Good afternoon, my name is Cheryl and I will be your conference operator today. At this time I’d like to welcome everyone to the Planet Fitness Fourth Quarter 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. [Operator Instructions] Thank you Brendon Frey, Managing Director of ICR, you may begin your conference.

Thank you for joining us today to discuss Planet Fitness’ fourth quarter 2016 earnings results. On today’s call are Chris Rondeau, Chief Executive Officer 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. 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 and year-end 2016 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 adjusted 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 Rondeau, Chief Executive Officer of Planet Fitness. Chris?

Thanks, Brendon and thanks you for joining us today. I am very pleased with momentum we've built in 2016 which concluded with a very strong fourth quarter, marking ten years of consecutive quarterly same store sales growth. In the fourth quarter system-wide same store sales continued to accelerate increasing 10.6% on top of a 6.2% gain on same quarter last year. The vast majority of this comp performance was driven by membership growth as an increasing number of consumers including a large percentage of first time gym users are joining Planet Fitness. In 2016, we added 1.6 million net new members to end the year approximately 8.9 million. A milestone at the fitness industry has never come close to seeing. We also expanded our presence through the opening of 195 franchise locations this year including seven in Canada bringing the total store count to 1313 at the end of December. While the Planet Fitness universe has expanded considerably in recent years, our 2016 performance added to our confidence that there's still a long runway for future growth. Previously shared we polled almost 1 million new members in 2016 and 43% indicated they had never belonged to a gym prior to joining Planet Fitness. We are clearly growing the overall market by successfully targeting the approximately 80% of the population of the US and Canada that currently does not gone to a gym. Our ability to market as large demographic continues to improve as we grow. Each net new joint 1.6 million in 2016 as incremental to the national advertising fund as 2% of monthly dues are contributed to it system wide. In 2016, over 30 million was spent on supporting national marketing campaigns that included running advertising nationally throughout the year that reinforces differences between Planet Fitness and stereotypical gyms.…

Thanks Chris and good afternoon everyone I'll begin by reviewing the details of our fourth quarter results, highlights from 2016 and then discuss our full-year 2017 outlook. For the fourth quarter of 2016 total revenue increased 10% to 116.4 million from 105.8 million in the prior period. Total system-wide same store sales increased 10.6%. From a segment perspective franchisee same store sales increased 11% and our corporate store same store sales increased 4.7%. Over 90% of our Q4 comp increase was driven by an increase in members. At the same time, our black card membership penetration was 59%., a 180 basis points improvement over Q4 of last year. Our franchise segment revenue was 32.1 million, an increase of 30.2% from 24.7 million in the prior period. Let me break down the drivers of our fastest growing revenue segment. Royalty revenue was $17.5 million which consists of royalties on monthly membership dues and annual membership fees. This compares to royalty revenue of $12.1 million in the same quarter of last year and increase of 45%. This year-over-year increase had three drivers. First, we opened 195 new franchise stores since the fourth quarter of last year. Second, as I mentioned, our franchise owned same-store sales increased by 11%. And then third, a higher overall average royalty rate. For the fourth quarter the average royalty rate was 3.7%, up from 3.2% in the same period last year driven by more stores at our current royalty rate of 5%. Next our franchise and other fees were $6.3 million and the increase up 58% or 2.3 million over the prior period. These fees are received from processing dues to our point of sale system, fees from online new member sign ups as well as fees paid to us in association with franchise agreements and area…

[Operator Instructions] Your first question comes from John Heinbockel of Guggenheim. Your line is open.

Couple of things guys, first, on the royalty rate increase, that was probably biggest increase we've seen in a while, is that a function of this quarter in particular, a lot of new clubs hitting that 5% rate and is that a fair run rate in the near term or is there something aberrational in that 50 basis point increase?

