk characteristics, adjusted for management’s expectations. Adjustments for management’s expectations may be based on factors such as investee earnings performance, recent financing rounds at reduced valuations, changes in the regulatory, economic or technological environment of an investee or doubt about an investee’s ability to continue as a going concern. An increase or a decrease in the allowance for expected credit losses is recorded through other gain (loss) as a credit loss expense or a reversal thereof. The allowance for expected credit losses is presented as a deduction from the amortized cost. A held-to-maturity investment security is written off when deemed uncollectible. The Company accounts for investments under the equity method if it holds less than 50% of the voting stock, has the ability to exercise significant influence, and is not a VIE in which the Company is the primary beneficiary. These investments are recorded initially at cost and the carrying amount is adjusted to reflect the Company’s share of earnings or losses of the investee. Investments - Debt securities As of December 31, 2022, the Company’s debt security investment consists of redeemable preferred shares that are accounted for as a held-to-maturity investment. The Company’s investment is measured at amortized cost within investments in the consolidated balance sheets. The Company reviews its held-to-maturity securities for expected credit losses under ASC Topic 326, Credit Impairment, on an ongoing basis. During the year ended December 31, 2022, the Company’s review of the investee’s operations and financial position indicated that an adjustment to its allowance for expected credit losses was necessary. The Company utilized a probability-of-default (“PD”) and loss-given-default (“LGD”) methodology to calculate the allowance for expected credit losses. The Company derived its estimate using historical lifetime loss information for assets with similar risk characteristics, adjusted for management’s expectations. Adjustments for management’s expectations were based on the investee’s recent financial results, current financial position, and forward-looking financial forecasts. Based upon its analysis during the years ended December 31, 2022 and December 31, 2021, the Company recorded a gain on the adjustment of its allowance for credit losses of $2,505 and expense of $17,462, respectively, within other (income) expense on the consolidated statements of operations.
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Equity-based compensation | Equity-based compensationThe Company has an equity-based compensation plan under which it receives services from employees and directors as consideration for equity instruments of the Company. The compensation expense is determined based on the fair value of the award as of the grant date. Compensation expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are satisfied. For awards with graded vesting, the fair value of each tranche is recognized over its respective vesting period. For awards with performance targets, the Company recognizes compensation expense ratably over the required service period based on its estimate of the number of shares will vest upon achieving the measurement criteria. The Company accounts for forfeitures as they occur by reversing compensation cost for unvested awards when the award is forfeited. See Note 15 for further information. |
Business combinations | Business combinations The Company accounts for business combinations using the purchase method of accounting which results in the assets acquired and liabilities assumed being recorded at fair value. The valuation methodologies used are based on the nature of the asset or liability. The significant assets and liabilities measured at fair value include property and equipment, intangible assets, and favorable and unfavorable leases. For the 2012 Acquisition, intangible assets consisted of trade and brand names, member relationships, franchisee relationships related to both the franchise and equipment segments, non-compete agreements, order backlog and favorable and unfavorable leases. For other acquisitions, which consist of acquisitions of stores from franchisees, intangible assets generally consist of member relationships, re-acquired franchise rights, and favorable and unfavorable leases. The Company uses a variety of information sources to determine the estimated fair values of acquired assets and liabilities, including third-party valuation experts. The fair value of trade and brand names is estimated using the relief from royalty method, an income approach to valuation, which includes projecting future system-wide sales and other estimates. Membership relationships and franchisee relationships are valued based on an estimate of future revenues and costs related to the respective contracts over the remaining expected lives. The Company’s valuation includes assumptions related to the projected attrition and renewal rates on those existing franchise and membership arrangements being valued. Re-acquired franchise rights are valued using an excess earnings approach. The valuation of re-acquired franchise rights is determined using a multi-period excess earnings method under the income approach. For re-acquired franchise rights with terms that are either favorable or unfavorable to the terms included in current franchise agreements, a gain or charge is recorded at the time of the acquisition to the extent of the favorability or unfavorability, respectively. Favorable and unfavorable operating leases are recorded based on differences between contractual rents under the respective lease agreements and prevailing market rents at the lease acquisition date, and are recorded as a component of the ROU asset. Real and personal property asset valuation is determined using the replacement cost approach.The Company considers its trade and brand name intangible assets to have an indefinite useful life, and, therefore, these assets are not amortized but rather are tested for impairment annually as discussed above. Finite-lived intangible assets, such as re-acquired franchise rights and member relationships are subject to amortization over the assets’ estimated useful lives based on the pattern in which the economic benefits are expected to be received, which may be straight-line or an accelerated method. Favorable and unfavorable operating leases are amortized into rental expense over the lease term of the respective leases using the straight-line method.
