Life Time (LTH) 8 Mar 232022 Q4 Earnings call transcript

Company Profile

Participants

Ken Cooper	IR
Bob Houghton	CFO
Bahram Akradi	CEO
Chris Carril	RBC Capital Markets
Brian Nagel	Oppenheimer
Robby Ohmes	Bank of America Merrill Lynch
John Baumgartner	Mizuho Securities
Simeon Siegel	BMO Capital Markets
Dan Politzer	Wells Fargo Securities
Matt Morris	Morgan Stanley
Chris Woronka	Deutsche Bank
John Heinbockel	Guggenheim Securities

Call transcript

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Operator

Good morning, and welcome to the Lifetime Group Holdings 2022 Fourth Quarter and Full Year Earnings Conference Call. 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.

I will now turn the call over to Ken Cooper with Investor Relations for Lifetime Group Holdings. Please go ahead.

Ken Cooper

you and us call. full thank XXXX the and quarter fourth year morning, for for joining Lifetime Good earnings conference me Akradi, Bob Bahram today and With and CEO; Founder, Houghton, Chairman CFO. are

number you differ risk the is company which a today. SEC encouraged may forward-looking involve uncertainties During this factors our review. company's of results forward-looking filings, will and to call, risks actual There of in from to statements, the comprehensive make are which list a materially cause made that statements

the the are in will the issued unreasonable adjusted with measures information, most earnings Investor without flow capital Also, company SEC financial the discuss and measures, GAAP efforts This possible EBITDA before on where certain section included including X-K expenditures. along website. company's of the non-GAAP to Lifetime's comparable filed and the in cash Relations with reconciliations and release free directly this morning growth

Bob to pleased turn now Bob? I'm over the to Houghton, call

Bob Houghton

good outline and full year XXXX. appreciate I can our key Bahram we and quarter Ken, issued join earnings you fourth for the followed will The guidance and then briefly this you, full today. updated in to time morning, will be results. details us Thank our release the strategies cover taking We found initiatives morning. everyone. by

increase by XX% our XXXX a increase XX% a in driven in-center XX% increased fees membership million, and with Starting and $XXX results, fourth revenue revenue. quarter to dues enrollment total in

to For memberships. than the more the billion. year XXX,XXX to $X.X Center memberships full total end increased XX% XX% year, revenue increased at

the $XXX for from year membership benefit of of fourth quarter a to in fourth income of quarter $XXX from XXXX. million the higher in-center XX% up the to net net quarter continue compared dues loss revenue with million $XXX, Fourth fourth the up last in per We $XX were increased generated XX% activity. quarter and we quarter average $XXX, dues as prior $XXX monthly year. period increased Fourth center from in

Excluding $XX XXXX. expenses X.X detailed our earnings adjusted fourth to in improved both XX.X% percentage by Adjusted release increased million. increased of and versus the of points XXX% in the income in XX.X% margin million quarter onetime EBITDA EBITDA periods, net $XXX

year, loss $XXX the million, and EBITDA For net to adjusted improved our our $X million. full was

million another delivered improving net in quarter cash strong net in leverage year-end total use by on a We with available cash million $XX of activities EBITDA in provided and the million We and $XXX of remains the credit flow cash position period. revolving our and prior liquidity adjusted to of $X net cash borrowings our reduced equivalents debt with our million of $XX quarter year cash operating versus facility.

shape, price to our our As leverage sheet. we enhance strategic balance across is and our optimize flow drive investments, our opening we strategies cash experience, member are are believe to in and We XXXX, and clubs on working. successfully margins, to our reduce helping business increased using and increased our expanding performance club driving turn great usage new club

and initiatives over now to guidance. financial outline strategic will our turn it Bahram XXXX I to

Bahram Akradi

our Thanks, of XXXX. Bob. members team proud I more am and accomplishments very XX,XXX than our in

main that Our prove is our and business grow was EBITDA adjusted back and margins intact in our revenue priority and XXXX healthy. model to

were model, program, critical of , Small and, Training our Personal increasing adjustments our made ARORA successfully These we our initiatives Training of revenue. and traffic XXXX, is initiatives Dynamic pricing the SGT, rollout which DPT, In to of of our to execution our executed and aging our strategic pickleball. strategy course, active Group

in which past Additionally, to a necessary effort. and our Life as helped get We keep made less we our adaptations to rewired the expansion significantly took challenge a process decision-making layers to years Time done, three have great leading margin position. things

of third busy clubs than to As few our vibrant. are report and clubs the have both I'm visited last that over more happy our months, I

