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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________to ______________
Commission file number: 001-37534
PLANET FITNESS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
 
38-3942097
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
4 Liberty Lane West, Hampton, NH 03842
(Address of Principal Executive Offices and Zip Code)
(603) 750-0001
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.0001 Par Value
PLNT
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
  
Accelerated filer
 
 
 
 
 
Non-accelerated filer
 
  
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  
As of July 31, 2020 there were 80,008,738 shares of the Registrant’s Class A Common Stock, par value $0.0001 per share, outstanding and 6,499,487 shares of the Registrant’s Class B Common Stock, par value $0.0001 per share, outstanding.



PLANET FITNESS, INC.
TABLE OF CONTENTS
  
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:
future financial position;
business strategy;
budgets, projected costs and plans;
future industry growth;
financing sources;
potential return of capital initiatives;
the impact of litigation, government inquiries and investigations;
the impact of the novel coronavirus disease (“COVID-19”) and actions taken in response; and
all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Important factors that could cause actual results and events to differ materially from those indicated in the forward-looking statements include, among others, risks and uncertainties associated with the following:
our dependence on the operational and financial results of, and our relationships with, our franchisees and the success of their new and existing stores;
damage to our brand and reputation;
our ability to successfully implement our growth strategy, including our and our franchisees’ ability to identify and secure suitable sites for new franchise stores;
technical, operational and regulatory risks related to our third-party providers’ systems and our own information systems, including failures, interruptions or security breaches of such systems;
our and our franchisees’ ability to attract and retain members;
the high level of competition in the health club industry generally;
our reliance on a limited number of vendors, suppliers and other third-party service providers;
our substantial increased indebtedness as a result of our refinancing and securitization transactions and our ability to incur additional indebtedness or refinance that indebtedness in the future;
our future financial performance and our ability to pay principal and interest on our indebtedness;
our corporate structure and tax receivable agreements;
the duration and impact of COVID-19, which has resulted in store closures and may give rise to or heighten one or more of the other risks and uncertainties described above;
as a result of COVID-19 we have experienced to date, and may continue to experience, a decrease in our net membership base; and
the other factors identified under the heading “Risk Factors” herein and in our annual report on Form 10-K for the fiscal year ended December 31, 2019, our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2020, and our other filings with the Securities and Exchange Commission.
The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Report. We undertake no obligation to publicly update any forward-looking statements whether as a result of new information, future developments or otherwise.

3

Table of Contents

PART I-FINANCIAL INFORMATION
1. Financial Statements
Planet Fitness, Inc. and subsidiaries
Condensed consolidated balance sheets
(Unaudited)
(Amounts in thousands, except per share amounts) 
 
 
June 30,
 
December 31,
 
 
2020
 
2019
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
423,553

 
$
436,256

Restricted cash
 
86,407

 
42,539

Accounts receivable, net of allowance for bad debts of $84 and $111 at June 30, 2020 and
December 31, 2019, respectively
 
15,251

 
42,268

Inventory
 
2,778

 
877

Deferred expenses – national advertising fund
 
7,942

 

Prepaid expenses
 
12,160

 
8,025

Other receivables
 
21,301

 
9,226

Other current assets
 
12,089

 
947

Total current assets
 
581,481

 
540,138

Property and equipment, net of accumulated depreciation of $89,417 and $73,621 at June 30, 2020
and December 31, 2019, respectively
 
149,624

 
145,481

Right-of-use assets, net
 
155,523

 
155,633

Intangible assets, net
 
225,498

 
233,921

Goodwill
 
227,821

 
227,821

Deferred income taxes
 
458,196

 
412,293

Other assets, net
 
1,894

 
1,903

Total assets
 
$
1,800,037

 
$
1,717,190

Liabilities and stockholders’ deficit
 
 
 
 
Current liabilities:
 
 
 
 
Current maturities of long-term debt
 
$
17,500

 
$
17,500

Accounts payable
 
11,461

 
21,267

Accrued expenses
 
19,767

 
31,623

Equipment deposits
 
3,832

 
3,008

Deferred revenue, current
 
32,147

 
27,596

Payable pursuant to tax benefit arrangements, current
 
30,912

 
26,468

Other current liabilities
 
18,959

 
18,016

Total current liabilities
 
134,578

 
145,478

Long-term debt, net of current maturities
 
1,681,953

 
1,687,505

Borrowings under Variable Funding Notes
 
75,000

 

Lease liabilities, net of current portion
 
154,501

 
152,920

Deferred revenue, net of current portion
 
33,585

 
34,458

Deferred tax liabilities
 
1,562

 
1,116

Payable pursuant to tax benefit arrangements, net of current portion
 
438,105

 
400,748

Other liabilities
 
2,453

 
2,719

Total noncurrent liabilities
 
2,387,159

 
2,279,466

Commitments and contingencies (Note 13)
 

 

Stockholders’ equity (deficit):
 
 
 
 
Class A common stock, $.0001 par value - 300,000 authorized, 79,994 and 78,525 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 
8

 
8

Class B common stock, $.0001 par value - 100,000 authorized, 6,500 and 8,562 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
 
1

 
1

Accumulated other comprehensive (loss) income
 
(57
)
 
303

Additional paid in capital
 
38,900

 
29,820

Accumulated deficit
 
(757,139
)
 
(736,587
)
Total stockholders’ deficit attributable to Planet Fitness Inc.
 
(718,287
)
 
(706,455
)
Non-controlling interests
 
(3,413
)
 
(1,299
)
Total stockholders’ deficit
 
(721,700
)
 
(707,754
)
Total liabilities and stockholders’ deficit
 
$
1,800,037

 
$
1,717,190


 See accompanying notes to condensed consolidated financial statements

4

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of operations
(Unaudited)
(Amounts in thousands, except per share amounts)
 
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenue:
 
 

 
 

 
 
 
 
Franchise
 
$
16,214

 
$
58,225

 
$
65,125

 
$
111,181

Commission income
 
45

 
1,065

 
435

 
2,059

National advertising fund revenue
 
4,743

 
12,522

 
13,971

 
24,334

Corporate-owned stores
 
9,419

 
39,695

 
49,935

 
77,739

Equipment
 
9,813

 
70,154

 
37,998

 
115,165

Total revenue
 
40,234

 
181,661

 
167,464

 
330,478

Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of revenue
 
8,478

 
54,391

 
30,323

 
88,877

Store operations
 
14,681

 
20,163

 
40,838

 
41,068

Selling, general and administrative
 
15,896

 
18,864

 
32,848

 
37,018

National advertising fund expense
 
10,878

 
12,522

 
26,083

 
24,334

Depreciation and amortization
 
13,008

 
10,577

 
25,800

 
20,484

Other loss (gain)
 
15

 
(122
)
 
26

 
246

Total operating costs and expenses
 
62,956

 
116,395

 
155,918

 
212,027

(Loss) income from operations
 
(22,722
)
 
65,266

 
11,546

 
118,451

Other expense, net:
 
 
 
 
 
 
 
 
Interest income
 
359

 
1,979

 
2,286

 
3,777

Interest expense
 
(20,467
)
 
(14,636
)
 
(40,708
)
 
(29,385
)
Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
Total other expense, net
 
(20,181
)
 
(14,101
)
 
(39,182
)
 
(30,370
)
(Loss) income before income taxes
 
(42,903
)
 
51,165

 
(27,636
)
 
88,081

(Benefit) provision for income taxes
 
(10,918
)
 
11,338

 
(6,034
)
 
16,615

Net (loss) income
 
(31,985
)
 
39,827

 
(21,602
)
 
71,466

Less net (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Net (loss) income attributable to Planet Fitness, Inc.
 
$
(29,177
)
 
$
34,844

 
(20,570
)
 
$
62,253

Net (loss) income per share of Class A common stock:
 
 
 
 
 
 
 
 
Basic
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74

Diluted
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74

Weighted-average shares of Class A common stock outstanding:
 
 
 
 
 
 
 
 
Basic
 
79,966

 
84,143

 
79,532

 
83,975

Diluted
 
79,966

 
84,835

 
79,532

 
84,639

 
See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of comprehensive income (loss)
(Unaudited)
(Amounts in thousands)
 
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Net (loss) income including non-controlling interests
 
$
(31,985
)
 
$
39,827

 
$
(21,602
)
 
$
71,466

Other comprehensive income (loss), net:
 
 
 
 
 
 
 
 
Foreign currency translation adjustments
 
249

 
103

 
(360
)
 
157

Total other comprehensive income, net
 
249

 
103

 
(360
)
 
157

Total comprehensive (loss) income including non-controlling
interests
 
(31,736
)
 
39,930

 
(21,962
)
 
71,623

Less: total comprehensive (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Total comprehensive (loss) income attributable to Planet Fitness,
Inc.
 
$
(28,928
)
 
$
34,947

 
$
(20,930
)
 
$
62,410

 
See accompanying notes to condensed consolidated financial statements.

6

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of cash flows
(Unaudited)
(Amounts in thousands)
 
 
For the six months ended June 30,
 
 
2020
 
2019
Cash flows from operating activities:
 
 

 
 

Net (loss) income
 
$
(21,602
)
 
$
71,466

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
25,800

 
20,484

Amortization of deferred financing costs
 
3,187

 
2,664

Amortization of asset retirement obligations
 
33

 
168

Deferred tax (benefit) expense
 
(3,713
)
 
8,854

(Gain) loss on re-measurement of tax benefit arrangement
 
(502
)
 
4,852

Provision for bad debts
 
(28
)
 
(10
)
Equity-based compensation
 
2,493

 
2,279

Other
 
434

 
(515
)
Changes in operating assets and liabilities, excluding effects of acquisitions:
 
 
 
 
Accounts receivable
 
26,917

 
12,465

Inventory
 
(1,900
)
 
2,608

Other assets and other current assets
 
(16,323
)
 
(9,288
)
National advertising fund
 
(7,941
)
 
(5,096
)
Accounts payable and accrued expenses
 
(22,354
)
 
(20,831
)
Other liabilities and other current liabilities
 
1,472

 
1,777

Income taxes
 
(4,485
)
 
1,987

Payable pursuant to tax benefit arrangements
 

 
(17,476
)
Equipment deposits
 
824

 
(532
)
Deferred revenue
 
3,820

 
6,631

Leases and deferred rent
 
884

 
17

Net cash (used in) provided by operating activities
 
(12,984
)
 
82,504

Cash flows from investing activities:
 
 
 
 
Additions to property and equipment
 
(21,161
)
 
(18,925
)
Acquisition of franchises
 

 
(14,801
)
Proceeds from sale of property and equipment
 
169

 
54

Net cash used in investing activities
 
(20,992
)
 
(33,672
)
Cash flows from financing activities:
 
 
 
 
Principal payments on capital lease obligations
 
(84
)
 
(27
)
Proceeds from borrowings under Variable Funding Notes
 
75,000

 

Repayment of long-term debt
 
(8,750
)
 
(6,000
)
Proceeds from issuance of Class A common stock
 
1,583

 
1,520

Dividend equivalent payments
 
(174
)
 
(138
)
Distributions to Continuing LLC Members
 
(1,600
)
 
(3,742
)
Net cash provided by (used in) financing activities
 
65,975

 
(8,387
)
Effects of exchange rate changes on cash and cash equivalents
 
(834
)
 
542

Net increase in cash, cash equivalents and restricted cash
 
31,165

 
40,987

Cash, cash equivalents and restricted cash, beginning of period
 
478,795

 
320,139

Cash, cash equivalents and restricted cash, end of period
 
$
509,960

 
$
361,126

Supplemental cash flow information:
 
 
 
 
Net cash paid for income taxes
 
$
2,155

 
$
6,530

Cash paid for interest
 
$
37,724

 
$
26,923

Non-cash investing activities:
 
 
 
 
Non-cash additions to property and equipment
 
$
2,099

 
$
1,896

 See accompanying notes to condensed consolidated financial statements.

7

Table of Contents

Planet Fitness, Inc. and subsidiaries
Condensed consolidated statements of changes in equity (deficit)
(Unaudited)
(Amounts in thousands) 
 
 
Class A
common stock
 
Class B
common stock
 
Accumulated
other
comprehensive
(loss) income
 
Additional paid-
in capital
 
Accumulated
deficit
 
Non-controlling
interests
 
Total (deficit)
equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at December 31, 2019
 
78,525

 
$
8

 
8,562

 
$
1

 
$
303

 
$
29,820

 
$
(736,587
)
 
$
(1,299
)
 
$
(707,754
)
Net loss
 

 

 

 

 

 

 
(20,570
)
 
(1,032
)
 
(21,602
)
Equity-based compensation expense
 

 

 

 

 

 
2,493

 

 

 
2,493

Exchanges of Class B common stock
 
2,062

 

 
(2,062
)
 

 

 
(956
)
 

 
956

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
74

 

 

 

 

 
1,353

 

 

 
1,353

Repurchase and retirement of Class A common stock
 
(667
)
 

 

 

 

 

 

 

 

Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
 

 

 

 

 

 
6,190

 

 

 
6,190

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(438
)
 
(438
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(1,600
)
 
(1,600
)
Other
 

 

 

 

 

 

 
18

 

 
18

Other comprehensive income
 

 

 

 

 
(360
)
 

 

 

 
(360
)
Balance at June 30, 2020
 
79,994

 
$
8

 
6,500

 
$
1

 
$
(57
)
 
$
38,900

 
$
(757,139
)
 
$
(3,413
)
 
$
(721,700
)
 
 
 
Class A
common stock
 
Class B
common stock
 
Accumulated
other
comprehensive
(loss) income
 
Additional paid-
in capital
 
Accumulated
deficit
 
Non-controlling
interests
 
Total (deficit)
equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at December 31, 2018
 
83,584

 
$
9

 
9,448

 
$
1

 
$
94

 
$
19,732

 
$
(394,410
)
 
$
(8,215
)
 
$
(382,789
)
Net income
 

 

 

 

 

 

 
62,253

 
9,213

 
71,466

Equity-based compensation expense
 

 

 

 

 

 
2,279

 

 

 
2,279

Exchanges of Class B common stock
 
866

 

 
(866
)
 

 

 
(1,172
)
 

 
1,172

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
69

 

 

 

 

 
1,209

 

 

 
1,209

Repurchase and retirement of Class A common stock
 
(524
)
 
(1
)
 

 

 

 
64

 

 
(64
)
 
(1
)
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
 

 

 

 

 

 
2,383

 

 

 
2,383

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(3,621
)
 
(3,621
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(3,742
)
 
(3,742
)
Cumulative effect adjustment - ASC 842
 

 

 

 

 

 

 
(1,713
)
 

 
(1,713
)
Other comprehensive income
 

 

 

 

 
157

 

 

 

 
157

Balance at June 30, 2019
 
83,995

 
$
8

 
8,582

 
$
1

 
$
251

 
$
24,495

 
$
(333,870
)
 
$
(5,257
)
 
$
(314,372
)


8

Table of Contents

 
 
Class A
common stock
 
Class B
common stock
 
Accumulated
other
comprehensive
(loss) income
 
Additional paid-
in capital
 
Accumulated
deficit
 
Non-controlling
interests
 
Total (deficit)
equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at March 31, 2020
 
79,928

 
$
8

 
6,501

 
$
1

 
$
(306
)
 
$
36,460

 
$
(727,946
)
 
$
(386
)
 
$
(692,169
)
Net loss
 

 

 

 

 

 

 
(29,177
)
 
(2,808
)
 
(31,985
)
Equity-based compensation expense
 

 

 

 

 

 
1,546

 

 

 
1,546

Exchanges of Class B common stock
 
1

 

 
(1
)
 

 

 

 

 

 

Exercise of stock options, vesting of restricted share units and ESPP share purchase
 
65

 

 

 

 

 
894

 

 

 
894

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(219
)
 
(219
)
Other
 

 

 

 

 

 

 
(16
)
 

 
(16
)
Other comprehensive income
 

 

 

 

 
249

 

 

 

 
249

Balance at June 30, 2020
 
79,994

 
$
8

 
6,500

 
$
1

 
$
(57
)
 
$
38,900

 
$
(757,139
)
 
$
(3,413
)
 
$
(721,700
)

 
 
Class A
common stock
 
Class B
common stock
 
Accumulated
other
comprehensive
(loss) income
 
Additional paid-
in capital
 
Accumulated
deficit
 
Non-controlling
interests
 
Total (deficit)
equity
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at March 31, 2019
 
84,463

 
$
9

 
8,589

 
$
1

 
$
148

 
$
22,576

 
$
(368,714
)
 
$
(8,062
)
 
$
(354,042
)
Net income
 

 

 

 

 

 

 
34,844

 
4,983

 
39,827

Equity-based compensation expense
 

 

 

 

 

 
964

 

 

 
964

Exchanges of Class B common stock
 
7

 

 
(7
)
 

 

 

 

 

 

Exercise of stock options and vesting of restricted share units
 
49

 

 

 

 

 
704

 

 

 
704

Repurchase and retirement of Class A common stock
 
(524
)
 
(1
)
 

 

 

 
64

 

 
(64
)
 
(1
)
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock
 

 

 

 

 

 
187

 

 

 
187

Non-cash adjustments to VIEs
 

 

 

 

 

 

 

 
(214
)
 
(214
)
Distributions paid to members of Pla-Fit Holdings
 

 

 

 

 

 

 

 
(1,900
)
 
(1,900
)
Other comprehensive income
 

 

 

 

 
103

 

 

 

 
103

Balance at June 30, 2019
 
83,995

 
$
8

 
8,582

 
$
1

 
$
251

 
$
24,495

 
$
(333,870
)
 
$
(5,257
)
 
$
(314,372
)

See accompanying notes to condensed consolidated financial statements.

9

Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)



(1) Business Organization
Planet Fitness, Inc. (the “Company”), through its subsidiaries, is a franchisor and operator of fitness centers, with more than 15.2 million members and 2,059 owned and franchised locations (referred to as stores) in 50 states, the District of Columbia, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico and Australia as of June 30, 2020.
In March 2020, the Company proactively closed all of its stores system wide in response to the novel coronavirus disease (“COVID-19”) pandemic in order to promote the health and safety of its members, team members and their communities. As of June 30, 2020, 1,490 stores had reopened, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores.
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.
Selling fitness-related equipment to franchisee-owned stores.
The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”), which was completed on August 11, 2015 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 that occurred prior to the IPO, 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 through its subsidiaries. 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 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 limited liability company units of Pla-Fit Holdings (“Holdings Units”) not owned by the Company. Unless otherwise specified, “the Company” refers to both Planet Fitness, Inc. and Pla-Fit Holdings throughout the remainder of these notes.
As of June 30, 2020, Planet Fitness, Inc. held 100.0% of the voting interest and 92.5% of the economic interest of Pla-Fit Holdings and the holders of Holdings Units of Pla-Fit Holdings (the “Continuing LLC Owners”) held the remaining 7.5% economic interest in Pla-Fit Holdings.

(2) Summary of Significant Accounting Policies
(a) Basis of presentation and consolidation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated financial statements as of and for the three and six months ended June 30, 2020 and 2019 are unaudited. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”) filed with the SEC on February 28, 2020. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.
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

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


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 on behalf of which the Company collects 2% of gross monthly membership dues from franchisees, in accordance with the provisions of the franchise agreements, and uses the amounts received to support our national marketing campaigns, its social media platforms and the development of local advertising materials.
(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 assets and liabilities in connection with acquisitions, valuation of equity-based compensation awards, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, income taxes, including deferred tax assets and liabilities and reserves for unrecognized tax benefits, the liability for the Company’s tax benefit arrangements, and the value of the lease liability and related right-of-use asset recorded in accordance with ASC 842 (see Note 7).
(c) 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 carrying value and estimated fair value of long-term debt as of June 30, 2020 and December 31, 2019 were as follows:
 
 
June 30, 2020
 
December 31, 2019
 
 
Carrying value
 
Estimated fair value(1)
 
Carrying value
 
Estimated fair value(1)
Long-term debt
 
$
1,726,250

 
$
1,659,119

 
$
1,735,000

 
$
1,765,805

Variable Funding Notes
 
$
75,000

 
$
75,000

 
$

 
$

(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 our fixed rate long-term debt is estimated primarily based on current bid prices for our long-term debt. Judgment is required to develop these estimates. As such, the fair value of our long-term debt is classified within Level 2, as defined under U.S. GAAP.
As a result of the COVID-19 pandemic, the fair value of our long-term debt has fluctuated significantly and may continue to fluctuate based on market conditions and other factors, including changes in the target federal funds rate.

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(d) Recent accounting pronouncements
The FASB issued ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. This guidance eliminates the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The Company adopted this guidance on January 1, 2020 noting no material impact on the Company’s consolidated financial statements.
The FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, in August 2018. The guidance helps align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance on January 1, 2020 on a prospective basis, noting no material impact on the Company’s consolidated financial statements.
(3) Variable Interest Entities
The carrying values of VIEs included in the consolidated financial statements as of June 30, 2020 and December 31, 2019 are as follows: 
 
 
June 30, 2020
 
December 31, 2019
 
 
Assets
 
Liabilities
 
Assets
 
Liabilities
PF Melville
 
$
2,603

 
$

 
$
2,682

 
$

MMR
 
2,153

 

 
2,206

 

Total
 
$
4,756

 
$

 
$
4,888

 
$


 
The Company also has variable interests in certain franchisees mainly through the guarantee of lease agreements up to a maximum period of ten years with earlier expiration dates possible if certain conditions are met. The Company’s maximum obligation, as a result of its guarantees of leases, is approximately $14,412 and $10,309 as of June 30, 2020 and December 31, 2019, respectively.
The amount of the Company’s maximum obligation represents a loss that the Company could incur from the variability in credit exposure without consideration of possible recoveries through insurance or other means. In addition, the amount bears no relation to the estimated fair value of the guarantees, which is not material.

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(4) Acquisitions
New Jersey Acquisition
On December 16, 2019, the Company purchased from one of its franchisees certain assets associated with twelve franchisee-owned stores in New Jersey for a cash payment of $37,812. As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $1,810. The loss incurred reduced the net purchase price to $36,002. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
3,044

Reacquired franchise rights
9,480

Customer relationships
940

Favorable leases, net
1,508

Reacquired area development rights
90

Other assets
314

Goodwill
21,069

Liabilities assumed, including deferred revenues
(443
)
 
$
36,002


The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The acquisition was not material to the results of operations of the Company.
Maine Acquisition
On May 30, 2019, the Company purchased from one of its franchisees certain assets associated with four franchisee-owned stores in Maine for a cash payment of $14,801. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
999

Reacquired franchise rights
6,740

Customer relationships
30

Unfavorable leases, net
(140
)
Other assets
78

Goodwill
7,239

Liabilities assumed, including deferred revenues
(145
)
 
$
14,801


The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The acquisition was not material to the results of operations of the Company.


