Life Time Reports Third Quarter 2024 Financial Results
Total revenue of $693.2 million, an increase of 18.5% over the prior year quarter
Net income of $41.4 million, an increase of 422.5% over the prior year quarter
Adjusted net income of $56.3 million, an increase of 110.9% over the prior year quarter
Adjusted EBITDA of $180.3 million, an increase of 26.1% over the prior year quarter
Diluted EPS increased to $0.19 from $0.04 in the prior year quarter
Reduced net debt leverage ratio to 2.4 times
Delivered positive net cash provided by operating activities and free cash flow before sale-leaseback transactions
CHANHASSEN, Minn., Oct. 24, 2024 /PRNewswire/ -- Life Time Group Holdings, Inc. ("Life Time," "we," "our," "us," or the "Company") (NYSE:LTH) today announced its financial results for the fiscal third quarter ended September 30, 2024.
Bahram Akradi, Founder, Chairman and CEO, stated: "Having achieved another quarter of strong financial performance, we remain confident in the strength and trajectory of our business. In the third quarter, we continued deleveraging to under 2.5 times and once again delivered significant cash from our operating activities and achieved positive free cash flow before sale-leaseback proceeds. With our equity offering complete and our debt refinancing in place, we are now even better positioned to continue growing our business by taking advantage of the significant opportunities in front of us. I'd like to thank all our team members for their passion and dedication to building a company that is stronger, bigger and the best version of itself."
Financial Summary
Three Months Ended
Nine Months Ended
($ in millions, except memberships and per membership data)
September 30,
September 30,
2024
2023
Percent Change
2024
2023
Percent Change
Total revenue
$693.2
$585.2
18.5 %
$1,957.7
$1,657.8
18.1 %
Center operations expenses
$371.1
$319.4
16.2 %
$1,048.5
$896.1
17.0 %
Rent
$78.6
$69.2
13.5 %
$225.8
$203.2
11.1 %
General, administrative and marketing expenses (1)
$57.7
$51.7
11.7 %
$159.8
$147.0
8.7 %
Net income
$41.4
$7.9
422.5 %
$119.1
$52.4
127.3 %
Adjusted net income
$56.3
$26.7
110.9 %
$140.2
$91.1
53.9 %
Adjusted EBITDA
$180.3
$143.0
26.1 %
$499.8
$399.1
25.2 %
Comparable center revenue (2)
12.1 %
11.4 %
11.8 %
16.6 %
Center memberships, end of period
826,502
784,331
5.4 %
826,502
784,331
5.4 %
Average center revenue per center membership
$815
$722
12.9 %
$2,361
$2,095
12.7 %
(1)
The three months ended September 30, 2024 and 2023 included non-cash share-based compensation expense of $10.3 million and $13.4 million, respectively. The nine months ended September 30, 2024 and 2023 included non-cash share-based compensation expense of $27.1 million and $32.9 million, respectively.
(2)
The Company includes a center, for comparable center revenue purposes, beginning on the first day of the 13th full calendar month of the center's operation, in order to assess the center's growth rate after one year of operation.
Third Quarter 2024 Information
Revenue increased 18.5% to $693.2million due to continued strong growth in membership dues and in-center revenue, driven by an increase in average dues, membership growth in our new and ramping centers, and higher member utilization of our in-center offerings.
Center memberships increased by 42,171, or 5.4%, when compared to September 30, 2023, and decreased consistent with seasonality expectations by approximately 6,100 from the second quarter 2024 to 826,502.
Total subscriptions, which include center memberships and our digital on-hold memberships, increased 5.6% to 876,509 as compared to September 30, 2023.
Center operations expenses increased 16.2% to $371.1 million primarily due to operating costs related to our new and ramping centers as well as costs to support growth in memberships and in-center business revenue.
General, administrative and marketing expenses increased 11.7% to $57.7 million primarily due to increases in cash incentive compensation and benefit-related expenses, information technology costs, and center support overhead to enhance and broaden our member services and experiences, partially offset by lower share-based compensation expense.
Net income increased $33.5 million to $41.4 million primarily due to improved business performance and to a lesser extent a $3.8 million decrease in the tax-effected one-time net losses from sale-leaseback transactions in the current period and a tax-effected one-time gain of $0.5 million on sales of land in the current year period as compared to a tax-effected one-time loss of $3.3 million in the prior year period.
Adjusted net income increased $29.6 million to $56.3 million.
Adjusted net income and Adjusted EBITDA improved significantly as we experienced greater flow through of our increased revenue and benefited from the structural improvements to our business that have improved our margins.
