This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Town Sports International Holdings, Inc. Announces First Quarter 2012 Financial Results

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,
2012 2011
Revenue % Revenue Revenue % Revenue % Variance
Membership dues $ 93,263 75.9 % $ 91,080 78.0 % 2.4 %
Joining fees   2,566 2.1 %   1,447 1.3 % 77.3 %
Membership revenue   95,829 78.0 %   92,527 79.3 % 3.6 %
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 $ 122,912 100.0 % $ 116,705 100.0 % 5.3 %

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,  
2012   2011
Expense % of Revenue

Expense % Variance

Payroll and related 38.5 % 38.8 % 4.7 %
Club operating 36.7 % 37.8 % 2.3 %
General and administrative 4.8 % 6.4 % (20.0 ) %
Depreciation and amortization 10.5 % 11.1 % (1.1 ) %
Operating expenses 90.5 % 94.1 % 1.4 %

Total operating expenses increased $1.5 million, or 1.4%, in Q1 2012 compared to Q1 2011. Operating margin was 9.5% for Q1 2012 compared to 5.9% in Q1 2011.

Payroll and related . Payroll and related expenses increased 4.7% or $2.1 million to $47.4 million in Q1 2012 compared to $45.3 million in Q1 2011, driven by payroll related to ancillary revenue growth.

Club operating . Club operating expenses increased $1.0 million or 2.3% to $45.1 million in Q1 2012 compared to $44.1 million in Q1 2011 primarily due to increases in occupancy related expenses.

General and administrative. In Q1 2012 general and administrative expenses decreased compared to Q1 2011, primarily attributable to decreases in consulting and legal expenses and continued decreases in general liability insurance expense.

Depreciation and amortization . Depreciation and amortization expense for Q1 2012 was relatively flat versus the prior year.

Net income for Q1 2012 was $3.9 million compared to net income of $1.5 million for Q1 2011.

Cash flow from operating activities for the three months ended March 31, 2012 totaled $16.4 million, a decrease of $9.0 million from the corresponding period in 2011, driven primarily by the timing of payments made associated with our accounts payable, accrued expenses and prepaid rent, partially offset by the overall increase in earnings.

Second Quarter 2012 Financial Outlook:

Based on the current business environment, recent performance and current trends in the marketplace and subject to the risks and uncertainties inherent in forward-looking statements, our outlook for the second quarter of 2012 includes the following:

  • 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.

Investing Activities Outlook:

For the year ending December 31, 2012, we currently plan to invest $25.0 million to $28.0 million in capital expenditures compared to $30.9 million of capital expenditures in 2011. This amount includes approximately $2.5 million to $3.0 million related to potential 2012 and 2013 club openings, approximately $16.0 million to $17.0 million to continue upgrading existing clubs, and approximately $4.0 million to $5.0 million principally related to major renovations at clubs with recent lease renewals and to upgrade our in-club entertainment system network. We also expect to invest approximately $2.5 million to $3.0 million to enhance our management information systems. These capital expenditures will be funded by cash flow provided by operations and available cash on hand.

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs