LTH - Earnings call transcript Q2 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 Second Fiscal Quarter of 2022. [Operator Instructions] 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.

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

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

Bahram Akradi

Good million monthly quarter. emerge million XX.X% to on million Texas, Adjusted this report $XX.X to quarter and $XXX.X million $XXX.X year-over-year surpassing Colorado, such morning. from second from back call happy from to as Time to early pandemic second Life the We're growing million million levels. North quarter. our from in is from grew today. It Clubs first rolled is and strategic and where in initiatives the XXXX and that recovered steadily. EBITDA year-over-year great grew with $XXX.X the revenue be in In you others $X.X nicely $XX.X revenue have out and already several we first dues states Carolina the in that quarter,

we're and dynamic and training, and strategic our profitability. rollout executing clubs, personal your our initiatives: surpass small community, dues revenue on group revenue monthly performers drive To of refresh is XXXX and training driving levels relentless see clubs complete to memory, pillar our expect first we major the investing of programs in programs. We country rollout. nationwide transformation more X many strategic continue To these pickleball do that, as ARORA to our athletic focus initiatives our

training. First, small group

of to approximately group club XX XX We an classes have small per currently. increased average from per week

ultimate the certification in XXX to driving goal six per around participation months, with Over and classes we're the per to next week performer club get XXXX.

growth for membership So there revenue here. in and opportunity still is tremendous

ARORA. Second,

a we programs, Since growing the the aging an then, ARORA by did increased the creating created membership branded by year, expect systematic beginning programs have exist brand we not Our our dedicated add community of XX-plus age XX,XXX the to year active these and at a end community. the around ago. XX,XXX, Since additional year. have of approximately group and the in

cannot brand and development Dynamically-engaged personal We in remotely. and personal training last Since certification designed see X. team reached Third, or has on revenue DPT transformation. a and been of have just opportunity training be replicated training concept, to completed, in-person the grow to physical training. tremendous dynamic August this our a experience our our with largely we call, an personal is transformation digitally that is be

We will progress our in quarters on report the on DPT to come.

but the Life pickleball. incredibly least, to Time in brand sport. is Finally, uniquely position last this in national not pickleball fast-growing leader a be

country. of of very the athletic We to have estate and this space the the clubs the large accomplish footprint our because across real

have and involved six more our are end complete with XX,XXX last the established can of XXX by growing. XX,XXX in regional have mixers, XXX to participant year tournaments. and nearly unique national of seen local, dedicated expect approximately than the and end XXXX Time courts than already participation than in have more leagues courts get programming. Of We these more and the by and app, Using XXX easily from and and we participants grow find numbers, the monthly book months. to And XX,XXX just Life

so and we're to to the also environment, can to is call, revenue continue recession our Inflation continued high believe negative minimize managing accelerate the our we of opportunities growth revenue and business business four As On has of also we much and impact just impact monitoring rollout overcome profitability, invest the and actively macroeconomic our inflation drive our environment. in our of the environment continue I mentioned. that the to short-term headroom Tom believe The margins it I impact news and as will transformation like. expect our not this business. construction we gain to asset-light as future programs we in on the more a have is settled. until last to macroeconomic further. we fast and great as membership prices we discuss albeit and and would our and our we we have additional have costs performance a control, had discussed

working. as mentioned, our existing the work the can and maximizing is revenue in priority, clubs This programs have by first opportunities most I and our accelerating effort been investing we highlighted. make, investment initiatives at I asset-light these We're are on return the have that we was proved busy we implementation. Our in now

sale-leaseback entire more the enterprise mentioned to we make asset-light. Second,

what end definitive agreement the leaseback have five approximately properties underway proceeds $XXX we over the cap to into million with a entered for back achieved have rates some more discussions last have sale-leaseback the of We another And sale we years. million, similar for the of gross of of by year. to $XXX the complete several

opportunities bringing than developers and equity more are before. asset-light reputation ever brand our growth Third, us with

the and can what Finally, Time Q&A to a Life as the of looking accomplish forward future demonstrate company. life to healthy opportunities I'm way

Now Tom. turn over to I will it

Thomas Bergmann

over a the highlights then and Bahram, I'm pleased the good before everyone. our to for the and results quarter outlook discuss morning, our questions. of few you, second for remainder share turning from call Thank year

total compared other quarter, and and by $XXX per $XXX monthly XX% driven in and membership $XXX membership from average last year quarter the the membership first $XXX period $XXX first prior and $XXX Average per of $XXX center same Total the quarter $XXX center to in quarter period dues to for million increase strong revenue XXXX. XX% center by in approximately was a revenue. and to increased revenue quarter. the in-center second center both in in revenue revenue the increase the increases the million driven in increased to increased And in a year XX% revenue. in For to XX% dues increased

