- Total revenue increased 18.2% to $558.8 million for the fourth quarter and
21.6% to $2,216.6 million for
the year
- Net income increased to $23.7 million for the fourth quarter and
$76.1 million for the
year
- Adjusted net income increased to $38.0 million for the fourth quarter and
$129.7 million for the
year
- Adjusted EBITDA increased 28.7% to $137.7 million for the fourth quarter and
90.6% to $536.8 million for the
year
- Diluted EPS increased to $0.12 for the fourth quarter and $0.37 for the year
- Adjusted diluted EPS increased to $0.19 for the fourth quarter and $0.64 for the year
CHANHASSEN, Minn., Feb. 28,
2024 /PRNewswire/ -- Life Time Group Holdings,
Inc. ("Life Time," "we," "our," "us," or the "Company") (NYSE: LTH)
today announced its financial results for the fiscal fourth quarter
and full-year ended December 31,
2023.
Bahram Akradi, Founder,
Chairman and CEO, stated: "I am thrilled to report that we
achieved our operating and strategic objectives and exceeded our
financial goals in 2023. We set record levels of revenue and
adjusted EBITDA, improved our balance sheet, and further reduced
our net debt leverage ratio. We also increased member engagement
through our strategic programming initiatives, as
highlighted by the increase to 135 average visits per membership
compared to 124 in 2022 and, most notably, 108 in 2019 before the
pandemic. The increase is a clear indication that our members are
more engaged with higher retention as a key outcome. We are off to
a great start in 2024 and expect to build on our progress and
success this year by executing our plan to be free cash flow
positive after all capital expenditures beginning in the second
quarter, further improving our balance sheet, reducing our net debt
leverage ratio, and continuing to grow our revenue and adjusted
EBITDA."
Financial Summary
|
Three Months
Ended
|
|
|
|
Year
Ended
|
|
|
($ in millions, except
memberships and per membership data)
|
December
31,
|
|
|
|
December
31,
|
|
|
2023
|
|
2022
|
|
Percent
Change
|
|
2023
|
|
2022
|
|
Percent
Change
|
Total
revenue
|
$558.8
|
|
$472.7
|
|
18.2 %
|
|
$2,216.6
|
|
$1,822.6
|
|
21.6 %
|
Center operations
expenses
|
$288.3
|
|
$253.8
|
|
13.6 %
|
|
$1,184.4
|
|
$1,068.2
|
|
10.9 %
|
Rent
|
$71.9
|
|
$66.1
|
|
8.8 %
|
|
$275.1
|
|
$245.2
|
|
12.2 %
|
General, administrative
and marketing expenses (1)
|
$54.1
|
|
$38.3
|
|
41.3 %
|
|
$201.1
|
|
$214.0
|
|
(6.0) %
|
Net income
(loss)
|
$23.7
|
|
$13.7
|
|
73.0 %
|
|
$76.1
|
|
$(1.8)
|
|
NM
|
Adjusted net income
(loss)
|
$38.0
|
|
$17.6
|
|
115.9 %
|
|
$129.7
|
|
$(41.6)
|
|
NM
|
Adjusted
EBITDA
|
$137.7
|
|
$107.0
|
|
28.7 %
|
|
$536.8
|
|
$281.7
|
|
90.6 %
|
Comparable center
revenue
|
11.7 %
|
|
26.0 %
|
|
|
|
15.3 %
|
|
33.0 %
|
|
|
Center memberships, end
of period
|
763,216
|
|
725,206
|
|
5.2 %
|
|
763,216
|
|
725,206
|
|
5.2 %
|
Average center revenue
per center membership
|
$711
|
|
$640
|
|
11.1 %
|
|
$2,810
|
|
$2,528
|
|
11.2 %
|
|
NM - Not
meaningful
|
|
(1)
|
The three months ended
December 31, 2023 and 2022 included non-cash share-based
compensation expense of $11.9 million and $3.4 million,
respectively. The years ended December 31, 2023 and 2022 included
non-cash share-based compensation expense of $44.8 million and
$33.5 million, respectively.
|
Fourth Quarter 2023 Information
- Revenue increased 18.2% to $558.8 million due to continued strong
growth in membership dues and in-center revenue.
