
Life Time Fitness Announces Third Quarter 2013 Financial Results
Life Time Fitness Announces Third Quarter 2013 Financial Results
CHANHASSEN, Minn.--(BUSINESS WIRE)--October 24, 2013--
Life Time Fitness, Inc. (NYSE: LTM), The Healthy Way of Life Company, today reported its financial results for the third quarter ended September 30, 2013.
Third quarter 2013 revenue grew 7.2% to $316.0 million from $294.9 million during the same period last year. Revenue for the first nine months of 2013 grew 7.4% to $914.9 million from $851.6 million during the same period last year.
Net income for the quarter was $34.4 million, or $0.83 per diluted share, compared to net income of $32.1 million, or $0.77 per diluted share, for 3Q 2012. Net income for the first nine months of 2013 was $95.7 million, or $2.30 per diluted share, compared to net income of $88.1 million, or $2.10 per diluted share for the prior-year period.
“Our focus in 2013 continues to be upon improving the operational execution and consistency with which we deliver our broad range of programs, services and products in health, fitness and nutrition,” said Bahram Akradi, chairman, president and chief executive officer. “At the same time, our unwavering efforts to establish Life Time as the definitive Healthy Way of Life Company and brand are taking hold as communities, organizations and individuals alike select our offerings. As we look toward the acceleration of our new center expansion in 2014, we are well positioned to provide even more value to our customers.”
During the quarter, the Company opened its fourth center in Virginia, located in Reston (Washington D.C. market). The Company’s final planned 2013 new center opening will occur in November in Montvale, New Jersey (Greater New York market), representing the third Life Time location in New Jersey. In 2014, plans call for six new center openings in existing and new markets.
Three and Nine Months Ended September 30, 2013, Financial Highlights:
Total revenue for the third quarter grew 7.2% to $316.0 million from $294.9 million in 3Q 2012. Total revenue for the first nine months of 2013 grew 7.4% to $914.9 million from $851.6 million during the prior-year period.
3Q 2013 vs. 3Q 2012
(in millions except revenue per
membership data)
Membership dues $195.7 vs. $187.6 (up 4.3%)
In-center revenue $97.2 vs. $90.5 (up 7.4%)
Other revenue $19.5 vs. $12.9 (up 51.3%)
Average center revenue per Access $421 vs. $403 (up 4.3%)
membership
Average in-center revenue per Access $140 vs. $131 (up 6.6%)
membership
Same-center revenue (open 13 months or Up 4.2%
longer)
Same-center revenue (open 37 months or Up 3.4%
longer)
YTD 2013 vs. YTD 2012
(in millions except revenue per
membership data)
Membership dues $576.8 vs. $547.9 (up 5.3%)
In-center revenue $286.5 vs. $265.3 (up 8.0%)
Other revenue $41.0 vs. $26.7 (up 53.6%)
Average center revenue per Access $1,243 vs. $1,182 (up 5.1%)
membership
Average in-center revenue per Access $412 vs. $385 (up 7.2%)
membership
Same-center revenue (open 13 months or Up 4.2%
longer)
Same-center revenue (open 37 months or Up 3.4%
longer)
Total memberships grew 0.7% to 801,851 at September 30, 2013, from 796,102 at September 30, 2012.
-- Access memberships grew 0.1% to 695,923 at September 30, 2013, from
695,271 at September 30, 2012.
-- Non-Access memberships grew 5.1% to 105,928 at September 30, 2013, from
100,831 at September 30, 2012.
-- Attrition in 3Q 2013 was 9.5% compared to 9.0% in the prior-year period.
Attrition for the trailing 12-month period ended September 30, 2013, was
35.0% compared to trailing 12-month attrition of 32.9% at September 30,
2012.
Total operating expenses during 3Q 2013 were $253.2 million compared to $235.5 million for 3Q 2012. Total operating expenses for the first nine months of 2013 were $738.9 million compared to $687.3 million in 2012.
-- Income from operations margin was 19.9% for 3Q 2013 compared to 20.1% in
the prior-year period.