As discussed quarter. basis, in under in-center $XXX June we increase $XXX,XXX increased to to expected March year dues XX memberships last metrics of we center compared end last earnings and of XXXX. range monthly and Center for on average range end June membership right The in $XXX middle of sequential second and upper the by of these to execution sales to that center with to the a approximately the of member we of XX, reflect see just per the XX% as spending $XXX,XXX increase to just were call, at quarter's XX%. approximately the $XXX,XXX our year-over-year as quarter, our On strategy. continued same-store the comparable increased under businesses and pricing end increased the

properties We the a expected center and and million add sale in included two million expenses to Total million. during memberships with the second in $XX operating noncash quarter quarter. the $X $XXX gain net to were center around leaseback XX,XXX quarter the expense XX,XXX to net compensation second onetime that memberships. of related of of slightly close beat share-based This

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

to increased our program expense share-based operations expense, during the increased increased and due members investments compensation prior by our as of staffing required by strategic the compared XX.X% Excluding year period. usage quarter to center centers

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

$X.X to increased and share-based in quarter year loss $XX Excluding expense sequential last approximately first from to period compensation Adjusted improvement. of million for in nonrecurring items, other and the improved million year. million million the adjusted second the and year-over-year our quarter showing this $XX.X strong $XX.X year, $X.X million prior net from EBITDA

the of Our facility. equivalents and million liquidity position with and credit in our $XX.X strong revolving on cash remained of $XXX cash at million second $XX quarter the only million borrowings end

including planned $XXX end the additional year, before for proceeds million XXXX. With continue our gross expect to to the in the flexibility of are remainder October strengthen of of that sale-leaseback and the targeting we an financial million million $XXX liquidity additional and XXXX, we $XXX throughout

in $XX.X second cash $XX.X activities with nice of compared quarter provided operating net also million cash the during to the improvement flow year. during We same million by showed last period

our turning Now outlook. to

on and mentioned today first executing efficiencies half growth. remain last across Bahram revenue remarks, also a in number to again We center quarter and As made and in focused we driving investments investments all clubs while those his drive year membership we've of control. expense highlighted the of our the

about the aging. as second our headwinds healthy caused very be our momentum the and this seeing in the we're year, a good definitive feel our healthy While more cautious little leader positioning outlook around business to macroeconomic and spending living we in and the consumer half of us for with overall inflation

and includes four the outlook opening The our six to total XX. third of during Our quarter, assumptions during the new centers new centers following fourth XXXX new quarter club the and opening bringing components.

center few fourth of memberships in by thousand the be thousand memberships second quarter lose the compared mind to a increase the of we a second half half during quarter, units. openings we center Given back will few the decline of normally a and memberships units year, the this these expect third keep declined timing by center in seasonality, normal of the improvement and flattish more in XXXX resulting by XX,XXX units in half now memberships XXXX. to when Please the that during so than significant

to expense monthly total the expenses remainder year, the We noncash of of expenses The GAAP XXXX. just to during million transactions will million fourth first million the for during $X of expect the of incurred average quarter dues range of anticipate million second expense approximately million XXXX. be of result for we will full million quarters. $X expect of includes rent half This close third the to $XXX to the incurred approximately per fourth year, which in of full will remain the half $XX sale-leaseback membership in year the $XX $XXX and of to during $XXX of million. the approximately rent approximately million which be preopening $XXX XXXX We for additional on during compared $XX center $XXX preopening

rent XXXX run completion of for leasebacks of the in an XXXX, with approximately exit million. million annual rate $XXX $XXX we Assuming of will sale

for adjusted quarter million sequential million $XXX million in improvement $XXX of year year to in to EBITDA the resulting to $XX be range and continued and fourth in for quarter in million XXXX. to and the Given full investments to the the million $XXX discussed $X.XX expect total for these $XXX billion $X.X of expected million the key quarter, range initiatives to we and macroeconomic headwinds, assumptions, third revenue billion full the be the XXXX; third of we the continued $XX the for

and As strong year run the the to rate Bahram of I exit that supports a our a momentum to said objective XXXX. XXXX in year, been order throughout has continue start the have since build to on

As years, back the to our executing over with the last confident couple Operator? elevated strategic operator building the XXXX balls, that, With and for are to throw us growth but and continued curve we of course continued we business. priorities, we will in have turn in call experience Q&A. stayed of the our has the

Operator

First Brian question Oppenheimer & Co. is Instructions] [Operator of Nagel from

Brian Nagel

Nice results.