January XXXX dues of that reramping. at end the are XXXX, of in For membership of and January open in our still of aggregate were clubs XXXX, membership were dues XXX%

past re-ramp explained takes months, years four the three we our As it to athletic of ramp one several to have over clubs. large or

results. clubs While to we membership already expect across dues January have XXXX surpassed in and to aggregate, recovery continue these still we're in period improve

dues This In driven results rates, we average the higher feel adding clubs, of total power by addition roughly opportunity to a we The to the memberships new tailwinds membership strong Not XXX. this additional and is proposition. year per sold significant we're through for month. memberships $XXX. $XX compares churn average in pricing each of our of at have only our dues value all February dues reramping memberships

are addition, $XX there memberships rates. that, of couple roughly XXX,XXX per our aggregate, and XXXX in are to have of am a over in less and model and very dues proud month In never looking been brand to Furthermore, our year first months that shape. million beyond. paying the has been current forward the in strong, the say better full business than I year we're

adjusted of to With to we quarter our the established $XXX first year $XXX to are we to $XXX to that million this in setting all guidance million are X $XXX million that, January $XXX $XXX full year. million million we million raising the EBITDA expectation for on and the from

reduction on continuation adjusted XXXX to adjusted our remain for to and of levels EBITDA. EBITDA focus our Our margin recovery of and growing debt record will expansion,

of far announced have on sale-leaseback February. that so $XXX first of year, the we in already We the $XX million closed transactions have million this at end

of to track the We for sale goal our of are on year. well $XXX leasebacks accomplish million

from experience, continuing stronger. on on landlords. from focused funded to move make opportunities we customer lifetime coming and is balance work where largely Every asset-light our more growth facilities enhancing brand, we're sheet Additionally, making are our

looking we're to answer Now forward questions. your

Operator

from ahead. of Capital and a Our question-and-answer the will Carril RBC first conducting Please [Operator from Ladies this Chris session. go you. time, Thank at comes we gentlemen, be Instructions] Markets. question line

Chris Carril

Hi, good morning.

reach presume XX% that's think will year the close that's expect So 'XX. from this and you Can case just us EBITDA on guidance unchanged here? XX% you hurt whether morning. provided us It's profitability may early ramp it's this your update XX% of the that based about course also I the expect still you up in from that over January, gave still the maturity you how in to to previously that you what disclosed but largely you on year? of you

Bahram Akradi

question, Yeah. Great Chris.

catching ahead cases, the the of to as is improving and The up doing catching clubs up And that We in-center the continuing the average at are performance Obviously, to under they dues. well. seeing past. higher up past swipe. of swipes much that's pick moving in some are

I our we -- more beyond the XXXX-XXXX still don't ramping. get I and mentioned, and as then prior still XXXX are So closure -- to clubs they're runway gaining think to they still, I've margins revenues early that that have for as the --

of the dollars in think opportunity clubs more terms plenty and recovered, is have still get While I revenue more our abundant. majority memberships, the more to and of traffic

as to and are getting you month, see more beyond. more and mentioned past easily we each guys, passed go clubs, then performance you So their more states

we don't that to clubs ramped how they when that level call about -- the your just -- bit of now, keep going. really know it's that more they I clubs you. most recovered lot margin, we in don't quite the have -- dollar room the reconcile helps And if right they when can't have and I fill dollar still to room a I there's a up mature, like a you it think question have think mathematically these you're And to said gain but have revenue clubs memberships talking more,

Chris Carril

Got again. on maybe reception you then you've Thank And pricing. it. to just Thanks, as a pricing recent you. the actions taken? Yeah. talk follow-up Can about

Bahram Akradi

resistance today thousands the things The variety zero price customer it's sold the sports. higher not not to couple year a is It's their Lifetime. rejoins at the -- the -- in proposition of is not a athletic really memberships value still of And tens and of family, resistance. finding there of the of for gym. It's than they do first It's are they at pre-pandemic. interesting, We've the were Yeah. any front. rate our months

So it's social community. a

zero if so But far, easily we go If So take the and can price just price resistance. we're had week. And prices, to see we the actually, in work, we don't, change they and don't. adjust to next getting back they will they the we're backwards. the haven't continuing club for club any

Bob Houghton

Bob. Hey, Chris, it's

add down $XX the the a little departures versus up, fact months color Just up of two and are to dues last are 'XX first to despite that that. 'XX, membership actually only our relative or Not churn average roughly memberships that's are more year. membership to

Chris Carril

for detail. Okay. Thanks much the so

Operator

Thank you.

from the line from Our Please next of question go Oppenheimer. Nagel ahead. Brian comes

Brian Nagel

good guys. Hi, morning,

Bahram Akradi

Hi, Brian.

