Life Time Group Holdings, Inc. reported revenue in 2022 to be within the midpoint of its prior guidance and earnings to top guidance. The fitness center operator also forecasted growth of about 23 percent at the midpoint of overall guidance for 2023.
The company provided its financial update in advance of participating at the ICR Conference.
Preliminary Fourth Quarter 2022 Financial Results
- Sales are expected in the range of $472 million and $473 million, representing growth of 31 percent. Guidance had called for sales between $460 million and $490 million.
- Net income is expected in the range of $10 million and $12 million, exceeding guidance calling for a loss in the range of $10 million to $2 million.
- Adjusted EBITDA is expected in the range of $104 million from $106 million, topping guidance in the range of $80 million and $90 million.
- Revenue is anticipated to be within the midpoint of its November 9, 2022, guidance and reflects strong growth in both membership dues and in-center revenues compared to the prior year period. Revenue growth is also expected to reflect the continued successful execution of its pricing strategy.
- Life Time expects to achieve revenue growth despite several new club openings later in the fourth quarter than originally anticipated and two club openings that were delayed to January 2023.
- Total net center memberships are expected to decline by approximately 3,500 in the fourth quarter, less than the seasonal membership decline Life Time traditionally sees in the fourth quarter. As a comparison, in the same quarter in 2019, Life Time declined by over 13,000 net center memberships.
- Total comparable center sales are expected to increase 26 percent in the quarter compared to the prior year period.
- Life Time opened five new clubs in the fourth quarter and 10 new clubs in 2022. It has more than 160 athletic country clubs across the U.S. and Canada.
- Net income and adjusted EBITDA are anticipated to be better than its November 9, 2022, guidance for both the fourth quarter and the full fiscal year, due primarily to a faster implementation of our margin expansion activities, lower than anticipated expenses related to its self-insured medical plan and lower real estate taxes.
- Expected net income and adjusted EBITDA improvement versus the prior-year period is also a result of the continued growth in membership dues and in-center revenues, and the continued successful execution of its pricing strategy.
Preliminary Full-Year 2022 Financial Results
- Revenue for the year is expected in the range of $1,822 million to $1,823, a gain of 38 percent. Guidance was expected in the range of $1,810 million to $1,840 million.
- The net loss for the year is expected in the range of $4 million to $2 million. Guidance had called for a loss in the range of $26 million to $17 million.
- Adjusted EBITDA is expected to land in the range of $279 million to $281 million, exceeding guidance in the range of $255 million to $265 million.
Introduction of Fiscal 2023 Annual Guidance
The company introduced the following select guidance for the full-year fiscal 2023:
- $2.2 billion to $2.3 billion in revenue (growth of 23 percent at the midpoint versus preliminary 2022 results); and
- $430 million to $450 million in adjusted EBITDA (growth of 57 percent at the midpoint versus preliminary 2022 results).
Life Time said, “We anticipate revenue growth will be driven primarily by the continued ramping of mature clubs, new club openings, strategic investments and pricing. We expect adjusted EBITDA growth will be driven primarily by revenue growth and margin expansion activities. We anticipate rent expense for fiscal 2023 to be $280 million – $290 million, which includes full annualized rents for the $375 million of sale-leasebacks we completed in 2022, rent from sale-leaseback transactions we expect to complete in 2023 and non-cash rent associated with sites where we expect to take possession and start construction but not open for operation in 2023.”
The company will provide detailed 2023 guidance as part of its 2022 fourth quarter and full-year earnings release in March.