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Guarantees | GuaranteesThe Company, as a guarantor, is required to recognize, at inception of the guaranty, a liability for the fair value of the obligation undertaken in issuing the guarantee. See Note 18 for further discussion of such obligations guaranteed. |
Contingencies | ContingenciesThe Company records estimated future losses related to contingencies when such amounts are probable and estimable. The Company includes estimated legal fees related to such contingencies as part of the accrual for estimated future losses. |
Reclassifications | ReclassificationsCertain amounts have been reclassified to conform to current year presentation. |
Recent accounting pronouncements | Recent accounting pronouncements The FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, in December 2019. The guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The Company adopted the new guidance on January 1, 2021, with no material impact on the Company’s consolidated financial statements. The FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, in October, 2021. The guidance improves the accounting for acquired revenue contracts with customers in a business combination by aligning the acquisition date measurement with ASC 606 - Revenue Recognition. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within that year, with early adoption permitted. The Company early adopted the new guidance on January 1, 2022 and applied it to the Sunshine Acquisition, noting the impact of adoption was not material. See Note 5.
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Summary of significant accounting policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Useful Lives of Fixed Assets | The estimated useful lives of the Company’s property and equipment by class of asset are as follows:
Property and equipment as of December 31, 2022 and 2021 consists of the following:
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Summary of Company's Assets and Liabilities Measured at Fair Value on Recurring Basis | The carrying value and estimated fair value of long-term debt as of December 31, 2022 and 2021 were as follows:
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Variable interest entities (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Value of Variable Interest Entities of Consolidated Financial Statements | The carrying values of certain VIEs included in the consolidated financial statements as of December 31, 2022 and December 31, 2021 are as follows:
Assets and liabilities of the NAF, which are restricted in their use, included in the Consolidated Balance Sheets were as follows:
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National advertising fund (Tables) |
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Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets And Liabilities of NAF | The carrying values of certain VIEs included in the consolidated financial statements as of December 31, 2022 and December 31, 2021 are as follows:
Assets and liabilities of the NAF, which are restricted in their use, included in the Consolidated Balance Sheets were as follows:
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Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Consideration Allocation | The allocation of the estimated purchase consideration was as follows:
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Schedule of Components of Identifiable Intangible Assets Acquired | The following table sets forth the components of identifiable intangible assets acquired in the Sunshine Acquisition and their estimated useful lives as of the date of the acquisition:
(1) Reacquired franchise rights represent the fair value of the reacquired franchise agreements using the income approach, specifically, the multi-period excess earnings method. (2) Customer relationships represent the fair value of the existing contractual customer relationships using the income approach, specifically, the multi-period excess earnings method. (3) Reacquired area development rights represent the fair value of the undeveloped area development agreement rights using the cost approach.
