Life Fitness, Rosemont, Illinois, reported second quarter revenue of $229.8 million, marking a 32 percent increase from the same period in 2015, according to financials released on Thursday by parent company Brunswick Corp., Lake Forest, Illinois.
Sales increased in the quarter due to growth at health clubs and at local and federal governments, according to Brunswick. The increase in net sales to European and Asian businesses was called "solid" in the earnings presentation. The United States accounted for 56 percent of total Life Fitness sales with Europe accounting for 17 percent and the rest of the world accounting for 27 percent.
Life Fitness reported second quarter operating earnings of $24.1 million, which included restructuring and integration charges of $2.6 million. This compares with operating earnings of $23.2 million in the second quarter of 2015. The increase in operating earnings included benefits from higher sales, partially offset by increased investment in growth initiatives, an unfavorable impact from sales mix, and restructuring and integration costs associated with the acquisition of Cybex in January.
"Our fitness business continues to benefit from solid demand, particularly in the global health club and hospitality markets," Brunswick Chairman and CEO Mark Schwabero said in a statement. "This foundational core growth, combined with favorable trends in the rehabilitation and active aging category, as well as increased participation in group exercise activities, is providing a healthy marketplace in which to execute our fitness strategy. We are making outstanding progress integrating Cybex into our Fitness segment and remain on plan to achieve our near-term and long-term financial objectives for this acquisition."
Brunswick's increased investment in growth initiatives continued Thursday when it announced the acquisition of International Cycling Group (ICG), which reported approximately $41 million in 2015 revenue. Terms of that deal, which is expected to be finalized in the third quarter after regulatory approval, were not disclosed. The acquisition will allow Life Fitness to expand its position in group exercise and boutique studios, according to the earnings presentation.
Brunswick noted ICG's ability to provide integrated technology solutions and a "total experience offering" in the earnings presentation. ICG's capabilities have the ability to be ported to Life Fitness' other group exercise products, including WattRate Power Meter, Coach by Color and My Ride.
The ICG acquisition is consistent with Brunswick's goal of achieving revenue of $1.5 billion at Life Fitness by 2020, Brunswick said in the earnings release. Life Fitness reported net sales of $769.3 million in 2015.
Life Fitness' net sales for the first two quarters of 2016 grew to $448.1 million, reflecting 25 percent growth compared to the $359.4 million reported through the first two quarters of 2015. Life Fitness reported revenue of $218.3 million in the first quarter.
Life Fitness is targeting 2016 revenue growth in the mid to high 20 percent range, including announced acquisitions. The plan reflects operating margins, as adjusted, to be lower due to the impact of the Cybex acquisition, including purchase accounting adjustment. In June, Life Fitness broke ground on a $22.85 million expansion project at the Cybex factory in Owatonna, Minnesota.
Brunswick reported a year-over-year net sales increase of 8.8 percent in the second quarter to $1.2 billion, up from the $1.1 billion reported in the second quarter of 2015. Brunswick's top line growth reflected strong growth rates in the fitness segment and fiberglass outboard and aluminum boats, Schwabero said.
Brunswick (NYSE:BC) shares traded down at 2.3 percent in late trading Thursday at $49.10 per share. Brunswick shares have traded in a 52-week range between $36.05 and $55.76.