planet 13 holdings earnings call


When you go back years ago, we only had two months we billed annual fees. Third, the real estate market will be even more attractive in terms of availability of prime locations and lower rent costs and enhanced landlord incentives for our system. Yes. We continue to host free live United move workouts on Facebook, which have been extremely well received, totaling more than 20 million views from 36 countries around the world. I mean, what are you seeing in terms of any uptick in planned replacements or new club openings in the back half? We did place equipment in 14 stores in Q2, some of which were originally scheduled to be placed in late March, but were delayed until the second quarter. Planet 13 Holdings Inc. (PLNHF) Management on Q2 2020 Results - Earnings Call Transcript SA Transcripts Mon, Aug. 31 4 Comments Planet 13 Holdings EPS misses by $0.01, beats on revenue
In terms of the new gyms and new placements that we could actually expect?

Continue on Western Ave to Planet 13 Las Vegas Dispensary 2548 W Desert Inn Rd Suite 100, Las Vegas, NV 89109. I think back to my previous question from the first John comp is that we believe that most of these cans machines today are draft related.

Certainly, at least wanted to hear your perspective on that, which is very helpful. Date: June 1st, 2020 | Time: 5:00 p.m. EST, Participant Dial-in: 416-764-8688 or 1-888-390-0546, Replay Dial-in: 416-764-8677 or 1-888-390-0541, Listen to webcast: https://bit.ly/2LYV5xD.

[Operator Instructions] Your first question comes from the line of Jonathan Komp of Baird. That is all the questions we have time for today. I'll now turn the call back to the operator for questions. Now this situation is even worse, right? When our stores shut down due to COVID, we were unable to grow net membership levels in our stores, and as a result, have seen a slowdown in same-store sales growth.

The remaining gap in our comp performance compared with the first quarter was due to the decline in Black Card penetration, which we attribute to the fact that we were unable to repeat a Black Card national promotion in mid-March due to the COVID store closures. Your line is open. And I think the only other thing I'd add, as we've talked about before, we've been in touch with lenders and through these franchise business reviews to the extent that a franchisee had really a modest amount of debt from a leverage standpoint. And that really doesn't concern us in a big way, particularly because earlier in the year, we were seeing our performance of our business similar to the past.

We look forward to reopening more stores in the future as states and municipalities allow to further provide our communities with much needed access to health and fitness. Turning to our Equipment segment. So they want to sell the membership to us or if we're interested in the location. This is Dorvin.

The decrease in expense was due to reduced advertising and marketing expenses as a result of COVID-19. Your line is open. [Operator Instructions] At this time.

I think the one thing I would add to this is that we're I'm extremely happy about and proud of is that the franchisees collectively with us and with the independent franchise council. I know you certainly mentioned the potential to see consolidation across the industry. To be more specific, there were 297 stores that drafted in May and 1,357 that drafted in June. As Chris discussed, across the 1,490 stores that were opened by the end of the second quarter, membership levels remained relatively flat at the end of the second quarter versus the membership levels when the store is reopened. Is that what you're... No, no, at a corporate level. We'll continue to proceed cautiously until there is greater certainty on when conditions will return to normal.

While the near-term is difficult to predict, we believe that, in the longer term, our business will be well positioned to widen our competitive moat and create value for our shareholders and our stakeholders. Okay. These are fees received from online new member sign-ups and the recognition of fees paid to us for franchise agreements, area development agreement and the transfer of existing stores and fees received from processing dues.

In fact, 24% of Planet Fitness digital content users were not existing members.
So earlier in the year, our stores that we opened up, were performing just in line with the way stores have performed in the past. Based on the current situation and our focus on preserving liquidity, we announced in March that we were halting our share repurchase activity for the time being. And I think the probability of this model, which, as you know, I mean, is extremely profitable where if you look at crunch, for example, in their FDD, their EBITDA margins per store is almost half of ours. A, HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American. We also recognized $3.1 million of NAF contributions in the second quarter that were also deferred from Q1. They opened the stores in North Carolina, for example, if they open tomorrow, they're not building their first bill cycle until September. Upon reopening our stores in early May, we had approximately 15.4 million members. While in Q1, we saw a 30 basis point improvement year-over-year.