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Schedule of Revenues and Income Before Taxes | Revenues and income before taxes of Sunshine Fitness included in the Company’s consolidated statement of operations from the acquisition date of February 10, 2022 to December 31, 2022 are as follows:
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Schedule of Pro Forma Financial Information | The following pro forma financial information summarizes the combined results of operations for the Company and Sunshine Fitness, as though the companies were combined as of the beginning of 2021. The unaudited pro forma financial information was as follows:
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Property and equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | The estimated useful lives of the Company’s property and equipment by class of asset are as follows:
Property and equipment as of December 31, 2022 and 2021 consists of the following:
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Investments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Securities, Held-to-maturity, Allowance for Credit Loss | A rollforward of the Company’s allowance for expected credit losses on held-to-maturity investments is as follows:
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Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Balance Sheet Classification of Lease Assets and Liabilities |
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Schedule of Components of Lease Cost | For the years ended December 31, 2022, 2021 and 2020, the components of lease cost were as follows:
Supplemental disclosures of cash flow information related to leases were as follows for the years ended December 31, 2022, 2021 and 2020:
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Schedule of Supplemental Disclosures of Cash Flow Information Related to Leases | For the years ended December 31, 2022, 2021 and 2020, the components of lease cost were as follows:
Supplemental disclosures of cash flow information related to leases were as follows for the years ended December 31, 2022, 2021 and 2020:
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Schedule of Maturities of Lease Liabilities | As of December 31, 2022, maturities of lease liabilities were as follows:
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Schedule of Maturities of Lease Liabilities | As of December 31, 2022, maturities of lease liabilities were as follows:
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Goodwill and intangible assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Goodwill and Intangible Assets | A summary of goodwill and intangible assets at December 31, 2022 and 2021 is as follows:
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Summary of Goodwill | A rollforward of goodwill during the years ended December 31, 2022 and 2021 is as follows:
The following table summarizes the Company’s goodwill by reportable segment:
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Summary of Amortization expenses | The anticipated annual amortization expense to be recognized in future years as of December 31, 2022 is as follows:
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Long-term debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-term debt as of December 31, 2022 and 2021 consists of the following:
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Schedule of Future Annual Payments of Long-term Debt | Future annual principal payments of long-term debt as of December 31, 2022 are as follows:
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Revenue from contract with customers (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contract Liabilities and Deferred Revenue | The following table reflects the change in contract liabilities between December 31, 2021 and December 31, 2022:
The summary set forth below represents the balances in deferred revenue as of December 31, 2022 and 2021:
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Schedule of Remaining Performance Obligation | The Company has elected to exclude short term contracts, sales and usage based royalties and any other variable consideration recognized on an “as invoiced” basis.
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Related party transactions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Activity with franchisees considered to be related parties is summarized below.
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Equity-based compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value of Stock Option Awards Determined on Grant Date | The fair value of stock option awards granted were determined on the grant date using the Black-Scholes valuation model based on the following assumptions:
(1)Expected term represents the estimated period of time until an award is exercised and was determined using the simplified method. (2)Expected volatility is based on the historical volatility of a selected peer group over a period equivalent to the expected term. (3)The risk-free rate is an interpolation of yields on U.S. Treasury securities with maturities equivalent to the expected term. (4)Based on an assumed a dividend yield of zero at the time of grant.
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Summary of Stock Option Activity | A summary of stock option activity for the year ended December 31, 2022:
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Summary of Restricted Stock Units Activity |
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Earnings per share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Numerators and Denominators Used to Compute Basic and Diluted Earnings per Share | The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:
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Income taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Before Provision for Income Taxes | Income (loss) before the provision for income taxes as shown in the accompanying consolidated statements of operations is as follows:
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Schedule of Provision (Benefit) for Income Taxes | The provision (benefit) for income taxes consists of the following:
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Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate | A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows:
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Schedule of Deferred Tax Assets and Liabilities | Details of the Company’s deferred tax assets and liabilities are summarized as follows:
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Summary Of Changes In Unrecognized Tax Positions | A summary of the changes in the Company’s unrecognized tax positions is as follows:
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Schedule of Future Payments Under Tax Benefit Arrangements | Projected future payments under the tax benefit arrangements are as follows:
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Segments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Information for the Company's Reportable Segments | The tables below summarize the financial information for the Company’s reportable segments for the years ended December 31, 2022, 2021 and 2020. The “Corporate and other” column, as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services which are not directly attributable to any individual segment.
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Reconciliation of Total Segment EBITDA to Income Before Taxes | The following table reconciles total Segment EBITDA to income before taxes:
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Summary of Company's Assets by Reportable Segment | The following table summarizes the Company’s assets by reportable segment:
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Summary of Company's Goodwill by Reportable Segment | A rollforward of goodwill during the years ended December 31, 2022 and 2021 is as follows:
The following table summarizes the Company’s goodwill by reportable segment:
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Corporate-owned and franchisee-owned stores (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Franchisors [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Corporate-owned and Franchisee-owned Stores | The following table shows changes in our corporate-owned and franchisee-owned stores for the years ended December 31, 2022, 2021 and 2020:
(1)The term “debrand” refers to a franchisee-owned store whose right to use the Planet Fitness brand and marks has been terminated in accordance with the franchise agreement. We retain the right to prevent debranded stores from continuing to operate as fitness centers. The term “consolidated” refers to the combination of a franchisee’s store with another store located in close proximity with our prior approval. This often coincides with an enlargement, re-equipment and/or refurbishment of the remaining store. (2)The “stores operated” includes stores that have closed temporarily related to the COVID-19 pandemic. All stores were closed in March 2020 in response to the COVID-19 pandemic, and as of December 31, 2022, all 2,410 were re-opened and operating.
