Press Release: Town Sports International Holdings, Inc. Reports Second Quarter 2019 Results
Town Sports International Holdings, Inc. Reports Second Quarter 2019 Results
NEW YORK--(BUSINESS WIRE)--July 25, 2019--
Town Sports International Holdings, Inc. ("TSI" or the "Company") (NASDAQ: CLUB) today reported results for the second quarter of 2019.
TSI's earnings for the second quarter of 2019 are summarized below. To become fully apprised of our results, shareholders are urged to read our Form 10-Q for the quarterly period ended June 30, 2019 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
Second Quarter
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2019 2018
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Revenues:
Club operations $ 117,027 $ 111,047
Fees and other 1,677 1,282
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118,704 112,329
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Operating Expenses:
Payroll and related 45,547 42,396
Club operating 55,017 50,131
General and administrative 6,493 6,381
Depreciation and amortization 10,075 9,640
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117,132 108,548
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Operating income 1,572 3,781
Interest expense 3,240 3,338
Interest income (16 ) (45 )
Equity in the earnings of investees (93 ) (78 )
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(Loss) income before benefit for corporate
income taxes (1,559 ) 566
Benefit for corporate income taxes (2 ) (35 )
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Net (loss) income including
non-controlling interests (1,557 ) 601
Less: net loss attributable to
non-controlling interests (110 ) --
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Net (loss) income attributable to Town
Sports International Holdings, Inc. and
Subsidiaries $ (1,447 ) $ 601
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(Loss) earnings per share:
Basic $ (0.05 ) $ 0.02
Diluted $ (0.05 ) $ 0.02
Weighted average number of shares used in
calculating (loss) earnings per share:
Basic 26,580,772 25,844,061
Diluted 26,580,772 26,584,112
Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA
Second Quarter
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2019 2018
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Net (loss) income including non-controlling
interests $(1,557) $601
Less: net loss attributable to non-controlling
interests (110 ) --
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Net (loss) income attributable to TSI and
subsidiaries (1,447 ) 601
Interest expense, net of interest income 3,224 3,293
Benefit for corporate income taxes (2 ) (35 )
Depreciation and amortization 10,075 9,640
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EBITDA(1) 11,850 13,499
Net income related to closing clubs and other
cost-savings initiatives 8 42
Incremental expense related to the adoption
of ASC 606(2) 122 267
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Adjusted EBITDA(1) $11,980 $13,808
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(1) EBITDA and Adjusted EBITDA for the second quarters of 2019 and 2018
include costs related to acquisitions of $168 and $609, respectively.
(2) 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.
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), 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, as well as net income related to closing clubs and other cost-savings initiatives. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190725005784/en/
CONTACT: Investors:
(917) 765-9974
Investor.relations@town-sports.com
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