-- Income from operations margin was 19.2% for the first nine months of 2013
compared to 19.3% for the first nine months of 2012.
(Expense as a percent of total 3Q 2013 vs. 3Q 2012 YTD 2013 vs. YTD 2012
revenue)
------------------- ---------------------
Center operations 57.1% vs. 57.5% 57.6% vs. 58.4%
Advertising and marketing 3.1% vs. 3.0% 3.3% vs. 3.4%
General and administrative 4.6% vs. 4.6% 5.0% vs. 4.8%
Other operating 5.8% vs. 4.8% 5.1% vs. 4.1%
Depreciation and amortization 9.5% vs. 10.0% 9.8% vs. 10.0%
Net income for 3Q 2013 was $34.4 million, or $0.83 per diluted share, compared to net income of $32.1 million, or $0.77 per diluted share, for 3Q 2012. Net income for the first nine months of 2013 was $95.7 million, or $2.30 per diluted share, compared to net income of $88.1 million, or $2.10 per diluted share, for the prior-year period.
EBITDA for 3Q 2013 was $93.2 million compared to $89.2 million in 3Q 2012. For the first nine months of 2013, EBITDA was $266.3 million compared with $250.7 million in the prior-year period.
-- As a percentage of total revenue, EBITDA in 3Q 2013 was 29.5% in 3Q 2013
and 30.2% in 3Q 2012.
-- For the first nine months of 2013, EBITDA, as a percentage of total
revenue, was 29.1% compared to 29.4% in the prior-year period.
Cash flows from operating activities for the first nine months of 2013 totaled $190.8 million compared to $202.9 million in the prior-year period. This reduction is driven primarily by changes in operating assets and liabilities.
Weighted average fully diluted shares for 3Q 2013 totaled 41.6 million compared to 41.9 million in 3Q 2012. For the first nine months of 2013, weighted average fully diluted shares totaled 41.6 million compared to 41.9 million for the prior-year period.
2013 Business Outlook:
The following statements are based on the Company’s current expectations for fiscal year 2013 and incorporate 2013 operating trends. These 2013 expectations are subject to the risks and uncertainties further described in the Company’s forward-looking statements:
-- Revenue is expected to be up 7-7.5%, or $1.205-1.210 billion (updated
from $1.205-1.220 billion), driven primarily by price and mix
optimization, square foot expansion, and growth in in-center and
ancillary business revenue.
-- Net income is expected to be up 9-10%, or $121.5-122.5 million (updated
from $121.0-124.0 million), driven by revenue growth and cost
efficiencies.
-- Diluted earnings per common share is expected to be $2.91-2.93 (updated
from $2.89-2.95).
As announced on October 17, 2013, the Company will hold a conference call today at 10:00 a.m. ET to discuss its third quarter 2013 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and John Heller, vice president, Finance and Investor Relations, will host the conference call. The conference call will be webcast and may be accessed via the Company’s Investor Relations section of its website at lifetimefitness.com. A replay of the call will be available the same day via the Company’s website beginning at approximately 2:00 p.m. ET.
About Life Time Fitness, Inc.
As The Healthy Way of Life Company, Life Time Fitness (NYSE:LTM) helps organizations, communities and individuals achieve their total health objectives, athletic aspirations and fitness goals by engaging in their areas of interest — or discovering new passions — both inside and outside of Life Time’s distinctive and large sports, professional fitness, family recreation and spa destinations, most of which operate 24 hours a day, seven days a week. The Company’s Healthy Way of Life approach enables customers to achieve this by providing the best programs, people and places of uncompromising quality and value. As of October 24, 2013, the Company operated 107 centers under the LIFE TIME FITNESS(R) and LIFE TIME ATHLETIC(R) brands in the United States and Canada. Additional information about Life Time centers, programs and services is available at lifetimefitness.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can usually be identified by the use of terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,” “expect,” “forecast,” “intend,” “looking ahead,” “may,” “opinion,” “plan,” “possible,” “potential,” “project,” “should,” “will” and similar words or expressions. Forward-looking 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, the ability to access our existing credit facility and obtain additional financing, strains on our business from continued and future growth, including potential acquisitions and other strategic initiatives, risks related to maintenance and security of our data, potential recognition of compensation expense related to performance-based stock grants, 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 risk factor section of the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission.
The Company cautions investors not to place undue reliance on any such forward-looking statements, which speak only as of the date on which such statements were made. The Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date. All remarks made during the Company’s preliminary financial results webcast will be current at the time of the webcast and the Company is under no obligation to update the recording.
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
2013 2012
--------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,719 $ 16,499
Accounts receivable, net 9,834 9,272
Center operating supplies and
inventories 30,691 27,240
Prepaid expenses and other current
assets 25,545 26,826
Deferred membership origination costs 10,747 11,664
Deferred income taxes 4,037 8,813
---------- ---------
Total current assets 100,573 100,314
PROPERTY AND EQUIPMENT, net 2,024,070 1,858,666
RESTRICTED CASH 734 2,087
DEFERRED MEMBERSHIP ORIGINATION COSTS 6,019 6,820
GOODWILL 49,256 37,176
OTHER ASSETS 73,138 67,111
---------- ---------
TOTAL ASSETS $ 2,253,790 $ 2,072,174
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 14,469 $ 12,603
Accounts payable 28,890 32,140
Construction accounts payable 51,820 25,208
Accrued expenses 66,528 63,333
Deferred revenue 33,362 34,753
---------- ---------
Total current liabilities 195,069 168,037
LONG-TERM DEBT, net of current portion 774,323 691,867
DEFERRED RENT LIABILITY 24,858 22,490
DEFERRED INCOME TAXES 91,232 95,509
DEFERRED REVENUE 6,057 6,840
OTHER LIABILITIES 21,216 14,514
---------- ---------
Total liabilities 1,112,755 999,257
---------- ---------
SHAREHOLDERS' EQUITY:
Common stock 854 864
Additional paid-in capital 420,557 447,912
Retained earnings 724,616 628,942
Accumulated other comprehensive loss (4,992) (4,801)
---------- ---------
Total equity 1,141,035 1,072,917
---------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 2,253,790 $ 2,072,174
========== =========
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
For the Three Months
Ended For the Nine Months Ended
September 30, September 30,
-------------------- -------------------------
2013 2012 2013 2012
--------- --------- ------------ -----------
REVENUE:
Membership dues $195,657 $187,568 $576,847 $547,933
Enrollment fees 3,598 3,859 10,567 11,742
In-center
revenue 97,234 90,543 286,480 265,277
------- ------- ------- -------
Total center
revenue 296,489 281,970 873,894 824,952
Other revenue 19,522 12,903 40,972 26,672
------- ------- ------- -------
Total
revenue 316,011 294,873 914,866 851,624
------- ------- ------- -------
OPERATING
EXPENSES:
Center
operations 180,431 169,521 527,191 496,790
Advertising and
marketing 9,758 8,826 30,346 28,871
General and
administrative 14,531 13,631 45,600 41,190
Other operating 18,479 14,091 46,538 35,243
Depreciation
and
amortization 29,956 29,396 89,235 85,217
------- ------- ------- -------
Total
operating
expenses 253,155 235,465 738,910 687,311
------- ------- ------- -------
Income from
operations 62,856 59,408 175,956 164,313
------- ------- ------- -------
OTHER INCOME
(EXPENSE):
Interest
expense, net (6,436) (6,510) (18,999) (19,332)
Equity in
earnings of
affiliate 379 375 1,103 1,143
------- ------- ------- -------
Total other
income
(expense) (6,057) (6,135) (17,896) (18,189)
------- ------- ------- -------
INCOME BEFORE
INCOME TAXES 56,799 53,273 158,060 146,124
PROVISION FOR
INCOME TAXES 22,413 21,129 62,386 58,016
------- ------- ------- -------
NET INCOME $ 34,386 $ 32,144 $ 95,674 $ 88,108
======= ======= ======= =======
BASIC EARNINGS PER
COMMON SHARE $ 0.83 $ 0.77 $ 2.31 $ 2.13
======= ======= ======= =======
DILUTED EARNINGS
PER COMMON SHARE $ 0.83 $ 0.77 $ 2.30 $ 2.10
======= ======= ======= =======
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES
OUTSTANDING -
BASIC 41,307 41,484 41,353 41,370
======= ======= ======= =======
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES
OUTSTANDING -
DILUTED 41,613 41,881 41,606 41,885
======= ======= ======= =======
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Nine Months Ended
September 30,
-------------------------------
2013 2012
--------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 95,674 $ 88,108
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 89,235 85,217
Deferred income taxes (583) (4,387)
(Gain) loss on disposal of property
and equipment, net (100) 1,231
Gain on sale of land held for sale - (196)
Amortization of deferred financing
costs 1,635 1,504
Share-based compensation 9,410 10,862
Excess tax benefit related to
share-based compensation (6,575) (9,138)
Changes in operating assets and
liabilities 2,726 30,429
Other (659) (769)
---------- ----------
Net cash provided by operating
activities 190,763 202,861
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (224,542) (164,556)
Acquisitions, net of cash acquired (13,102) (28,984)
Proceeds from sale of property and
equipment 1,116 673
Proceeds from sale of land held for
sale - 1,758
Proceeds from property insurance
settlements 177 901
Increase in other assets (1,022) (94)
Decrease in restricted cash 1,353 376
---------- ----------
Net cash used in investing
activities (236,020) (189,926)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 125,000 -
Repayments of long-term borrowings (31,773) (5,094)
Repayments of revolving credit
facility, net (7,150) (16,000)
Increase in deferred financing costs (4,213) (306)
Excess tax benefit related to
share-based compensation 6,575 9,138
Proceeds from stock option exercises 1,563 2,088
Proceeds from employee stock purchase
plan 1,074 999
Stock purchased for employee stock
purchase plan (1,309) (1,290)
Repurchases of common stock (40,272) -
---------- ----------
Net cash provided by (used in)
financing activities 49,495 (10,465)
---------- ----------
Effect of exchange rates on cash and cash
equivalents (1,018) (1,332)
---------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS 3,220 1,138
CASH AND CASH EQUIVALENTS - Beginning of
period 16,499 7,487
---------- ----------
CASH AND CASH EQUIVALENTS - End of period $ 19,719 $ 8,625
========== ==========
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 measure 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 Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------- -------------------------------
2013 2012 2013 2012
-------------- ------------ --------------- --------------
Net income $ 34,386 $ 32,144 $ 95,674 $ 88,108
Interest
expense,
net 6,436 6,510 18,999 19,332
Provision for
income
taxes 22,413 21,129 62,386 58,016
Depreciation
and
amortization 29,956 29,396 89,235 85,217
---------- ----------- ----------- ----------
EBITDA $ 93,191 $ 89,179 $ 266,294 $ 250,673
========== =========== =========== ==========
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, excluding acquisitions. 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. Additional details related to free cash flow 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 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 Three Months
Ended For the Nine Months Ended
September 30, September 30,
------------------------- ----------------------------
2013 2012 2013 2012
------------- ---------- ------------- -------------
Net cash
provided
by
operating
activities $ 66,309 $ 60,671 $ 190,763 $ 202,861
Less:
Purchases
of
property
and
equipment (87,109) (58,454) (224,542) (164,556)
-------- -------- -------- ---------
Free cash
flow $ (20,800) $ 2,217 $ (33,779) $ 38,305
======== ======== ======== =========
CONTACT: Life Time Fitness, Inc.
Investor Relations:
John Heller, 952-229-7427
ir@lifetimefitness.com
or
Media Relations:
Jason Thunstrom, 952-229-7435
pr@lifetimefitness.com










































