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Summary of significant accounting policies - Summary of Company's Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Carrying value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | $ 2,025,188 | $ 1,700,000 |
Variable Funding Notes | 0 | 75,000 |
Estimated fair value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term debt | 1,730,634 | 1,725,021 |
Variable Funding Notes | $ 0 | $ 75,000 |
Variable interest entities - Carrying Value of Variable Interest Entities of Consolidated Financial Statements (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
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Variable Interest Entity [Line Items] | ||
Assets | $ 2,854,589 | $ 2,015,983 |
VIE | ||
Variable Interest Entity [Line Items] | ||
Assets | 4,088 | 4,354 |
Liabilities | 0 | 0 |
VIE | PF Melville | ||
Variable Interest Entity [Line Items] | ||
Assets | 2,204 | 2,363 |
Liabilities | 0 | 0 |
VIE | MMR | ||
Variable Interest Entity [Line Items] | ||
Assets | 1,884 | 1,991 |
Liabilities | $ 0 | $ 0 |
National advertising fund - Additional Information (Details) - NAF - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
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Related Party Transaction [Line Items] | |||
General and administrative expense | $ 2,437 | $ 1,997 | $ 793 |
Franchisee-owned stores: | |||
Related Party Transaction [Line Items] | |||
Percentage of franchise membership billing revenue | 2.00% | ||
Corporate-owned stores: | |||
Related Party Transaction [Line Items] | |||
Percentage of franchise membership billing revenue | 2.00% |
National advertising fund - Assets and liabilities of the NAF (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets | ||
Cash and cash equivalents | $ 409,840 | $ 545,909 |
Total current assets | 555,531 | 662,414 |
Liabilities | ||
Accounts payable | 20,578 | 27,892 |
Total current liabilities | 244,530 | 176,610 |
NAF | ||
Assets | ||
Cash and cash equivalents | 4,938 | 15,754 |
Other current assets | 938 | 388 |
Total current assets | 5,876 | 16,142 |
Liabilities | ||
Accounts payable | 1,089 | 175 |
Accrued expenses and other current liabilities | 3,620 | 16,240 |
Total current liabilities | $ 4,709 | $ 16,415 |
Acquisitions - Schedule of Purchase Consideration (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Feb. 10, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 702,690 | $ 228,569 | $ 227,821 | |
Sunshine Acquisition | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 5,917 | |||
Other current assets | 757 | |||
Property and equipment | 153,092 | |||
Right of use assets | 162,827 | |||
Other long-term assets | 1,830 | |||
Intangible assets | 259,430 | |||
Goodwill | 488,544 | |||
Deferred income taxes, net | (54,737) | |||
Deferred revenue | (16,973) | |||
Other current liabilities | (13,720) | |||
Lease liabilities | (162,327) | |||
Other long-term liabilities | (1,213) | |||
Net assets acquired | $ 823,427 |
Acquisitions - Components of Identifiable Intangible Assets Acquired (Details) - Sunshine Acquisition $ in Thousands |
Feb. 10, 2022
USD ($)
|
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Business Acquisition [Line Items] | |
Fair value | $ 259,430 |
Reacquired franchise and area development rights | |
Business Acquisition [Line Items] | |
Fair value | $ 233,070 |
Useful life | 11 years 3 months 18 days |
Customer relationships | |
Business Acquisition [Line Items] | |
Fair value | $ 24,920 |
Useful life | 8 years |
Reacquired area development rights | |
Business Acquisition [Line Items] | |
Fair value | $ 1,440 |
Useful life | 5 years |
Acquisitions - Schedule of Revenues and Income Before Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Business Acquisition [Line Items] | |||
Total revenues | $ 936,772 | $ 587,023 | $ 406,618 |
Income before taxes | 161,438 | $ 51,960 | $ (14,517) |
Sunshine Acquisition | |||
Business Acquisition [Line Items] | |||
Total revenues | 180,841 | ||
Income before taxes | $ 17,478 |
