PLANET FITNESS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Unless the context otherwise requires, references in this report to the “Company”, “we”, “us” and “our” refer to Planet Fitness, Inc. and its consolidated subsidiaries.

Insight


We are one of the largest and fastest-growing franchisors and operators of
fitness centers in the United States by number of members and locations, with a
highly recognized national brand. Our mission is to enhance people's lives by
providing a high-quality fitness experience in a welcoming, non-intimidating
environment, which we call the Judgement Free Zone, where anyone-and we mean
anyone-can feel they belong. Our bright, clean stores are typically 20,000
square feet, with a large selection of high-quality, purple and yellow Planet
Fitness-branded cardio, circuit- and weight-training equipment and friendly
staff trainers who offer unlimited free fitness instruction to all our members
in small groups through our PE@PF program. We offer this differentiated fitness
experience at only $10 per month for our standard membership in the United
States. This exceptional value proposition is designed to appeal to a broad
population, including occasional gym users and the approximately 80% of the U.S.
and Canadian populations over age 14 who are not gym members, particularly those
who find the traditional fitness club setting intimidating and expensive. We and
our franchisees fiercely protect Planet Fitness' community atmosphere-a place
where you do not need to be fit before joining and where progress toward
achieving your fitness goals (big or small) is supported and applauded by our
staff and fellow members.

As of March 31, 2022, we had more than 16.2 million members and 2,291 stores in
all 50 states, the District of Columbia, Puerto Rico, Canada, Panama, Mexico and
Australia. Of our 2,291 stores, 2,062 are franchised and 229 are
corporate-owned, including 114 stores acquired in the Sunshine Acquisition. As
of March 31, 2022, we had commitments to open more than 1,000 new stores under
existing ADAs.

Our segments

We operate and manage our business in three business segments: Franchise,
Corporate-owned stores and Equipment. Our Franchise segment includes operations
related to our franchising business in the United States, Puerto Rico, Canada,
Panama, Mexico and Australia, including revenues and expenses from the NAF. Our
Corporate-owned stores segment includes operations with respect to all
corporate-owned stores throughout the United States and Canada. The Equipment
segment primarily includes the sale of equipment to our United States
franchisee-owned stores. We evaluate the performance of our segments and
allocate resources to them based on revenue and earnings before interest, taxes,
depreciation and amortization, referred to as Segment EBITDA. Revenue and
Segment EBITDA for all operating segments include only transactions with
unaffiliated customers and do not include intersegment transactions. The tables
below summarize the financial information for our segments for the three months
ended March 31, 2022 and March 31, 2021. "Corporate and other," as it relates to
Segment EBITDA, primarily includes corporate overhead costs, such as payroll and
related benefit costs and professional services that are not directly
attributable to any individual segment.

                                        Three months ended
                                            March 31,
(in thousands)                         2022           2021
Revenue
Franchise segment                   $  80,084      $  64,061
Corporate-owned stores segment         76,157         37,877
Equipment segment                      30,435          9,939
Total revenue                       $ 186,676      $ 111,877

Segment EBITDA
Franchise                           $  60,106      $  41,180
Corporate-owned stores                 23,364         10,691
Equipment                               8,653          1,830
Corporate and other                   (13,931)        (8,656)
Total Segment EBITDA(1)             $  78,192      $  45,045



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

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A reconciliation of income from operations to Segment EBITDA is set forth
below:

                                                               Corporate-owned                               Corporate and
(in thousands)                             Franchise               stores                Equipment               other                Total
Three months ended March 31, 2022
Income (loss) from operations             $  58,251          $          4,907          $    7,392          $      (21,893)         $ 48,657
Depreciation and amortization                 1,855                    18,427               1,261                   4,140            25,683
Other income                                      -                        30                   -                   3,822             3,852
Segment EBITDA(1)                         $  60,106          $         23,364          $    8,653          $      (13,931)         $ 78,192

Three months ended March 31, 2021
Income (loss) from operations             $  39,285          $          1,380          $      637          $      (11,896)         $ 29,406
Depreciation and amortization                 1,895                     9,266               1,261                   3,052            15,474
Other (expense) income                            -                        45                 (68)                    188               165
Segment EBITDA(1)                         $  41,180          $         10,691          $    1,830          $       (8,656)         $ 45,045



