Town Sports International Holdings, Inc. (“TSI” or the
“Company”) (NASDAQ: CLUB) today reported results for the third
quarter of 2019.
TSI’s earnings for the third quarter of 2019 are summarized
below. To become fully apprised of our results, shareholders are
urged to read our Form 10-Q for the quarterly period ended
September 30, 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.
Dollar amounts in this release are in thousands, except for
share and per share amounts. Amounts are unaudited.
Condensed Consolidated Statements of Operations
Third Quarter
2019
2018
Revenues:
Club operations
$
113,864
$
108,709
Fees and other
1,632
1,464
115,496
110,173
Operating Expenses:
Payroll and related
44,976
42,108
Club operating
55,789
50,107
General and administrative
6,915
6,700
Depreciation and amortization
9,456
9,188
Impairment of fixed assets
7,189
2,082
124,325
110,185
Operating loss
(8,829
)
(12
)
Interest expense
3,221
3,493
Interest income
(12
)
(46
)
Equity in the earnings of investees
(58
)
(79
)
Loss before provision for corporate income
taxes
(11,980
)
(3,380
)
Provision for corporate income taxes
74
562
Net loss including non-controlling
interests
(12,054
)
(3,942
)
Less: net (loss) income attributable to
non-controlling interests
(321
)
4
Net loss attributable to Town Sports
International Holdings, Inc. and subsidiaries
$
(11,733
)
$
(3,946
)
Loss per share:
Basic
$
(0.44
)
$
(0.15
)
Diluted
$
(0.44
)
$
(0.15
)
Weighted average number of shares used in
calculating loss per share:
Basic
26,592,031
25,849,800
Diluted
26,592,031
25,849,800
Reconciliation of Net Loss to EBITDA and Adjusted
EBITDA
Third Quarter
2019
2018
Net loss including non-controlling
interests
$
(12,054
)
$
(3,942
)
Less: net (loss) income attributable to
non-controlling interests
(321
)
4
Net loss attributable to TSI and
subsidiaries
(11,733
)
(3,946
)
Interest expense, net of interest
income
3,209
3,447
Provision for corporate income taxes
74
562
Depreciation and amortization
9,456
9,188
EBITDA(1)
1,006
9,251
Impairment of fixed assets
7,189
2,082
Net costs related to closing clubs and
other cost-savings initiatives
39
403
Incremental expense related to the
adoption of ASC 606(2)
14
264
Separation expense related to headcount
reductions and former executive officers
124
57
Adjusted EBITDA(1)
$
8,372
$
12,057
(1)
EBITDA and Adjusted EBITDA for the third
quarters of 2019 and 2018 include costs related to acquisitions of
$5 and $722, 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.
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, incremental
expense related to the adoption of ASC 606, separation expense
related to headcount reductions and former executive officers, as
well as net costs related to closing clubs and other cost-savings
initiatives. 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/20191105006149/en/
Investor Contact: (917) 765-9974
Investor.relations@town-sports.com
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