LTH - Earnings call transcript Q1 2022 | Life Time Group Holdings, Inc.

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Operator

Good morning, and welcome to the Life Time Group Holdings Conference Call to discuss financial results for the First Fiscal Quarter of 2022. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from the company.

As a reminder, this call is being recorded.

our company risks forward-looking cause and to materially the a which actual call, differ of number uncertainties from this will statements, make involve results During statements. forward-looking that may which list comprehensive in SEC to risk There's you a encouraged of are the factors company's filings, review. adjusted capital company expenditures. will including non-GAAP cash free financial certain the and flow Also, measures, discuss EBITDA before growth and measures the to of are with X-K Investor This reconciliations the issued most this comparable the release information the morning in included Life with GAAP company's the filed on SEC earnings along directly Time's and website. section Relations

the On Chief over Please Akradi. ahead, today Executive management and to are sir. and Tom go and Founder, turn Bergmann, President Chairman, I the call call Officer, Officer. Chief Mr. Bahram from Financial Akradi, now will

Bahram Akradi

morning, Good our thank joining for and earnings first call. quarter you

members, inflection past great in our to but performance. vendors to remains outlook. live, and strategy us are again restrictions, members, only most seeing of in point term life, treated and been our an and premium, rewards we put has strategy, masks, impact executing brand great communities. inflection not ecosystem.As growth Despite of and is has great with Life Time a loved for other this from the long and the vaccines and continued landlords, at most Life mandated the we've was build government once pre-COVID. Our build brand programs. at to strengthen work, result a respected shutdowns and team an exceed accelerate our results and systems This and of very uphold way play reputation, healthy And to we position point, the Time recover, way

also Our not each on full provide been color fundamentals they been this month, call. only Tom have accelerating. will improving have

down parts. to our strategy term going I'm break Now, short in three

the growth to clubs we grow X% is capital seeing country existing revenue have and profitability. of will initiatives paying clubs will rest clubs in We are XX off in believe athletic the the continue investment months. We're our XXXX and the believe life at end. year. improve to athletic to their country initiatives most and majority dues of throughout highest opportunity dues it over by our our we approximately revenue to numerous our potential First, bring exceed implemented revenue month-over-month our year last which These

sale evaluate to asset are to objective. Second, continue opportunities we strengthen company sheet. and our actively we exploring our leaseback light additional balance area and make transactions other more In this structures this to achieve

Third, estate we brand country where light membership capture health and and real clubs, are with locations assets us brand and succeed. trusted natural a for base growth gives equity leveraging additional to advantage along our potential to reputation well being our athletic opportunities our

our For grow our revenue will visits, results mid continuing line right profitability in club those to and with onward, results our at our clubs revenue believe you and rapidly first we the our we country we're membership and on continue priority quarter with growth in athletic we growth there. next February this forward sharing And recovery accelerate were as Tom our have quarter. to existing From quarter locations. expectations. athletic seen strong look I second at and throughout country first

athletic to range fuel and a of in country our provides accelerating that profitability invested have we mentioned, premium our recovery. revenue and clubs initiatives complements I As

$XXX membership the quarter, by three in many, diverse. higher This were of see $XXX year. membership quarter in to in the of average the XXX fourth dues. membership put the at has for base first growing quarter have these increase a reported $XXX just the join rollout just also $XXX position end from dues we us rate nationwide sold quarter Average of of both aging substantially to group XXX And programs pickleball, additional these active in are of dues XXX is we are initiatives strong the XXXX compared memberships $XX of range to and capture the numbers small aggressive more underway. first new Members last quarter during during becoming we training first year. first a sequential in The many the the and XXXX. increasingly averaged and of growing significant Our and engaging to our

second owned strengthen involving of a balance our we're transactions estate for leaseback priority further the to For portfolio. real sale amount significant sheet, evaluating alternatives

currently country XX we reminder, a own athletic approximately As clubs.

XXXX of As the to in We're quarter the about on expect leaseback million additional proceeds to bringing up the we owned sell XX on XX closed end of mentioned, by fourth close with first million estate total with on opportunities transaction and XX of we year. or and monetize of sell this two evaluating currently third year-to-date million of another transaction to quarter an May XXX to real call, quarter proceeds our million. to leaseback the $XXX other

provide as will you with We updates we progress.

priority For that continue growth to will assets explore are like natural brand. extension our opportunities we our to third

opportunities. is growth capture healthy We have built and extremely ecosystem of new well-positioned a a and premium life to that way brand grow

in experiences continuous place our good want Life As and in our to we in power the the initiatives reinforce time trends in it have for We the deliver. Time, these Time. to Thank trends. business about of I and over my feel strategic underlying I turn we driving and your the Life brand you Tom, support confidence your very today

Looking forward to Q&A. the Tom?

