Valuation: ~$100mm of EBITDA in 2012 per company guidance. Conservative 5x multiple gets to $500mm enterprise value. $200mm net debt at end of 2012 (per company). Leaves $300mm equity value, divide by 23mm shares, you get to $13/share. At a 6x multiple, you get $17/share.
Free cash flow waterfall: $100mm EBITDA, $21mm cash interest, $30mm capex, $5-10mm cash taxes, leaves $39-44mm of FCF. Big yield on current $200mm market cap.
Operating leverage: $470mm of revenue. 1% increase in membership fee = $4.7mm of EBITDA. 1% increase in membership = $2.9mm of incremental EBITDA assuming 50% flow through (conservative). Just imagine if they can raise fees by 3% and members by 3% -- huge growth.
Insider buying: Lots of insider buying by a very smart board. Bruce Bruckman is buying stock and he's the head of his own PE firm, which used to own the company. Very likely he wants to sell.
Capital structure: One piece of debt, a $300mm term loan at 7% interest. No covenant issues. No prepayment penalties.