In addition, we ended the quarter with $86.4 million of restricted cash compared to $63.2 million at the end of Q1. I mean, this really is and I guess, the biggest and most important kind of part of the question at this point. Are they now profitable? And is that more what's more the focus? I think the ads question, I think the bigger question now is back to what I just mentioned here is from an acquisition standpoint, are we going to be able to drive a lot of high acquisition join on exploration dates, for example, is it just more rebranding and reassurance messaging, which is yet to be seen. So if we look at as we've always talked about, we take us and LA Fitness and 24 Hour Fitness and put them all together, you're lucky if you get to 3,000 or 4,000 stores. And as we said, no one through all of these discussions has raised their hand and said, "I need financial help, right? Of the decline in growth in June from Q1 levels, approximately 85% was due to a drop in net member growth and the balance being a decrease in rate growth. And that's just really, at this point, John, it's just still too much of an unknown.

So there's clearly been a bit of a slower pace on ramping post-COVID. Just any other kind of periods of time that you can compare this to that show give us some perspective on how much of our these competitors can collapse?

So there's a lot of noise because also it was the same timing around the California reshutdown, Arizona reshutdown and then the news in the surgeon state.

Tom Fitzgerald -- Chief Financial Officer. The biggest driver of our Q2 top and bottom line was the decline in royalty revenue and corporate store revenue related to monthly membership dues that weren't collected as the result of our decision to freeze member accounts while stores were closed due to COVID-19. We continue to see encouraging usage of our I-Fit digital content, which is enabling a new avenue for us to engage with existing and prospective members, and helping to inform our long-term digital strategy. As we previously communicated, in mid-March, we temporarily closed all of our stores due to health and safety of our employees, members and communities we serve. Store operation expenses, which are associated with our corporate-owned stores, decreased to $14.7 million compared to $20.2 million a year ago. We believe this is particularly reassuring for members who may want to work out in less busy times. Your next question comes from the line of Joe Altobello of Raymond James. I'll talk about joining the cancels and Tamica fill in on the part there.

A quick follow up to Black Card penetration going forward. Because none of our stores drafted in April, and only a portion of stores drafted in May and June, we are not reporting a same-store sales figure for the second quarter. I think now what we're seeing is it's reassurance that we're clean, that the members are going to be safe. Fitness plays a key role in positively impacting the overall mental and visible well-being, and addition to combating COVID-19 risk factors such as obesity, heart disease, lung disease and diabetes. Continue on East Tropicana Ave to Western Ave for 9 minutes and then take exit 39 from I-15 North.

Total membership is now 14.8 million, a 4% decrease from the 15.5 million members we ended with Q1.

For the second quarter, total revenue was $40.2 million compared to $181.7 million in the prior year period. I would like to hand the call over to your speaker today, Brendon Frey from ICR. So I'm just wondering, at that level, I mean, I understand the June quarter. With the health and safety of our members and employees as our primary focus, we temporarily closed all Planet Fitness locations in mid-March. Yes. Luckily, we were low cost.

Yes.

See you at the top! But we opened stores in Q2, and we'll open stores over the balance of the year.

Does the average age of members within those stores? National advertising fund expense was $10.9 million compared to $12.5 million in the prior year period. So those months that we didn't billed the members, so you had a lot of members that got built their annual fee for the first time in over a year because they didn't get their April, May, June annual fee. We got together to look at the second half lab mix and have agreed to slightly change that mix, increase the NAF slightly for the rest of the year to help kick in that flywheel here as we hopefully get a sense of some normalcy in the world. Yes. The overall health of our franchisees remains a top priority for us.

Health and wellness is more important now than ever. And then, as we mentioned, we did offer a 15% discount if equipment was ordered in place by the end of the year.

The only question is, how long does it take to get there?

So there's still another 35,000 mom-and-pops out there.

We have clubs on our opening, but when people get in deferred rent, they get deferred lease payments on their equipment leases and so on and so forth. I mean, cancels, first and foremost, we got to make sure people not using the club.

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