of a about of me couple surprised pressure, consumer macro first mean lot not off, a I have talking it's companies are questions. now so here. look, So I

-- that -- reduced more you Bahram, maybe maybe segment tie -- in particularly center more membership have, the where you out themselves? you to business? the are I more programs it's and -- what directly I as number you're are number of out the business, growth within is, you of initiatives. you as You Where pressures are what's But And Could where question have early happening a question even as I know something these these to about in well. Are or a implementing? second seeing these you programs, laid or churn talk QX, really the emerging? geographically are the anything rolling talked these look seeing your you're more of you recent if the macro identifying macro then trends or mentioned they at terms

Bahram Akradi

and Absolutely. I'm I'll Tom Brian, going to first second take one. let take the question, the

Thomas Bergmann

business seen X% is macro Yes, was quickly business, in on like Brian, continue still we're biggest country inflation the to But labor I'm and seeing we've inflation that just headwind our to else. to X% the our that the the experience X% year, X% inflation. we that's seeing, as everybody labor year-to-date, and last in running environment it

our in inflation in of we of inflation other lot if chicken goods with in saw So cost a examples. hire as of season. employees, some well, it's in good and at as our and then to we here supply throughout look parts We And sold, wages the summer our seasonal business summertime. continue food you see the avocado

So calls, we we've pressure on we just good see can. that At taken past number about to the our actions on the of time, cost that reduction we've to extent continue offset same inflationary greatest business. talked to a

So combining our member a costs. role concierge well surcharge as taking as by a on to actions well our roles lot of proactive sales card into credit those offset as fees, passing bunch of we're

So of it. things almost out like every doing a think it try we're there, offset but still continue to lot to business we see I other good to

Bahram Akradi

focused cost not add Brian, mentioned, And and to much. had literally have that, Tom as that measures to I on we

run inflation, in et was point clubs corporate half focus cetera. sort the between offset to how in and this pressures the additional There some year. gotten the opportunity of really get we've up of office, still at about half, opportunities to come thinking amount the During this our XXXX, we of from that to business to are the tremendous to first pick may that there's critical the memberships point first

world will So again, we the don't ever always think be great.

always it ahead how thinking we're challenges. can we and mitigate So about these of

asked, as the programs frankly, you been far a lot. As there's

them. rolled We programs. have had these out to We concept

We to have them. brand

and things things, to is it has create perform normal of to longer to they and a to a some clubs eagerly out. on the roll those depth as very taking call, more well just little back to out mentioned tried do, and to up slower, have And couple restrictions clubs roll with a and jumped just before forward to expectation clubs, time of and closures of We very some try them go do then little the I the can much and the out. some wake

is executing in even even all numbers though, is, not news beyond where those we XX%, clubs like great have numbers, membership these numbers. XX%, the revenue yet, the So at these of XXXX initiatives, XXX% are clubs those

DPT next programs We the all memberships right in that can are starting group we we is working. of X time very, in is on that pickleball already has and is pressing The we next out growth X this rolling revenue week that the program per to from a year put X revenue growth consistently the per critical -- have classes the country by company. most of now and of PT can place. now very number have for in continued across And have Xx very confident increased just or launch from course, they're to training small tremendous have so that and do. those We now thing proof that months right We the clear subscription opportunity. club our right to

and to excited. I'm So have cards lot yet, in we hands our a of play

win know I And dedicated. They're to want that focused. here. is let don't anybody everybody team down. We Our wants to

really we good feel really, about that. that's So --

Operator

John question Heinbockel from Guggenheim next The Securities. of is

John Heinbockel

with wanted Do reaction? Or initiative, start backdrop, looked? they the I get to with -- How you with to never at all you your more about sort any a about little it reaction? by how slower, your the experience? knew in this that, you And impacted I it's And guys take have progression in think I obsessive were NPS ever NPS guess the pricing time go scores. tied of look right? of does, the does pricing? Have seen you

Bahram Akradi

never to doors. can to Life the This -- to What it, around right would right the They that not completely around exquisite that The is We've the price, Ritz-Carlton in is It's our there deliver if improvements XX goes we Four -- point. gyms. our have the is What away at and look, NPS low-priced is consistent. in do and we end consistent. chase has very very, mid do that a already. maintain do wanted not is, is service. to experience customer gone customer the the have would the on ours customers can that range customer that. No, level got it's Yes. depend them high been Seasons, day, of they they been Time coming

the It's making very are correct. So you not like price not a It's methodical. that was also really you can't complicated. mistake

