Q1 2022 Membership Collective Group Inc Earnings Call

[music].

Good morning, My name is Rob and I will be your conference operator today.

At this time I would like to welcome everyone to the membership collective Group, Inc. First quarter 2022 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one.

<unk> on your telephone keypad, if you would like to withdraw your question again, just press star one. Thank you great feeling director of Investor Relations you May begin your conference.

Thank you for joining us today to discuss the membership Calypso group's first quarter 2022 financial results. So much that these statements may be forward looking and that shows outs may differ materially due to a number of risks and uncertainties, including those discussed in our most recent annual report on Form 10-K filed on March 16th 2002.

Two to any forward looking statements represent our views only as of today and we assume no obligation to update any forward looking statements if our views change.

Now he's just got access to our first quarter 2022 earnings release, which can be found at membership collective group Dot com in the news and events section.

Additionally, with price stuck Q1, 2022 earnings presentation, which can also be found in the news and events section on our site.

During the call. We also refer to non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results reconciliations to the most comparable GAAP measures are available in today's earnings press release.

Hello, everyone.

Welcome to the M C G Q.

2022 earnings presentation. My name is Nick Jones.

I am the CEO and founder.

And the M. C. G I want to start by giving you an overview of our Q1 performance.

It's good news, we had a good start but yeah.

January was problematic because of pandemic was still affecting all have some things, but by the end of January all our houses where open apart from in Hong Kong.

We saw a really strong recovery of members, we're very keen to get back to the houses and they also very much enjoyed the fact that they didn't have to webmaster wasn't social distancing and life.

To be getting back to normal that was really good to see.

Members events were hugely popular with all our members globally.

It really felt like for the first time it was back to similar levels of what we were doing in 2019, we had exceptional membership growth in the quarter with 16000, new members. The demand for members continues with the M. C. G waitlist at an all time high.

79000, we saw continued growth in recurring membership revenues up 45% versus Q1, 2021 and 12% versus the prior Q4 2021 retention remains at pre COVID-19 levels, we opened two.

So our houses in the quarter and are on track to open nine this fiscal year I got to say.

The new houses we're opening right.

Some of the best we've ever done they rarely fail fantastic good.

Our design team so just doing such an amazing job in house revenue, so strong recovery up 440%.

Is Q1 2021 even April this year was 14% up on 2019 levels, which is very very positive. We delivered adjusted EBITDA of $2 3 million, which was up $25 1 million versus Q1 'twenty.

<unk> 21, and I am excited to announce that today, we will be introducing 2022 guidance on the back of the Q1 performance and momentum in Q2.

I just wanted to talk about membership because it's something I wake up every day and think about what do I think about it as two things a.

How do I look off to our existing members better and B, how do I add more members.

And what really makes our members Super happy because when we opened new houses and new exciting cities.

And membership is at the center, So house and so a house as a center of M. C. G I.

And I've been acquiring and retaining members. So 27 years the more global we get the more exciting it gets not just as a membership group of people, but also.

The different countries add such flavour and interest into a global membership recurring membership revenues underpin our business in Q1. This year. We added 10000, new members, which is the best we've ever done.

Our waitlist is sitting at 79000, which again is the highest its ever been and the retention of our members is higher than I've ever known it in 27 years. So naturally we are very confident we will.

Our membership target, which will be 40000, new so has members by the end of the year.

We're on track to open nine new so it has since this year.

We have successfully opened Nashville brightened in Q1.

And we've opened Hollaway house, which is in West Hollywood, California. This month.

And again I just want to stress. These are fantastic houses. The new members are so excited about it and also the existing members who visit than just saying my membership has got better. We're also adding new houses into four new countries in the second part of the C. S. Scandinavia is going to get.

Two one in Copenhagen in London, Stockholm, those members globally. When you look at what we have on CW age versus US cities without houses members are very very strong cities and then later in the year, we're going to Mexico City, and then we're going to Bangkok.

And what is happening is Sarah has membership is becoming truly global with.