John, it’s Dorvin. We had this year throughout the year talked about that the overall impact from year to year would be somewhere around 25, 30 basis points and on a full-year basis, it’s just slightly ahead of that as I mentioned just a minute ago in my remarks. And I think that it does have to do with mix, it does have to do with which stores come online, and how fast they might ramp up store that's got a 5% royalty rate versus one that has one lower than that. I think in terms of thinking about let's say 2017, I think that rate is probably going to be in call it the low 30s, you know 30 to 35 basis points range. So somewhat comparable to where it was in 2016. As you know with the pipeline of stores that we still have committed under area development agreements, it's a combination of stores with lower rates and then stores with the current 5% rate.

Then maybe two quick ones for Chris, maybe not quick but, when you think about what - when you guys think about the right rate of expansion, 190 to 200, obviously financially I would think you could do more than that. Is it really a real estate bottleneck and/or trying to get really better sites when you maybe had in the past? And then secondly, you’ve had some success with promotions right going back to last summer, how do you think about that, do you now have the brand awareness where those promotions are you more successful than you know maybe they might have been and do you do more of those?

Hi John, it’s Chris. Yeah. I think the 190 to 200 is still of the right number and it is with the comps we’re seeing, the franchisees are extremely excited as you can imagine. So they're you know as happy they could be to continue to expand. So I think it has more selective with the real estate and waiting for that A site. Could we do more possibly but I think we don't of course force an opening just to build when there's a great stables box or something they would rather have opposed to being in the corner with the [indiscernible]. So I think it’s probably more selective. On the other question I think the awareness, I definitely look at marketing as an investment and it really I feel compounds. This year again we’re for the second year in the row we’ve first beat Gold's Gym [indiscernible] awareness their legacy brand last year. We probably took first place and we’re first place again this year for brand awareness. So I do think that promotions will and have continue to outperform. And digital like we mentioned in the past, last year was really the full year that we did have a digital component to our marketing. Those well thought out and digital as we've can change by the day it seems like. It’s how they react and how it works and how it performs. So I think we can continue to learn from that and get better at it quite honestly.

Your next question comes from Randy Konik of Jefferies. Your line is open.

I guess my first question for Dorvin, I'm sure a lot of shareholders appreciate the special dividend. You've optimized capital structure, you feel generally a lot of cash flow, if we start thinking going forward, now that you paid the special dividend and you see gross leverage at above 4.5 times, how should we be thinking about you using the ongoing free cash flow over the next 12 to 24 months, should be thinking about keeping leverage ratios at current levels and using that free cash flow for potentials more special dividends, we do thinking about a mixture of paying down some debt to take down the leverage a little bit or how should we be thinking about use of free cash flow going forward over the next 12 to 24 months is my first question. Thanks.

As you know from a CapEx perspective because of the real franchisee model here we have a pretty asset light based model, we continue to replace equipment in our existing stores and as we've stated in the past you know one, two, three stores here maybe you know something like that corporately. So we don't expect our CapEx to be too significantly off from where it’s been in the past other than maybe doing an extra corporate store if that right opportunity came along in some of our markets adjacent to where our current footprint is. So outside of that I think that two or three things that I would say and maybe possibly one new one that we haven't really talked about in the past too much is with the potential tax reform that the Trump administrant is talking about and the elimination of interest, I think that's one factor that you know we might take into consideration as we think about the longer term uses of those cash. But I still think I'll come back to what we have historically said now since we've been a public company and that is you know we'll look at the most prudent way to return cash to shareholders. We made that decision in Q4 to do the special dividend and we did that in lieu of one, implementing a quarterly dividend or two, doing any kind of a bigger prepayment of debt. With that said we felt like our leverage ratio and the right capital structure was at a point that one, to take advantage of interest rates and where they were at the time and the ability to go to the debt markets we felt the timing was right. But I think as we go down the road the next 12 to 24 months we will evaluate those same options we have and it obviously provides us with a lot of flexibility because of the cash flow we’d generate, but we will look and work with our Board closely on whether it is a special dividend, where it would be maybe a quarterly dividend or even a debt prepayment if the right thing toward a current and interest rates arising. But I'd say that our strategy has not changed on the leverage ratios. And then the types of options we have would be very similar to what we've had in the past.