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

How we assess the performance of our business


In assessing the performance of our business, we consider a variety of
performance and financial measures. The key measures for determining how our
business is performing include the number of new store openings, same store
sales for both corporate-owned and franchisee-owned stores, system-wide sales,
EBITDA, Adjusted EBITDA, Segment EBITDA, Adjusted net income and Adjusted net
income per share, diluted. See "-Non-GAAP financial measures" below for our
definition of EBITDA, Adjusted EBITDA, Adjusted net income, and Adjusted net
income per share, diluted and why we present EBITDA, Adjusted EBITDA, Adjusted
net income, and Adjusted net income per share, diluted, and for a reconciliation
of our EBITDA, Adjusted EBITDA, and Adjusted net income to net income, the most
directly comparable financial measure calculated and presented in accordance
with U.S. GAAP, and a reconciliation of Adjusted net income per share, diluted
to net income per share, diluted, the most directly comparable financial measure
calculated and presented in accordance with U.S. GAAP.

Number of new store openings


The number of new store openings reflects stores opened during a particular
reporting period for both corporate-owned and franchisee-owned stores. Opening
new stores is an important part of our growth strategy and we expect the
majority of our future new stores will be franchisee-owned. Before we obtain the
certificate of occupancy or report any revenue for new corporate-owned stores,
we incur pre-opening costs, such as rent expense, labor expense and other
operating expenses. Some of our stores open with an initial start-up period of
higher than normal marketing and operating expenses, particularly as a
percentage of monthly revenue. New stores may not be profitable and their
revenue may not follow historical patterns.
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The following table shows the evolution of our corporate and franchise-owned store base for the three months ended March 31, 2022 and 2021:


                                                                                          Three months ended March 31,
                                                                                      2022                             2021
Franchisee-owned stores:
Stores operated at beginning of period                                                2,142                              2,021
New stores opened                                                                        34                                 22
Stores debranded, sold or consolidated(1)                                              (114)                                 -
Stores operated at end of period                                                      2,062                              2,043

Corporate-owned stores:
Stores operated at beginning of period                                                  112                                103
New stores opened                                                                         3                                  -
Stores acquired from franchisees                                                        114                                  -
Stores operated at end of period                                                        229                                103

Total stores:
Stores operated at beginning of period                                                2,254                              2,124
New stores opened                                                                        37                                 22
Stores acquired, debranded, sold or consolidated(1)                                       -                                  -
Stores operated at end of period                                                      2,291                              2,146



(1)The term "debrand" refers to a franchisee-owned store whose right to use the
Planet Fitness brand and marks has been terminated in accordance with the
franchise agreement. We retain the right to prevent debranded stores from
continuing to operate as fitness centers. The term "consolidated" refers to the
combination of a franchisee's store with another store located in close
proximity with our prior approval. This often coincides with an enlargement,
re-equipment and/or refurbishment of the remaining store.

Comparable store sales


Same store sales refers to year-over-year sales comparisons for the same store
sales base of both corporate-owned and franchisee-owned stores. We define the
same store sales base to include those stores that have been open and for which
monthly membership dues have been billed for longer than 12 months. We measure
same store sales based solely upon monthly dues billed to members of our
corporate-owned and franchisee-owned stores.

Several factors affect our same store sales in any given period, including the
following:
•the number of stores that have been in operation for more than 12 months;
•the percentage mix and pricing of PF Black Card and standard memberships in any
period;
•growth in total net memberships per store;
•consumer recognition of our brand and our ability to respond to changing
consumer preferences;
•overall economic trends, particularly those related to consumer spending;
•our ability and our franchisees' ability to operate stores effectively and
efficiently to meet consumer expectations;
•marketing and promotional efforts;
•local competition;
•trade area dynamics; and
•opening of new stores in the vicinity of existing locations.

Consistent with common industry practice, we present same store sales as
compared to the same period in the prior year and which is calculated for a
given period by including only sales from stores that had sales in the
comparable months of both years. Same store sales of our international stores
are calculated on a constant currency basis, meaning that we translate the
current year's same store sales of our international stores at the same exchange
rates used in the prior year. Since opening new stores will be a significant
component of our revenue growth, same store sales is only one measure of how we
evaluate our performance.

Stores acquired from or sold to franchisees are removed from the
franchisee-owned or corporate-owned same store sales base, as applicable, upon
the ownership change and for the 12 months following the date of the ownership
change. These stores are included in the corporate-owned or franchisee-owned
same store sales base, as applicable, following the 12th month after the
acquisition or sale. These stores remain in the system-wide same store sales
base in all periods.
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The following table shows our same store sales for the three months ended March
31, 2022 and 2021:

                                                       Three months ended March 31,
                                                            2022                   2021
Same store sales data
Same store sales growth:
Franchisee-owned stores                                               15.8  %     (14.7) %
Corporate-owned stores                                                17.0  %     (18.2) %
Total stores                                                          15.9  %     (14.9) %
Number of stores in same store sales base:
Franchisee-owned stores                                              1,828        1,605
Corporate-owned stores                                                  99           83
Total stores                                                         2,032        1,688


Total monthly and annual membership dues (system-wide sales)


We define system-wide sales as total monthly dues and annual fees billed by us
and our franchisees. System-wide sales is an operating measure that includes
sales by franchisees that are not revenue realized by the Company in accordance
with GAAP, as well as sales by our corporate-owned stores. While we do not
record sales by franchisees as revenue, and such sales are not included in our
consolidated financial statements, we believe that this operating measure aids
in understanding how we derive royalty revenue and is important in evaluating
our performance. We review the total amount of dues we collect from our members
on a monthly basis, which allows us to assess changes in the performance of our
corporate-owned and franchisee-owned stores from period to period, any
competitive pressures, local or regional membership traffic patterns and general
market conditions that might impact our store performance. We collect monthly
dues on or around the 17th of every month. We collect annual fees once per year
from each member based upon when the member signed his or her membership
agreement. System-wide sales were $961 million and $765 million, during the
three months ended March 31, 2022 and 2021, respectively.

Non-GAAP Financial Measures


We refer to EBITDA and Adjusted EBITDA as we use these measures to evaluate our
operating performance and we believe these measures provide useful information
to investors in evaluating our performance. EBITDA and Adjusted EBITDA as
presented in this Quarterly Report on Form 10-Q are supplemental measures of our
performance that are neither required by, nor presented in accordance with U.S.
GAAP. EBITDA and Adjusted EBITDA should not be considered as substitutes for
U.S. GAAP metrics such as net income or any other performance measures derived
in accordance with U.S. GAAP. Also, in the future we may incur expenses or
charges such as those used to calculate Adjusted EBITDA. Our presentation of
EBITDA and Adjusted EBITDA should not be construed as an inference that our
future results will be unaffected by unusual or nonrecurring items. We have also
disclosed Segment EBITDA as an important financial metric utilized by the
Company to evaluate performance and allocate resources to segments in accordance
with ASC 280, Segment Reporting. As part of such disclosure in "Our Segments"
within Management's Discussion and Analysis of Financial Condition and Results
of Operations, the Company has provided a reconciliation from income from
operations to Total Segment EBITDA, which is equal to the Non-GAAP financial
metric EBITDA.

We define EBITDA as net income before interest, taxes, depreciation and
amortization. We believe that EBITDA, which eliminates the impact of certain
expenses that we do not believe reflect our underlying business performance,
provides useful information to investors to assess the performance of our
segments as well as the business as a whole. Our board of directors also uses
EBITDA as a key metric to assess the performance of management. We define
Adjusted EBITDA as net 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.
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A reconciliation of net profit to EBITDA and Adjusted EBITDA is shown below for the three months ended March 31, 2022 and 2021:


