Life Time Fitness Announces First Quarter 2008 Financial Results
Company Reports Revenue Growth of 20.5%, Net Income Growth of 23.1%, and Earnings Per Diluted Share of $0.44 for the Quarter
CHANHASSEN, Minn.--(BUSINESS WIRE)--
Life Time Fitness, Inc. (NYSE: LTM) today reported its operating results for the first quarter ended March 31, 2008.
First quarter 2008 revenue grew 20.5% to $184.5 million from $153.1 million during the same period last year. Net income during the quarter grew 23.1% to $17.4 million, or $0.44 per diluted share. This compares to net income of $14.1 million, or $0.38 per diluted share, for 1Q 2007.
"We continue to deliver against our fundamental business objectives," said Bahram Akradi, chairman and chief executive officer. "Just as we seek to continually evolve the unparalleled experience and value we deliver to members, we continue to improve our differentiated business model and the opportunities our company has for future growth and expansion. In support of this, we remain focused on driving our member connectivity initiatives and concentrating on research and development activities in the areas of consumer and corporate wellness programming and services."
Life Time Fitness continued its expansion efforts during the first quarter with an opening in Parker, Colorado, representing the Company's first location in this market. Construction is underway for the remaining ten planned openings in 2008.
Three Months Ended March 31, 2008, Financial Highlights:
Total revenue for the first quarter grew 20.5% to $184.5 million, driven primarily by growth in membership dues and in-center revenue.
(Period-over-period growth) 1Q 2008 vs. 1Q 2007
-------------------
-- Memberships 521,177 - up 9.9%
-- Membership dues 19.0%
-- Enrollment fees 14.9%
-- In-center revenue 25.9%
-- Same-center revenue 4.3%
-- Average center revenue / membership $363 - up 8.7%
-- Average in-center revenue / membership $111 - up 13.3%
Total operating expenses during 1Q 2008 totaled $148.4 million compared to $124.4 million for 1Q 2007, driven primarily by increased expenses to support new centers, membership ramp, and in-center revenue growth. Operating margin was 19.5% for 1Q 2008, compared to 18.8% in the prior-year period.
(Expense as a percent of total revenue) 1Q 2008 vs. 1Q 2007
-------------------
-- Center operations 58.3% vs. 58.4%
-- Advertising and marketing 5.1% vs. 4.8%
-- General and administrative 5.8% vs. 6.9%
-- Other operating 2.3% vs. 2.2%
-- Depreciation and amortization 9.0% vs. 8.9%
Net income during 1Q 2008 grew 23.1% to $17.4 million from $14.1 million in 1Q 2007, driven by continued top-line growth and improved operating margin. Net income margin for 1Q 2008 was 9.4% compared with 9.2% in 1Q 2007.
EBITDA for 1Q 2008 grew 23.8% to $52.9 million from $42.7 million in 1Q 2007. As a percentage of total revenue, EBITDA was 28.7% in 1Q 2008, compared to 27.9% in 1Q 2007.
Cash flows from operations for the first quarter grew 26.4% to $49.3 million from $39.0 million in the prior-year period.
Weighted average diluted shares for 1Q 2008 totaled 39.4 million compared to 37.4 million shares in 1Q 2007.
Updated 2008 Business Outlook:
The following statements are based on the Company's current expectations for fiscal year 2008 and subject to the risks and uncertainties described below:
-- Revenue is expected to be $780-$800 million, or approximately
19-22% growth. This year-over-year increase is driven
primarily by new center growth, membership ramp at new and
existing centers, and in-center revenue growth.
-- Net income is expected to be $82.0-$83.5 million, or
approximately 21-23% growth (up from $81.5-$83.0 million, or
approximately 20-22% growth). This year-over-year increase is
driven primarily by our growth strategies.
-- Diluted earnings per common share is expected to be
$2.06-$2.09, or approximately 16-18% growth (up from
$2.05-$2.08, or approximately 15-17% growth).
As announced on April 16, 2008, the Company will hold a conference call today at 10:00 a.m. ET to discuss first quarter 2008 results. Bahram Akradi, chairman and chief executive officer, Michael Robinson, executive vice president and chief financial officer, and Kenneth Cooper, senior director 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 consultation, 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 April 24, 2008, Life Time Fitness operated 71 centers in 16 states, including Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Nebraska, North Carolina, Ohio, Texas, Utah and Virginia. The Company also operated one satellite facility and five preview locations in existing and new markets. Life Time Fitness is headquartered in Chanhassen, Minnesota, and can be located on the Web at lifetimefitness.com. LIFE TIME FITNESS, EXPERIENCE LIFE, and the LIFE TIME FITNESS TRIATHLON SERIES are registered trademarks of Life Time Fitness, Inc. All other trademarks or registered trademarks are the property of their respective owners.
