Town Sports International Holdings, Inc. (“TSI” or the “Company”) (NASDAQ: CLUB), a leading owner and operator of health clubs located primarily in major cities from Washington, DC north through New England, operating under the brand names “New York Sports Clubs,” “Boston Sports Clubs,” “Washington Sports Clubs” and “Philadelphia Sports Clubs,” announced its results for the third quarter ended September 30, 2011.
Third Quarter Overview:
- Total member count increased 5,000 to 522,000 in Q3 2011.
- Membership attrition averaged 3.7% per month in Q3 2011 compared to 3.8% per month in Q3 2010.
- Revenue increased 2.7% in Q3 2011 compared to Q3 2010.
- Comparable club revenue increased 3.0% in Q3 2011 compared to Q3 2010.
- Ancillary club revenue increased 8.3% in Q3 2011 compared to Q3 2010.
- Diluted earnings per share were $0.08 in Q3 2011 compared to loss per share of ($0.00) in Q3 2010.
- EBITDA was $21.8 million in Q3 2011, an increase of $4.1 million, or 23.0%, when compared to EBITDA of $17.7 million in Q3 2010.
Robert Giardina, Chief Executive Officer of TSI, commented: “We were very pleased to have continued to build on our momentum from the first half of the year in the third quarter. Comparable club revenue, new member signups, and attrition were all on or ahead of plan, and memberships at our two new clubs that open for workouts in the fourth quarter are running nicely ahead of plan. When combined with tight expense controls, these revenue drivers translated into EBITDA for the quarter that was up 23%; and overall, this was one of our best quarters in years. We are also on track to add more members in the fourth quarter and exceed our membership goals for the year. We also believe we are much better positioned than we were a couple years ago on a number of fronts, and even if the current weak economy persists we believe we can continue to make progress next year toward our target of a 20% EBITDA margin.”
Quarter Ended and Year to Date September 30, 2011 Financial Results:
|Revenue (in thousands):|
|Quarter Ended September 30,|
|Revenue||% Revenue||Revenue||% Revenue||% Variance|
|Personal training revenue||14,852||12.8||%||13,837||12.2||%||7.3||%|
|Other ancillary club revenue||8,612||7.4||%||7,819||7.0||%||10.1||%|
|Ancillary club revenue||23,464||20.2||%||21,656||19.2||%||8.3||%|
|Fees and other revenue||1,256||1.1||%||1,157||1.0||%||8.6||%|
Total revenue for Q3 2011 increased $3.0 million, or 2.7%, compared to Q3 2010. Revenue at clubs operated for over 12 months (“comparable club revenue”) increased 3.0% in Q3 2011 compared to Q3 2010 .
|Quarter Ended September 30,|
|Expense % of Revenue||Expense % Variance|
|Payroll and related||37.3||%||39.3||%||(2.5)||%|
|General and administrative||5.3||%||6.2||%||(12.9)||%|
|Depreciation and amortization||10.9||%||11.6||%||(3.9)||%|
- Revenue for Q4 2011 is expected to be between $114.5 million and $115.5 million versus $111.4 million for Q4 2010, after adjusting Q4 2010 revenue downward for $2.7 million of expired personal training sessions recognized in Q4 2010.
- In Q4 2011, as a percentage of revenue, we expect payroll and related expenses to be approximately 50 basis points higher than Q3 2011 and club operating expenses to approximate 38%. General and administrative expenses are expected to be approximately $7.0 million, while depreciation and amortization and interest expenses are expected to be similar to Q3 2011 amounts in total dollars.
- Adjusted EBITDA is expected to improve $2.5 million, or 13.2%, to $21.5 million in Q4 2011 compared to Q4 2010, after adjusting Q4 2010 Adjusted EBITDA downward for $2.7 million of expired personal training sessions recognized in Q4 2010.
- We estimate that net income for Q4 2011 will be between $1.6 million and $2.1 million, and earnings per share will be in the range of $0.07 per share to $0.09 per share, assuming a 34% effective tax rate and 23.5 million weighted average fully diluted shares outstanding.
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