Life Time Fitness Announces First Quarter 2007 Financial Results
Company Reports Revenue Growth of 32.6% and Net Income Growth of 35.5% for the Quarter
EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--
Life Time Fitness, Inc. (NYSE:LTM), a national operator of distinctive and large health and fitness centers, today reported its operating results for the first quarter ended March 31, 2007.
First quarter 2007 revenue grew 32.6% to $153.1 million from $115.4 million during the same period last year. Net income during the quarter grew 35.5% to $14.1 million, or $0.38 per diluted share. This compares to net income of $10.4 million, or $0.28 per diluted share, for 1Q 2006.
"We continue to execute on our fundamental business strategies, as evidenced by our first quarter 2007 performance," said Bahram Akradi, Life Time Fitness chairman and chief executive officer. "As of the end of the quarter, we operated 60 centers in 13 states. We plan to open eight additional new centers this year, four of which will open in the second quarter. The first of these new centers opened on April 11 in Dublin, Ohio, representing our second center in the Columbus market. Year over year, memberships grew 23.7% to 474,364. We also are pleased with our in-center revenue growth of 35.8% to $43.9 million during 1Q 2007, which was driven primarily by membership ramp, targeted marketing programs, and new products and services."
Three Months Ended March 31, 2007, Financial Highlights:
Total revenue for the first quarter grew 32.6% to $153.1 million, driven primarily by growth in membership dues and in-center revenue.
(Period-over-period growth) 1Q 2007 vs. 1Q 2006
-------------------
-- Membership dues 32.6%
-- Enrollment fees 11.9%
-- In-center revenue 35.8%
-- Same-center revenue 7.5%
-- Average center revenue / membership $334 - up 6.5%
-- Average in-center revenue / membership $98 - up 9.1%
Total operating expenses during 1Q 2007 totaled $124.4 million compared to $94.3 million for 1Q 2006, driven primarily by increased expenses to support new centers, membership ramp, and in-center revenue growth. Operating margin was 18.8% for 1Q 2007, compared to 18.3% in the prior-year period.
(Expense as a percent of total revenue) 1Q 2007 vs. 1Q 2006
-------------------
-- Center operations 58.4% vs. 56.4%
-- Advertising and marketing 4.8% vs. 5.1%
-- General and administrative 6.9% vs. 7.6 %
-- Other operating 2.2% vs. 2.6%
-- Depreciation and amortization 8.9% vs. 10.0%
Net income during 1Q 2007 grew 35.5% to $14.1 million from $10.4 million in 1Q 2006, driven by continued top-line growth and operating margin expansion. Net income margin for 1Q 2007 was 9.2% compared with 9.0% in 1Q 2006.
EBITDA for 1Q 2007 grew 29.8% to $42.7 million from $32.9 million in 1Q 2006. As a percentage of total revenue, EBITDA was 27.9% in 1Q 2007, compared to 28.5% in 1Q 2006.
Cash flows from operations for the first quarter grew 16.3% to $39.0 million from $33.6 million in the prior-year period.
Weighted average diluted shares for 1Q 2007 totaled 37.4 million compared to 36.8 million shares in 1Q 2006.
Updated 2007 Business Outlook:
The following statements are based on the Company's current expectations for fiscal year 2007 and subject to the risks and uncertainties described below:
-- Revenue is expected to be $640-$650 million (or approximately
25-27% 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 $64.8-$65.8 million (or
approximately 28-30% growth) up from $64.3-$65.3 million. This
year-over-year increase is driven primarily by our growth
strategies.
-- Diluted earnings per common share is expected to be
$1.72-$1.75 (or approximately 26-28% growth), up from
$1.71-$1.74.
As announced on April 19, 2007, the Company will hold a conference call today at 10:00 a.m. EDT to discuss its first quarter 2007 results. Bahram Akradi, chairman and chief executive officer, and Michael Robinson, executive vice president and chief financial officer, 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 sports and athletic, professional fitness, family recreation and resort/spa centers. As of April 26, 2007 the Company operated 61 centers in 13 states, including Arizona, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Ohio, Texas, Utah and Virginia. The Company also operates two satellite facilities and five preview locations in existing and new markets. Additionally, Life Time Fitness 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 and supplements. Life Time Fitness is headquartered in Eden Prairie, Minnesota, and may be accessed on the Web at www.lifetimefitness.com. LIFE TIME FITNESS, the LIFE TIME FITNESS logo, and EXPERIENCE LIFE 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. 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. 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.
