Town Sports International Holdings, Inc. (“TSI”) (NASDAQ: CLUB)
today reported results for the fourth quarter and
full-year of 2018.
TSI’s earnings for the fourth quarter and full-year of 2018 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, 2018 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
Fourth Quarter Full-Year 2018
2017 2018 2017 Revenues:
Club operations $ 111,926 $ 104,081 $ 437,357 $ 397,166 Fees and
other 1,555 1,247 5,737 5,876 113,481
105,328 443,094 403,042
Operating
Expenses: Payroll and related 44,337 34,097 168,315 145,612
Club operating 49,087 45,174 197,689 180,467 General and
administrative 6,055 5,601 25,047 22,680 Depreciation and
amortization 9,486 10,650 37,442 40,849 Impairment of fixed assets
— — 2,082 6,497 108,965 95,522
430,575 396,105 Operating income 4,516 9,806
12,519 6,937 Interest expense 3,479 3,210 13,478 12,665 Interest
income (6 ) (42 ) (133 ) (78 ) Equity in the earnings of investees
and rental income (82 ) (116 ) (344 ) (333 ) Income (loss) before
benefit for corporate income taxes 1,125 6,754 (482 ) (5,317 )
Benefit for corporate income taxes (962 ) (14,236 ) (357 ) (9,686 )
Net income (loss) including non-controlling interests 2,087 20,990
(125 ) 4,369 Less: net loss attributable to non-controlling
interests (206 ) — (202 ) — Net income attributable
to TSI and subsidiaries $ 2,293 $ 20,990 $ 77
$ 4,369 Earnings per share: Basic $ 0.09 $ 0.83 $ — $ 0.17
Diluted $ 0.09 $ 0.81 $ — $ 0.17 Weighted average number of shares
used in calculating earnings per share:
Basic
26,027,676 25,388,602 25,858,494 25,229,614 Diluted 26,464,881
26,025,709 26,252,137 25,948,870
Reconciliation of EBITDA and Adjusted
EBITDA
Fourth Quarter Full-Year 2018
2017 2018 2017 Net income (loss)
including non-controlling interests $ 2,087 $ 20,990 $ (125 ) $
4,369 Less: net loss attributable to non-controlling interests (206
) — (202 ) — Net income attributable to TSI and
subsidiaries 2,293 20,990 77 4,369 Interest expense, net of
interest income 3,473 3,168 13,345 12,587 Benefit for corporate
income taxes (962 ) (14,236 ) (357 ) (9,686 ) Depreciation and
amortization 9,486 10,650 37,442 40,849
EBITDA attributable to TSI and subsidiaries (2) 14,290 20,572
50,507 48,119 Impairment of fixed assets — — 2,082 6,497
Incremental expense related to the adoption of ASC 606 (1) 249 —
1,056 —
Net costs related to closing clubs and
other cost-savings initiatives, net oflandlord recovery
56 (848 ) 501 (711 )
Separation expense related to headcount
reductions and former executiveofficers
48 606 105 1,433 Personal training revenue recognized for unused
and expired sessions — (3,557 ) — (3,557 ) Adjusted
EBITDA attributable to TSI and subsidiaries (2) $ 14,643 $
16,773 $ 54,251 $ 51,781 (1) 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. (2) EBITDA and Adjusted
EBITDA include costs related to acquisitions of $1,378 and $192 for
the fourth quarter of 2018 and 2017, respectively, and $3,114 and
$468 for the full-year of 2018 and 2017, respectively.
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 (benefit) 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, net costs related to
closing clubs and other cost-savings initiatives, net of landlord
recovery, separation expense related to headcount reductions and
former executive officers, and personal training revenue recognized
for unused and expired sessions. 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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Investors:(917) 765-9974Investor.relations@town-sports.com
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