CHANHASSEN, MN -- Life Time Fitness CEO Bahram Akradi admitted during his company’s third quarter earnings call in October that the lengthy lagging economy has driven his will to succeed.
“In a sick way, I almost liked this tough economy that exists out there because it is allowing us to sharpen our skills and get much tougher,” Akradi told analysts.
Sick or not, Akradi and Life Time have continued to get healthy from an earnings perspective this year. Life Time’s third quarter 2010 revenue grew 11.2 percent to $238.3 million compared to $214.3 million in the same period last year. Total revenue for the first nine months of 2010 grew 8.8 percent to $689.2 million from $633.3 million in the first nine months of 2009.
Net income for the quarter was $23.4 million compared to $20.6 million in third quarter 2009 and $63.1 million for the first nine months of 2010 compared to $54 million in the same period last year.
Life Time also increased its memberships by 5.4 percent, from 590,716 on Sept. 30, 2009, to 622,698 on Sept. 30, 2010.
Attrition levels are decreasing at Life Time, too. The Chanhassen, MN-based company’s trailing 12-month attrition rate for the quarter was 37.1 percent, down from 40.6 percent at the same time last year.
“We can continue to improve on that 37.1 percent here in the fourth quarter, albeit, it will be a small improvement,” Akradi said. “We are not done with ideas that we are still baking and trying to implement to improve our attrition. We really want to hit that [goal of] 36 percent bad, and we continue to work on that.”
Life Time updated its forward-looking statements for the year. It expects 2010 revenue to be $900 million to $910 million (up from $890 million to $905 million) and net income to be $81 million to $83.5 million (up from $79.0 million to $81.0 million).
The total number of open Life Time clubs on Sept. 30, 2010, was 89 compared with 84 on Sept. 30, 2009. The company was scheduled to open its third and final club of 2010 this month in Centennial, CO.
“While I am not bullish on the consumer environment, I have never felt better about the company and our management team,” Akradi said. “Since the economic downturn, we have executed on almost every aspect of our plan.”
Akradi indicated that Life Time will see more growth next year if there is a drop in unemployment.
“2010 has been, as we have mentioned numerous times, a very, very challenging year,” Akradi told analysts. “We feel that we can continue to perform as well as we have performed in 2010 in 2011. I do not expect to be radically different one way or the other unless we see robust change in unemployment going from [about] 9.5 percent to 7.5 percent. Then, we will get some wings on our back.”