                                                                                        Three months ended March 31,
                                                                                           2022                  2021
(in thousands)
Net income                                                                          $        18,376          $   6,190
Interest income                                                                                (209)              (217)
Interest expense(1)                                                                          22,631             20,244
Provision for income taxes                                                                   11,711              3,354
Depreciation and amortization                                                                25,683             15,474
EBITDA                                                                              $        78,192          $  45,045
Purchase accounting adjustments-revenue(2)                                                       58                 69
Purchase accounting adjustments-rent(3)                                                         109                117
Loss on reacquired franchise rights(4)                                                        1,160                  -
Gain on settlement of preexisting contract with acquiree(5)                                  (2,059)                 -
Transaction fees(6)                                                                           4,423                  -

Gain on adjustment of allowance for credit losses on held-to-maturity investments(7)

                                                                               (2,110)                 -
Dividend income on held-to-maturity investments(8)                                             (451)                 -
Pre-opening costs(9)                                                                            656                365
Insurance recovery(10)                                                                            -             (2,175)
Tax benefit arrangement remeasurement(11)                                                    (3,788)              (348)
Other(12)                                                                                     1,153                635
Adjusted EBITDA                                                                     $        77,343          $  43,708


(1)Includes a $1,583 loss on extinguishment of debt in the three months ended
March 31, 2022.
(2)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 area
development agreement fees, deferred franchise fees, and deferred enrollment
fees that the Company billed and collected up front but recognizes for U.S. GAAP
purposes at a later date. In connection with the 2012 Acquisition, it was
determined that the carrying amount of deferred revenue was greater than the
fair value assessed in accordance with ASC 805-Business Combinations, which
resulted in a write-down of the carrying value of the deferred revenue balance
upon application of acquisition push-down accounting under ASC 805. These
amounts represent the additional revenue that would have been recognized in
these periods if the write-down to deferred revenue had not occurred in
connection with the application of acquisition pushdown accounting.
(3)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 $45 and $49 in the three months ended March 31, 2022 and 2021,
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 $64 and
$68 in the three months ended March 31, 2022 and 2021, respectively, are due to
the amortization of favorable and unfavorable leases. All of the rent related
purchase accounting adjustments are adjustments to rent expense which is
included in store operations on our consolidated statements of operations.
(4)Represents the impact of a non-cash loss recorded in accordance with ASC 805
- Business Combinations related to our acquisition of franchisee-owned stores.
The loss recorded under U.S. GAAP represents the difference between the fair
value and the contractual terms of the reacquired franchise rights and is
included in other (gains) losses, net on our consolidated statement of
operations.
(5)Represents a gain on settlement of deferred revenue from existing contracts
with acquired franchisee-stores recorded in accordance with ASC 805 - Business
Combinations, and is included in other (gains) losses, net on our consolidated
statement of operations.
(6)Represents transactions fees and expenses incurred in connection with our
acquisition of franchisee-owned stores.
(7)Represents a gain on the adjustment of the allowance for credit losses on the
Company's held-to-maturity investments.
(8)Represents dividend income on held-to-maturity investments.
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(9)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.
(10)Represents an insurance recovery of previously recognized expenses related
to the settlement of legal claims.
(11)Represents gains related to the adjustment of our tax benefit arrangements
primarily due to changes in our effective tax rate.
(12)Represents certain other charges and gains that we do not believe reflect
our underlying business performance.


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Our presentation of Adjusted net income and Adjusted net income per share,
diluted, 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 U.S. GAAP and assuming
the full exchange of all outstanding Holdings Units and corresponding Class B
common stock as of the beginning of each period presented. Adjusted net 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 U.S. GAAP. We believe Adjusted net income and Adjusted net income per
share, diluted, supplement U.S. GAAP measures and enable us to more effectively
evaluate our performance period-over-period. A reconciliation of Adjusted net
income to net income, the most directly comparable U.S. GAAP measure, and the
computation of Adjusted net income per share, diluted, are set forth below.