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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(5) Goodwill and Intangible Assets
A summary of goodwill and intangible assets at June 30, 2020 and December 31, 2019 is as follows: 
June 30, 2020
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(118,511
)
 
$
55,522

Reacquired franchise rights
 
8.0
 
37,660

 
(14,284
)
 
23,376

 
 
 
 
211,693

 
(132,795
)
 
78,898

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(132,795
)
 
$
225,498

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821

 
December 31, 2019
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(112,114
)
 
$
61,919

Reacquired franchise rights
 
8.0
 
37,660

 
(12,258
)
 
25,402

 
 
 
 
211,693

 
(124,372
)
 
87,321

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(124,372
)
 
$
233,921

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821


 The Company determined that no impairment charges were required during any periods presented.
Amortization expense related to the intangible assets totaled $4,222 and $4,019 for the three months ended June 30, 2020 and 2019, respectively and $8,445 and $8,025 for the six months ended June 30, 2020 and 2019, respectively. The anticipated annual amortization expense related to intangible assets to be recognized in future years as of June 30, 2020 is as follows:
 
Amount
Remainder of 2020
$
8,423

2021
16,636

2022
16,728

2023
16,558

2024
14,067

Thereafter
6,486

Total
$
78,898



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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(6) Long-Term Debt
Long-term debt as of June 30, 2020 and December 31, 2019 consists of the following: 
 
 
June 30, 2020
 
December 31, 2019
2018-1 Class A-2-I notes
 
$
564,938

 
$
567,813

2018-1 Class A-2-II notes
 
614,062

 
617,187

2019-1 Class A-2 notes
 
547,250

 
550,000

Borrowings under Variable Funding Notes
 
75,000

 

Total debt, excluding deferred financing costs
 
1,801,250

 
1,735,000

Deferred financing costs, net of accumulated amortization
 
(26,797
)
 
(29,995
)
Total debt
 
1,774,453

 
1,705,005

Current portion of long-term debt
 
17,500

 
17,500

Long-term debt and borrowings under Variable Funding Notes, net of current portion
 
$
1,756,953

 
$
1,687,505


Future annual principal payments of long-term debt as of June 30, 2020 are as follows: 
 
Amount
Remainder of 2020
$
8,750

2021
17,500

2022
568,063

2023
86,750

2024
11,750

Thereafter
1,108,437

Total
$
1,801,250


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 “Variable Funding Notes”). The Company fully drew down on the Variable Funding Notes on March 20, 2020. Outstanding amounts under the Variable Funding Notes bear interest at a variable rate, which is currently 2.95%. 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 “Indenture”). Together the Notes and Variable Funding Notes will be referred to as the “Securitized Senior Notes”.
The Notes were issued in a securitization transaction 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 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-I Notes will be repaid in September 2022 and the 2018 Class A-2-II Notes will be repaid in 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 December 2029 (together, the “Anticipated Repayment Dates”). If the Master

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


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 Variable Funding Notes on March 20, 2020 at a current rate of 2.95%. The Variable Funding Notes accrue interest at a variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the London interbank offered 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 Variable Funding Notes. There is a commitment fee on the unused portion of the Variable Funding Notes of 0.5% based on utilization. It is anticipated that the principal and interest on the Variable Funding Notes will be repaid in full on or prior to September 2023, subject to two additional one-year extension options. Following the anticipated repayment date (and any extensions thereof) additional interest will accrue on the Variable Funding Notes equal to 5.0% per year.

In connection with the issuance of the 2018 Notes and 2019 Notes, the Company incurred debt issuance costs of $27,133 and $10,577, 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.
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 million (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 on the Company of 7.0x (calculated without regard for any indebtedness subject to the $50 million 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 June 30, 2020, the Company had restricted cash held by the Trustee of $70,399, which includes pre-funding of principal and interest payments through the remainder of 2020. 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.
(7) Leases
The Company leases space to operate corporate-owned stores, equipment, office, and warehouse space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning in 2019 and later, we account 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.

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


Our corporate-owned store leases generally have remaining terms of one to ten years, and typically include one or more renewal options, with renewal terms that can generally extend the lease term from three to ten years or more. The exercise of lease renewal options is at our 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.
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. Operating lease ROU assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs and lease incentives. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases based upon interpolated rates using our Class A-2 Notes.
The Company has certain non-real estate leases that are accounted for as finance leases under ASC 842, which is similar to the accounting for capital leases under the previous standard. These leases are immaterial, and therefore the Company has not included them in them in the tables below, except for their location on the consolidated balance sheet.
Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our ROU asset related to the lease. These tenant incentives are amortized as reduction of rent expense over the lease term.
Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Leases
 
Classification
 
June 30, 2020
 
December 31, 2019
Assets
 
 
 
 
 
 
Operating lease assets
 
Right of use asset, net
 
$
155,523

 
$
155,633

Finance lease assets
 
Property and equipment, net of accumulated depreciation
 
286

 
309

Total lease assets
 
 
 
$
155,809

 
$
155,942

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating
 
Other current liabilities
 
$
17,658

 
$
16,755

Noncurrent:
 
 
 
 
 
 
Operating
 
Lease liabilities, net of current portion
 
154,501

 
152,920

Financing
 
Other liabilities
 
298

 
333

Total lease liabilities
 
 
 
$
172,457

 
$
170,008

 
 
 
 
 
 
 
Weighted-average remaining lease term (years) - operating leases
 
8.7

 
 
 
 
 
 
 
 
 
Weighted-average discount rate - operating leases
 
5.0
%
 
 


During the three and six months ended June 30, 2020 and 2019, the components of lease cost were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease cost
 
$
5,957

 
$
4,951

 
$
12,348

 
$
9,796

Variable lease cost
 
2,459

 
2,033

 
4,830

 
3,973

Total lease cost
 
$
8,416

 
$
6,984

 
$
17,178

 
$
13,769



The Company’s costs related to short-term leases, those with a duration between one and twelve months, were immaterial.


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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


Supplemental disclosures of cash flow information related to leases were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Cash paid for lease liabilities
 
$
5,599

 
$
4,718

 
$
11,397

 
$
9,365

Operating assets obtained in exchange for operating lease liabilities
 
$
6,102

 
$
2,981

 
$
6,102

 
$
2,981



As of June 30, 2020, maturities of lease liabilities were as follows:
 
 
Amount
Remainder of 2020
 
$
12,792

2021
 
26,313

2022
 
26,905

2023
 
26,928

2024
 
25,124

Thereafter
 
105,812

Total lease payments
 
$
223,874

Less: imputed interest
 
51,417

Present value of lease liabilities
 
$
172,457



As of June 30, 2020, operating lease payments exclude approximately $20,323 of legally binding minimum lease payments for leases signed but not yet commenced.
(8) Revenue recognition
Contract Liabilities
Contract liabilities consist primarily of deferred revenue resulting from initial and renewal franchise fees and area development agreement (“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 condensed consolidated balance sheets.
Additionally, as of June 30, 2020, due to temporary store closures in March as a result of the COVID-19 pandemic, approximately $10.3 million remains of deferred revenue from March related to monthly membership billings of corporate-owned store and franchise revenue that the Company will recognize as the stores reopen.
The following table reflects the change in contract liabilities between December 31, 2019 and June 30, 2020.

 
Contract liabilities
Balance at December 31, 2019
$
62,054

Revenue recognized that was included in the contract liability at the beginning of the year
(18,621
)
Increase, excluding amounts recognized as revenue during the period
22,299

Balance at June 30, 2020
$
65,732


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 June 30, 2020. 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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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


Contract liabilities to be recognized in:
 
Amount
Remainder of 2020
 
$
28,973

2021
 
5,129

2022
 
3,616

2023
 
3,509

2024
 
3,249

Thereafter
 
21,256

Total
 
$
65,732


(9) Related Party Transactions
Amounts due from related parties of $420 as of June 30, 2020 recorded within other receivables on the condensed consolidated balance sheet relate to a potential indemnification reimbursement for an outstanding legal matter, see Note 13.
Activity with entities considered to be related parties is summarized below: 
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Franchise revenue
 
$

 
$
717

 
$
500

 
$
1,233

Equipment revenue
 

 
2,324

 
93

 
2,324

Total revenue from related parties
 
$

 
$
3,041

 
$
593

 
$
3,557


Additionally, the Company had deferred franchise agreement and area development agreement revenue from related parties of $188 and $256 as of June 30, 2020 and December 31, 2019, respectively.
The Company had payables to related parties pursuant to tax benefit arrangements of $31,729 and $53,491, as of June 30, 2020 and December 31, 2019, respectively (see Note 12).
The Company provides administrative services to the NAF and typically charges NAF a fee for providing these services. The services provided include accounting services, information technology, data processing, product development, legal and administrative support, and other operating expenses, which amounted to $224 and $695 for the three months ended June 30, 2020 and 2019, respectively, and $793 and $1,369 for the six months ended June 30, 2020 and 2019, respectively.
In the three and six months ended June 30, 2020, the Company incurred approximately $11 and $60, 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.
During the three months ended June 30, 2020, the Company provided a short-term loan of approximately $8,950 to its third party payment processor related to amounts drafted by franchisee-owned stores in March that were not collected as part of the typical monthly process as a result of the impact of COVID-19. Repayment of this loan will occur over several months, once the stores reopen. As of June 30, 2020, approximately $8,777 of the loan balance is outstanding.
(10) Stockholder’s 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 six months ended June 30, 2020, certain existing holders of Holdings Units exercised their exchange rights and exchanged 2,062,433 Holdings Units for 2,062,433 newly-issued shares of Class A common stock. Simultaneously, and in connection with these exchanges, 2,062,433 shares of Class B common stock were surrendered by the holders of Holdings Units that exercised their exchange rights and canceled. Additionally, in connection with these exchanges, Planet Fitness, Inc. received 2,062,433 Holdings Units, increasing its total ownership interest in Pla-Fit Holdings.

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


As a result of the above transactions, as of June 30, 2020:
Holders of our Class A common stock owned 79,995,307 shares of our Class A common stock, representing 92.5% of the voting power in the Company and, through the Company, 79,995,307 Holdings Units representing 92.5% of the economic interest in Pla-Fit Holdings; and
the Continuing LLC Owners collectively owned 6,499,487 Holdings Units, representing 7.5% of the economic interest in Pla-Fit Holdings, and 6,499,487 shares of our Class B common stock, representing 7.5% of the voting power in the Company.
Share repurchase program
2019 share repurchase program
On November 5, 2019, our 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 had been 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.
On March 18, 2020, the Company announced the suspension of its 2019 share repurchase program. If the 2019 share repurchase program is reinstated, 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. The Company may reinstate or terminate the program at any time.
2018 share repurchase program
On August 3, 2018, our board of directors approved an increase to the total amount of the previously approved share repurchase program to $500,000.
On November 13, 2018, the Company entered into a $300,000 accelerated share repurchase agreement (the “2018 ASR Agreement”) with Citibank, N.A. (“Citibank”). Pursuant to the terms of the 2018 ASR Agreement, on November 14, 2018, the Company paid Citibank $300,000 upfront in cash and received 4,607,410 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 2018 ASR Agreement occurred on April 30, 2019. At final settlement, Citibank delivered 524,124 additional shares of the Company’s Class A common stock, based on a weighted average cost per share of $58.46 over the term of the 2018 ASR agreement, which were retired. This had been 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 three months ended September 30, 2019, the Company purchased 2,272,001 shares of its Class A common stock for an average purchase price of $69.51 per share, completing its previously approved $500,000 share repurchase program.
Preferred stock
The Company had 50,000,000 shares of preferred stock authorized and none issued or outstanding for the six months ended June 30, 2020 and 2019.
(11) Earnings Per Share
Basic 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 during the same period. 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.

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


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 used to compute basic and diluted earnings per share of Class A common stock:  
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Numerator
 
 

 
 

 
 
 
 
Net (loss) income
 
$
(31,985
)
 
$
39,827

 
$
(21,602
)
 
$
71,466

Less: net (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Net (loss) income attributable to Planet Fitness, Inc.
 
$
(29,177
)
 
$
34,844

 
$
(20,570
)
 
$
62,253

Denominator
 
 
 
 
 
 
 
 
Weighted-average shares of Class A common stock outstanding - basic
 
79,965,842

 
84,142,975

 
79,532,155

 
83,975,192

Effect of dilutive securities:
 
 
 
 
 
 
 
 
Stock options
 

 
643,120

 

 
614,050

Restricted stock units
 

 
49,088

 

 
49,408

Weighted-average shares of Class A common stock outstanding - diluted
 
79,965,842

 
84,835,183

 
79,532,155

 
84,638,650

(Loss) earnings per share of Class A common stock - basic
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74

(Loss) earnings per share of Class A common stock - diluted
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74


Potentially dilutive stock options of 516,927 and 546,303 for the three and six months ended June 30, 2020 and restricted stock units of 31,811 and 41,189 for the three and six months ended June 30, 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 6,500,908 and 8,585,294 for the three months ended June 30, 2020 and 2019, respectively, and 7,139,172 and 8,910,315 for the six months ended June 30, 2020 and 2019, 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 179,893 and 72,984 for the three months ended June 30, 2020 and 2019, respectively, and 147,118 and 36,648 for the six months ended June 30, 2020 and 2019, 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 2,331 and 0 for the three months ended June 30, 2020 and 2019, respectively, and 3,069 and 1,209 for the six months ended June 30, 2020 and 2019, respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive.
(12) Income Taxes
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’s effective tax rate was 25.4% and 22.2% for the three months ended June 30, 2020 and 2019, respectively. The effective tax rate for the three months ended June 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, partially offset by income attributable to non-controlling interests. The effective tax rate for the three months ended June 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, partially offset by income attributable to non-controlling interests. The Company’s effective tax rate was 21.8% and 18.9% for the six months ended June 30, 2020 and 2019, respectively. The effective tax rate for the six months ended June 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, the recognition of a tax expense from the remeasurement of the Company's net deferred tax assets, partially offset by income attributable to non-controlling interests. The effective tax rate for the six months ended June 30, 2019 differed from the U.S. federal statutory

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


rate of 21% primarily due the recognition of a tax benefit from the remeasurement of the Company's net deferred tax assets, and income attributable to non-controlling interests, offset by state and local taxes. The Company was also subject to taxes in foreign jurisdictions. Undistributed earnings of foreign operations were not material for the three and six months ended June 30, 2020 and 2019.
Net deferred tax assets of $456,634 and $411,177 as of June 30, 2020 and December 31, 2019, respectively, relate primarily to the tax effects of temporary differences in the book basis as compared to the tax basis of our investment in Pla-Fit Holdings as a result of the secondary offerings, other exchanges, recapitalization transactions and the IPO.
As of June 30, 2020 and December 31, 2019, the total liability related to uncertain tax positions was $420. The Company recognizes interest accrued and penalties, if applicable, related to unrecognized tax benefits in income tax expense. Interest and penalties for the three and six months ended June 30, 2020 and 2019 were not material.
Tax benefit arrangements
The Company’s acquisition of Holdings Units in connection with the IPO and future and certain 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 (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 exchanges 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.
During the six months ended June 30, 2020, 2,062,433 Holdings Units were exchanged by the TRA Holders 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 subject to the provisions of the tax receivable agreements. As a result of the change in Planet Fitness, Inc.’s ownership percentage of Pla-Fit Holdings, we recorded a decrease to our net deferred tax assets of $1,331 during the six months ended June 30, 2020. As a result of these exchanges, during the six months ended June 30, 2020, we also recognized deferred tax assets in the amount of $49,518, and corresponding tax benefit arrangement liabilities of $41,997, representing approximately 85% of the tax benefits due to the TRA Holders. The offset to the entries recorded in connection with exchanges was to equity.
As of June 30, 2020 and December 31, 2019, the Company had a liability of $469,017 and $427,216, respectively, related to its projected obligations under the tax benefit arrangements. Projected future payments under the tax benefit arrangements are as follows:
 
Amount
Remainder of 2020
$
26,551

2021
6,229

2022
33,106

2023
41,510

2024
37,345

Thereafter
324,276

Total
$
469,017


(13) Commitments and contingencies
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 3, 2019, the Company and other defendants received a joint and several judgment against them in the amount of $6,300, inclusive of accrued interest, in a civil action brought by a former employee. As of June 30, 2020, the Company has estimated its obligation related to this matter to be approximately $1,260, which is included in other current liabilities on the condensed

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


consolidated balance sheet. In connection with 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 therefore recorded an offsetting indemnification receivable of $1,260 in other receivables on the Company’s condensed consolidated balance sheet, of which $420 is due from a related party. The Company has incurred, and may incur in the future, legal costs on behalf of the defendants in the case, which include a related party. These costs have not been and are not expected to be material in the future.
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.
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 has not closed as of June 30, 2020 as the parties are in dispute over the final terms of the transaction and related matters. The Company analyzed the contract and estimates that the purchase price will approximate fair value of the acquired assets.
(14) 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, the Dominican Republic, Panama, Mexico and Australia, including revenues and expenses from the NAF. The Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the United States and Canada. The Equipment segment primarily includes the sale of equipment to our United States 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 three and six months ended June 30, 2020 and 2019. The “Corporate and other” category, 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.
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenue
 
 

 
 

 
 
 
 
Franchise segment revenue - U.S.
 
$
20,819

 
$
70,221

 
$
78,161

 
$
134,618

Franchise segment revenue - International
 
183

 
1,591

 
1,370

 
2,956

Franchise segment total
 
21,002

 
71,812

 
79,531

 
137,574

Corporate-owned stores - U.S.
 
9,244

 
38,592

 
48,810

 
75,541

Corporate-owned stores - International
 
175

 
1,103

 
1,125

 
2,198

Corporate-owned stores total
 
9,419

 
39,695

 
49,935

 
77,739

Equipment segment - U.S.
 
9,813

 
70,154

 
37,998

 
115,165

Equipment segment total
 
9,813

 
70,154

 
37,998

 
115,165

Total revenue
 
$
40,234

 
$
181,661

 
$
167,464

 
$
330,478


Franchise segment revenue includes franchise revenue, NAF revenue, and commission income.
Franchise revenue includes revenue generated from placement services of $868 and $5,071 for the three months ended June 30, 2020 and 2019, respectively, and $2,880 and $7,836 for the six months June 30, 2020 and 2019, respectively.

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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Segment EBITDA
 
 

 
 

 
 
 
 
Franchise
 
$
3,529

 
$
49,860

 
$
40,275

 
$
97,220

Corporate-owned stores
 
(6,342
)
 
18,137

 
5,665

 
33,706

Equipment
 
1,311

 
16,772

 
7,677

 
27,179

Corporate and other
 
(8,285
)
 
(10,370
)
 
(17,031
)
 
(23,932
)
Total Segment EBITDA
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173


 
The following table reconciles total Segment EBITDA to (loss) income before taxes:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Total Segment EBITDA
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173

Less:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
13,008

 
10,577

 
25,800

 
20,484

Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
(Loss) income from operations
 
(22,722
)
 
65,266

 
11,546

 
118,451

Interest income
 
359

 
1,979

 
2,286

 
3,777

Interest expense
 
(20,467
)
 
(14,636
)
 
(40,708
)
 
(29,385
)
Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
(Loss) income before income taxes
 
$
(42,903
)
 
$
51,165

 
$
(27,636
)
 
$
88,081


The following table summarizes the Company’s assets by reportable segment: 
 
 
June 30, 2020
 
December 31, 2019
Franchise
 
$
178,107

 
$
193,504

Corporate-owned stores
 
468,764

 
471,234

Equipment
 
171,118

 
197,656

Unallocated
 
982,048

 
854,796

Total consolidated assets
 
$
1,800,037

 
$
1,717,190


The table above includes $867 and $1,039 of long-lived assets located in the Company’s international corporate-owned stores as of June 30, 2020 and December 31, 2019, respectively. All other assets are located in the U.S.
The following table summarizes the Company’s goodwill by reportable segment: 
 
 
June 30, 2020
 
December 31, 2019
Franchise
 
$
16,938

 
$
16,938

Corporate-owned stores
 
118,217

 
118,217

Equipment
 
92,666

 
92,666

Consolidated goodwill
 
$
227,821

 
$
227,821




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Table of Contents
Planet Fitness, Inc. and subsidiaries
Notes to Condensed Consolidated financial statements
(Unaudited)
(Amounts in thousands, except share and per share amounts)


(15) Corporate-Owned and Franchisee-Owned Stores
The following table shows changes in our corporate-owned and franchisee-owned stores for the three and six months ended June 30, 2020 and 2019:
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Franchisee-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
1,940

 
1,730

 
1,903

 
1,666

New stores opened
 
21

 
53

 
59

 
118

Stores debranded, sold or consolidated(1)
 
(1
)
 
(4
)
 
(2
)
 
(5
)
Stores operated at end of period(2)
 
1,960

 
1,779

 
1,960

 
1,779

 
 
 
 
 
 
 
 
 
Corporate-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
99

 
76

 
98

 
76

New stores opened
 

 

 
1

 

Stores acquired from franchisees
 

 
4

 

 
4

Stores operated at end of period(2)
 
99

 
80

 
99

 
80

 
 
 
 
 
 
 
 
 
Total stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
2,039

 
1,806

 
2,001

 
1,742

New stores opened
 
21

 
53

 
60

 
118

Stores acquired, debranded, sold or consolidated(1)
 
(1
)
 

 
(2
)
 
(1
)
Stores operated at end of period(2)
 
2,059

 
1,859

 
2,059

 
1,859

 (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. The Company retains 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” include stores that have closed temporarily related to the COVID-19 pandemic. All stores were closed in March 2020 in response to COVID-19, and as of June 30, 2020, 1,490 were re-opened and operating, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores.

25

Table of Contents

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context requires otherwise, references in this report to the “Company,” “we,” “us” and “our” refer to Planet Fitness, Inc. and its consolidated subsidiaries.
Overview
We are one of the largest and fastest-growing franchisors and operators of fitness centers in the United States by number of members and locations, with a highly recognized national brand. Our mission is to enhance people’s lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone, where anyone—and we mean anyone—can feel they belong. Our bright, clean stores are typically 20,000 square feet, with a large selection of high-quality, purple and yellow Planet Fitness-branded cardio, circuit- and weight-training equipment and friendly staff trainers who offer unlimited free fitness instruction to all our members in small groups through our PE@PF program. We offer this differentiated fitness experience at only $10 per month for our standard membership. This exceptional value proposition is designed to appeal to a broad population, including occasional gym users and the approximately 80% of the U.S. and Canadian populations over age 14 who are not gym members, particularly those who find the traditional fitness club setting intimidating and expensive. We and our franchisees fiercely protect Planet Fitness’ community atmosphere—a place where you do not need to be fit before joining and where progress toward achieving your fitness goals (big or small) is supported and applauded by our staff and fellow members.
As of June 30, 2020, we had more than 15.2 million members and 2,059 stores in all 50 states, the District of Columbia, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico and Australia. Of our 2,059 stores, 1,960 are franchised and 99 are corporate-owned. As of June 30, 2020, we had commitments to open more than 1,000 new stores under existing ADAs.
COVID-19 Impact
On March 11, 2020, the World Health Organization declared a global pandemic related to the COVID-19 outbreak. The pandemic has caused unprecedented economic volatility and uncertainty which has negatively impacted our recent operating results. In response to the COVID-19 pandemic, we proactively closed all of our stores system wide in March 2020. Our stores began reopening in early May as local guidelines allowed, and as of June 30, 2020, 1,490 of our stores were open and operating, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores. As COVID-19 continues to impact areas in which our stores operate, certain of our stores have had to re-close, and additional stores may have to re-close, pursuant to local guidelines. As previously announced, members will not be charged membership dues while our stores are closed and will be credited for any membership dues paid for periods when our stores were closed. We have experienced and continue to expect to experience decreased new store development and remodels, as well as decreased replacement equipment sales for 2020 as a result of the COVID-19 pandemic.
We continue to reopen stores as local authorities issue guidelines authorizing the reopening of fitness centers and we determine it is safe to do so. We have recognized franchise revenue and corporate-owned store revenue associated with any March membership dues collected prior to store closures as stores reopened, and we continue to defer revenue for stores that have not yet opened. We may have to defer further revenue in the future for stores that have been required to re-close.
The duration of the COVID-19 pandemic and the extent of its impact on our business cannot be reasonably estimated at this time. We anticipate that the COVID-19 pandemic will continue to negatively impact our operating results in future periods. As a result of COVID-19 we have experienced to date, and may continue to experience, a decrease in our net membership base. We previously withdrew our 2020 full-year guidance and are not providing updated guidance at this time due to continued uncertainty around the duration and impact of COVID-19.
We have taken the following actions to efficiently manage the business, as well as increase liquidity and financial flexibility in order to mitigate the current and anticipated future impact of the COVID-19 pandemic on our business:
Board of Director and Executive Compensation: The Company’s Chief Executive Officer, President, Chief Financial and Chief Digital and Information Officers have significantly reduced their base salaries. In addition, the base salaries of other members of senior management were reduced in graduated amounts. The Board of Directors has suspended payment of the annual retainer to non-employee directors.
Corporate-owned stores: We temporarily furloughed all employees except the store manager at each corporate-owned store location while the store remains closed. These employees are able to continue receiving benefits from the Company during store closures.
Corporate Office: Our corporate headquarters has begun a phased reopening, with certain employees continuing to work remotely to ensure their well-being.
Credit Facility: We fully drew down our $75.0 million Variable Funding Notes to provide additional liquidity and flexibility.
Share Repurchase: We have suspended share repurchases to preserve liquidity and flexibility.

