Life Time Reports Fourth Quarter and Full-Year Fiscal 2022 Financial Results
Life Time Group Holdings reported robust financial results for Q4 and FY 2022, showing a marked revenue increase of 31.1% to $472.7 million in Q4 and 38.3% to $1.82 billion for the year. The company attributed this growth to increased memberships and center usage. Net income rose significantly to $13.7 million, compared to a loss of $304.8 million in Q4 2021. Adjusted EBITDA surged by 122.9% to $107 million in Q4. The company plans to open 10 new centers in 2023 and anticipates first-quarter revenue of $505-$510 million, reflecting a 29% increase year-over-year.
- Revenue increased 31.1% in Q4 2022 and 38.3% for the full year.
- Net income improved to $13.7 million from a loss of $304.8 million in Q4 2021.
- Adjusted EBITDA rose 122.9% in Q4 2022.
- Center memberships increased 11.7% year-over-year, totaling 725,206.
- Center operations expenses increased by 16.0% in Q4 2022.
- Net cash used in operating activities totaled $201 million, a significant change from $(20 million) in 2021.
Financial Summary | |||||||||||
Three Months Ended | Year Ended | ||||||||||
($ in millions, except memberships and per membership data) | |||||||||||
2022 | 2021 | Percent | 2022 | 2021 | Percent | ||||||
Revenue | 31.1 % | 38.3 % | |||||||||
Center operations expenses (1) | 16.0 % | 26.5 % | |||||||||
Rent | 19.5 % | 16.9 % | |||||||||
General, administrative, and marketing expenses (2) | (89.2) % | (55.5) % | |||||||||
Net income (loss) | NM | NM | |||||||||
Adjusted EBITDA | 122.9 % | 250.8 % | |||||||||
Comparable center sales | 26.0 % | 52.0 % | 33.0 % | 35.3 % | |||||||
Center memberships, end of period | 725,206 | 649,373 | 11.7 % | 725,206 | 649,373 | 11.7 % | |||||
Average center revenue per center membership | 19.4 % | 20.5 % |
NM - Not meaningful | |
(1) | Includes non-cash share-based compensation expense of |
(2) | The three months ended |
Fourth Quarter 2022 Information
- Revenue increased due to strong growth in membership dues and in-center revenues, which was driven by our pricing strategy, increased memberships and higher utilization of our in-center offerings by our members.
- Average monthly dues per center membership increased approximately
20% to .$162 - Net center memberships declined approximately 3,500, consistent with typical seasonality, and far less than the approximately 13,000 decline in the fourth quarter of 2019.
- Center operations expenses increased primarily due to added staffing to support increased center usage, expanded programming and new center openings, as well as labor and utility cost inflation.
- General, administrative and marketing expenses declined primarily due to higher non-cash share-based compensation expense in the prior year period. Excluding non-cash share-based compensation expense and one-time items in both periods, general, administrative and marketing expenses declined by
primarily due to lower expenses associated with management incentive compensation.$6.4 million - Net income included
of tax-effected non-cash share-based compensation expense and$3.4 million of one-time tax-effected expenses. Net loss in the prior year period included$0.5 million of tax-effected non-cash share-based compensation expense and$258.3 million of one-time tax-effected additional interest expense incurred in connection with the partial pay down of our term loan. Excluding the impact of these expenses, net income improved by$12.6 million .$51.2 million - Net income and Adjusted EBITDA improved significantly as we experienced greater flow through of our increased revenue and benefited from our initial margin expansion efforts.
Full-Year 2022 Information
- Revenue increased due to strong growth in membership dues and in-center revenues, which was driven by our pricing strategy, continued center membership recovery, higher utilization of our in-center offerings by our members after the adverse impacts of COVID-19, and supported by strategic investments in our business, and the opening of 10 new centers.
- Center operations expenses increased primarily due to added staffing to support increased center usage, expanded programming and new center openings, as well as labor and utility cost inflation.
- General, administrative and marketing expenses declined due to higher non-cash share-based compensation expense in the prior year period. Excluding non-cash share-based compensation expense and one-time items in both periods, general, administrative and marketing expenses increased by
primarily due to increased labor to enhance and broaden our member services and higher marketing, information technology and public company-related expenses.$19.6 million - Net loss included a
tax-effected gain on sale-leaseback transactions associated with nine of our properties, partially offset by$66.9 million of tax-effected non-cash share-based compensation expense. Net loss in the prior year included$25.5 million of tax-effected non-cash share-based compensation expense and$269.1 million of one-time tax-effected additional interest expense incurred in connection with the conversion of a related-party secured note into preferred stock, debt refinancing, and the partial pay down of our term loan. Excluding these items of income and expense, net loss improved by$68.6 million .$195.2 million - Net loss and Adjusted EBITDA improved significantly as we experienced greater flow through of our increased revenue.
New Center Openings
- The Company opened five new centers in the fourth quarter of 2022 and 10 new centers in fiscal 2022.
- As of
December 31, 2022 , we operated a total of 161 centers. - The Company plans to open 10 new centers in 2023, including three in the first quarter.
Cash Flow Highlights
- As of
December 31, 2022 , the Company had total cash and cash equivalents of and had$25.5 million in outstanding borrowings under its$20.0 million revolving credit facility.$475 million - Net cash provided by (used in) operating activities totaled
for the year ended$201.0 million December 31, 2022 , compared to in 2021.$(20.0) million - Free cash flow before growth capital expenditures totaled
for the year ended$19.2 million December 31, 2022 , compared to in 2021.$(143.6) - Growth capital expenditures, net of construction reimbursements, center maintenance capital expenditures and corporate capital expenditures totaled
,$409.4 million and$98.1 million , respectively, for the year ended$83.6 million December 31, 2022 , compared to ,$205.3 million and$61.9 million , respectively, in 2021.$61.7 million
Sale-Leasebacks
- The Company completed sale-leaseback transactions associated with nine properties for gross proceeds of approximately
in fiscal 2022.$375 million - The Company continues to explore alternative sale-leaseback structures to optimize our financing cost in a tax-efficient manner.
2023 Outlook
First Quarter 2023 Guidance | |||||
Percent | |||||
Three Months Ended | Three Months Ended | Change | |||
(Using | |||||
($ in millions) | (Guidance) | (Actual) | midpoints) | ||
Revenue | 29 % | ||||
Net income (loss) | NM | ||||
Adjusted EBITDA | 166 % |
NM - Not meaningful |
Full-Year 2023 Guidance | |||||||
Year Ended | Percent | Year Ended | |||||
Year Ended | Change | ||||||
(Guidance | (Using | (Guidance | |||||
($ in millions) | (Actual) | midpoints) | |||||
Revenue | 23 % | ||||||
Adjusted EBITDA | 60 % | ||||||
Rent | 12 % |
Other 2023 Outlook Items
- We plan to open 10 athletic country clubs in 2023.
- We expect full-year rent expense to include non-cash rent expense of
to$35 million .$40 million - We anticipate being able to offset a large portion of our 2023 cash taxes by utilizing a portion of our net operating loss carryforwards.
- We are planning to execute sale-leaseback transactions to generate gross proceeds of
.$300 million - We are targeting capital expenditures of
to$260 million , net of the planned$280 million in sale-leaseback gross proceeds. This includes$300 million to$380 million of growth capital with the balance primarily devoted to asset management and technology spending.$400 million - We expect to achieve leverage of approximately four times net debt to adjusted EBITDA by year-end.
Conference Call Details
A conference call to discuss the Company's fourth quarter and full-year financial results is scheduled for today:
- Date and Time:
March 8, 2023 , at8:30am Eastern Time - Dial-In: 877-451-6152 (
U.S. ) and 201-389-0879 (international) - Webcast: Link to 4Q and Full-Year Webcast
- A recorded replay of the conference call will be available after the conclusion of the call and will be available for a period of time online at https://ir.lifetime.life/
About Life Time®
Life Time (NYSE: LTH) empowers people to live healthy, happy lives through its portfolio of more than 160 athletic country clubs across
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
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 before growth capital expenditures is defined as net cash provided by (used in) operating activities less center maintenance capital expenditures and corporate capital expenditures.