You can at issue hasn't been adjust works. the it you it $X $XX. or back all. can price, If see if down It doesn't it work, an take

as we we you, all eliminated -- promotions. We have told

If you done we're assisting And we ever literally since people not ago, and membership good We're units memberships. promotion. just you are years has as told ever the guys noticed, all been buy selling they've been. -- haven't X.X there a we helping, none as

the no So higher no promotion. or with prices and sales

just that mentioned we're decisively far, the club across seeing so is strategy not to our consistently. need working. more implement I no indication So, to We programs all the you

John Heinbockel

And number right? then two, not change was. was The guidance the maybe EBITDA substantial, that revenue right,

in guess two versus break do in just forward at pace it are If buckets, terms pulled right, you out So put put in 'XX a I EBITDA can faster it it right? would thinking investments, Costs 'XX? how that those were let's in you any you the thought them of X you buckets, about have and for reduction? you than inflating

Thomas Bergmann

guidance well. in up it Yes, EBITDA I or John, for the in think year, it characterizing you change the setting are

to XXXX. than been As this these heavy of from a deliver to investments memberships again, driving up and set these strong in operating we're initiatives revenue and strategic XXXX we've focused making Bahram million on investments investments expense making $XX to strategic the year, more said, this additional which, leave very year, us

third focusing going start same more efficiency of investments some drive make and of control continue these But quarter. center offset So time, to on to at we're heavily some really to these these expense the going investments. into efficiencies the to to we're

for I well positions this in XXXX a us results. to extremely us, So was it come think year great big a investment of to spot to XXXX good but out drive

Bahram Akradi

clear have have -- I that And to we working intended. as the indication now as you, the we are mentioned programs

you The have you coming Now have classes When to classes, -- club, to week membership. like cover to XX and a I'd look, that all we access all that and out get the We week. on now. in. these comes all opened end the on programs roll membership very are things the going way the it. happening, order classes XX% doing, other a the fashion. are is then got have have the get we to robust average that go comes is XX of same have we -- that XXX revenue membership get have want you clubs for XX to with programs based by that place, an up to you've a number you membership behind we're in clear-headed. count up we to or on, rolling the we cost the from the build and schedule, all investment pickleball execute to first from are all then But that that, classes year, the in in This to out consistent payroll there the the In another thing program we get upfront where to of

can want allowing for where we to on EBITDA. position of the approach the of part are the run a us be so that that to and to gets -- revenue for XXXX those into jump it the in EBITDA conservative for the always we is that so the January in off December we that rate programs, investment room And

Operator

question Ohmes next from of Bank is Robby America. Our of

Robert Ohmes

on follow-ups few first the a had just two questions. I

continue But higher these think sounds these beyond. one cost? and -- is the it It margin, -- The center we year do targets these to would great. working have programs I and just like to need you EBITDA per Do all initiatives higher the membership first you these all higher into new of about next either had? how longer-term back then are the like EBITDA sounds say, per -- you long-term should they over given with would And prices to follow-up programs a kind expectation center get of time, have to a cover have that profit margin question. or normally incremental programs

Bahram Akradi

Great question.

me I'm Let glad you -- asked.

me Let explain.

we the swipes. is that just -- generate robust a margin the significantly list. add participation higher swipes a class many the add revenue Those -- we That with that when class at end. good mathematically So generates has It's basically, a run. full class, It subscription. wait is all enough, adds so

much -- and completely once they And programs sort a XX% working. margin some as a of are XX%, have these as of rolled can out

higher lowest, So they it's our -- we much a a a I mentioned, what initially, they early conversations, the cost run in most Initially, the do on $XX asset-light that. more. because of pay class. per $XXX investments XX%, are I Ultimately, the create you part mentioned or when for it's investment as cost. cost. revenue margin But actually about just they these the can Tom XX% ultimately, is make it's is math,

So cost that -- and on margin. XX% on

revolver but unused. going sheet We with our you. in I'm have all more take -- to position time. to particularly great it's This that leasebacks. we is our so financially, And manage or So continue saying we a balance less to sale want the are to

XXXX plenty brand, a there's margin. build to no virtually to confidence continue of than -- I have the generate programs lower to right a we better bullet have So things Tom? margin elevate the but these for that do full will so and

Thomas Bergmann

Yes. Robby, will couple I think I of a comments. reiterate

to in you have membership leg think growth. I think the about

my later which strong XXXX. up that cost memberships pick that flow-through year, expansion next has will of this it to take year, into will a incremental and investments start next investments. time high, base. will make all of I the leverage help the know model my membership very grow these be be to the margin fixed year So But going high this was on We driving been and to market this the year remember, and

the between so building schedules leg events and the programs, that in forth. just the social we're So

to build. need will all through and membership So will that these to my investments improvement. then make and And continue get my the flow margin we

