Thank you for joining us today to discuss Planet Fitness’ Fourth Quarter 2015 Earnings Results. On today’s call are Chris Rondeau, President and CEO; and Dorvin Lively, Chief Financial Officer. A copy of today’s press release is available on the Investor Relations section of Planet Fitness’ website at planetfitness.com. I would like to remind you that certain statements we will make in this presentation are forward-looking statements and these forward-looking statements reflect Planet Fitness’ judgment and analysis only as of today and actual results may differ materially from current expectations based on a number of factors affecting Planet Fitness’ business. Accordingly, you should not place undue reliance on these forward-looking statements. For a more thorough discussion of the risk and uncertainties associated with the forward-looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward-looking statements that is included in our fourth quarter 2015 earnings release, which was furnished to the SEC today on Form 8-K as well as our filings with the SEC referenced in that disclaimer. We do not undertake any obligation to update or alter any forward-looking statements whether as a result of new information, future events or otherwise. In addition, the company may refer to certain pro forma non-GAAP metrics on this call. Explanation of these metrics can be found in the earnings release filed earlier today. With that, I’ll turn the call over to Chris. Chris?

Thanks, Brendon. Thanks everyone for joining us today. Our strong fourth quarter performance, which exceeded expectations, was a great way to complete a terrific year for Planet Fitness. 2015 total revenue increased 18% to a record $330 million, including system-wide same-store sales growth of 7.7%. All three segments of our business segments, franchise, corporate stores and equipment grew double digits, led by 23% growth in the franchise revenue, our highest-margin segment. Our business model allowed us to translate our top-line success into even stronger gains in adjusted EBITDA, which increased 23% to a record $123 million. On top of our record financial performance, which Dorvin will review in more detail shortly, the past year was filled with several milestones, accomplishments that underscore the health our business and the strength of our brand. First, surpassed our 1,000th location in June and ended the year at 1,124 stores after opening 209 throughout the year, including 84 in the fourth alone. This rapid expansion was driven by our group of well-capitalized franchisees, who opened all but three of the 209 locations and are responsible for more than doubling our store count over the last three years. Perhaps more importantly, new unit sales are outpacing store openings, replenishing the pipeline with over 1,000 new locations that are committed to open in the next seven years, more than 500 set to open in the next three years. 2015 marked our first international franchise locations outside the U.S., beginning with Canada and, more recently, the Dominican Republic, where the brand is off to fantastic start. The success our concept has enjoyed in Puerto Rico since launching there in 2011, combined with our initial reception of the Dominican, bodes well for the potential expansion into other Latin American markets down the road. Second, total membership reached more…

Thanks, Chris, and good afternoon, everyone. I’ll begin by reviewing the details of our fourth quarter results and then I’ll provide our full-year outlook for 2016. For the fourth quarter of 2015, total revenue increased 10.2% to a $105.8 million from $96 million in the prior year period. Total system-wide same-store sales increased by 6.2%. By segment, our franchise segment revenue was $24.7 million, an increase of 16.9% from $21.1 million in the prior year period. Within our franchise segment revenue, our royalty revenues increased 35.5% to $12.1 million, which consists of royalties on our monthly membership dues and annual membership fees. This compares to royalty revenue of $8.9 million in the same quarter of last year. The increase was driven by three factors. First, royalties from the opening of new franchise stores since the fourth quarter of last year; second, our franchise owned same-store sales growth of 6.6%; and then third a higher overall royalty rate. For the fourth quarter, the average royalty rate was 3.2%, up from 2.9% for the same period last year, driven by more new stores opening at the current royalty rate of 5%. Remember, we have an annual fee in Q4, it’s in October, which brings down the average royalty rate versus Q3 where we do not have an annual fee in that quarter. Next within our franchise and other fees, which were $4 million versus $4.4 million in the prior year period, these fees are fees that we receive for processing dues to our point-of-sale system as well as fees paid to us in association with new franchise agreements and area development agreements. In the prior year, there was both a revenue component as well as a cost of component in revenue or in cost of revenue rather, related to our point-of-sale transaction…

[Operator Instructions] And your first question is from John Heinbockel from Guggenheim Securities.

So guys, couple of things. How the one quarter membership sign-ups been right in light of your stepped-up marketing around New Year's Eve? And the biggest loser? And just general brand awareness? What kind of start have you gotten off to with sign-ups? And then just embedded in your first-quarter guidance, what type of growth do you think we get in membership sequentially? Somewhere in the high teens it would seem to imply? Thoughts on that?

Let’s say, so far, the membership growth has been great, I'm pleased with how it's gone so far this year.

Yes.

The New Year's Eve I mean everything I saw it was quite spectacular and that would be mostly around a branding promotion wasn't really call that action as much as the January sale is. I think one really important factor we just came across just this weekend, as we did last January we did the same thing is a brand health findings summary and we actually just for the first time helped beat the legacy brand goals which has been around [indiscernible] been dying brand in a lot of ways. So for the first time we've actually taken this far way in first place from many brand awareness since New Year's Eve. As well as we took over other important things. On advertising awareness, we were first there at 26% and next closest is only 10%. So as far as a brand that definitely made us accelerate quite a bit on a brand awareness role, but as far as hard to push that exactly as a tribute to membership growth as opposed to the call to action sale in January.

And John, I think the other thing I'd add to Chris's comments is that as part of trying to give you guys some insights into the quarter as I reflected the kind of mid single-digit comps, I mean, if you will recall last year, in Q1 we were not removing any of those non-paying members during – and we had talked about this in some previous quarters. So I think that the guidance to that mid single-digit comp range kind of reflects how we feel about the quarter at this stage of the game.

All right. And then secondly, how do you guys get visibility internally on replacement equipment? I'm not sure how you do that, how good that is as you move through the year. And then any thoughts I know occasionally you've had some general guidance on how that – what the cadence ought to be quarterly. What would your thoughts be in 2016 in terms of quarterly cadence and equipment?

John, of course, I think one of the benefits of the fact that they're buying equipment from us is that we're able to track when they originally purchased the equipment, so we don't how old the equipment is, and when it needs to be replaced, that's the easy part. And then if they've already done it once, we know one that’s go around is a bit year 10 now and they’ve already done the card in year five and they are up again. So we're able to document when they brought it and when they need to be replacing it. If you couple that with our brand excellence crews which are throughout the country, that go around and help franchisees’ operations and cleanliness and everything else so they also kind of look at an inventory want to be sure that the equipment is up and running in good working order and need repair, but also that does not un approved equipment, being slit in as well so it does a little bit of both in essence as well.

Yes John, a couple of things on that terms of cadence and way to think about it, we had told you guys back like in – when we reported Q2 and Q3 results we expected that we would be in the kind of high teens in terms of the equipment revenue up close to 20% replacement equipment as the total it came in at about 24% as far as the replacement equipment as a percent of total equipment revenues and we feel good about that we got a lot of franchisees that certainly a replacement replacing equipment on a regular basis and schedule you may also recall that I said that although it had been lumpy in the past, quarter-to-quarter, we expected somewhere between say 65% 70% of our replacement equipment revenues would happen in Q2 and Q3. And there's a lot of reasons for that. It's a better time of the year. There's sometimes doing renovations and they'll do all that at the same time. So as an example, it came in, in 2015 about 60% or so was what was in Q2 and Q3. We see that 60% to 70% again as we look towards 2016 as replacement revenue. We think Q1 will probably be the lowest and then 60% to 70% in Q2 and Q3 and then the balance in Q4.

Your next question is from Randy Konik from Jefferies.

Thanks a lot guys. I just have first wanted to ask about the Canadian business, sounded like we've heard some very large membership numbers in the initial stores or doors there. What's the end of, I guess the returns are probably better than the franchise partners potentially in that market trying to get some perspective there because sounds like it's going very well. And so can you give us some more color on how that Canadian market should start to develop over time?

Yes we have two corporate stores as you probably recall the first two there we opened in December, January so last year. So those are still doing very well North of 10,000 members a piece, the other franchise locations are just opened in December so there primary much on average pace of any U.S. store at this point. But again both have been opened a couple months at this point.

But we’re still very happy with the results I’d say.

Got it, good. I guess the other question I had was if we look at the 6,500 members per door can you give us some perspective on the different densities you see on by geography perhaps in the Northeast market where the company is founded versus the younger markets out West, what differentials would we be seeing order opportunities from the different geographies both in members per door but also black card penetration, just curious there.

Yes well the black card penetration the reciprocity is one of the or is the biggest cell in that black card benefit so people use that most so naturally the more an area of the more in the market more than of so that is. So as far as density whether we're Northeast or California, for example any heavier damp city happens to generate more membership just pure numbers you know. But our California stores are doing very well and the brand awareness only about 50+ stores in California. Brand awareness there is no real different than here in the Northeast I’d say. And the clubs opening their, probably that’s exactly what you see here.