- Center memberships increased by 38,010, or 5.2%, when compared
to December 31, 2022, and decreased
sequentially from September 30, 2023
by 21,115, consistent with typical seasonality.
- Total subscriptions, which include center memberships and our
digital on-hold memberships, increased 4.9% from December 31, 2022 to 814,936.
- Center operations expenses increased 13.6% to $288.3 million primarily due to increased
operating costs related to our new and ramping centers as well as
growth in memberships and in-center business revenue.
- General, administrative and marketing expenses increased 41.3%
to $54.1 million primarily due to
higher share-based compensation expense in the current period and
lower incentive compensation expenses last year as we did not meet
our threshold performance under our short-term and long-term
incentive programs in 2022.
- Net income increased $10.0
million to $23.7 million,
primarily due to improved business performance in the current
period, partially offset by higher share-based compensation
expense.
- Adjusted net income increased $20.4
million to $38.0 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.
Full-Year 2023 Information
- Revenue increased 21.6% to $2,216.6 million due to continued strong
growth in membership dues and in-center revenue.
- Center operations expenses increased 10.9% to $1,184.4 million primarily due to increased
operating costs related to our new and ramping centers as well as
growth in memberships and in-center business revenue.
- General, administrative and marketing expenses decreased 6.0%
to $201.1 million primarily due
to reduced center support overhead and advertising and marketing
expenses.
- Net income increased $77.9
million to $76.1 million
primarily due to improved business performance in the current year,
partially offset by a $66.9 million
tax-effected gain on sale-leaseback transactions in the prior year,
higher share-based compensation in the current year, and a
$10.9 million tax-effected loss from
sale-leasebacks in the current year.
- Adjusted net income increased $171.3
million to $129.7
million.
- Adjusted net income and Adjusted EBITDA improved significantly
for the same reasons identified for the quarter.
New Center Openings
- The Company opened one new center in the fourth quarter of 2023
and a total of 11 centers for the year.
- As of December 31, 2023, Life
Time operated a total of 171 centers.
Cash Flow Highlights
|
Three Months
Ended
|
|
|
|
Year
Ended
|
|
|
($ in
millions)
|
December
31,
|
|
|
|
December
31,
|
|
|
2023
|
|
2022
|
|
Percent
Change
|
|
2023
|
|
2022
|
|
Percent
Change
|
Net cash provided by
operating activities
|
$132.1
|
|
$75.6
|
|
74.7 %
|
|
$463.0
|
|
$201.0
|
|
130.3 %
|
Total capital
expenditures (1)
|
$168.1
|
|
$181.2
|
|
(7.2) %
|
|
$693.9
|
|
$591.2
|
|
17.4 %
|
|
|
(1)
|
Excludes net proceeds
from sale-leaseback transactions of $123.3 million and $373.2
million for the years ended December 31, 2023 and 2022,
respectively.
|
Liquidity and Capital Resources
- As of December 31, 2023, the
Company's total available liquidity was $363.3 million, which included availability on
our revolving credit facility and unrestricted cash and cash
equivalents.
- During 2023, the Company completed sale-leaseback transactions
associated with three properties for net proceeds of approximately
$123.3 million.
- The Company's net debt leverage ratio improved to 3.6x as of
December 31, 2023, from 6.5x as of
December 31, 2022.
