EDEN PRAIRIE, MN—Membership growth and in-center revenue led Life Time Fitness to a 33 percent increase in second quarter earnings, according to financials filed by the company today with the Securities and Exchange Commission.
Revenue increased 32 percent to $162.1 million in the second quarter from $122.5 million during the same period last year. Total revenue for the first six months of 2007 grew to $315.2 million from $237.9 million during the same period last year.
“We have had very strong growth in the past three years and the future looks great,” Bahram Akradi, CEO of Life Time, said this morning in a conference call with analysts.
Net income during the quarter grew 33.1 percent to $16.5 million compared to net income of $12.4 million for the same period last year. Net income grew 34.2 percent in the first six months of 2007 from $22.8 million to $30.6 million.
Much of the revenue growth came from new memberships. The company opened four clubs during the second quarter, which ended June 30. Life Time also opened a club in July and has three more clubs planned to open before the end of the year.
Memberships increased 24.5 percent to 489,489, and membership dues increased 32 percent.
Life Time has raised some of the memberships at certain clubs to $79 per month for new members. The company often offers memberships at $49 per month when opening a club, increasing that amount several months later for new members to $59 per month.
When asked whether the goal in raising the membership dues at certain clubs was to decrease memberships at full clubs, Akradi said that often the increases came at clubs with memberships at 12,000, noting one particular club in the Chicago area.
“I’d like to see that [number] come down in time,” said Bakradi. “I hope in two years, we have a larger percent of memberships paying the higher rate of $79 and have come down to 11,000 memberships.”
Mike Robinson, CFO of Life Time, said that Life Time was not feeling pressure from consumer spending pull back because the club company pulled from a higher end market.
“People are treating health club memberships as less of a discretionary spend,” he said on the call.