And then I guess I wanted to ask about Black Card penetration, it obviously continues to move up nicely, I think you recorded at 59%. Just curious, how much variability do you see on that penetration by geography? Just wondering if there's any type of lower or higher penetration in the younger market, say, the Western markets versus the Eastern markets and just trying to get a sense of where you think Black Card penetration can ultimately get towards over the medium term?

Yeah. Randy, it’s really not a factor of geography, except for the piece that relates to reciprocity and obviously you go into a market where you've got only three or four stores in a big market, reciprocity is not as much of a benefit, but as you know, the top two reasons are reciprocity and guest privileges. But what we have not seen is from a -- outside of a bit related to that, what we have not seen is, let’s just call it a region of the country where we drive consistently higher or lower. What you will though see is, if you go back to stores that are 6, 7 years old and those stores were not built as today, we call them are by core spot areas and they're not as built out and that’s nicely designated itself little bit more exclusive with doors and small glass and et cetera, the way we do it today, you tend to see a lower percentage in those markets versus where you've got stores that have just opened up in the last couple of years. So it's more so with that and obviously what we hope to happen is, as stores come up for renewals on their franchise agreements and do some major renovations and really expand that Black Card area, to be able to get that benefit, but that is what really drives it more than anything else.

Got it. Thank you. My last question would be for both Chris and Dorvin is, it seems like every time I recall we have -- you’re getting more kind of confidence that the model, the business model that is, is repeatable across countries and it sounded like, you had good progress and success in Canada, spoken in the past about I believe the Dominican Republic. Just want to get an update on the internationals timeline what you're thinking beyond the next or over the next 12 to 24 months, so you talked about more master licensees or franchise agreements, et cetera, just wanted to get some more meat on the bone or color on how you're thinking about the timeline of potentially more international expansion going forward over the medium term? Thanks.

Sure, Randy. This is Chris. We are continuing, like I mentioned in the past, continue to look at all of Latin America. I will be -- I will let you know that happily, finally, we did do a deal in Panama recently. It’s not a big country, but it is multiunit deal there. It’s a little bit less complicated to go there, because it’s US dollar. So again, it's kind of testing the waters and getting our model right before we even enter into a bigger country like a Mexico or Brazil for that matter. But that one there, we just will do probably by maybe more fourth quarter of next year, early next year will be the first store opened.

Your next question comes from Sean Naughton of Piper Jaffray. Your line is open.

Good afternoon. So just any comments on the current quarter, how you guys are running. We’re about two-thirds of the way through here. I know January is a pretty big month. I think last year, you had guided to mid-single-digit comps. I guess is it fair to say that now you're guiding for the full year in that 6 to 8 range that we can safely expect that you're in that range for the current quarter?

Yeah. Sure. Yeah, after the New Year's Eve celebration, which was a big hit for us, I’d say the acceleration we saw in the second half of last year is continuing. So I think it's -- everything is still going on [indiscernible].

I think what I’d add to that Sean is that in my full-year guidance, I gave 6% to 8% comps. Q1 is going to be the easiest comp quarter for us. When you look year-over-year comparisons, so I would say that you can expect a higher comp in Q1. Everything else being equal, when you try to compare the quarters year-over-year just because it's an easier comparison.

Okay. That's fair. And then I think you guys are looking for pretty strong EBITDA margin expansion this year. Just wondering can you help us frame up whether that's more coming from the franchise segment or the corporate stores, I'm assuming the equipment is going to be relatively stable, but any guidance or color you could help on the segments would be helpful on where you’re looking for that margin expansion?