Interesting members.

Just a little bit more about cities, where that houses cause cities, where that has this is what it says on the tin.

It's a city, where we don't have a house, but we have a membership base.

And currently we are in 72 cities, where we have membership representation, we have membership committees and we have members and within those cities. We put members' event sone and those members traveled cities, where there are houses and use them, but also what they do is really.

Show Us.

The city they live in really requires a physical house and they help us fund that physical house. They help us find the local developing partner and they are incredibly loyal to the house when it opens.

Our new houses and the ones I've just spoken about they're all in and do it interesting buildings, they're all well I believe a fantastic spaces.

And on the asset light model, where the local developer pays for everything each one has a local design fail because it's for the local membership for design inspiration always comes from the building and the city.

And that also runs through into everything we do at our houses as well as our global opinion, but a local decision.

All houses work on our houses been Super successful with the local members and we offer a home away from home for a global members when our global vendors visit. These cities. They then want to visit our house, which feels like it was designed for every city in the world They want to visit our house.

Which fills local diversity, there visiting and I'm incredibly confident.

But our pipeline of between eight and 10, so houses per year.

Is achievable and this gets us to 85 houses by 2027, our members will love that I'm also very excited about other openings within the M. C G portfolio.

We got the net opening in New York for the first time members of being Els, London members, New York members have been asking women that's coming after a very long time and the early uptake of membership is super impressive.

And we got exciting plans for the future for the net.

<unk>.

Thank you Nick and good morning, Good afternoon, everyone I'm really pleased to speak with you all today, we'd make in Humira I'm really pleased with our strong Q1 results within a volatile operating backdrop that we witnessed in Q1, specifically there remain kv jurisdictions in select regions earlier in the quarter, they progressively eased as the quarter progressed for it.

Sample Hong Kong houses closer than most of the quarter I am however, glad to say that our teams did an incredible job adapting within this environment and welcoming our members back to our houses notwithstanding the challenges I. Just described our teams delivered record quarterly results in terms of revenue.

This was driven by a strong rebound across cyber March seeing nice grades versus 2019, and we saw further momentum in April which is super encouraging so I'd like to actually spend a few moments talking about the significant progress we've made on each of our strategic pillars, which we outlined at the time of our IPO.

First global expansion of sell houses is a priority for us.

As already discussed a lot of the detail around our pipeline are unprecedented demand. However, I would just like to reiterate our revised annual target is eight to 10 houses pay year, which gets us to that eight five to 90 houses and five years. Secondly, if you remember on the last call I took quite a bit about our cities that houses membership.

C debates is incredibly important to us.

But important to our growth it provides us a low cost highly predictable path to opening new houses.

To give you an example, with Nashville, Embrighten houses, where opinion Q1 had a very strong see WH membership, which ensured we open the houses perfectly tailored to our members one in each of those cities and achieving our opening membership goals.

So I'm really pleased to say, we've now expanded CD rates into a third 15 cities across Africa, Asia, and Latin America, which will really feel our house eight things in the next five years.

Now on to enhancing membership valley you know.

So it's really at the core of our long term success and Nick talked a lot about this.

You know, we're really focused on growing the number of SAR houses any adds clear value to our membership that's what you're seeing in our record waitlist, but also ebbinghaus membership is at all time highs of 81%.

Additionally, retention rates of existing members are at record levels. So I'm really pleased that there's three kpis.

Really strong as a barometer for the membership value that we're delivering additionally events. That's all houses which are key to our proposition for our members are starting again as we see a semblance of normalized environment, we're really starting to put our members loved the mace, which is events back in our houses again for example for the first time since the patent.

To make our North American U K houses across further March had a full events program.

Each house put them 30, plus events across music fashion Art film Health and wellbeing and he was really great to see our eventful with happy Memphis.

I'll give you a great example of this in celebration of the triumphant return for South by Southwest Austin House of several days of very programming.

MS Glatt, including George Clinton, and sister Sledge and many more.

