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

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)

$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%

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 (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, 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)

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