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Tax benefit arrangement payments: We delayed the payment of the annual tax benefit arrangement payments, typically made in April, to the third quarter.
Capital Expenditures: Capital expenditures may be deferred, including new corporate-owned store openings and investments in existing corporate-owned stores.
Although we expect the COVID-19 pandemic to continue to negatively impact the Company’s operations and cash flows, based on management’s current expectations and currently available information, the Company believes current cash and cash from operations will be sufficient to meet its operating cash requirements, planned capital expenditures and interest and principal payments for at least the next twelve months.
Our segments
We operate and manage our business in three business segments: Franchise, Corporate-owned stores and Equipment. Our Franchise segment includes operations related to our franchising business in the United States, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico and Australia, including revenues and expenses from the NAF. Our Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the United States and Canada. The Equipment segment primarily includes the sale of equipment to our United States franchisee-owned stores. We evaluate the performance of our segments and allocate resources to them based on revenue and earnings before interest, taxes, depreciation and amortization, referred to as Segment EBITDA. Revenue and Segment EBITDA for all operating segments include only transactions with unaffiliated customers and do not include intersegment transactions. The tables below summarize the financial information for our segments for the three and six months ended June 30, 2020 and 2019. “Corporate and other,” as it relates to Segment EBITDA, primarily includes corporate overhead costs, such as payroll and related benefit costs and professional services that are not directly attributable to any individual segment.
 
 
Three months ended
June 30,
 
Six months ended
June 30,
(in thousands)
 
2020
 
2019
 
2020
 
2019
Revenue
 
 
 
 
 
 
 
 
Franchise segment
 
$
21,002

 
$
71,812

 
$
79,531

 
$
137,574

Corporate-owned stores segment
 
9,419

 
39,695

 
49,935

 
77,739

Equipment segment
 
9,813

 
70,154

 
37,998

 
115,165

Total revenue
 
$
40,234

 
$
181,661

 
$
167,464

 
$
330,478

 
 
 
 
 
 
 
 
 
Segment EBITDA
 
 
 
 
 
 
 
 
Franchise
 
$
3,529

 
$
49,860

 
$
40,275

 
$
97,220

Corporate-owned stores
 
(6,342
)
 
18,137

 
5,665

 
33,706

Equipment
 
1,311

 
16,772

 
7,677

 
27,179

Corporate and other
 
(8,285
)
 
(10,370
)
 
(17,031
)
 
(23,932
)
Total Segment EBITDA(1)
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173


(1)
Total Segment EBITDA is equal to EBITDA, which is a metric that is not presented in accordance with U.S. GAAP. Refer to “—Non-GAAP financial measures” for a definition of EBITDA and a reconciliation to net (loss) income, the most directly comparable U.S. GAAP measure.


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A reconciliation of income (loss) from operations to Segment EBITDA is set forth below: 
(in thousands)
 
Franchise
 
Corporate-owned
stores
 
Equipment
 
Corporate and
other
 
Total
Three months ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
$
1,644

 
$
(13,776
)
 
$
49

 
$
(10,639
)
 
$
(22,722
)
Depreciation and amortization
 
1,965

 
7,262

 
1,262

 
2,519

 
13,008

Other (expense) income
 
(80
)
 
172

 

 
(165
)
 
(73
)
Segment EBITDA(1)
 
$
3,529

 
$
(6,342
)
 
$
1,311

 
$
(8,285
)
 
$
(9,787
)
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
$
47,883

 
$
11,919

 
$
15,509

 
$
(10,045
)
 
$
65,266

Depreciation and amortization
 
1,977

 
6,023

 
1,260

 
1,317

 
10,577

Other income (expense)
 

 
195

 
3

 
(1,642
)
 
(1,444
)
Segment EBITDA(1)
 
$
49,860

 
$
18,137

 
$
16,772

 
$
(10,370
)
 
$
74,399

 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2020
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
$
36,467

 
$
(8,097
)
 
$
5,152

 
$
(21,976
)
 
$
11,546

Depreciation and amortization
 
3,892

 
14,584

 
2,525

 
4,799

 
25,800

Other (expense) income
 
(84
)
 
(822
)
 

 
146

 
(760
)
Segment EBITDA(1)
 
$
40,275

 
$
5,665

 
$
7,677

 
$
(17,031
)
 
$
36,586

 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2019
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
$
93,249

 
$
21,571

 
$
24,656

 
$
(21,025
)
 
$
118,451

Depreciation and amortization
 
3,973

 
11,736

 
2,520

 
2,255

 
20,484

Other (expense) income
 
(2
)
 
399

 
3

 
(5,162
)
 
(4,762
)
Segment EBITDA(1)
 
$
97,220

 
$
33,706

 
$
27,179

 
$
(23,932
)
 
$
134,173


(1)
Total Segment EBITDA is equal to EBITDA, which is a metric that is not presented in accordance with U.S. GAAP. Refer to “—Non-GAAP Financial Measures” for a definition of EBITDA and a reconciliation to net (loss) income, the most directly comparable U.S. GAAP measure.
How we assess the performance of our business
In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our business is performing include the number of new store openings, same store sales for both corporate-owned and franchisee-owned stores, system-wide sales, EBITDA, Adjusted EBITDA, Segment EBITDA, Adjusted net (loss) income, and Adjusted net (loss) income per share, diluted. See “—Non-GAAP financial measures” below for our definition of EBITDA, Adjusted EBITDA, Adjusted net (loss) income, and Adjusted net (loss) income per share, diluted and why we present EBITDA, Adjusted EBITDA, Adjusted net (loss) income, and Adjusted net (loss) income per share, diluted, and for a reconciliation of our EBITDA, Adjusted EBITDA, and Adjusted net (loss) income to net (loss) income, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, and a reconciliation of Adjusted net (loss) income per share, diluted to net (loss) income per share, diluted, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Number of new store openings
The number of new store openings reflects stores opened during a particular reporting period for both corporate-owned and franchisee-owned stores. Opening new stores is an important part of our growth strategy and we expect the majority of our future new stores will be franchisee-owned. Before we obtain the certificate of occupancy or report any revenue for new corporate-owned stores, we incur pre-opening costs, such as rent expense, labor expense and other operating expenses. Some of our stores open with an initial start-up period of higher than normal marketing and operating expenses, particularly as a percentage of monthly revenue. New stores may not be profitable and their revenue may not follow historical patterns.

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The following table shows the change in our corporate-owned and franchisee-owned store base for the three and six months ended June 30, 2020 and 2019: 
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Franchisee-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
1,940

 
1,730

 
1,903

 
1,666

New stores opened
 
21

 
53

 
59

 
118

Stores debranded, sold or consolidated(1)
 
(1
)
 
(4
)
 
(2
)
 
(5
)
Stores operated at end of period(2)
 
1,960

 
1,779

 
1,960

 
1,779

 
 
 
 
 
 
 
 
 
Corporate-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
99

 
76

 
98

 
76

New stores opened
 

 

 
1

 

Stores acquired from franchisees
 

 
4

 

 
4

Stores operated at end of period(2)
 
99

 
80

 
99

 
80

 
 
 
 
 
 
 
 
 
Total stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
2,039

 
1,806

 
2,001

 
1,742

New stores opened
 
21

 
53

 
60

 
118

Stores acquired, debranded, sold or consolidated(1)
 
(1
)
 

 
(2
)
 
(1
)
Stores operated at end of period(2)
 
2,059

 
1,859

 
2,059

 
1,859


(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 COVID-19, and as of June 30, 2020, 1,490 were re-opened and operating, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores.
Same store sales
Same store sales refers to year-over-year sales comparisons for the same store sales base of both corporate-owned and franchisee-owned stores. We define the same store sales base to include those stores that have been open and for which monthly membership dues have been billed for longer than 12 months. We measure same store sales based solely upon monthly dues billed to members of our corporate-owned and franchisee-owned stores.
Several factors affect our same store sales in any given period, including the following:
the number of stores that have been in operation for more than 12 months;
the percentage mix and pricing of PF Black Card and standard memberships in any period;
growth in total net memberships per store;
consumer recognition of our brand and our ability to respond to changing consumer preferences;
overall economic trends, particularly those related to consumer spending;
our and our franchisees’ ability to operate stores effectively and efficiently to meet consumer expectations;
marketing and promotional efforts;
local competition;
trade area dynamics; and
opening of new stores in the vicinity of existing locations.
Consistent with common industry practice, we present same store sales as compared to the same period in the prior year and which is calculated for a given period by including only sales from stores that had sales in the comparable months of both years. Same store sales of our international stores are calculated on a constant currency basis, meaning that we translate the current year’s same store sales of our international stores at the same exchange rates used in the prior year. Since opening new stores will be a significant component of our revenue growth, same store sales is only one measure of how we evaluate our performance.

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Stores acquired from or sold to franchisees are removed from the franchisee-owned or corporate-owned same store sales base, as applicable, upon the ownership change and for the 12 months following the date of the ownership change. These stores are included in the corporate-owned or franchisee-owned same store sales base, as applicable, following the 12th month after the acquisition or sale. These stores remain in the system-wide same store sales base in all periods.
As a result of the closure of all of our stores due to COVID-19 in March 2020, a majority of stores remained closed for a portion of the three and six months ended June 30, 2020. Because less than 50% of our stores in the same store sales base had membership billings in all of the months included in the three and six months ending June 30, 2020, we are not providing same store sales comparisons for these periods.
The following table shows our same store sales for the three and six months ended June 30, 2020 and 2019:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Same store sales data
 
 
 
 

 
 
 
 
Same store sales growth:
 
 
 
 

 
 
 
 
Franchisee-owned stores
 
NC
 
9.0
%
 
NC
 
9.6
%
Corporate-owned stores
 
NC
 
5.8
%
 
NC
 
6.9
%
Total stores
 
NC
 
8.8
%
 
NC
 
9.5
%
Number of stores in same store sales base:
 
 
 
 
 
 
 
 
Franchisee-owned stores
 
NC
 
1,522

 
NC
 
1,522

Corporate-owned stores
 
NC
 
68

 
NC
 
68

Total stores
 
NC
 
1,598

 
NC
 
1,598


Total monthly dues and annual fees from members (system-wide sales)
We define system-wide sales as total monthly dues and annual fees billed by us and our franchisees. System-wide sales is an operating measure that includes sales by franchisees that are not revenue realized by the Company in accordance with GAAP, as well as sales by our corporate-owned stores. While we do not record sales by franchisees as revenue, and such sales are not included in our consolidated financial statements, we believe that this operating measure aids in understanding how we derive royalty revenue and is important in evaluating our performance. We review the total amount of dues we collect from our members on a monthly basis, which allows us to assess changes in the performance of our corporate-owned and franchisee-owned stores from period to period, any competitive pressures, local or regional membership traffic patterns and general market conditions that might impact our store performance. We collect monthly dues on or around the 17th of every month. We collect annual fees once per year from each member based upon when the member signed his or her membership agreement. System-wide sales were $86 million and $851 million, during the three months ended June 30, 2020 and 2019, respectively, and $1,002 million and $1,649 million during the six months ended June 30, 2020 and 2019, respectively.

Non-GAAP financial measures
We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our operating performance and we believe these measures provide useful information to investors in evaluating our performance. EBITDA and Adjusted EBITDA as presented in this Quarterly Report on Form 10-Q are supplemental measures of our performance that are neither required by, nor presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA should not be considered as substitutes for U.S. GAAP metrics such as net (loss) income or any other performance measures derived in accordance with U.S. GAAP. Also, in the future we may incur expenses or charges such as those used to calculate Adjusted EBITDA. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items. We have also disclosed Segment EBITDA as an important financial metric utilized by the Company to evaluate performance and allocate resources to segments in accordance with ASC 280, Segment Reporting. As part of such disclosure in “Our Segments” within Management’s Discussion and Analysis of Financial Condition and Results of Operations, the Company has provided a reconciliation from income from operations to Total Segment EBITDA, which is equal to the Non-GAAP financial metric EBITDA.
We define EBITDA as net (loss) income before interest, taxes, depreciation and amortization. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our segments as well as the business as a whole. Our board of directors also uses EBITDA as a key metric to assess the performance of management. We define Adjusted EBITDA as net (loss) income before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company’s core operations. These items include certain purchase accounting adjustments, stock offering-related costs, and certain other charges and gains. We believe that Adjusted EBITDA is an

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appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.
A reconciliation of net (loss) income to EBITDA and Adjusted EBITDA is set forth below for the three and six months ended June 30, 2020 and 2019:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
(in thousands)
 
 

 
 

 
 
 
 
Net (loss) income
 
$
(31,985
)
 
$
39,827

 
$
(21,602
)
 
$
71,466

Interest income
 
(359
)
 
(1,979
)
 
(2,286
)
 
(3,777
)
Interest expense
 
20,467

 
14,636

 
40,708

 
29,385

(Benefit) provision for income taxes
 
(10,918
)
 
11,338

 
(6,034
)
 
16,615

Depreciation and amortization
 
13,008

 
10,577

 
25,800

 
20,484

EBITDA
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173

Purchase accounting adjustments-revenue(1)
 
79

 
176

 
146

 
249

Purchase accounting adjustments-rent(2)
 
129

 
117

 
271

 
240

Severance costs(3)
 
159

 

 
159

 

Pre-opening costs(4)
 
154

 
194

 
515

 
195

Tax benefit arrangement remeasurement(5)
 

 
1,479

 
(502
)
 
4,852

Other(6)
 

 
145

 
93

 
159

Adjusted EBITDA
 
$
(9,266
)
 
$
76,510

 
$
37,268

 
$
139,868

 
(1)
Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected up front but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.
(2)
Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $41, $44, $82, and $88 in the three and six months ended June 30, 2020 and 2019, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $88, $73, $189, and $152 in the three and six months ended June 30, 2020 and 2019, respectively, are due to the amortization of favorable and unfavorable leases. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our consolidated statements of operations.
(3)
Represents severance expense recorded in connection with an equity award modification.
(4)
Represents costs associated with new corporate-owned stores incurred prior to the store opening, including payroll-related costs, rent and occupancy expenses, marketing and other store operating supply expenses.
(5)
Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate.
(6)
Represents certain other charges and gains that we do not believe reflect our underlying business performance.

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Our presentation of Adjusted net (loss) income and Adjusted net (loss) income per share, diluted, assumes that all net (loss) income is attributable to Planet Fitness, Inc., which assumes the full exchange of all outstanding Holdings Units for shares of Class A common stock of Planet Fitness, Inc., adjusted for certain non-recurring items that we do not believe directly reflect our core operations. Adjusted net (loss) income per share, diluted, is calculated by dividing Adjusted net (loss) income by the total shares of Class A common stock outstanding plus any dilutive options and restricted stock units as calculated in accordance with U.S. GAAP and assuming the full exchange of all outstanding Holdings Units and corresponding Class B common stock as of the beginning of each period presented. Adjusted net (loss) income and Adjusted net (loss) income per share, diluted, are supplemental measures of operating performance that do not represent, and should not be considered, alternatives to net (loss) income and earnings per share, as calculated in accordance with U.S. GAAP. We believe Adjusted net (loss) income and Adjusted net (loss) income per share, diluted, supplement U.S. GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of Adjusted net (loss) income to net (loss) income, the most directly comparable U.S. GAAP measure, and the computation of Adjusted net (loss) income per share, diluted, are set forth below.
 
 
Three months ended June 30,
 
Six months ended June 30,
(in thousands, except per share amounts)
 
2020
 
2019
 
2020
 
2019
Net (loss) income
 
$
(31,985
)
 
$
39,827

 
$
(21,602
)
 
$
71,466

(Benefit) provision for income taxes, as reported
 
(10,918
)
 
11,338

 
(6,034
)
 
16,615

Purchase accounting adjustments-revenue(1)
 
79

 
176

 
146

 
249

Purchase accounting adjustments-rent(2)
 
129

 
117

 
271

 
240

Severance costs(3)
 
159

 

 
159

 

Pre-opening costs(4)
 
154

 
194

 
515

 
195

Tax benefit arrangement remeasurement(5)
 

 
1,479

 
(502
)
 
4,852

Other(6)
 

 
145

 
93

 
159

Purchase accounting amortization(7)
 
4,211

 
4,009

 
8,424

 
8,008

Adjusted (loss) income before income taxes
 
$
(38,171
)
 
$
57,285

 
$
(18,530
)
 
$
101,784

Adjusted income tax (benefit) expense(8)
 
(10,230
)
 
15,238

 
(4,966
)
 
27,075

Adjusted net (loss) income
 
$
(27,941
)
 
$
42,047

 
$
(13,564
)
 
$
74,709

 
 
 
 
 
 
 
 
 
Adjusted net (loss) income per share, diluted
 
$
(0.32
)
 
$
0.45

 
$
(0.16
)
 
$
0.80

 
 
 
 
 
 
 
 
 
Adjusted weighted-average shares outstanding(9)
 
86,467

 
93,420

 
86,671

 
93,549

 
(1)
Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected up front but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.
(2)
Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company’s deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $41, $44, $82, and $88 in the three and six months ended June 30, 2020 and 2019, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $88, $73, $189, and $152 in the three and six months ended June 30, 2020 and 2019, respectively, are due to the amortization of favorable and unfavorable leases. All of the rent related purchase accounting adjustments are adjustments to rent expense which is included in store operations on our consolidated statements of operations.
(3)
Represents severance expense recorded in connection with an equity award modification.
(4)
Represents costs associated with new corporate-owned stores incurred prior to the store opening, including payroll-related costs, rent and occupancy expenses, marketing and other store operating supply expenses.

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(5)
Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate.
(6)
Represents certain other charges and gains that we do not believe reflect our underlying business performance.
(7)
Includes $3,096, $3,096, $6,192, and $6,192 of amortization of intangible assets, other than favorable leases, for the three and six months ended June 30, 2020 and 2019, recorded in connection with the 2012 Acquisition, and $1,116, $913, $2,231 and $1,816 of amortization of intangible assets for the three months ended June 30, 2020 and 2019, respectively, recorded in connection with historical acquisitions of franchisee-owned stores. The adjustment represents the amount of actual non-cash amortization expense recorded, in accordance with U.S. GAAP, in each period.
(8)
Represents corporate income taxes at an assumed effective tax rate of 26.8% and 26.6% for the three and six months ended June 30, 2020 and 2019, respectively, applied to adjusted income (loss) before income taxes.
(9)
Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc.


A reconciliation of net (loss) income per share, diluted, to Adjusted net (loss) income per share, diluted is set forth below for the three and six months ended June 30, 2020 and 2019:
 
 
For the three months ended
June 30, 2020
 
For the three months ended
June 30, 2019
(in thousands, except per share amounts)
 
Net loss
 
Weighted Average Shares
 
Net loss per share, diluted
 
Net income
 
Weighted Average Shares
 
Net income per share, diluted
Net (loss) income attributable to Planet Fitness, Inc.(1)
 
$
(29,177
)
 
79,966

 
$
(0.36
)
 
$
34,844

 
84,835

 
$
0.41

Assumed exchange of shares(2)
 
(2,808
)
 
6,501

 
 
 
4,983

 
8,585

 
 
Net (loss) income
 
(31,985
)
 
 
 
 
 
39,827

 
 
 
 
Adjustments to arrive at adjusted (loss)
   income before income taxes
(3)
 
(6,186
)
 
 
 
 
 
17,458

 
 
 
 
Adjusted (loss) income before income taxes
 
(38,171
)
 
 

 
 
 
57,285

 
 
 
 
Adjusted income tax (benefit) expense(4)
 
(10,230
)
 
 
 
 
 
15,238

 
 
 
 
Adjusted net (loss) income
 
$
(27,941
)
 
86,467

 
$
(0.32
)
 
$
42,047

 
93,420

 
$
0.45

(1)
Represents net (loss) income attributable to Planet Fitness, Inc. and the associated weighted average shares, diluted of Class A common stock outstanding.
(2)
Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. Also assumes the addition of net (loss) income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and Class B common shares for shares of Class A common stock.
(3)
Represents the total impact of all adjustments identified in the adjusted net (loss) income table above to arrive at adjusted (loss) income before income taxes.
(4)
Represents corporate income taxes at an assumed effective tax rate of 26.8% and 26.6% for the three months ended June 30, 2020 and 2019, respectively, applied to adjusted (loss) income before income taxes.


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For the six months ended
June 30, 2020
 
For the six months ended
June 30, 2019
(in thousands, except per share amounts)
 
Net loss
 
Weighted Average Shares
 
Net loss per share, diluted
 
Net income
 
Weighted Average Shares
 
Net income per share, diluted
Net (loss) income attributable to Planet Fitness, Inc.(1)
 
$
(20,570
)
 
79,532

 
$
(0.26
)
 
$
62,253

 
84,639

 
$
0.74

Assumed exchange of shares(2)
 
(1,032
)
 
7,139

 


 
9,213

 
8,910

 


Net (loss) income
 
(21,602
)
 
 
 
 
 
71,466

 
 
 
 
Adjustments to arrive at adjusted (loss)
   income before income taxes
(3)
 
3,072

 
 
 
 
 
30,318

 
 
 
 
Adjusted (loss) income before income taxes
 
(18,530
)
 
 
 
 
 
101,784

 
 
 
 
Adjusted income tax (benefit) expense(4)
 
(4,966
)
 
 
 
 
 
27,075

 
 
 
 
Adjusted net (loss) income
 
$
(13,564
)
 
86,671

 
$
(0.16
)
 
$
74,709

 
93,549

 
$
0.80


(1)
Represents net (loss) income attributable to Planet Fitness, Inc. and the associated weighted average shares, diluted of Class A common stock outstanding.
(2)
Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. Also assumes the addition of net (loss) income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and Class B common shares for shares of Class A common stock.
(3)
Represents the total impact of all adjustments identified in the adjusted net (loss) income table above to arrive at adjusted (loss) income before income taxes.
(4)
Represents corporate income taxes at an assumed effective tax rate of 26.8% and 26.6% for the six months ended June 30, 2020 and 2019, respectively, applied to adjusted (loss) income before income taxes.


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Results of operations
The following table sets forth our condensed consolidated statements of operations as a percentage of total revenue for the three and six months ended June 30, 2020 and 2019:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenue:
 
 

 
 

 
 
 
 
Franchise revenue
 
40.3
 %
 
32.1
 %
 
38.9
 %
 
33.6
 %
Commission income
 
0.1
 %
 
0.6
 %
 
0.3
 %
 
0.6
 %
National advertising fund revenue
 
11.8
 %
 
6.9
 %
 
8.3
 %
 
7.4
 %
Franchise segment
 
52.2
 %
 
39.6
 %
 
47.5
 %
 
41.6
 %
Corporate-owned stores
 
23.4
 %
 
21.8
 %
 
29.8
 %
 
23.6
 %
Equipment
 
24.4
 %
 
38.6
 %
 
22.7
 %
 
34.8
 %
Total revenue
 
100.0
 %
 
100.0
 %
 
100.0
 %
 
100.0
 %
Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of revenue
 
21.1
 %
 
29.9
 %
 
18.1
 %
 
26.9
 %
Store operations
 
36.5
 %
 
11.1
 %
 
24.4
 %
 
12.4
 %
Selling, general and administrative
 
39.5
 %
 
10.4
 %
 
19.6
 %
 
11.2
 %
National advertising fund expense
 
27.0
 %
 
6.9
 %
 
15.6
 %
 
7.4
 %
Depreciation and amortization
 
32.3
 %
 
5.8
 %
 
15.4
 %
 
6.2
 %
Other loss
 
 %
 
(0.1
)%
 
 %
 
0.1
 %
Total operating costs and expenses
 
156.4
 %
 
64.0
 %
 
93.1
 %
 
64.2
 %
(Loss) income from operations
 
(56.4
)%
 
36.0
 %
 
6.9
 %
 
35.8
 %
Other income (expense), net:
 
 
 
 
 
 
 
 
Interest income
 
0.9
 %
 
1.1
 %
 
1.4
 %
 
1.1
 %
Interest expense
 
(50.9
)%
 
(8.1
)%
 
(24.3
)%
 
(8.9
)%
Other expense
 
(0.2
)%
 
(0.8
)%
 
(0.5
)%
 
(1.4
)%
Total other expense, net
 
(50.2
)%
 
(7.8
)%
 
(23.4
)%
 
(9.2
)%
(Loss) income before income taxes
 
(106.6
)%
 
28.2
 %
 
(16.5
)%
 
26.6
 %
(Benefit) provision for income taxes
 
(27.1
)%
 
6.2
 %
 
(3.6
)%
 
5.0
 %
Net (loss) income
 
(79.5
)%
 
22.0
 %
 
(12.9
)%
 
21.6
 %
Less net (loss) income attributable to non-controlling interests
 
(7.0
)%
 
2.7
 %
 
(0.6
)%
 
2.8
 %
Net (loss) income attributable to Planet Fitness, Inc.
 