Brian Nagel

quarter. Nice

Bahram Akradi

you. Thank

Brian Nagel

clearly of the -- your to respect job of with just some a done have, I the within mean control question look of the cost quarters costs. you of these costs repositioning first the over the So them? last as top couple of or we cost I dues and nice controlling way in how at and the business leverageability light perspective sustainability our membership, of especially from about line, of controls think improving the we should another model,

Bahram Akradi

more, us more expect create be to a want clear. I more, question. That's great margin. continue to I Yeah. don't to

percentage by going revenue the our the is to going to many that to revenue, which grow. to going aggregate, are the in go club's grow those fact Now the to continues revenue that's as substantially, clubs margins still up of is add

On now people six, something, rewired an company, it's of seven the going the three. instead cost approval through we process lifetime of as I to get five, decision-making the side, completely to mentioned, down and different

eliminated eliminated. decisions basically We've much So layers we being making are those faster. are

the to that -- So -- need grow. going corporate additional that have does not office of the a office to the also office clubs, then grow to transitioned we the as structure cost majority we and isn't corporate

actually So benefit the to it's the of that allows company. -- scale from us

be But not we more move. intending want put in it be here So have and back go to I We're should clear. cost, to place what should permanently. cut

Bob Houghton

Yeah, fourth cost Brian, quarter of last were just emphasize that point to the actions made, in Bahram of the most taken year. efficiency X

aren't we'll year. take of in see to need additional that So see we to saving XXXX. benefit cost full benefit the this There full lot annual steps year a

Bahram Akradi

right But through they're now rolling every month.

Brian Nagel

openings, at your helpful. we're are this? about generally, track here. How center well would But great. And those results versus -- how that look how -- those versus my of seeing levels, expectations if the you obviously, second historic are question, my are how the -- you That's sort new feeling you tracking follow-up Very thing? then these --

Bahram Akradi

We're the business They're now plan our fantastic. programing again, of way ramping up in pricing the modeling and we're new operations right of opening the the they're and system. this above the clubs, beautifully. revenue and the our the -- the model, generally I mean in both clubs dues

So issue. we have no

months opening time months before about from flip significant three club that club week, after few is the Generally, have the you open, as clubs start a and EBITDA we one California. just loss sort over EBITDA. about the opens that from giving on take months, this in within maybe those. four-five and -- kind of a But so substantial open, covering know, to in But opened December four negative of and a and are been we've number big back they we -- they of the we they

it as pretty my we're stronger is everything where has than healthier, about today. remarks never going. business earlier, looked I So the mentioned again, And on excited is

Brian Nagel

Thank again. Congrats, you. Helpful.

Bahram Akradi

Thank you.

Operator

you. Thank

America. comes from Bank next Ohmes Robby of the question from line Please of go ahead. Our

Robby Ohmes

questions. Bahram. Hey, Two Hey, Bob.

that would ARORA? can Was versus more like in fell memberships group that of a and pickleball that, any played significant of that? clubs as center that difference being do? expecting training and role color it give know, quarter. if lot departures on don't versus less us can pickleball about it like the a Is personal examples and Just clubs initiatives less a talk like -- memberships Bob departure performance than things there just the you want based that fourth you in we we were and kind the rates that? said, in to the in have Is And maybe was like

Bahram Akradi

though. pickleball, just not It's Yeah.

obviously all number think having amazing is customers training up group I people generates doing increased. and for small the sort under more personal has margins we training personal I programming DPT, programs training, clear, be new us the to back and mentioned, So of that -- area, of are and recovery the come revenue an

than more of last beginning is since training group the Small year. tripled

So basically, simple. it's

about average, in Our in business, generates memberships. company, business on our our on particular XX swipes

the generate SSR, we revenue. subscription we which in subscription So then focused doing on to have the generates large and what athletic swipe people would is creating basically called that to reasons facilities, swipes and our be

was the strategy that's to that So execute. full last we're what continuing And year.

ARORA, significantly We aging program expect this year. to grow our active

massively -- expect first in the it grew to quarter. We

group growing significantly. So far, we training small are

growth and steady have, continuing to convert We the We're pickleball again to programs. in running opportunities pickleball.

[ph] mentioned, VPC as is working. and I So

And the expectation all membership fantastic. this first then gain seasonally, our own we're So and quarter substantial in the programs are usually quarter. than there, working. going doing It's we membership, better

so we're really that really very that are And getting seeing we're see leap about year stage to like initiated, the programs that and we they the programs. have into very, optimistic as I catching momentum with the

Robby Ohmes

on That's in-center in-center guidance sort And just do growth you visit? guys growth helpful. The in revenue is of the And the the revenue -- disclose in-center for frequency a spend versus expectation follow-up. to What driver is per growth? of XXXX? sort there

Bahram Akradi

Yeah.

office -- back down, and it training, has is And personal which forth. our It's to the approach just corporate in-center a working. The So training of and significantly grow. I The continue reinvented it's broken we it's better and the ever that into let's clubs the to through to things. than wiring factor. up from really is working And number biggest and go this. on expect