Okay then I guess, two questions for Dorvin. Dorvin, I think of royalty revenue rate based on mix and so forth was up about 30 bps sounded like year-over-year.

Yes.

Should we be thinking about 30 basis point increase in penetration on a quarterly basis going forward? Or how should we think about that? And then lastly, from a re-equipment perspective, the average age of the chain is fairly young explosion of growth, and the last four or five years. When should we be thinking about the big year expansion in the equipment revenues when the majority of decent portion of the chain hit that five to seven-year window just curious there?

Yes, first on the royalty rates, we've said in the past and it was pretty spot on for the fourth quarter that that rate would kind of grow on an annual basis, somewhere around 25 bps to 30 bps or so and we grew 30 bps in Q4 as I mentioned. That growth rate will stay pretty consistent until we start seeing a lot of older franchise stores that have a lower rate expire and start to renew and that's really in like 2017, 2018, 2019, is when you start to see a bigger volume of those expiring. So I still stick to my guidance to think about our average royalty rate kind of in that 30 bps or so a year. With respect to the replacement equipment, you're right in that the last three years or we’ve opened up close to half of our stores and that will on average really start because of the cardio being years four and five and then strength being six, seven, it's kind of in that fourth or fifth year when you start seeing it so if you go back and try to model it we've given you what the revenue number is for 2015 and you start looking at stores that we opened back four or five years ago and those are the ones that will be replacing their equipment this year, next year, et cetera. One more point I'll make on that is that and I say this in the past that it's a process where they really replace their equipment over kind of a rolling quarterly basis and they don't replace everything all at once. So if you're cardio comes up and you're halfway through year for, they don't typically go in and replace everything at once and so the way we've talked about it is, it’s probably a more like an eight-month to 12-month kind of quarterly rolling period that some of this will happen. It won't all happen in every quarter but it's during that period of time when ultimately that equipment gets replaced. Then just the final point is I said we ended up at about 24% of our total equipment revenue was replacement this quarter or for the full-year rather. That's going to stay in that mid-20s in 2016. That's how we see it.

The next question is from Sharon Zackfia from William Blair.

Hi good afternoon.

Good afternoon.

Dorvin I think I may have missed when you talked about what the clap black card penetration ended up being for 2015.

It came in 200 basis points so it was from 55% up to 57%.

Perfect thank you. Then I’m just curious, there’s been a lot of concern about different regional pockets of the country and obviously you have a pretty big national system out there. Are you seeing any signs of customer reticence in places like Texas anything with sign-ups or attrition that would make you any more concerned about the economy and maybe some perspective if we were to have a slowing consumer how you think Planet would fair vis-à-vis others in the space?

Yes a couple things and Chris I think will jump in on it too. Just because of a lot of that was going on with the oil and gas business, went back and looked at all of our stores, in Texas and I took the period from September of I took the period from September 2014, through February 2015, and then compared the same six-month period this year because I think oil was close to $100 a barrel in September 2014. And I compared the same six-month period of the same set of stores and those stores are comping right in line with the rest of the stores so we don't see including the last couple of months January and February we don't see any trend at all of call it the Texas state stores versus the overall chain.

I'd say adding to that too if we go back to the great same-store sales growth and also back to 2000 the .com [indiscernible] we had really four stores back then. But I remember then our stores were extremely well and were busy middle of the day people didn't have work but they also had nothing else to do but worked out and go to few interviews. So that was a good time for us and people traded down from – the people were trading down from the higher-priced clubs, they weren't working out they just decided to do a more affordable option.

The other thing frankly that may come out of it is there may be some cheaper real estate more real estate locations down there for us to open up more and more stores.

Okay great, thank you.

Sure.

The next question is from Kevin Milota from JP Morgan.

Hey good evening guys. Appreciate it. Looking at your mid-single-digit same-store sales guidance obviously last year on the corporate side was impacted by the Hudson Valley stores. Hoping you could give us some perspective on what your views are on both the franchise and corporate side same-store sales estimate for this year and how those Hudson Valley units are doing whether it be from a membership perspective or just give an update on that front? Thank you.

Sure Kevin. When you think about our business in the comps that we gave, guidance to for the year, back at the end of Q3, we had said that those Hudson Valley stores there's eight of them there that had been a drag if you will on our corporate store base. We continue to see improvements in those stores through the last four months or five months six months of last year. There's a couple of them there that we're still working on and we have plans on those. The other six are they've made the turn and we're still working on them obviously as well, but that's all embedded into the way we built our guidance for 2016 of saying mid-single-digit comps. And that's the same guidance I gave for Q1 and so as we get past Q1 and then to Q2 we’ll try to refine that a bit further for the full-year but we feel pretty comfortable with it right now.

Okay great. And just a follow-up on the balance sheet obviously your guidance looks good and is obviously growing. As we look at your leverage targets and as we move through 2016 and then into 2017 with the free cash that you're generating, just remind us kind of what your priorities are for that free cash flow, is it purely debt paydown or should we start potentially thinking about a dividend or other shareholder uses? Thank you.

Sure Kevin. I think number one is a good piece of our total corporate CapEx out of our cash flows goes to replace equipment in our existing stores so that's always a high priority to do that. And then second would be we have built a couple stores, we built three last year corporate new stores that's something that we'll probably continue to look at one, maybe two stores but we don't plan to do anything more than that. So that's a piece of it. And then I think I think two more of the crux of your question, how do we deal with our leverage and then what would we do corporately with the free cash flow, I think outside of those, we'll certainly work with our Board as to what's the right way to return cash to our shareholders? But at this time we're obviously very comfortable with our current debt leverage. We will delever over time. And as I made in my prepared remarks I said we did prepay $10 million in Q4, so it will be a combination of those things. I don't think at the moment outside of the cash needs just to run the business with the CapEx for our replacement stores I think that that's something that we'll continue to look at throughout this year.

Okay thanks a lot.

Sure.

The next question from Seth Sigman from Credit Suisse.

Thanks. Nice quarter guys.

Thank you.

Just one clarification, as we look at the store growth for this year, the guidance seems a little bit higher I just want to clarify is that incremental just Canada or were there other incremental opportunities that maybe you're seeing in the U.S. as well?

Yes we said 210 to 220 and that includes 15 international stores most of all those stores will be in Canada. So that gets you down to really in the long-term range target that we gave frankly back when we went public we said approximately 200 stores a year for the next three years or so. And we feel pretty good about that. We are very selective when we put a location in. We want to make sure that we're finding the best locations with our franchisees and we have as I think you know we have approval rights on all sides and we turned down a lot of sites frankly because we just don't think it's the right place to put the store, but I think with that thoughtful growth strategy that we've had for the last couple years that that 200 range or so plus extra in Canada that we are referring to is we think that's a good number to shoot for this year.

Okay. Got it. And then just a couple quick questions on pricing obviously a lot of focus over the last couple of years in driving the black card you sweeten the offer there a bit and seems to be successful. Can you give us a sense of how much that may have contributed to comps in the fourth quarter and as you think about the mid single-digit guidance for 2016, the balance of pricing and member growth, that may be embedded there?

Yes. I think I'd say the same thing for Q4 that I said for Q3, that most of our comp growth is coming from member growth. There's a small piece of that's coming from rate and as I stated then to Sharon’s question that we went from 55% to 57% we still see some rate growth. But not like it was back three or four years ago. But I think embedded in our comp guidance is that a major portion of that will come from member growth and then a smaller piece of it will come from rate growth.

And then just as you look ahead do you feel like there's an opportunity to maybe test a higher price point maybe even just selectively in certain markets? Are there things that consumers ask for that they would be willing to pay more for?

Yes. I think as long as we continue to add more members per store and drive rate that $10 a month is pretty compelling. And because of our national advertising and we're able to advertise one price nationwide which is extremely powerful, so if I'm a little hesitant to start breaking the rate structure separately throughout the country having that all participating locations you really have nothing substantial to go out to the national market with.

Okay. Understood. Thanks, guys.

Sure. Thank you.

The next question is from Sean Naughton from Piper Jaffray.

Hi, good afternoon.

Hi, Sean.

Just on the new store opening cadence for 2016, you obviously gave us I think the 46 for Q1 so that's helpful but just thinking about the balance of the stores, how should we think about those kind of falling out for the remainder of 2016?

Yes, I think other than a bit of the headwinds on Q1 to Q1 that I referred to, it will be more than likely a very similar to the prior year. Inevitably a lot of franchisees want to get it open and in late November, December right before January, we had a very strong Q4 and a really strong December. With a few of those stores that we originally kind of planned to open up in the first couple of weeks in January sliding into Q4, but I think the cadence outside of a little bit of Q1 comparison will be very comparable to the prior-year.

Okay. That’s helpful. And then I don't know if you gave this I might have missed it but just the CapEx guidance or what you're kind of thinking about for 2016?

Yes, I did not, but it will probably be right in that high teens to $20 million range something like that. About half of that is our replacement equipment CapEx. Then a little bit in there for some IT related headquarter type expenses but a good 50 to 60-plus percent of it is replacement equipment for existing stores, but I'd say good pull ballpark number is kind of $18 million to $20 million CapEx.

Okay and then one – if I could make one more in here. Just I think the last question was talking about the drivers of comp in 2016 between mix and members per club. How should we think about just in terms of framing it up for people on the contribution potentially from the – just the new store maturity curve on some of these clubs for comp? Thanks.

Yes, the way that I explained this model in the past is that I break it into three groups. You've got your brand-new stores kind of first 12months, you have the group it's kind of 12 months to 36 months and then you've got the real mature stores. Mature store comps, we've kind of guided to the fact that it's low single-digits. And the second bucket being those that are kind of in years two and three, they're going to comp in the 20s to 30s typically. With first year maybe 45% or 40% to 60% comp based depending on how they get out of the gate et cetera. So the model is kind of build that you’re going to get that low single-digit comp range for your mature stores and then if you look at our mix of call it roughly 1,000 stores, a little bit less on the franchise side, that that mix is how you get into that mid-single to high single-digit range. But that's kind of the way the model works in terms of what drives comp. So the average when you kind of model out the stores, the average AUV gets you to about $1.5 million. As a second year run rate, with a comp in that call at 40% to 60% range.

That’s helpful. Thank you, Dorvin.

By the way, I will just make one other comment, related to that because it kind of relates to comp and/or ramp rather, we look at kind of how stores perform for the year. And our brand-new stores and on average all of our stores that opened in 2015 opened up with about 1,300 members per store which is very consistent with what it was in 2014. So we see new stores – newer stores 2015 stores performing very similar they’re very first draft out of the gate on average of about 1,300 members per store.

And your next question is from Jonathan Komp from Robert W. Baird.

Yes, thanks Chris. Maybe a bigger picture question on the marketing side, as you probably now are above 8 million users or per members for the gym, and have a pretty sizable growing national ad budget can you talk about with that scale what that means in terms of the marketing over the next few years and even in 2016 more specifics on the plan as you sit here today?

Yes, I think at the scene with the NAF accomplished between the biggest loser again we’re going to have five seasons and what recently just happened with brand awareness with the New Year's Eve celebration, I think using the NAF and sort of larger scale more impactful opportunities like that, franchisee bought in just as much as we have with brand awareness and what it gets to that brand that evening I think it set us apart I mean those are type of things that are close competitor can't even come close to replicating and that's really the competitive advantage that we have that we need to capitalize on so I think you'll see a lot of interesting fun impactful things in the years to come.

The other beauty of it, Jon is that, not only is the national advertising growing but locally as we open up more and more stores in these markets and the co-ops of these franchisees get together and not only pooling more dollars but then the dollars go further and buying more marketing in some of these markets. So that's another benefit of having the scale that we have particularly in some of the DMA's what we have more concentration.

Yes, if I add quickly, a lot of areas we have a lot of different franchisees and obviously regional co-ops that just put together themselves and doing large stuff even in the wrong way they are sponsoring some of the national sports teams, whether I think it was Louisville, Kentucky stuff in the stadium, San Antonio and Atlanta, so I think they're doing stuff that even local – excuse me local levels…. In the local level they can't really replicate as a local competitor they just got 30, 40 stores in our market.

Got it. Great, and then maybe just a couple of questions about factors that might drive the black card penetration higher, really two things I know recently you took the annual fee for the white card, up to $39 which is on parity with the black card so wondering if you had any early signs of what you've seen from that or any expectations of if that could drive higher black card penetration. And then secondly I know that the test or the pilot of the local affinity in New Hampshire is going on just any updates on what you're seeing there and thoughts about when you might roll something like that out more broadly across the system?

Yes, we have the local affinity stuff testing here. I think we haven't seen whether or not it's really increasing black card although the members are taking advantage of it so that's the first sign, right? I think we have to put together a way to allow the franchisees to scale up on a local level and push it on their side so we kind of put the platform together for them. Locally we're obviously testing which I might have mentioned on the last call personalized sauna that we have in the store and then Gold New Hampshire now implementing that and plus 6 or 7 other pilot clubs again as amenity hoping that does something with the hydromassage we implemented about three or four years ago, hydromassage was a big impact on black card ratio so I’ll be interesting to see if this personal sauna which early signs seems the people really enjoy it so I’ll be interesting to see if we can get that to help that black card penetration in the future.

And any early signs from the move for the white card taking the annual feel up on par with the black card?

