- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the Life Time Group Holdings Conference Call to Discuss Financial Results for the Third Fiscal Quarter of 2022. At this time, all participants are in listen-only mode. Later, we will 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 conference 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 filings, comprehensive a review. factors company's encouraged of There which is are list you in risk the SEC to including growth Also, capital the measures, company free and certain discuss EBITDA will expenditures. cash financial non-GAAP adjusted flow before the GAAP with issued of measures, to Investor directly X-K and are this in along the the reconciliations information, the comparable This Life with release included earnings morning on site. SEC company's filed most Time's and Web section Relations

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

Bahram Akradi

Good you morning and the my the be morning of for run Bob With is Houghton. me available myself remarks, to Bergmann us. the call I portion this and joining After Tom, and questions Bob will And turn then Bob to opening and Tom call. answers will for over numbers. thank through

So to our pandemic progress with poised on start, right from beyond. recovery are to go track and on strategic we

have of in priority membership focus and we to our strictly offense revenue. coming past, the first As discussed the out play was our pandemic on dues rebuilding

path sale benefit of our the pre-pandemic fine-tune to first initiatives dues dues see membership focus a exceeding opportunities next We revenue club same-store year and expense. of positioned to working of turned percentage, and of office. on our balance XXXX, as XXXX XXXX planning the improve of the to quarter expect the market and significant leaseback are operations impact are EBITDA corporate close our and expand leaseback slightly margin of capture to we adjusted a headwinds, regards rollout revenue, basis with excluding and we expansion. that our to exceed XXXX. With a during we to in number in that inflation the are sale higher have even believe sheet, rent of margins Now well the we are margin strategic transactions to liquidity macroeconomic quarter the our on first in We additional and swiftly our efficiency we optimize the over with the great partners on

our cash operations taken the have optimize operating to look alternative in structures our We utilization our at losses time flow and financing from sale XXXX beyond. and growing the extra for leaseback of net costs to reserved

our This equal For liquidity sheet $XXX during million cash allow revolving and on XXXX. by a sheet cash sale XXXX, XXXX we only plan XXXX leaseback high small facility amount, flow will capital our exceed credit levels expenditure. a maintain strong to to balance maintaining or from the very us during utilizing operations of balance with or proceeds about

as partnership he Time success of over secondly, to how XXXX strategic life. Bob in about priorities is confidence want Life him environment, it I XXXX. substantial to chapter moves our business first XXXX run numbers, drive next executing my the on contribution a we really profitability thank challenging It through forward turning I'm Before his positioned on but XXXX. made our look we and to as improvement happiness much are have excited in progress to wish Tom finish his for and macroeconomic during we to and to reiterate and to the and And the

to of Our come. members highly deliver business we for in to are and to way more life years model a Bob? resilient, is position continue great to healthy

Robert Houghton

positioned space, members to with at Life of lifestyle spending and to North I and X.X unmatched omni-channel more to beloved with athletic first weeks incredible look lead forward who there speak of pleasure everyone. life you each in quarters analysts community way members Time clubs professionals we the programming, earnings country incredible and believe other Bahram, on joined the ahead. particularly our better every the Thank deliver my amazing I our with brand, of healthy good and our no America. to company across and and is Life provide a ecosystem time because of call in our team you, experiences I morning, day investment It nearly Time, our and is million

in with we the total Bahram are to improving in top revenue increased our quarter. highlighted, revenue As performance, with profitability happy momentum line quarter XX% Starting $XXX including our third and continued date, and million. of increase to progress in the Total quarter. increased XX% XX% center revenue. and dues revenue a by increase comparable in was in XX% and sales $XXX million third enrollment incentive a also XX% driven increased Total fees membership center

and training, a making are through opening membership quarter. increased our classes, and of with we strategic additional we dues investments count reduction over Sequentially, monthly broadening demonstrates sequential both dynamic strategy the our X,XXX XXXX. grew we By the pleased second life from members small quarter our quarters, and Third by memberships our typically usage ARORA pickleball by This seasonally our in from the driven see unique and membership priced higher year, continued continued have programming higher our personal levels. of membership X,XXX to in membership quarter base driven of active the center driven to $XXX healthy increase of execution and strategy of pricing second count increased approximately memberships. quarters elevating successful in X% nearly clubs. and attract that The third XXX,XXX expanded is Average last community an supported comparison, in way base aging third working. XX% membership $XXX new per our to recovery offerings all to are this between third center the declined the second the our membership We quarter. memberships nearly so group

average average member increased to Third membership center increased spending period, in-center the in within $XXX per our the and center year quarter prior dues $XXX from businesses. increase led by revenue in