Yeah. I think that a couple of thoughts, Sean. You're right on the equipment that ought to stay and it has stayed pretty constant, so that should be somewhere in ‘17. When you think about our corporate store segment, as it was most of ’16, it's somewhat driven really by comp. You have a relatively fixed cost structure there, a little bit of variable cost on marketing and a few things like that in terms of the top line growth. And then where our fastest growing segment and obviously the most profitable segment is franchise side. And as I've said in the past, we continue to invest there because that’s the lifeblood of the company with the thirteen plus hundred stores that we have out there now and the franchisees continuing to have over a thousand in the pipeline to build. But with that said, I think we can continue to get some leverage in that segment as well, but that is about all I can say right now other than we don't see anything abnormally different than what we've seen in the last 12 months or so.

Your next question comes from the line of Oliver Chen of Cowen and Company. Your line is open.

Thank you. Congrats on great results. Regarding the comp store sales and the opportunity you had on the comp line, do you think that there still be -- a majority of that will be related to new members and as you think -- in the year ahead for as you continue to add members and members per store versus the maximum of where you can go in terms of members for gym, what's the nature of the types of marketing programs that you're going to be doing and adding new members, if there's any nuances we should think about in terms of looking and thinking about the comp for next year? Thanks.

Yeah. Thanks, Oliver. I’ll take a stab at the first part of that, maybe let Chris jump in on the last part. We’ve seen now for the last certainly in ’16 and a good part of ’15, roughly 90% of our comp gain or so has been from member growth and that -- we're glad to see that rate increase and driven by the Black card, because it's obviously incremental to the bottom line, but I think that it speaks to the fact that we're reaching out to more and more new members that fit our profile, as we're adding those members, so that's what's been driving the comp. I would expect to see again in ’17, the far majority of our comp games that I referred to earlier as being driven by member growth.

Yeah. And I’d say as I mentioned a little bit earlier, they did perfect the digital stuff really, we get to learning a lot from that and doing better at. We mentioned it, I think it was in the last call that flash sales we began doing, which is a one-day sale which is something we’ve never done before. We take over websites and really make a big digital splash. It’s proven to be real successful for us. And I think just better time placement even commercials mean, we’re able to afford now primetime, which was something we couldn’t do before just because of the pure expense. As I mentioned in my script, the fact that every incremental member is really incremental advertising dollars, so it’s not a flat marketing budget. So each incremental join, we had a 1.6 million last year. So it’s just, it’s more dollar to spend, which is -- I really feel pushing more members through our door and away from our competition. It’s just a number that they can’t come close to trying to replicate our match, which has just I think put more and more pressure on our competition.

Okay. And Chris, as you continue to innovate and ensure that your concept is on the cutting edge, are you seeing anything out there with the equipment in terms of what you want to do over the longer term and what customers are looking for as you evolve and continue to standardize and look for the best experience at a good price.

Yeah. I mean we’re always definitely looking for the new things that are out there. I think there is a lot of ways that we’ve all seen the industry definitely gravitates to the newest fad, which is something that we stay very disciplined not to get pulled into. Nuts and bolts that we say is treadmill is always the number one most important piece in the gym and we’ve stayed true to that. I think the one thing that’s quite changed in this industry though is technology has definitely come full board, which I see this industry quite technology in the past. So I think more technology advancements maybe in the cardio, which is what most of our members use, could be something that might get people excited in getting more value to them.

Okay. And just lastly, you guys have had really consistent growth and progress. What's your take on how your consumer is feeling because there are so many crosscurrents as it applies to the consumer and the retail environment, but this business model is quite resilient? Just curious about how you feel your customer is feeling with regards to the larger environment and how they're feeling with the geopolitical volatility, et cetera. Thank you.

Yeah. I think with 10 years now of straight same-store sales comps, we’ve seen a lot of ups and downs whether it's in the economy or the political ones on I guess you can say. So we’ve always just continued to perform. I think it just proves that how [indiscernible] kind of always have that on top of your mind. In some case, you maybe say, it’s even more on top of your mind when things are maybe in the downcycle. So I think it's a good tailwind for us and with the market that we go after, and that person is thinking that, this is the week that I got to do something, what better brand to go try it out than Planet Fitness with the affordability and just that 80% we care to a first timers in the right conducive atmosphere for them.

