Life Time Reports Second Quarter Fiscal 2023 Financial Results
- Revenue increased by 21.8% to $561.7 million
- Net income improved to $17.0 million from a net loss of $2.3 million in the second quarter
- Adjusted EBITDA increased by 115.5% to $136.0 million
- Full year fiscal 2023 net income guidance range of $75-$83 million
- Full year fiscal 2023 Adjusted EBITDA guidance range increased to $510-$520 million
- The company is rated B by S&P and B- by Moody's
- Net cash provided by operating activities increased by 99.0% to $141.9 million
- None.
- Second quarter revenue increased
21.8% to from$561.7 million in the second quarter of 2022.$461.3 million - Net income increased to
from a net loss of$17.0 million in the second quarter of 2022.$2.3 million - Adjusted EBITDA increased
115.5% to from$136.0 million in the second quarter of 2022.$63.1 million - The Company provides full year fiscal 2023 net income guidance range of
and increases full year fiscal 2023 Adjusted EBITDA guidance range to$75 -$83 million .$510 -$520 million - On July 24, Fitch Ratings assigned the Company an issuer credit rating of B+ (stable). The Company is rated B by S&P and B- by Moody's.
Bahram Akradi, Founder, Chairman and CEO, stated: "Our strong quarter further validates that all of our strategies are working and contributing to our success. We added 26,000 memberships, grew revenue nearly
Financial Summary
Three Months Ended | Six Months Ended | ||||||||||
($ in millions, except memberships and per membership data) | June 30, | June 30, | |||||||||
2023 | 2022 | Percent | 2023 | 2022 | Percent | ||||||
Revenue | 21.8 % | 25.7 % | |||||||||
Center operations expenses | 8.2 % | 11.1 % | |||||||||
Rent | 12.3 % | 15.5 % | |||||||||
General, administrative, and marketing expenses (1) | 1.5 % | (19.6) % | |||||||||
Net income (loss) | NM | NM | |||||||||
Adjusted EBITDA | 115.5 % | 147.0 % | |||||||||
Comparable center revenue | 15.5 % | 36.2 % | 19.7 % | 42.4 % | |||||||
Center memberships, end of period | 790,238 | 724,778 | 9.0 % | 790,238 | 724,778 | 9.0 % | |||||
Average center revenue per center membership | 9.7 % | 12.3 % |
NM | - Not meaningful |
(1) | The three months ended June 30, 2023 and 2022 included non-cash share-based compensation expense of |
Second Quarter 2023 Information
- Revenue increased
21.8% to due to continued strong growth in membership dues and in-center revenue.$561.7 million - Center memberships increased by approximately 26,000 from the first quarter to 790,238.
- Total subscriptions, which include our digital on-hold memberships, increased to 832,639.
- Center operations expenses increased
8.2% to primarily due to operating costs related to our new and ramping centers.$302.6 million - General, administrative and marketing expenses increased
1.5% to due to higher share-based compensation expense, which was partially offset by reduced center support overhead, advertising and marketing, public company and cash incentive compensation expenses.$52.8 million - Net income included tax-effected expenses of
, including$21.0 million related to non-cash share-based compensation expense and a$13.7 million loss on a sale-leaseback transaction. Net loss in the prior year period included a tax-effected net benefit of$6.2 million , including a$5.4 million gain on sale-leaseback transactions, partially offset by$7.7 million in non-cash share-based compensation expense. Excluding these expenses and net benefit, net income improved by$2.2 million .$45.7 million - Net income and Adjusted EBITDA improved significantly as we experienced greater flow through of our increased revenue and benefited from the structural improvements to our business that have improved our margins.
Six-Month 2023 Information
- Revenue increased
25.7% to due to continued strong growth in membership dues and in-center revenue.$107 2.6 million - Center memberships increased by approximately 65,000 versus last year.
- Center operations expenses increased
11.1% to primarily due to operating costs related to our new and ramping centers and utility cost inflation.$576.7 million - General, administrative and marketing expenses declined
19.6% to due to lower share-based compensation expense, lower cash incentive compensation expense, and reduced center support overhead, advertising and marketing, and public company expenses.$95.3 million - Net income included tax-effected expenses of
, including$15.4 million related to non-cash share-based compensation expense and a$17.3 million net loss on sale-leaseback transactions. Net loss in the prior year period included a tax-effected net benefit of$0.6 million , including a$18.4 million gain on sale-leaseback transactions, partially offset by$42.4 million in non-cash share-based compensation expense and$23.4 million in expenses consisting primarily of COVID-19 related costs. Excluding these expenses and net benefit, net income improved by$0.8 million .$118.5 million - Net income and Adjusted EBITDA improved significantly for the same reasons identified for the quarter.
New Center Openings
- The Company opened one new center in the second quarter of 2023 and has opened four new centers through the first half of 2023.
- As of June 30, 2023, Life Time operated a total of 164 centers.
- The Company plans to open a total of 12 centers in 2023, eight of which are planned for the second half.
- The Company is still targeting capital expenditures of
to$260 million for the year, net of the planned$280 million of gross sale-leaseback proceeds.$300 million
Cash Flow Highlights
Three Months Ended | Six Months Ended | ||||||||||
($ in millions) | June 30, | June 30, | |||||||||
2023 | 2022 | Percent | 2023 | 2022 | Percent | ||||||
Net cash provided by operating activities | 99.0 % | 169.4 % | |||||||||
Free cash flow before growth capital expenditures | 153.4 % | NM | |||||||||
Growth capital expenditures, net of construction reimbursements (1) | 3.2 % | 35.0 % | |||||||||
Center maintenance capital expenditures | 133.0 % | 118.0 % | |||||||||
Corporate capital expenditures | (22.2) % | (36.6) % | |||||||||
Total capital expenditures | 17.2 % | 33.4 % |
(1) | Growth capital expenditures include new center land and construction, growth initiatives, major remodels of acquired centers, and the purchase of previously leased centers. |
Liquidity and Capital Resources
- As of June 30, 2023 the Company had total cash and cash equivalents of
, and$30.9 million in outstanding borrowings under its$20.0 million revolving credit facility.$475 million - On May 9, 2023, Life Time completed the refinancing of its
Term Loan B facility with a$274 million Term Loan B facility that matures January 15, 2026.$310 million - The Company completed a sale leaseback transaction for one property for gross proceeds of approximately
in the second quarter, bringing total gross proceeds for the year-to-date 2023 period to$45.5 million .$78.5 million - The final property from the Company's previously announced letters of intent is expected to be completed by September 30, 2023, for gross proceeds of approximately
.$45 million - The Company continues to expect to complete
in sale-leaseback transactions in 2023.$300 million
2023 Outlook
Third Quarter 2023 Guidance
Three Months Ended | Three Months Ended | Percent | |||
September 30, 2023 | September 30, 2022 | (Using | |||
($ in millions) | (Guidance) | (Actual) | Midpoints) | ||
Revenue | 18.9 % | ||||
Net income (loss) | NM | ||||
Adjusted EBITDA | 93.0 % |
(1) | Net income in the third quarter of 2022 included a |
Full-Year 2023 Guidance
Year Ended | Year Ended | Percent | Year Ended | ||||
December 31, 2023 | December 31, 2022 | (Using | (Guidance April | ||||
($ in millions) | (Guidance) | (Actual) | Midpoints) | 25, 2023) | |||
Revenue | 23.4 % | ||||||
Net income (loss) | N/A | ||||||
Adjusted EBITDA | 82.6 % | ||||||
Rent | 12.2 % |
Conference Call Details
A conference call to discuss the Company's second quarter financial results is scheduled for today:
How to Participate
- Date: Tuesday, July 25, 2023
- Time: 10:00 a.m. Eastern time (9:00 a.m. Central time)
U.S. dial-in number: 1-877-451-6152- International dial-in number: 1-201-389-0879
- Webcast: LTH 2Q 2023
A link to the live audio webcast of the conference call will also be available at https://ir.lifetime.life
Replay Information
WEBCAST - A recorded replay of the webcast will be available within approximately three hours of the conclusion of the call and may be accessed online at https://ir.lifetime.life
CONFERENCE CALL - A replay of the conference call will be available after 1:00 p.m. ET the same day through August 8, 2023 and may be accessed as follows:
U.S. replay number: 1-844-512-2921- International replay number: 1-412-317-6671
- Replay ID: 1373 9845
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 the United States and
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. Net debt is defined as long-term debt, net of current portion, plus current maturities of debt, excluding fair value adjustments, unamortized debt discounts and issuance costs, minus cash and cash equivalents. Net debt is as of the last day of the respective quarter. Our net debt leverage ratio is calculated as our net debt divided by our trailing twelve months of Adjusted EBITDA.
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.
The Company includes a center, for comparable center revenue 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 third quarter and full year 2023, 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 and lease obligations, risks relating to our human capital, risks relating to legal compliance and risk management 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 December 31, 2022, filed with the Securities and Exchange Commission (the "SEC") on March 8, 2023, (File No. 001-40887), as such factors may be updated from time to time in the Company's other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any forward-looking statement that the Company makes in this press release speaks only as of the date of such statement. Except as required by law, the Company does not have any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise.
LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenue: | |||||||
Center revenue | $ 542,125 | $ 445,882 | $ 1,039,877 | $ 827,503 | |||
Other revenue | 19,606 | 15,385 | 32,705 | 26,018 | |||
Total revenue | 561,731 | 461,267 | 1,072,582 | 853,521 | |||
Operating expenses: | |||||||
Center operations | 302,603 | 279,557 | 576,712 | 519,130 | |||
Rent | 67,434 | 59,989 | 133,971 | 115,953 | |||
General, administrative and marketing | 52,840 | 51,950 | 95,337 | 118,511 | |||
Depreciation and amortization | 58,252 | 57,173 | 116,449 | 115,280 | |||
Other operating expense (income) | 28,194 | (8,212) | 30,321 | (25,247) | |||
Total operating expenses | 509,323 | 440,457 | 952,790 | 843,627 | |||
Income from operations | 52,408 | 20,810 | 119,792 | 9,894 | |||
Other (expense) income: | |||||||
Interest expense, net of interest income | (31,979) | (27,093) | (63,174) | (57,036) | |||
Equity in earnings of affiliate | 88 | 8 | 231 | 34 | |||
Total other expense | (31,891) | (27,085) | (62,943) | (57,002) | |||
Income (loss) before income taxes | 20,517 | (6,275) | 56,849 | (47,108) | |||
Provision for (benefit from) income taxes | 3,513 | (3,990) | 12,385 | (6,857) | |||
Net income (loss) | $ 17,004 | $ (2,285) | $ 44,464 | $ (40,251) | |||
Income (loss) per common share: | |||||||
Basic | $ 0.09 | $ (0.01) | $ 0.23 | $ (0.21) | |||
Diluted | $ 0.08 | $ (0.01) | $ 0.22 | $ (0.21) | |||
Weighted-average common shares outstanding: | |||||||
Basic | 195,476 | 193,692 | 195,026 | 193,082 | |||
Diluted | 204,821 | 193,692 | 203,872 | 193,082 |
LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES | |||
June 30, | December 31, | ||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 30,858 | $ 25,509 | |
Accounts receivable, net | 18,146 | 13,381 | |
Center operating supplies and inventories | 48,148 | 45,655 | |
Prepaid expenses and other current assets | 49,595 | 45,743 | |
Income tax receivable | 6,669 | 748 | |
Total current assets | 153,416 | 131,036 | |
Property and equipment, net | 3,030,480 | 2,901,242 | |
Goodwill | 1,235,029 | 1,233,176 | |
Operating lease right-of-use assets | 2,161,837 | 2,116,761 | |
Intangible assets, net | 173,056 | 173,404 | |
Other assets | 74,218 | 69,744 | |
Total assets | $ 6,828,036 | $ 6,625,363 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 83,721 | $ 73,973 | |
Construction accounts payable | 120,404 | 125,031 | |
Deferred revenue | 41,303 | 36,859 | |
Accrued expenses and other current liabilities | 170,289 | 154,427 | |
Current maturities of debt | 64,814 | 15,224 | |
Current maturities of operating lease liabilities | 54,793 | 51,892 | |
Total current liabilities | 535,324 | 457,406 | |
Long-term debt, net of current portion | 1,792,373 | 1,805,698 | |
Operating lease liabilities, net of current portion | 2,216,647 | 2,162,424 | |
Deferred income taxes, net | 47,347 | 41,393 | |
Other liabilities | 35,633 | 34,181 | |
Total liabilities | 4,627,324 | 4,501,102 | |
Stockholders' equity: | |||
Common stock, | 1,960 | 1,943 | |
Additional paid-in capital | 2,814,424 | 2,784,416 | |
Accumulated deficit | (608,412) | (652,876) | |
Accumulated other comprehensive loss | (7,260) | (9,222) | |
Total stockholders' equity | 2,200,712 | 2,124,261 | |
Total liabilities and stockholders' equity | $ 6,828,036 | $ 6,625,363 |
LIFE TIME GROUP HOLDINGS, INC. AND SUBSIDIARIES | |||
Six Months Ended June 30, | |||
2023 | 2022 | ||
Cash flows from operating activities: | |||
Net income (loss) | $ 44,464 | $ (40,251) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 116,449 | 115,280 | |
Deferred income taxes | 5,864 | (9,009) | |
Share-based compensation | 22,171 | 27,411 | |
Non-cash rent expense | 17,630 | 15,635 | |
Impairment charges associated with long-lived assets | 1,280 | — | |
Loss (gain) on disposal of property and equipment, net | 904 | (49,743) | |
Amortization of debt discounts and issuance costs | 3,919 | 3,918 | |
Changes in operating assets and liabilities | 6,734 | 17,909 | |
Other | (3,124) | (825) | |
Net cash provided by operating activities | 216,291 | 80,325 | |
Cash flows from investing activities: | |||
Capital expenditures | (337,076) | (252,640) | |
Proceeds from sale-leaseback transactions | 78,040 | 174,246 | |
Other | (462) | 692 | |
Net cash used in investing activities | (259,498) | (77,702) | |
Cash flows from financing activities: | |||
Proceeds from borrowings | 44,291 | 8,657 | |
Repayments of debt | (7,430) | (11,539) | |
Proceeds from revolving credit facility | 620,000 | 420,000 | |
Repayments of revolving credit facility | (620,000) | (390,000) | |
Repayments of finance lease liabilities | (508) | (697) | |
Payments of debt discounts and issuance costs | (2,550) | — | |
Proceeds from stock option exercises | 13,276 | 1,194 | |
Proceeds from issuances of common stock in connection with the employee stock purchase plan | 1,450 | — | |
Other | (109) | (476) | |
Net cash provided by financing activities | 48,420 | 27,139 | |
Effect of exchange rates on cash and cash equivalents | 136 | (110) | |
Increase in cash and cash equivalents | 5,349 | 29,652 | |
Cash and cash equivalents—beginning of period | 25,509 | 31,637 | |
Cash and cash equivalents—end of period | $ 30,858 | $ 61,289 |
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 | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Membership Data | |||||||
Center memberships | 790,238 | 724,778 | 790,238 | 724,778 | |||
Digital On-hold memberships | 42,401 | 50,985 | 42,401 | 50,985 | |||
Total memberships | 832,639 | 775,763 | 832,639 | 775,763 | |||
Revenue Data | |||||||
Membership dues and enrollment fees | 71.4 % | 69.4 % | 71.6 % | 70.2 % | |||
In-center revenue | 28.6 % | 30.6 % | 28.4 % | 29.8 % | |||
Total Center revenue | 100.0 % | 100.0 % | 100.0 % | 100.0 % | |||
Membership dues and enrollment fees | $ 387,115 | $ 309,262 | $ 744,603 | $ 581,178 | |||
In-center revenue | 155,010 | 136,620 | 295,274 | 246,325 | |||
