Planet Fitness, Inc. Announces First Quarter 2019 Results

System-Wide Same Store Sales Increased 10.2%

Published

HAMPTON, N.H., May 2, 2019 /PRNewswire/ -- Today, Planet Fitness, Inc. (NYSE: PLNT) reported financial results for its first quarter ended March 31, 2019.

First Quarter Fiscal 2019 Highlights

  • Total revenue increased from the prior year period by 22.7% to $148.8 million.

  • System-wide same store sales increased 10.2%.

  • Net income attributable to Planet Fitness, Inc. was $27.4 million, or $0.32 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $19.9 million, or $0.23 per diluted share in the prior year period.

  • Net income increased 34.7% to $31.6 million, compared to net income of $23.5 million in the prior year period.

  • Adjusted net income(1) increased 24.9% to $32.7 million, or $0.35 per diluted share, compared to $26.2 million, or $0.27 per diluted share in the prior year period.

  • Adjusted EBITDA(1) increased 29.9% to $63.4 million from $48.8 million in the prior year period.

  • 65 new Planet Fitness stores were opened during the period, bringing system-wide total stores to 1,806 as of March 31, 2019.

(1) Adjusted net income and Adjusted EBITDA are non-GAAP measures. For reconciliations of Adjusted EBITDA and Adjusted net income to U.S. GAAP ("GAAP") net income see "Non-GAAP Financial Measures" accompanying this press release.

"Fiscal year 2019 is off to a great start.  Our strong first quarter results, which included 10.2% system-wide same store sales growth and 65 new store openings, show why Planet Fitness is a leader in the fitness industry," stated Chris Rondeau, Chief Executive Officer. "We once again demonstrated the attractiveness of our high value, low cost welcoming fitness concept and the power of our business model with our diversified revenue streams and strong free cash flow. As we move forward, we believe we can continue to deliver significant growth and increased shareholder value through robust unit expansion, increased national and local advertising spending, and membership enhancement initiatives. The future for Planet Fitness looks extremely bright and I am confident that with our great group of experienced franchisees, the Company is well positioned to capitalize on the many opportunities that lie ahead."

Operating Results for the First Quarter Ended March 31, 2019

For the first quarter 2019, total revenue increased $27.5 million or 22.7% to $148.8 million from $121.3 million in the prior year period. By segment:

  • Franchise segment revenue increased $11.2 million or 20.4% to $65.8 million from $54.6 million in the prior year period, driven primarily by higher royalty revenue which increased as a result of new stores opened since December 31, 2017, a 10.3% increase in same store sales, and a higher average royalty rate;

  • Corporate-owned stores segment revenue increased $5.3 million or 16.3% to $38.0 million from $32.7 million in the prior year period, $2.4 million of which is from new corporate-owned stores opened or acquired since January 1, 2018, and another $2.0 million of which is from same store sales growth; and

  • Equipment segment revenue increased $11.0 million or 32.3% to $45.0 million from $34.0 million in the prior year period, driven by an increase in equipment sales to new stores and an increase in replacement equipment sales to existing franchisee-owned stores.

System-wide same store sales increased 10.2%. By segment, franchisee-owned same store sales increased 10.3% and corporate-owned same store sales increased 8.0%.

For the first quarter of 2019, net income attributable to Planet Fitness, Inc. was $27.4 million, or $0.32 per diluted share, compared to net income attributable to Planet Fitness, Inc. of $19.9 million, or $0.23 per diluted share in the prior year period. Net income was $31.6 million in the first quarter of 2019 compared to $23.5 million in the prior year period. Adjusted net income increased 24.9% to $32.7 million, or $0.35 per diluted share, from $26.2 million, or $0.27 per diluted share in the prior year period. Adjusted net income has been adjusted to reflect a normalized federal income tax rate of 26.6% for the current year period and 26.3% for the comparable prior year period and excludes certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures").

Adjusted EBITDA, which is defined as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that we do not consider in the evaluation of ongoing operational performance (see "Non-GAAP Financial Measures"), increased 29.9% to $63.4 million from $48.8 million in the prior year period.

Segment EBITDA represents our Total Segment EBITDA broken down by the Company's reportable segments. Total Segment EBITDA is equal to EBITDA, which is defined as net income before interest, taxes, depreciation and amortization (see "Non-GAAP Financial Measures").

  • Franchise segment EBITDA increased $10.7 million or 29.1% to $47.4 million driven by royalties from new franchised stores opened since January 1, 2018, a higher average royalty rate and higher same store sales of 10.3%;

  • Corporate-owned stores segment EBITDA increased $3.4 million or 27.9% to $15.6 million driven primarily by an increase in same store sales, higher annual fees and from additional clubs opened or acquired since January 1, 2018; and

  • Equipment segment EBITDA increased by $2.9 million or 39.3% to $10.4 million driven by an increase in equipment sales to new stores and an increase in replacement equipment sales to existing franchisee-owned stores.

