Town Sports International Holdings, Inc. (“TSI” or the
“Company”) (NASDAQ:CLUB) today reported results for the fourth
quarter and full-year of 2019.
TSI’s earnings for the fourth quarter and full-year of 2019 are
summarized below. To become fully apprised of our results,
shareholders are urged to read our Form 10-K for the full-year
ended December 31, 2019 posted at
https://www.townsportsinternational.com.
The limited information that follows in this press release is
not adequate for making informed investment decisions. The
unaudited condensed consolidated Statements of Operations are
included below.
Patrick Walsh, Chairman and Chief Executive Officer of TSI,
commented: “Our fourth quarter same store revenue results
materially improved from the third quarter. We are very pleased to
report that this improvement continued into the new year with same
store sales increasing 0.9% in January and 1.2% in February of
2020. As we weather the strains on our business from the
unprecedented worldwide response to the Coronavirus outbreak, we
look forward to resuming this trend in the remainder of 2020.”
Dollar amounts in this release are in thousands, except for
share and per share amounts. Amounts are unaudited.
Condensed Consolidated Statements of Operations
Fourth Quarter
Full-Year
2019
2018
2019
2018
Revenues:
Club operations
$
114,303
$
111,926
$
460,334
$
437,357
Fees and other
1,659
1,555
6,426
5,737
115,962
113,481
466,760
443,094
Operating Expenses:
Payroll and related
45,099
44,337
180,945
168,315
Club operating
54,683
49,087
219,065
197,689
General and administrative
7,535
6,055
27,813
25,047
Depreciation and amortization
9,083
9,486
38,199
37,442
Impairment of fixed assets
—
—
7,189
2,082
116,400
108,965
473,211
430,575
Operating (loss) income
(438
)
4,516
(6,451
)
12,519
Interest expense
3,069
3,479
12,982
13,478
Interest income
(9
)
(6
)
(65
)
(133
)
Equity in the earnings of investees
(93
)
(82
)
(299
)
(344
)
(Loss) income before provision (benefit)
for corporate income taxes
(3,405
)
1,125
(19,069
)
(482
)
Provision (benefit) for corporate income
taxes
66
(962
)
212
(357
)
Net (loss) income including
non-controlling interests
(3,471
)
2,087
(19,281
)
(125
)
Less: net loss attributable to
non-controlling interests
(142
)
(206
)
(723
)
(202
)
Net (loss) income attributable to Town
Sports International Holdings, Inc. and subsidiaries
$
(3,329
)
$
2,293
$
(18,558
)
$
77
(Loss) earnings per share:
Basic
$
(0.12
)
$
0.09
$
(0.70
)
$
—
Diluted
$
(0.12
)
$
0.09
$
(0.70
)
$
—
Weighted average number of shares used in
calculating (loss) earnings per share:
Basic
26,767,443
26,027,676
26,596,923
25,858,494
Diluted
26,767,443
26,464,881
26,596,923
26,252,137
Reconciliation of Net Loss (Income) to EBITDA and Adjusted
EBITDA
Fourth Quarter
Full-Year
2019
2018
2019
2018
Net (loss) income including
non-controlling interests
$
(3,471
)
$
2,087
$
(19,281
)
$
(125
)
Less: net loss attributable to
non-controlling interests
(142
)
(206
)
(723
)
(202
)
Net (loss) income attributable to Town
Sports International Holdings, Inc. and subsidiaries
(3,329
)
2,293
(18,558
)
77
Interest expense, net of interest
income
3,060
3,473
12,917
13,345
Provision (benefit) for corporate income
taxes
66
(962
)
212
(357
)
Depreciation and amortization
9,083
9,486
38,199
37,442
EBITDA(1)
8,880
14,290
32,770
50,507
Impairment of fixed assets
—
—
7,189
2,082
Separation expense related to headcount
reductions and former executive officers
819
48
943
105
Net costs (income) related to closing
clubs and other cost-savings initiatives
157
56
(409
)
501
Incremental expense related to the
adoption of ASC 606(2)
—
249
546
1,056
Non-cash deferred base rent(3)
—
—
519
—
Adjusted EBITDA(1)
$
9,856
$
14,643
$
41,558
$
54,251
(1)
EBITDA and Adjusted EBITDA include costs
related to acquisitions of $190 and $1,378 for the fourth quarter
of 2019 and 2018, respectively, and $512 and $3,114 for the
full-year of 2019 and 2018, respectively.
(2)
On January 1, 2018, the Company adopted
FASB Accounting Standards Codification Topic 606 and all the
related amendments (“ASC 606”) which requires the Company to defer
costs related to obtaining members and expense those costs over the
estimated membership life. Under previous guidance, these
membership costs were expensed at the time of the respective
sale.
(3)
Represents non-cash deferred base rent in
the first quarter of 2019 related to the adoption of the Accounting
Standards Codification Topic 842.
Non-GAAP Financial Measures - EBITDA and Adjusted
EBITDA
EBITDA consists of net income (loss) attributable to TSI and
subsidiaries plus interest expense (net of interest income),
provision for corporate income taxes, and depreciation and
amortization. Adjusted EBITDA is TSI’s EBITDA excluding certain
items, such as any fixed asset or goodwill impairments, separation
expense related to headcount reductions and former executive
officers, net costs (income) related to closing clubs and other
cost-savings initiatives, incremental expense related to the
adoption of ASC 606, as well as non-cash deferred base rent. 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) attributable to TSI and subsidiaries, 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
attributable to TSI and subsidiaries and operating income, are
significant and must be considered in performing a comprehensive
assessment of our performance.
Investors or prospective investors in TSI 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 TSI’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.
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.
Forward-Looking Statements
This release may contain “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 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 “may,” “should,” or the
negative version of these words or other comparable words.
Forward-looking statements speak only as of the date when made, and
TSI 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.
Town Sports International Holdings, Inc. is a diversified
holding company with subsidiaries engaged in a number of business
and investment activities. The Company’s largest operating
subsidiary has been involved in the fitness industry since 1973 and
has grown to become one of the largest owners and operators of
fitness clubs in the Northeast region of the United States. TSI’s
corporate structure provides flexibility to make investments across
a broad spectrum of industries in order to create long-term value
for shareholders.
Until further notice, TSI will not be hosting conference calls
to discuss quarterly results. TSI intends to continue to issue
press releases reporting quarterly earnings.
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version on businesswire.com: https://www.businesswire.com/news/home/20200320005588/en/
Investors: (917) 765-9974 Investor.relations@town-sports.com
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