Q2 2020 Planet Fitness Inc Earnings Call
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Britain friendly for my CR. Please go ahead Sir.
Thank you for joining us today to discuss the planet fitness in second quarter.
On today's call, Chris Rondeau, Chief Executive Officer, Dorvin widely President and Tom Fitzgerald, Chief Financial Officer.
Following Kristen Tom's prepared remarks, we will open the call up for questions.
I would like to remind you that certain statements we will make it is.
These forward looking statements reflect planet fitness is judgment and analysis only as of today.
And actual results may differ materially from current exit the planet fitness is business.
Accordingly, you should not.
Place undue reliance on these forward looking for a discussion of the risks and uncertainties associated with the forward looking.
Statements to be made in this conference call. It for you to the disclaimer regarding forward.
In quarter 2020 earnings.
If you see today on form 8-K.
As well as our filings with the T. He referenced in that disclaimer.
We do not undertake any obligation to update or alter any forward looking statements, whether the result of new information future events condition. The company may refer to certain adjusted non-GAAP metrics out.
These metrics can be found any earnings really.
Filed earlier today.
With that I'll turn the call there, Chris Rondeau, Chief Executive Officer.
Thank you Brennan degree <unk> joining us today.
Fully share a Q2 results I went to express matches.
So the phone lines of our stores at our corporate headquarters in our franchisees.
Some person in tight.
Well were 19 pandemic teams to present challenges for our business as we previously communicated you didn't March Kimberly close all of our stores due to health and safety you affirmed ways members can communities we serve.
As you.
What's the global <unk> expertise and work closely with franchisee to develop a robust cooling 19 operations playbook.
Integration policies and procedures.
Of our store, except while act.
The local and state restrictions.
We will continue to proceed cautiously until there is greater certainty on wind conditions will return to normal.
There were opened by the end of the second quarter overall joint outpaced prior year.
Levels of local and national advertising nearly offsetting total cancels for the period as a result, we sold we saw a modest decline in membership across our opened stores through the end of June the number of visits per store continued to climb consistently across stores.
Some stores, reaching levels comparable to prior year.
Our stores in early May we had approximately 50.
For the quarter total membership was down a little.
2 million.
As a third quarter got underway in consumer sentiment began to shift with the ups.
Dick overnight teekays across the country enjoying starting to stabilize as clubs available.
Have been generally flat to prior year, except when we were up against the July sale period.
Can cancels with much of the increase.
Who took over 19 usage has remained strong particularly in stores open the.
The longest after growing consistently each week, usually has plateaued at about.
Yeah.
Today, we have 1477 stores opened 46 days DC five province.
1426 will be stores, our franchise Eagle occasions, and 51 or Corporately owned stores total membership is now 14.8 million a 4% decrease from the 15.5 million members. We ended Q1.
On the robust cleaning and integration policies and procedures to instill confidence in research.
For our employees in number safe.
Both in our stores in at home also remains a top priority for US we continue to host free and live United to remove workers on Facebook.
Which had been extremely well receive totaling more than 20 million views from 36 countries around the world.
In the quarter, we also accelerate our digital offerings on plan. If it is mobile app with our recent partnership with ice it a leader in streaming world more growth in a pioneering interactive connected fitness.
We continue to see encouraging use.
She is enabling a new avenue for us to engage with existing and prospective members and helping to inform our long term digital strategy. In fact, 24% plant that is digital content users were not existing members our accelerating digital strategy will soon as early stages is proving to be great engagement tool for existing members and for potentially acquiring new members.
The upturn of our mobile App was an all time high in Q2 with nearly 60% of our new joins downloading the app in the quarter. During the month of June we saw more in App joins in during January 2020, which is a pretty.
Member sign a period and was prior to totaling 100% of our stores will open.
We also recently released new features and functionality.
Okay to our members be the App and.
Passed the of their club before they get to the Jim.
We will use of particularly urea sharing to members who may want to work out less busy times.
The overall health of our franchisees remains a top priority for us in an effort to continue to support them. Throughout this time, we provide a 12 month extension on new store development obligations Ria quips remodels in a 15% discount off equipment in place by the end of this year.
We opened 21, new stores in the quarter ample. These locations were originally scheduled to open in Q1, but were delayed due to cope with 19 as we previously said, we expect there to be reduced development over the next couple of quarters as franchisees focused primarily on training and supporting SAP, a new policies procedures is successful reopening our stores keeping our members engaged.