The aquatics. second one is and kids

strong is right now. programming Our very

summer We like selling more much earlier. getting for camps, them sign-ups are

have have many get on to to because expand capacity where out we going sold capability full capacity in we So of seeing clubs opportunity we the to we're have. the the that

laying So we're just that of sort out.

we but in in making we're progress making past of growing. that -- same now third got thirds think we revenue the expect I and that, go one readjust we're we're the in-center, that pandemic get But up two The once we as that that back for it cafe our way we the come XX% we're to store, our close, the are and expect so and dues. business Cafe, that on like it to gradually of some as well. I ahead past into aggregate, number on used we kind of more all and revenue, was to number period, I back programing improvements In be the centers need. shrank past,

and happening. seeing -- is that it we're So

Robby Ohmes

Thanks sounds That great. so much.

Bahram Akradi

Yeah.

Operator

you. Thank

comes question go line from John Mizu ahead. Baumgartner Please Securities. the next from of Our

John Baumgartner

first increases thus members Good from the sort of of already for guess increased, how the think to off, are morning, operator's thanks worth? with the consistent for the experience I memberships relative an from pricing been back more part to how new the lack Bahram, resistance perspective, to want I conceptually, that to I'm think prices about price perspective. have value question. objective these And pricing. seen I you've your curious price your on to But come lifetime your what versus clear of you about you be perceive about far.

Bahram Akradi

Yeah.

when I massive problems just them have saw business, So And the a a, We repeatedly mistake we the and to Ritz-Carlton we quality, is couldn't down that building many that reality the one. level pricing club with I of country a the admitted season extremely really a these level that was just started real people support was that There it. too run that clubs my quality. athletic number clubs on excellence want low. club, was, with is challenge. We the athletic beating do of big couldn't

to they company, because they two, in changes. was stuck just there we price not really with we just have could the it just number the salespeople And -- not of really, the were system And could clunky. react

do critical to customer go at system looks product, look the here did the the they eliminate that room, the in office choose clubs goes chat club and cetera, just product they et or corporate to the or people person just what this buy. to a we via most not the the would of we show goes in both where that So calls, can facilities people sales concierge, member middleman, the or was piece the in have the and online buy

membership. business. really no the fear there's that I you this harass happening this that than buy took what's love a the back really a to And years price. is I we was first mistake different XX-some you're Nobody because you will on and a approach call mean, making in

club Let's want XXX just we then has took not the we XXX. happened. XXX that's a to This from to enough, and take it say, says, to management

assume didn't XX price not it, it god, it's some fear, the a is mistake. one on us takes to works, take it anybody If it's -- sort keep get work, you We just not XXX We hours doesn't of change big it It's work. this $XXX. you doesn't. XXX test or that price computer back should just it -- to that the basically a and you run of

we clubs was give maybe saturated. a And at this. now million, What's saturated happening, that with friction That membership Austin. dose with club million, like I'll they month you levels one have have $X million. zero we South had $X $X though, just million So something. pre-pandemic or is is example, were And were $X

are off has these So the to $XX replicate also facilities, construction, They don't $XX million, cost have not but new of $XX as of they're $XX $XX million, million replicate. it's million, to mentioned, mean are potential can't I've of the million, you really away. facilities. -- you -- them just lid I give it easy took $XX these our today, not clubs million

that for for the now intuitively right system price naturally us find that a club. have be just should we the So and helps equilibrium

John Baumgartner

XXXX. it's EBITDA expected, I margin for wanted elevates was to implies is also around the drive Okay. just in a sort would than there as that then rent year. phasing QX that. considerations, or margin anything bit the expenses, I Are down there of stronger little sequential follow-up, in The it QX? for in anything that QX. moderation new for in but Thanks of temporarily whether dig And duration guess in that a a fall opening EBITDA you. Thank step Or the margin for else timing any outlook

Bahram Akradi

-- to should don't first quarter margins right want I right exactly are elevates now. be just no, they be the what We think anything

grows their camp. grow two also come the obviously, summer, with As in EBITDA next quarters, summer cost like the we all to revenue substantially. And the incremental then quarters. expect in the revenues two next bigger we a we have the have Obviously,

So we that. payroll with have revenue. have we big big Also,

increase in this -- world, deliver go to guidance still what have So we to when we we in. that's revenue have furthermore, that on more goes trying taken expect we in of on we up sense that we quarter pinch to the our to than the conservative will are have reason haven't clubs, pokes want say be baked have the numbers But down rest we the margin is open obviously the new after we for we for The we don't just and we do is ability make the as only the real margins place the quarter. already the up. sure but

decrease have So think event margin year. no, we don't the that throughout should any to the

John Baumgartner

much. you very Thank Okay.

Operator

Thank you.

Our go Please comes next Siegel ahead. Capital of BMO the Markets. Simeon line question from from

Simeon Siegel

expected there number you're the then it million good we the for doing units Could need Hope Thanks, you members within is cash or versus -- it, revenue full timing. just new missed guys. Thanks, well. revenue anything. pricing from expecting less -- And I might keep year Bahram. on be if came say in embedded and out lift just XQ any morning offset you and from mind sale-leaseback expected balance you're rent sorry guys than break the to in why new Did January? $XX

Bob Houghton

Bob. it's Simeon, Hey, Yeah.

will very bit the relative distributed, of the a our some and year That's Let to be on a function deliver little sale-leaseback the $XXX initial but of in piece still received proceeds later evenly we're track just me much tackle the versus guidance, million. rent completion first. -- to

be of QX revenue meaningful to In yeah, memberships, versus from pricing terms contribution both they're going contributors.

know, we're quarter. first in mentioned, we Bahram membership the you in quarter. And the historically, add growth stronger-than-expected memberships seeing As as

in So there revenue growth meaningful quarter. to the will both contributors that be

Simeon Siegel

Great. if quick And follow-up then can on. I

fall back? about the the terms in So of of XQ, just what churn. tend tends talk off In members the percent to to maybe reactivations the come out that seasonality comment, within

Bahram Akradi

and good this great really stuff. Yeah. the are Simeon, the is stuff a looking and bad through kind question, you good about of

customer, questioned some basically Look, and gone count haven't think right, come -- they of I've I they ways, count. in soon sometimes, drop if we back reporting out, always we off. membership as do our -- are as and they not a

So in of and a Now dropping four back or times, many resigning out has months just these right, and $XX a coming back are going within the XX people a later. hold right? months for customer up, back on month, choice

but they that. news, their They're stop is in really more giving from up Now have not doesn't and possibly they reacting a what coming that monthly pay in them little to in membership back.

XX-XX the clubs actually our We're all hundred XXX to at see we a system. to now we through, the we is of in season, strength about will couple some where by expect Where that least have across as have initiation and I gone strength. beyond. we And start fees $XXX. we wait once coming locations aggregate charging from enrollment for probably fees enrollment way And the wanted across that have of the that the get to in dollars fees summer introducing are gradually are the system. recovered opportunity basically, to We is fully which to today, we

afford the fee seeing process. real The there if out and we're at can concern. they Time. what if they to get they Time is Life they go they But Life just coming mean, us given loves that it, that can't help go no for that pattern generally -- in a elsewhere. is If customers just that -- that back And a people will speed real enrollment I really dropping break is

Simeon Siegel

lot Best the year. luck Great. a of for guys. Thanks

Bahram Akradi

Thank much. Yeah. you so

Operator

you. Thank

of Wells question next ahead. Fargo. Please line Politzer Our from Dan the comes go from

Dan Politzer

my morning taking everyone. question. Thanks good for Hey,

Bahram Akradi

Hello, you? are Dan. How

Dan Politzer

Because fees. there that the at locations. you year be included facing the I everybody's at in I'm Is course all? too. well. that to of something on be over over the could mentioned the well XXX-plus think enrollment I guide that know you're Hope I could that, material. wanted that would up just follow

Bahram Akradi

material in are numbers pool the because year long. what overcrowding the summer because season people to trying not just has who the manage of for more all customer it's a pool we're been of the Yeah, is pass we part joining paying months charge

pool pool a on pass pool and charge goes pass out that I the we basically into, several of dose over the averaged So line. open the guess, months

The gapped fee memberships that we're that clubs over have basically the the selling in they is that length now of the enrollment enrollment membership.

So customer months. if of we charge, XX call that it XX in a i month for -- which we're the taking the $XXX revenue and number seeing average months, that first and only member for that -- for was $XX over per

you how works. As that know

than X%, for revenue where X% So a to it's desire my would it of like it's and gets generation. EBITDA customer a really really be club. I just as closer health really to again in introduction I the club have like once do actual really, of like the our Again, enrollment to the right experience of company that lifetime terms makes a now. rather -- fee for a phase next number country

Dan Politzer

makes earlier -- point--- you is you the XXXX where think above On at commentary, the they're I Interesting. that think mentioned That said call, X% I memberships, center sense. on this

Bahram Akradi

really accurate. that take me Let

of over the the of are XXXX. open or it's that the through way bit So higher January actually like clubs XXX% And clubs then little January to XXXX same the XXX% XXXX all dues. relative a the

and a the in remember, January and you we XXXX, shutdown came March. robust January then if Now February of had

that were we at The open, were be had had strong So that best very, ever the hit to what was similar we able January XXX%. strong. January we've very able and a of XXXX, to is. that clubs number January, very That's number beat

