Life Time Fitness Announces First Quarter 2013 Financial Results

  Life Time Fitness Announces First Quarter 2013 Financial Results

      Revenue Grew 8.3%, Net Income Grew 9.5% and Diluted EPS was $0.67

Business Wire

CHANHASSEN, Minn. -- April 25, 2013

Life Time Fitness, Inc. (NYSE: LTM), The Healthy Way of Life Company, today
reported its financial results for the first quarter ended March31, 2013.

First quarter 2013 revenue grew 8.3% to $290.7 million from $268.4 million
during the same period last year. Net income for the quarter was $28.1
million, or $0.67 per diluted share, compared to net income of $25.7 million,
or $0.62 per diluted share, for 1Q 2012.

“We delivered solid revenue, net income and earnings-per-share performance in
the first quarter,” said Bahram Akradi, chairman, president and chief
executive officer. “Our focus continues to be delivering on our member
experience and connectivity objectives, while building our Healthy Way of Life
Company and brand. Today, our wide range of interest-driven programs and
services, and certified professionals help our members establish personalized
health objectives and plans that allow them to achieve real, sustainable
results. This has created a differentiated and powerful business model for
Life Time that we believe positions us for long-term growth and success.”

In April, the Company opened its first center in Alabama, located in Vestavia
Hills. Two additional centers are planned for opening in the second half of
2013, including Montvale, New Jersey and Reston, Virginia. These represent the
Company’s third and fourth centers in New Jersey and Virginia, respectively.
In 2014, plans call for six new center openings, led by locations in Harrison,
New York and Laguna Niguel, California during the first quarter.

Three Months Ended March 31, 2013, Financial Highlights:
Total revenue for the first quarter grew 8.3% to $290.7 million from $268.4
million in 1Q 2012.
                                                   
(Period-over-period growth)   1Q 2013         vs.      1Q 2012
                              (in millions except revenue per membership data)
Membership dues                   $186.4      vs.      $175.5    (up 6.2%)
In-center revenue                 $92.0       vs.      $84.6      (up 8.7%)
Other revenue                     $9.0        vs.      $4.4       (up 104.4%)
                                                                  
Average center revenue per Access $404        vs.      $382       (up 5.9%)
membership
Average in-center revenue per     $134        vs.      $124       (up 8.0%)
Access membership
Same-center revenue (open 13      Up          3.5%
months or longer)
Same-center revenue (open 37      Up          3.0%
months or longer)
                                                                  

Total memberships grew 1.5% to 809,813 at March31, 2013, from 797,640 at
March31, 2012.

  *Access memberships grew 0.6% to 708,563 at March31, 2013, from 704,467 at
    March31, 2012.
  *Non-Access memberships grew 8.7% to 101,250 at March31, 2013, from 93,173
    at March31, 2012.
  *Attrition in 1Q 2013 was 8.2% compared to 7.9% in the prior-year period.
    Attrition for the trailing 12-month period ended March31, 2013, was 33.9%
    compared to trailing 12-month attrition of 31.7% at March31, 2012. The
    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 1Q 2013 were $238.4 million compared to $220.1
million for 1Q 2012.

  *Income from operations margin was 18.0% for 1Q 2013 and 1Q 2012.

(Expense as a percent of total revenue)  1Q 2013  vs.  1Q 2012
Center operations                         58.5  %  vs.  59.9%
Advertising and marketing                 3.8   %   vs.   3.9%
General and administrative                5.2   %   vs.   5.1%
Other operating                           4.4   %   vs.   3.0%
Depreciation and amortization             10.1  %   vs.   10.1%
                                                          

Net income for 1Q 2013 was $28.1 million, or $0.67 per diluted share, compared
to net income of $25.7 million, or $0.62 per diluted share, for 1Q 2012.

EBITDA for 1Q 2013 was $82.0 million compared to $75.7 million in 1Q 2012.

  *As a percentage of total revenue, EBITDA in 1Q 2013 was 28.2% in 1Q 2013
    and 1Q 2012.

Cash flows from operating activities for 1Q 2013 totaled $76.2 million
compared to $73.9 million in 1Q 2012.

Weighted average fully diluted shares for 1Q 2013 totaled 41.6 million
compared to 41.7 million in 1Q 2012.

Updated 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 (updated from
    $1.200-1.220 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 (updated
    from $120.0-124.0 million), driven by revenue growth and cost
    efficiencies.
  *Diluted earnings per common share is expected to be $2.87-2.95 (updated
    from $2.85-2.95).

As announced on April18, 2013, the Company will hold a conference call today
at 10:00 a.m. ET to discuss its first 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.

Additionally, the Company will hold its Annual Meeting of Shareholders at 2:00
p.m. ET at its headquarters (2902 Corporate Place in Chanhassen, Minnesota).
The meeting will be webcast and may be accessed live via the Company’s
investor relations section of its website at lifetimefitness.com. A replay of
the webcast will be available beginning at approximately 5:00 p.m. ET today,
and remain available for 30 days.

About Life Time Fitness, Inc.

As The Healthy Way of Life Company, Life Time Fitness (NYSE: 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 April25, 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.


LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

                                            March 31,      December 31,
                                             2013            2012
                                             (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                    $ 13,694        $ 16,499
Accounts receivable, net                     8,376           9,272
Center operating supplies and inventories    29,132          27,240
Prepaid expenses and other current assets    28,941          26,826
Deferred membership origination costs        11,596          11,664
Deferred income taxes                        2,193          8,813       
Total current assets                         93,932          100,314
PROPERTY AND EQUIPMENT, net                  1,898,070       1,858,666
RESTRICTED CASH                              2,362           2,087
DEFERRED MEMBERSHIP ORIGINATION COSTS        6,286           6,820
GOODWILL                                     39,762          37,176
OTHER ASSETS                                 66,354         67,111      
TOTAL ASSETS                                 $ 2,106,766    $ 2,072,174 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt         $ 22,228        $ 12,603
Accounts payable                             34,683          32,140
Construction accounts payable                34,898          25,208
Accrued expenses                             66,305          63,333
Deferred revenue                             41,810         34,753      
Total current liabilities                    199,924         168,037
LONG-TERM DEBT, net of current portion       676,631         691,867
DEFERRED RENT LIABILITY                      23,120          22,490
DEFERRED INCOME TAXES                        93,685          95,509
DEFERRED REVENUE                             6,326           6,840
OTHER LIABILITIES                            21,387         14,514      
Total liabilities                            1,021,073      999,257     
SHAREHOLDERS’ EQUITY:
Common stock                                 862             864
Additional paid-in capital                   432,852         447,912
Retained earnings                            657,043         628,942
Accumulated other comprehensive income       (5,064      )   (4,801      )
Total shareholders’ equity                   1,085,693      1,072,917   
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 2,106,766    $ 2,072,174 
                                                                         

                                                  
LIFE TIME FITNESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)

                                                    For the Three Months Ended
                                                    March 31,
                                                    2013          2012
REVENUE:
Membership dues                                     $  186,374     $ 175,470
Enrollment fees                                     3,396          3,954
In-center revenue                                   91,971        84,616    
Total center revenue                                281,741        264,040
Other revenue                                       9,006         4,407     
Total revenue                                       290,747        268,447
OPERATING EXPENSES:
Center operations                                   169,962        160,715
Advertising and marketing                           10,959         10,356
General and administrative                          15,356         13,703
Other operating                                     12,834         8,391
Depreciation and amortization                       29,262        26,960    
Total operating expenses                            238,373       220,125   
Income from operations                              52,374         48,322
OTHER INCOME (EXPENSE):
Interest expense, net of interest income            (6,129     )   (6,277    )
Equity in earnings of affiliate                     346           373       
Total other income (expense)                        (5,783     )   (5,904    )
INCOME BEFORE INCOME TAXES                          46,591         42,418
PROVISION FOR INCOME TAXES                          18,490        16,746    
NET INCOME                                          $  28,101     $ 25,672  
                                                                   
BASIC EARNINGS PER COMMON SHARE                     $  0.68       $ 0.62    
DILUTED EARNINGS PER COMMON SHARE                   $  0.67       $ 0.62    
WEIGHTED AVERAGE NUMBER OF COMMON SHARES            41,295        41,174    
OUTSTANDING - BASIC
WEIGHTED AVERAGE NUMBER OF COMMON SHARES            41,646        41,675    
OUTSTANDING - DILUTED
                                                                             

                                                  
LIFE TIME FITNESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

                                                    For the Three Months Ended
                                                    March 31,
                                                    2013           2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                          $  28,101       $ 25,672
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                       29,262          26,960
Deferred income taxes                               4,582           5,360
Loss on disposal of property and equipment, net     (228       )    (2       )
Amortization of deferred financing costs            505             503
Share-based compensation                            2,830           3,878
Excess tax benefit related to share-based           (4,657     )    (8,118   )
compensation
Changes in operating assets and liabilities         16,645          19,789
Other                                               (809       )    (139     )
Net cash provided by operating activities           76,231         73,903   
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment                 (59,145    )    (38,477  )
Acquisitions, net of cash acquired                  —               (6,578   )
Proceeds from sale of property and equipment        555             363
Proceeds from property insurance settlements        121             670
Increase in other assets                            (730       )    (172     )
Increase in restricted cash                         (275       )    (177     )
Net cash used in investing activities               (59,474    )    (44,371  )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings                  75,000          —
Repayments of long-term borrowings                  (1,696     )    (1,441   )
Repayments of revolving credit facility, net        (78,400    )    (34,600  )
Increase in deferred financing costs                (465       )    (10      )
Excess tax benefit related to share-based           4,657           8,118
compensation
Proceeds from stock option exercises                872             1,972
Proceeds from employee stock purchase plan          414             388
Stock purchased for employee stock purchase plan    (569       )    (649     )
Repurchases of common stock                         (19,349    )    —        
Net cash used in financing activities               (19,536    )    (26,222  )
Effect of exchange rates on cash and cash           (26        )    —        
equivalents
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS    (2,805     )    3,310
CASH AND CASH EQUIVALENTS – Beginning of period     16,499         7,487    
CASH AND CASH EQUIVALENTS – End of period           $  13,694      $ 10,797 
                                                                             

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 measure 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 Three Months Ended
                                March 31,
                                2013             2012
Net income                      $  28,101        $  25,672
Interest expense, net           6,129            6,277
Provision for income taxes      18,490           16,746
Depreciation and amortization   29,262          26,960
EBITDA                          $  81,982       $  75,655
                                                    

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,
excluding acquisitions. 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. Additional details related to free cash flow
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 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 Three Months Ended
                                              March 31,
                                              2013                2012
Net cash provided by operating activities     $   76,231          $  73,903
Less: Purchases of property and equipment     (59,145      )      (38,477   )
Free cash flow                                $   17,086         $  35,426 
                                                                            

Contact:

Life Time Fitness, Inc.
John Heller, 952-229-7427 (Investors)
ir@lifetimefitness.com
Jason Thunstrom, 952-229-7435 (Media)
pr@lifetimefitness.com
 
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