(72.5
)%
 
19.3
 %
 
(12.3
)%
 
18.8
 %


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The following table sets forth a comparison of our condensed consolidated statements of operations for the three and six months ended June 30, 2020 and 2019:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
(in thousands)
 
 

 
 

 
 
 
 
Revenue:
 
 
 
 

 
 
 
 
Franchise revenue
 
$
16,214

 
$
58,225

 
$
65,125

 
$
111,181

Commission income
 
45

 
1,065

 
435

 
2,059

National advertising fund revenue
 
4,743

 
12,522

 
13,971

 
24,334

Franchise segment
 
21,002

 
71,812

 
79,531

 
137,574

Corporate-owned stores
 
9,419

 
39,695

 
49,935

 
77,739

Equipment
 
9,813

 
70,154

 
37,998

 
115,165

Total revenue
 
40,234

 
181,661

 
167,464

 
330,478

Operating costs and expenses:
 
 
 
 
 
 
 
 
Cost of revenue
 
8,478

 
54,391

 
30,323

 
88,877

Store operations
 
14,681

 
20,163

 
40,838

 
41,068

Selling, general and administrative
 
15,896

 
18,864

 
32,848

 
37,018

National advertising fund expense
 
10,878

 
12,522

 
26,083

 
24,334

Depreciation and amortization
 
13,008

 
10,577

 
25,800

 
20,484

Other loss
 
15

 
(122
)
 
26

 
246

Total operating costs and expenses
 
62,956

 
116,395

 
155,918

 
212,027

(Loss) income from operations
 
(22,722
)
 
65,266

 
11,546

 
118,451

Other income (expense), net:
 
 
 
 
 
 
 
 
Interest income
 
359

 
1,979

 
2,286

 
3,777

Interest expense
 
(20,467
)
 
(14,636
)
 
(40,708
)
 
(29,385
)
Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
Total other expense, net
 
(20,181
)
 
(14,101
)
 
(39,182
)
 
(30,370
)
(Loss) income before income taxes
 
(42,903
)
 
51,165

 
(27,636
)
 
88,081

(Benefit) provision for income taxes
 
(10,918
)
 
11,338

 
(6,034
)
 
16,615

Net (loss) income
 
(31,985
)
 
39,827

 
(21,602
)
 
71,466

Less net (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Net (loss) income attributable to Planet Fitness, Inc.
 
$
(29,177
)
 
$
34,844

 
$
(20,570
)
 
$
62,253

Comparison of the three months ended June 30, 2020 and three months ended June 30, 2019
Revenue
Total revenues were $40.2 million in the three months ended June 30, 2020, compared to $181.7 million in the three months ended June 30, 2019, a decrease of $141.4 million, or 77.9%.
Franchise segment revenue was $21.0 million in the three months ended June 30, 2020, compared to $71.8 million in the three months ended June 30, 2019, a decrease of $50.8 million, or 70.8%.
Franchise revenue was $16.2 million in the three months ended June 30, 2020 compared to $58.2 million in the three months ended June 30, 2019, a decrease of $42.0 million or 72.2%. Included in franchise revenue is royalty revenue of $14.9 million, franchise and other fees of $0.5 million, and placement revenue of $0.9 million for the three months ended June 30, 2020, compared to royalty revenue of $48.9 million, franchise and other fees of $4.2 million, and placement revenue of $5.1 million for the three months ended June 30, 2019. Of the $14.9 million in franchise royalty revenue, $9.4 million represents the recognition of revenue that was deferred in March related to temporary store closures as stores reopened. The franchise revenue decreases in the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 were due to COVID-19 related store closures beginning in March 2020.
Commission income, which is included in our franchise segment, was $0 in the three months ended June 30, 2020 compared to $1.1 million in the three months ended June 30, 2019. The decrease was primarily attributable to fewer franchisees on our commission structure compared to the prior year period and store closures associated with COVID-19.

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National advertising fund revenue was $4.7 million in the three months ended June 30, 2020, compared to $12.5 million in the three months ended June 30, 2019. Of the $4.7 million in national advertising fund revenue, $3.1 million was due to the recognition of revenue that was deferred in March related to temporary store closures as stores reopened. The decrease in national advertising fund revenue in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 was a result of the temporary closures beginning in March 2020 related to COVID-19.
Revenue from our corporate-owned stores segment was $9.4 million in the three months ended June 30, 2020, compared to $39.7 million in the three months ended June 30, 2019, a decrease of $30.3 million, or 76.3%. Of the $9.4 million in corporate-owned store revenue, $1.8 million was due to the recognition of revenue that was deferred in March related to temporary store closures as stores reopened. The decrease was a result of temporary store closures related to COVID-19 beginning in March 2020.
Equipment segment revenue was $9.8 million in the three months ended June 30, 2020, compared to $70.2 million in the three months ended June 30, 2019, a decrease of $60.3 million, or 86.0%. The decrease was driven by lower equipment sales to new and existing franchisee-owned stores in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 as a result of COVID-19 related closures beginning in March 2020.
Cost of revenue
Cost of revenue was $8.5 million in the three months ended June 30, 2020 compared to $54.4 million in the three months ended June 30, 2019, a decrease of $45.9 million, or 84.4%. Cost of revenue, which primarily relates to our equipment segment, decreased as a result of lower equipment sales to new and existing franchisee-owned stores in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 as a result of COVID-19 related closures beginning in March 2020.
Store operations
Store operation expenses, which relate to our corporate-owned stores segment, were $14.7 million in the three months ended June 30, 2020 compared to $20.2 million in the three months ended June 30, 2019, a decrease of $5.5 million, or 27.2%. The decrease was primarily attributable to lower operating and marketing expenses as a result of COVID-19 related closures beginning in March 2020, partially offset by higher expenses as a result of the acquisition of four franchisee-owned stores on May 30, 2019, the acquisition of 12 franchisee-owned stores on December 16, 2019, and the opening of seven corporate-owned stores since April 1, 2019.
Selling, general and administrative
Selling, general and administrative expenses were $15.9 million in the three months ended June 30, 2020 compared to $18.9 million in the three months ended June 30, 2019, a decrease of $3.0 million, or 15.7%. The $3.0 million decrease was primarily due to lower variable compensation expense, decreased travel and lower equipment placement expenses during the three months ended June 30, 2020 related to COVID-19 compared to the prior year quarter.
National advertising fund expense
National advertising fund expense was $10.9 million in the three months ended June 30, 2020 compared to $12.5 million in the three months ended June 30, 2019, as a result of decreased advertising and marketing expenses as a result of COVID-19.
Depreciation and amortization
Depreciation and amortization expense consists of the depreciation of property and equipment, including leasehold and building improvements and equipment. Amortization expense consists of amortization related to our intangible assets, including customer relationships and non-compete agreements.
Depreciation and amortization expense was $13.0 million in the three months ended June 30, 2020 compared to $10.6 million in the three months ended June 30, 2019, an increase of $2.4 million, or 23.0%. The increase was primarily attributable to franchisee-store acquisitions, the opening of corporate-owned stores since April 1, 2019 and depreciation of new information systems assets.
Other gain
Other gain was zero in the three months ended June 30, 2020 compared to $0.1 in the three months ended June 30, 2019.
Interest income
Interest income was $0.4 million in the three months ended June 30, 2020, compared to $2.0 million in the three months ended June 30, 2019, primarily as a result of lower interest rates in the three months ended June 30, 2020 compared to the three months ended June 30, 2019.
Interest expense
Interest expense primarily consists of interest on long-term debt as well as the amortization of deferred financing costs.  

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Interest expense was $20.5 million in the three months ended June 30, 2020 compared to $14.6 million in the three months ended June 30, 2019. The increase is primarily attributable to the issuance of $550.0 million of 2019 Notes in December 2019.
Other expense
Other expense was $0.1 million in the three months ended June 30, 2020 compared to $1.4 million in the three months ended June 30, 2019. In the three months ended June 30, 2019, the expense represents a loss on the remeasurement of our tax benefit arrangements due to changes in our effective tax rate.
(Benefit) provision for income taxes
Provision for income taxes was a benefit of $10.9 million in the three months ended June 30, 2020, compared to expense of $11.3 million in the three months ended June 30, 2019, a decrease of $22.3 million. The decrease in the provision for income taxes was primarily attributable to the Company’s net loss in the three months ended June 30, 2020 as compared to net (loss) income three months ended June 30, 2019, primarily as a result of COVID-19 related closures beginning in March 2020.
Segment results
Franchise
Segment EBITDA for the franchise segment was $3.5 million in the three months ended June 30, 2020 compared to $49.9 million in the three months ended June 30, 2019, a decrease of $46.3 million, or 92.9%. The franchise segment EBITDA decrease in the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 was primarily due to COVID-19 related store closures beginning in March 2020. Depreciation and amortization was $2.0 million in both the three months ended June 30, 2020 and the three months ended June 30, 2019.
Corporate-owned stores
Segment EBITDA for the corporate-owned stores segment was a loss of $6.3 million in the three months ended June 30, 2020 compared to earnings of $18.1 million in the three months ended June 30, 2019, a decrease of $24.5 million, or 135.0%. The corporate-owned store segment EBITDA decrease was due to COVID-19 related store closures beginning in March 2020. Depreciation and amortization was $7.3 million and $6.0 million for the three months ended June 30, 2020 and 2019, respectively. The increase in depreciation and amortization was primarily attributable to the stores acquired and opened since April 1, 2019.
Equipment
Segment EBITDA for the equipment segment was $1.3 million in the three months ended June 30, 2020 compared to $16.8 million in the three months ended June 30, 2019, a decrease of $15.5 million, or 92.2%, driven by lower equipment sales to new and existing franchisee-owned stores in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 as a result of COVID-19 related closures beginning in March 2020. Depreciation and amortization was $1.3 million for both the three months ended June 30, 2020 and 2019.
Comparison of the six months ended June 30, 2020 and six months ended June 30, 2019
Revenue
Total revenues were $167.5 million in the six months ended June 30, 2020, compared to $330.5 million in the six months ended June 30, 2019, a decrease of $163.0 million, or 49.3%.
Franchise segment revenue was $79.5 million in the six months ended June 30, 2020, compared to $137.6 million in the six months ended June 30, 2019, a decrease of $58.0 million, or 42.2%.
Franchise revenue was $65.1 million in the six months ended June 30, 2020 compared to $111.2 million in the six months ended June 30, 2019, a decrease of $46.1 million or 41.4%. Included in franchise revenue is royalty revenue of $55.5 million, franchise and other fees of $6.7 million, and placement revenue of $2.9 million for the six months ended June 30, 2020, compared to royalty revenue of $93.7 million, franchise and other fees of $9.7 million, and placement revenue of $7.8 million for the six months ended June 30, 2019. The franchise revenue decreases in the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 were due to COVID-19 related store closures beginning in March 2020.
Commission income, which is included in our franchise segment, was $0.4 million in the six months ended June 30, 2020 compared to $2.1 million in the six months ended June 30, 2019. The $1.6 million decrease was primarily attributable to fewer franchisees on our commission structure compared to the prior year period and store closures associated with COVID-19.
National advertising fund revenue was $14.0 million in the six months ended June 30, 2020, compared to $24.3 million in the six months ended June 30, 2019. The decrease in national advertising fund revenue in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was a result of the temporary closures beginning in March 2020 related to COVID-19.

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Revenue from our corporate-owned stores segment was $49.9 million in the six months ended June 30, 2020, compared to $77.7 million in the six months ended June 30, 2019, a decrease of $27.8 million, or 35.8%. The decrease was primarily attributable to store closures associated with COVID-19.
Equipment segment revenue was $38.0 million in the six months ended June 30, 2020, compared to $115.2 million in the six months ended June 30, 2019, a decrease of $77.2 million, or 67.0%. The decrease was driven by lower equipment sales to new and existing franchisee-owned stores in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 as a result of COVID-19 related closures beginning in March 2020.
Cost of revenue
Cost of revenue was $30.3 million in the six months ended June 30, 2020 compared to $88.9 million in the six months ended June 30, 2019, a decrease of $58.6 million, or 65.9%. Cost of revenue, which primarily relates to our equipment segment, decreased as a result of lower equipment sales to new and existing franchisee-owned stores in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 as a result of COVID-19 related closures beginning in March 2020.
Store operations
Store operation expenses, which relate to our corporate-owned stores segment, were $40.8 million in the six months ended June 30, 2020 compared to $41.1 million in the six months ended June 30, 2019, a decrease of $0.2 million, or 0.6%. The decrease was primarily attributable to lower operating and marketing expenses as a result of COVID-19 related closures beginning in March 2020, partially offset by higher expenses as a result of the acquisition of four franchisee-owned stores on May 30, 2019, the acquisition of 12 franchisee-owned stores on December 16, 2019, and the opening of seven corporate-owned stores since January 1, 2019.
Selling, general and administrative
Selling, general and administrative expenses were $32.8 million in the six months ended June 30, 2020 compared to $37.0 million in the six months ended June 30, 2019, a decrease of $4.2 million, or 11.3%. The $4.2 million decrease was primarily due to lower variable compensation expense, reduced travel and lower equipment placement expenses during the six months ended June 30, 2020 related to COVID-19 compared to the prior year quarter.
National advertising fund expense
National advertising fund expense was $26.1 million in the six months ended June 30, 2020 compared to $24.3 million in the six months ended June 30, 2019, as a result of the higher store count, partially offset by decreased advertising and marketing expense on a per store basis as a result of COVID-19.
Depreciation and amortization
Depreciation and amortization expense consists of the depreciation of property and equipment, including leasehold and building improvements and equipment. Amortization expense consists of amortization related to our intangible assets, including customer relationships and non-compete agreements.
Depreciation and amortization expense was $25.8 million in the six months ended June 30, 2020 compared to $20.5 million in the six months ended June 30, 2019, an increase of $5.3 million, or 26.0%. The increase was primarily attributable to the acquisition and opening of corporate-owned stores since January 1, 2019 and depreciation on new information systems assets.
Other loss
Other loss was $0 in the six months ended June 30, 2020 compared to $0.2 million in the six months ended June 30, 2019.
Interest income
Interest income was $2.3 million in the six months ended June 30, 2020 compared to $3.8 million in the six months ended June 30, 2019, primarily as a result of lower interest rates in the six months ended June 30, 2020 compared to the six months ended June 30, 2019.
Interest expense
Interest expense primarily consists of interest on long-term debt as well as the amortization of deferred financing costs.  
Interest expense was $40.7 million in the six months ended June 30, 2020 compared to $29.4 million in the six months ended June 30, 2019. The increase is primarily attributable to the issuance of $550.0 million of 2019 Notes in December 2019.
Other expense
Other expense was $0.8 million in the six months ended June 30, 2020 and $4.8 million in the six months ended June 30, 2019. Other expense was primarily attributable to foreign currency losses, partially offset by a gain on the remeasurement of our tax

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Table of Contents

benefit arrangements due to changes in our effective tax rate in the six months ended June 30, 2020. In the six months ended June 30, 2019, the other expense is attributable to the remeasurement of our tax benefit arrangements primarily due to changes in our effective tax rates.
(Benefit) provision for income taxes
The provision for income taxes was a benefit of $6.0 million in the six months ended June 30, 2020, compared to expense of $16.6 million in the six months ended June 30, 2019. The decrease in the provision for income taxes was primarily attributable to the Company’s net loss in the six months ended June 30, 2020 as compared to net (loss) income for the six months ended June 30, 2019, primarily as a result of COVID-19 related closures beginning in March 2020.
Segment results
Franchise
Segment EBITDA for the franchise segment was $40.3 million in the six months ended June 30, 2020 compared to $97.2 million in the six months ended June 30, 2019, a decrease of $56.9 million, or 58.6%. The franchise segment EBITDA decrease in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was primarily due to COVID-19 related store closures beginning in March 2020. Depreciation and amortization was $3.9 million and $4.0 million for the six months ended June 30, 2020 and 2019, respectively.
Corporate-owned stores
Segment EBITDA for the corporate-owned stores segment was $5.7 million in the six months ended June 30, 2020 compared to $33.7 million in the six months ended June 30, 2019, a decrease of $28.0 million, or 83.2%. The corporate-owned store segment EBITDA decrease was due to COVID-19 related store closures beginning in March 2020. Depreciation and amortization was $14.6 million and $11.7 million for the six months ended June 30, 2020 and 2019, respectively. The increase in depreciation and amortization was primarily attributable the acquisition and opening of corporate-owned stores since January 1, 2019.
Equipment
Segment EBITDA for the equipment segment was $7.7 million in the six months ended June 30, 2020 compared to $27.2 million in the six months ended June 30, 2019, a decrease of $19.5 million, or 71.8%, driven by lower equipment sales to new and existing franchisee-owned stores in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 as a result of COVID-19 related closures beginning in March 2020. Depreciation and amortization was $2.5 million for both the six months ended June 30, 2020 and 2019.
Liquidity and capital resources
As of June 30, 2020, we had $423.6 million of cash and cash equivalents.
We require cash principally to fund day-to-day operations, to finance capital investments, to service our outstanding debt and tax benefit arrangements and to address our working capital needs. Based on our current level of operations, we believe that with the available cash balance, the cash generated from our operations, and amounts we have drawn under our Variable Funding Notes will be adequate to meet our anticipated debt service requirements and obligations under the tax benefit arrangements, capital expenditures and working capital needs for at least the next 12 months. We believe that we will be able to meet these obligations even if we continue to experience a reduction in sales and profits as a result of the COVID-19 pandemic. Our ability to continue to fund these items and continue to reduce debt could be adversely affected by the occurrence of any of the events described under “Risk Factors” in this Quarterly Report on Form 10-Q, “Risk Factors” in the Quarterly Report on Form 10-Q for the period ended March 31, 2020, and “Risk factors” in the Annual Report. There can be no assurance, that our business will generate sufficient cash flows from operations or otherwise to enable us to service our indebtedness, including our Securitized Senior Notes, or to make anticipated capital expenditures. Our future operating performance and our ability to service, extend or refinance the Senior Secured Credit facility will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control, including potential future impacts related to the COVID-19 pandemic.

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The following table presents summary cash flow information for the six months ended June 30, 2020 and 2019:
 
 
 
Six months ended June 30,
(in thousands)
 
2020
 
2019
Net cash (used in) provided by:
 
 

 
 

Operating activities
 
$
(12,984
)
 
$
82,504

Investing activities
 
(20,992
)
 
(33,672
)
Financing activities
 
65,975

 
(8,387
)
Effect of foreign exchange rates on cash
 
(834
)
 
542

Net increase in cash
 
$
31,165

 
$
40,987

Operating activities
For the six months ended June 30, 2020, net cash used in operating activities was $13.0 million compared to net cash provided by operating activities of $82.5 million in the six months ended June 30, 2019, a decrease of $95.5 million. Of the decrease, $104.1 million is due to lower net (loss) income after adjustments to reconcile net (loss) income to net cash provided by operating activities in the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. This decrease was partially offset by $8.7 million of favorable changes in working capital primarily in accounts receivable and payables to related parties pursuant to tax benefit arrangements, partially offset by unfavorable changes in working capital primarily from other assets, other current assets and income taxes.
Investing activities
Cash flow used in investing activities related to the following capital expenditures for the six months ended June 30, 2020 and 2019
 
 
Six months ended June 30,
(in thousands)
 
2020
 
2019
New corporate-owned stores and corporate-owned stores not yet opened
 
$
5,365

 
$
3,918

Existing corporate-owned stores
 
8,300

 
5,788

Information systems
 
7,417

 
8,677

Corporate and all other
 
79

 
542

Total capital expenditures
 
$
21,161

 
$
18,925

 
For the six months ended June 30, 2020, net cash used in investing activities was $21.0 million compared to $33.7 million in the six months ended June 30, 2019, a decrease of $12.7 million. The primary driver for the decrease in cash used in investing activities was the acquisition of franchisee-owned stores in the six months ended June 30, 2019 compared to $0 in the six months ended June 30, 2020, partially offset by $2.2 million higher cash used for additions to property, plant and equipment as broken out in the table above.
Financing activities
For the six months ended June 30, 2020, net cash provided by financing activities was $66.0 million compared to cash used of $8.4 million in the six months ended June 30, 2019, an increase of $74.4 million. The primary driver of the increase in six months ended June 30, 2020 was the Company’s incurrence of $75.0 million of borrowings under its Variable Funding Notes.
Securitized Financing Facility
On August 1, 2018, the Master Issuer, a limited-purpose, bankruptcy remote, wholly-owned indirect subsidiary of Pla-Fit Holdings, LLC, entered into the 2018 Indenture under which the Master Issuer may issue multiple series of notes. On the same date, the Master Issuer issued the 2018 Class A-2-I Notes with an initial principal amount of $575 million and the 2018 Class A-2-II Notes with an initial principal amount of $625 million. In connection with the issuance of the 2018 Notes, the Master Issuer also entered into the Variable Funding Notes that allow for the incurrence of up to $75 million in revolving loans and/or letters of credit, which the Company fully drew down on March 20, 2020. On December 3, 2019 the Master Issuer issued the 2019 Notes with an initial principal amount of $550 million. The 2019 Notes were issued under the Indenture. The Securitized Senior Notes were issued in a securitization transaction 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,

41

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bankruptcy remote, wholly-owned indirect subsidiaries of the Company (the “securitization entities”) 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 Notes is in September 2048, but the Anticipated Repayment Dates of the 2018 Class A-2-I Notes and the 2018 Class A-2-II Notes are September 2022 and September 2025 respectively, unless earlier prepaid to the extent permitted under the Indenture. 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 December 2029. 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.
The Variable Funding Notes will accrue interest at a variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the London interbank offered 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 Variable Funding Notes. There is a commitment fee on the unused portion of the Variable Funding Notes of 0.5% based on utilization. It is anticipated that the principal and interest on the Variable Funding Notes will be repaid in full on or prior to September 2023, subject to two additional one-year extension options. Following the anticipated repayment date (and any extensions thereof) additional interest will accrue on the Variable Funding Notes equal to 5.0% per year.
In connection with the issuance of the 2018 Notes and 2019 Notes, the Company incurred debt issuance costs of $27.1 million and $10.6 million, 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.
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 million (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 on the Company of 7.0x (calculated without regard for any indebtedness subject to the $50 million cap) and (vi) covenants relating to recordkeeping, access to information and similar matters.
Pursuant to a parent company support agreement, we have agreed to cause our 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 our subsidiary has not performed any such obligation or duty within the prescribed time frame after such obligation or duty was required to be performed, we have agreed to either (i) perform such obligation or duty or (ii) cause such obligations or duties to be performed on our 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 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 June 30, 2020, the Company had restricted cash held by the Trustee of $70.4 million, which includes pre-funding of principal and interest payments through the remainder of 2020. 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.

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Off-balance sheet arrangements
As of June 30, 2020, our off-balance sheet arrangements consisted of guarantees of lease agreements for certain franchisees up to a maximum period of ten years with earlier expiration dates possible if certain conditions are met. Our maximum total obligation under these lease guarantee agreements is approximately $14.4 million and would only require payment upon default by the primary obligor. The estimated fair value of these guarantees at June 30, 2020 was not material, and no accrual has been recorded for our potential obligation under these arrangements.
Critical accounting policies and use of estimates
There have been no material changes to our critical accounting policies and use of estimates from those described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report.  
 