Third prior staffing $XXX increased centers the of support added usage new labor to primarily utility million expanded cost versus increased opening quarter center of center and the year, and programming, XX% expense and driven operations inflation. by

and Third non-cash not properties possession the million and compensation quarter share-based have non-cash where and million, and expenses expense rent started sale opened taken $XX by marketing expense a XX% construction expense. leaseback for million were to driven of $XX we've site from General, in primarily increased rent of but expense XXXX. administrative operation $X nine rent yet included of

increased in marketing driven and the and increased to periods, by and administrative both our items company XX% non-operating general, broaden labor public Excluding additional in expenses. investments member services, increased expenses and marketing quarter, technology enhance primarily

Our loss GAAP net net last of quarter for third with income a million quarter in the year. the third $XX million $XX was compared

million, Excluding to items, sequential a on million third basis to loss adjusted second another $XX of improving quarter net third bringing was one-time quarter, $XX compensation year leaseback million In We for XX% provided EBITDA quarter period. the quarter gain the another a from first year. net quarter cash and basis back of net sequentially to year-over-year months improvement. margin we year through in and of third activities the XXX aggregate and last the to of cash Adjusted in by our XX% points and increased the the flow grew XX of year quarter other XXXX. a in prior loss of delivered million sale leaseback prior XX.X% sequential sale demonstrating EBITDA cash operating the million properties adjusted of non-recurring use five million million a and $XX from $XX increased basis, points of Adjusted versus with strong of of related leased share-based five million. net proceeds $X.X proceeds our expense properties, $XXX $XXX the sold $XX approximately nine compared the aggregate

end borrowings credit cash $XXX equivalents Our million facility. quarter with and strong our and $XXX revolving third of remains at the liquidity on no cash the of million position

Turning to guidance.

outlook, full range leaving tightening and quarter our are fourth our guidance the we For year midpoint unchanged. but guidance

million projecting million to $XX total For quarter, revenue $XXX of EBITDA of million. adjusted we the $XX are and fourth to $XXX million

average membership decline typically year, fourth XXXX, X,XXX the and opening fourth assumptions; year $X.XX total lose to monthly billion full quarter. the to the that adjusted of new million revenue the billion seven in between of quarter. fourth Please in includes equates for to memberships EBITDA $X.XX in full do following mind $XXX, center $XXX membership keep in and per X,XXX center outlook the of a and the $XXX XX this $XXX quarter For we centers net quarter to million. This fourth dues

we when XXXX net to fourth nice and fourth So nearly lost memberships this just year last compared be would over a lost net quarter when XX,XXX memberships. quarter improvement XX,XXX we

in we approximately million the in add to expect for $XXX million which to be quarter non-cash our approximately more rent the of $XX XX,XXX and For Preopening center fourth $XX and the includes the remain full to $XX million the $XX expense, full incurred full net million $XXX of committed quarter. GAAP $XX making $X million million This million quarter approximately year, million expenses expense approximately for will fourth enterprise in to annual of year. fourth rent the year, We asset-light. memberships. of

preserve sale round leaseback the optimize We our our of structures to leaseback our losses we offset on net close costs mentioned, of alternative quarter first As plan to utilization future in of XXXX. Bahram sale our activity financing and the are operating to taxable income. growing exploring next

provide progress new on our make will for back that, we're initiatives shareholders We in revenue added Q&A. to and With pricing, operations XXXX, increasing efficient our to continuing programming. to more we us are We additional country priorities turn growth call for executing experiences while corporate just possible substantial optimizing clubs the started. a and levels. getting positioned in this year. are strategic to believe usage over creating opening our our continued We're our value profitability deliver with the to leave these best membership we the members. efforts Operator? pleased our We're and and field ensure athletic and our well improvement operator We've

Operator

this Instructions]. a question-and-answer be [Operator At session. we you. Thank time, will conducting

have Nagel from Brian Oppenheimer line of a ahead. go Co. first the Please question with We &

Brian Nagel

Good morning. Hi.