XX% you EBITDA the long being range. business look an see business XX% that EBITDA rent on basis. about think rent running We still expense you run business. plus then a this XX% margin And as Specifically, to around think term, about still the and I we in at

to So the look are the any we we at how want absent of operations performing, of decision run business. how financing

So when plus plus think term see we historically. EBITDA incremental rent this rent that a you business, around about margin, XX% getting the into still been margin EBITDA for we've longer expense, this low where to mid-XXs

Bahram Akradi

add going to I'm that, too. to

We we're office. our we're the and technology have operation a a several in been to this spending pretty and of on extensive corporate there. last And amount have spend tremendous continuing we years, money

as have increase to there in scale proportional However, absolutely reason a overhead. up, the is company no our we

same today. XX -- corporate do have we with more we we do office the we have can big it clubs, have have We when the today, clubs XX, same we can running, it with technology

office go on. backwards. In it fact, but in them for in I focused been of technology we been mitigating of the that most to our have is we should all, improve. There's spending no corporate reason think have But all the margins cost the in back going

Robert Ohmes

That's quick really a follow-up the just helpful. And memberships. on

know you're of other not sequentially third coming at thought XQ, normally year. which you but benefit? that point up maybe of new be membership, help kind this And of the up, Is this I versus or be think quarter the did wouldn't think, what pre-COVID any you on-hold could And think one versus the on-hold I programs Was on a memberships, with membership -- members the of I -- memberships for members down guys kind retention thought doing? I membership levels. numbers that the think? color these or XQ quarter dynamic do help on in the what's also came

Thomas Bergmann

during quarter's on big many major in third would On-hold a Yes. quarter. call. thought we quarter. coming people initially, In normal. get was summer, that In say it season, hold so we'd call the the factor slightly I the of be summer off I we for the positive, factor wouldn't a quarter, weren't last memberships

Now XXXX, we're the you, we'll we in lost units I'm thousand units a be few -- XX,XXX half I year. of which in think telling back in typically the the down quarter,

I or lower year, lot a programming, active like we'll gains ARORA a our older in be aging, at and some we're attrition you nice these of few investments and in think this much just to down that if thousand, think of the seeing is So members due of the club.

what seeing we So to got some that a had the I or third that earlier like But chain various few supply openings for couple also months. club thought delayed happen reasons, I'm going were quarter I in there. weeks a of

I I'm third the actually, later quarter. than quarter quarter in the in opening third a little So fourth clubs the more and

and the we're the also But year that new on openings little on what's the trends half that's year. of successful So driving a with the seeing think be back which memberships, for in perspective would XX the different the of club the we'll business, very half flattish third quarter. I again, back be the

Operator

Harbour of Our next Instructions] Morgan Brian [Operator question is Stanley. from

Brian Harbour

a of range members how that that in investment that, above to confidence doing, get does Just Is historically? this number of that kind new is these as drive class and basis? your basic question. the programming think to you've of some 'XX? class kind been about Or is years bring you will that really where you all were kind just beyond of And of you back maybe where basis, on kind three a of on a of more you're in ago

Bahram Akradi

Yes.

explain. me Let

cetera. small cheaper to per program group and XX and of together. $XXX et Then then of buy people the do our It be $XXX, an class group it was than than like part a alpha what classes dues, large those different completely sessions a have group, fitness program in than like or system. always pre-COVID We the of group so so incremental part different were club packages X really membership used you while sell for it small some is our pay separate it the personal SGT PT month, person, sort where on was a was those. a many we group a our X/X cumbersome would program training, that, yoga, strength, you The a X call of of in was SGT. was we training fees. hour training Basically, It -- it like was to

group basically answer to to of strategy customer near any have basically engage was an small that to company's club. kind easy this so in boutique the an we the develop for way So a training

we what call invented we Signature Memberships. the So

month, a Membership $XXX expensive or Their Signature $XXX, basically the $XXX. cheaper included is $XXX. and the or $XXX Signature the $XXX was more are clubs Some clubs is whatever locations. maybe The in or automatically Membership are membership clubs

Now Membership, have training, week go can that's classes. a and -- to boutique, may with They I had XX, club, app. group the participate right small It's to XX like to in small We into in while we any classes the they XX to they they now, a that you. we're easy. XX the get between super would group use mentioned number that Signature the like go to all just

going will the way We be all up.