Yes, we haven’t seen an impact on pushing more black cards but also haven’t seen any at all decline on closing percentages on the sales process could as more money now so I guess the good news is it hasn't slowed down new join that's for sure just haven't pushed any black card ratio change.

Got it, all right. Thank you very much.

Your next question is from Oliver Chen from Cowen and Company.

Hi, congrats on a great finish to the year.

Thank you.

Chris, generally speaking where do you see the biggest buckets in terms of the awareness comment and in terms of the segments of the world and the consumers where you might have the most incremental opportunity going forward? And then Dorvin as we model next year, could you just give us a puts and takes as we look at the gross margin and also regarding the comp guidance do you expect it to be somewhat volatile throughout the year or what are some key factors that could help drive upside or downside to comps?

Yes, Oliver, say that to the brand awareness question if I go back a couple of two, three years ago and we’ve been doing the biggest loser now since 2010 when we opened a store site west of the Mississippi, where we had much fewer stores the ramp-up or the maturity took a little bit longer, people just didn't know who we were they didn't know if we were just one club chain with a creative name or not. I fast-forward to today - stores in California now or in anywhere west of Mississippi, we're opening with the same trajectory as we do in the Northeast or the Southeast the same awareness and more of a pent-up demand I guess the easiest way to put it it's almost like they know is they've seen is there waiting for us to come there so when we open it it's like finally you guys are here, you know? So I would say that's probably the brand awareness that's the biggest upside actually…

Yes, Oliver, I think a couple of things related to gross margin and kind of what the puts and takes maybe I think the way to think about our model is – the equipment should stay pretty consistent on a gross margin basis, should not vary significantly from quarter-to-quarter so that one's pretty easy to model. Franchise which is as you know is our fastest-growing and most profitable segment, we should be able to continue to lever our structure there and as we open up more and more stores and we get the call it 25, 30 bps a year that we talked about in terms of kind of that royalty rate. So we should be able to keep levering that, corporate stores we grow comps there we should be able to lever that a bit, offset by a little bit of inflation maybe but not significantly so that's kind of how I see thinking about our margins on our segments. From a comp perspective, I think that we've talked a lot about it and I've said it a couple of times this evening that the comparisons to the prior-year makes it a little bit difficult particularly now Q1 to Q1 whereas last year we were not removing those nonpaying members and we had comps kind of on the 10% range. And then you’ve seen how that has gone down over the subsequent quarters. And we guided you here to saying full year comps kind of in the mid single-digit range. I think as you, if you think about it from a comparable to the prior-year that's where it gets a little difficult with what was going on in those. But when you just sit back and say what are the other drivers to that, comp, as I said earlier, most of our comp in 2015 was coming from member growth as opposed to rate. We believe we'll continue to be able to get a little bit of rate this coming year in 2016. But we do still see most of our comp store growth continuing to be from member growth. And to the point that I mentioned just a few minutes ago where all of our stores that opened up in 2015 that haven't gotten into comp yet they opened up with basically the same average members per store as all the stores that did back in 2014, which are now in comp. So some of those in 2015 will come in comp after they hit their 13th month. So I mean those are the things that I see that come into play when I think about that kind of mid single-digit range of comps for 2016 and then for Q1 as I said earlier.

Okay. That's super helpful and on the numbers per store, just could you brief us on the long-term evolution of that in terms of if there's an overall target or kind of saturation level or not? In terms of that number, and Chris, would you highlight anything with respect to competition as you've been so successful and you have unique marketing scale and capabilities and branding and experience, what are your thoughts on how competition is evolving and what other concepts are members kind of interested in as you think about a different risk factor and making sure you attract new members to the concept and grow comps consistently?

Sure. I'll hand the competition side of things. I see not I’d say increasing trend but probably the same consistent trend I've seen over the last handful of years is naturally there's four or five years where there was no one charging $10 a month and got a market we're in that is never low-cost competitor trying to replicate us. I'd say that the best part of the replicating the rate structure not necessarily the models, right? So they're a typical club with heavy free weights are hidden to the avid exerciser just happened to be charging $10 a month which is great. So not really copying the model and I think the other thing to is a lot of times I always say more of economy fits in lot of cases where they're charging $10 a month but they are either smaller club size or they've got lesser expensive equipment, I mean tier, second tier, third tier equipment manufacturer. Where we have big club, nice lock rooms, nice fitness tools, best good money can buy so we give it lot more value I would say we're building a $50 a month club just happened to sell it for $10. So I think that's probably one of the true differentiating factors. And then as I mentioned earlier I think we put the size of our advertising scale in the national average fund as well as our local advertising fund even our a lot of our franchisees at this point are much larger than even the local competitors are. Or even the regional competitors are. So it’s the beauty of it is we've got a really big head start opening 84 in the last quarter, and most of our competitors space don't even have close to that. So we're just at this point and our franchise company which is growing much faster. So that's probably a good piece there I'll let Dorvin add things in.

