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 first quarter ended March 31, 2012.
First Quarter Overview:
- Total member count increased 10,000 to 533,000 in Q1 2012.
- Membership attrition averaged 3.4% per month in Q1 2012 compared to 3.2% per month in Q1 2011.
- Revenue increased 5.3% in Q1 2012 compared to Q1 2011.
Comparable club revenue increased 4.5% in Q1 2012 versus a decrease of 0.5% in Q1 2011.
- Ancillary club revenue increased 12.3% in Q1 2012 compared to Q1 2011.
- Diluted earnings per share were $0.16 in Q1 2012 compared to diluted earnings per share of $0.07 in Q1 2011.
- EBITDA was $25.1 million in Q1 2012, an increase of $4.5 million, or 21.9%, when compared to EBITDA of $20.6 million in Q1 2011.
Robert Giardina, Chief Executive Officer of TSI, commented: “The many improvements we have made to drive profitability in 2011 have carried into the first quarter of 2012, producing double digit percentage growth of ancillary revenue and our highest same club sales growth in 4 years. With strong membership gains over the past year, we can now be even more focused on increasing revenue per member, as well as putting leases in place to resume club growth. Finally, the hiring of our new Chief Operating Officer in March adds a very experienced industry executive to this effort and gives us all even more confidence that we will continue to move ahead successfully.”
Quarter Ended March 31, 2012 Financial Results:
|Revenue (in thousands):|
|Quarter Ended March 31,|
|Revenue||% Revenue||Revenue||% Revenue||% Variance|
|Personal training revenue||17,621||14.3||%||15,692||13.4||%||12.3||%|
|Other ancillary club revenue||8,284||6.7||%||7,373||6.3||%||12.4||%|
|Ancillary club revenue||25,905||21.0||%||23,065||19.7||%||12.3||%|
|Fees and other revenue||1,178||1.0||%||1,113||1.0||%||5.9||%|
Total revenue for Q1 2012 increased $6.2 million, or 5.3%, compared to Q1 2011. Revenue at clubs operated for over 12 months (“comparable club revenue”) increased 4.5% in Q1 2012 compared to Q1 2011. Memberships in our comparable clubs increased 3.2% with ancillary club revenue, initiation fees and other revenue increasing 3.1%. These increases were partially offset by a 1.8% decrease in the price of our dues and fees.Operating expenses:
|Quarter Ended March 31,|
|Expense % of Revenue||
Expense % Variance
|Payroll and related||38.5||%||38.8||%||4.7||%|
|General and administrative||4.8||%||6.4||%||(20.0||)||%|
|Depreciation and amortization||10.5||%||11.1||%||(1.1||)||%|
- Revenue for Q2 2012 is expected to be between $123.0 million and $124.0 million versus $118.3 million for Q2 2011. As percentages of revenue, we expect Q2 2012 payroll and related expenses to be approximately 37.8% and club operating expenses to approximate 36.0%. We expect general and administrative expenses to approximate $6.9 million, depreciation and amortization to approximate $12.8 million and net interest expense to approximate $5.6 million.
- We expect net income for Q2 2012 to be between $4.25 million and $4.75 million, and diluted earnings per share to be in the range of $0.18 per share to $0.20 per share, assuming a 39% effective tax rate and 23.9 million weighted average fully diluted shares outstanding.
- We estimate that EBITDA will approximate $26.0 million in Q2 2012.