With our brand.
Which will reduce during this period.
Health and wellness is more important now than ever we see ourselves as an integral part of the healthcare delivery system and part of the solutions to overnight.
Team.
This plays a key role so well being and addition to combat in over 19 risk factors, such as obesity heart disease lung disease and diabetes, we look forward to re opening more stores in the future as stated in his valleys allow to further provider communities with much needed access to health and fitness.
While enhancing our operating environment is likely to remain volatile and negatively affect our near term revenue and profitability I'm confident in the long run once has been done the has the highest supplementing this will be able to significantly widen our competitive mode for several reasons first incredible strength sophistication in diversification of our franchise system.
Were 75% of our stores are owned by franchisees will own and operate locations in multiple states second we are well positioned to capitalize on the industry consolidation as many of our competitors and struggled to survive financially.
Third the real estate market will be even more attractive in terms of availability of prime locations lower rent costs enhance landlord incentives for our system. There's not many brands will be adding hundreds of locations with some years fourth the encouraging early results of our opportunity. We're seeing as a result of the accelerated digital content strategy focusing on the needs of first time and casual Jim user.
And finally, the overall increased focus on health and wellness, which we believe will emerge over the next several years. This will further enhance the tailwinds in the category and we believe our value proposition is second to none I'll now turn the call to Tom.
Thanks, Chris and good afternoon, everyone as we outlined in our Q1 call in May and as Chris just discussed over 19 us significantly disrupted our business.
With the health and safety primary focus we temporarily closed all planet fitness locations in mid March.
It Wasnt until early May that we slowly began the Rio.
That's a cobot 19 store reopening playbook and adhering to health authority guidelines.
As we mentioned on our Q1 call 1800, 75 of our 2039 stores drafted monthly membership dues in March.
And then closed shortly thereafter.
Those members who were drafted in collected in March at a 30 day credit to utilize once their home store reopened.
Going to walk through how this dynamic among others shaped our results and then provide color by segments.
For the second quarter total revenue was 40.2 million compared to 181.7 million in the prior year period.
The biggest driver of our Q2 top and bottom line was the decline in royalty revenue and corporate store revenue related to monthly membership dues that werent collected as the result of our decision to freeze member accounts, while stores were closed due to cover 90.
Could you more specific there were 297 stores that drafted in may.
And 1300 57 that drafted in June.
However, due to the issued credits.
Only three stores had a full draft in May and 340 head of old draft in June.
Partially offsetting this decline was the recognition of 11.2 million in deferred revenue related to monthly membership is collected in March before stores closed.
Made up of 9.4 million from franchise royalties and $1.8 million from corporate owned stores monthly dues.
We also recognized 3.1 million of NAF contributions in the second quarter. There were also differed from Q1.
In addition, our year over year performance was significantly impacted by the decline in equipment sales as we were unable to move forward with planned new and replacement equipment sales due to cover 90.
14 stores in Q2, some of which were originally scheduled to be placed in late March but were delayed until the second quarter.
We had replacement equipment sales of 2.7 million in Q2.
Before I get into the specifics of same store sales, let me spend a minute on our same store sales definition.
One stores are closed and we don't draft monthly membership dues or don't execute a full draft. Upon reopening because members have credits to utilize from prior periods.
They are not included in the comparable store base and therefore are not included in the same store sales both calculation for that month.
Because none of our stores drafted in April and only a portion of stores drafted in May and June we're not reporting a same store sales figure for the second quarter that said, we do want to share the results and provide some color for the comparable stores that had a full draft in June and walk through the key drivers.
For some context, we reported 53 consecutive quarters of positive same store sales before covert 19 hit in March and shut down all of our stores.
Our recurring revenue model and historically strong same store sales results are built on the ability to continue to grow net membership levels across our store base month over month, and therefore year over year. Additionally, in our recurring revenue model. Our same store sales performance at any point in time is a function of what happened to our membership.
Levels over the trailing 12 months.
The way our recurring revenue model works is that if the net membership growth rate per store in the current period falls below the growth rate for net membership first store in the same period last year, then our same store sales will grow at a slower rate and could even decline.
Our comps are not based on what happened in the last month.
But based on what's happened in the last 12 months. So when the majority of our stores were closed for two to three months as a result of coven 19 that created a an interruption in our membership growth cycle that cannot be offset in a given month.