is XX XX, to about get to to at the amazing. are -- incremental. XX clubs the XXX Some results XXX across all to clubs. and This are going And we're

includes club doing about and Now remains. -- average a -- unchanged in was classes, the group XXX also That not per large week. past, that's an that's

getting the participants as wouldn't are small could XXX group you mean So have as XXX will the an I otherwise. memberships the it's the to way using memberships, that a from going membership come when I group training, XXX all incremental be those minimum ultimately, program running. that XXX, the and memberships it be small training. is to And per much associated -- gotten club think swipes It of that club with

the have membership. the have So the emerge of and we to basically ultimately, rerigged out pandemic business

they club that rest we The for The other the the have part using or made up of of that's it's the whereas dues. to $XX, business not paying want most use you it's hard them the a They the and business for so -- nonuse use HVLP customers model, use at XX%, the have club, even basically sell we lower they far, of attrition is to we XX% model, our month, prior then $XX a of are the people -- our $XX the and memberships, to club. understand keep use their people though model, look kind club. But model.

who these of robustly, of we we today's sooner, strategy does XXXX actually the But the to to XX%, open as XX would clear past see of who all -- you and weeks, were and many, for X long things, and members right our up more and have getting like to an with path for or came not it pay despite XX%, rerigged done did that ended bringing up running clubs that business pre-COVID clubs club as do those was would of majority of who making clubs, of revenues less. When And the we environment, our those for the are up XX% are not XXXX get to would people right prior Our we ahead paying high-end days. almost the use not using. Most members club above it invent focus When in the have and that, lost those wasn't a that. business that margins. to environment, confident weeks, the X not can member dues lasted because for are significantly using. eternity everything a dues it. it for make pandemic, combination many things. pandemic and use is back, you're beginning programs But now We've have clubs now our of paying markets in the to you

Brian Harbour

operating Okay. you that in quite still to driven that drivers know kind kind that you which work largely not in just is slower You're I clubs were have still as more of by just or to on that think new or main programming those investments. far about? of geographical are that like are are path been things? along the slow for recover? kind back, example, and And along about do has that recovery, disrupted a Chicago New Boston, York you what the come of talking you for Do as if in those not there's that those and think clubs impacted some of example. think have to explanation far that companies other we What think been of for places are like patterns,

Bahram Akradi

Yes, great question.

your to And XXX. the of unbearably you for markets going affected are three like on are I think workforce difficult. like be where only have dependent have membership, those luckily, clubs we or out four that

we see. and actually to near where It's or When our back to So that they you the to not organization external that look back no make of three excuse. used clubs be, just But have or not we the excuse, deal. big is every have four three No kind it's impossible [expletive] unless we're workforce excuse. get sure can company, just four. and workforce only again, our want just the comes them uses to I And of there. again, I at

limbs the markets basically, too As out were them we can the shake where close and were part the long. long, asleep and roll longer stayed we I mean is too of that execution. asleep. It organization to our just programs. perfect. we repeatedly, clubs it And I then you, takes is area restrictions just the not had literally, market mentioned like And were literally have I awake own the in tell were them more

to in now, our that week. And three the see butts We is would And amazing our right our caught going opportunity get of but consistency what next possible. execution we the day, topic four-walls up you driving us every everybody the just four or in off, were the reality in of some are are believe are you some company, been board. have markets, of I months is working to to areas levels. every the behind would same across be the is for the This #X an if

Operator

Simeon Our of is next BMO Capital. Siegel question from

Simeon Siegel

And to to willingness how pricing the get watching absorb price be that great members' Can to Just great year on $XXX million... to the understand how of the one. would just hear Appreciate you're you environment going going. sure kind $XXX looking million listening be help then, What guidance. Bahram, quick rent you'll a well is or that you're the to either signals make basis, worse? speak to what the an annualized in Tom, us hikes just for should so full direction.

Bahram Akradi

-- Tom Simeon, why don't question. Tom an let that I It's don't answer go let ahead. I Why easy one. Tom,

Thomas Bergmann

Yes.

the So $XXX annual assuming rent year-to-date exit leasebacks -- million, Simeon, done this total an year, $XXX of the rate at we to year I'll the million of to $XXX leave the I get of sale another run additional expense. -- bring when other million

be year. run So that will my the rate leaving

Bahram? the On pricing,

Bahram Akradi

Yes. -- an The actually been pricing, Simeon, is has not issue.

out can't we we are largely, is what markets have we look today more actually and -- -- people the just club. then we doing have at keep We like of

So at And I'm club every needs by most we Edina, club it's right now in at club in $XXX even I overrun people and is just that it's like, there, this time just getting to it's be -- -- Minneapolis. because go more expensive the price.

right you we're we're then we running have the every If going if we watching are how fast in. And price then play the we the everything they're correctly? we're bring basically the it's in, $XX. and -- programs, fast correctly, running the them, are the But as memberships down we it coming people first looking in, as play membership examine, and doing or price are the coming So not not at the coming if membership day. is $XX pattern, to are are so when memberships want the

it's not something we've done It's an easy. last decision. This is annual -- it's that decision. in-a-decade everything made the day-by-day over not So years, What couple of decision. not we've

for up. easy to it's you sign So

go and sign you You online up.

