Exhibit 99.1
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Investor Contact: Ken Cooper — 952-229-7427 or ir@lifetimefitness.com
Media Contact: Jason Thunstrom — 952-229-7435 or jthunstrom@lifetimefitness.com
Media Contact: Jason Thunstrom — 952-229-7435 or jthunstrom@lifetimefitness.com
FOR IMMEDIATE RELEASE
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
Company Reports Revenue Growth of 32.6% and Net Income Growth of 35.5% for the Quarter
EDEN PRAIRIE, Minn. (April 26, 2007)— 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.”
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Life Time Fitness First Quarter 2007 Results — Page 2
Three Months Ended March 31, 2007, Financial Highlights:
Total revenuefor the first quarter grew 32.6% to $153.1 million, driven primarily by growth in membership dues and in-center revenue.
Total revenuefor 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 expensesduring 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 incomeduring 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.
EBITDAfor 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 operationsfor the first quarter grew 16.3% to $39.0 million from $33.6 million in the prior-year period.
Weighted average diluted sharesfor 1Q 2007 totaled 37.4 million compared to 36.8 million shares in 1Q 2006.
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Life Time Fitness First Quarter 2007 Results — Page 3
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:
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 atlifetimefitness.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.
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Life Time Fitness First Quarter 2007 Results — Page 4
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.
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.
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LIFE TIME FITNESS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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 | ||||
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)
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 | ||||
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)
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)
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 | ||||