2024
Outlook
|
|
First Quarter 2024
Guidance
|
|
|
|
|
|
|
|
|
|
|
|
Percent
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
Change
|
|
March 31,
2024
|
|
March 31,
2023
|
|
(Using
|
($ in
millions)
|
(Guidance)
|
|
(Actual)
|
|
Midpoints)
|
Revenue
|
$585 – $595
|
|
$510.9
|
|
15.5 %
|
Net income
|
$29 – $32
|
|
$27.5
|
|
10.9 %
|
Adjusted
EBITDA
|
$142 – $146
|
|
$120.1
|
|
19.9 %
|
Rent
|
$72 – $74
|
|
$66.5
|
|
9.8 %
|
|
Full-Year 2024
Guidance
|
|
|
|
|
|
|
Percent
|
|
Year
Ended
|
|
Year
Ended
|
|
Change
|
|
December 31,
2024
|
|
December 31,
2023
|
|
(Using
|
($ in
millions)
|
(Guidance)
|
|
(Actual)
|
|
Midpoints)
|
Revenue
|
$2,460 –
$2,500
|
|
$2,216.6
|
|
11.9 %
|
Adjusted
EBITDA
|
$595 – $610
|
|
$536.8
|
|
12.2 %
|
Rent
|
$300 – $312
|
|
$275.1
|
|
11.2 %
|
Additional 2024 Outlook Information:
- We expect to continue to reduce our net debt leverage ratio
towards our target of 3.0x by December 31,
2024
- We expect to be free cash flow positive beginning in the second
quarter of 2024
- We plan to open 9-10 new centers in 2024
- We expect rent expense to include non-cash rent expense of
$35 million to $40 million for the year
- We anticipate being able to offset a large portion of our 2024
cash taxes by utilizing a portion of our net operating loss
carryforwards from the COVID-19 pandemic
We continue to actively monitor the sale-leaseback market and
intend to resume transactions once terms are in line with our
long-term financial objectives.
Conference Call Details
A conference call to discuss the Company's fourth quarter and
full-year financial results is scheduled for today:
- Date: Wednesday, February 28, 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 4Q and Full-Year
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 conclusion of the
call and may be accessed online 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 March 6, 2024,
and may be accessed as follows:
- U.S. replay number: 1-844-512-2921
- International replay number: 1-412-317-6671
- Replay ID: 1374 3996
About Life Time
Life Time (NYSE: LTH) empowers people to live healthy, happy
lives through its portfolio of more than 170 athletic country clubs
across the United States and
Canada. The Company's healthy way
of life communities and ecosystem address all aspects of healthy
living, healthy aging and healthy entertainment for people 90 days
to 90+ years old. Supported by a team of more than 37,000 dedicated
professionals, Life Time is committed to providing the best
programs and experiences through its clubs, iconic athletic events
and comprehensive digital platform.
Use of Non-GAAP Financial Measures and Key Performance
Indicators
This 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 (loss), Adjusted net income
(loss) 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
(loss), net income (loss) 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 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 (loss) is defined as net income (loss)
excluding the impact of share-based compensation expense, (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, including incremental
costs related to COVID-19, less the tax effect of these
adjustments. Adjusted EBITDA is defined as net income (loss) before
interest expense, net, provision for (benefit from) income taxes
and depreciation and amortization, excluding the impact of
share-based compensation expense, (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, including incremental costs
related to COVID-19. Free cash flow or free cash flow after capital
expenditures is defined as net cash provided by (used in) operating
activities less capital expenditures, net of construction
reimbursements and net proceeds from sale-leaseback transactions.
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 unrestricted
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. 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.
Please note that the Company has not provided the most directly
comparable GAAP financial measure, or a quantitative reconciliation
thereto, for the Adjusted EBITDA forward-looking guidance for 2024
included in this press release in reliance on the unreasonable
efforts exception provided under Item 10(e)(1)(i)(B) of Regulation
S-K. Providing the most directly comparable GAAP financial measure,
or a quantitative reconciliation thereto, cannot be done without
unreasonable effort due to the inherent uncertainty and difficulty
in predicting certain non-cash, material and/or non-recurring
expenses or benefits; legal settlements or other matters; and
certain tax positions. The variability of these items could have an
unpredictable, and potentially significant, impact on our future
GAAP financial results.
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.