Bahram Akradi

Brian. Good morning,

Robert Houghton

morning. Good

Brian Nagel

working quarter. to you. Nice with welcome. Look Bob, forward

Robert Houghton

you. Thank

Brian Nagel

with It's you comments, I Bahram, opening expense recovering your have, membership about question is leverage. tracking just nicely. first but the talked your clearly regard this So in to well.

should this You've operating And got the we -- here margin coming year the the and the about of And about that through the into target should 'XX. But cadence where new we will, expense of next year. -- through EBITDA see the more and components? through of where margin maybe online into majority, sorry, really of balance I'm kind work think that then 'XX leverage of should improvement and we we for now most the talked how balance 'XX, of centers you the you if as P&L?

Bahram Akradi

Brian. Thanks,

think the three. were really explain, sometimes I me important we -- that's but situation XXX reiterate came of XXX basically pre-pandemic, that when Of out to it's we them, those in clubs. of clubs, we normally XXX a pandemic, number had year hard we to XXX for in

much XX% EBITDA. club, of but flat and handful the where XX%, it's make revenue, They're and of five And the first year, basically lose revenue, months, then of at months they're the pretty EBITDA. they're five money year a in They doing months, maybe in pretty doing full they year in are they're are and XX% of that clubs they a doing So of much four them last Maybe basically EBITDA. XX% the full one, in some months, four, handful the doing of are two, potential flat. six their the of maturity. revenue the

much So when business, understood one. as in what's every year in out business really subscription pretty club pandemic, a started of we not this came we

really we of into markets XX, have So We clubs two the year they acting clubs like in were reached year our they number a was of similar robust, same-store particular then they have open. all sooner is probably are numbers. this because rather larger much year to rate Texas with restrictions opening year didn't They are mature restrictions margins. all as in any three. revenue now that of even clubs to bring what have beyond of Depending XX that longer on. states the like were past, portfolio and the still went the the who one and open ahead in they on when by which back and they more time one. more lot much some held than much closure ever a acting we doing more in are Those additional Today, year in

the ahead, behind. able take looks By But just should on a with the analytics rate like run dues of sure have a they're on of shutdown. the course, before could first up we additional the and and to beginning August, first XXXX to couple months then months for we of revenue caught costs. clubs we same-store XXXX of tracking basically basis, it look out. of couple our we got mapped we have, XXXX, the So be And

are. can we a now offense, truly okay, start not look switched grow we post-pandemic still our now what focus decided at we're our just of going So quickly we to phase of the X playing recovery, the is on looking which efficiencies but to kind memberships, cost at,

the Once every do three opportunities you Every for efficiencies. next had across the We trying to digging these we win year, do guys we year, side understand all can we full the for just we typically, look the so how we we that board. But do this that We tremendous important were improve. first. that, revenue we we on years. when get look that didn't going year. started it's for clubs we for a to strictly for have budget Now we're could and see on to trajectory of

have we the they number that between So corporate. a of positions the reserve and clubs eliminated

clubs. fine tuned rewiring our some office in We structures in even and efficiencies the have additionally of corporate the many

and Tom with during shared you to So you we guys that comfortable guiding numbers the IPO. I are the very, very

of we some adding EBITDA the guys rent you for back. plus So sort range gave margin

slightly margins committed on than am You and we're those, same be guys better But confident can the percentages. those take to deliver we XXXX front. I that can

and opportunities. is it across So plenty of of our coming all there's aspects business

of to first adjustments, taking those than XX% have clean expenses already. that for the then take We're necessary a make forward. slate going have to We implemented we have XX%, more we those and things should quarter

Brian Nagel

of -- Got helpful, versus look How so it. then a on lot Wall clubs the traditional Life question Time have, should lately model the Street of I've great, Bahram. Dumbo. They to time you. and we there's about for Thank I And you've Very that historically? clubs more economic Congratulations. centers Bahram. a the clubs urban-type opened think follow-up new One that spent like

Bahram Akradi

for or rate doesn't capital. we similar invested urban Look, of business return matter run it's any when plan, on if not, looking we're exactly

So for leaseback we a clear our have in real on estate advantage the sale world the ground ups.

as was I the just legitimate They rent. the company pays of in trust are phone Time. Life who partners have on we last We every with, two week. that as standup late ready. full know early always the They're have them of penny They

then else, life So want if worked And constantly. we different at that have apartment Life the of they everybody add that. busy is building to variety we other they in a they in looking options. want have is Time healthy anything building The all way sort asset, want don't anything we owners category, a of our buildings, developers have company are of of one big mall who buildings, so part

have take been over some didn't to assets else, they also didn't were to other perform somewhere where We they meant -- but go perform. folks able

structures So and us able the for to called we negotiate deal amazing us. landlords were

than different our return be So on prototype will our capital no the is invested expectation models.

