CHANHASSEN, MN — Life Time Fitness is off to a good start in 2010.
On Jan. 9 in Houston, Life Time set a new world record for having the most participants in a stationary cycle class. None other than Life Time CEO Bahram Akradi led the class of 600 participants, a feat recognized last month by Guinness World Records.
The same day as the record cycle class, Life Time opened a new club in the Cleveland suburb of Beachwood, OH. The Chanhassen, MN-based company also was scheduled to open another new club this month in the Kansas City, MO, suburb of Lenexa, KS.
The month of January was pleasing to Akradi and Life Time executives in other ways, too. During last month's financial call with analysts, Life Time CFO Mike Robinson said the company added approximately 18,000 memberships, with more than 50 percent fewer clubs in the first year of operation. That's compared to the 20,000 memberships the company added at a lower average dues rate in 2009.
“We're very, very excited about our year,” Akradi said in the call.
The company is coming off positive fourth quarter 2009 and year-end results. For 2009, Life Time's overall revenue, $837 million, was 8.8 percent more than it generated in 2008 ($769.6 million). Also, the company generated more revenue in fourth quarter 2009 ($203.7 million) than it did in the same period in 2008 ($194 million), an increase of 5 percent.
Akradi said the company was free cash flow positive every quarter of 2009 and hit other goals regarding debt reduction and cost structure improvements.
“Our same-center revenue and attrition metrics remain key areas of focus, and we saw some improvement during the year, but we are not satisfied,” Akradi said.
Life Time's net income also increased. For fourth quarter 2009, net income was $18.4 million compared to $13 million in the fourth quarter of 2008. For the year, net income was $72.4 million compared with $71.8 million in 2008.
Memberships also grew in 2009, up 2.1 percent to 578,937 on Dec. 31, 2009, compared to 567,110 on Dec. 31, 2008.
Attrition, always one of Akradi's sticking points, was 10.8 percent in fourth quarter 2009 — the same as it was in the prior-year period. Overall, attrition was 40.6 percent in 2009 compared to 42.3 percent in 2008. Akradi said he would like to see the attrition rate reduced to around 36 percent.
Looking forward in 2010, Life Time expects overall revenue to increase between 4 percent and 7 percent, or $870 million to $895 million. Net income is expected to increase between 4 percent and 9 percent, or $75 million to $79 million.
In addition to the Beachwood and Lenexa clubs, the company will open one more big-box center during the fourth quarter. It also announced the opening of two boutique clubs of 10,000 and 20,000 square feet in Scottsdale, AZ.
Akradi said that he wants Life Time to be the best place for all of its members, including runners, cyclists and those who want to do yoga.
“We have been positioning Life Time as a healthy-way-of-life company,” Akradi said. “[We want to] truly deliver something that is difficult for anybody else to just jump in this space and do. It's taking more time, but we are not stopping our efforts on that delivery. So it's not a question of will it happen; it's a question of when it will happen.”