Forward-Looking Statements
This 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 the first quarter
and 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, rent expense, expected number of new
center openings and successful signings and closings of center
takeovers and sale-leaseback transactions (including the amount,
pricing and timing thereof). 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, 2022, filed
with the Securities and Exchange Commission (the "SEC") on
March 8, 2023, (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 SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
Three Months
Ended
December
31,
|
|
Year
Ended
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue:
|
|
|
|
|
|
|
|
Center
revenue
|
$
546,050
|
|
$
462,022
|
|
$ 2,154,329
|
|
$ 1,769,520
|
Other
revenue
|
12,784
|
|
10,633
|
|
62,264
|
|
53,037
|
Total
revenue
|
558,834
|
|
472,655
|
|
2,216,593
|
|
1,822,557
|
Operating
expenses:
|
|
|
|
|
|
|
|
Center
operations
|
288,257
|
|
253,825
|
|
1,184,370
|
|
1,068,208
|
Rent
|
71,926
|
|
66,060
|
|
275,122
|
|
245,226
|
General,
administrative and marketing
|
54,126
|
|
38,326
|
|
201,131
|
|
213,976
|
Depreciation and
amortization
|
64,330
|
|
57,203
|
|
244,397
|
|
228,883
|
Other operating
expense (income)
|
21,526
|
|
12,250
|
|
86,363
|
|
(44,355)
|
Total operating
expenses
|
500,165
|
|
427,664
|
|
1,991,383
|
|
1,711,938
|
Income from
operations
|
58,669
|
|
44,991
|
|
225,210
|
|
110,619
|
Other (expense)
income:
|
|
|
|
|
|
|
|
Interest expense, net
of interest income
|
(34,548)
|
|
(28,805)
|
|
(130,797)
|
|
(113,537)
|
Equity in earnings of
affiliates
|
90
|
|
171
|
|
377
|
|
300
|
Total other
expense
|
(34,458)
|
|
(28,634)
|
|
(130,420)
|
|
(113,237)
|
Income (loss) before
income taxes
|
24,211
|
|
16,357
|
|
94,790
|
|
(2,618)
|
Provision for (benefit
from) income taxes
|
527
|
|
2,631
|
|
18,727
|
|
(825)
|
Net income
(loss)
|
$
23,684
|
|
$
13,726
|
|
$
76,063
|
|
$
(1,793)
|
|
|
|
|
|
|
|
|
Income (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.12
|
|
$
0.07
|
|
$
0.39
|
|
$
(0.01)
|
Diluted
|
$
0.12
|
|
$
0.07
|
|
$
0.37
|
|
$
(0.01)
|
Weighted-average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
196,463
|
|
194,182
|
|
195,671
|
|
193,570
|
Diluted
|
203,420
|
|
196,378
|
|
204,005
|
|
193,570
|
LIFE TIME GROUP
HOLDINGS, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
29,966
|
|
$
25,509
|
Accounts receivable,
net
|
23,903
|
|
13,381
|
Center operating
supplies and inventories
|
52,803
|
|
45,655
|
Prepaid expenses and
other current assets
|
57,751
|
|
45,743
|
Income tax
receivable
|
10,101
|
|
748
|
Total current
assets
|
174,524
|
|
131,036
|
Property and equipment,
net
|
3,171,616
|
|
2,901,242
|
Goodwill
|
1,235,359
|
|
1,233,176
|
Operating lease
right-of-use assets
|
2,202,601
|
|
2,116,761
|
Intangible assets,
net
|
172,127
|
|
173,404
|
Other assets
|
75,914
|
|
69,744
|
Total
assets
|
$
7,032,141
|
|
$
6,625,363
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
81,252
|
|
$
73,973
|
Construction accounts
payable
|
108,730
|
|
125,031
|
Deferred
revenue
|
49,299
|
|
36,859
|
Accrued expenses and
other current liabilities
|
185,305
|
|
154,427
|
Current maturities of
debt
|
73,848
|
|
15,224
|
Current maturities of
operating lease liabilities
|
58,764
|
|
51,892
|
Total current
liabilities
|
557,198
|
|
457,406
|
Long-term debt, net of
current portion
|
1,859,027
|
|
1,805,698
|
Operating lease
liabilities, net of current portion
|
2,268,863
|
|
2,162,424
|
Deferred income taxes,
net
|
56,066
|
|
41,393
|
Other
liabilities
|
36,875
|
|
34,181
|
Total
liabilities
|
4,778,029
|
|
4,501,102
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.01
par value per share; 500,000 shares authorized; 196,671 and 194,271
shares issued and outstanding, respectively.
|
1,967
|
|
1,943
|
Additional paid-in
capital
|
2,835,883
|
|
2,784,416
|
Accumulated
deficit
|
(576,813)
|
|
(652,876)
|
Accumulated other
comprehensive loss
|
(6,925)
|
|
(9,222)
|
Total stockholders'
equity
|
2,254,112
|
|
2,124,261
|
Total liabilities and
stockholders' equity
|
$
7,032,141
|
|
$
6,625,363
|
LIFE TIME GROUP
HOLDINGS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
Year
Ended
December
31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
76,063
|
|
$
(1,793)
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
244,397
|
|
228,883
|
Deferred income
taxes
|
14,577
|
|
(13,560)
|
Share-based
compensation
|
50,144
|
|
37,291
|
Non-cash rent
expense
|
37,544
|
|
38,534
|
Impairment charges
associated with long-lived assets
|
14,466
|
|
2,062
|
Loss (gain) on
disposal of property and equipment, net
|
14,089
|
|
(99,974)
|
Amortization of debt
discounts and issuance costs
|
7,821
|
|
7,873
|
Changes in operating
assets and liabilities
|
6,465
|
|
3,372
|
Other
|
(2,562)
|
|
(1,719)
|
Net cash provided by
operating activities
|
463,004
|
|
200,969
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(693,902)
|
|
(591,178)
|
Acquisitions, net of
cash acquired
|
(5,708)
|
|
—
|
Proceeds from
sale-leaseback transactions
|
121,831
|
|
351,850
|
Other
|
3,619
|
|
(4,214)
|
Net cash used in
investing activities
|
(574,160)
|
|
(243,542)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
44,291
|
|
20,084
|
Repayments of
debt
|
(15,026)
|
|
(25,644)
|
Proceeds from
revolving credit facility
|
1,376,000
|
|
805,000
|
Repayments of
revolving credit facility
|
(1,306,000)
|
|
(785,000)
|
Repayments of finance
lease liabilities
|
(1,031)
|
|
(1,404)
|
Proceeds from
financing obligations
|
1,500
|
|
21,350
|
Payments of debt
discounts and issuance costs
|
(3,050)
|
|
(43)
|
Proceeds from stock
option exercises
|
15,770
|
|
3,755
|
Proceeds from
issuances of common stock in connection with the employee stock
purchase plan
|
3,479
|
|
—
|
Other
|
(381)
|
|
(1,300)
|
Net cash provided by
financing activities
|
115,552
|
|
36,798
|
Effect of exchange
rates on cash and cash equivalents
|
61
|
|
(353)
|
Increase (decrease) in
cash and cash equivalents
|
4,457
|
|
(6,128)
|
Cash and cash
equivalents—beginning of period
|
25,509
|
|
31,637
|
Cash and cash
equivalents—end of period
|
$
29,966
|
|
$
25,509
|
Non-GAAP Measurements and Key Performance Indicators
See "Use of Non-GAAP Financial Measures and Key Performance
Indicators" for a discussion of the Non-GAAP financial measures
reconciled below.
Key Performance
Indicators
|
($ in thousands,
except for Average Center revenue per center
membership)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Membership
Data
|
|
|
|
|
|
|
|
Center
memberships
|
763,216
|
|
725,206
|
|
763,216
|
|
725,206
|
Digital On-hold
memberships
|
51,720
|
|
51,470
|
|
51,720
|
|
51,470
|
Total
memberships
|
814,936
|
|
776,676
|
|
814,936
|
|
776,676
|
|
|
|
|
|
|
|
|
Revenue
Data
|
|
|
|
|
|
|
|
Membership dues and
enrollment fees
|
74.1 %
|
|
72.5 %
|
|
72.3 %
|
|
70.7 %
|
In-center
revenue
|
25.9 %
|
|
27.5 %
|
|
27.7 %
|
|
29.3 %
|
Total Center
revenue
|
100.0 %
|
|
100.0 %
|
|
100.0 %
|
|
100.0 %
|
|
|
|
|
|
|
|
|
Membership dues and
enrollment fees
|
$
404,783
|
|
$
334,798
|
|
$
1,557,289
|
|
$
1,251,693
|
In-center
revenue
|
141,267
|
|
127,224
|
|
597,040
|
|
517,827
|
Total Center
revenue
|
$
546,050
|
|
$
462,022
|
|
$
2,154,329
|
|
$
1,769,520
|
|
|
|
|
|
|
|
|
Average Center revenue
per center membership (1)
|
$
711
|
|
$
640
|
|
$
2,810
|
|
$
2,528
|
Comparable center
revenue (2)
|
11.7 %
|
|
26.0 %
|
|
15.3 %
|
|
33.0 %
|
|
|
|
|
|
|
|
|
Center
Data
|
|
|
|
|
|
|
|
Net new center openings
(3)
|
1
|
|
5
|
|
10
|
|
10
|
Total centers (end of
period) (3)
|
171
|
|
161
|
|
171
|
|
161
|
Total center square
footage (end of period) (4)
|
16,800,000
|
|
16,000,000
|
|
16,800,000
|
|
16,000,000
|
|
|
|
|
|
|
|
|
GAAP and Non-GAAP
Financial Measures
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
23,684
|
|
$
13,726
|
|
$
76,063
|
|
$
(1,793)
|
Net income (loss)
margin (5)
|
4.2 %
|
|
2.9 %
|
|
3.4 %
|
|
(0.1) %
|
Adjusted net income
(loss) (6)
|
$
37,985
|
|
$
17,638
|
|
$
129,704
|
|
$
(41,569)
|
Adjusted net income
(loss) margin (6)
|
6.8 %
|
|
3.7 %
|
|
5.9 %
|
|
(2.3) %
|
Adjusted EBITDA
(7)
|
$
137,708
|
|
$
107,027
|
|
$
536,831
|
|
$
281,724
|
Adjusted EBITDA margin
(7)
|
24.6 %
|
|
22.6 %
|
|
24.2 %
|
|
15.5 %
|
Center operations
expense
|
$
288,257
|
|
$
253,825
|
|
$
1,184,370
|
|
$
1,068,208
|
Pre-opening expenses
(8)
|
$
1,134
|
|
$
3,103
|
|
$
7,280
|
|
$
12,399
|
Rent
|
$
71,926
|
|
$
66,060
|
|
$
275,122
|
|
$
245,226
|
Non-cash rent expense
(open properties) (9)
|
$
7,964
|
|
$
12,887
|
|
$
33,626
|
|
$
27,737
|
Non-cash rent expense
(properties under development) (9)
|
$
2,680
|
|
$
(1,657)
|
|
$
3,918
|
|
$
10,797
|
|
|
(1)
|
We define Average
Center revenue per center membership as Center revenue less Digital
On-hold revenue, divided by the average number of Center
memberships for the period, where the average number of Center
memberships for the period is an average derived from dividing the
sum of the total Center memberships outstanding at the beginning of
the period and at the end of each month during the period by one
plus the number of months in each period.
|
|
|
(2)
|
We measure the results
of our centers based on how long each center has been open as of
the most recent measurement period. We include 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.
|
|
|
(3)
|
Net new center openings
is calculated as the number of centers that opened for the first
time to members during the period, less any centers that closed
during the period. Total centers (end of period) is the number of
centers operational as of the last day of the period. During the
fourth quarter of 2023, we opened one center. During 2023, we
opened 11 centers and closed one center.
|
|
|
(4)
|
Total center square
footage (end of period) reflects the aggregate fitness square
footage, which we use as a metric for evaluating the efficiencies
of a center as of the end of the period. The total center square
footage figures exclude the approximate square footage of areas
used for tennis courts, outdoor swimming pools, outdoor play areas
and stand-alone Work, Sport and Swim locations. These figures are
approximations.
|
|
|
(5)
|
Net income (loss)
margin is calculated as net income (loss) divided by total
revenue.
|
|
|
(6)
|
We present Adjusted net
income (loss) as a supplemental measure of our performance. We
define Adjusted net income (loss) as net income (loss) excluding
the impact of share-based compensation expense, (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, including incremental
costs related to COVID-19, less the tax effect of these
adjustments.
|
|
|
|
Adjusted net income
(loss) margin is calculated as Adjusted net income (loss) divided
by total revenue.
