News
CHANHASSEN, Minn.--(BUSINESS WIRE)--Life Time Fitness, Inc. (NYSE: LTM), The Healthy Way of Life Company, today reported its financial results for the fourth quarter and full year ended December 31, 2012.
Fourth quarter 2012 revenue grew 9.7% to $275.3 million from $250.9 million during the same period last year. Total revenue for the year grew 11.2% to $1.127 billion from $1.014 billion in 2011.
Net income for the quarter was $23.4 million, or $0.56 per diluted share, compared to net income of $19.8 million, or $0.48 per diluted share, for 4Q 2011. Net income for the year was $111.5 million, or $2.66 per diluted share, compared to net income of $92.6 million, or $2.26 per diluted share, in 2011.
“For 2012, I am pleased to report double-digit growth in revenue, operating profit, net income, and earnings per share,” said Bahram Akradi, chairman, president and chief executive officer. “We also saw total-center revenue growth above 10%, along with solid revenue-per-membership and same-store-sales. Looking ahead, we are positioning our company for top-line growth through center expansion, new membership and programming initiatives, and expanded products and services. For 2013, we plan to open one new center in the first half of the year, our first in Alabama, and two in the second half, including one in Virginia and one in New Jersey. We also have initial plans to double our center openings in 2014, led by openings in New York and California early in the year.”
Three and Twelve Months Ended December 31, 2012, Financial Highlights:
Total revenue for the fourth quarter grew 9.7% to $275.3 million from $250.9 million in 4Q 2011. Total revenue for the year grew 11.2% to $1.127 billion from $1.014 billion in 2011.
| (Period-over-period growth) |
4Q 2012 vs. 4Q 2011 (in millions except revenue per membership data) |
|
|
$179.7 vs. $166.9 (up 7.6%) | |
|
$83.0 vs. $73.7 (up 12.5%) | |
|
$9.1 vs. $6.1 (up 48.6%) | |
|
$393 vs. $380 (up 3.5%) | |
|
$122 vs. $114 (up 7.1%) | |
|
Up 3.6% | |
|
Up 3.0% |
| (Period-over-period growth) |
2012 vs. 2011 (in millions except revenue per membership data) |
|
|
$727.6 vs. $663.4 (up 9.7%) | |
|
$348.3 vs. $308.5 (up 12.9%) | |
|
$35.7 vs. $23.3 (up 53.3%) | |
|
$1,587 vs. $1,543 (up 2.9%) | |
|
$507 vs. $481 (up 5.4%) | |
|
Up 4.3% | |
|
Up 3.7% |
Memberships grew 1.0% to 682,621 at December 31, 2012, from 676,054 at December 31, 2011.
- Excluding memberships acquired in connection with LFF, memberships grew 2.4%.
- Attrition in 4Q 2012 was 10.4% compared to 9.6% in the prior-year period. Excluding LFF, 4Q 2012 attrition was 10.1%.
- Attrition for the trailing 12-month period ended December 31, 2012, was 38.2% compared to trailing 12-month attrition of 35.0% at December 31, 2011. Excluding LFF, trailing 12-month attrition was 36.9%.
Total operating expenses during 4Q 2012 were $231.4 million compared to $214.0 million for 4Q 2011. Total operating expenses for the year were $918.7 million compared to $840.4 million in 2011.
- Income from operations margin was 16.0% for 4Q 2012 compared to 14.7% in the prior-year period.
- Income from operations margin for the year was 18.5% compared to 17.1% in 2011.
| (Expense as a percent of total revenue) |
4Q 2012 vs. 4Q 2011 |
2012 vs. 2011 |
||
|
57.8% vs. 59.6% | 58.2% vs. 60.7% | ||
|
4.0% vs. 3.9% | 3.5% vs. 3.5% | ||
|
5.3% vs. 6.9% | 5.0% vs. 5.4% | ||
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6.1% vs. 4.8% | 4.6% vs. 3.5% | ||
|
10.8% vs. 10.1% | 10.2% vs. 9.8% |
Net income for 4Q 2012 was $23.4 million, or $0.56 per diluted share, compared to net income of $19.8 million, or $0.48 per diluted share, for 4Q 2011. Net income for the year was $111.5 million, or $2.66 per diluted share, compared to net income of $92.6 million, or $2.26 per diluted share, in 2011.
EBITDA for 4Q 2012 was $74.1 million compared to $62.4 million in 4Q 2011. For the year, EBITDA was $324.7 million compared to $273.4 million in 2011.
- As a percentage of total revenue, EBITDA in 4Q 2012 was 26.9% compared to 24.9% in 4Q 2011.
- For the year, EBITDA, as a percentage of total revenue, was 28.8% compared to 27.0% in 2011.
Cash flows from operating activities for the year totaled $255.7 million compared to $227.9 million in 2011.
Weighted average fully diluted shares for 4Q 2012 totaled 42.0 million compared to 41.3 million in 4Q 2011. For the year, weighted average fully diluted shares totaled 42.0 million compared to 40.9 million in 2011.
2013 Business Outlook:
The following statements are based on the Company’s current expectations for fiscal year 2013 and incorporate 2012 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 6.5-8%, or $1.200-1.220 billion, driven primarily by price and mix optimization, and growth in in-center and ancillary business revenue.
- Net income is expected to be up 8-11%, or $120.0-124.0 million, driven by revenue growth and cost efficiencies.
- Diluted earnings per common share is expected to be $2.85-2.95.
As announced on February 14, 2013, the Company will hold a conference call today at 10:00 a.m. ET to discuss its fourth quarter and full-year 2012 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and John Heller, senior director, investor relations & treasurer, 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 February 21, 2013, the Company operated 105 centers under the LIFE TIME FITNESS® and LIFE TIME ATHLETIC℠ 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) |
||||||||
| December 31, 2012 |
December 31, 2011 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 16,499 | $ | 7,487 | ||||
| Accounts receivable, net | 9,272 | 6,156 | ||||||
| Center operating supplies and inventories | 27,240 | 21,600 | ||||||
| Prepaid expenses and other current assets | 26,826 | 22,905 | ||||||
| Deferred membership origination costs | 11,664 | 12,525 | ||||||
| Deferred income taxes | 8,813 | 9,850 | ||||||
| Income tax receivable | - | 5,022 | ||||||
| Total current assets | 100,314 | 85,545 | ||||||
| PROPERTY AND EQUIPMENT, net | 1,858,666 | 1,740,434 | ||||||
| RESTRICTED CASH | 2,087 | 1,088 | ||||||
| DEFERRED MEMBERSHIP ORIGINATION COSTS | 6,820 | 8,131 | ||||||
| GOODWILL | 37,176 | 25,550 | ||||||
| OTHER ASSETS | 67,111 | 55,080 | ||||||
| TOTAL ASSETS | $ | 2,072,174 | $ | 1,915,828 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current maturities of long-term debt | $ | 12,603 | $ | 6,849 | ||||
| Accounts payable | 32,140 | 22,035 | ||||||
| Construction accounts payable | 25,208 | 21,892 | ||||||
| Accrued expenses | 63,333 | 56,284 | ||||||
| Deferred revenue | 34,753 | 33,898 | ||||||
| Total current liabilities | 168,037 | 140,958 | ||||||
| LONG-TERM DEBT, net of current portion | 691,867 | 679,449 | ||||||
| DEFERRED RENT LIABILITY | 22,490 | 19,370 | ||||||
| DEFERRED INCOME TAXES | 95,509 | 100,582 | ||||||
| DEFERRED REVENUE | 6,840 | 8,203 | ||||||
| OTHER LIABILITIES | 14,514 | 9,793 | ||||||
| Total liabilities | 999,257 | 958,355 | ||||||
| SHAREHOLDERS' EQUITY: | ||||||||
| Common stock | 864 | 849 | ||||||
| Additional paid-in capital | 447,912 | 441,813 | ||||||
| Retained earnings | 628,942 | 517,404 | ||||||
| Accumulated other comprehensive loss | (4,801 | ) | (2,593 | ) | ||||
| Total shareholders' equity | 1,072,917 | 957,473 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 2,072,174 | $ | 1,915,828 | ||||
| LIFE TIME FITNESS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) |
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| For the Three Months Ended December 31, |
For the Year Ended December 31, |
|||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
| REVENUE: | ||||||||||||||||