2019 Outlook

For the year ending December 31, 2019, the Company reiterates its expectation of:

  • Total revenue increase of approximately 15% as compared to the year ended December 31, 2018;

  • System-wide same store sales in the high single digits;

  • Adjusted net income to increase approximately 18% as compared to the year ended December 31, 2018; and

  • Adjusted net income per diluted share to increase approximately 25% as compared to the year ended December 31, 2018.

Presentation of Financial Measures

Planet Fitness, Inc. (the "Company") was formed in March 2015 for the purpose of facilitating the initial public offering (the "IPO") and related recapitalization transactions that occurred in August 2015, and in order to carry on the business of Pla-Fit Holdings, LLC ("Pla-Fit Holdings") and its subsidiaries. As the sole managing member of Pla-Fit Holdings, the Company operates and controls all of the business and affairs of Pla-Fit Holdings, and through Pla-Fit Holdings, conducts its business. As a result, the Company consolidates Pla-Fit Holdings' financial results and reports a non-controlling interest related to the portion of Pla-Fit Holdings not owned by the Company.

The financial information presented in this press release includes non-GAAP financial measures such as EBITDA, Segment EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted, to provide measures that we believe are useful to investors in evaluating the Company's performance. These non-GAAP financial measures are supplemental measures of the Company's performance that are neither required by, nor presented in accordance with GAAP. These financial measures should not be considered in isolation or as substitutes for GAAP financial measures such as net income or any other performance measures derived in accordance with GAAP. In addition, in the future, the Company may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted. The Company's presentation of Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted, should not be construed as an inference that the Company's future results will be unaffected by similar amounts or other unusual or nonrecurring items. See the tables at the end of this press release for a reconciliation of EBITDA, Adjusted EBITDA, Total Segment EBITDA, Adjusted net income, and Adjusted net income per share, diluted, to their most directly comparable GAAP financial measure.

The non-GAAP financial measures used in our full-year outlook will differ from net income and net income per share, diluted, determined in accordance with GAAP in ways similar to those described in the reconciliations at the end of this press release. We do not provide guidance for net income or net income per share, diluted, determined in accordance with GAAP or a reconciliation of guidance for Adjusted net income and Adjusted net income per share, diluted, to the most directly comparable GAAP measure because we are not able to predict with reasonable certainty the amount or nature of all items that will be included in our net income and net income per share, diluted, for the year ending December 31, 2019. These items are uncertain, depend on many factors and could have a material impact on our net income and net income per share, diluted, for the year ending December 31, 2019.

Investor Conference Call

The Company will hold a conference call at 4:30 pm (ET) on May 2, 2019 to discuss the news announced in this press release. A live webcast of the conference call will be accessible at www.planetfitness.com via the "Investor Relations" link. The webcast will be archived on the website for one year.

About Planet Fitness

Founded in 1992 in Dover, NH, Planet Fitness is one of the largest and fastest-growing franchisors and operators of fitness centers in the United States by number of members and locations. As of March 31, 2019, Planet Fitness had more than 13.6 million members and 1,806 stores in 50 states, the District of Columbia, Puerto Rico, Canada, the Dominican Republic, Panama and Mexico. The Company's mission is to enhance people's lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment, which we call the Judgement Free Zone®. More than 95% of Planet Fitness stores are owned and operated by independent business men and women.

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


Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts)
For the three months endedMarch 31,
2019 2018
Revenue:
Franchise $ 52,956 $ 42,162
Commission income 994 1,989
National advertising fund revenue 11,812 10,461
Corporate-owned stores 38,044 32,708
Equipment 45,011 34,013
Total revenue 148,817 121,333
Operating costs and expenses:
Cost of revenue 34,486 26,500
Store operations 20,905 18,356
Selling, general and administrative 18,154 17,623
National advertising fund expense 11,812 10,461
Depreciation and amortization 9,907 8,465
Other loss 368 1,010
Total operating costs and expenses 95,632 82,415
Income from operations 53,185 38,918
Other expense, net:
Interest income 1,798 37
Interest expense (14,749) (8,771)
Other income (expense) (3,318) 192
Total other expense, net (16,269) (8,542)
Income before income taxes 36,916 30,376
Provision for income taxes 5,277 6,883
Net income 31,639 23,493
Less net income attributable to non-controlling interests 4,230 3,613
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880
Net income per share of Class A common stock:
Basic $ 0.33 $ 0.23
Diluted $ 0.32 $ 0.23
Weighted-average shares of Class A common stock outstanding:
Basic 83,806 87,434
Diluted 84,425 87,698

 


Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts)
For the three months endedMarch 31, March 31, 2019 December 31, 2018
2019 2018 Assets
Revenue: Current assets:
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431
Commission income 994 1,989 Restricted cash 30,645 30,708
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960
Corporate-owned stores 38,044 32,708 Due from related parties
Equipment 45,011 34,013 Inventory 3,445 5,122
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530
Operating costs and expenses: Prepaid expenses 7,254 4,947
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548
Store operations 20,905 18,356 Other current assets 4,877 6,824
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745
Other loss 368 1,010 Intangible assets, net 228,663 234,330
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841
Other expense, net: Other assets, net 1,612 1,825
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit
Other income (expense) (3,318) 192 Current liabilities:
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384
Net income 31,639 23,493 Equipment deposits 12,502 7,908
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127
Basic 83,806 87,434 Deferred rent, net of current portion 10,083
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470
Deferred revenue, net of current portion 27,652 26,374
Deferred tax liabilities 1,798 2,303
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468
Other liabilities 2,031 1,447
  Total noncurrent liabilities 1,729,159 1,604,802
Stockholders' equity (deficit):
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1
Accumulated other comprehensive income 148 94
Additional paid in capital 22,576 19,732
Accumulated deficit (368,714) (394,410)
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574)
Non-controlling interests (8,062) (8,215)
  Total stockholders' deficit (354,042) (382,789)
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416

 


Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts)
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31,
2019 2018 Assets 2019 2018
Revenue: Current assets: Cash flows from operating activities:
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities:
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396)
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14)
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

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

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: EBITDA, Total Segment EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted (collectively, the "non-GAAP financial measures"). The Company believes that these non-GAAP financial measures, when used in conjunction with GAAP financial measures, are useful to investors in evaluating our operating performance. These non-GAAP financial measures presented in this release are supplemental measures of the Company's performance that are neither required by, nor presented in accordance with GAAP. These financial measures should not be considered in isolation or as substitutes for GAAP financial measures such as net income or any other performance measures derived in accordance with GAAP. In addition, in the future, the Company may incur expenses or charges such as those added back to calculate Adjusted EBITDA, Adjusted net income and Adjusted net income per share, diluted. The Company's presentation of Adjusted EBITDA, Adjusted net income, and Adjusted net income per share, diluted, should not be construed as an inference that the Company's future results will be unaffected by unusual or nonrecurring items.

EBITDA, Segment EBITDA and Adjusted EBITDA

We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our operating performance and we believe these measures provide useful information to investors in evaluating our performance. We have also disclosed Segment EBITDA as an important financial metric utilized by the Company to evaluate performance and allocate resources to segments in accordance with ASC 280, Segment Reporting. We define EBITDA as net income before interest, taxes, depreciation and amortization. Segment EBITDA sums to Total Segment EBITDA which is equal to the Non-GAAP financial metric EBITDA. We believe that EBITDA, which eliminates the impact of certain expenses that we do not believe reflect our underlying business performance, provides useful information to investors to assess the performance of our segments as well as the business as a whole. Our Board of Directors also uses EBITDA as a key metric to assess the performance of management. We define Adjusted EBITDA as net income before interest, taxes, depreciation and amortization, adjusted for the impact of certain additional non-cash and other items that we do not consider in our evaluation of ongoing performance of the Company's core operations. These items include certain purchase accounting adjustments, stock offering-related costs, and certain other charges and gains. We believe that Adjusted EBITDA is an appropriate measure of operating performance in addition to EBITDA because it eliminates the impact of other items that we believe reduce the comparability of our underlying core business performance from period to period and is therefore useful to our investors in comparing the core performance of our business from period to period.

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

Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts) Three months ended March 31,
2019 2018
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31, (in thousands)
2019 2018 Assets 2019 2018 Net income $ 31,639 $ 23,493
Revenue: Current assets: Cash flows from operating activities: Interest income (1,798) (37)
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493 Interest expense 14,749 8,771
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities: Provision for income taxes 5,277 6,883
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465 Depreciation and amortization 9,907 8,465
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484 EBITDA $ 59,774 $ 47,575
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92 Purchase accounting adjustments-revenue(1) 74 443
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1 Purchase accounting adjustments-rent(2) 123 182
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195 Loss on reacquired franchise rights(3) 350
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909 Pre-opening costs(4) 1 21
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396) Tax benefit arrangement remeasurement(5) 3,373 (396)
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14) Other(6) 14 597
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350 Adjusted EBITDA $ 63,359 $ 48,772
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts) Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.
2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 in the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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.
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31, (in thousands) (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations.
2019 2018 Assets 2019 2018 Net income $ 31,639 $ 23,493 (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.
Revenue: Current assets: Cash flows from operating activities: Interest income (1,798) (37) (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate.
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493 Interest expense 14,749 8,771 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system.
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities: Provision for income taxes 5,277 6,883
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465 Depreciation and amortization 9,907 8,465
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484 EBITDA $ 59,774 $ 47,575
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92 Purchase accounting adjustments-revenue(1) 74 443
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1 Purchase accounting adjustments-rent(2) 123 182
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195 Loss on reacquired franchise rights(3) 350
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909 Pre-opening costs(4) 1 21
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396) Tax benefit arrangement remeasurement(5) 3,373 (396)
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14) Other(6) 14 597
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350 Adjusted EBITDA $ 63,359 $ 48,772
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

 

A reconciliation of Segment EBITDA to Total Segment EBITDA is set forth below.

Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts) Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. Three months ended March 31,
2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 in the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (in thousands) 2019 2018
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31, (in thousands) (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. Segment EBITDA
2019 2018 Assets 2019 2018 Net income $ 31,639 $ 23,493 (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. Franchise $ 47,360 $ 36,677
Revenue: Current assets: Cash flows from operating activities: Interest income (1,798) (37) (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. Corporate-owned stores 15,569 12,170
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493 Interest expense 14,749 8,771 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system. Equipment 10,407 7,469
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities: Provision for income taxes 5,277 6,883 Corporate and other (13,562) (8,741)
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465 Depreciation and amortization 9,907 8,465 Total Segment EBITDA(1) $ 59,774 $ 47,575
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484 EBITDA $ 59,774 $ 47,575
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92 Purchase accounting adjustments-revenue(1) 74 443 (1) Total Segment EBITDA is equal to EBITDA.
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1 Purchase accounting adjustments-rent(2) 123 182
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195 Loss on reacquired franchise rights(3) 350
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909 Pre-opening costs(4) 1 21
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396) Tax benefit arrangement remeasurement(5) 3,373 (396)
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14) Other(6) 14 597
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350 Adjusted EBITDA $ 63,359 $ 48,772
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

 

Adjusted Net Income and Adjusted Net Income per Diluted Share

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

Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts) Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. Three months ended March 31, Three months ended March 31,
2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 in the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (in thousands) 2019 2018 (in thousands, except per share amounts) 2019 2018
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31, (in thousands) (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. Segment EBITDA Net income $ 31,639 $ 23,493
2019 2018 Assets 2019 2018 Net income $ 31,639 $ 23,493 (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. Franchise $ 47,360 $ 36,677 Provision for income taxes, as reported 5,277 6,883
Revenue: Current assets: Cash flows from operating activities: Interest income (1,798) (37) (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. Corporate-owned stores 15,569 12,170 Purchase accounting adjustments-revenue(1) 74 443
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493 Interest expense 14,749 8,771 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system. Equipment 10,407 7,469 Purchase accounting adjustments-rent(2) 123 182
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities: Provision for income taxes 5,277 6,883 Corporate and other (13,562) (8,741) Loss on reacquired franchise rights(3) 350
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465 Depreciation and amortization 9,907 8,465 Total Segment EBITDA(1) $ 59,774 $ 47,575 Pre-opening costs(4) 1 21
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484 EBITDA $ 59,774 $ 47,575 Tax benefit arrangement remeasurement(5) 3,373 (396)
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92 Purchase accounting adjustments-revenue(1) 74 443 (1) Total Segment EBITDA is equal to EBITDA. Other(6) 14 597
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1 Purchase accounting adjustments-rent(2) 123 182 Purchase accounting amortization(7) 3,999 3,921
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195 Loss on reacquired franchise rights(3) 350 Adjusted income before income taxes $ 44,500 $ 35,494
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909 Pre-opening costs(4) 1 21 Adjusted income taxes(8) 11,837 9,335
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396) Tax benefit arrangement remeasurement(5) 3,373 (396) Adjusted net income $ 32,663 $ 26,159
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14) Other(6) 14 597
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350 Adjusted EBITDA $ 63,359 $ 48,772 Adjusted net income per share, diluted $ 0.35 $ 0.27
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998 Adjusted weighted-average shares outstanding(9) 93,664 98,651
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts) Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. Three months ended March 31, Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting.
2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 in the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (in thousands) 2019 2018 (in thousands, except per share amounts) 2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 for the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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.
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31, (in thousands) (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. Segment EBITDA Net income $ 31,639 $ 23,493 (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations.
2019 2018 Assets 2019 2018 Net income $ 31,639 $ 23,493 (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. Franchise $ 47,360 $ 36,677 Provision for income taxes, as reported 5,277 6,883 (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.
Revenue: Current assets: Cash flows from operating activities: Interest income (1,798) (37) (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. Corporate-owned stores 15,569 12,170 Purchase accounting adjustments-revenue(1) 74 443 (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate.
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493 Interest expense 14,749 8,771 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system. Equipment 10,407 7,469 Purchase accounting adjustments-rent(2) 123 182 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write-off of certain assets that were being tested for potential use across the system.
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities: Provision for income taxes 5,277 6,883 Corporate and other (13,562) (8,741) Loss on reacquired franchise rights(3) 350 (7) Includes $3,096 and $3,096 of amortization of intangible assets, other than favorable leases, for the three months ended March 31, 2019 and 2018, respectively, recorded in connection with the 2012 Acquisition, and $903 and $825 of amortization of intangible assets for the three months ended March 31, 2019 and 2018, respectively, recorded in connection with prior 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.
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465 Depreciation and amortization 9,907 8,465 Total Segment EBITDA(1) $ 59,774 $ 47,575 Pre-opening costs(4) 1 21 (8) Represents corporate income taxes at an assumed effective tax rate of 26.6% and 26.3% for the three months ended March 31, 2019 and 2018, respectively, applied to adjusted income before income taxes.
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484 EBITDA $ 59,774 $ 47,575 Tax benefit arrangement remeasurement(5) 3,373 (396) (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.
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92 Purchase accounting adjustments-revenue(1) 74 443 (1) Total Segment EBITDA is equal to EBITDA. Other(6) 14 597
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1 Purchase accounting adjustments-rent(2) 123 182 Purchase accounting amortization(7) 3,999 3,921
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195 Loss on reacquired franchise rights(3) 350 Adjusted income before income taxes $ 44,500 $ 35,494
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909 Pre-opening costs(4) 1 21 Adjusted income taxes(8) 11,837 9,335
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396) Tax benefit arrangement remeasurement(5) 3,373 (396) Adjusted net income $ 32,663 $ 26,159
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14) Other(6) 14 597
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350 Adjusted EBITDA $ 63,359 $ 48,772 Adjusted net income per share, diluted $ 0.35 $ 0.27
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998 Adjusted weighted-average shares outstanding(9) 93,664 98,651
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