                                                                                        Three months ended March 31,
(in thousands, except per share amounts)                                                   2022                  2021
Net income                                                                          $        18,376          $   6,190
Provision for income taxes, as reported                                                      11,711              3,354
Purchase accounting adjustments-revenue(1)                                                       58                 69
Purchase accounting adjustments-rent(2)                                                         109                117
Loss on reacquired franchise rights(3)                                                        1,160                  -
Gain on settlement of preexisting contract with acquiree(4)                                  (2,059)                 -
Transaction fees(5)                                                                           4,423                  -
Loss on extinguishment of debt(6)                                                             1,583                  -

Gain on adjustment of allowance for credit losses on held-to-maturity investments(7)

                                                                               (2,110)                 -
Dividend income on held-to-maturity investments(8)                                             (451)                 -
Pre-opening costs(9)                                                                            656                365
Insurance recovery(10)                                                                            -             (2,175)
Tax benefit arrangement remeasurement(11)                                                    (3,788)              (348)
Other(12)                                                                                     1,153                635
Purchase accounting amortization(13)                                                          8,518              4,159
Adjusted income before income taxes                                                 $        39,339          $  12,366
Adjusted income tax expense(14)                                                              10,307              3,289
Adjusted net income                                                         

$29,032 $9,077


Adjusted net income per share, diluted                                      

$0.32 $0.10


Adjusted weighted-average shares outstanding(15)                                             89,652             87,179


(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 area
development agreement fees, deferred franchise fees, and deferred enrollment
fees that the Company billed and collected up front but recognizes for U.S. GAAP
purposes at a later date. In connection with the 2012 Acquisition, it was
determined that the carrying amount of deferred revenue was greater than the
fair value assessed in accordance with ASC 805-Business Combinations, which
resulted in a write-down of the carrying value of the deferred revenue balance
upon application of acquisition push-down accounting under ASC 805. These
amounts represent the additional revenue that would have been recognized in
these periods if the write-down to deferred revenue had not occurred in
connection with the application of acquisition pushdown accounting.
(2)Represents the impact of rent-related purchase accounting adjustments. In
accordance with guidance in ASC 805 - Business Combinations, in connection with
the 2012 Acquisition, the Company's deferred rent liability was required to be
written off as of the acquisition date and rent was recorded on a straight-line
basis from the acquisition date through the end of the lease term. This resulted
in higher overall recorded rent expense each period than would have otherwise
been recorded had the deferred rent liability not been written off as a result
of the acquisition push down accounting applied in accordance with ASC 805.
Adjustments of $45 and $49 in the three months ended March 31, 2022 and 2021,
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
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$64 and $68 in the three months ended March 31, 2022 and 2021, respectively, are
due to the amortization of favorable and unfavorable leases. All of the rent
related purchase accounting adjustments are adjustments to rent expense which is
included in store operations on our consolidated statements of operations.
(3)Represents the impact of a non-cash loss recorded in accordance with ASC 805
- Business Combinations related to our acquisition of franchisee-owned stores.
The loss recorded under U.S. GAAP represents the difference between the fair
value and the contractual terms of the reacquired franchise rights and is
included in other (gains) losses, net on our consolidated statement of
operations.
(4)Represents a gain on settlement of deferred revenue from existing contracts
with acquired franchisee-stores recorded in accordance with ASC 805 - Business
Combinations, and is included in other (gains) losses, net on our consolidated
statement of operations.
(5)Represents transactions fees and expenses incurred in connection with our
acquisition of franchisee-owned stores.
(6)Represents a loss on extinguishment of debt in the three months ended March
31, 2022.
(7)Represents a gain on the adjustment of the allowance for credit losses on the
Company's held-to-maturity investments.
(8)Represents dividend income on held-to-maturity investments.
(9)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.
(10)Represents an insurance recovery of previously recognized expenses related
to the settlement of legal claims.
(11)Represents gains related to the adjustment of our tax benefit arrangements
primarily due to changes in our effective tax rate.
(12)Represents certain other charges and gains that we do not believe reflect
our underlying business performance.
(13)Includes $3,096 of amortization of intangible assets, for the three months
ended March 31, 2022 and 2021, recorded in connection with the 2012 Acquisition,
and $5,415 and $1,063 of amortization of intangible assets for the three months
ended March 31, 2022 and 2021, respectively, recorded in connection with
historical acquisitions of franchisee-owned stores. The adjustment represents
the amount of actual non-cash amortization expense recorded, in accordance with
U.S. GAAP, in each period.
(14)Represents corporate income taxes at an assumed effective tax rate of 26.2%
for the three months ended March 31, 2022 and 26.6% for the three months ended
March 31, 2021, applied to adjusted income before income taxes.
(15)Assumes the full exchange of all outstanding Holdings Units and
corresponding shares of Class B common stock for shares of Class A common stock
of Planet Fitness, Inc.

