Exhibit 99.1
Investor Contact: Kenneth Cooper — 952-229-7427 or ir@lifetimefitness.com
Media Contact: Jason Thunstrom — 952-229-7435 or pr@lifetimefitness.com
Media Contact: Jason Thunstrom — 952-229-7435 or pr@lifetimefitness.com
FOR IMMEDIATE RELEASE
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
Company Reports Revenue Growth of 10.5% and Earnings Per Diluted Share of $0.46 for the Quarter
CHANHASSEN, Minn. (July 23, 2009)— 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.
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Life Time Fitness Second Quarter 2009 Results — Page 2
Three and Six Months Ended June 30, 2009, Financial Highlights:
Total revenuefor 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 / membership | $354 – down 2.0% | $706 – down 2.5% | ||
• Average in-center revenue / membership | $102 – down 5.1% | $204 – down 6.0% |
Membershipsincreased 11.1% to 608,281 at June 30, 2009, from 547,497 at June 30, 2008.
Total operating expensesduring 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 revenue) | 2Q 2009 vs. 2Q 2008 | YTD 2008 | ||
• 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 incomeduring 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.
EBITDAfor 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 operationsfor the first half of 2009 totaled $98.3 million compared with $105.7 million in the prior-year period.
Weighted average fully diluted sharesfor 2Q 2009 totaled 39.8 million compared to 39.3 million shares in 2Q 2008.
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Life Time Fitness Second Quarter 2009 Results — Page 3
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.
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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)
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, 2009 | December 31, 2008 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
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)
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 amortization | 22,635 | 17,190 | 44,699 | 33,780 | ||||||||||||
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 affiliate | 332 | 326 | 669 | 649 | ||||||||||||
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 SHARE | $ | 0.46 | $ | 0.51 | $ | 0.85 | $ | 0.96 | ||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.46 | $ | 0.50 | $ | 0.85 | $ | 0.95 | ||||||||
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)
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 arrangements | — | (5 | ) | |||||
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 facility, net | (6,800 | ) | 116,200 | |||||
Increase in deferred financing costs | (721 | ) | (3,641 | ) | ||||
Excess tax benefit related to share-based payment arrangements | — | 5 | ||||||
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)
(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)
(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 | ) | |||