Longyan Yao (Maggie)Su ChenMeechai Taychapipranai (Bo) 26 APR 2012
Life Time Fitness operates multi-use sports and athletic, professional fitness, family recreation and spa centers in a resort-like environment in U.S. The fitness centers are located among the residential, business and shopping districts of the surrounding community.
GICS Code: 25301030 Leisure FacilitiesCurrent Price 44.9Market Cap 1.85B
PEG 1.01P/E 18.94
1 Year Implied growth in earning 32%
7-10 years Implied growth 5.20%
Source: Google Finance
Source: Google Finance
Obesity
Overweight
Source: Centers for Disease Control and Prevention, CDC
COST
Government:
190 Billion
Corporation:
45 Billion
Source: Merriman Curhan Ford, Fitness and Wellness Report
Currently two bills are before Congress, each encourage exercise and promote healthier lifestyles
pre-tax dollars is allowed to pay for physical fitness
tax deduction for employers on fitness membership fees
Personal Health Investment Today Act of 2011
Workforce Health Improvement Program Act of 2011
Source: Merriman Curhan Ford, Fitness and Wellness Report
65% of major U.S corporations provide employer-sponsored wellness program such as gym membership or discounts
Increased EmployeeMorale
ImprovedEmployeeHealth
Reduced Health Care Cost
Reducedaccidentson the job
56%
41%
27%
8% 8% 8%
Reduce Absence
IncreaseProductivity
66% of companies who provided wellness program also offered to spouses or dependents.
Source: IHRSA Success by Association
Health insurance company provide incentives to exercise, such as discount for gym membership, offer gym membership credit if policy holder exercise at certain level.
Source: Merriman Curhan Ford, Fitness and Wellness Report
Households with higher incomes are able to spend more on gym or fitness club
More people aware of the importance of exercise that will drive demand for fitness industry Source: IBIS World
1 hr 50 min Online
2 hr 40 min TV
1 hr 20 min Phone
5hr 50 min Media
4hr Sporting activities
Day
Week
• 1/3 American kids are overweight or obese
• No. 1 Health concern among American parentsSource: kids health Organization http://kidshealth.org/parent/positive/family/tv_affects_child.html
$#
Source: IHRSA Success by Association
Variety Workout DVD
Limit Equipment
Less motivation
Distraction
Group fitness classes
Multiple equipments
Motivated
Baby sitting program
Source: Google
Source: Google
Group Exerci
se
Personal
Training
Kid Club 24/7 SPA Pool
Nutrition
support
Racquetball &
Basketball
COMMUNI
TY
24 hour
fitnessYESYES YESYES NO YESYES NA YESYES YESYES NA NO
Bally Fitness YESYES YESYES NA NO NA YESYES YESYES NA YESYES
Town Sports YESYES YESYES BabysittiBabysitti
ngngNO YESYES YESYES NA YESYES NA
Curves YESYES YESYES NA NO NA NA YESYES No YESYES
Anytime
Fitness NA YESYES NA YESYES NA NA YESYES NA YESYES
LA Fitness YESYES YESYES BabysittiBabysitti
ngngSOMSOM
EEWATERSP
A YESYES YESYES YESYES NA
Life Life timetime YESYES YESYES YESYES YESYES YESYES YESYES YESYES YESYES YESYES
Source: each company website
Source: LTM Website
Source: LTM Website
Source: LTM Website
Source: LTM IR Page 6
Source: LTM IR Page 6
Source: Lifetime Investor Presentation page 5
Source: Lifetime Investor Presentation page 5
Source: Lifetime Investor Presentation page 5
Growing membership
base
Solid same store sales
metrics
Solid attrition
improvement
High member utilization
and customer
satisfaction
Strong revenue per membership
metric
Source: LTM 2012 10K
Source: LTM 2012 10K
Source: LTM 2012 10K
Source: LTM 2012 10K
Source: LTM 2012 10K
Source: LTM 2012 10K
Source: LTM 2012 10K
Source: LTM 2012 10K
Ability to access additional capital through credit facility
Failure to manage growth effectively Delay in new center openings Fail to pass the rising cost related to
constructions to customers New centers in existing location may
negatively impact operating margins Fail to maintain the reputation of our
brandSource: LTM 2012 10K
Source: Bloomberg UK – GOAL, Mexico – SPORTS, US – CLUB, Canada – ICE, Japan – Central Sports, Tosho, Megalos, Renaissance
Company P/E USA Market P/E
Canada Market P/E
Canada Company’s equivalent P/E
Source: Bloomberg UK – GOAL, Mexico – SPORTS, US – CLUB, Canada – ICE, Japan – Central Sports, Tosho, Megalos, Renaissance
Comparable companyUSA Company – CLUB
Canada Company – ICE
UK Company – GOAL
Mexico Company – SPORTS
EV/Revenue
1.15x
EV/EBIT
15.11x
P/E
19.7
Price per share 40.8
DCF Valuation $29.0 per share
Multiple Valuation $40.8 per share
Current Stock Price $44.9 per share