When our store shut down due to cope with we were unable to grow net membership levels in our stores and as a result has seen a slowdown in same store sales growth.
Now of the 340 stores that had a full draft in June 279 were in the comp base. These stores had a same store sales increase of 4.4% with approximately 80% of the increase due to net member growth.
And the balance being rate growth.
For comparison purposes. These stores delivered same store sales growth of 9.3% in Q1 of this year 490 basis points higher than june's results.
Of the decline in growth in June from Q1 levels, approximately 85% was due to a drop in net member growth in the balance being a decrease in rate growth.
To exchange explained this change further membership per store in the 279 comp stores dropped by approximately 1% or 70 members in Q2 of this year.
Whereas in last year's Q2 membership for store increased by approximately 3% or 190 members.
This factor contributed approximately 400 basis points of the difference in comps.
Between Q1, and Q2 of this year.
The remaining gap in our comp performance compared with the first quarter was due to the decline in black card penetration, which we attribute to the fact that we were unable to repeat a black card national promotion in mid March due to the Covance store closures.
Our system wide black card penetration rate in Q2 was 61.1%.
If 40 basis point decrease compared to the prior year period, while in Q1, we saw a 30 basis point improvement year over year.
As Chris discussed across the 1400 90 stores that were opened by the end of the second quarter membership levels remained relatively flat at the ended the second quarter versus the membership levels one the stores reopened.
Joins over index compared to prior year due to overall demand early on after reopening and cancels also index tire than the prior year.
However, since mid June.
The combination of the resurgence of cobot, 19, and corresponding media coverage and increased consumer concerns in general regarding the virus.
And the resumption of the billing of monthly an annual membership dues joins our now inline with prior year levels for stores that have reopened and cancels have continued to index above prior year.
Moving on to review of our segment revenue results franchise segment revenue was 21.0 million compared to 71.8 million in the prior year period.
Let me break down the components first royalty revenue, which consists of royalties on monthly membership dues and annual membership fees was 14.9 million compared to 48.9 million in the same quarter of last year.
The 14.9 million of revenue includes 9.4 million of deferred revenue recognized from the March draft from stores that were closed.
In March as result of Coven, 19, and reopened during the quarter.
The average royalty rate for the second quarter for the stores that drafted was 6.4%.
Up from 6% in the same period last year, driven by more stores at higher royalty rates compared to the same period last year.
Next our franchise.
5 million compared to $4.2 million than the prior year period.
These are fees received from online new member sign ups and the recognition of fees paid to us for franchise agreements area development agreements and the transfer of existing stores and fees received from processing dues.
The decrease was primarily driven by lower online join fees in the quarter.
Also within the franchise segment revenue was our placement revenue, which was 0.9 million than the second quarter compared to $5.1 million year ago.
These are fees, we received for the assembly and placement of equipment sales to our franchise owned stores within the U.S the.
The decrease reflects the lower net store placements, we executed in the quarter compared with.
With a year ago as I just outlined.
Finally national advertising fund revenue was 4.7 million compared to 12.
<unk> point 5 million last year as NAF revenue is not collected unless stores are open and draft monthly membership dues.
The NAF revenue in the current quarter includes 3.1 million of deferred NAF revenue that was collected in March but not recognized until Q2.
Our corporate owned store segment revenue was $9 decrease was due to lower membership fees due to the closure of our corporate stores since the majority of our corporate stores were still closed in Q2 the 9.4.
For $1 million of revenue includes the recognition of annual dues previously collected.
Due to cover 19 and Rick.
Okay ignite in the second quarter.
Turning revenue decreased 60.3 million to 9.8 million from 70.2 million.
The decrease was primarily due to lower replacement equipment sales to existing franchise.
Well as lower new store equipments.
Sales.
Replacement equipment million compared to 42.5.
Sure.
In the second quarter, we had 14, new store equipment placements, which was down.
Yes.
Beginning in Q2, we lost.
For two all on all equipment orders.
And replacement orders.
This offer applies to all equipment purchased in place by the end of 2020.
Equipment revenues for the quarter was a.
Decrease of 1.8 million related to the additional discount.
Our cost of revenue was primarily consists relates to direct cost of equipment sales to new and existing franchise owned stores amounted to 8.5 billion compared to 54.4 million a year ago.
