Market Overview

Life Time Fitness Tanks on Out-of-Shape Earnings Report

Life Time Fitness Tanks on Out-of-Shape Earnings Report

Life Time Fitness (NYSE: LTM) is taking a beating in the market after releasing lackluster preliminary earnings results.

EPS is expected to be in the $0.53 to $0.56 range for the fourth quarter. Analysts expected it to be $0.65.

The company anticipates fourth quarter revenues will come in below analysts' expectations, as well. Revenues will be in the $273-$275 million range, finishing slightly below the $278 million analysts hoped for.

Life Time attributes its weak quarter to several factors. These include Hurricane Sandy, unrelated self-insured expenses and the launch of Commitment Day - the company's movement to urge young people to eat healthy and exercise, among other activities. The Chanhassen, Minnesota firm also experienced lower-than-expected membership growth and higher membership acquisition costs.

For the year, revenues will be at or below guidance. The company originally estimated revenues of $1.127-$1.137 billion and now expects to report $1.125-$1.127 billion.

Annual EPS will be at or below expectations. Analysts hoped for $2.76 and the company will announce an EPS in the $2.73-$2.76 range.

2013 Guidance

The company expects revenues to finish at $1.2 to $1.22 billion in 2013. Net earnings are expected to be $120 to $124 billion with an EPS of $2.85 to $2.95.

Three New Centers in 2013

Life Time plans to open three new centers in 2013. One will open during the first half and two more will open later in the year.

This comes after the company recently abandoned plans to build a new location in Mount Laurel, New Jersey. According to the Burlington County Times, the plan fell through in December after the contractor allegedly repeatedly failed to meet one of the conditions in the contract.

However, during the same month, Life Time announced the commencement of construction on its first “resort-like sports, professional fitness, family recreation and spa destination” in California. The 127,000+ square foot facility is being built in Laguna Niguel, which is on the southern outskirts of the Los Angeles area.

Market Reaction

Life Time has taken a shellacking in the market on Friday. After closing above $49 every day in January, with most days above $50, the stock has tumbled to under $41.

As of this writing, the stock is at its lowest point since July 13, 2012, when it dropped to $40.50 before finishing a bit over $41.

Life Time Fitness is down around 20 percent in trading on Friday.


Related Articles (LTM)

View Comments and Join the Discussion!

Posted-In: Hurricane SandyEarnings News Guidance Best of Benzinga