News

Life Time Fitness Announces Fourth Quarter And Full-Year 2009 Financial Results
Company Reports Revenue Growth of 5.0% and Earnings Per Share of $0.46 for the Quarter; Full-Year Revenue Grew 8.8% and Earnings Per Share was $1.82
"In 2009, we set our minds on winning on a number of fronts and I’m pleased with our progress on many of them, including free cash flow delivery, debt reduction and cost structure improvements"

CHANHASSEN, Minn.--(BUSINESS WIRE)--Life Time Fitness, Inc. (NYSE:LTM) today reported its financial results for the fourth quarter and full year ended December 31, 2009.

Fourth quarter 2009 revenue grew 5.0% to $203.7 million from $194.0 million during the same period last year. Revenue for the year totaled $837.0 million, up 8.8% from $769.6 million in 2008.

Net income for the quarter was $18.4 million, or $0.46 per diluted share. This compares to net income of $13.0 million, or $0.33 per diluted share, for 4Q 2008. For the full year, net income was $72.4 million, or $1.82 per diluted share, compared to $71.8 million, or $1.83 per diluted share, for 2008.

“In 2009, we set our minds on winning on a number of fronts and I’m pleased with our progress on many of them, including free cash flow delivery, debt reduction and cost structure improvements,” said Bahram Akradi, Life Time Fitness chairman, president and chief executive officer. “At the same time, our same-center revenue and attrition metrics remain key areas of focus, and we saw some improvement during the year, but we are not satisfied. In 2010, we will strive to improve both of these metrics. We also remain highly committed to ongoing growth as a Healthy Way of Life Company in spite of the continuing economic headwind. Overall, I am pleased with the impact we are starting to see on many of our connectivity and growth initiatives, and with our entire team’s focus on making significant progress through the course of this year.”

In January, the Company opened a new center in Beachwood, Ohio, marking its first location in the Cleveland market and the first of three new, large format centers planned for 2010. In March, the Company expects to open its second new, large format center for the year in Lenexa, Kansas. This represents the second Life Time Fitness location in the Kansas City market. One additional large format center is expected to open in the fourth quarter. This month, the Company also plans to open a new Pilates, yoga and personal training boutique concept center in Scottsdale, Arizona.

Three and Twelve Months Ended December 31, 2009, Financial Highlights:

Total revenue for the fourth quarter grew 5.0% to $203.7 million from $194.0 million. Total revenue for the full year grew 8.8% to $837.0 million from $769.6 million in 2008.

(Period-over-period growth)   4Q 2009 vs. 4Q 2008       2009 vs. 2008
  • Membership dues
    5.8 %       10.9 %
  • Enrollment fees
    (1.1 %)       (1.6 %)
  • In-center revenue
    6.6 %       6.7 %
             
  • Same-center revenue (13th month of operation)
    0.3 %       (3.1 %)
  • Same-center revenue (37th month of operation)
    (4.7 %)       (7.5 %)
  • Average center revenue per membership
  $350 – up 1.6%       $1,414 – down 0.9%
  • Average in-center revenue per membership
  $95 – up 2.4 %       $400 – down 3.4%

Memberships grew 2.1% to 578,937 at December 31, 2009, from 567,110 at December 31, 2008.

  • Attrition in 4Q 2009 was 10.8%, the same as the prior-year period.
  • Attrition improved to 40.6% in 2009 compared to 42.3% in 2008.

Total operating expenses during 4Q 2009 totaled $165.6 million compared to $164.6 million for 4Q 2008. Fourth quarter 2008 results included $5.0 million in costs primarily related to slowing the development of new centers. Full-year operating expenses were $688.1 million compared with $622.3 million in 2008.

  • Operating margin was 18.7% for 4Q 2009 compared to 15.1% in the prior-year period.
  • Full-year operating margin was 17.8% compared to 19.1% in 2008.
(Expense as a percent of total revenue)     4Q 2009 vs. 4Q 2008   2009 vs. 2008
  • Center operations
    60.4% vs. 60.6%   60.5% vs. 59.1%
  • Advertising and marketing
    3.0% vs. 4.1%   3.2% vs. 4.1%
  • General and administrative
    4.8% vs. 6.7%   5.1% vs. 5.7%
  • Other operating
    2.0% vs. 3.0%   2.6% vs. 2.5%
  • Depreciation and amortization
    11.1% vs. 10.5%  

10.8% vs. 9.5%

Net income for 4Q 2009 was $18.4 million compared with $13.0 million in 4Q 2008, and full-year net income was $72.4 million compared with $71.8 million in 2008. The effective income tax rate for 2009 was 39.6% compared with 39.7% in 2008.

EBITDA for 4Q 2009 was $61.1 million compared with $50.0 million in 4Q 2008. Full-year EBITDA was $240.9 million compared with $221.5 million in 2008.

  • As a percentage of total revenue, EBITDA was 30.0% in 4Q 2009 compared to 25.8% in 4Q 2008.
  • EBITDA margin in 2009 was 28.8%, the same as the prior year.

Cash flows from operations for the full year 2009 totaled $186.2 million compared to $183.1 million in 2008.

Weighted average diluted shares for 4Q 2009 totaled 40.3 million compared to 39.2 million in 4Q 2008. For the full year 2009, weighted average diluted shares totaled 39.9 million compared to 39.3 million in 2008.

2010 Business Outlook:

The following statements are based on the Company's current expectations for fiscal year 2010, which incorporate late 2009 operating trends and are subject to the risks and uncertainties described below:

  • Revenue is expected to be up 4-7%, or $870-895 million, driven primarily by membership growth at new and ramping centers.
  • Net income is expected to be up 4-9%, or $75-79 million, driven by revenue growth and cost efficiencies.
  • Diluted earnings per common share is expected to be $1.85-1.95.

As announced on February 11, 2010, the Company will hold a conference call today at 10:00 a.m. ET to discuss its fourth quarter and full-year 2009 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and Kenneth Cooper, vice president 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.

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 February 18, 2010, Life Time Fitness operated 85 centers in 19 states, including Arizona, Colorado, Florida, Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Jersey, North Carolina, Ohio, Tennessee, Texas, Utah and Virginia. Life Time Fitness is headquartered in Chanhassen, Minnesota, and can be located on the Web at lifetimefitness.com. LIFE TIME FITNESS, LIFE TIME ATHLETIC, EXPERIENCE LIFE, and the LIFE TIME FITNESS TRIATHLON SERIES are trademarks or service marks of Life Time Fitness, Inc. All other trademarks or registered trademarks are the property of their respective owners.

Risks and 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 attracting and retaining members, risks related to our debt levels and debt covenants, our ability to access existing credit facilities and obtain additional financing, 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 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. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
               
               
          December 31, 2009   December 31, 2008
ASSETS     (Unaudited)    
CURRENT ASSETS:        
  Cash and cash equivalents   $ 6,282     $ 10,829  
  Accounts receivable, net     4,026       6,114  
  Inventories and center operating supplies     14,621       14,632  
  Prepaid expenses and other current assets     12,938       10,994  
  Deferred membership origination costs     20,278       19,877  
  Deferred income taxes     660       1,365  
    Total current assets     58,805       63,811  
PROPERTY AND EQUIPMENT, net     1,512,993       1,515,957  
RESTRICTED CASH     2,941       3,936  
DEFERRED MEMBERSHIP ORIGINATION COSTS     8,716       14,210  
OTHER ASSETS     48,070       49,789  
    TOTAL ASSETS   $ 1,631,525     $ 1,647,703  
               
LIABILITIES AND SHAREHOLDERS' EQUITY        
CURRENT LIABILITIES:        
  Current maturities of long-term debt   $ 16,716     $ 10,335  
  Accounts payable     14,429       14,842  
  Construction accounts payable     9,882       63,418  
  Accrued expenses     48,235       46,230  
  Deferred revenue     36,939       36,098  
    Total current liabilities     126,201       170,923  
LONG-TERM DEBT, net of current portion     643,630       702,569  
DEFERRED RENT LIABILITY     29,048       27,925  
DEFERRED INCOME TAXES     77,189       51,982  
DEFERRED REVENUE     8,819       13,719  
OTHER LIABILITIES     9,207       27,684  
    Total liabilities     894,094       994,802  
SHAREHOLDERS' EQUITY:        
  Common stock     829       793  
  Additional paid-in capital     395,121       385,095  
  Retained earnings     344,095       271,711  
  Accumulated other comprehensive loss     (2,614 )     (4,698 )
    Total shareholders' equity     737,431       652,901  
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 1,631,525     $ 1,647,703  
                     
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
                       
        For the     For the
        Three Months Ended     Year Ended
        December 31,     December 31,
        2009   2008     2009   2008
        (Unaudited)   (Unaudited)     (Unaudited)    
REVENUE:                  
  Membership dues   $ 139,535     $ 131,926       $ 564,605     $ 508,927  
  Enrollment fees     6,508       6,579         26,138       26,570  
  In-center revenue     54,153       50,813         232,834       218,198  
    Total center revenue     200,196       189,318         823,577       753,695  
  Other revenue     3,502       4,636         13,424       15,926  
    Total revenue     203,698       193,954         837,001       769,621  
OPERATING EXPENSES:                  
  Center operations     123,130       117,506         506,443       454,645  
  Advertising and marketing     6,154       7,892         26,299       31,500  
  General and administrative     9,604       13,042         42,776       43,749  
  Other operating     4,061       5,730         21,852       19,426  
  Depreciation and amortization     22,643       20,447         90,770       72,947  
    Total operating expenses     165,592       164,617         688,140       622,267  
    Income from operations     38,106       29,337         148,861       147,354  
OTHER INCOME (EXPENSE):                  
  Interest expense, net     (7,333 )     (8,251 )       (30,338 )     (29,552 )
  Equity in earnings of affiliate     317       258         1,302       1,243  
    Total other income (expense)     (7,016 )     (7,993 )       (29,036 )     (28,309 )
INCOME BEFORE INCOME TAXES     31,090       21,344         119,825       119,045  
PROVISION FOR INCOME TAXES     12,713       8,329         47,441       47,224  
NET INCOME   $ 18,377     $ 13,015       $ 72,384     $ 71,821  
BASIC EARNINGS PER COMMON SHARE   $ 0.47     $ 0.33       $ 1.84     $ 1.84  
DILUTED EARNINGS PER COMMON SHARE   $ 0.46     $ 0.33       $ 1.82     $ 1.83  
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                  
  OUTSTANDING - BASIC     39,444       39,124         39,297       39,002  
WEIGHTED AVERAGE NUMBER OF COMMON SHARES                  
  OUTSTANDING - DILUTED     40,331       39,172         39,870       39,342  
                                     
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
               
          For the
          Year Ended
          December 31,
          2009   2008
          (Unaudited)    
CASH FLOWS FROM OPERATING ACTIVITIES:        
  Net income   $ 72,384     $ 71,821  
 

Adjustments to reconcile net income to net cash provided by operating activities:

       
    Depreciation and amortization     90,770       72,947  
    Deferred income taxes     23,270       14,815  
    Loss on disposal of property and equipment, net     1,229       985  
    Gain on sale of land held for sale     (1,132 )     -  
    Amortization of deferred financing costs     2,544       1,663  
    Share-based compensation     8,082       7,456  
    Excess tax benefit related to share-based payment arrangements     (507 )     (103 )
    Changes in operating assets and liabilities     (10,951 )     13,543  
    Other       514       (61 )
      Net cash provided by operating activities     186,203       183,066  
               
CASH FLOWS FROM INVESTING ACTIVITIES:        
  Purchases of property and equipment     (146,632 )     (463,337 )
  Proceeds from sale of property and equipment     8       161,888  
  Proceeds on sale of land held for sale     1,954       -  
  Proceeds from property insurance settlement     -       318  
  Decrease (increase) in other assets     390       (7,695 )
  Decrease in restricted cash     995       2,831  
      Net cash used in investing activities     (143,285 )     (305,995 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:        
  Proceeds from long-term borrowings     18,151       43,272  
  Repayments of long-term borrowings     (11,001 )     (13,143 )
  Proceeds from (repayments of) revolving credit facility, net     (56,500 )     101,800  
  Increase in deferred financing costs     (1,092 )     (6,664 )
  Excess tax benefit related to share-based payment arrangements     507       103  
  Proceeds from exercise of stock options     2,470       3,036  
      Net cash provided by (used in) financing activities     (47,465 )     128,404  
               
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     (4,547 )     5,475  
CASH AND CASH EQUIVALENTS - Beginning of period     10,829       5,354  
CASH AND CASH EQUIVALENTS - End of period   $ 6,282     $ 10,829  
                 

Non-GAAP Financial Measures

This release and the related conference call disclose certain non-GAAP financial measures.

EBITDA. Earnings Before Interest, Income Taxes and Depreciation and Amortization (EBITDA) is a non-GAAP disclosure consisting 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, net cash 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 EBITDA
(In thousands)
(Unaudited)
                     
      For the     For the
      Three Months Ended     Year Ended
      December 31,     December 31,
      2009   2008     2009   2008
Net income     $ 18,377   $ 13,015     $ 72,384   $ 71,821
Interest expense, net     7,333     8,251       30,338     29,552
Provision for income taxes     12,713     8,329       47,441     47,224
Depreciation and amortization     22,643     20,447       90,770     72,947
EBITDA   $ 61,066   $ 50,042     $ 240,933   $ 221,544

Free Cash Flow. Free cash flow is a non-GAAP measure consisting of net cash provided by operating activities, less purchases of property and equipment. This term, as the Company defines it, may not be comparable to a similarly titled measure used by other companies and does not represent the total increase or decrease in the cash balance presented in accordance with GAAP. The Company uses free cash flow as a measure of cash generated after spending on property and equipment. Free cash flow should not be considered as a substitute for net cash provided by operating activities prepared in accordance with GAAP.

The following table provides a reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to free cash flow:

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(In thousands)
(Unaudited)
    For the
    Year Ended
    December 31,
    2009   2008
Net cash provided by operating activities   $ 186,203     $ 183,066  
Less: Purchases of property and equipment     (146,632 )     (463,337 )
Free cash flow   $ 39,571     $ (280,271 )
 
For further information: Life Time Fitness, Inc. Investor Contact: Ken Cooper, 952-229-7427 ir@lifetimefitness.com Media Contact: Jason Thunstrom, 952-229-7435 pr@lifetimefitness.com