Brian Nagel

you Thank very it. Appreciate much. it. Got

Operator

Thank you.

line go have of question Ohmes next Robby of America. the Bank We ahead. from Please with

Robert Ohmes

Hi. are members? where pricing And back questions. you've about where dues prices getting Good by as can with the job members bringing you to to the for done -- in Can new the membership heading levels. you raise way, you you those up great legacy side to per talk Thanks pricing well my the And in what store talk about the do morning. the are? pre-pandemic opportunity Bahram, as members XXXX? see new legacy more into taking

Bahram Akradi

That's a brilliant question.

to let take So the explain. time me

around XXXX for less it. than bucks that. really went average price is right couple year, for our pandemic, into a just the to year important. per $XXX, been was to might $XXX This think membership right across $XXX-ish, went around have the And finish we I We're about of before we the when was So $XXX, membership going board. full

While I've the membership count, isn't years, pays has membership think public. And the of I a the for gone on a through count lot put XX I bills. attention what dollars. to been It's even before this XX was

incredibly But shutdown the amazing correct that, we and and created basically For of sold cheap the most our it correct during them trying too started that. business, we Bob, club-by-club optimal built myself and now, And my approach. we right in started the issues. and as and what working as that JZ over what took an then group, of out of of this going services days, when we that, And than membership to point correct company, we are we kind reopening, product those XX next on and memberships be had rest counts past. in we're to to sort the membership basis less Tom be And club. the put team, the the in should optimal

dues they're difference we a dropping about we're the that today average $XXX the memberships roughly month, Our off. it's of are about what selling a is memberships $XX and between selling so

put quite price few have a legacy increases. in we So

don't We new come customer, basis large going price so. really, people be monthly off on additional or really but are get not every those out in a $XX increase forward. a the after churn but to, month is that good them We revenue. to We the people we the right hold a a as drop give need expect of churn it's if -- clubs they and a place hit a amounts Very small of going will lot do now. as those

job membership the on So put this maybe we legacy per like next target on rest just of $XXX a end small we've to here going from won't members, a group of up of it's increase creep year, another by our achieving year. we great to forward, and them did November probably major done And price season, of of the passed in September, year. pool October, going

Robert Ohmes

That's Got And you. a follow just quick helpful. very up.

in demographics format standing pickleball, it is the What or sort those et the small the on out And how initiatives? is called ARORA training impacting of it out impacting of guys membership? the cetera. is group You membership, initiative demographics of the and

Bahram Akradi

to are basically different older is those above and of well come -- fee they able and an XX companies. is as to the want get people, we as pay And upgrade fee the other a them to sports group. through selling got upgrade programs. So insurance and a memberships the get they the lot can all of This use at of pickleball has ARORA signature all that hours above. make with get XX to qualified sure club full into. A be

So XX% you is category. ARORA Pickleball is like dominate want quarter-over-quarter. up. growing is guys this on fire. Utilization told we I to

online over have XXX now. right dedicated courts We

are other of things personal else our programs two doing than which engaged not. year Time. Life Then unique doing say customers DPT, They're all playing are XX,XXX the to quality, us pickleball have Time. personal would six memberships courts I are be us get XXX next And training. phone with online partnership is with would it's to other iPad. type Life courts in or to our MLP by service, We have ongoing dynamically end expect a gaining myself PPA. in members a I half or signed a are an to with Life with half anything We workout and members of clubs. XX,XXX expect new five brand and training, to and just The more pickleball of end agreement those We're new executed, of XXX, week, a it's innovation have about Time that next way additional we than relationship to or like that app that your of that they by an year. impossible completely I

and business right be beat now training your need expect it's is therapist, all growing your in trainer, nice completely massage You one therapist imagine interactive. XXXX. very quarter-over-quarter. [indiscernible], the to That to personal your physical XXXX chiropractor, numbers I in

everything have up. lined We

We pricing. have the

the do small DPT. strategy, has workers, training. group of We XXX%, it. the reprogrammed have they Last totally been how the about least, but feel structure excited not Everything

in time of popular, sprint We combined GTX sort functional significant training Alpha, with our and Ultra forth. high which workout is rapidly. energy on intermittently of and have changing Cross-Fit workout. Hugely invested version dollars amounts is of a -- the back version which end growing and our Fit, it's

signature customers. price They for classes of growing. they're and so buy they the then many it's membership don't the all take membership, as much monthly as They differently. buy dues, signature So pay part have They're just to they easier want. a and can point

all when look we that expectation you, down anything doing ahead, are every our one side, the I of programs the strategy, the they're for And mentioned my structure with company, days these things, is So not are these to and week. rewiring just this them. I of the a working and everybody all doubling all leadership, is efficiency, our all each on working these than other seven reasons everybody transformation, pricing this of

fired for XXXX. best record have had. for alignment the ever year Everybody have We up is a we

Robert Ohmes

That sounds much. Thanks great. so

Operator

you. Thank

the Securities. go Please next of from line question We with have ahead. John Guggenheim Heinbockel

Bahram Akradi

Hi, John. Hello, John.

Operator

line has been unmuted. John, your

muted yourself unmute have you and please If ask your yourself, question.

Bahram Akradi

Why come John another and don't to to we Okay. back question go later.

Operator

Carril with RBC Capital Markets. Thank from you. question ahead. go line We move the Chris of Please the to next

Christopher Carril

Hi, guys. morning. Good

And as you center the kind decline. saw for was expected XQ I seasonal one that you opening less versus with think of the prepared you in that than were XQ. So noted in growth remarks, anticipating typical membership

saw was decline? you respect the memberships what degree to that expectations to that what about different from last did talk on-hold to versus with And the drove contribute And what that growth? growth? your membership expected increase quarter you can So modest

Bahram Akradi

on all. of on-hold The it memberships at much impact really not an have

hold hold, going to We steady. XX,XXX XX,XXX, are XX,XXX, on right memberships think that is I in

for the XXXX And that surpassed the these who of that was factor the versus to still markets pool run a explained their have by I for expect in so metrics less clubs much I come going in in, what Our people mentioned, other just until programs of season would behind, potential. come major they're potential. season, pool decision all because if to our there's of believe gain well be again, historically not how and clubs come those ARORA, the they quite they memberships. bit revenues, expect still of that to membership membership year -- of pretty the I were in for loss of mid-summer not the surpassed is yes, come we those of And because course, earlier, come next but both the slight XXXX and for center. performance a traffic, change slight they pickleball, in in swipes to in in outperform I they of dues

Christopher Carril

of and a of and focus But evolving Got just rebuilding to supply the and Bahram, kind product for curious competitive generally latest you big that's competition know offer health on how post thoughts in here? just been company a to the I hear at unique -- experience, it. historically environment is And thoughts space. a then, just pandemic just industry of and just here. curious kind your hear high the the wellness on level, very curious your

Bahram Akradi

Yes.

has been always see, pressure can attack. level there as -- under is price there you point always, as on mid -- a bit the of mid the think is level I

level, really there's can real in the people do anything. sign think no I that mid

think in everybody end. that the you cost to And from chain low the on just high really a I dozens increases Crunch it's a So challenge construction. with basically Planet they to And also will of brands. Fitness have end, bit supply of have

you of the of So model franchise they to that's harder have think why the make some time runs, a all work. in I see math

own. in So is being our in sort we of elaborate life, to a club style my healthy country are perspective don't I these of able anybody the league athletic our emerge. see way space, of

deliver strictly that needed and to are delivering last clarity don't growing had let recovery, exact margin other offense the We to XX of we the once they over you a and needed path to And we any see it months I next you could Our if since XX it we reengineering then to us strategy the revenue business for model expansion, of several you, retooling kind that that how results have needed the XX years. done be months reopen last there then the play deployed. is way, slowly. XXX% switch