The decrease of 84.4% inline with the revenue decrease as previously discussed.
Store operation Ics.
Expenses, which are associated with our corporate owned stores decreased to 14.7 million compared to $20.2 million year ago.
The decrease was primarily driven by cost saving measures taken all stores are closed, including lower payroll marketing and operating expenses, partially offset by higher occupancy expense associated with the seven new stores open.
And 16 stores acquired since the ended the first quarter of last year.
SGN a for the quarter was 15.9 million compared to 18.9 million a year ago.
The decrease was driven primarily by reductions in variable compensation temporary executive salary reductions lower equipment placement expenses.
And various administrative expense reductions related to cope with 19.
National Advertising fund expense was 10.9 million compared to 12.5 million in the prior year period.
The decrease in expense was due to expenses and revenue this quarter, primarily reflects lower nap contribution revenue due to cope with 19.
Adjusted EBITDAX is depreciation and amortization.
Adjusted for the impact of certain noncash and other items that are not considered in the evaluation of ongoing operating performance was a loss of 9.3 million compared to earnings of 76.5 million in the prior year.
Year period.
Included in this quarter's adjusted EBITDA is approximately 14.3 million related to the recognition of deferred revenue previously discussed.
A reconciliation.
By segment franchise, adjusted EBITDA was 3.6 million corporate store adjusted EBITDA was negative 5.9 million.
Any equipment adjusted EBITDA was adjusted net loss was 20.
7.9 million down a year ago and adjusted net.
Net loss per diluted share was 32 cents a decrease of 77.
Cents per diluted share.
Now turning to the balance sheet.
As of June 30, 2020, we had point sixmillion.
Compared to 547.5 million on March 31, 2020.
In addition, we ended the quarter with 86 point.
Q1.
Based on the current situation then announced in March that we were halting our share.
Repurchase activity for the time being reduced our monthly cash burn, including the previously announced compensation reductions for our leadership team and our board of directors.
Total long term debt, excluding deferred finance.
Zero billion as of June 30, 2020 consist.
Thing of our three tranches of securitized debt and $75 million, a variable securitized debt structures covenant like we have to maintenance covenants debt service coverage ratio and a total systems sales threshold. These are both tested quarterly calculated on a.
And reported on a roughly.
Two month lag.
And reporting period of June 5th 2020, wed a 120% and a 100.
So the first triggering event for our debt service coverage ratio and system wide sales covenant, respectively, similar to our liquidity position. We believe we have sufficient headroom for our two maintenance covenants.
Given the uncertainty surrounded the evolving nature refrain from providing guidance.
Well to predict we believe that in the longer term our business will be well.
Boat and create value for our shareholders and our stakeholders.
I'll now turn the call back to the operator for questions.
At this time it seems like cost request.
That's in line on your telephone keypad as a reminder, please limit yourself to one question and one follow up question.
Beyond that.
Your first question comes from line of Johnson comparable.
Eric Your line is open.
Yes.
Firstly the.
The recent trend you highlighted in the membership.
With a more of the headlines impacting the business in July here.
Curious to get your cost any any perspective on why there you have reason I think it might continue here and.
The short term and when you think about marketing plans in the second half and bear any.
Plans that you have in place that you think good ROI restart the new drawings and the trying there that you're seeing.
Sure John Yeah. This is Chris.
Yes, so as you know the joined billing day for our members the 17th the month and we started opening up beginning of May and most of these clubs did have a month credit. So we started building a good portion of our members in June 17th would've been the first go round of.
Smaller number and then the larger building would have been July 17. So after that June 17 billing, we begin to see that spike and we've seen historically forever in and around build days before slightly a few days after cancellations spike around that so.
Yeah. There's a lot of noise is also with the same timing around California re shutdown, Arizona re shutdown and then the news in the sort of new states a lot of noise is going on.
But based on what we see we definitely think that there's more to do with billing cycles in the kicking in and restarting of the billing of the members. So so we had the June 17th then the July 1st annual fee, then July 17th billing, which is a big chunk should the chunking clubs of that 1400, which has.
We believe is driving most of those cancellations that we saw come through.
As far as it also in July last year, we had an annual sale in the first week in July which Didnt didnt occur this year.
So do you marketing question as now we have three quarters of the stores opened over the next 500 or so we'll get the greenlight shortly which time will tell and it's very fluid at this point.