Tom Bergmann

per new center a strategy membership the a and in $XXX to driven revenue million Bahram the and from reflecting that membership I'll our more increased $XXX by increase provide center our first a $XXX fluid first center our execution member the year start XX% in-center opening outlook with comparable period, spending of On the highlighted mainly same some markets. thanks, XXX,XXX just memberships results by increased driven revenue revenue country in clubs in and athletic total pricing for with million XXXX. of in-center priorities right, of revenue. businesses XX, Average revenue full increased continued store year. basis, XX March detail approximately to increased to XX% in additional To to of dues, Total XX% March growth. was as three now XX.X%. quarter quarter, approximately on XX of XX% compared XXX,XXX center XX% under All sales to December last center Center increased increased as as Bahram. $XXX year and XXX,XXX and prior increase

early of the seasonal membership typical discussed while disrupted quarter. surge the our the As our pattern earnings January this of last on year month the we call because typically Omicron. was membership be in period patterns the would This reversed in timing Omicron strongest

memberships March with into in X,XXX put back the in us in center and not progression To context we provide quarter While XX,XXX of March. adding in net to memberships we the business. provide in to we center into memberships January, April, do and in of basis, of following under center By monthly April on memberships March. in some a saw intend context and net added month we X,XXX this XXXX Further, compared in February, in continued February, the regular XXXX. the added will momentum net help January, XX,XXX X,XXX breakdown momentum X,XXX the just to X,XXX XX,XXX

Given expect the the opening during the add net in country quarter sequential dues Average in and $XXX fourth legacy was This of center and or year, to quarter increases a new momentum of of first higher mix last the athletic and are $XXX year-over-year in last driven the year. quarter. was approximately business, we to per clubs, memberships. we by in of first family pricing second the XX,XXX increase monthly in membership more seeing compared $XXX memberships quarter,

operating continue the from doubled range in to back per to expense a generated year. athletic revenue gain $XX.X see primarily leaseback in We first range two which the during million. included $XXX the businesses our $XX.X properties Other events during of second quarter. remaining than the and in to outside end $XXX business. of based member and centers, approximately by Total by million of $XXX that the XX.X revenue, was onetime sale were quarter This million of share targeted of non-cash the to dues and quarter to related more compensation of our half the million expenses includes the average the driven increasing quarter

expense. Center X.X items, these and million. compensation Excluding total non-cash operating increased to operations XX.X% $XXX million expense $XXX based share million of expenses was included

not rent taken driven compared site begin based million, year operation. our XX% and our and open expense completed sale and by quarter. programs compensation expense marketing services of based possession General, staffing usage requirements members share prior XX.X but million for increased center lease additional we've and included backs to compensation $XX.X increased XX.X% services Rent increased in non-cash to non-cash the have expense. support centers million construction share administrative centers our expense our where additional to due and investment to operations yet and a and Excluding were the expenses $XX and to by during of expense of increased construction, primarily

to million, $XX to administrative and $XX.X $XXX,XXX X.X% leaseback gained $XX.X to additional general, Depreciation support along non to including the based due million expense, overhead company with sale items our usage XX% the was of cash and expenses. as two continued centers expenses to and other the Excluding related rates compensation of $XX.X re-staffing decreased both properties in reopened and quarter. income increased was and share operating million. from non-operating functions This marketing million onetime periods center a amortization increase primarily public of

primarily Excluding business. XX.X million these events million increased increased our operating the other X.X activity to athletic items, in from expenses related

was from $XX.X in XX.X the compared operations reported period. the a for GAAP of prior Our million year loss quarter with loss million

the from last from expense items million X.X to XX.X% the loss XX.X onetime million compared based million an loss compared expense impacts a XX.X from adjusted the of period. to in XX.X with year's and interest in million first decrease million year was prior Excluding adjusted XX.X net operations share other Net the compensation quarter. operations

interest Excluding the onetime XXXX approximately declined levels. expense to debt quarter first or expense the lower of due in items $X impacting million XX% interest its

Our as in lower increase year net a is well prior primarily effective GAAP associated tax a rate with certain assets, of with period. XXX.X deductibility was our This effective year tax rate associated the as allowance compared of with net XX% tax of loss X% compared loss compensation. with valuation period. prior in in the executive $XX result limitations was million the deferred an million

adjusted share from the in million compensation million prior XX.X based loss to million net items from to our year. of period. increased improved year Adjusted last expense XX.X other Excluding XX.X EBITDA nonrecurring XX.X loss and million a

to compared Moving million as of XX.X million and equivalents XX, on to cash end. was the balance XXXX, sheet, cash at year March XX.X

During the sale May two $XXX leaseback closed proceeds our in quarter proceeds properties we and as close on or sale two about expect XX Bahram bringing year-to-date $XX million, to XX leaseback the for on of sale leaseback approximately we million gross proceeds, properties on gross mentioned, additional gross million. an of approximately for to additional

Bahram $XXX million prior of estate to our As look sale to monetize of quarter. opportunities evaluating and to end currently to further real discussed, portfolio estate opportunities the we additional leaseback at up to are the real third continue an

XXX use down the on sheet the future cash to term to our proceeds, completion fund pay growth. incremental put an plan balance we million successful Assuming and to leaseback of would loan the of sale proceeds

million We open higher $XXX to and and leaseback execute XXXX. performance cash quarter, was clubs, transactions financial the As and reported our plus underlying of at operating $XX rent under million a the XX athletic expense compared understand and better expense construction. non-cash to of trends. incur as we currently in rent number first we last of reminder, country sale The Capital impact related statements properties club country just new during the the incremental compared year. as with totaled athletic with our in EBITDA to look in increase quarter primarily to expenditures adjusted six openings continue plan

provided and Turning last guidance to quarter full we year. the our outlook, how we focused commentary the around were on some about thinking our quarter, first

second right results our with the quarter through were first Our that seeing quarter. anticipated the type in of expectations and we line acceleration are we moving

year a the outlook has very about changed. result, not progress feel to revenue full billion of billion we X.X and total business the good As for X.X our of the

into for still or margin third higher XX% the rent we or quarter million of to year approximately $XXX transactions year the year the to will and momentum as revenue of total total Assuming we cash expense sale range in XX.X% for base. to our leverage Even the end million back leaseback expect additional the XXX range increase the million of projected adjusted on $XXX full this expect the year business from non-cash million, XX% rent of of in on with our close steadily to expense, cost approximately gain at improve million, $XXX we previous to and to continue of our projected half our EBITDA revenue. the operating XX% fixed we $XXX

a think about year. as Finally, note full our you for to of items couple performance the

the begins as First, average earlier, go of the year in quarter our memberships range end XXX seasonally to be the remain school. and decline I kids to our mentioned the back second expect that in the pools as and when during to dues range mix we half second monthly to closed family of by the of XXX

a away Q&A. where half memberships years, the With turn third move previous to to new to net we that country from of XX the in. new new many we is lot momentum and in year, the unlike quarters season been the to building improved engagement expect and about have the investing Operator? net lose opening member our the the and see call in be typically and during members forward outdoor the look of that summer over this of retention. for we back will we of as year in initiatives the athletic operator due There center optimistic to pandemic, back period we gain fourth Second, clubs

Operator

you. Thank

conducting be session. John is go answer Please ahead. from of Instructions] and a now [Operator Guggenheim. question question will First We Heinbockel

John Heinbockel

want with I to estate. start real

have that you per seven sense Tom, property. rate REITs property I might think give this impact clearly 'XX what much us we environment, tower, don't on that. your about I because see. would you environment for comment rate on one. for right get that don't maybe think I current if impact which would don't Normally the part that a So of valuation. per XX million then about pipeline the And you including I can have That's Can think now, think Brooklyn that?

Bahram Akradi

right. All

So, No of day? your are John, was all? first Great. How complaints. how you

total opening is clubs question XX. Your in

John Heinbockel

Yes.

you right, I'm curious sort Just plus, XX of now. with pipeline, the said right just

Bahram Akradi

really it just part fluid. think needs It's I like, everybody of is to remain

XX same to of nonstop. XX pipeline deals on. like, have XX we're the if or massive going to and is we're clubs. or We not is working an be incredible clubs, The At time, commit activity pipeline need clubs,

the However, deliberately, we Construction now. high are taking the time to sometimes costs rebid some constructions. of right are

it of remain, back. Some won't will go

purely it has just not subcontractors. demand, issue of some supply And enough of a just is timing and sort the not too been much where of there

give number of whatever it. So they work on sort doing you any without

rebid. So you to and just to take time have go the back

have so So, any growth to those better, are our issues been macro just we in deal been But logistical better. with. any has literally the never picture, never opportunity

concern about, you clubs I up all grow brand. And in opening up have of York a new see guys Frisco. no the New in so to do course, chance that the opening amazing opportunities the to clubs or perform just happened discussions Chicago amazingly. the City if that They what we are time just much have We have

do the we So we on or deals there, have looking next to it's pipeline am six focused XX answer hey yes. but less More in we're have, years concerned and forward about XX the XX. growth or can I if XXX is the for the five,

Tom Bergmann

leaseback right, very currently proceeds your our in, it's environment. our Yes, or sale impact question minor on will and on we're environment John, second rate that have the on you're on

attractiveness minor. volatile rate it's properties. change of the So our it's extremely competent Again, a environment. but we're in interest pretty And in rate the environment, obviously,

Bahram Akradi

everyone, they There go that. to And to and know by guys explain. Normal, some thing, and corporate called talking FFO kinds. is down types don't are one big to different rates this strictly important and from of different come to project private REITs, of going investing more these for I up, Interest people they're some do have REITs are project those continue financing. big, these We're to also are big, of massive that they numerous have revolvers, going investors.

paid they're many tenants There throughout aren't have that So actually those. assets that looking and of their time. for that great whole rent

but specific people I to work do to So assets landlords people who us that kind have to are and is the lifetime more right going result, that over not group pay have they're specific putting other treating zero certainly way, and lack brand I XX% get us, looking not giving the we're with very ability we're everywhere clubs, off. this buy three And a obviously, respect. done. compete they come is financing the cap of then, facts, as who is us wanting assets, rates to it say total it. folks We of everyone with wanting have is financing, building when to some a the treat your years concern these will want asset, the XX of for. buying they time And they're facts getting on to about with to worried and harder and about

John Heinbockel

think All when revenue about you follow you then to getting personal right, XXXX maybe timetables. where back mid staff? That's to still quick And think 'XX are in rebuilding that one the up late training was per and the member, fair? always I internal

Bahram Akradi

anybody I the to you, been I for sure business you're secrets. to the XX So about And can't always now tell make you years. last pessimistic ask back, or I training about Look, tell have personal trade have starting come if XX it.

as only And past by the years. and in on you are to it. want the plan at to of of pretty working so it we're seen we excited the and it Life am to to about is highest that number We X,XXXs beat that Super difference it we involved that revenues swipes I lot like and see delivered now personally the in surpass the height what to will training and now been as training, to trainers we're get daily. well the my of growing. quality in So the the they're details, a guys to is of for beyond place trained standalone I'm personal product more we that clubs there. will am we creating coming I trainers can deliver the and [Indiscernible]. has will think have that personal performances. and business and And towards terms Time. and of important sure. We're focus it. most going don't confident. credit type XXXX building then of the for the number confident without where much physically same getting transforming Other trainers Dues be in I've I personal I a need are, And the exactly But attract the are incentive fluff. following it's company. truly of personal trainers of are earning But a coach we are right think it's the type who the have year The the a we of really in areas increase. educated, end Right their been

John Heinbockel

Okay, thank you.

Operator

go from ahead. Oppenheimer. Nagel Our of question Please next Brian is

Brian Nagel

morning. good Hi,

Bahram Akradi

morning, Good you? are How Brian.

Brian Nagel

here. on Congrats momentum the well. Doing

your appreciate the you question all first month the So commentary. in to gave us month Tom, and breakdown

back to with digital just of regionally. joining as the then looking you were portion Life as hold that that membership could now here, normal really And members as on to would now far So on versus new my what I also to your the mean, Time? we're build those gross. regard question at say converting anything

Tom Bergmann

you with and Good April as a for to or the saw quarter. restrictions question. we Yes. same these all markets the restrictions Omicron are what to momentum confidence it's and lower. we rebuild. broader for continued are And happy well. getting or such really Brian, we Yes. see broader again, balances of severe the we're would we're that thanks now these us expect great strength country Really pre-pandemic region, the balances continuing to see reduced and know XXX%, got saw that those other in see is, the later back reason performers. starting and And the and that question. off the across mandates into where We're down some or areas as active on the seeing then Atlantic had more the the where the last, largely especially across memberships and we're other to into the that optimism And We're access rebuild. markets the on back And into at levels. The we to our South in mountain that's came heartland strongest starting hold gives into what level those now on convert trajectory were following are markets as to the areas near Northeast and as starting a of start another Mid Texas hold normalized to

expect So off really and you as where would those coming pre-pandemic upper with are or restrictions in back of less through. again, the came And that XXX%, the were levels. already momentum about good they earlier, coming XXs, states are feeling

Bahram Akradi

back, were now all doesn't detectable that with any surpass clearly Tom put that It's see water get idiosyncrasies handful has XXXX that the of them that course. but again, we're uniquely the much to will more doubt can been to we takes structure restrictions mean, month to all said, have utilities We interfered, where few also increase the will us are think programming the the and those There the and government are They many stuff. market like place, having and we up they seeing majority, achieving the back see matter. none the a tweaks versus don't given XXXX implemented I a of and of more sale the sort things I it. dues clubs, coming the pushing. for profitability clubs the we demonstrates more dam. places everything on trend make revenues But more the just And gives you that costs in do versus initiatives other did a each incredible data of didn't of couple It member changing and in XXXX of all today, bit these effect cost patterns We it over margin and quite concierge, had which, maybe revenues. increases. obviously great

So clubs to be really-really revenues get exact of we months of profits, well productivity level question we it is later. couple our are to positioned of have the couple is used just and to same the that a to sooner a it months going

We have enough trends.

We enough data. have

examples enough have it what We takes. of

severe they to shut for analysts longer Now long a that understand. have And time. for clubs a They had deeper period had the And important this really very-very is restrictions of all were for drop. time. they down

you of hard-line retail, Some some run in technology, guys some guys run are guys of you you of restaurants.

the subscription. Our we memberships Each forever any somewhere business sell a build X% basically a total is We're not of of business. between a It month, club. to X% takes of like subscription businesses. those and mature

So to and time it build that that the protection. you gives takes

for it down, with the and except things government things they go shutting did that the the takes when it So down also they did way to steps does ridiculous businesses in this. time

stopped EBITDA. investing this not it's December, have now turned we our never point, at rebuild company in strategy, we corner, So not We positive in in growth January. have the

beach going the coming then quarter of pool August, a And now with put in we our that. the have seeing the quarter get seasonal money, clubs second all and the We athletic a all drop programs typically continue robust pretty we here, everything that of fruits all to we're obviously end spend place, get we joining. fast through to will have plow and October. And continue September, there and families have the people, and

We on a memberships out. seasonal or drop back drop hold and have go people

dropping so is the different back. sure So have implementing membership to us with are I Jeff not on do we actually and come else August, Tom make the many September, programs everybody sure and make it. to go seasonal we we have been

We are the it. execution, confident trends are strategy, on our on our supporting and

Brian Nagel

other the And about programming. early, on I normal uptake up you other all existing to newer that. better So pickleball sticky lot push it's but the Rob, a made, Are big members seeing and to you programs membership are you've seeing With to than going a these you've suggest on and from it's helpful. follow that know your very one investments just could forward? the regard talked that, into

Tom Bergmann

are the Absolutely. customer programs. using we I taking that mean, unique is the different

professionally Our executed on XX,XXX do everything a like are is dedicated a tape. is there, online almost and the not like This to the assets But pickleball we finish with are have courts space, having going the these courts, else, Life growing programming, be to literally number same pickleball. explosively. we The opportunity will with people we for that XXX we're that on absolutely courts, tennis in some facility it's paints nobody basketball would the sales almost dedicated of we courts have on wood to like cord understand some Time. Amazon, with they position floor the in that have basketball going have, outdoor

Florida, market California, you're reserve in, your matter the join a club, you Time Arizona, Phoenix, go to doesn't play whatever can athletic Texas, you use from can Minnesota, court country go can You Chicago, your and programs. app, Life and

XX can We're XXx, of provider we the next and it. United doing months pickleball States we the literally taking are be within largest So that.

on just normal are Small group XXX fitness on that We hiring setting focused used for similar up. that schedule getting to lot numbers ramp classes, of classes to group then a of goal a that. club. span it programs. to small programs programming, a join roughly Obviously, group that's making it's those per to enough big now training we teach small with together, this all some are providing we yoga, So relentless And and the customer the training. people, have to the the putting group it up places, convenient right

put we So subscriptions swipe focused will program the be run programs in adjusted. test We're company, XXXX. level an run place. and And the top in a EBITDA on We it. did a engineer are make we we revenue, brilliant we money we just other to month-to-month all in it. that line obviously be clear. people, on getting adaptation, it, standard We we have to we as how in today club the We works. are And test more it each the focused making see this than all not we a

working we're then we yes, extremely looking all those it adaptations everything at to need trends, we trends and So with make is and that well.

Brian Nagel

again. Congrats Thank you.

Operator

RBC Our next of question Carril ahead. go Please Christopher Capital. is from

Christopher Carril

great all. and to from hear morning, good Hi, you

you $XXX quarter-over-quarter that dues a and sight increases expand tailwinds to those that growth growth including on maybe the different the about a level. discussed contribution? you can healthy line from you center of and more new that talked average bit membership So And the to legacy $XXX little contribution on with

Bahram Akradi

a cheap. We try these them going the Life way that some etc. results the taken through to you in more always we We pricing. as At wouldn't our XX to myself. the membership upset with that use country We guys two took athletic with small We've not business guys down could you and the a go is let's adjust for approach. two So I've I'm The clock club, it's business we literally planet fitness micro but a too our business sold be of those Time model. always we big through reality, past. breaks walk and the to the model. prices adjustments we in so a compare are is different worked athletic by large this an business around compare this me. is bolder or any built as cruncher, really working to else clubs, years have for nobody not and you again guys And blame

club club. We to expect signed to dues month, at XXX isn't XX% high the up That's you business a the customer HVLP but But of paying XX% or a paying in that they they or like $XX model, sometimes there. use but using easy. they Americans paying model, amount XX to a it's dues. for the maybe a customer non-use XX% XX over to the use XXX model model the that or club, start are too are month there of In time, XX% of years, customers more their a $XX a the They because the little using the even the the have lightly, not of use facility. keep

So we creating on with be focused cannot experience that an us, duplicated.

that So we the planning we XXX%, road of that a are This XXX%, wasn't our that count, of as get quickly, years people clear who of paying to it we as membership during XX% using. build going was and to not immediately guys told will lightly XXX% tank back at This you mystery. show our XX%, water. dues. and are take to to will

plus dues execution get this XXX% XX%-ish at to of We strategic into the So of membership has allow. our count.

and on who's of heavier at count based type users users. paying the membership back, Now the XX% have dues you

you swipes with club have the is albeit, the lower. So membership XX% about basically that swipes matches XXXX

the just simply pushing, much based not smoother, prices. with by navigate not because brand to So we momentum the gimmicks. buying. customer Time We're off, And we selling. change more just They're it's experiences. we're Life on It's is them or had any have lack promoting. We're assist in, the to a it easy that not there is not skewing what buying. ability coming We're the

so get then you We are following the other see Texas And going like, to is through the says trend XXX% also are reaching stuff if they're the swipe XXX% we XXX% to it. look these are that dues then improving. see market at swipe that which and with clubs

the is on able XXX the get We end total straightforward. by higher So to be bank. December to membership XXX our of that pricing pretty should

last are As price, us, in dues XXX. time customers but it's past just joining $XXX-ish membership, drops, those customers is the our and there customer each person up then the joining said Tom and new the joins, and XXX. is current coming the The each new like quarter And of creeping month. dues come average a XXX average new

we're an the strategically have plus month to bucks, going your dues who's up old you paying continue going less person than the to this still to membership saying going take So rack a pay rotation because member. this and back $XX rate less a $XX than rack rate transaction, XX you're of

rate a pricing. treated and the drag as lots in that still have versus of be legacy opportunity we has customer The that the is legacy our rate working customer. go So still to up is room

of to slowly, So need us it the basis as we doing dues monthly we we the levers We're by poised of into groups left very have a end XXXX. year, setting small a lot and counts execute. go is on to My expectation methodically get average the it. will the membership hit

Christopher Carril

can locations? here maybe club it. then anything all locations suburban And on Got it, that got by if legacy the of at demand you're newer you. type, Thank there's you else versus add terms seeing for in Thanks detail. levels urban those performance

Bahram Akradi

country these highest experience the that Chicago, can level clubs, small It's is same. to it's not that have guys Digital one will just, can't urban the enough add, incremental, are or emphasize not are the it's the if incremental suburban, if we a of you simply digitally. I get, athletic They all cannot see really the you the added the or clubs you gyms, have they're of whether go get only customer. I to customer. again, Frisco for They're similar be any see, experience new for one opportunity duplicated

workout lessons every is only they always have if classes we create the our and has address customer. incredible the it athletic can't country national with been So But with but has that tennis strategy have build make entry, Life with business classes the to best guys to to digital the clubs detail as art. best improve. from in classes, they app you business to continues everything only it the best to barrier meditation, every club, swim a for club, Time with beach option checked

competitors. We by or governments regional to have the the national take We or no international us across country. was just damage that to the have inflicted

of We taken to We've it. it. around. hard take at that the part We're turned have We've damage.

remainder the these which the clubs, revenue in into the now in revenue the got to just our We profitability. of are goes bring of bulk of remainder this

fantastic all members. we the time, get have reputation, is amazing. team our into our incredibly get we Life phenomenal on and We all it we team paying it. absolutely my the their has of back members, along So blow have all We vendors; in is handled about appreciation company. This how we put and dealt they to Time The how off landlords. in how short nothing difficult this the been our with now. have everybody way feel of brand, right get But built it's it's

Operator

from Bank Ohmes ahead. go America. of of is question next Our Robert Please

Unidentified Analyst

is this strong for congrats and Hi, momentum Alex here. our Robbie. on questions Thanks for the taking on

expense just initiatives, flow of adjusted should club maybe you. as how sort much the from operations maybe we of SG&A as these through for on expect just So And assumptions like due versus of if the time the more you the levels. pre-pandemic, on EBITDA through guess the when talk strategic through wage the investments maybe pickleball, much first, are your Thank guidance, expectations. sort group when programs small walk a should that maybe things then pressuring we versus XQ? per expect inflation? some embedded and XQ of maybe could investments additional versus pre-pandemic maybe pressures in structurally return such profitability I of original part then you the to basis higher center start us to And to to training, guide could how one more sort layer of aging a

Tom Bergmann

Alex, looking talking we're the I'll about at Hey, and it's second quarter Tom. it. start how Yes.

heard season you We And comments, our of you all our my know coming as summer out of yes, momentum advantage take have wonderful as spaces. outdoor So very great us. April. well, of in ahead we

new we dues momentum at it, So see $XXX look with quarter joins to that, with happening the that average at the in rates, building continued yes. you $XXX second XX,XXX if more than

see So dues to our in you the continued if build yes, business. you momentum start that that, up

You into are training. making about, programs we're and these small activate aging investments smart really as and right Bahram good talked such group pickleball, and as

with pleased are in seeing has the business just the been member growth We really we're feedback of the tremendous. and those indicators early

digits, in wage respect. upper certain of strong well. XX% some culture great can we XXXX. XXXX beginning at to we club start single fixed quarter leverage the and to see the higher third seeing chain year and wage here from really and have second up And to a full exit industries through And year So I then gain have we'll get Clearly cost Life the margin. in membership quarter. And a back that the remind much and we as rate our us margin we call do. to fixed base, investments of our those other in supply pressure. But wage you XX% I fourth today. make you a through don't grow if as have on we're go the in XX% the it continue that it's some really feel that to guidance cost XX% to through areas sets people, a flow to investments on and exit pressure always the that's why as the for start culture EBITDA maybe is an we then leverage the much base come as if would as a Time, pressure people pressure do we we

such and introducing However as lot fees, concierge, member we've our credit services, chain consolidating had. we've in member to cost steps about saving wage taken have a as our of supply we've inflation as surcharge that and card as and savings functions a well as offset other cost all inflation talked initiatives introducing order that well sales

margin we'll really of don't that back that with So I a help job experience. us the up coming doing we're year. And half get ways impact the member the expansion nice of in think

Bahram Akradi

sales and coordinators and chain, intended some cover gives a add had the measures dues own swipes. additional past was past a the I'm supply the in with and cost series get increased surpass the instructors concierge strategy the covering all that of and have cost, we and that dues the through the the back. club's pickleball coupled from of count member will hourly beyond And swipes in before. our margin But drive past swipes savings has teaching gone and takes Once programming the the some that group place we margin the Tom cost we number now have so priced you in mentioned, transformation potentially stuff, me recovered again, card experiences increased to just erosion. to programs is Tom put driving to to PT And adding from with initially the helping get to the that credit throws in high pickleball, we PT with the plan our know, that and what small are level such is task going game oldest here to that am one a I

I we the am more focused you next what and are have to this to more corporate revenue more member to to did and one us start of in added the We will be and process squeeze the this on XXXX about tape layers, the be for our we experience. system red focus will the quarter captured to the banner company kick the of ass planning not should what off we for duplicable the the a beyond. a now want recovery services that streamlining XQ, EBITDA focus they merging year efficiencies, the to things all always company. naturally efficiencies the the it goal the for across rid of decision want division thinking and In to experiences revenue then heavily share the customer we and is our we being things thing this directing be on revenue the on I is or recovery the we gives other impact want the that out of EBITDA in the going will opportunistically that the jumping in of best get totally similar be I of hey, making So layers the 'XX. will way by office into on have XX do to Obviously, and that bulk so with some two point the year not margins more that club the EBITDA. market December we that's throw the planning chances work the year and have, to fourth the where I But sales to call that revenue And growth, more come quarters. capturing create XXXX and need based get then is by

Unidentified Analyst

you better Thank of memory sort driving of assumed is usage do that that. and in What there's for signals periods? you time you And terms member for of those then retention guide I follow what some I data Are of you. up XQ Thank sort of patterns. attention for historical XQ see helpful. sort sort my that? driving mentioned different think Tom, incredibly assumptions versus you guess and of to of That's question year be full seeing sort is more in optimistic the sort

Tom Bergmann

question. Yes, good Alex

that continues and new the as feedback and strong investing very investing the they're we're activities. members into new all engaged and that they're all participate and Yes, club, we we the our we're members, they're these coming small programming in Life training. been in in back lot to in have pickleball walking items how we again the experience B, initiatives score then pandemic the the and One, to several of Time that group to it's to in great getting a NPS look people improve during member So and see at treated business.

membership members average continue. the of expect those to we So

and club experience it's people the that social provide. different into all communities overall and new Time that aspects investments Life really driving to we're the the engage So

So we're attrition right where members about front with heading pretty our now. the feel on engagement good we

Unidentified Analyst

helpful. incredibly of that's Best Perfect, going luck forward.

Operator

is Our Please from Simeon ahead. go of Siegel BMO. next question

Simeon Siegel

all Hope everyone. morning, Thanks, you're well. doing

Bahram Akradi

Morning.

Simeon Siegel

I the color. Hey. appreciate all Yes.

you sell color higher operating. sheer comp given non little center I maybe the few can and G&A well expect So over a expense base quantifying just had the and acceleration. just and see the the next off how nice marketing then any the And I several was lease on as on appreciate to color potential pieces look moving the quarters if to all a lift Tom, nuance and backs. given same just question rent, the you with

the any Thank three those moving several you're if given you. pieces line next over to. So willing quarters, on help items,

Tom Bergmann

Yes.

center ops in starting see margin. making fourth from we're to It's improvement our So the and about again center as third here. in ops quarter quarter talked perspective investments you'll continue the we've continued

I expect fourth So second to more then in and see third and quarters. improvement in improvement incremental the quarter

cost and our fixed base the base. get As we on grow that back membership leverage

investing And we've not quarter. we're marketing front sale point we become of on We're our close SG&A if adds providing. that revenue. on we those what you club same third I an more On on continue marketing up we really G&A year certain prospective of really to in. message of And the marketing in to getting base the reduce XX.X% Time the we're towards need that full talked of of the in fixed about SG&A members red the Life leaseback for quarter, base. the to additional we can pleased leverage at about we the areas efficient about business areas on thing experience that about, cost didn't into to and expense get to we the to the the with spend the when and as we, back of we the fourth into rent out us When make as half we And do dialing year be and do more add continue million there how and if SG&A more front, $XX social the that where of is sure moves it, spend, around have. then that see piece. of we're end on cost our the media $XXX about rent to expected the XX% and incremental expense Bahram million effective. marketing any we'll as for get leverage our assume

Bahram Akradi

literally approximately as this My all not people month. in in club based is sort expect the sold byproduct I on doing is and intensity retention every customer. eight to month today, guys basically our very-very were of of programming the of come non we're engage was out we Life to the that XX,XXX pre-COVID marketing approach times membership different do hated based be tailwinds the just to customer XX% we're had join classes we it Life told promotions, during what so just execution XX,XXX the better in take process. a all the sticky that being you joining selling had and where but I've then dust summer period. to There's of are show settles the the joining of on of out. I the they during and joining country believe One been memberships the They We in They Time offering, because it all was are the and that all the that the once in heavy-heavy, camp, opportunity used in anticipation doing. want That COVID coming all athletic who's things our the hustled Time I road We took that. time settles, consistently, about well when XX% a we'd just a before. natural than promotional

cost of heavy is $XXX basically in that it of be $XXX should of quarterly and as gimmick. in It XX%. done EBITDA Tom what a translating naturally. believe not basis, of should we it XX%, our And better. authentic sales folks, it the the of that is some into a the is XX% it's because our We're one directly of have about and and So is incremental $XXX like is cost being, the thirds all keep cost be there's boosting infrastructure fixed Nothing bullshit bulk million, the total no answering a already your next is two then questions year have comes retention in natural incremental expectation million largely be is so down. spending on drop explaining be that million XXX% a covered being bulk other and we place. This already revenue about should should revenue advertising

is So see the helpful? that as layer next of coming improvement, natural a we Is in. revenue the margin should

Simeon Siegel

year. I fitness we that's then don't to Yes, get we when spoken situation, you. your I last have obviously, different if sorry, I think then perspective And did. hoping what maybe I a But was Thank missed great. in it, on, had connected

forum. to thoughts are were we coming people continue we any any So back, across using trends the survey can

Bahram Akradi

you this guys COVID. And is little don't I've transformation So connected customer. listen, a got the boost fitness you told before, from the the

enough customers their treadmill. And habit this in playing of get on or connection the enough, social bike get getting home stuff. not and are their getting Some affluent all they they their and

model business business that to executed radically you Our from is if goes groups, never It's different. standpoint, correctly. that leagues, need it's everything programming, have clubs, social done away

club. our programs, as doing have being we had or COVID threatened be home. their may at no habit their It social into again. come but here back. of community, going come they play is business of be fitness people of do just wasn't. done the saw pickleball getting no, going that gotten or natural is want We're Now, environment home, this those some of down, two going still customers our piece of that in creatures a over. just this have that shut joined there. some is us to so a no back We are also negatively. they and of But but all to never basically who three tendencies the workouts supporting and may was some see take human equipment, at home, facts out for to one the who everybody pre-COVID just join data, habits social doing actually connected pushed at Everybody affecting forward, it would you're From and that into home stuff

explain to all business. just back. supporting. only It have. the is bank X% Oh COVID I worry is X%, the that you analyst will of time. how total expect matter thing period the work as should So and in members month you rejoin subscription that trends a over, of good way come you, It doesn't are your takes what takes doesn't try X%, the sometimes I It is about But

however So already [Audio is our numbers. Gap of we ] feel in increases

plugged cost more bigger than the teach incrementally into plugged than this our upside we We don't have due for incremental costs we already that in costs significantly is much the all We headwinds. classes already have the the year robust energy I a think, that We've way is think to more numbers. in stuff dollars will there. are. I utility

now revenue grows EBITDA sweet steeper right again, mentioned spot So just are to but of seeing we the grow that than that clearing we've the you. nicely, of all significantly the because

August, designed before, time get we as back know you So I guys at to we love and time stage just with guys is the see this tell in place where programming just there, all will second call membership can to make you there been other we'd sure to quarter be different to be is quarter is but and this people next during And to that work, membership the we for feel able for you counts that rep sure July, like results the be facilities that we to where put great. in I need learn and initiatives really the think our to have enough mentioned of reasons point make I our our grow. to in what then communicate that the really continue all to we've hard with read, leap by

future. extremely generate And more out. So all let the play team alignment. foreseeable more And EBITDA on things month company just all is revenue see diligently itself and and to have deck, the we every just fantastic. Customer the in response for are all hands it hopefully working is

Operator

session. closing remarks. Q&A to management any I that for Ladies back love concludes the and gentlemen to would hand

Tom Bergmann

today. Thank you, you, with great Have look you day. joining And to thank I Bahram, Irene. us soon. everybody, forward Great, speaking for a

Operator

That concludes today's conference. Thank you joining us. for

disconnect You may now your lines.

Life Time (LTH) 11 May 222022 Q1 Earnings call transcript