 

A reconciliation of net income per share, diluted, to Adjusted net income per share, diluted is set forth below for the three months ended March 31, 2019 and 2018:

Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts) Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. Three months ended March 31, Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. For the three months endedMarch 31, 2019 For the three months endedMarch 31, 2018
2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 in the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (in thousands) 2019 2018 (in thousands, except per share amounts) 2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 for the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (in thousands, except per share amounts) Net income Weighted Average Shares Net income per share, diluted Net income Weighted Average Shares Net income per share, diluted
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31, (in thousands) (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. Segment EBITDA Net income $ 31,639 $ 23,493 (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. Net income attributable to Planet Fitness, Inc.(1) $ 27,409 84,425 $ 0.32 $ 19,880 87,698 $ 0.23
2019 2018 Assets 2019 2018 Net income $ 31,639 $ 23,493 (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. Franchise $ 47,360 $ 36,677 Provision for income taxes, as reported 5,277 6,883 (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. Assumed exchange of shares(2) 4,230 9,239 3,613 10,953
Revenue: Current assets: Cash flows from operating activities: Interest income (1,798) (37) (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. Corporate-owned stores 15,569 12,170 Purchase accounting adjustments-revenue(1) 74 443 (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. Net Income 31,639 23,493
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493 Interest expense 14,749 8,771 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system. Equipment 10,407 7,469 Purchase accounting adjustments-rent(2) 123 182 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write-off of certain assets that were being tested for potential use across the system. Adjustments to arrive at adjusted income   before income taxes(3) 12,861 12,001
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities: Provision for income taxes 5,277 6,883 Corporate and other (13,562) (8,741) Loss on reacquired franchise rights(3) 350 (7) Includes $3,096 and $3,096 of amortization of intangible assets, other than favorable leases, for the three months ended March 31, 2019 and 2018, respectively, recorded in connection with the 2012 Acquisition, and $903 and $825 of amortization of intangible assets for the three months ended March 31, 2019 and 2018, respectively, recorded in connection with prior 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. Adjusted income before income taxes 44,500 35,494
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465 Depreciation and amortization 9,907 8,465 Total Segment EBITDA(1) $ 59,774 $ 47,575 Pre-opening costs(4) 1 21 (8) Represents corporate income taxes at an assumed effective tax rate of 26.6% and 26.3% for the three months ended March 31, 2019 and 2018, respectively, applied to adjusted income before income taxes. Adjusted income taxes(4) 11,837 9,335
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484 EBITDA $ 59,774 $ 47,575 Tax benefit arrangement remeasurement(5) 3,373 (396) (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. Adjusted Net Income $ 32,663 93,664 $ 0.35 $ 26,159 98,651 $ 0.27
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92 Purchase accounting adjustments-revenue(1) 74 443 (1) Total Segment EBITDA is equal to EBITDA. Other(6) 14 597
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1 Purchase accounting adjustments-rent(2) 123 182 Purchase accounting amortization(7) 3,999 3,921
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195 Loss on reacquired franchise rights(3) 350 Adjusted income before income taxes $ 44,500 $ 35,494
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909 Pre-opening costs(4) 1 21 Adjusted income taxes(8) 11,837 9,335
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396) Tax benefit arrangement remeasurement(5) 3,373 (396) Adjusted net income $ 32,663 $ 26,159
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14) Other(6) 14 597
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350 Adjusted EBITDA $ 63,359 $ 48,772 Adjusted net income per share, diluted $ 0.35 $ 0.27
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998 Adjusted weighted-average shares outstanding(9) 93,664 98,651
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

