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 fourth quarter and full-year ended December 31, 2011.
Fourth Quarter Overview:
- Total member count increased 1,000 to 523,000 in Q4 2011 and increased by 30,000, or 6.1%, in full-year 2011.
- Membership monthly attrition averaged 3.4% per month in both Q4 2011 and Q4 2010.
- Revenue of $115.8 million in Q4 2011 increased 1.5% as compared to Q4 2010 and 3.9% as compared to adjusted Q4 2010. Adjusted Q4 2010 revenue of $111.5 million excludes $2.6 million of personal training revenue recognized for expired and unused sessions.
- Comparable club revenue increased 3.4% in Q4 2011 compared to adjusted Q4 2010.
- Personal training revenue increased 7.7% in Q4 2011 compared to adjusted Q4 2010. Adjusted Q4 2010 revenue excludes $2.6 million of personal training revenue recognized for expired and unused sessions.
- Diluted earnings per share were $0.14 in Q4 2011 compared to $0.06 in Q4 2010. Q4 2011 results include a favorable tax credit of approximately $343,000, or $0.01 per share related to state deferred tax adjustments. Q4 2010 results included $1.4 million, net of taxes, or approximately $0.06 per share, of personal training revenue recognized for expired and unused sessions.
- Adjusted EBITDA increased 19.7% to $22.9 million in Q4 2011 as compared to Q4 2010 and increased 21.2% to $89.5 million in full-year 2011 compared to full-year 2010.
Robert Giardina, Chief Executive Officer of TSI, commented: “Our 19.7% EBITDA margin in Q4 2011 driven by comparable club revenue growth of 3.4% demonstrated the company’s ability to execute at every level of the organization. We are excited about our prospects for additional productivity and profitability gains in 2012, and are on the cusp of reaching our 20% EBITDA margin goal ahead of schedule. We are also once again setting our sights on club growth, and see significant opportunity over the next five years as health and wellness continues to gain momentum as a major trend in the U.S.”
|Fourth Quarter Ended December 31, 2011 Financial Results:|
|Revenue (in thousands):|
|Quarter Ended December 31,|
|Revenue||% Revenue||Revenue||% Revenue||% Variance|
|Personal training revenue||15,142||13.1||%||16,657||14.6||%||(9.1||)||%|
|Other ancillary club revenue||5,778||5.0||%||5,010||4.4||%||15.3||%|
|Ancillary club revenue||20,920||18.1||%||21,667||19.0||%||(3.4||)||%|
|Fees and other revenue||1,421||1.2||%||1,176||1.0||%||20.8||%|
Total revenue for Q4 2011 increased $1.7 million, or 1.5% compared to Q4 2010. In Q4 2010, we recognized $2.6 million of personal training revenue for unused and expired personal training sessions in three of the jurisdictions in which we operate. Excluding this revenue from Q4 2010, we experienced an increase in revenue of $4.3 million, or 3.9% compared to Q4 2010. For Q4 2011, revenues increased $678,000 at the two clubs opened or acquired subsequent to December 31, 2009 (both opened in Q4 2011), increased by $3.8 million at our clubs opened or acquired prior to December 31, 2009 and decreased $511,000 related to the three clubs that were closed subsequent to December 31, 2009.
|Quarter Ended December 31,|
|Expense % of Revenue||Expense % Variance|
|Payroll and related||37.9||%||38.6||%||(0.4)||%|
|General and administrative||5.3||%||5.7||%||(5.4)||%|
|Depreciation and amortization||11.0||%||10.5||%||6.0||%|
- Revenue for Q1 2012 is expected to be between $121.3 million and $122.3 million versus $116.7 million for Q1 2011. As percentages of revenue, we expect Q1 2012 payroll and related expenses to approximate 39.0% and club operating expenses to approximate 37.0%. We expect general and administrative expenses to approximate $6.8 million, depreciation and amortization to approximate $12.8 million and net interest expense to approximate $6.0 million.
- We expect net income for Q1 2012 to be between $2.75 million and $3.25 million, and diluted earnings per share to be in the range of $0.12 per share to $0.14 per share, assuming a 41.0% effective tax rate and 23.75 million weighted average fully diluted shares outstanding.
- We estimate that Adjusted EBITDA will approximate $23.75 million in Q1 2012.
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