Dive Brief:
- Fitness center operator Life Time Group appointed company veteran and interim CFO Erik Weaver as its permanent finance chief effective immediately, according to a Thursday securities filing.
- The Chanhassen, Minnesota-based company appointed Weaver — a 20-year veteran of the business — to its interim CFO seat in January following the abrupt resignation of finance chief Robert Houghton, CFO Dive previously reported.
- Weaver will move into the permanent role as Life Time achieves its goal of becoming cash flow positive, according to its most recent earnings results also reported Thursday. For its second quarter, which ended June 30, Life Time reported $175.1 million in free cash flow, largely due to $149 million in proceeds from sales of land and sale-leaseback transactions, according to its results.
Dive Insight:
Weaver, 46, first joined the company in 2004 and has held a number of financial roles for the fitness center operator. Prior to assuming the role of interim CFO, he most recently served as Life Time’s chief accounting officer and controller.
In association with his role as permanent CFO, Weaver will receive an annual base salary of $500,000 effective Aug. 1, according to Thursday’s filing with the Securities and Exchange Commission. He will also receive an annual incentive opportunity of up to $300,000 for 2024 and a grant of 15,000 restricted stock units, according to the filing.
Weaver assumed the interim CFO seat at a time of executive leadership transition for the fitness operator, with both ex-CFO Houghton and Life Time’s chief operating officer, Jeffrey Zwiefel, departing as of December 2023. Zweifel inked a consulting agreement requiring him to provide a minimum of 1,000 hours of strategic and operational consulting services to Life Time within his first two years of retirement, according to the company’s latest proxy filed in March.
The leadership shift came as Life Time looked to weather rising operating costs for its centers as well as targeting new club growth and cash positivity by the middle of this year, CFO Dive reported at the time.
Weaver’s appointment as permanent CFO occurs as Life Time reaches a key “inflection point” during its most recent quarter upon reaching its cash flow aims, Life Time founder, CEO and Chairman Bahram Akradi said in a statement.
In addition to achieving its cash flow positivity goals, the company also reduced its net debt leverage ratio to 3.0x during the quarter as compared to 4.3x during the same period last year, a metric reached two quarters earlier than planned, Akradi said. Life Time reduced its debt by $169.2 million, according to its earnings report.
“We are enthusiastic about the trajectory of our business and remain committed to funding our growth while generating positive free cash flow and further reducing our leverage,” he said.
Life Time reported a 210% year-over-year jump in net income to $52.8 million as compared to $17 million for the prior year period, while adjusted EBITDA rose by 27.6% to reach $173.5 million. The company said it opened three new centers in its second quarter, contributing to a 17.4% rise in operations expenses for the latest six-month period.
Its strong second quarter has led the company to increase its guidance for full-year 2024, with Life Time now anticipating revenues of between $2.56-$2.59 billion, as compared to the $2.5-$2.53 billion in revenue forecast in May.
Life Time declined to comment beyond its press release.