| Membership dues | $ | 179,663 | $ | 166,909 | $ | 727,596 | $ | 663,439 | ||||||||
| Enrollment fees | 3,604 | 4,157 | 15,346 | 18,447 | ||||||||||||
| In-center revenue | 82,988 | 73,745 | 348,265 | 308,474 | ||||||||||||
| Total center revenue | 266,255 | 244,811 | 1,091,207 | 990,360 | ||||||||||||
| Other revenue | 9,068 | 6,103 | 35,740 | 23,314 | ||||||||||||
| Total revenue | 275,323 | 250,914 | 1,126,947 | 1,013,674 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Center operations | 159,097 | 149,436 | 655,887 | 614,949 | ||||||||||||
| Advertising and marketing | 11,060 | 9,818 | 39,931 | 36,318 | ||||||||||||
| General and administrative | 14,525 | 17,429 | 55,715 | 54,736 | ||||||||||||
| Other operating | 16,927 | 12,165 | 52,170 | 35,562 | ||||||||||||
| Depreciation and amortization | 29,799 | 25,198 | 115,016 | 98,843 | ||||||||||||
| Total operating expenses | 231,408 | 214,046 | 918,719 | 840,408 | ||||||||||||
| Income from operations | 43,915 | 36,868 | 208,228 | 173,266 | ||||||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||||
| Interest expense, net | (6,143 | ) | (4,865 | ) | (25,475 | ) | (20,138 | ) | ||||||||
| Equity in earnings of affiliate | 339 | 326 | 1,482 | 1,299 | ||||||||||||
| Total other income (expense) | (5,804 | ) | (4,539 | ) | (23,993 | ) | (18,839 | ) | ||||||||
| INCOME BEFORE INCOME TAXES | 38,111 | 32,329 | 184,235 | 154,427 | ||||||||||||
| PROVISION FOR INCOME TAXES | 14,681 | 12,486 | 72,697 | 61,810 | ||||||||||||
| NET INCOME | $ | 23,430 | $ | 19,843 | $ | 111,538 | $ | 92,617 | ||||||||
| BASIC EARNINGS PER COMMON SHARE | $ | 0.57 | $ | 0.49 | $ | 2.70 | $ | 2.29 | ||||||||
| DILUTED EARNINGS PER COMMON SHARE | $ | 0.56 | $ | 0.48 | $ | 2.66 | $ | 2.26 | ||||||||
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC |
41,260 | 40,487 | 41,345 | 40,358 | ||||||||||||
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED |
42,015 | 41,342 | 41,972 | 40,930 | ||||||||||||
| LIFE TIME FITNESS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) |
||||||||
| For the Year Ended December 31, |
||||||||
| 2012 | 2011 | |||||||
| (Unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 111,538 | $ | 92,617 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 115,016 | 98,843 | ||||||
| Deferred income taxes | (2,832 | ) | 5,557 | |||||
| Loss on disposal of property and equipment, net | 1,086 | 1,779 | ||||||
| Gain on sale of land held for sale | (196 | ) | - | |||||
| Amortization of deferred financing costs | 2,003 | 2,269 | ||||||
| Share-based compensation | 14,686 | 19,767 | ||||||
| Excess tax benefit related to share-based compensation | (8,502 | ) | (3,537 | ) | ||||
| Changes in operating assets and liabilities | 22,999 | 10,277 | ||||||
| Other | (53 | ) | 371 | |||||
| Net cash provided by operating activities | 255,745 | 227,943 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | (224,194 | ) | (165,335 | ) | ||||
| Acquisitions, net of cash acquired | (30,614 | ) | (70,264 | ) | ||||
| Proceeds from sale of property and equipment | 969 | 794 | ||||||
| Proceeds from sale of land held for sale | 1,758 | - | ||||||
| Proceeds from property insurance settlements | 909 | 464 | ||||||
| Increase in other assets | (333 | ) | (92 | ) | ||||
| Decrease in restricted cash | 102 | 1,484 | ||||||
| Net cash used in investing activities | (251,403 | ) | (232,949 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayments of long-term borrowings | (6,929 | ) | (79,192 | ) | ||||
| Proceeds from revolving credit facility, net | 22,000 | 77,800 | ||||||
| Increase in deferred financing costs | (914 | ) | (4,989 | ) | ||||
| Excess tax benefit related to share-based compensation | 8,502 | 3,537 | ||||||
| Proceeds from stock option exercises | 2,342 | 3,162 | ||||||