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 2023 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 sales 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 fiscal year 2023, opportunities for growth, cost efficiencies and margin expansion, improvements to its balance sheet and leverage, capital expenditures, consumer demand, industry and economic trends, expected number of new center openings and successful signings and closings of 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, risks relating to our human capital, risks relating to legal compliance and risk management, risks relating to our financial performance 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
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
(In thousands, except per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended | Year Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenue: | |||||||
Center revenue | $ 462,022 | $ 352,944 | $ 1,769,520 | $ 1,286,634 | |||
Other revenue | 10,633 | 7,584 | 53,037 | 31,419 | |||
Total revenue | 472,655 | 360,528 | 1,822,557 | 1,318,053 | |||
Operating expenses: | |||||||
Center operations | 253,825 | 218,776 | 1,068,208 | 844,098 | |||
Rent | 66,060 | 55,271 | 245,226 | 209,823 | |||
General, administrative and marketing | 38,326 | 353,647 | 213,976 | 480,543 | |||
Depreciation and amortization | 57,203 | 58,119 | 228,883 | 235,124 | |||
Other operating expenses (income) | 12,250 | 12,993 | (44,355) | 43,653 | |||
Total operating expenses | 427,664 | 698,806 | 1,711,938 | 1,813,241 | |||
Income (loss) from operations | 44,991 | (338,278) | 110,619 | (495,188) | |||
Other (expense) income: | |||||||
Interest expense, net of interest income | (28,805) | (48,372) | (113,537) | (224,516) | |||
Equity in earnings (loss) of affiliate | 171 | 403 | 300 | (9) | |||
Total other expense | (28,634) | (47,969) | (113,237) | (224,525) | |||
Income (loss) before income taxes | 16,357 | (386,247) | (2,618) | (719,713) | |||
Provision for (benefit from) income taxes | 2,631 | (81,477) | (825) | (140,344) | |||
Net income (loss) | $ 13,726 | $ (304,770) | $ (1,793) | $ (579,369) | |||
Income (loss) per common share: | |||||||
Basic | $ 0.07 | $ (1.64) | $ (0.01) | $ (3.73) | |||
Diluted | $ 0.07 | $ (1.64) | $ (0.01) | $ (3.73) | |||
Weighted-average common shares outstanding: | |||||||
Basic | $ 194,182 | $ 185,956 | $ 193,570 | $ 155,470 | |||
Diluted | 196,378 | 185,956 | 193,570 | 155,470 |
CONSOLIDATED BALANCE SHEETS | |||
(In thousands, except per share data) | |||
(Unaudited) | |||
2022 | 2021 | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 25,509 | $ 31,637 | |
Accounts receivable, net | 13,381 | 6,464 | |
Center operating supplies and inventories | 45,655 | 41,007 | |
Prepaid expenses and other current assets | 45,743 | 48,883 | |
Income tax receivable | 748 | 3,533 | |
Total current assets | 131,036 | 131,524 | |
Property and equipment, net | 2,901,242 | 2,791,464 | |
1,233,176 | 1,233,176 | ||
Operating lease right-of-use assets | 2,116,761 | 1,864,528 | |
Intangible assets, net | 173,404 | 174,241 | |
Other assets | 69,744 | 61,742 | |
Total assets | $ 6,625,363 | $ 6,256,675 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 73,973 | $ 71,308 | |
Construction accounts payable | 125,031 | 83,311 | |
Deferred revenue | 36,859 | 33,871 | |
Accrued expenses and other current liabilities | 154,427 | 147,920 | |
Current maturities of debt | 15,224 | 23,527 | |
Current maturities of operating lease liabilities | 51,892 | 46,315 | |
Total current liabilities | 457,406 | 406,252 | |
Long-term debt, net of current portion | 1,805,698 | 1,775,719 | |
Operating lease liabilities, net of current portion | 2,162,424 | 1,909,883 | |
Deferred income taxes, net | 41,393 | 55,213 | |
Other liabilities | 34,181 | 18,216 | |
Total liabilities | 4,501,102 | 4,165,283 | |
Stockholders' equity: | |||
Common stock, | 1,943 | 1,931 | |
Additional paid-in capital | 2,784,416 | 2,743,560 | |
Accumulated deficit | (652,876) | (651,083) | |
Accumulated other comprehensive loss | (9,222) | (3,016) | |
Total stockholders' equity | 2,124,261 | 2,091,392 | |
Total liabilities and stockholders' equity | $ 6,625,363 | $ 6,256,675 |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(In thousands) | |||
(Unaudited) | |||
Year Ended | |||
2022 | 2021 | ||
Cash flows from operating activities: | |||
Net loss | $ (1,793) | $ (579,369) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 228,883 | 235,124 | |
Deferred income taxes | (13,560) | (139,941) | |
Share-based compensation | 37,291 | 334,339 | |
Non-cash rent expense | 38,534 | 22,602 | |
Impairment charges associated with long-lived assets | 2,062 | 2,076 | |
(Gain) loss on disposal of property and equipment, net | (99,974) | 2,746 | |
Loss on debt extinguishment | — | 40,993 | |
Write-off of debt discounts and issuance costs | — | 28,568 | |
Amortization of debt discounts and issuance costs | 7,873 | 9,590 | |
Changes in operating assets and liabilities | 3,372 | 26,717 | |
Other | (1,719) | (3,474) | |
Net cash provided by (used in) operating activities | 200,969 | (20,029) | |
Cash flows from investing activities: | |||
Capital expenditures | (591,178) | (328,909) | |
Acquisitions, net of cash acquired | — | (9,529) | |
Proceeds from sale-leaseback transactions | 351,850 | 73,981 | |
Other | (4,214) | (5,462) | |
Net cash used in investing activities | (243,542) | (269,919) | |
Cash flows from financing activities: | |||
Proceeds from borrowings | 20,084 | 1,907,577 | |
Repayments of debt | (25,644) | (2,178,004) | |
Proceeds from revolving credit facility | 805,000 | 159,000 | |
Repayments of revolving credit facility | (785,000) | (253,000) | |
Repayments of finance lease liabilities | (1,404) | (1,514) | |
Proceeds from financing obligations | 21,350 | — | |
Proceeds from the issuance of common stock, net of issuance costs | — | 701,926 | |
Proceeds from stock option exercises | 3,755 | — | |
Increase in debt discounts and issuance costs | (43) | (47,586) | |
Other | (1,300) | — | |
Net cash provided by financing activities | 36,798 | 288,399 | |
Effect of exchange rates on cash and cash equivalents | (353) | (9) | |
Decrease in cash and cash equivalents | (6,128) | (1,558) | |
Cash and cash equivalents—beginning of period | 31,637 | 33,195 | |
Cash and cash equivalents—end of period | $ 25,509 | $ 31,637 |
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 | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Membership Data | |||||||
Center memberships | 725,206 | 649,373 | 725,206 | 649,373 | |||
Digital On-hold memberships | 51,470 | 74,767 | 51,470 | 74,767 | |||
Total memberships | 776,676 | 724,140 | 776,676 | 724,140 | |||
Revenue Data | |||||||
Membership dues and enrollment fees | 72.5 % | 71.8 % | 70.7 % | 70.5 % | |||
In-center revenue | 27.5 % | 28.2 % | 29.3 % | 29.5 % | |||
Total Center revenue | 100.0 % | 100.0 % | 100.0 % | 100.0 % | |||
Membership dues and enrollment fees | $ 334,798 | $ 253,527 | $ 1,251,693 | $ 907,111 | |||
In-center revenue | 127,224 | 99,417 | 517,827 | 379,523 | |||
Total Center revenue | $ 462,022 | $ 352,944 | $ 1,769,520 | $ 1,286,634 | |||
Average Center revenue per center membership (1) | $ 640 | $ 536 | $ 2,528 | $ 2,098 | |||
Comparable center sales (2) | 26.0 % | 52.0 % | 33.0 % | 35.3 % | |||
Center Data | |||||||
Net new center openings (3) | 5 | (4) | 10 | 2 | |||
Total centers (end of period) (3) | 161 | 151 | 161 | 151 | |||
Total center square footage (end of period) (4) | 16,000,000 | 15,000,000 | 16,000,000 | 15,000,000 | |||
GAAP and Non-GAAP Financial Measures | |||||||
Net income (loss) | $ 13,726 | $ (304,770) | $ (1,793) | $ (579,369) | |||
Net income (loss) margin (5) | 2.9 % | (84.5) % | (0.1) % | (44.0) % | |||
Adjusted EBITDA (6) | $ 107,027 | $ 48,022 | $ 281,724 | $ 80,299 | |||
Adjusted EBITDA margin (6) | 22.6 % | 13.3 % | 15.5 % | 6.1 % | |||
Center operations expense | $ 253,825 | $ 218,776 | $ 1,068,208 | $ 844,098 | |||
Pre-opening expenses (7) | $ 3,103 | $ 1,717 | $ 12,399 | $ 7,021 | |||
Rent | $ 66,060 | $ 55,271 | $ 245,226 | $ 209,823 | |||
Non-cash rent expense (open properties) (8) | $ 12,887 | $ 6,136 | $ 27,737 | $ 9,959 | |||
Non-cash rent expense (properties under development) (8) | $ (1,657) | $ 4,920 | $ 10,797 | $ 12,643 | |||
Net cash provided by (used in) operating activities | $ 75,649 | $ (4,707) | $ 200,969 | $ (20,029) | |||
Free cash flow before growth capital expenditures (9) | $ 13,720 | $ (44,172) | $ 19,226 | $ (143,630) |
(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 sales 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. As of |
(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 square footage figures exclude 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 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 (in thousands): |
Three Months Ended | Year Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net income (loss) | $ 13,726 | $ (304,770) | $ (1,793) | $ (579,369) | |||
Interest expense, net of interest income (a) | 28,805 | 48,372 | 113,537 | 224,516 | |||
Provision for (benefit from) income taxes | 2,631 | (81,477) | (825) | (140,344) | |||
Depreciation and amortization | 57,203 | 58,119 | 228,883 | 235,124 | |||
Share-based compensation expense (b) | 4,077 | 327,380 | 37,291 | 334,339 | |||
COVID-19 related expenses (credits) (c) | 2,119 | (1,179) | 3,056 | (1,589) | |||
Loss (gain) on sale-leaseback transactions (d) | 535 | (677) | (97,632) | 2,380 | |||
Capital transaction costs (e) | — | 2,316 | 255 | 2,904 | |||
Legal settlements (f) | — | — | — | (44) | |||
Other (g) | (2,069) | (62) | (1,048) | 2,382 | |||
Adjusted EBITDA | $ 107,027 | $ 48,022 | $ 281,724 | $ 80,299 |
(a) | During the year ended | |
(b) | Share-based compensation expense recognized during the year ended | |
(c) | Represents the incremental net expenses (credits) we recognized related to the COVID-19 pandemic. We adjust for these costs as they do not represent costs associated with our normal ongoing operations. We believe that adjusting for these costs provides a more accurate and consistent representation of our actual operating performance from period to period. For the year ended | |
(d) | We adjust for the impact of gains or losses on the sale-leaseback of our properties as they do not reflect costs associated with our ongoing operations. | |
(e) | Represents one-time costs related to capital transactions, including debt and equity offerings that are non-recurring in nature but excluding direct costs related to the IPO that were netted against the proceeds of the IPO. | |
(f) | We adjust for the impact of large class action and unusual legal settlements paid or recoveries received. These are non-recurring in nature and do not reflect costs associated with our normal ongoing operations. | |
(g) | Includes costs associated with severance and other transactions that are unusual and non-recurring in nature. | |
(7) | Represents non-capital expenditures associated with opening new centers which 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. | |
(8) | 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. | |
(9) | Free cash flow before growth capital expenditures, a non-GAAP financial measure, is calculated as net cash provided by (used in) operating activities less center maintenance capital expenditures and corporate capital expenditures. | |
The following table provides a reconciliation from net cash provided by (used in) operating activities to free cash flow before growth capital expenditures (in thousands): |
Three Months Ended | Year Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net cash provided by (used in) operating activities | $ 75,649 | $ (4,707) | $ 200,969 | $ (20,029) | |||
Center maintenance capital expenditures | (40,196) | (18,887) | (98,111) | (61,932) | |||
Corporate capital expenditures | (21,733) | (20,578) | (83,632) | (61,669) | |||
Free cash flow before growth capital expenditures | $ 13,720 | $ (44,172) | $ 19,226 | $ (143,630) |
Capital Expenditures Summary | |||||||
($ in thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended | Year Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Growth capital expenditures, net of construction reimbursements (1) | $ 119,303 | $ 87,703 | $ 409,435 | $ 205,308 | |||
Center maintenance capital expenditures | 40,196 | 18,887 | 98,111 | 61,932 | |||
Corporate capital expenditures | 21,733 | 20,578 | 83,632 | 61,669 | |||
Total capital expenditures | $ 181,232 | $ 127,168 | $ 591,178 | $ 328,909 |
(1) | Growth capital expenditures include new center land and construction, growth initiatives, major remodels of acquired centers and the purchase of previously leased centers. |
Proceeds from Sale-Leaseback Transactions | |||||||
($ in thousands) | |||||||
(Unaudited) | |||||||
Three Months Ended | Year Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Proceeds from sale-leaseback transactions (1) | $ — | $ — | $ 373,200 | $ 73,981 |
(1) | Sale-leaseback proceeds for the year ended |
Reconciliation of Net Loss to Adjusted EBITDA Guidance for First Quarter 2023 | |
($ in millions) | |
(Unaudited) | |
Three Months Ended | |
Net income | |
Interest expense, net of interest income | 31 - 30 |
Provision for (benefit from) income taxes | 4 - 5 |
Depreciation and amortization | 58 - 59 |
Share-based compensation expense | 5 - 5 |
Adjusted EBITDA |
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