For music showcases to panel discussions to pool parties to all events members were treated to this best of south by <unk>.

Now onto creating new membership brands, which is our third strategic priority. This is important as it diversifies our revenue base and that's new revenue streams at the IPA. We said the key focus which has increased the share of wallet of our members by providing them unique value add services from Sarah House folks on the new ways of working from Sahar.

Works and being able to take the household Viasat, we're really pleased with our continued growth in each and both are resonating very well with our members. So first I'd love to talk about <unk>.

Our new spring Assortments, which are all based from our houses resonated well from our members. This resulted in 150% revenue growth versus Q1 'twenty one.

That's off the back of 100% growth in Q4 'twenty one so what we're seeing in Sarah Hermes continued high growth, but most importantly, our members are really enjoying what we're offering is a home and that's why 70% of our sales are accounted by for our members by Soho was membership jumped at fault.

<unk> represent versus Q1, 2021 as our members we tend to wet and I'm pleased to say that now all our offices globally, our full occupancy, which is a great achievement and similar to <unk>. What our members are loving is a unique environment created by sort of house that allows a lot of flexibility in their lives for them to flow.

In the work force is enhancing our digital experience for our members you know we're midway through a digital transformation journey, which is three pepsi's to really improve member experience and have a frictionless experience throughout their lives within sell houses.

To enhance and improve our connectivity with our members and said the driving cost efficiency opportunities across our company. So firstly on all apps, we continue to invest in our existing members experience throughout the five platforms that powers. The <unk> house at the shop continued to improve throughout Q1 with feature enhancements included need.

Additional health club bookings, which led to a 75% of all global bookings being by the shop, an increase of 500 basis points versus Q1, 'twenty, one where Jesse members' feedback on our app by simplifying user experience, including improvements in navigation homepage, and personalization, which members will progressive experience throughout.

Key to most Excitingly. We're currently beta testing Asa has connect App, which will provide the next level of digital connectivity to our members. The new product is untried to introduce a house members. This summer see now by the end of July our members are going to have a fantastic app that will be able to book and pay throughout all.

Sarah houses globally, and a really great way to connect digitally but it's in the houses and that the houses and that's something we've been working on for over two years. So we're really excited about what our members are going to get comes out of house by the end of Q2.

Operational excellence as we deliver our growth plans is a core pillar.

Our top line is incredibly important and we are a high growth business, we're equally focused on profitable growth and improving our margin and hitting our targets. We'll achieve this through operational leverage targeted cost management spot. It became it policies and better management of fixed costs as we Gregg. This is demonstrated by an improvement of 300 basis.

Placing house level contribution in Q1, we ended at 21% margin versus 18% in Q1 'twenty one.

F&B margins for the quarter continued to grow and were ahead by 260 basis points versus 2019 on a comparative basis now I'd like to address a few macro clouds and how they relate to M. C. G in our margins the.

Our supply chain remains constrained and we expect that these constraints continue for the balance of year to compensate we've significantly diversifies our supply base over the last 24 months, which is alleviated a lot of the pressures and that's resulted in server and being able to continue its exceptional goods and opening our houses, which we've opened now.

Three courts state and we feel very confident on opening on nine as Nick mentioned earlier.

Inflationary pressures, we expect to continue throughout 2022.

We have strong pricing power, which we have demonstrated already this year and combined with better procurement and F&B margins can offset the near term pressures regarding labor, we have multiple initiatives in place to retain our existing colleagues and also find new colleagues and we're already seeing the benefits of our efforts. Finally, we continued to build in all.

E. S. T program House foundations were incredibly proud today to publish our first ESG report, which outlines our goals and key initiatives the 2030.

Our strategy uses the foundations were built over 27 years to have a positive impact on the people around us the lives of our members and our environment.

We have strengthened our commitment to help people from lowest say, she economic and underrepresented backgrounds tap access to the creative industries.

By 20, 35% of our annual Sir House membership intake will represent members in our trading access programs and in the last quarter. We expanded Asa had mentioned program to nine to 13 cities and welcomed over hundred and 17, new members to ensure we minimize our impact on the environment.

We have set environmental goals, which include net zero carbon emissions by 2030, and reducing waste across all our operations globally by 50%.

In Q1, we launched our wastewater feed campaign in North America, increasing total sites that divert food from landfill from 65% to 74%. So as you can see each quarter, we're making progress against the targets that we're going to outline today. There are 2030, and we'll always update you on our progress.

So in summary, I recognize we're operating under a volatile macro environment within that backdrop, I'm really pleased with our performance and also our progress towards our strategic goals that we outlined our IPA importantly, we continue to see a high retentions in our members' demand, but some membership being all time highs and we continue.

To open our new houses, which ultimately drives the most value to us our house members. However, I recognize that we do have to carefully navigate the coming years in terms of balancing growth and demand and profitability, which we are very focused on.

I'm now going to hand over to Humira, who will drill into the numbers and our results and share with you for the first time, our 2022 guidance.

Thanks, Sanjay and good morning, everyone. He has some of the highlights for Q1 2022.

It was a good quarter for us with total revenues of 192 million, representing an increase of 165% years yeah.

With a growing contribution across all three of our segments.

These results were delivered despite a number of restrictions prevailing particularly early on in the quarter do you see the omicron variant and most of the territories in which we operate and it's worth noting that that continued to be very strict restrictions in Hong Kong throughout the whole quarter, which I only know they need we.

We saw continued growth in maturing membership revenues, which were up 45% versus Q1, 'twenty, one and 12% higher than Q4 'twenty one.

Our in house revenue, so a very strong recovery up 440% year over year during the quarter driven by the increase in mobility and strength in leisure spending from our members. Our improved performance reflects continued focus on cost management as well as strong topline performance, particularly as our houses travel up the maturity curve given our confidence in a recovery.

We are now introducing fiscal year 2022 guidance on the back of our first quarter performance as well as our current trading.

Turning to some of the details of our Q1 2022 performance on slide 12.

That said our total revenue in Q1 of 192 million increased by a 165% compared with the first quarter of 'twenty one.

In the quarter membership revenue our recurring revenue income stream increased to $58 8 million or 45% above Q1, 'twenty, one levels and accounted for 31% of total revenue in the period.

This was driven by the growth in ASO House membership base year on year.

In house revenue in Q1 continued to rebound strongly overall, despite the omicron impacts increasing to $87 8 million, a 440% improvement year over year.

Other revenues of $45 5 million also showed a very strong recovery.

191% versus 21 and sustaining the recovery seen in Q4, 'twenty, one where we delivered $42 8 million.

This was driven by the continued robust performance of sell him and we also saw a recovery in public restaurants in the U K North America also aiding our the revenue growth with improved performance of the Netherlands, and for which we see the management fee and growing contribution from line and flora hitch houses PK and part of the great of M. C. G. M. Do you intend to 'twenty one.

<unk> house level contribution benefited from significant ebit's restrictions year on year and robust membership growth pace in the second half of last year and the first quarter of this year. However, this was partially offset by increased operating costs and the impact of the new openings, which you're aware tend to impact contribution in the fast wanted T.

Yes.

Contribution margin for Q1, 'twenty, two is 21% versus 18% at Q1 'twenty one.

This improvement is predominantly due to the flow through of additional membership fees and higher sales face here.

The contribution Osage play strongly from a loss of nearly $12 million in Q1 21 to a positive $4 6 million in Q1, 'twenty two predominantly due to growth in our retail offering year on year and improved performance in our restaurants and townhouses following reduced restrictions, leaving onto the revenue bridge. This slide sets out the building blocks.

Although our year on year as new Grace in this last quarter.

You'll see here the three main drivers to our improved revenue performance and they include membership Grace much improved in house revenue performance and finally, the revenue from our other businesses.

Membership revenue growth was driven by 19819, new adult paying members and existing houses since Q1 'twenty one.

6960, new members in the new houses Aten during 'twenty one we.

We also added 1677, new mandates from the two new houses opened during Q1 'twenty two although it's worth noting that a full quarters revenue would not be recognized given the members will be joining only partway through the quarter.

[noise] frozen Mendes continue to drop quarter on quarter now at a level of 3519, which is below pre pandemic levels.

We also increased our every house membership fee for service members renewing from February 2022 onwards, having not raise membership prices since 2019.

Other memberships contribute to circa 30% of the revenue growth versus the same quarter in 2021.

The in house revenue increase of 440% versus Q1, 'twenty one to $87 8 million was aided by our new housing it means in Nashville, lighten. The fact that we experience he okay that closures and restrictions as well versus Q1, 'twenty, one leading to increase footfall through the houses they will say price increases across food and beverage and.

As a reminder, the price increases were a weighted average of 5% across categories.

Revpar in February and March was above comparable with 2019 levels led by North America and UK.

North America, Revpar was 22% higher than Q1, 2022 versus Q1, 2019, and U K Ras PA was 30% higher than Q1 2022 versus Q1 2019.

This April revpar growth of 4% in Q1 2022 versus Q1 19 on a like for like basis was driven by higher average daily rates, it's worth noting that occupancy levels were impacted D. T. Omicron variant in January before rebounding in February and March and this improvement has continued into April .

The revenue growth came from various sources, including revenue from mandolin and the valores restaurants as well as contribution from the line in Swire properties, which were not part of the group in Q1 'twenty one.

We saw improved management fees from the Netherlands, and due to increased activity versus Q1, 'twenty one and Additionally, there was continued strong growth and so hey, morphing showing revenue growth of 150% versus Q1 'twenty one turning next to EBITDA, our adjusted EBITDA improved from a loss of $22 8 million in Q1, 'twenty one until positive too.

Point 3 million for Q1 'twenty two in terms of the key drivers of the improved performance EBITDA growth year on year is predominantly driven by four key aspects. Firstly increased membership revenues were volume driven with significant increase in full paying so a hausmann ms year on year as well as membership fees from new houses.

Additional membership revenue was driven by improved occupancy at Cerro acts.

The next driver is a recovery of in house contribution to increase footfall given here stations year on year. As noted there was an impact of the new houses on house contribution, but at the same time the positive benefit of other houses progressing up the maturity curve.

Within other contribution we benefited from continued growth in retail as well as increased performances from our restaurants and contribution from the line in Florida.

Finally, EBITDA growth was partially offset by increased G&A expenses, firstly teach the increase in business activity as compared to Q1, 'twenty, one and also increased support costs for our new houses.

We also saw wage inflation, our corporate office and finally, we incurred $4 million of costs in the quarter related to being a public company.

However, strong cost control and vacancy management and support sites further helped offset some of these G&A expense increases.

Overall operating expenses grew at a rate below the revenue growth rate a further driver of the increase in EBITDA margin was in employee retention tax credit gain of $2 5 million.

As you know we report our adjusted EBITDA burden for crisis, meaning that we include expenses that are associated with the growth of our business.

The bridge on this slide shows some of these expenses firstly pre opening costs were $4 million in Q1 2022, lower by point 8 million in the same quarter prior year.

Secondly, noncash rent, which is the difference between the rental costs in accordance with GAAP and the actual cash cost was $3 4 million in the quarter and.

And finally deferred registration fees with $2 4 million in Q1 2020 to the.

The table on this slide shows our cash and debt position as at the end of Q1 2022, we ended the quarter with 285 million of cash and cash equivalents and restricted cash and net debt of $493 5 million.

As previously noted on March nine 2022, we exercise our option under the Goldman Sachs Senior secured note purchase agreement to issue $100 million of additional notes.

The company also repurchased 342972 shares for $2 $6 million during the first quarter 2022, we utilize 18 million for capital expenditures and anticipate FY 2022 capex broadly similar to 2021 levels.

We also paid 4 million for a new energy supply deposits in the U K.

And as you can see from our loan maturity profile. The vast majority of our debt cottony runs out to <unk> 27, we do not anticipate any difficulty in refinancing or extending the facility due in 2024.

Overall, our liquidity profile, including Undrawn debt of circa 93 million provides us with sufficient flexibility to fund our operational needs as well as our capacity to grow.

Our priority remains to generate free cash flow and pay down debt in the short to medium term.

Looking ahead to the balance of fiscal 2022, we remain confident about the overall recovery of our M. C. G group revenues given the positive momentum of Q1, 'twenty two carrying through into Q2 22.

Total M. C. G members have increased by a further 3% in April and together with a high level of member retention record weightless numbers and growth from new houses membership continues to be a very valuable recurring revenue stream based on our confidence in a recovery and I believe we can provide the following guidance.

In terms of so house numbers, we anticipate ending the current fiscal year between 160000 and 165000 members.

That should translate into total M. C. G membership revenue, including Nuthouse Mendes in the range of 270 million to $280 million.

From a total revenue perspective for M. C. G. We anticipate a range of 950 million to $1.0 billion to $5 billion we.

We are targeting adjusted EBITDA between 80 to 90 million for fiscal 2022 and for clarity. This is without adding back pre opening costs noncash rent and deferred registration phase, which we currently estimate to be a total of $60 million combined for the year as a whole we're still cautious about the emergence of any future COVID-19 variants.

And this guidance assumes no future unforeseen interruptions from the emergence of any such variance. We're also mindful of continued inflationary pressures. However, we have several cost control measures and progress to counter some of these concerns notwithstanding these headwinds we expect to deliver sustained margin growth within the short term.

And now I'll pass it back to Nick.

So well.

Yeah, so far and we are nearly half way through it but my God.

Feels like things are really getting back to normal plus plus.

It feels like its in the rear view mirror.

Members are super excited to be back.

All our events, which are happening in the houses are full.

Rooftops or full Theres, a real excitement just to connect together with human beings in spaces that they are familiar and they love it.

The team are doing a brilliant job.

Executing our growth plans.

All in good time, three houses who already open.

And I'm Super proud of them.

And I feel so positive about the future and I just again want to thank all very incredible loyal members I want to thank the.

Patients of the 79000 people, who are on our waitlist and I want to thank the teams who put so much work and effort into making sort of a house work.

Thank you Mr. Nick Jones at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. Your first question comes from the line of Stephens <unk>, calling from Citi. Your line is open.

Great.

Good morning, everyone. Thanks for taking my question.

I wanted to start asking on the price increases that you've taken both on member.

Membership and then also on food and beverage.

Our members taking these increases to rates is there room to increase it a little bit more as we go through the year.

That'd be very helpful. Thanks.

Thank you for that Steven well as Amir mentioned in and has it had an hub.

But we have put the membership price up for every house members.

Ranging between 10 and 13%.

Remember, there's been no resistance of acetyl members.

Oh.

They realize that things had gone up in price.

We're very logical about that.

That has been.

Received with no problem whatsoever.

As far as menu prices are concerned.

We're always reasonably priced houses and but.

But we've had to inflation.

Inflationary.

Prices onto Amazon they understand that they get back.

So as far as room rates are concerned.

And again.

Our room product I believe is some of the best on the market.

And again, we're very lucky in the fact that we don't use any booking engine to drive drive all bookings, we don't use booking docomo, we didn't pay any commission to anyone to book rooms.

We always pass that onto our onto our members. So they always have been.

So.

Yes.

Our members.

Find about the pricing and inflation does keep going up.

We wouldn't hesitate.

Paul some of their own.

Okay, great very helpful. Thanks for that Nick and.

Then my follow up was just on on the guidance much appreciated for giving guidance. This year I'm curious how you think about.

'twenty three I know, you're not providing guidance for that today, but is there a way to contextualize, maybe the exit rate that you will come out of this year as a potential run rate for the business.

So I think on 2023, I think what we can say today, we're comfortable where we are seeing twenty-three EBITDAR expectations today.

Our focus is getting through this year and Thats why we wanted to provide the guidance this year, which reflected Q1.

As you know and that's what we wanted to give you guys today.

Just add to that in terms of the ramp up to the margin increases quarter on quarter say first quarter is typically a low cost our second quarter. It will get better and that's supported by PSA, which is a very high margin business.

Q3, again get stronger in Q4, because of a Christmas bookings and that sort of thing so so.

So in terms of the ramp up to the logic.

Sure Yes.

Great. Thank you for the detail.

Your next question comes from the line of Stephen Grambling from Goldman Sachs. Your line is open.

Hi, Thanks, maybe another follow up on the guidance can you just help break down maybe the revenue guidance into other revenues and in house.

Especially the the kpis in each of those as well as give us a little more color on how youre thinking about in house contribution.

Hi, it's Steven so in terms of the revenue breakdown in the way things between the three different segments I would say that Q1 is a reasonably good indicator of the different weightings Q1 in terms of sort of the membership revenue. We've always said you know between 10, 7% to 29% I think that's consistent than maybe a bit of variation between.

In house, another but broadly that breakdown and that waiting will be consistent and in terms of of March an in house level contribution I'd point, you back to that the maturation curve.

This is all going to progress up the curve. They are progressing up the curve versus 2019, which the loss normal yeah. So I'd point you back to that I don't see any anomalies are coming through.

And maybe an unrelated follow up.

How does developer funded capex lending rates moved over the course of the quarter. It just seems like there's been a lot of moving parts in the capital markets around hospitality in particular, some im wondering if theres anything thats that.

What's changed there and if you could help clarify maybe how much.

Developed refunded Capex are you anticipating this year.

So in terms of the Rensselaer's Asian, although off the Capex spend by developers that is typically around the 5% to 7% yield that hasn't really changed for us we're not seeing that changing in the short term and any other deals that we're negotiating now.

You know our debt.

Is it around eight 5% so that still represents a good cost of capital relative to the cost of our debt.

Okay.

Awesome, Thanks, I'll jump back in the queue.

Thank you.

Your next question comes from a line of BOE Lloyd from Lloyd Holdings. Your line is open.

Hi, Yes, I'm just wondering if you can provide a little bit of insights based on your members without houses what region is kind of showing the most demand or maybe area of opportunity for growth.

Hi.

So cities without.

It is a really successful membership program for us.

The areas, where with the most successful actually where we have where we're opening so.

For instance, Stockholm.

Where we are.

I'll find the members already.

For the CW write tremendous same with Copenhagen, So we see very strong growth in other cities in America on CW, San Francisco Portland wherever they are eventually going to be opening physically.

And other cities around.

So it's a really good indicator of how popular.

A potential physical house will be in that city.

And obviously.

Over Covid too.

As the Covid.

Haven't been doing the activity that we.

We were doing pre COVID-19 are now back in full swing.

We've expanded to 72 countries now.

It'd be something I'd be really pleased to report on.

Yes.

In future calls.

And just a quick follow up as well.

Property kind of I guess type I know you have your more traditional.

And city properties and then you have your more farmhouse, you made back in the states.

Just curious if theres any insight as to the strategy as to property type and mix in the future. You continue just to be more in a city or is it more maybe essentially a state style properties as well.

Well.

We got four types of houses so we've got a large has a big half.

Medium has days ago literally houses and we got the resort style houses.

We plan to expand all four types equally.

Over the coming years.

To give you a bit more color on that actually in 2022, I I'd say five of the nine a medium houses.

One or two small and the remainder will be lodged looking forward to 2023, and there's probably one experiential.

For medium and large that's the rough breakdown for the next couple of years.

And I want to highlight.

Ed on that so if you think about North America.

Largest region, which you're seeing huge amount of growth.