Acquisitions - Schedule of Pro Forma Financial Information (Details) - Sunshine Acquisition - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Business Acquisition [Line Items] | ||
Total revenues | $ 957,222 | $ 731,606 |
Income before taxes | 161,284 | 41,041 |
Net income | $ 110,340 | $ 37,911 |
Sale of corporate-owned stores (Details) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Aug. 31, 2022
USD ($)
store
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from sale of corporate-owned stores | $ 20,820 | $ 0 | $ 0 | |
Gain on sale of corporate-owned stores | $ 1,324 | $ 0 | $ 0 | |
Sale | Six Colorado Stores | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of stores sold | store | 6 | |||
Proceeds from sale of corporate-owned stores | $ 20,820 | |||
Net value of assets sold | 19,496 | |||
Goodwill | 14,423 | |||
Intangible assets | 2,629 | |||
Net tangible assets | 2,444 | |||
Gain on sale of corporate-owned stores | $ 1,324 |
Property and equipment - Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 83,310 | $ 46,123 | $ 36,943 |
Investments - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Apr. 09, 2021 |
Dec. 31, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Credit (gain) loss expense on held-to-maturity investment | $ (2,505) | $ 17,462 | $ 0 | ||
Amortized cost of held-to-maturity debt security investments | $ 28,277 | 28,277 | 26,401 | ||
Allowance for expected credit loss | $ 14,957 | 14,957 | 17,462 | 0 | |
Dividends accrued on investment | 1,876 | 1,401 | |||
Proportionate share of equity method loss | $ (467) | (179) | $ 0 | ||
Bravo Fit Holdings Pty Ltd | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 21.00% | 21.00% | 21.00% | ||
Payment to acquire equity method investment | $ 10,000 | $ 2,449 | |||
Underlying equity in net assets | $ 11,802 | $ 11,802 | $ 9,820 |
Investments - Held-to-Maturity Debt Security Investments (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Debt Securities, Held-to-maturity, Allowance for Credit Loss [Roll Forward] | |||
Beginning allowance for expected credit losses | $ 17,462 | $ 0 | |
(Gain) loss on adjustment of allowance for credit losses on held-to-maturity investment | (2,505) | 17,462 | $ 0 |
Write-offs, net of recoveries | 0 | 0 | |
Ending allowance for expected credit losses | $ 14,957 | $ 17,462 | $ 0 |
Leases - Balance Sheet Classification of Lease Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Assets | ||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net of accumulated depreciation of $227,869 and $152,296, as of December 31, 2022 and 2021, respectively | Property and equipment, net of accumulated depreciation of $227,869 and $152,296, as of December 31, 2022 and 2021, respectively |
Operating | $ 346,937 | $ 190,330 |
Finance | 370 | 222 |
Total lease assets | $ 347,307 | $ 190,552 |
Liabilities [Abstract] | ||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other current liabilities | Other current liabilities |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities |
Current operating lease liabilities | $ 33,233 | $ 22,523 |
Noncurrent operating lease liabilities | 341,843 | 197,682 |
Noncurrent finance lease liabilities | 380 | 230 |
Total lease liabilities | $ 375,456 | $ 220,435 |
Weighted-average remaining lease term (years) - operating leases | 8 years 1 month 6 days | 8 years 8 months 12 days |
Weighted-average discount rate - operating leases | 4.70% | 5.00% |
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Leases [Abstract] | |||
Operating lease cost | $ 56,319 | $ 29,012 | $ 26,255 |
Variable lease cost | 20,327 | 11,317 | 10,324 |
Total lease cost | $ 76,646 | $ 40,329 | $ 36,579 |
Leases - Supplemental Disclosures of Cash Flow Information (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Leases [Abstract] | |||
Cash paid, net, for lease liabilities | $ 44,928 | $ 28,126 | $ 24,091 |
Operating lease ROU assets obtained in exchange for operating lease liabilities, excluding the Sunshine Acquisition | 37,928 | 48,651 | 33,140 |
