Life Time Fitness Announces Second Quarter 2013 Financial Results

Life Time Fitness Announces Second Quarter 2013 Financial Results

Revenue Grew 6.9%, Net Income Grew 9.6% and Diluted EPS was $0.80

CHANHASSEN, Minn.--(BUSINESS WIRE)-- Life Time Fitness, Inc. (NYS: LTM) , The Healthy Way of Life Company, today reported its financial results for the second quarter ended June 30, 2013.

Second quarter 2013 revenue grew 6.9% to $308.1 million from $288.3 million during the same period last year. Total revenue for the first six months of 2013 grew 7.6% to $598.9 million from $556.8 million during the same period last year.

Net income for the quarter was $33.2 million, or $0.80 per diluted share, compared to net income of $30.3 million, or $0.73 per diluted share, for 2Q 2012. Net income for the first six months of 2013 was $61.3 million, or $1.47 per diluted share, compared to net income of $56.0 million, or $1.34 per diluted share for the prior-year period.

"Our unrelenting focus on the member experience continues to differentiate the high quality of our centers and programs, and emphasizes our strong business model," said Bahram Akradi, chairman, president and chief executive officer. "As our company has evolved so has the precision with which we operate our centers and serve our members. This has allowed us to deliver strong business results and created a solid platform for future growth through new center expansion and our portfolio of healthy way of life programs and services delivered both inside and outside of our destinations."

During the quarter, the Company opened its first center in Alabama, located in Vestavia Hills (Birmingham market). Two additional centers are planned for opening in 2013, including Reston, Virginia (Washington D.C. market), in September, and Montvale, New Jersey (Greater New York area market), in November. These represent the Company's fourth and third centers in Virginia and New Jersey, respectively. In 2014, plans call for six new center openings, led by locations in Harrison, New York (Greater New York area market) and Laguna Niguel, California (Orange County market) during the first quarter.

Three and Six Months Ended June 30, 2013, Financial Highlights:

Total revenue for the second quarter grew 6.9% to $308.1 million from $288.3 million in 2Q 2012. Total revenue for the first six months of 2013 grew 7.6% to $598.9 million from $556.8 million during the prior-year period.

Total memberships grew 1.2% to 812,866 at June 30, 2013, from 802,889 at June 30, 2012.

• Access memberships grew 0.6% to 713,138 at June 30, 2013, from 708,585 at June 30, 2012.

• Non-Access memberships grew 5.8% to 99,728 at June 30, 2013, from 94,304 at June 30, 2012.

• Attrition in 2Q 2013 was 8.2% compared to 7.6% in the prior-year period. Attrition for the trailing 12-month period ended June 30, 2013, was 34.5% compared to trailing 12-month attrition of 31.9% at June 30, 2012. The second quarter year-over-year attrition increase was driven primarily by Non-Access membership terminations. The trailing 12-month attrition increase was driven primarily by Non-Access membership terminations and the Lifestyle Family Fitness acquisition.

Total operating expenses during 2Q 2013 were $247.4 million compared to $231.7 million for 2Q 2012. Total operating expenses for the first six months of 2013 were $485.8 million compared to $451.8 million in 2012.

• Income from operations margin was 19.8% for 2Q 2013, up from 19.6% for 2Q 2012.

• Income from operations margin was 18.9% for the first six months of 2013 compared to 18.8% for 2012.

Net income for 2Q 2013 was $33.2 million, or $0.80 per diluted share, compared to net income of $30.3 million, or $0.73 per diluted share, for 2Q 2012. Net income for the first six months of 2013 was $61.3 million, or $1.47 per diluted share, compared to net income of $56.0 million, or $1.34 per diluted share, for the prior-year period.

EBITDA for 2Q 2013 was $91.1 million compared to $85.8 million in 2Q 2012. For the first six months of 2013, EBITDA was $173.1 million compared with $161.5 million in the prior-year period.

• As a percentage of total revenue, EBITDA in 2Q 2013 was 29.6% in 2Q 2013 and 29.8% in 2Q 2012.

• For the first six months of 2013, EBITDA, as a percentage of total revenue, was 28.9% compared to 29.0% in the prior-year period.

Cash flows from operating activities for the first six months of 2013 totaled $124.5 million compared to $142.2 million in the prior-year period. This reduction is driven primarily by the timing of income and real estate tax payments, and lower growth in operating liabilities this year.

Weighted average fully diluted shares for 2Q 2013 totaled 41.7 million compared to 41.8 million in 2Q 2012. For the first six months of 2013, weighted average fully diluted shares totaled 41.6 million compared to 41.8 million for the prior-year period.

2013 Business Outlook:

The following statements are based on the Company's current expectations for fiscal year 2013 and incorporate 2013 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 7-8%, or $1.205-1.220 billion, driven primarily by price and mix optimization, square foot expansion, and growth in in-center and ancillary business revenue.

• Net income is expected to be up 8.5-11%, or $121.0-124.0 million, driven by revenue growth and cost efficiencies.

• Diluted earnings per common share is expected to be $2.89-2.95 (updated from $2.87-2.95).

As announced on July 18, 2013, the Company will hold a conference call today at 10:00 a.m. ET to discuss its second quarter 2013 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 July 25, 2013, the Company operated 106 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.