Yes. I think in terms of thinking of member growth and how our stores are performing and I guess more importantly how they will perform down the road, if you look at the typical store today we are building a 20,000 square foot box and you go back four, five years ago there were a bit smaller, but what I see and the way I look at our business is it's important to see member growth and rate growth as we've been talking about but it's also important to see that in your older more mature stores because it's one thing to get those high comps in that first, second year that I was referring to earlier, but you want to continue to see those older stores perform. And many of you guys will recall as we've had some meetings in the past we've talked about some of our corporate stores which happen to be obviously some of the oldest. And our Dover, New Hampshire store is an example, had a good year, this year they have comped mid single-digit comps and it's been open 20 plus years. So we believe that we can continue to do that. And to drive member growth even in the mature stores. And to the point I just made a minute ago is that our brand new stores opened up in 2015 very, very consistent with the ones opened up in 2015. And I see us being able to continue to drive those bigger number now as we get bigger and bigger with our store count, even in those older stores, I go back and look and – we look at it like by classier, whether you're looking at the 2008, 2009, 2010 kind of classier stores where now we're starting to get more and more into these classier, because we've opened more. We still see some pretty consistent patterns in terms of average members. And yes, we got in our high dense markets Chris was kind of referring this to an earlier question whether it's New York City or certainly up in Toronto with our two corporate stores there and in Oakland, we've got a lot of stores north of 10,000 members, and we see the ability to be able to handle that kind of volume even in a 20,000 square foot box. So it's not a matter of we've got to increase the size of the store and increase investment to be able to handle that. But we believe with the power of the advertising and some of the brand recognition data that Chris is talking about that we can continue to drive these comps even in our older mature stores.

The next question is from Dave King from Roth Capital Partners.

Thanks. Good afternoon, guys. I guess, first off, Dorvin, just a point of clarification. It sounds like you said re-equips as a percentage of the total in 2015. I think were 24% of revenue I want to say. Where did you say you would think that would shake out in 2016? I guess the reason I ask is because embedded in your guidance sort of coming up with decelerating a little bit, is that a fair assessment. And then for Chris, can you talk a little bit about how you’re thinking about the international opportunity somewhat, beyond Canada that is, what's needed to develop interest from franchisees in Latin America and in what year would you think we might start to see some of these openings? Thanks.

I'll take the first question – the second question there. Yes, so back to Puerto Rico market, since 2010 or 2011 we went there was been a very well performing chain of clubs there. That same franchisee went on to Dominican and also as well has been probably one of the record openings in the Company's history. And when I look at even the states where I look at heavier spend markets like Miami and Southern California, for example El Paso, San Antonio, all those markets are very well for us, so made me to believe, I believe that Latin America market is pretty interesting to me. And a lot less I’d say lot less clubs for – affordable clubs I guess and that's kind of one of the benefits of Dominican and Puerto Rico is only the close rates to this so they are really wealthy nothing else for anybody else. In Dominican for example where the states are 80% of the population doesn't have a health club membership, well in Dominican it is 98% of them health have memberships. So and that is the whole pretty true for a lot of the part is Latin America so I believe there is some good upside there. Super focus though back again on the states, potentially 4,000 year and focus now in Canada, which we’ve gone into potentially north of 300 there, so want to make sure we really get that right and go that direction first. But Latin America is probably something that you’ll see down the road.

Okay. So just before you go Dorvin, it sounds like that's further down the road several years out and then it sounds like you haven't necessarily thought through the plans in terms of how to approach the franchisees there because I would say, typically it feels like you guys don't really need to advertise in terms of drumming up interest from franchisees? I mean I would think that in Latin America might be a little different but may be a different thought?

Yes. Some of those might be more master agreements or master development agreements as opposed to just 1Gs and 2Gs we are looking at in those areas.

Okay. Okay. That helps. Thank you.

Probably companies have other franchise brands a lot of them down there, a lot of franchise concepts U.S. looking towards more of [indiscernible] developers.

