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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Town Sports International Holdings Inc | NASDAQ:CLUB | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.20 | 0.204 | 0.2049 | 0 | 01:00:00 |
Town Sports International Holdings, Inc. (“TSI” or the “Company”) (NASDAQ: CLUB) today reported financial results for its fourth quarter and year-ended December 31, 2016.
Fourth Quarter Results
Full Year Results
Patrick Walsh, Chairman and Chief Executive Officer of TSI, commented: “2016 was an extraordinary year for our Company. I want to thank the 7,500 plus TSI team members that delivered exceptional results this past year. During the fourth quarter, Adjusted EBITDA increased 23.7% from the prior year to $12.3 million. The Company's profitability continued to improve throughout the year with the fourth quarter's Adjusted EBITDA margin increasing to 12.8%. The Company's improvement in profitability is a material achievement given the margin pressure from declining revenues. The annual Chairman's letter will be released on February 27, 2017 and posted on the Company's website and will provide further commentary on the business.”
Total revenue for Q4 2016 was $96.1 million compared to $100.8 million for Q4 2015. Revenue decreased approximately $3.2 million at closed club locations and approximately $2.3 million at our clubs operating longer than 24 months. These decreases were partially offset by an $836,000 increase in revenue from clubs opened in the last 24 months.
Q4 2016 vs. Q4 2015 (in millions) Membership revenue $74.7 vs. $76.9 (down 2.8%) Personal training revenue $15.4 vs. $17.7 (down 12.7%)Total operating expenses for Q4 2016 was $94.7 million compared to $24.6 million for Q4 2015. Q4 2015 included a gain on the previously completed sale of the East 86th Street property of $77.1 million ($73.6 million was non-cash) and a $3.0 million net gain related to the termination of a lease for a planned club opening that was not yet effective. Excluding these charges, operating expenses decreased $10.1 million primarily reflecting the results of our cost-savings initiatives and club closures; in particular, overhead and club level savings as well as General and administrative expenses.
Q4 2016 vs. Q4 2015 (in millions) Payroll and related $33.8 vs. $40.0 (down 15.5%) Club operating $44.7 vs. $45.3 (down 1.3%) General and administrative $5.5 vs. $7.5 (down 27.2%)Total cash and total debt as of December 31, 2016 was $45.6 million and $202.0 million, respectively, and total cash and total debt as of December 31, 2015 was $76.2 million and $275.4 million, respectively. The decrease in both total cash and total debt was primarily due to the purchases of long-term debt. In Q2 2016, TSI Holdings purchased a total of $71.1 million principal amount of debt outstanding under the 2013 Senior Credit Facility for $29.8 million, or an average of 42% of face value. The purchased debt was transferred to Town Sports International, LLC and canceled upon settlement.
Forward-Looking Statements:
This release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding future financial results and performance, potential sales revenue, potential club closures, results of cost savings initiatives, and other statements that are predictive in nature or depend upon or refer to events or conditions, or that include words such as “outlook”, “believes”, “expects”, “potential”, “continues”, “may”, “will”, “should”, “seeks”, “approximately”, “predicts”, “intends”, “plans”, “estimates”, “anticipates”, “target”, “could” or the negative version of these words or other comparable words. These statements are subject to various risks and uncertainties, many of which are outside the Company’s control, including, among others, the level of market demand for the Company’s services, economic conditions affecting the Company’s business, the success of our pricing strategy, the geographic concentration of the Company’s clubs, competitive pressure, the ability to achieve reductions in operating costs and to continue to integrate acquisitions, outsourcing of certain aspects of our business, environmental matters, the application of Federal and state tax laws and regulations, any security and privacy breaches involving customer data, the levels and terms of the Company’s indebtedness, and other specific factors discussed herein and in other releases and public filings made by the Company (including the Company’s reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission). The Company believes that all forward-looking statements are based on reasonable assumptions when made; however, the Company cautions that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other factors on anticipated results or outcomes and that, accordingly, one should not place undue reliance on these statements. Forward-looking statements speak only as of the date when made, and the Company undertakes no obligation to update these statements in light of subsequent events or developments. Actual results may differ materially from anticipated results or outcomes discussed in any forward-looking statement.
About Town Sports International Holdings, Inc.:
New York-based Town Sports International Holdings, Inc. is one of the leading owners and operators of fitness clubs in the Northeast and mid-Atlantic regions of the United States and, through its subsidiaries, operated 150 fitness clubs as of December 31, 2016, comprising 102 New York Sports Clubs, 28 Boston Sports Clubs, 12 Washington Sports Clubs (one of which is partly-owned), five Philadelphia Sports Clubs, and three clubs located in Switzerland. These clubs collectively served approximately 544,000 members as of December 31, 2016. For more information on TSI, visit http://investor.mysportsclubs.com.
Until further notice, the Company will not be hosting conference calls to discuss quarterly results. The Company intends to continue to issue press releases reporting quarterly and annual earnings.
From time to time the Company may use its Web site as a channel of distribution of material company information. Financial and other material information regarding the Company is routinely posted on and accessible at http://investor.mysportsclubs.com. In addition, you may automatically receive email alerts and other information about the Company by enrolling through the “Email Alerts” section at http://investor.mysportsclubs.com.
TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS As of December 31, 2016 and December 31, 2015 (All figures in thousands) (Unaudited) December 31, 2016 December 31, 2015ASSETS
Current assets: Cash and cash equivalents $ 45,596 $ 76,217 Accounts receivable, net 1,221 1,923 Inventory 238 337 Deferred tax assets — 1,549 Prepaid corporate income taxes 1,505 6,895 Prepaid expenses and other current assets 10,274 13,170 Total current assets 58,834 100,091 Fixed assets, net 170,580 195,341 Goodwill 1,008 1,025 Intangible assets, net 135 171 Deferred tax assets — 219 Deferred membership costs 1,092 3,029 Other assets 4,229 3,225 Total assets $ 235,878 $ 303,101LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities: Current portion of long-term debt $ 2,082 $ 2,810 Accounts payable 2,477 2,615 Accrued expenses 25,907 26,129 Accrued interest 119 129 Deferred revenue 34,572 40,225 Deferred tax liabilities — 236 Total current liabilities 65,157 72,144 Long-term debt 194,743 263,930 Deferred lease liabilities 49,660 51,136 Deferred tax liabilities 61 1,593 Deferred revenue 440 319 Other liabilities 11,487 10,224 Total liabilities 321,548 399,346 Stockholders’ deficit: Common stock 24 24 Additional paid-in capital (6,261 ) (8,386 ) Accumulated other comprehensive loss (168 ) (523 ) Accumulated deficit (79,265 ) (87,360 ) Total stockholders’ deficit (85,670 ) (96,245 ) Total liabilities and stockholders’ deficit $ 235,878 $ 303,101 TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Twelve Months Ended December 31, 2016 and 2015 (All figures in thousands except share and per share data) (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Revenues: Club operations $ 94,502 $ 99,321 $ 390,560 $ 418,069 Fees and other 1,605 1,518 6,361 6,254 96,107 100,839 396,921 424,323 Operating Expenses: Payroll and related 33,827 40,012 149,029 175,898 Club operating 44,739 45,339 185,104 196,725 General and administrative 5,486 7,539 24,702 30,683 Depreciation and amortization 10,630 11,845 43,727 47,887 Impairment of fixed assets — — 742 14,571 Impairment of goodwill — — — 31,558 Gain on sale of building — (77,146 ) — (77,146 ) Gain on lease termination — (2,967 ) — (2,967 ) 94,682 24,622 403,304 417,209 Operating income (loss) 1,425 76,217 (6,383 ) 7,114 Gain on extinguishment of debt — (17,911 ) (37,893 ) (17,911 ) Interest expense 3,194 5,017 13,940 20,579 Interest income — — (2 ) — Equity in the earnings of investees and rental income (41 ) (600 ) (242 ) (2,361 ) (Loss) income before (benefit) provision for corporate income taxes (1,728 ) 89,711 17,814 6,807 (Benefit) provision for corporate income taxes (1,469 ) 2,715 9,771 (14,351 ) Net (loss) income $ (259 ) $ 86,996 $ 8,043 $ 21,158 (Loss) earnings per share: Basic $ (0.01 ) $ 3.50 $ 0.31 $ 0.86 Diluted $ (0.01 ) $ 3.47 $ 0.31 $ 0.84 Weighted average number of shares used in calculating (loss) earnings per share: Basic 25,809,667 24,857,928 25,568,371 24,630,898 Diluted 25,809,667 25,049,813 26,074,735 25,114,057 TOWN SPORTS INTERNATIONAL HOLDINGS, INC. AND SUBSIDIARIES Reconciliation of Net Loss (Income) to EBITDA and Adjusted EBITDA For the Three and Twelve Months Ended December 31, 2016 and 