A reconciliation of net income per share, diluted, to Adjusted net income per
share, diluted is set forth below for the three months ended March 31, 2022 and
2021:

                                                                 For the three months ended                                              For the three months ended
                                                                       March 31, 2022                                                          March 31, 2021
                                                                                                   Net income                                                             Net income
(in thousands, except per share                                                                    per share,                                                             per share,
amounts)                                       Net income         Weighted Average Shares            diluted          Net income         Weighted Average Shares            diluted
Net income attributable to Planet
Fitness, Inc.(1)                              $  16,464                    84,635                 $     0.19          $  5,581                    83,707                 $     0.07
Assumed exchange of shares(2)                     1,912                     5,017                                          609                     3,472
Net income                                       18,376                                                                  6,190

Adjustments to arrive at adjusted

  income before income taxes(3)                  20,963                                                                  6,176
Adjusted income before income taxes              39,339                                                                 12,366
Adjusted income tax expense(4)                   10,307                                                                  3,289
Adjusted net income                           $  29,032                    89,652                 $     0.32          $  9,077                    87,179                 $     0.10


(1)Represents net income attributable to Planet Fitness, Inc. and the associated
weighted average shares, diluted of Class A common stock outstanding.
(2)Assumes the full exchange of all outstanding Holdings Units and corresponding
shares of Class B common stock for shares of Class A common stock of Planet
Fitness, Inc. Also assumes the addition of net income attributable to
non-controlling interests corresponding with the assumed exchange of Holdings
Units and Class B common shares for shares of Class A common stock.
(3)Represents the total impact of all adjustments identified in the adjusted net
income table above to arrive at adjusted income before income taxes.
(4)Represents corporate income taxes at an assumed effective tax rate of 26.2%
and 26.6% for the three months ended March 31, 2022 and 2021, respectively,
applied to adjusted income before income taxes.

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Operating results

The following table sets forth our condensed consolidated statements of earnings as a percentage of total revenue for the three months ended March 31, 2022 and 2021:

Three months completed March, 31st,

                                                                                      2022                   2021
Revenue:
Franchise revenue                                                                        35.1  %                46.6  %
Commission income                                                                         0.3  %                 0.2  %
National advertising fund revenue                                                         7.5  %                10.4  %
Franchise segment                                                                        42.9  %                57.2  %
Corporate-owned stores                                                                   40.8  %                33.9  %
Equipment                                                                                16.3  %                 8.9  %
Total revenue                                                                           100.0  %               100.0  %
Operating costs and expenses:
Cost of revenue                                                                          12.0  %                 7.1  %
Store operations                                                                         25.5  %                23.2  %
Selling, general and administrative                                                      16.5  %                20.1  %
National advertising fund expense                                                         7.8  %                11.4  %
Depreciation and amortization                                                            13.8  %                13.8  %
Other (gains) losses, net                                                                (1.6) %                (1.9) %
Total operating costs and expenses                                                       74.0  %                73.7  %
Income from operations                                                                   26.0  %                26.3  %
Other income (expense), net:
Interest income                                                                           0.1  %                 0.2  %
Interest expense                                                                        (12.1) %               (18.1) %
Other income                                                                              2.2  %                 0.1  %
Total other expense, net                                                                 (9.8) %               (17.8) %
Income before income taxes                                                               16.2  %                 8.5  %
Equity earnings (losses) of unconsolidated entities, net of tax                          (0.1) %                   -  %
Provision for income taxes                                                                6.3  %                 3.0  %
Net income                                                                                9.8  %                 5.5  %
Less net income attributable to non-controlling interests                                 1.0  %                 0.5  %
Net income attributable to Planet Fitness, Inc.                                           8.8  %                 5.0  %



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