Sunshine Acquisition operating lease ROU assets obtained in exchange for operating lease liabilities | $ 162,827 | $ 0 | $ 0 |
Leases - Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Leases [Abstract] | ||
2023 | $ 49,853 | |
2024 | 60,578 | |
2025 | 60,889 | |
2026 | 59,495 | |
2027 | 54,964 | |
Thereafter | 170,818 | |
Total lease payments | 456,597 | |
Less: imputed interest | 81,141 | |
Present value of lease liabilities | $ 375,456 | $ 220,435 |
Leases - Additional Information (Details) $ in Thousands |
Dec. 31, 2022
USD ($)
|
---|---|
Leases [Abstract] | |
Lease payments for leases signed but not yet commenced | $ 19,017 |
Goodwill and intangible assets - Goodwill Rollforward (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Goodwill [Roll Forward] | ||
Beginning balance | $ 228,569 | $ 227,821 |
Acquisition of franchisee-owned stores | 488,544 | 748 |
Sale of corporate-owned stores | (14,423) | |
Ending balance | 702,690 | 228,569 |
Franchise | ||
Goodwill [Roll Forward] | ||
Beginning balance | 16,938 | 16,938 |
Acquisition of franchisee-owned stores | 0 | 0 |
Sale of corporate-owned stores | 0 | |
Ending balance | 16,938 | 16,938 |
Corporate-owned stores | ||
Goodwill [Roll Forward] | ||
Beginning balance | 118,965 | 118,217 |
Acquisition of franchisee-owned stores | 488,544 | 748 |
Sale of corporate-owned stores | (14,423) | |
Ending balance | 593,086 | 118,965 |
Equipment | ||
Goodwill [Roll Forward] | ||
Beginning balance | 92,666 | 92,666 |
Acquisition of franchisee-owned stores | 0 | 0 |
Sale of corporate-owned stores | 0 | |
Ending balance | $ 92,666 | $ 92,666 |
Goodwill and intangible assets - Additional Information (Details) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2022
USD ($)
store
|
Dec. 31, 2021
USD ($)
store
|
Dec. 31, 2020
USD ($)
store
|
Dec. 31, 2019
store
|
|
Goodwill And Intangible Assets [Line Items] | ||||
Impairment charges | $ | $ 0 | $ 0 | $ 0 | |
Number of owned and franchised locations | 2,410 | 2,254 | 2,124 | 2,001 |
Amortization of intangible assets | $ | $ 40,294,000 | $ 16,677,000 | $ 16,888,000 | |
2022 Acquisitions | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Number of owned and franchised locations | 114 | |||
2021 Acquisitions | ||||
Goodwill And Intangible Assets [Line Items] | ||||
Number of owned and franchised locations | 2 |
Goodwill and intangible assets - Summary of Amortization expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 50,307 | |
2024 | 47,601 | |
2025 | 35,476 | |
2026 | 31,024 | |
2027 | 27,119 | |
Thereafter | 78,940 | |
Total | $ 270,467 | $ 54,337 |
Long-term debt - Schedule of Future Annual Payments of Long-term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Debt Disclosure [Abstract] | ||
2023 | $ 20,750 | |
2024 | 20,750 | |
2025 | 600,438 | |
2026 | 419,313 | |
2027 | 10,250 | |
Thereafter | 953,686 | |
Total | $ 2,025,187 | $ 1,775,000 |
Revenue from contract with customers - Schedule of Contract Liabilities (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2022
USD ($)
| |
Contract liabilities | |
Beginning Balance | $ 61,779 |
Revenue recognized that was included in the contract liability at the beginning of the year | (28,115) |
Other gain on settlement of preexisting contracts in connection with the Sunshine Acquisition | (2,059) |
Deferred revenue acquired in the Sunshine Acquisition | 16,973 |
Increase, excluding amounts recognized as revenue during the period | 38,333 |
Ending Balance | $ 86,911 |
Revenue from contract with customers - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | $ 86,911 | $ 61,779 |
Long-term portion of deferred revenue | 33,152 | 33,428 |
Deferred revenue - current | 53,759 | 28,351 |
Prepaid membership fees | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | 14,160 | 6,491 |
Enrollment fees | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | 3,806 | 1,257 |
Equipment discount | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | 5,256 | 3,152 |
Annual membership fees | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | 26,848 | 13,591 |