Risks & 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 identifying and acquiring suitable sites for new sports, fitness and family recreation centers, opening new sports, fitness and family recreation centers, attracting and retaining members, obtaining additional financing 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.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, 2008 December 31, 2007
-------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,459 $ 5,354
Accounts receivable, net 3,278 4,475
Inventories 13,942 14,324
Prepaid expenses and other current
assets 13,173 15,963
Deferred membership origination
costs 17,333 16,205
Deferred tax asset 1,177 1,188
Income tax receivable - 5,814
-------------- -----------------
Total current assets 51,362 63,323
PROPERTY AND EQUIPMENT, net 1,360,427 1,259,271
RESTRICTED CASH 3,515 6,767
DEFERRED MEMBERSHIP ORIGINATION COSTS 15,157 14,367
OTHER ASSETS 52,654 42,805
-------------- -----------------
TOTAL ASSETS $1,483,115 $1,386,533
============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $ 9,314 $ 9,568
Accounts payable 12,148 12,872
Construction accounts payable 64,549 59,261
Accrued expenses 48,090 47,052
Deferred revenue 38,181 34,851
-------------- -----------------
Total current liabilities 172,282 163,604
LONG-TERM DEBT, net of current
portion 622,130 555,037
DEFERRED RENT LIABILITY 25,827 25,526
DEFERRED INCOME TAXES 39,456 38,607
DEFERRED REVENUE 18,620 17,529
OTHER LIABILITIES 14,839 13,673
-------------- -----------------
Total liabilities 893,154 813,976
-------------- -----------------
SHAREHOLDERS' EQUITY:
Common stock 791 783
Additional paid-in capital 376,276 373,910
Retained earnings 217,294 199,890
Accumulated other comprehensive
loss (4,400) (2,026)
-------------- -----------------
Total shareholders' equity 589,961 572,557
-------------- -----------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,483,115 $1,386,533
============== =================
LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
For the
Three Months Ended
March 31,
---------------------
2008 2007
---------- ----------
REVENUE:
Membership dues $119,648 $100,528
Enrollment fees 6,533 5,686
In-center revenue 55,265 43,897
---------- ----------
Total center revenue 181,446 150,111
Other revenue 3,005 2,990
---------- ----------
Total revenue 184,451 153,101
---------- ----------
OPERATING EXPENSES:
Center operations 107,580 89,492
Advertising and marketing 9,498 7,369
General and administrative 10,672 10,488
Other operating 4,095 3,324
Depreciation and amortization 16,590 13,687
---------- ----------
Total operating expenses 148,435 124,360
---------- ----------
Income from operations 36,016 28,741
---------- ----------
OTHER INCOME (EXPENSE):
Interest expense, net (7,211) (5,528)
Equity in earnings of affiliate 323 316
---------- ----------
Total other income (expense) (6,888) (5,212)
---------- ----------
INCOME BEFORE INCOME TAXES 29,128 23,529
PROVISION FOR INCOME TAXES 11,724 9,395
---------- ----------
NET INCOME $ 17,404 $ 14,134
========== ==========
BASIC EARNINGS PER COMMON SHARE $ 0.45 $ 0.39
========== ==========
DILUTED EARNINGS PER COMMON SHARE $ 0.44 $ 0.38
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 38,895 36,642
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 39,363 37,392
========== ==========
LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the
Three Months Ended
March 31,
--------------------
2008 2007
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 17,404 $ 14,134
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 16,590 13,687
Deferred income taxes 3,252 1,496
Provision for doubtful accounts 30 (5)
Loss on disposal of property and equipment,
net 831 39
Amortization of deferred financing costs 235 195
Share-based compensation 1,782 1,818
Excess tax benefit from stock option
exercises (65) (916)
Change in investment in unconsolidated
subsidiary (323) (316)
Changes in operating assets and liabilities 9,568 8,848
Other 18 47
---------- ---------
Net cash provided by operating activities 49,322 39,027
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (102,218) (84,146)
Proceeds from sale of property and equipment 392 35
Proceeds from property insurance settlement - 48
Increase in other assets (5,482) (1,155)
Decrease in restricted cash 3,252 29
---------- ---------
Net cash used in investing activities (104,056) (85,189)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings - 105,000
Repayments on long-term borrowings (2,415) (3,179)
Proceeds from (repayments on) revolving credit
facility, net 54,200 (57,700)
Increase in deferred financing costs (310) (1,014)
Excess tax benefit from stock option exercises 65 916
Proceeds from exercise of stock options 299 1,171
---------- ---------
Net cash provided by financing activities 51,839 45,194
---------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (2,895) (968)
CASH AND CASH EQUIVALENTS - Beginning of period 5,354 6,880
---------- ---------
CASH AND CASH EQUIVALENTS - End of period $ 2,459 $ 5,912
========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash payments for interest, including
capitalized interest $ 8,683 $ 5,721
========== =========
Cash payments for income taxes $ 109 $ 571
========== =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Purchases of property and equipment financed
through capital lease obligations $ 11,299 $ -
========== =========
Purchases of property and equipment in accounts
payable $ 4,957 $ 273
========== =========
Non-cash share-based compensation capitalized
to projects under development $ 228 $ 166
========== =========
Non-GAAP Financial Measures
This release contains a non-GAAP disclosure, EBITDA, which consists 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, cash flows 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 EARNINGS BEFORE INTEREST,
INCOME TAXES AND DEPRECIATION AND AMORTIZATION
(In thousands)
(Unaudited)
For the
Three Months Ended
March 31,
-------------------
2008 2007
---------- --------
Net income $17,404 $14,134
Interest expense, net 7,211 5,528
Provision for income taxes 11,724 9,395
Depreciation and amortization 16,590 13,687
---------- --------
EBITDA $52,929 $42,744
========== ========
Source: Life Time Fitness, Inc.
Released April 24, 2008