| Proceeds from employee stock purchase plan | 1,206 | 1,061 | ||||||
| Stock purchased for employee stock purchase plan | (1,290 | ) | (1,113 | ) | ||||
| Repurchases of common stock | (19,099 | ) | - | |||||
| Net cash provided by financing activities | 5,818 | 266 | ||||||
| Effect of exchange rates on cash and cash equivalents | (1,148 | ) | - | |||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 9,012 | (4,740 | ) | |||||
| CASH AND CASH EQUIVALENTS - Beginning of period | 7,487 | 12,227 | ||||||
| CASH AND CASH EQUIVALENTS - End of period | $ | 16,499 | $ | 7,487 | ||||
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) |
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| For the Three Months Ended December 31, |
For the Year Ended December 31, |
|||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| Net income | $ | 23,430 | $ | 19,843 | $ | 111,538 | $ | 92,617 | ||||
| Interest expense, net | 6,143 | 4,865 | 25,475 | 20,138 | ||||||||
| Provision for income taxes | 14,681 | 12,486 | 72,697 | 61,810 | ||||||||
| Depreciation and amortization | 29,799 | 25,198 | 115,016 | 98,843 | ||||||||
| EBITDA | $ | 74,053 | $ | 62,392 | $ | 324,726 | $ | 273,408 | ||||
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 December 31, |
For the Year Ended December 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Net cash provided by operating activities | $ | 52,884 | $ | 50,621 | $ | 255,745 | $ | 227,943 | ||||||||
| Less: Purchases of property and equipment | (59,638 | ) | (43,186 | ) | (224,194 | ) | (165,335 | ) | ||||||||
| Free cash flow | $ | (6,754 | ) | $ | 7,435 | $ | 31,551 | $ | 62,608 | |||||||
Non-GAAP Average Center Revenue Per Membership. Non-GAAP average center revenue per membership is a non-GAAP financial measure consisting of average center revenue per membership excluding the impact of LFF, which may provide a better metric for comparing operating results. The following table provides a reconciliation of average center revenue per membership, the most directly comparable GAAP measure, to non-GAAP average center revenue per membership:
| RECONCILIATION OF AVERAGE CENTER REVENUE PER MEMBERSHIP TO NON-GAAP AVERAGE CENTER REVENUE PER MEMBERSHIP (Unaudited) |
|||||||||||||||||
| For the Three Months Ended December 31, |
Growth | For the Year Ended December 31, |
Growth | ||||||||||||||
| 2012 | 2011 | Rate | 2012 | 2011 | Rate | ||||||||||||
| Average center revenue per membership | $ | 393 | $ | 380 | 3.5 | % | $ | 1,587 | $ | 1,543 | 2.9 | % | |||||
| Excluding the impact of LFF transaction | 6 | 2 | - | 31 | 2 | - | |||||||||||
|
Non-GAAP average center revenue per membership |
$ | 399 | $ | 382 | 4.5 | % | $ | 1,618 | $ | 1,545 | 4.7 | % | |||||
Non-GAAP Average In-Center Revenue Per Membership. Non-GAAP average in-center revenue per membership is a non-GAAP financial measure consisting of average in-center revenue per membership excluding the impact of LFF, which may provide a better metric for comparing operating results. The following table provides a reconciliation of average in-center revenue per membership, the most directly comparable GAAP measure, to non-GAAP average in-center revenue per membership:
| RECONCILIATION OF AVERAGE IN-CENTER REVENUE PER MEMBERSHIP TO NON-GAAP AVERAGE IN-CENTER REVENUE PER MEMBERSHIP (Unaudited) |
||||||||||||||||||
| For the Three Months Ended December 31, |
Growth | For the Year Ended December 31, |
Growth | |||||||||||||||
| 2012 | 2011 | Rate | 2012 | 2011 | Rate | |||||||||||||
|
Average in-center revenue per membership |
$ | 122 | $ | 114 | 7.1 | % | $ | 507 | $ | 481 | 5.4 | % | ||||||
| Excluding the impact of LFF transaction | 3 | 1 | 11 | 1 | - | |||||||||||||
|
Non-GAAP average in-center revenue per membership |
$ | 125 | $ | 115 | 8.1 | % | $ | 518 | $ | 482 | 7.6 | % |
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