Area development and franchise fees | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | $ 36,841 | $ 37,288 |
Revenue from contract with customers - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Revenue from Contract with Customer [Abstract] | ||
Equipment deposits | $ 8,443 | $ 6,036 |
Deferred revenue expected recognition period (in months) | 12 months |
Related party transactions - Schedule of Related Party Transactions (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Related Party Transaction [Line Items] | |||
Total revenue from related parties | $ 5,983 | $ 5,137 | $ 2,298 |
Franchise revenue | |||
Related Party Transaction [Line Items] | |||
Total revenue from related parties | 4,074 | 3,511 | 1,783 |
Equipment revenue | |||
Related Party Transaction [Line Items] | |||
Total revenue from related parties | $ 1,909 | $ 1,626 | $ 515 |
Equity-based compensation - Fair Value of Stock Option Awards Determined on Grant Date Using Black-Scholes Valuation Model (Details) |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Aug. 31, 2015 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 6 years 3 months | ||
Expected volatility, Minimum (percentage) | 28.00% | 48.80% | |
Expected volatility, Maximum (percentage) | 55.50% | 49.40% | |
Risk-free interest rate, Minimum (percentage) | 0.65% | 1.05% | |
Risk-free interest rate, Maximum (percentage) | 4.20% | 1.21% | |
Dividend yield (percentage) | 0.00% | 0.00% | 0.00% |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 3 months | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (years) | 6 years 3 months |
Income taxes - Schedule of Income Before Provision for Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ 158,345 | $ 52,425 | $ (13,382) |
Foreign | 3,093 | (465) | (1,135) |
Income (expense) before income taxes | $ 161,438 | $ 51,960 | $ (14,517) |
Income taxes - Schedule of Provision (Benefit) for Income Taxes Expenses (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Current: | |||
Federal | $ 0 | $ (314) | $ (6,938) |
State | 842 | 4,197 | 256 |
Foreign | 1,055 | 248 | 156 |
Total current tax expense (benefit) | 1,897 | 4,131 | (6,526) |
Deferred: | |||
Federal | 27,401 | 11,079 | 2,769 |
State | 21,049 | (9,750) | 4,530 |
Foreign | 168 | 199 | (86) |
Total deferred tax expense | 48,618 | 1,528 | 7,213 |
Provision for income taxes | $ 50,515 | $ 5,659 | $ 687 |
Income taxes - Schedule of Reconciliation of U.S. Statutory Income Tax Rate to Company's Effective Tax Rate (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Income Tax Disclosure [Abstract] | |||
U.S. statutory tax rate | 21.00% | 21.00% | 21.00% |
State and local taxes, net of federal benefit | 4.00% | 6.60% | 5.70% |
State rate change impact on deferred taxes | 8.60% | (22.70%) | (37.40%) |
Tax benefit arrangement liability adjustment | (1.80%) | 4.70% | 8.60% |
Foreign tax rate differential | 0.20% | 0.70% | (1.00%) |
Withholding taxes and other | 0.30% | 0.60% | (0.30%) |
Colorado store sale | 0.90% | 0.00% | 0.00% |
Change in valuation allowance | (0.40%) | 8.60% | 0.00% |
Equity-based compensation | (0.20%) | (7.40%) | 0.00% |
Income attributable to non-controlling interests | (1.30%) | (1.20%) | (1.30%) |
Effective tax rate | 31.30% | 10.90% | (4.70%) |
Income taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Deferred tax assets: | ||
Deferred revenue | $ 5,277 | $ 7,518 |
Goodwill and intangible assets | 401,438 | 487,752 |
Net operating loss | 53,370 | 47,361 |
Lease liabilities | 91,205 | 53,625 |
Other | 12,585 | 11,209 |
Deferred tax assets | 563,875 | 607,465 |
Valuation allowance | (4,037) | (4,630) |
Deferred tax assets, net of valuation allowance | 559,838 | 602,835 |
Deferred tax liabilities: | ||
Prepaid expenses | (952) | (2,244) |
Property and equipment | (23,718) | (16,433) |
Right of use assets | (82,074) | (44,894) |
Total deferred tax liabilities | (106,744) | (63,571) |
Total deferred tax assets and liabilities | 453,094 | 539,264 |
Reported as: | ||
Deferred income taxes - non-current assets | 454,565 | 539,264 |
Deferred income taxes - non-current liabilities | (1,471) | 0 |
Total deferred tax assets and liabilities | $ 453,094 | $ 539,264 |
Income taxes - Summary Of Changes In Unrecognized Tax Positions (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance at beginning of year | $ 420 | $ 420 |
Increase related to current year tax positions | 0 | 0 |
Decrease related to prior year tax positions | (92) | 0 |
Balance at end of year | $ 328 | $ 420 |
Income taxes - Schedule of Future Payments Under Tax Benefit Arrangements (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
2023 | $ 31,940 | |
2024 | 41,153 | |
2025 | 51,713 | |
2026 | 54,038 | |
2027 | 56,761 | |
Thereafter | 258,860 | |
Total | $ 494,465 | $ 528,107 |
Commitments and contingencies (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
May 27, 2022 |
Mar. 19, 2020 |
Dec. 31, 2022 |
Dec. 31, 2022 |
Dec. 31, 2020 |
Dec. 31, 2021 |
|
Commitment And Contingencies [Line Items] | ||||||
Litigation settlement | $ 3,800,000 | |||||
Guarantor obligations, maximum period | 10 years | |||||
Maximum obligation of guarantees of leases and debt | $ 5,942,000 | $ 5,942,000 | $ 6,670,000 | |||
Accrued potential obligation recorded under guaranty arrangement | 0 | 0 | $ 0 | |||
Advertising Purchase Commitment | ||||||
Commitment And Contingencies [Line Items] | ||||||
Purchase commitments | 77,865,000 | 77,865,000 | ||||
Equipment Purchase Commitment | ||||||
Commitment And Contingencies [Line Items] | ||||||
Purchase commitments | 22,019,000 | $ 22,019,000 | ||||
Mexico Acquisition | ||||||
Commitment And Contingencies [Line Items] | ||||||
Loss contingency reserve | $ 8,550,000 | |||||
Final judgement | Civil Action Brought By Former Employee | ||||||
Commitment And Contingencies [Line Items] | ||||||
Paid | $ 3,414,000 | |||||
Indemnification receivable increase | $ 1,189,000 | |||||
Loss contingency reserve | $ 1,189,000 |
Retirement plan (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Retirement Benefits [Abstract] | |||
Percentage of employer matching contribution | 100.00% | ||
Maximum percentage of employee contribution | 4.00% | ||
Total employer matching contributions expense | $ 1,123 | $ 846 | $ 910 |
Segments - Reconciliation of Total Segment EBITDA to Income Before Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Segment Reporting [Abstract] | |||
Total Segment EBITDA | $ 368,616 | $ 194,914 | $ 118,495 |
Depreciation and amortization | 124,022 | 62,800 | 53,832 |
Other income (expense) | 14,983 | (11,102) | 4,903 |
Equity losses of unconsolidated entities, net of tax | (467) | (179) | 0 |
Income from operations | 230,078 | 143,395 | 59,760 |
Interest expense, net | (83,623) | (80,333) | (79,180) |
Other income (expense), net | 14,983 | (11,102) | 4,903 |
Income (expense) before income taxes | $ 161,438 | $ 51,960 | $ (14,517) |
Segments - Summary of Company's Assets by Reportable Segment (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated assets | $ 2,854,589 | $ 2,015,983 |
Operating segments | Franchise | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated assets | 161,355 | 172,822 |
Operating segments | Corporate-owned stores | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated assets | 1,559,985 | 516,714 |
Operating segments | Equipment | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated assets | 200,020 | 193,983 |
Unallocated | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total consolidated assets | $ 933,229 | $ 1,132,464 |
Segments - Summary of Company's Goodwill by Reportable Segment (Details) - USD ($) $ in Thousands |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Total consolidated goodwill | $ 702,690 | $ 228,569 | $ 227,821 |
Franchise | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Total consolidated goodwill | 16,938 | 16,938 | 16,938 |
Corporate-owned stores | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Total consolidated goodwill | 593,086 | 118,965 | 118,217 |
Equipment | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Total consolidated goodwill | $ 92,666 | $ 92,666 | $ 92,666 |