Your next question comes from the line of John Ivankoe of JP Morgan. Your line is open.

Hi, everyone. This is Alex Mergard from JP Morgan on for John today. Thank you for the question. Your franchisees are required to replace the equipment in their gyms on a roughly 4 to 7 year cycle and based on your unit growth history, there seems to be an acceleration in the replacement revenue that's going to occur in the 2018, 2019 timeframe. So kind of given where we stand today, could you give us kind of best guess as to what you are expecting in replacement revenue or the number of re-equips in 2018 or 2019, even if it’s a wide range? Thank you.

Yeah. We never given any kind of guidance like that on a longer term basis, but you make a good point in terms of, if you go back and look at the vintage years, when we started opening more and more stores, obviously, when they hit their fourth, fifth, sixth, seventh, eighth years, they come into that pool of needing to replace equipment Another point is that we’ve said in the past that it’s, you don't just, on day one of your four, day one of your five going to replace everything, a-la-carte always an example that's got to replace first. It's usually on a kind of a rolling quarterly basis. We don't shut down stores when we go in and replace equipment, et cetera. So -- and that’s the way it’s been over the last two or three years. But obviously as we continue to open up more stores, there's an overlapping of that too. If you’re replacing some equipment in your fourth or fifth year, but the time you're in your sixth, seventh, eighth year, you’ve got other stores that are in the first part of the cycle of replacing their cardio. What I would say is that, so we ended the year right around 30% of our total equipment revenues were replacement equipment and I've been -- I think at the end of Q3, I'd said it would be coming in the high-20s. So it's pretty close to that, it’s right around 30%. I expect that in 2017 to be right around that or slightly higher, 30 to very low 30% range as re-equipment as a percent of our total, obviously, the dollars are higher. But that is kind of the answer we have right now in terms of that replacement cycle.

Your next question comes from Jonathan Komp of William W. Baird. Your line is open.

Yeah. Hi. Thanks. Jon Komp from Baird. Dorvin, maybe if I could follow up on that last question real quick. Can you just remind us a year ago last year, what you expected the re-equipment piece to be as a percent of total and it seems like it's been a consistent source of upside and I'm just curious maybe more context around the trend you’ve seen relative to your initial expectations?

Sure, I think Jon, we said that at the beginning of the year, it was going to be kind of in the low to mid-20s as a percentage. And then throughout the year, as we saw what our franchisees were doing and what was kind of in the pipeline, I believe I said that at the end of Q3, we expected the full year to be up in the mid to high 20s as a percentage. And then again, as I just repeated, it came in right around 30 and we expect it to be maybe just a slight increase over that. I think what that means Jon is that, I think our brand is doing very well in the market. I think our -- you saw our comps. I think our franchisees are bigger now on average. The franchisee two years ago had four, five, six, eight, ten stores less than they have today. So you've got a number of franchisees that have got a pretty good portfolio of stores now. And generally in that market, they don't want one store to be run down versus a store that they just opened up -- for a store that's been opened up a year, a year and a half or so. And so I think what you see is that the franchisee is much like taking care of your house or your car or something, they realize that this is -- it's what killed the industry if you go back 15, 20 years ago, just that lack of CapEx that we've talked about a number of times and I think what differentiates us is for $10 or $99 on a month, you get this really high value proposition, because you’ve get fresh claim, in some cases, brand new equipment and so I think that’s what is going on out there and we hope will continue as our franchisees pull that brand and what they provide to their customers.

Got it. Thank you. And maybe one more follow-up, clarification, just on the guidance for the year, Dorvin, I just want to make sure you said 190 to 200 placements and when you factor in the international openings as the total, unit growth higher than that, I just wanted to confirm.

