Life Time Fitness Announces Second Quarter 2009 Financial Results
Company Reports Revenue Growth of 10.5% and Earnings Per Diluted Share of $0.46 for the Quarter
CHANHASSEN, Minn.--(BUSINESS WIRE)-- Life Time Fitness, Inc. (NYSE: LTM) today reported its operating results for the second quarter ended June 30, 2009.
Second quarter 2009 revenue grew 10.5% to $212.5 million from $192.4 million during the same period last year. Net income during the quarter was $18.3 million, or $0.46 per diluted share. This compares to net income of $19.8 million, or $0.50 per diluted share, for 2Q 2008.
For the six months ended June 30, 2009, revenue grew 11.2% to $419.0 million from $376.9 million during the same period last year. Net income for the same period was $33.4 million, or $0.85 per diluted share, as compared with $37.2 million, or $0.95 per diluted share, for the first six months of 2008.
"We are pleased with our second quarter operating results, which are highlighted by increased free cash flow generation, lower debt balances, double-digit membership growth and lower membership acquisition costs," said Bahram Akradi, Life Time Fitness chairman, chief executive officer and president. "We're also seeing progress in managing our infrastructure expense and our trailing 12-month attrition rate reduced slightly during the quarter. Member retention remains a priority for us as does maintaining a close alignment between the products and services we deliver and today's discerning consumer. To this end, we continue to advance several connectivity and value enhancement initiatives for members, including dedicated monthly events across a wide range of interest areas at every center and a significantly enhanced myLT.com Web portal. Through this, we are establishing stronger member connections and enhancing the value we provide, making Life Time an even bigger part of members' lives."
In June, Life Time Fitness opened its third and final planned center for 2009, located in Collierville, Tennessee (Memphis area). This location marks the Company's first center in Tennessee.
Three and Six Months Ended June 30,
2009, Financial Highlights:
Total revenue for the
second quarter grew 10.5% to $212.5 million. Total revenue for the first
six months of 2009 grew to $419.0 million from $376.9 million during the
same period last year.
YTD 2009 vs.
(Period-over-period growth) 2Q 2009 vs. 2Q 2008 YTD 2008
-- Membership dues 13.3% 14.0%
-- Enrollment fees (1.5%) (1.2%)
-- In-center revenue 7.6% 7.5%
-- Same-center revenue (4.4%) (3.6%)
-- Average center revenue / $354 - down 2.0% $706 - down 2.5%
membership
-- Average in-center revenue / $102 - down 5.1% $204 - down 6.0%
membership
Memberships increased 11.1% to 608,281 at June 30, 2009, from 547,497 at June 30, 2008.
Total operating expenses during 2Q 2009 totaled $174.3 million compared to $152.5 million for 2Q 2008. Year-to-date operating expenses totaled $348.2 million compared with $301.0 million for the same period last year.
Operating margin was 18.0% for 2Q 2009 compared with 20.7% during the prior-year period. Year-to-date operating margin was 16.9%, compared to 20.1% in the prior-year period.
YTD 2009 vs.
(Expense as a percent of total 2Q 2009 vs. 2Q 2008 YTD 2008
revenue)
-- Center operations 60.6% vs. 58.9% 61.1% vs. 58.6%
-- Advertising and marketing 2.9% vs. 3.5% 3.4% vs. 4.3%
-- General and administrative 5.5% vs. 5.5% 5.6% vs. 5.7%
-- Other operating 2.3% vs. 2.4% 2.3% vs. 2.3%
-- Depreciation and amortization 10.7% vs. 9.0% 10.7% vs. 9.0%
Net income during 2Q 2009 was $18.3 million compared with $19.8 million for 2Q 2008. For the six months ended June 30, 2009, net income was $33.4 million compared with $37.2 million in the prior-year period.
EBITDA for 2Q 2009 grew 6.7% to $61.2 million from $57.4 in 2Q 2008. Year-to-date EBITDA grew 5.3% to $116.1 million from $110.3 million during the same period last year.
Cash flows from operations for the first half of 2009 totaled $98.3 million compared with $105.7 million in the prior-year period.
Weighted average fully diluted shares for 2Q 2009 totaled 39.8 million compared to 39.3 million shares in 2Q 2008.
Updated 2009 Business Outlook:
The
following statements are based on the Company's current expectations for
fiscal year 2009 and are subject to the risks and uncertainties
described below:
-- Revenue is expected to be $830-$860 million.
-- Net income is expected to be $67-$71 million (updated from $62-$68
million).
-- Diluted earnings per common share is expected to be $1.65-$1.75 (updated
from $1.55-$1.70).
As announced on July 16, 2009, the Company will hold a conference call today at 10:00 a.m. ET to discuss second quarter 2009 results. Bahram Akradi, chairman, chief executive officer and president, Michael Robinson, executive vice president and chief financial officer, and Kenneth Cooper, vice president of Finance, will host the conference call. The conference call will be Web cast and may be accessed via the Company's Investor Relations section of its Web site at lifetimefitness.com. A replay of the call will be available the same day via the Company's Web site beginning at approximately 1:00 p.m. ET.
About Life Time Fitness, Inc.
Life Time Fitness, Inc.
(NYSE:LTM) operates distinctive and large, multi-use sports and
athletic, professional fitness, family recreation and resort and spa
centers. The Company also provides consumers with personal training
services, full-service spas and cafes, corporate wellness programs,
health and nutrition education, the healthy lifestyle magazine,
Experience Life, athletic events and nutritional products. As of July
23, 2009, Life Time Fitness operated 84 centers in 19 states, including
Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kansas,
Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, North
Carolina, Ohio, Tennessee, Texas, Utah and Virginia. Life Time Fitness
is headquartered in Chanhassen, Minnesota, and can be located on the Web
at lifetimefitness.com. LIFE TIME FITNESS, LIFE TIME ATHLETIC,
EXPERIENCE LIFE, and the LIFE TIME FITNESS TRIATHLON SERIES are
trademarks of Life Time Fitness, Inc. All other trademarks or registered
trademarks are the property of their respective owners.
Risks and Uncertainties
Certain
information contained in this press release may be deemed to constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties that could cause the Company's actual results in
the future to differ materially from its historical results and those
presently anticipated or projected. Among these factors are attracting
and retaining members, risks related to our debt levels and debt
covenants, our ability to access existing credit facilities and obtain
additional financing, competition from other health and fitness centers,
identifying and acquiring suitable sites for new centers, delays in
opening new centers and other factors set forth in the Company's filings
with the Securities and Exchange Commission. Diluted earnings per share
could also be affected by the number of shares outstanding, which
depends on factors such as the number of shares issued upon exercise of
stock options and future grants of awards pursuant to equity-based
incentive plans as well as stock offerings. The Company cautions
investors not to place undue reliance on any such forward-looking
statements. Any forward-looking statement speaks only as of the date on
which such statement is made, and the Company undertakes no obligation
to update such statement to reflect events or circumstances arising
after such date. All remarks made during the Company's financial results
conference call will be current at the time of the call and the Company
undertakes no obligation to update the replay.
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2009 December 31, 2008
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 10,805 $ 10,829
Accounts receivable, net 3,681 6,114
Inventories and center operating supplies 14,420 14,632
Prepaid expenses and other current assets 16,359 10,994
Deferred membership origination costs 21,317 19,877
Deferred income taxes 2,090 1,365
Total current assets 68,672 63,811
PROPERTY AND EQUIPMENT, net 1,517,206 1,515,957
RESTRICTED CASH 3,439 3,936
DEFERRED MEMBERSHIP ORIGINATION COSTS 13,115 14,210
OTHER ASSETS 49,918 49,789
TOTAL ASSETS $ 1,652,350 $ 1,647,703
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 11,945 $ 10,335
Accounts payable 15,690 14,842
Construction accounts payable 22,223 63,418
Accrued expenses 55,526 46,230
Deferred revenue 41,123 36,098
Total current liabilities 146,507 170,923
LONG-TERM DEBT, net of current portion 695,401 702,569
DEFERRED RENT LIABILITY 27,882 27,925
DEFERRED INCOME TAXES 50,079 51,982
DEFERRED REVENUE 12,143 13,719
OTHER LIABILITIES 28,817 27,684
Total liabilities 960,829 994,802
SHAREHOLDERS' EQUITY:
Common stock 825 793
Additional paid-in capital 389,462 385,095
Retained earnings 305,085 271,711
Accumulated other comprehensive loss (3,851 ) (4,698 )
Total shareholders' equity 691,521 652,901
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,652,350 $ 1,647,703
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
REVENUE:
Membership dues $ 142,841 $ 126,121 $ 280,238 $ 245,769
Enrollment fees 6,540 6,640 13,013 13,173
In-center revenue 60,250 55,969 119,552 111,234
Total center revenue 209,631 188,730 412,803 370,176
Other revenue 2,918 3,677 6,180 6,682
Total revenue 212,549 192,407 418,983 376,858
OPERATING EXPENSES:
Center operations 128,871 113,259 255,845 220,839
Advertising and marketing 6,091 6,823 14,389 16,321
General and administrative 11,795 10,582 23,503 21,254
Other operating 4,887 4,675 9,774 8,770
Depreciation and 22,635 17,190 44,699 33,780