To add a lot more of the experiential houses into North America, which will again increase the value of our membership because most of the folks are members in North America. Our ebbinghaus. So if you think about the farmhouse concept, we have here, which is incredibly popular with all our members those kind of concepts will be coming to North America to round out our North America.

Membership. So that's you know that's the way we you know we see the experiential houses is really adding value to our biggest regions.

Thank you.

Your next question comes from the line of Joe Greff from JP Morgan Your line is open.

Hello, everybody.

Another a couple of questions with regard to your 'twenty two guidance.

Your membership guidance implies 32000 net adds over the next three quarters I was hoping you could help us understand the breakout or the contribution coming from <unk>.

Is that are opening in.

In 'twenty, two and the balance of 'twenty two houses that opened last year and earlier.

In the <unk> and are ramping and then maybe contribution from from houses that opened prior to 2021.

Yeah, Great question, So I would think of it and a little bit like this you have our existing houses. So you think about.

What we call vintage houses to pre 2018, we.

We will add between 5% to 10% of members in those houses and we've been doing that for the last 27 years because of the natural usage of our members within those existing housing. So I would always think of that as a real strong indicator of the strength of our business that we can always add each year between 510% members in this house.

<unk>.

That's almost like like for like comparable than your 2018 houses up until 'twenty one they're the houses that we've opened recently and we that's why we can ramp up the membership a lot more this year, so you're going to see.

You said of the new members getting in our newer houses and then as we've always said when we opened the new houses. The nine this year, we always intend to open with a minimum of a thousand members say it. This way I would think about it in those three buckets are a good ramp up on the 2018 houses and 21, the new houses opening.

5000, each who actually beating that right now with Nashville in Brighton and then the like for like growth in our existing houses.

Did the other variation.

Notice that actually the regional variation. So for instance, North America sees a significant portion of growth to 38% of the balance of the year is coming out in North America and this also points to the point, we've made before that the geographical mix of our membership is changing moving more towards North America, and that's the higher price point, which also drive <unk>.

Right.

Great and then.

Do I imply from.

Your overall guidance that other segment.

<unk> segment.

It's profitable for the rest of the balance of 2022.

Yes.

It's well, it's very that various matters.

Total, yes, there'll be ups and downs within that.

Okay.

I deduce from your comment that is that in each quarter that that other segment is P&L positive.

Yeah Yeah.

Okay.

And then my final question.

And maybe you'd referenced it and I missed it I had some technical difficulties can you give us an update on the CFO search please.

Yes, I can we are very close to finding.

Successor, and we'll be announcing in the next few weeks, we've done a huge surge globally.

Meera involved and we're obviously very sad that this is hemorrhaged last call, but we will be announcing our new CFO in the next three to four weeks.

Okay.

Great. Thank you everybody.

And there are no further phone questions I will turn the call back over to management for any web questions.

We have now online questions at the moment.

I mean.

I want to talk about there is a lot lower than the news at the moment about about potential recession.

I just want to.

Sort of.

Talking about our experiences with recessions in the past we've.

We've been going for 27 years.

There have been a few of them.

And what we found particularly in the last one in 2008.

But actually members didn't give up that membership.

Ended up using their houses more.

The expected.

Good value and they came to the houses.

One thing I didn't want to give up because they realize it was a home away from home and they also realize but to give up their membership that was an incredibly long queue to get back in so I just wanted to.

Sure.

Anyone who's on this call.

We're not we're not worried about a recession.

And then there is hopefully.

No more questions.

And there are no further phone questions at this time, Mr. Nick Jones, CEO and founder I'll turn it back to you for scent for any closing remarks.

My closing remarks.

I would like to be back open again, it's what we do best.

It's great to see all houses so it's great to see our waiting lists.

Okay, even bigger even longer is fantastic to see the new houses open very sad to see America.

Thank you.

And I want to say generally thank you to hold off.

Team, Andrew Who's in the room with me.

For the constant support.

Help while we get this business.

Yes.

Flying on all cylinders. So thank you.

Thank you Laura on today's conference call. Thank you for your participation you may now disconnect.

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Okay.

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