Life Time Fitness' revenues increase 7.2% to $316M in third quarter 2013

Life Time FitnessOct 24 2013

Life Time Fitness, Inc. (NYSE: LTM), The Healthy Way of Life Company, today reported its financial results for the third quarter ended September 30, 2013.

Third quarter 2013 revenue grew 7.2% to $316.0 million from $294.9 million during the same period last year. Revenue for the first nine months of 2013 grew 7.4% to $914.9 million from $851.6 million during the same period last year.

Net income for the quarter was $34.4 million, or $0.83 per diluted share, compared to net income of $32.1 million, or $0.77 per diluted share, for 3Q 2012. Net income for the first nine months of 2013 was $95.7 million, or $2.30 per diluted share, compared to net income of $88.1 million, or $2.10 per diluted share for the prior-year period.

"Our focus in 2013 continues to be upon improving the operational execution and consistency with which we deliver our broad range of programs, services and products in health, fitness and nutrition," said Bahram Akradi, chairman, president and chief executive officer. "At the same time, our unwavering efforts to establish Life Time as the definitive Healthy Way of Life Company and brand are taking hold as communities, organizations and individuals alike select our offerings. As we look toward the acceleration of our new center expansion in 2014, we are well positioned to provide even more value to our customers."

During the quarter, the Company opened its fourth center in Virginia, located in Reston (Washington D.C. market). The Company's final planned 2013 new center opening will occur in November in Montvale, New Jersey (Greater New York market), representing the third Life Time location in New Jersey. In 2014, plans call for six new center openings in existing and new markets.

Three and Nine Months Ended September 30, 2013, Financial Highlights:

Total revenue for the third quarter grew 7.2% to $316.0 million from $294.9 million in 3Q 2012. Total revenue for the first nine months of 2013 grew 7.4% to $914.9 million from $851.6 million during the prior-year period.

Total memberships grew 0.7% to 801,851 at September 30, 2013, from 796,102 at September 30, 2012.

• Access memberships grew 0.1% to 695,923 at September 30, 2013, from 695,271 at September 30, 2012.
• Non-Access memberships grew 5.1% to 105,928 at September 30, 2013, from 100,831 at September 30, 2012.
• Attrition in 3Q 2013 was 9.5% compared to 9.0% in the prior-year period. Attrition for the trailing 12-month period ended September 30, 2013, was 35.0% compared to trailing 12-month attrition of 32.9% at September 30, 2012.

Total operating expenses during 3Q 2013 were $253.2 million compared to $235.5 million for 3Q 2012. Total operating expenses for the first nine months of 2013 were $738.9 million compared to $687.3 million in 2012.

• Income from operations margin was 19.9% for 3Q 2013 compared to 20.1% in the prior-year period.
• Income from operations margin was 19.2% for the first nine months of 2013 compared to 19.3% for the first nine months of 2012.

Net income for 3Q 2013 was $34.4 million, or $0.83 per diluted share, compared to net income of $32.1 million, or $0.77 per diluted share, for 3Q 2012. Net income for the first nine months of 2013 was $95.7 million, or $2.30 per diluted share, compared to net income of $88.1 million, or $2.10 per diluted share, for the prior-year period.

EBITDA for 3Q 2013 was $93.2 million compared to $89.2 million in 3Q 2012. For the first nine months of 2013, EBITDA was $266.3 million compared with $250.7 million in the prior-year period.

• As a percentage of total revenue, EBITDA in 3Q 2013 was 29.5% in 3Q 2013 and 30.2% in 3Q 2012.
• For the first nine months of 2013, EBITDA, as a percentage of total revenue, was 29.1% compared to 29.4% in the prior-year period.

Cash flows from operating activities for the first nine months of 2013 totaled $190.8 million compared to $202.9 million in the prior-year period. This reduction is driven primarily by changes in operating assets and liabilities.

Weighted average fully diluted shares for 3Q 2013 totaled 41.6 million compared to 41.9 million in 3Q 2012. For the first nine months of 2013, weighted average fully diluted shares totaled 41.6 million compared to 41.9 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 7-7.5%, or $1.205-1.210 billion (updated from $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 9-10%, or $121.5-122.5 million (updated from $121.0-124.0 million), driven by revenue growth and cost efficiencies.
• Diluted earnings per common share is expected to be $2.91-2.93 (updated from $2.89-2.95).

As announced on October 17, 2013, the Company will hold a conference call today at 10:00 a.m. ET to discuss its third quarter 2013 results. Bahram Akradi, Michael Robinson, executive vice president and chief financial officer, and John Heller, vice president, Finance and Investor Relations, 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.