Planet Fitness's stock falls as downbeat outlook, another exec departure weigh

By Tomi Kilgore

CFO Tom Fitzgerald said he plans to retire, just days after the former CEO resigned from the board due to 'disagreements'

Shares of Planet Fitness Inc. got crunched Thursday, after the fitness-center operator beat fourth-quarter earnings expectations but provided a downbeat growth outlook for this year.

The company also said Chief Financial Officer Tom Fitzgerald plans to retire in August after about four years with the company.

That means the company is now looking for two top executives, as Craig Benson remains interim chief executive until a permanent CEO is found. And it was disclosed earlier this week that the former CEO, Christopher Rondeau, resigned from the board of directors because of "disagreements with the company" over decisions made since he stepped down as CEO.

"[W]e believe this leadership adjustment has added another layer of uncertainty to a biz that is currently navigating other headwinds," wrote Jefferies analyst Randal Konik in a recent note to clients.

The stock (PLNT) sank 2.8% in morning trading, to put it on track for the lowest close since Nov. 15.

The company said before the open that net income for the quarter to Dec. 31 increased to $35.3 million, or 41 cents a share, from $33.7 million, or 40 cents a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of 60 cents topped the FactSet consensus of 58 cents.

Total revenue grew 1.4% to $285.1 million, above the FactSet consensus of $282.7 million, as same-store sales were 7.7% better than a year ago, to match Wall Street forecasts.

Franchise revenue rose 13.9% to $98.2 million, due primarily to higher royalty revenue, and corporate-owned stores revenue was up 15.9% to $116.4 million.

Meanwhile, equipment revenue dropped 25.5% to $70.4 million, due to lower equipment sales to existing franchisee-owned stores.

For 2024, the company expects adjusted EPS to increase in the 10% to 11% range, while the current FactSet EPS consensus of $2.51 implies 12.1% growth.

The company said full-year revenue is expected to be 6% to 7% above that of 2023, while the FactSet revenue consensus of $1.155 billion implies 7.8% growth.

Given the company's new growth model, which focuses on reducing the capital requirements for opening and maintaining a franchise location, Chief Executive Craig Benson said he believes 2024 will be a "transition year" for franchisees.

The stock has tumbled 12.3% year to date, while the S&P 500 has gained 6.1%.

-Tomi Kilgore

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02-22-24 1007ET

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