Total Center revenue | $ 542,125 | $ 445,882 | $ 1,039,877 | $ 827,503 | |||
Average Center revenue per center membership (1) | $ 701 | $ 639 | $ 1,369 | $ 1,219 | |||
Comparable center revenue (2) | 15.5 % | 36.2 % | 19.7 % | 42.4 % | |||
Center Data | |||||||
Net new center openings (3) | — | — | 3 | 2 | |||
Total centers (end of period) (3) | 164 | 153 | 164 | 153 | |||
Total center square footage (end of period) (4) | 16,200,000 | 15,300,000 | 16,200,000 | 15,300,000 | |||
GAAP and Non-GAAP Financial Measures | |||||||
Net income (loss) | $ 17,004 | $ (2,285) | $ 44,464 | $ (40,251) | |||
Net income (loss) margin (5) | 3.0 % | (0.5) % | 4.1 % | (4.7) % | |||
Adjusted EBITDA (6) | $ 136,039 | $ 63,096 | $ 256,141 | $ 103,722 | |||
Adjusted EBITDA margin (6) | 24.2 % | 13.7 % | 23.9 % | 12.2 % | |||
Center operations expense | $ 302,603 | $ 279,557 | $ 576,712 | $ 519,130 | |||
Pre-opening expenses (7) | $ 2,984 | $ 2,559 | $ 4,669 | $ 3,946 | |||
Rent | $ 67,434 | $ 59,989 | $ 133,971 | $ 115,953 | |||
Non-cash rent expense (open properties) (8) | $ 6,819 | $ 4,547 | $ 13,196 | $ 5,988 | |||
Non-cash rent expense (properties under development) (8) | $ 1,784 | $ 5,079 | $ 4,434 | $ 9,647 | |||
Net cash provided by operating activities | $ 141,943 | $ 71,263 | $ 216,291 | $ 80,325 | |||
Free cash flow before growth capital expenditures (9) | $ 82,062 | $ 32,441 | $ 109,298 | $ (1,853) |
(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 revenue 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. During the second quarter of 2023, we opened one center and closed one smaller-format leased center. |
(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 | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) | $ 17,004 | $ (2,285) | $ 44,464 | $ (40,251) | |||
Interest expense, net of interest income | 31,979 | 27,093 | 63,174 | 57,036 | |||
Provision for (benefit from) income taxes | 3,513 | (3,990) | 12,385 | (6,857) | |||
Depreciation and amortization | 58,252 | 57,173 | 116,449 | 115,280 | |||
Share-based compensation expense (a) | 16,549 | 5,973 | 22,171 | 27,411 | |||
COVID-19 related (credits) expenses (b) | (76) | 371 | 246 | 583 | |||
Loss (gain) on sale-leaseback transactions (c) | 7,491 | (21,212) | 759 | (49,584) | |||
Capital transaction costs (d) | — | — | — | 255 | |||
Other (e) | 1,327 | (27) | (3,507) | (151) | |||
Adjusted EBITDA | $ 136,039 | $ 63,096 | $ 256,141 | $ 103,722 |
(a) | Share-based compensation expense recognized during the three and six months ended June 30, 2023 was associated with stock options, restricted stock units, our employee stock purchase plan ("ESPP") that launched on December 1, 2022, and liability classified awards related to our short-term incentive plan in 2023. Share-based compensation expense recognized during the three and six months ended June 30, 2022 was associated with stock options, restricted stock and restricted stock units. The majority of this expense was associated with awards that were fully vested and became exercisable on April 4, 2022 in connection with the expiration of the lock-up period following our IPO. | |
(b) | Represents the incremental (credits) expenses we recognized related to the COVID-19 pandemic. We adjust for these (credits) expenses as they do not represent (credits) expenses associated with our normal ongoing operations. We believe that adjusting for these (credits) expenses provides a more accurate and consistent representation of our actual operating performance from period to period. For the three months ended June 30, 2023, COVID-19 related (credits) primarily consisted of a subsidy for our Canadian operations, partially offset by legal-related costs in pursuit of our claim against | |