Nine-Month 2024 Information
Revenue increased 18.1% to $1,957.7million due to continued strong growth in membership dues and in-center revenue, driven by an increase in average dues, membership growth in our new and ramping centers, and higher member utilization of our in-center offerings.
Center operations expenses increased 17.0% to $1,048.5million primarily due to operating costs related to our new and ramping centers as well as costs to support growth in memberships and in-center business revenue.
General, administrative and marketing expenses increased 8.7% to $159.8million primarily due to increases in cash incentive compensation and benefit-related expenses, information technology costs, center support overhead to enhance and broaden our member services and experiences, and the timing of marketing expenses primarily related to our new club openings, partially offset by lower share-based compensation expense.
Net income increased $66.7 million to $119.1 million primarily due to improved business performance and to a lesser extent tax-effected one-time net gains of $3.7 million on sales of land and $2.0 million on sale-leaseback transactions in the current year period as compared to tax-effected one-time net losses of $10.0 million on sale-leaseback transactions and $4.2 million on the sale of land in the prior year period. Net income in the prior year period also included a $3.5 million tax-effected one-time gain on the sale of two triathlon events.
Adjusted net income increased $49.1 million to $140.2 million.
Adjusted net income and Adjusted EBITDA improved significantly as we experienced greater flow through of our increased revenue and benefited from the structural improvements to our business that have improved our margins.
New Center Openings
We opened two new centers during the third quarter.
As of September 30, 2024, we operated a total of 177 centers.
Cash Flow Highlights
Net cash provided by operating activities increased 31.8% to $151.1 million.
We achieved free cash flow of $138.3 million, including approximately $65.0 million of net proceeds from sale-leaseback transactions.
Our capital expenditures by type of expenditure were as follows:
Three Months Ended
Nine Months Ended
($ in millions)
September 30,
September 30,
2024
2023
Percent Change
2024
2023
Percent Change
Growth capital expenditures (1)
$46.4
$131.9
(64.8) %
$259.9
$368.8
(29.5) %
Maintenance capital expenditures (2)
$21.6
$29.7
(27.3) %
$70.0
$81.8
(14.4) %
Modernization and technology capital expenditures (3)
$19.1
$31.3
(39.0) %
$58.3
$79.3
(26.5) %
Total capital expenditures
$87.1
$192.9
(54.8) %
$388.2
$529.9
(26.7) %
(1)
Consist of new center land and construction, initial major remodels of acquired centers, major remodels of existing centers that expand existing square footage, asset acquisitions including the purchase of previously leased centers and other growth initiatives.
(2)
Consist of general maintenance of existing centers.
(3)
Consist of modernization of existing centers and technology.
Liquidity and Capital Resources
As of September 30, 2024, our total available liquidity was $529.7 million, which included availability on our $650.0 million revolving credit facility and cash and cash equivalents.
Our net debt leverage ratio improved to 2.4x as of September 30, 2024, from 3.7x as of September 30, 2023.
We completed sale-leaseback transactions on two properties for net proceeds of approximately $65.0 million.
We completed an equity offering of 6.0 million primary shares resulting in net proceeds of $124.4 million. We used a portion of these net proceeds to pay down an aggregate principal amount of $110.0 million of our former term loan facility. We also upsized and extended our revolving credit facility and paid the remaining aggregate principal amount of $200.0 million of our former term loan facility and no borrowings remained outstanding thereunder.
2024 Outlook
Full-Year 2024 Guidance
Percent
Year Ended
Year Ended
Year Ended
Change
December 31, 2024
December 31, 2024
December 31, 2023
(Using
(Guidance as of
($ in millions)
(Guidance)
(Actual)
Midpoints)
August 1, 2024)
Revenue
$2,595, $2,605
$2,216.6
17.3 %
$2,560, $2,590
Net Income (1)
$138, $140
$76.1
82.7 %
$142, $148
Adjusted EBITDA
$658, $662
$536.8
23.0 %
$642, $652
Rent
$305, $310
$275.1
11.8 %
$300, $312
(1)
Includes approximately $15 million of estimated one-time interest expense related to the refinancing of our senior secured and unsecured notes.
Conference Call Details
A conference call to discuss our third quarter financial results is scheduled for today:
Date: Thursday, October 24, 2024
Time: 10:00 a.m. ET (9:00 a.m. CT)
U.S. dial-in number: 1-877-451-6152
International dial-in number: 1-201-389-0879
Webcast: LTH 3Q 2024 Earnings Call
A link to the live audio webcast of the conference call will be available at https://ir.lifetime.life
Replay Information
Webcast – A recorded replay of the webcast will be available within approximately three hours of the call's conclusion and may be accessed at: https://ir.lifetime.life.