Planet Fitness, Inc. and subsidiariesConsolidated Statements of Operations(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Balance Sheets(Unaudited)(Amounts in thousands, except per share amounts) Planet Fitness, Inc. and subsidiariesConsolidated Statements of Cash Flows(Unaudited)(Amounts in thousands, except per share amounts) Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the acquisition of Pla-Fit Holdings on November 8, 2012 by TSG (the "2012 Acquisition"). At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. Three months ended March 31, Three months ended March 31, (1) Represents the impact of revenue-related purchase accounting adjustments associated with the 2012 Acquisition. At the time of the 2012 Acquisition, the Company maintained a deferred revenue account, which consisted of deferred ADA fees, deferred franchise fees, and deferred enrollment fees that the Company billed and collected upfront but recognizes for U.S. GAAP purposes at a later date. In connection with the 2012 Acquisition, it was determined that the carrying amount of deferred revenue was greater than the fair value assessed in accordance with ASC 805—Business Combinations, which resulted in a write-down of the carrying value of the deferred revenue balance upon application of acquisition push-down accounting under ASC 805. These amounts represent the additional revenue that would have been recognized in these periods if the write-down to deferred revenue had not occurred in connection with the application of acquisition pushdown accounting. For the three months endedMarch 31, 2019 For the three months endedMarch 31, 2018 (1) Represents net income attributable to Planet Fitness, Inc. and the associated weighted average shares, diluted of Class A common stock outstanding.
2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 in the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (in thousands) 2019 2018 (in thousands, except per share amounts) 2019 2018 (2) Represents the impact of rent-related purchase accounting adjustments. In accordance with guidance in ASC 805 – Business Combinations, in connection with the 2012 Acquisition, the Company's deferred rent liability was required to be written off as of the acquisition date and rent was recorded on a straight-line basis from the acquisition date through the end of the lease term. This resulted in higher overall recorded rent expense each period than would have otherwise been recorded had the deferred rent liability not been written off as a result of the acquisition push down accounting applied in accordance with ASC 805. Adjustments of $44 and $90 in the three months ended March 31, 2019 and 2018, respectively, reflect the difference between the higher rent expense recorded in accordance with U.S. GAAP since the acquisition and the rent expense that would have been recorded had the 2012 Acquisition not occurred. Adjustments of $79 and $92 for the three months ended March 31, 2019 and 2018, respectively, are due to the amortization of favorable and unfavorable lease intangible assets. 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. (in thousands, except per share amounts) Net income Weighted Average Shares Net income per share, diluted Net income Weighted Average Shares Net income per share, diluted (2) Assumes the full exchange of all outstanding Holdings Units and corresponding shares of Class B common stock for shares of Class A common stock of Planet Fitness, Inc. Also assumes the addition of net income attributable to non-controlling interests corresponding with the assumed exchange of Holdings Units and Class B common shares for shares of Class A common stock.
For the three months endedMarch 31, March 31, 2019 December 31, 2018 For the three months ended March 31, (in thousands) (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. Segment EBITDA Net income $ 31,639 $ 23,493 (3) Represents the impact of a non-cash loss recorded in accordance with ASC 805 - Business Combinations related to our acquisition of six franchisee-owned stores on January 1, 2018. The loss recorded under GAAP represents the difference between the fair value of the reacquired franchise rights and the contractual terms of the reacquired franchise rights and is included in other (gain) loss on our consolidated statements of operations. Net income attributable to Planet Fitness, Inc.(1) $ 27,409 84,425 $ 0.32 $ 19,880 87,698 $ 0.23 (3) Represents the total impact of all adjustments identified in the adjusted net income table above to arrive at adjusted income before income taxes.
