lifetime fitness 2010 shareholder presentation
TRANSCRIPT
Annual Meeting of ShareholdersApril 22, 2010
Welcome and Opening RemarksKenneth E. Cooper
Vice President of Finance
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2009 Annual Meeting of Shareholders
1. Formal Business Meeting
2. Management PresentationBusiness Overview
Financial Overview
3. Question and Answer Session
Forward-Looking Statements
During this presentation, we may make forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Forward-looking statements include statements about:
our estimates of future expenses, revenue, profitability and returns;
trends affecting our financial condition and results of operations;
our ability to attract and retain members or achieve our targeted membership capacity;
the availability and terms of debt financing;
our ability to identify sites, open new centers on schedule, and our ability to integrate acquired facilities;
new initiatives to enhance our brand in the areas of exercise, nutrition and education;
industry trends and the competitive environment;
the impact of losing one or more senior executives or failing to attract additional key personnel;
other forward-
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Formal Business MeetingEric J. Buss
Executive Vice President, General Counsel and Secretary
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Formal Business Meeting
1. Election of DirectorsBahram AkradiGiles H. BatemanJack W. EugsterGuy C. JacksonJohn K. LloydMartha A. MorfittJohn B. RichardsJoseph S. Vassalluzzo
2. Ratification of Deloitte & Touche LLP as Independent Registered Public Accounting Firm
3. Transact other business properly brought forth - NONE
Business OverviewBahram Akradi
Founder, Chairman and Chief Executive Officer
We are changing our culture
2009 Key GoalsFree Cash Flow Generation - ACCOMPLISHEDBecome a leaner, more capable company - ACCOMPLISHEDDeliver $1.70 diluted EPS ACCOMPLISHED
2009 Stretch GoalsAchieve positive SSS for mature clubs MADE PROGRESSAttrition rate in the mid- MADE PROGRESS
2010 Key GoalsAchieve positive SSS for mature clubs in second half of 2010Improve our attrition rate throughout the year
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Accomplish goals by connecting with members in a way never seen before.
2010 Key Objective
Reestablish Life Time as a healthy-way-of-life growth company
Grow square footageGrow membershipsGrow in-center programsGrow our corporate businessesGrow top-line revenue and EPSContinue to strengthen our balance sheet
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Financial OverviewMichael R. Robinson
Executive Vice President and Chief Financial Officer
$120.4 $149.0
$197.7 $221.5
$240.9
Strong Historical Financial Performance
$390.1
$511.9
$655.8
$769.6 $837.0
Total Revenue ($ in millions)
EBITDA ($ in millions)
7.7% 7.3% 6.1%
Comparable Center Revenue Growth
30.9% 29.1% 30.1%
EBITDA Margin
2.8% 28.8%(3.1)% 28.8%2005 20072006 20062008 2009 2005 2007 2008 2009
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2010 Key Goal: Reduce Attrition
Quarterly Attrition %
Q1 Q2 Q3 Q4 Total Year
2006 7.6% 8.2% 9.3% 9.4% 34.6%
2007 7.4% 7.9% 9.1% 9.6% 34.2%
2008 9.3% 10.6% 11.5% 10.8% 42.3%
2009 9.8% 9.5% 10.6% 10.8% 40.6%
Enhance value proposition everywhereDrive connectivity and involvementEnhanced energy to work with members indicating a desire to leave
Continued membership growth expected, while driving to reduce attrition
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2010 Key Goal: Same Store Sales Improvement
13-month SSS Q1 Q2 Q3 Q4 Total Year
2007 7.5% 6.6% 5.1% 5.3% 6.1%
2008 4.3% 3.3% 3.9% 0.0% 2.8%
2009 (2.7)% (4.4)% (5.4)% 0.3% (3.1%)
Mature (37-month) SSS
Q1 Q2 Q3 Q4 Total Year
2007 2.6% 1.6% (0.3)% (0.5)% 0.8%
2008 (1.8)% (2.0)% (1.9)% (5.2)% (2.8)%
2009 (7.9)% (9.0)% (8.7)% (4.7)% (7.5)%
Get to Positive Mature SSS in the 2nd half of 2010:
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Revenue per Membership
Revenue per Membership
Q1 Q2 Q3 Q4 Total Year
2007 $334 (+6.5%)
$338 (+6.3%)
$345 (+5.3%)
$344 (6.8%)
$1,360 (+6.2%)
2008 $363 (+8.7%)
$361 (+6.9%)
$358 (+3.9%)
$345(+0.3%)
$1,427 (+4.9%)
2009 $352 (-2.9%)
$354 (-2.0%)
$358 (-0.2%)
$350 (+1.6%)
$1,414 (-0.9%)
In-Center Revenue per Membership
Q1 Q2 Q3 Q4 Total Year
2007 $98 (+9.1%)
$98 (+8.9%)
$99 (+9.0%)
$93 (+9.4%)
$387 (+9.1%)
2008 $111 (+13.3%)
$107 (+9.8%)
$104 (+4.8%)
$93 (flat)
$414 (+7.0%)
2009 $103 (-7.0%)
$102 (-5.1%)
$100 (-3.1%)
$95 (+2.4%)
$400 (-3.4%)
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Generate Free Cash Flow
Generate free cash flow and maintain prudent capital structure:
Key Statistics ($ in millions) FY 2009 FY 2008 FY 2007
Free Cash Flow $39.6 $(280.2) $(273.6)
Net Debt to total capital 47.0% 51.8% 49.4%
TTM cash flow/ops as % debt 28.2% 25.7% 25.2%
Cash and revolver availability $107 $56 $72
Total Debt to EBITDAR (covenant is 4.00) 3.29 3.51 2.88
Capital Structure ($ in millions) FY 2009 FY 2008 FY 2007
Long Term Debt $643.6 $702.6 $555.0
Short Term Debt 16.7 10.3 9.6
Total Debt 660.3 712.9 564.6
$737.4 $652.9 $572.6
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Maintain Lean and Efficient Cost Structure
Operating Margin Rate Q1 Q2 Q3 Q4 Total
2006 18.3% 19.2% 20.6% 20.1% 19.6%
2007 18.8% 20.7% 22.2% 22.0% 21.0%
2008 19.5% 20.7% 21.2% 15.1% 19.1%
2009 15.7% 18.0% 18.7% 18.7% 17.8%
2010 Target Areas:Marketing and acquisition costsCentral infrastructureMaturity curve of center baseCenter level efficiencies (labor/supplies)
Execute to our Economic Model
Recent Cost Structure Changes:3Q 2008 sale-leasebacks on 6 centers4Q 2008 charge related to growth slow-down ($5 million pre-tax)2008/2009 higher member acquisition costs
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Question and Answer Session
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