(c) | We adjust for the impact of losses and gains on the sale-leaseback of our properties as they do not reflect costs associated with our ongoing operations. | |
(d) | Represents 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. | |
(e) | Includes benefits and costs associated with 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 operating activities less center maintenance capital expenditures and corporate capital expenditures. |
The following table provides a reconciliation from net cash provided by operating activities to free cash flow before growth capital expenditures ($ in thousands): | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net cash provided by operating activities | $ 141,943 | $ 71,263 | $ 216,291 | $ 80,325 | |||
Center maintenance capital expenditures | (44,470) | (19,057) | (77,369) | (35,453) | |||
Corporate capital expenditures | (15,411) | (19,765) | (29,624) | (46,725) | |||
Free cash flow before growth capital expenditures | $ 82,062 | $ 32,441 | $ 109,298 | $ (1,853) |
Proceeds from Sale-Leaseback Transactions | |||||||
Three Months Ended | Six Months Ended | ||||||
June 30, | June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Proceeds from sale-leaseback transactions | $ 45,364 | $ 94,580 | $ 78,040 | $ 174,246 |
Reconciliation of Net Income (Loss) to Adjusted EBITDA Trailing Twelve Months | |||
Twelve | Twelve | ||
Months Ended | Months Ended | ||
June 30, 2023 | June 30, 2022 | ||
Net income (loss) | $ 82,922 | $ (390,463) | |
Interest expense, net of interest income | 119,675 | 145,257 | |
Provision for (benefit from) income taxes | 18,417 | (100,315) | |
Depreciation and amortization | 230,052 | 231,376 | |
Share-based compensation expense | 32,051 | 358,869 | |
COVID-19 related expenses | 2,719 | (817) | |
(Gain) on sale-leaseback transactions | (47,289) | (48,034) | |
Other | (4,404) | 2,902 | |
Adjusted EBITDA | $ 434,143 | $ 198,775 |
Reconciliation of Net Debt and Leverage Calculation | |||
Twelve | Twelve | ||
Months Ended | Months Ended | ||
June 30, 2023 | June 30, 2022 | ||
Current maturities of debt | $ 64,814 | $ 21,727 | |
Long-term debt, net of current portion | 1,792,373 | 1,807,418 | |
Total Debt | $ 1,857,187 | $ 1,829,145 | |
Less: Fair value adjustment | 843 | 1,493 | |
Less: Unamortized debt discounts and issuance costs | (18,276) | (22,784) | |
Less: Cash and cash equivalents | 30,858 | 61,289 | |
Net Debt | $ 1,843,762 | $ 1,789,147 | |
Trailing twelve-month Adjusted EBITDA | 434,143 | 198,775 | |
Net Debt Leverage Ratio | 4.2x | 9.0x |
Reconciliation of Net Income to Adjusted EBITDA Guidance for Third Quarter 2023 and Fiscal Year 2023 | |||
Three Months Ended | Twelve Months Ended | ||
September 30, 2023 | December 31, 2023 | ||
Net income | |||
Interest expense, net of interest income | 34 – 33 | 131 – 129 | |
Provision for income taxes | 8 – 8 | 23 – 25 | |
Depreciation and amortization | 59 – 60 | 234 – 236 | |
Share-based compensation expense | 13 – 13 | 48 – 48 | |
Other | 0 – 0 | (1) – (1) | |
Adjusted EBITDA |
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SOURCE Life Time Group Holdings, Inc.
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