2019 2018 Assets 2019 2018 Net income $ 31,639 $ 23,493 (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. Franchise $ 47,360 $ 36,677 Provision for income taxes, as reported 5,277 6,883 (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. Assumed exchange of shares(2) 4,230 9,239 3,613 10,953 (4) Represents corporate income taxes at an assumed effective tax rate of 26.6% and 26.3% for the three months ended March 31, 2019 and 2018, respectively, applied to adjusted income before income taxes.
Revenue: Current assets: Cash flows from operating activities: Interest income (1,798) (37) (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. Corporate-owned stores 15,569 12,170 Purchase accounting adjustments-revenue(1) 74 443 (5) Represents gains and losses related to the adjustment of our tax benefit arrangements primarily due to changes in our effective tax rate. Net Income 31,639 23,493
Franchise $ 52,956 $ 42,162 Cash and cash equivalents $ 335,961 $ 289,431 Net income $ 31,639 $ 23,493 Interest expense 14,749 8,771 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write off of certain assets that were being tested for potential use across the system. Equipment 10,407 7,469 Purchase accounting adjustments-rent(2) 123 182 (6) Represents certain other charges and gains that we do not believe reflect our underlying business performance. In the three months ended March 31, 2018, this amount includes expense of $590 related to the write-off of certain assets that were being tested for potential use across the system. Adjustments to arrive at adjusted income   before income taxes(3) 12,861 12,001
Commission income 994 1,989 Restricted cash 30,645 30,708 Adjustments to reconcile net income to net cash provided by operating activities: Provision for income taxes 5,277 6,883 Corporate and other (13,562) (8,741) Loss on reacquired franchise rights(3) 350 (7) Includes $3,096 and $3,096 of amortization of intangible assets, other than favorable leases, for the three months ended March 31, 2019 and 2018, respectively, recorded in connection with the 2012 Acquisition, and $903 and $825 of amortization of intangible assets for the three months ended March 31, 2019 and 2018, respectively, recorded in connection with prior 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. Adjusted income before income taxes 44,500 35,494
National advertising fund revenue 11,812 10,461 Accounts receivable, net of allowance for bad debts of $86 and $84 at March 31, 2019 and   December 31, 2018, respectively 18,919 38,960 Depreciation and amortization 9,907 8,465 Depreciation and amortization 9,907 8,465 Total Segment EBITDA(1) $ 59,774 $ 47,575 Pre-opening costs(4) 1 21 (8) Represents corporate income taxes at an assumed effective tax rate of 26.6% and 26.3% for the three months ended March 31, 2019 and 2018, respectively, applied to adjusted income before income taxes. Adjusted income taxes(4) 11,837 9,335
Corporate-owned stores 38,044 32,708 Due from related parties Amortization of deferred financing costs 1,356 484 EBITDA $ 59,774 $ 47,575 Tax benefit arrangement remeasurement(5) 3,373 (396) (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. Adjusted Net Income $ 32,663 93,664 $ 0.35 $ 26,159 98,651 $ 0.27
Equipment 45,011 34,013 Inventory 3,445 5,122 Amortization of favorable leases 92 Purchase accounting adjustments-revenue(1) 74 443 (1) Total Segment EBITDA is equal to EBITDA. Other(6) 14 597
Total revenue 148,817 121,333 Deferred expenses – national advertising fund 6,530 Amortization of asset retirement obligations 221 1 Purchase accounting adjustments-rent(2) 123 182 Purchase accounting amortization(7) 3,999 3,921
Operating costs and expenses: Prepaid expenses 7,254 4,947 Amortization of interest rate caps 195 Loss on reacquired franchise rights(3) 350 Adjusted income before income taxes $ 44,500 $ 35,494
Cost of revenue 34,486 26,500 Other receivables 9,805 12,548 Deferred tax expense 2,165 4,909 Pre-opening costs(4) 1 21 Adjusted income taxes(8) 11,837 9,335
Store operations 20,905 18,356 Other current assets 4,877 6,824 Gain on re-measurement of tax benefit arrangement 3,373 (396) Tax benefit arrangement remeasurement(5) 3,373 (396) Adjusted net income $ 32,663 $ 26,159
Selling, general and administrative 18,154 17,623   Total current assets 417,436 388,540 Provision for bad debts 2 (14) Other(6) 14 597
National advertising fund expense 11,812 10,461 Property and equipment, net of accumulated depreciation of $59,029, as of March 31, 2019 and   $53,086 as of December 31, 2018 114,676 114,367 Loss on reacquired franchise rights 350 Adjusted EBITDA $ 63,359 $ 48,772 Adjusted net income per share, diluted $ 0.35 $ 0.27