Conference Call, A replay of the conference call will be available after 1:00 p.m. ET the same day through November 7, 2024:
U.S. replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 1374 9346
About Life TimeLife Time (NYSE:LTH) empowers people to live healthy, happy lives through its portfolio of more than 175 athletic country clubs across the United States and Canada. The health and wellness pioneer also delivers a range of healthy way of life programs and information via its complimentary Life Time Digital app. The Company's healthy living, healthy aging, healthy entertainment communities and ecosystem serve people 90 days to 90+ years old and is supported by a team of more than 41,000 dedicated professionals. In addition to delivering the best programs and experiences through its clubs, Life Time owns and produces nearly 30 of the most iconic athletic events in the country.
Use of Non-GAAP Financial Measures and Key Performance IndicatorsThis press release includes certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States ("GAAP"), including Adjusted net income, Adjusted net income per common share, Adjusted EBITDA, free cash flow and net debt and ratios and calculations with respect thereto. These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should be considered in addition to, and not as a substitute for or superior to, net income, net income per common share, net cash provided by operating activities or total debt (defined as long-term debt, net of current portion, plus current maturities of debt) as a measure of financial performance or liquidity or any other performance measure derived in accordance with GAAP, and should not be construed as an inference that the Company's future results will be unaffected by unusual or non-recurring items. In addition, these non-GAAP financial measures should be read in conjunction with the Company's financial statements prepared in accordance with GAAP. The reconciliations of the Company's non-GAAP financial measures to the corresponding GAAP measures should be carefully evaluated.
Adjusted net income is defined as net income excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of our ongoing operations, less the tax effect of these adjustments. Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes and depreciation and amortization, excluding the impact of share-based compensation expense as well as (gain) loss on sale-leaseback transactions, capital transaction costs, legal settlements, asset impairment, severance and other items that are not indicative of the Company's ongoing operations. Free cash flow is defined as net cash provided by operating activities less capital expenditures, net of construction reimbursements, plus net proceeds from sale-leaseback transactions and land sales. Net debt is defined as long-term debt, net of current portion, plus current maturities of debt, excluding fair value adjustments, unamortized debt discounts and issuance costs, minus cash and cash equivalents. Net debt is as of the last day of the respective quarter or year. Our net debt leverage ratio is calculated as our net debt divided by our trailing twelve months of Adjusted EBITDA.
The Company presents these non-GAAP financial measures because management believes that these measures assist investors and analysts in comparing the Company's operating performance across reporting periods on a consistent basis by excluding items that management does not believe are indicative of the Company's ongoing operating performance, and management believes that free cash flow assists investors and analysts in evaluating our liquidity and cash flows, including our ability to make principal payments on our indebtedness and to fund our capital expenditures and working capital requirements. Investors are encouraged to evaluate these adjustments and the reasons the Company considers them appropriate for supplemental analysis. In evaluating the non-GAAP financial measures, investors should be aware that, in the future, the Company may incur expenses that are the same as or similar to some of the adjustments in the Company's presentation of its non-GAAP financial measures. There can be no assurance that the Company will not modify the presentation of non-GAAP financial measures in future periods, and any such modification may be material. In addition, the Company's non-GAAP financial measures may not be comparable to similarly titled measures used by other companies in the Company's industry or across different industries.
The non-GAAP financial measures have limitations as analytical tools, and investors should not consider these measures in isolation or as substitutes for analysis of the Company's results as reported under GAAP.
Forward-Looking StatementsThis press release includes "forward-looking statements" within the meaning of federal securities regulations. Forward-looking statements in this press release include, but are not limited to, the Company's plans, strategies and prospects, both business and financial, including its financial outlook for full year 2024, growth, cost efficiencies and margin expansion, improvements to its balance sheet, net debt and leverage ratio, capital expenditures and free cash flow, consumer demand, industry and economic trends, taxes, and rent expense. These statements are based on the beliefs and assumptions of the Company's management. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning the Company's possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or similar expressions. In addition, any statements or information that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking.
Factors that could cause actual results to differ materially from those forward-looking statements included in this press release include, but are not limited to, risks relating to our business operations and competitive and economic environment, risks relating to our brand, risks relating to the growth of our business, risks relating to our technological operations, risks relating to our capital structure and lease obligations, risks relating to our human capital, risks relating to legal compliance and risk management and risks relating to ownership of our common stock and the other important factors discussed under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the "SEC") on February 28, 2024, (File No. 001-40887), as such factors may be updated from time to time in the Company's other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any forward-looking statement that the Company makes in this press release speaks only as of the date of such statement. Except as required by law, the Company does not have any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise.
LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Revenue:
