After five straight years of revenue decline, Town Sports International Holdings Inc. (TSI), Jupiter, Florida, has reported its second consecutive year of growth. On Feb. 28, the company reported 2018 year-end revenue of $443 million and fourth quarter 2018 revenue of $113 million, representing year-over-year increases of 7.6 percent and 9.9 percent, respectively.
The fourth quarter of 2018 marks six straight quarters of growth for TSI, whose resurgence during the era of CEO Patrick Walsh has included acquisitions of Lucille Roberts, New York; Total Woman Gym + Spa, San Diego; and TMPL, New York.
TSI's staple club brands include New York Sports Clubs, Boston Sports Clubs, Washington Sports Club and Philadelphia Sports Clubs.
According to financials, TSI’s fourth quarter operating expenses increased 8.7 percent to $49.09 million, while adjusted EBITDA dropped 12.7 percent to $14.64 million. For the full year of 2018, those same categories saw respective increases of 9.4 percent to $197.68 million and 4.8 percent to $54.24 million.
In a Feb. 21 column on Seeking Alpha, Invest With Discipline suggested that TSI's current financial status does not justify its shifting stock prices. TSI closed at $5.73 per share on March 1, 2019 (NYSE: CLUB). This juxtaposes with a high mark of $14.75 on July 5, 2018, and a relatively comparative price of $6.80 on March 5, 2018.
"Although its 52-week high might not be an appropriate valuation, [TSI's] current depressed stock price looks quite attractive," the column states. "Unfortunately, [TSI] does not provide guidance, and management commentary is very limited. Therefore, calculating an intrinsic value with a high level of confidence is nearly impossible. However, its downside risk seems manageable, while its upside potential offers excitement."
In closing, the column states: "[TSI's] debt levels are concerning; however, [TSI] seems to generate enough cash to continue covering interest payments, paying off some principal and provide the ability to refinance at more attractive terms."
In July 2017, TSI, which is a publicly traded company, announced it would no longer host conference calls to discuss quarterly results, despite the calls being a practice that many public company do.
TSI ranked No. 7 on Club Industry’s Top 100 Health Clubs of 2018 list, reporting $403 million in 2017 revenue.