customer hold, people go hold. club, easier we made as off You it on it made show We for up the come to And you. cancel. the easy somebody assist to well for

has So it's I point any ahead in clubs see everything other And really, and XXXX. have Like basically, in of of are further is It's that designed disturbing and -- particular ones clubs that a our a pattern don't way and club XXXX are few this are customer execution. there ahead from Boston, been we view. just interesting. behind

stuff. of It's So can't terms the organization and on we execution price execution. on you is doing the make are job us, and working the super if closures affecting overall, everything that rapid on great see market corrections But I the the really blame decisions can and don't the pushing teams geographical necessary. in a

Thomas Bergmann

it great wrap just we up, lot Simeon, And have a Yes. of to data.

our do attrition feedback, trends, in. NPS members looking at what's Bahram said, traffic So at interviews and traffic our leave, lead reasons at looking as at acquisition flowing looking they're the exit and leaving, it's when web day-to-day looking

at our all to the seeing also in and trends what look we we're data is working. how pricing how So execution business different our points strategy analyze those help us overall and

Operator

of Our next from Deutsche is Woronka question Bank. Chris

Chris Woronka

programs, not of of are on the you some a year building these even beyond the have where you're you're currently full the I costs year going it labor of most that about. of as you these you rollout PT of what have are EBITDA question confident of How guess, pertains rest mean loaded Had classes these go. you locked guidance, the costs the a classes? of of kind rollout to some to up group I for and the another some the to lot step still small in of dynamic especially the envision? still and talked

Thomas Bergmann

Chris, Yes, I'll start.

good I've the quarter. a rest I cost and different all fourth the here build of programs think the in that for third approach conservative that year taken the to we're these the and making investment quarter I very inflation all feel the for in

small growth ARORA, I've see then I've the And So cost said, make really pickleball, in. as on we'll Bahram we the as sure come DPT, membership through. built taken conservative group, to a hard push view

built if growth, the year, faster all really the given into of see half a already and it. flow-through the in opportunity get back So beat membership nice I've can to expenses we the we'll that have

So story the that's there.

Chris Woronka

there Okay. or given of the radar of that's some on talked cost cadence 'XX? Great. the of on develop rising costs And going clubs follow-up, that XXXX in to about, the open to thinking any stuff or to the -- scope changing then the a you've is new as

Bahram Akradi

ahead. Go Yes ahead. go --

Thomas Bergmann

start. me Let

year you've bought out clubs as really committed and XX still the the we clubs out inflation we're more of those already term, those. for on on So we're seen side schedule and construction the and A short had them bid doesn't XX projects the lot year. next this impact recent on

So 'XX. 'XX, see that really not an in we'll impact

beyond, 'XX, these look projects, about we at them we and 'XX go smart about out, down starting we're we're bidding how projects. being slowing As very how

we say to this in 'XX, impact really down. markets delay of we're around at any project markets be going cost So probably beyond and we've to things look that If projects point a construction we're cetera. be what market at say, effectively than to to high 'XX other slow can would seeing other available, other certain where done in too or and early year, it'd more do et in more time, labor lot the inflation where potential may be on a good it

Operator

Our Capital Markets. next question is Chris from of Carril RBC

Christopher Carril

footprint? terms still development of environment curious in around office, across regions. behaviors is thinking But has But long-term in clearly I know follow-up maybe the It's some location evolving maybe a But costs, to types, as thoughts if on opportunities. around around planned or shifted here. different of geography just about all and strategy focus could kind suburban urban to at advance your timing return specifically and Maybe versus couple of you development a questions. prior latest well pipeline long-term talk --

Bahram Akradi

We Great brand not as residential question. open building what appreciated Again, do a resorts of what is this and is one an we equity we the to ecosystem really of our lifetime or of -- the able is Bahram. area. of athletic part are apartment when

-- developers more of the there's that their the can buildings. for they faster by unique so rent advantage where ramp that can costs get increased and into a mitigate amount we more these to And have get can they we significantly table substantial bring a they get to opportunity a fact

the of done changes dramatically Living, and potentially with rate apartment Life which being kind the ramp and of the Time and lots just -- the is an sort a of So of developers work ecosystem lots -- the on -- with brand doing different business. of the

in execution, have market. of not in to other office on, the -- as So and I But time like never blended that development much going then you goes ones. have these as been a fan strictly never focus. a look typical be assets which being suburban think means We there's in area, a some been there's

our that's never well. is strategy, in where markets So our advantage that urban the as there's so change. lots working But been to you have of no resis, then

of we grow the to better continue situation from be to because expect and So margins able -- to Time brand the good from occupancy have brings table. expense and what equity to Life