ITEM 3. Quantitative and Qualitative Disclosure about Market Risk
Interest rate risk
The securitized financing facility includes the Series 2018-1 Senior Class A-2 Notes which are comprised of fixed interest rate notes and the Variable Funding Notes which allow for the incurrence of up to $75.0 million in revolving loans and/or letters of credit under the Variable Funding Notes, which is fully drawn. The issuance of the fixed-rate Class A-2 Notes has reduced the Company’s exposure to interest rate increases that could adversely affect its earnings and cash flows. An increase in the effective interest rate applied to borrowings under the Variable Funding Notes of 100 basis points would result in a $0.8 million increase in pre-tax interest expense on an annualized basis.
Foreign exchange risk
We are exposed to fluctuations in exchange rates between the U.S. dollar and the Canadian dollar, which is the functional currency of our Canadian entities. Our sales, costs and expenses of our Canadian subsidiaries, when translated into U.S. dollars, can fluctuate due to exchange rate movement. As of June 30, 2020, a 10% increase or decrease in the exchange rate of the U.S. and Canadian dollar would increase or decrease net income by a negligible amount.
Inflation risk
Although we do not believe that inflation has had a material effect on our income from continuing operations, we have a substantial number of hourly employees in our corporate-owned stores that are paid wage rates at or based on the applicable federal or state minimum wage. Any increases in these minimum wages will subsequently increase our labor costs. We may or may not be able to offset cost increases in the future.

43

Table of Contents

ITEM 4. Controls and Procedures
Evaluation of disclosure controls and procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2020, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
There have been no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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Table of Contents

PART II-OTHER INFORMATION
 
 
ITEM 1. Legal Proceedings
We are currently involved in various claims and legal actions that arise in the ordinary course of business, most of which are covered by insurance. We do not believe that the ultimate resolution of these actions will have a material adverse effect on our business, financial condition, results of operations, liquidity or capital resources nor do we believe that there is a reasonable possibility that we will incur material loss as a result of such actions. However, a significant increase in the number of these claims or an increase in amounts owing under successful claims could have a material adverse effect on our business, financial condition and results of operations. 
 
ITEM 1A. Risk Factors.
The risk factors set forth below are in addition and serve as an update to the risk factors previously disclosed in Item 1A “Risk Factors” in Part I of our Annual Report.

Our business and results of operations have been and are expected to continue to be materially impacted by the ongoing COVID-19 pandemic.
The outbreak of disease caused by COVID-19, which has been declared a pandemic by the World Health Organization, continues to impact worldwide economic activity. A public health pandemic such as COVID-19 poses the risk that we or our employees, franchisees, members, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns, travel restrictions, social distancing requirements, stay at home orders and advisories and other restrictions that may be suggested or mandated by governmental authorities. The COVID-19 pandemic may also have the effect of heightening many of the other risks described in the ‘‘Risk Factors’’ section of our 2019 Form 10-K, such as those relating to our growth strategy, international operations, our ability to attract and retain members, our supply chain, health and safety risks to our members, loss of key employees and changes in consumer preferences, as well as risks related to our significant indebtedness, including our ability to generate sufficient cash and comply with the terms of and restrictions under the agreements governing such indebtedness.
The extent of the impact of the COVID-19 pandemic remains highly uncertain and difficult to predict. However, the continued spread of the virus and the measures taken in response to it have disrupted our operations and have adversely impacted our business, financial condition and results of operations. For example, in response to the COVID-19 pandemic, we proactively closed all of our stores system-wide beginning in mid-March 2020, temporarily furloughed a majority of our corporate-owned store employees while corporate-owned stores remained closed, and have suspended billing membership fees to members while stores remain closed and temporarily suspended sales and installation of equipment. As COVID-19 continues to impact areas in which our stores operate, certain of our stores have had to re-close, and additional stores may have to re-close, pursuant to local guidelines. As a result of COVID-19 we have experienced to date, and may continue to experience, a decrease in our net membership base. The significance of the ultimate operational and financial impact to us will depend on how long and widespread the disruptions caused by COVID-19, and the corresponding response to contain the virus and treat those affected by it, prove to be.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
The following table provides information regarding purchases of shares of our Class A common stock by us and our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the three months ended June 30, 2020.
 
 
 
Issuer Purchases of Equity Securities
Period
 
Total Number of Shares Purchased
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
 
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
04/01/20 - 04/30/20
 

 
$

 

 
$200,000,000
05/01/20 - 05/31/20
 

 

 

 
200,000,000

06/01/20 - 06/30/20
 

 

 

 
200,000,000

Total
 

 
$

 

 


(1)On November 5, 2019, our board of directors approved a share repurchase program of $500,000,000. Purchases may be effected through one or more open market transactions, privately negotiated transactions, transactions structured through investment banking institutions, or a

45

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combination of the foregoing. On March 18, 2020, the Company announced the suspension of its share repurchase program. The Company may reinstate or terminate the program at any time.

In connection with our IPO, we and the existing holders of Holdings Units entered into an exchange agreement under which they (or certain permitted transferees) have the right, from time to time and subject to the terms of the exchange agreement, to exchange their Holdings Units, together with a corresponding number of shares of Class B common stock, for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and other similar transactions. As an existing holder of Holdings Units exchanges Holdings Units for shares of Class A common stock, the number of Holdings Units held by Planet Fitness, Inc. is correspondingly increased, and a corresponding number of shares of Class B common stock are canceled.
 
ITEM 3. Defaults Upon Senior Securities.
None.
 
ITEM 4. Mine Safety Disclosures.
None.
 
ITEM 5. Other Information.
None.
 
ITEM 6. Exhibits
 
 
 
 
Description of Exhibit Incorporated
 
 
 
 
Herein by Reference
Exhibit
 
 
 
 
 
 
 
 
 
Exhibit
 
Filed
Number
 
Exhibit Description
 
Form
 
File No.
 
Filing Date
 
Number
 
Herewith
 
 
 
 
 
 
 
 
 
 
 
 
 
31.1
 
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
31.2
 
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
32.1
 
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
32.2
 
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
101
 
Interactive Data Files pursuant to Rule 405 of regulation S-T (XBRL)
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
104
 
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 
 
 
 
 
 
 
 
 
X


46

Table of Contents

Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
 
 
Planet Fitness, Inc.
 
 
 
 
(Registrant)
 
 
 
Date: August 7, 2020
 
 
 
/s/ Thomas Fitzgerald
 
 
 
 
Thomas Fitzgerald
 
 
 
 
Chief Financial Officer
(On behalf of the Registrant and as Principal Financial Officer)


47
Exhibit


Exhibit 31.1
CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Chris Rondeau, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Planet Fitness, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 7, 2020
 
/s/ Chris Rondeau
 
Chris Rondeau
 
Chief Executive Officer
 
(Principal Executive Officer)
 



Exhibit


Exhibit 31.2
CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Thomas Fitzgerald, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Planet Fitness, Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 7, 2020
 
/s/ Thomas Fitzgerald
 
Thomas Fitzgerald
 
Chief Financial Officer
 
(Principal Financial Officer)
 



Exhibit


Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Planet Fitness, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chris Rondeau, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
Date: August 7, 2020
 
/s/ Chris Rondeau
 
Chris Rondeau
 
Chief Executive Officer
 
(Principal Executive Officer)
 



Exhibit


Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Planet Fitness, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2020 filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas Fitzgerald, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented therein.
Date: August 7, 2020
 
/s/ Thomas Fitzgerald
 
Thomas Fitzgerald
 
Chief Financial Officer
 
(Principal Financial Officer)
 



v3.20.2
Cover Page - shares
6 Months Ended
Jun. 30, 2020
Jul. 31, 2020
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2020  
Document Transition Report false  
Entity File Number 001-37534  
Entity Registrant Name PLANET FITNESS, INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 38-3942097  
Entity Address, Address Line One 4 Liberty Lane West  
Entity Address, City or Town Hampton  
Entity Address, State or Province NH  
Entity Address, Postal Zip Code 03842  
City Area Code 603  
Local Phone Number 750-0001  
Title of 12(b) Security Class A common stock, $0.0001 Par Value  
Trading Symbol PLNT  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q2  
Entity Central Index Key 0001637207  
Current Fiscal Year End Date --12-31  
Class A Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   80,008,738
Class B Common Stock    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   6,499,487
v3.20.2
Condensed consolidated balance sheets (Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 423,553 $ 436,256
Restricted cash 86,407 42,539
Accounts receivable, net of allowance for bad debts of $84 and $111 at June 30, 2020 and December 31, 2019, respectively 15,251 42,268
Inventory 2,778 877
Deferred expenses – national advertising fund 7,942 0
Prepaid expenses 12,160 8,025
Other receivables 21,301 9,226
Other current assets 12,089 947
Total current assets 581,481 540,138
Property and equipment, net of accumulated depreciation of $89,417 and $73,621 at June 30, 2020 and December 31, 2019, respectively 149,624 145,481
Right-of-use assets, net 155,523 155,633
Intangible assets, net 225,498 233,921
Goodwill 227,821 227,821
Deferred income taxes 458,196 412,293
Other assets, net 1,894 1,903
Total assets 1,800,037 1,717,190
Current liabilities:    
Current maturities of long-term debt 17,500 17,500
Accounts payable 11,461 21,267
Accrued expenses 19,767 31,623
Equipment deposits 3,832 3,008
Deferred revenue, current 32,147 27,596
Payable pursuant to tax benefit arrangements, current 30,912 26,468
Other current liabilities 18,959 18,016
Total current liabilities 134,578 145,478
Long-term debt, net of current maturities 1,681,953 1,687,505
Borrowings under Variable Funding Notes 75,000 0
Lease liabilities, net of current portion 154,501 152,920
Deferred revenue, net of current portion 33,585 34,458
Deferred tax liabilities 1,562 1,116
Payable pursuant to tax benefit arrangements, net of current portion 438,105 400,748
Other liabilities 2,453 2,719
Total noncurrent liabilities 2,387,159 2,279,466
Commitments and contingencies (Note 13)
Stockholders’ equity (deficit):    
Accumulated other comprehensive (loss) income (57) 303
Additional paid in capital 38,900 29,820
Accumulated deficit (757,139) (736,587)
Total stockholders’ deficit attributable to Planet Fitness Inc. (718,287) (706,455)
Non-controlling interests (3,413) (1,299)
Total stockholders’ deficit (721,700) (707,754)
Total liabilities and stockholders’ deficit 1,800,037 1,717,190
Class A Common Stock    
Stockholders’ equity (deficit):    
Common stock, value 8 8
Class B Common Stock    
Stockholders’ equity (deficit):    
Common stock, value $ 1 $ 1
v3.20.2
Condensed consolidated balance sheets (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Accounts receivable, allowance for bad debts $ 84 $ 111
Accumulated depreciation $ 89,417 $ 73,621
Class A Common Stock    
Common stock, par value (in usd per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in shares) 300,000,000 300,000,000
Common stock, shares issued (in shares) 79,994,000 78,525,000
Common stock, shares outstanding (in shares) 79,994,000 78,525,000
Class B Common Stock    
Common stock, par value (in usd per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in shares) 100,000,000 100,000,000
Common stock, shares issued (in shares) 6,500,000 8,562,000
Common stock, shares outstanding (in shares) 6,500,000 8,562,000
v3.20.2
Condensed consolidated statements of operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Revenue:        
Revenue $ 40,234 $ 181,661 $ 167,464 $ 330,478
Operating costs and expenses:        
Cost of revenue 8,478 54,391 30,323 88,877
Store operations 14,681 20,163 40,838 41,068
Selling, general and administrative 15,896 18,864 32,848 37,018
National advertising fund expense 10,878 12,522 26,083 24,334
Depreciation and amortization 13,008 10,577 25,800 20,484
Other loss (gain) 15 (122) 26 246
Total operating costs and expenses 62,956 116,395 155,918 212,027
(Loss) income from operations (22,722) 65,266 11,546 118,451
Other expense, net:        
Interest income 359 1,979 2,286 3,777
Interest expense (20,467) (14,636) (40,708) (29,385)
Other expense (73) (1,444) (760) (4,762)
Total other expense, net (20,181) (14,101) (39,182) (30,370)
(Loss) income before income taxes (42,903) 51,165 (27,636) 88,081
(Benefit) provision for income taxes (10,918) 11,338 (6,034) 16,615
Net (loss) income (31,985) 39,827 (21,602) 71,466
Less net (loss) income attributable to non-controlling interests (2,808) 4,983 (1,032) 9,213
Net (loss) income attributable to Planet Fitness, Inc. $ (29,177) $ 34,844 $ (20,570) $ 62,253
Class A Common Stock        
Net (loss) income per share of Class A common stock:        
Basic (in dollars per share) $ (0.36) $ 0.41 $ (0.26) $ 0.74
Diluted (in dollars per share) $ (0.36) $ 0.41 $ (0.26) $ 0.74
Weighted-average shares of Class A common stock outstanding:        
Basic (in shares) 79,965,842 84,142,975 79,532,155 83,975,192
Diluted (in shares) 79,965,842 84,835,183 79,532,155 84,638,650
Franchise        
Revenue:        
Revenue $ 16,214 $ 58,225 $ 65,125 $ 111,181
Commission income        
Revenue:        
Revenue 45 1,065 435 2,059
National advertising fund revenue        
Revenue:        
Revenue 4,743 12,522 13,971 24,334
Corporate-owned stores        
Revenue:        
Revenue 9,419 39,695 49,935 77,739
Equipment        
Revenue:        
Revenue $ 9,813 $ 70,154 $ 37,998 $ 115,165
v3.20.2
Condensed consolidated statements of comprehensive income (loss) (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net (loss) income including non-controlling interests $ (31,985) $ 39,827 $ (21,602) $ 71,466
Other comprehensive income (loss), net:        
Foreign currency translation adjustments 249 103 (360) 157
Total other comprehensive income, net 249 103 (360) 157
Total comprehensive (loss) income including non-controlling interests (31,736) 39,930 (21,962) 71,623
Less: total comprehensive (loss) income attributable to non-controlling interests (2,808) 4,983 (1,032) 9,213
Total comprehensive (loss) income attributable to Planet Fitness, Inc. $ (28,928) $ 34,947 $ (20,930) $ 62,410
v3.20.2
Condensed consolidated statements of cash flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash flows from operating activities:    
Net (loss) income $ (21,602) $ 71,466
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 25,800 20,484
Amortization of deferred financing costs 3,187 2,664
Amortization of asset retirement obligations 33 168
Deferred tax (benefit) expense (3,713) 8,854
(Gain) loss on re-measurement of tax benefit arrangement (502) 4,852
Provision for bad debts (28) (10)
Equity-based compensation 2,493 2,279
Other 434 (515)
Changes in operating assets and liabilities, excluding effects of acquisitions:    
Accounts receivable 26,917 12,465
Inventory (1,900) 2,608
Other assets and other current assets (16,323) (9,288)
National advertising fund (7,941) (5,096)
Accounts payable and accrued expenses (22,354) (20,831)
Other liabilities and other current liabilities 1,472 1,777
Income taxes (4,485) 1,987
Payable pursuant to tax benefit arrangements 0 (17,476)
Equipment deposits 824 (532)
Deferred revenue 3,820 6,631
Leases and deferred rent 884 17
Net cash (used in) provided by operating activities (12,984) 82,504
Cash flows from investing activities:    
Additions to property and equipment (21,161) (18,925)
Acquisition of franchises 0 (14,801)
Proceeds from sale of property and equipment 169 54
Net cash used in investing activities (20,992) (33,672)
Cash flows from financing activities:    
Principal payments on capital lease obligations (84) (27)
Proceeds from borrowings under Variable Funding Notes 75,000 0
Repayment of long-term debt (8,750) (6,000)
Proceeds from issuance of Class A common stock 1,583 1,520
Dividend equivalent payments (174) (138)
Distributions to Continuing LLC Members (1,600) (3,742)
Net cash provided by (used in) financing activities 65,975 (8,387)
Effects of exchange rate changes on cash and cash equivalents (834) 542
Net increase in cash, cash equivalents and restricted cash 31,165 40,987
Cash, cash equivalents and restricted cash, beginning of period 478,795 320,139
Cash, cash equivalents and restricted cash, end of period 509,960 361,126
Supplemental cash flow information:    
Net cash paid for income taxes 2,155 6,530
Cash paid for interest 37,724 26,923
Non-cash investing activities:    
Non-cash additions to property and equipment $ 2,099 $ 1,896
v3.20.2
Condensed consolidated statement of changes in equity (deficit) (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Total
Accumulated other comprehensive (loss) income
Additional paid- in capital
Accumulated deficit
Non-controlling interests
Class A common stock
Class A common stock
Common stock
Class B common stock
Class B common stock
Common stock
Beginning balance (in shares) at Dec. 31, 2018             83,584   9,448
Beginning balance at Dec. 31, 2018 $ (382,789) $ 94 $ 19,732 $ (394,410) $ (8,215)   $ 9   $ 1
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net (loss) income 71,466     62,253 9,213        
Equity-based compensation expense 2,279   2,279            
Exchanges of Class B common stock (in shares)             866   (866)
Exchanges of Class B common stock     (1,172)   1,172        
Exercise of stock options, vesting of restricted share units and ESPP share purchase (in shares)             69    
Exercise of stock options, vesting of restricted share units and ESPP share purchase 1,209   1,209            
Repurchase and retirement of common stock (in shares)             (524)    
Repurchase and retirement of common stock (1)   64   (64)   $ (1)    
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock 2,383   2,383            
Non-cash adjustments to VIEs (3,621)       (3,621)        
Distributions paid to members of Pla-Fit Holdings (3,742)       (3,742)        
Cumulative effect adjustment (1,713)     (1,713)          
Other comprehensive income 157 157              
Ending balance (in shares) at Jun. 30, 2019             83,995   8,582
Ending balance at Jun. 30, 2019 (314,372) 251 24,495 (333,870) (5,257)   $ 8   $ 1
Beginning balance (in shares) at Mar. 31, 2019             84,463   8,589
Beginning balance at Mar. 31, 2019 (354,042) 148 22,576 (368,714) (8,062)   $ 9   $ 1
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net (loss) income 39,827     34,844 4,983        
Equity-based compensation expense 964   964            
Exchanges of Class B common stock (in shares)             7   (7)
Exercise of stock options, vesting of restricted share units and ESPP share purchase (in shares)             49    
Exercise of stock options, vesting of restricted share units and ESPP share purchase 704   704            
Repurchase and retirement of common stock (in shares)             (524)    
Repurchase and retirement of common stock (1)   64   (64)   $ (1)    
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock 187   187            
Non-cash adjustments to VIEs (214)       (214)        
Distributions paid to members of Pla-Fit Holdings (1,900)       (1,900)        
Other comprehensive income 103 103              
Ending balance (in shares) at Jun. 30, 2019             83,995   8,582
Ending balance at Jun. 30, 2019 (314,372) 251 24,495 (333,870) (5,257)   $ 8   $ 1
Beginning balance (in shares) at Dec. 31, 2019           78,525 78,525 8,562 8,562
Beginning balance at Dec. 31, 2019 (707,754) 303 29,820 (736,587) (1,299)   $ 8   $ 1
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net (loss) income (21,602)     (20,570) (1,032)        
Equity-based compensation expense 2,493   2,493            
Exchanges of Class B common stock (in shares)             2,062   (2,062)
Exchanges of Class B common stock     (956)   956        
Exercise of stock options, vesting of restricted share units and ESPP share purchase (in shares)             74    
Exercise of stock options, vesting of restricted share units and ESPP share purchase 1,353   1,353            
Repurchase and retirement of common stock (in shares)             (667)    
Tax benefit arrangement liability and deferred taxes arising from exchanges of Class B common stock 6,190   6,190            
Non-cash adjustments to VIEs (438)       (438)        
Distributions paid to members of Pla-Fit Holdings (1,600)       (1,600)        
Other 18     18          
Other comprehensive income (360) (360)              
Ending balance (in shares) at Jun. 30, 2020           79,994 79,994 6,500 6,500
Ending balance at Jun. 30, 2020 (721,700) (57) 38,900 (757,139) (3,413)   $ 8   $ 1
Beginning balance (in shares) at Mar. 31, 2020             79,928   6,501
Beginning balance at Mar. 31, 2020 (692,169) (306) 36,460 (727,946) (386)   $ 8   $ 1
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net (loss) income (31,985)     (29,177) (2,808)        
Equity-based compensation expense 1,546   1,546            
Exchanges of Class B common stock (in shares)             1   (1)
Exercise of stock options, vesting of restricted share units and ESPP share purchase (in shares)             65    
Exercise of stock options, vesting of restricted share units and ESPP share purchase 894   894            
Non-cash adjustments to VIEs (219)       (219)        
Other (16)     (16)          
Other comprehensive income 249 249              
Ending balance (in shares) at Jun. 30, 2020           79,994 79,994 6,500 6,500
Ending balance at Jun. 30, 2020 $ (721,700) $ (57) $ 38,900 $ (757,139) $ (3,413)   $ 8   $ 1
v3.20.2
Business Organization
6 Months Ended
Jun. 30, 2020
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 more than 15.2 million members and 2,059 owned and franchised locations (referred to as stores) in 50 states, the District of Columbia, Puerto Rico, Canada, the Dominican Republic, Panama, Mexico and Australia as of June 30, 2020.
In March 2020, the Company proactively closed all of its stores system wide in response to the novel coronavirus disease (“COVID-19”) pandemic in order to promote the health and safety of its members, team members and their communities. As of June 30, 2020, 1,490 stores had reopened, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores.
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.
Selling fitness-related equipment to franchisee-owned stores.
The Company was formed as a Delaware corporation on March 16, 2015 for the purpose of facilitating an initial public offering (the “IPO”), which was completed on August 11, 2015 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 that occurred prior to the IPO, 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 through its subsidiaries. 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 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 limited liability company units of Pla-Fit Holdings (“Holdings Units”) not owned by the Company. Unless otherwise specified, “the Company” refers to both Planet Fitness, Inc. and Pla-Fit Holdings throughout the remainder of these notes.
As of June 30, 2020, Planet Fitness, Inc. held 100.0% of the voting interest and 92.5% of the economic interest of Pla-Fit Holdings and the holders of Holdings Units of Pla-Fit Holdings (the “Continuing LLC Owners”) held the remaining 7.5% economic interest in Pla-Fit Holdings.
v3.20.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
(a) Basis of presentation and consolidation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated financial statements as of and for the three and six months ended June 30, 2020 and 2019 are unaudited. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”) filed with the SEC on February 28, 2020. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.
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 on behalf of which the Company collects 2% of gross monthly membership dues from franchisees, in accordance with the provisions of the franchise agreements, and uses the amounts received to support our national marketing campaigns, its social media platforms and the development of local advertising materials.
(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 assets and liabilities in connection with acquisitions, valuation of equity-based compensation awards, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, income taxes, including deferred tax assets and liabilities and reserves for unrecognized tax benefits, the liability for the Company’s tax benefit arrangements, and the value of the lease liability and related right-of-use asset recorded in accordance with ASC 842 (see Note 7).
(c) 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 carrying value and estimated fair value of long-term debt as of June 30, 2020 and December 31, 2019 were as follows:
 
 
June 30, 2020
 
December 31, 2019
 
 
Carrying value
 
Estimated fair value(1)
 
Carrying value
 
Estimated fair value(1)
Long-term debt
 
$
1,726,250

 
$
1,659,119

 
$
1,735,000

 
$
1,765,805

Variable Funding Notes
 
$
75,000

 
$
75,000

 
$

 
$

(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 our fixed rate long-term debt is estimated primarily based on current bid prices for our long-term debt. Judgment is required to develop these estimates. As such, the fair value of our long-term debt is classified within Level 2, as defined under U.S. GAAP.
As a result of the COVID-19 pandemic, the fair value of our long-term debt has fluctuated significantly and may continue to fluctuate based on market conditions and other factors, including changes in the target federal funds rate.
(d) Recent accounting pronouncements
The FASB issued ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. This guidance eliminates the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The Company adopted this guidance on January 1, 2020 noting no material impact on the Company’s consolidated financial statements.
The FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, in August 2018. The guidance helps align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance on January 1, 2020 on a prospective basis, noting no material impact on the Company’s consolidated financial statements.
v3.20.2
Variable Interest Entities
6 Months Ended
Jun. 30, 2020
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract]  
Variable Interest Entities Variable Interest Entities
The carrying values of VIEs included in the consolidated financial statements as of June 30, 2020 and December 31, 2019 are as follows: 
 