I think the total will be somewhere around -- between that 190 and 200, including international. International is obviously going to be a small component of that in total as we continue to open more and more stores. And Canada, number one and then as Chris said, we’re just going in to Panama. We might get one opened at the end of this year. It might not open until Q1 of next year.

Okay. Got it. And then Chris, maybe a bigger picture question, as you approach 10 million members or maybe might even be out that now today, but you're obviously growing base overall and a strong base of good operating franchisees, could you just talk maybe a little bit more and I'm sure there's always idea that franchisees are bouncing your way about how to capture some of the opportunity that you have throughout the systems. So anything in the pipeline that franchisees are looking at or any ideas that even if they're kind of in test mode today that have promise. I know it's a balance between maintaining the discipline and that's proven successful over time, but any color there?

We’re constantly trying and testing different types of equipment that would be in wheelhouse of our type of member. A lot of the stuff in the industry unfortunately is probably more not our member and [indiscernible] keep, stay true to our expense line and our payroll model and not move that needle, but moving revenue instead. So constantly looking for those things. I think what I’m still seeing as I mentioned last year is 2016 is the first year that we started to really see the competition calling in, the local franchisee calling me directory, waving the white flag. I think are constantly growing advertising dollar. I think our industry is really feeling the pressure, coming probably solely from PF at this point. We did a handful of conversions fourth quarter and it looks like we’re doing some more this first quarter. I think it’s going to be a trend that continues for sure.

Your next question comes from Rafe Jadrosich of Bank of America Merrill Lynch. Your line is open.

Hi. Thanks for taking my questions. In the past, you've given some color on how many of your store openings are coming from existing franchisees. Can you just talk a little bit how many are new ADAs and then in your current pipeline, how many of the openings will come from existing franchisees?

Yes. I think I’d say, the same trend is continuing in the last couple of years and this year as well, above 90% of our openings will be by the existing franchisees adding to their portfolio. And seeing new sales of new ADAs or new individual units are coming from the same franchisees continuing to add more dirt. That’s the one thing that if anything we probably deal with the most here is what franchisee gets it over another. So it’s kind of a good problem there, but you all want more to add to their portfolio. So it’s all pretty much existing. We have a little bit of new blood here and there, but not a lot.

And then I think you spoke about online trends were strong in the quarter, can you talk about how, as a percent of total signups, how much of that is coming from online and then how does that compare to prior years. And then can you just remind us of the kind of economics, how much of a fee do you collect from that?

Yeah. We collect the $5 online joint fee for each one that we can produce on the website. Last year, we were probably roughly in that mid-20% range out of online, total joints about 25% roughly. Before that, I’d say low-20s was the norm the year before that. So I think as we get better at e-commerce I guess if you will and how the joint process is streamlined coupled with our digital marketing, we’ll continue to drive that and drive that number for sure.

Okay. Thank you. And one final question. Just when you look across the industry, can you just talk about the promotional cadence versus prior years and then maybe your promotional cadence versus prior years and then you spoke about it a little bit earlier in Q&A, but just in terms of the competitive environment, have you seen any changes in terms of the store opening outlook for some of the low cost competitors? Thank you.

Yeah. I’d say the industry norm, even I go back as long as I can go back and think of is, you advertise your memberships in the first half of the year and you buckle down and weathered the storm throughout the summer and third, fourth quarter waiting for the winter again, but which with PF, we've always looked at it as, you got to be up there all the time regardless of what season it is. So it’s I think we’ve been more disciplined now between our quarterly mandatory sales nationwide and our digital component that’s constantly running on focusing on the online Dropbox that we're attempting to join that cool feature of the process and re-targeting them and our flash sales are as I mentioned. So I think we're much more disciplined with our quarterly schedules to market full for the year.

Your next question comes from the line of George Kelly of Imperial Capital. Your line is open.