So next after a pipeline the us. can generate have three chew income, in this years, result expect can me to offset. with of we trajectory have years part, we to And income at I we income loss in. as substantial. we forward to net coming that and pre-tax to next next we opportunities we when the the up we're mentioned, look our that that, a We going took a looked million looking about the additional really pre-tax takes we're three second to I valuable as in $XXX of mid-August, significantly And carryover it be be that have is the

say, the we when our And basically our us so gain and lot started I the strategy that new lot those of washing launch real of trust landlords it profitable, why incredibly loss to than structure and going constructions, partners, so going out which want So then take that new we the a of for the they net whether talking growth our know our fund office be now building it's up, valuable to partners, funded to hey, to or by a don't them change they our to new estate, is will deal in. that selling we're guarantees, rates the that corporate get have carryover, need they They changed think clubs allow already buildings, will doesn't we us rather old and deals and apartment locations was to just our come be taking mall or buildings the and we ground we're a club kind similar. us. openings for prefunded we

position billion naturally. do money X.X% some we to than great spent of competitively. then I less allows XXX revenue can. well marketing. us the XX% And in do direct on so unlike excess revenue of really, $X anybody on marketing, we are don't other on in to track $XX billion year, It about of really And million fitness impressions with companies, a of they are this spend so-called see

the an this quality in up side shows position country. make our economics amazing brand are loved is by to to sure side by of model that that the We business the of

at. give to we're impact I where to any that's Life So emerge Time. see don't able to anybody being

Christopher Carril

Great. Thanks so much.

Operator

Thank you.

question We of Please have Heinbockel ahead. from line John the with Guggenheim. go next

Julio Marquez

guys. Hi,

Sorry earlier. technical difficulties about the

Bahram Akradi

That's you, forgive okay. John. We

Julio Marquez

on This John actually for Marquez is Heinbockel. Julio

Just question you a quick for all.

broad I one opportunities, And experience be you. guess have your the how in if clubs, mentioned are that for are the guys you biggest identified? efficiency safeguarding to you buckets the based You what members? but that two happens or Thank

Bahram Akradi

Yes.

we new for departments. general super have all like for And their into can when it's dashboards lead last model in leader then our general during other And and sort all benefits years, had than of excited operate the deeper over into an it autonomy. back, more course more our priorities. the look management brand of adopted there we them a we more created been They ability ownership management snap then structure lovingly three structure a went see business for So of mindset, years clubs. them, of basically sort we style were the on to creep our their about and of focused and the back slowly because that And are can all manager rather of style, be by business a they of into we it's that, managers. is but to

We power cost wiring. between basically in basically was the stuff, huge a have corporate in structure the all that area executive the layer sort regional regional and clubs in given that department to significant office all layer heads -- we new more and the clubs, eliminated clubs of leads, the the team of leads, and the have

all actually So it's across fronts.

approach burden office a expense it reduce in overhead they and to And G&A the I historically to we've than love less sure I the the an cost substantially have better X will make margins XXXX the percentage has. next clubs as our our Therefore, least corporate while X.X think to by deliver actually than to aggressive taken year. training really percentage revenues be clubs our grow that past, personal point to at of see the would been substantially in the percentage a passed will shrink is grow should versus for corporate will on in points.

Julio Marquez

you. Thank Great.

Operator

you. Thank

Capital question ahead. have with Siegel line Markets. We of next Please the Simeon BMO from go

Unidentified Analyst

just outside member This the given note. resiliency curious, Hi. seeing among on interesting Good within can for your Thanks increased of I'm taking churn of base? for is macro [ph] along normal Garrett anything just you anything And customer question. our your base the you're or Simeon. there backdrop, morning. seasonality maybe lines

Bahram Akradi

Yes.

market. the part, -- XX% top we the on years, for sort seeing a then we of swing are been think much dozen most I our It's last but of half not our the strategy. more about focused to strictly the swift

than As you spending still is other guys next top affected. of, XX% well more not all is the XX% the category, still money any aware

not anybody oh, membership So gas $X saying, a least. and to in We're because my more. is the the coming cancel hearing gallon is God, I'm of price top XX% going

in completely we are right So a environment.

the of I clear. we We want to expect the However, be worst and plan just course. for best,

terms cash are our revolver seeing any expect the we're liquidity. all to maintaining now. cautious approach as in impact having still growth our as part, through have powder not dry our But revenues through in the substantial. And flow we and So mentioned, keeping our We for year. most substantial again, right XXXX, customer our of very I a next to very,

Unidentified Analyst

just Okay. touched and kind guess detail you further little Bahram a on follow any I a bit, but up, would of great as this And hear. That's great. to be

kind Are of Just mentioned real sale are build new on the for cost understanding CapEx how the new the any and that's estate that just kind changes and our across that's what noting? leaseback you worth products availability seeing out and market you and worth of of evolving builds. there calling

Bahram Akradi

Yes.

there allow and They XX% So -- get by sale portion right to a a you cash-on-cash XX% -- It starts huge that They partners unit the interest is massive market to operation, they to dividend the their asset. with are get will they types -- rough do finance from want not two funds broken financing have to each need and putting we and who year from return. X%, our get their basically of deals. Then tough, unless those have pay XX% investments a now, come back interest up the give back to pay down have leaseback we down, a who -- of to environment completely reopen. rate lined years if returns, to big, a the or current investor a kind revolver. Those they'll huge again, have year capital are REITs, the doesn't from specific and punitive, basically on cap market fixed won't. the large we from that FFO, now, of with the half take coming a rate, that now, which a

need of They So need leases years work to deals They deals. to can Again, like they the XX points, move or selective while that XX going still basis do may and and put grow our -- are they're grow. substantially. options. some move XX-year with capital those also still rates XX of to guys their need not to --

long-term these investments companies. So these are long, for

away So they're companies. not great from going assets from shy great to

able relationships has a Time, worry our sell have to Labor Life never But probably or steel being concrete up. back construction going costs, to isn't I half down, last a So I gone that they they in credential come far it's costs. really is construction is come go thing have. some of think and based they we can whatever, or not had commodities to go ever status the transition our expect basis, third like which the up. doubt ever as up, Labor the down, the you on about any leasebacks and I as of

we're happen. settle not to they're That's to up going back used be to pre-COVID. or going in going be at higher. XX% settle or to costs XX% they to they are and higher, general what XX% going at see to going XX% So they construction not go to The question are is,

GC you Life down. internal And so Time, construction guys costs [ph] know, at our our which has own have as kept we

we're So of well aware it.

with latitude We have the a of of our timing lot starts.

large right parcels. own now five club we So

to We these nine again, until have macroeconomic to I 'XX, six started of cash forward. other moving lot the the increased Street plus of more we have if have some of And have we sale we could clubs quarter on beyond. new while done and want pause get of forward to have a lot later, those three see next entitlements. our until leasebacks that we right XX-ish clear. start flow could from or deliberately then And now, And those the demonstrate we some four us have months have we opportunities those two club later, we that 'XX a months allow of opportunities still starting growth or from

to obstacle. years. it our totally just we're We expecting challenges are We've done growth with the way. to any prepared not ability macroeconomic we're it. to find way and for And some more our of we XX our overcome sort completely a gets So for and comfortable sort handle with of that see obstacle any prospects

Unidentified Analyst

Appreciate the Thank Great. you. color.

Operator

you. Thank

of with the We ahead. line Politzer go have question Dan from Fargo. next Wells Please

Daniel Politzer

you morning, my thank and taking Good Hi. everyone, questions. for

definitely growth better seasonality. negative to down that in quarter, typically But came there's guiding fourth quarter, the appreciate membership in third So again. and you're I

the shipping You quarter. the out fourth have one into of XQ center

to just there the down? fourth some would Thanks. what about And is there So why pieces into moving quarter kind conservatism that? of memberships the be built think are

Bahram Akradi

don't Well, tell conservatism built we into you. Yes. be if we we would foolish have what

So know on don't to what you else I tell that.

miss. don't to tell conservative. they So want yes, We are you something and

memberships have quarter, and which seasonally, we're out It's sort basically February, massively the guiding lose is memberships then We we go what and than more lost in We you It's significantly in the of to. July is thing through June, grow March robust September, October, shift. the through in this season. way really more all lot seasonal. flatten November. a our second we The just fourth in December period, January we

absolutely past a up giving many not just have additional are position. as in January. That's memberships. a We weak years, we as gain nothing. That's the membership lose great we So X,XXX in It's given points up nothing.

