TSI Reports Improved Results in Third Quarter

Town Sports International (TSI), New York, had an increase in revenue in third quarter 2011 compared to the same period in 2010 as it released its financial results today.

TSI increased its revenue 2.7 percent to $116.1 million compared to $113.1 million in third quarter 2010. Net income dramatically increased to $1.9 million compared to a net loss of $18,000 for third quarter 2010.

For the nine months ending Sept. 30, 2011, TSI increased revenue to $351.1 million from $348.3 million in the first nine months of 2010. Its net income for the first nine months of this year increased to $3.1 million from a net loss of $1.6 million in the first nine months of 2010.

Memberships also grew by 5,000 to 522,000 in third quarter 2011. Membership attrition averaged 3.7 percent per month in third quarter 2011 compared to 3.8 percent per month in the same period last year, the seventh consecutive quarter of improved attrition for the company.

“We were very pleased to have continued to build on our momentum from the first half of the year in the third quarter,” TSI CEO Bob Giardina told analysts today in a call discussing the financial results.

Giardina pointed out that the company achieved its results with two fewer clubs than it had a year ago and despite events such as the earthquake and hurricane that hit the East Coast in August, 9/11 observances and, most recently, issues with Occupy Wall Street protests.

Giardina estimated that the company lost between $100,000 to $200,000 in revenue due to Hurricane Irene, which forced some clubs to close for up to full two days. All but three of the 158 clubs TSI operated as of Sept. 30, 2011, are New York Sports Clubs, Boston Sports Clubs, Washington Sports Clubs and Philadelphia Sports Clubs. The remaining three clubs are in Switzerland.

TSI opened a club in Garnerville, NY, on Oct. 1 and is scheduled to open a club in Bayonne, NJ, on Dec. 1.

“We don’t want to share too much information for competitive reasons, but both of these clubs should outperform our new member expectations,” Giardina said today.

TSI raised its expectations for fourth quarter 2011 to be between $114.5 million and $115.5 million compared to adjusted revenue of $111.4 million for fourth quarter 2010. The adjustment is for $2.7 million of expired personal training sessions recognized in that quarter.

TSI also estimates that its fourth quarter 2011 net income will be between $1.6 million and $2.1 million.

The company also expects its 2012 capital expenditures to be similar to or less than its 2011 levels. Although TSI says it has no new leases signed for 2012, it is targeting up to three openings of smaller fitness-only clubs in the second half of next year.

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