Depreciation and amortization 9,907 8,465 Right of use assets, net 115,745 Loss on disposal of property and equipment 650
Other loss 368 1,010 Intangible assets, net 228,663 234,330 Equity-based compensation 1,315 998 Adjusted weighted-average shares outstanding(9) 93,664 98,651
Total operating costs and expenses 95,632 82,415 Goodwill 199,513 199,513 Changes in operating assets and liabilities, excluding effects of acquisitions:
Income from operations 53,185 38,918 Deferred income taxes 431,947 414,841 Accounts receivable 20,032 18,637
Other expense, net: Other assets, net 1,612 1,825 Due to and due from related parties (269) 165
Interest income 1,798 37   Total assets $ 1,509,592 $ 1,353,416 Inventory 1,677 (1,364)
Interest expense (14,749) (8,771) Liabilities and stockholders' deficit Other assets and other current assets (2,648) (1,341)
Other income (expense) (3,318) 192 Current liabilities: National advertising fund (6,500) (4,586)
Total other expense, net (16,269) (8,542) Current maturities of long-term debt $ 12,000 $ 12,000 Accounts payable and accrued expenses (14,640) (16,758)
Income before income taxes 36,916 30,376 Accounts payable 23,060 30,428 Other liabilities and other current liabilities 214 83
Provision for income taxes 5,277 6,883 Accrued expenses 23,679 32,384 Income taxes 1,768 1,898
Net income 31,639 23,493 Equipment deposits 12,502 7,908 Equipment deposits 4,594 7,784
Less net income attributable to non-controlling interests 4,230 3,613 Restricted liabilities – national advertising fund 30 Deferred revenue 3,668 3,536
Net income attributable to Planet Fitness, Inc. $ 27,409 $ 19,880 Deferred revenue, current 25,920 23,488 Leases and deferred rent 60 853
Net income per share of Class A common stock: Payable pursuant to tax benefit arrangements, current 24,765 24,765    Net cash provided by operating activities 57,934 48,134
Basic $ 0.33 $ 0.23 Other current liabilities 12,519 430 Cash flows from investing activities:
Diluted $ 0.32 $ 0.23   Total current liabilities 134,475 131,403 Additions to property and equipment (7,471) (2,036)
Weighted-average shares of Class A common stock outstanding: Long-term debt, net of current maturities 1,158,483 1,160,127 Acquisition of franchises (28,503)
Basic 83,806 87,434 Deferred rent, net of current portion 10,083 Proceeds from sale of property and equipment 21 40
Diluted 84,425 87,698 Lease liabilities, net of current portion 114,470    Net cash used in investing activities (7,450) (30,499)
Deferred revenue, net of current portion 27,652 26,374 Cash flows from financing activities:
Deferred tax liabilities 1,798 2,303 Principal payments on capital lease obligations (12) (11)
Payable pursuant to tax benefit arrangements, net of current portion 424,725 404,468 Repayment of long-term debt (3,000) (1,796)
Other liabilities 2,031 1,447 Proceeds from issuance of Class A common stock 607 242
  Total noncurrent liabilities 1,729,159 1,604,802 Dividend equivalent payments (20) (20)
Stockholders' equity (deficit): Distributions to Continuing LLC Members (1,842) (1,734)
Class A common stock, $.0001 par value - 300,000 authorized, 84,463 and 83,584 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively 9 9    Net cash used in financing activities (4,267) (3,319)
Class B common stock, $.0001 par value - 100,000 authorized, 8,589 and 9,448 shares issued and outstanding as of March 31, 2019 December 31, 2018, respectively 1 1 Effects of exchange rate changes on cash and cash equivalents 250 (250)
Accumulated other comprehensive income 148 94    Net increase in cash, cash equivalents and restricted cash 46,467 14,066
Additional paid in capital 22,576 19,732 Cash, cash equivalents and restricted cash, beginning of period 320,139 113,080
Accumulated deficit (368,714) (394,410) Cash, cash equivalents and restricted cash, end of period $ 366,606 $ 127,146
  Total stockholders' deficit attributable to Planet Fitness Inc. (345,980) (374,574) Supplemental cash flow information:
Non-controlling interests (8,062) (8,215) Net cash paid for income taxes $ 1,479 $ 106
  Total stockholders' deficit (354,042) (382,789) Cash paid for interest $ 13,477 $ 8,146
  Total liabilities and stockholders' deficit $ 1,509,592 $ 1,353,416 Non-cash investing activities:
Non-cash additions to property and equipment $ 4,151 $ 453

 

 

 

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SOURCE Planet Fitness, Inc.

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