Regarding your question on replacement equipment? You are right. I said it was about 24% in 2015. We think it's going to be about the same in 2016. It will be a little bit bigger as our total equipment revenue grows. But we see that still pretty consistent this year 2016, as it was in 2015.

Your next question is from Rafe Jadrosich with Bank of America Merrill Lynch.

Hi guys, it’s Rafe. Thanks for taking my questions.

Hi, Rafe.

Can you just talk about the growth in web joins in 2015 and then remind us of how big your website is as a percent of overall joins?

Our overall join percentage online is about low 20% range, 20% of all total joins.

Okay. And then can you just talk about the real estate availability for your franchisees and what is allowing them to open up stores at a faster pace than you were initially expecting?

I will say that real estate continues to be ever since the year nine kind of has been great for us pre-that it was – we were competing with Old Navy’s, Dick's Sporting Goods and Best Buy’s for example where you fast-forward to today even just this past week with sports authority's announced closing stores. Walmart being able to market closing stores continues to be really good for us, I guess the struggle our struggle the thing we really want to wait for is to be sure that we maybe wait for that A+ spot and not take the B today that's probably the discipline. If we have a B spot then somebody comes in and takes us out because lot of things out make how that’s missed today they filed on way differently plus occasion so it’s just being disciplined to not just open some that is available make sure it's really the spot we really want to be for the next, 10, 20 years.

And have you seen any changes in credit availability for your franchisees? Thank you.

No I haven’t seen anything. No it has been actually probably easier of anything and then as we said in the past a lot of these franchisees and also multi club operators that now it is easy to get finance and allowing to just paying cash for lot of build outs for increasing equipment at this point.

Great thank you.

The last question is from Joe Edelstein, from Stephens.

Hi Chris, hi Dorvin. Thanks for taking the questions.

Good evening Joe.

Appreciate the year end membership number that you gave earlier. It is a net number though I still get a lot of questions just about the attrition rate. I was hoping you could may be address that, my general hunch is that something north of 30% but maybe it's not quite that high just want you to take a minute and talk to that but also related to that have you seen any major shifts within the attrition rates by region? And specifically here thinking around some of the news we've seen out of Texas?

Yes so Joe couple of things on that one is we haven’t seen anything out of Texas. As I said earlier, the stores down there are performing right in line with the rest of the system even in January and February this year, so no unusual trend there. The way we look at our member mix is we always offer a noncommittal membership. Every day of the week you in join try us out, you want to cancel? A month later you can cancel a month later. And because of that, and that's who we go after and target, it is that 80% of the population that do not belong to have a health club membership. So what you're going to get, you're going to get a lot of people that are going to try and they're not going to make it or certainly not make it for a long time. But if we make the experience a good experience in coming in and a good experience in leaving when they are at a point in time that they want to try to work out and get healthy again, we want them to be the place to come. And in fact, there was some studies done back four years ago when members canceled, from us, where would you join if you joined another club? It was Planet Fitness. So because of that we look at what our stickiness is to members that have been here more than 12 months because we think they’ve made a commitment, we hope they've done a great job of making them a happy number and what happens after that? That's the way we measure it. So two points, number one the trend hasn't changed. And number two, it's low single digits. One, two, maybe get up to 3% a month at some times during the year but it has been very consistent for the last two three years.

That is helpful Dorvin. And just if you were to capture some of those members that is due come in that are more of the short lived just from an annual perspective, what is that total attrition rate look like?

Yes we don’t disclose that and we don’t even measure it that way because we actually look at if you've been with 12 months what happens? It's embedded obviously in our comps. Members are in a store that's been in there for 12 months or longer it's in our comp and so you've got obviously a lot of members coming in by default you're going to have members that are going to cancel and we've talked about the members that we have removed from the system from our point of sale system so that we get a good member experience across the brand now. Where we are removing all nonpaying members now on a systemic basis. But that's not a number that we pay any attention to nor do we disclose.

And I will now turn the call back over to you Chris for closing comments

Thank you. Well thanks everybody for joining us today for our fourth quarter earnings call. I want to reiterate my satisfaction great satisfaction with the Q4 numbers and then the way we accomplished 2015. I have been here since a little over 20 years and look most of – most is not my entire career at this point I build this great brand and honestly more confident now in the future of the brand than ever. I formed relationship with franchisee partners who are just excited about the brand as myself and the company, and gives us a much clearer lens I'd say on executing our growth strategy in the future and continuing to bring fitness to millions of people here. So thanks again for the call, I look forward to discussing Q1 with you guys shortly and have a good evening. Thank you.

This concludes today’s conference call. You may now disconnect.