 
June 30, 2020
 
December 31, 2019
 
 
Assets
 
Liabilities
 
Assets
 
Liabilities
PF Melville
 
$
2,603

 
$

 
$
2,682

 
$

MMR
 
2,153

 

 
2,206

 

Total
 
$
4,756

 
$

 
$
4,888

 
$


 
The Company also has variable interests in certain franchisees mainly through the guarantee of lease agreements up to a maximum period of ten years with earlier expiration dates possible if certain conditions are met. The Company’s maximum obligation, as a result of its guarantees of leases, is approximately $14,412 and $10,309 as of June 30, 2020 and December 31, 2019, respectively.
The amount of the Company’s maximum obligation represents a loss that the Company could incur from the variability in credit exposure without consideration of possible recoveries through insurance or other means. In addition, the amount bears no relation to the estimated fair value of the guarantees, which is not material.
v3.20.2
Acquisitions
6 Months Ended
Jun. 30, 2020
Business Combinations [Abstract]  
Acquisitions Acquisitions
New Jersey Acquisition
On December 16, 2019, the Company purchased from one of its franchisees certain assets associated with twelve franchisee-owned stores in New Jersey for a cash payment of $37,812. As a result of the transaction, the Company incurred a loss on unfavorable reacquired franchise rights of $1,810. The loss incurred reduced the net purchase price to $36,002. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
3,044

Reacquired franchise rights
9,480

Customer relationships
940

Favorable leases, net
1,508

Reacquired area development rights
90

Other assets
314

Goodwill
21,069

Liabilities assumed, including deferred revenues
(443
)
 
$
36,002


The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The acquisition was not material to the results of operations of the Company.
Maine Acquisition
On May 30, 2019, the Company purchased from one of its franchisees certain assets associated with four franchisee-owned stores in Maine for a cash payment of $14,801. The Company financed the purchase through cash on hand. The acquired stores are included in the Corporate-owned stores segment.
The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
999

Reacquired franchise rights
6,740

Customer relationships
30

Unfavorable leases, net
(140
)
Other assets
78

Goodwill
7,239

Liabilities assumed, including deferred revenues
(145
)
 
$
14,801


The goodwill created through the purchase is attributable to the assumed future value of the cash flows from the stores acquired. The goodwill is amortizable and deductible for tax purposes over 15 years.
The acquisition was not material to the results of operations of the Company.
v3.20.2
Goodwill and Intangible Assets
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible assets Goodwill and Intangible Assets
A summary of goodwill and intangible assets at June 30, 2020 and December 31, 2019 is as follows: 
June 30, 2020
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(118,511
)
 
$
55,522

Reacquired franchise rights
 
8.0
 
37,660

 
(14,284
)
 
23,376

 
 
 
 
211,693

 
(132,795
)
 
78,898

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(132,795
)
 
$
225,498

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821

 
December 31, 2019
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(112,114
)
 
$
61,919

Reacquired franchise rights
 
8.0
 
37,660

 
(12,258
)
 
25,402

 
 
 
 
211,693

 
(124,372
)
 
87,321

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(124,372
)
 
$
233,921

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821


 The Company determined that no impairment charges were required during any periods presented.
Amortization expense related to the intangible assets totaled $4,222 and $4,019 for the three months ended June 30, 2020 and 2019, respectively and $8,445 and $8,025 for the six months ended June 30, 2020 and 2019, respectively. The anticipated annual amortization expense related to intangible assets to be recognized in future years as of June 30, 2020 is as follows:
 
Amount
Remainder of 2020
$
8,423

2021
16,636

2022
16,728

2023
16,558

2024
14,067

Thereafter
6,486

Total
$
78,898


v3.20.2
Long-Term Debt
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Long-Term Debt Long-Term Debt
Long-term debt as of June 30, 2020 and December 31, 2019 consists of the following: 
 
 
June 30, 2020
 
December 31, 2019
2018-1 Class A-2-I notes
 
$
564,938

 
$
567,813

2018-1 Class A-2-II notes
 
614,062

 
617,187

2019-1 Class A-2 notes
 
547,250

 
550,000

Borrowings under Variable Funding Notes
 
75,000

 

Total debt, excluding deferred financing costs
 
1,801,250

 
1,735,000

Deferred financing costs, net of accumulated amortization
 
(26,797
)
 
(29,995
)
Total debt
 
1,774,453

 
1,705,005

Current portion of long-term debt
 
17,500

 
17,500

Long-term debt and borrowings under Variable Funding Notes, net of current portion
 
$
1,756,953

 
$
1,687,505


Future annual principal payments of long-term debt as of June 30, 2020 are as follows: 
 
Amount
Remainder of 2020
$
8,750

2021
17,500

2022
568,063

2023
86,750

2024
11,750

Thereafter
1,108,437

Total
$
1,801,250


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 “Variable Funding Notes”). The Company fully drew down on the Variable Funding Notes on March 20, 2020. Outstanding amounts under the Variable Funding Notes bear interest at a variable rate, which is currently 2.95%. 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 “Indenture”). Together the Notes and Variable Funding Notes will be referred to as the “Securitized Senior Notes”.
The Notes were issued in a securitization transaction 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 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-I Notes will be repaid in September 2022 and the 2018 Class A-2-II Notes will be repaid in 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 December 2029 (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 Variable Funding Notes on March 20, 2020 at a current rate of 2.95%. The Variable Funding Notes accrue interest at a variable interest rate based on (i) the prime rate, (ii) overnight federal funds rates, (iii) the London interbank offered 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 Variable Funding Notes. There is a commitment fee on the unused portion of the Variable Funding Notes of 0.5% based on utilization. It is anticipated that the principal and interest on the Variable Funding Notes will be repaid in full on or prior to September 2023, subject to two additional one-year extension options. Following the anticipated repayment date (and any extensions thereof) additional interest will accrue on the Variable Funding Notes equal to 5.0% per year.

In connection with the issuance of the 2018 Notes and 2019 Notes, the Company incurred debt issuance costs of $27,133 and $10,577, 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.
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 million (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 on the Company of 7.0x (calculated without regard for any indebtedness subject to the $50 million 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 June 30, 2020, the Company had restricted cash held by the Trustee of $70,399, which includes pre-funding of principal and interest payments through the remainder of 2020. 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.
v3.20.2
Leases
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Leases Leases
The Company leases space to operate corporate-owned stores, equipment, office, and warehouse space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning in 2019 and later, we account 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.
Our corporate-owned store leases generally have remaining terms of one to ten years, and typically include one or more renewal options, with renewal terms that can generally extend the lease term from three to ten years or more. The exercise of lease renewal options is at our 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.
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. Operating lease ROU assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs and lease incentives. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases based upon interpolated rates using our Class A-2 Notes.
The Company has certain non-real estate leases that are accounted for as finance leases under ASC 842, which is similar to the accounting for capital leases under the previous standard. These leases are immaterial, and therefore the Company has not included them in them in the tables below, except for their location on the consolidated balance sheet.
Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our ROU asset related to the lease. These tenant incentives are amortized as reduction of rent expense over the lease term.
Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Leases
 
Classification
 
June 30, 2020
 
December 31, 2019
Assets
 
 
 
 
 
 
Operating lease assets
 
Right of use asset, net
 
$
155,523

 
$
155,633

Finance lease assets
 
Property and equipment, net of accumulated depreciation
 
286

 
309

Total lease assets
 
 
 
$
155,809

 
$
155,942

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating
 
Other current liabilities
 
$
17,658

 
$
16,755

Noncurrent:
 
 
 
 
 
 
Operating
 
Lease liabilities, net of current portion
 
154,501

 
152,920

Financing
 
Other liabilities
 
298

 
333

Total lease liabilities
 
 
 
$
172,457

 
$
170,008

 
 
 
 
 
 
 
Weighted-average remaining lease term (years) - operating leases
 
8.7

 
 
 
 
 
 
 
 
 
Weighted-average discount rate - operating leases
 
5.0
%
 
 


During the three and six months ended June 30, 2020 and 2019, the components of lease cost were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease cost
 
$
5,957

 
$
4,951

 
$
12,348

 
$
9,796

Variable lease cost
 
2,459

 
2,033

 
4,830

 
3,973

Total lease cost
 
$
8,416

 
$
6,984

 
$
17,178

 
$
13,769



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:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Cash paid for lease liabilities
 
$
5,599

 
$
4,718

 
$
11,397

 
$
9,365

Operating assets obtained in exchange for operating lease liabilities
 
$
6,102

 
$
2,981

 
$
6,102

 
$
2,981



As of June 30, 2020, maturities of lease liabilities were as follows:
 
 
Amount
Remainder of 2020
 
$
12,792

2021
 
26,313

2022
 
26,905

2023
 
26,928

2024
 
25,124

Thereafter
 
105,812

Total lease payments
 
$
223,874

Less: imputed interest
 
51,417

Present value of lease liabilities
 
$
172,457



As of June 30, 2020, operating lease payments exclude approximately $20,323 of legally binding minimum lease payments for leases signed but not yet commenced.
Leases Leases
The Company leases space to operate corporate-owned stores, equipment, office, and warehouse space. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. For leases beginning in 2019 and later, we account 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.
Our corporate-owned store leases generally have remaining terms of one to ten years, and typically include one or more renewal options, with renewal terms that can generally extend the lease term from three to ten years or more. The exercise of lease renewal options is at our 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.
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. Operating lease ROU assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs and lease incentives. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases based upon interpolated rates using our Class A-2 Notes.
The Company has certain non-real estate leases that are accounted for as finance leases under ASC 842, which is similar to the accounting for capital leases under the previous standard. These leases are immaterial, and therefore the Company has not included them in them in the tables below, except for their location on the consolidated balance sheet.
Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our ROU asset related to the lease. These tenant incentives are amortized as reduction of rent expense over the lease term.
Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Leases
 
Classification
 
June 30, 2020
 
December 31, 2019
Assets
 
 
 
 
 
 
Operating lease assets
 
Right of use asset, net
 
$
155,523

 
$
155,633

Finance lease assets
 
Property and equipment, net of accumulated depreciation
 
286

 
309

Total lease assets
 
 
 
$
155,809

 
$
155,942

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating
 
Other current liabilities
 
$
17,658

 
$
16,755

Noncurrent:
 
 
 
 
 
 
Operating
 
Lease liabilities, net of current portion
 
154,501

 
152,920

Financing
 
Other liabilities
 
298

 
333

Total lease liabilities
 
 
 
$
172,457

 
$
170,008

 
 
 
 
 
 
 
Weighted-average remaining lease term (years) - operating leases
 
8.7

 
 
 
 
 
 
 
 
 
Weighted-average discount rate - operating leases
 
5.0
%
 
 


During the three and six months ended June 30, 2020 and 2019, the components of lease cost were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease cost
 
$
5,957

 
$
4,951

 
$
12,348

 
$
9,796

Variable lease cost
 
2,459

 
2,033

 
4,830

 
3,973

Total lease cost
 
$
8,416

 
$
6,984

 
$
17,178

 
$
13,769



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:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Cash paid for lease liabilities
 
$
5,599

 
$
4,718

 
$
11,397

 
$
9,365

Operating assets obtained in exchange for operating lease liabilities
 
$
6,102

 
$
2,981

 
$
6,102

 
$
2,981



As of June 30, 2020, maturities of lease liabilities were as follows:
 
 
Amount
Remainder of 2020
 
$
12,792

2021
 
26,313

2022
 
26,905

2023
 
26,928

2024
 
25,124

Thereafter
 
105,812

Total lease payments
 
$
223,874

Less: imputed interest
 
51,417

Present value of lease liabilities
 
$
172,457



As of June 30, 2020, operating lease payments exclude approximately $20,323 of legally binding minimum lease payments for leases signed but not yet commenced.
v3.20.2
Revenue recognition
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue recognition Revenue recognition
Contract Liabilities
Contract liabilities consist primarily of deferred revenue resulting from initial and renewal franchise fees and area development agreement (“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 condensed consolidated balance sheets.
Additionally, as of June 30, 2020, due to temporary store closures in March as a result of the COVID-19 pandemic, approximately $10.3 million remains of deferred revenue from March related to monthly membership billings of corporate-owned store and franchise revenue that the Company will recognize as the stores reopen.
The following table reflects the change in contract liabilities between December 31, 2019 and June 30, 2020.

 
Contract liabilities
Balance at December 31, 2019
$
62,054

Revenue recognized that was included in the contract liability at the beginning of the year
(18,621
)
Increase, excluding amounts recognized as revenue during the period
22,299

Balance at June 30, 2020
$
65,732


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 June 30, 2020. 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.
Contract liabilities to be recognized in:
 
Amount
Remainder of 2020
 
$
28,973

2021
 
5,129

2022
 
3,616

2023
 
3,509

2024
 
3,249

Thereafter
 
21,256

Total
 
$
65,732


v3.20.2
Related Party Transactions
6 Months Ended
Jun. 30, 2020
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
Amounts due from related parties of $420 as of June 30, 2020 recorded within other receivables on the condensed consolidated balance sheet relate to a potential indemnification reimbursement for an outstanding legal matter, see Note 13.
Activity with entities considered to be related parties is summarized below: 
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Franchise revenue
 
$

 
$
717

 
$
500

 
$
1,233

Equipment revenue
 

 
2,324

 
93

 
2,324

Total revenue from related parties
 
$

 
$
3,041

 
$
593

 
$
3,557


Additionally, the Company had deferred franchise agreement and area development agreement revenue from related parties of $188 and $256 as of June 30, 2020 and December 31, 2019, respectively.
The Company had payables to related parties pursuant to tax benefit arrangements of $31,729 and $53,491, as of June 30, 2020 and December 31, 2019, respectively (see Note 12).
The Company provides administrative services to the NAF and typically charges NAF a fee for providing these services. The services provided include accounting services, information technology, data processing, product development, legal and administrative support, and other operating expenses, which amounted to $224 and $695 for the three months ended June 30, 2020 and 2019, respectively, and $793 and $1,369 for the six months ended June 30, 2020 and 2019, respectively.
In the three and six months ended June 30, 2020, the Company incurred approximately $11 and $60, 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.
During the three months ended June 30, 2020, the Company provided a short-term loan of approximately $8,950 to its third party payment processor related to amounts drafted by franchisee-owned stores in March that were not collected as part of the typical monthly process as a result of the impact of COVID-19. Repayment of this loan will occur over several months, once the stores reopen. As of June 30, 2020, approximately $8,777 of the loan balance is outstanding.
v3.20.2
Stockholder's Equity
6 Months Ended
Jun. 30, 2020
Equity [Abstract]  
Stockholder's Equity Stockholder’s 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 six months ended June 30, 2020, certain existing holders of Holdings Units exercised their exchange rights and exchanged 2,062,433 Holdings Units for 2,062,433 newly-issued shares of Class A common stock. Simultaneously, and in connection with these exchanges, 2,062,433 shares of Class B common stock were surrendered by the holders of Holdings Units that exercised their exchange rights and canceled. Additionally, in connection with these exchanges, Planet Fitness, Inc. received 2,062,433 Holdings Units, increasing its total ownership interest in Pla-Fit Holdings.
As a result of the above transactions, as of June 30, 2020:
Holders of our Class A common stock owned 79,995,307 shares of our Class A common stock, representing 92.5% of the voting power in the Company and, through the Company, 79,995,307 Holdings Units representing 92.5% of the economic interest in Pla-Fit Holdings; and
the Continuing LLC Owners collectively owned 6,499,487 Holdings Units, representing 7.5% of the economic interest in Pla-Fit Holdings, and 6,499,487 shares of our Class B common stock, representing 7.5% of the voting power in the Company.
Share repurchase program
2019 share repurchase program
On November 5, 2019, our 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 had been 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.
On March 18, 2020, the Company announced the suspension of its 2019 share repurchase program. If the 2019 share repurchase program is reinstated, 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. The Company may reinstate or terminate the program at any time.
2018 share repurchase program
On August 3, 2018, our board of directors approved an increase to the total amount of the previously approved share repurchase program to $500,000.
On November 13, 2018, the Company entered into a $300,000 accelerated share repurchase agreement (the “2018 ASR Agreement”) with Citibank, N.A. (“Citibank”). Pursuant to the terms of the 2018 ASR Agreement, on November 14, 2018, the Company paid Citibank $300,000 upfront in cash and received 4,607,410 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 2018 ASR Agreement occurred on April 30, 2019. At final settlement, Citibank delivered 524,124 additional shares of the Company’s Class A common stock, based on a weighted average cost per share of $58.46 over the term of the 2018 ASR agreement, which were retired. This had been 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 three months ended September 30, 2019, the Company purchased 2,272,001 shares of its Class A common stock for an average purchase price of $69.51 per share, completing its previously approved $500,000 share repurchase program.
Preferred stock
The Company had 50,000,000 shares of preferred stock authorized and none issued or outstanding for the six months ended June 30, 2020 and 2019.
v3.20.2
Earnings Per Share
6 Months Ended
Jun. 30, 2020
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 attributable to Planet Fitness, Inc. by the weighted-average number of shares of Class A common stock outstanding during the same period. 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 used to compute basic and diluted earnings per share of Class A common stock:  
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Numerator
 
 

 
 

 
 
 
 
Net (loss) income
 
$
(31,985
)
 
$
39,827

 
$
(21,602
)
 
$
71,466

Less: net (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Net (loss) income attributable to Planet Fitness, Inc.
 
$
(29,177
)
 
$
34,844

 
$
(20,570
)
 
$
62,253

Denominator
 
 
 
 
 
 
 
 
Weighted-average shares of Class A common stock outstanding - basic
 
79,965,842

 
84,142,975

 
79,532,155

 
83,975,192

Effect of dilutive securities:
 
 
 
 
 
 
 
 
Stock options
 

 
643,120

 

 
614,050

Restricted stock units
 

 
49,088

 

 
49,408

Weighted-average shares of Class A common stock outstanding - diluted
 
79,965,842

 
84,835,183

 
79,532,155

 
84,638,650

(Loss) earnings per share of Class A common stock - basic
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74

(Loss) earnings per share of Class A common stock - diluted
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74


Potentially dilutive stock options of 516,927 and 546,303 for the three and six months ended June 30, 2020 and restricted stock units of 31,811 and 41,189 for the three and six months ended June 30, 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 6,500,908 and 8,585,294 for the three months ended June 30, 2020 and 2019, respectively, and 7,139,172 and 8,910,315 for the six months ended June 30, 2020 and 2019, 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 179,893 and 72,984 for the three months ended June 30, 2020 and 2019, respectively, and 147,118 and 36,648 for the six months ended June 30, 2020 and 2019, 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 2,331 and 0 for the three months ended June 30, 2020 and 2019, respectively, and 3,069 and 1,209 for the six months ended June 30, 2020 and 2019, respectively, were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive.
v3.20.2
Income Taxes
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
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’s effective tax rate was 25.4% and 22.2% for the three months ended June 30, 2020 and 2019, respectively. The effective tax rate for the three months ended June 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, partially offset by income attributable to non-controlling interests. The effective tax rate for the three months ended June 30, 2019 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, partially offset by income attributable to non-controlling interests. The Company’s effective tax rate was 21.8% and 18.9% for the six months ended June 30, 2020 and 2019, respectively. The effective tax rate for the six months ended June 30, 2020 differed from the U.S. federal statutory rate of 21% primarily due to state and local taxes, the recognition of a tax expense from the remeasurement of the Company's net deferred tax assets, partially offset by income attributable to non-controlling interests. The effective tax rate for the six months ended June 30, 2019 differed from the U.S. federal statutory
rate of 21% primarily due the recognition of a tax benefit from the remeasurement of the Company's net deferred tax assets, and income attributable to non-controlling interests, offset by state and local taxes. The Company was also subject to taxes in foreign jurisdictions. Undistributed earnings of foreign operations were not material for the three and six months ended June 30, 2020 and 2019.
Net deferred tax assets of $456,634 and $411,177 as of June 30, 2020 and December 31, 2019, respectively, relate primarily to the tax effects of temporary differences in the book basis as compared to the tax basis of our investment in Pla-Fit Holdings as a result of the secondary offerings, other exchanges, recapitalization transactions and the IPO.
As of June 30, 2020 and December 31, 2019, the total liability related to uncertain tax positions was $420. The Company recognizes interest accrued and penalties, if applicable, related to unrecognized tax benefits in income tax expense. Interest and penalties for the three and six months ended June 30, 2020 and 2019 were not material.
Tax benefit arrangements
The Company’s acquisition of Holdings Units in connection with the IPO and future and certain 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 (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 exchanges 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.
During the six months ended June 30, 2020, 2,062,433 Holdings Units were exchanged by the TRA Holders 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 subject to the provisions of the tax receivable agreements. As a result of the change in Planet Fitness, Inc.’s ownership percentage of Pla-Fit Holdings, we recorded a decrease to our net deferred tax assets of $1,331 during the six months ended June 30, 2020. As a result of these exchanges, during the six months ended June 30, 2020, we also recognized deferred tax assets in the amount of $49,518, and corresponding tax benefit arrangement liabilities of $41,997, representing approximately 85% of the tax benefits due to the TRA Holders. The offset to the entries recorded in connection with exchanges was to equity.
As of June 30, 2020 and December 31, 2019, the Company had a liability of $469,017 and $427,216, respectively, related to its projected obligations under the tax benefit arrangements. Projected future payments under the tax benefit arrangements are as follows:
 
Amount
Remainder of 2020
$
26,551

2021
6,229

2022
33,106

2023
41,510

2024
37,345

Thereafter
324,276

Total
$
469,017


v3.20.2
Commitments and contingencies
6 Months Ended
Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and contingencies Commitments and contingencies
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 3, 2019, the Company and other defendants received a joint and several judgment against them in the amount of $6,300, inclusive of accrued interest, in a civil action brought by a former employee. As of June 30, 2020, the Company has estimated its obligation related to this matter to be approximately $1,260, which is included in other current liabilities on the condensed
consolidated balance sheet. In connection with 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 therefore recorded an offsetting indemnification receivable of $1,260 in other receivables on the Company’s condensed consolidated balance sheet, of which $420 is due from a related party. The Company has incurred, and may incur in the future, legal costs on behalf of the defendants in the case, which include a related party. These costs have not been and are not expected to be material in the future.
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.
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 has not closed as of June 30, 2020 as the parties are in dispute over the final terms of the transaction and related matters. The Company analyzed the contract and estimates that the purchase price will approximate fair value of the acquired assets.
v3.20.2
Segments
6 Months Ended
Jun. 30, 2020
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, the Dominican Republic, Panama, Mexico and Australia, including revenues and expenses from the NAF. The Corporate-owned stores segment includes operations with respect to all corporate-owned stores throughout the United States and Canada. The Equipment segment primarily includes the sale of equipment to our United States 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 three and six months ended June 30, 2020 and 2019. The “Corporate and other” category, 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.
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenue
 
 

 
 

 
 
 
 
Franchise segment revenue - U.S.
 
$
20,819

 
$
70,221

 
$
78,161

 
$
134,618

Franchise segment revenue - International
 
183

 
1,591

 
1,370

 
2,956

Franchise segment total
 
21,002

 
71,812

 
79,531

 
137,574

Corporate-owned stores - U.S.
 
9,244

 
38,592

 
48,810

 
75,541

Corporate-owned stores - International
 
175

 
1,103

 
1,125

 
2,198

Corporate-owned stores total
 
9,419

 
39,695

 
49,935

 
77,739

Equipment segment - U.S.
 
