CHANHASSEN, MN -- Life Time Fitness reported revenue growth for both fourth quarter 2009 and the entire year in its earnings call with analysts.
The Chanhassen, MN-based company announced Thursday that its fourth quarter 2009 revenue grew 5 percent to $203.7 million from $194 million during the same period in 2008. Also, revenue for 2009 was $837 million, an increase of 8.8 percent from $769.6 million in 2008.
Life Time CEO Bahram Akradi said the company was free cash flow positive every quarter of 2009 and hit other goals regarding debt reduction and cost structure improvements.
“Our same-center revenue and attrition metrics remain key areas of focus, and we saw some improvement during the year, but we are not satisfied,” Akradi said.
Life Time’s net income also increased. For fourth quarter 2009, net income was $18.4 million compared to $13 million in the fourth quarter of 2008. For the year, net income was $72.4 million compared with $71.8 million in 2008.
Memberships also grew in 2009, up 2.1 percent to 578,937 on Dec. 31, 2009, compared to 567,110 on Dec. 31, 2008.
Attrition, one of Akradi’s sticking points, was 10.8 percent in fourth quarter 2009—the same as it was in the prior-year period. Overall, attrition was 40.6 percent in 2009 compared to 42.3 percent in 2008. Akradi would like to see the attrition rate reduced to around 36 percent, he said.
Looking forward in 2010, Life Time expects revenue to increase between 4 percent and 7 percent, or $870 million to $895 million. Net income is expected to increase between 4 percent and 9 percent, or $75 million to $79 million.
Analysts who were polled predicted a profit of 44 cents per share on revenue of $206.8 million. Shares of Life Time stock fell $2.73, or 9.7 percent, to $25.57 during midday trading on Thursday. The stock closed at $26.
Akradi established two goals for the company in 2010: to achieve positive same-store revenue for its mature clubs in the second half of the year and a definitive improvement in the attrition rate during the year.
Akradi spent a good deal of time defending his company’s full-service model compared to other clubs he described as being a “roomful of equipment.”
“We want to make sure that we offer a completely differentiated product than everybody else out there,” Akradi said.
Life Time opened one club in January in the Cleveland suburb of Beachwood, OH, and will open another club in March in the Kansas City, MO, suburb of Lenexa, KS. The company also will open two boutique centers this month in Scottsdale, AZ. Each club will be between 10,000 and 20,000 square feet. One more big-box center is expected to open during the fourth quarter of this year.
Earlier this month, Guinness World Records confirmed a new world record set by a group of cyclists led by Akradi. During the Ride of a Lifetime on Jan. 9 in Houston, 600 participants rode two hours on outdoor stationary bikes. Life Time held the same record of 418 participants set on March 23, 2009, but that record was broken on Sept. 18, 2009, by a group of 450 cyclists in a static cycle class in Galway, Ireland.