|
|
|
|
The following table
provides a reconciliation of net income (loss) and income (loss)
per common share, the most directly comparable GAAP measures, to
Adjusted net income (loss) and Adjusted net income (loss) per
common share:
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
($ in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
(loss)
|
$
23,684
|
|
$
13,726
|
|
$
76,063
|
|
$
(1,793)
|
Share-based
compensation expense (a)
|
13,115
|
|
4,077
|
|
50,144
|
|
37,291
|
COVID-19 related
expenses (b)
|
131
|
|
2,119
|
|
470
|
|
3,056
|
Loss (gain) on
sale-leaseback transactions (c)
|
193
|
|
535
|
|
13,624
|
|
(97,632)
|
Capital transaction
costs (d)
|
—
|
|
—
|
|
—
|
|
255
|
Asset
impairments (e)
|
—
|
|
—
|
|
6,620
|
|
—
|
Other
(f)
|
1,180
|
|
(2,069)
|
|
(4,011)
|
|
(1,048)
|
Taxes
(g)
|
(318)
|
|
(750)
|
|
(13,206)
|
|
18,302
|
Adjusted net income
(loss)
|
$
37,985
|
|
$
17,638
|
|
$
129,704
|
|
$
(41,569)
|
|
|
|
|
|
|
|
|
Income (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.12
|
|
$
0.07
|
|
$
0.39
|
|
$
(0.01)
|
Diluted
|
$
0.12
|
|
$
0.07
|
|
$
0.37
|
|
$
(0.01)
|
Adjusted income (loss)
per common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.19
|
|
$
0.09
|
|
$
0.66
|
|
$
(0.21)
|
Diluted
|
$
0.19
|
|
$
0.09
|
|
$
0.64
|
|
$
(0.21)
|
Weighted-average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
196,463
|
|
194,182
|
|
195,671
|
|
193,570
|
Diluted
|
203,420
|
|
196,378
|
|
204,005
|
|
193,570
|
|
|
(a)
|
Share-based
compensation expense recognized during the three months and year
ended December 31, 2023 was associated with stock options,
restricted stock units, our employee stock purchase plan ("ESPP")
that launched on December 1, 2022, and liability classified awards
related to our short-term incentive plan in 2023. Share-based
compensation expense recognized during the three months and year
ended December 31, 2022 was associated with stock options,
restricted stock, restricted stock units and our ESPP. The majority
of this expense in 2022 was associated with awards that were fully
vested and became exercisable on April 4, 2022 in connection with
the expiration of the lock-up period following our initial public
offering ("IPO").
|
|
|
(b)
|
Represents the
incremental net expenses we recognized related to the COVID-19
pandemic. We adjust for these expenses as they do not represent
expenses associated with our normal ongoing operations. We believe
that adjusting for these expenses provides a more accurate and
consistent representation of our actual operating performance from
period to period. For the three months ended December 31, 2023 and
December 31, 2022, COVID-19 related expenses primarily consisted of
legal-related costs in pursuit of our claim against Zurich. For the
year ended December 31, 2023, COVID-19 related expenses primarily
consisted of legal-related costs in pursuit of our claim against
Zurich, partially offset by a subsidy for our Canadian operations.
For the year ended December 31, 2022, COVID-19 related expenses
primarily consisted of site development cost write-offs and
legal-related costs in pursuit of our claim against
Zurich.
|
|
|
(c)
|
We adjust for the
impact of losses and gains on the sale-leaseback of our properties
as they do not reflect costs associated with our ongoing
operations.
|
|
|
(d)
|
Represents costs
related to capital transactions, including debt and equity
offerings that are non-recurring in nature, but excluding direct
costs related to the IPO, which were netted against the proceeds of
the IPO.
|
|
|
(e)
|
Represents non-cash
asset impairments of our long-lived assets, excluding impairments
on development costs that are part of our normal course of
business.
|
|
|
(f)
|
Includes benefits and
costs associated with transactions that are unusual and
non-recurring in nature.
|
|
|
(g)
|
Represents the
estimated tax effect of the total adjustments made to arrive at
Adjusted net income (loss) using the effective income tax rates for
the respective periods.
|
|
|
(7)
|
We present Adjusted
EBITDA as a supplemental measure of our performance. We define
Adjusted EBITDA as net income (loss) before interest expense, net,
provision for (benefit from) income taxes and depreciation and
amortization, excluding the impact of share-based compensation
expense, loss (gain) on sale-leaseback transactions, capital
transaction costs, legal settlements, asset impairment, severance
and other items that are not indicative of our ongoing operations,
including incremental costs related to COVID-19.
|
|
|
|
Adjusted EBITDA margin
is calculated as Adjusted EBITDA divided by total
revenue.