Christopher Carril

I then ask just wanted Got to follow-up, my for about hiring And it. staff and retention.

spa talked recently, And there rebuilding services. across much see you've any the and training think did XQ? staff I about helpful? How be going you progress here in thoughts forward would

Bahram Akradi

culture personal and want Time. a the -- we the they We whether spa or place #X take a would how best and amongst talk a would had can It's to talent, be it's choice them Life really to working look well. training, be themselves for really, create really see virtually where

young Life to we people They past We Time to to may have been going you folks. for little market when Time. oh, made tiny want tremendous to at people in adjustments are things to go We open the these how staff and still to Life significant else. We've that Typically, have everything. eliminated old. something? point a number done work They a of there's pain we've wouldn't in who say, that clubs want and work work anywhere from

don't Time. we our excuse our quality brand any have for any it And been of virtually the excuse Life and an has or issue the for that. culture, I for issue not future. because being of So see no Talent

Thomas Bergmann

just I'll Chris, add. Yes,

progress rebuilding of We make to these some really continue key nice areas. on in

a several the business over training with spa. here We to including add personal added -- half second XXX in we'll of personal need up. need continue hundred over Same add in build the now, back that trainers continue to So to year we've year-to-date, the back still XXX And waiting here as extremely continue waitlist quarter. to swim members even hire diligently and and few X,XXX build of as swim like well. right hundred I instructors to technicians to body instructors. lessons we're to hire And have more hair to business for now things swim over a well. working up so that

members doing So these just cast as because from got we've point effectively our And we're to all great for as services. that can quickly I we it shows everything just possible. demand out and

Operator

question next is from Politzer of Our Fargo. Dan Wells

Daniel Politzer

as about terms think members to about Or you detail we couple sounds levels. lot how should that think XX% revenue to able years? that already, didn't XXXX wanted of kind within of ramp of back have kind just guys should cadence like think exceed a that XXXX, we confirm, margins, in be to you're you memberships, I how think of guys Is XX the over XX% But you the the given it next losing we come days? up? just just last should of about that but of

Bahram Akradi

So question, that's great Dan. a Good your voice. to hear

not take the business five will years and our for I years think and month. to for not build -- we that. just you strategy It nonusers dependent laid people XX out the strategy. years, come club That now a to will take of to using We're not years do paying is back. XX%

gradually, make that and strategy the to margins we membership can sure and built achieve that basically revenues then will counts, So we dues without come.

we've clearly The the at it's revenues counts confident programs and margins. -- just have plan. slow we're of we our it levels for the that the out and to over very XXXX, residual over, programs part hit a intended. we be will but becomes build-out need I'm that So going the laid not membership those that executed

about feel bullish I very very, XXXX. So

Daniel Politzer

And But just you it's we probably have And EBITDAR threshold million second exceed? coverage maybe for or XXXX. ratio -- one rent Okay. you of target wouldn't had do Tom. have it's then leasebacks I my $XXX -- for a I One, in the want think part, sale of plus you that two-parter. in guess to terms do follow-up, to a in penciled

number? the and your just So how real macro should we partners, conversations given think about your also that with estate

Thomas Bergmann

then the pleased the incremental planning. with for completed as we the the we remainder our discussions with million having take and ratios. $XXX We've on great very got Dan, talked that of about discussion again, we And $XXX off-line relationships just remaining XXXX, million great great the have underway Yes, we're partners. coverage we're discussions can and on

think will decide XXXX it to to be sale For million, do rates range and of, so I what $XXX forth. interest would on million depending that I somewhere leasebacks, we do, what say, in $XXX

sale-leaseback So a we'll little market. that sale to But XXXX early leasebacks. will to year take have the guidance opening firm to you on that the any have give several next properties opportunity be will

we'll to continue that our market So and months develops next how here. over XX how the business develops see

Operator

gentlemen, I and have the to management remarks. session. the call like Ladies closing of reached for any And question-and-answer end the would turn we to back

Thomas Bergmann

sheet in and keeping we're and initiatives your balance for liquidity great. Well, the thanks over as strategic these we'll strong updating progress near on time, our quarter everybody, Thank joining, here. forward you, as look next for you our and to term continued that well improving making the all

again thanks joining and So look for quarter. we to next forward us today,

Operator

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

may You now your disconnect lines.

Life Time (LTH) 10 Aug 222022 Q2 Earnings call transcript