closeouts, customer So of robust could outcome. you, change price to to to we not actually look, to the a do that to to guys I it showing we're the that us with are we're come product, want some desire we hint marketing, very It's And going the I want to and the to just stick services, sales going naturally been have don't you zero is explain that promotions and some -- and number and company's experience it's zero the strategy. to promotional some a let great. and points, strategy, dilute because that

guys And ever salespeople, in years had We it's that I revenues ago margins deliver us to working. are to with allow you haven't this closeout, two higher deviated from it have going and you we better from before it's we zero to zero guys told and a promotions, and zero NPS when than doing XXXX. all higher

Daniel Politzer

How Or to there of that this to about through year? where to the then percenters call past. or today staffing Is percent here about of hire the the sit there margins. for we've at Are on average need with centers you the efficiencies and you of where think FTEs you guess members' the XXXX. where detail. And thinking the are still number the Bahram, I Got there? are you in center? you trainers Thanks said ramping talked per talked lot And be? below we plus all kind personal XX% cut it. I about a it you focus that room some

Bahram Akradi

Yes.

a strict like these a run they being disappointed cutting Ritz-Carlton. frontline incredibly have -- like expectation our is I order to our clubs staff, if they're clubs, Season, So if while are mean Four I cutting

the we're not where not in you people. cutting clean the locker keeping for is. That's saving staff room, the So immaculately clubs

work rather many where the leading the too middle the all had in the the demonstrating way meetings office, only sitting model. than the have conference corporate through place the that's from management leaders more the dollars have to all we're offices club restructuring and having calls. level we way, and business the We And way to go

office, in the corporate of the biggest for So the in in that it been It's the the office in cafes. board. clubs, was It's biggest and corporate corporate spa. portion who it's between XXX% the substantial. across It's initiatives, and It's -- office been It's the has everybody corporate and PT. in and was eliminated.

slate this January performance. and over Now have for everything is But coming charges. taking out on for we're one-time a forward. with our quarter, saying clean paying We're we're expectation it not just we

So record on we and translate you year a And EBITDA can have -- work that want to have we like and I such, that. can do guys own your and will told of revenue margins. guys, obviously, you to

Daniel Politzer

Thanks all for the Understood. color.

Bahram Akradi

Thanks.

Operator

gentlemen, Bahram. session. the have and you, you. Thank the back to Over reached Akradi like closing we over Ladies question-and-answer Mr. I'd call the of end remarks. for to to And turn

Bahram Akradi

Bob week, to me the to in finance I'd needs. gift here. CFO amazing partner. can they help everything He is absolute always couple in that an Yes. here seven for like been available incredible He's take an minutes six, always has amazing last truly welcome an of built and here he been has and Tom team for Bob. is a partner. He He days on years. partner a an seven support

bike jet pilots know, lot and same are me expect and a if both he a on I available him time guys I these you I exact older, but to years I'm do races. as always goes Tom we XXX if As Tom He level mile five on. We need and needs mountain always doing crazy to I something. share personal with He's I'm fully to be regularly. something. both the talk birthday. available

few of a want all up. of I you So I here, say to hang things biggest Tom guys and appreciation give him here before we my truly to marks want just with have

Tom Bergmann

almost thank the Bahram. Thank the thank I all you, for a of want And team I and our had Great. now, at for want other XX,XXX-plus Time years that. most out and Life to to thank friendship support. all seven it. really members you It's there. partnership importantly, for executives appreciate great we've I

for years it's and members to going bring and with hands well The energy happiness grateful You come. been you positioned to and so for guys in positioned are super and and you really the drive to profitability It's really years impressive incredible. forward. this I've every growth our happy company good serve bring seven how day to is

everybody. you, thank It's working been So with you. great

Bahram Akradi

And I minute won't you to want Bob. and everyone hello Bob, to for just take one say --

Robert Houghton

during next for call your great Life Yes. for you on placing thank with CFO. to to Thrilled I and be morning. as to be It's Hello, you Tom this you huge everybody. have thank this A in the that support to here at his all Bahram he your me Time. trust had, transition confidence and and

Bahram Akradi

call right, Thank look forward to any much. so reach on to Thank feel free with you you All guys. you so us any We you much. again of to the one have be guys questions, of if beginning And three. XXXX.

Operator

today's conference. this and concludes gentlemen, Ladies you. Thank

You lines your may time. your participation. at disconnect you for this Thank

Life Time (LTH) 13 Nov 222022 Q3 Earnings call transcript