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, 2007 December 31, 2006
-------------- ------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $5,912 $6,880
Accounts receivable, net 2,288 2,320
Inventories 11,253 8,773
Prepaid expenses and other current
assets 11,775 9,201
Deferred membership origination
costs 14,185 12,575
Income tax receivable - 97
-------------- ------------------
Total current assets 45,413 39,846
PROPERTY AND EQUIPMENT, net 972,327 902,122
RESTRICTED CASH 4,709 4,738
DEFERRED MEMBERSHIP ORIGINATION
COSTS 12,223 10,875
OTHER ASSETS 32,385 30,095
-------------- ------------------
TOTAL ASSETS $1,067,057 $987,676
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term
debt $13,534 $15,228
Accounts payable 9,167 8,878
Construction accounts payable 48,498 49,285
Accrued expenses 56,563 37,191
Deferred revenue 34,354 29,773
-------------- ------------------
Total current liabilities 162,116 140,355
LONG-TERM DEBT, net of current
portion 420,166 374,327
DEFERRED RENT LIABILITY 25,662 25,716
DEFERRED INCOME TAXES 31,235 38,584
DEFERRED REVENUE 16,897 15,917
OTHER LIABILITIES 264 264
-------------- ------------------
Total liabilities 656,340 595,163
-------------- ------------------
SHAREHOLDERS' EQUITY:
Common stock 741 737
Additional paid-in capital 263,972 259,905
Retained earnings 146,004 131,871
-------------- ------------------
Total shareholders' equity 410,717 392,513
-------------- ------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,067,057 $987,676
============== ==================
LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
For the
Three Months Ended
March 31,
------------------
2007 2006
--------- --------
REVENUE:
Membership dues $100,528 $75,799
Enrollment fees 5,686 5,083
In-center revenue 43,897 32,334
--------- --------
Total center revenue 150,111 113,216
Other revenue 2,990 2,209
--------- --------
Total revenue 153,101 115,425
OPERATING EXPENSES:
Center operations 89,492 65,093
Advertising and marketing 7,369 5,839
General and administrative 10,488 8,815
Other operating 3,324 2,987
Depreciation and amortization 13,687 11,519
--------- --------
Total operating expenses 124,360 94,253
--------- --------
Income from operations 28,741 21,172
OTHER INCOME (EXPENSE):
Interest expense, net (5,528) (4,117)
Equity in earnings of affiliate 316 243
--------- --------
Total other income (expense) (5,212) (3,874)
--------- --------
INCOME BEFORE INCOME TAXES 23,529 17,298
PROVISION FOR INCOME TAXES 9,395 6,865
--------- --------
NET INCOME $14,134 $10,433
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BASIC EARNINGS PER COMMON SHARE $0.39 $0.29
========= ========
DILUTED EARNINGS PER COMMON SHARE $0.38 $0.28
========= ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 36,642 35,701
========= ========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 37,392 36,752
========= ========
LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the
Three Months Ended
March 31,
------------------
2007 2006
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $14,134 $10,433
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,687 11,519
Deferred income taxes (7,349) 85
Loss on disposal of property and equipment, net 39 196
Amortization of deferred financing costs 195 159
Share-based compensation 1,818 1,210
Excess tax benefit from stock option exercises (916) (5,331)
Change in investment in unconsolidated subsidiary (316) (243)
Changes in operating assets and liabilities 17,693 15,478
Other 42 64
--------- --------
Net cash provided by operating activities 39,027 33,570
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (84,146) (48,820)
Proceeds from sale of property and equipment 35 20
Proceeds from property insurance settlement 48 -
Increase in other assets (1,155) (212)
Decrease in restricted cash 29 1,106
--------- --------
Net cash used in investing activities (85,189) (47,906)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 105,000 -
Repayments on long-term borrowings (3,179) (3,656)
Proceeds from (repayments on) revolving credit
facility, net (57,700) 3,400
Increase in deferred financing costs (1,014) -
Excess tax benefit from stock option exercises 916 5,331
Proceeds from exercise of stock options 1,171 7,129
--------- --------
Net cash provided by financing activities 45,194 12,204
--------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (968) (2,132)
CASH AND CASH EQUIVALENTS - Beginning of period 6,880 4,680
--------- --------
CASH AND CASH EQUIVALENTS - End of period $5,912 $2,548
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest, including capitalized
interest $5,721 $4,558
========= ========
Cash payments for income taxes $571 $74
========= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Purchases of property and equipment in accounts
payable $273 $2,770
========= ========
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,
------------------
2007 2006
--------- --------
Net income $14,134 $10,433
Interest expense, net 5,528 4,117
Provision for income taxes 9,395 6,865
Depreciation and amortization 13,687 11,519
--------- --------
EBITDA $42,744 $32,934
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Source: Life Time Fitness, Inc.
Released April 26, 2007