9,813

 
70,154

 
37,998

 
115,165

Equipment segment total
 
9,813

 
70,154

 
37,998

 
115,165

Total revenue
 
$
40,234

 
$
181,661

 
$
167,464

 
$
330,478


Franchise segment revenue includes franchise revenue, NAF revenue, and commission income.
Franchise revenue includes revenue generated from placement services of $868 and $5,071 for the three months ended June 30, 2020 and 2019, respectively, and $2,880 and $7,836 for the six months June 30, 2020 and 2019, respectively.
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Segment EBITDA
 
 

 
 

 
 
 
 
Franchise
 
$
3,529

 
$
49,860

 
$
40,275

 
$
97,220

Corporate-owned stores
 
(6,342
)
 
18,137

 
5,665

 
33,706

Equipment
 
1,311

 
16,772

 
7,677

 
27,179

Corporate and other
 
(8,285
)
 
(10,370
)
 
(17,031
)
 
(23,932
)
Total Segment EBITDA
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173


 
The following table reconciles total Segment EBITDA to (loss) income before taxes:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Total Segment EBITDA
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173

Less:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
13,008

 
10,577

 
25,800

 
20,484

Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
(Loss) income from operations
 
(22,722
)
 
65,266

 
11,546

 
118,451

Interest income
 
359

 
1,979

 
2,286

 
3,777

Interest expense
 
(20,467
)
 
(14,636
)
 
(40,708
)
 
(29,385
)
Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
(Loss) income before income taxes
 
$
(42,903
)
 
$
51,165

 
$
(27,636
)
 
$
88,081


The following table summarizes the Company’s assets by reportable segment: 
 
 
June 30, 2020
 
December 31, 2019
Franchise
 
$
178,107

 
$
193,504

Corporate-owned stores
 
468,764

 
471,234

Equipment
 
171,118

 
197,656

Unallocated
 
982,048

 
854,796

Total consolidated assets
 
$
1,800,037

 
$
1,717,190


The table above includes $867 and $1,039 of long-lived assets located in the Company’s international corporate-owned stores as of June 30, 2020 and December 31, 2019, respectively. All other assets are located in the U.S.
The following table summarizes the Company’s goodwill by reportable segment: 
 
 
June 30, 2020
 
December 31, 2019
Franchise
 
$
16,938

 
$
16,938

Corporate-owned stores
 
118,217

 
118,217

Equipment
 
92,666

 
92,666

Consolidated goodwill
 
$
227,821

 
$
227,821


v3.20.2
Corporate-Owned and Franchisee-Owned Stores
6 Months Ended
Jun. 30, 2020
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 three and six months ended June 30, 2020 and 2019:
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Franchisee-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
1,940

 
1,730

 
1,903

 
1,666

New stores opened
 
21

 
53

 
59

 
118

Stores debranded, sold or consolidated(1)
 
(1
)
 
(4
)
 
(2
)
 
(5
)
Stores operated at end of period(2)
 
1,960

 
1,779

 
1,960

 
1,779

 
 
 
 
 
 
 
 
 
Corporate-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
99

 
76

 
98

 
76

New stores opened
 

 

 
1

 

Stores acquired from franchisees
 

 
4

 

 
4

Stores operated at end of period(2)
 
99

 
80

 
99

 
80

 
 
 
 
 
 
 
 
 
Total stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
2,039

 
1,806

 
2,001

 
1,742

New stores opened
 
21

 
53

 
60

 
118

Stores acquired, debranded, sold or consolidated(1)
 
(1
)
 

 
(2
)
 
(1
)
Stores operated at end of period(2)
 
2,059

 
1,859

 
2,059

 
1,859

 (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. The Company retains 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” include stores that have closed temporarily related to the COVID-19 pandemic. All stores were closed in March 2020 in response to COVID-19, and as of June 30, 2020, 1,490 were re-opened and operating, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores.
v3.20.2
Summary of significant accounting policies (Policies)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Basis of presentation and consolidation Basis of presentation and consolidation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations, financial position and cash flows for the periods presented have been reflected. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated financial statements as of and for the three and six months ended June 30, 2020 and 2019 are unaudited. The condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited financial statements at that date but does not include all of the disclosures required by U.S. GAAP. These interim condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”) filed with the SEC on February 28, 2020. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year.
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 on behalf of which the Company collects 2% of gross monthly membership dues from franchisees, in accordance with the provisions of the franchise agreements, and uses the amounts received to support our national marketing campaigns, its social media platforms and the development of local advertising materials.
Use of estimates 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 assets and liabilities in connection with acquisitions, valuation of equity-based compensation awards, the evaluation of the recoverability of goodwill and long-lived assets, including intangible assets, income taxes, including deferred tax assets and liabilities and reserves for unrecognized tax benefits, the liability for the Company’s tax benefit arrangements, and the value of the lease liability and related right-of-use asset recorded in accordance with ASC 842 (see Note 7).
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.
Recent accounting pronouncements Recent accounting pronouncements
The FASB issued ASU No. 2017-4, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. This guidance eliminates the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The Company adopted this guidance on January 1, 2020 noting no material impact on the Company’s consolidated financial statements.
The FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, in August 2018. The guidance helps align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company adopted this guidance on January 1, 2020 on a prospective basis, noting no material impact on the Company’s consolidated financial statements.
v3.20.2
Summary of Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2020
Accounting Policies [Abstract]  
Summary of Company's Liabilities Measured at Fair Value
The carrying value and estimated fair value of long-term debt as of June 30, 2020 and December 31, 2019 were as follows:
 
 
June 30, 2020
 
December 31, 2019
 
 
Carrying value
 
Estimated fair value(1)
 
Carrying value
 
Estimated fair value(1)
Long-term debt
 
$
1,726,250

 
$
1,659,119

 
$
1,735,000

 
$
1,765,805

Variable Funding Notes
 
$
75,000

 
$
75,000

 
$

 
$

(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 our fixed rate long-term debt is estimated primarily based on current bid prices for our long-term debt. Judgment is required to develop these estimates. As such, the fair value of our long-term debt is classified within Level 2, as defined under U.S. GAAP.
v3.20.2
Variable Interest Entities (Tables)
6 Months Ended
Jun. 30, 2020
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract]  
Carrying Value of Variable Interest Entities of Consolidated Financial Statements
The carrying values of VIEs included in the consolidated financial statements as of June 30, 2020 and December 31, 2019 are as follows: 
 
 
June 30, 2020
 
December 31, 2019
 
 
Assets
 
Liabilities
 
Assets
 
Liabilities
PF Melville
 
$
2,603

 
$

 
$
2,682

 
$

MMR
 
2,153

 

 
2,206

 

Total
 
$
4,756

 
$

 
$
4,888

 
$


v3.20.2
Acquisitions (Tables)
6 Months Ended
Jun. 30, 2020
Business Combinations [Abstract]  
Purchase Consideration Allocation
The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
3,044

Reacquired franchise rights
9,480

Customer relationships
940

Favorable leases, net
1,508

Reacquired area development rights
90

Other assets
314

Goodwill
21,069

Liabilities assumed, including deferred revenues
(443
)
 
$
36,002


The purchase consideration was allocated as follows:
 
Amount
Fixed assets
$
999

Reacquired franchise rights
6,740

Customer relationships
30

Unfavorable leases, net
(140
)
Other assets
78

Goodwill
7,239

Liabilities assumed, including deferred revenues
(145
)
 
$
14,801


v3.20.2
Goodwill and Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Summary of Goodwill and Intangible Assets
A summary of goodwill and intangible assets at June 30, 2020 and December 31, 2019 is as follows: 
June 30, 2020
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(118,511
)
 
$
55,522

Reacquired franchise rights
 
8.0
 
37,660

 
(14,284
)
 
23,376

 
 
 
 
211,693

 
(132,795
)
 
78,898

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(132,795
)
 
$
225,498

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821

 
December 31, 2019
 
Weighted
average
amortization
period (years)
 
Gross
carrying
amount
 
Accumulated
amortization
 
Net carrying
Amount
Customer relationships
 
11.0
 
$
174,033

 
$
(112,114
)
 
$
61,919

Reacquired franchise rights
 
8.0
 
37,660

 
(12,258
)
 
25,402

 
 
 
 
211,693

 
(124,372
)
 
87,321

Indefinite-lived intangible:
 
 
 
 
 
 
 
 
Trade and brand names
 
N/A
 
146,600

 

 
146,600

Total intangible assets
 
 
 
$
358,293

 
$
(124,372
)
 
$
233,921

Goodwill
 
 
 
$
227,821

 
$

 
$
227,821


Summary of Amortization expenses The anticipated annual amortization expense related to intangible assets to be recognized in future years as of June 30, 2020 is as follows:
 
Amount
Remainder of 2020
$
8,423

2021
16,636

2022
16,728

2023
16,558

2024
14,067

Thereafter
6,486

Total
$
78,898


v3.20.2
Long-Term Debt (Tables)
6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Schedule of Long-Term Debt
Long-term debt as of June 30, 2020 and December 31, 2019 consists of the following: 
 
 
June 30, 2020
 
December 31, 2019
2018-1 Class A-2-I notes
 
$
564,938

 
$
567,813

2018-1 Class A-2-II notes
 
614,062

 
617,187

2019-1 Class A-2 notes
 
547,250

 
550,000

Borrowings under Variable Funding Notes
 
75,000

 

Total debt, excluding deferred financing costs
 
1,801,250

 
1,735,000

Deferred financing costs, net of accumulated amortization
 
(26,797
)
 
(29,995
)
Total debt
 
1,774,453

 
1,705,005

Current portion of long-term debt
 
17,500

 
17,500

Long-term debt and borrowings under Variable Funding Notes, net of current portion
 
$
1,756,953

 
$
1,687,505


Schedule of Future Annual Payments of Long-term Debt
Future annual principal payments of long-term debt as of June 30, 2020 are as follows: 
 
Amount
Remainder of 2020
$
8,750

2021
17,500

2022
568,063

2023
86,750

2024
11,750

Thereafter
1,108,437

Total
$
1,801,250


v3.20.2
Leases (Tables)
6 Months Ended
Jun. 30, 2020
Leases [Abstract]  
Balance Sheet Classification of Lease Assets and Liabilities
Leases
 
Classification
 
June 30, 2020
 
December 31, 2019
Assets
 
 
 
 
 
 
Operating lease assets
 
Right of use asset, net
 
$
155,523

 
$
155,633

Finance lease assets
 
Property and equipment, net of accumulated depreciation
 
286

 
309

Total lease assets
 
 
 
$
155,809

 
$
155,942

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Current:
 
 
 
 
 
 
Operating
 
Other current liabilities
 
$
17,658

 
$
16,755

Noncurrent:
 
 
 
 
 
 
Operating
 
Lease liabilities, net of current portion
 
154,501

 
152,920

Financing
 
Other liabilities
 
298

 
333

Total lease liabilities
 
 
 
$
172,457

 
$
170,008

 
 
 
 
 
 
 
Weighted-average remaining lease term (years) - operating leases
 
8.7

 
 
 
 
 
 
 
 
 
Weighted-average discount rate - operating leases
 
5.0
%
 
 

Components of Lease Cost
Supplemental disclosures of cash flow information related to leases were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Cash paid for lease liabilities
 
$
5,599

 
$
4,718

 
$
11,397

 
$
9,365

Operating assets obtained in exchange for operating lease liabilities
 
$
6,102

 
$
2,981

 
$
6,102

 
$
2,981


During the three and six months ended June 30, 2020 and 2019, the components of lease cost were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease cost
 
$
5,957

 
$
4,951

 
$
12,348

 
$
9,796

Variable lease cost
 
2,459

 
2,033

 
4,830

 
3,973

Total lease cost
 
$
8,416

 
$
6,984

 
$
17,178

 
$
13,769


Schedule of Supplemental Disclosures of Cash Flow Information Related to Leases
Supplemental disclosures of cash flow information related to leases were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Cash paid for lease liabilities
 
$
5,599

 
$
4,718

 
$
11,397

 
$
9,365

Operating assets obtained in exchange for operating lease liabilities
 
$
6,102

 
$
2,981

 
$
6,102

 
$
2,981


During the three and six months ended June 30, 2020 and 2019, the components of lease cost were as follows:
 
 
Three months ended June 30,
 
Six months ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Operating lease cost
 
$
5,957

 
$
4,951

 
$
12,348

 
$
9,796

Variable lease cost
 
2,459

 
2,033

 
4,830

 
3,973

Total lease cost
 
$
8,416

 
$
6,984

 
$
17,178

 
$
13,769


Maturities of Operating Lease Liabilities
As of June 30, 2020, maturities of lease liabilities were as follows:
 
 
Amount
Remainder of 2020
 
$
12,792

2021
 
26,313

2022
 
26,905

2023
 
26,928

2024
 
25,124

Thereafter
 
105,812

Total lease payments
 
$
223,874

Less: imputed interest
 
51,417

Present value of lease liabilities
 
$
172,457


v3.20.2
Revenue recognition (Tables)
6 Months Ended
Jun. 30, 2020
Revenue from Contract with Customer [Abstract]  
Schedule of Contract Liabilities
The following table reflects the change in contract liabilities between December 31, 2019 and June 30, 2020.

 
Contract liabilities
Balance at December 31, 2019
$
62,054

Revenue recognized that was included in the contract liability at the beginning of the year
(18,621
)
Increase, excluding amounts recognized as revenue during the period
22,299

Balance at June 30, 2020
$
65,732


Remaining Performance Obligation
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 June 30, 2020. 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.
Contract liabilities to be recognized in:
 
Amount
Remainder of 2020
 
$
28,973

2021
 
5,129

2022
 
3,616

2023
 
3,509

2024
 
3,249

Thereafter
 
21,256

Total
 
$
65,732


v3.20.2
Related party transactions (Tables)
6 Months Ended
Jun. 30, 2020
Related Party Transactions [Abstract]  
Schedule of Related Party Transactions
Activity with entities considered to be related parties is summarized below: 
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Franchise revenue
 
$

 
$
717

 
$
500

 
$
1,233

Equipment revenue
 

 
2,324

 
93

 
2,324

Total revenue from related parties
 
$

 
$
3,041

 
$
593

 
$
3,557


v3.20.2
Earnings Per Share (Tables)
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Reconciliation of Numerators and Denominators Used to Compute Basic and Diluted Earnings per Share
The following table sets forth reconciliations used to compute basic and diluted earnings per share of Class A common stock:  
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Numerator
 
 

 
 

 
 
 
 
Net (loss) income
 
$
(31,985
)
 
$
39,827

 
$
(21,602
)
 
$
71,466

Less: net (loss) income attributable to non-controlling interests
 
(2,808
)
 
4,983

 
(1,032
)
 
9,213

Net (loss) income attributable to Planet Fitness, Inc.
 
$
(29,177
)
 
$
34,844

 
$
(20,570
)
 
$
62,253

Denominator
 
 
 
 
 
 
 
 
Weighted-average shares of Class A common stock outstanding - basic
 
79,965,842

 
84,142,975

 
79,532,155

 
83,975,192

Effect of dilutive securities:
 
 
 
 
 
 
 
 
Stock options
 

 
643,120

 

 
614,050

Restricted stock units
 

 
49,088

 

 
49,408

Weighted-average shares of Class A common stock outstanding - diluted
 
79,965,842

 
84,835,183

 
79,532,155

 
84,638,650

(Loss) earnings per share of Class A common stock - basic
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74

(Loss) earnings per share of Class A common stock - diluted
 
$
(0.36
)
 
$
0.41

 
$
(0.26
)
 
$
0.74


v3.20.2
Income Taxes (Tables)
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Schedule of Future Payments Under Tax Benefit Arrangements Projected future payments under the tax benefit arrangements are as follows:
 
Amount
Remainder of 2020
$
26,551

2021
6,229

2022
33,106

2023
41,510

2024
37,345

Thereafter
324,276

Total
$
469,017


v3.20.2
Segments (Tables)
6 Months Ended
Jun. 30, 2020
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 three and six months ended June 30, 2020 and 2019. The “Corporate and other” category, 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.
 
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Revenue
 
 

 
 

 
 
 
 
Franchise segment revenue - U.S.
 
$
20,819

 
$
70,221

 
$
78,161

 
$
134,618

Franchise segment revenue - International
 
183

 
1,591

 
1,370

 
2,956

Franchise segment total
 
21,002

 
71,812

 
79,531

 
137,574

Corporate-owned stores - U.S.
 
9,244

 
38,592

 
48,810

 
75,541

Corporate-owned stores - International
 
175

 
1,103

 
1,125

 
2,198

Corporate-owned stores total
 
9,419

 
39,695

 
49,935

 
77,739

Equipment segment - U.S.
 
9,813

 
70,154

 
37,998

 
115,165

Equipment segment total
 
9,813

 
70,154

 
37,998

 
115,165

Total revenue
 
$
40,234

 
$
181,661

 
$
167,464

 
$
330,478


 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Segment EBITDA
 
 

 
 

 
 
 
 
Franchise
 
$
3,529

 
$
49,860

 
$
40,275

 
$
97,220

Corporate-owned stores
 
(6,342
)
 
18,137

 
5,665

 
33,706

Equipment
 
1,311

 
16,772

 
7,677

 
27,179

Corporate and other
 
(8,285
)
 
(10,370
)
 
(17,031
)
 
(23,932
)
Total Segment EBITDA
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173


Reconciliation of Total Segment EBITDA to (Loss) Income Before Taxes
The following table reconciles total Segment EBITDA to (loss) income before taxes:
 
 
Three months ended
June 30,
 
Six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Total Segment EBITDA
 
$
(9,787
)
 
$
74,399

 
$
36,586

 
$
134,173

Less:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
13,008

 
10,577

 
25,800

 
20,484

Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
(Loss) income from operations
 
(22,722
)
 
65,266

 
11,546

 
118,451

Interest income
 
359

 
1,979

 
2,286

 
3,777

Interest expense
 
(20,467
)
 
(14,636
)
 
(40,708
)
 
(29,385
)
Other expense
 
(73
)
 
(1,444
)
 
(760
)
 
(4,762
)
(Loss) income before income taxes
 
$
(42,903
)
 
$
51,165

 
$
(27,636
)
 
$
88,081


Summary of Company's Assets by Reportable Segment
The following table summarizes the Company’s assets by reportable segment: 
 
 
June 30, 2020
 
December 31, 2019
Franchise
 
$
178,107

 
$
193,504

Corporate-owned stores
 
468,764

 
471,234

Equipment
 
171,118

 
197,656

Unallocated
 
982,048

 
854,796

Total consolidated assets
 
$
1,800,037

 
$
1,717,190


Summary of Company's Goodwill by Reportable Segment
The following table summarizes the Company’s goodwill by reportable segment: 
 
 
June 30, 2020
 
December 31, 2019
Franchise
 
$
16,938

 
$
16,938

Corporate-owned stores
 
118,217

 
118,217

Equipment
 
92,666

 
92,666

Consolidated goodwill
 
$
227,821

 
$
227,821


v3.20.2
Corporate-Owned and Franchisee-Owned Stores (Tables)
6 Months Ended
Jun. 30, 2020
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 three and six months ended June 30, 2020 and 2019:
 
 
For the three months ended
June 30,
 
For the six months ended
June 30,
 
 
2020
 
2019
 
2020
 
2019
Franchisee-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
1,940

 
1,730

 
1,903

 
1,666

New stores opened
 
21

 
53

 
59

 
118

Stores debranded, sold or consolidated(1)
 
(1
)
 
(4
)
 
(2
)
 
(5
)
Stores operated at end of period(2)
 
1,960

 
1,779

 
1,960

 
1,779

 
 
 
 
 
 
 
 
 
Corporate-owned stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
99

 
76

 
98

 
76

New stores opened
 

 

 
1

 

Stores acquired from franchisees
 

 
4

 

 
4

Stores operated at end of period(2)
 
99

 
80

 
99

 
80

 
 
 
 
 
 
 
 
 
Total stores:
 
 
 
 
 
 
 
 
Stores operated at beginning of period
 
2,039

 
1,806

 
2,001

 
1,742

New stores opened
 
21

 
53

 
60

 
118

Stores acquired, debranded, sold or consolidated(1)
 
(1
)
 

 
(2
)
 
(1
)
Stores operated at end of period(2)
 