Hi, guys. Couple of questions for you. First, wondering, see, you've created this big brand and have 9 million members at this point. Is there an opportunity at some point in the future for you to introduce new products or additional revenue streams, are there other ways that you can monetize either your brand or your member base?

Yeah. We are going to have that a lot and I think with 9 million members as you said, I think we are getting to the point where we're bragging within itself most out of the gym space. So we’re thinking what are the things we do as their likely component we can get into whether it’s the clothing line or something like that. We haven’t done anything. We thought about it. We put nothing really concrete at this point, but I agree I think it’s, we’re getting to the point now where we’re really, got a member base and a pretty good size following that it is a brand outside of the gym.

Okay. And then a couple of questions on your international expansion. You mentioned it seems like Latin America is a focus for you. How can you -- I don't know what the exact question is, but how do you think about as you're looking at Mexico or Brazil, what's the opportunity like in one of those markets, how competitive is it currently, what’s the gym usage, any kind of help around that would be great?

Yeah. We're still studying it at this point. Our focus as I said in the past going down there is mostly around the fact that our Latin American here in the States is that the Miamis, the El Pasos, the San Antonios, in the Puerto Rico for example, they do really well for us. So it's kind of our focus at this point. Overseas might be a little bit in the future, but that’s only our main direction at this point. I think down in South America, it’s more just focusing on what's the right POS company that used on those markets and how is technology used and how is electronic funds transfer or EFT. So it’s more just studying at this point. That’s why there is Panama because it’s American dollars, US dollars, just simpler. So it’s a good way to kind of get our feet at again like Dominican.

Okay. And then the last question on Canada, had more, you've seen how your stores have performed there now and seen how they've matured. Does it look similar to the US store maturity?

Yes. I’d say comparable to the US. I don't see anything red flag either way. They’re pretty much comparable how they react here.

Your last question comes from the line of Tania Anderson of William Blair. Your line is open.

Hi. Most of my questions have been answered. I was just curious on the placement equipment revenue, can we expect this year’s cadence to be sort of where it’s in the second and third quarters so that 70% range more or less prior years?

Yeah. I think a couple of things. I think that Q1 is probably going to be a little bit more difficult or a little bit less comparable than the prior year, but I think on a total basis for the year, it should be, if you look at the guidance I gave, it's going to be very comparable, I'd say the last two quarters of the year or as we see it today, will be pretty similar to Q3 and Q4 of last year.

Okay. And did you say your CapEx guidance specifically, I know it's something that I was curious.

Yeah. We did not. I think it’s typically been in low to mid-20s, in that range. And as I said a while ago, the real only big variable is typically do we do one or two or three corporate stores, something like that. We didn’t do any corporate stores this year in 2016. So if we do a couple of stores in 2017, it will be a little bit higher, but not in a material way.

Okay. And then on Latin America, [indiscernible] but out of curiosity, because you're mentioning finding the right POS system and some of these things that you have to figure out before you can really start, maybe some expansion there, are these things about a year off or two year off, I'm just trying to figure out when US growth and a little bit in Canada sort of more augmented by Latin America?

Yeah. I think I would say as Chris said a minute ago, it’s -- we want to make sure we get the model right and I think what we've done in Canada was the right way to do it, don't rush in and just open up a bunch of stores all at once, see how the model works, operates, gets, I mean marketing is different there. Even things like advertising, social and digital and how much should be in mobile versus not, et cetera and you get into some places like Mexico and some other countries, the form of payment is just drastically different. A lot of people don't have bank accounts. Today, you can only join in the US by giving us your bank account. So we continue to study it and to make sure that when we do that, that we have a model that will operate and get the kind of returns that our franchisees expect. But at this point, that's all we can address in terms of international expansion.

There no further questions at this time. I'll turn the call back over to the presenters.

I want to thank everybody for joining us today. As you can see, we had a great year and a great fourth quarter and thank you for joining the call. I look forward to first quarter release here in a few months. Thank you.

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