Dan Politzer

guess combination and And higher today at those back a come prior mean question is centers around the over your both? customers of Is to back. it. receptivity that Is possibly that those what's fully to membership? $XXX here I and system-wide prices pricing fees. as Got pricing? And enrollment my I was, getting and sit that we Okay. is it

Bahram Akradi

so that in really pickleball, Well, -- and group in the we have we Life we deliver business deck, a company. is is experience and right? anything becomes a this basically -- manage demand, that's about demand we spots experiential so small to Time have in in it's -- And can that highly supply many a that supply assuming

adjust so to is we And wanted, pricing. we to we what the the experience want have and make sure

I I that again, part that -- XXX-XXX-XXX price. sold are the if As for clubs back, of we All at early before the aggregate new have shutdown that is go now at mentioned, been sold memberships XXXX the time. in maybe membership would

additional told Now for we've we price period you, its the XXX increases. made some

I doesn't actually Prior month of to mean seeing, for are mean just it's it the Now we as you, what to first, XX%-some getting our highest we above rejoins. is, this we work, not if was again, can are XXX sold. XX% And of an -- can membership so adjust we we far pandemic, the are I issue. It if is rejoined. -- fear are mentioned membership -- them. And working. I being it's memberships

can they just a to online up, So is their and the customer making They sign not and happy as they go business. they come the club, be, doing about answer even is go comment. they

way we So very strategy, working. comfortable are with the it's the

And so what -- it keep portion goes to the you pricing. is asking

memberships So It we me uncomfortable clubs to individual deliver clubs of X,XXX too want much. to just for social was prior as had pandemic. give had the brand too It's was they north you some many.

higher better higher when memberships will at have that to margins we we get X,XXX much and So experience. now dues,

So clubs want some ever we the numbers. old don't to of basically get back the to

go weren't really experience. at to that because have beyond the they giving we threshold some uncomfortable And room of

a a is higher opportunity them for the now higher So dues. but at number, also

are choice business the below But by that's model the business, of So design in I in mentioned, to we our a have the in that pre-pandemic. membership still of that we made we by change membership them. we all count count we will -- were to I that's emphasize again, one aggregate our adaptations made tweaks have

we open So clubs. would

more right to look The ever to memberships guys those thing Brian XXX%-plus we say we to I'll now maturity. in doing is is today are club mean, the all memberships time, XX,XXX of to. this The the different has at I the every CPM firms to get that if Nagel more I max they're But dues sessions company get ever to money. want of I revenue. are would X,XXX-X,XXX clubs club, clubs, of the they're used almost public getting was first most covering been large I last training personal -- some -- you than since the at -- want

really So it's structure changed the the cost position has company and the just dramatically. of

Dan Politzer

if appreciate And I I in the Thanks. all sneak one just could Bob. housekeeping for last one color.

Just XQ the year, year-end. on target a times rate think the at all Thanks. rent long-term think a know about? and on should traditional leverage, you And there throughout X as about the or a said then basis And guys lease-adjusted for I the exit rent we we expense? that's Is is me. for progressing there

Bahram Akradi

is owned I very worth sale healthy to billion still times, stuff are that real coming roughly X estate have do for we grow, continually a on that the we per number not the carrying that improving everybody a continue working we -- think recycled we're I gets assets leverage, under a se is all just real would allow call, the about until that on to leasebacks want the the we right? But at that long-term have going all is balance three is leverage in. own. of not to billion I that doesn't times it Since debt-to-EBITDA would like even below that company change in with $X $X on The The so leverage sheet estate three. under

my progress we're to under in we're three, happy keep that to and help Obviously, and EBITDA the most that is EBITDA So down. the margins, that improvement with keep target debt will number the just making. the grow come rapidly the growing to revenue

And math, -- think then the just you will can time you you Bob I that go ahead. the get run by

Bob Houghton

Yeah.

that's the that guide slightly than the So Dan, year. for the million guided $XXX quarter since we've Obviously, on higher $XXX we'd the rent million for year. exit fourth full to to full at the piece, run-rate

something So million of just $XX north that --

Bahram Akradi

future. we of mid-Xs to that we here announce a the you in that add deals $XXX just we exited. cap more next of other only of then leaseback scheduled But where $XX is and assume in and we the another couple months, sale closed on in to the the that take one the in the in rent June, just would year for did One because working million if July, we You rate February. end for are range million close

product of coming So be -- these depends with will ability deliver want the the to the deals. the to will Time's their -- out that on timing Life they and/or you that the give go on of the exit time ability landlord's

little $XX fourth million going call it, annually our to sort of moving about of to XXXX. added that's of, some on But take $XX the at million looking So quarter target. exiting you're rent rents incremental

Dan Politzer

Really so much. helpful. Thanks

Bahram Akradi

You're welcome.

Operator

Thank you.

go from ahead. Our next question Brian Stanley. from comes of the line Please Morgan Harbour

Matt Morris

Brian. for is This Morris Matt on guys. Hey,

on levels. back, follow-up A versus XXXX state. months couple broken a by that Just it of membership down gave you around conversation dues

states, at Has And those a is You're are few app states? kind of well in least a that that but Minnesota, out markets off timing in core those bit else later those were when or of call other obviously Or there just to levels mostly restrictions is kind anything rolling Thanks. of the closed? due to there? in kind disclosed. of of the couple like of quite Illinois running you last very performing Midwest, still a

Bob Houghton

you they're Yeah, and now, fully be ones like will timing. hasn't go the recovered, we investors. we through We right the before up. are ones with back out, And you conference. investor filed the was in like those as an mapped month, other meet at and really -- that majority go states then that we But coming from if green of single of are keep can those Orange, but majority look turning -- every orange anomalies, more

beyond. go will every to numbers state is single expectation Our recover and full

is really, timing. saying, going there Michigan Minnesota, a just be different world situation hasn't or to it's not. is been So And it the in

club So think depending you the little been bit draw in large, super, town in always mega that one we line, message. very thing on has the state Minnesota a only off have that where lot It's I will from dilutes have that and that the other large, that opened a is summer, so I hardly behind. is members think close. any club takes ones, we the other of And left this by

Bob Houghton

Yeah.

XXXX. not of just rolled additional coverage X states We're seeing to progress what additional context November from to give quarter clubs. we've as Matt, So similar, happened into the in accelerated fourth two if two December, and states,

Bahram Akradi

every that you'll Yeah, happening. see progress month,

Matt Morris

recently? pickleball, Thanks. just chaining et on shift have Net Scores personal programming be seen gyms Promoter revamped more. Curious are given And may have or crowded also versus training, but cetera? some group any small then Okay. how around Have Thanks. less you you evolved noticeable likely pre-COVID, additional whatever X

Bahram Akradi

Yeah. $XX. change The and things when up to getting saying reduce their expanded get because then results $XX a is What's better, one most the go programing potent our two happening letter No or is we're will a NPS. significant obviously, going to is NPS. little the of members use

So usually one-month the NPS good legacy and a make finally, the impact. so an increases experience just clubs but as the And yes, basically been. those and seasonal, apples traffic apples, in pinched little those our is It's just can it's a as the January ever are is impact.

Matt Morris

Thank you.

Bahram Akradi

Thank you.

Operator

Thank you.

question Woronka comes Please Chris of from ahead. next go Our line from Deutsche Bank. the

Chris Woronka

Yeah. Hey, far. the good color Thanks all morning, so guys. for

the thoughts that get Any environment such the a question from we of rate follow-up on economics know lot the the a materially. includes the around that? is some Just change still don't REITs kind comfortable we you that I and do given The which interest get provide big how investors can leasebacks. that buyers, the

Bahram Akradi

-- So ahead. go

Bob Houghton

Yeaj.

Chris, yes, cap from -- with a in so sale consistent we to -- leaseback, seeing REITs from participate little So see Yeah, rates still demand the rate properties. strong our we're done a on consistent mid-Xs we cap perspective, what historically, we've

the nickel of As you rent we during know, every pandemic. paid

flow Our clubs are positive. cash

a landlords. attractive tenant really So we're for

consistent at continued there. what had strong demand with seeing rates we we're So

Bahram Akradi

their -- the partners our or rates But we so current investors this who deals current of One thing I obviously, initially all XX-year would the they'll to options, the that. long term. -- us, mortgage change are with have and mention enough to under XXXX multiple you more year guys if is will options that relative And our rather have change be it tying than know it, don't we a year. very a leases leases these after are doing should think rates. soon pressure There's very, you like change it XX-plus they for then into five-year they're year if they

So lease. don't pull. two-year while they volatile a rates or It's are even for the XX-plus as big XX-year percent five-year, a XX on really have a years, not of percent

other that way So virtually quarter the get there a The concern we no done. is is one the cap rate. percentage them just or difference point can't on

Chris Woronka

Appreciate Okay. then, Bahram, talked in the you're changes might anything debt an what the ago And view maybe of about your relative year there year potential participant weaker the Has versus so? the you've M&A Very markets Is changed that. or what next some for anything that of seeing terms happen the on that. months helpful. players. over in tough to, active being space again, and capitalized six a in past ago, in being

Bahram Akradi

Yeah.

those point, very strategically, think Life attractive at for I opportunities Time. will become some

everybody first of make XX on the focusing adaptations about I recovered the months, payroll. inflationary all the six the make months and current overcome the months, construction, fundamentals. dealt six needed stuff down that supplies, -- pandemic inflationary that For model has business year, the our has from last and talked overcome is to to all sure heads ups the with We our and the downs issues have

as you the rents. to unit, the because examples because EBITDA talk some on that, I it call, tried we excited this when do into the And I have we to give am convoluted, -- exclude you I the guys look we can breakdown accomplished unfortunately, so of impact gets think have we of business it about and

So so in it detailed can I do I just took it approach. a out more much

digging model is I'm and of I'm a necessary company proud of have that we proud business the company. our for all in I'm our since business my But with the team, to the better. proud a deep making partners such of up adaptations healthiest end And today.

course get and that done look Now we you also of we're clubs, we once the we start dealing with the sharing then are opportunities are kind how we and can by or next call building and can opportunities guys or up two them. hopefully, with our three, of at normal popping

Chris Woronka

very Okay, good. guys. Thanks,

Bahram Akradi

Thanks.

Ken Cooper

time have we ahead And guys. for one. Go

Operator

you. Thank

line the Guggenheim Please John from Heinbockel ahead. from comes of question Partners. go next Our

John Heinbockel

Hey, Barham.

Bahram Akradi

are Hey, John. you? How

John Heinbockel

Good.

in better will invest the a well, gets quick. further one quick experience right? there's more take Can So here, and business, on be talk -- you can you in you flywheel philosophy, about right, a your You -- raise pricing. virtual dues, X the

Talking invest would raising would or about not further, would think that philosophically, what that you're right, experience the you what right? new -- like to And about elevate to services it's you experience. you the in when whether doing that today, like upgrades

Bahram Akradi

Yeah.

doing we're great we are doing them system, across it's John, them not the So question. a

Like is to want with would overnight. -- small terms a things has a really training So ultra-fit completed coupled training our class, somebody can't of let like kind training, group is It just what you for me which functional do in amazing of certain I'd workout do sprint to have. perception.

now the pop-up that build for we of with busy we've our maybe takes have this and done, than of we are and we're to studios able do this others plans to to to clubs, done those, kind two of thirds implement more time be That Okay, to still the working going nonstop that the forward. floor get remodeling idea. tails converting doing people been to

the coach have that, now people once class you that to that have follow. can wanting then has the actually get you to that talent And

one these speed that it's of the a have just like software of consideration. for things not is those it into really can everybody -- things want that to just something writing take then So is do and we new and implementation you out rolling to

best country coaches, cafe the the all see your programs clubs food, to to the consistently by the what gives locker executing in I'd in the like answer best you that all love like what I'd So the instructors. is across the question, best taught best smells the room spa that world, more the

to So of any we it's the a just CEO and when of -- any really multiunit. continuing -- work

all stores is the that the system? is is, programs running The few across can get that can closer that you And across see you out consistently You excited how everything system. to the whole consistently you about roll fast perfectly. happening question new

that. doing are we So

XXX continuation We I there. our have terms lots to to see lots excess in what summer membership new you're right now then talked of And of of lots this for XXX. of dues average and well runway in programs of in Club the charging. just about. Country by and sold -- of almost plenty like we There that's the have runway is implementation

that, just for So like to the sure of longing we believe feel the I make that deeply the brand. got best going customer sense they're then where they to

Time, saying, doing to nobody it's The facilities travel I for we other Life hear look can give feet nearly the home XX customer, constantly. else way mean no I for Club million more square of of access country. we're customers is happening Life and can from thing the near a across Country Time. More the we

country, the at So ever and well we've place XX I one the think brands in been. best to build of it most for coveted working been is today has in desire And it's been the years. our

John Heinbockel

underpriced memberships, And talked at right, the then real before. just one the if to about quick, that be, quick look was going you you

about mean So period? about not of how of think all one-year, but that do I two-year, is you $XXX staging revenue. -- available, over annual million three-year that's you about maybe think that

Bahram Akradi

aggressive. Yeah. That's too

really point You customer your business run to the view. from have of

XX make appreciation for no like six-seven-eight who's years, years, have like been XX customer feel with You want don't you you to that. feel the for years,

So price do we we're a now, didn't as everybody do as as We every November have -- it doing we smoothly too at steadily. to increase one for we doing been time, it this used harsh. are

take $X.X everything of worth through we go and we use utilization month. $X.X million -- studies, may may next increase We Now this another AI million dues take a month. of

of member So number of number it's the club -- that that it's individual of people. then per that club. an between conversation lead a general particular small a allows people and small the allows And

of opportunity the So the we're to going dry slowly of that's year. methodically revenue just powder, lots have but to really we an improve throughout lead the company for that steadily in kind dues that,

John Heinbockel

Thank you. Okay.

Bahram Akradi

Thank you.

Operator

and Life Ladies participation. Inc., the has reached end of now Group Time have we you. the Holdings question-and-answer gentlemen, Thank your you session. conference And Thank concluded. the for of

your may disconnect lines. You now

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