Exhibit 99.1
Investor Contact: Ken Cooper — 952-229-7427 orir@lifetimefitness.com
Media Contact: Jason Thunstrom — 952-229-7435 orpr@lifetimefitness.com
Media Contact: Jason Thunstrom — 952-229-7435 orpr@lifetimefitness.com
FOR IMMEDIATE RELEASE
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
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. (April 24, 2008)— 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.
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Life Time Fitness First Quarter 2008 Results — Page 2
Three Months Ended March 31, 2008, Financial Highlights:
Total revenuefor the first quarter grew 20.5% to $184.5 million, driven primarily by growth in membership dues and in-center revenue.
Total revenuefor 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 expensesduring 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 incomeduring 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.
EBITDAfor 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 operationsfor the first quarter grew 26.4% to $49.3 million from $39.0 million in the prior-year period.
Weighted average diluted sharesfor 1Q 2008 totaled 39.4 million compared to 37.4 million shares in 1Q 2007.
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Life Time Fitness First Quarter 2008 Results — Page 3
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.
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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 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)
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)
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)
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)
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 | ||||