|
|
|
|
The following table
provides a reconciliation of net income (loss), the most directly
comparable GAAP measure, to Adjusted EBITDA:
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
($ in
thousands)
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
(loss)
|
$
23,684
|
|
$
13,726
|
|
$
76,063
|
|
$
(1,793)
|
Interest expense, net
of interest income
|
34,548
|
|
28,805
|
|
130,797
|
|
113,537
|
Provision for (benefit
from) income taxes
|
527
|
|
2,631
|
|
18,727
|
|
(825)
|
Depreciation and
amortization
|
64,330
|
|
57,203
|
|
244,397
|
|
228,883
|
Share-based
compensation expense (a)
|
13,115
|
|
4,077
|
|
50,144
|
|
37,291
|
COVID-19 related
expenses (b)
|
131
|
|
2,119
|
|
470
|
|
3,056
|
Loss (gain) on
sale-leaseback transactions (c)
|
193
|
|
535
|
|
13,624
|
|
(97,632)
|
Capital transaction
costs (d)
|
—
|
|
—
|
|
—
|
|
255
|
Asset impairments
(e)
|
—
|
|
—
|
|
6,620
|
|
—
|
Other
(f)
|
1,180
|
|
(2,069)
|
|
(4,011)
|
|
(1,048)
|
Adjusted
EBITDA
|
$
137,708
|
|
$
107,027
|
|
$
536,831
|
|
$
281,724
|
|
(a) –
(f) See the
corresponding footnotes to the table in footnote 6 immediately
above.
|
|
(8)
|
Represents non-capital
expenditures associated with opening new centers that are incurred
prior to the commencement of a new center opening. The number of
centers under construction or development, the types of centers and
our costs associated with any particular center opening can vary
significantly from period to period.
|
|
|
(9)
|
Reflects the non-cash
portion of our annual GAAP operating lease expense that is greater
or less than the cash operating lease payments. Non-cash rent
expense for our open properties represents non-cash expense
associated with properties that were operating at the end of each
period presented. Non-cash rent expense for our properties under
development represents non-cash expense associated with properties
that are still under development at the end of each period
presented.
|
Proceeds from
Sale-Leaseback Transactions
|
($ in
thousands)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
December
31,
|
|
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Proceeds from
sale-leaseback transactions (1)
|
$
—
|
|
$
—
|
|
$
123,331
|
|
$
373,200
|
|
|
(1)
|
Sale-leaseback proceeds
for the years ended December 31, 2023 and 2022, includes $1.5
million and $21.4 million, respectively, that was recognized as
financing obligations and reported within financing activities on
our consolidated statements of cash flows.
|
Reconciliation of
Net Debt and Leverage Calculation
|
($ in
thousands)
|
(Unaudited)
|
|
|
Twelve
|
|
Twelve
|
|
Months
Ended
|
|
Months
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
Current maturities of
debt
|
$
73,848
|
|
$
15,224
|
Long-term debt, net of
current portion
|
1,859,027
|
|
1,805,698
|
Total
Debt
|
$
1,932,875
|
|
$
1,820,922
|
Less: Fair value
adjustment
|
521
|
|
1,166
|
Less: Unamortized debt
discounts and issuance costs
|
(15,270)
|
|
(19,249)
|
Less: Cash and cash
equivalents (1)
|
11,161
|
|
15,198
|
Net
Debt
|
$
1,936,463
|
|
$
1,823,807
|
Trailing twelve-month
Adjusted EBITDA
|
536,831
|
|
281,724
|
Net Debt Leverage
Ratio
|
3.6x
|
|
6.5x
|
|
|
(1)
|
Excludes restricted
cash of $18.8 million and $10.3 million for the years ended
December 31, 2023 and 2022, respectively.
|
Reconciliation of
Net Income to Adjusted EBITDA Guidance for First Quarter
2024
|
($ in
millions)
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
March 31,
2024
|
Net income
|
$29
– $32
|
Interest expense, net
of interest income
|
27
– 27
|
Provision for income
taxes
|
11
– 12
|
Depreciation and
amortization
|
65
– 65
|
Share-based
compensation expense
|
10
– 10
|
Adjusted
EBITDA
|
$142
– $146
|
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SOURCE Life Time Group Holdings, Inc.