2015 (All figures in thousands) (Unaudited) Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Net (loss) income $ (259 ) $ 86,996 $ 8,043 $ 21,158 Interest expense, net of interest income 3,194 5,017 13,938 20,579 (Benefit) provision for corporate income taxes (1,469 ) 2,715 9,771 (14,351 ) Depreciation and amortization 10,630 11,845 43,727 47,887 EBITDA 12,096 106,573 75,479 75,273 Gain on extinguishment of debt — (17,911 ) (37,893 ) (17,911 ) Impairment of fixed assets — — 742 14,571 Impairment of goodwill — — — 31,558 Gain on sale of building — (77,146 ) — (77,146 ) Gain on lease termination — (2,967 ) — (2,967 ) Separation expense related to headcount reductions and former executive officers 107 844 2,042 4,039 Net costs related to closing clubs and other cost savings initiatives 129 1,217 513 3,209 Non-cash rental income from former tenant (1) — (450 ) — (1,926 ) Rent related to building financing arrangement (2) — (187 ) — (750 ) Legal and other costs in connection with changes to the Board of Directors — — — 899 Adjusted EBITDA $ 12,332 $ 9,973 $ 40,883 $ 28,849 (1) Represents non-cash rental income from our former tenant in connection with the East 86th Street building financing arrangement. (2) Rent paid in connection with our previously owned club at the East 86th Street property was recorded as interest expense on the consolidated statement of operations.Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA
EBITDA consists of net income (loss) plus interest expense (net of interest income), provision (benefit) for corporate income taxes, and depreciation and amortization. Adjusted EBITDA is the Company’s EBITDA excluding certain items, such as any fixed asset or goodwill impairments, gain (loss) on extinguishment of debt, net occupancy gain (loss) related to closing clubs and other cost-savings initiatives and separation expense related to headcount reductions and former executive officers. In 2015, Adjusted EBITDA also excludes gain on sale of building, gain on lease termination, legal and other costs in connection with changes to the Board of Directors, non-cash rental income from a former tenant and rent related to building financing arrangement. EBITDA is not a measure of liquidity or financial performance presented in accordance with GAAP. EBITDA, as we define it, may not be identical to similarly titled measures used by some other companies.
EBITDA has material limitations as an analytical tool and should not be considered in isolation or as a substitute for net income (loss), operating income (loss), cash flows from operating activities or other cash flow data prepared in accordance with GAAP. The items excluded from EBITDA, but included in the calculation of reported net income and operating income, are significant and must be considered in performing a comprehensive assessment of our performance.
Investors or prospective investors in the Company regularly request EBITDA as a supplemental analytical measure to, and in conjunction with, our GAAP financial data. We understand that these investors use EBITDA, among other things, to assess our ability to service our existing debt and to incur debt in the future, to evaluate our executive compensation programs, to assess our ability to fund our capital expenditure program, and to gain insight into the manner in which the Company’s management and board of directors analyze our performance. We believe that investors find the inclusion of EBITDA in our press releases to be useful and helpful to them.
Our management and board of directors also use EBITDA as a supplemental measure to our GAAP financial data for purposes broadly similar to those used by investors.
The purposes to which EBITDA may be used by investors, and is used by our management and board of directors, include the following:
Adjusted EBITDA has similar uses and limitations as EBITDA. We have excluded additional items in the calculation of Adjusted EBITDA because management believes that this metric is useful in making period to period comparisons of our performance. We do not, and investors should not, place undue reliance on EBITDA or Adjusted EBITDA as a measure of our performance.
Adjusted EBITDA margin is calculated as Adjusted EBITDA over total revenue.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170216006193/en/
Town Sports International Holdings, Inc., New YorkInvestor:917-765-9974Investor.relations@town-sports.com
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