Town Sports International Holdings, Inc. (“TSI”) (NASDAQ:CLUB)
today reported results for the third
quarter of 2018.
TSI’s earnings for the third quarter of 2018 are summarized
below. To become fully apprised of our results, shareholders are
urged to read our Form 10-Q for the quarterly period ended
September 30, 2018 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
Third Quarter 2018 2017
Revenues: Club operations $ 108,709 $ 97,022 Fees and other
1,464 1,619 110,173 98,641
Operating
Expenses: Payroll and related 42,108 37,072 Club operating
50,107 46,087 General and administrative 6,700 5,380 Depreciation
and amortization 9,188 9,874 Impairment of fixed assets 2,082
6,497 110,185 104,910 Operating loss
(12 ) (6,269 ) Interest expense 3,493 3,192 Interest income (46 )
(36 ) Equity in earnings of investee (79 ) (77 ) Loss before
provision for corporate income taxes (3,380 ) (9,348 ) Provision
for corporate income taxes 562 3,928 Net loss (3,942
) (13,276 ) Net income attributable to non-controlling interests 4
— Net loss attributable to Town Sports International
Holdings, Inc. and subsidiaries $ (3,946 ) $ (13,276 ) Loss
per share: Basic $ (0.15 ) $ (0.53 ) Diluted $ (0.15 ) $ (0.53 )
Weighted average number of shares used in calculating loss per
share: Basic 25,849,800 25,245,262 Diluted 25,849,800 25,245,262
Reconciliation of Net Loss to EBITDA
and Adjusted EBITDA
Third Quarter 2018 2017
Net loss $ (3,942 ) $ (13,276 ) Interest expense, net of interest
income 3,447 3,156 Provision for corporate income taxes 562 3,928
Depreciation and amortization 9,188 9,874 EBITDA (2)
9,255 3,682 Impairment of fixed assets 2,082 6,497 Net costs
related to closing clubs and other cost-savings initiatives 403 188
Incremental expense related to the adoption of ASC 606 (1) 264 —
Separation expense related to headcount reductions and former
executive officers 57 676 Adjusted EBITDA (2) $
12,061 $ 11,043
(1)
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.
(2)
EBITDA and Adjusted EBITDA for the third
quarters of 2018 and 2017 include costs related to acquisitions of
$722 and $250, respectively.
Non-GAAP Financial Measures - EBITDA and Adjusted
EBITDA
EBITDA consists of net income (loss) plus interest expense (net
of interest income), provision (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, gain (loss) on extinguishment of debt, net costs
related to closing clubs and other cost-savings initiatives,
incremental expense related to the adoption of ASC 606, and
separation expense related to headcount reductions and former
executive officers. 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), 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 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20181025005915/en/
Town Sports International Holdings,
Inc.Investors:917-765-9974Investor.relations@town-sports.com
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