On those that the second half the year as we now we're collecting the annual the nap again, which is a 2% on ft.
Well lining up to probably started the first national sale come September.
But time will tell on that I think the one thing I would add to this that that were I'm extremely happy about and proud of is that the franchisees collectively with us and with the independent franchise Council.
We got together to look at the second half NAF in Atlanta mix and have agreed to slightly changed that mix increased a lap the nash slightly for rest of the year to help kicking that flywheel here as we.
Hopefully get sense of some normalcy in the world.
Okay, that's great and maybe just one broader question on the health of the system I know.
And you certainly mentioning that potential that you can see consolidation across the industry. When you think of your system and we can see that pressure on your own companies segment.
Just any any perspective on the pressure that you're franchisee base is feeling today and you know any updated a statistic we can share around the house on the system.
Within the private system.
Sure Yeah, I'll quickly of accomplishes that and then let Tom filling on the Oh, we do a front end business reviews with all the franchisees now where we're going through them as we speak here. So we've got some good financials and updates there, but you have any competition neo besides the besides the ones that you everybody find the phone is hurting the gold's gym and the 24 hour fitness there's definitely.
You know what the you know there's almost one Alan spoke 40000 different independent.
Jim's out there that you don't see the mom and Pops, our hair bottom acura national level of closures are not reopening and we have franchisees in most markets now even some corporate stores that have been reached out by a competitor that just decide not to open. So there's going to be I think probably a six or 12 month you know.
Just not reopened just based on the financial standpoint, you know so I think there's definitely some opportunity there for us from a benefit the system for sure in that world, but Tom provide color on that frequent visits for use yeah, Hey, John.
So as Chris said, we've been in touch with our franchisees as we said all along but more recently doing franchise business uses we call them.
But also reaching out in certain six situations like in California, where the Jim's closed and talking to all those franchisees were affected and.
You know I think we're I think we're fortunate in as Chris said in his prepared remarks, 75% of our stores. Our franchise stores are owned by franchisees, who operate in more than one state. So they are geographically diverse.
Diversified so that.
If they do have some stores in one state that are close they may have stores and other states that are open to help sort of.
With the with the economic pressure.
And.
I think the only other thing I'd add as we've talked about before you know we've been in touch with lenders and through these franchise business reviews.
Z had really a modest amount of debt from a leverage standpoint.
Hey boat.
But just cause those debt levels to to increase when they would have otherwise still remained modest.
The lenders across the board.
And we've talked to them directly as I said in the franchisees are obviously in touch with them. So theyre, they're waving as long as the stores.
The metrics upon reopening, which the franchisee share with them for their own for their own stores.
And so we feel like they're going to come out of this you know, but thankfully in good shape and as we said no one through.
So all of these discussions has raised their hand and says I need financial help ride I don't think.
Sound working with lenders, who are being accommodating and.
And they can start to build back there their cash in their balance sheet and then start to look forward to development, but it's in that sequence and and that seems appropriate given where we are.
Great I appreciate the color Mark Thank you.
Thanks, John you bet.
Your next question comes from line of.
John Heinbockel of Guggenheim Securities. Your line is open.
Hey can you guys Jeremy.
Yes, sure John yet.
Hey, So Chris let me start.
If you look at the six or 700000.
And how that breaks out among your.
Geographically.
Or anything to learn from that.
Yes.
Hi level, the boomers and then what we normally see while Gen Xers, where millennials and Tim These are not.
And some of the higher spiking stages, we were seeing.
This is the Florida is Arizona.
For example, those also skew slightly higher than the payers here in throughout the rest of the country.
In Canada, which is great.
Okay, cancels and I Echo a lot more usage up there.
In the U.S.
And then secondly, when you think about right on where you what plans you started.
Put together for.
New years Eve heading into January I guess, you would assume that you'd have.
Right.
Sure.
Probably thought on how you attack.
Since he joined season and it is that more once more the focus this year the drawings are.
Okay.
Trying to limit the king in your marketing.
Yes, I mean in Kansas first and foremost we want to make sure people start using the club, meaning breeding the cancellations generally people are using workouts or facility. So we want to make sure that people will begin to workout and take getting better.
The man.
Definitely in the B.
But I guess a question on the demand piece, which we're seeing here, who customer sentiment that a lot of they're going to be reassurance as it.
