GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Town Sports International Holdings Inc. Reports Operating Results (10-Q)

October 29, 2009 | About:
10qk

10qk

18 followers
Town Sports International Holdings Inc. (CLUB) filed Quarterly Report for the period ended 2009-09-30.

TOWN SPORTS INTERNATIONAL INC. health club company is the largest in the Northeastern United States. TSI owns and operates the Sports Clubs Network of clubs which includes New York Sports Clubs Boston Sports Clubs Washington Sports Clubs and Philadelphia Sports Clubs. There are also three locations in Switzerland: the Forum and the Joggeli Fitness Clubs in Basel and the Luxor Club in Zurich.All Sports Clubs locations offer a multitude of options for everyone including a wide range of group exercise and fitness programs. Select facilities also offer racquet sports pools basketball courts and other recreational activities. All Clubs are fully equipped with tons of strength training equipment cardiovascular machines and other exercise equipment. Additional services such as personal training massage steam room and sauna Sports Clubs for Kids and fitness assessments are also available. Town Sports International Holdings Inc. has a market cap of $80.2 million; its shares were traded at around $3.55 with a P/E ratio of 6.8 and P/S ratio of 0.2.

Highlight of Business Operations:

Our revenues, operating income and net income (loss) for the three months ended September 30, 2009 were $120.4 million, $1.4 million and ($1.5) million, respectively, and $128.1 million, $11.6 million and $3.8 million, respectively, for the three months ended September 30, 2008. Our revenues, operating income and net income for the nine months ended September 30, 2009 were $371.1 million, $15.6 million and $1.7 million, respectively, and $383.8 million, $42.1 million and $15.5 million, respectively, for the nine months ended September 30, 2008.

Total revenue for the three months ended September 30, 2009 decreased $10.8 million, or 9.1%, at clubs opened for more than 24 months when compared to the same period last year. Total revenue for the nine months ended September 30, 2009 decreased $26.9 million, or 7.4%, at clubs opened for more than 24 months when compared to the same period last year. Our operating margins decreased to 1.2% and 4.2% in the three and nine months ended September 30, 2009, respectively, from 9.0% and 11%, respectively, in the same periods in the prior year.

For the three months ended September 30, 2009, revenue increased $5.1 million at the 22 clubs opened or acquired subsequent to September 30, 2007. This increase in revenue was offset by decreases in revenue of 9.1%, or $10.8 million, at clubs opened or acquired prior to September 30, 2007 and $2.0 million related to the 11 clubs that were closed subsequent to September 30, 2007.

Payroll and related. This decrease for the three months ended September 30, 2009 compared to the same period in the prior year was primarily due to a decrease in ancillary club payroll of $1.2 million directly related to the decrease in ancillary club revenue and a decrease of $674,000 in club commissions and bonuses related to the decrease in the number of memberships sold.

General and administrative. This $594,000 decrease for the three months ended September 30, 2009 compared to the same period in the prior year was principally attributable to a $430,000 decrease in general liability insurance expense. Our claims activity has been decreasing as a percentage of our revenue, causing a decreased loss trend rate. In addition, we reduced our insurance claims reserves because we have lower claims exposure as a result of a decrease in the number of memberships. The remainder of the expense decrease was due to cost reduction efforts realized within various general and administrative expenses.

Impairment of fixed assets. In the three months ended September 30, 2009, we recorded fixed asset impairment charges totaling $3.5 million, which represented the write-offs of fixed assets at two underperforming clubs. In the nine months ended September 30, 2008, we recorded an impairment loss of $839,000 on fixed assets related to the planned closure of a club prior to its lease expiration. The impairment loss is included as a separate line in operating income on the consolidated statement of operations.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.7/5 (6 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide