Life Time Fitness Announces Fourth Quarter and Full-Year 2012 Financial Results

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Life Time Fitness Announces Fourth Quarter and Full-Year 2012 Financial Results

  • For the Quarter, Revenue Grew 9.7%, Net Income Grew 18.1% and Diluted EPS was $0.56, up 16.2%
  • For the Year, Revenue Grew 11.2%, Net Income Grew 20.4% and Diluted EPS was $2.66, up 17.4%

CHANHASSEN, Minn.--(BUSINESS WIRE)-- Life Time Fitness, Inc. (NYS: 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)

  • Membership dues
$179.7 vs. $166.9 (up 7.6%)
  • In-center revenue
$83.0 vs. $73.7 (up 12.5%)
  • Other revenue
$9.1 vs. $6.1 (up 48.6%)
 
  • Average center revenue per membership (up 4.5% to $399 excluding the Lifestyle Family Fitness transaction ("LFF"))
$393 vs. $380 (up 3.5%)
  • Average in-center revenue per membership (up 8.1% to $125 excluding LFF)
$122 vs. $114 (up 7.1%)
  • Same-center revenue (open 13 months or longer)
Up 3.6%
  • Same-center revenue (open 37 months or longer)
Up 3.0%
(Period-over-period growth) 

2012 vs. 2011

(in millions except revenue per membership data)

  • Membership dues
$727.6 vs. $663.4 (up 9.7%)
  • In-center revenue
$348.3 vs. $308.5 (up 12.9%)
  • Other revenue
$35.7 vs. $23.3 (up 53.3%)
 
  • Average center revenue per membership (up 4.7% to $1,618 excluding LFF)
$1,587 vs. $1,543 (up 2.9%)
  • Average in-center revenue per membership (up 7.6% to $518 excluding LFF)
$507 vs. $481 (up 5.4%)
  • Same-center revenue (open 13 months or longer)
Up 4.3%
  • Same-center revenue (open 37 months or longer)
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

  • Center operations
57.8% vs. 59.6%58.2% vs. 60.7%
  • Advertising and marketing
4.0% vs. 3.9%3.5% vs. 3.5%
  • General and administrative
5.3% vs. 6.9%5.0% vs. 5.4%
  • Other operating
6.1% vs. 4.8%4.6% vs. 3.5%
  • Depreciation and amortization
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 (NYS: 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, net9,2726,156
Center operating supplies and inventories27,24021,600
Prepaid expenses and other current assets26,82622,905
Deferred membership origination costs11,66412,525
Deferred income taxes8,8139,850
Income tax receivable -  5,022 
Total current assets100,31485,545
PROPERTY AND EQUIPMENT, net1,858,6661,740,434
RESTRICTED CASH2,0871,088
DEFERRED MEMBERSHIP ORIGINATION COSTS6,8208,131
GOODWILL37,17625,550
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 payable32,14022,035
Construction accounts payable25,20821,892
Accrued expenses63,33356,284
Deferred revenue 34,753  33,898 
Total current liabilities168,037140,958
LONG-TERM DEBT, net of current portion691,867679,449
DEFERRED RENT LIABILITY22,49019,370
DEFERRED INCOME TAXES95,509100,582
DEFERRED REVENUE6,8408,203
OTHER LIABILITIES 14,514  9,793 
Total liabilities 999,257  958,355 
SHAREHOLDERS' EQUITY:
Common stock864849
Additional paid-in capital447,912441,813
Retained earnings628,942517,404
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)
    
For the Three Months Ended
December 31,
For the Year Ended
December 31,
2012201120122011
(Unaudited)(Unaudited)(Unaudited)
REVENUE:
Membership dues$179,663$166,909$727,596$663,439
Enrollment fees3,6044,15715,34618,447
In-center revenue 82,988  73,745  348,265  308,474 
Total center revenue266,255244,8111,091,207990,360
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 operations159,097149,436655,887614,949
Advertising and marketing11,0609,81839,93136,318
General and administrative14,52517,42955,71554,736
Other operating16,92712,16552,17035,562
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 TAXES38,11132,329184,235154,427
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,
20122011
(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 amortization115,01698,843
Deferred income taxes(2,832)5,557
Loss on disposal of property and equipment, net1,086 Read Full Story

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