amortization
Total operating expenses 174,279 152,529 348,210 300,964
Income from operations 38,270 39,878 70,773 75,894
OTHER INCOME (EXPENSE):
Interest expense, net (7,880 ) (6,905 ) (15,354 ) (14,116 )
Equity in earnings of 332 326 669 649
affiliate
Total other income (expense) (7,548 ) (6,579 ) (14,685 ) (13,467 )
INCOME BEFORE INCOME TAXES 30,722 33,299 56,088 62,427
PROVISION FOR INCOME TAXES 12,462 13,471 22,714 25,195
NET INCOME $ 18,260 $ 19,828 $ 33,374 $ 37,232
BASIC EARNINGS PER COMMON $ 0.46 $ 0.51 $ 0.85 $ 0.96
SHARE
DILUTED EARNINGS PER COMMON $ 0.46 $ 0.50 $ 0.85 $ 0.95
SHARE
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING - BASIC 39,285 38,963 39,167 38,923
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES
OUTSTANDING - DILUTED 39,763 39,325 39,475 39,372
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the
Six Months Ended
June 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 33,374 $ 37,232
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 44,699 33,780
Deferred income taxes (421 ) 8,874
Provision for doubtful accounts 279 27
Loss on disposal of property and equipment, net 560 1,335
Gain on sale of land held for sale (873 ) -
Amortization of deferred financing costs 1,301 571
Share-based compensation 4,027 3,895
Excess tax benefit related to share-based payment - (5 )
arrangements
Equity in earnings of affiliate (669 ) (654 )
Changes in operating assets and liabilities 14,245 20,555
Other 1,762 50
Net cash provided by operating activities 98,284 105,660
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (91,725 ) (235,577 )
Proceeds from sale of property and equipment 8 365
Proceeds on sale of land held for sale 1,327 -
Proceeds from property insurance settlement - 270
Increase in other assets (921 ) (12,140 )
Decrease (increase) in restricted cash 497 (2,234 )
Net cash used in investing activities (90,814 ) (249,316 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 7,812 38,538
Repayments of long-term borrowings (7,978 ) (10,588 )
Proceeds from (repayments of) revolving credit (6,800 ) 116,200
facility, net
Increase in deferred financing costs (721 ) (3,641 )
Excess tax benefit related to share-based payment - 5
arrangements
Proceeds from exercise of stock options 193 1,462
Net cash provided by (used in) financing activities (7,494 ) 141,976
DECREASE IN CASH AND CASH EQUIVALENTS (24 ) (1,680 )
CASH AND CASH EQUIVALENTS - Beginning of period 10,829 5,354
CASH AND CASH EQUIVALENTS - End of period $ 10,805 $ 3,674
Non-GAAP Financial Measures This release and the related conference call disclose certain non-GAAP financial measures.
EBITDA. Earnings Before Interest, Income Taxes and Depreciation and Amortization (EBITDA) is a non-GAAP disclosure consisting of net income plus interest expense, net, provision for income taxes and depreciation and amortization. This term, as the Company defines it, may not be comparable to a similarly titled measure used by other companies and is not a measure of performance presented in accordance with GAAP. The Company uses EBITDA as a measure of operating performance. The funds depicted by EBITDA are not necessarily available for discretionary use if they are reserved for particular capital purposes, to maintain compliance with debt covenants, to service debt or to pay taxes. EBITDA should not be considered as a substitute for net income, net cash provided by operating activities or other income or cash flow data prepared in accordance with GAAP. Additional details related to EBITDA are provided in the Form 8-K that the Company filed with the Securities and Exchange Commission on the date of this press release.
The following table provides a reconciliation of net income, the most directly comparable GAAP measure, to EBITDA:
RECONCILIATION OF NET INCOME TO EBITDA
(In thousands)
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Net income $ 18,260 $ 19,828 $ 33,374 $ 37,232
Interest expense, net 7,880 6,905 15,354 14,116
Provision for income taxes 12,462 13,471 22,714 25,195
Depreciation and amortization 22,635 17,190 44,699 33,780
EBITDA $ 61,237 $ 57,394 $ 116,141 $ 110,323
Free Cash Flow. Free cash flow is a non-GAAP measure consisting of net cash provided by operating activities, less purchases of property and equipment. This term, as the Company defines it, may not be comparable to a similarly titled measure used by other companies and does not represent the total increase or decrease in the cash balance presented in accordance with GAAP. The Company uses free cash flow as a measure of cash generated after spending on property and equipment. Free cash flow should not be considered as a substitute for net cash provided by operating activities prepared in accordance with GAAP.
The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to free cash flow:
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
For the
Six Months Ended
June 30,
2009 2008
Net cash provided by operating activities $ 98,284 $ 105,660
Less: Purchases of property and equipment (91,725 ) (235,577 )
Free cash flow $ 6,559 $ (129,917 )
Source: Life Time Fitness, Inc.
Released July 23, 2009