Both strictly a dollar down I remember is intended as a month anyway so not.
Now what we're seeing is it's reassuring earnings that were clean that their members are going to be say hey.
And all assemblies, we've done so far on our side has shown that people are extremely happy with everything with put in place.
And the employees as well, we've had even corporate that about 85% retention of.
Our employees as I've come back from furlough. So people are our side to get back in and see what they are as we've said in the past like ours.
Remember, we're so five to six times, a month or other people using the store.
Great.
New years Eve, yet it's still in play they still plan on having it.
Hypothesis is that God forbid still here or there is some social this is anything or issues going to bars or.
The up because people are stuck at home. So I'm like they are still think we've got a lot of airplay out of it.
With the message and get people hopefully you get 2021 off to a better start.
Okay. Thank you.
Thanks, Tom.
Thanks, Hey, guys up you're doing I'll draw this.
Thanks.
Hi, gross adds first cancellations.
And then just given the color on the card members cost more than core current year, and then I sorry, if I mean, you get a friend differentiation.
Black card versus classic for their reopened gems.
Right.
Yes. The Q2, we were about 58% Black card acquisition for Q2.
Yes.
The the ads question.
Sure now is back to I, just mentioned here from an acquisition standpoint.
We're going to really drive a lot of.
Ratios for example is just more rebrand ending and reassurance messaging.
Would you got to be seen.
The first.
John.
No. We believe the most these kids and see if they are our draft related. So the question is is now that these days.
Does it get back to more normalcy right because they haven't been drops and for three or four months, which we've seen it we always have Kansas Ron Draft day. So we just playing catch up at this point is a billing which time will tell so next couple of grass here August September for example, do we start to see.
People are going down there second that there too.
Great and then Palmer Darby.
Yeah and stops at various levels of.
Revenue for the rest of here.
Yes.
I'll start and don't feel free to add so I.
Store associates, except the club manager, where the stores are closed.
And we'll continue to do so until we get the Green light.
We're continuing to work with landlords as our franchisees around you know rent deferrals, while the stores are closed.
And I'd I'd say.
More broadly just at this.
When it comes to age two if theres. Some if theres a project that was in motion that we just don't feel we need to do at this point you know, that's that's where we're really pulling back.
Previously mentioned and put in place.
Great. Thanks for the rest of the yoga.
Yes, I mean, thank you [noise].
Your next question comes from the line of Randy chronic of Jefferies. Your line is open.
Thanks, a lot I can remember.
Okay.
[laughter].
I kind of get your perspective on.
You know how do you still some environment for your competition looks up versus the.
The great financial crisis of 2008, 2009, or 911 stuff like that just any other kind of curious the time that you do you want to Congress to that you know show I give us some perspective on.
How how much of our competitors to collapse how quickly. They include collapse versus prior periods. What are you at what do you feel like or what is it looking like to you in any kind of color you can provide on what you're saying about.
The non usual suspects little industry on how there.
They're doing financially moving like not.
The chose more than the mom and Pops just.
Your location. So there's a lot morsel Osten Alley finished 20 profit it and put them all together you're lucky if you get to 300000 stores. So there's still another 35000 mom and Pops out there. So I think it'd be a lot more of those than we do we realize I think you look at our franchisees and commentary.
And a diversification I mean, our average franchisee has 20 locations there in multiple states. So.
35% remote will stay so it might not have all their stores opened but the half your portfolio open so they're able to weather the storm a heck of a lot lot longer you now and I think the probability of this model, which as you know I mean is extremely profitable where.
If you look at trying for example in their FTD their EBITDA margins per stores is a almost half of ours. So you know this is the the strength of those franchisees getting through the system and also.
So we're very newer franchise system <unk> I look back in 2009, when we had this happened then we are much smaller back then and the average franchisee Bryant three locations.
Luckily we were low cost. So we got a lot of people trained down from higher price clubs, but you know the sophistication in our system at that point was a very low it was a lot lot harder to weather last kind of storm now. This situation is even worse right. The weather this kind of Clorox area. We do see wouldn't close back that right. So I think it look at the EBITDA margins of our stores the the.
The the veteran ownership in our system now doing this for almost 20 years and franchising, it's just a much stronger system as a whole them to get through this so.
The thing is once we opened or different story weve clubs that are opening but you know when people are getting deferred rent the getting deferred lease payments on there.