2,059

 
1,859

 
2,059

 
1,859

 (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. The Company retains 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” include stores that have closed temporarily related to the COVID-19 pandemic. All stores were closed in March 2020 in response to COVID-19, and as of June 30, 2020, 1,490 were re-opened and operating, of which 1,451 were franchisee-owned stores and 39 were corporate-owned stores.
v3.20.2
Business Organization - Additional Information (Detail)
6 Months Ended
Jun. 30, 2020
member
store
state
segment
Mar. 31, 2020
store
Dec. 31, 2019
store
Jun. 30, 2019
store
Mar. 31, 2019
store
Dec. 31, 2018
store
Aug. 05, 2015
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Number of owned and franchised locations 2,059 2,039 2,001 1,859 1,806 1,742  
Number of states in which entity operates | state 50            
Number of stores reopened 1,490            
Number of reportable segments | segment 3            
Pla-Fit Holdings, LLC              
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Percentage of ownership (in percentage) 100.00%           100.00%
Percentage of economic interest (in percentage) 92.50%            
Pla-Fit Holdings, LLC | Holdings Units              
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Percentage of economic interest (in percentage) 7.50%            
Planet Intermediate, LLC | Pla-Fit Holdings, LLC              
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Percentage of ownership (in percentage)             100.00%
Planet Fitness Holdings, LLC | Planet Intermediate, LLC              
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Percentage of ownership (in percentage)             100.00%
Minimum              
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Number of members (more than) | member 15,200,000            
Franchisee-Owned Stores              
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Number of owned and franchised locations 1,960 1,940 1,903 1,779 1,730 1,666  
Number of stores reopened 1,451            
Corporate-Owned Stores              
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]              
Number of owned and franchised locations 99 99 98 80 76 76  
Number of stores reopened 39            
v3.20.2
Summary of Significant Accounting Policies - Additional Information (Details)
6 Months Ended
Jun. 30, 2020
Planet Fitness NAF, LLC  
Significant Accounting Policies [Line Items]  
Percentage of franchise membership billing revenue 2.00%
v3.20.2
Summary of Significant Accounting Policies - Summary of Company's Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Carrying value    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt $ 1,726,250 $ 1,735,000
Variable Funding Notes 75,000 0
Estimated fair value    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt 1,659,119 1,765,805
Variable Funding Notes $ 75,000 $ 0
v3.20.2
Variable Interest Entities - Carrying Value of Variable Interest Entities of Consolidated Financial Statements (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Variable Interest Entity [Line Items]    
Assets $ 1,800,037 $ 1,717,190
Variable Interest Entity, Primary Beneficiary    
Variable Interest Entity [Line Items]    
Assets 4,756 4,888
Liabilities 0 0
Variable Interest Entity, Primary Beneficiary | PF Melville    
Variable Interest Entity [Line Items]    
Assets 2,603 2,682
Liabilities 0 0
Variable Interest Entity, Primary Beneficiary | MMR    
Variable Interest Entity [Line Items]    
Assets 2,153 2,206
Liabilities $ 0 $ 0
v3.20.2
Variable Interest Entities - Additional Information (Detail) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Variable Interest Entity, Consolidated, Carrying Amount, Assets and Liabilities, Net [Abstract]    
Franchisee lease term, maximum 10 years  
Maximum obligation of guarantees of leases and debt $ 14,412 $ 10,309
v3.20.2
Acquisitions - Narrative (Details)
$ in Thousands
Dec. 16, 2019
USD ($)
store
May 30, 2019
USD ($)
store
Jun. 30, 2020
store
Mar. 31, 2020
store
Dec. 31, 2019
store
Jun. 30, 2019
store
Mar. 31, 2019
store
Dec. 31, 2018
store
Business Acquisition [Line Items]                
Number of owned and franchised locations | store     2,059 2,039 2,001 1,859 1,806 1,742
New Jersey Acquisition                
Business Acquisition [Line Items]                
Number of owned and franchised locations | store 12              
Acquisition, gross cash payments $ 37,812              
Loss on reacquired franchise rights 1,810              
Consideration transferred $ 36,002              
Maine Acquisition                
Business Acquisition [Line Items]                
Number of owned and franchised locations | store   4            
Acquisition, gross cash payments   $ 14,801            
v3.20.2
Acquisitions - Purchase Consideration Allocation (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Dec. 16, 2019
May 30, 2019
Business Acquisition [Line Items]        
Goodwill $ 227,821 $ 227,821    
New Jersey Acquisition        
Business Acquisition [Line Items]        
Fixed assets     $ 3,044  
Other assets     314  
Goodwill     21,069  
Liabilities assumed, including deferred revenues     (443)  
Net assets acquired     36,002  
Maine Acquisition        
Business Acquisition [Line Items]        
Fixed assets       $ 999
Unfavorable leases, net       (140)
Other assets       78
Goodwill       7,239
Liabilities assumed, including deferred revenues       (145)
Net assets acquired       14,801
Reacquired franchise rights | New Jersey Acquisition        
Business Acquisition [Line Items]        
Intangible assets     9,480  
Reacquired franchise rights | Maine Acquisition        
Business Acquisition [Line Items]        
Intangible assets       6,740
Customer relationships | New Jersey Acquisition        
Business Acquisition [Line Items]        
Intangible assets     940  
Customer relationships | Maine Acquisition        
Business Acquisition [Line Items]        
Intangible assets       $ 30
Favorable leases, net | New Jersey Acquisition        
Business Acquisition [Line Items]        
Intangible assets     1,508  
Reacquired area development rights | New Jersey Acquisition        
Business Acquisition [Line Items]        
Intangible assets     $ 90  
v3.20.2
Goodwill and Intangible Assets - Summary of Goodwill and Intangible Assets (Detail) - USD ($)
$ in Thousands
6 Months Ended 12 Months Ended
Jun. 30, 2020
Dec. 31, 2019
Goodwill And Intangible Assets [Line Items]    
Gross carrying amount $ 211,693 $ 211,693
Accumulated amortization (132,795) (124,372)
Net carrying Amount 78,898 87,321
Total intangible assets, Gross carrying amount 358,293 358,293
Total intangible assets, Net carrying Amount 225,498 233,921
Goodwill, gross carrying amount 227,821 227,821
Goodwill, Accumulated amortization 0 0
Goodwill, net carrying amount 227,821 227,821
Trade and brand names    
Goodwill And Intangible Assets [Line Items]    
Indefinite-lived intangible assets $ 146,600 $ 146,600
Customer relationships    
Goodwill And Intangible Assets [Line Items]    
Weighted average amortization period (years) 11 years 11 years
Gross carrying amount $ 174,033 $ 174,033
Accumulated amortization (118,511) (112,114)
Net carrying Amount $ 55,522 $ 61,919
Reacquired franchise rights    
Goodwill And Intangible Assets [Line Items]    
Weighted average amortization period (years) 8 years 8 years
Gross carrying amount $ 37,660 $ 37,660
Accumulated amortization (14,284) (12,258)
Net carrying Amount $ 23,376 $ 25,402
v3.20.2
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]          
Impairment charges     $ 0   $ 0
Amortization of intangible assets $ 4,222,000 $ 4,019,000 $ 8,445,000 $ 8,025,000  
v3.20.2
Goodwill and Intangible Assets - Summary of Amortization expenses (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]    
Remainder of 2020 $ 8,423  
2021 16,636  
2022 16,728  
2023 16,558  
2024 14,067  
Thereafter 6,486  
Net carrying Amount $ 78,898 $ 87,321
v3.20.2
Long-Term Debt - Schedule of Long-Term Debt (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Debt Instrument [Line Items]    
Total debt, excluding deferred financing costs $ 1,801,250 $ 1,735,000
Deferred financing costs, net of accumulated amortization (26,797) (29,995)
Total debt 1,774,453 1,705,005
Current portion of long-term debt 17,500 17,500
Long-term debt and borrowings under Variable Funding Notes, net of current portion 1,756,953 1,687,505
2018-1 Class A-2-I notes | Senior fixed-rate term notes    
Debt Instrument [Line Items]    
Total debt, excluding deferred financing costs 564,938 567,813
2018-1 Class A-2-II notes | Senior fixed-rate term notes    
Debt Instrument [Line Items]    
Total debt, excluding deferred financing costs 614,062 617,187
2019-1 Class A-2 notes | Senior fixed-rate term notes    
Debt Instrument [Line Items]    
Total debt, excluding deferred financing costs 547,250 550,000
Revolving Financing Facility | Borrowings under Variable Funding Notes    
Debt Instrument [Line Items]    
Total debt, excluding deferred financing costs $ 75,000 $ 0
v3.20.2
Long-Term Debt - Schedule of Future Annual Payments of Long-term Debt (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Debt Disclosure [Abstract]    
Remainder of 2020 $ 8,750  
2021 17,500  
2022 568,063  
2023 86,750  
2024 11,750  
Thereafter 1,108,437  
Total $ 1,801,250 $ 1,735,000
v3.20.2
Long-Term Debt - Narrative (Details)
1 Months Ended
Dec. 03, 2019
USD ($)
Aug. 01, 2018
USD ($)
extension
Sep. 30, 2023
Jun. 30, 2020
USD ($)
Mar. 20, 2020
USD ($)
Debt Instrument [Line Items]          
Debt issuance costs incurred $ 10,577,000 $ 27,133,000      
Restricted cash       $ 70,399,000  
2018-1 Class A-2-I notes | Senior fixed-rate term notes          
Debt Instrument [Line Items]          
Fixed interest rate   4.262%      
Debt face amount   $ 575,000      
2018-1 Class A-2-II notes | Senior fixed-rate term notes          
Debt Instrument [Line Items]          
Fixed interest rate   4.666%      
Debt face amount   $ 625,000      
2019-1 Class A-2 notes | Senior fixed-rate term notes          
Debt Instrument [Line Items]          
Fixed interest rate 3.858%        
Debt face amount $ 550,000        
Variable funding notes | Revolving Financing Facility          
Debt Instrument [Line Items]          
Maximum borrowing capacity   $ 75,000      
Variable rate percentage         2.95%
Borrowings on line of credit         $ 75,000
Commitment fee percentage   0.50%      
Number of additional extensions | extension   2      
Term of extension   1 year      
Variable funding notes | Revolving Financing Facility | Scenario, Forecast          
Debt Instrument [Line Items]          
Line of credit interest rate     5.00%    
Securitized Senior Notes | Securitized Senior Notes          
Debt Instrument [Line Items]          
Cap on non-securitized indebtedness       $ 50,000,000  
Leverage ratio cap       7.0  
v3.20.2
Leases - Additional Information (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Lessee, Lease, Description [Line Items]  
Lease payments for leases signed but not yet commenced $ 20,323
Minimum  
Lessee, Lease, Description [Line Items]  
Remaining lease term 1 year
Renewal term 3 years
Maximum  
Lessee, Lease, Description [Line Items]  
Remaining lease term 10 years
Renewal term 10 years
v3.20.2
Leases - Balance Sheet Classification of Lease Assets and Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Leases [Abstract]    
Operating lease assets $ 155,523 $ 155,633
Finance lease assets 286 309
Total lease assets 155,809 155,942
Current operating lease liabilities 17,658 16,755
Noncurrent operating lease liabilities 154,501 152,920
Noncurrent finance lease liabilities 298 333
Total lease liabilities $ 172,457 $ 170,008
Weighted-average remaining lease term (years) - operating leases 8 years 8 months 12 days  
Weighted-average discount rate - operating leases 5.00%  
v3.20.2
Leases Leases - Components of Lease Cost (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Leases [Abstract]        
Operating lease cost $ 5,957 $ 4,951 $ 12,348 $ 9,796
Variable lease cost 2,459 2,033 4,830 3,973
Total lease cost $ 8,416 $ 6,984 $ 17,178 $ 13,769
v3.20.2
Leases Leases - Supplemental Disclosures of Cash Flow Information (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Leases [Abstract]        
Cash paid for lease liabilities $ 5,599 $ 4,718 $ 11,397 $ 9,365
Operating assets obtained in exchange for operating lease liabilities $ 6,102 $ 2,981 $ 6,102 $ 2,981
v3.20.2
Leases Leases - Maturities of Lease Liabilities (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Leases [Abstract]  
Remainder of 2020 $ 12,792
2021 26,313
2022 26,905
2023 26,928
2024 25,124
Thereafter 105,812
Total lease payments 223,874
Less: imputed interest 51,417
Present value of lease liabilities $ 172,457
v3.20.2
Revenue recognition - Narrative (Details) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Disaggregation of Revenue [Line Items]    
Deferred revenue $ 65,732 $ 62,054
COVID-19 | Corporate-owned stores and franchise segment    
Disaggregation of Revenue [Line Items]    
Deferred revenue $ 10,300  
v3.20.2
Revenue recognition - Schedule of Contract Liabilities (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2020
USD ($)
Contract liabilities  
Beginning Balance $ 62,054
Revenue recognized that was included in the contract liability at the beginning of the year (18,621)
Increase, excluding amounts recognized as revenue during the period 22,299
Ending Balance $ 65,732
v3.20.2
Revenue recognition - Remaining Performance Obligation (Details)
$ in Thousands
Jun. 30, 2020
USD ($)
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 65,732
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 28,973
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected timing of satisfaction 6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 5,129
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected timing of satisfaction 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 3,616
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected timing of satisfaction 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 3,509
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected timing of satisfaction 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 3,249
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected timing of satisfaction 1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01  
Revenue from Contract with Customer [Abstract]  
Remaining performance obligation $ 21,256
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]  
Remaining performance obligation, expected timing of satisfaction
v3.20.2
Related Party Transactions - Additional Information (Detail) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
May 08, 2020
Dec. 31, 2019
Related Party Transaction [Line Items]            
Liability payable under tax benefit obligations $ 31,729   $ 31,729     $ 53,491
Administrative fees charged 0 $ 3,041 593 $ 3,557    
Short-term loan to third party payment processor 8,777   8,777   $ 8,950  
Area Development Agreements            
Related Party Transaction [Line Items]            
Deferred area development revenue from related parties 188   188     $ 256
Corporate Travel | Affiliated Entity            
Related Party Transaction [Line Items]            
Expense incurred for corporate travel to a third-party company 11   60      
Administrative Service | Planet Fitness NAF, LLC            
Related Party Transaction [Line Items]            
Administrative fees charged 224 $ 695 793 $ 1,369    
Civil Action Brought By Former Employee | Pending Litigation            
Related Party Transaction [Line Items]            
Receivables due from related parties $ 420   $ 420      
v3.20.2
Related Party Transactions - Schedule of Related Party Transactions (Detail) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Related Party Transaction [Line Items]        
Total revenue from related parties $ 0 $ 3,041 $ 593 $ 3,557
Franchise revenue        
Related Party Transaction [Line Items]        
Total revenue from related parties 0 717 500 1,233
Equipment revenue        
Related Party Transaction [Line Items]        
Total revenue from related parties $ 0 $ 2,324 $ 93 $ 2,324
v3.20.2
Stockholder's Equity - Additional Information (Detail) - USD ($)
3 Months Ended 6 Months Ended
Mar. 02, 2020
Dec. 05, 2019
Apr. 30, 2019
Nov. 14, 2018
Sep. 30, 2019
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Dec. 04, 2019
Nov. 05, 2019
Nov. 13, 2018
Aug. 03, 2018
Class of Stock [Line Items]                        
Stock repurchase program, authorized amount                   $ 500,000,000   $ 500,000,000
Repurchase and retirement of common stock           $ 1,000   $ 1,000        
Preferred Stock, Shares Authorized (in shares)           50,000,000 50,000,000 50,000,000        
Preferred Stock, Shares Issued (in shares)           0 0 0        
Preferred Stock, Shares Outstanding (in shares)           0 0 0        
Pla-Fit Holdings, LLC                        
Class of Stock [Line Items]                        
Number of shares exchanged             2,062,433          
Holdings Units                        
Class of Stock [Line Items]                        
Number of shares exchanged             2,062,433          
Investor | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Number of units held by owners (in shares)             79,995,307          
Investor | Pla-Fit Holdings, LLC | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Percentage of economic interest             92.50%          
Continuing LLC Owners | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Number of units held by owners (in shares)             6,499,487          
Continuing LLC Owners | Pla-Fit Holdings, LLC | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Percentage of economic interest             7.50%          
Holdings Units                        
Class of Stock [Line Items]                        
Shares exchanged for Class A common stock             1          
Class A Common Stock                        
Class of Stock [Line Items]                        
Number of shares exchanged             2,062,433          
Class A Common Stock | Investor | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Number of units held by owners (in shares)             79,995,307          
Class A Common Stock | Investor | Pla-Fit Holdings, LLC | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Percentage of voting interests acquired             92.50%          
Class B Common Stock                        
Class of Stock [Line Items]                        
Shares exchanged for Class A common stock             1          
Number of shares exchanged             2,062,433          
Class B Common Stock | Continuing LLC Owners | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Number of units held by owners (in shares)             6,499,487          
Class B Common Stock | Continuing LLC Owners | Pla-Fit Holdings, LLC | Secondary Offering and Exchange                        
Class of Stock [Line Items]                        
Percentage of voting interests acquired             7.50%          
2019 ASR Agreement                        
Class of Stock [Line Items]                        
Stock repurchase program, authorized amount                 $ 300,000,000      
Repurchase and retirement of common stock $ 60,000,000 $ 240,000,000                    
2019 ASR Agreement | Class A Common Stock                        
Class of Stock [Line Items]                        
Stock repurchased (in shares) 666,961 3,289,924                    
Weighted average cost per share (in dollars per share) $ 75.82                      
2018 ASR Agreement                        
Class of Stock [Line Items]                        
Stock repurchase program, authorized amount                     $ 300,000,000  
Repurchase and retirement of common stock     $ 60,000,000 $ 240,000,000                
2018 ASR Agreement | Class A Common Stock                        
Class of Stock [Line Items]                        
Stock repurchased (in shares)     524,124 4,607,410 2,272,001              
Weighted average cost per share (in dollars per share)     $ 58.46   $ 69.51              
v3.20.2
Earnings Per Share - Additional Information (Detail) - shares
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Holdings Units        
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]        
Shares exchanged for Class A common stock     1  
Class A Common Stock | Stock Options        
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]        
Anti-dilutive securities excluded from computation of earnings per share (in shares) 516,927   546,303  
Class A Common Stock | Restricted Stock Units        
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]        
Anti-dilutive securities excluded from computation of earnings per share (in shares) 31,811   41,189  
Class B Common Stock        
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]        
Shares exchanged for Class A common stock     1  
Class B Common Stock | Stock Options        
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]        
Anti-dilutive securities excluded from computation of earnings per share (in shares) 179,893 72,984 147,118 36,648
Class B Common Stock | Restricted Stock Units        
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]        
Anti-dilutive securities excluded from computation of earnings per share (in shares) 2,331 0 3,069 1,209
Class B Common Stock | Equity Unit Purchase Agreements        
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]        
Anti-dilutive securities excluded from computation of earnings per share (in shares) 6,500,908 8,585,294 7,139,172 8,910,315
v3.20.2
Earnings Per Share - Reconciliation of Numerators and Denominators Used to Compute Basic and Diluted Earnings per Share (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Numerator        
Net (loss) income $ (31,985) $ 39,827 $ (21,602) $ 71,466
Less: net (loss) income attributable to non-controlling interests (2,808) 4,983 (1,032) 9,213
Net (loss) income attributable to Planet Fitness, Inc. $ (29,177) $ 34,844 $ (20,570) $ 62,253
Stock Options        
Effect of dilutive securities:        
Weighted-average shares outstanding adjustment (in shares) 0 643,120 0 614,050
Restricted Stock Units        
Effect of dilutive securities:        
Weighted-average shares outstanding adjustment (in shares) 0 49,088 0 49,408
Class A Common Stock        
Denominator        
Weighted-average shares of Class A common stock outstanding - basic (in shares) 79,965,842 84,142,975 79,532,155 83,975,192
Effect of dilutive securities:        
Weighted-average shares of Class A common stock outstanding - diluted (in shares) 79,965,842 84,835,183 79,532,155 84,638,650
(Loss) earnings per share of Class A common stock - basic (in dollars per share) $ (0.36) $ 0.41 $ (0.26) $ 0.74
(Loss) earnings per share of Class A common stock - diluted (in dollars per share) $ (0.36) $ 0.41 $ (0.26) $ 0.74
v3.20.2
Income Taxes - Additional information (Detail)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Jun. 30, 2019
Jun. 30, 2020
USD ($)
agreement
shares
Jun. 30, 2019
Dec. 31, 2019
USD ($)
Tax Credit Carryforward [Line Items]          
Effective income tax rate 25.40% 22.20% 21.80% 18.90%  
Net deferred tax assets $ 456,634   $ 456,634   $ 411,177
Total liability related to uncertain tax positions 420   $ 420   420
Number of tax receivable agreements | agreement     2    
Percentage of remaining tax savings     15.00%    
Tax benefit obligation $ 469,017   $ 469,017   $ 427,216
TRA Holders          
Tax Credit Carryforward [Line Items]          
Applicable tax savings 85.00%   85.00%    
Decrease in deferred tax assets     $ 1,331    
Deferred tax asset $ 49,518   49,518    
Deferred tax liability $ 41,997   $ 41,997    
Class A Common Stock          
Tax Credit Carryforward [Line Items]          
Number of shares exchanged | shares     2,062,433    
Class A Common Stock | TRA Holders          
Tax Credit Carryforward [Line Items]          
Number of shares exchanged | shares     2,062,433    
v3.20.2
Income Taxes - Schedule of Future Payments Under Tax Benefit Arrangements (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Income Tax Disclosure [Abstract]    
Remainder of 2020 $ 26,551  
2021 6,229  
2022 33,106  
2023 41,510  
2024 37,345  
Thereafter 324,276  
Total $ 469,017 $ 427,216
v3.20.2
Commitments and contingencies - Additional Information (Details) - Pending Litigation - Civil Action Brought By Former Employee - USD ($)
$ in Thousands
May 03, 2019
Jun. 30, 2020
Loss Contingencies [Line Items]    
Damages sought $ 6,300  
Estimate of possible loss   $ 1,260
Loss contingency, receivable   1,260
Receivables due from related parties   $ 420
v3.20.2
Segments - Additional Information (Detail)
3 Months Ended 6 Months Ended
Jun. 30, 2020
USD ($)
Jun. 30, 2019
USD ($)
Jun. 30, 2020
USD ($)
segment
Jun. 30, 2019
USD ($)
Dec. 31, 2019
USD ($)
Segment Reporting Information [Line Items]          
Number of reportable segments | segment     3    
Number of operating segments | segment     0    
Revenue $ 40,234,000 $ 181,661,000 $ 167,464,000 $ 330,478,000  
Franchise revenue          
Segment Reporting Information [Line Items]          
Revenue 21,002,000 71,812,000 79,531,000 137,574,000  
Franchise revenue | Placement Services          
Segment Reporting Information [Line Items]          
Revenue 868,000 5,071,000 2,880,000 7,836,000  
Corporate-owned stores          
Segment Reporting Information [Line Items]          
Revenue 9,419,000 $ 39,695,000 49,935,000 $ 77,739,000  
Corporate-owned stores | Canada          
Segment Reporting Information [Line Items]          
Long-lived assets $ 867,000   867,000   $ 1,039,000
Intersegment Eliminations          
Segment Reporting Information [Line Items]          
Revenue     $ 0    
v3.20.2
Segments - Summary of Financial Information for the Company's Reportable Segments (Detail) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting Information [Line Items]        
Revenue $ 40,234 $ 181,661 $ 167,464 $ 330,478
Total Segment EBITDA (9,787) 74,399 36,586 134,173
Corporate and other        
Segment Reporting Information [Line Items]        
Total Segment EBITDA (8,285) (10,370) (17,031) (23,932)
Franchise revenue        
Segment Reporting Information [Line Items]        
Revenue 21,002 71,812 79,531 137,574
Franchise revenue | Operating Segments        
Segment Reporting Information [Line Items]        
Total Segment EBITDA 3,529 49,860 40,275 97,220
Franchise revenue | US        
Segment Reporting Information [Line Items]        
Revenue 20,819 70,221 78,161 134,618
Franchise revenue | International        
Segment Reporting Information [Line Items]        
Revenue 183 1,591 1,370 2,956
Corporate-owned stores        
Segment Reporting Information [Line Items]        
Revenue 9,419 39,695 49,935 77,739
Corporate-owned stores | Operating Segments        
Segment Reporting Information [Line Items]        
Total Segment EBITDA (6,342) 18,137 5,665 33,706
Corporate-owned stores | US        
Segment Reporting Information [Line Items]        
Revenue 9,244 38,592 48,810 75,541
Corporate-owned stores | International        
Segment Reporting Information [Line Items]        
Revenue 175 1,103 1,125 2,198
Equipment revenue        
Segment Reporting Information [Line Items]        
Revenue 9,813 70,154 37,998 115,165
Equipment revenue | Operating Segments        
Segment Reporting Information [Line Items]        
Total Segment EBITDA 1,311 16,772 7,677 27,179
Equipment revenue | US        
Segment Reporting Information [Line Items]        
Revenue $ 9,813 $ 70,154 $ 37,998 $ 115,165
v3.20.2
Segments - Reconciliation of Total Segment EBITDA to (Loss) Income Before Taxes (Detail) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Segment Reporting [Abstract]        
Total Segment EBITDA $ (9,787) $ 74,399 $ 36,586 $ 134,173
Depreciation and amortization 13,008 10,577 25,800 20,484
Other expense (73) (1,444) (760) (4,762)
(Loss) income from operations (22,722) 65,266 11,546 118,451
Interest income 359 1,979 2,286 3,777
Interest expense (20,467) (14,636) (40,708) (29,385)
(Loss) income before income taxes $ (42,903) $ 51,165 $ (27,636) $ 88,081
v3.20.2
Segments - Summary of Company's Assets by Reportable Segment (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Segment Reporting, Asset Reconciling Item [Line Items]    
Total consolidated assets $ 1,800,037 $ 1,717,190
Operating Segments | Franchise revenue    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total consolidated assets 178,107 193,504
Operating Segments | Corporate-owned stores    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total consolidated assets 468,764 471,234
Operating Segments | Equipment revenue    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total consolidated assets 171,118 197,656
Unallocated    
Segment Reporting, Asset Reconciling Item [Line Items]    
Total consolidated assets $ 982,048 $ 854,796
v3.20.2
Segments - Summary of Company's Goodwill by Reportable Segment (Detail) - USD ($)
$ in Thousands
Jun. 30, 2020
Dec. 31, 2019
Segment Reporting, Other Significant Reconciling Item [Line Items]    
Consolidated goodwill $ 227,821 $ 227,821
Franchise revenue    
Segment Reporting, Other Significant Reconciling Item [Line Items]    
Consolidated goodwill 16,938 16,938
Corporate-owned stores    
Segment Reporting, Other Significant Reconciling Item [Line Items]    
Consolidated goodwill 118,217 118,217
Equipment revenue    
Segment Reporting, Other Significant Reconciling Item [Line Items]    
Consolidated goodwill $ 92,666 $ 92,666
v3.20.2
Corporate-Owned and Franchisee-Owned Stores - Schedule of Changes in Corporate-owned and Franchisee-owned Stores (Detail) - store
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Number Of Stores [Roll Forward]        
Stores operated at beginning of period 2,039 1,806 2,001 1,742
New stores opened 21 53 60 118
Stores acquired, debranded, sold or consolidated (1) 0 (2) (1)
Stores operated at end of period 2,059 1,859 2,059 1,859
Number of stores reopened 1,490   1,490  
Franchisee-Owned Stores        
Number Of Stores [Roll Forward]        
Stores operated at beginning of period 1,940 1,730 1,903 1,666
New stores opened 21 53 59 118
Stores acquired, debranded, sold or consolidated (1) (4) (2) (5)
Stores operated at end of period 1,960 1,779 1,960 1,779
Number of stores reopened 1,451   1,451  
Corporate-Owned Stores        
Number Of Stores [Roll Forward]        
Stores operated at beginning of period 99 76 98 76
New stores opened 0 0 1 0
Stores acquired from franchisees 0 4 0 4
Stores operated at end of period 99 80 99 80
Number of stores reopened 39   39